Exhibit 10.3

CONFIDENTIAL AGREEMENT AND GENERAL RELEASE

This is a Confidential Agreement and General Release (hereinafter “Agreement”)
between The Hershey Company (hereinafter “the Company”) and Thomas K. Hernquist
(hereinafter “you”). The Company is presenting this Agreement to you on
November 29, 2007. You should talk to an attorney before you sign this Agreement
because it affects your legal rights.

 

1. Purpose of this Agreement.

You and the Company have mutually agreed to terminate your employment
relationship with the Company. You and the Company are entering into this
Agreement because you wish to receive benefits under Article 9 of the Company’s
Executive Benefits Protection Plan (Group 3A), receipt of which is conditioned
upon the execution of a waiver and release acceptable to the Company.

 

2. Scope of this Agreement.

You agree that this Agreement applies to The Hershey Company and its past and
present subsidiaries, divisions, affiliates, benefits plans and its and their
agents, directors, officers, employees, representatives, successors and assigns
(hereinafter collectively “the Company”). You also agree that you are entering
into this Agreement knowingly and voluntarily on your own behalf and also on
behalf of any heirs, agents, representatives, successors and assigns that you
may have now or in the future.

 

3. Lump Sum Payment.

You will receive a lump sum payment in the amount of two times your current base
salary, totaling $840,000. In addition, you shall receive a lump sum payment for
any unused 2007 vacation days, excluding any carry-over days from 2006 or any
prior year. These amounts will be paid on the date on which the Company makes
its first payroll payment in January 2008.

 

4. Termination of Active Employment:Unpaid Leave of Absence.

Your period of active employment with the Company will end on December 31, 2007.
It is intended that such termination will be a separation from service for
purposes of Internal Revenue Code Section 409A, because, except for the
consultation and transition assistance the Company might request of you under
paragraph 6 below (which assistance will involve bona fide services at a level
significantly less than 20% of the level of services you have been providing),
it is not expected that you will return to perform services for the Company
after December 31, 2007 or during the period beginning on January 1, 2008, and
continuing until December 31, 2009 (hereinafter “Leave of Absence Period”).
During this Leave of Absence Period, you shall be placed on an unpaid leave of
absence and shall continue to receive the following employee benefits, in
accordance with the terms and conditions of the applicable programs and plans as
if you remained an active employee: the group insurance flex benefits you
previously elected, except you are not eligible for short-term disability
benefits or long-term disability benefits. Your participation in any group
insurance flex benefits is contingent upon your payment to the Company of the
applicable premium amount for an active employee at the E2 (or comparable
successor) salary band. In addition, you will continue to participate during the
Leave of Absence Period in the Annual Incentive Pay program of the Employee
Incentive Compensation Plan (or any comparable successor plan applicable to a
member of the Hershey Executive Team), and your target percentage will be that
in effect prior to the beginning of the Leave of Absence Period. For purposes of
determining the amount due hereunder, the applicable score shall be the
Company’s actual financial score for the payment received in 2008 based on 2007
performance, and for the payments received in 2009 based on 2008 performance and
in 2010 based on 2009 performance, the applicable score shall be the Company’s
actual financial score up to a maximum payment of target (Exhibit A details this
further). Financial scores shall be those determined by the Company in its sole
discretion and made applicable to members of the Hershey Executive Team. These
payments and the lump sum referenced in paragraph 3 above are referred to
collectively as “Severance Benefits.” A summary of these Severance Benefits and
certain other benefit programs of the Company is set forth in the attached
Exhibit A.

--------------------------------------------------------------------------------

5. Termination of Employment and Officer Status.

As noted in paragraph 4 above, your active employment will cease irrevocably on
December 31, 2007. At the end of the Leave of Absence Period on December 31,
2009, your employment with the Company will cease irrevocably and forever, and
will not be resumed again at any point in the future. Your status as an elected
or appointed officer of the Company will be terminated effective December 4,
2007, and your execution of this Agreement will constitute your resignation as
an officer effective as of that date. In exchange for the Severance Benefits set
forth in Exhibit A, you promise that you will not seek to be employed,
reinstated or re-employed by the Company.

