Exhibit 10.29


 


EMPLOYMENT AGREEMENT


 


AGREEMENT, dated as of the 24th day of
August, 2000 (this “Agreement”), by and
between Hercules Incorporated, a Delaware corporation (the “Company”), and
Allen A. Spizzo (“Executive”).


 


WHEREAS, the Board of Directors of the Company (the “Board”),
has determined that it is in the best interests of the Company and its
shareholders/stockholders to assure that the Company will have the continued
dedication of the Executive, notwithstanding the possibility, threat or occurrence
of a Change of Control (as defined herein). 
The Board believes it is imperative to diminish the inevitable
distraction of the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and to encourage the
Executive’s full attention and dedication to the current Company and in the
event of any threatened or pending Change of Control, and to provide the
Executive with compensation and benefits arrangements upon a Change of Control
that ensure that the compensation and benefits expectations of the Executive
will be satisfied and that are competitive with those of other
corporations.  Therefore, in order to
accomplish these objectives, the Board has caused the Company to enter into
this Agreement.


 


NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:


 


Section 1.                                          Certain Definitions.  (a) “Effective Date” means
the first date during the Change of Control Period (as defined herein) on which
a Change of Control occurs. 
Notwithstanding anything in this Agreement to the contrary, if a Change
of Control occurs and if the Executive’s employment with the Company is
terminated prior to the date on which the Change of Control occurs, and if it
is reasonably demonstrated by the Executive that such termination of employment
(1) was at the request of a third party that has taken steps reasonably
calculated to effect a Change of Control or (2) otherwise arose in
connection with or anticipation of a Change of Control, then “Effective Date”
means the date immediately prior to the date of such termination of employment.


 


(b) “Change of
Control Period” means the period commencing on the date hereof and ending on
the third anniversary of the date hereof; provided, however, that, commencing on the date one year after the
date hereof, and on each annual anniversary of such date (such date and each
annual anniversary thereof, the “Renewal Date”), unless previously terminated,
the Change of Control Period shall be automatically extended so as to terminate
three years from such Renewal Date, unless, at least 60 days prior to the
Renewal Date, the Company shall give notice to the Executive that the Change of
Control Period shall not be so extended.


 


(c) “Affiliated
Company” means any company controlled by, controlling or under common control
with the Company.


 


(d) “Change of
Control” means:


 





















 


(1)                                  The
acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “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 Section 1(d), 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
Sections 1(d)(3)(A), 1(d)(3)(B) and 1(d)(3)(C).


 


(2)                                  Individuals
who, as of the date hereof, 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)                                  Approval by
the shareholders of the Company 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


 


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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.


 


(e) “Alternative
Change of Control” means a Change of Control as defined above, except that the
phrase “Approval by the shareholder of the Company” in clause (3) of Section 1(d) shall
be deemed to read “Consummation.”


 


Section 2.                                          Employment Period.  The Company hereby agrees to
continue the Executive in its employ, subject to the terms and conditions of
this Agreement, for the period commencing on the Effective Date and ending on
the third anniversary of the Effective Date (the “Employment Period”).  The Employment Period shall terminate upon
the Executive’s termination of employment for any reason.


 


Section 3.                                          Terms of Employment.  (a)  Position
and Duties.  (1) 
During the Employment Period, (A) the Executive’s position (including
status, offices, titles and reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all material respects with
the most significant of those held, exercised and assigned at any time during
the 120-day period immediately preceding the Effective Date and (B) the
Executive’s services shall be performed at the office where the Executive was
employed immediately preceding the Effective Date or at any other location less
than 30 miles from such office.


 


(2)                                  During the
Employment Period, and excluding any periods of vacation and sick leave to
which the Executive is entitled, the Executive agrees to devote reasonable
attention and time during normal business hours to the business and affairs of
the Company and, to the extent necessary to discharge the responsibilities
assigned to the Executive hereunder, to use the Executive’s reasonable best
efforts to perform faithfully and efficiently such responsibilities.  During the Employment Period, it shall not be
a violation of this Agreement for the Executive to (A) serve on corporate,
civic or charitable boards or committees, (B) deliver lectures, fulfill
speaking engagements or teach at educational institutions and (C) manage
personal investments, so long as such activities do not significantly interfere
with the performance of the Executive’s responsibilities as an employee of the
Company in accordance with this Agreement. 
It is expressly understood and agreed that, to the extent that any such
activities have been conducted by the Executive prior to the Effective Date,
the continued conduct of such activities (or the conduct of activities similar
in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive’s
responsibilities to the Company.


