Exhibit 10.4

THE HERSHEY COMPANY

EXECUTIVE BENEFITS PROTECTION PLAN

(GROUP 3A)

Amended and Restated as of October 2, 2007

The Hershey Company Executive Benefits Protection Plan (Group 3A), as set forth
herein, is intended to help attract and retain qualified management employees
and maintain a stable work environment by making provision for the protection of
covered employees in connection with a Change in Control or termination of
employment under certain circumstances as set forth herein. The Plan is an
amendment to and restatement (as amended) of The Hershey Company Executive
Benefits Protection Plan (Group 3A), which was last amended and restated
effective December 29, 2006.

ARTICLE 1

DEFINITIONS

As hereinafter used, the following words shall have the meanings set forth
below.

1.1 Annual Base Salary means with respect to an Executive the higher of:

1.1.1 his or her highest annual base salary in effect during the one (1) year
period preceding a Change in Control; or

1.1.2 his or her highest annual base salary in effect during the one (1) year
period preceding his or her Date of Termination.

For purposes of the foregoing, salary reduction elections pursuant to Code
sections 125 and 401(k) shall not be taken into account.

1.2 Annual Incentive Pay means with respect to an Executive the higher of:

1.2.1 the highest Incentive Pay paid or payable, including any Incentive Pay or
portion thereof which has been earned but deferred, to him or her by the Company
in any of the three fiscal years (or such shorter period during which he or she
has been employed by the Company or eligible to receive any Incentive Pay
payment) immediately preceding the fiscal year in which a Change in Control
occurs (annualized for any fiscal year during such period consisting of less
than twelve full months or with respect to which he or she has been employed by
the Company or eligible to receive Incentive Pay for less than twelve full
months); or

1.2.2 his or her 100% target Incentive Pay award amount payable for the year in
which his or her Date of Termination occurs.

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1.3 Base Amount shall have the meaning ascribed to such term in Code section
280G(b)(3).

1.4 Board means the Board of Directors of the Company.

1.5 Cause means with respect to an Executive:

1.5.1 his or her willful and continued failure to substantially perform his or
her duties with the Company (other than any such failure resulting from
incapacity due to physical or mental illness), after a written demand for
substantial performance is delivered to him or her by the Board or the Chief
Executive Officer of the Company which specifically identifies the manner in
which the Board or Chief Executive Officer believes that the Executive has not
substantially performed his or her duties; or

1.5.2 his or her willfully engaging in illegal conduct or gross misconduct which
is materially and demonstrably injurious to the Company.

For purposes of this Section 1.5, no act or failure to act, on the part of an
Executive, shall be considered willful unless it is done, or omitted to be done,
by him or her in bad faith and without reasonable belief that his or her action
or omission was in the best interests of the Company. Any act, or failure to
act, based upon prior approval given by the Board or upon the instruction or
with the approval of the Chief Executive Officer or an Executive’s superior, or
based upon the advice of counsel for the Company (provided such approval,
instruction, or advice of counsel is made by or from someone other than the
Executive), shall be conclusively presumed to be done, or omitted to be done, by
the Executive in good faith and in the best interests of the Company. The
cessation of employment of an Executive shall not be deemed to be for Cause
unless and until there shall have been delivered to him or her a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
of the entire membership of the Board at a meeting of the Board called and held
for such purpose (after the provision of reasonable notice to him or her and
after he or she has been heard before the Board, or has been given a reasonable
opportunity to be heard but declined to do so, together with counsel (if he or
she chooses)), finding that, in the good faith opinion of the Board, he or she
is guilty of the conduct described in Section 1.5.1 or 1.5.2 above, and
specifying the particulars thereof in detail.

1.6 Change in Control means:

1.6.1 individuals who, on April 18, 2006, constitute the Board (the “Incumbent
Directors”) cease for any reason to constitute at least a majority of the Board,
provided that any person becoming a Director subsequent to April 18, 2006, whose
election or nomination for election was approved by a vote of at least
two-thirds of the Incumbent Directors then on the Board (either by specific vote
or by approval of the proxy statement of the Company in which such person is
named as nominee for Director, without written objection to such nomination)
shall be an Incumbent Director; provided, however, that no individual initially
elected or nominated as a Director of the Company as a result of an actual or
threatened election contest (as described in Rule 14a-12(c) under the Securities
Exchange Act of 1934 (the “Exchange Act”))

 

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(“Election Contest”) or other actual or threatened solicitation of proxies or
consents by or on behalf of any person (as such term is defined in
Section 3(a)(9) of the Exchange Act and as used in Sections 13(d)(3) and
14(d)(2) of the Exchange Act) (“Person”) other than the Board (“Proxy Contest”),
including by reason of any agreement intended to avoid or settle any Election
Contest or Proxy Contest, shall be deemed an Incumbent Director; and provided
further, however, that a Director who has been approved by the Hershey Trust
while it beneficially owns more than 50% of the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of Directors (the “Outstanding Company Voting Power”) shall be
deemed to be an Incumbent Director;

1.6.2 the acquisition or holding by any Person of beneficial ownership (within
the meaning of Section 13(d) under the Exchange Act and the rules and
regulations promulgated thereunder) of shares of the Common Stock and/or the
Class B Common Stock of the Company representing 25% or more of either (i) the
total number of then outstanding shares of both Common Stock and Class B Common
Stock of the Company (the “Outstanding Company Stock”) or (ii) the Outstanding
Company Voting Power; provided that, at the time of such acquisition or holding
of beneficial ownership of any such shares, the Hershey Trust does not
beneficially own more than 50% of the Outstanding Company Voting Power; and
provided, further, that any such acquisition or holding of beneficial ownership
of shares of either Common Stock or Class B Common Stock of the Company by any
of the following entities shall not by itself constitute such a Change in
Control hereunder: (i) the Hershey Trust; (ii) any trust established by the
Company or by any Subsidiary for the benefit of the Company and/or its employees
or those of a Subsidiary; (iii) any employee benefit plan (or related trust)
sponsored or maintained by the Company or any Subsidiary; (iv) the Company or
any Subsidiary or (v) any underwriter temporarily holding securities pursuant to
an offering of such securities;

1.6.3 the approval by the stockholders of the Company of any merger,
reorganization, recapitalization, consolidation or other form of business
combination (a “Business Combination”) if, following consummation of such
Business Combination, the Hershey Trust does not beneficially own more than 50%
of the total voting power of all outstanding voting securities eligible to elect
directors of (x) the surviving entity or entities (the “Surviving Corporation”)
or (y) if applicable, the ultimate parent corporation that directly or
indirectly has beneficial ownership of more than 50% of the combined voting
power of the then outstanding voting securities eligible to elect directors of
the Surviving Corporation; or

1.6.4 the approval by the stockholders of the Company of (i) any sale or other
disposition of all or substantially all of the assets of the Company, other than
to a corporation (the “Acquiring Corporation”) if, following consummation of
such sale or other disposition, the Hershey Trust beneficially owns more than
50% of the total voting power of all outstanding voting securities eligible to
elect directors (x) of the Acquiring Corporation or (y) if applicable, the
ultimate parent corporation that directly or indirectly has beneficial ownership
of more than 50% of the combined voting power of the then outstanding voting
securities eligible to elect directors of the Acquiring Corporation, or (ii) a
liquidation or dissolution of the Company.

 

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1.7 Change in Control Event means a Change in Control Event as defined under
Code section 409A and applicable guidance thereunder.

1.8 CLRP means The Hershey Company Compensation Limit Replacement Plan and any
successor or replacement plan thereof.

1.9 Code means the Internal Revenue Code of 1986, as amended from time to time.

1.10 Committee means the Compensation and Executive Organization Committee of
the Board or any successor committee having similar authority.

1.11 Company means The Hershey Company, a Delaware corporation.

1.12 Coverage Period means the period commencing on the date on which a Change
in Control occurs and ending on the date which is the second anniversary
thereof.

1.13 Date of Termination has the meaning assigned to such term in Section 4.2 or
4.3.

1.14 DB SERP means The Hershey Company Amended and Restated (2007) Supplemental
Executive Retirement Plan and any successor or replacement plan thereof.

1.15 DC SERP means the Defined Contribution Supplemental Executive Retirement
Plan benefit of The Hershey Company Deferred Compensation Plan.

1.16 Deferred Compensation Plan means The Hershey Company Deferred Compensation
Plan and any successor or replacement plan thereof.

1.17 Director means a member of the Board.

1.18 Disability means the long-term disability of the Executive determined in
accordance with the terms set forth in the Company’s long-term disability plan
(the “LTD Plan”) (regardless of whether the Executive is covered by the LTD
Plan; except that with respect to an Executive who is covered by the LTD Plan, a
determination that the Executive does not meet the definition of disability
under the LTD Plan will mean that the Executive does not meet the definition of
disability under this Plan).

1.19 Effective Date means October 2, 2007.

1.20 EICP means The Hershey Company Equity and Incentive Compensation Plan
(formerly known as the Hershey Foods Corporation Key Employee Incentive Plan)
and any successor or replacement plan thereof.

