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                              HERCULES INCORPORATED
                  ANNUAL MANAGEMENT INCENTIVE COMPENSATION PLAN
                    (AMENDED AND RESTATED FEBRUARY 21, 2003)

ARTICLE I PURPOSE

      The Hercules Incorporated Annual Management Incentive Compensation Plan,
      the terms of which are herein set forth (as the same is now in effect or
      as hereafter amended from time to time, the "Plan"), is intended to enable
      the Company to secure, retain and motivate highly qualified and
      experienced management personnel by providing to employees (including
      officers and directors who are employees) who (i) occupy positions that
      affect the annual performance of the Company and of such of its
      participating related companies as shall from time to time be designated
      by the Board for participation in the Plan and (ii) are designated as
      Participants in the Plan, incentive compensation linked to (a) the
      Company's success in meeting prescribed corporate goals, (b) the
      performance of the employee's organizational unit in meeting its
      prescribed goals and (c) the employee's individual performance in meeting
      its prescribed personal performance goals.

ARTICLE II DEFINITIONS AND CONSTRUCTION

Section 2.1 Definitions

      The following words and phrases when used in the Plan with an initial
      capital letter, unless their context clearly indicates to the contrary,
      shall have the respective meanings set forth below in this Section 2.1:

            Beneficiary. As defined in Subsection 17.7.1.

            Board. The Board of Directors of the Company.

            CEO. The Chief Executive Officer of the Company.

            Change in Control. As defined in Section 15.1.

            Committee. The Compensation Committee of the Board or such other
            committee as may be designated by the Board to administer the Plan.

            Common Stock. The common stock of the Company.

            Company. Hercules Incorporated and its successors and assigns.

            Corporate Payout Curves. As defined in Section 7.1.
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            Corporate Performance Goals. Performance goals for a Plan Year based
            upon corporate performance during that Plan Year.

            Determination Date. As defined in Article X.

            Employee. An employee of the Company or of a Participating
            Subsidiary.

            Exchange Act. The Securities Exchange Act of 1934, as now in effect
            or as hereafter amended from time to time.

            Grantor. The Board, when used in reference to an Incentive Award
            granted to the CEO; the Committee, when used in reference to an
            Incentive Award granted to a Reporting Person; or the CEO, when used
            in reference to an Incentive Award granted to a Nonreporting Person.

            Group. One of the operating groups or corporate staff departments of
            either the Company or a Participating Subsidiary.

            Group Head. The individual occupying the highest organizational
            position within a particular Group.

            Group Payout Curves. As defined in Section 7.1.

            Group Performance Goals. Performance goals for a Plan Year based
            upon the performance of a particular Group during that Plan Year.

            Incentive Award. The actual cash and/or stock distribution made to
            any Participant pursuant to the Plan, the amount and payment of
            which is determined as set forth in the Plan.

            Incentive Awards Pool. As defined in Article IV.

            Incumbent Board. As defined in Section 15.1.

            Individual Performance Goals. Performance goals for a Plan Year
            based upon the performance of a particular Participant during that
            Plan Year.

            Individual Target Award. As defined in Section 5.1.

            LTICP. The Company's Long-Term Incentive Compensation Plan or any
            successor thereto or any other plan pursuant to which the Company
            has the ability to grant restricted shares of Common Stock.

            Maximum. The level of achievement of a particular Performance Goal
            at which the amount distributed with respect to the applicable
            component of the relevant Incentive Award will reach its highest
            possible level.


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            Nonreporting Person. An Employee who is not subject to the reporting
            requirements of Section 16(a) of the Exchange Act with respect to
            the Company.

            Participant. An Employee who is designated as a Participant in the
            Plan for a given Plan Year pursuant to Article III.

            Participating Subsidiary. A Subsidiary designated by the Board as a
            Participating Subsidiary.

            Payout Curve. The proposed Incentive Awards distribution scheme
            established for a given Plan Year established pursuant to Article
            VII hereof.

            Performance Goals. Corporate Performance Goals, Group Performance
            Goals and Individual Performance Goals.

            Plan. As defined in Article I.

            Plan Year. A calendar year for which any Participant is given the
            opportunity to earn an Incentive Award under the Plan.

            Reporting Person. An Employee subject to the reporting requirements
            of Section 16(a) of the Exchange Act with respect to the Company,
            other than the CEO.

            Restricted Common Stock. As defined in Article X.

