Directors Code of
Business Conduct and Ethics
 

Corporate Governance

(As adopted by the Board of Directors on December 13, 2007)

The Board of Directors (the “Board”) of Hercules Incorporated (the “Corporation”) has adopted this Code of Business Conduct and Ethics (this “Code”) which shall apply to the entire Board. This Code is to help Directors in the fulfillment of their duties of due care and loyalty to the Corporation and its shareholders. It is intended to focus the Board and each Director on some areas of ethical risk, provide guidance to Directors to help them recognize and deal with ethical issues, provide mechanisms to report unethical conduct, and help foster a culture of honesty and accountability. Each Director must comply with the letter and spirit of this Code. Without limiting the foregoing, a Director should avoid activities that might be reasonably understood or misunderstood by others to reflect poorly on the Corporation or give the appearance of self-dealing, unfairness, dishonesty, or improper Director Benefit. For purposes of this Code, “Director Benefit” means a personal, professional, or business benefit, gain, advantage, interest or profit of the Director or any member of his or her immediate family. (It is noted that New York Stock Exchange Rule 303A.02(b) defines “immediate family” to include an individual’s spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law, and anyone (other than domestic employees) who shares such individual’s home.)

No code or policy can anticipate every situation that may arise. Accordingly, this Code is intended to serve as a source of guiding principles for Directors. Directors are encouraged to bring questions about particular circumstances that may implicate one or more of the provisions of this Code to the attention of the Chair of the Corporate Governance, Nominating and Ethics Committee (the “Governance Committee”), who may consult with advisors (including, without limitation, inside or outside legal counsel) as such person deems appropriate.

Directors who also serve as officers of the Corporation should comply with the letter and spirit of this Code as well as the Corporation’s “Business Practices Policy for Hercules Employees” and the Corporation’s “Code of Ethics for Senior Financial Executives.”

If a law conflicts with a policy in this Code, you must comply with the law.

This Code does not attempt to describe all potential problem areas that could develop for a Director; however, some of the more common problem areas are described below. When a problem, question or situation arises and it is not described below, then you should contact the Governance Committee (see Section 14 of this Code). Without limiting the generality of the foregoing, if you are in a situation which you believe may violate or lead to a violation of this Code, follow the guidelines described in Section 14 of this Code.

  1. Conflict of Interest.

    A “conflict of interest” occurs when an actual or potential Director Benefit interferes, could reasonably be expected to interfere, or could reasonably create the appearance of interference in any way with the interests of the Corporation. A conflict situation may arise when a Director takes actions or has interests that may make it difficult to perform his or her director duties objectively and effectively. Directors should be scrupulous in avoiding conflicts of interest with the Corporation. Any situation that involves, or may reasonably be expected to involve or appear to involve, a conflict of interest with the Corporation must be disclosed promptly to the Chair of the Governance Committee. If the conflict of interest cannot be reasonably resolved to the satisfaction of the Chair of the Governance Committee, then the involved Director(s) should recuse himself or herself and not participate in the discussion and voting on any matter presented at a Board or Board committee meeting related to the conflict of interest. If a conflict of interest exists that cannot be resolved, the involved Director(s) is expected to tender his or her resignation to the Chair of the Board for consideration by the Governance Committee of the continued appropriateness of Board service.

    Loans to, or guarantees of the obligations of, a Director, or a member of his or her immediate family, may create conflicts of interest. Moreover, Section 13(k) of the Securities Exchange Act of 1934 (the “Exchange Act”), as amended, generally makes it unlawful for the Corporation to, directly or indirectly, extend or maintain credit, arrange for the extension of credit, or renew an extension of credit, in the form of a personal loan to or for any Director or executive officer (or equivalent thereof). Any loans or guarantees that may be made will be disclosed to the shareholders.

    A Director shall recuse himself or herself from any discussion or decision involving or affecting an actual or potential Director Benefit of such Director.
     
  2. Relationship of the Corporation with Third Parties.

    A Director may not engage in any conduct or activities that are inconsistent with the Corporation’s best interests or that disrupt or impair the Corporation’s relationship with a person or entity with which the Corporation has or proposes to enter into a business or contractual relationship. Without limiting the foregoing, a Director should not attempt to use his or her influence to cause the Corporation to use or not to use particular company(ies), firm(s), or organization(s). However, this does not prevent or inhibit a Director from making recommendations about particular company(ies), firm(s), or organization(s), or sharing with the Corporation or the Board his or her knowledge of or past experience with particular company(ies), firm(s), or organization(s).
     
  3. Compensation from Sources Other than the Corporation.

    A Director may not accept compensation, in any form, for services performed for the Corporation from any source other than the Corporation. Without limiting the foregoing, a Director may not accept from others a commission, finder’s fee, or similar remuneration for any business transaction in which the Corporation is involved or for services rendered to the Corporation.
     
