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EXHIBIT 10 (l)
July 13, 1998
PERSONAL AND CONFIDENTIAL
Jeffrey P. Shaw
157 Garden Gate Court
Green Bay, WI 54313
Dear Jeff:
This letter is to confirm our recent conversation and serve as
a binding agreement between you and Dean Foods Company (the "Company").
The Company is seeking bids from third parties for the
purchase of Dean Foods Vegetable Company ("Vegetable"), of which you are a key
employee. Such a purchase, if consummated, could take the form of a purchase of
all or a majority of Vegetable's stock, a purchase of all or substantially all
of Vegetable's assets and the assumption of some or all of Vegetable's
liabilities, or a merger of Vegetable with the purchaser or an affiliate of the
purchaser (each a "Purchase"). Your continued employment pending any Purchase
and your cooperation in connection with any Purchase will be of value to the
Company and its shareholders. Accordingly, as an incentive to you to so continue
employment and cooperate, the Company will provide you with the benefits
described below (the "Special Benefits"). Except as described below, the Special
Benefits will be in addition to all other benefits to which you are entitled as
an employee of Vegetable.
1. Selling Bonus. Provided a Purchase closes on or before
December 31, 1998, and further provided you remain employed by Vegetable
through such closing (or your employment is actually or constructively
terminated by Vegetable without cause (as defined below), or is terminated as a
result of your death or disability, prior to such closing):
(a) The Company will pay to you the selling bonus based on the
Purchase Price (as defined below) set forth in the Schedule attached hereto as
and when such Purchase Price is realized by the Company (with the amount of your
payment interpolated from such Schedule in the event the Purchase Price is
greater than $350 million but less than $500 million).
(b) For purposes of the foregoing, Purchase Price will be
"realized" by the Company when cash, securities or other property (including
without limitation a promissory note) is received, directly or indirectly, by
the Company free and clear of any contingency (other than contingent
indemnification obligations of the Company in connection with the Purchase).
Purchase Price will also be "realized" by the Company to the extent of any
closing escrow or holdback by the
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purchaser related to the Company's indemnification obligations in connection
with the Purchase. The amount of any contingent earnout will not be "realized"
until received, directly or indirectly, by the Company in cash, securities or
other property free and clear of any contingency other than contingent
indemnification obligations of the Company in connection with the Purchase.
(c) For purposes of the foregoing, Purchase Price means the
amount paid or payable, directly or indirectly, to the Company in a Purchase,
including any amount paid or payable, directly or indirectly, to the Company for
a noncompetition agreement. Purchase Price does not include the amount of any
liabilities assumed or acquired, directly or indirectly, by the purchaser in
connection with the Purchase, nor the amount of any funds provided to Vegetable,
directly or indirectly, by the purchaser or any lender in connection with the
Purchase, nor any amount paid or payable to any individuals for employment or
consulting agreements. "Purchase Price" shall be determined as follows:
(i) If Purchase Price includes securities or other property,
the value thereof will be the fair market value thereof at the close of
the day preceding the day of the closing of the Purchase. If such
securities or other property trade in an established market, the fair
market value thereof will be the closing price thereof at such close.
If such securities or other property do not trade in an established
market, the fair market value thereof will be agreed to between the
parties or, in the absence of such agreement, will be determined in
accordance with (ii) below.
(ii) If the parties are unable to agree upon the fair market
value of any property or securities whose fair market value is to be
agreed upon by them pursuant to (i) above, then each will select an
appraiser of recognized national standing experienced in appraising
securities or other property of such type to determine the fair market
value thereof. The midway point between the two fair market values
established by such appraisers will be the fair market value of such
property or securities for purposes hereof. Each party shall be solely
responsible for paying all of the charges of the appraiser selected by
it for performing services hereunder.
This letter agreement is one of six similar letter agreements of even
date herewith being entered into by the Company with key employees of
Vegetable (collectively with you, the "Letter Parties"). In the event
the Company and the Letter Parties are unable to agree upon the fair
market value of any securities or property whose fair market value is
to be agreed upon pursuant to (i) above, you agree (and each of the
other Letter Parities is agreeing) that a single representative shall
act on behalf of all of the Letter Parties in connection therewith and
that that representative shall be Jeffrey P. Shaw or, in the event he
is unable or unwilling to so act, one of the other Letter Parties
selected by the Letter Parties by a numerical majority thereof.
By way of example, if the Purchase Price is $475 million your
selling bonus will be $971.5 thousand, and if the Purchase Price is $525 million
your selling bonus will be $1,218 thousand.
