Exhibit 10.1        Key Employee Incentive Plan

     Exhibit 10.2        Executive Employment Agreement

     Exhibit 12           Computation of Ratio of Earnings to Fixed Charges

-16-

                                                                    EXHIBIT 10.1



                            HERSHEY FOODS CORPORATION

                           KEY EMPLOYEE INCENTIVE PLAN


1.   ESTABLISHMENT AND PURPOSE

     Hershey Foods Corporation (the  "Corporation")  hereby  establishes the Key
     Employee Incentive Plan (the "Plan"). The purpose of the Plan is to provide
     to selected  key  employees of the  Corporation  and its  subsidiaries  (as
     defined  below),  upon whose efforts the  Corporation  is dependent for the
     successful  conduct of its  business,  further  incentive  to continue  and
     increase  their  efforts  as  employees  and to remain in the employ of the
     Corporation and its subsidiaries.

     The Plan  continues  the Annual  Incentive  Program  ("AIP"),  with certain
     modifications,  as in effect under the Corporation's  Management  Incentive
     Plan ("MIP")  established  in 1975 and as amended  thereafter,  pursuant to
     which participants are entitled to receive cash awards based on achievement
     of  performance  goals  during  annual  performance  cycles.  The Plan also
     continues the Long-Term  Incentive Program ("LTIP") portion of the MIP with
     certain modifications. In addition to performance stock units ("Performance
     Stock  Units"),  the LTIP  portion  now also  includes  nonqualified  stock
     options for the purchase of Common Stock  ("Options");  stock  appreciation
     rights ("SARs"); and restricted stock units ("Restricted Stock Units").

     As used  herein,  (i) the  term  "Subsidiary  Corporation"  shall  mean any
     present  or  future   corporation  which  is  or  would  be  a  "subsidiary
     corporation"  of the  Corporation as defined in Section 424 of the Internal
     Revenue Code of 1986 (the "Code"), and (ii) the term "Corporation"  defined
     above  shall  refer  collectively  to  Hershey  Foods  Corporation  and its
     Subsidiary Corporations unless the context indicates otherwise.

2.   STOCK SUBJECT TO THE PLAN

     The aggregate number of shares of the Corporation's Common Stock, $1.00 Par
     Value (the  "Common  Stock"),  which may be covered  by  Performance  Stock
     Units,  Options,  SARs and Restricted  Stock Units granted  pursuant to the
     LTIP portion of the Plan will be  established by the Board of Directors and
     will be subject to  adjustment  in  accordance  with Section 12 below.  The
     shares issued under this Plan may be either authorized but unissued shares,
     treasury  shares  held  by  the  Corporation  or  any  direct  or  indirect
     subsidiary  thereof or shares  acquired  by the  Corporation  through  open
     market  purchases  (whether made before or after any exercise of Options(s)
     or the granting of stock compensation  hereunder) or otherwise. In addition
     to shares of Common Stock actually  issued or  distributed  under the Plan,
     there shall be deemed to have been  issued a number of shares  equal to (i)
     the number of shares of Common Stock in respect of which optionees  utilize
     the manner of  exercise  of,  and  payment  for,  Options  as  provided  in
     Paragraph  7II(g)  of this  Plan,  and (ii) the  number of shares of Common
     Stock which is  equivalent  in value to any cash amounts  distributed  upon
     payment of Performance  Stock Units,  SARs or Restricted  Stock

                                       1


     Units.  For  purposes  of  determining  the charge to be made  pursuant  to
     subpart (ii) against the shares of Common  Stock  subject to the Plan,  the
     value of a share of Common  Stock shall be its Fair Market Value as defined
     in  Paragraph  4 when  awards are made with  respect to  Performance  Stock
     Units,  upon  exercise  of SARs,  and  upon  expiration  of the  applicable
     restriction  period of Restricted Stock Units. Any shares subject under the
     Plan to Performance  Stock Units,  Options,  SARs or Restricted Stock Units
     which, for any reason,  expire or terminate or are forfeited or surrendered
     shall again be available for issuance under the Plan.

3.   ADMINISTRATION

     The  Plan  shall  be  administered  by  the   Compensation   and  Executive
     Organization  Committee  (the  "Committee"),  or any  successor  committee,
     appointed  by and  consisting  solely of members of the Board of  Directors
     (the  "Board")  of the  Corporation,  each  of  whom  qualifies  as  both a
     "nonemployee  director"  within the meaning of Rule 16b-3 or its  successor
     under  the  Securities  Exchange  Act of 1934 (the  "Exchange  Act") and an
     "outside  director"  within  the  meaning  of  Section  162(m) of the Code.
     Committee  members shall not be eligible to  participate  in the Plan.  The
     Board may from time to time remove and appoint  members of the Committee in
     substitution for, or in addition to, members  previously  appointed and may
     fill vacancies,  however caused, in the Committee.  The Committee may adopt
     such rules and regulations as it deems useful in governing its affairs. Any
     action of the  Committee  with  respect to the  administration  of the Plan
     shall be taken by majority vote at a Committee  meeting or written  consent
     of all Committee members.

     Subject to the terms and conditions of the Plan,  the Committee  shall have
     authority:  (i) to construe and interpret Plan  provisions;  (ii) to define
     the terms used in the Plan; (iii) to prescribe, amend and rescind rules and
     regulations  relating to the Plan; (iv) to select  particular  employees to
     participate in the Plan, (v) to determine the terms,  conditions,  form and
     amount of  grants,  distributions  or  payments  made to each  participant,
     including  conditions  upon  and  provisions  for  vesting,   exercise  and
     acceleration  of any  grants,  distributions  or  payments;  (vi)  upon the
     request of a participant in the Plan, to approve and determine the duration
     of leaves  of  absence  which may be  granted  to the  participant  without
     constituting  a termination  of his or her  employment  for purposes of the
     Plan; and (vii) to make all other determinations necessary or advisable for
     the  administration and operation of the Plan. The Committee shall have the
     right to impose varying terms and conditions  with respect to each grant or
     award. All determinations and  interpretations  made by the Committee shall
     be final,  binding and  conclusive on all  participants  and on their legal
     representatives and beneficiaries.

4.   FAIR MARKET VALUE

     As used in the Plan (unless a different  method of  calculation is required
     by  applicable  law, and except as otherwise  specifically  provided in any
     Plan  provision),  "Fair Market  Value" on or as of any date shall mean (i)
     the  closing  price of the Common  Stock as  reported in the New York Stock
     Exchange   Composite   Transactions   Report  (or  any  other  consolidated
     transactions reporting system which subsequently may replace such Composite
     Transactions   Report)  for

                                       2




     the New York Stock Exchange trading day immediately preceding such date, or
     if there  are no sales on such  date,  on the next  preceding  day on which
     there were sales,  or (ii) in the event that the Common  Stock is no longer
     listed for trading on the New York Stock Exchange,  an amount determined in
     accordance with standards adopted by the Committee.

5.   ELIGIBILITY AND PARTICIPATION

     Key employees of the Corporation or of any of its Subsidiary  Corporations,
     including  officers and directors who are regular employees but not members
     of the Committee,  who in the opinion of the Committee are in a position to
     contribute   significantly  to  the  success  of  the  Corporation  or  any
     Subsidiary  Corporation,  division  or  operating  unit  thereof,  shall be
     eligible for selection to participate in the Plan. In making this selection
     and in  determining  the form  and  amount  of  grants,  distributions  and
     payments under the Plan,  the Committee  shall take into account the duties
     of the respective employees,  their present and potential  contributions to
     the success of the Corporation or any Subsidiary  Corporation,  division or
     operating  unit  thereof,  and such other factors as the Committee may deem
     relevant in  connection  with  accomplishing  the purposes of the Plan.  An
     employee  who  has  been  selected  to  participate  may,  if he or  she is
     otherwise eligible,  receive more than one grant from time to time, and may
     be granted any  combination  of  contingent  target grants under the AIP or
     under the LTIP components of the Plan, as the Committee shall determine.

6.   ANNUAL INCENTIVE PROGRAM

     The Committee may from time to time,  subject to the provisions of the Plan
     and such  other  terms  and  conditions  as the  Committee  may  determine,
     establish  contingent target grants for those eligible employees it selects
     to participate in the AIP. Each such contingent  grant may be, but need not
     be, evidenced by a written instrument,  and shall be determined in relation
     to the  participant's  level of  responsibility  in the Corporation and the
     competitive  compensation  practices  of other major  businesses,  and such
     other factors as are deemed appropriate by the Committee.

     (a) Awards actually earned by and paid to AIP  participants  ("AIP Awards")
         will be based  primarily upon  achievement of performance  goals over a
         one-year performance cycle as approved by the Committee.

     (b) The Committee, within the limits of the Plan, shall have full authority
         and  discretion  to  determine  the  time  or  times  of   establishing
         contingent  target  grants;  to select  from among those  eligible  the
         employees to receive  awards;  to review and certify the achievement of
         performance  goals;  to  designate  levels  of  awards  to be earned in
         relation to levels of achievement of performance  goals;  to adopt such
         financial  and  nonfinancial  performance  or  other  criteria  for the
         payment  of  awards  as it may  determine  from  time to time;  to make
         awards;  and to  establish  such other  measures as may be necessary to
         achieve the  objectives  of the Plan.  The  financial or  non-financial
         performance goals established by the Committee may be based upon one or
         more of the following: earnings per share, return on net assets, market
         share,  control of costs, net sales,  cash flow,  economic  value-added
         measures, sales growth, earnings growth, stock price, return on equity,

                                       3


         improvements in financial ratings,  regulatory compliance,  achievement
         of balance sheet or income statement objectives, or any other objective
         goals established by the Committee (the "Performance Factors").

     (c) The maximum amount any  participant can receive as an AIP Award for any
         calendar year shall not exceed $2,100,000.

     (d) AIP Awards as earned  under the terms of the Plan shall be paid in cash
         and may exceed or be less than the contingent  target  grants,  subject
         nevertheless to the maximum award limit set forth in  subparagraph  (c)
         above. Payment shall normally be made as soon as possible following the
         close of the year, but payment of all or any portion may be deferred by
         participants with the approval of the Committee.

7.   LONG-TERM INCENTIVE PROGRAM

     The LTIP consists of the following four components:

     I.  PERFORMANCE STOCK UNITS

         The Committee may, subject to the provisions of the Plan and such other
         terms and conditions as the Committee may determine,  grant Performance
         Stock  Units  to  reflect  the  value  of   contingent   target  grants
         established for each eligible employee selected for participation. Each
         grant of Performance  Stock Units may be, but need not be, evidenced by
         a written instrument. Such contingent target grants shall be determined
         in  relation  to  the  employee's  level  of   responsibility   in  the
         Corporation or any Subsidiary  Corporation,  division or operating unit
         thereof,  and the  competitive  compensation  practices  of other major
         businesses.

         (a)  Awards actually earned by and paid to holders of Performance Stock
              Units ("PSU Awards") will be based upon achievement of performance
              goals over performance  cycles as approved by the Committee.  Such
              performance  cycles  each  shall  cover such  period of time,  not
              exceeding  five years,  as the  Committee  from time to time shall
              determine.

         (b)  The  Committee,  within  the  limits of the Plan,  shall have full
              authority  and  discretion  to  determine  the  time or  times  of
              establishing   contingent   target  grants  and  the  granting  of
              Performance  Stock Units;  to select from among those eligible the
              employees  to  receive  PSU  Awards;  to review  and  certify  the
              achievement of performance goals; to designate levels of awards to
              be earned in  relation  to levels of  achievement  of  performance
              goals;  to adopt such  financial and  nonfinancial  performance or
              other  criteria for the payment of PSU Awards as it may  determine
              from time to time;  to make awards;  and to  establish  such other
              measures as may be necessary to the  objectives  of the Plan.  The
              performance goals established by the Committee may be based on one
              or more of the Performance Factors.

                                       4


         (c)  Payments of PSU Awards  shall be made in shares of Common Stock or
              partly  in cash as the  Committee  in its  sole  discretion  shall
              determine and shall be charged against the shares  available under
              the LTIP portion of the Plan as provided in Paragraph 2; provided,
              however,  that no  fractional  shares shall be issued and any such
              fraction will be  eliminated  by rounding  downward to the nearest
              whole share. In any case in which actual payment of a PSU Award is
              deferred as  provided  below,  a charge  will be made  against the
              available shares for the number of shares equivalent to the dollar
              amount of the deferred PSU Award.

         (d)  PSU Awards as earned  under the terms of the Plan may exceed or be
              less than the contingent target grants.  Payment shall normally be
              made as soon as  possible  following  the close of the  year,  but
              payment of all or any portion may be deferred by participants with
              the approval of the Committee.

         (e) The maximum amount a participant  can receive as a PSU Award in any
calendar year is $2,430,000.

     II. STOCK OPTIONS

         The Committee may, from time to time,  subject to the provisions of the
         Plan and such other terms and  conditions  as it may  determine,  grant
         nonqualified  Options  to  purchase  shares  of  Common  Stock  of  the
         Corporation  to employees  eligible to  participate  in the Plan.  Each
         grant of an Option shall be on such terms and conditions and be in such
         form as the  Committee  may from time to time  approve,  subject to the
         following:

         (a)  The exercise  price per share with respect to each Option shall be
              determined by the Committee in its sole discretion,  but shall not
              be less than 100% of the Fair Market  Value of the Common Stock as
              of the date of the grant of the Option.

         (b)  Options  granted  under  the Plan  shall be  exercisable,  in such
              installments  and for such  periods,  as shall be  provided by the
              Committee  at the  time of  granting,  but in no event  shall  any
              Option granted extend for a period in excess of ten years from the
              date of grant.

         (c)  The maximum  number of shares of Common  Stock  covered by Options
              granted to a  participant  for any calendar  year shall not exceed
              250,000.

         (d)  Among other  conditions  that may be imposed by the Committee,  if
              deemed  appropriate,  are  those  relating  to (i) the  period  or
              periods and the conditions of exercisability  of any Option;  (ii)
              the minimum  periods  during  which  grantees  of Options  must be
              employed, or must hold Options before they may be exercised; (iii)
              the minimum  periods  during which shares  acquired  upon exercise
              must be held  before  sale or transfer  shall be  permitted;  (iv)
              conditions  under  which such  Options or shares may be subject to
              forfeiture;  and (v) the  frequency  of exercise or the minimum or
              maximum number of shares that may be acquired at any one time.

                                       5


         (e)  Exercise  of an Option  shall be by  written  notice  stating  the
              election  to  exercise  in the form and manner  determined  by the
              Committee.

         (f)  The  purchase  price upon  exercise of any Option shall be paid in
              full by making  payment  (i) in cash;  (ii) in whole or in part by
              the delivery of a certificate or  certificates of shares of Common
              Stock of the Corporation, valued at its then Fair Market Value; or
              (iii) by a combination of (i) and (ii).

         (g)  Notwithstanding  subparagraph  (e) above,  any  optionee  may make
              payment of the Option price through a simultaneous exercise of his
              or her Option and sale of the shares thereby acquired  pursuant to
              a brokerage  arrangement  approved in advance by the  Committee to
              assure its conformity with the terms and conditions of the Plan.

         (h)  The  Committee may require the  surrender of  outstanding  Options
              as a condition to the grant of new Options.

         (i)  Notwithstanding  any other  provision of the Plan or of any Option
              agreement  between  the  Corporation  and an  employee,  upon  the
              occurrence of a Change in Control, each outstanding Option held by
              a  participant  who  is an  employee  of  the  Corporation  or any
              Subsidiary  Corporation  or  who  retired  while  employed  by the
              Corporation  or any  Subsidiary  Corporation  shall  become  fully
              vested and  exercisable  notwithstanding  any vesting  schedule or
              installment schedule relating to the exercisability of such Option
              contained  in  the  applicable   Option   agreement  or  otherwise
              established at the time of grant of the Option.

         (j)  For purposes of this Plan, a "Change in Control" means:

              (1) Individuals  who, on June 8, 1999,  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 June 8, 1999, 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  Corporation  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
                  Corporation  as a result of an actual or  threatened  election
                  contest (as  described in Rule 14a-11 under the Exchange  Act)
                  ("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 Section  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
                  Corporation  entitled  to vote  generally  in the

                                       6




                  election of directors (the "Outstanding  Corporation  Voting
                  Power") shall be deemed to be an Incumbent Director; or

              (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  Corporation  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 Corporation  (the
                  "Outstanding  Corporation  Stock")  or  (ii)  the  Outstanding
                  Corporation  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 Corporation 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  Corporation  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  Corporation or by any Subsidiary  Corporation  for the
                  benefit of the Corporation  and/or its employees or those of a
                  Subsidiary  Corporation or by any Subsidiary  Corporation  for
                  the benefit of the  Corporation  and/or its employees or those
                  of a Subsidiary  Corporation;  (iii) any employee benefit plan
                  (or related trust)  sponsored or maintained by the Corporation
                  or any  Subsidiary  Corporation;  (iv) the  Corporation or any
                  Subsidiary  Corporation  or (v)  any  underwriter  temporarily
                  holding securities pursuant to an offering of such securities;
                  or

              (3) The approval by the  stockholders  of the  Corporation  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 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

                                       7


              (4) The approval by the stockholders of the Corporation 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.

              For purposes of this Plan, "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

         (k)  For purposes of this Plan, a "Potential Change in Control" means:

              (1) The Hershey  Trust by action of any of the Board of  Directors
                  of Hershey  Trust  Company;  the Board of  Managers  of Milton
                  Hershey School; the Investment Committee of the Hershey Trust;
                  and/or any of the 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 (i) an offer made to the Hershey
                  Trust to purchase any number of its shares in the  Corporation
                  such that if the Hershey  Trust  accepted  such offer and sold
                  such number of shares in the  Corporation  the  Hershey  Trust
                  would  no  longer  have  more  than  50%  of  the  Outstanding
                  Corporation  Voting  Power,  (ii) an  offering  by the Hershey
                  Trust of any number of its shares in the  Corporation for sale
                  such that if such  sale were  consummated  the  Hershey  Trust
                  would  no  longer  have  more  than  50%  of  the  Outstanding
                  Corporation  Voting Power or (iii) entering into any agreement
                  or understanding  with a person or entity that would lead to a
                  Change in Control; or

              (2) The Board approves a transaction  described in subsection (2),
                  (3) or (4) of the definition of a Change in Control  contained
                  in subparagraph (j) of Paragraph 7II hereof.


