CONSULTING AGREEMENT
This Consulting Agreement (the "Agreement") is made as of July 1, 1997,
by and between Suiza Foods Corporation, a Delaware corporation (the
"Company"), and Cletes O. Beshears ("Consultant").
WHEREAS, Consultant has been serving as President of the Company pursuant
to an employment agreement with the Company, dated as of March 31, 1995 (as
amended on February 29, 1996), which was scheduled to expire on March 31,
1999 (the "Employment Agreement");
WHEREAS, the parties desire to terminate the Employment Agreement and
enter into a consulting relationship, under which Consultant would provide
services to the Company in accordance with the terms and conditions of this
Agreement;
NOW, THEREFORE, the Company and Consultant agree as follows.
1. TERMINATION OF EMPLOYMENT AGREEMENT. Consultant hereby resigns as
President of the Company, and the Company hereby accepts such resignation.
The Company and Consultant hereby agree that the existing Employment
Agreement is terminated and that neither party has any further liabilities or
obligations to the other pursuant to the Employment Agreement, except for the
payment of compensation through the date of this Agreement (to the extent not
previously paid).
2. CONSULTING SERVICES. Subject to the terms and conditions of this
Agreement, the Company agrees to engage Consultant as an independent business
consultant for dairy acquisitions, and Consultant agrees to perform such
consulting services for the Company diligently and to the reasonable
satisfaction of the Company's Board of Directors. The Company anticipates
that Consultant will continue to serve as a member of the Board of Directors
of the Company (the "Board") and as a member of the Executive Committee of
the Board, and the Company will use its best efforts to cause Consultant to
be elected to the office of Vice Chairman of the Board of Directors.
Consultant will report to the Chairman of the Board and will comply with the
policies and guidelines established by the Board from time to time.
3. TERM AND TERMINATION. The term of Consultant's engagement under
this Agreement (the "Term") will commence on the date hereof and continue
until December 31, 1998; provided that the Company may end the Term earlier
under the following circumstances:
(a) in the event of Consultant's death;
(b) if Consultant is totally disabled so that he has been unable to
perform his duties and responsibilities hereunder for a period of 180
consecutive days;
(c) if the Board terminates this Agreement with "cause" (as defined
below); or
(d) if Consultant materially breaches the terms of this Agreement and
such breach remains uncured after a reasonable opportunity to cure such
breach.
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If the Company terminates this Agreement pursuant to this paragraph prior to
the stated end of the Term, Consultant (or his representative in the event of
his death) will be entitled to receive payment of all compensation earned
through the date of termination. If the Term ends pursuant to clause (a) or
clause (b) above, Consultant (or his representative) will not be required to
repay any unearned portion of the retainer previously paid pursuant to
SECTION 4. The provisions of SECTIONS 6, 7 and 8 hereof will survive any
termination in accordance with their terms. As used in this Agreement,
termination with "cause" means any termination for (i) the commission of an
act of fraud or embezzlement against the Company, (ii) conviction of a felony
or a crime involving moral turpitude, (iii) gross negligence or willful
misconduct in performing Consultant's duties hereunder, or (iv) breach of
fiduciary duty in connection with Consultant's engagement by the Company.
4. COMPENSATION. During the Term of this Agreement, Consultant will be
entitled to receive the compensation described in EXHIBIT A. All of
Consultant's compensation under this Agreement will be subject to deduction
and withholding authorized or required by applicable law.
5. BENEFITS. During the term of this Agreement, the Company will
reimburse Consultant for premiums paid by Consultant to continue his existing
health insurance coverage and for the cost of one physical examination per
year. The Company will also reimburse Consultant for reasonable out-of-pocket
business expenses incurred and documented in accordance with the policies of
the Company in effect from time to time.
6. CONFIDENTIAL INFORMATION.
(a) In the course of performing services for the Company under this
Agreement, Consultant may receive or have access to commercially valuable,
confidential or proprietary information. "Confidential Information" means
all confidential information, whether oral or written, now or hereafter
developed, acquired or used by the Company and relating to the business of
the Company that is not generally known to others in the Company's area of
business, including without limitation (to the extent confidential) (i) any
trade secrets, work product, processes, analyses or know-how of the
Company; (ii) the Company's advertising, product development, strategic and
business plans and information; (iii) the prices at which the Company has
sold or offered to sell its products or services; and (iv) the Company's
financial statements and other financial information.
(b) Consultant acknowledges and agrees that the Confidential
Information (to the extent is can be owned) is and will be the sole and
exclusive property of the Company. Consultant will not use any
Confidential Information for his own benefit or disclose any Confidential
Information to any third party (except in the course of performing his
authorized duties for the Company under this Agreement), either during or
subsequent to his engagement by the Company. Upon termination of his
engagement by the Company, Consultant will promptly deliver to the Company
all documents, computer disks and other computer storage devices and other
papers and materials (including all copies thereof in whatever form)
containing or incorporating any Confidential Information or
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otherwise relating in any way to the Company's business that are in his
possession or under his control.
