exh10_1.htm


    Exhibit
      10.1

    
 

    RETIREMENT
      AGREEMENT AND GENERAL RELEASE

    


    


    This
      Retirement Agreement and General Release (the “Agreement”) is made as of
      the 1st day of
      October 2007, by and between The Hershey Company, a Delaware corporation (the
      “Company”), and Marcella K. Arline (“Employee”), and together with
      the Company, (the “Parties”).

    


    RECITALS

    


    WHEREAS,
      Employee is on the date hereof an employee of the Company holding the office
      of
      Senior Vice President, Chief People Officer; and

    


    WHEREAS,
      Employee was eligible to elect to retire with enhanced benefits under the
      Company’s 2005 Early Retirement Program (“2005 ERP”); and

    


    WHEREAS,
      the Chair of the Compensation and Executive Organization Committee (“Committee”)
      of the Company’s Board of Directors informed Employee in connection with her
      consideration of retirement under the 2005 ERP that if she did not retire under
      such program, the Committee would consider providing her additional benefits
      upon her actual retirement to compensate her for foregone benefits under the
      2005 ERP; and

    


    WHEREAS,
      Employee has informed the Company that she desires to retire from the Company
      (“Retirement”) effective at the close of business on December 31, 2007,
      whereupon Employee’s employment with the Company shall terminate;
      and

    


    WHEREAS,
      Employee has informed the Company that she desires to resign as an officer
      of
      the Company (“Resignation”) effective on or before December 31, 2007 (the
      effective date of her resignation as set forth in a written notice to the
      Secretary of the Company is hereinafter referred to as her “Resignation
      Date”); and

    


    WHEREAS,
      Employee will remain an active employee of the Company following the Resignation
      Date through and including December 31, 2007 and will provide services relating
      to the transition of her duties as Chief People Officer to her successor
      (“Transition Services”) from the Resignation Date to and including
      December 31, 2007 (such period hereinafter called the “Transition
      Period”); and

    


    WHEREAS,
      as set forth on Annex A hereto, the value of certain benefits described thereon
      to which Employee would have been entitled under the 2005 ERP exceeds the
      estimated value of such benefits if employee retired effective December 31,
      2007
      by $983,121.00; and

    


    WHEREAS,
      in order to secure the services of Employee throughout the Transition Period
      and
      in consideration of her not having elected to retire under the 2005 ERP, Company
      is willing to retain Employee during such period as an active employee of the
      Company and to pay her $983,121.00 in addition to all other benefits and
      payments to which she will be entitled upon her retirement; and

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    WHEREAS,
      the Company and Employee desire voluntarily to enter into this Agreement in
      order to set forth the definitive rights and obligations of the Parties during
      the Transition Period and at Retirement; and

    


    WHEREAS,
      the Parties acknowledge that they have entered into this Agreement for their
      mutual cooperation and benefit.

    


    NOW,
      THEREFORE, in consideration of the mutual covenants, commitments and agreements
      set forth herein, and for other good and valuable consideration, the receipt
      and
      sufficiency of which are hereby acknowledged, the Parties, intending to be
      legally bound, hereby agree as follows:

    


    1.           Acknowledgment
      of Retirement Date.  The Parties acknowledge and agree that the
      Retirement shall be effective (the “Retirement Date”) as of the earliest
      of (i) the close of business on December 31, 2007; (ii) in the event Employee
      breaches any of her covenants, agreements or obligations hereunder, the date
      the
      Company provides notice of such breach to Employee; and (iii) Employee’s date of
      death.

    


    2.           Resignation
      from Company Offices. Effective on the Resignation Date, Employee hereby
      voluntarily resigns from all of her positions and offices with the Company
      and
      its subsidiaries, including, without limitation, Senior Vice President, Chief
      People Officer and each office she may occupy of any subsidiary of the
      Company.

