Edgar Filing: HERCULES INC

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
ON MARCH 23, 2001

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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant To Section 14(a) of the
Securities Exchange Act of 1934.

Filed by the Registrant [__]
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Check the appropriate box:
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[_] Soliciting Material Under Rule 14a-12

HERCULES INCORPORATED
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

INTERNATIONAL SPECIALTY PRODUCTS INC.
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(NAME OF PERSON (S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)

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2001 ANNUAL MEETING OF THE STOCKHOLDERS

HERCULES INCORPORATED

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PROXY STATEMENT

INTERNATIONAL SPECIALTY PRODUCTS INC.

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We are sending this proxy statement to you as one of the
holders of common stock, $25/48 stated value per share, of Hercules
Incorporated, a Delaware corporation, in connection with our solicitation of
your proxy for use at the 2001 Annual Meeting of the Stockholders of Hercules
scheduled for 11:00 A.M., local time, on Thursday, April 26, 2001, at the
Delaware Art Museum, 2301 Kentmere Parkway, Wilmington, Delaware and at any
adjournments or postponements thereof. We are International Specialty Products
Inc., a Delaware corporation, and the largest stockholder of the Company,
beneficially owning approximately 9.9% of Hercules' outstanding shares of common
stock.

We are soliciting your proxy to vote at the 2001 Annual
Meeting for the election of our nominees, Samuel J. Heyman, Sunil Kumar, Gloria
Schaffer and Raymond Troubh, as directors of Hercules in the class with a
three-year term continuing until the 2004 Annual Meeting.

This proxy statement and the BLUE proxy card are first
being furnished to stockholders on or about March 23, 2001.

WE URGE YOU TO SIGN, DATE AND RETURN THE BLUE PROXY CARD IN FAVOR OF THE
ELECTION OF OUR NOMINEES DESCRIBED IN THIS PROXY STATEMENT.

IF YOU HAVE ALREADY SENT A WHITE PROXY CARD TO THE HERCULES DIRECTORS, YOU MAY
REVOKE THAT PROXY AND VOTE AGAINST THE ELECTION OF HERCULES NOMINEES BY SIGNING,
DATING AND RETURNING THE ENCLOSED BLUE PROXY CARD. THE LATEST DATED PROXY IS THE
ONLY ONE THAT COUNTS. ANY PROXY MAY BE REVOKED AT ANY TIME PRIOR TO THE 2001
ANNUAL MEETING BY DELIVERING A WRITTEN NOTICE OF REVOCATION OR A LATER DATED
PROXY FOR THE 2001 ANNUAL MEETING TO GEORGESON SHAREHOLDER COMMUNICATIONS INC.
OR TO THE SECRETARY OF HERCULES, OR BY VOTING IN PERSON AT THE 2001 ANNUAL
MEETING. SEE "VOTING PROCEDURES" ON PAGE 27.

REASONS FOR OUR SOLICITATION

We are the largest stockholder of the Company. As the owner
of more than 10.7 million shares of Hercules common stock, we have an investment
of $150 million at stake. Our interests are clearly aligned with yours. We want
to maximize value for all Hercules stockholders. Our four nominees for
directorships are committed, subject to their fiduciary duties if elected, to
urge the Hercules Board to:

o bring about the sale or merger of the Company, in the most
timely, effective and efficient manner possible;

o remove barriers to offers for your shares, so that you can
make your own decisions; and

o reverse the Company's position with regard to a Hercules Bylaw
which it claims requires the affirmative vote of the holders
of a majority of all outstanding shares for the election of
directors.

THE COMPANY'S PERFORMANCE OVER THE LAST FIVE YEARS HAS, IN OUR
OPINION, BEEN DISASTROUS FOR STOCKHOLDERS

When measured by virtually any financial yardstick,
Hercules' performance over the last five years, has, in our opinion, been
disastrous for the Company's stockholders. Consider the following:

o Hercules' stock price in the last five years has lost nearly
80% of its value since reaching its high of $66.25 on March
19, 1996, wiping out more than $5.5 billion in stockholder
value, notwithstanding one of the greatest bull markets in the
history of the American stock market;

o Based on total return to shareholders over the past five
years, Hercules was recently ranked by The Wall Street Journal
(February 26, 2001) as 6th worst out of 1,000 major public
companies;

o Hercules first cut and then totally eliminated your dividend
last year despite earlier assurances that the dividend would
be maintained;

o Hercules' $3.1 billion acquisition of BetzDearborn in 1998 has
been characterized by Paul Leming, an ING Barings security
analyst, as "one of the worst acquisitions in the history of
the chemical industry" (July 18, 2000);

o You should know that all eight of the current incumbent
Hercules directors who served on the Hercules Board at the
time of the BetzDearborn acquisition in 1998 voted to approve
the transaction. Three of the other current Hercules directors
are former BetzDearborn directors;

o As a result of the BetzDearborn acquisition and the poor
operating performance of Hercules' businesses since that time,
the Company's debt, including preferred stock, has increased
eleven-fold over the last five years - from less than $300
million, at the end of 1995, to approximately $3.2 billion, at
the end of 2000. During that period of time, Hercules' debt
ratings have been reduced (six grade levels by Moody's and
seven at Standard and Poor's) to non-investment grade -
thereby severely impacting the Company's borrowing costs;

o Leslie Ravitz, a chemicals industry security analyst at Morgan
Stanley Dean Witter, referring to the continued deterioration
in Hercules' financial performance, observed, "It just seems
to get worse and worse" (March 23, 2000). Since that time,
Hercules' performance has deteriorated even further; and

o Just this past February, Hercules reported fourth quarter 2000
profit from operations of $68 million and a net loss of $6
million, or $0.05 per diluted share, excluding nonrecurring
items. This result was in sharp contrast to Hercules' own
projection (off more than 30%) given on October 26th, only two
months before the end of the quarter, that fourth quarter
profit from operations would be in the range of $100 million.
The results also reflected a significant decline from
Hercules' fourth quarter earnings per share of $0.46 in the
previous year.

HERCULES HAS DISREGARDED, IN OUR VIEW, THE INTERESTS OF ITS
STOCKHOLDERS BY ERECTING A FORTRESS OF ANTI-TAKEOVER DEFENSES

Hercules has erected over time a fortress of anti-takeover
defenses, which include a poison pill, staggered board, interpretation of a
Company Bylaw to require an affirmative vote of a majority of all outstanding
shares for election of directors, "blank check" preferred stock, an 80% super
majority vote requirement to amend certain Bylaws and charter provisions and
approve certain merger transactions, and the ability to add directors without
stockholder approval.

Consider the following examples of how the Hercules Board
has utilized these defenses in disregard, in our opinion, of the interests of
its stockholders:

(1) In October 2000, in order to increase our investment in
the Company, we proposed to purchase 25 million additional shares of Hercules
stock for $17.50 per share in cash, a premium of almost 50% over the closing
price on the day before our Hercules share ownership was first publicly
announced. Parenthetically, we made this offer at the same time we recommended

that the Hercules Board entertain a sale of the Company. In so doing, we
acknowledged that "Hercules shares should be worth more in a sale of the
Company," and stated that the offer was an "expression of our confidence" in the
proposed sale course of action and was designed to "provide those Hercules
shareholders who wished to sell their shares now with an opportunity to do so at
a 25% premium above the current market price." However, because of the Company's
poison pill our offer required Board consent, and despite repeated requests that
Hercules permit us to proceed, the Board refused to do so.

You should know that the Hercules poison pill was adopted
last August notwithstanding the fact that Hercules stockholders have in the past
voiced their strong opposition to poison pills. In 1991, a non-binding proposal
to redeem Hercules' then-existing poison pill, or submit it to a stockholder
vote, was approved by stockholders. Despite this stockholder mandate, the
Hercules Board never put the redemption of the poison pill to a definitive vote
and refused to terminate the pill until three years later, allowing it to
terminate only two years prior to its expiration.

With regard to the poison pill currently in effect at the
Company, which has a low 10% threshold, the Hercules Board rushed to adopt it
last year, without stockholder approval, less than two weeks after ISP had
publicly announced its ownership position in Hercules. When we later proposed a
compromise whereby the poison pill would be amended to permit anyone, including
ISP, to purchase up to 20% of the Company's outstanding shares (20% being a more
customary threshold for Companies with poison pills), our proposal was rejected
by the Board.

In its proxy statement, Hercules cites studies conducted by
J.P. Morgan & Co. in 1995 and 1997 that "show that companies with rights plans
receive higher takeover premiums than those without such plans and that rights
plans do not decrease the likelihood that takeover bids will be made or
completed." An IRRC publication "Corporate Governance Service 2000 Background
Report -- Poison Pills" published on March 6, 2000 discussed various poison pill
studies and noted that "[s]ome observers downplay the importance of the various
studies, saying that they provide generalized descriptions but that specific
companies use pills differently - sometimes for management entrenchment" and
that "some observers said their view of the studies depended in part on their
view of those producing them." We believe that the critical point here is that
because Hercules has reinstated its poison pill, its stockholders have been
deprived of the right to decide whether or not to accept offers for their
shares.

(2) Similarly, Hercules' disregard for the interests of the
Company's stockholders is demonstrated by a Hercules Bylaw which the Board
claims requires an affirmative vote of the holders of a majority of all
outstanding shares for the election of directors, instead of the greatest number
of votes actually cast at the 2001 Annual Meeting (a plurality vote). This would
mean, for example, that even if each ISP nominee receives 50,000,000 votes and
each incumbent director receives 10,000,000 votes, the incumbents would retain
their seats on the Board because our nominees would not have received a majority
vote of approximately 108 million outstanding shares of Hercules common stock.

This voting requirement, we believe, is not only highly
unusual but also disenfranchises stockholders and is inconsistent with good
corporate governance. We do not know of any other public company that has such a
provision. In our view, the Hercules Bylaw, as interpreted by the Company,
serves as a mechanism to entrench the current Board, because if no nominee
receives a majority vote of the outstanding shares, the incumbent directors
would remain in place beyond their three-year term, even if our nominees
received a plurality vote. We disagree with this interpretation and believe,
based on the reasons set forth under "Vote Required," that under Delaware law,
nominees for directorships should be elected if they receive the greatest number
of votes cast at the 2001 Annual Meeting - i.e., a plurality.