 


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(b) Compensation.  (1)  Base
Salary.  During the
Employment Period, the Executive shall receive an annual base salary (the “Annual
Base Salary”) at an annual rate at least equal to 12 times the highest monthly
base salary paid or payable, including any base salary that has been earned but
deferred, to the Executive by the Company and the Affiliated Companies in
respect of the 12-month period immediately preceding the month in which the
Effective Date occurs.  The Annual Base
Salary shall be paid at such intervals as the Company pays executive salaries
generally.  During the Employment Period,
the Annual Base Salary shall be reviewed at least annually, beginning no more
than 12 months after the last salary increase awarded to the Executive prior to
the Effective Date.  Any increase in the
Annual Base Salary shall not serve to limit or reduce any other obligation to
the Executive under this Agreement.  The
Annual Base Salary shall not be reduced after any such increase and the term “Annual
Base Salary” shall refer to the Annual Base Salary as so increased.


 


(2)                                  Annual Bonus.  In addition to the Annual Base Salary, the
Executive shall be awarded, for each fiscal year ending during the Employment
Period, an annual bonus (the “Annual Bonus”) in cash at least equal to the
Executive’s Recent Target Bonus, as defined in the next sentence.  The “Recent Target Bonus” means the Annual
Base Salary times a percentage equal to the percentage of base salary most
recently established, before the Effective Date, for purposes of determining
the Executive’s target bonus under the Company’s Management Incentive
Compensation Plan or any predecessor or successor plan (the “MICP”).  Each such Annual Bonus shall be paid no later
than the end of the third month of the fiscal year next following the fiscal
year for which the Annual Bonus is awarded, unless the Executive shall elect to
defer the receipt of such Annual Bonus. 
Any bonus paid to the Executive under the MICP as a result of the Change
of Control (a “Change of Control Bonus”) shall be taken into account in
determining whether the requirements of this Section 3(b)(2) have
been met with respect to the fiscal year in which the Change of Control occurs.


 


(3)                                  Incentive, Savings and Retirement Plans.  During the
Employment Period, the Executive shall be entitled to participate in all cash
incentive, equity incentive, savings and retirement plans, practices, policies,
and programs applicable generally to other peer executives of the Company and
the Affiliated Companies, but in no event shall such plans, practices, policies
and programs provide the Executive with incentive opportunities (measured with
respect to both regular and special incentive opportunities, to the extent, if
any, that such distinction is applicable), savings opportunities and retirement
benefit opportunities, in each case, less favorable, in the aggregate, than the
most favorable of those provided by the Company and the Affiliated Companies
for the Executive under such plans, practices, policies and programs as in
effect at any time during the 120-day period immediately preceding the Effective
Date or, if more favorable to the Executive, those provided generally at any
time after the Effective Date to other peer executives of the Company and the
Affiliated Companies.  The Executive
shall also continue to be entitled to any supplemental pension benefits to
which he may be entitled pursuant to any individual agreement with the company
or any Affiliated Companies (collectively, “Enhanced Pension Benefits”).


 


(4)                                  Welfare Benefit Plans. 
During the Employment Period, the Executive and/or the Executive’s
family, as the case may be, shall be eligible for participation in and shall
receive


 


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all
benefits under welfare benefit plans, practices, policies and programs provided
by the Company and the Affiliated Companies (including, without limitation,
medical, prescription, dental, disability, employee life, group life,
accidental death and travel accident insurance plans and programs) to the
extent applicable generally to other peer executives of the Company and the
Affiliated Companies, but in no event shall such plans, practices, policies and
programs provide the Executive with benefits that are less favorable, in the
aggregate, than the most favorable of such plans, practices, policies and
programs in effect for the Executive at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the
Executive, those provided generally at any time after the Effective Date to
other peer executives of the Company and the Affiliated Companies.