1.21 Excise Tax means any excise tax imposed under Code section 4999.

1.22 Executive means an individual designated by the Committee, in its sole
discretion, as eligible for coverage under the Plan.

 

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1.23 Good Reason means with respect to an Executive:

1.23.1(i) the assignment to him or her of any duties inconsistent in any respect
with his or her position, authority, duties or responsibilities immediately
prior to either the Potential Change in Control preceding the Change in Control
or the Change in Control, or (ii) any other action by the Company, which
assignment or other action results in a material diminution in any respect in
his or her position, authority, duties or responsibilities;

1.23.2 a material diminution by the Company in his or her annual base salary as
in effect, as applicable, on the Effective Date or as the same may be increased
from time to time, or on the date he or she first becomes an Executive if he or
she was not an Executive on the Effective Date or as the same may be increased
from time to time;

1.23.3 the failure by the Company, without his or her consent, to pay to him or
her any portion of his or her current compensation (including, but not limited
to, current salary and employee benefits), or to pay to him or her any portion
of an installment of deferred compensation under any deferred compensation
program of the Company, provided that any such failures, in the aggregate,
result in a material negative change in the Executive’s compensation;

1.23.4 the failure by the Company to continue in effect any compensation plan in
which he or she participates immediately prior to either the Potential Change in
Control preceding the Change in Control or the Change in Control which is
material to his or her total compensation, including but not limited to the EICP
(other than with respect to any contingent PSU grant that is outstanding as of
the date of the Change in Control), the CLRP, and the DB SERP, as applicable, or
any substitute or alternative plans adopted prior to either such Potential
Change in Control or Change in Control, (unless (a) an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been made with
respect to such plan, or (b) the failure by the Company to continue the
Executive’s participation therein (or in such substitute or alternative plan) is
on a basis not materially less favorable, both in terms of the amount of
benefits provided and the level of his or her participation relative to other
participants, as existed at the time of such Potential Change in Control or
Change in Control), and provided that any such failures, in the aggregate,
result in a material negative change in the Executive’s compensation;

1.23.5 the failure by the Company to continue to provide him or her with
benefits substantially similar to those enjoyed by him or her under any of the
Company’s pension, life insurance, medical, health and accident, disability,
vacation pay or other welfare or fringe benefit plans or arrangements in which
he or she was participating at the time of either the Potential Change in
Control preceding the Change in Control or the Change in Control, provided that
any such failures, in the aggregate, result in a material negative change in the
Executive’s compensation;

 

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1.23.6 any material failure by the Company to comply with and satisfy any of its
obligations under this Plan after a Potential Change in Control that is followed
within one (1) year by a Change in Control; or

1.23.7 any material failure by the Company to comply with and satisfy any of its
obligations under any grantor trust established by the Company to provide itself
with a source of funds to assist itself in satisfying its liabilities under this
Plan after (a) a Change in Control described in one of the following:
Section 1.6.1, Section 1.6.4(ii), or Section 1.6.4(i) other than a sale or other
disposition to a corporation; (b) a Change in Control described in Section 1.6.2
if during the Coverage Period, Incumbent Directors, as described in
Section 1.6.1, cease for any reason to constitute at least a majority of the
Board; (c) a Change in Control described in Section 1.6.3 if, at any time during
the Coverage Period, Incumbent Directors, as described in Section 1.6.1, do not
constitute at least a majority of the board of directors of the Surviving
Corporation; or (d) a Change in Control described in clause (i) of Section 1.6.4
involving a sale or other disposition to a corporation if, at any time during
the Coverage Period, Incumbent Directors, as described in Section 1.6.1, do not
constitute at least a majority of the board of directors of such corporation;
provided further, that any such failures, in the aggregate, result in a material
negative change in the Executive’s compensation.

To qualify as a Good Reason under the Plan, any of the conditions listed above
in this Section 1.23 must be followed by a termination of employment within two
years of the initial existence of the Good Reason, and the notice requirements
of Section 4.1 must be satisfied. For purposes of this Plan, any good faith
determination of Good Reason (including the corresponding determination of
“materiality”) made by the Executive shall be conclusive; provided that such
determination satisfies the materiality requirement under Treasury Regulations
§1.409A-1(n)(2)(i), any successor thereto and other applicable guidance.

1.24 Hershey Pension Plan means The Hershey Company Retirement Plan and any
successor or replacement plan thereof.

1.25 Hershey Trust means either or both of (a) the Hershey Trust Company, a
Pennsylvania corporation, as Trustee for the Milton Hershey School, or any
successor to the Hershey Trust Company as such trustee, and (b) the Milton
Hershey School, a Pennsylvania not-for-profit corporation.

1.26 Incentive Pay means incentive payments awarded under the EICP from the
Company’s Annual Incentive Program, Sales Incentive Program and any similar,
successor or replacement program under the EICP.

1.27 Incumbent Director has the meaning assigned to such term in Section 1.6.1.

1.28 Key Employee means a “specified employee” under Code section
409A(a)(2)(B)(i) (i.e., a key employee (as defined under Code section 416(i)
(without regard to paragraph (5) thereof)) of a corporation any stock in which
is publicly traded on an established securities market or otherwise) and
applicable Treasury regulations and other guidance under

 

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Code section 409A. Key Employees shall be determined in accordance with Code
section 409A and pursuant to the methodology established by the Plan
Administrator.

1.29 Mandatory Retirement Age means age sixty-five (65) in the case of an
Executive who has served for a minimum of two (2) years at a high level
executive or high policy-making position and who is entitled to a
non-forfeitable, immediate, annual employer-provided retirement benefit from any
source, which is at least equal to a benefit, computed as a life annuity, of at
least $44,000 per year (or such other amount as may be provided by future
legislation). In the case of all other Executives, there shall be no Mandatory
Retirement Age.

1.30 Notice of Intent to Terminate shall have the meaning assigned to such term
in Section 4.1.

1.31 Plan means The Hershey Company Executive Benefits Protection Plan (Group
3A), as set forth herein, as amended from time to time.

1.32 Plan Administrator means the Company’s Senior Vice President, Chief People
Officer (or other officer of the Company holding a successor position in the
Company having the same or substantially similar organizational
responsibilities).

1.33 Potential Change in Control means the occurrence of any of the following:

1.33.1 The Hershey Trust by action of: (i) the Board of Directors of Hershey
Trust Company; (ii) the Board of Managers of Milton Hershey School; (iii) the
Investment Committee of the Hershey Trust; and/or (iv) any officer or officers
of Hershey Trust Company or Milton Hershey School (acting with authority),
undertakes consideration of any action the taking of which would lead to a
Change in Control as defined herein, including, but not limited to consideration
of (1) an offer made to the Hershey Trust to purchase any number of its shares
in the Company such that if the Hershey Trust accepted such offer and sold such
number of shares in the Company the Hershey Trust might no longer have more than
50% of the Outstanding Company Voting Power, (2) an offering by the Hershey
Trust of any number of its shares in the Company for sale such that if such sale
were consummated the Hershey Trust might no longer have more than 50% of the
Outstanding Company Voting Power, or (3) entering into any agreement or
understanding with a person or entity that would lead to a Change in Control; or

1.33.2 The Board approves a transaction described in Section 1.6.2, 1.6.3 or
1.6.4 of the definition of a Change in Control contained herein.

1.34 Separation from Service or Separates from Service means a “separation from
service” within the meaning of Code section 409A.

1.35 Severance Benefits has the meaning assigned to such term in Section 3.2.

 

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1.36 Severance Period means the period beginning on the Executive’s Date of
Termination and continuing for 36 months, or, if less, the number of months
until the Executive would reach his or her Mandatory Retirement Age, if
applicable, but not less than 12 months.

1.37 Subsidiary means any corporation controlled by the Company, directly or
indirectly.

1.38 The 401(k) Plan means The Hershey Company 401(k) Plan and any successor or
replacement plan thereof.

1.39 Vested Current Incentive Pay Amount shall have the meaning assigned to such
term in Section 2.1.

1.40 Vested Current PSU Amount shall have the meaning assigned to such term in
Section 2.2.

1.41 Vested DB SERP Benefit shall have the meaning assigned to such term in
Section 2.3.

ARTICLE 2

VESTING OR PAYMENT OF CERTAIN BENEFITS

IN THE EVENT OF A CHANGE IN CONTROL

2.1 Vesting of Incentive Pay Benefits; Payment of Benefits. Upon the occurrence
of a Change in Control:

2.1.1 each Executive shall have a vested and non-forfeitable right hereunder to
receive a lump sum cash payment (as specified in Section 2.1.2) with respect to
each Incentive Pay award for which the award’s performance period has begun but
not ended as of the date of the Change in Control equal to the greater of
(x) the amount of the Executive’s 100% target Incentive Pay award, and (y) the
amount that would have been payable to him or her under the Incentive Pay award
calculated using his or her and the Company’s annualized actual performance as
of the date of the Change in Control (the greater of (x) and (y) is herein
referred to as the “Vested Current Incentive Pay Amount”); and

2.1.2 the Company shall, within sixty (60) days following the Change in Control,
pay to each Executive a lump sum cash payment equal to his or her Vested Current
Incentive Pay Amount.