On February 7, 2001, we called Hercules' attention to this
obvious inequity, whereby a director-nominee could receive a majority of the
votes cast but nevertheless lose the election. On March 8, we requested that
Hercules take the necessary action to remedy this situation, but it has refused
to do so.

You should know that in a Delaware News Journal article
(March 14, 2001) entitled, "Hercules' Election Method Is Fought", the Hercules
voting requirement provision prompted the following comments from a Wall Street
analyst as well as a corporate governance expert: Gary Hindes, Managing Director
of New York's Deltec Asset Management stated that, "These people [referring to
the Hercules directors] have managed to destroy what was a wonderful company,"
and is further reported to have stated that Hercules should be asking for the
resignation of its directors, not supporting them for re-election; and Charles
Elson, Director of the Center for Corporate Governance at the University of
Delaware, characterized Hercules' voting provision as "highly unusual" and
further stated, "In all my years [of tracking corporate policies], I have not
seen that with the election of a board."

Ask yourself whether these devices are in your best
interests. You do not need to be "protected" from making your own decision to
sell your shares. We believe that it is paramount that YOU have the right to
consider for yourself the merits of offers for your shares, although some may
argue that anti-takeover devices such as those described above provide boards of
directors with time to respond to unsolicited bids and provide incentives for a
potential bidder to negotiate with the board. Our nominees will advocate that
the Board remove barriers to offers for your shares, so that you can make your
own decisions.

THE REVOLVING DOOR AT HERCULES- FOUR CHIEF EXECUTIVES IN A
TWENTY-TWO MONTH PERIOD AND NOW SEARCHING FOR A FIFTH

One of the primary responsibilities of a Company's Board of
Directors is to choose, attract, evaluate, and properly motivate capable chief
executives and retain them for extended periods of time. By this standard of
measurement, in our opinion, the Hercules Board has been extremely unsuccessful,
and we ask you to consider the recent record of chief executive turnover at
Hercules.

In 1996, R. Keith Elliott was elected Chief Executive of
the Company. In July, 1998, Elliott and the Hercules Board engineered the
BetzDearborn acquisition which, in our opinion, has been a disaster for the
Company and its stockholders. In October, 1998, William R. Cook, formerly Chief
Executive at BetzDearborn, was elected Hercules' Co-Chief Executive. Within two
months, in December, 1998, Cook abruptly resigned. As Leslie Ravitz, a chemicals
analyst at Morgan Stanley Dean Witter stated at the time, "operating with two
CEO's is a very inefficient strategy [for running] a company." Ravitz went on to
say that Cook and Elliott "were taking too long to make decisions."

Shortly thereafter, in May 1999, and less than one year
after the BetzDearborn acquisition, Elliott abruptly "resigned."
Parenthetically, in connection with Elliott's resignation after less than three
years as Hercules' Chief Executive, during which time the Company made the
disastrous BetzDearborn acquisition, he was given a severance package estimated
to be worth more than $14.25 million (not counting the value of accelerated
vesting of stock options and restricted stock grants).(1) This consisted of
promised payments of $462,500 per annum for the remaining years of his life plus
an additional $500,000 per annum for the next ten years.

Elliott was succeeded by Vincent Corbo who in turn resigned
less than sixteen months later in October, 2000. For Mr. Corbo's performance
during his short tenure as the Company's Chief Executive, Smart Money nominated
him to its "Underachievers Club". The Smart Money article (June 1, 2000),
entitled "Underachievers Club: Chief Executive Obstacle," had this to say about
Mr. Corbo and Hercules' performance on his watch:

"CEO Vincent Corbo took over on 7/1/99

Return since then: -62.2 percent

The facts: This Delaware-based firm has been suffering
after an acquisition binge drove debt up to 80 percent of
its total capital, nearly three times that of competitors.
Corbo has tried to cut the debt by selling off slow-growth
divisions. But he's had problems integrating Hercules's
biggest acquisition, BetzDearborn, a chemicals maker that
until recently used a separate financial tracking system.
The result? Confusion on Wall Street, earnings downgrades
and research reports with titles such as `More Bad News'
and `When Will It End?'

The response: `We have already announced significant
actions to improve the performance and the value of
Hercules,' Corbo says."

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(1) Estimate is based on 20 year life expectancy for Mr. Elliott.

Thomas Gossage, who had retired as the Company's Chief
Executive in 1996, replaced Corbo last October as "temporary" Chief Executive.
At the time of Mr. Gossage's appointment, the Company announced that it had
begun a nationwide search for a "permanent" Chief Executive with the assistance
of an outside search firm. Since that announcement almost five months ago,
Hercules stockholders have heard nothing further concerning the search for a
permanent chief executive.

While Mr. Gossage has, to be sure, immersed himself in the
Company's refinancing and restructuring activities, ask yourself whether
Hercules' operating businesses, with its more than 10,000 employees and 3
billion dollars of sales, could receive proper direction from a temporary chief
executive. Do you believe that the Hercules Board has properly discharged one of
its primary responsibilities - to choose, attract, evaluate, and retain able
chief executives?

Finally, chief executive turnover at Hercules has not been
without substantial cost to the Company and its stockholders. In addition to the
cost inevitably associated with extraordinary turnover, Hercules has incurred
costs, in the form of severance and pension payments, which we estimate will
exceed $30 million (not counting the value of pension enhancements, accelerated
vesting of stock options and restricted stock grants and other benefits and
perquisites), in connection with the resignations of four Hercules Chief
Executives in four years.

THE HERCULES BOARD, WE BELIEVE, MUST PROMPTLY SELL THE
COMPANY IN ORDER TO MAXIMIZE STOCKHOLDER VALUES

Management wasted valuable time during the Corbo
administration, in our opinion, pursuing a flawed restructuring strategy. On
October 11, 2000, we wrote the Hercules Board stating that "it has become all
too apparent to us that the course Hercules is now pursuing will not enhance
shareholder value but erode it instead." We went on to recommend that "the
Hercules Board abandon its `too little, too late' approach and promptly
entertain a sale of the Company while the time is still propitious."

While shortly after our letter, Mr. Corbo resigned and
Hercules elected its current Chief Executive, Thomas Gossage, it was not until
late November that the Company implicitly acknowledged that we were right and
began to pursue a sale. A New York Times article, entitled "Hercules, a Chemical
Maker, to Sell All Its Businesses," observed, "the announcement was a tacit
acknowledgement that Hercules's original plan . . . was unlikely to work."

Notwithstanding the Company's October 27 announcement that
it had hired a financial advisor to advise it concerning a potential sale of the
Company, the Company's performance continues to deteriorate, and no sale of the
Company is in sight. What realistic expectation is there that the Hercules Board
is sufficiently committed to realizing the Company's underlying value when, in
our opinion, it has completely failed to do so over the last five years?

AS THE COMPANY'S LARGEST STOCKHOLDER, WE ARE COMMITTED
TO MAXIMIZING VALUE FOR ALL HERCULES STOCKHOLDERS

ISP is the owner of more than 10.7 million shares of
Hercules common stock and has an investment of $150 million at stake. Our
interests are clearly aligned with yours. We want to maximize value for all
Hercules stockholders. Two of our nominees, Messrs. Heyman and Kumar, are ISP's
Chairman and its President and Chief Executive Officer, respectively, and
accordingly have a strong interest in maximizing the value of Hercules shares.
In contrast, the four incumbent nominee directors up for reelection this year
have in the aggregate purchased at market value only approximately 10,000
shares.(2)

We seek the opportunity for our nominees to participate
constructively as directors, and particularly with respect to any sale process
involving Hercules. We are not seeking to acquire or control the Company.
Rather, our concern is to safeguard stockholder interests and help ensure that a
sale be executed in an efficient and timely manner for the best price. In our
view, the performance of the current Board and its continued maintenance of a
wide variety of anti-takeover devices have not served the interests of the
stockholders and raise serious question as to whether the incumbent directors
can provide the best solution to the Company's problems. Their record speaks for
itself.

OUR NOMINEES WILL SEEK TO REMOVE ANTI-TAKEOVER DEVICES

If elected, our nominees will urge the Hercules Board to
remove the anti-takeover devices, which, in our view, threatens to
disenfranchise your voting rights and prevent you from making your own decisions
as to offers for your shares. Our nominees will seek, among other things, to:

o redeem the poison pill rights plan adopted by the Hercules
Board last year;

o urge the Board to reverse the Company's position with regard
to a Hercules Bylaw which it claims requires the affirmative
vote of the holders of a majority of all outstanding shares
for the election of directors;

o present stockholders with the opportunity to opt out of
Section 203 of the Delaware General Corporation Law (which
generally prohibits certain business combination transactions
with a beneficial owner of more than 15% of Hercules' voting
stock for three years unless Hercules' Board has previously
approved the business combination transaction or the initial
15% acquisition); and

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(2) The Hercules nominees own in the aggregate approximately 162,000 shares,
having acquired approximately 152,000 shares through outright grants and Company
subsidized stock purchases.

o resist the adoption of any other measures which could deprive
stockholders of the opportunity to make their own decisions.

Our nominees, if elected, will not constitute a majority of the Board. As a
result, our nominees will not be in a position by themselves to cause the
Hercules Board to take the foregoing actions. However, we believe that the
election of our nominees will send a clear message to the remaining incumbent
directors that these actions are necessary and in the best interest of Hercules
stockholders. Although it may be argued that anti-takeover devices such as those
described above provide boards of directors with time to respond to unsolicited
bids and provide incentives for a potential bidder to negotiate with the board,
we believe that you should be permitted to consider for yourself the merits of
offers for your shares.

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QUESTIONS AND ANSWERS ABOUT THIS PROXY SOLICITATION

Q: WHO IS SOLICITING YOUR PROXY?