 


(5)                                  Expenses.  During the
Employment Period, the Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Executive in
accordance with the most favorable policies, practices and procedures of the
Company and the Affiliated Companies in effect for the Executive at any time
during the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and the Affiliated Companies.


 


(6)                                  Fringe Benefits. 
During the Employment Period, the Executive shall be
entitled to fringe benefits, including, without limitation, tax and financial
planning services, payment of club dues, and, if applicable, use of an
automobile and payment of related expenses, in accordance with the most
favorable plans, practices, programs and policies of the Company and the
Affiliated Companies in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and the Affiliated Companies.


 


(7)                                  Office and Support Staff. 
During the Employment Period, the Executive shall be
entitled to an office or offices of a size and with furnishings and other
appointments, and to exclusive personal secretarial and other assistance, at
least equal to the most favorable of the foregoing provided to the Executive by
the Company and the Affiliated Companies at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the
Executive, as provided generally at any time thereafter with respect to other
peer executives of the Company and the Affiliated Companies.


 


(8)                                  Vacation.  During the
Employment Period, the Executive shall be entitled to paid vacation in
accordance with the most favorable plans, policies, programs and practices of
the Company and the Affiliated Companies as in effect for the Executive at any
time during the 120-day period immediately preceding the Effective Date or, if
more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and the Affiliated
Companies.


 


Section 4.                                          Termination of Employment.  (a)  Death or
Disability.  The Executive’s
employment shall terminate automatically if the Executive dies during the
Employment Period.  If the Company
determines in good faith that the Disability (as defined herein) of the


 


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Executive has occurred during the Employment Period
(pursuant to the definition of “Disability”), it may give to the Executive
written notice in accordance with Section 11(b) of its intention to
terminate the Executive’s employment.  In
such event, the Executive’s employment with the Company shall terminate
effective on the 30th day after receipt of such notice by the Executive (the “Disability
Effective Date”), provided that, within the 30 days
after such receipt, the Executive shall not have returned to full-time
performance of the Executive’s duties.  “Disability”
means the absence of the Executive from the Executive’s duties with the Company
on a full-time basis for 180 consecutive business days as a result of
incapacity due to mental or physical illness that is determined to be total and
permanent by a physician selected by the Company or its insurers and acceptable
to the Executive or the Executive’s legal representative.


 


(b) Cause. 
The Company may terminate the Executive’s employment during the
Employment Period for Cause.  “Cause”
means:


 


(1)                                  the willful
and continued failure of the Executive to perform substantially the Executive’s
duties (as contemplated by Section 3(a)(1)(A)) with the Company or any
Affiliated Company (other than any such failure resulting from incapacity due
to physical or mental illness or following the Executive’s delivery of a Notice
of Termination for Good Reason), after a written demand for substantial
performance is delivered to the Executive by the Board or the Chief Executive
Officer of the Company that specifically identifies the manner in which the
Board or the Chief Executive Officer of the Company believes that the Executive
has not substantially performed the Executive’s duties, or


 


(2)                                  the willful
engaging by the Executive in illegal conduct or gross misconduct that is
materially and demonstrably injurious to the Company.


 


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 the Executive in bad faith or without
reasonable belief that the Executive’s action or omission was in the best
interests of the Company.  Any act, or
failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer of
the Company or a senior officer of the Company or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or omitted
to be done, by the Executive in good faith and in the best interests of the
Company.  The cessation of employment of
the Executive shall not be deemed to be for Cause unless and until there shall
have been delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire membership of
the Board (excluding the Executive, if the Executive is a member of the Board)
at a meeting of the Board called and held for such purpose (after reasonable
notice is provided to the Executive and the Executive is given an opportunity,
together with counsel for the Executive, to be heard before the Board), finding
that, in the good faith opinion of the Board, the Executive is guilty of the
conduct described in Section 4(b)(1) or 4(b)(2), and specifying the
particulars thereof in detail.


