**Exhibit 10.34**

 

December28, 2004

 

Mr. Paul C. Raymond III

60 Trish Court

Danville, CA 94506

 

#### Dear Paul:

####  

I am pleased to confirm theterms and conditions of your offer to join Hercules Incorporated in theposition of Vice President and President Pulp and Paper Division effective uponyour reporting date – sometime January 2005. This position will report to the Chief Executive Officer.

 

Our offer includes thefollowing components:

 

1.               *Annual Base Salary: *$300,000 payable in 12 equal monthly installments.  Pursuant to our salary administration policy,salary reviews are conducted each March 1st.  Your first cycle review will be based on aMarch 1, 2006 review date.

 

2.               *Annual Incentive Compensation:* Your target annual incentive opportunityunder the Hercules Management Incentive Compensation Plan (MICP) for calendaryear 2005, is $150,000 (50% of benchmark salary).  The range, based on performance, is afunction of Corporate performance (pool funding) business results andindividual performance against accountabilities. The maximum payout is 200% ofthe target and, of course, the minimum is zero. Any payouts above the targetamount may be made in restricted stock.

 

3.               *Long-Term Incentive*: In this position, you are eligible toreceive annual grants under the Hercules Long-Term Incentive Compensation Plan(LTICP).  The value of the 2005 award,which is normally made in March, is $383,000. This award may be made in any of the forms of equity described in theHercules Long-Term Incentive Compensation plan document attached.  For 2005, we anticipate making restrictedstock grants subject to Board approval. Change in control vesting applies.

 

4.               *Benefits:* Your approximate four years of service withHoneywell will be recognized for purposes of eligibility to receive benefitsand vesting.  You will accrue benefitsbased on your actual Hercules service pursuant to the terms of the Pension Planof Hercules Incorporated.  Benefits willbe funded to the extent legally possible under the qualified pension plan trustwith the balance paid under the unfunded non-qualified pension restorationplan.  As mentioned, we recently amendedour Pension Plan to provide for additional 401-k contributions in lieu of adefined benefit pension plan.  Theenclosed newsletter #2 on pages 2 and 3 more fully describes this.

 

Other benefits are describedin the attached Benefits Choices Enrollment Guide.

 

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Your 4 years service willqualify you for any described benefits. In calendar year 2005, you will be eligible for 4 weeks paidvacation.  Subsequent years will be thegreater of 4 weeks or the standard accrual.

 

5.               *Avoidance of CompensationForfeiture:*  Based on your notification that, as a resultof your accepting employment with Hercules, you will forfeit certain equity andcash benefits under Honeywell’s compensation plans, we will pay or grant youthe following at such times indicated:

 

1.                           $100,000 immediately upon your first day ofemployment

2.                           15,000 Restricted Stock shares vesting 33%each anniversary (5,000 vest 1/06; 5,000 vest 1/07; and 5,000 vest 1/08).

3.                           $100,000 on the date your 2004 Honeywellannual bonus for 2004 would otherwise be payable.

 

6.               *Severance Benefits:*  TheSeverance Pay Plan as described in the Summary Plan Description will applysubject to the following modifications, which shall apply with respect to youremployment, but shall otherwise not be part of the Severance Pay Plan:

 

Special Dismissal Benefit –Severance Pay Plan

 

•                  Qualifying conditions of “reorganization” or “reductionin the workforce” as defined in the Severance Pay Plan shall include (i) atransfer to a new work location which is 30 or more miles greater than thecurrent distance from your residence to the Hercules Wilmington headquarters,(ii) termination of your employment for reasons other than “cause” ordemonstrated poor performance, and (iii) a reduction in your compensationunrelated to your performance which is disproportionately greater thanreductions generally imposed on other Hercules employees in your Band level.  [As used herein, “cause” shall mean: (a) thewillful and continued failure to substantially perform your duties (other thanany such failure resulting from incapacity due to physical or mental illness)following your receipt of notice which specifically identifies such failure andwhich provides a reasonable opportunity to cure; or (b) the willful engaging byyou in illegal conduct or gross misconduct that is materially and demonstrablyinjurious to the Company.]

 

•                  Should you be notified your job location ischanging as defined in sub-paragraph (i) above, or of any other event whichqualifies you for a Special Dismissal Benefit under sub-paragraph (iii) above,you must notify Hercules within 30 days of such notification of your rejectionof the job at the new location or of your claim for Special Dismissal Benefitspursuant to the terms of this letter.

 

•                  Should severance benefits become payable,your benefit shall be the greater of (i) the then current year’s base salaryplus target bonus, or (ii) the benefit payable under the formula stated in theSeverance Pay Plan or any modified or successor plan.

 

•                  Should the Severance Pay Plan be terminated,and should the items set forth in

 

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sub-paragraphs (i), (ii) or (iii) occur, and subject to your compliancewith the notification requirements set forth above, you will nonetheless remaineligible to receive Special Dismissal Benefits of the then year’s base salaryplus target bonus plus three months’ paid medical benefits.

 

7.               *Relocation Benefits*:  TheHercules Relocation Policy applicable to “homeowner” employees will apply.  A copy of that Policy is enclosed.  Due to Sarbanes Oxley, we are unable toimplement the equity advance provision. Please discuss alternatives with me.

 

8.               *Deferred Compensation:*Beginning calendar year 2005, you becomeeligible to participate in the Hercules Deferred Compensation Plan.  This Plan provides the option to deferbefore-tax salary and/or target MICP amounts. More information will be provided to you on this plan when you becomeeligible to participate.

 

9.               *Parking:* Your position qualifies for Company paidparking in the Hercules Plaza garage or if not available, the nearest facility.

 

10.         Starting Date:* *Contingent upon your acceptance,we anticipate a starting date sometime during the second half of January2005.  Should you start on any date otherthan the third of January, your monthly base salary will be prorated.

 

This offer is contingentupon your passing our standard substance abuse examination.  We will contact you to schedule this simpletest.  Additionally, we must verify U.S.employment eligibility under the Immigration Reform and Control Act.  We will discuss what is needed when you firstreport.  Finally, this offer iscontingent upon successful completion of a background check as appropriate forthe position and in accordance with applicable law.  This contingency must be met before youranticipated starting date.

 

Attached are two forms forthe background check:  1) ReleaseAuthorization, and 2) Disclosure to Employment Applicant Regarding Procurementof A Consumer Report.  Please complete,sign and date both forms (the Disclosure form contains the Summary of yourRights under the Fair Credit Reporting Act – you should retain a copy for yourrecords) and FAX them to Michelle Levitskie, Manager, Organization Developmentand HR Initiatives, at (302)594-7272.

 

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Paul, we enthusiastically welcome you to the Hercules managementteam.  I look forward to working with youto make this a personally and professionally rewarding opportunity.

 

To indicate your acceptanceof the above terms please sign a copy of this letter and return it to me withinthree days.

 
|                |   | Best regards,                    |
|---------------------|--------|----------------------------------|
|                |   |                             |
|                |   |                             |
|                |   | Edward V. Carrington             |
|                |   | Vice President, Human  Resources |
|                |   |                             |
| Accepted by:        |   |                             |
|                |   |                             |
|                |   |                             |
|                |   |                             |   |
| Paul C. Raymond III | Date   |                             |
|                |   |                             |
|                |   |                             |
| Enclosures          |   |                             |
|                     |        |                                  |  |  |

 

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