exh102.htm


    Exhibit
      10.3

    
 

    THE
      HERSHEY COMPANY

    


    TERMS
      AND CONDITIONS OF

    NONQUALIFIED
      STOCK OPTION AWARDS

    UNDER
      THE

    EQUITY
      AND INCENTIVE COMPENSATION PLAN

    


    1.           The
      Optionee, by accepting the option to purchase shares of the Company's Common
      Stock (the "Options") granted to him/her on
____________________, (the “Grant Date”), accepts and agrees to
      these terms and conditions and the terms and conditions of the Equity and
      Incentive Compensation Plan (the "Plan"), which Plan is incorporated herein
      by
      reference.

    


    2.           The
      Options shall not be exercisable until vested.  The Options shall be
      exercisable during the period ____________________ through
____________________ (the “Exercise Period”), subject to the
      vesting schedule described in the next sentence and the provisions regarding
      termination set forth in paragraphs 3 and 4 below and in the Plan. Of the total
      Options granted to the Optionee on the Grant Date (“Total Grant”), twenty-five
      percent (25%) of the Total Grant will become vested on the first anniversary
      of
      the Grant Date; an additional twenty-five percent (25%) of the Total Grant
      will
      become vested on the second anniversary of the Grant Date; an additional
      twenty-five percent (25%) of the Total Grant will become vested on the third
      anniversary of the Grant Date; and an additional twenty-five percent (25%)
      of
      the Total Grant will become vested on the fourth anniversary of the Grant
      Date.  During the Exercise Period, vested Options may be exercised in
      whole or in part and on one or more than one occasion.  The purchase
      price of any shares as to which the Options shall be exercised shall be paid
      in
      full at the time of such exercise.

    


    3.           In
      the event Optionee's employment with the Company is terminated for any reason
      other than the occurrence of an event described in paragraph 4 below, or a
      “Corporate Event” or “Change in Control” as described in this paragraph 3,
      whether voluntarily or involuntarily, the Options shall terminate immediately
      upon termination of Optionee’s employment and may not be exercised after such
      termination of employment.

    


    If
      Optionee’s employment with the Company is terminated solely due to a “Corporate
      Event,” Optionee shall have the right to exercise any Options that vest on or
      prior to the Corporate Event Exercise Deadline at the time or after such Options
      vest but on or before the Corporate Event Exercise Deadline.  The
“Corporate Event Exercise Deadline” is the 90th day following
      the
      Optionee’s termination of employment or, if such 90th day is
      not a New
      York Stock Exchange trading day, the first day after such 90th day that
      is a New
      York Stock Exchange trading date, provided that the Corporate Event Exercise
      Deadline shall not extend beyond ____________________, the date
      the Options expire.  For purposes of this grant, a Corporate Event
      shall mean a corporate action, such as the sale of a subsidiary or business
      unit, a corporate restructuring, or other material, non-recurring event which
      results in the displacement or elimination of a significant number of jobs
      and
      which is required to be disclosed as a separate matter in the Company’s
      financial statements.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Upon
      the
      occurrence of a Change in Control (as that term is defined in the Plan), the
      Options shall become fully vested and exercisable notwithstanding the vesting
      schedule set forth in paragraph 2 above.  If Optionee’s employment is
      terminated by the Company within two (2) years following the Change in Control
      for any reason other than for Cause (as that term is defined in the Plan) or
      if
      Optionee's employment is terminated by the Optionee within such two year period
      for Good Reason (as that term is defined in the Plan), Optionee shall have
      one
      (1) year from the date of termination of employment to exercise his/her
      Options.  In no event, however, may Options be exercised after
____________________, the date the Options expire.

    


    4.           If
      Optionee retires after the Grant Date and during the calendar year in which
      the
      Grant Date occurs, the Total Grant will be reduced on a pro-rata basis to
      reflect Optionee’s period of employment during the calendar year in which the
      Grant Date occurs (the “Adjusted Grant”).  The Adjusted Grant shall
      equal the Total Grant multiplied by a fraction, the numerator of which equals
      the number of calendar months from and including April 2007 through and
      including the calendar month preceding the month during which Optionee’s
      retirement date occurs and the denominator of which equals 9; provided, however,
      that any fractional share resulting from such calculation shall be eliminated
      by
      rounding the Adjusted Grant down to the nearest whole number.