    


    3.           Employee’s
      Acknowledgment of Consideration.  Employee specifically
      acknowledges and agrees that certain of the obligations created and payments
      made to her by the Company under this Agreement are promises and payments to
      which she is not otherwise entitled under any law, contract, or benefit plan
      maintained by the Company.

    


    
      	
              4.  

            	
              Transition
                Period and Retirement.

            


    

    


    
      	
               

            	
              4.1

            	
              Employee
                shall remain an active employee of the Company during the Transition
                Period and her employment with the Company shall continue during
                the
                Transition Period on the same basis and under the same terms as existed
                immediately prior to the Resignation Date, except that (i) Employee
                shall
                have no assigned duties and shall perform no services for the Company
                other than the Transition Services as reasonably requested by the
                Company
                from time to time, and (ii) Employee’s coverage under the Company’s
                short-term disability plan, and the Company’s premium contributions under
                the long-term disability plan shall cease as of the Resignation
                Date.

            


    

    


    
      	
               

            	
              4.2

            	
              Following
                Employee’s Retirement Date and on or before January 31, 2008, the Company
                shall pay to Employee as a lump sum bonus, the amount of $983,121.00,
                subject to customary withholding:

            


    

    


    
      	
               

            	
              4.3

            	
              Except
                as provided for in Section 6 below, employee shall be free to seek
                and
                accept other employment after the Retirement
                Date.

            


    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    5.           COBRA
      Rights and Retiree Medical Coverage.

    


    
      	
            	
              5.1.1

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

            


    

    


    
      	
            	
              5.1.2

            	
              As
                an alternative to COBRA coverage, Employee shall be offered the
                opportunity to elect coverage under The Hershey Company Retiree Medical
                and Life Insurance Plan, as amended, for so long as the Company shall
                make
                such plan available.  It is the Parties’ intention that, should
                Employee elect coverage under this Section 5.1.2, such coverage shall
                be
                deemed an alternative medical coverage which satisfies the continuation
                of
                coverage requirements of COBRA.  As such, the period of time
                which Employee receives coverage under the Retiree Medical and Life
                Insurance Plan shall be credited towards Employee’s continuation of
                coverage requirements under COBRA.

            


    

    


    6.           Confidential,
      Proprietary and Privileged Information; Non-Competition.  The
      parties agree the terms and conditions of that certain Long-Term Incentive
      Program Participation Agreement and Mutual Agreement to Arbitrate Claims by
      and
      between the Company and Employee executed by Employee on May 5, 2005
      (“Participation and Arbitration Agreement”), a copy of which is attached
      hereto, 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 years after the Retirement Date regardless
      of
      whether Employee is eligible or not to receive benefits under the
      SERP.

    


    7.           General
      Release and Waiver by Employee.

    


    
      	
               

            	
              7.1

            	
              Employee,
                for and on behalf of herself and each of her heirs, executors,
                administrators, personal representatives, successors and assigns,
                hereby
                acknowledges full and complete satisfaction of and fully and forever
                releases, acquits and discharges the Company, together with its
                subsidiaries and affiliates, and each of its and their past and present
                direct and indirect stockholders, directors, members, partners, officers,
                employees, agents, inside and outside counsel and representatives
                and its
                and their respective heirs, executors, administrators, personal
                representatives, successors and assigns (collectively, the
                “Releasees”), from any and all claims, demands, suits, causes of
                action, liabilities, obligations, judgments, orders, debts, liens,
                contracts, agreements, covenants and


            


    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    causes
      of
      action of every kind and nature, whether known or unknown, suspected or
      unsuspected, concealed or hidden, vested or contingent, in law or equity,
      existing by statute, common law, contract or otherwise, which have existed,
      may
      exist or do exist, through and including the execution and delivery by Employee
      of this Agreement (but not including the Parties’ performance under this
      Agreement), including, without limitation, any of the foregoing arising out
      of
      or in any way related to or based upon:

     

    
      	
               