 

6. Consultation and Transition Assistance.

You have agreed to provide transition assistance and consultation during the
period January 1, 2008 to December 31, 2008. You agree that you will provide
such information, consultation and transition assistance as may be reasonably
requested by the Company at times mutually agreed upon and which do not
interfere with any future employment during this period. It is understood that
such assistance shall only involve a level of services that is less than 20% of
the average level of services you have provided to the company since January 1,
2005. The benefits provided under this Agreement constitute consideration for
your performance of such services.

 

7. Severance Benefits and Other Benefits.

In addition to the Severance Benefits, you are entitled to certain other
benefits (“Other Benefits”), all of which are set forth on Exhibit A, attached
hereto and incorporated herein by this reference. By signing this Agreement, you
agree that these Severance Benefits and Other Benefits are the only benefits
that you are entitled to receive under the Executive Benefits Protection Plan
(Group 3A), under any other benefits plans or by law. You agree that all
payments or benefits paid to you under this Agreement are subject to withholding
in accordance with applicable plan provisions, laws and regulations. In the
event of a change in control during your leave of absence, no additional
benefits would be due to you.

 

8. COBRA Rights.

Effective as of the end of your Leave of Absence Period, as required by the
continuation coverage provisions of Section 4980B of the U. S. Internal Revenue
Code of 1986, as amended (“the Code”), you shall be offered the opportunity to
elect continuation coverage under the group medical plan of the Company (“COBRA
coverage”). The Company shall provide you with the appropriate COBRA coverage
notice and election form for this purpose. You shall notify the Company within
two weeks of any change in circumstances that would warrant discontinuation of
COBRA coverage and benefits (including but not limited to your receipt of group
medical and dental benefits from any other employer). The existence and duration
of your rights and/or the COBRA rights of any of your eligible dependents shall
be determined in accordance with Section 4980B of the Code.

 

9. General Release.

In exchange for the Severance Benefits and Other Benefits, you agree to release
and hereby do release the Company from all claims, demands, actions or
liabilities you may have against the Company of whatever kind including, but not
limited to, those that are related to your employment by the Company, the
termination of that employment, your eligibility for other benefits under
non-vested benefits plans and/or claims for attorneys’ fees, except that you do
not waive any claims which you are unable to waive under applicable law.

You agree that this General Release covers, but is not limited to, claims
arising from the Age Discrimination in Employment Act, Title VII of the Civil
Rights Act of 1964, the Equal Pay Act, the Americans with Disabilities Act, the
Rehabilitation Act of 1973 and any other federal, state or local law dealing
with discrimination in employment including, but not limited to, discrimination
based on sex, sexual orientation, race, national origin, religion, disability,
veteran status or age. You also agree that this General Release covers claims
arising from the Family and Medical Leave Act of 1993 and any state or local law
dealing with leave time or wages and hours of work. You also agree that this
General Release covers, but is not limited to, claims based on theories of
contract or tort, whether based on common law or otherwise.

 

2

--------------------------------------------------------------------------------

This General Release covers both claims you know about and those you may not
know about which accrued by the time you sign this General Release. In this
regard, you agree to waive all rights that any state or local law may provide
with respect to a general release of unknown claims.

You agree to pay all costs, damages, expenses and attorneys’ fees incurred by
the Company in successfully defending against any lawsuit or administrative
proceeding you bring to contest the validity of this Agreement or asserting any
of the claims covered by this General Release.

You hereby agree and acknowledge that you are not entitled to receive, and the
Company would not have granted you, the Severance Benefits and Other Benefits
without release of each and every claim covered by this General Release. You
agree that, if you file a lawsuit asserting any of the claims covered by the
General Release, the Company will be entitled to a set-off against any judgment
you obtain against the Company. You also agree that the appropriate amount of
any such set-off in a lawsuit or administrative proceeding asserting any one or
more of the claims covered by the General Release is the entire amount of
Severance Benefits.

You waive your right to file any charge or complaint against the Company arising
out of your employment or separation from employment with any federal, state or
local court or any state or local administrative agency, except where such
waivers are prohibited by law. This Agreement, however, does not prevent you
from filing a charge with the Equal Employment Opportunity Commission, any other
government agency, concerning claims of discrimination, although you waive the
right to recover any damages or other relief in any claim or suit brought by or
through the Equal Employment Opportunity Commission or any other federal, state
or local agency under the Age Discrimination in Employment Act, Title VII of the
Civil Rights Act of 1964 as amended, the Americans with Disabilities Act, or any
other federal or state discrimination law, except where such waivers are
prohibited by law.