            Subsidiary. Any corporation, partnership, joint venture or other
            entity (i) that, directly or indirectly through one or more
            intermediaries, is controlled by the Company or (ii) a majority or
            more of whose outstanding voting stock or voting power for election
            of directors or equivalent governing body is beneficially owned by
            the Company directly or indirectly through one or more
            intermediaries.

            Target. The targeted level of performance with respect to any
            particular Performance Goal.

            Target Incentive Awards Pool. As defined in Article IV.

            Threshold. The minimum level of achievement of a Performance Goal.

Section 2.2 Construction

      Whenever any words are used herein in the masculine gender, they shall be
      construed as though they were also used in the feminine gender in all
      cases where they would so apply, and wherever any words are used herein in
      the singular


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      form they shall be construed as though they were also used in the plural
      form in all cases where they would so apply. Headings of sections and
      subsections of the Plan are inserted for convenience of reference, are not
      a part of the Plan, and are not to be considered in the construction
      hereof. The words "hereof," "herein," "hereunder" and other similar
      compounds of the word "here" shall mean and refer to the entire Plan, and
      not to any particular provision or section. All references herein to
      specific Articles, Sections or Subsections shall mean Articles, Sections
      or Subsections of this document unless otherwise qualified.

ARTICLE III PARTICIPATION AND GRANT OF INCENTIVE AWARDS

Section 3.1 Power to Designate Participants and Make Incentive Awards

      3.1.1: The Board shall have the exclusive power to designate the CEO as a
      Participant and to make all decisions concerning the Incentive Awards of
      the CEO, including without limitation the terms and conditions of the
      CEO's Incentive Award opportunities and the amounts actually payable to
      the CEO pursuant to Incentive Awards, subject to the terms of the Plan and
      after taking into account the recommendations of the Committee.

      3.1.2: The Committee shall have the exclusive power to designate Reporting
      Persons as Participants and to make all decisions concerning the Incentive
      Awards of Reporting Persons, including without limitation the terms and
      conditions of their Incentive Award opportunities and the amounts actually
      payable to them pursuant to Incentive Awards, subject to the terms of the
      Plan.

      3.1.3: The CEO shall have the power to designate Nonreporting Persons as
      Participants and to make all decisions concerning the Incentive Awards of
      Nonreporting Persons, including without limitation the terms and
      conditions of their Incentive Award opportunities and the amounts actually
      payable to them pursuant to Incentive Awards, subject to the terms of the
      Plan and to the authority and oversight of the Committee.

Section 3.2 Establishment of Terms of Awards

      The terms and conditions of Incentive Award opportunities shall be
      established in accordance with the process set forth in Articles IV
      through VII below. Such process shall be completed not later than the end
      of the first calendar quarter of the applicable Plan Year.

Section 3.3 Notification of Participation

      Employees designated as Participants shall be so advised in writing, and
      shall also be informed of the amount of their Individual Target Awards and
      the other terms and conditions of their Incentive Award opportunities.


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ARTICLE IV INCENTIVE AWARDS POOLS

      The Committee shall recommend to the Board, and the Board shall determine
      and approve, the aggregate dollar amount of the Incentive Awards that
      would be payable to all Participants if all Performance Goals were met at
      the Target level (the "Target Incentive Awards Pool" for that Plan Year)
      and the maximum aggregate dollar amount of the Incentive Awards that would
      become payable to all Participants if all Performance Goals were met at
      the Maximum level (the "Incentive Awards Pool"). However, the Board may
      adjust the amount of the Target Incentive Awards Pool and/or the Incentive
      Awards Pool upwards or downwards at any time before the end of the Plan
      Year.

ARTICLE V INDIVIDUAL TARGET AWARDS

Section 5.1 Target Awards

      The Grantor shall establish an incentive opportunity (an "Individual
      Target Award") for each Participant who will be eligible to receive an
      Incentive Award for each Plan Year, such that the aggregate of the
      Individual Target Awards does not exceed the Target Incentive Awards Pool
      for that Plan Year. The Individual Target Award shall be a percentage of
      the Participant's base salary or the benchmark for the Participant's
      position, or a flat dollar amount, as determined by the Grantor, but need
      not be the same for any other Participant or group of Participants. In
      selecting such percentage or amount, the Grantor shall consider, among
      other criteria, survey data regarding competitive industry practices for
      similar positions in comparable-sized chemical companies.

Section 5.2 Components

      Each Individual Target Award will consist of two parts: a corporate
      component, to be earned based upon achievement of the applicable Corporate
      Performance Goals, and a Group component, to be earned based upon
      achievement of the applicable Group Performance Goals (in each case
      subject to adjustment based on the achievement of the applicable
      Individual Performance Goals). The Grantor shall determine the percentage
      assigned to each of the two components.