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(b) Effective upon the closing of such Purchase, any options to
purchase Company Common Stock granted to you under the Company's 1989 Stock
Awards Plan that remain unexpired and unexercised will fully vest.
2. Post-Sale Severance Benefits. Provided a Purchase closes on or
before December 31, 1998, if (i) you remain employed by Vegetable through such
closing (or your employment is actually or constructively terminated by
Vegetable without cause (as defined below) prior to such closing) and do not
become an employee of the purchaser or an affiliate of the purchaser in
connection with such closing, or you remain employed by the Company or an
affiliate of the Company immediately following such closing or (ii) you become
an employee of the purchaser or an affiliate of the purchaser in connection with
such closing, such employment is actually or constructively terminated by your
employer at any time prior to the second anniversary of such closing without
cause (as defined below) and other than as a result of your death or disability
and you do not reasonably promptly thereafter become an employee of the Company
or an affiliate of the Company, the Company will provide you with the following
benefits (the "Severance Benefits"): (a) payment of $32,000.00 per month over
the 27 months subsequent to such termination (or, if you so elect by written
notice to the Company at any time after such termination, the present value
equivalent of the remaining such payments as of the date of payment of such
present value calculated using a discount rate of 8% per annum compounded),
reduced to take into account any severance payments received by you from the
purchaser or an affiliate of the purchaser as a result of the termination of
your employment (of which severance payments you agree to notify the Company at
the time of such termination), (b) medical, dental and life insurance coverage
for you and your dependents over the 27 months subsequent to such termination
(or, in the case of each such type of coverage, for such shorter period
following such termination until you become eligible for a similar type of
coverage from another source) under the plans and programs of the Company in
effect for Company employees generally from time to time during such period
(including the employee contribution and deductible provisions thereof),
provided such coverage is permitted under the terms of such plans and programs
- -- or, if such coverage is not permitted under the terms of such plans and
programs, the equivalent of coverage under such plans and programs (including
the employee contribution and deductible provisions thereof), and (c)
reimbursement for fees and expenses of any outplacement service retained by you
on account of such termination, in an amount up to $25,000 less the fees and
expenses of any counsel retained by you to review this letter agreement prior to
your signing it which are paid by the Company pursuant to this letter agreement.
The Severance Benefits will be in lieu of all other severance payments, if any,
to which you may otherwise be entitled from the Company or Vegetable, other than
any such severance payments from Vegetable to which you may become entitled
pursuant to the definitive sale agreement entered into with the Purchaser (the
"Sale Agreement Severance Benefits"). The Severance Benefits shall be reduced by
the amount of any Sale Agreement Severance Benefits received by you. The
Severance Benefits shall not be reduced as a result of your failure to mitigate
the amount of such Severance Benefits.
For purposes of this letter agreement, "constructive termination"
means (i) termination of your employment by you or your employer following
implementation by your employer, without your consent, of a material adverse
change in your aggregate compensation (other
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than under equity purchase or equity awards plans) or job responsibilities or of
a relocation of your office to a location more than 50 miles from Green Bay,
Wisconsin, or (ii) a termination of your employment with the Company or
Vegetable by you prior to a Purchase following the Company's breach of any of
its agreements in this letter agreement which remains uncured for thirty (30)
days after the Company receives written notice of such breach.
For purposes of this letter agreement, "cause" means: (i) your
conviction of a felony or a crime involving moral turpitude; (ii) your
conviction of a fraud; (iii) your commission of any act involving dishonesty or
disloyalty with respect to your employer or any of its subsidiaries or
affiliates; (iv) intentional conduct by you tending to bring your employer or
any of its subsidiaries or affiliates into substantial public disgrace or
disrepute; (v) your gross negligence or willful misconduct with respect to your
employer or any of its subsidiaries or affiliates; (vi) your abandonment of
employment with your employer or any of its subsidiaries or affiliates other
than as a result of your death or disability; or (vii) your breach of any of
your agreements in this letter agreement which remains uncured for thirty (30)
days after you receive written notice of such breach. Any disputes as to the
existence of "cause" shall be submitted to arbitration with a single arbitrator,
as agreed to by the parties, in Green Bay, Wisconsin, under the rules of the
American Arbitration Association, and the decision of such arbitrator shall be
final and binding upon both parties. All charges of the arbitrator shall be
shared equally by the Company and you.
Your entitlement to the Special Benefits is subject to the further
condition that, so long as you remain employed by Vegetable, you cooperate with
the Company in its efforts to negotiate a Purchase and close it on or before
December 31, 1998, and, in the event you remain employed by Vegetable at the
time any Purchase closes on or before December 31, 1998 and if the purchaser or
an affiliate of the purchaser offers you continued employment in a comparable
position at a location not more than 50 miles from Green Bay, Wisconsin and for
comparable compensation, you accept such offer.