You represent and affirm that you have not filed or caused to be filed, and are
not presently a party to, any claim, complaint, or action against the Company in
any forum or form. You further affirm and represent that you have no known
workplace injuries.

 

10. Confidentiality.

 

  (a) Confidentiality of Proprietary Information and/or Trade Secrets.

In exchange for the Severance Benefits and Other Benefits, you agree not to
disclose, use to your benefit or use to the benefit of any other person or
entity any confidential information, proprietary information and/or trade
secrets to which you had access during your employment by the Company. This
includes, but is not limited to, formulas, trade secrets, manufacturing
processes, customer lists, marketing strategies, financial information and
business data not generally known to the public. You agree that disclosure of
such information by you in violation of this paragraph 10(a) would cause so much
injury to the Company that money alone could not fully compensate the Company.
You also agree that the Company would be entitled to recover money from you if
you violate this paragraph 10(a).

 

  (b) Confidentiality of the Terms of this Agreement.

The terms and conditions of this Agreement are confidential. You agree not to
disclose the terms of this Agreement to anyone except immediate family members,
your attorney and your financial and tax advisors. You further agree to inform
these people that the Agreement is confidential and must not be disclosed to
anyone else. The Company agrees not to disclose the terms of this Agreement to
anyone except those persons who have a business need to know its contents or
except as required by law. Either party may disclose the terms of this Agreement
if compelled to do so by a court. However, the party so compelled (the
“Disclosing Party”) agrees to notify the other party immediately if anyone seeks
to compel production of this Agreement or the Disclosing Party’s testimony about
this Agreement, and the Disclosing Party agrees to cooperate with the other
party if the other party decides to oppose such effort. Any notice required by
this paragraph 10(b) to be given to the other party shall be mailed by first
class mail, postage prepaid, to the following address: if to the Company, to the
address listed in paragraph 15, and if to you, to your address at 240 Eshelman
Road, Lancaster, Pennsylvania 17601.

 

3

--------------------------------------------------------------------------------

11. Creative Property.

You agree that all ideas, inventions, trade secrets, know-how, documents and
data (hereinafter “Creative Property”) developed either during, in connection
with, or pursuant to your employment by the Company are and will be the
Company’s exclusive property. You agree to provide all reasonable assistance to
the Company in perfecting and maintaining its rights to the Creative Property.
The Company shall have the right to use the Creative Property for any purpose
without any additional compensation to you. This Agreement, however, does not
prevent you from using your general business, management, financial,
professional and/or scientific skills, techniques and abilities.

 

12. Mutual non-disparagement.

(a) The Parties agree that they will not make any statement that disparages or
tends to disparage the other. The Parties also agree that they will not make any
public statements to the media concerning the other, including any statements
concerning the business objective, management practices or management personnel
of the Company. The Parties agree that they will take no action that would cause
the other embarrassment, humiliation or to be held in disrepute by the general
public or by the Company’s employees, suppliers or customers. For purposes of
this Agreement, it would be considered disparagement for either party to make
any statement to the effect that the other had violated any law or regulation,
breached any statutory or contractual obligation, or had otherwise acted
wrongfully in any manner in connection with your employment at the Company.

(b) Nothing in this paragraph 12 is intended to restrict you from describing
your personal or professional reasons for seeking opportunities outside of
Hershey in a non-disparaging manner; or from making other non-disparaging
statements about Hershey.