ARTICLE VI PERFORMANCE GOALS

Section 6.1 Corporate Performance Goals

      The Committee shall recommend to the Board, and the Board shall determine
      and approve, the Corporate Performance Goals for each Plan Year, including
      the Threshold, Target and Maximum levels of achievement. After such
      approval, the Board may modify the Corporate Performance Goals in any
      manner that it deems equitable and appropriate as a result of an
      extraordinary and material change in the Company's business, operations,
      corporate or capital structure, in


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      the manner in which it conducts business or any other extraordinary and
      material change affecting the Company.

Section 6.2 Group Performance Goals

      Group Performance Goals for Participants in each Group shall be
      established for each Plan Year by the CEO after consultation with the
      applicable Group Head, including the Threshold, Target and Maximum levels
      of achievement. After such establishment, the CEO may approve a
      modification to such Group Performance Goals in any manner that he deems
      equitable and appropriate as a result of an extraordinary and material
      change in the Company's business, operations, corporate or capital
      structure, in the manner in which it conducts business or any other
      extraordinary and material change affecting the Company.

Section 6.3 Individual Performance Goals

      Individual Performance Goals shall be established for each Participant for
      each Plan Year, as follows:

            6.3.1: Individual Performance Goals for the CEO shall be established
            by the Board, after consultation with the Committee and the CEO.
            Individual Performance Goals for a Reporting Person shall be
            established by the Committee after consultation with the CEO and the
            Reporting Person. Individual Performance Goals for a Nonreporting
            Person shall be established by the Group Head for whom he works
            after consultation with such Nonreporting Person.

            6.3.2: After Individual Performance Goals have been established
            under Section 6.3.1, the Board, the Committee or the Group Head, as
            applicable, may approve a modification to the Individual Performance
            Goals in any manner that it or he deems equitable and appropriate as
            a result of a change in the Participant's duties and
            responsibilities or the manner in which he discharges his duties and
            responsibilities or any other change, in each case if it or he
            determines such change to be extraordinary and material.

Section 6.4 Certain Modifications

      In the event of a modification of the Corporate Performance Goals or the
      Group Performance Goals for any Plan Year pursuant to Section 6.1 or 6.2,
      the Grantor may modify the Individual Performance Goals of any Participant
      affected by the change resulting in such modification as deemed
      appropriate and equitable in his sole and absolute discretion.


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ARTICLE VII PAYOUT CURVE

Section 7.1 Establishment of Payout Curves

      The Committee shall establish the Payout Curves for the corporate
      component of Incentive Awards (the "Corporate Payout Curve"), and the CEO
      shall establish the Payout Curves for the Group component of Incentive
      Awards (the "Group Payout Curves").

Section 7.2 Requirements

      Each Payout Curve shall, within the framework of the applicable
      Performance Goals, Individual Target Awards, Thresholds and other terms
      and conditions established pursuant to Articles III through VI:

            7.2.1: Establish Threshold, Target, Maximum and intermediate(s)
            performance and distribution levels for determining the amounts to
            be distributed to Participants pursuant to their Incentive Awards;
            and

            7.2.2: Provide for distributions ranging from 0% to 200% of the
            Target Incentive Awards Pool, depending on the application of actual
            performance against the distribution levels set forth on such Payout
            Curve.

Section 7.3 Modification

      From time to time, at any time before distributions are made with respect
      to Incentive Awards for a Plan Year, the Committee in its sole discretion
      may modify the Corporate Payout Curve, and the CEO, in his sole
      discretion, may modify or amend the Group Payout Curve for any Group, in
      order to reflect changed business or economic conditions.

ARTICLE VIII DETERMINATION OF PERFORMANCE RESULTS

      As soon as practicable following the end of each Plan Year (1) the
      Committee shall determine whether and the extent to which the applicable
      Corporate Performance Goals were attained, (2) the CEO shall determine
      whether and the extent to which each Group attained its applicable Group
      Performance Goals, and (3) the Board, the CEO or the relevant Group Head,
      as applicable, shall determine whether and the extent to which each
      Participant attained his Individual Performance Goals. All such
      determinations shall be conclusive and binding with respect to all
      Participants and their Beneficiaries, except as they may be modified
      pursuant to other provisions of the Plan.