            	
              7.1.1

            	
              Employee's
                application for and employment with the Company, her being an employee
                of
                the Company, her Resignation or her
                Retirement;

            


    

    


    
      	
               

            	
              7.1.2

            	
              any
                and all claims in tort or contract, and any and all claims alleging
                breach
                of an express or implied, or oral or written, contract, policy manual
                or
                employee handbook;

            


    

    


    
      	
               

            	
              7.1.3

            	
              any
                alleged misrepresentation, coercion, duress, defamation, interference
                with
                contract, intentional or negligent infliction of emotional distress,
                sexual harassment, negligence or wrongful discharge;
                or

            


    

    


    
      	
               

            	
              7.1.4

            	
              any
                federal, state or local statute, ordinance or regulation, including
                but
                not limited to the Fair Labor Standards Act, the Equal Pay Act, Title
                VII
                of the Civil Rights Act of 1964, the Americans With Disabilities
                Act, the
                Family and Medical Leave Act, and the Pennsylvania Human Relations
                Act.

            


    

    


    
      	
               

            	
              7.2

            	
              Employee
                acknowledges and agrees that other than to seek the Company’s performance
                under this Agreement she is waiving all rights to sue or obtain equitable,
                remedial or punitive relief from any or all Releasees of any kind
                whatsoever, including, without limitation, reinstatement, back pay,
                front
                pay, attorneys' fees and any form of injunctive
                relief.  Employee acknowledges and agrees that this waiver and
                release is an essential and material term of this
                Agreement.  Employee further acknowledges and agrees that she
                will not assert any breach of any agreement, plan, or right referred
                to
                herein based on any action or inaction of the Releasees prior to
                the date
                hereof.

            


    

    


    
      	
               

            	
              7.3

            	
              Employee
                understands and intends that this Section 7 constitutes a general
                release,
                and that no reference therein to a specific form of claim, statute
                or type
                of relief is intended to limit the scope of such general release
                and
                waiver; provided, however, notwithstanding any other provision of
                this
                Section 7, the provisions of this Section 7 shall not apply to any
                rights
                Employee may have under the Age Discrimination in Employment Act
                of 1967,
                as amended.

            


    

    


    
      	
               

            	
              7.4

            	
              Employee
                expressly waives all rights afforded by any statute which limits
                the
                effect of a release with respect to unknown claims.  Employee
                understands the significance of her release of unknown claims and
                her
                waiver of statutory protection against a release of unknown
                claims.

            


    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    
 

    
      	
               

            	
              7.5

            	
              Employee
                agrees that she will not be entitled to or accept any benefit from
                any
                claim or proceeding within the scope of this Section 7 general release
                that is filed or instigated by her or on her behalf with any agency, court
                or other government entity.

            


    

    


    8.           Employee’s
      Representations and Covenants Regarding Actions.  Employee
      represents, warrants and covenants to each of the Releasees that at no time
      prior to or contemporaneous with her execution of this Agreement has she filed
      or caused or knowingly permitted the filing or maintenance, in any state,
      federal or foreign court, or before any local, state, federal or foreign
      administrative agency or other tribunal, any charge, claim or action of any
      kind, nature and character whatsoever (“Claim”), known or unknown,
      suspected or unsuspected, which she may now have or has ever had against the
      Releasees which is based in whole or in part on any matter referred to in
      Section 7.1 (or Section 7.3, with the exception of the proviso thereto) above,
      and, to the maximum extent permitted by law Employee is prohibited from filing
      or maintaining, or causing or knowingly permitting the filing or maintaining,
      of
      any such Claim in any such forum.  Employee hereby grants the Company
      her perpetual and irrevocable limited power of attorney with full right, power
      and authority to take all actions necessary to dismiss or discharge any such
      Claim.  Employee further covenants and agrees that she will not
      encourage any person or entity, including but not limited to any current or
      former employee, officer, director or stockholder of the Company, to institute
      any Claim against the Releasees or any of them, and that except as expressly
      permitted by law or administrative policy or as required by legally enforceable
      order she will not aid or assist any such person or entity in prosecuting such
      Claim.