         (l)  In the event that a transaction which would constitute a Change in
              Control if approved by the  stockholders  of the Corporation is to
              be  submitted  to  such  stockholders  for  their  approval,  each
              participant  who is an  employee  and who holds an Option  granted
              under the Plan at the time  scheduled for the taking of such vote,
              whether or not then exercisable, shall have the right to receive a
              notice at least ten (10)  business days prior to the date on which
              such vote is to be taken.  Such notice shall set forth the date on
              which such vote of  stockholders  is to be taken, a description of
              the transaction  being

                                       8



               proposed to stockholders for such approval,  a description of the
               provisions of subparagraph (i) of Paragraph 7II of the Plan and a
               description  of the  impact  thereof on such  participant  in the
               event that such  stockholder  approval is  obtained.  Such notice
               shall  also set forth the  manner in which and price at which all
               Options  then held by each such  participant  could be  exercised
               upon the obtaining of such stockholder approval.

     III.STOCK APPRECIATION RIGHTS

         The Committee may, from time to time,  subject to the provisions of the
         Plan  and  such  other  terms  and  conditions  as  the  Committee  may
         determine, grant SARs to employees eligible to participate in the Plan.
         SARs may, but need not be  evidenced  by an  agreement  executed by the
         Corporation  and the  holder,  and shall be  subject  to such terms and
         conditions  consistent with the Plan as the Committee shall impose from
         time to time, including the following:

         (a)  SARs may, but need not,  relate to Options granted under the Plan,
              as the Committee  shall  determine  from time to time. In no event
              shall any SARs granted  extend for a period in excess of ten years
              from the date of grant.

         (b)  A holder shall  exercise his or her SARs by giving  written notice
              of  such  exercise  in  the  form  and  manner  determined  by the
              Committee, and the date upon which such written notice is received
              by the Corporation shall be the exercise date for the SARs.

         (c)  A holder of SARs shall be entitled to receive  upon  exercise  the
              excess of the Fair Market  Value of a share of Common Stock at the
              time of exercise over the Fair Market Value of a share at the time
              the SARs were  granted,  multiplied  by the number of shares  with
              respect to which the SARs relate.

         (d)  In the sole discretion of the Committee, the amount payable to the
              holder upon exercise of SARs may be paid either in Common Stock or
              in cash or in a combination  thereof. To the extent paid in Common
              Stock,  the value of the Common  Stock  that shall be  distributed
              shall be the Fair  Market  Value of a share of Common  Stock  upon
              exercise  of the  SARs  as  provided  in  Paragraph  2;  provided,
              however,  that no  fractional  shares shall be issued and any such
              fraction will be  eliminated  by rounding  downward to the nearest
              whole share.

         (e)  In the sole discretion of the Committee,  SARs related to specific
              Options may be exercisable only upon surrender of all or a portion
              of the related Option, or may be exercisable, in whole or in part,
              only at such times and to the extent  that the  related  Option is
              exercisable,  and the number of shares purchasable pursuant to the
              related  Option  may be  reduced  to the  extent of the  number of
              shares with respect to which the SARs are exercised.

         (f)  In lieu of  receiving  payment  at the time of  exercise  of SARs,
              payment of all or any portion  may be deferred by the  participant
              with the approval of the Committee.

                                       9


         (g)  The maximum  number of SARs  granted to a  participant  during any
              calendar year shall not exceed 250,000.

     IV. RESTRICTED STOCK UNITS

         The Committee may, from time to time,  subject to the provisions of the
         Plan and such other terms and  conditions  as it may  determine,  grant
         Restricted  Stock Units to  employees  eligible to  participate  in the
         Plan.  Each  grant of  Restricted  Stock  Units may be, but need not be
         evidenced by a written instrument.  The grant of Restricted Stock Units
         shall state the number of Restricted  Stock Units covered by the grant,
         and shall contain such terms and  conditions and be in such form as the
         Committee may from time to time approve, subject to the following:

         (a) Each Restricted  Stock Unit shall be equivalent in value to a share
of Common Stock.

         (b)  Vesting of each grant of Restricted  Stock Units shall require the
              holder  to  remain  in  the  employment  of the  Corporation  or a
              Subsidiary  Corporation  for a prescribed  period (a  "Restriction
              Period").  The Committee shall determine the Restriction Period or
              Periods which shall apply to the shares of Common Stock covered by
              each  grant  of  Restricted  Stock  Units.   Except  as  otherwise
              determined by the Committee and provided in the written instrument
              granting  the  Restricted  Stock  Units,  and except as  otherwise
              provided in Paragraph 8, all  Restricted  Stock Units granted to a
              participant under the Plan shall terminate upon termination of the
              participant's  employment  with the  Corporation or any Subsidiary
              Corporation  before the end of the  Restriction  Period or Periods
              applicable to such Restricted  Stock Units,  and in such event the
              holder  shall not be entitled to receive any payment  with respect
              to those  Restricted  Stock Units.  The Committee may also, in its
              sole  discretion,  establish  other terms and  conditions  for the
              vesting of Restricted Stock Units,  including conditioning vesting
              on the  achievement  of one or  more of the  Performance  Factors.
              Notwithstanding any other provisions of the Plan or of any written
              instrument granting Restricted Stock Units, upon the occurrence of
              a Change in Control as defined in  subparagraph  (j) of  Paragraph
              7II hereof,  all  restrictions on Restricted Stock Units held by a
              participant   who  is  an  employee  of  the  Corporation  or  any
              Subsidiary Corporation shall lapse.

         (c)  Upon expiration of the Restriction Period or Periods applicable to
              each grant of Restricted  Stock Units,  the holder shall,  without
              payment on his part,  be entitled to receive  payment in an amount
              equal to the  aggregate  Fair Market Value of the shares of Common
              Stock covered by such grant upon such expiration. Such payment may
              be made in cash,  in shares of Common Stock equal to the number of
              Restricted Stock Units with respect to which such payment is made,
              or in any  combination  thereof,  as  the  Committee  in its  sole
              discretion shall  determine.  Any payment in cash shall reduce the
              number  of  shares of  Common  Stock  available  under the Plan as
              provided in Paragraph 2, to the extent of the number of Restricted
              Stock  Units to which  such  payment  relates.  Further  upon such
              expiration, the holder shall be entitled to receive

                                       10



               a cash  payment  in an  amount  equal to each cash  dividend  the
               Corporation  would  have paid to such  holder  during the term of
               those  Restricted Stock Units as if the holder had been the owner
               of  record  of  the  shares  of  Common  Stock  covered  by  such
               Restricted Stock Units on the record date for the payment of such
               dividend.

         (d)  In lieu of  receiving  payment  at the time of  expiration  of the
              Restriction  Period or Periods,  payment of all or any portion may
              be deferred by the participant with the approval of the Committee.

         (e)  The  maximum  number  of  shares  of  Common  Stock  as  to  which
              Restricted  Stock  Units may be granted to a  participant  for any
              calendar year shall not exceed 50,000.

8.   TERMINATION OF EMPLOYMENT

     Upon  termination of employment  with the  Corporation of any  participant,
     such  participant's  rights with respect to any  contingent  target  grants
     under the AIP, or any Performance Stock Units,  Options, SARs or Restricted
     Stock Units granted under the LTIP, shall be as follows:

     (a) In the event that the  participant  is  terminated or discharged by the
         Corporation  for  any  reason,  except  as and to the  extent  provided
         otherwise by the  Committee in writing,  the  participant's  rights and
         interests  under the Plan shall  immediately  terminate  upon notice of
         termination of employment. Upon the occurrence of a Potential Change in
         Control (as defined in  subparagraph  (k) of Paragraph  7II hereof) and
         for a period  of one year  thereafter,  and  upon the  occurrence  of a
         Change in Control  (as defined in  subparagraph  (j) of  Paragraph  7II
         hereof), the following special provisions and notice requirements shall
         be applicable in the event of the  termination of the employment of any
         participant  holding  an Option  under the Plan:  (i) in no event may a
         notice of  termination  of  employment  be issued to such a participant
         unless at least ten (10) business  days prior to the effective  date of
         such  termination  the participant is provided with a written notice of
         intent to terminate the  participant's  employment  which sets forth in
         reasonable detail the reason for such intent to terminate,  the date on
         which such  termination  is to be effective,  and a description  of the
         participant's  rights under this Plan and under the agreements granting
         such Option or Options,  including  the fact that no such Option may be
         exercised after such  termination has become  effective and the manner,
         extent and price at which all Options then held by such participant may
         be   exercised;   and  (ii)  such  notice  of  intent  to  terminate  a
         participant's   employment   shall  not  be  considered  a  "notice  of
         termination of  employment"  for purposes of the first sentence of this
         Paragraph 8 (a). This Paragraph 8 (a) is intended only to provide for a
         requirement  of notice to terminate  upon the  occurrence of the events
         set forth herein and shall not be construed to create an  obligation of
         continued  employment  or a contract of  employment in any manner or to
         otherwise  affect or limit the  Corporation's  ability to terminate the
         employment of any participant holding an Option under the Plan.

     (b) If a participant  terminates  employment  with the  Corporation  as the
         result,  in the sole judgment of the Committee,  of his or her becoming
         totally disabled (in which event termination will be deemed to occur on
         the date the Committee makes such

                                       11



          determination),  or if a  participant  should  die  or  (except  as to
          Restricted  Stock Units) retire while  employed by the  Corporation or
          any of its Subsidiary  Corporations,  then the  participant or, as the
          case may be, the person or persons to whom the participant's  interest
          under  the  Plan  shall  pass by will or by the  laws of  descent  and
          distribution (the "Estate"), shall have the following rights:

         (i)  the  grantee  of a  contingent  AIP grant or the  Estate  shall be
              entitled to receive payment of an AIP award as, and to the extent,
              determined by the Committee;

         (ii) if the holder of Performance  Stock Units shall have been employed
              for at least two-thirds of the related  performance cycle prior to
              the date of  termination  or  death,  then,  except  as  otherwise
              provided  in  the  written  instrument  (if  any)  evidencing  the
              Performance  Stock Units,  and subject to any further  adjustments
              the Committee may make in its absolute discretion, the participant
              or the Estate shall be entitled to receive  payment of a PSU Award
              upon the  expiration of the related  performance  cycle,  provided
              that such  award  shall be  adjusted  by  multiplying  the  amount
              thereof by a fraction,  the numerator of which shall be the number
              of full  and  partial  calendar  months  between  the  date of the
              beginning  of  each  such  performance   cycle  and  the  date  of
              termination  or death,  and the  denominator of which shall be the
              number of full and  partial  calendar  months from the date of the
              beginning  of  the  performance  cycle  to the  end  of  the  said
              performance cycle;

         (iii)except as otherwise  provided in the terms and  conditions  of the
              stock  option or SAR  grant,  the  holder or the  Estate  shall be
              entitled to exercise  (provided any vesting  requirement  has been
              satisfied  as of the date of  exercise)  any  Option  or SAR for a
              period of five years  (three  years in the case of options or SARs
              granted prior to 1997) from such date of death,  total  disability
              or  retirement,  or for such longer  period as the  Committee  may
              determine  in the case of  financial  hardship  or  other  unusual
              circumstances  (subject to the maximum exercise period for Options
              and  SARs  specified  in  Paragraph  7II(b)  and  7III(a)  hereof,
              respectively);

         (iv) except as otherwise provided in the written instrument  evidencing
              the Restricted Stock Units, upon death or termination due to total
              disability  the holder or the Estate  shall be entitled to receive
              payment in respect of the  Restricted  Stock Units,  provided that
              such Units shall be adjusted by multiplying  the amount thereof by
              a fraction, the numerator of which shall be the number of full and
              partial  calendar  months  between the date of grant of such Units
              and the date of death or termination, and the denominator of which
              shall be the number of full and partial  calendar  months from the
              date of the  grant  to the  end of the  Restriction  Period.  Upon
              retirement,  the  participant's  rights with respect to Restricted
              Stock Units shall immediately terminate.

     (c) In the  event of  resignation  by the  participant,  the  participant's
         rights and interests  under the Plan shall  immediately  terminate upon
         such resignation;  provided, however, that the Committee shall have the
         absolute  discretion  to review the  reasons and  circumstances  of the
         resignation  and to  determine  whether,  alternatively,  and  to  what
         extent,  if any,  the  participant  may  continue to hold any rights or
         interests under the Plan.

                                       12


     (d) A transfer of a participant's  employment without an intervening period
         from the Corporation to a Subsidiary Corporation or vice versa, or from
         one  Subsidiary   Corporation  to  another,   shall  not  be  deemed  a
         termination of employment.

     (e) The  Committee  shall  be  authorized  to make all  determinations  and
         calculations required by this Paragraph 8, including any determinations
         necessary to establish the reason for  terminations  of employment  for
         purposes of the Plan, which  determinations  and calculations  shall be
         conclusive and binding on any affected participants and Estates.

9.   ADDITIONAL REQUIREMENTS

     No  Performance  Stock  Units,  Options,  SARs or  Restricted  Stock  Units
     (hereinafter collectively an "Interest") granted pursuant to the Plan shall
     be exercisable or realized in whole or in part, and the  Corporation  shall
     not be obligated  to sell,  distribute  or issue any shares  subject to any
     such Interest,  if such exercise and sale would,  in the opinion of counsel
     for the  Corporation,  violate the  Securities  Act of 1933, as amended (or
     other Federal or state statutes having similar requirements). Each Interest
     shall be subject to the further  requirement that, if at any time the Board
     of  Directors  shall  determine  in its  discretion  that  the  listing  or
     qualification  of the shares relating or subject to such Interest under any
     securities  exchange  requirements  or under  any  applicable  law,  or the
     consent or approval of any  governmental  regulatory  body, is necessary or
     desirable as a condition  of, or in connection  with,  the granting of such
     Interest or the distribution or issue of shares  thereunder,  such Interest
     may  not  be   exercised   in  whole  or  in  part  unless  such   listing,
     qualification,  consent or  approval  shall have been  effected or obtained
     free of any condition not acceptable to the Board of Directors.

     Interests may be subject to restrictions as to resale or other  disposition
     and to such other  provisions as may be  appropriate to comply with Federal
     and state securities laws and stock exchange requirements, and the exercise
     of any Interest or entitlement to payment thereunder may be contingent upon
     receipt  from the holder  (or any other  person  permitted  by this Plan to
     exercise  any  Interest  or  receive  any  distribution   hereunder)  of  a
     representation  that at the  time of such  exercise  it is his or her  then
     present  intention to acquire the shares being  distributed  for investment
     and not for resale.

10.  NONTRANSFERABILITY

     Unless  otherwise  approved  by  the  Committee,   contingent  AIP  grants,
     Performance Stock Units,  Options,  SARs and Restricted Stock Units granted
     under  the Plan to an  employee  shall be  nonassignable  and  shall not be
     transferable  by him or her  otherwise  than by will or the laws of descent
     and distribution, and shall be exercisable, during the employee's lifetime,
     only by the employee or the employee's guardian or legal representative.

                                       13


11.  DISCLAIMER OF RIGHTS

     No provision in the Plan or any contingent  target AIP grants,  Performance
     Stock Units,  Options,  SARs or Restricted  Stock Units granted pursuant to
     the Plan shall be construed to confer upon the  participant any right to be
     employed  by  the  Corporation  or by  any  Subsidiary  Corporation,  or to
     interfere in any way with the right and authority of the Corporation or any
     Subsidiary  Corporation  either to increase or decrease the compensation of
     the participant at any time, or to terminate any relationship of employment
     between  the  participant  and  the  Corporation  or any of its  Subsidiary
     Corporations.

     Participants  under the Plan shall have none of the rights of a stockholder
     of the  Corporation  with respect to shares  subject to  Performance  Stock
     Units, Options, SARs or Restricted Stock Units unless and until such shares
     have been issued to him or her.

12.  STOCK ADJUSTMENTS

     In the event that the shares of Common  Stock,  as  presently  constituted,
     shall be changed into or exchanged for a different number or kind of shares
     of stock or other  securities of the Corporation or of another  corporation
     (whether   by   reason   of   merger,   consolidation,    recapitalization,
     reclassification,  stock split, combination of shares or otherwise),  or if
     the number of such shares of Common  Stock shall be  increased  through the
     payment of a stock dividend, or a dividend on the shares of Common Stock of
     rights or warrants to purchase securities of the Corporation shall be made,
     then there shall be substituted  for or added to each share available under
     and  subject to the Plan as  provided  in  Paragraph  2 hereof,  and to the
     limitations set forth in Paragraphs 7II (c); 7III (g) and 7IV (e), and each
     share  theretofore  appropriated or thereafter  subject or which may become
     subject to Performance Stock Units, Options, SARs or Restricted Stock Units
     under the Plan, the number and kind of shares of stock or other  securities
     into which each  outstanding  share of Common  Stock shall be so changed or
     for which each such share  shall be  exchanged  or to which each such share
     shall be entitled,  as the case may be.  Outstanding  Options and SARs also
     shall be  appropriately  amended  as to  price  and  other  terms as may be
     necessary to reflect the foregoing  events. In the event there shall be any
     other  change  in the  number or kind of the  outstanding  shares of Common
     Stock,  or of any stock or other  securities  into which the  Common  Stock
     shall have been changed or for which it shall have been exchanged,  then if
     the Board of Directors shall, in its sole  discretion,  determine that such
     change  equitably  requires an adjustment in the shares available under and
     subject to the Plan, or in any Performance  Stock Units,  Options,  SARs or
     Restricted  Stock Units  theretofore  granted or which may be granted under
     the  Plan,  such  adjustments   shall  be  made  in  accordance  with  such
     determination.

     No fractional  shares of Common Stock or units of other securities shall be
     issued pursuant to any such  adjustment,  and any fractions  resulting from
     any such adjustment  shall be eliminated in each case by rounding  downward
     to the nearest whole share or unit.