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ARTICLE IX DETERMINATION OF INCENTIVE AWARDS

Section 9.1 Calculation

      As soon as practicable after the determinations required by Article VIII
      have been made, the actual Incentive Awards to be made to Participants
      shall be calculated, based upon such determinations, and in the following
      manner:

            9.1.1: The corporate component of each Participant's Incentive Award
            shall be determined by the application of the Corporate Payout Curve
            to the achievement of the applicable Corporate Performance Goals.

            9.1.2: The relevant Group component of each Participant's Incentive
            Award shall be determined by the application of the achievement of
            the relevant Group Payout Curve to the applicable Group Performance
            Goals.

            9.1.3: The actual Incentive Award for each Participant, subject to
            Subsection 9.1.4, shall be calculated by adding the corporate and
            Group components as so calculated, and then adjusting the result as
            appropriate based upon the Participant's achievement of the
            applicable Individual Performance Goals and such other factors as
            the Grantor may deem appropriate.

            9.1.4: If the total amount of the Incentive Awards as thus
            determined for all Participants exceeds the Incentive Awards Pool,
            Incentive Awards shall be adjusted so that the total equals the
            Incentive Awards Pool.

Section 9.2 Threshold Requirement

      Notwithstanding any other provision of the Plan, if the achievement of the
      Corporate Performance Goals for a given Plan Year is below the stated
      Threshold, no Participant shall receive any payment under Incentive Awards
      for that Plan Year unless the Board determines otherwise in its sole
      discretion.

ARTICLE X PAYMENT OF INCENTIVE AWARDS

      Promptly following the date on which the final determination of Incentive
      Awards for a Plan Year is made (the "Determination Date"), subject to
      Articles XI through XIII below, each Participant shall be entitled have
      his Incentive Award distributed to him in cash, in restricted shares of
      common stock pursuant to the LTICP ("Restricted Common Stock") or partly
      in each, as the Committee shall determine (and such determination need not
      be the same for all Participants). If any portion of any Incentive Award
      is distributed in Restricted Common Stock of the Company, the number of
      shares shall be determined by dividing (1) the dollar amount of such
      portion of the Incentive Award by (2) 85% of the fair market value of one
      share of Common Stock on the applicable Determination Date. For purposes
      of this Article X, the term "fair market value" shall mean, as of any


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      given Determination Date, the closing price for one share of Common Stock
      on that Determination Date, as reported on the Composite Tape for New York
      Stock Exchange Listed Companies and published in the Eastern Edition of
      The Wall Street Journal or, if there is no trading on that Determination
      Date, the closing price of the Common Stock as so reported and published
      on the next preceding date on which there was trading in Common Stock.

ARTICLE XI PRO-RATED INCENTIVE AWARDS

Section 11.1 New Participants

      Notwithstanding any provision of the Plan other than Article XV, if an
      Employee becomes a Participant during a given Plan Year, such
      Participant's Incentive Award may (but need not) be pro-rated, if so
      determined by the Grantor, to reflect the partial year of participation.

Section 11.2 Transferred Participants

      Notwithstanding any provision of the Plan other than Article XV, a
      Participant whose employment is transferred from one Group to another
      during a given Plan Year may have his Incentive Award pro-rated between or
      among such Groups as determined by the Grantor, including without
      limitation by applying different Group Performance Goals to different
      portions of his Incentive Award.

Section 11.3 Position Change

      Notwithstanding any provision of the Plan other than Article XV, if during
      any Plan Year a Participant moves from one position to another position in
      the Company or a Participating Subsidiary, the Grantor may, if the Grantor
      determines it is warranted, approve appropriate and equitable
      modifications to the performance requirements applicable to such
      Participant for such Plan Year to take account of such change.

ARTICLE XII SUBSTANDARD PERFORMANCE

      Notwithstanding any provision of the Plan other than Article XV, if, at
      any time before a Participant has received distribution of any particular
      Incentive Award, the Grantor shall determine that a given Participant has
      performed any of his employment obligations in an unsatisfactory manner,
      the Grantor may decrease or may entirely eliminate the amount of the
      distribution that the Participant would otherwise be entitled to receive
      with respect to that Incentive Award.


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ARTICLE XIII TERMINATION OF EMPLOYMENT

Section 13.1 General Rule

      Except as provided below in this Article XIII and in Article XV, a
      Participant shall not be entitled to receive any distribution pursuant to
      an Incentive Award for a particular Plan Year unless he is employed by the
      Company or a Participating Subsidiary, as applicable, on December 31 of
      such Plan Year.