  4. Gifts.

    A Director and members of his or her immediate family may not offer, give, or receive gift(s) (whether cash, non-cash, or other) from persons or entities who deal with the Corporation in those cases where any such gift is being made or could reasonably appear to have been made in order to influence the Director’s actions as a member of the Board or where acceptance of the gift(s) could reasonably create or appear to create a conflict of interest. In certain circumstances, a Director may accept non-cash gift(s) (of a nominal fair market value), provided that acceptance of such gift(s) is customary and closely related to the Corporation’s business at hand and the gift(s) are disclosed to the Chair of the Governance Committee at the earliest opportunity.
     
  5. Corporate and Charitable Giving.

    In furtherance of its business interests or corporate good citizenry, the Corporation may make corporate gifts to charitable organizations from time to time. Any Director who has any significant interest in a charitable organization to which the Corporation proposes to make a corporate gift shall promptly inform the Chair of the Governance Committee of this situation, and, thereafter, any corporate gifts by the Corporation to such charitable organization (and appropriateness thereof) shall be reviewed and approved by the Chair of the Governance Committee.
     
  6. Political Activities.

    It is recognized that, as an individual, a Director may become engaged in public service, partisan politics, or political issues. A Director shall be sensitive that some people may be unable to differentiate such Director’s personal view from the view of the Board or of the Corporation. In furtherance of such differentiation, a Director should do (except as otherwise specifically approved by the Governance Committee) at least the following: (a) where appropriate, make it clear that the Director is speaking or acting personally and not as a Director of the Corporation; (b) not make a political contribution for or in the Corporation’s name, and Directors will not receive reimbursement from the Corporation for any political contribution made as an individual; (c) not endorse for or in the Corporation’s name the appointment or election of a public official or the passage or non-passage of any ballot propositions; and (d) not use the Corporation’s materials or property in public service, partisan politics, or political issues activities.
     
  7. Corporate Opportunities.

    A Director owes a duty to the Corporation to advance the Corporation’s legitimate interests when the opportunity to do so arises. A Director may not: (a) receive or seek to receive a Director Benefit from opportunities that are discovered through his or her involvement with the Corporation (including, without limitation, his or her use of the Corporation’s property, the Corporation’s information, or his or her position as a Director); (b) use the Corporation’s property, the Corporation’s information, or his or her position as a Director for his or her personal gain or the personal gain of his or her immediate family or (c) compete with the Corporation, directly or indirectly, for business opportunities; provided, however, that, if the Governance Committee finally determines that the Corporation will not pursue an opportunity that relates to the Corporation’s business activities, a Director may do so after disclosing to such Committee that such Director will pursue such opportunity.
     
  8. Confidentiality.

    It is imperative that a Director maintain the confidentiality of all information (whether belonging to the Corporation or a party with whom the Corporation has a relationship such as a customer, supplier, or business partner) entrusted to him or her or that comes to him or her, from whatever source, in his or her capacity as a Director, except when disclosure is authorized by the Governance Committee or required by laws or regulations. Confidential information includes all non-public information (including private, proprietary, and other) that might be of use to competitors or harmful to the Corporation or its relationship parties (such as customers, suppliers, and business partners) if disclosed.
     
  9. Protection and Proper Use of Assets of the Corporation.

    A Director shall protect the Corporation’s assets and ensure their efficient use. Theft, loss, misuse, carelessness, and waste of assets have a direct impact on the Corporation’s profitability. Any suspected incident of fraud or theft should be immediately reported to the Governance Committee for investigation. A Director shall protect and not use or seek to use the Corporation’s time, employees, supplies, equipment, tools, buildings, or other assets (including without limitation, proprietary information) for non-Corporation business, except as part of an adopted or approved program or policy of the Corporation available to all Directors.
    The obligation to protect the Corporation’s proprietary information includes intellectual property as well as business plans, novel ideas, databases, records, salary information and any unpublished financial data and reports. Unauthorized use or distribution of proprietary information would violate the Corporation’s policy. It could also be illegal and result in civil or even criminal penalties.
     
  10. Competition and Fair Dealing.

    A Director shall deal fairly and oversee fair and honest dealing by employees and officers with the Corporation’s Directors, officers, employees, customers, suppliers, and competitors. Stealing proprietary information, possessing trade secret information that was obtained improperly (e.g., unlawfully or without the owner’s consent or agreement or from persons not having a legal right to disclose such information), or inducing such disclosures by past or present directors, officers, employees or agents of other companies is prohibited. None of such persons should take unfair advantage of others through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other unfair dealing practices.
     
  11. Compliance with Laws, Rules, and Regulations.

    A Director shall comply, and oversee compliance by employees, officers, and other Directors, with all laws, rules, and regulations of the United States (federal, state, and other) and other countries applicable to the Corporation, including insider trading laws and stock exchange rules and regulations. Transactions, directly or indirectly, involving securities of the Corporation should not be undertaken by Directors without pre-clearance from the Corporation’s Chief Legal Officer or the General Counsel. Such transactions do not include investments in vehicles (such as mutual funds) where the Director is one of many investors and the Director does not control or materially influence the vehicles’ actions (if any) related to the Corporation’s securities. All non-public information about the Corporation should be considered confidential information and shall not be used or shared for stock trading purposes or for any other purpose except the conduct of the Corporation’s business. To use non-public information for Director Benefit or to “tip” others who might make an investment decision on the basis of this information is not only unethical but also illegal. If you have any questions, please consult the Corporation’s Chief Legal Officer or the General Counsel.
     