                                       14


13.  TAXES

     The  Corporation  shall be  entitled  to  withhold  the  amount  of any tax
     attributable to any amounts  payable or shares of Common Stock  deliverable
     under the Plan. The person  entitled to any such  delivery,  whether due to
     the settlement of PSUs, the exercise of an Option or SAR, or the vesting of
     Restricted  Stock Units,  or any other  taxable event may, by notice to the
     Corporation, elect to have such withholding satisfied by a reduction of the
     number of shares otherwise so deliverable (a "Stock Withholding Election"),
     or by delivery of shares of Stock  already owned by the  Participant,  with
     the amount of shares subject to such reduction or delivery to be calculated
     based on the Fair Market Value on the date of such taxable event. Reporting
     Persons may make a Stock  Withholding  Election only in accordance with the
     methods then permitted under applicable  Securities and Exchange Commission
     interpretations.

14.  EFFECTIVE DATE AND TERMINATION OF PLAN

     The Plan shall become  effective upon adoption by the Board of Directors of
     the  Corporation,  provided such adoption is approved by the  stockholders,
     within  twelve  months of  adoption by the Board of  Directors.  Contingent
     target AIP grants,  Performance Stock Units,  Options,  SARs and Restricted
     Stock Units  under this Plan,  granted  before  approval of the Plan by the
     stockholders,  shall be granted  subject to such  approval and shall not be
     exercisable or payable before such approval.

     The  Board of  Directors  at any  time may  terminate  the  Plan,  but such
     termination  shall  not alter or impair  any of the  rights or  obligations
     under any contingent target AIP grants,  Performance Stock Units,  Options,
     SARs or Restricted  Stock Units  theretofore  granted under the Plan unless
     the affected participant shall so consent.

15.  PRIOR PLAN

     Effective  upon the  adoption  of this Plan by the Board of  Directors,  no
     additional  grants  of  contingent  target  grants  under  the  AIP  or  of
     Performance  Stock  Units shall be made under the MIP;  provided,  that any
     payments  of AIP awards or  deferrals  thereof  made with  respect to prior
     grants of contingent  AIP awards,  any prior grants of any LTIP Units,  and
     any payments of LTIP awards or deferrals  thereto made with respect to such
     prior grants, shall not be affected.  Notwithstanding the foregoing, to the
     extent the remaining  shares reserved for use under the LTIP portion of the
     MIP are  insufficient  for any LTIP awards  under  performance  cycles that
     began  prior to January 1, 1987,  shares  available  under this Plan may be
     used for such purpose.

16.  APPLICATION OF FUNDS

     The proceeds  received by the  Corporation  from the sale of capital  stock
     pursuant to Options will be used for general corporate purposes.

                                       15


17.  NO OBLIGATION TO EXERCISE OPTION OR SAR

     The  granting  of an  Option or SAR shall  impose  no  obligation  upon the
     optionee to exercise such Option or SAR.

18.  AMENDMENT

     The Board of Directors by majority vote, at any time and from time to time,
     may amend the Plan in such respects as it shall deem advisable,  to conform
     to  any   change  in  any   applicable   law  or  in  any  other   respect.
     Notwithstanding the foregoing, the Plan may not be terminated or amended in
     a manner adverse to the interests of any  participant  (without the consent
     of the participant)  either: (a) after a Potential Change in Control occurs
     and for one (1) year  following  the  cessation  of a  Potential  Change in
     Control,  or (b) for a two-year period beginning as of the date of a Change
     in Control (the  "Coverage  Period").  Upon the  expiration of the Coverage
     Period,  subparagraph  (l) of Paragraph 7II of the Plan and Paragraph 8 (a)
     of the Plan may not be amended in any manner  that would  adversely  affect
     any participant without the consent of the participant.



                                       16

                                                                    Exhibit 10.2


                         EXECUTIVE EMPLOYMENT AGREEMENT


         THIS EXECUTIVE  EMPLOYMENT  AGREEMENT (the "Agreement") is entered into
as of March 12, 2001 (the "Effective Date"),  between Hershey Foods Corporation,
a Delaware  corporation together with its successors and assigns permitted under
this Agreement ("Employer"), and Richard H. Lenny (the "Executive").

         1. TERM.  Subject to earlier  termination as provided herein,  Employer
hereby  agrees to employ  and  continue  in its employ  the  Executive,  and the
Executive  hereby accepts such  employment and agrees to remain in the employ of
Employer,  for the period  commencing  on the  Effective  Date and ending on the
third anniversary of the Effective Date; provided,  however,  that commencing on
the day following the Effective  Date and each day  thereafter,  the term of the
Executive's  employment under this Agreement shall be extended automatically for
one (1) additional day, creating a new three-year term commencing as of each day
until  such  date on which  either  the  Board of  Directors  of  Employer  (the
"Board"),  on behalf of Employer,  or the Executive  gives written notice to the
other, in accordance with Section 16(b), below, that such automatic extension of
the Executive's  employment under this Agreement shall cease, in which event, as
of the  effective  date of such notice,  the term of  employment  shall become a
fixed  three-year  term.  Any such notice  shall be effective  immediately  upon
delivery.  The term of the Executive's  employment as provided in this Section 1
shall be hereinafter referred to as the "Term."

         2.       DUTIES.

                  (a)  EXECUTIVE'S  POSITIONS  AND  TITLES.  Commencing  on  the
Effective  Date,  the  Executive's  positions  and titles shall be President and
Chief  Executive  Officer of  Employer.  At or prior to  Employer's  2002 annual
meeting of  stockholders,  tentatively  scheduled for April 2002,  the Executive
shall be elected to the additional office of Chairman of the Board in accordance
with, and subject to the provisions of, Section 2(d) hereof.

                  (b) EXECUTIVE'S DUTIES. Executive shall report directly to the
Board. As Chief Executive  Officer of Employer,  Executive shall have active and
general supervision and management over the business and affairs of Employer and
shall have full power and  authority to act for all purposes for and in the name
of Employer in all matters  except where action of the Board is required by law,
the By-laws of Employer, or resolutions of the Board.

                  (c)   BUSINESS   TIME.   The   Executive   agrees   to  devote
substantially  all of his business  time to the business and affairs of Employer
and to use his best reasonable efforts to perform faithfully and efficiently the
duties and  responsibilities  assigned to the  Executive  hereunder,  subject to
periods of vacation  and sick leave to which he is  entitled  and subject to the
understanding  that for the period from the Effective  Date to April 3, 2001 the
Executive  shall be in a  transition  period  during which his time spent on the
business  and affairs of  Employer  shall be subject to his  personal  and other
business schedules.  Notwithstanding the foregoing, Executive may serve on civic
or  charitable  boards or  committees  and manage his personal  investments  and
affairs to the extent such  activities do not interfere with the  performance of
his duties and responsibilities  hereunder. After consultation with the Board or
the  Compensation




and Executive Organization  Committee (the "Compensation  Committee") thereof as
to appropriateness with regard to the Executive's duties and responsibilities to
Employer,  the  Executive  may also serve on  corporate  boards of  directors of
corporations which do not compete, as described in Section 11(b), with Employer.
In no event during the Term will Executive invest in any business which competes
with Employer;  provided,  that nothing in this Agreement  shall be construed to
prohibit  the  Executive  from  investing  in  up  to 2% of  the  stock  of  any
corporation the stock of which is listed on a national securities exchange or on
the Nasdaq National Market quotation system.

                  (d) BOARD SERVICE. Upon the Effective Date, the Executive will
be appointed as a member of the Board. Provided that the Executive's  employment
with  Employer  has  not  previously  been  terminated,  the  Executive  will be
nominated  for  election  as a member of the  Board at  Employer's  2001  annual
meeting  of  the  stockholders   and  at  each  subsequent   annual  meeting  of
stockholders during the Term. If so appointed and elected,  the Executive agrees
that: (i) he will serve as a member of the Board and (ii) after  Employer's 2002
annual meeting of the  Stockholders,  or if sooner elected by the Board, he will
serve as Chairman of the Board.

         3.       COMPENSATION AND BENEFITS.

                  (a) BASE SALARY.  During the Term, the Executive shall receive
a base  salary  ("Base  Salary"),  paid in  accordance  with the normal  payroll
practices of Employer,  at an annual rate of $750,000.  The Base Salary shall be
reviewed from time to time in accordance with Employer's policies and practices,
but no  less  frequently  than  once  annually  and  may be  increased,  but not
decreased,  at any time  and from  time to time by  action  of the  Board or the
Compensation Committee.

                  (b) ANNUAL BONUS PROGRAMS. In addition to the Base Salary, the
Executive  shall be eligible to  participate  throughout the Term in such annual
bonus plans and programs  ("Annual  Bonus  Programs"),  as may be in effect from
time to time in accordance with Employer's  compensation practices and the terms
and  provisions  of any  such  plans  or  programs,  such as  Employer's  Annual
Incentive  Program (the "AIP") of the Key Employee  Incentive Plan (the "KEIP");
provided that the Executive's  eligibility for and  participation in each Annual
Bonus Program shall be at a level and on terms and  conditions  consistent  with
those for other senior  executives of Employer.  If the  Executive  achieves his
target  performance  goals,  as determined by the  Compensation  Committee on an
annual basis,  the Executive  shall have a target annual bonus under such Annual
Bonus  Programs  equal to eighty  percent  (80%) of Base  Salary,  and a maximum
annual bonus equal to one hundred  sixty percent  (160%) of Base Salary.  Unless
Executive's  employment is terminated for Cause or by the Executive without Good
Reason  prior to the normal  annual  bonus  payment date for the 2001 year under
Employer's compensation  practices,  Executive shall receive an annual bonus for
such year equal to at least the target annual bonus of $600,000.

                  (c) LONG TERM  INCENTIVE  PROGRAMS.  In  addition  to the Base
Salary and  participation  in the Annual Bonus Programs,  the Executive shall be
eligible to  participate  throughout  the Term in such long term bonus plans and
programs  including,  without limitation,  stock option,  restricted stock unit,
performance  stock unit and other similar programs ("Long Term Bonus Programs"),
as may be in effect from time to time in accordance with Employer's

                                       2


compensation  practices  and the  terms  and  provisions  of any  such  plans or
programs,  such as Employer's  Long Term  Incentive  Program (the "LTIP") of the
KEIP;  provided  that the  Executive's  participation  in each Long  Term  Bonus
Program  shall  be at a  level  and on  terms  and  conditions  consistent  with
participation  by other senior  executives of Employer.  Executive's LTIP target
bonus for the  2001-2003  performance  cycle shall have a present value equal to
two hundred  percent (200%) of Base Salary and shall be determined at such times
and in  such  manner  as is  consistent  with  the  treatment  of  other  senior
executives of Employer and with the provisions of the LTIP.

                  (d)      INITIAL EQUITY BASED INCENTIVE COMPENSATION.

                           (i)      INITIAL OPTION GRANTS.

                                    (A)  Executive   shall  be  awarded  on  the
                  Effective  Date grants of ten-year  options  ("Initial  Option
                  Grant") to  purchase  400,000  shares of the  common  stock of
                  Employer (one for 169,300  shares and one for 230,700  shares)
                  in  accordance  with  the  forms  of  stock  option  agreement
                  attached as Exhibits A-1 and A-2 hereto.

                                    (B) Executive  shall be awarded:  (I) on the
                  Effective Date, a grant of ten-year options to purchase 25,000
                  shares of common stock and (II) during  2002,  at such time as
                  is consistent with the treatment of other senior executives of
                  Employer,  a grant of  ten-year  options  to  purchase  50,000
                  shares of common  stock.  Such  options  shall be  granted  in
                  accordance  with the policies and  practices of Employer as in
                  effect from time to time with respect to stock options granted
                  to other senior executives of Employer under the LTIP.

                           (ii)  INITIAL   RESTRICTED  STOCK  UNIT  GRANTS.   In
         recognition   of  certain   compensation   forfeited  as  a  result  of
         Executive's resignation from his prior employment,  the Executive shall
         be awarded deferrable restricted stock units ("Initial Restricted Stock
         Unit Grant"), vesting 50% of such units on each of the first and second
         anniversaries  of the Effective  Date, in accordance  with the forms of
         restricted  stock unit award  attached  hereto as Exhibits B-1 and B-2.
         50,000 of the  units  will be  awarded  on the  Effective  Date and the
         remainder  will be  awarded on  January  2,  2002.  If the  Executive's
         employment under this Agreement  terminates  before January 1, 2002 for
         any  reason  other than  termination  by  Employer  for Cause or by the
         Executive without Good Reason, the Fair Market Value (as defined in the
         KEIP)  determined as of the Date of Termination of the remaining shares
         underlying the restricted  stock units which would have been awarded on
         January  2,  2002  will be paid to the  Executive  in cash  immediately
         following the Date of Termination.  The aggregate  number of restricted
         stock units to be awarded  pursuant to this Section  3(d)(ii)  shall be
         determined  by  reference  to the fair  market  value of the  forfeited
         compensation and the Employer's common stock determined by reference to
         closing  prices as  reported in the New York Stock  Exchange  Composite
         Transactions Report for March 9, 2001.

                  (e) OTHER  INCENTIVE  PLANS.  During the Term,  the  Executive
shall be eligible to participate,  subject to the terms and conditions  thereof,
in all incentive  plans and programs,

                                       3


including,  but not limited to, such cash and deferred  bonus programs as may be
in effect  from time to time with  respect  to  senior  executives  employed  by
Employer on as favorable a basis as provided to other similarly  situated senior
executives so as to reflect the Executive's responsibilities.

                  (f)      DEFERRAL OF NON-DEDUCTIBLE COMPENSATION.

                           (i)  The  Executive  agrees  that  all  compensation,
         except the Initial  Option  Grant,  the Initial  Restricted  Stock Unit
         Grant,  and his  guaranteed  2001 minimum  bonus under the Annual Bonus
         Program,  shall be subject to Employer's  compensation  deferral policy
         which  requires that the Executive  defer  receipt of  compensation  in
         excess of $1 million  that is not  deductible  for  federal  income tax
         purposes in any given  taxable  year to the taxable  year in which such
         compensation  would be  deductible  by Employer  (unless  Executive has
         elected  to  continue  deferral  to a later  date  under an  applicable
         deferred compensation plan).

                           (ii) The Initial Option Grant, the Initial Restricted
         Stock Unit Grant, and Executive's  guaranteed 2001 minimum target bonus
         under the Annual Bonus  Program  shall not be subject to such  Employer
         compensation deferral policy, except as Employer and Executive agree at
         least  180 days  prior to the date  any  such  amount  becomes  due and
         payable to  Executive,  to defer such payment in  accordance  with such
         policy.

                  (g)  SUPPLEMENTAL  RETIREMENT  BENEFIT.  The  Executive  shall
participate in Employer's  Amended and Restated  (1999)  Supplemental  Executive
Retirement  Plan, as amended from time to time (the "SERP  Program").  The terms
and  conditions  of the SERP Program  shall govern any  supplemental  retirement
benefit accrued by the Executive, except as set forth below:

                           (i)      ACCRUAL OF SUPPLEMENTAL RETIREMENT BENEFIT.

                                    (A)  For  the  period   commencing   on  the
                  Effective  Date and ending on the  Executive's  55th birthday,
                  the  supplemental  retirement  benefit  shall  accrue based on
                  37.5%  multiplied by a fraction,  the numerator of which shall
                  be the number of full and fractional years of service from the
                  Effective Date to the date in question and the  denominator of
                  which shall be 5.82. For purposes of this Section  3(g)(i),  a
                  year  of  service  shall  mean  365  days  commencing  on  the
                  Effective Date and each anniversary thereof.

                                    (B)  For  the  period   commencing   on  the
                  Executive's 55th birthday and ending on his 60th birthday, the
                  supplemental  retirement  benefit  shall accrue at the rate of
                  3.5% for each year of service commencing on his 55th birthday,
                  with pro-rata accrual for a fractional year of employment.

                                    (C) The accrual  percentages  as  determined
                  pursuant to  paragraphs  (A) and (B) of this  Section  3(g)(i)
                  above shall apply in lieu of the accrual percentages set forth
                  in  Sections  4.a.(1)  and  4.b.(1) of the SERP  Program  and,
                  accordingly,  shall be  multiplied  by the  Executive's  Final
                  Average

                                       4


                  Compensation (as defined in the SERP Program) to determine the
                  supplemental retirement benefit pursuant to this Section 3(g)
                  (i).

                           (ii)  VESTING;  ELIGIBILITY.  Executive  shall at all
         times be fully vested in his accrued  supplemental  retirement  benefit
         and shall be deemed to have satisfied all  requirements for eligibility
         for  such  benefit;  provided,  however,  that,  in  the  event  of the
         termination of Executive's employment prior to his 55th birthday either
         (A) by Employer for Cause or (B) by the Executive  without Good Reason,
         the Executive shall not be entitled any supplemental retirement benefit
         under the SERP Program.

                           (iii) OFFSET. For purposes of the offset provided for
         in Section 4.a.(2) and 4.b.(2), as applicable, of the SERP Program, the
         offset  for  any  defined   benefit  pension  plan  maintained  by  the
         Executive's prior employers shall be determined by multiplying any such
         defined benefit  receivable by the Executive from any prior employer by
         a  fraction,  the  numerator  of which is the  percentage  of his Final
         Average  Compensation  which had accrued under Section 3(g)(i) above as
         of the Date of Termination (as hereinafter defined) and the denominator
         of which is 55%, provided,  however,  that such fraction shall never be
         greater than 1.

                           (iv) COORDINATION WITH EXECUTIVE BENEFITS  PROTECTION
         PLAN  ("EBPP").  In the event of a Change in  Control as defined in the
         EBPP, the Executive shall be credited with an additional three years of
         service as  provided  under the EBPP,  which  shall be  credited in the
         manner  described  in  Section  3(g)(i)  above and added to the  actual
         credited  service  determined in accordance with paragraphs (A) and (B)
         of Section 3(g)(i) above, and in no event shall such additional service
         be diminished by actual  credited  service  subsequent to the Change in
         Control;  provided that in no event shall the aggregate number of years
         of service credited for purposes of Section 3(g)(i) above exceed 10.82.
         Such additional service shall be added first to actual service pursuant
         to  paragraph  (A) of  Section  3(g)(i)  until  the sum of all years of
         credited  service  equals  5.82 and then  any such  additional  service
         remaining  shall be added as  service  under  paragraph  (B) of Section
         3(g)(i) above, for purposes of determining the supplemental  retirement
         benefit under Section 3(g).