2.2 Vesting of PSU Benefits; Payment of Benefits. Upon the occurrence of a
Change in Control and Change in Control Event:

2.2.1 each Executive shall have a vested and non-forfeitable right hereunder to
receive in cash (as specified in Section 2.2.2) an amount equal to the target
Performance Stock

 

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Unit (“PSU”) grant, if any, made to him or her under the EICP for the cycle
ending in the year of the Change in Control, determined as the greater of
(x) the amount of the Executive’s 100% target PSU grant and (y) the PSU grant
amount that would have been payable to him or her at the end of such grant cycle
based on the Company’s actual performance through the date of the Change in
Control (as if the same level of Company performance continued throughout the
remainder of the cycle); plus, if applicable, the PSU grant amounts from any
other cycle that was completed prior to the Change in Control for which
(i) payment has not been made or (ii) an election to defer such PSUs has been
made, but such amounts have not been credited to the Executive’s PSU Award
Sub-Account under the Deferred Compensation Plan, in each case valued at the
higher of (a) the highest closing price of the Company’s Common Stock on the New
York Stock Exchange during the sixty (60) day period preceding and including the
date of the Change in Control, and (b) if the Change in Control involves a
transaction in which an offer is made to purchase shares of Common Stock from
the Company’s stockholders, the price at which such offer is made (the higher of
(a) and (b) is herein referred to as the “Transaction Value”) (the greater of
(x) and (y) is herein referred to as the “Vested Current PSU Amount”); and

2.2.2 the Company shall, within sixty (60) days following the Change in Control
Event, pay to each Executive a lump sum cash payment equal to his or her Vested
Current PSU Amount, increased for any dividends that would be otherwise payable
on the PSUs following the Change in Control Event but prior to the distribution
date under this Section 2.2.2.

2.3 Vested DB SERP Benefit. Upon the occurrence of a Change in Control each
Executive who either is a participant in the DB SERP on the date of the Change
in Control or was a participant in the DB SERP on the date of the Potential
Change in Control preceding the Change in Control shall be fully vested under
the DB SERP (such vested benefit is hereinafter referred to as “Vested DB SERP
Benefit”). If such an Executive has not attained age fifty-five (55) as of his
or her Date of Termination, the Executive shall be treated as being eligible for
the “Early Retirement Benefit” as set forth in Section 4 of the DB SERP;
provided, however, the reduction factor prescribed in Section 4 of the DB SERP
shall still be given effect in calculating his or her Vested DB SERP Benefit,
provided that (i) for an Executive (other than the Chief Executive Officer of
the Company) who has not yet attained age fifty (50) as of the Executive’s Date
of Termination, the reduction factor in Section 4 of the DB SERP shall be based
on the number of complete calendar months by which the Date of Termination
precedes the Executive’s fifty-second (52nd) birthday, and (ii) for an Executive
(other than the Chief Executive Officer of the Company) who has attained age
fifty (50) as of the Executive’s Date of Termination, the reduction factor in
Section 4 of the DB SERP shall be zero percent (0%).

An Executive’s Vested DB SERP Benefit shall be payable in accordance with the DB
SERP, but the actuarial present value of such Executive’s Vested DB SERP
Benefit, taking into account the foregoing provisions, shall be determined
using: (i) the mortality table described in the DB SERP; (ii) an interest rate
equal to the “Lump Sum Interest Rate,” as defined in the DB SERP, as of the
Executive’s Date of Termination; (iii) the Executive’s Date of Termination as
the date on which payment of the Executive’s Vested DB SERP Benefit is to
commence being paid and as the date as on which the actuarial present value of
such Vested DB SERP Benefit is calculated; and (iv) the actual age of the
Executive and his or her spouse as of the Executive’s Date of Termination.

 

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2.4 Vested Deferred Compensation Plan Benefit. Upon the occurrence of a Change
in Control, each Executive who either is a participant in the Deferred
Compensation Plan on the date of the Change in Control or was a participant in
the Deferred Compensation Plan on the date of the Potential Change in Control
preceding the Change in Control shall be fully vested in all benefits payable
under the Deferred Compensation Plan.

2.5 Vested CLRP Benefit. Upon the occurrence of a Change in Control, each
Executive who either is a participant in the Hershey Pension Plan on the date of
the Change in Control or was a participant in the Hershey Pension Plan on the
date of the Potential Change in Control preceding the Change in Control shall be
fully vested in his or her benefit, if any, under the CLRP.

2.6 Vested 401(k) Plan Accounts. Upon the occurrence of a Change in Control,
each Executive who either is a participant in The 401(k) Plan on the date of the
Change in Control or was a participant in The 401(k) Plan on the date of the
Potential Change in Control preceding the Change in Control shall be fully
vested in all of his or her accounts under The 401(k) Plan.

2.7 DB SERP, CLRP, or Deferred Compensation Plan Amendments. Notwithstanding any
provision of the DB SERP, CLRP, or Deferred Compensation Plan, none of the DB
SERP, CLRP, or Deferred Compensation Plan may be terminated or amended in any
manner that is adverse to the interests of any Executive without his or her
consent either: (i) after a Potential Change in Control occurs and for one
(1) year following the cessation of the Potential Change in Control, or
(ii) after a Change in Control. In addition, any termination or amendment of the
DB SERP, CLRP, or Deferred Compensation Plan in a manner adverse to the
interests of an Executive within one (1) year prior to a Potential Change in
Control shall not be given effect for purposes of determining benefits under
this Plan.

2.8 Other PSU Grants Outstanding as of the Date of a Change in Control. An
Executive shall have a vested and non-forfeitable right hereunder to receive a
lump sum cash payment with respect to each PSU grant cycle that has begun but
not ended as of the occurrence of both a Change in Control and Change in Control
Event (and that is not otherwise paid out in whole or in part in accordance with
the terms of Section 2.2) in an amount equal to the product of (x) and (y),
where (x) is an amount equal to the 100% target PSU grant for each such cycle
valued at the higher of (i) the Transaction Value and (ii) the highest closing
price of the Company’s Common Stock on the New York Stock Exchange from the date
of the Change in Control until the earlier of the end of the applicable grant
cycle or the Executive’s Separation from Service, and (y) is 100%, unless the
Change in Control occurs within the first year of the applicable grant cycle, in
which case, (y) is a fraction the numerator of which is the number of days from
and including the first day of the applicable grant cycle until (and including)
the date of the Change in Control or the Change in Control Event (whichever is
later) and the denominator of which is the number of days in the applicable
grant cycle; and such product is increased for any dividends that would be
otherwise payable on the PSUs following the Change

 

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in Control but prior to the distribution date under this Section 2.8. The
payment provided for in this Section 2.8 with respect to each such PSU grant
cycle shall be made to an Executive in a lump sum by the sixtieth (60th) day
following the earlier of: (a) the last day of the applicable grant cycle, and
(b) the Executive’s Separation from Service. Notwithstanding the foregoing,
distributions may not be made to a Key Employee upon a Separation from Service
before the date which is six months after the date of the Key Employee’s
Separation from Service (or, if earlier, the date of death of the Key Employee).
Any payment upon a Key Employee’s Separation from Service under this Section 2.8
shall be made in the seventh month following the date of such Separation from
Service (or, if earlier, the month after the Key Employee’s death).

ARTICLE 3

EXECUTIVE BENEFITS AND RIGHTS

UPON TERMINATION OF EMPLOYMENT

3.1 General Termination Rights and Benefits. If an Executive’s employment at the
Company is terminated at any time after a Change in Control for any reason
(whether by him or her or the Company), the Company shall pay to him or her
payments described in Sections 3.1.1 through 3.1.5 below.

3.1.1 Previously Earned Salary. The Company shall pay his or her full salary to
him or her through his or her Date of Termination at the highest rate in effect
during the period between (a) the Potential Change in Control (if any) preceding
the Change in Control or the Change in Control (if no Potential Change in
Control occurs), and (b) the date the Notice of Intent to Terminate is given,
together with all compensation and benefits payable to him or her through the
Date of Termination under the terms of any compensation or benefit plan, program
or arrangement maintained by the Company during such period.

3.1.2 Previously Earned Benefits. The Company shall pay his or her normal
post-termination compensation and benefits to him or her as such payments become
due. Such post-termination compensation and benefits shall be determined under,
and paid in accordance with, the Company’s retirement, insurance, pension,
welfare and other compensation or benefit plans, programs and arrangements.

3.1.3 Payment of Vested Current Incentive Pay Amount. Except to the extent that
the Company has previously paid or concurrently pays to him or her all or a
portion of his or her Vested Current Incentive Pay Amount pursuant to
Section 2.1, Section 3.1.1 or Section 3.1.2, the Company shall pay to him or her
a lump sum cash payment equal to his or her Vested Current Incentive Pay Amount.

3.1.4 Payment of Vested Current PSU Amount. Except to the extent that the
Company has previously paid or concurrently pays to him or her all or a portion
of his or her Vested Current PSU Amount pursuant to Section 2.2, Section 3.1.1
or Section 3.1.2, the Company shall pay to him or her a lump sum cash payment
equal to his or her Vested Current PSU Amount.