A: We are International Specialty Products Inc. ("ISP"), a New York Stock
Exchange listed, multinational manufacturer of specialty chemicals and
mineral products. As of the date of this proxy statement, we are the
largest stockholder of the Company and beneficially own 10,719,200
shares of Hercules common stock, representing approximately 9.9% of the
outstanding shares. For more information on the participants in our
proxy solicitation, please see "Certain Information Concerning the
Participants" on page 33.

Q: WHO ARE THE ISP NOMINEES?

A: In addition to Mr. Heyman, the Chairman of ISP's Board, and Mr. Kumar,
President and Chief Executive Officer of ISP, our nominees include two
independent persons who are not affiliated with ISP - Gloria Schaffer
and Raymond Troubh. Gloria Schaffer has served in a number of high
profile Government positions including the Secretary of State and the
Commissioner of the Department of Consumer Protection of the State of
Connecticut and a Member of the Civil Aeronautics Board. Mr. Troubh has
broad financial experience, with over 25 years in financial consulting,
which includes serving as a general partner at Lazard Freres & Co. Mr.
Troubh also served as a governor of the American Stock Exchange. In
addition, Mr. Troubh has served as a member of the Board of Directors of
Time Warner, Inc., Becton, Dickinson and Company and America West
Airlines, Inc. and currently serves as a member of the Board of
Directors of eight public companies - including Starwood Hotels &
Resorts, Inc., Health Net, Inc. and Diamond Offshore Drilling, Inc. If
elected to the Hercules Board, each ISP nominee would act in accordance
with his or her fiduciary duties to Hercules stockholders with respect
to any action that he or she takes as a director. We have no reason to

believe that any of our nominees will be disqualified or unable or
unwilling to serve if elected. However, if any of our nominees are
unable to serve or for good cause will not serve, proxies may be voted
for another person nominated by ISP to fill the vacancy.

Q: WHO CAN VOTE AT THE 2001 ANNUAL MEETING?

A: If you owned Hercules shares on March 6, 2001 (the "Record Date"), you
have the right to vote at the 2001 Annual Meeting. As of the close of
business on the Record Date, we believe that there were 108,115,824
shares of common stock of Hercules issued and outstanding and entitled
to vote. Stockholders have one vote for each share of common stock they
own with respect to all matters to be considered at the 2001 Annual
Meeting.

Q: WHAT SHOULD YOU DO TO VOTE?

A: Sign, date and return the enclosed BLUE proxy card TODAY in the envelope
provided. For more information on how to vote your shares, please see
"Voting Procedures" on page 27.

Q: WHO DO YOU CALL IF YOU HAVE QUESTIONS ABOUT THE SOLICITATION?

A: Please call Georgeson Shareholder Communications Inc. toll free at
1-800-223-2064.

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IMPORTANT

Please review this document and the enclosed materials
carefully. YOUR VOTE IS VERY IMPORTANT, no matter how many or how few shares you
own.

1. If your shares are registered in your own name, please sign, date and
mail the enclosed BLUE proxy card to Georgeson Shareholder
Communications Inc. in the postage-paid envelope provided today.

2. If you have previously signed and returned a WHITE proxy card to
Hercules, you have every right to change your vote. Only your latest
dated card will count. You may revoke any WHITE proxy card already sent
to Hercules by signing, dating and mailing the enclosed BLUE proxy card
in the postage-paid envelope provided. Any proxy may be revoked at any
time prior to the 2001 Annual Meeting by delivering a written notice of
revocation or a later dated proxy for the 2001 Annual Meeting to
Georgeson Shareholder Communications Inc. or the Secretary of Hercules,
or by voting in person at the 2001 Annual Meeting.

3. If your shares are held in the name of a brokerage firm, bank nominee or
other institution, only it can sign a BLUE proxy card with respect to
your shares and only after receiving your specific instructions.
Accordingly, please sign, date and mail the enclosed BLUE proxy card in
the postage-paid envelope provided, and to ensure that your shares are
voted, you should also contact the person responsible for your account
and give instructions for a BLUE proxy card to be issued representing
your shares.

4. After signing the enclosed BLUE proxy card, do not sign or return the
WHITE proxy card unless you intend to change your vote, because only
your latest dated proxy card will be counted.

If you have any questions about giving your proxy or
require assistance, please call:

Georgeson Shareholder Communications Inc.
17 State Street
New York, NY 10004

Call Toll-Free: 1-800-223-2064
Banks and Brokerage Firms Call Collect: 212-440-9800

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BACKGROUND AND RECENT EVENTS

ISP began purchasing shares of Hercules common stock in
January 2000 because we believed that the shares of the Company were
substantially undervalued. On July 24, 2000, we filed a Schedule 13D with
respect to our beneficial ownership of approximately 9.98% of the outstanding
common stock of Hercules and informed the Company's former Chairman and CEO,
Vincent Corbo, that we wished to increase our ownership position and were filing
a Hart-Scott-Rodino application seeking permission to do so.

On August 1, 2000, Hercules released its second quarter
2000 earnings, which reported that net income had fallen 56% from the previous
quarter.

On August 4, 2000, less than two weeks after we filed our
Schedule 13D, the Hercules Board adopted the poison pill Rights Agreement. The
Board, in taking this action, defied the wishes of Hercules stockholders as
evidenced by the adoption of a non-binding proposal to redeem Hercules' previous
pill in 1992. The poison pill serves as a powerful anti-takeover device by
making it prohibitively expensive to acquire 10% or more of Hercules' common
stock without Board approval.

On August 25, 2000, Hercules announced that it was reducing
its quarterly dividend from $0.27 to $0.08 per share. The dividend was totally
eliminated on November 14, 2000.

On October 11, 2000, Mr. Heyman proposed that ISP commence
a tender offer for 25 million shares of Hercules common stock at $17.50 per
share in cash. This price represented a premium of over 22% based on the
Hercules closing price of $14.31 per share on October 10, 2000, and an almost
50% premium over the Hercules closing price of $11.75 per share on July 21,
2000, the day before our first public filing stating that we had acquired a 9.9%
interest in Hercules. In connection with ISP's proposal, Mr. Heyman delivered
the following letter to the Board on October 11, 2000, encouraging the Board to
abandon management's restructuring plan.

Dear Hercules Board member:

As you no doubt are aware, Vince Corbo and I have had a
number of discussions in recent weeks regarding Hercules'
restructuring program. In this regard, I was surprised to learn
from Vince yesterday that, notwithstanding the recent Moody's
downgrade of the Company's debt as well as other developments
referred to below, Hercules does not intend to alter its current
course. Parenthetically, the downgrade, coming at a particularly
turbulent time in the high yield market (I am enclosing an
October 10th, The Wall Street Journal article entitled,
"Junk-Bond Prices Shrink As Investor Caution Grows," regarding
this subject), will now result in a very costly refinancing for

the Company -- thereby making it impossible for Hercules to
achieve anywhere near the interest savings previously projected.

While Hercules' game plan may have made good sense when
first adopted, we are convinced that adverse developments in
recent months have now overtaken it. Accordingly, for Hercules to
proceed now with a "too little, too late" program raises serious
question as to whether the Company is pursuing a strategy which
discriminates in favor of its creditors at the expense of its
shareholders.

Consider these recent developments:

(1) Significant delays in asset dispositions,
including the real possibility that FiberVisions
will not be sold at this time;

(2) Decline in growth forecasts for core operations;

(3) Reduction in size of acquisition program;

(4) Significant decline in projected interest rate
savings;

(5) Adverse impact of the euro, which is especially
significant for Hercules given its substantial
European presence;

(6) Decline in overall earnings projections; and

(7) Drastic dividend reduction.

In the face of these developments, it has become all
too apparent to us that the course Hercules is now pursuing will
not enhance shareholder value but erode it instead. What
justification can there be for making asset divestitures which
are earnings dilutive, and which in the end, because of the
credit downgrade as well as other factors, will not be sufficient
to enable Hercules to achieve sufficient financial flexibility to
grow its remaining businesses at anywhere near the targets the
Company established only several months ago? Under all the
circumstances and given the fact that private sale values of
specialty chemicals businesses are still robust and well above
public trading values, we have come to the conclusion that the
only practicable option for realizing Hercules' underlying values
must involve the sale of the Company, in whole or in parts.

Also of serious concern to us is Hercules' apparent
disregard for the interest of its shareholders, as demonstrated
by its adoption of a "poison pill" on August 7th, which provides
for a 10% trigger point. Significantly, the Board adopted this
anti-shareholder provision little more than 2 weeks after we had
notified Vince that we had acquired 9.9% of Hercules' shares,

informing him at the same time that we wished to increase our
ownership position and were filing a Hart-Scott Rodino
application seeking permission to do so. Moreover, Hercules'
refusal to eliminate or modify its "poison pill" in the face of
our offer of a standstill agreement is further indicative of
Hercules' anti-shareholder bias.

We are therefore requesting that the Hercules Board
abandon its "too little, too late" approach and promptly
entertain a sale of the Company while the time is still
propitious. And the timing here is all the more important in
light of the fact that Hercules is about to embark on a major
refinancing, which we anticipate could become extremely expensive
to unwind should Hercules decide to pursue a sale of the Company
at a later time.

In the meantime, as an expression of our confidence in
this proposed course of action and to provide those Hercules
shareholders who wish to sell their shares now with an
opportunity to do so at a 25% premium above the current market
price, we are prepared to commence a tender offer for 25 million
shares of Hercules common stock at $17.50 per share in cash.
While we believe that Hercules' shares should be worth more, in a
sale of the Company, than our tender offer price, this price
represents an almost 50% premium over Hercules' closing price of
$11.75 per share on July 21st, the day before ISP's 13D filing
providing notice for the first time that it had acquired a 9.9%
interest in Hercules. ISP's tender offer will not be subject to
financing but will obviously require that the Hercules Board
exempt our offer from the "poison pill" and approve ISP's
purchase of shares for purposes of Section 203 of the Delaware
General Corporation Law.

