INDEPENDENT CONTRACTOR AND
NONCOMPETITION AGREEMENT
THIS
INDEPENDENT CONTRACTOR AND NONCOMPETITION AGREEMENT (this “
Agreement ”), dated as of the 1st day of
December 2005, between Dean Foods Company (“ Dean
Foods ”), a Delaware corporation, having its principal
place of business at 2515 McKinney Avenue, Suite 1200, Dallas
TX 75201, and Pete Schenkel (“ Mr. Schenkel” or
“you" ).
WHEREAS , the Dean Foods Company, or one or more of its
affiliates or subsidiaries (the “ Company ”) has
employed Mr. Schenkel in an executive capacity for several
years;
WHEREAS , Dean Foods has offered Mr. Schenkel to
continue his employment, in the position of “Vice
Chairman” of Dean Foods, for a period of up to two years,
under the terms of a written agreement to be executed
simultaneously herewith, that shall specify the terms and
conditions of his employment and provide commitments to
Mr. Schenkel with regard to the salary and incentive
compensation opportunities to be made available during such
continued employment (the “ Employment Agreement
”), and to retain access to Mr. Schenkel’s
knowledge and experience as a senior advisor for an additional two
years thereafter, under the terms of this agreement;
WHEREAS , during his employment, Mr. Schenkel has
acquired and will continue to acquire, by reason of his position,
substantial knowledge of the operations and practices of the
business of Company;
WHEREAS , the Company desires to assure that, to the
extent and for the period of Mr. Schenkel’s service to
the Company and for a reasonable period thereafter, it may maintain
the confidentiality of its trade secrets and proprietary
information, goodwill and other legitimate business interests, each
of which could be compromised if any competitive business were to
secure the services of Mr. Schenkel; and
WHEREAS , to induce Dean Foods to enter into the
Employment Agreement, and to provide the commitments to
Mr. Schenkel in respect of the substantial compensation to be
provided thereunder, the Company has required that
Mr. Schenkel enter into this Agreement.
NOW, THEREFORE,
it is agreed as follows:
1.
Services . During the period from your Resignation Date,
as defined in the Employment Agreement, to December 31, 2009
(the “ Senior Advisory Services Period ”), your
responsibilities under this Agreement will be to provide general
advice and consultation to the Chief Executive Officer, Chairman of
the Board, and the Dairy Group President on matters of strategy and
execution, as well as to provide assistance with respect to such
specific operating initiatives as may be requested from time to
time (“ Senior Advisory Services ”). The Company
and you intend to have an independent contractor relationship. In
performing services for the Company pursuant to this Agreement, you
shall act in the capacity of an independent contractor with respect
to the Company and not as an employee of the Company. You will,
however, be considered an agent for purposes of the Indemnification
Agreement dated February 21, 2003 and entered into by you with
Dean Foods Company (“ Indemnification Agreement
”). Notwithstanding the foregoing, in the event that your
employment under the Employment
1
Agreement is
terminated by Company with or without Cause or by you for Good
Reason (as each such term is defined in the Employment Agreement),
there shall be no Senior Advisory Services Period.
2.
Senior Advisory Services Fees . For your Senior Advisory
Services you will be paid a Senior Advisory Services fee at the
annual rate of $200,000 (the “ Senior Advisory Services
Fee ”). Such Senior Advisory Services Fee will be paid in
approximately equal monthly installments, in arrears. In addition,
during the Senior Advisory Services Period, Company shall provide
you a continued car allowance, reimbursement of expenses, club
membership, office and secretarial assistance, and other
perquisites and benefits provided to you by the Company on the date
hereof. In addition, in the event that your employment under the
Employment Agreement is terminated by the Company without Cause or
by you for Good Reason, at any time after you execute the
Employment Agreement, or the Senior Advisory Period is ended by the
Company prior to December 31, 2009 and, in any such case, you
have not theretofore breached any of your obligations in
Sections 4, 5, or 6, Company shall pay you a single lump sum
payment, six months and one day after your termination of
employment, equal to the aggregate amount of the Senior Advisory
Services Fees that would have been payable during the remainder of
the Senior Advisory Services Period.
3.