    


    9.           No
      Disparaging Remarks.  Employee hereby covenants to each of the
      Releasees and agrees that she shall not, directly or indirectly, within or
      without the Company, make or solicit or encourage others to make or solicit
      any
      disparaging or negative remarks concerning the Releasees (as defined in Section
      7 of this Agreement), or any of their products, services, businesses or
      activities.  Employee understands that her breach of this Section 9
      and the Company’s delivery to her of notice of such breach shall subject her to
      liability for any damages arising from such remarks and could cause her benefits
      under the SERP to be suspended or terminated.

    


    10.           No
      Conflict of Interest.  Employee hereby covenants and agrees that
      she shall not, directly or indirectly, incur any obligation or commitment,
      or
      enter into any contract, agreement or understanding, whether express or implied,
      and whether written or oral, which would be in conflict with her obligations,
      covenants or agreements hereunder or which could cause any of her
      representations or warranties made herein to be untrue or
      inaccurate.

    


    11.           Confidentiality.  Employee
      represents that she has not discussed, and agrees that she will not discuss,
      this Agreement or the circumstances of her Resignation and/or Retirement, except
      as approved by the Company, and that she will take affirmative steps to avoid
      or
      absent herself from any such discussion even if she is not an active participant
      therein.  EMPLOYEE ACKNOWLEDGES THE SIGNIFICANCE AND MATERIALITY OF
      THIS PROVISION TO THIS AGREEMENT, AND HER UNDERSTANDING THEREOF.

    


    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    12.           Return
      of Corporate Property; Conveyance of Information.  Employee hereby
      covenants and agrees that upon her Resignation, or at such earlier date as
      the
      Company may request in writing, Employee shall immediately return all documents,
      keys, ID cards, credit cards (without further use thereof), desktop and/or
      laptop computer, cell phones, Blackberry devices, and all other items which
      are
      the property of the Company and/or which contain confidential information;
      and,
      in the case of documents, to return any and all materials of any kind and in
      whatever medium evidenced, including, without limitation, all hard disk drive
      data, diskettes, thumb drives, microfiche, photographs, negatives, blueprints,
      printed materials, tape recordings and videotapes.

    


    13.           Remedies.
      In the event that Employee has breached any of her covenants, agreements or
      obligations under this Agreement, the Company shall notify Employee in writing
      at her home address as shown in the Company’s records of the reason for such
      determination.  The notice shall be sent via hand delivery or
      overnight courier.  Employee hereby acknowledges and affirms that in
      the event of any breach by Employee of any of her covenants, agreements and
      obligations hereunder, Employee’s Retirement shall be effective as of the day
      the Company provides notice thereof.  Employee further hereby
      acknowledges and affirms that in the event of such breach monetary damages
      would
      be inadequate to compensate the Releasees or any of
      them.  Accordingly, in addition to other remedies which may be
      available to the Releasees hereunder or otherwise at law or in equity, any
      Releasee shall be entitled to specifically enforce such covenants, obligations
      and restrictions through injunctive and/or equitable relief, in each case
      without the posting of any bond or other security with respect
      thereto.  Should any provision hereof be adjudged to any extent
      invalid by any court or tribunal of competent jurisdiction, each provision
      shall
      be deemed modified to the minimum extent necessary to render it
      enforceable.

    


    14.           Acknowledgment
      of Voluntary Agreement.  Employee hereby acknowledges and affirms
      that she is entering into this Agreement knowingly and voluntarily, without
      coercion or duress of any sort, in order to receive the payments and other
      consideration from the Company as set forth herein.  Employee
      acknowledges and affirms that she has been given adequate opportunity to review
      and consider this Agreement.