We are prepared to commence the tender offer promptly
should you inform us that you will meet the above conditions. We
would appreciate your timely response.

Sincerely,

/s/ Samuel J. Heyman

On October 11, 2000, Hercules issued a press release
indicating that it had received ISP's letter and that the Board would consider
ISP's proposal. Soon thereafter, on October 17, 2000, Vincent Corbo resigned as
Chairman and CEO of Hercules and Thomas Gossage was named its new Chairman and
CEO. Mr. Gossage stated that Hercules "will consider all strategic alternatives,
as well as the proposal made by Mr. Heyman, based on our considered view of what
is in the best interest of all Hercules shareholders." At the same time,
Hercules announced that it did not expect to meet analysts earnings estimates
for its third quarter ending September 30, 2000.

On October 27, 2000, Hercules announced that it had
retained a financial advisor to assist Mr. Gossage and the Board in its
evaluation of various alternatives.

On November 28, 2000, Hercules announced that its Board had
decided to consider the sale or merger of the Company. Mr. Gossage stated that
"the best strategic path for the Company over the long-term is to become part of
a larger enterprise" and that "moving forward on this path provides the maximum
value and opportunity for our shareholders, employees and customers."

In mid-January 2001, ISP informed Hercules that it was not
interested in acquiring the Company and declined to receive confidential
information from Hercules in connection with its sale process.

On January 18, 2001, Hercules announced that it had ended
discussions on the sale of its FiberVisions Unit. Shortly thereafter, on January
23, 2001, Hercules debt was downgraded by Standard & Poor's.

After receiving no response to our proposal made on October
11, 2000, and in light of the adverse developments at the Company described
above, on January 23, 2001, ISP reiterated its proposal to make an offer to
purchase 25 million shares of Hercules common stock at a price of $17.50 per
share in cash if, as requested by Mr. Heyman, the Hercules Board would exempt
the offer from the poison pill and approve ISP's purchase of shares for purposes
of Section 203 of the Delaware General Corporation Law. In connection with ISP's
proposal, Mr. Heyman delivered the following letter to Mr. Gossage on January
23, 2001:

Dear Tom:

Confirming yesterday's telephone conversation, I have
reiterated ISP's interest in proceeding with its tender offer
first proposed to the Hercules Board last October.
Notwithstanding a number of adverse developments at the Company,
as well as the substantial deterioration of the U.S. economy in
recent months, we are still willing to proceed on the same basis
-- at the original price of $17.50 per share in cash for 25
million shares of Hercules common stock.

Given the delay with respect to execution of the
Company's program and uncertainty as to its outcome, we believe
that a substantial number of Hercules shareholders may very well
wish to avail themselves of the opportunity to sell their
shares, or a portion thereof, at what amounts to a 30% premium
above the current market price and an almost 50% premium over
Hercules' closing price of $11.75 per share on July 21st, the
day before ISP's 13D filing providing notice for the first time
that it had acquired a 9.9% interest in Hercules. As we have
stated earlier, ISP's tender offer will not be subject to
financing but will obviously require that the Hercules Board

exempt our offer from the "poison pill" and approve ISP's
purchase of shares for purposes of Section 203 of the Delaware
General Corporation Law. We are prepared to commence the tender
offer promptly should you inform us that you will meet these
conditions.

Finally, ISP's proposed course of action is perfectly
consistent with Hercules' ongoing effort to maximize shareholder
values. In this connection, you can always rely on the fact that
we will be constructive with respect to any actions favorable to
all Hercules shareholders. Moreover, time is of the essence
here. As you know, Tom, we have been extremely patient due in no
small measure to your reassurance to Hercules shareholders over
recent months as well as our desire to be constructive. Now, of
course, Hercules' continued optimistic prognostications over the
past year have yet to be realized, the economic environment
deteriorates with each passing day, and we must be allowed to
proceed expeditiously so that we can hold the price in place.

I would appreciate your prompt response.

All the best.

Sincerely,

/s/ Samuel J. Heyman

After still receiving no response to our tender offer
proposal made on October 11, 2000, and reiterated on January 23, 2001, Mr.
Heyman delivered the following letter to Mr. Gossage on February 7, 2001:

Dear Tom:

I am very disappointed that, notwithstanding our
attempt to impress upon you the urgency that ISP be permitted to
proceed with its tender offer, now more than two weeks later we
still have not received your Board's response. Apparently, it
has decided to await the results of Hercules' divestiture
program, which we believe is a serious mistake. Moreover, as I
indicated to you, it is just not realistic to expect us to keep
our offer in place indefinitely, especially when the Company can
clearly pursue its divestiture program while permitting our
offer to go forward at the same time.

Unless you promptly communicate that we can proceed
with the tender offer, we would now request that Hercules
consider an alternative ISP initiative - which would be to amend
the threshold for the Company's poison pill from the current 10%
to 20% (the latter being a more customary threshold for
companies with poison pills) and approve any party's purchase of
shares up to the 20% threshold for purposes of Section 203 of

the Delaware General Corporation Law. While you have indicated
that you share our philosophic opposition to poison pills
altogether, this more limited, compromise approach is designed
to hopefully elicit your Board's prompt affirmative response and
would at least permit ISP, or anyone else for that matter, to
make purchases up to a 20% limitation.

If the Hercules Board refuses to take this action
voluntarily, we intend to seek a vote of Hercules shareholders
at this year's Annual Meeting to repudiate the Company's poison
pill. In this connection, we believe that if the Company will
not act responsibly, its shareholders should be able to decide.
If you require us to proceed in this fashion, we are requesting
that the Hercules Board include the various proposals in the
attached letter in your proxy materials for this year's Annual
Meeting. Should the Board refuse this request, the attached
letter serves as formal notification pursuant to Section 14 of
the Securities Exchange Act of 1934, which we have been advised
must be provided no later than today.

As you can see, we have included a proposal whereby
Hercules would opt out of the provisions of Section 203 of the
Delaware General Corporation Law, as well as various
housekeeping proposals, and have included a proposal relating to
the methodology used to elect directors. In this later
connection, we believe that Hercules Bylaws, which your Company
claims require "the affirmative vote of a majority of the
outstanding shares" to elect directors, is highly unusual and
serves no purpose other than as an entrenchment device. Most
companies require only a majority of the shares voted (a
plurality). Under your interpretation of the bylaws, a nominee
could receive a majority of the votes cast but nevertheless lose
the election.

All the best.

Sincerely,

/s/ Samuel J. Heyman

Just this past February, Hercules reported fourth quarter
2000 profit from operations of $68 million and a net loss of $6 million, or
$0.05 per diluted share, excluding nonrecurring items. This result was in sharp
contrast to Hercules' own projection (off more than 30%) given on October 26th,
only two months before the end of the quarter, that fourth quarter profit from
operations would be in the range of $100 million. The results also reflected a
significant decline from Hercules' fourth quarter earnings per share of $0.46 in
the previous year.

On February 8, 2001, almost four months after our initial
proposal, Hercules said that it would consider ISP's tender offer "in due
course." Mr. Gossage also told analysts on February 8, 2001 that he was working
toward a sale of the Company by midyear, but declined to provide details on the
process.

In light of the Company's failure to respond to ISP's
repeated requests that the Company terminate its poison pill, or in the
alternative amend the poison pill's threshold from 10% to 20%, Mr. Heyman
delivered the following letter to Mr. Gossage on February 20, 2001:

Dear Tom:

Despite our repeated requests that Hercules eliminate
its poison pill (or, in connection with a proposed compromise,
at least increase its trigger point to 20%) to enable ISP (or
anyone else for that matter) to increase its ownership of your
Company's shares - which requests date back to September, 2000,
and have been repeated in letters dated October 11, January 23,
and most recently on February 7 - we continue to receive no
response from you or your Board.

Since we became a shareholder early last year, the
Company and its shareholders have in our opinion paid a high
price for management's procrastination as well as its continued
flawed policies and poor execution. We are also shocked and
surprised by the Company's continued withholding of information
from its shareholders and what we consider to be its remarkable
indifference to their concerns - as was plainly evidenced by the
Company's recent conference call.

Under the circumstances, we believe that you have left
us no alternative but to wage a proxy contest at the Company's
Annual Meeting this Spring. In addition to the previous
notification we have given regarding proposals to be presented
for action at the Meeting, we will also be nominating a slate of
Directors to run for the four Board seats whose terms expire
this year, director-nominees who, I can assure you, will be
committed to the maximization of values for all Hercules
shareholders.

Sincerely,

/s/ Samuel J. Heyman

Mr. Heyman stated in his February 20 letter that "[w]e are
shocked and surprised by the Company's continued withholding of information from
its shareholders" because on Hercules' February 8, 2001 conference call for
stockholders and analysts, the Company refused to entertain any questions
concerning the then-current state of the Company's business, the Company's

prospects for the year, the status of the Company's sale process or the
proposals made by ISP. In addition, the Company even refused to disclose the
sale price for the Company's resins business, instead suggesting "you are
certainly free to speak to Eastman on that."

The Hercules Board failed to respond to ISP's repeated
requests (on October 11, 2000, January 23, 2001 and February 7, 2001) that
Hercules eliminate or revise its poison pill to enable ISP to promptly proceed
with its proposed tender offer.

On February 23, 2001, Mr. Gossage sent a letter to Mr.
Heyman stating that the Board had declined to amend the Hercules Shareholder
Rights Plan to permit an acquiror to purchase up to an additional 10% of the
Company's shares beyond the current 10% threshold. In addition, Mr. Gossage
alleged that "the progress of the Company's discussions with third parties could
be very negatively impacted by their perception of your activities." Mr. Gossage
also invited ISP to "submit a proposal to acquire the entire Company rather than
a proposal to purchase a significant minority interest."