7. RESTRICTIVE COVENANT. In consideration of the Company's agreement
to engage Consultant, Consultant hereby agrees that, during the period
Consultant is engaged by the Company and for two years thereafter, Consultant
will not (except in the course of performing his authorized duties for the
Company under this Agreement), directly or indirectly, on his own behalf or
as an officer, director, employee, consultant or other agent of, or as a
stockholder, partner or other investor in, any person or entity (other than
the Company or its affiliates):
(a) engage in the business of manufacturing, processing,
distributing, marketing or selling dairy products, packaged ice or plastic
containers (the "Business") within the geographic area currently served by
the Company and its subsidiaries (the "Territory");
(b) directly or indirectly influence or attempt to influence any
customer or potential customer of the Company located within the Territory
to purchase goods or services which are competitive with those presently
being offered by the Company from any person or entity other than the
Company; or
(c) employ, attempt to employ or solicit for employment in any
position related to the conduct of the Business in the Territory any
individual who is an employee of the Company at such time or was an
employee of the Company during the year prior to such time;
provided that the foregoing will not apply to any investment in publicly
traded securities constituting less than 5% of the outstanding securities in
such class.
8. ENFORCEMENT.
(a) Consultant represents to the Company that he is willing and able
to engage in businesses other than Businesses within the Territory and that
enforcement of the restrictions set forth in SECTION 7 would not be unduly
burdensome to Consultant. The Company and Consultant acknowledge and agree
that the restrictions set forth in SECTION 7 are reasonable as to time,
geographic area and scope of activity and do not impose a greater restraint
than is necessary to protect the goodwill and other business interests of
the Company, and Consultant agrees that that the Company is justified in
believing the foregoing.
(b) If the provisions of SECTION 7 are found by a court of competent
jurisdiction to contain unreasonable or unnecessary limitations as to time,
geographical area or scope of activity, then such court is hereby directed
to reform such provisions to the minimum extent necessary to cause the
limitations contained therein as to time, geographical area and scope of
activity to be reasonable and enforceable.
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(c) Consultant acknowledges and agrees that the Company would be
irreparably harmed by any violation of Consultant's obligations under
SECTIONS 6 and 7 hereof and that, in addition to all other rights or
remedies available at law or in equity, the Company will be entitled to
injunctive and other equitable relief to prevent or enjoin any such
violation. If Consultant violates SECTION 7, the period of time during
which the provisions thereof are applicable will automatically be extended
for a period of time equal to the time that Consultant began such violation
until such violation permanently ceases.
9. ENTIRE AGREEMENT. This Agreement embodies the complete agreement of
the parties with respect to the subject matter hereof and supersedes any
prior written, or prior or contemporaneous oral, understandings or agreements
between the parties that related in any way to the subject matter hereof.
This Agreement may be amended only in writing executed by the Company and
Consultant.
10. NOTICE. Any notice required or permitted under this Agreement must
be in writing and will be deemed to have been given when delivered
personally, by telecopy or by overnight courier service or three days after
being sent by mail, postage prepaid, to (a) if to the Company, to the
Company's principal place of business, or (b) if to Consultant, to his
residence or to his latest address then contained in the Company's records
(or to such changed address as such person may subsequently give notice of in
accordance herewith).
IN WITNESS WHEREOF, the Company and Consultant have executed and
delivered this Agreement as of the date first above written.
SUIZA FOODS CORPORATION
By: /s/ Gregg L. Engles
-------------------------
Gregg L. Engles,
Chairman of the Board
/s/ Cletes O. Beshears
-------------------------
Cletes O. Beshears
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EXHIBIT A
COMPENSATION
1. On the date of this Agreement, the Company will pay Consultant (a) $125,000
as a consulting fee for services to be rendered during the remainder of
1997 and (b) $250,000 as a transaction fee in connection with the Company's
acquisition of the assets of Dairy Fresh L.P.
2. During calendar year 1998, the Company will pay Consultant an annual
consulting fee of $250,000, payable semi-monthly throughout the year.
3. The Company will pay Consultant a transaction fee equal to one percent of
the purchase price of each successful acquisition introduced to the Company
by Consultant and completed during the Term. Prior to the end of the Term,
the Company and Consultant will negotiate in good faith to agree on a list
of pending or contemplated acquisitions introduced by Consultant for which
Consultant would be entitled to receive a transaction fee following the
Term, if such acquisitions are completed. Each transaction fee under this
paragraph will be paid at the closing of the acquisition giving rise to
such fee.
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