Acknowledgments . You acknowledge that ( i )
Company is engaged in a continuous program of research, development
and production respecting its business throughout the United States
(the foregoing, together with any other businesses in which Company
engages from the date hereof to the date of the termination of your
employment with Company, is hereinafter referred to as the “
Company Business ”); ( ii ) your work for
Company allows you access to trade secrets of, and confidential
information concerning, Company; ( iii ) the Company
Business is national and international in scope; ( iv )
Company would not have agreed to employ you and to enter into the
Employment Agreement but for the agreements and covenants contained
in this Agreement; and ( v ) the agreements and covenants
contained in this Agreement are necessary and essential to protect
the business, goodwill, and customer relationships that Company has
expended significant resources to develop. The Company agrees and
acknowledges that, on or following the date hereof, it will provide
you with one or more of the following: ( a ) authorization
to access Proprietary Information (as defined below) through a new
computer password or by other means, ( b ) authorization to
represent the Company in communications with customers and other
third parties to promote the goodwill of the business in accordance
with generally applicable Company policies and ( c ) access
to participate in certain restricted access meetings, conferences
or training relating to your position with the Company.
4.
Non-Disclosure . You recognize that Company competes in
a highly competitive field and that Company possesses and will
continue to possess information of commercial value that relates to
the Company Business, including but not limited to trade secrets,
technical and scientific information, financial business
information, processes, recipes, formulas, data, know-how,
improvements, inventions, product concepts, discoveries,
developments, designs, inventions, techniques, marketing plans,
strategies, forecasts, new products, blueprints, specifications,
programs, ideas, customer lists, vendor lists, pricing and other
structures, marketing and business strategies, budgets,
projections, licenses, costs, financial data, and plans, proposals
and information about Company’s employees and/or consultants
(collectively, " Proprietary Information ”).
Notwithstanding the foregoing, Proprietary Information shall
not
2
include
information that: ( a ) is publicly available when received,
( b ) thereafter becomes publicly available through no fault
of your own, ( c ) is otherwise disclosed by the Company to
another party without obligation of confidentiality, ( d )
is in your possession, or becomes available to you, on a non
confidential basis, from a source other than the Company, or (
e ) that you are required by law, regulation, court order or
discovery demand to disclose; provided, however, that in the case
of clause (e), you give the Company reasonable notice prior to the
disclosure of the Proprietary Information and the reasons and
circumstances surrounding such disclosure to provide the Company an
opportunity to seek a protective order or other appropriate request
for confidential treatment of the applicable Proprietary
Information. You agree that the Proprietary Information constitutes
a unique and valuable asset which is essential to the
Company’s business success, and that any release of
Proprietary Information would be harmful to Company and/or its
customers. To protect Company’s Proprietary Information, you
agree that at all times, including during and after the term of
your employment, you will not disclose to any person, firm,
company, or corporation or use for your own benefit or for the
benefit of any third party (except in furtherance of Company
Business or affairs of Company) any and all Proprietary Information
that you may have acquired in the course of or as an incident to
your employment with Company. You further agree to take all
reasonable precautions to protect against the intentional,
negligent, or inadvertent disclosure by you of Company’s
Proprietary Information to any other person, or business entity,
except in furtherance of the Company Business.
5.
Non-Competition . You understand and agree that during
your employment with the Company, and during the Senior Advisory
Services Period where you are available to provide services to the
Company as a senior advisor following your Resignation Date (as
defined in such Employment Agreement), you have been and will
continue to be provided access to specialized information related
to Company Business and trade secrets, as well as Company’s
customers and their confidential information. You further agree
that if this information were used in competition against Company,
Company would experience serious harm and the competitor would have
a unique advantage against Company. You hereby covenant and agree
that ( a ) at no time during your employment with Company, (
b ) at no time during the Senior Advisory Services Period
and ( c ) at no time until the second anniversary of the
date of your termination of services for Company (whether as an
employee or independent contractor) for any reason (the “
Non-Compete Period ”), will you ( i ) develop,
own, manage, operate or otherwise engage in, participate in,
represent in any way or be connected with, whether as officer,
director, partner, owner, employee, agent, independent contractor,
consultant, proprietor, stockholder (except for the ownership of
less than five percent equity interest in a publicly traded
company)
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