                           (v) Anything to the contrary notwithstanding,  if for
         any reason Executive's  supplemental  retirement entitlements under the
         SERP Program,  as may be enhanced in accordance with the EBPP, are less
         than the benefit  provided  pursuant to this  Section 3(g) based on the
         SERP Program and the EBPP as in effect on the Effective  Date,  whether
         due to amendment or termination of either or both of those plans,  then
         to the extent of such  difference  he shall be  provided  such  benefit
         under  this  Section  3(g) as if there  had been no such  amendment  or
         termination of either of those plans.

                  (h) OTHER PENSION AND WELFARE BENEFIT PLANS.  During the Term,
the Executive  and/or the Executive's  dependents,  as the case may be, shall be
eligible to  participate  in all pension and similar  benefit plans  (qualified,
non-qualified  and  supplemental),  profit sharing,  ESOP,  401(k),  medical and
dental,  disability,  group and/or  executive life,  accidental death and travel
accident  insurance,  and all similar  benefit  plans and  programs of Employer,
subject to the

                                       5


terms and  conditions  thereof,  as in effect from time to time with  respect to
senior  executives  employed  by  Employer  so as  to  reflect  the  Executive's
responsibilities.

                  (i) PERQUISITES.  During  the Term,  the  Executive  shall be
entitled  to  participate  in perquisite programs, as such are made available
to senior executives of Employer.

                  (j) EXPENSES. During the Term, the Executive shall be entitled
to receive prompt  reimbursement for all reasonable  expenses incurred by him in
accordance with the policies and practices of Employer as in effect from time to
time. Employer will pay all reasonable  professional expenses up to a maximum of
$50,000  incurred  by the  Executive  in  connection  with the  negotiation  and
preparation of this Agreement.

                  (k) VACATION. During the Term, the Executive shall be entitled
to paid vacation in accordance with the policies and practices of Employer as in
effect from time to time with respect to senior executives employed by Employer,
but in no event shall such  vacation  time be less than five weeks per  calendar
year.

                  (l) CERTAIN  AMENDMENTS.  Nothing herein shall be construed to
prevent  Employer from  amending,  altering,  eliminating or reducing any plans,
benefits or programs so long as the Executive continues to receive  compensation
and benefits consistent with Sections 3(a) through (k).

                  (m) RELOCATION  EXPENSES.  From April 2001 through the earlier
of December 31, 2001 or his relocation to permanent housing, the Executive shall
be reimbursed for reasonable living expenses in the Hershey,  Pennsylvania area,
including  apartment  and  furniture  rental.  Employer  will  pay all  costs of
relocation of the Executive and his family to the Hershey,  Pennsylvania area in
accordance with Employer's  relocation  policy for  transferred  employees.  The
reimbursement  of expenses  pursuant to this Section 3(m) shall be provided on a
tax grossed-up basis as provided in the policy.

                  (n) MINIMUM STOCK  OWNERSHIP.  Executive  shall be subject to,
and shall comply  with, the stock ownership guidelines of Employer.

                  (o) INITIAL  PURCHASE OF STOCK.  The Executive  shall purchase
from  Employer  and  Employer  shall cause to be sold to  Executive  for his own
account  3,000  shares of  Employer's  common stock at the fair market value (as
defined under the KEIP) of the common stock of Employer on the Effective Date.

         4.       TERMINATION.

                  (a) DISABILITY. Either the Executive or Employer may terminate
Executive's employment,  after having established the Executive's Disability, by
giving notice of his or its intention to terminate the  Executive's  employment,
and the Executive's  employment  with Employer shall terminate  effective on the
90th day after such notice (the "Disability  Effective  Date").  For purposes of
this Agreement,  the Executive's "Disability" shall occur and shall be deemed to
have occurred only in the event that the Executive  suffers a disability  due to
illness or injury which  substantially  and materially limits the Executive from
performing  each of the essential  functions of the  Executive's  job, even with
reasonable  accommodation,  for a continuing

                                       6


period of 180 days, and he becomes entitled to receive disability benefits under
the long-term disability plan offered by Employer to its exempt employees.

                  (b)      CAUSE.

                           (i) Employer may terminate the Executive's employment
         for Cause,  if "Cause" as defined  below  exists.  For purposes of this
         Agreement, "Cause" means with respect to the Executive:

                                    (A) Executive's  willful and continued gross
                  neglect  of  duties  with  the  Company  (other  than any such
                  occurrence resulting from incapacity due to physical or mental
                  illness),  after a written  demand is  delivered to him by the
                  Board which  specifically  identifies  the manner in which the
                  Board believes that the Executive has been in gross neglect of
                  his duties; or

                                    (B)  Executive's  being  guilty of willfully
                  committing a felony or other  serious crime under any Federal,
                  state or local law of the United States or  Executive's  gross
                  misconduct   which,   in  either  case,  is   materially   and
                  demonstrably injurious to the Company.

                           (ii) For  purposes of this  Section  4(b),  no act or
         failure  to act,  on the part of the  Executive,  shall  be  considered
         willful  unless it is done,  or omitted to be done, by him in bad faith
         and without  reasonable  belief that his action or omission  was in the
         best interests of the Company.  A termination  for Cause shall not take
         effect unless the  provisions of this subclause (ii) are complied with.
         The  Executive  shall  be  given  written  notice  by the  Board of the
         intention  to  terminate  him for  Cause,  such  notice (A) to state in
         detail the  particular  act or acts or failure or  failures to act that
         constitute the grounds on which the proposed  termination  for Cause is
         based and (B) to be given  within 90 days of the  Board's  learning  of
         such act or acts or failure or failures  to act.  The  Executive  shall
         have ten calendar days after the date that such written notice has been
         given to the  Executive in which to cure such  conduct.  If he fails to
         cure such conduct,  the  Executive  shall then be entitled to a hearing
         before the Board, and, thereafter,  upon a determination by affirmative
         vote of no fewer than  three-quarters  of the members of the Board that
         Cause exists, he shall be terminated for Cause.

                  (c)      GOOD REASON.

                           (i)  The  Executive  may  terminate  the  Executive's
         employment at any time for Good Reason. For purposes of this Agreement,
         "Good  Reason"  means  any of the  following  actions  by the  Employer
         without Executive's written consent:

                                    (A) The  assignment  to the Executive of any
                  duties  inconsistent  with  his  position  (including  status,
                  offices,  titles  and  reporting  relationships),   authority,
                  duties  or  responsibilities,  all  as in  effect  immediately
                  following the Effective  Date, or any other action by Employer
                  which results in a diminution in any respect in such position,
                  authority,  duties  or  responsibilities,  excluding  for this
                  purpose  any  action  not  taken  in bad  faith  and  which is
                  remedied by Employer  promptly after receipt of notice thereof
                  given by the Executive;

                                       7


                                    (B) The  failure  to  elect  the  Executive
                  to the  additional  office  of Chairman of the Board at or
                  prior to the 2002 annual meeting of stockholders;

                                    (C) Any  material  breach by  Employer  of a
                  material  provision  of  this  Agreement,  including,  without
                  limitation,  a reduction in Executive's  Base Salary or target
                  bonus    opportunity   or   failure   to   provide   incentive
                  opportunities  as provided in Section 3(c),  and excluding for
                  this  purpose any action,  or failure to act, not taken in bad
                  faith and which is remedied by Employer promptly after receipt
                  of notice thereof given by the Executive;

                                    (D)  Any  termination  of  the  EBPP  or the
                  amendment of the EBPP that  eliminates or reduces  Executive's
                  benefits thereunder in connection with a Change in Control (as
                  defined  under  the  EBPP)  without  substituting  a  plan  or
                  arrangement  that  provides   Executive   equivalent  or  more
                  favorable benefits in connection with a Change in Control than
                  provided under the EBPP,  immediately  prior to such amendment
                  or  termination,  excluding  for this  purpose any action,  or
                  failure to act,  not taken in bad faith and which is  remedied
                  by Employer  promptly  after receipt of notice  thereof by the
                  Executive;

                                    (E) Employer's requiring the Executive to be
                  based at any  office  or  location  that is more than 50 miles
                  from his office or location in  Hershey,  Pennsylvania,  as of
                  the Effective Date;

                                    (F) Employer's  giving  notice to the
                  Executive to stop further  operation of the evergreen feature
                  described in Section 1, above; or

                                    (G) the failure of the Company to obtain the
                  assumption  in  writing  of its  obligation  to  perform  this
                  Agreement by any successor to all or substantially  all of the
                  assets   of   Employer   within   15  days   after  a  merger,
                  consolidation, sale or similar transaction.

                           (ii) A  termination  for Good  Reason  shall not take
         effect unless the  provisions  of this  subclause  (ii) are  satisfied.
         Executive  shall  give  Employer  written  notice of his  intention  to
         terminate his employment for Good Reason,  such notice: (A) to state in
         detail the  particular  act or acts or failure or  failures to act that
         constitute  the  grounds  on which the  proposed  termination  for Good
         Reason is based and (B) to be given  within 90 days of the  Executive's
         learning of such act or acts or failure or  failures  to act.  Employer
         shall have ten calendar  days after the date that such  written  notice
         has been  given by the  Executive  in which to cure  such  conduct.  If
         Employer fails to cure such conduct,  Executive shall be deemed to have
         terminated his employment for Good Reason.

                  (d)  TERMINATION BY EXECUTIVE  WITHOUT GOOD REASON.  Executive
may,  at any time  without  Good  Reason,  by at least  30 days'  prior  notice,
voluntarily  terminate this Agreement without liability.  Executive's  voluntary
termination is not a breach of this Agreement.

                                        8
 


                  (e) NOTICE OF TERMINATION.  Any termination of the Executive's
employment by Employer for Disability,  for or without Cause or by the Executive
for Disability or for or without Good Reason shall be  communicated  by a Notice
of Termination to the other party hereto given in accordance with Section 16(b).
For purposes of this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination  provision in this Agreement relied
upon; (ii) sets forth in reasonable detail the facts and  circumstances  claimed
to  provide a basis for  termination  of the  Executive's  employment  under the
provision so indicated;  and (iii)  specifies the Date of  Termination  (defined
below).

                  (f) DATE OF TERMINATION.  "Date of Termination" means the date
of actual  receipt of the  Notice of  Termination  or any later  date  specified
therein  (but not more than  fifteen (15) days after the giving of the Notice of
Termination),  or the date of Executive's  death,  as the case may be;  provided
that (i) if the Executive's  employment is terminated by Employer for any reason
other than Cause or  Disability,  the Date of  Termination  is the date on which
Employer  notifies the Executive of such  termination;  (ii) if the  Executive's
employment is  terminated  due to  Disability,  the Date of  Termination  is the
Disability Effective Date; and (iii) if the Executive's employment is terminated
by the Executive without Good Reason, the Date of Termination is the date thirty
(30) days  after the  giving of the Notice of  Termination,  unless the  parties
otherwise agree in writing.

         5.   OBLIGATIONS  OF  EMPLOYER  UPON   TERMINATION.   The   Executive's
entitlements  upon termination of employment are set forth below.  Except to the
extent otherwise provided in this Agreement,  all benefits,  including,  without
limitation,  stock option  grants,  restricted  stock units and awards under the
Long Term Bonus  Programs,  shall be subject to the terms and  conditions of the
plan or  arrangement  under  which  such  benefits  accrue,  are  granted or are
awarded.  For purposes of this Section 5, the term "Accrued  Obligations"  shall
mean,  as of the Date of  Termination,  (i) the  Executive's  full  Base  Salary
through  the Date of  Termination,  at the rate in effect at the time  Notice of
Termination is given, to the extent not theretofore paid, (ii) the amount of any
bonus, incentive compensation, deferred compensation (including, but not limited
to, any supplemental  retirement  benefits) and other cash  compensation  earned
(and not forfeited  hereunder) by the Executive as of the Date of Termination to
the  extent  not   theretofore   paid  and  (iii)  any  vacation  pay,   expense
reimbursements  and other cash  entitlements  accrued by the Executive as of the
Date of  Termination  to the  extent  not  theretofore  paid.  For  purposes  of
determining an Accrued  Obligation under this Section 5, amounts shall be deemed
to  accrue  ratably  over the  period  during  which  they are  earned  (and not
forfeited hereunder),  but no discretionary  compensation shall be deemed earned
or accrued until it is specifically approved by the Board in accordance with the
applicable plan, program or policy.

                  (a) DEATH.  If the  Executive's  employment  is  terminated by
reason of the Executive's  death, this Agreement shall terminate without further
obligations  by Employer to the  Executive's  legal  representatives  under this
Agreement,  except  as set  forth in this  Section  5(a) or as  contained  in an
applicable Employer plan or program which takes effect at the date of his death,
but in no event shall Employer's obligations be less than those provided by this
Agreement.

                           (i)  From and  after  the  Date of  Termination,  the
         Executive's  surviving spouse, other named beneficiaries or other legal
         representatives, as the case may be, shall

                                       9


         be entitled to receive those benefits  payable to them under the
         provisions of any applicable Employer plan or program and as provided
         for under Section 3(g),above, including, without limitation, any
         benefits commencing immediately upon the Executive's death;

                           (ii)  On the  Date of  Termination,  all  options  to
         purchase stock of Employer theretofore granted to the Executive and not
         exercised by the Executive  shall be exercisable in accordance with the
         terms of the applicable stock option agreement between Employer and the
         Executive;

                           (iii)  On the  Date of  Termination,  all  restricted
         stock units granted by Employer to the  Executive  prior to the Date of
         Termination  which had not vested prior to such date shall become fully
         vested, nonforfeitable, and payable in accordance with the terms of the
         applicable grant award or agreement between Employer and the Executive;
         and

                           (iv)  Promptly  following  the  Date of  Termination,
         Employer shall pay the Executive's legal  representatives a lump sum in
         cash equal to the sum of (A) a pro-rata bonus for year of  termination,
         based  on the  target  bonus,  and  (B)  the  Accrued  Obligations  not
         theretofore paid.

                  (b)      DISABILITY.  If the  Executive's  employment is
terminated by reason of the  Executive's Disability, the Executive shall be
entitled to receive after the Disability Effective Date:

                           (i)    Disability benefits, if any, at least equal to
         those then provided by Employer to disabled executives and their
         families;

                           (ii)   Supplemental  executive  retirement benefits
         in accordance with Section 3(g) of this Agreement which incorporates
         Section 4.c. of the SERP Program;

                           (iii)  On the Date of  Termination,  all  options  to
         purchase stock of Employer theretofore granted to the Executive and not
         exercised by the Executive  shall be exercisable in accordance with the
         terms of the applicable stock option agreement between Employer and the
         Executive;

                           (iv) On the Date of Termination, all restricted stock
         units  granted  by  Employer  to the  Executive  prior  to the  Date of
         Termination  which had not vested prior to such date shall become fully
         vested, nonforfeitable, and payable in accordance with the terms of the
         applicable grant award or agreement between Employer and the Executive;
         and

                           (v)  Promptly  following  the  Date  of  Termination,
         Employer shall pay the Executive a lump sum in cash equal to the sum of
         (A) a pro-rata bonus for the year of  termination,  based on the target
         bonus, and (B) the Accrued Obligations not theretofore paid.

                                       10


                  (c)  CAUSE/OTHER  THAN FOR  GOOD  REASON.  If the  Executive's
employment  is terminated  for Cause by Employer or if the Executive  terminates
the Executive's employment without Good Reason, Employer shall pay the Executive
all Accrued Obligations. All unexercised stock options and all unpaid restricted
stock units and other equity incentive  compensation  awards theretofore granted
to the Executive,  including,  without limitation, the Initial Option Grant, and
the Initial Restricted Stock Unit Grant,  shall be exercisable or forfeited,  as
the case may be, in accordance  with the  applicable  agreement or award between
Employer and the Executive.

                  (d)  OTHER THAN FOR CAUSE,  DEATH OR DISABILITY;  GOOD REASON.
If Employer  terminates the Executive's employment other than for Cause,  Death
or  Disability or the Executive  terminates  the  Executive's employment for
Good Reason:

                           (i) Employer shall pay to the Executive in a lump sum
         in cash within 30 days after the Date of  Termination  the aggregate of
         the following amounts:

                                    (A)  the sum of (I) a pro-rata bonus for the
                  year of  termination,  based on the target bonus, and (II)
                  Executive's Accrued Obligations not theretofore paid;

                                    (B)  two   times   the   sum  of:   (I)  the
                  Executive's  annual  Base  Salary at the rate in effect at the
                  time  the  Notice  of  Termination  is  given,  or  in  effect
                  immediately  prior to any  reduction  thereof in  violation of
                  this Agreement,  and (II) the AIP bonus at target for the year
                  in which such termination occurs.

                           (ii)  Executive  shall  be  entitled  to  such  other
         incentive  compensation,  including,  without  limitation,  the Initial
         Option Grant and the Initial Restricted Stock Unit Grant, in accordance
         with the terms of such grant or award  agreement  between  Employer and
         the Executive.

                           (iii)   Executive   shall  be   entitled  to  receive
         supplemental  executive  retirement benefits in accordance with Section
         3(g) of this Agreement.

                           (iv)  Employer  shall  provide  to the  Executive  at
         Employer's  expense  the  health  and  welfare  benefits  (or,  if such
         benefits are not  available,  the value  thereof)  specified in Section
         3(h) to which  Executive is entitled as of the Date of Termination  for
         two (2) years  following  the Date of  Termination,  provided that such
         benefits   shall   be   reduced   by  any   similar   benefits,   on  a
         benefit-by-benefit  and  coverage-by-coverage   basis,  provided  by  a
         subsequent  employer;  provided  further  that (A) with  respect to any
         benefit to be  provided  on an insured  basis,  such value shall be the
         present  value of the premiums  expected to be paid for such  coverage,
         and with  respect to other  benefits,  such value  shall be the present
         value of the expected net cost to Employer of providing  such  benefits
         and (B) from and after  the Date of  Termination,  Executive  shall not
         become  entitled to any additional  awards under any plans,  practices,
         policies or programs of the Company.