In response to Mr. Gossage's February 23 letter, Mr. Heyman
reminded Mr. Gossage that ISP had already declined to take part in the auction
process, in large measure because ISP views its Hercules stake as an investment
and so that there could be no claim that ISP's participation, as the Company's
largest stockholder, would have a chilling effect on other interested bidders.
Mr. Heyman's message was contained in the following letter sent to Mr. Gossage
on February 28, 2001:

Dear Tom:

I was disappointed in your February 23rd letter and
your Board's decision to reject ISP's compromise proposal.
Contrary to your apparent belief, there is nothing inconsistent
in our view with a shareholder being permitted to underscore its
confidence in the underlying values of the Company by making an
additional investment on the one hand and your "on going sale
process" on the other.

We are concerned with what seems to us Hercules'
narrow, one-dimensional approach to maximizing shareholder
values. If Hercules is unable to sell the Company on an
advantageous basis, it will have needlessly deprived Hercules
shareholders of the opportunity to decide for themselves whether
to accept our previously proposed $17 1/2 tender offer or, under
our compromise approach, sell their shares in the open market to
ISP or any other shareholder wishing to acquire up to 20% of the
Company's shares. This position is especially surprising given
the multitude of takeover defenses the Company has erected and
the fact that we have always been willing to address any of your
legitimate concerns in the form of reasonable conditions with
respect to our ownership position.

With respect to your reference to the withdrawal of
our proposed tender offer, as you know, the October offer
expired by its own terms on account of the fact that your Board
had refused to exempt it from its poison pill and related
Delaware statutory provisions. That is why we put forward the
compromise proposal to permit ISP to acquire up to 20% of
Hercules' shares rather than 35%. While we can only assume that
if your Board is unwilling to permit our acquisition of up to
20% of Hercules shares, it would not have gone along with our
35% proposal either - but if we are missing something in this
regard, please let us know.

With regard to the last point in your letter, your
claim that ISP's actions/statements are a hindrance to your
efforts is sheer nonsense, as in point of fact we have been very
patient and constructive shareholders for some time now. As you
will recall, it was ISP who first encouraged Hercules to abandon
its flawed restructuring strategy and sell the Company. While it
took Hercules quite some time to adopt this strategy, we not
only applauded the decision but have provided assurances,
whether we were a 10%, 20%, or 35% owner, that we would support
the sale of the Company at a fair price. In fact, despite your
invitation, we have refrained from taking part in the auction
process in large measure because we view our Hercules stake as
an investment and so that there could be no claim that our
participation, as the Company's major shareholder, would have a
chilling effect on other interested bidders.

Tom, you know that we have a high conviction
concerning the way in which Hercules has conducted the Company's
affairs in recent years. In this connection, we intend to bring
these matters to the attention of Hercules shareholders at the
Company's upcoming Annual Meeting. Moreover, as owners of more
than 10.7 million Hercules shares, we will be seeking to elect a
slate of directors, with a strong ownership orientation
committed to the interests of Hercules shareholders, to replace
the four incumbent directors up for re-election this year, who
we understand (as of the last public filing) own in the
aggregate less than 50,000 shares.

Sincerely,

/s/ Samuel J. Heyman

On March 5, 2001, Mr. Heyman sent the following letter to
Mr. Gossage:

Dear Tom:

Just a note to close the loop with you regarding the
discussions between our General Counsel, Rich Weinberg, and your
David Katz.

When I received your February 23rd letter, although I
do not believe for a minute that we are in any way hindering
your efforts to sell the Company, in an effort to bend over
backwards, I asked Rich to contact David to see whether there
was anything we could do to be helpful. Rich and David met on
February 26th and talked on the telephone several days later,
during which time we were requested to delay the filing of our
preliminary proxy materials.

We suggested, and quite appropriately I believe, that
if you wanted us to delay our filing for some period, we would
be willing to accommodate you so long as there was a similar
adjustment to the Annual Meeting date. Obviously, we cannot be
put in the position of delaying our filing and as a result SEC
clearance of our materials while at the same time Hercules
reserves its right to press forward with its April 26th Annual
Meeting date. And so we were completely floored when David got
back to us to indicate that this was apparently what you had in
mind.

Tom, we attempted to respond to your stated concerns,
but the upshot of these discussions is that you have left us no
alternative but to proceed with our filing, which should take
place later today.

Sincerely,

/s/ Samuel J. Heyman

On March 8, 2001, Samuel J. Heyman sent the following
letter to Mr. Gossage:

Dear Tom:

Although I wrote you on February 7th regarding your
Company's director election by-law, which requires, according to
Hercules' interpretation, an affirmative vote of a majority of
the outstanding shares for election of directors, we have
received no response concerning this matter.

We have been advised that this by-law, as interpreted
by your Company, is to say the least highly unusual and indeed
may be unique in the annals of corporate governance. Moreover,
it could well operate to disenfranchise Hercules shareholders by
bringing about an unfair result whereby an ISP nominee, by way
of example, could receive votes representing 50 million Hercules

shares to 10 million shares for the incumbent, and under your
Company's by-law, the incumbent would retain his or her seat on
the Board.

Tom, I think you would acknowledge that this would be
an outrageous result, and I would request that you and your
Board promptly take whatever action is necessary to remedy this
- thereby taking this issue off the table so that we can all
focus in our proxy contest on the real issues of concern to
Hercules shareholders.

Inasmuch as the Annual Meeting is scheduled to take
place in April, I would appreciate your prompt response.

Thank you for your anticipated cooperation in this
matter.

Sincerely,

/s/ Samuel J. Heyman

On March 12, 2001, Samuel J. Heyman sent the following
letter to Mr. Gossage:

Dear Tom:

We have not received a response to our February 7 and
March 8 letters concerning the director election Bylaw matter. I
can only assume that this matter has been referred to your Board
for its determination, and from past experience I must tell you,
quite frankly, that I simply have no confidence in the
willingness of the Hercules Board to do the right thing.

And this brings us to a second point. In reviewing
past actions of the Hercules Board, which in our opinion
evidence a clear disregard for the rights and interests of the
Company's shareholders, we simply cannot be sure that a
favorable vote on resolutions currently included in our
Preliminary Proxy Statement will be implemented by your Board
without costly and time consuming delay and even possible
litigation. For example, what possible explanation could there
be for the following:

In 1992, a non-binding proposal to redeem
Hercules' then existing, 20% threshold poison pill or
submit it to a stockholder vote was approved by
stockholders. Despite this stockholder mandate, the
Hercules Board never put it to a definitive vote and
refused to terminate the pill for three years. And
then to add insult to injury, notwithstanding the 1992
stockholder vote, the Hercules Board implemented just
this past August, without notice or shareholder
approval, a new poison pill with a low 10% threshold.

In view of the above, we have decided to table our
other shareholder proposals in order to focus the proxy contest
on the election of our nominees. As a result, both sides will be
able to address for shareholders, in a very direct and clear cut
way, the paramount issue - the Hercules Board's record of
corporate stewardship.

Sincerely,

/s/ Samuel J. Heyman

Mr. Heyman's statement in his March 12 letter that "we have
decided to table our other shareholder proposals" was intended to indicate that
except for the election of our four nominees, we do not presently intend to
raise any of our prior proposals (primarily relating to the Company's poison
pill and Delaware 203) at the 2001 Annual Meeting.

ELECTION OF DIRECTORS

We are soliciting your proxy for the election of the ISP
nominees as directors of the Company to serve until the 2004 Annual Meeting of
Stockholders and until their successors are duly elected and qualified.

In accordance with Hercules Restated Certificate of
Incorporation and Bylaws and the Delaware General Corporation Law, Hercules
Board of Directors is to consist of not less than seven and not more than
eighteen Directors, the exact number to be specified by the Board. The Directors
are to be divided into three classes as nearly equal in number as possible. At
each annual meeting of stockholders, members of one of the classes, on a
rotating basis, are elected for a three-year term. Based on information
contained in reports filed by the Company with the Securities and Exchange
Commission, thirteen directors currently serve on the Hercules Board. Four of
these directors have terms that expire in 2001 and, according to the Company's
proxy statement for the 2001 Annual Meeting, four directors are to be elected at
the 2001 Annual Meeting and one director, Robert G. Jahn, will be retiring upon
the expiration of his term. Messrs. Heyman, Kumar, Gloria Schaffer and Raymond
Troubh, if elected, would serve for terms expiring at the Company's annual
meeting of stockholders in 2004. If any additional directorships are to be voted
upon at the 2001 Annual Meeting, we reserve the right to nominate additional
persons to fill such positions. We do not expect that the ISP nominees will be
unable to stand for election but, in the event that any ISP nominee is unable to
do so, shares represented by BLUE proxy cards will be voted for the other ISP
nominees. In addition, ISP reserves the right to nominate substitute or
additional persons if the Company makes or announces any changes to its Bylaws
or takes or announces any other action that has, or if consummated would have,
the effect of disqualifying any of the ISP nominees.

If the ISP nominees are elected and take office as
directors, they intend to discharge their duties as directors of the Company in
compliance with all applicable legal requirements, including the general
fiduciary obligations imposed upon corporate directors.

ISP Nominees

The information below concerning age, principal occupation
and directorships has been furnished by each respective nominee. The following
persons are our nominees for election as directors in the class whose terms
expire at the 2004 Annual Meeting of Stockholders:

Present Principal Occupation and Five Year
Name and Business Address Age Employment History Class
------------------------- --- ------------------ -----

Samuel J. Heyman 62 Mr. Heyman has been a director and Chairman 2004
1361 Alps Road of ISP since its formation and served as its
Wayne, New Jersey 07470 Chief Executive Officer from its formation
until June 1999. He also has been a director
of GAF Corporation ("GAF") and its successor

by merger, G-I Holdings Inc. ("G-I
Holdings"), for more than five years and was
President and Chief Executive Officer of GAF
and certain of its subsidiaries and Chief
Executive Officer of G-I Holdings for more
than five years until September 2000. G-I
Holdings primary business is conducted
through Building Materials Corporation of
America ("BMCA"), an indirect, approximately
97% - owned subsidiary of G-I Holdings which
is primarily engaged in the commercial and
residential roofing business. In January
2001, G-I Holdings filed for protection
under chapter 11 of the United States
Bankruptcy Code as a result of its asbestos
liabilities. Mr. Heyman was a director and
Chairman of BMCA from its formation until
September 2000, and served as Chief
Executive Officer of BMCA from June 1996 to
January 1999 and from July 1999 to September
2000 and as the President of BMCA from July
1999 to February 2000. He is also the Chief
Executive Officer, Manager and General
Partner of a number of closely held real
estate development companies and
partnerships whose investments include
commercial real estate and a portfolio of
publicly traded securities.