 


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(c) Good Reason.  The Executive’s employment may be
terminated by the Executive for Good Reason or by the Executive voluntarily
without Good Reason.  “Good Reason”
means:


 


(1)                                  the
assignment to the Executive of any duties inconsistent in any respect with the
Executive’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as contemplated by Section 3(a),
or any other diminution in such position, authority, duties or responsibilities
(whether or not occurring solely as a result of the Company’s ceasing to be a
publicly traded entity), excluding for this purpose an isolated, insubstantial
and inadvertent action not taken in bad faith and that is remedied by the
Company promptly after receipt of notice thereof given by the Executive;


 


(2)                                  any failure
by the Company to comply with any of the provisions of Section 3(b), other
than an isolated, insubstantial and inadvertent failure not occurring in bad
faith and that is remedied by the Company promptly after receipt of notice
thereof given by the Executive;


 


(3)                                  the Company’s
requiring the Executive (i) to be based at any office or location other
than as provided in Section 3(a)(1)(B), (ii) to be based at a
location other than the principal executive offices of the Company if the
Executive was employed at such location immediately preceding the Effective
Date, or (iii) to travel on Company business to a substantially greater
extent than required immediately prior to the Effective Date;


 


(4)                                  any
purported termination by the Company of the Executive’s employment otherwise than
as expressly permitted by this Agreement; or


 


(5)                                  any failure
by the Company to comply with and satisfy Section 10(c).


 


For purposes of this Section 4(c),
any good faith determination of Good Reason made by the Executive shall be
conclusive.  The Executive’s mental or
physical incapacity following the occurrence of an event described above in
clauses (1) through (5) shall not affect the Executive’s ability to
terminate employment for Good Reason.


 


(d) Notice of Termination.  Any termination by the Company for Cause,
or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 11(b).  “Notice of Termination” means a written
notice that (1) indicates the specific termination provision in this
Agreement relied upon, (2) to the extent applicable, 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
(3) if the Date of Termination (as defined herein) is other than the date
of receipt of such notice, specifies the Date of Termination (which Date of
Termination shall be not more than 30 days after the giving of such
notice).  The failure by the Executive or
the Company to set forth in the Notice of Termination any fact or circumstance
that contributes to a showing of Good Reason or Cause shall not waive any right
of the Executive or the


 


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Company, respectively, hereunder or
preclude the Executive or the Company, respectively, from asserting such fact
or circumstance in enforcing the Executive’s or the Company’s respective rights
hereunder.


 


(e) Date of Termination.  “Date of Termination” means (1) if
the Executive’s employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified in the Notice of Termination, (which date shall not be
more than 30 days after the giving of such notice), as the case may be, (2) if
the Executive’s employment is terminated by the Company other than for Cause or
Disability, the Date of Termination shall be the date on which the Company
notifies the Executive of such termination, and (3) if the Executive’s
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be.


 


Section 5.                                          Obligations of the Company upon Termination.  (a) 
Good Reason; Other Than for Cause, Death or Disability.  If, during the Employment Period,
the Company terminates the Executive’s employment other than for Cause or
Disability or the Executive terminates employment for Good Reason:


 


(1)                                  the Company
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) the
Executive’s Annual Base Salary through the Date of Termination to the extent
not theretofore paid; (ii) the product of (x) the higher of (I) the Recent
Target Bonus and (II) the Annual Bonus paid or payable, including any bonus or
portion thereof that has been earned but deferred (and annualized for any
fiscal year consisting of less than 12 full months or during which the
Executive was employed for less than 12 full months), for the most recently
completed fiscal year during the Employment Period, if any (such higher amount,
the “Highest Annual Bonus”) and (y) a fraction, the numerator of which is the
number of days in the current fiscal year through the Date of Termination and
the denominator of which is 365; provided, that
if the Date of Termination occurs in the same fiscal year as the Change of
Control, then such product shall be reduced (but not below zero) by the amount
of any Change of Control Bonus payable to the Executive; and (iii) any
accrued vacation pay, in each case, to the extent not theretofore paid (the sum
of the amounts described in subclauses (i), (ii) and (iii), the “Accrued
Obligations”);


 


(B)                                the amount
equal to the product of (i) three and (ii) the sum of (x) the
Executive’s Annual Base Salary and (y) the Highest Annual Bonus; and


 