    


    15.           Complete
      Agreement; Inconsistencies.  This Agreement, Annex A hereto and
      the Participation and Arbitration Agreement  constitute the complete
      and entire agreement between Employee and  the Company with respect to
      the subject matter hereof, and supersede in their entirety any and all prior
      understandings, commitments, obligations and/or agreements, whether written
      or
      oral, with respect thereto; it being understood and agreed that this Agreement,
      Annex A and the Participation and Arbitration Agreement, including the mutual
      covenants, agreements, acknowledgments and affirmations contained herein and
      therein, are intended to constitute a complete settlement and resolution of
      all
      matters set forth in Section 7 hereof.

    


    16.           No
      Strict Construction.  The language used in this Agreement shall be
      deemed to be the language mutually chosen by the Parties to reflect their mutual
      intent, and no doctrine of strict construction shall be applied against any
      Party.

    


    17.           Third
      Party Beneficiaries.  The Releasees are intended third-party
      beneficiaries of this Agreement, and this Agreement may be enforced by each
      of
      them in accordance with the terms hereof in respect of the rights granted to
      such Releasees hereunder. Except and to the extent set 

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    forth
      in
      the preceding sentence, this Agreement is not intended for the benefit of any
      person other than the Parties, and no such other person shall be deemed to
      be a
      third party beneficiary hereof.  Without limiting the generality of
      the foregoing, it is not the intention of the Company to establish any policy,
      procedure, course of dealing or plan of general application for the benefit
      of
      or otherwise in respect of any other employee, officer, director or stockholder,
      irrespective of any similarity between any contract, agreement, commitment
      or
      understanding between the Company and such other employee, officer, director
      or
      stockholder, on the one hand, and any contract, agreement, commitment or
      understanding between the Company and Employee, on the other hand, and
      irrespective of any similarity in facts or circumstances involving such other
      employee, officer, director or stockholder, on the one hand, and the Employee,
      on the other hand.

    


    18.           Tax
      Withholdings.  Notwithstanding any other provision herein, the
      Company shall be entitled to withhold from any amounts otherwise payable
      hereunder to Employee any amounts required to be withheld in respect of federal,
      state or local taxes.

    


    19.           Governing
      Law.  All issues and questions concerning the construction,
      validity, enforcement and interpretation of this Agreement shall be governed
      by,
      and construed in accordance with, the laws of the Commonwealth of Pennsylvania,
      without giving effect to any choice of law or conflict of law rules or
      provisions (whether of the Commonwealth of Pennsylvania or any other
      jurisdiction) that would cause the application hereto of the laws of any
      jurisdiction other than the Commonwealth of Pennsylvania.  In
      furtherance of the foregoing, the internal law of the Commonwealth of
      Pennsylvania shall control the interpretation and construction of this
      Agreement, even though under any other jurisdiction's choice of law or conflict
      of law analysis the substantive law of some other jurisdiction may ordinarily
      apply.

    


    20.           Severability.  The
      invalidity or unenforceability of any provision of this Agreement shall not
      affect the validity or enforceability of any other provision of this Agreement,
      which shall otherwise remain in full force and effect.

    


    21.           Counterparts.  This
      Agreement may be executed in separate counterparts, each of which shall be
      deemed to be an original and all of which taken together shall constitute one
      and the same agreement.

    


    22.           Successors
      and Assigns.  The Parties’ obligations hereunder shall be binding
      upon their heirs, personal representatives, successors and
      assigns.  The Parties’ rights and the rights of the other Releasees
      shall inure to the benefit of, and be enforceable by, any of the Parties’ and
      Releasees’ respective heirs, personal representatives, successors and
      assigns.

    


    23.           Amendments
      and Waivers.  No amendment or waiver shall be binding upon any
      party hereto unless consented to in writing by such party.

    


    24.           Headings.  The
      headings of the Sections and subsections hereof are for purposes of convenience
      only, and shall not be deemed to amend, modify, expand, limit or in any way
      affect the meaning of any of the provisions hereof.

