VACU-DRY COMPANY
                                    
                      COMMISSION FILE NUMBER 01912
                                     
 
 
                    For the year ended June 30, 1996
                                     
 
 Exhibit 10. (e) March 14, 1996 Gary L. Hess Employment Agreement
 
 
 
 The Company entered into an employment agreement with Mr. Hess dated March
 14, 1996, pursuant to which Mr. Hess is employed by the Company as its
 President and Executive Officer. Under the agreement, Mr. Hess is entitled
 to an annual base salary of $150,000, subject to annual review, an
 incentive bonus during the first year of $75,000, one-half of which is at
 the discretion of the Compensation Committee of the Board of Directors and
 one-half of which is based on the Company achieving pre-tax return equal to
 at least a 12% return on adjusted shareholders equity and other
 requirements as may be agreed. Mr. Hess was granted an option to purchase
 89,474 shares of the Company's common stock at $5.00 per share, the fair
 market value of a share of the Company's common stock on May 1, 1996. The
 options were granted pursuant to the Company's 1996 Stock Option Plan which
 the Shareholders are being asked to approve at the Annual Meeting of
 Shareholders. Under the agreement Mr. Hess serves at will provided that in
 the event of termination of his employment by the Company prior to April
 30, 2000 for any reason other than cause, he is entitled to twelve months
 continued salary at a rate of $150,000 per year. In addition, Mr. Hess is
 entitled to the reimbursement of relocation expenses, temporary living
 expense, an automobile allowance and certain other fringe benefits.