 

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3.1.5 Hershey Pension Plan and The 401(k) Plan. In the event that any amount
under the Hershey Pension Plan and/or The 401(k) Plan which vests pursuant to
Sections 2.5 and/or 2.6, respectively, cannot be paid to the Executive under the
terms of the applicable plan, the Company shall pay such amount to the Executive
under the terms of this Plan.

3.2 Severance Benefits. In addition to the payments provided for by Section 3.1,
the Company shall pay or provide to an Executive the payments, benefits, and
services described in Sections 3.2.1 through 3.2.5 below (the “Severance
Benefits”) in accordance with such Sections upon termination of his or her
employment with the Company during the Coverage Period, unless such termination
is (a) by the Company for Cause, (b) by reason of his or her death or Disability
or after his or her Mandatory Retirement Age, if applicable, or (c) by him or
her without Good Reason.

3.2.1 Lump-Sum Severance Payment. In lieu of any further salary payments to him
or her for periods subsequent to the Date of Termination, the Company shall pay
to him or her a lump-sum severance payment, in cash, equal to the number of
years (including fractions) in the Executive’s Severance Period times the sum of
(a) and (b), where (a) equals his or her Annual Base Salary, and (b) equals his
or her Annual Incentive Pay.

3.2.2 Continued Welfare Benefits. During the Executive’s Severance Period, the
Company shall provide him or her with continued welfare benefits (including
group term life insurance, and health and other welfare benefits, but excluding
long-term and short-term disability benefits) (the benefits to be provided
hereunder referred to collectively as “Welfare Benefits”) that are substantially
similar in all respects to those which he or she was receiving immediately prior
to the Notice of Intent to Terminate on substantially the same terms and
conditions, including contributions required from him or her for such benefits
(without giving effect to any reduction in such benefits (e.g., increasing the
contributions required from the Executive) subsequent to the Potential Change in
Control preceding the Change in Control or the Change in Control, which
reduction constitutes or may constitute Good Reason); provided that if he or she
cannot continue to participate in the Company plans providing Welfare Benefits,
the Company shall otherwise provide such benefits on the same after-tax basis as
if continued participation had been permitted. The Executive shall be entitled
to elect to change his or her level of coverage and/or his or her choice of
coverage options (such as Executive only or family medical coverage) with
respect to the Welfare Benefits to be provided by the Company to him or her to
the same extent that actively employed executives of the Company are permitted
to make such changes; provided, however, that in the event of any such changes
he or she shall pay the amount of any cost increase that would actually be paid
by an actively employed executive of the Company by reason of such actively
employed executive making the same change in level of coverage or coverage
options. Notwithstanding the foregoing, in the event that the Executive becomes
reemployed with another employer and becomes eligible to receive welfare
benefits from such employer, the Welfare Benefits described herein shall be
secondary to such benefits, but only to the extent that the Company reimburses
him or her for any increased cost and provides any additional benefits necessary
to give him or her benefits at the same level as the Welfare Benefits provided
hereunder.

 

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To the extent the continuation of the Welfare Benefits under this Section 3.2.2
is, or ever becomes, taxable to the Executive, and to the extent the Welfare
Benefits continue beyond the period in which the Executive would be entitled (or
would, but for this Plan, be entitled) to continuation coverage under a group
health plan of the Company under Code section 4980B (COBRA) if the Executive
elected such coverage and paid the applicable premiums, the Company shall
administer such continuation of coverage consistent with the following
additional requirements as set forth in Treas. Reg. § 1.409A-3(i)(1)(iv):

3.2.2.1 Executive’s eligibility for Welfare Benefits in one year will not affect
Executive’s eligibility for Welfare Benefits in any other year (disregarding any
limit on the amount of Welfare Benefits that may be reimbursed during such
continuation period);

3.2.2.2 Any reimbursement of eligible expenses will be made on or before the
last day of the year following the year in which the expense was incurred; and

3.2.2.3 Executive’s right to Welfare Benefits is not subject to liquidation or
exchange for another benefit.

In the event the preceding sentence applies, the Executive’s applicable COBRA
period lasts less than six (6) months and the Executive is a Key Employee,
reimbursement for Welfare Benefits shall commence in the seventh month following
the Executive’s Separation from Service (or, if earlier, the month after the
Executive’s death).

3.2.3 Outstanding Awards. Except to the extent the Company has previously paid
or concurrently pays to him or her all or a portion of his or her Vested Current
Incentive Pay Amount as provided for herein, if an Executive’s Date of
Termination occurs within the Coverage Period, he or she shall be entitled to a
lump sum cash payment with respect to each Incentive Pay award for which the
award’s performance period has begun but not ended as of the Executive’s Date of
Termination equal to the product of (x) and (y) for each such Incentive Pay
award, where (x) is an amount equal to the greater of (A) the 100% target
Incentive Pay award amount for the applicable award period, and (B) the amount
that would have been payable to the Executive under such Incentive Pay award for
the applicable award period, calculated using his or her and the Company’s
annualized actual performance as of his or her Date of Termination, and (y) is a
fraction, the numerator of which is the number of days from and including the
first day of the applicable award period until (and including) his or her Date
of Termination, and the denominator of which is the number of days in such
applicable award period.

3.2.4 Outplacement Services. If an Executive becomes eligible to receive
Severance Benefits, such Executive shall be entitled to receive reasonable
outplacement services in accordance with the Company’s outplacement services
policy (as in effect immediately prior to the Change in Control) until the
earliest of: (a) one (1) year following the Executive’s Separation from Service,
(b) the date the Executive secures other full-time employment, or (c) the date
the value of such reasonable outplacement services provided by the Company
reaches $35,000. The reimbursement of the reasonable outplacement services set
forth above shall be made to the Executive as soon as practicable, but in no
event later than the end of the second year following the year the Executive
Separates from Service.

 

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3.2.5 Financial Counseling and Tax Preparation. If an Executive becomes eligible
to receive Severance Benefits, such Executive shall be entitled to receive
reimbursements for expenses incurred for financial counseling and tax
preparation services under The Hershey Company Financial Counseling and Tax
Preparation Services Program (hereinafter referred to as “Qualifying Expenses”),
on a basis that is no less favorable than the manner in which such benefits were
available to the Executive immediately prior to the Change in Control, for
twenty-four (24) months following the Executive’s Separation from Service. The
Company shall reimburse the Executive directly or indirectly for Qualifying
Expenses commencing in the seventh month following the Executive’s Separation
from Service and in the first month of each subsequent calendar quarter until
the end of the twenty-four (24) month period referred to in the previous
sentence. On the first date of reimbursement, the Company’s payment will
reimburse the Executive for all Qualifying Expenses that are incurred during the
initial delay period immediately following his or her Separation from Service;
thereafter, such reimbursements shall be in an amount equal to the Qualifying
Expenses that are submitted to the Company during each subsequent quarterly
period. For the purposes of this Section 3.2.5, the Committee in its sole
discretion shall determine whether the expenses incurred by the Executive for
financial counseling and tax preparation services constitute Qualifying
Expenses.

Benefits under this Section 3.2.5 shall be administered consistent with the
following additional requirements as set forth in Treas. Reg. §
1.409A-3(i)(1)(iv): (1) Executive’s eligibility for benefits in one year will
not affect Executive’s eligibility for benefits in any other year; (2) any
reimbursement of eligible expenses will be made on or before the last day of the
year following the year in which the expense was incurred; and (3) Executive’s
right to benefits is not subject to liquidation or exchange for another benefit.

3.3 Enhanced Pension Benefits. In addition to payments provided for by Sections
3.1 and 3.2, the Company shall pay or provide to an Executive the benefits
described in Sections 3.3.1 through 3.3.4 below in accordance with such Sections
upon termination of his or her employment with the Company during the Coverage
Period, unless such termination is (a) by the Company for Cause, (b) by reason
of his or her death or Disability or after his or her Mandatory Retirement Age,
if applicable, or (c) by him or her without Good Reason.

3.3.1 Enhanced DB SERP Benefit. For an Executive who continues to be a
participant in the DB SERP as of his or her Date of Termination, such Executive
shall receive in cash an amount equal to the increase in his or her Vested DB
SERP Benefit, as a result of the additional credits set forth below (such vested
benefit under this Section 3.3.1 is hereinafter referred to as “Enhanced DB SERP
Benefit”).