    


    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    25.           Waiver
      of Jury Trial.  Each of the Parties hereby waives its rights to a
      jury trial of any claim or cause of action based upon or arising out of this
      Agreement or any dealings between the Parties relating to the subject matter
      hereof to the extent the resolution of such matter is not governed by the
      Participation and Arbitration Agreement.  Each of the Parties also
      waives any bond or surety or security upon such bond which might, but for this
      waiver, be required of the other party.  The scope of this waiver is
      intended to be all-encompassing of any and all disputes that may be filed in
      any
      court and that relate to the subject matter of this Agreement, including,
      without limitation, contract claims, tort claims, breach of duty claims, and
      all
      other common law and statutory claims.  EACH OF THE PARTIES
      ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO THIS
      AGREEMENT, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS
      AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED
      FUTURE DEALINGS.  Each of the Parties further represents and warrants
      that she or it knowingly and voluntarily waives her or its jury trial
      rights.  This waiver may not be modified orally, but only in writing,
      and the waiver shall apply to any subsequent amendments, renewals, supplements
      or modifications to this Agreement.  In the event of litigation, this
      Agreement may be filed as a written consent to a trial by the
      court.

    


    *  *  *  *  *

    


    IN
      WITNESS WHEREOF, the Parties have executed this Agreement effective as of the
      date of the first signature affixed below or as otherwise provided in this
      Agreement.

    


    READ
      CAREFULLY BEFORE SIGNING

    


    I
      have
      read this Agreement.  I understand that by executing this Agreement I
      will relinquish any right or demand, other than those created by or otherwise
      set forth in this Agreement, I may have against the Releasees or any of
      them.

    


    


    
      	
              DATED:  November
                11, 2007

            	
              /s/
                Marcella K. Arline

              Marcella
                K. Arline

               

            
	 	 
	 	
              THE
                HERSHEY COMPANY

               

            
	
              DATED: 
                October 11, 2007

            	
              /s/
                Burton H. Snyder

              Burton
                H. Snyder

              Senior
                Vice President, General Counsel

              and
                Secretary

            


    


    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    


     Annex
      A

    Retirement
      Agreement

    Marcella
      K. Arline

     

    ERP
      Make-Up Value

     

    


    
      	
              ERP
                Make-up is sum of difference in minimum benefit provided by ERP less
                estimated benefit as 12/31/07 plus additional vesting of 1,000 RSUs
                as
                provided by ERP

            	 


    

    


    
      	 	 
	
              Retirement
                values

            	
              2005

              ERP

              Value

            	 	
              Est.
                Benefit

              as
                of

              12/31/2007

            	 	
              Difference

              between

              ERP
                and Est.

            
	 	 	 	 	 	 
	
              HRA
                Qualified Pension

            	 	
              $818,907

            	 	 	
              $557,959

            	 	 	
              $260,948

            
	
              DB
                SERP

            	 	
              $4,106,982

            	
              1

            	 	
              $3,430,429

            	2	 	
              $676,553

            
	 	 	
              $4,925,889

            	 	 	
              $3,988,388

            	 	 	
              $937,501

            
	 	 	 	 	 	 	 	 	 
	
              RSU
                value3

            	 	 	 	 	 	 	 	 
	
              1,000
                Units @ $45.62

            	 	 	 	 	 	 	 	
              $45,620

            
	 	 	 	 	 	 	 	 	 
	
              ERP
                Make-up

            	 	 	 	 	 	 	 	
              $983,121

            
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 


    

    


    
      	
              1 
Minimum
                provided by ERP

            	 
	
              2 
Current
                SERP benefit estimated as of 12/31/07 based on rolling 30-year Treasury
                rate (9 months actual and 3 months at current rate)
                4.91%

            	 
	
              3 
Average
                closing price Hershey common stock, Sept 1 - Sept 14, 2007