  12. Payments to Government Personnel

    The U.S. Foreign Corrupt Practices Act prohibits giving anything of value, directly or indirectly, to officials of foreign governments or foreign political candidates in order to obtain or retain business. It is strictly prohibited to make illegal payments to government officials of any country.
    In addition, the U.S. government has a number of laws and regulations regarding business gratuities which may be accepted by U.S. government personnel. The promise, offer or delivery to an official or employee of the U.S. government of a gift, favor or other gratuity in violation of these rules would not only violate the Corporation’s policy but could also be a criminal offense. State and local governments, as well as foreign governments, may have similar rules. The Corporation’s Chief Legal Officer or the General Counsel can provide guidance to you in this area.
     
  13. Encouraging the Reporting of Any Illegal or Unethical Behavior.

    A Director should promote ethical behavior and take steps to ensure that the Corporation: (a) encourages employees to talk to supervisors, managers and other appropriate personnel about observed illegal or unethical behavior and, when in doubt, about the best course of action in a particular situation; (b) encourages employees to report to appropriate personnel violations of laws, rules, or regulations of the Corporation’s Business Practices Policy or Code of Ethics for Senior Financial Executives or of other illegal or unethical conduct; and (c) informs employees that the Corporation will not permit retaliation for reports or complaints of illegal or unethical conduct made in good faith.
     
  14. Failure to Comply; Compliance Procedures.

    A Director should communicate the failure of such Director or any other Director to comply with any laws or regulations, any rule governing the Corporation’s business, this Code, or any other policy or requirement of the Corporation to the Chair of the Governance Committee. Violations will be addressed by the Governance Committee, which shall timely report them to the Board for appropriate action. To the extent a Director who is not an employee of the Corporation becomes aware of any failure by any employee of the Corporation to comply with any laws or regulations, any rule governing the Corporation’s business or any other policy or requirement of the Corporation, such Director should communicate such failure to the Corporation’s Chief Executive Officer and, if appropriate, to the Chair of the Governance Committee.
    In some situations it is difficult to know if a violation has occurred. Since we cannot anticipate every situation that will arise, it is important that we have a way to approach a borderline or new question or problem. While the duty of due care and loyalty to the Corporation and its shareholders, and the exercise of good judgment are guiding principles for all questions or problems, the following steps should be kept in mind when addressing a borderline or new question or problem:

    Always ask first, act later: If you are unsure of what to do in any situation, seek guidance from the Governance Committee before you act.
    ● Make sure you have all the facts. When seeking guidance, disclose all the facts and relevant information that you have. In order to reach the right solutions, we must be as fully informed as possible.
    ● Ask yourself: What specifically am I being asked to do? Does it seem unethical or improper? This will enable you to focus on the specific question you are faced with, and the alternatives you have. Use your good judgment and common sense; if something seems unethical or improper, it probably is.
    ● Seek help from the Governance Committee. In situations where it may not be appropriate to discuss an issue with the Governance Committee, or where you do not feel comfortable approaching the Governance Committee with your question, discuss it with the Chief Legal Officer or the General Counsel.
     
  15. Accounting and Financial Reporting.

    The Corporation’s policy is to comply with all financial reporting and accounting regulations applicable to the Corporation. A Director supports and upholds ethical behavior and honesty as it pertains to the Corporation’s Financial Reporting. If any Director has concerns or complaints regarding questionable accounting or auditing matters of the Corporation, then he or she shall submit those concerns or complaints to the Chair of the Audit Committee promptly.

    As a public company, it is of critical importance that the Corporation’s filings with the Securities and Exchange Commission be accurate and timely. A Director should encourage management to take steps to ensure that the Corporation’s public reports are complete, fair, and understandable.
     
  16. Annual Certification.

    As part of the Directors and Officers Questionnaire sent annually to Directors in connection with the Annual Meeting of Shareholders, each Director will be asked to certify that he or she has complied and is in compliance with this Code. Such certification may be in substantially the following form:


“I, [insert name], hereby certify and acknowledge that: (i) I am a member in good standing of the Board of Directors of Hercules Incorporated; (ii) I have received, read, and understood the “Hercules Incorporated Directors Code of Business Conduct and Ethics”; (iii) such Code has been and is applicable to my activities as a member of such Board of Directors; (iv) I have complied and am in compliance with such Code; and (v) I am not aware of any non-compliance with such Code by others.

Signed: ___________________________________

Name Printed: ____________________________________

Date: ________________________”
 

  1. Administration, Amendment, Modification, and Waiver.

    This Code is administered by the Governance Committee and may be amended, modified, or waived by the Board from time to time and/or in whole or in part, provided that waivers may also be granted by the Governance Committee, in accordance with the terms hereof and subject to the disclosure and other provisions of the Securities Exchange Act of 1934, as amended, and the rules thereunder, and the applicable rules of the New York Stock Exchange.