         6. CHANGE IN  CONTROL.  In the event of a Change in Control (as defined
in the  EBPP),  the  rights  and  obligations  of  Employer  and the  Executive,
including,  without  limitation,  rights and  obligations  upon  termination  of
Executive's  employment,  shall be governed by the EBPP

                                       11


subject  to  the  following  provisions  of  this  Section  6.  If any  item  of
compensation  or benefit is provided  under this  Agreement,  or under any other
plan, agreement,  program or arrangement of Employer (other than the EBPP) which
is more favorable to Executive than the  corresponding  item of  compensation or
benefit  under the EBPP,  or if an item of  compensation  or benefit is provided
under  this  Agreement,  or  under  such  other  plan,  agreement,   program  or
arrangement,  but not under the EBPP, such item of compensation or benefit shall
be provided in accordance  with the terms of this  Agreement or such other plan,
agreement,  program or  arrangement.  In no event,  however,  shall Executive be
entitled  to  duplication  as to any item of  compensation  or  benefit  that is
provided  under both this Agreement (or such other plan,  agreement,  program or
arrangement)  and the  EBPP.  7.  NON-EXCLUSIVITY  OF  RIGHTS.  Nothing  in this
Agreement  shall  prevent  or  limit  the   Executive's   continuing  or  future
participation in any benefit, bonus, incentive or other plan or program provided
by Employer and for which the Executive may qualify,  nor shall anything  herein
limit or otherwise  affect such rights as the Executive may have under any stock
option or other  agreement  with  Employer or any of its  affiliated  companies.
Except as  otherwise  provided  herein,  amounts and  benefits  which are vested
benefits or which the Executive is otherwise entitled to receive under any plan,
program,  agreement or  arrangement  of Employer at or subsequent to the Date of
Termination shall be payable in accordance with such plan or program.

         8. NO SET OFF; NO  MITIGATION.  Except as provided  herein,  Employer's
obligation to make the payments  provided for in this Agreement and otherwise to
perform its obligations  hereunder  shall not be affected by any  circumstances,
including without limitation any set-off,  counterclaim,  recoupment, defense or
other right which Employer may have against the Executive or others. In no event
shall the  Executive  be obligated  to seek other  employment  or take any other
action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement,  and such amounts shall not be reduced whether
or not the Executive obtains other employment.

         9.  ARBITRATION  OF DISPUTES.  As a condition to  participation  in the
LTIP,  the  Executive  agrees  to  execute  the  Long-Term   Incentive   Program
Participation  Agreement  (the  "Participation   Agreement"),   which  agreement
includes a Mutual  Agreement to Arbitrate  Claims.  Executive and Employer agree
that such agreement to arbitrate shall govern disputes hereunder.

         10. ENTIRE AGREEMENT.  The Executive  acknowledges and agrees that this
Agreement  includes the entire agreement and  understanding  between the parties
with respect to the subject  matter  hereof,  including the  termination  of the
Executive's  employment  during the Term and all amounts to which the  Executive
shall be entitled  whether  during the Term or  thereafter.  The Executive  also
acknowledges and agrees that the Executive's  right to receive severance pay and
other  benefits  pursuant to Section 5(d) (i) (B) of this Agreement (but not any
other compensation or benefits including,  without limitation,  the supplemental
retirement  benefit as provided in Section 3(g) and incentive awards which shall
be determined in accordance  with the terms of the applicable  plan or award) is
contingent  upon the  Executive's  compliance  with the  covenants  set forth in
Section 11 of this Agreement.

                                       12


         11.      EXECUTIVE'S COVENANTS.

                  (a)  Executive  acknowledges  that  due to the  nature  of his
employment  and the position of trust that he will hold with  Employer,  he will
have special access to, learn,  be provided with, and in some cases will prepare
and create for Employer,  trade secrets and other  confidential  and proprietary
information  relating to  Employer's  business,  including,  but not limited to,
information  about  Employer's  manufacturing  processes;  manuals,  recipes and
ingredient percentages;  engineering drawings;  product and process research and
development; new product information; cost information; supplier data; strategic
business information; marketing, financial and business development information,
plans,  forecasts,  reports  and  budgets;  customer  information;  new  product
strategies,  plans and  project  activities;  and  acquisition  and  divestiture
strategies, plans and project activities. Executive acknowledges and agrees that
such information,  whether or not in written form, is the exclusive  property of
Employer, that it has been and will continue to be of critical importance to the
business of Employer,  and that the disclosure of it to, or use by,  competitors
and others will cause Employer  substantial and irreparable  harm.  Accordingly,
Executive  will not,  either  during  his  employment  or at any time  after the
termination  (whether voluntary or involuntary) of his employment with Employer,
use, reproduce or disclose any trade secrets or other  confidential  information
relating to the  business of Employer  which is not  generally  available to the
public.  Notwithstanding  the foregoing  provisions of this Section  11(a),  the
Executive may disclose or use any such information (i) as such disclosure or use
may be required or appropriate  in the course of his  employment  with Employer,
(ii)  when  required  by a  court  of law,  by any  governmental  agency  having
supervisory  authority over the business of Employer or by any administrative or
legislative body (including a committee thereof) with apparent jurisdiction,  or
(iii) with the prior  written  consent of Employer.  Executive  understands  and
agrees that his obligations under this Agreement shall be in addition to, rather
than in lieu of, any  obligations  Executive may have under any  confidentiality
agreement or other agreement with Employer relating to confidential  information
or under any applicable statute or at common law.

                  (b)  Executive  shall be subject to and bound by all terms and
conditions  of  the  Participation  Agreement  as may be in  effect  for  senior
executive officers of Employer from time to time, including, without limitation,
the  noncompetition  restrictions,  all of  which  are  incorporated  herein  by
reference;  provided,  however,  that in the event the  Participation  Agreement
shall be  amended  with  respect to the  Employer's  senior  executive  officers
generally  to require a  noncompetition  restriction  that is less  favorable to
Executive than as shall be required on the Effective  Date, such amendment shall
be  disregarded  and  such  requirement  or  requirements  of the  Participation
Agreement as in effect on the Effective Date shall apply to Executive.

                  (c) The Executive  agrees that for a period  commencing on the
termination  of his employment and ending on the earlier of: (i) 12 months after
the last date on which the  Executive  receives any  payments or benefits  under
this  Agreement  or (ii)  three  years  after  the  termination  of  Executive's
employment,  the Executive  will not knowingly  participate in recruiting any of
Employer's  employees or in the  solicitation of Employer's  employees,  and the
Executive will not communicate,  except in the case of a reference  described in
the last  sentence of this  paragraph,  to any other  person or entity about the
nature,  quality or  quantity  of work,  or any  special  knowledge  or personal
characteristics,  of any person  employed by Employer.  If the

                                       13


Executive  should  wish to discuss  possible  employment  with any  then-current
employee  of  Employer  during the period set forth  above,  the  Executive  may
request written  permission to do so from the senior human resources  officer of
Employer  who may, in his/her  discretion,  grant a written  exception to the no
solicitation  covenant  set forth  immediately  above;  provided,  however,  the
Executive  shall  not  discuss  any such  employment  possibility  with any such
employee prior to such permission.  Nothing herein shall prevent  Executive from
giving a reference, when requested, on behalf of an employee.

         12.      INDEMNIFICATION.

                  (a) Employer  agrees that if the  Executive is made a party to
or  involved  in,  or is  threatened  to be made a party to or  otherwise  to be
involved  in,  any  action,  suit  or  proceeding,   whether  civil,   criminal,
administrative or investigative (a "Proceeding"),  by reason of the fact that he
is or was a  director,  officer or  employee of Employer or is or was serving at
the request of Employer as a  director,  officer,  member,  employee or agent of
another corporation, limited liability corporation,  partnership, joint venture,
trust or other  enterprise,  including  service with respect to employee benefit
plans,  whether or not the basis of such Proceeding is the  Executive's  alleged
action in an official  capacity  while serving as a director,  officer,  member,
employee or agent,  the  Executive  shall be  indemnified  and held  harmless by
Employer  against  any  and  all  liabilities,   losses,  expenses,   judgments,
penalties,  fines  and  amounts  reasonably  paid in  settlement  in  connection
therewith, and shall be advanced reasonable expenses (including attorneys' fees)
as and when  incurred in connection  therewith,  to the fullest  extent  legally
permitted or authorized by Employer's by-laws or, if greater, by the laws of the
State of Delaware,  as may be in effect from time to time. The rights  conferred
on Executive  by this  Section  12(a) shall not be exclusive of any other rights
which  Executive may have or hereafter  acquire under any statute,  the by-laws,
agreement,  vote of stockholders or disinterested  directors, or otherwise.  The
indemnification  and advancement of expenses  provided for by this Article shall
continue as to Executive  after he ceases to be a director,  officer or employee
and shall inure to the benefit of his heirs, executors and administrators.

                  (b) For the Term and thereafter, Executive shall be covered by
any directors' and officers'  liability policy  maintained by Employer from time
to time.

         13.      SUCCESSORS.

                  (a) This Agreement is personal to the Executive  and,  without
the prior written consent of Employer,  shall not be assignable by the Executive
otherwise than by will or the laws of descent and  distribution.  This Agreement
shall  inure to the  benefit  of and be  enforceable  by the  Executive's  legal
representatives.

                  (b)  This  Agreement  shall  inure  to the  benefit  of and be
binding upon Employer and its successors. It shall not be assignable by Employer
or its successors except in connection with the sale or other disposition of all
or substantially all the assets or business of Employer.  Employer shall require
any  successor  to all or  substantially  all of the business  and/or  assets of
Employer,  whether  direct or  indirect,  by  purchase,  merger,  consolidation,
acquisition  of stock,  or  otherwise,  by an  agreement  in form and  substance
satisfactory  to the  Executive,

                                       14


expressly to assume and agree to perform  this  Agreement in the same manner and
to the  same  extent  as  Employer  would  be  required  to  perform  if no such
succession had taken place.


         14.  AMENDMENT;  WAIVER.  This Agreement  contains the entire agreement
between  the  parties  with  respect  to the  subject  matter  hereof and may be
amended,  modified  or  changed  only by a written  instrument  executed  by the
Executive and Employer. No provision of this Agreement may be waived except by a
writing  executed  and  delivered  by the party  sought to be charged.  Any such
written waiver will be effective only with respect to the event or  circumstance
described  therein  and not with  respect  to any other  event or  circumstance,
unless such waiver expressly provides to the contrary.

         15.      CERTAIN ADDITIONAL COVENANTS.

                  (a) The Executive agrees that, prior to the Effective Date, he
will undergo a physical  examination  performed  by a physician  selected by the
Executive  which is reasonably  satisfactory to Employer and provide the results
of such examination to Employer.

                  (b) Employer represents and warrants to the Executive that to
the best of its knowledge:

                           (i) the execution of this Agreement and the provision
         of all benefits and grants provided herein have been duly authorized by
         Employer, including action of the Board and Compensation Committee;

                           (ii) the execution,  delivery and performance of this
         Agreement  by  Employer   does  not  and  will  not  violate  any  law,
         regulation,  order,  judgment  or  decree  or any  agreement,  plan  or
         corporate governance document of Employer; and

                           (iii)  upon  the   execution  and  delivery  of  this
         Agreement  by the  Executive,  this  Agreement  shall be the  valid and
         binding  obligation of Employer,  enforceable  in  accordance  with its
         terms, except to the extent enforceability may be limited by applicable
         bankruptcy,  insolvency or similar laws  affecting the  enforcement  of
         creditors' rights generally and by the effect of general  principles of
         equity  (regardless  of  whether  enforceability  is  considered  in  a
         proceeding in equity or at law).

                  (c) The Executive represents and warrants to Employer that to
the best of his knowledge:

                           (i) the execution,  delivery and  performance of this
         Agreement by the Executive does not and will not conflict with,  breach
         or violate any  contract,  agreement,  instrument,  order,  judgment or
         decree to which the  Executive is a party or by which the  Executive is
         bound;

                           (ii) the  Executive is not a party to or bound by any
         employment  agreement,   noncompetition  agreement  or  confidentiality
         agreement with any other person or entity that would interfere with the
         execution, delivery and performance of this Agreement by the Executive;
         and

                                       15


                           (iii) upon the execution, delivery and performance of
         this  Agreement  by  Employer,  this  Agreement  shall be the valid and
         binding obligation of the Executive, enforceable in accordance with its
         terms, except to the extent enforceability may be limited by applicable
         bankruptcy,  insolvency or similar laws  affecting the  enforcement  of
         creditors' rights generally and by the effect of general  principles of
         equity  (regardless  of  whether  enforceability  is  considered  in  a
         proceeding in equity or at law).

         16.      MISCELLANEOUS.

                  (a) This  Agreement  shall be  governed  by and  construed  in
accordance with the laws of the Commonwealth of Pennsylvania,  without reference
to principles of conflict of laws.  The captions of this  Agreement are not part
of the provisions hereof and shall have no force or effect.

                  (b) All notices and other communications hereunder shall be in
writing;  shall be  delivered  by hand  delivery to the other party or mailed by
registered or certified mail, return receipt requested,  postage prepaid or by a
nationally  recognized courier service such as Federal Express;  shall be deemed
delivered upon actual receipt; and shall be addressed as follows:

                  IF TO EMPLOYER:

                           Hershey Foods Corporation
                           100 Crystal A Drive
                           Hershey, Pennsylvania 17033
                           ATT:  Richard C. Dreyfuss

                  IF TO EXECUTIVE:

                           Richard H. Lenny
                           100 Crystal A Drive
                           Hershey, Pennsylvania 17033

or to such other  address as either  party shall have  furnished to the other in
writing in accordance herewith.

                  (c) Any  provision of this  Agreement  which is  prohibited or
unenforceable in any jurisdiction will, as to such jurisdiction,  be ineffective
to the extent of such prohibition or unenforceability  without  invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction will not invalidate or render  unenforceable  such provision in any
other jurisdiction.

                  (d) Employer may withhold from any amounts  payable under this
Agreement such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.

                            [SIGNATURE PAGE FOLLOWS]


                                       16



         IN WITNESS  WHEREOF,  each of the parties hereto has duly executed this
Executive Employment Agreement as of the date first set forth above.

                                   EXECUTIVE:
                                   Richard H. Lenny


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



                                    EMPLOYER:
                                    Hershey Foods Corporation,
                                    a Delaware corporation


                                    By:
                                       ------------------------
                                          Kenneth L. Wolfe
                                         Chairman and Chief Executive Officer


ATTEST:

- --------------------
Robert M. Reese
Secretary





                                       17






                                                                    Exhibit A-1



                  2001 NONQUALIFIED STOCK OPTION AGREEMENT

         1. The Hershey  Foods  Corporation  (the  "Employer")  hereby grants to
Richard H. Lenny  ("Optionee"),  effective March 12, 2001 (the "Grant Date"), an
option to purchase 169,300 shares of the Employer's Common Stock (the "Options")
at a price of $64.65 per share (the "Exercise Price"),  purchasable as set forth
herein.  The Options shall be governed by the terms and conditions in this Stock
Option  Agreement and the Employer's  Key Employee  Incentive Plan (the "Plan").
Unless  otherwise  indicated,  all  capitalized  terms not defined in this Stock
Option Agreement shall have the meanings ascribed to such terms in the Executive
Employment  Agreement  between  Optionee and the Employer  dated as of March 12,
2001 (the "Employment Agreement").

         2. The Options shall not be exercisable until vested. The Options shall
be  exercisable  during the period March 12, 2002,  through  March 12, 2011 (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, to the extent not  inconsistent  with the terms and  conditions  of
this Stock Option Agreement, in the Plan. Twenty-five percent (25%) of the total
Options granted to Optionee on the Grant Date ("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, on one or more than one  occasion,  provided that
the Options must be exercised  for a minimum of 100 shares on any one  occasion,
or for the remaining  number of shares  covered by the Options if less than such
minimum.  The Options may be exercised in accordance with any method  applicable
to options  granted  under the Plan and 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 in the manner provided in the Plan.

         3. In the event  Optionee's  employment with the Employer is terminated
for any reason other than the  occurrence  of an event  described in paragraph 4
below,  whether  voluntarily  or  involuntarily,  the  Options  shall  terminate
immediately  upon the Date of  Termination  and may not be exercised  after such
date.

         4. In the event of a Change in  Control  (as  defined in the Plan as of
the date of this Stock Option  Agreement),  any unvested  Options shall be fully
vested and  exercisable  immediately  prior to such Change in Control.  Upon the
occurrence  of Optionee's  death,  Disability,  retirement,  or  termination  of
Optionee's  employment  by the  Employer  without  Cause or by Optionee for Good
Reason,  the Options shall continue to vest in accordance with paragraph 2 above
and remain exercisable and Optionee (or his estate or personal representative in
the case of death or  Disability,  as the case may be) shall have five (5) years
from  the  Date of  Termination  to  exercise  the  Options,  provided  that the
Compensation and Executive Organization Committee of the Board of Directors (the
"Committee") shall retain its discretion to extend such five (5)


year period. In no event,  however,  shall any post-termination  exercise period
extend  beyond March 12,  2011.  For purposes of the Plan,  any  termination  of
Optionee's   employment  by  the  Employer  without  Cause  shall  be  deemed  a
resignation  by Optionee  and,  in the event of a  termination  by the  Employer
without Cause or Optionee for Good Reason,  the  provisions of this  paragraph 4
shall be the Committee's  determination as to Optionee's  rights or interests to
the Options under the Plan.

         5. The Options  shall be  exercisable  by written  notice  given to the
Employer substantially in one of the forms provided by the Law Department, or by
such other method as shall be  established by the Employer from time to time. If
written  notice is  required  to be given to the  Employer  for the  exercise of
Options  (which is the method of exercise  utilized by the Employer on the Grant
Date), each such notice shall:

                  a.       state the election to exercise the Options and the
number of shares to be exercised,

                  b.       be signed by the person  exercising  the Options and,
in the event that the Options are being  exercised  by any  person  other  than
Optionee,  be  accompanied  by proof of the right of such person to exercise the
Options, and

                  c.       be accompanied by payment in full as provided in
Sections 7II(f) and (g) of the Plan.