    


    The
      foregoing provisions of this
      paragraph 4 notwithstanding, if a Change in Control occurs following the Grant
      Date, and Optionee retires after the occurrence of the Change in Control but
      prior to the first day of the twelfth (12th) calendar
      month
      following the month during which the Grant Date occurs, the Total Grant shall
      not be reduced as aforesaid, but rather the Total Grant of Options shall be
      deemed to have become fully vested and exercisable upon the occurrence of the
      Change in Control.

    


    In
      the event Optionee retires, dies or
      becomes totally disabled, the Options shall not terminate but instead will
      continue to remain outstanding and vest, subject to the vesting provisions
      of
      paragraph 2, the provisions of paragraph 3 if a Change in Control occurs or
      shall have occurred and the provisions regarding possible adjustment of the
      Total Grant to an Adjusted Grant as provided in this paragraph 4, and Optionee
      (or his/her estate in the case of death) shall have five (5) years from the
      date
      of retirement, death, or disability to exercise his/her Options at the time
      or
      after such Options vest, provided such five (5) year period cannot extend beyond
      ____________________, the date the Options
      expire.  For purposes of this grant, Optionee shall be deemed to have
      retired if his or her employment terminates for any reason on or after his
      or
      her 55th
      birthday.

    


    5.           The
      Options shall be exercisable through Charles Schwab & Co. ("Schwab"), the
      broker selected by the Company to provide services for stock options, or by
      such
      other method as shall be established by the Company from time to
      time.  For information about Schwab's services and how to exercise
      stock options, call 1-800-654-2593 or go online to Schwab Equity Award
      CenterTM at
      http://equityawardcenter.schwab.com for assistance.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    6.           The
      Compensation and Executive Organization Committee of the Board of Directors
      (the
“Committee”), or any successor committee performing similar functions, may from
      time to time impose certain limitations or restrictions on the exercise of
      the
      Options by employees who are subject to employee minimum stockholding
      requirements established by the Committee.  Such limitations,
      restrictions and minimum stockholding requirements are subject to change at
      the
      discretion of the Committee.

    


    7.           Except
      to the extent that the Plan permits exercise in limited circumstances by persons
      other than the Optionee, the Options may not be assigned, transferred, pledged
      or hypothecated in any way whether by operation of law or otherwise, and shall
      not be subject to execution, attachment or similar process.  Any
      attempted assignment, transfer, pledge, hypothecation or other disposition
      of
      the Options contrary to the provisions hereof or of the Plan, and the levy
      of
      any execution, attachment or similar process upon the Options, shall be null
      and
      void and without effect and shall cause the Options to terminate.

    


    8.           By
      accepting the Options granted herewith, Optionee acknowledges and agrees,
      subject to paragraph 12 below, that the Options are granted under and governed
      by the terms and conditions set forth in this document and in the
      Plan.  Any dispute or disagreement which shall arise under, as a
      result of, or in any way relate to the interpretation, construction or
      administration of the Plan or the Options granted thereunder shall be determined
      in all cases and for all purposes by the Committee, or any successor committee,
      and any such determination shall be final, binding and conclusive for all
      purposes.

    


    9.           In
      selling the Company's Common Stock (the "Shares") upon Optionee's exercise
      of
      his/her Options, the Company is fulfilling in full its contractual obligation
      to
      Optionee by making such transfer, and the Company shall have no further
      obligations or duties with respect thereto and is discharged and released from
      the same.  The Company makes no representations to Optionee regarding
      the market price of the Shares or the information which is available to Optionee
      regarding the Shares of the Company.

    


    10.           The
      Optionee may be restricted by the Company in its sole judgment from exercising
      any of the Options to the extent necessary to comply with insider trading or
      other provisions of federal or state securities laws.

    


    11.           The
      grant of Options and all terms and conditions related thereto, including those
      of the Plan, shall be governed by the laws of the Commonwealth of
      Pennsylvania.  The Plan shall control in the event there is a conflict
      between the Plan and these terms and conditions.

    


    12.           The
      terms and conditions set forth in this document shall not, unless expressly
      stated otherwise, modify or supersede the terms and conditions of any other
      plan
      or agreement applicable to employee benefit plans of the
      Company.