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
Xxxxxx X. Xxxxxxxx ("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/ XXXXX X. XXXXXX
-----------------------------------
Xxxxx X. Xxxxxx,
Chairman of the Board
/s/ XXXXXX X. XXXXXXXX
--------------------------------------
Xxxxxx X. Xxxxxxxx
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EXHIBIT A
COMPENSATION
1. On the date of this Agreement, the Company will pay Consultant $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 a retainer of
$250,000, payable bi-weekly or semi-monthly in accordance with the payroll
practices of the Company in effect from time to time. This retainer will
be earned in full upon completion of the first acquisition introduced by
Consultant to the Company during 1998 (but will nevertheless be paid bi-
weekly or semi-monthly in accordance with the preceding sentence).
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, except that the first $250,000 of fees
earned during calendar year 1998 will be paid as provided in the preceding
paragraph.
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