         For so long as  written  notice to the  Employer  is  required  for the
exercise of Options, the date of the exercise of the Options with respect to any
particular  shares  shall be the date on which such  written  notice,  proof (if
required), and payment shall have been delivered to the Employer.

         6.  This  grant  of  Options  is  subject  to  the   employee   minimum
stockholding  requirements  established  by the  Committee in effect on the date
hereof and as the same may be modified  from time to time by the  Committee.  In
the  event  Optionee  has  not  satisfied  the  employee  minimum   stockholding
requirement  then in effect or then  applicable to Optionee,  Optionee  shall be
restricted  in his ability to receive  cash from such  exercise  and sale of the
shares thereby  acquired to the extent and on the terms provided for in the then
applicable minimum  stockholding  requirements.  The terms and conditions of the
employee  minimum  stockholding  requirements  are  subject  to  change  at  the
discretion of the Committee.

         7. Except to the extent the Plan  provides  otherwise,  the Options may
not be  assigned,  transferred,  pledged or  hypothecated  in any way whether by
operation of law or  otherwise by Optionee and the Options  shall not be subject
to execution, attachment or similar process. Any attempted assignment, transfer,
pledge,  hypothecation  or other  disposition  of the  Options  or the rights or
benefits,  under this Stock  Option  Agreement,  and the levy of any  execution,
attachment  or similar  process upon such  Options,  or such rights and benefits
shall be null and void and without effect.

         8. Any dispute or disagreement arising out of or relating to this Stock
Option  Agreement  shall be resolved by binding  arbitration in accordance  with
Section  9 of the  Employment  Agreement.  Notwithstanding  the  foregoing,  any
dispute or  disagreement  which


                                       2


shall arise under,  as a result of, or in any way relate to the  interpretation,
construction or  administration of the Plan 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.  All  shares  issued  upon  exercise  of any  Option  shall  be duly
authorized  and when issued  upon such  exercise,  shall be (a) validly  issued,
fully paid and  non-assessable,  (b)  registered  for sale,  and for resale,  by
Optionee under Federal and state securities laws and shall remain  registered so
long as the shares may not be freely  sold in the  absence of such  registration
and (c) listed, or otherwise qualified, for trading in the United States on each
national  securities  exchange or national securities market system on which the
Common Stock is listed or qualified.

         10.  Subject  to  the  provisions  of  this  Stock  Option   Agreement,
including,  without  limitation,  paragraph 9 above,  in selling the  Employer's
Common  Stock  (the  "Shares")  upon  Optionee's  exercise  of his  Options  and
delivering  such Shares to  Optionee,  the  Employer is  fulfilling  in full its
contractual  obligation  to Optionee by making such  transfer,  and the Employer
shall  have no  further  obligations  or  duties  with  respect  thereto  and is
discharged  and  released  from the same.  Other than in respect to the Exercise
Price, the Employer 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 Employer.

         11.  The  Employer  represents  and  warrants  that  (a)  it  is  fully
authorized by its Board or the Committee (and of any person or body whose action
is  required)  to enter  into this Stock  Option  Agreement  and to perform  its
obligations under it, (b) the execution,  delivery and performance of this Stock
Option   Agreement  by  the  Employer  does  not  violate  any  applicable  law,
regulation,  order,  judgment  or decree  or any  agreement,  plan or  corporate
governance document of the Employer or any agreement among holders of its shares
and (c) upon the  execution  and delivery of this Stock Option  Agreement by the
Employer  and  Optionee,  this  Stock  Option  Agreement  shall be the valid and
binding  obligation of the Employer,  enforceable in accordance  with its terms,
except to the extent  enforceability  may be limited by  applicable  bankruptcy,
insolvency  or similar laws  affecting  the  enforcement  of  creditors'  rights
generally.

         12. Optionee may be restricted by the Employer, based on the reasonable
determination  of its counsel,  from exercising any of the Options to the extent
necessary to comply with insider trading or other provisions of federal or state
securities  laws.  In the event of any such  restriction  (other than one due to
insider  trading  issues),  the  Employer  shall take all such  action as may be
necessary  or  appropriate  to  eliminate  such   restriction  at  the  earliest
practicable  date. In the event Optionee attempts to exercise any of the Options
on or prior to March  12,  2011,  and is  restricted  from  doing so under  this
paragraph  12 until  after  March  12,  2011,  Optionee  shall be deemed to have
exercised such Options on March 12, 2011 unless Optionee shall be rescinded such
exercise prior to the elimination of such restriction.

         13. The  Options  shall be subject to  adjustment  (including,  without
limitation,  as to the number of shares of Common Stock  covered by the Options)
pursuant to Section 12 of the Plan in connection  with the  occurrence of any of
the events described in Section 12 of the Plan following the Date of Grant.

                                       3


         14. All notices and other communications  relating to this Stock Option
Agreement  shall  be given  as  provided  in  Section  16(b)  of the  Employment
Agreement.

         15. a. This Stock Option  Agreement is personal to Optionee and, except
as otherwise  provided in paragraph 7 above, shall not be assignable by Optionee
otherwise  than by will or the laws of descent  and  distribution,  without  the
prior written consent of the Employer.  This Stock Option  Agreement shall inure
to the benefit of and be enforceable by Optionee's legal representatives.

                  b. This  Stock  Option  shall  inure to the  benefit of and be
binding upon the Employer and its successors.  It shall not be assignable except
in connection with the sale or other  disposition of all or substantially all of
the assets or business of the Employer.

         16. This Stock Option Agreement  contains the entire agreement  between
the  parties  with  respect to the  subject  matter  hereof and may be  amended,
modified or changed  only be a written  instrument  executed by Optionee and the
Employer.  No provision of this Stock Option Agreement may be waived except by a
writing  executed  and  delivered  by the party  sought to be charged.  Any such
written waiver will be effective only with respect to the event or  circumstance
described  therein  and not with  respect  to any other  event or  circumstance,
unless such waiver expressly provides to the contrary.

         17. 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,  without  reference to  principles of conflict of laws. In the
event  there is a conflict  between  the Plan as from time to time in effect and
the terms and  conditions  in this Stock  Option  Agreement,  this Stock  Option
Agreement  shall  govern  unless the terms and  conditions  of the Plan are more
favorable  to  Optionee.  If such terms and  conditions  are more  favorable  to
Optionee,  then the Employer and Optionee agree that this Stock Option Agreement
is amended to the extent necessary to enable Optionee to gain the benefit of the
more favorable terms and conditions of the Plan.

                                       4




         18.  This  Stock  Option  Agreement  may be  executed  in  one or  more
counterparts,  each of which shall be deemed to be an original  but all of which
together shall constitute one and the same instrument.  Signatures  delivered by
facsimile shall be effective for all purposes.

                                     Hershey Foods Corporation



                                     By:
                                         --------------------------------------
                                     Name: Kenneth L. Wolfe
                                     Title: Chairman and Chief Executive Officer


Accepted:

OPTIONEE

- -----------------------
Richard H. Lenny


                                       5






                                                                     EXHIBIT A-2


                    2001 NONQUALIFIED STOCK OPTION AGREEMENT

         1. The Hershey  Foods  Corporation  (the  "Employer")  hereby grants to
Richard H. Lenny  ("Optionee"),  effective March 12, 2001 (the "Grant Date"), an
option to purchase 230,700 shares of the Employer's Common Stock (the "Options")
at a price of $64.65 per share (the "Exercise Price"),  purchasable as set forth
herein.  Optionee  accepts  that  such  Options  shall be  granted  outside  the
Employer's  Key  Employee  Incentive  Plan (the  "Plan").  The Options  shall be
governed by the terms and conditions in this Stock Option  Agreement and, to the
extent not inconsistent with the terms and conditions  hereunder,  in accordance
with the terms and  conditions  of the Plan as if the Options were granted under
the Plan.  References  herein to the Plan refer to such terms and  conditions as
incorporated  herein.  Unless  otherwise  indicated,  all capitalized  terms not
defined in this Stock Option Agreement shall have the meanings  ascribed to such
terms in the Executive  Employment  Agreement  between Optionee and the Employer
dated as of March 12, 2001 (the "Employment Agreement").

         2. The Options shall not be exercisable until vested. The Options shall
be  exercisable  during the period  March 12, 2002  through  March 12, 2011 (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, to the extent not  inconsistent  with the terms and  conditions  of
this Stock Option Agreement, in the Plan. Twenty-five percent (25%) of the total
Options granted to Optionee on the Grant Date ("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, on one or more than one  occasion,  provided that
the Options must be exercised  for a minimum of 100 shares on any one  occasion,
or for the remaining  number of shares  covered by the Options if less than such
minimum.  The Options may be exercised in accordance with any method  applicable
to options  granted  under the Plan and 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 in the manner provided in the Plan.

         3. In the event  Optionee's  employment with the Employer is terminated
for any reason other than the  occurrence  of an event  described in paragraph 4
below,  whether  voluntarily  or  involuntarily,  the  Options  shall  terminate
immediately  upon the Date of  Termination  and may not be exercised  after such
date.

         4. In the event of a Change in  Control  (as  defined in the Plan as of
the date of this Stock Option  Agreement),  any unvested  Options shall be fully
vested and  exercisable  immediately  prior to such Change in Control.  Upon the
occurrence  of  Optionee's  death,  Disability,  retirement  or  termination  of
Optionee's  employment  by the  Employer  without  Cause or by Optionee for Good
Reason,  the Options shall continue to vest in accordance with paragraph 2 above
and remain exercisable and Optionee (or his estate or personal representative in
the case of death or  Disability,  as the case may be) shall have five (5) years
from  the  Date of  Termination





to  exercise  the  Options,   PROVIDED  that  the   Compensation  and  Executive
Organization  Committee of the Board of Directors (the "Committee") shall retain
its discretion to extend such five (5) year period. In no event, however,  shall
any post-termination exercise period extend beyond March 12, 2011.

         5. The Options  shall be  exercisable  by written  notice  given to the
Employer substantially in one of the forms provided by the Law Department, or by
such other method as shall be  established by the Employer from time to time. If
written  notice is  required  to be given to the  Employer  for the  exercise of
Options  (which is the method of exercise  utilized by the Employer on the Grant
Date), each such notice shall:

                  a.       state the election to exercise the Options and the
number of shares to be exercised,

                  b.       be signed by the person exercising  the Options  and,
in the event that the Options are being  exercised  by any  person  other  than
Optionee,  be  accompanied by proof of the right of such  person to exercise the
Options, and

                  c.       be accompanied by payment in full as provided in
Sections 7II(f) and (g) of the Plan.

         For so long as  written  notice to the  Employer  is  required  for the
exercise of Options, the date of the exercise of the Options with respect to any
particular  shares  shall be the date on which such  written  notice,  proof (if
required), and payment shall have been delivered to the Employer.

         6.  This  grant  of  Options  is  subject  to  the   employee   minimum
stockholding  requirements  established  by the  Committee in effect on the date
hereof and as the same may be modified  from time to time by the  Committee.  In
the  event  Optionee  has  not  satisfied  the  employee  minimum   stockholding
requirement  then in effect or then  applicable to Optionee,  Optionee  shall be
restricted  in his or her ability to receive cash from such exercise and sale of
the shares  thereby  acquired to the extent and on the terms provided for in the
then applicable minimum stockholding  requirements.  The terms and conditions of
the  employee  minimum  stockholding  requirements  are subject to change at the
discretion of the Committee.

         7. Except to the extent that the Plan provides  otherwise,  the Options
may not be assigned, transferred,  pledged or hypothecated in any way whether by
operation of law or  otherwise by Optionee and the Options  shall not be subject
to execution, attachment or similar process. Any attempted assignment, transfer,
pledge,  hypothecation  or other  disposition  of the Options,  or the rights or
benefits,  under  this Stock  Option  Agreement  and the levy of any  execution,
attachment  or similar  process  upon such  Options or such rights and  benefits
shall be null and void and without effect.

         8. Any dispute or disagreement arising out of or relating to this Stock
Option  Agreement  shall be resolved by binding  arbitration in accordance  with
Section  9 of the  Employment  Agreement.  Notwithstanding  the  foregoing,  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 shall
be  determined  in all  cases  and for all  purposes  by the  Committee,

                                       2


or any successor  committee,  and any such determination shall be final, binding
and conclusive for all purposes.

         9. The Employer shall at all times  reserve,  out of its authorized and
unissued  shares,  a number of shares  sufficient to provide for the exercise in
full of the Options. All shares issued upon exercise of any Option shall be duly
authorized  and, when issued upon such  exercise,  shall be (a) validly  issued,
fully paid and  non-assessable,  (b)  registered  for sale,  and for resale,  by
Optionee under Federal and state securities laws and shall remain  registered so
long as the shares may not be freely  sold in the  absence of such  registration
and (c) listed, or otherwise qualified, for trading in the United States on each
national  securities  exchange or national securities market system on which the
Common Stock is listed or qualified.

         10.  Subject  to  the  provisions  of  this  Stock  Option   Agreement,
including,  without  limitation,  paragraph 9 above,  in selling the  Employer's
Common  Stock  (the  "Shares")  upon  Optionee's  exercise  of his  Options  and
delivering  such Shares to  Optionee,  the  Employer is  fulfilling  in full its
contractual  obligation  to Optionee by making such  transfer,  and the Employer
shall  have no  further  obligations  or  duties  with  respect  thereto  and is
discharged  and  released  from the same.  Other than in respect to the Exercise
Price, the Employer 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 Employer.

         11.  The  Employer  represents  and  warrants  that  (a)  it  is  fully
authorized by its Board or the Committee (and of any person or body whose action
is  required)  to enter  into this Stock  Option  Agreement  and to perform  its
obligations under it, (b) the execution,  delivery and performance of this Stock
Option   Agreement  by  the  Employer  does  not  violate  any  applicable  law,
regulation,  order,  judgment  or decree  or any  agreement,  plan or  corporate
governance document of the Employer or any agreement among holders of its shares
and (c) upon the  execution  and delivery of this Stock Option  Agreement by the
Employer  and  Optionee,  this  Stock  Option  Agreement  shall be the valid and
binding  obligation of the Employer,  enforceable in accordance  with its terms,
except to the extent  enforceability  may be limited by  applicable  bankruptcy,
insolvency  or similar laws  affecting  the  enforcement  of  creditors'  rights
generally.

         12. Optionee may be restricted by the Employer, based on the reasonable
determination  of its counsel,  from exercising any of the Options to the extent
necessary to comply with insider trading or other provisions of federal or state
securities  laws.  In the event of any such  restriction  (other than one due to
insider  trading  issues),  the  Employer  shall take all such  action as may be
necessary  or  appropriate  to  eliminate  such   restriction  at  the  earliest
practicable  date. In the event Optionee attempts to exercise any of the Options
on or prior to March  12,  2011,  and is  restricted  from  doing so under  this
paragraph  12 until  after  March  12,  2011,  Optionee  shall be deemed to have
exercised such Options on March 12, 2011 unless Optionee shall be rescinded such
exercise prior to the elimination of such restriction.

         13. The  Options  shall be subject to  adjustment  (including,  without
limitation,  as to the number of shares of Common Stock  covered by the Options)
pursuant to Section 12 of the Plan in connection  with the  occurrence of any of
the events described in Section 12 of the Plan following the Date of Grant.

                                       3


         14. All notices and other communications  relating to this Stock Option
Agreement  shall  be given  as  provided  in  Section  16(b)  of the  Employment
Agreement.

         15. a. This Stock Option  Agreement is personal to Optionee and, except
as otherwise  provided in paragraph 7 above, shall not be assignable by Optionee
otherwise  than by will or the laws of descent  and  distribution,  without  the
prior written consent of the Employer.  This Stock Option  Agreement shall inure
to the benefit of and be enforceable by Optionee's legal representatives.

                  b. This  Stock  Option  shall  inure to the  benefit of and be
binding upon the Employer and its successors.  It shall not be assignable except
in connection with the sale or other  disposition of all or substantially all of
the assets or business of the Employer.

         16. This Stock Option Agreement  contains the entire agreement  between
the  parties  with  respect to the  subject  matter  hereof and may be  amended,
modified or changed  only be a written  instrument  executed by Optionee and the
Employer.  No provision of this Stock Option Agreement may be waived except by a
writing  executed  and  delivered  by the party  sought to be charged.  Any such
written waiver will be effective only with respect to the event or  circumstance
described  therein  and not with  respect  to any other  event or  circumstance,
unless such waiver expressly provides to the contrary.

         17. 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,  without  reference to  principles of conflict of laws. In the
event  there is a conflict  between  the Plan as from time to time in effect and
the terms and  conditions  in this Stock  Option  Agreement,  this Stock  Option
Agreement  shall  govern  unless the terms and  conditions  of the Plan are more
favorable  to  Optionee.  If such terms and  conditions  are more  favorable  to
Optionee,  then the Employer and Optionee agree that this Stock Option Agreement
is amended to the extent necessary to enable Optionee to gain the benefit of the
more favorable terms and conditions of the Plan.

         16.  This  Stock  Option  Agreement  may be  executed  in  one or  more
counterparts,  each of which shall be deemed to be an original  but all of which
together shall constitute one and the same instrument.  Signatures  delivered by
facsimile shall be effective for all purposes.

                                   Hershey Foods Corporation


                                   By:___________________________
                                   Name: Kenneth L. Wolfe
                                   Title:  Chairman and Chief Executive Officer


Accepted:

OPTIONEE

- -----------------------
Richard H. Lenny



                                       4


                                                                   EXHIBIT B-1








                            HERSHEY FOODS CORPORATION
                           KEY EMPLOYEE INCENTIVE PLAN






In recognition of your essential role in the continuing realization of Hershey's
goals of sustained  growth,  you have been granted a Restricted Stock Unit Award
under the Hershey Foods  Corporation Key Employee  Incentive Plan,  representing
the right, subject to restrictions, to acquire shares of Hershey Common Stock as
follows:


                 NUMBER OF SHARES        50,000

This grant is made pursuant to the Restricted  Stock Unit Award  Agreement dated
as of March 12,  2001,  between  Hershey and you,  which  Agreement  is attached
hereto and made a part hereof.