Section 13.2 Death, Disability, Retirement or Reduction in Force

      A Participant (or, as appropriate, his Beneficiary or his estate) whose
      employment terminates during a Plan Year due to death, disability,
      retirement or reduction in force, may receive a pro-rated portion of his
      Incentive Award for such Plan Year, if so determined by the Grantor.

Section 13.3 Termination for Cause

      Notwithstanding any other provision of the Plan, except as provided in the
      next sentence, a Participant whose employment is involuntarily terminated
      for cause (as determined by the Committee) shall not receive any
      distributions with respect to any Incentive Award for the Plan Year that
      has not actually been distributed before such termination. However, the
      foregoing shall not apply to any payment to the Participant pursuant to
      Article XV unless both the Participant's termination of employment and the
      Committee's determination that such termination was for cause occur before
      the relevant Change in Control.

ARTICLE XIV ADMINISTRATION OF THE PLAN AND DELEGATIONS OF AUTHORITY

Section 14.1 Committee Authority and Responsibility

      The Committee shall have primary responsibility for the administration of
      the Plan, and shall make all determinations under the Plan with respect to
      Reporting Persons. Without limiting the generality of the foregoing, the
      Committee shall (i) grant Incentive Awards to Reporting Persons, (ii)
      establish the maximum aggregate amount of Incentive Awards to be granted
      to Nonreporting Persons as a Group and (iii) establish the guidelines and
      oversight under which, pursuant to authorities granted by the Committee
      and the provisions of the Plan, the CEO may grant Incentive Awards to, and
      make determinations under the Plan with respect to, Nonreporting Persons,
      as more fully provided in Section 3.2. Furthermore, the Committee shall
      have final authority, in its sole discretion, to interpret the Plan and to
      make rules regarding its operation and administration, which shall be
      final and binding upon all Participants. The Committee may delegate to any
      of its members or to one or more employees of the Company the
      responsibility for the day-to-day administration of the Plan, provided
      that the delegated responsibilities are ministerial in nature.


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Section 14.2 Board Authority and Responsibility

      The Board shall make all determinations under the Plan with respect to the
      CEO in his capacity as a Participant, taking into account the
      recommendations of the Committee. Notwithstanding anything to the contrary
      in the Plan, the Board may exercise any authority under the Plan that is
      given to the Committee or the CEO.

Section 14.3 CEO Authority and Responsibility

      In making awards to Nonreporting Persons and carrying out his other
      responsibilities under the Plan, the CEO is acting as a delegee of the
      Committee and is at all times accountable to the Committee and authorized
      to act only in accordance with the provisions of the Plan and the
      guidelines and direction provided by the Committee from time to time.
      Furthermore, notwithstanding anything to the contrary in the Plan, the
      Committee may at any time revoke any or all authority given to the CEO
      under the Plan, in which event such authority shall be exercised by the
      Committee unless and until the Committee determines otherwise. The CEO
      shall report to the Committee as and when requested by the Committee
      regarding the manner in which the CEO has exercised his power under the
      Plan. The CEO is not intended to be, nor shall the CEO be construed to be,
      a member of the Committee. The CEO may delegate all or part of his
      authority and responsibilities under the Plan to one or more other
      appropriate officers or employees of the Company or any Participating
      Subsidiary.

ARTICLE XV CHANGE IN CONTROL

Section 15.1 Definition

      A "Change in Control" shall mean the occurrence of any of the following
      events:

      (1)   The acquisition by any individual, entity or group (within the
            meaning of Section 13(d)(3) or 14(d)(2) of Exchange Act (a
            "Person")) of beneficial ownership (within the meaning of Rule 13d-3
            promulgated under the Exchange Act) of 20% or more of either (A) the
            then-outstanding shares of common stock of the Company (the
            "Outstanding Company Common Stock") or (B) the combined voting power
            of the then-outstanding voting securities of the Company entitled to
            vote generally in the election of directors (the "Outstanding
            Company Voting Securities"); provided, however, that, for purposes
            of this part (1), the following acquisitions shall not constitute a
            Change of Control: (i) any acquisition directly from the Company,
            (ii) any acquisition by the Company, (iii) any acquisition by any
            employee benefit plan (or related trust) sponsored or maintained by
            the Company or any Affiliated Company, or (iv) any acquisition by
            any corporation pursuant to a transaction that complies with parts
            (3)(A), (3)(B) and (3)(C) of this definition;