Sunil Kumar 50 Mr. Kumar has been director, President and 2004
1361 Alps Road Chief Executive Officer of ISP since June
Wayne, New Jersey 07470 1999. Mr. Kumar has also been President and
Chief Executive Officer of certain
subsidiaries of ISP, including ISP
Investments Inc., since June 1999. Mr. Kumar
was a director, President and Chief
Executive Officer of BMCA from May 1995,
July 1996 and January 1999, respectively,
until June 1999. He was Chief Operating
Officer of BMCA from March 1996 to January
1999. Mr. Kumar also was President,

Commercial Roofing Products Division, and
Vice President of BMCA from February 1995 to
March 1996.

Gloria Schaffer 70 Ms. Schaffer served as a Commissioner of the 2004
1211 Chapel St. Department of Consumer Protection of the
New Haven, CT 06511 State of Connecticut from 1991 to 1995, as a
Member of the Civil Aeronautics Board from
1978 to 1984 and as the Secretary of State
of the State of Connecticut from 1970 to
1978. Ms. Shaffer also previously served on
the Board of Directors of Amity Bank and
Amity Bankcorp, Mott's Inc. and Emery Air
Worldwide, and, since 1996, has served as a
partner at C.A. White, Inc., a real estate
development firm.

Raymond S. Troubh 74 Mr. Troubh has been a financial consultant 2004
10 Rockefeller Plaza for more than five years. Prior to that he
Suite 712 was a general partner of Lazard Freres &
New York, New York 10020 Co., an investment banking firm, and a
governor of the American Stock Exchange. Mr.
Troubh has served as a director of the
following public companies: Time Warner,
Inc., Becton, Dickinson and Company and
America West Airlines, Inc., and is a
director of ARIAD Pharmaceuticals, Inc., a
biopharmaceutical company, Diamond Offshore
Drilling, Inc., a contract drilling company,
General American Investors Company, an
investment trust company, Gentiva Health
Services, Inc., a healthcare provider,
Health Net, Inc., a managed healthcare
company, Starwood Hotels & Resorts, Inc., a
hotel operating company, Triarc Companies,
Inc., a holding company, and WHX
Corporation, a steel products company. He is
also a trustee of Corporate Renaissance
Group Liquidating Trust, Inc., MicroCap
Liquidating Trust and Petrie Stores
Liquidating Trust.

Each of the nominees has consented to serve as a director
until the expiration of his or her respective term and until such nominee's
successor has been elected and qualified or until the earlier resignation or
removal of such nominee. We have no reason to believe that any of the nominees
named above will be disqualified or unable or unwilling to serve if elected.

However, if any of the nominees are unable to serve or for good cause will not
serve, proxies may be voted for another person nominated by ISP to fill the
vacancy.

The nominees understand that, if elected as directors of
Hercules, each of them will have an obligation under
Delaware law to discharge his or her duties as a director in good faith,
consistent with his or her fiduciary duties to Hercules and its stockholders.

WE STRONGLY RECOMMEND THAT YOU VOTE
"FOR" THE ELECTION OF OUR NOMINEES

OTHER MATTERS TO BE CONSIDERED
AT THE 2001 ANNUAL MEETING

RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS

As set forth in Hercules' proxy statement, at the 2001
Annual Meeting, Hercules stockholders will be asked to ratify the appointment by
Hercules Board of PricewaterhouseCoopers LLP as Hercules' independent auditors
for the year 2001. We are not making any recommendation on this proposal.

OTHER PROPOSALS

Except as set forth above, we are not aware of any
proposals to be brought before the 2001 Annual Meeting. However, we intend to
bring before the 2001 Annual Meeting such business as may be appropriate,
including without limitation nominating additional persons for directorships, or
making other proposals as may be appropriate to address any action of Hercules
Board not publicly disclosed prior to the date of this proxy statement. Should
other proposals be brought before the 2001 Annual Meeting, the persons named as
proxies in the enclosed BLUE proxy card will vote on such matters in their
discretion.

VOTING PROCEDURES

In order to ensure that your views on the proposals are
heard by Hercules and your vote represented at the 2001 Annual Meeting, we urge
you to sign and date the enclosed BLUE proxy card and return it to Georgeson
Shareholder Communications Inc. ("Georgeson"), in the enclosed postage paid
envelope TODAY. Execution of the BLUE proxy card will not affect your right to
attend the 2001 Annual Meeting and to vote in person.

You are eligible to execute a BLUE proxy only if you owned
the Common Stock on the Record Date. Hercules Board has set March 6, 2001 as the
Record Date for determining those stockholders who will be entitled to notice of
and to vote at the 2001 Annual Meeting. You will retain the right to execute a
proxy card in connection with this proxy solicitation even if you sell your
shares after the Record Date. Accordingly, it is important that you vote the

Shares held by you on the Record Date, or grant a proxy to vote such Shares on
the BLUE proxy card, even if you sell such shares after the Record Date.

As of the close of business on the Record Date, we believe
that there were 108,115,824 shares of common stock of Hercules issued and
outstanding and entitled to vote. Stockholders will have one vote for each share
of common stock they own with respect to all matters to be considered at the
2001 Annual Meeting.

In order for your views on the above-described proposals to
be represented at the 2001 Annual Meeting, please sign and date the enclosed
BLUE proxy card and return it to Georgeson in the enclosed prepaid envelope
TODAY. Execution of the BLUE proxy card will not affect your right to attend the
2001 Annual Meeting and to vote in person. Any proxy may be revoked at any time
prior to the 2001 Annual Meeting by delivering a written notice of revocation or
a later dated proxy for the 2001 Annual Meeting to Georgeson or the Secretary of
Hercules, or by voting in person at the 2001 Annual Meeting. Only your latest
dated proxy will count.

Unless otherwise indicated, the BLUE proxy authorizes the
persons named in the proxy to vote, and such persons will vote, properly
executed and duly returned proxies FOR the ISP nominees. If no marking is made
on your BLUE proxy with respect to the ratification of the appointment of
Hercules' independent auditors, you will be deemed to have given a direction to
abstain from voting on such matter.

VOTE REQUIRED

Based on currently available public information, a quorum
will exist at the 2001 Annual Meeting if holders of not less than a majority of
the shares of Hercules common stock outstanding and entitled to vote at the 2001
Annual Meeting are present in person or by proxy. If a quorum is present, the
election of directors requires the following vote:

o ELECTION OF DIRECTORS: Hercules claims that its Bylaws require that in
order to be elected, nominees for director must receive the affirmative
vote of a majority of all outstanding shares. We disagree with its
interpretation and believe, based on the reasons set forth below, that
under Delaware law our nominees should be elected if they receive the
greatest number of votes cast at the 2001 Annual Meeting.

Our view that, under Delaware law and the Hercules Bylaws,
our nominees should be deemed elected if they receive the greatest number of
votes cast at the 2001 Annual Meeting is supported by the following legal
analysis:

Section 216(3) of the Delaware General Corporation Law
provides that in the absence of specification in the certificate of
incorporation or bylaws of a corporation, "[d]irectors shall be elected by a
plurality of the votes of the shares present in person or represented by proxy
at the meeting and entitled to vote on the election of directors." Delaware case
law has established that in order to overcome this voting rule, the certificate
of incorporation or bylaw provision must "not be couched in ambiguous language,

rather the language employed must be positive, explicit, clear and readily
understandable and susceptible to but one reasonable interpretation, which would
indicate beyond doubt that the rule was intended to be abrogated." Standard
Power and Light Corp. v. Investment Associates, Del. Supr., 51 A.2d 572 (1947).

Article II, Section 2 of Hercules Bylaws currently provides
that "[a]t each annual meeting, there shall be elected by ballot, by the
majority vote of the stock then issued and outstanding and entitled to vote
thereat, the number of directors necessary to fill the class of those whose term
then expires." The subordinate clause "by the majority vote of the stock then
issued and outstanding and entitled to vote thereat", we believe, should not be
interpreted as requiring that the winner obtain the affirmative vote of the
holders of a majority of the shares issued and outstanding. Such an
interpretation of the subordinate clause is disfavored because it deviates from
the "fundamental principle of majority rule." Centaur Partners, IV v. National
Intergroup, Inc., Del. Supr., 582 A.2d 923, 927 (1990). It also creates a
conflict with the rest of the sentence. Absent the subordinate clause, the
remainder of the sentence requires that a class of directors "shall be elected"
at the annual meeting. A construction that would require the winner to obtain
the affirmative vote of the holders of a majority of the shares issued and
outstanding, we believe, creates the possibility that in a contested election no
candidate will obtain the requisite number of votes, in which event no
successors would be elected at the annual meeting as the By-laws require and the
incumbent directors would continue to hold their seats even though their
three-year terms have expired and indeed, even though the incumbent directors
had received fewer votes than the other candidates or even no votes at all.

The Delaware Supreme Court has interpreted a similar bylaw
in a manner that avoids this same problem. In Standard Power, the Court was
asked to interpret the following provision in a certificate of incorporation:

The holders of the Common Stock Series B shall have the right by the
vote of a majority in number of shares of the Common Stock Series B
issued and outstanding to elect a minority in number of the full
Board of Directors of the corporation, such minority to consist of
the largest number of Directors which will constitute a minority in
number of such full Board of Directors, and the directors so elected
shall be known as Class B directors.

