Employment Offer Letter - John E. Panichella


    


    


    


    


    
      
        

      



    


    December
      8, 2005

    


    Mr.
      John
      E. Panichella

    3771
      Sablewood Drive

    Doylestown,
      PA 18901

    


    Dear
      John:

    


    I
      am
      pleased to confirm the terms and conditions of your offer to join Hercules
      Incorporated effective January 1, 2006 in the position of President Aqualon
      Division of Hercules and Vice President, Hercules Incorporated. This position
      will report to Craig A. Rogerson, President and Chief Executive Officer.


    


    Our
      offer
      includes the following components:

    


    
      	 	
              1.

            	
              Annual
                Base Salary: $315,000
                payable in 12 equal monthly installments. Pursuant to our salary
                administration policy, salary reviews are conducted each March
                1st.
                Your first scheduled review will be March
                2007.

            


    

    


    
      	2.  	
              2006
                MICP Target Opportunity:
                Your target annual incentive opportunity under the Hercules Management
                Incentive Compensation Plan (MICP) is 50% of your base salary. In
                recognition of your current variable compensation minimum grant,
                your 2006
                MICP award will be subject to a minimum payout of $110,000. The maximum
                payout is 2 times your target and, of course, aside from the above
                2006
                minimum, the minimum is zero. Any payouts above the target amount
                may be
                made in restricted stock. 

            


    

    


    
      	3.  	
              Long-Term
                Incentive:
                In this position, you are eligible to receive annual grants under
                the
                Hercules Long-Term Incentive Compensation Plan (LTICP). Your first
                year
                target award value will be $250,000 subject to Board approval and
                adjustments reference below. Future awards will be determined based
                on
                competitive practice for your position at that time but are expected
                to be
                $300,000 in 2007, and $350,000 in
                2008.

            


    

    


    
      	4.  	
              Benefits:
                Your benefits will be covered under the current Hercules Incorporated
                plan
                per the enclosed Benefits overview. Your previous Hercules credited
                service will be immediately reinstated upon joining Hercules and
                will be
                used for benefit eligibility and
                calculation.

            


    

    


    
      	5. 
               	
              Should
                you forfeit your current variable compensation award that otherwise
                would
                be paid for 2005, we will pay the amount forfeited up to $108,000
                subject
                to the following adjustments taken against your LTICP awards in 2006,
                2007
                and 2008: 

            


    

    


    “2006
      LTICP award value will be reduced by 50% of the forfeiture reimbursement.
      However, the number of shares so reduced shall be reinstated
      with the 2007 LTICP grant provided you are employed as of
      such
      date.”

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	6.  	
              Executive
                Stock Purchase Program: You
                will become eligible to participate in the Executive Stock Purchase
                Program. This program, under the LTICP, provides you with the option
                of
                converting salary and target MICP amounts into Hercules Restricted
                Stock
                at a 15% discount. The program also provides for the exchange of
                Nonqualified Savings Plan balances for restricted stock with no discount.
                More information will be provided to you on this program through
                the
                Corporate Human Resources
                Department.

            


    

    


    
      	7.  	
              Relocation
                Benefits:
                The Hercules Relocation Benefits Plan applicable to homeowner employees
                (copy enclosed) will apply for 12 months beginning January 1,
                2006.

            


    

    


    
      	8.  	
              Change
                in Control Several Benefit:
                Your Severance Pay Plan benefits entitlement will be adjusted to
                one
                year’s base salary in the event of a Change in Control, as defined in
                the
                Hercules LTICP. The LTICP also provides for immediate vesting of
                all
                outstanding awards in the event of a Change in
                Control.

            


    

    


    


    This
      offer is contingent upon three issues. You must successfully pass our standard
      pre-placement physical examination before your anticipated starting date. A
      part
      of this examination will be a test to detect the use of drugs or alcohol. If
      you
      are currently using prescription drugs, please bring your prescription with
      you
      to the physical. In addition, we must verify employment eligibility under the
      Immigration Reform and Control Act. Finally, any agreement with former employers
      must not inhibit your freedom to perform the duties of the President of Aqualon
      position.

    


    I
      am
      excited about having you as part of the Hercules team in this critical role.
      I
      look forward to working with you to make this a personally and professionally
      rewarding opportunity.

    


    To
      indicate your review and acceptance with the above terms please sign a copy
      of
      this letter and return it to me within three days.

    


    Best
      regards,

    


    /s/
      Edward V. Carrington

    Edward
      V.
      Carrington, Vice President

    Human
      Resources and Corporate Resources

    


    Accepted
      by:

    


    /s/
      John E. Panichella

    John
      E.
      Panichella

    


    


    


    


    


    


    


    Encolosures

    Offer
      Letter.doc