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      (2)   Individuals who, as of [INSERT DATE], constitute the Board (the
            "Incumbent Board") cease for any reason to constitute at least a
            majority of the Board; provided, however, that any individual
            becoming a director subsequent to the date hereof whose election, or
            nomination for election by the Company's shareholders, was approved
            by a vote of at least a majority of the directors then comprising
            the Incumbent Board shall be considered as though such individual
            were a member of the Incumbent Board, but excluding, for this
            purpose, any such individual whose initial assumption of office
            occurs as a result of an actual or threatened election contest with
            respect to the election or removal of directors or other actual or
            threatened solicitation of proxies or consents by or on behalf of a
            Person other than the Board;

      (3)   Consummation of a reorganization, merger, consolidation or sale or
            other disposition of all or substantially all of the assets of the
            Company (a "Business Combination"), in each case, unless, following
            such Business Combination, (A) all or substantially all of the
            individuals and entities that were the beneficial owners of the
            Outstanding Company Common Stock and the Outstanding Company Voting
            Securities immediately prior to such Business Combination
            beneficially own, directly or indirectly, 60% or more of the
            then-outstanding shares of common stock and the combined voting
            power of the then-outstanding voting securities entitled to vote
            generally in the election of directors, as the case may be, of the
            corporation resulting from such Business Combination (including,
            without limitation, a corporation that, as a result of such
            transaction, owns the Company or all or substantially all of the
            Company's assets either directly or through one or more
            subsidiaries) in substantially the same proportions as their
            ownership immediately prior to such Business Combination of the
            Outstanding Company Common Stock and the Outstanding Company Voting
            Securities, as the case may be, (B) no Person (excluding any
            corporation resulting from such Business Combination or any employee
            benefit plan (or related trust) of the Company or such corporation
            resulting from such Business Combination) beneficially owns,
            directly or indirectly, 20% or more of, respectively, the
            then-outstanding shares of common stock of the corporation resulting
            from such Business Combination or the combined voting power of the
            then-outstanding voting securities of such corporation, except to
            the extent that such ownership existed prior to the Business
            Combination, and (C) at least a majority of the members of the board
            of directors of the corporation resulting from such Business
            Combination were members of the Incumbent Board at the time of the
            execution of the initial agreement or of the action of the Board
            providing for such Business Combination; or

      (4)   Approval by the shareholders of the Company of a complete
            liquidation or dissolution of the Company.


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Section 15.2 Effect of Change in Control

      In the event of a Change in Control of the Company during a given Plan
      Year, each Participant who is employed by the Company or a Participating
      Subsidiary on the date of the Change in Control, or whose employment was
      terminated during the Plan Year but before the Change in Control, shall
      receive a cash payment, in full settlement of his Incentive Award for that
      Plan Year, equal to the Individual Target Award established for such
      Participant at the beginning of such Plan Year, times (in the case of a
      Participant not so employed on the date of the Change in Control) a
      fraction, the numerator of which is the number of days in the Plan Year
      through the date of the Change in Control, and the denominator of which is
      the number of days in the Plan Year. The Incentive Award payable to each
      Participant as a result of such Change in Control shall be paid in full
      within thirty (30) days after the effective date of such Change in
      Control. In the case of a Participant who is a party to any Individual
      Agreement under which the Participant is or may become entitled to
      payments with respect to the same Incentive Award as described above, the
      Company or its successor may make the right of such Participant to receive
      the payment set forth above conditioned upon the execution by such
      Participant of a waiver of the right to receive such payments under the
      Individual Agreement to the extent they would duplicate such payment. In
      the case of a Participant who is a party to any individual agreement under
      which the Participant is or may become entitled to additional payments
      with respect to the same Incentive Award, the Company or its successor may
      make the right of such Participant to receive the payment set forth above
      conditioned upon the execution by such Participant of a waiver of the
      right to receive such payments under the individual agreement to the
      extent they would duplicate such payment.

ARTICLE XVI AMENDMENT, SUSPENSION AND TERMINATION

      The Board reserves the right to amend, suspend or terminate, in whole or
      in part, at any time and from time to time, any or all of the provisions
      of the Plan; provided, that no amendment, suspension or termination of the
      Plan that is made in anticipation of, in connection with or following a
      Change in Control, or at the request of a third party seeking to effect a
      Change in Control, shall have any effect on Article XV or the second
      sentence of Section 13.3, as they apply to that Change in Control, unless
      such effect is in no way adverse to the interests of Participants.

ARTICLE XVII MISCELLANEOUS

Section 17.1 Shares Available for Awards

      Shares of Restricted Common Stock delivered under the Plan shall be taken
      from the share authorization under the LTICP, and shall be subject to all
      of the terms, conditions and provisions thereof, including without
      limitation periods of restriction, transferability restrictions, risk of
      forfeiture and such other conditions


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      as the Committee, in accordance with the terms of the Long-Term Incentive
      Compensation Plan, may establish at the time the shares are delivered.