The Court declined to interpret the highlighted phrase as requiring a contestant
to obtain the votes of a majority of the outstanding shares because that result
"would be inequitable, unusual and such as reasonable men would not likely
intend." Id. at 577. The Court ruled that the provision "should be construed to
mean that a majority in number of the issued and outstanding Series B shares
must be voted, and that this is the full extent of the charter requirement in
this regard." Id. At 578. The court accepted that construction even though a
separate provision in the certificate of incorporation "requir[ed] the presence
for quorum purposes of a majority in number of the shares of the Series B stock
before the stockholders are entitled to vote for the election of Class B
directors[.]" Id. At 577.

The clause "by the majority vote of the stock then issued
and outstanding and entitled to vote thereat", we believe, should be interpreted
in identical fashion as the phrase from Standard Power: "by the vote of a
majority in number of shares of the Common Stock Series B issued and
outstanding." The reasons for our interpretation include the following:

o The language of the Hercules Bylaw closely tracks the language
of the bylaw interpreted in Standard Power.

o The Standard Power construction avoids the policy problems of
holdover directors and the possible disenfranchisement of a
plurality or even majority of those voting. These policy
considerations are of particular concern in this case, because
Hercules has a classified board.

o The Standard Power construction avoids creating an internal
inconsistency in Article II, Section 2.

o The language of Article II, Section 2 does not track the clear
language of Article I, Section 6: "the affirmative vote of the
holders of a majority of the shares present in person or by
proxy." If the drafters of the Bylaws wanted to deviate from
the default rule in Article I, Section 6, they knew how to
clearly draft such language (e.g., "election of a new director
shall require the affirmative vote of the holders of a
majority of the shares issued and outstanding").

Furthermore, the interpretation by the Company is not
consistent with the scheme of Section 141(d) of the Delaware General Corporation
Law, which establishes the conditions for a classified board of directors. The
statute permits, by the certificate of incorporation or a by-law adopted by the
vote of the stockholders, division of the directors into one, two or three
classes. The term of the first class shall expire at the next annual meeting,
the second class the year thereafter and the third class two years thereafter.
The statute further provides "... and at each annual election held after such
classification and election, directors shall be chosen for a full term, as the
case may be, to succeed those whose terms expired." Should the Company's
interpretation be adopted and a class of directors not be elected in a
particular year, the incumbent directors would remain in office since their
successors would not be elected and qualified. We believe that this result,
which should be impermissible in any event as a matter of good corporate
governance, also runs contrary to New York Stock Exchange policy, as Section
304.00 of the NYSE Listed Company Manual specifies that "... directors' terms of
office should not exceed three years." There are no mechanics in the By-laws to
establish how many classes of directors would be elected in the second year and
third year and the term of each class. While this is also true should a
plurality not elect the new members of the class, the higher voting requirement
makes this a greater likelihood, particularly in the case of a proxy contest.

Our proxy statement and a form of proxy will be delivered
to holders of at least the percentage of the Company's common stock required
under applicable law to carry the Proposals.

WE STRONGLY RECOMMEND THAT YOU
VOTE "FOR" THE ELECTION OF OUR NOMINEES

METHOD OF COUNTING VOTES

The holders of not less than a majority of the number of
shares of Hercules common stock outstanding and entitled to vote at the 2001
Annual Meeting must be represented in person or by proxy in order to constitute
a quorum for the transaction of business. Abstentions and broker non-votes will
be included for purposes of determining whether a quorum exists. Broker
non-votes occur when brokers do not receive voting instructions from their
customers on non-routine matters and consequently have no discretion to vote on
those matters. If your Hercules shares are held in the name of a brokerage firm,
bank nominee or other institution, you should contact the person responsible for
your account and give instructions for a proxy card to be issued so that your
shares will be represented at the 2001 Annual Meeting.

After a quorum is determined to exist at the 2001 Annual
Meeting, under our interpretation of Hercules director election Bylaw,
abstentions and broker non-votes will have no effect on the outcome of the
election of directors. Under Hercules' interpretation of that Bylaw, however,
abstentions and broker non-votes will be counted as votes cast against the
election of directors.

USE OF PREVIOUSLY PUBLISHED MATERIAL

This proxy statement includes quotations from previously
published material contained in periodicals, newspapers and analyst reports, the
source of which has been cited when used. We did not seek the consent of the
author or publication to the use of any such material as proxy soliciting
material. We have not directly or indirectly paid or proposed to pay any
consideration in connection with the publication or republication of such
material.

ADDITIONAL INFORMATION

The principal executive offices of Hercules Incorporated
are at Hercules Plaza, 1313 North Market Street, Wilmington, Delaware 19894.
Hercules manufactures chemical specialties used in a variety of home, office and
industrial products including process paper chemicals, water treatment
chemicals, water-soluble polymers, food ingredients, resins and polypropylene
and polyethylene fibers. Hercules' primary markets include pulp and paper,
petroleum refineries, food processors and manufacturers, construction materials,
adhesives, pharmaceutical companies and personal care product manufacturers.
Except as otherwise noted herein, the information concerning Hercules has been
taken from or is based upon documents and records on file with the SEC and other
publicly available information. Although we do not have any knowledge that would
indicate that any statement contained herein based upon such documents and
records is untrue, we do not take any responsibility for the accuracy or
completeness of the information contained in such documents and records, or for
any failure by Hercules to disclose events that may affect the significance or
accuracy of such information.

The principal executive offices of ISP are at 300 Delaware
Avenue, Wilmington, Delaware 19801. We are a manufacturer of specialty chemicals
and mineral products.

We are subject to the informational requirements of the
Exchange Act, and, in accordance with the Exchange Act, file reports, proxy
statements and other documents with the SEC relating to our business, financial
condition and other matters. These reports, proxy statements and other documents
can be inspected and copied at the public reference facilities of the SEC at 450
Fifth Street, N.W., Washington, DC 20549, and at the regional offices of the SEC
located at Seven World Trade Center, 13th Floor, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of ISP's filings with the SEC can also be obtained by mail for a fee by
writing to the SEC's principal office at 450 Fifth Street, N.W., Washington, DC
20549. You can also get electronic copies of our filings with the SEC for free
on the SEC's Internet web site at http://www.sec.gov. Copies of our filings with
the SEC are also be available for inspection at the offices of the New York
Stock Exchange, 20 Broad Street, New York, New York 10005.

PROXY SOLICITATION; EXPENSES

Executed proxies may be solicited in person, by mail,
advertisement, telephone, telecopier, telegraph or similar means. Solicitation
may be made by directors, officers, investor relations personnel and other
employees of ISP and their affiliates, none of whom will receive additional
compensation for such solicitation. Proxies will be solicited from individuals,
brokers, banks, bank nominees and other institutional holders. We have requested
banks, brokerage houses and other custodians, nominees and fiduciaries to
forward all solicitation materials to the beneficial owners of the shares they
hold of record. We will reimburse these record holders for their reasonable
out-of-pocket expenses.

In addition, ISP has retained Georgeson to solicit proxies
on our behalf in connection with the 2001 Annual Meeting. Georgeson will employ
approximately 75 people in its efforts. We have agreed to reimburse Georgeson
for its reasonable expenses and to pay to Georgeson fees not to exceed $225,000.

The entire expense of our proxy solicitation is being borne
by ISP. In the event that our nominees are elected to Hercules Board, we may
seek reimbursement of such expenses from Hercules. ISP does not intend to seek
reimbursement for the stipend it pays to its nominees and does not intend to
seek stockholder approval of reimbursement of its other expenses. In addition to
the engagement of Georgeson described above, costs related to the solicitation
of proxies include expenditures for printing, postage, legal and related
expenses and are expected to be approximately $750,000. Total payment of costs
to date in furtherance of our proxy solicitation is approximately $350,000.

CERTAIN INFORMATION CONCERNING THE PARTICIPANTS

ISP, our nominees for directorships and the following
officers of ISP may be deemed to be "participants" (as defined in Instruction 3
to Item 4 of Rule 14a-101 of the Exchange Act) in this proxy solicitation:
Richard A. Weinberg, Executive Vice President, General Counsel and Secretary;
Randall R. Lay, Executive Vice President and Chief Financial Officer; Susan B.
Yoss, Executive Vice President and Treasurer; Stephen R. Olsen, Senior Vice
President-Corporate Development; Jared Landaw, Vice President-Law; and Ben
Stoller, Director-Corporate Finance and Investments. Information relating to the
beneficial ownership of common stock of Hercules by the participants in this
solicitation and certain other information relating to the participants is
contained in Annex I to this proxy statement and is incorporated in this proxy
statement by reference. Except as set forth in Annex I, none of the participants
in this solicitation are party to any commercial dealings with Hercules or its
subsidiaries required to be discussed pursuant to Schedule 14A promulgated under
the Exchange Act, which governs the disclosure contained in this proxy
statement.

CERTAIN INTERESTS IN THE PROPOSALS AND
WITH RESPECT TO SECURITIES OF HERCULES

To the knowledge of ISP, there are no contracts,
arrangements, understandings or relationships (legal or otherwise) among ISP or
its associates with respect to any securities of Hercules.

Gloria Schaffer and Raymond Troubh, each in his or her
capacity as a nominee for election to the Hercules Board, will receive a stipend
of $25,000 from ISP for his or her service as a nominee. This stipend is not
refundable in any manner in connection with the outcome of our proxy
solicitation or otherwise. The Nominees are each party to an indemnity agreement
with ISP (the "Director Indemnity Agreements"). In accordance with the terms of
the Director Indemnity Agreements, ISP has agreed to indemnify and hold harmless
each of the nominees from and against, among other things, all expenses,
liabilities and losses, including reasonable attorney's fees, related to any
action, suit or proceeding to which such nominee is made a party or threatened
to be made a party by reason of such nominee's action or inaction while serving
as a nominee.

SECURITY OWNERSHIP OF DIRECTORS
AND MANAGEMENT OF HERCULES

The following table presents, as of March 6, 2001, based
solely on information contained in Hercules' 2001 proxy statement, the common
stock beneficially owned (as that term is defined by the SEC) by all directors
and named executive officers of Hercules, and the directors and executive
officers of Hercules as a group.