In consideration of the Special Benefits, you promise that so long as
you remain employed by Vegetable, you will, at the closing of any Purchase that
occurs on or before December 31, 1998, waive and release the Company and its
subsidiaries, divisions and affiliated companies (collectively the "Dean
Companies") from liability for all rights and claims, whether or not they are
then known to exist, that you then have or may have against the Dean Companies
relating in any way to your employment or separation from employment, excluding
the benefits and Special Benefits contemplated by this letter agreement. For
the purposes of such waiver and release, the Dean Companies shall be understood
to also include then and former directors, shareholders, employees and agents
of the Dean Companies. It shall also mean successors and assigns of the Dean
Companies.
The rights and claims which you waive and release pursuant to the
preceding paragraph will include, to every extent allowed by law, those
arising under the Employee Retirement Income Security Act of 1974, the Civil
Rights Acts of 1866, 1871 and 1964, the Rehabilitation Act of 1973, and the Age
Discrimination in Employment Act of 1967, as amended by the Older Worker's
Benefit Protection Act of 1990. This is not a complete list, and you will waive
and release all similar
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rights and claims under all other federal, state and local discrimination
provisions and all other statutory and common law causes of action relating in
any way to your employment or separation from employment, excluding causes of
action for the benefits and Special Benefits contemplated by this letter
agreement.
In consideration of your execution of this letter agreement, the Company
agrees to reimburse you for fees and expenses of any counsel retained by you to
review this letter agreement provided such amount does not exceed Eight Hundred
Fifty Dollars ($850.00).
You agree that subsequent to the closing of any Purchase that occurs on
or before December 31, 1998 you shall not intentionally undertake or make any
disparaging conduct or derogatory statements concerning the Dean Companies.
Further, the terms and the amounts of the Special Benefits shall remain
confidential and shall not be disclosed, directly or indirectly, by you to
anyone other than your spouse and attorney (to whom you may disclose such terms
and amounts provided you advise them, in advance of such disclosure, of the
provisions of this paragraph, and for whose observance of the provisions of this
paragraph you shall be responsible).
You further agree that you will not at any time subsequent to the
closing of any Purchase that occurs on or before December 31, 1998 divulge,
furnish or make accessible to anyone, or use for your benefit or the benefit or
any other person, firm, corporation or other entity, any trade secret, knowledge
or other information with respect to the confidential or secret processes,
plans, devices or materials of any of the Dean Companies. Notwithstanding the
foregoing, no information shall be considered to be confidential, and the
obligation of nondisclosure set forth in this paragraph shall not apply to any
information, that (i) is or becomes publicly known through no fault of yours, or
(ii) which you receive from a third party without violation by such source of
any obligation to the Company or Vegetable.
You also agree that, in the event you fail to comply with any of the
foregoing agreements, your right to receive any further payment of the Special
Benefits described above shall be forfeited and, in addition to any and all
other remedies which may be available to the Company at law or in equity for
such noncompliance by you, the Company shall have the right to injunctive relief
and specific performance to the extent permitted by law.
Except as otherwise expressly provided in this letter agreement in
regard to appraisal or arbitration proceedings contemplated herein, in the event
you institute in good faith any litigation or proceeding to enforce your rights
hereunder, or the Company institutes in good faith any litigation or proceeding
to enforce its rights hereunder, the prevailing party in such litigation or
proceeding shall be reimbursed by the other party for all of its costs and
expenses (including without limitation attorneys' fees) incurred in connection
with such litigation or proceeding.
Nothing in this letter agreement confers any right on you to continue in
the employment of Vegetable or any of the other Dean Companies, or to become an
employee of or continue in the employment of any purchaser of Vegetable or any
affiliate of such a purchaser, or
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affects in any way the right of any of them, as the case may be, to terminate
your employment at any time.
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In order to accept this letter agreement and receive the
Special Benefits on the terms provided herein, you must return a signed copy of
this letter to me within ten (10) days after the date of this letter. You are
advised to contact an attorney prior to executing this letter agreement.
Benefits which are required by law will be provided whether or not you execute
this letter agreement.
DEAN FOODS COMPANY
By:________________________
Its:_______________________
I have read and understand this letter agreement and accept and agree to it.
Date: July __, 1998
______________________________________
Jeffrey P. Shaw
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Schedule
Purchase Selling
Price Bonus
(in millions of dollars) (in thousands of dollars)
------------------------ ------------------------
350 or less 203
400 464
450 783
500 1,160
In excess of 500 1,160 plus .232% of the
excess