(C)                                an amount
equal to the excess of (i) the actuarial equivalent of the benefit under
the Company’s qualified defined benefit retirement plan (the “Retirement Plan”)
(utilizing actuarial assumptions no less favorable to the Executive than those
in effect under the Retirement Plan immediately prior to the Effective Date),
any excess or supplemental retirement plan in which the


 


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Executive participates
(collectively, the “SERP”) and any Enhanced Pension Benefits that the Executive
would receive if the Executive’s employment had continued for a number of years
and fractions of years equal to the sum of (I) one or, if greater, the number
of years and fractions of years from the Date of Termination through the third
anniversary of the Change of Control (the “Continuation Period”) plus (II)
three years, and had achieved an age equal to the (x) Executive’s actual age,
plus (y) the number of years and fractions of years in the Continuation Period,
plus (z) such additional number of years and fractions thereof, as may be
necessary for the Executive to be eligible for unreduced early retirement
benefits under the Retirement Plan, the SERP and the Enhanced Pension Benefits
(if any), but the number described in this clause (z) shall not exceed five;
with the foregoing calculations being made with the assumptions that all accrued
benefits are fully vested, and that the Executive’s compensation during the
period of assumed continued employment is that required by Sections 3(b)(1) and
3(b)(2); over (ii) the actuarial equivalent of the Executive’s actual
benefit (paid or payable), if any, under the Retirement Plan, the SERP and the
Enhanced Pension Benefits (if any) as of the Date of Termination;


 


(2)                                  for three
years after the Executive’s Date of Termination, or such longer period as may
be provided by the terms of the appropriate plan, program, practice or policy,
the Company shall continue welfare and fringe benefits to the Executive and/or
the Executive’s family at least equal to those that would have been provided to
them in accordance with the plans, programs, practices and policies described
in Section 3(b)(4) and (6) if the Executive’s employment had not
been terminated or, if more favorable to the Executive, as in effect generally
at any time thereafter with respect to other peer executives of the Company and
the Affiliated Companies and their families, provided,
however, that, if the Executive becomes
reemployed with another employer and is eligible to receive medical or other
welfare benefits under another employer provided plan, the medical and other
welfare benefits described herein shall be secondary to those provided under
such other plan during such applicable period of eligibility; and for purposes
of determining eligibility (but not the time of commencement of benefits) of
the Executive for retiree benefits pursuant to such plans, practices, programs
and policies, the Executive shall be considered to have remained employed until
three years after the Date of Termination and to have retired on the last day
of such period;


 


(3)                                  the Company
shall, at its sole expense as incurred, provide the Executive with outplacement
services the scope and provider of which shall be selected by the Executive in
the Executive’s sole discretion provided, that the cost of such
outplacement shall not exceed $50,000;


 


(4)                                  all stock
options and restricted stock held by the Executive immediately before the Date
of Termination shall vest in full, and such stock options shall remain


 


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exercisable until the
first to occur of the first anniversary of the Date of Termination and the
expiration of their original terms; and


 


(5)                                  to the
extent not theretofore paid or provided, the Company shall timely pay or
provide to the Executive any other amounts or benefits required to be paid or
provided or that the Executive is eligible to receive under any plan, program,
policy or practice or contract or agreement of the Company and the Affiliated
Companies (such other amounts and benefits, the “Other Benefits”).


 


(b) Death.  If the Executive’s employment is terminated
by reason of the Executive’s death during the Employment Period, the Company
shall provide the Executive’s estate or beneficiaries with the Accrued
Obligations and the timely payment or delivery of the Other Benefits, and shall
have no other severance obligations under this Agreement.  The Accrued Obligations shall be paid to the
Executive’s estate or beneficiary, as applicable, in a lump sum in cash within
30 days of the Date of Termination.  With
respect to the provision of the Other Benefits, the term “Other Benefits” as
utilized in this Section 5(b) shall include, without limitation, and
the Executive’s estate and/or beneficiaries shall be entitled to receive,
benefits at least equal to the most favorable benefits provided by the Company
and the Affiliated Companies to the estates and beneficiaries of peer
executives of the Company and the Affiliated Companies under such plans,
programs, practices and policies relating to death benefits, if any, as in
effect with respect to other peer executives and their beneficiaries at any
time during the 120-day period immediately preceding the Effective Date or, if
more favorable to the Executive’s estate and/or the Executive’s beneficiaries,
as in effect on the date of the Executive’s death with respect to other peer
executives of the Company and the Affiliated Companies and their beneficiaries.