              HERSHEY FOODS CORPORATION KEY EMPLOYEE INCENTIVE PLAN
                      RESTRICTED STOCK UNIT AWARD AGREEMENT

         This  Restricted   Stock  Unit  Award  Agreement   (herein  called  the
"Agreement")  is made and  entered  into as of March 12,  2001,  by and  between
Hershey Foods Corporation,  a Delaware corporation (the "Company"),  and Richard
H. Lenny  ("Employee").  The  Restricted  Stock Unit Award (as defined below) is
governed by this Agreement and, subject to Paragraph  13(b),  below, the Hershey
Foods  Corporation Key Employee  Incentive Plan (the "Plan").  Except as defined
herein,  capitalized  terms shall have the same meanings  ascribed to them under
the Plan.

         1.  AWARD OF  RESTRICTED  STOCK  UNIT  AWARD.  In  order  to  encourage
Employee's  contribution  to the successful  performance of the Company,  and in
consideration  of the covenants and promises of Employee herein  contained,  the
Company  hereby awards to Employee as of the date first written above (the "Date
of Grant"),  pursuant to the terms of the Plan,  a  Restricted  Stock Unit Award
representing the right to acquire 50,000 shares of Common Stock,  subject to the
conditions,  restrictions  and  limitations set forth below and in the Plan (the
"Restricted  Stock Unit Award").  Employee hereby  acknowledges and accepts such
grant and agrees to acquire  the  Restricted  Stock Unit Award and the shares of
Common Stock  covered  thereby  upon such terms and subject to such  conditions,
restrictions and limitations, subject to Paragraph 13(b), below.

         2.       VESTING.

                  (a) Subject to the  termination of the  Restricted  Stock Unit
Award pursuant to Paragraph 3, below, or the  acceleration of the vesting of the
Units covered  pursuant to  Paragraphs  2(b) and 2(c),  below,  on the first and
second  Annual  Vesting  Dates (as  hereinafter  defined)  following the Date of
Grant,  Employee  shall become vested in fifty percent (50%) of the total number
of Units covered by the Restricted Stock Unit Award, and such Units shall become
Vested Units (as hereinafter defined).

                  (b) In all events,  Employee  shall become vested in all Units
not yet vested under this  Agreement,  and such Units shall become Vested Units,
no later than the earliest of (i) the second Annual  Vesting Date  following the
Date of  Grant,  (ii) the Date of  Termination  (as  hereinafter  defined)  upon
Employee's Disability (as hereinafter defined), death, retirement or termination
of Employee's  employment by the Company without Cause (as hereinafter  defined)
or by  Employee  for Good  Reason  (as  hereinafter  defined)  or (iii) upon the
occurrence  of a Change in Control (as is defined in the Plan as in effect as of
the date of this  Agreement).  For  purposes  of the Plan,  any  termination  of
Employee's employment by the Company without Cause shall be deemed a resignation
by Employee and, in the event of a termination  by the Company  without Cause or
Employee for Good Reason,  the  provisions of this  Paragraph  2(b) shall be the
Compensation   and  Executive   Organization   Committee's   (the   "Committee")
determination  as to  Employee's  rights to or  interests in the Units under the
Plan.

                  (c)  Notwithstanding  the  provisions of  Paragraphs  2(a) and
2(b), above, and Paragraph 3, below,  Employee shall become vested in any or all
Units  covered  by the  Restricted  Stock  Unit  Award at an  earlier  date than
provided in Paragraphs  2(a) and 2(b),  above,  and  Paragraph 3, below,  if the
Committee expressly so determines, in its sole discretion.




         3. EFFECT OF CERTAIN EVENTS. If Employee's  employment with the Company
is terminated by the Company for Cause or by Employee  without Good Reason prior
to the first  date upon which all shares  covered by the  Restricted  Stock Unit
Award shall have become  Vested Units  pursuant to  Paragraph 2 above,  then the
Restricted  Stock Unit Award and Employee's  right to receive  shares  hereunder
(other than as to Units which are Vested Units at the Date of Termination) shall
terminate,  without any  payment of  consideration  by the Company to  Employee,
unless expressly determined otherwise by the Committee, in its sole discretion.

         4.  RESTRICTIONS ON TRANSFER.  The Restricted  Stock Unit Award granted
hereunder  to  Employee  may not be  sold,  assigned,  transferred,  pledged  or
otherwise encumbered, whether voluntarily or involuntarily,  by operation of law
or  otherwise.  No right or  benefit  under this  Agreement  shall be subject to
transfer,  anticipation,  alienation,  sale, assignment,  pledge, encumbrance or
charge, whether voluntary,  involuntary,  by operation of law or otherwise,  and
any attempt to transfer, anticipate, alienate, sell, assign, pledge, encumber or
charge the same shall be void.

         5.       DELIVERY OF SHARES.

                  (a) Except to the extent  delivery has been deferred  under an
applicable deferred  compensation plan of the Company, not less than thirty (30)
days and not more than  forty  (40)  days  after  each of the  first two  Annual
Vesting  Dates,  the Company  shall  deliver to Employee one (1) share of Common
Stock for each Unit  which  became a Vested  Unit on the  immediately  preceding
Annual Vesting Date.

                  (b) Within ten (10) days after the Units shall  become  Vested
Units pursuant to Paragraph 2(b)(ii) or (iii),  above, the Company shall deliver
to  Employee  one (1)  share of  Common  Stock  for  each  Unit  covered  by the
Restricted Stock Unit Award which has become a Vested Unit but only with respect
to which a share of Common Stock has not yet been delivered.

         6. WITHHOLDING TAX REQUIREMENTS. Except to the extent delivery has been
deferred under an applicable deferred compensation plan of the Company, prior to
the date on which  shares  of  Common  Stock  are to be  delivered  pursuant  to
Paragraph 5, above,  the Company shall  deliver to Employee a notice  specifying
such  amounts  as  Employee  is  required  to  pay  to  satisfy  applicable  tax
withholding  requirements.  In the event that the Company  does not exercise its
right to  withhold  shares  of stock at the time of  vesting  to cover  such tax
withholding  requirements  as provided in the Plan,  Employee hereby agrees that
Employee  shall either:  (i) deliver to the Company by the due date specified in
such notice a check equal to the amount set forth in such notice, or (ii) direct
the Company to withhold, at the time of delivery of shares pursuant to Paragraph
5,  above,  an  appropriate  number of  shares to  satisfy  the  applicable  tax
withholding  requirements  (with such shares  valued  based on their Fair Market
Value on the day the  Company  delivers  the shares  pursuant  to  Paragraph  5,
above), or (iii) make other appropriate  arrangements  acceptable to or required
by the Company to satisfy such tax withholding requirements. Failure by Employee
to  comply  with  the  foregoing  shall  entitle  the  Committee,  in  its  sole
discretion,  to authorize  the sale of a  sufficient  number of shares of Common
Stock owned by Employee in order to satisfy such withholding requirements.  Upon
the payment of any dividend equivalents payable pursuant to Paragraph 10 hereof,
Employee  agrees that the

                                       2


Company shall be entitled to deduct  therefrom  such amounts as are necessary to
satisfy applicable tax withholding requirements.

         7. SALE AND ISSUANCE OF COMMON  STOCK.  Employee  agrees that  Employee
shall not sell Award  Shares,  and that the Company  shall not be  obligated  to
deliver  any  shares  of  Common  Stock if  counsel  to the  Company  reasonably
determines  that such sale or delivery  would violate any applicable law rule or
regulation of any  governmental  authority or any applicable  rule or regulation
of, or agreement of the Company with,  any  securities  exchange or  association
upon  which  the  Common  Stock is listed  or  quoted.  In the event of any such
restriction  (other than one due to insider trading  issues),  the Company shall
take all such  action as may be  necessary  or  appropriate  to  eliminate  such
restriction at the earliest  practicable  date.  All Award Shares,  when issued,
shall  be duly  authorized  and  shall be (a)  validly  issued,  fully  paid and
nonassessable,  (b)  registered  for sale,  and for resale,  by  Employee  under
Federal and state  securities  laws and shall remain  registered  so long as the
shares  may not be  freely  sold in the  absence  of such  registration  and (c)
listed,  or  otherwise  qualified,  for  trading  in the  United  States on each
national  securities  exchange or national securities market system on which the
Common Stock is listed or qualified.

         8.  LIMITATION OF RIGHTS.  Nothing  contained in this  Agreement or the
Plan,  and no action of the Company  with  respect  hereto,  shall  confer or be
construed  to confer on  Employee  any right to continue  in the  employment  or
service of the  Company,  or affect the right of the  Company to  terminate  the
employment or service of Employee at any time for any reason.

         9. PREREQUISITES TO BENEFITS.  Neither Employee nor any person claiming
through  Employee  shall  have  any  right  or  interest  in the  Units  awarded
hereunder,  unless and until all of the terms, conditions and provisions of this
Agreement and the Plan, as amended  hereby,  which affect Employee or such other
person shall have been complied with as specified herein.

         10. NO RIGHTS AS A STOCKHOLDER  PRIOR TO DELIVERY,  PAYMENT OF DIVIDEND
EQUIVALENTS;  ADJUSTMENT.  Employee shall not have any right,  title or interest
in, or be entitled to vote or receive  distributions in respect of, or otherwise
be  considered  the owner of, any of the shares of Common  Stock  covered by the
Restricted  Stock Unit  Award,  except to the extent  that such shares are Award
Shares.  Notwithstanding  the foregoing,  upon the Units  becoming  Vested Units
pursuant to  Paragraph  2, above,  Employee  shall be entitled to receive a cash
payment in an amount equal to each cash  dividend the Company would have paid to
Employee  during  the term of the  Units as if  Employee  had been the  owner of
record of the shares of Common  Stock  covered by such Units on the record  date
for the payment of such dividend.  In lieu of receiving such payment at the time
of such Units becoming  Vested Units,  all or any portion of such payment may be
deferred by Employee pursuant to an applicable  deferred  compensation plan with
the approval of the Committee.  The Restricted Stock Unit Award shall be subject
to  adjustment  (including,  without  limitation,  as to the number of shares of
Common  Stock  covered  by the  Award)  pursuant  to  Section  12 of the Plan in
connection  with the occurrence of any of the events  described in Section 12 of
the Plan following the Date of Grant.

         11. COMPANY  REPRESENTATIONS.  The Company represents and warrants that
(a) it is fully  authorized by its Board or the Committee  (and of any person or
body whose action is required) to enter into this  Agreement  and to perform its
obligations  under it,  (b) the  execution,

                                       3


delivery and  performance  of this Agreement by the Company does not violate any
applicable law, regulation,  order, judgment or decree or any agreement, plan or
corporate  governance  document of the Company or any agreement among holders of
its shares and (c) upon the  execution  and  delivery of this  Agreement  by the
Company and Employee,  this Agreement shall be the valid and binding  obligation
of the Company,  enforceable in accordance with its terms,  except to the extent
enforceability  may be limited by applicable  bankruptcy,  insolvency or similar
laws affecting the enforcement of creditors' rights generally.

         12.      CERTAIN  DEFINITIONS.  For  purposes of this  Agreement,  the
 following  additional  definitions shall be applicable:

         "Annual  Vesting  Date" shall mean with respect to any year,  beginning
with 2002, March 12.

         "Award  Shares"  shall  mean  shares of  Common  Stock  covered  by the
Restricted  Stock Unit Award which have been delivered  pursuant to Paragraph 5,
above.

         "Cause" shall have the same meaning as in the Employment Agreement.

         "Date of Termination"  shall have the same meaning as in the Employment
Agreement.

         "Disability"   shall  have  the  same  meaning  as  in  the  Employment
Agreement.

         "Employment  Agreement" shall mean the Executive  Employment  Agreement
dated as of March 12, 2001, between the Company and Employee.

         "Good  Reason"  shall  have  the  same  meaning  as in  the  Employment
Agreement.

         A "Unit"  covered by the  Restricted  Stock  Unit Award  shall mean the
right to  receive,  pursuant to the terms of this  Agreement,  a share of Common
Stock, and any other amount or property payable with respect thereto, covered by
the Restricted Stock Unit Award.

         "Vested Units" shall mean units corresponding to shares of Common Stock
covered by the  Restricted  Stock Unit Award which at the time in question  have
become Vested Units pursuant to Paragraph 2 hereof.

         13.      MISCELLANEOUS  PROVISIONS.  For purposes  of  this  Agreement,
the  following  miscellaneous provisions shall be applicable:

                  (a)  RECEIPT  AND  REVIEW  OF PLAN  AND  PROSPECTUS.  Employee
acknowledges  receipt  of a copy  of the  Plan,  together  with  the  Prospectus
relating thereto and to the Common Stock.  Employee further  acknowledges notice
of the terms,  conditions,  restrictions and limitations  contained in the Plan,
and acknowledges the restrictions set forth in this Agreement.

                  (b) CONFLICTS.  This  Agreement  amends and modifies the Plan.
The  Company  and  Employee  agree to be bound by all of the terms,  conditions,
restrictions  and  limitations  of the Plan,  as amended  and  modified  by this
Agreement. The Company and Employee agree that the Plan may be amended from time
to time in  accordance  with the terms  thereof,  but no such

                                       4


amendment  shall,  without  Employee's  consent,  adversely  affect  the  rights
specifically granted Employee hereunder or under the Plan. In the event there is
a conflict between the Plan and the terms and conditions in this Agreement, this
Agreement  shall  govern  unless the terms and  conditions  of the Plan are more
favorable  to  Employee.  If such terms and  conditions  are more  favorable  to
Employee,  then the Company and Employee agree that this Agreement is amended to
the  extent  necessary  to  enable  Employee  to gain  the  benefit  of the more
favorable terms and conditions of the Plan.

                  (c)      SUCCESSORS.

                           (i) This  Agreement  is  personal  to  Employee  and,
         except  as  otherwise  provided  in  Paragraph  4 above,  shall  not be
         assignable  by Employee  otherwise  than by will or the laws of descent
         and  distribution,  without the written  consent of the  Company.  This
         Agreement  shall  inure  to  the  benefit  of  and  be  enforceable  by
         Employee's legal representatives.

                           (ii) This Agreement shall inure to the benefit of and
         be binding upon Company and its successors.  It shall not be assignable
         except  in  connection  with the sale or  other  disposition  of all or
         substantially all the assets or business of the Company.

                  (d)      NOTICE. All notices and other communications relating
to this  Agreement  shall be given as provided in Section 16(b) of the
Employment Agreement.

                  (e)  SEVERABILITY.  If any provision of this Agreement for any
reason  should be found by any court of  competent  jurisdiction  to be invalid,
illegal or unenforceable, in whole or in part, such declaration shall not affect
the validity,  legality or enforceability of any remaining  provision or portion
thereof, which remaining provision or portion thereof shall remain in full force
and effect as if this  Agreement  had been adopted with the invalid,  illegal or
unenforceable provision or portion thereof eliminated.

                  (f)      HEADINGS.  The headings,  captions and  arrangements
utilized in this  Agreement  shall not be construed to limit or modify the
terms or meaning of this Agreement.

                  (g) EQUITABLE RELIEF. Any dispute or disagreement  arising out
of or relating to this  Agreement  shall be resolved by binding  arbitration  in
accordance  with  Section 9 of the  Employment  Agreement.  Notwithstanding  the
foregoing, either party shall be entitled to enforce the terms and provisions of
this Agreement by an action for injunction and/or specific performance,  and any
such action may be brought in any  federal or state court  located in the county
where the Company has its principal business headquarters.

                  (h)  GOVERNING  LAW;  JURISDICTION.  This  Agreement  shall be
governed  by and  construed  and  enforced  in  accordance  with the laws of the
Commonwealth of Pennsylvania  without  reference to conflict of laws principles.
Subject to Paragraph 13(g), above, any action, suit or proceeding arising out of
any claim  against  the  Company  pursuant  to this  Agreement  shall be brought
exclusively  in the  federal or state  courts  located in the state in which the
Company has its principal business headquarters.

                                       5


                  (i)  DETERMINATIONS  BY  COMMITTEE.  All  references  in  this
Agreement  to  determinations  to be made by the  Committee  shall be  deemed to
include  determinations  by any  person or  persons  to whom the  Committee  may
delegate such authority in accordance with the rules adopted thereby.

                  (j) ENTIRE  AGREEMENT;  AMENDMENT  OR WAIVER.  This  Agreement
contains  the entire  agreement  between the parties with respect to the subject
matter  hereof  and may be  amended,  modified  or  changed  only  by a  written
instrument  executed by Employee and the Company. No provision of this Agreement
may be waived except by a writing  executed and delivered by the party sought to
be charged.  Any such written  waiver will be effective only with respect to the
event or circumstance  described therein and not with respect to any other event
or circumstance, unless such waiver expressly provides to the contrary.

                  (k)  COUNTERPARTS.  This  Agreement  may be executed in one or
more  counterparts,  each of which shall be deemed to be an original  but all of
which  together  shall  constitute  one  and  the  same  instrument.  Signatures
delivered by facsimile shall be effective for all purposes.


                                       6





         IN WITNESS  WHEREOF,  this  Agreement  has been executed as of the date
first above written by an officer of the Company and by Employee.

EMPLOYEE:                           HERSHEY FOODS CORPORATION:



          __________                 _________________________________________
Richard H. Lenny                     Name:  Kenneth L. Wolfe
                                     Its:  Chairman and Chief Executive Officer




                                       7



                                                                  EXHIBIT B-2







                            HERSHEY FOODS CORPORATION
                           KEY EMPLOYEE INCENTIVE PLAN



In recognition of your essential role in the continuing realization of Hershey's
goals of sustained  growth,  you have been granted a Restricted Stock Unit Award
under the Hershey Foods  Corporation Key Employee  Incentive Plan,  representing
the right, subject to restrictions, to acquire shares of Hershey Common Stock as
follows:


               NUMBER OF SHARES         15,542

This grant is made pursuant to the Restricted  Stock Unit Award  Agreement dated
as of January 2, 2002,  between  Hershey and you,  which  Agreement  is attached
hereto and made a part hereof.