For purposes of determining such Executive’s Enhanced DB SERP Benefit as of the
date of his or her Date of Termination: (i) he or she shall be credited for all
purposes under the DB SERP with additional Years of Service (as defined in the
DB SERP) equal to the number of years (including fractions thereof) in the
Executive’s Severance Period; (ii) the provisions of

 

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Section 2.3 regarding vesting and early retirement eligibility and reduction
factors shall apply; (iii) he or she shall be deemed to have been paid his or
her Annual Base Salary during his or her Severance Period which shall be
considered to have been earned over such period of time during his or her last
five (5) years of employment with the Company for purposes of calculating “Final
Average Compensation” (as defined in the DB SERP); (iv) he or she shall be
deemed to have been paid his or her Annual Incentive Pay during his or her
Severance Period which, together with his or her Vested Current Incentive Pay
Amount as determined pursuant to Section 2.1.1 shall be considered his or her
Incentive Pay awards paid or accrued with respect to his or her Severance
Period, which shall be considered part of his or her last five (5) years of
employment with the Company for purposes of calculating “Final Average
Compensation” (as defined in the DB SERP); and (v) for the purposes of
determining “Final Average Compensation” and not for the purposes of any other
provision of the DB SERP, in the event he or she has not participated in the
Incentive Pay portion of the EICP (after taking into account the year during
which the Change in Control occurs as to which he or she is entitled to his or
her Vested Current Incentive Pay Amount plus the number of years with respect to
which he or she is deemed to have been paid his or her Annual Incentive Pay as
provided in this Section 3.3.1(v)) for three (3) consecutive years in his or her
last five (5) years of employment with the Company, he or she shall have his or
her highest annual average Incentive Pay award be based on the average of his or
her Incentive Pay awards paid or accrued over the sum of the number of years
preceding the year during which the Date of Termination occurs during which he
or she has participated in the Incentive Pay portion of the EICP plus the number
of years with respect to which he or she is deemed to have been paid his or her
Annual Incentive Pay as provided in this Section 3.3.1(v) plus the year during
which the Change in Control occurs with respect to which he or she is entitled
to his or her Vested Current Incentive Pay Amount regardless of his or her
actual years of participation in the Incentive Pay portion of the EICP at the
time of his or her Date of Termination and regardless of the number of years
such Executive has been employed by the Company as of the Date of Termination.

3.3.2 Enhanced DC SERP Benefit. Each Executive who is a participant in the DC
SERP as of his or her Date of Termination shall receive in cash an amount equal
to the applicable percentage rate under Section 6.2 of the Deferred Compensation
Plan multiplied by his or her Annual Base Salary and Annual Incentive Pay
determined as if such amounts were paid during the years (including fractions
thereof) in the Executive’s Severance Period.

3.3.3 Alternative Enhanced DB Benefits. Each Executive who is not a participant
in the DB SERP as of his or her Date of Termination shall have a vested and
non-forfeitable right hereunder to receive in cash an amount equal to the amount
determined under either Section 3.3.3.1 or 3.3.3.2, as applicable.

3.3.3.1 For an Executive who is a participant in the Hershey Pension Plan, a
lump sum cash amount equal to the Basic Credit rate applicable to the Executive
under the Hershey Pension Plan multiplied by his or her Annual Base Salary and
Annual Incentive Pay determined as if such amounts were paid to the Executive
for the number of years (including fractions thereof) in his or her Severance
Period. For this purpose, the IRS limitations imposed under the Hershey Pension
Plan shall not apply. Notwithstanding the foregoing, for purposes of

 

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determining the lump sum cash amount payable under this Section 3.3.3.1 to an
Executive who is a participant under the DC SERP, the Basic Credit rate
applicable to amounts paid to the Executive in excess of the limitation under
Code section 401(a)(17) shall equal three (3) percent; or

3.3.3.2 For an Executive who is not a participant in the Hershey Pension Plan, a
lump sum cash amount equal to the Core Retirement Contribution rate in effect
under The 401(k) Plan multiplied by his or her Annual Base Salary and Annual
Incentive Pay determined as if such amounts were paid to the Executive for the
number of years (including fractions thereof) in his or her Severance Period.
For this purpose, the IRS limitations imposed under The 401(k) Plan shall not
apply.

3.3.4 Enhanced Matching Contributions. Each Executive who is eligible to receive
amounts under Section 3.3.1, 3.3.2, or 3.3.3 shall also receive in cash an
amount equal to the Matching Contribution rate in effect under The 401(k) Plan
multiplied by his or her Annual Base Salary and Annual Incentive Pay determined
as if such amounts were paid to the Executive for the number of years (including
fractions thereof) in his or her Severance Period. For this purpose, the IRS
limitations imposed under The 401(k) Plan shall not apply.

3.4 Gross-Up Payment. In the event that an Executive becomes entitled to the
Severance Benefits or any other benefits or payments under this Plan (other than
pursuant to this Section 3.4), or under the EICP by reason of the accelerated
vesting of stock options thereunder (together, the “Total Benefits”), and in the
event that any of the Total Benefits will be subject to the Excise Tax, the
Company shall pay to him or her an additional amount (the “Gross-Up Payment”)
such that the net amount retained by him or her, after deduction of any Excise
Tax on the Total Benefits and any federal, state and local income tax, Excise
Tax and FICA and Medicare withholding taxes upon the payment provided for by
this Section 3.4, shall be equal to the Total Benefits. Any Gross-Up Payment
made to or on behalf of the Executive under this Section 3.4 shall be made in
compliance with Code section 409A and by the end of the year following the year
that the related taxes are remitted to the applicable taxing authority.

For purposes of determining whether any of the Total Benefits will be subject to
the Excise Tax and the amount of such Excise Tax, (i) any other payments or
benefits received or to be received by an Executive in connection with a Change
in Control or his or her termination of employment (whether pursuant to the
terms of this Plan or any other plan, arrangement or agreement with the Company,
any Person whose actions result in a Change in Control or any Person affiliated
with the Company or such Person) shall be treated as parachute payments within
the meaning of Code section 280G(b)(2), and all excess parachute payments within
the meaning of Code section 280G(b)(1) shall be treated as subject to the Excise
Tax, unless in the opinion of tax counsel (“Tax Counsel”) selected by the
Company’s independent auditors, such other payments or benefits (in whole or in
part) do not constitute parachute payments, or such excess parachute payments
(in whole or in part) represent reasonable compensation for services actually
rendered within the meaning of Code section 280G(b)(4) in excess of the Base
Amount, or are otherwise not subject to the Excise Tax, (ii) the amount of the
Total Benefits which shall be treated as subject to the Excise Tax shall be
equal to the lesser of (A) the total amount of the

 

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Total Benefits reduced by the amount of such Total Benefits that in the opinion
of Tax Counsel are not parachute payments, or (B) the amount of excess parachute
payments within the meaning of Section 280G(b)(1) (after applying clause (i),
above), and (iii) the value of any non-cash benefits or any deferred payment or
benefit shall be determined by the Company’s independent auditors in accordance
with the principles of Code sections 280G(d)(3) and (4). For purposes of
determining the amount of the Gross-Up Payment, an Executive shall be deemed to
pay federal income taxes at the applicable rate for federal income tax
withholding on supplemental wage payments in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the
applicable rate for withholding taxes on supplemental wage payments in the state
and locality of his or her residence on the Date of Termination, net of the
reduction in federal income taxes which could be obtained from deduction of such
state and local taxes (calculated by assuming that any reduction under Code
section 68 in the amount of itemized deductions allowable to him or her applies
first to reduce the amount of such state and local income taxes that would
otherwise be deductible by him or her).

In the event that the Excise Tax is determined to exceed the amount taken into
account hereunder at the time of the termination of an Executive’s employment
(including by reason of any payment the existence or amount of which cannot be
determined at the time of the Gross-Up Payment), the Company shall make an
additional Gross-Up Payment, determined as previously described, to him or her
in respect of such excess (plus any interest, penalties or additions payable by
him or her with respect to such excess) at the time that the amount of such
excess is finally determined.

3.5 Timing of Payments. The amounts payable under Sections 3.1.1, 3.1.3, 3.1.4,
3.1.5, 3.2.1, 3.2.3, and 3.3.4 and, as applicable, Sections 3.3.1, 3.3.2, or
3.3.3 shall be made to an Executive not later than the sixtieth (60th) day
following his or her Date of Termination.

3.6 Reimbursement of Legal Costs. The Company shall pay to an Executive
reasonable legal fees and expenses incurred by him or her as a result of a
termination of his or her employment which may entitle him or her to any
payments under Article 3 of the Plan to the extent that such fees and expenses,
if any, are incurred (a) in contesting or disputing in good faith any right or
benefit under Article 3 in connection with a Change in Control or any Notice of
Intent to Terminate under Section 4.3, or (b) in connection with any tax audit
or proceeding to the extent attributable to the application of Code section 4999
to any payment or benefit provided hereunder. Such payments shall be made within
sixty (60) days after delivery of his or her respective written requests for
payment accompanied by such evidence of fees and expenses incurred as the
Company reasonably may require.

Benefits under this Section 3.6 shall be administered consistent with the
following additional requirements as set forth in Treas. Reg. §
1.409A-3(i)(1)(iv): (1) Executive’s eligibility for benefits in one year will
not affect Executive’s eligibility for benefits in any other year; (2) any
reimbursement of eligible expenses will be made on or before the last day of the
year following the year in which the expense was incurred; and (3) Executive’s
right to benefits is not subject to liquidation or exchange for another benefit.
In the event the Executive is a Key Employee, reimbursement for benefits under
this Section 3.6 shall commence in the seventh month following the Executive’s
Separation from Service (or, if earlier, the month after the Executive’s death).