 


(c) Disability.  If the Executive’s employment is
terminated by reason of the Executive’s Disability during the Employment
Period, the Company shall provide the Executive with the Accrued Obligations
and the timely payment or delivery of the Other Benefits, and shall have no
other severance obligations under this Agreement.  The Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.  With respect to the provision of the Other
Benefits, the term “Other Benefits” as utilized in this Section 6(c) shall
include, and the Executive shall be entitled after the Disability Effective
Date to receive, disability and other benefits at least equal to the most
favorable of those generally provided by the Company and the Affiliated
Companies to disabled executives and/or their families in accordance with such
plans, programs, practices and policies relating to disability, if any, as in
effect generally with respect to other peer executives and their families at
any time during the 120-day period immediately preceding the Effective Date or,
if more favorable to the Executive and/or the Executive’s family, as in effect
at any time thereafter generally with respect to other peer executives of the
Company and the Affiliated Companies and their families.


 


(d) Cause; Other Than for Good Reason.  If the Executive’s employment is
terminated for Cause during the Employment Period, the Company shall provide to
the Executive (1) the Executive’s Annual Base Salary through the Date of
Termination, (2) the amount of any compensation previously deferred by the
Executive, and (3) the Other Benefits,


 


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in each case, to the extent theretofore
unpaid, and shall have no other severance obligations under this
Agreement.  If the Executive voluntarily
terminates employment during the Employment Period, excluding a termination for
Good Reason, the Company shall provide to the Executive the Accrued Obligations
and the timely payment or delivery of the Other Benefits, and shall have no
other severance obligations under this Agreement.  In such case, all the Accrued Obligations
shall be paid to the Executive in a lump sum in cash within 30 days of the Date
of Termination.


 


Section 6.                                          Non-exclusivity of Rights.  Nothing in this Agreement shall prevent or
limit the Executive’s continuing or future participation in any plan, program,
policy or practice provided by the Company or the Affiliated Companies and for
which the Executive may qualify, nor, subject to Section 11(f), shall
anything herein limit or otherwise affect such rights as the Executive may have
under any other contract or agreement with the Company or the Affiliated
Companies.  Amounts that are vested
benefits or that the Executive is otherwise entitled to receive under any plan,
policy, practice or program of or any contract or agreement with the Company or
the Affiliated Companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract
or agreement, except as explicitly modified by this Agreement.  Notwithstanding the foregoing, if the Executive
receives payments and benefits pursuant to Section 5(a) of this
Agreement, the Executive shall not be entitled to any severance pay or benefits
under any severance plan, program or policy of the Company and the Affiliated
Companies, including without limitation the Executive Severance Plan, unless
otherwise specifically provided therein in a specific reference to this
Agreement.


 


Section 7.                                          Full Settlement; Contests.  (a) The Company’s obligation to make the
payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense, or other claim, right or action that the Company 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.


 


(b) The Company
agrees to pay as incurred (within 10 days following the Company’s receipt of an
invoice from the Executive), to the full extent permitted by law, all legal
fees and expenses that the Executive may reasonably incur as a result of any
contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a
result of any contest by the Executive about the amount of any payment pursuant
to this Agreement), plus, in each case, interest on any delayed payment at the
applicable federal rate provided for in Section 7872(f)(2)(A) of the
Internal Revenue Code of 1986, as amended (the “Code”).  Notwithstanding the foregoing, the Company
shall have no obligation to pay the Executive’s legal fees and expenses in
connection with any action initiated by the Executive as to which the trier of
fact finds that the Executive’s claim was frivolous or brought in bad faith.


 


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Section 8.                                          Certain Additional Payments by the Company.


