AGREEMENT
Exhibit
10.1
THIS
AGREEMENT, is entered into on January 27, 2006 by The Hershey Company (the
“Company”) and HERSHEY TRUST COMPANY, as Trustee for the benefit of Xxxxxx
Xxxxxxx School (the “Trust”).
RECITALS
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I.
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The
Company’s Board of Directors has authorized a stock repurchase program
(the “Stock Repurchase Program”) for the purchase of shares of the
Company’s outstanding Common Stock, par value one dollar per share
(“Shares”).
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II.
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III.
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IV.
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This
Agreement is being entered into in good faith and not as part of
a plan or
scheme to evade the prohibitions of Rule 10b5-1 under the Securities
Exchange Act of 1934, as amended (the “1934
Act”).
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IN
CONSIDERATION OF the mutual promises contained in this Agreement, the Company
and the Trust agree:
| A. |
Purchase
and Sale
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1.
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The
Company shall deliver to the Trust a completed notice in the form
attached
to this Agreement as Exhibit “A” (a “Notice”) at or before 12:00 p.m.
Eastern Time each Monday or, if Monday is not a business day, on
the next
business day setting forth, with respect to the calendar week preceding
the date on which the Notice is delivered, the Prior Week Shares
(as
described below) and the VWAP (as described below) for such calendar
week.
The Trust shall, after receipt of the Notice, deliver and sell to
the
Company, and the Company shall buy from the Trust (each such transaction,
a “Sale”), at or before 12:00 p.m. Eastern Time on the second business day
following receipt of the Notice (a “Closing Date”) a number of Shares (the
“Sale Shares”) equal to 0.44, multiplied by the aggregate number of Shares
the Company has purchased on the open market from persons other than
the
Trust or any affiliate of the Company during the calendar week ending
immediately prior to the date of the relevant Notice (the “Prior Week
Shares”). On each Closing Date, (a) the Trust shall deliver to the
Company’s transfer agent stock instructions to transfer the Sale Shares to
the Company, together with such stock powers and other instruments
as may
be necessary to give effect to such instructions, and (b) the Company
shall pay the purchase price
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for
the Sale Shares in immediately available funds to such account
as the
Trust has designated in
writing.
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2.
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The
price per Share to be paid by the Company under each Sale shall be
the
Volume Weighted Average Price (“VWAP”) paid by the Company for the Prior
Week Shares. For purposes of this Agreement, VWAP is calculated by
dividing the total consideration paid, without taking commissions
into
account, for the Prior Week Shares by the Prior Week Shares; provided,
however, that the calculation of the VWAP for any Sale shall not
take into
consideration and shall exclude any transaction involving the purchase
of
Shares directly from affiliates of the Company.
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3.
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Notwithstanding
anything herein to the contrary, the Trust shall not be required
to effect
any Sale if the VWAP for the Shares applicable to such Sale is less
than
$55.00 per Share. The Company shall not be obligated to deliver a
Notice
and neither the Company nor the Trust shall be required to effect
a Sale
if the performance of their respective obligations would violate
applicable law; without limiting the foregoing, the Trust shall not
be
obligated to effect any Sale at (i) any time that any officer or
director
of either the Company or the Trust is in possession of material non-public
information regarding the Company, or (ii) any time after the Company
has
purchased Prior Week Shares when an officer or director of either
the
Company or the Trust was in possession of material non-public information
regarding the Company, unless, in either case, the Company’s purchases of
Prior Week Shares are made pursuant to the provisions of a plan adopted
by
the Company under SEC Rule 10b5-1(c). Only one Notice may be delivered
and
one Sale may be effected each week.
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4.
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Any
fractional amounts of Shares required to be sold to the Company under
any
Notice shall be rounded up to the nearest whole
number.
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5.
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For
purposes of this agreement, (a) “business day” means a day on which the
New York Stock Exchange is open for trading, and (b) “affiliate” has the
meaning given it in Rule 12b-2 under the 1934
Act.
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B.
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Term.
The term of this Agreement shall commence on January 30, 2006 and
shall
continue through July 31, 2006 with respect to the Prior Week Shares
for
the calendar week ending July 28, 2006. The parties, by mutual agreement,
may renew this Agreement for additional terms, subject to mutual
agreement
on the floor price in Section A.3. with respect to such renewal period.