 

13. Covenant Not To Compete.

In exchange for the Severance Benefits and Other Benefits, you agree that
beginning on the date you execute this Agreement and continuing during the Leave
of Absence Period: (a) you will not participate in recruiting or soliciting any
Company employees; (b) you will not communicate to any person or entity
regarding the nature, quality of work, special knowledge or personal
characteristics of any person employed by the Company without the prior written
consent of the Company’s Senior Vice President, Chief People Officer (or
successor having similar responsibilities within the Company); and (c) without
the consent of the Company’s Chief Executive Officer, who will consider and
respond to any request within ten business days, you will not accept employment
with or perform services for (1) The Wm. Wrigley Company or (2) any company that
produces or sells cocoa-based products, including without limitation chocolate,
cocoa-based snacks including confectionery, cocoa-based beverages or other
products containing chocolate, cocoa or cocoa butter (the “Competitive
Businesses”), provided that this provision shall not be violated by your
accepting employment with or providing services to:

 

  (i) a subsidiary, division or unit (“Group”) of an entity that engages,
directly or indirectly, in any of the Competitive Businesses, so long as the
Group for which you work is not engaged in any of the Competitive Businesses, or

 

  (ii) a parent company for which the gross revenue from Competitive Businesses
constitutes less than 10% of the parent company’s gross consolidated revenue for
its most recently completed fiscal year, so long as you do not participate
directly in such Competitive Business, or

 

  (iii) an entity with annual gross revenue less than $50 million which does not
sell confectionery and which has not more than 30% of its revenue from products
that have either (a) cocoa, cocoa butter or chocolate as a primary ingredient or
(b) cocoa or chocolate as the primary characterizing flavor.

 

14. Return of Company Property.

You agree to return to the Company all documents, business records in any form,
manuals, handbooks, ID cards, keys, credit cards, computer disks or any other
property of the Company, both tangible and intangible, that are in your
possession, custody or control. If you do not return all Company property, in
addition to any other rights it

 

4

--------------------------------------------------------------------------------

may have under this Agreement or otherwise, the Company may withhold Severance
Benefits and Other Benefits equal to the value of such Company property as
determined in the sole judgment of the Company.

 

15. No Admission of Liability.

By making this Agreement, the Company does not admit that it has done anything
wrong.

 

16. No Modification.

This Agreement constitutes the entire agreement between you and the Company, and
it cannot be modified except in writing by both you and the Company.

 

17. Twenty-one (21) Days To Consider This Agreement.

You have up to twenty-one (21) calendar days to decide whether or not to sign
this Agreement. You agree, if you decide not to take all that time, that your
reasons for doing so are entirely personal and not due to any pressure by the
Company.

 

18. Seven (7) Days To Revoke This Agreement.

You also may revoke this Agreement up to seven (7) calendar days after signing
it. The Agreement will not be effective or enforceable until after this
revocation period has expired. To revoke this Agreement, you must deliver
written notice of the revocation to the Company by 5 p.m. on the seventh
calendar day after you sign this Agreement to the following address: General
Counsel’s Office, The Hershey Company, 100 Crystal A Drive, Hershey, PA
17033-0810. You agree that, if you revoke this Agreement, it will not be
effective or enforceable and you will not receive the Severance Benefits and
Other Benefits.

 

19. Advice of Counsel.

You acknowledge that the Company has expressly advised you to seek the advice of
an attorney before executing this Agreement and that you had adequate time to do
so. You acknowledge that the decision to sign this Agreement is yours alone.

 

20. Severability and Interpretation.

Whenever possible, each provision of this Agreement shall be interpreted in such
a manner as to be effective and valid under applicable law. In case any part of
this Agreement shall be invalid, illegal or otherwise unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired.

 

21. Integration.

This Agreement, including the attached Exhibit A and Long Term Incentive Program
Participation Agreement (other than paragraph 3 of such Long Term Incentive
Participation Agreement), set forth the entire agreement between the parties and
supersedes any and all prior agreements, arrangements, representations or
warranties, whether expressed or implied, written or oral, that relate to the
subject matter of this Agreement.

 

22. Governing Laws.

The provisions of this Agreement shall be construed, administered and enforced
according to applicable federal law and, where appropriate, the laws of the
Commonwealth of Pennsylvania without reference to its conflict of laws rules and
without regard to any rule of any jurisdiction that would result in the
application of the law of another jurisdiction. You expressly consent that:
(a) any action or proceeding relating to this Agreement will only be brought in
the federal or state courts, as appropriate, located in the Commonwealth of
Pennsylvania; and (b) any such action or proceeding will be heard without a
jury. You expressly waive the right to bring any such action in any other
jurisdiction and to have such action heard before a jury.