 


(a) Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution in the nature of compensation
(within the meaning of Section 280G(b)(2) of the Code) to or for the
benefit of the Executive, whether paid or payable pursuant to this Agreement or
otherwise (a “Payment”), would be subject to the excise tax imposed by Section 4999
of the Code, together with any interest or penalties imposed with respect to
such excise tax (the “Excise Tax”), then the Executive shall be entitled to
receive an additional payment (the “Gross-Up Payment”) in an amount such that,
after payment by the Executive of all taxes (and any interest or penalties
imposed with respect to such taxes), including, without limitation, any income
taxes (and any interest and penalties imposed with respect thereto) and Excise
Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.


 


(b) Subject to the
provisions of Section 8(c), all determinations required to be made under
this Section 8, including whether and when a Gross-Up Payment is required,
the amount of such Gross-Up Payment and the assumptions to be utilized in
arriving at such determination, shall be made by PriceWaterhouseCoopers (the “Accounting
Firm”).  The Accounting Firm shall
provide detailed supporting calculations both to the Company and the Executive
within 15 business days of the receipt of notice from the Executive that there
has been a Payment or such earlier time as is requested by the Company.  In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group effecting
the Change of Control, the Executive may appoint another nationally recognized
accounting firm to make the determinations required hereunder (which accounting
firm shall then be referred to as the Accounting Firm hereunder).  All fees and expenses of the Accounting Firm
shall be borne solely by the Company. 
Any Gross-Up Payment, as determined pursuant to this Section 8,
shall be paid by the Company to the Executive within 5 days of the receipt of
the Accounting Firm’s determination.  Any
determination by the Accounting Firm shall be binding upon the Company and the
Executive.  As a result of the
uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments that will not have been made by the Company should have been
made (the “Underpayment”), consistent with the calculations required to be made
hereunder.  In the event the Company
exhausts its remedies pursuant to Section 8(c) and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.


 


(c) The Executive
shall notify the Company in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by the Company of the
Gross-Up Payment.  Such notification
shall be given as soon as practicable, but no later than 10 business days after
the Executive is informed in writing of such claim.  The Executive shall apprise the Company of
the nature of such claim and the date on which such claim is requested to be
paid.  The Executive shall not pay such
claim prior to the expiration of the 30-day period


 


12





















 


following the date on which the Executive
gives such notice to the Company (or such shorter period ending on the date
that any payment of taxes with respect to such claim is due).  If the Company notifies the Executive in
writing prior to the expiration of such period that the Company desires to
contest such claim, the Executive shall:


 


(1)                                  give the
Company any information reasonably requested by the Company relating to such
claim,


 


(2)                                  take such
action in connection with contesting such claim as the Company shall reasonably
request in writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney reasonably
selected by the Company,


 


(3)                                  cooperate
with the Company in good faith in order effectively to contest such claim, and


 


(4)                                  permit the
Company to participate in any proceedings relating to such claim;


 


provided,
however, that the Company shall bear and
pay directly all costs and expenses (including additional interest and
penalties) incurred in connection with such contest, and shall indemnify and
hold the Executive harmless, on an after-tax basis, for any Excise Tax or
income tax (including interest and penalties) imposed as a result of such
representation and payment of costs and expenses.  Without limitation on the foregoing
provisions of this Section 8(c), the Company shall control all proceedings
taken in connection with such contest, and, at its sole discretion, may pursue
or forgo any and all administrative appeals, proceedings, hearings and
conferences with the applicable taxing authority in respect of such claim and
may, at its sole discretion, either direct the Executive to pay the tax claimed
and sue for a refund or contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided,
however, that, if the Company directs
the Executive to pay such claim and sue for a refund, the Company shall advance
the amount of such payment to the Executive, on an interest-free basis, and
shall indemnify and hold the Executive harmless, on an after-tax basis, from
any Excise Tax or income tax (including interest or penalties) imposed with
respect to such advance or with respect to any imputed income in connection
with such advance; and provided, further, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect
to which such contested amount is claimed to be due is limited solely to such
contested amount.  Furthermore, the
Company’s control of the contest shall be limited to issues with respect to
which the Gross-Up Payment would be payable hereunder, and the Executive shall
be entitled to settle or contest, as the case may be, any other issue raised by
the Internal Revenue Service or any other taxing authority.