              HERSHEY FOODS CORPORATION KEY EMPLOYEE INCENTIVE PLAN
                      RESTRICTED STOCK UNIT AWARD AGREEMENT

         This  Restricted   Stock  Unit  Award  Agreement   (herein  called  the
"Agreement")  is made and  entered  into as of January 2, 2002,  by and  between
Hershey Foods Corporation,  a Delaware corporation (the "Company"),  and Richard
H. Lenny  ("Employee").  The  Restricted  Stock Unit Award (as defined below) is
governed by this Agreement and, subject to Paragraph  13(b),  below, the Hershey
Foods  Corporation Key Employee  Incentive Plan (the "Plan").  Except as defined
herein,  capitalized  terms shall have the same meanings  ascribed to them under
the Plan.

         1.  AWARD OF  RESTRICTED  STOCK  UNIT  AWARD.  In  order  to  encourage
Employee's  contribution  to the successful  performance of the Company,  and in
consideration  of the covenants and promises of Employee herein  contained,  the
Company  hereby awards to Employee as of the date first written above (the "Date
of Grant"),  pursuant to the terms of the Plan,  a  Restricted  Stock Unit Award
representing the right to acquire 15,542 shares of Common Stock,  subject to the
conditions,  restrictions  and  limitations set forth below and in the Plan (the
"Restricted  Stock Unit Award").  Employee hereby  acknowledges and accepts such
grant and agrees to acquire  the  Restricted  Stock Unit Award and the shares of
Common Stock  covered  thereby  upon such terms and subject to such  conditions,
restrictions and limitations, subject to Paragraph 13(b), below.

         2.       VESTING.

                  (a) Subject to the  termination of the  Restricted  Stock Unit
Award pursuant to Paragraph 3, below, or the  acceleration of the vesting of the
Units covered pursuant to Paragraphs 2(b) and 2(c),  below, on each of March 12,
2002, and March 12, 2003 (each,  a "Vesting  Date," and  collectively,  "Vesting
Dates"), Employee shall become vested in fifty percent (50%) of the total number
of Units covered by the Restricted Stock Unit Award, and such Units shall become
Vested Units (as hereinafter defined).

                  (b) In all events,  Employee  shall become vested in all Units
not yet vested under this  Agreement,  and such Units shall become Vested Units,
no later than the earliest of (i) March 12, 2003,  (ii) the Date of  Termination
(as hereinafter  defined) upon Employee's  Disability (as hereinafter  defined),
death,  retirement or  termination of Employee's  employment by Company  without
Cause (as  hereinafter  defined) or by Employee for Good Reason (as  hereinafter
defined) or (iii) upon the  occurrence of a Change in Control (as defined in the
Plan as in effect as of the date of this  Agreement).  For purposes of the Plan,
any  termination of Employee's  employment by the Company without Cause shall be
deemed a  resignation  by  Employee  and, in the event of a  termination  by the
Company  without  Cause or Employee  for Good  Reason,  the  provisions  of this
Paragraph 2(b) shall be the Compensation and Executive Organization  Committee's
(the  "Committee")  determination as to Employee's rights to or interests in the
Units under the Plan.

                  (c)  Notwithstanding  the  provisions of  Paragraphs  2(a) and
2(b), above, and Paragraph 3, below,  Employee shall become vested in any or all
Units  covered  by the  Restricted  Stock  Unit  Award at an  earlier  date than
provided in Paragraphs  2(a) and 2(b),  above,  and  Paragraph 3, below,  if the
Committee expressly so determines, in its sole discretion.




         3. EFFECT OF CERTAIN EVENTS. If Employee's  employment with the Company
is terminated by the Company for Cause or by Employee  without Good Reason prior
to the first  date upon which all shares  covered by the  Restricted  Stock Unit
Award shall have become  Vested Units  pursuant to  Paragraph 2 above,  then the
Restricted  Stock Unit Award and Employee's  right to receive  shares  hereunder
(other than as to Units which are Vested Units at the Date of Termination) shall
terminate,  without any  payment of  consideration  by the Company to  Employee,
unless expressly determined otherwise by the Committee, in its sole discretion.

         4.  RESTRICTIONS ON TRANSFER.  The Restricted  Stock Unit Award granted
hereunder  to  Employee  may not be  sold,  assigned,  transferred,  pledged  or
otherwise encumbered, whether voluntarily or involuntarily,  by operation of law
or  otherwise.  No right or  benefit  under this  Agreement  shall be subject to
transfer,  anticipation,  alienation,  sale, assignment,  pledge, encumbrance or
charge, whether voluntary,  involuntary,  by operation of law or otherwise,  and
any attempt to transfer, anticipate, alienate, sell, assign, pledge, encumber or
charge the same shall be void.

         5.       DELIVERY OF SHARES.

                  (a) Except to the extent  delivery has been deferred  under an
applicable deferred  compensation plan of the Company, not less than thirty (30)
days and not more than  forty (40) days after  each of the  Vesting  Dates,  the
Company  shall  deliver to Employee  one (1) share of Common Stock for each Unit
which became a Vested Unit on the immediately preceding Vesting Date.

                  (b) Within ten (10) days after the Units shall  become  Vested
Units pursuant to Paragraph 2(b)(ii) or (iii),  above, the Company shall deliver
to  Employee  one (1)  share of  Common  Stock  for  each  Unit  covered  by the
Restricted Stock Unit Award which has become a Vested Unit but only with respect
to which a share of Common Stock has not yet been delivered.

         6. WITHHOLDING TAX REQUIREMENTS. Except to the extent delivery has been
deferred under an applicable deferred compensation plan of the Company, prior to
the date on which  shares  of  Common  Stock  are to be  delivered  pursuant  to
Paragraph 5, above,  the Company shall  deliver to Employee a notice  specifying
such  amounts  as  Employee  is  required  to  pay  to  satisfy  applicable  tax
withholding  requirements.  In the event that the Company  does not exercise its
right to  withhold  shares  of stock at the time of  vesting  to cover  such tax
withholding  requirements  as provided in the Plan,  Employee hereby agrees that
Employee  shall either:  (i) deliver to the Company by the due date specified in
such notice a check equal to the amount set forth in such notice, or (ii) direct
the Company to withhold, at the time of delivery of shares pursuant to Paragraph
5,  above,  an  appropriate  number of  shares to  satisfy  the  applicable  tax
withholding  requirements  (with such shares  valued  based on their Fair Market
Value on the date the  Company  delivers  the shares  pursuant to  Paragraph  5,
above) or (iii) make other appropriate arrangements acceptable to or required by
the Company to satisfy such tax withholding requirements. Failure by Employee to
comply with the foregoing shall entitle the Committee,  in its sole  discretion,
to authorize the sale of a sufficient  number of shares of Common Stock owned by
Employee in order to satisfy such withholding requirements.  Upon the payment of
any dividend  equivalents  payable  pursuant to  Paragraph  10 hereof,  Employee
agrees that the

                                       2



Company shall be entitled to deduct  therefrom  such amounts as are necessary to
satisfy applicable tax withholding requirements.


         7. SALE AND ISSUANCE OF COMMON  STOCK.  Employee  agrees that  Employee
shall not sell Award  Shares,  and that the Company  shall not be  obligated  to
deliver  any  shares  of  Common  Stock if  counsel  to the  Company  reasonably
determines  that such sale or delivery would violate any applicable law, rule or
regulation of any  governmental  authority or any applicable  rule or regulation
of, or agreement of the Company with,  any  securities  exchange or  association
upon  which  the  Common  Stock is listed  or  quoted.  In the event of any such
restriction  (other than one due to insider trading  issues),  the Company shall
take all such  action as may be  necessary  or  appropriate  to  eliminate  such
restriction at the earliest  practicable  date.  All Award Shares,  when issued,
shall  be duly  authorized  and  shall be (a)  validly  issued,  fully  paid and
nonassessable,  (b)  registered  for sale,  and for resale,  by  Employee  under
Federal and State  securities  laws and shall remain  registered  so long as the
shares  may not be  freely  sold in the  absence  of such  registration  and (c)
listed,  or  otherwise  qualified,  for  trading  in the  United  States on each
national  securities  exchange or national securities market system on which the
Common Stock is listed or qualified.

         8.  LIMITATION OF RIGHTS.  Nothing  contained in this  Agreement or the
Plan,  and no action of the Company  with  respect  hereto,  shall  confer or be
construed  to confer on  Employee  any right to continue  in the  employment  or
service of the  Company,  or affect the right of the  Company to  terminate  the
employment or service of Employee at any time for any reason.

         9. PREREQUISITES TO BENEFITS.  Neither Employee nor any person claiming
through  Employee  shall  have  any  right  or  interest  in the  Units  awarded
hereunder,  unless and until all of the terms, conditions and provisions of this
Agreement and the Plan, as amended  hereby,  which affect Employee or such other
person shall have been complied with as specified herein.

         10. NO RIGHTS AS A STOCKHOLDER  PRIOR TO DELIVERY,  PAYMENT OF DIVIDEND
EQUIVALENTS;  ADJUSTMENT.  Employee shall not have any right,  title or interest
in, or be entitled to vote or receive  distributions in respect of, or otherwise
be  considered  the owner of, any of the shares of Common  Stock  covered by the
Restricted  Stock Unit  Award,  except to the extent  that such shares are Award
Shares.  Notwithstanding  the foregoing,  upon the Units  becoming  Vested Units
pursuant to  Paragraph  2, above,  Employee  shall be entitled to receive a cash
payment in an amount equal to each cash  dividend the Company would have paid to
Employee  during  the term of the  Units as if  Employee  had been the  owner of
record of the shares of Common  Stock  covered by such Units on the record  date
for the payment of such dividend.  In lieu of receiving such payment at the time
of such Units becoming  Vested Units,  all or any portion of such payment may be
deferred by Employee pursuant to an applicable  deferred  compensation plan with
the approval of the Committee.  The Restricted Stock Unit Award shall be subject
to  adjustment  (including,  without  limitation,  as to the number of shares of
Common  Stock  covered  by the  Award)  pursuant  to  Section  12 of the Plan in
connection  with the occurrence of any of the events  described in Section 12 of
the Plan following the Date of Grant.

         11. COMPANY  REPRESENTATIONS.  The Company represents and warrants that
(a) it is fully  authorized by its Board or the Committee  (and of any person or
body whose action is required) to enter into this  Agreement  and to perform its
obligations  under it,  (b) the  execution,

                                       3


delivery and  performance  of this Agreement by the Company does not violate any
applicable law, regulation,  order, judgment or decree or any agreement, plan or
corporate  governance  document of the Company or any agreement among holders of
its shares and (c) upon the  execution  and  delivery of this  Agreement  by the
Company and Employee,  this Agreement shall be the valid and binding  obligation
of the Company,  enforceable in accordance with its terms,  except to the extent
enforceability  may be limited by applicable  bankruptcy,  insolvency or similar
laws affecting the enforcement of creditors' rights generally.

         12.      CERTAIN  DEFINITIONS.  For  purposes of this  Agreement,  the
 following  additional  definitions shall be applicable:

         "Award  Shares"  shall  mean  shares of  Common  Stock  covered  by the
Restricted  Stock Unit Award which have been delivered  pursuant to Paragraph 5,
above.

         "Cause" shall have the same meaning as in the Employment Agreement.

         "Date of Termination"  shall have the same meaning as in the Employment
Agreement.

         "Disability"   shall  have  the  same  meaning  as  in  the  Employment
Agreement.

         "Employment  Agreement" shall mean the Executive  Employment  Agreement
dated as of March 12, 2001, between the Company and Employee.

         "Good  Reason"  shall  have  the  same  meaning  as in  the  Employment
Agreement.

         A "Unit"  covered by the  Restricted  Stock  Unit Award  shall mean the
right to  receive,  pursuant to the terms of this  Agreement,  a share of Common
Stock, and any other amount or property payable with respect thereto, covered by
the Restricted Stock Unit Award.

         "Vested Units" shall mean units corresponding to shares of Common Stock
covered by the  Restricted  Stock Unit Award which at the time in question  have
become Vested Units pursuant to Paragraph 2 hereof.

         13.      MISCELLANEOUS  PROVISIONS.  For  purposes of  this  Agreement,
the  following  miscellaneous provisions shall be applicable:

                  (a)  RECEIPT  AND  REVIEW  OF PLAN  AND  PROSPECTUS.  Employee
acknowledges  receipt  of a copy  of the  Plan,  together  with  the  Prospectus
relating thereto and to the Common Stock.  Employee further  acknowledges notice
of the terms,  conditions,  restrictions and limitations  contained in the Plan,
and acknowledges the restrictions set forth in this Agreement.

                  (b) CONFLICTS.  This  Agreement  amends and modifies the Plan.
The  Company  and  Employee  agree to be bound by all of the terms,  conditions,
restrictions  and  limitations  of the Plan,  as amended  and  modified  by this
Agreement. The Company and Employee agree that the Plan may be amended from time
to time in  accordance  with the terms  thereof,  but no such  amendment  shall,
without Employee's  consent,  adversely affect the rights  specifically  granted
Employee  hereunder or under the Plan. In the event there is a conflict  between
the Plan and the terms and conditions in this  Agreement,  this Agreement  shall
govern  unless  the  terms  and

                                       4


conditions  of the  Plan are more  favorable  to  Employee.  If such  terms  and
conditions are more  favorable to Employee,  then the Company and Employee agree
that this  Agreement is amended to the extent  necessary  to enable  Employee to
gain the benefit of the more favorable terms and conditions of the Plan.

                  (c)      SUCCESSORS.

                           (i) This  Agreement  is  personal  to  Employee  and,
         except  at  otherwise  provided  in  Paragraph  4 above,  shall  not be
         assignable  by Employee  otherwise  than by will or the laws of descent
         and  distribution,  without the written  consent of the  Company.  This
         Agreement  shall  inure  to  the  benefit  of  and  be  enforceable  by
         Employee's legal representatives.

                           (ii) This Agreement shall inure to the benefit of and
         be binding upon Company and its successors.  It shall not be assignable
         except  in  connection  with the sale or  other  disposition  of all or
         substantially all the assets or business of the Company.

                  (d)      NOTICES.  All  notices and other communications
relating  to this  Agreement  shall be given as provided in Section 16(b) of the
Employment Agreement.

                  (e)  SEVERABILITY.  If any provision of this Agreement for any
reason  should be found by any court of  competent  jurisdiction  to be invalid,
illegal or unenforceable, in whole or in part, such declaration shall not affect
the validity,  legality or enforceability of any remaining  provision or portion
thereof, which remaining provision or portion thereof shall remain in full force
and effect as if this  Agreement  had been adopted with the invalid,  illegal or
unenforceable provision or portion thereof eliminated.

                  (f)      HEADINGS.  The headings,  captions and  arrangements
utilized in this  Agreement shall not be construed to limit or modify the terms
or meaning of this Agreement.

                  (g) EQUITABLE RELIEF. Any dispute or disagreement  arising out
of or relating to this  Agreement  shall be resolved by binding  arbitration  in
accordance  with  Section 9 of the  Employment  Agreement.  Notwithstanding  the
foregoing, either party shall be entitled to enforce the terms and provisions of
this Agreement by an action for injunction and/or specific performance,  and any
such action may be brought in any  federal or state court  located in the county
where the Company has its principal business headquarters.

                  (h)  GOVERNING  LAW;  JURISDICTION.  This  Agreement  shall be
governed  by and  construed  and  enforced  in  accordance  with the laws of the
Commonwealth of Pennsylvania  without  reference to conflict of laws principles.
Subject to Paragraph 13(g), above, any action, suit or proceeding arising out of
any claim  against  the  Company  pursuant  to this  Agreement  shall be brought
exclusively  in the  federal or state  courts  located in the state in which the
Company has its principal business headquarters.

                  (i)  DETERMINATIONS  BY  COMMITTEE.  All  references  in  this
Agreement  to  determinations  to be made by the  Committee  shall be  deemed to
include  determinations  by any  person or  persons  to whom the  Committee  may
delegate such authority in accordance with the rules adopted thereby.

                                       5


                  (j) ENTIRE  AGREEMENT;  AMENDMENT  OR WAIVER.  This  Agreement
contains  the entire  agreement  between the parties with respect to the subject
matter  hereof  and may be  amended,  modified  or  changed  only  by a  written
instrument  executed by Employee and the Company. No provision of this Agreement
may be waived except by a writing  executed and delivered by the party sought to
be charged.  Any such written  waiver will be effective only with respect to the
event or circumstance  described therein and not with respect to any other event
or circumstance, unless such waiver expressly provides to the contrary.

                  (k)  COUNTERPARTS.  This  Agreement  may be executed in one or
more  counterparts,  each of which shall be deemed to be an original  but all of
which  together  shall  constitute  one  and  the  same  instrument.  Signatures
delivered by facsimile shall be effective for all purposes.

         IN WITNESS  WHEREOF,  this  Agreement  has been executed as of the date
first above written by an officer of the Company and by Employee.



EMPLOYEE:                               HERSHEY FOODS CORPORATION:



_________________________              _____________________________________
Richard H. Lenny                       Name:
                                       Its:



                                       6

EXHIBIT 12

HERSHEY FOODS CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(in thousands of dollars except for ratios)
(Unaudited)

                                                                 For the Three Months Ended
                                                                ------------------------------
                                                                    April 1,        April 2,
                                                                      2001            2000
                                                                   ---------       ---------

Earnings:

Income before income taxes                                     $    126,859      $    116,688

Add (deduct):

   Interest on indebtedness                                          18,269            18,946
   Portion of rents representative of the
     Interest factor (a)                                              3,649             3,847
   Amortization of debt expense                                         116               122
   Amortization of capitalized interest                               1,055             1,059
                                                                  ----------        ----------
          Earnings as adjusted                                 $    149,948      $    140,662
                                                                  ==========        ==========


Fixed Charges:

   Interest on indebtedness                                    $     18,269      $     18,946
   Portion of rents representative of the
    Interest factor (a)                                               3,649             3,847
   Amortization of debt expense                                         116               122
   Capitalized interest                                                 272               ---
                                                                  ----------        ----------
       Total fixed charges                                     $     22,306      $     22,915
                                                                  ==========        ==========

Ratio of earnings to fixed charges                                     6.72              6.14
                                                                  ==========        ==========


NOTE:

(a)  Portion  of  rents  representative  of the  interest  factor consists of all rental  expense
     pertaining to operating  leases used to finance the purchase or  construction  of warehouse
     and  distribution  facilities,  and one-third of rental expense for other operating leases.