It
is the intent of the parties that the Trust participate in the Stock
Repurchase Program on a pro rata basis with the public stockholders.
Accordingly, the parties agree that upon renewal the multiplier contained
in Section A.1., i.e. “0.44” will be adjusted, if necessary, to properly
account for the then current ownership position of the Trust and
the
public stockholders.
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| C. |
Representations
and Warranties.
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1.
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The
Trust represents and warrants to the Company that (a) each Sale will
have
been duly authorized by the Board of Directors of the Trust, (b)
no Sale
will contravene, or require any consent, notice or filing which has
not
been obtained, given or made, under (i) any law applicable to the
Trust, (ii) the organizational documents of the Trust or (iii) any
judgment, order or decree or any contract or agreement to which the
Trust
is subject, (c) the Trust has or will have valid title to the Shares
to be
sold to the Company and the legal right and power to sell, transfer
and
deliver such Shares, and (d) the delivery of the Shares under each
Sale will, upon payment of the purchase price therefor, pass valid
title
to the Company to such Shares free and clear of any security interests,
claims, liens, equities, and other
encumbrances.
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2.
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The
Company represents and warrants to the Trust that (a) each Sale will
have
been duly authorized by the Board of Directors of the Company, and
(b) no
Sale will contravene, or require any consent, notice or filing which
has
not been obtained, given or made, under (i) any law applicable to
the
Company, (ii) the organizational documents of the Company or (iii)
any
judgment, order or decree or any contract or agreement to which the
Company is subject.
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D.
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Third-Party
Beneficiaries. This Agreement is intended solely for the benefit
of the
Company and the Trust and may not be
assigned.
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E.
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Arbitration.
All disputes that may arise between the parties regarding the
interpretation or application of this Agreement and the legal effect
of
this Agreement shall, to the exclusion of any court of law, be arbitrated
and determined by a board of arbitrators, unless the parties can
resolve
the dispute by mutual agreement. Either party shall have the right
to
submit any dispute to arbitration ten (10) days after the other party
has
been notified as to the nature of the dispute. If the dispute goes
to
arbitration, each party shall select one arbitrator and the two
arbitrators shall jointly select a third arbitrator. The arbitration
shall
be governed by the rules of the American Arbitration Association
and the
laws of the State of Delaware. The proceeding shall be held in Hershey,
Pennsylvania. The parties consent that any papers, notices, or process
necessary or proper for the institution or continuance of, or relating
to
any arbitration proceeding, or for the confirmation of an award and
entry
of judgment on any award made, including appeals in connection with
any
judgment or award, may be served on each of the parties by registered
mail
addressed to the party at the principal office of the party, or by
personal service on the party. The Company and the Trust consent
to the
jurisdiction of the arbitration panel and agree that its decision
shall be
final and not subject to appeal.
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F.
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Sales
Plan. It is the intent of the parties that this Agreement comply
with the
requirements of Rule 10b5-1(c) under the 1934 Act and this Agreement
shall
be interpreted to comply with the requirements of Rule 10b5-1(c)
under the
1934 Act.
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G.
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Complete
Agreement. This Agreement constitutes the entire agreement between
the
parties with respect to its subject matter and supersedes all prior
agreements, oral or written, with respect to such subject
matter.
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H.
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Governing
Law. This Agreement shall be governed by and construed in accordance
with
the laws of the State of Delaware.
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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
THE
HERSHEY COMPANY
| By: |
/s/
Xxxxxxx X. Xxxxx
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Name: Xxxxxxx
X. Lenny
Title: Chairman,
President and CEO
HERSHEY
TRUST COMPANY
| By: |
/s/
Xxxxxx X. Xxxxxx
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Name: Xxxxxx
X. Xxxxxx
Title: President,
CEO and Secretary
EXHIBIT
“A”
THE
HERSHEY COMPANY STOCK PURCHASE NOTICE
Date:
________________
Item
1. Prior
Week Shares: _______________________.
Item
2. Sale
Shares to be purchased by The Hershey Company in connection with this Notice
(Prior Week Shares times 0.44): __________________.
Item
3. Volume
Weighted Average Price under Sale effected in connection with this Notice:
___________________.
Item
4. Total
amount payable under Sale effected in connection with this Notice:
______________________.