 

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3.7 Executives’ Covenant. The Company may condition the payment of the amounts
and provision of the benefits described in Article 3 of the Plan to an Executive
upon his or her providing to the Company a written agreement that, subject to
the terms and conditions of this Plan, in the event of a Potential Change in
Control, he or she will remain in the employ of the Company until the earliest
of (a) a date which is nine months after the date of such Potential Change in
Control, (b) the date of a Change in Control, (c) the date of his or her
termination of employment for Good Reason (determined by treating the Potential
Change in Control for this purpose as a Change in Control in applying the
definition of Good Reason) or by reason of death or Disability, (d) the
termination by the Company of his or her employment for any reason, or (e) his
or her attaining age sixty-five (65). In the event of such future written
agreement between the Company and the Executive, the benefits described in
Article 3 of the Plan shall be provided in compliance with Code section 409A, as
applicable.

ARTICLE 4

TERMINATION PROCEDURES AND

COMPENSATION DURING DISPUTE

4.1 Notice of Intent to Terminate. After a Change in Control, any purported
termination of an Executive’s employment (other than by reason of death) that
may result in benefits under this Plan must be preceded by a written Notice of
Intent to Terminate from him or her to the Company or the Company to him or her,
as applicable, in accordance with Section 8.17. For purposes of this Plan, a
Notice of Intent to Terminate shall mean a notice which shall indicate the
notifying party’s opinion regarding the specific provisions of this Plan that
will apply upon such termination and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for the application of the
provisions so indicated. Further, a Notice of Intent to Terminate for Cause is
required to include a copy of a resolution duly adopted by the affirmative vote
of not less than three-quarters (3/4) of the entire membership of the Board at a
meeting of the Board which was called and held for the purpose of considering
such termination (after reasonable notice to the Executive and an opportunity
for him or her, together with his or her counsel, to be heard before the Board)
finding that, in the good faith opinion of the Board, he or she was guilty of
conduct set forth in Section 1.5.1 or 1.5.2 herein, and specifying the
particulars thereof in detail.

In the case of a termination for Good Reason, the Executive must provide notice
to the Company of the existence of the applicable condition described in
Section 1.23 or 9.3 within ninety (90) days of the initial existence of the
condition. The Company will then have a period of thirty (30) days during which
it may remedy the condition in which case the Good Reason condition will no
longer apply to the Executive for purposes of this Plan.

 

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4.2 Date of Termination. Date of Termination, (a) with respect to any purported
termination of an Executive’s employment after a Change in Control, shall mean
(except as provided in Section 4.3) (i) if his or her employment is terminated
by reason of his or her death, the date of his or her death, (ii) if his or her
employment is terminated for Disability, thirty (30) days after Notice of Intent
to Terminate is given (provided that he or she shall not have returned to the
full-time performance of his or her duties during such thirty (30) day period),
or (iii) if his or her employment is terminated for any other reason, the date
specified as the date of termination within the Notice of Intent to Terminate
(which (x) in the case of a termination by the Company, shall not be less than
thirty (30) days, except in the case of a termination for Cause in which case it
shall not be less than ten (10) days, provided that the Company may require him
or her to not report to work during such ten (10) day period, and (y) in the
case of a termination by an Executive, shall not be less than fifteen (15) days
nor more than sixty (60) days, respectively, from the date such Notice of Intent
to Terminate is given), and (b) for purposes of Section 2.3 of this Plan and the
definitions of the defined terms Annual Base Salary and Annual Incentive Pay as
used in such Section 2.3, shall mean the date a Change in Control occurs.

4.3 Dispute Concerning Termination. If within fifteen (15) days after any Notice
of Intent to Terminate is given (within eight (8) days in the case of a
termination for Cause by the Company), or, if later, prior to the Date of
Termination (as determined without regard to this Section 4.3), the person
receiving such Notice of Intent to Terminate notifies the person giving such
notice that a dispute exists concerning the termination or the provisions of
this Plan that apply to such termination, the Date of Termination shall be the
date on which the dispute is finally resolved, either by mutual written
agreement of the parties to such dispute or by a final judgment, order or decree
of a court of competent jurisdiction (which is not appealable or with respect to
which the time for appeal therefrom has expired and no appeal has been
perfected); provided, however, that the Date of Termination shall be extended by
a notice of dispute only if such notice is given in good faith and the person
giving such notice pursues the resolution of such dispute with reasonable
diligence; and provided, that the payment, if applicable, of any amount in
dispute under this Section 4.3 shall be made as soon as practicable following
the Date of Termination (as determined without regard to this Section 4.3), but
in no event later than March 15 of the year following such date.

4.4 Compensation During Dispute. If a purported termination of an Executive’s
employment occurs following a Change in Control and such termination or the
provisions of this Plan that apply upon such termination is disputed in
accordance with Section 4.3 (including a dispute as to the existence of good
faith and/or reasonable diligence thereunder), the Company shall continue to pay
the Executive his or her Annual Base Salary and continue to provide to him or
her the Welfare Benefits provided for in Section 3.2.2 until the dispute is
finally resolved in accordance with Section 4.3. Notwithstanding the foregoing,
payment of Annual Base Salary may not be made to a Key Employee upon a
Separation from Service before the date which is six months after the date of
the Key Employee’s Separation from Service (or, if earlier, the date of death of
the Key Employee). Any payments that would otherwise be made during this period
of delay shall be accumulated and paid in the seventh month following the
Participant’s Separation from Service (or, if earlier, the month after the
Participant’s death). Amounts paid under this Section 4.4 are in addition to all
other amounts due under this Plan (other than those due under Section 3.1.1) and
shall not be offset against or reduce any other amounts due under this Plan.

 

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ARTICLE 5

PLAN ADMINISTRATION

5.1 Authority to Plan Administrator. The Plan shall be interpreted, administered
and operated by the Plan Administrator, subject to the express provisions of the
Plan.

5.2 Delegation of Duties. The Plan Administrator may delegate any of his or her
duties hereunder to such person or persons from time to time as he or she may
designate.

5.3 Engagement of Third Parties. The Plan Administrator is empowered, on behalf
of the Plan, to engage accountants, legal counsel and such other personnel as he
or she deems necessary or advisable to assist him or her in the performance of
his or her duties under the Plan. The functions of any such persons engaged by
the Plan Administrator shall be limited to the specified services and duties for
which they are engaged, and such persons shall have no other duties, obligations
or responsibilities under the Plan. Such persons shall exercise no discretionary
authority or discretionary control respecting the management of the Plan. All
reasonable expenses thereof shall be borne by the Company.

ARTICLE 6

CLAIMS

6.1 Claims Procedure. Claims for benefits under the Plan shall be filed with the
Plan Administrator. If any Executive or other payee claims to be entitled to a
benefit under the Plan and the Plan Administrator determines that such claim
shall be denied in whole or in part, the Plan Administrator shall notify such
person of its decision in writing. Such notification will be written in a manner
calculated to be understood by such person and will contain (a) specific reasons
for the denial, (b) specific reference to pertinent Plan provisions, (c) a
description of any additional material or information necessary for such person
to perfect such claim and an explanation of why such material or information is
necessary, and (d) information as to the steps to be taken if the person wishes
to submit a request for review. Such notification will be given within ninety
(90) days after the claim is received by the Plan Administrator. If such
notification is not given within such period, the claim will be considered
denied as of the last day of such period and such person may request a review of
his or her claim.

6.2 Review Procedure. Within sixty (60) days after the date on which a person
receives a written notice of a denied claim (or, if applicable, within sixty
(60) days after the date on which such denial is considered to have occurred)
such person (or his or her duly authorized representative) may (a) file a
written request with the Plan Administrator for a review of his or her denied
claim and of pertinent documents and (b) submit written issues and comments to
the Plan Administrator. The Plan Administrator will notify such person of its
decision in writing. Such notification will be written in a manner calculated to
be understood by such person and will contain specific reasons for the decision
as well as specific references to pertinent Plan provisions. The decision on
review will be made within sixty (60) days after the request for review is
received by the Plan Administrator. If the decision on review is not made within
such period, the claim will be considered denied.

 

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6.3 Claims and Review Procedures Not Mandatory. The claims procedure and review
procedure provided for in this Article 6 are provided for the use and benefit of
Executives who may choose to use such procedures, but compliance with the
provisions of this Article 6 is not mandatory for any Executive claiming
benefits under the Plan. It shall not be necessary for any Executive to file a
claim with the Plan Administrator or to exhaust the procedures and remedies
provided for by this Article 6 prior to bringing any legal claim or action, or
asserting any other demand, for payments or other benefits to which he or she
claims entitlement hereunder.