Section 17.2 Incentive Awards Pool Adjustments

      The Committee from time to time, either during a given Plan Year or
      subsequent to the conclusion thereof, at any time prior to the
      commencement of distribution of Incentive Award payments for such Plan
      Year to Participants, may recommend to the Board that the amount of the
      Target Incentive Awards Pool and/or the Incentive Awards Pool for such
      Plan Year be increased or decreased, in order to reflect changed business
      or economic conditions.

Section 17.3 Deferral of Payment of Incentive Awards

      A Participant shall be eligible to defer the payment of any Incentive
      Award that the Committee determines will be paid in cash, if he is
      eligible to participate in any deferred compensation plan that permits
      such deferral. Any such deferral shall be made under and subject to the
      provisions of the applicable deferred compensation plan.

Section 17.4 Unfunded Plan

      The Plan shall be unfunded, and the Company shall not be required to
      segregate any assets which may at any time be represented by Incentive
      Awards under the Plan. The Incentive Awards payable under the Plan are
      contingent in character and, therefore, no rights shall vest in any
      Participant under the Plan until either the amount of such Participant's
      Incentive Award has been determined and paid by the Company pursuant to
      the Plan, or receipt thereof has been deferred by such Participant
      pursuant to the Hercules Deferred Compensation Plan.

Section 17.5 Inalienability of Rights and Interests

      The rights and interests of a Participant under the Plan are personal to
      the Participant and to any person or persons who may become entitled to
      distribution or payments under the Plan by reason of death of the
      Participant, and the rights and interests of the Participant or any such
      person (including, without limitation, any Incentive Award distributable
      or payable under the Plan) shall not be subject in any manner to
      anticipation, alienation, sale, transfer, assignment, pledge, encumbrance
      or charge, and any such attempted action shall be void and no such benefit
      or interest shall be in any manner liable for or subject to debts,
      contracts, liabilities, engagements or torts of any Participants. If any
      Participant shall attempt to anticipate, alienate, sell, transfer, assign,
      pledge, encumber or charge any of his rights or interests under the Plan
      (including without limitation, any Incentive Award payable under the
      Plan), then the Committee may hold or apply such benefit or any part
      thereof to or for the benefit of such Participant or his Beneficiary, his
      spouse, children, blood relatives or other dependents, or any


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      of them in such manner and in such proportions as the Committee may
      consider proper.

Section 17.6 Withholding Taxes

      The Company shall deduct, or cause to be deducted, from all distributions
      pursuant to Incentive Awards, all Federal, state and local taxes that the
      Company is required by any law to withhold on such payments. Restricted
      Common Stock that is distributed in settlement or partial settlement of
      Incentive Awards shall be subject to the applicable tax withholding
      provisions of the Long-Term Incentive Compensation Plan. Cash
      distributions that are deferred as permitted by Section 17.3 shall be
      subject to the tax withholding provisions of the applicable deferred
      compensation plan.

Section 17.7 Designation of Beneficiaries

      17.7.1: Each Participant shall be permitted to file with the Company a
      written designation, on such form and in accordance with such procedures
      and rules as the Committee may prescribe, of one or more persons (each, a
      "Beneficiary") to receive the Incentive Award, if any, payable under the
      Plan upon the Participant's death. If a Participant has filed more than
      one such designation, the designation most recently received by the
      Company shall be controlling; provided, however, that no designation,
      change or revocation thereof shall be effective unless received by the
      Company prior to the Participant's death. If no such Beneficiary
      designation is in effect at the time of a Participant's death, or if no
      designated Beneficiary survives a Participant, all distributions of that
      Participant's Incentive Awards shall be made to the Participant's estate.

      17.7.2: The Committee may disregard the provisions of Section 17.7.1 to
      the extent distributions of Incentive Awards of a deceased Participant are
      required to be made in some other manner pursuant to applicable law. If
      the Committee is in doubt as to the right of any person to receive such
      Incentive Award, the Company may retain such Incentive Award, without
      liability for any interest thereon, until the Committee determines the
      rights thereto, or the Company may pay such Incentive Award to any court
      of appropriate jurisdiction and such payment shall be a complete discharge
      of the liability of the Company therefor.