 


(d) If, after the
receipt by the Executive of an amount advanced by the Company pursuant to Section 8(c),
the Executive becomes entitled to receive any refund with respect to such
claim, the Executive shall (subject to the Company’s complying with the
requirements of Section 8(c)) promptly pay to the Company the amount of
such refund


 


13





















 


(together with any interest paid or
credited thereon after taxes applicable thereto).  If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 8(c), a determination
is made that the Executive shall not be entitled to any refund with respect to
such claim and the Company does not notify the Executive in writing of its
intent to contest such denial of refund prior to the expiration of 30 days
after such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.


 


(e) Notwithstanding
any other provision of this Section 8, the Company may, in its sole
discretion, withhold and pay over to the Internal Revenue Service or any other
applicable taxing authority, for the benefit of the Executive, all or any
portion of the Gross-Up Payment, and the Executive hereby consents to such
withholding.


 


Section 9.                                          Confidential Information.  The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or the Affiliated Companies, and
their respective businesses, which information, knowledge or data shall have
been obtained by the Executive during the Executive’s employment by the Company
or the Affiliated Companies and which information, knowledge or data shall not
be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement).  After termination of the Executive’s
employment with the Company, the Executive shall not, without the prior written
consent of the Company or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to anyone other
than the Company and those persons designated by the Company.  In no event shall an asserted violation of
the provisions of this Section 9 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this
Agreement.


 


Section 10.                                   Successors.  (a)  This Agreement is personal to the
Executive, and, without the prior written consent of the Company, shall not be
assignable by the Executive other 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 the Company and its
successors and assigns.  Except as
provided in Section 10(c), without the prior written consent of the
Executive this Agreement shall not be assignable by the Company.


 


(c) The Company
will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place.  “Company” means the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid that
assumes and agrees to perform this Agreement by operation of law or otherwise.


 


14





















 


Section 11.                                   Miscellaneous.  (a)  This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware, 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.  This
Agreement may not be amended or modified other than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.


 


(b) All notices and
other communications hereunder shall be in writing and shall be given by hand
delivery to the other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:


 


if to
the Executive:


 


Allen A.
Spizzo


Hercules
Incorporated


Hercules
Plaza


Wilmington,
Delaware 19894-0001


 


if to
the Company:


 


Hercules
Incorporated


Hercules
Plaza


Wilmington,
Delaware 19894-0001


 


Attn:  Chief Executive Officer


 


or to such other address
as either party shall have furnished to the other in writing in accordance
herewith.  Notice and communications
shall be effective when actually received by the addressee.


 


(c) The invalidity
or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement.


 


(d) The Company may
withhold from any amounts payable under this Agreement such United States
federal, state or local or foreign taxes as shall be required to be withheld
pursuant to any applicable law or regulation.


 


(e) The Executive’s
or the Company’s failure to insist upon strict compliance with any provision of
this Agreement or the failure to assert any right the Executive or the Company
may have hereunder, including, without limitation, the right of the Executive
to terminate employment for Good Reason pursuant to Sections 4(c)(1) through
4(c)(5), shall not be deemed to be a waiver of such provision or right or any
other provision or right of this Agreement.


 


(f) The Executive
and the Company acknowledge that, except as may otherwise be provided under any
other written agreement between the Executive and the Company, the


 


15





















 


employment of the Executive by the
Company is “at will” and, subject to Section 1(a), prior to the Effective
Date, the Executive’s employment may be terminated by either the Executive or
the Company at any time prior to the Effective Date, in which case the Executive
shall have no further rights under this Agreement.  From and after the Effective Date, except as
specifically provided herein, this Agreement shall supersede any other
agreement between the parties with respect to the subject matter hereof.


 


16





















 


IN WITNESS WHEREOF, the Executive has hereunto set the
Executive’s hand and, pursuant to the authorization from the Board, the Company
has caused these presents to be executed in its name on its behalf, all as of
the day and year first above written.


 


 


	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Allen A. Spizzo

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HERCULES INCORPORATED

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Vincent J. Corbo

  	
   

  
	
   

  	
   

  	
   

  	
  Chairman,
  President and

  	
   

  
	
   

  	
   

  	
   

  	
  Chief Executive
  Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Israel J. Floyd

  	
   

  	
   

  
	
  Secretary

  	
   

  	
   

  



 


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