ARTICLE 7

PLAN MODIFICATION OR TERMINATION

The Plan may be amended or terminated by resolution of the Board at any time;
provided, however, that (a) the Plan may not be terminated or amended in a
manner adverse to the interests of any Executive, without his or her consent
(i) after a Potential Change in Control occurs and for one (1) year following
the cessation of a Potential Change in Control, or (ii) for the two-year period
following consummation of the transaction(s) resulting from or in the Change in
Control; and (b) no termination of this Plan or amendment hereof in a manner
adverse to the interests of any Executive, without his or her consent, shall be
effective if such termination or amendment occurs (i) at the request of a third
party who has taken steps reasonably calculated to effect a Change in Control or
(ii) in connection with or in anticipation of a Change in Control or Potential
Change in Control. For this purpose, the cessation of a Potential Change in
Control occurs if a Change in Control has not occurred within one (1) year
following the Potential Change in Control. In the event that the termination of
this Plan by the Company or an amendment hereof in a manner adverse to the
interests of any Executive (without his or her consent) occurs within one
(1) year prior to a Potential Change in Control or a Change in Control, there
shall be a presumption that the conditions of subclauses (i) and (ii) of clause
(b) of the next preceding sentence shall have been met. Upon the expiration of
the Coverage Period, the Plan may not be amended in any manner which would
adversely affect the rights which any Executive has at that time to receive any
and all payments or benefits pursuant to Articles 2, 3, and 4 by reason of a
Change in Control which has theretofore occurred or by reason of a termination
of his or her employment during the Coverage Period, and the Company’s
obligations to make such payments and provide such benefits shall survive any
termination of the Plan.

ARTICLE 8

MISCELLANEOUS

8.1 Terminations in Anticipation of Change in Control. An Executive’s employment
shall be deemed to have been terminated by the Company without Cause during the
Coverage Period if his or her employment is terminated by the Company without
Cause prior to a Change in Control or Potential Change in Control and such
termination of employment (a) was at the

 

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request of a third party who had indicated an intention to take or had taken
steps reasonably calculated to effect a Change in Control, or (b) otherwise
arose in connection with or in anticipation of a Change in Control, and (c) in
either case, a Change in Control does occur which may involve such third party
(or a party competing with such third party to effectuate a Change in Control).
An Executive shall be deemed to have terminated his or her employment for Good
Reason during the Coverage Period if he or she terminates his or her employment
with Good Reason prior to a Change in Control or Potential Change in Control if
the circumstance or event which constitutes Good Reason (a) occurred at the
request of a third party who had indicated an intention to take or had taken
steps reasonably calculated to effect a Change in Control, or (b) otherwise
arose in connection with or in anticipation of a Change in Control, and (c) in
either case, a Change in Control does occur which may involve such third party
(or a party competing with such third party to effectuate a Change in Control).
In the event of a termination of employment described in this Section 8.1, the
Executive shall be entitled to all payments and other benefits to which he or
she would have been entitled had such termination occurred during the Coverage
Period (other than salary pursuant to Section 3.1.1 for any period after the
actual date of termination) and he or she shall be entitled to an additional
payment in an amount which shall compensate him or her to the extent that he or
she was deprived by such termination of the opportunity prior to termination of
employment to exercise any stock options granted to him or her under the EICP
(including any such stock options that were not exercisable at the time of his
or her termination of employment) at the highest market price of the Company’s
Common Stock reached in connection with the Change in Control or Potential
Change in Control if a Potential Change in Control shall occur and not be
followed by a Change in Control within twelve (12) months of the Potential
Change in Control. In the event that the termination of employment of an
Executive as described in this Section 8.1 occurs following a Potential Change
in Control or within six (6) months prior to a Change in Control, there shall be
a presumption that clauses (a) and (b) of the first two sentences of this
Section 8.1 shall have been met. The Company shall pay to the Executive the
amount determined under this Section 8.1 in a lump sum within sixty (60) days
following the date of the Change in Control.

8.2 Burden. In any proceeding (regardless of who initiates such proceeding) in
which the payment of Severance Benefits or other compensation or benefits under
this Plan is at issue, (i) the burden of proof as to whether Cause exists for
purposes of this Plan shall be upon the Company and (ii) in the event that the
penultimate sentence of Section 8.1 applies, the Company shall have the burden
to prove, by clear and convincing evidence, that a termination of employment has
not been made in anticipation of a Change in Control as contemplated by
Section 8.1.

8.3 No Right to Continued Employment. Nothing in the Plan shall be deemed to
give any Executive the right to be retained in the employ of the Company, or to
interfere with the right of the Company to discharge him or her at any time and
for any lawful reason, with or without notice, subject in all cases to the terms
of this Plan.

8.4 No Assignment of Benefits. Except as otherwise provided herein or by law, no
right or interest of any Executive under the Plan shall be assignable or
transferable, in whole or in part, either directly or by operation of law or
otherwise, including without limitation by

 

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execution, levy, garnishment, attachment, pledge or in any manner; no attempted
assignment or transfer thereof shall be effective; and no right or interest of
any Executive under the Plan shall be liable for, or subject to, any obligation
or liability of such Executive.

8.5 Death. This Plan shall inure to the benefit of and be enforceable by an
Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If an Executive shall
die while any amount would still be payable to him or her hereunder (other than
amounts which, by their terms, terminate upon his or her death) if he or she had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Plan to the executors, personal
representatives or administrators of his or her estate.

8.6 Incompetency. Any benefit payable to or for the benefit of an Executive, if
legally incompetent or incapable of giving a receipt therefore, shall be deemed
paid when paid to his or her guardian or to the party providing or reasonably
appearing to provide for his or her care, and such payment shall fully discharge
the Company, the Plan Administrator and all other parties with respect thereto.

8.7 Reduction of Benefits By Legally Required Benefits. Notwithstanding any
other provision of this Plan to the contrary, if the Company is obligated by law
or by contract (other than under this Plan) to pay severance pay, a termination
indemnity, notice pay, or the like, to an Executive or if the Company is
obligated by law or by contract to provide advance notice of separation (“Notice
Period”) to an Executive, then any Severance Benefits payable to him or her
hereunder shall be reduced by the amount of any such severance pay, termination
indemnity, notice pay or the like, as applicable, and by the amount of any pay
received during any Notice Period; provided however, that the period following a
Notice of Intent to Terminate shall not be considered a Notice Period.

8.8 Enforceability. If any provision of the Plan shall be held invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provisions hereof, and the Plan shall be construed and enforced as if such
provisions had not been included.

8.9 Effective Date. The Plan shall be effective as of the Effective Date and
shall remain in effect unless and until terminated by the Board, subject to the
requirements of Article 7.

8.10 No Mitigation. The Company agrees that, if an Executive’s employment by the
Company is terminated during the Coverage Period, the Executive is not required
to seek other employment or to attempt in any way to reduce any amounts payable
to him or her by the Company pursuant to this Plan. Further, the amount of any
payment or benefit provided for under this Plan (other than to the extent
provided in Section 3.2.2) shall not be reduced by any compensation earned by
him or her as a result of employment by another employer, by retirement
benefits, by offset against any amount claimed to be owed by him or her to the
Company, or otherwise.

 

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8.11 Successors. In addition to any obligations imposed by law upon any
successor to the Company, the Company shall be obligated to require any
successor (whether direct or indirect, by purchase, merger, consolidation,
operation of law, or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform the
Company’s obligations under this Plan in the same manner and to the same extent
that the Company would be required to perform them if no such succession had
taken place. Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession shall entitle each Executive
to compensation and benefits from the Company in the same amount and on the same
terms as he or she would be entitled to hereunder if he or she were to terminate
his or her employment for Good Reason during the Coverage Period, provided that
the amounts payable under Sections 3.1.1, 3.1.3, 3.1.4, 3.1.5, 3.2.1, 3.2.3, and
3.3.4 and, as applicable, Sections 3.3.1, 3.3.2, or 3.3.3 shall be made to an
Executive not later than the sixtieth (60th) day following the effective date of
any such succession.

8.12 Consent to Cancellation of Awards and Reduction of DB SERP Benefit. The
Company may condition the payment to an Executive of his or her Vested Current
Incentive Pay Amount and Vested Current PSU Amount upon his or her providing a
written consent to the cancellation of the applicable outstanding target
Incentive Pay and PSU grants on which such amounts are based, and in lieu of
which such amounts are paid. The Company may condition the payment to an
Executive of his or her Vested DB SERP Benefit or the providing of any benefit
or payment under Section 3.3.1 upon his or her providing a written consent to
the reduction in the amount of the Vested DB SERP Benefit or the amount of any
payments or benefits provided under Section 3.3.1.

8.13 Employment by Subsidiary. For purposes of this Plan, an Executive who is
employed by a Subsidiary shall be treated as if employed by the Company and his
or her entitlement to benefits hereunder shall be determined as if he or she
were employed by the Company. For such purpose, the Subsidiary shall be treated
as if it were an unincorporated division of the Company.

8.14 Waiver. No waiver by an Executive at any time of any breach of the terms of
this Plan, or compliance with, any condition or provision of this Plan to be
performed by the Company shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.

8.15 Withholding Taxes. Any payments to an Executive provided for hereunder
shall be paid net of any applicable withholding required under federal, state or
local law and any additional withholding to which he or she has agreed.

8.16 Construction. The headings and captions herein are provided for reference
and convenience only, shall not be considered part of the Plan, and shall not be
employed in the construction of the Plan. Neither the gender nor the number
(singular or plural) of any word shall be construed to exclude another gender or
number when a different gender or number would be appropriate.

 

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8.17 Notices. Any notice or other communication required or permitted pursuant
to the terms hereof shall be deemed to have been duly given when delivered or
mailed by United States Mail, first class, postage prepaid, addressed to the
intended recipient at his or her last known address (which in the case of an
Executive shall be the address specified by him or her in any written notice
provided to the Company in accordance with this Section 8.17).