Section 17.8 No Right to an Incentive Award Payment or to Continued Employment

      Eligibility for Incentive Awards is determined annually. No Participant or
      other person shall have any claim or right to be granted an Incentive
      Award under the Plan or to receive a distribution pursuant to an Incentive
      Award. Neither the action of the Company in establishing the Plan nor any
      provisions hereof, nor any action taken by the Company, any Participating
      Subsidiary, the Committee or the CEO, or any of their respective delegees,
      pursuant to such provisions shall be construed as creating in any employee
      or class of employees any right with respect to continuation of employment
      by the Company or any of the Participating


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      Subsidiaries, and they shall not be deemed to interfere in any way with
      the Company's or any Participating Subsidiary's right to employ,
      discipline, discharge, terminate, lay off or retire any Participant with
      or without cause, to discipline any Participant, or to otherwise affect
      the Company's right to make employment decisions with respect to any
      Participant.

Section 17.9 Indemnification and Exculpation

      17.9.1: Indemnification. Each person who is or shall have been a member of
      the Committee and each director, officer or employee of the Company or any
      Participating Subsidiary to whom any duty or power related to the
      administration or interpretation of the Plan may be delegated, shall be
      indemnified and held harmless by the Company against and from any and all
      loss, cost, liability or expense that may be imposed upon or reasonably
      incurred by him in connection with or resulting from any claim, action,
      suit or proceeding to which he may be or become a party or in which he may
      be or become involved by reason of any action taken or failure to act
      under the Plan and against and from any and all amounts paid by him in
      settlement thereof (with the Company's written approval) or paid by him in
      satisfaction of a judgment in any such action, suit or proceeding, except
      a judgment in favor of the Company based upon a finding of his bad faith;
      subject, however, to the condition that upon the institution of any claim,
      action, suit or proceeding against him, he shall in writing give the
      Company an opportunity, at its own expense, to handle and defend the same
      before he undertakes to handle and defend it on his own behalf. The
      foregoing right of indemnification shall not be exclusive of any other
      right to which such person may be entitled under the Company's Restated
      Certificate of Incorporation, as a matter of law or otherwise, or any
      power that the Company may have to indemnify him or hold him harmless.

      17.9.2: Exculpation. Each member of the Committee, and each director,
      officer and employee of the Company or of any Participating Subsidiary
      shall be fully justified in relying or acting upon in good faith any
      information furnished in connection with the administration of the Plan by
      any appropriate person or persons other than himself. In no event shall
      any person who is or shall have been a member of the Committee, or a
      director, officer or employee of the Company or any Participating
      Subsidiary be liable for any determination made or other action taken or
      any omission to act in reliance upon such report or information, or for
      any action (including the furnishing of information) taken or any failure
      to act, if in good faith.

Section 17.10 Communications

      17.10.1: Communications by the Committee. All notices, statements, reports
      and other communications made, delivered or transmitted to a Participant,
      Beneficiary or other person under the Plan shall be deemed to have been
      duly given, made or transmitted when delivered to, or when mailed by
      first-class mail, postage


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      prepaid and addressed to such Participant, Beneficiary or other person at
      his address last appearing on the records of the Committee.

      17.10.2: Communications by the Participants and Others. All elections,
      designations, requests, notices, instructions and other communications
      made, delivered or transmitted by the Company or a Participating
      Subsidiary, Participant, Beneficiary or other person to the Committee
      required or permitted under the Plan shall be in such form as is
      prescribed from time to time by each such Committee, shall be mailed by
      first-class mail or delivered to such location as shall be specified by
      each such Committee, and shall be deemed to have been given and delivered
      only upon actual receipt thereof by such Committee at such location.

Section 17.11 Parties in Interest

      The provisions of the Plan and the terms and conditions of any Incentive
      Award shall, in accordance with their terms, be binding upon, and inure to
      the benefit of, all successors of each Participant, including, without
      limitation, such Participant's estate and the executors, administrators,
      or trustees thereof, heirs and legatees, and any receiver, trustee in
      bankruptcy or representative of creditors of such Participant. The terms
      of the Plan shall be binding upon the Company and its successors and
      assigns.

Section 17.12 No Strict Construction

      No rule of strict construction shall be implied against the Company, the
      Committee or any other person in the interpretation of any of the terms of
      the Plan, any Incentive Award granted under the Plan or any rule or
      procedure established by the Committee.

Section 17.13 Governing Law

      All questions pertaining to the validity, construction and administration
      of the Plan shall be determined with reference to, and the provisions of
      the Plan shall be governed by, and shall be construed in conformity with,
      the internal laws of the State of Delaware.


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