 

5

--------------------------------------------------------------------------------

BY SIGNING BELOW, YOU CERTIFY THAT YOU HAVE READ THIS AGREEMENT, THAT YOU KNOW
AND UNDERSTAND THE MEANING AND INTENT OF THIS AGREEMENT AND THAT YOU ARE
ENTERING THIS AGREEMENT KNOWINGLY AND VOLUNTARILY.

 

EMPLOYEE     THE HERSHEY COMPANY By:   /s/ Thomas K. Hernquist     By:   /s/
Burton H. Snyder   Thomas K. Hernquist       Date:   November 29, 2007     Date:
  November 29, 2007

 

6

--------------------------------------------------------------------------------

EXHIBIT A

 

Thomas K. Hernquist

Lump sum payment

  

Lump sum payment of 2 times current base salary ($840,000)

 

Unused 2007 vacation, if any (no payment for carry-over vacation from prior
years, and vacation for subsequent years does not accrue)

 

•        Will be paid with first payroll period of 2008

Status

  

•        Cease to be an officer of the Company December 4, 2007

•        Termination of employment and separation from service as defined under
Section 409A occurs on December 31, 2007

•        Available for consultation to ensure smooth transition January 1, 2008
through December 31, 2008

•        Unpaid leave of absence January 1, 2008 through December 31, 2009

AIP

  

Will participate in AIP through the end of the unpaid leave of absence period.
During the unpaid leave of absence period, AIP is determined as the lower of
actual financial results or target bonus

•        2007 based on actual financial results

•        2008 range from $0 - $294,000, based on actual financial results but
not exceeding $294,000

•        2009 range from $0 - $294,000, based on actual financial results but
not exceeding $294,000

•        For clarity, a financial result of 100% of target or higher would
result in a payment of $294,000. The payout for a financial result below target
would be the percentage approved by the Compensation Committee for members of
the Hershey Executive Team (this is more accurate than the way it was written,
as this puts Tom in the same position for bonuses below target as if he were a
continuing employee.)

Benefits

  

•        Health and welfare benefits including medical, dental and vision
coverage will remain in effect as elected until December 31, 2009, the end of
the leave of absence period. You will pay the active rate based on the E2 salary
band by personal check

•        Short-term disability and long term disability benefits will not
continue during the leave of absence period

COBRA Continuation

   Will have the option to elect COBRA continuation for benefits at the end of
the leave of absence period.

401(k) and pension

   Benefit accruals cease upon separation from service, December 31, 2007

SERP

   Benefit forfeited; did not meet age 55 vesting requirement

CLRP

   Will be eligible for the Compensation Limit Replacement Plan (CLRP),
calculated based on accruals up to December 31, 2007, with no accruals
thereafter. The CLRP provides retirement benefits on pensionable earnings that
exceed the IRS compensation limit under the Hershey Retirement Account, which
was $225,000 in 2007. The CLRP amount will be paid no later than August 1, 2008
with interest at the applicable rate under the CLRP from December 31, 2007 until
paid.

 

7

--------------------------------------------------------------------------------

Deferred Compensation

   Subject to deferral elections, if any. Change in deferral election
permissible under 409A transition rules in accordance with Company procedures.

LTIP

   PSU cycle      

2003 – 2005

   Will be fully vested on 12/31/08 via the leave of absence   

2005 – 2007

   Payout, if any, will be determined after February 2008 Board meeting, based
on company performance as determined by Board   

2006 – 2008

   Based on company performance, this cycle is not expected to have a payout.
Not eligible.   

2007 – 2009

   Not eligible.   

2008 – 2010

   Not eligible.   

Stock option portion

  

•       Existing stock options continue to vest and be available for exercise
through the leave period of absence period, 12/31/09

•       Will not receive a 2008 award or future awards

RSUs

   Vesting Date    RSUs    6/16/08    1,250    2/28/08    2,500    2/28/09   
2,500

 

   All above will vest through the leave of absence period.

Outplacement Assistance

   Will be provided in accordance with Company practices Financial Counseling
and Tax Preparation    Will be provided through the leave of absence period at
the same level as made available to active employees at the E2 salary grade

 

8