8.18 Statutory Changes. All references to sections of the Exchange Act or the
Code shall be deemed also to refer to any successor provisions to such sections.

8.19 Governing Law. This Plan shall be construed and enforced according to the
laws of the State of Delaware to the extent not preempted by Federal law, which
shall otherwise control.

ARTICLE 9

TERMINATION WITHOUT CAUSE

UNRELATED TO A POTENTIAL CHANGE IN

CONTROL OR CHANGE IN CONTROL

9.1 Subject to the terms and conditions noted below, in the event Executive’s
employment with the Company is, or is deemed to be, terminated by the Company
without cause (as defined below), or is, or is deemed to be, terminated by the
Executive for good reason (as defined below) regardless of whether a Potential
Change in Control or Change in Control has occurred or is pending (such
termination hereinafter is referred to as “Change in Status Event”), the
Executive shall be entitled to the severance benefits set forth below; provided,
however, any termination of an Executive’s employment which results in such
Executive being entitled to Severance Benefits pursuant to Section 3.2 shall not
constitute a Change in Status Event and no Executive entitled to Severance
Benefits pursuant to Section 3.2 shall in addition be entitled to the benefits
provided for in this Section 9.1. Notwithstanding the foregoing, a precondition
to the receipt of severance benefits under Article 9 of the Plan shall be the
Executive’s signing and delivering to the Company, in a form acceptable to the
Company, a separation agreement containing a valid and enforceable waiver and
release of all claims which is not revoked (“Release”). In the absence of a
valid and enforceable Release, the Company shall have no obligations under
Article 9 of the Plan.

9.1.1 The Company shall pay to the Executive in a lump sum on or before March 15
of the year following the date of the Change in Status Event an amount equal to
two (2) times the Executive’s Annual Base Salary as defined in Section 1.1
(substituting “Change in Status Event” for “Change in Control”). Executive will
be fully vested in Incentive Pay and PSU grants previously deferred and shall be
entitled to payments for any awards covering periods ending prior to the date of
the Change in Status Event that have been earned but not yet paid prior to the
date of the Change in Status Event. For purposes of clarification, the Executive
shall not receive credit towards vesting or participation in any PSU grant for
any period after the date of the Change in Status Event.

 

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9.1.2 From and after the date of the Change in Status Event for a period of two
(2) years thereafter, the Company will continue Executive’s Welfare Benefits
excluding disability coverage (and excluding coverage under all tax-qualified
retirement plans).

9.1.3 From and after the date of the Change in Status Event for a period of two
(2) years thereafter, Executive shall remain entitled to participate in the
Incentive Pay programs. During this two-year period, Executive’s target
Incentive Pay award percentage will be that in effect just prior to the Change
in Status Event, and Executive’s actual Incentive Pay award amounts will be
determined and paid as follows:

9.1.3.1 For the period from January 1 of the year in which the Change in Status
Event occurs until the date of the Change in Status Event, the award will be
equal to the product of (x) and (y), where (x) is the amount that would have
been payable to the Executive under such Incentive Pay award calculated using
(A) the Company’s actual performance for the complete calendar year in which
such period ends, and (B) the Executive’s actual performance as of the Change in
Status Event, and (y) is a fraction the numerator of which is the number of days
from and including the first day of that award period until (and including) his
or her Change in Status Event and the denominator of which is the number of days
in that award period. The amount determined will be paid in a lump sum on or
after January 1 and on or before March 15 of the year following this period.

9.1.3.2 For the period from the Change in Status Event until December 31 of the
year in which the Change in Status Event occurs, the award will be equal to the
product of (x) and (y), where (x) is the amount that would have been payable to
the Executive under such Incentive Pay award calculated using (A) for the
Company’s performance score, the lesser of 100% or the Company’s actual
performance for the complete calendar year in which such period ends, and
(B) for the individual’s performance score, 100%, and (y) is a fraction the
numerator of which is the number of days from the day after the day of the
Change in Status Event until (and including) the end of that award period and
the denominator of which is the number of days in that award period. The amount
determined will be paid in a lump sum on or after January 1 and on or before
March 15 of the year following this period.

9.1.3.3 For the calendar year period beginning on January 1 after the Change in
Status Event, the award will be equal to the amount that would have been payable
to the Executive under such Incentive Pay award calculated using (A) for the
Company’s performance score, the lesser of 100% or the Company’s actual
performance for such calendar year, and (B) for the individual’s performance
score, 100%. The amount determined will be paid in a lump sum on or after
January 1 and on or before March 15 of the year following this period.

9.1.3.4 For the period beginning on the second January 1 after the Change in
Status Event until the second anniversary of the Change in Status Event, the
award will be equal to the product of (x) and (y), where (x) is the amount that
would have been payable to the Executive under such Incentive Pay award
calculated using (A) for the Company’s performance score, the lesser of 100% or
the Company’s actual performance for the complete calendar year in which such
period ends, and (B) for the individual’s performance score, 100%, and (y) is a

 

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fraction the numerator of which is the number of days from and including the
first day of that award period until (and including) the second anniversary of
his or her Change in Status Event and the denominator of which is the number of
days in that award period. The amount determined will be paid in a lump sum on
or after January 1 and on or before March 15 of the year following this period.

9.1.4 From and after the date of the Change in Status Event for a period of two
(2) years thereafter, (a) Executive’s stock options granted prior to the Change
in Status Event will continue to vest in accordance with the vesting schedule(s)
applicable under the terms of the grant(s), but (b) except as provided in
Section 9.1.4(a) above, Executive will not be eligible to participate in or
receive new grants or benefits under the Long-Term Incentive Program portion of
the EICP and will not be eligible for participation in or the payment of
benefits under this Plan (except for under this Article 9), The Hershey Company
Executive Benefits Protection Plan (Group 3), The Hershey Company Employee
Benefits Protection Plan (Group 2), or The Hershey Company Severance Benefits
Plan.

9.1.5 In the event an Executive is entitled to benefits under this Section 9.1
pursuant to a Change in Status Event, the Company shall reimburse the Executive
following his or her Separation from Service for (i) reasonable outplacement
services in accordance with Section 3.2.4 and (ii) financial counseling and tax
preparation services in accordance with Section 3.2.5.

9.2 If Executive voluntarily resigns from the Company other than for good reason
(as defined below), such resignation shall not constitute a Change in Status
Event and therefore will not entitle Executive to the benefits provided for in
Section 9.1 above. In such event, Executive may be entitled to the benefits
provided under the other Company benefit plans in accordance with the terms of
those plans.

9.3 Termination of an Executive’s employment “without cause,” for purposes of
this Article 9, shall refer to the Company causing the Executive’s Separation
from Service with no “cause,” as that term is defined in the DB SERP.
Termination of Executive’s employment “for good reason” for purposes of this
Article 9 shall mean Separation from Service by the Executive during the first
two (2) years of the tenure of the Company’s then current Chief Executive
Officer if, and only if, the Executive has not given the Company written notice
of his or her intention to retire and during such two (2) year period prior to
the Executive’s Separation from Service either (i) the Company has assigned
duties to the Executive or taken other actions which are inconsistent with his
or her position, authority, duties or responsibilities immediately prior to the
then current Chief Executive Officer becoming the Chief Executive Officer of the
Company and such assignment of duties or other action results in a material
diminution in such position, authority, duties or responsibilities; or (ii) the
Company has caused a material diminution of the Executive’s annual base salary
as in effect, as applicable, on the date the then current Chief Executive
Officer became the Chief Executive Officer of the Company or as the same may be
increased from time to time. To qualify as a termination for good reason under
this Article 9, either of the conditions listed in this paragraph must be
followed by a Separation from Service within two (2) years of its occurrence and
the notice requirements of Section 4.1 must be satisfied.

 

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9.4 The severance arrangements of this Article 9 shall not be considered to
constitute an employment contract. The terms and conditions of the Long-Term
Incentive Program Participation Agreement and Mutual Agreement to Arbitrate
Claims by and between Executive and the Company (“Participation and Arbitration
Agreement”), are incorporated herein by reference and made a part hereof as if
fully set forth herein. Notwithstanding any provisions to the contrary in the
Participation and Arbitration Agreement, the terms and conditions thereof shall
remain in effect for three (3) years after Executive’s Change in Status Event
regardless of whether he or she is eligible or not to receive benefits under the
DB SERP.

ARTICLE 10

APPLICATION OF CODE SECTION 409A

This Plan is intended to comply with the provisions of Code section 409A and the
Treasury regulations relating thereto. In furtherance of this intent, to the
extent this Plan is subject to Code section 409A, it shall be interpreted,
operated, and administered in a manner consistent with these intentions.

IN WITNESS WHEREOF, the Company has caused The Hershey Company Executive
Benefits Protection Plan (Group 3A), Amended and Restated as of October 2, 2007,
to be executed the 27th day of December, 2007.

 

THE HERSHEY COMPANY

By:

  /s/ Marcella K. Arline   Marcella K. Arline  

Senior Vice President, Chief People Officer

 

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