Except as otherwise noted in a footnote below, each
director, nominee and executive officer has sole voting and investment power
with respect to the number of shares of common stock set forth opposite his or
her name in the table.

Shares Options
Beneficially Exercisable Restricted Percent of
Name Owned (1) Within 60 Days Stock Units Shares
------------------------------------------------- ------------------- -------------------- ----------------- -------------------

DIRECTORS AND OFFICERS
Thomas L. Gossage, Director and
Officer (2) 129,003 264,000 0 *
J. Barry, Officer 71,954 7,200 0 *
D. W. DiDonna, Officer 44,637 148,100 0 *
J. G. Drosdick, Director 9,423 6,000 1,100 *
R. M. Fairbanks, III, Director 12,088 21,000 1,253 *
I. J. Floyd, Officer 65,944 71,800 0 *
A. R. Hirsig, Director 6,554 6,000 1,100 *
E. E. Holiday, Director 3,999 18,000 1,376 *
R. G. Jahn, Director 14,236 27,000 0 *
G. N. Kelley, Director 9,744 27,000 2,185 *
R. L. MacDonald, Jr., Director 15,421 27,000 1,928 *
G. MacKenzie, Officer 125,997 170,280 1,299 *
H. E. McBrayer, Director 77,324 24,000 1,527 *
P. McCausland, Director 7,784 9,000 1,100 *
J. A. H. Shober, Director 5,250 6,000 1,100 *
P. A. Sneed, Director 11,925 18,000 1,253 *
V. J. Corbo, Director and Officer (3) 109,119 275,200 0 *
H. J. Tucci, Officer (4) 53,231 209,200 0 *
ALL DIRECTORS AND OFFICERS AS A GROUP
773,633 1,448,520 15,221 2%

* Less than 1% of Hercules' outstanding shares of common stock.

(1) Includes shares, as of December 31, 2000, in the Savings and Investment
Plan as follows: J. Barry, 2,351; D. W. DiDonna, 1,276; I. J. Floyd,
1,372; and G. MacKenzie, 3,421; and all directors and officers as a
group, 8,420. Includes shares with restrictions and forfeiture risks as
specified under the Long-Term Incentive Compensation Plan: T. L.
Gossage, 128,003; J. Barry, 38,000; D. W. DiDonna, 39,747; G. MacKenzie,
76,270; I. J. Floyd, 45,910; H. J. Tucci, 1,821; and all directors and
officers as a group, 274,956. Owners have the same voting and dividend
rights as other shareholders of Hercules, except for the right to sell
or transfer. Included in the non-employee directors' totals is a
one-time equity award. Mr. Kelley's total includes 1,594 shares that he
holds jointly with his spouse.

(2) Named Chairman and Chief Executive Officer on October 17, 2000.

(3) Resigned as President, Chairman and Chief Executive Officer on October
17, 2000.

(4) Retired as officer on December 1, 2000.

PRINCIPAL STOCKHOLDERS OF HERCULES

The following table sets forth, based solely, except as
otherwise described herein, on information contained in Hercules' 2001 proxy
statement, the number and percentage of outstanding shares of common stock
beneficially owned by each person known to ISP as of such date to be the
beneficial owner of more than five percent of the outstanding shares of common
stock.

Shares
Beneficially Percent of
Name Owned Shares
--------------------------------------------------------------- -------------------------------- ----------------------------

5% SHAREHOLDERS
International Specialty Products, Inc. 10,719,200 9.9%(1)
ISP Investments Inc.
ISP Opco Holdings Inc.
c/o ISP Management Company, Inc.
1361 Alps Road
Wayne, New Jersey 07670

T. Rowe Price Associates, Inc. (2)
100 E. Pratt Street
Baltimore, Maryland 21202 7,198,428 6.7%

Mario J. Gabelli and related 6,707,400 6.23%
entities (3)
c/o Gabelli Asset Management Inc.
One Corporate Center
Rye, New York 10580

(1) ISP Investments Inc. (through ISP Investments Grantor Trust) has the sole
power to vote, direct the voting of, dispose of and direct the disposition
of the shares. ISP Opco Holdings Inc., by virtue of its indirect ownership
of all of the outstanding capital stock of ISP Investments Inc., may be
deemed to own beneficially (solely for purposes of Rule 13d-3) the shares.
ISP, by virtue of its ownership of all of the outstanding common stock of
ISP Opco Holdings Inc., may be deemed to own beneficially (solely for
purposes of Rule 13d-3) the shares. Samuel J. Heyman, by virtue of his
beneficial ownership (as defined in Rule 13d-3) of approximately 79% of
the capital stock of ISP, may be deemed to own beneficially (solely for
purposes of Rule 13d-3) the shares.

(2) Share holding as of March 6, 2001, as reported on Schedule 13G most
recently filed by such shareholder.

(3) Share holding as of March 6, 2001, as reported on Amendment No. 1 to the
Schedule 13D filed by such shareholder.

STOCKHOLDERS' PROPOSALS IN HERCULES' PROXY STATEMENT

Pursuant to Rule 14a-8(e)(2) under the Exchange Act, any
proposal by a stockholder at the 2001 Annual Meeting, to be included in
Hercules' proxy statement, must be received in writing at Hercules' principal
executive offices not less than 120 calendar days in advance of the date of
Hercules' proxy statement released to security holders in connection with its
2000 Annual Meeting of Stockholders. However, if the date of the meeting is
changed by more than 30 days from the date of the previous year's meeting, then
the deadline is a reasonable time before Hercules begins to print and mail its
proxy materials.

Proposals should be addressed to the Corporate Secretary,
Hercules Incorporated, Hercules Plaza, 1313 North Market Street, Wilmington,
Delaware 19894.

WE URGE YOU TO SIGN, DATE AND RETURN THE BLUE PROXY CARD IN FAVOR OF THE
ELECTION OF OUR NOMINEES DESCRIBED IN THIS PROXY STATEMENT.

Dated: March 23, 2001
Sincerely,

Your Fellow Stockholder:

INTERNATIONAL SPECIALTY PRODUCTS INC.

ANNEX I

INFORMATION CONCERNING INTERNATIONAL SPECIALTY
PRODUCTS INC. AND OTHER PARTICIPANTS
IN THE SOLICITATION

Information is being given herein for (i) International
Specialty Products Inc., a Delaware corporation ("ISP"), (ii) Samuel J. Heyman,
a natural person and nominee for the Board of Directors of the Company, (iii)
Sunil Kumar, a natural person and nominee for the Board of Directors of the
Company, (iv) Gloria Schaffer, a natural person and nominee for the Board of
Directors of the Company, (v) Raymond Troubh, a natural person and nominee for
the Board of Directors of the Company, (vi) Richard A Weinberg, Executive Vice
President, General Counsel and Secretary of ISP ("Weinberg"), (vii) Randall R.
Lay, Executive Vice President and Chief Financial Officer of ISP ("Lay"), (viii)
Susan B. Yoss, Executive Vice President and Treasurer of ISP ("Yoss"), (ix)
Stephen R. Olsen, Senior Vice President-Corporate Development of ISP ("Olsen"),
(x) Jared Landaw, Vice President-Law of ISP ("Landaw") and (xi) Ben Stoller,
Director-Corporate Finance and Investments of ISP ("Stoller" and together with
Weinberg, Lay, Yoss, Olsen and Landaw, the "ISP Participants"), who are each a
"participant in a solicitation" as defined under the proxy rules (collectively,
the "Participants").

Information is also given for each of the entities listed
on Schedule A to this Annex I, each of which is an "associate", as defined under
the proxy rules, of ISP.

ISP is a Delaware corporation. ISP has its principal place
of business at 300 Delaware Avenue, Wilmington, Delaware 19801. The business
address of each of the ISP Participants is c/o ISP Management Company, Inc.,
1361 Alps Road, Wayne, New Jersey 07470. The address of each of the entities
listed on Schedule A to this Annex I is c/o ISP Management Company, Inc., 1361
Alps Road, Wayne, New Jersey 07470.

The Participants may be deemed to have beneficial ownership
of Hercules Common Stock as set forth immediately below. Except as set forth
below, no associates of any of the Participants owns any Hercules Common Stock.

A-1

Number of Shares Approximate Margin
of Hercules Indebtedness with respect
Name Common Stock to Common Stock
---- ------------ ---------------

ISP Investments Inc. 10,719,200 (2)
(direct ownership)(1)

ISP Opco Holdings Inc. 10,719,200 (2)
(indirect ownership)(1)

International Specialty Products Inc. 10,719,200 (2)
(indirect ownership)(1)

Samuel J. Heyman 10,719,200 (2)
(indirect ownership)(1)

Sunil Kumar 0 $ 0

Gloria Schaffer 0 $ 0

Raymond Troubh 0 $ 0

Richard A. Weinberg 0 $ 0

Randall R. Lay 0 $ 0

Susan B. Yoss 0 $ 0

Stephen R. Olsen 0 $ 0

Jared Landaw 0 $ 0

Ben Stoller 0 $ 0

(1) ISP Investments (through ISP Investments Grantor Trust) has the sole
power to vote, direct the voting of, dispose of and direct the
disposition of the Hercules Common Stock. ISP Opco Holdings Inc.
("ISP Opco"), by virtue of its indirect ownership of all of the
outstanding capital stock of ISP Investments, may be deemed to own
beneficially (solely for purposes of Rule 13d-3) the Hercules Common
Stock owned by ISP Investments. International Specialty Products Inc.
("ISP"), by virtue of its ownership of all of the outstanding common
stock of ISP Opco, may be deemed to own beneficially (solely for
purposes of Rule 13d-3) the Hercules Common Stock owned by ISP
Investments. Mr. Heyman, by virtue of his beneficial ownership (as
defined in Rule 13d-3) of approximately 79% of the capital stock of
ISP, may be deemed to own beneficially (solely for purposes of Rule
13d-3) the Hercules Common Stock owned by ISP Investments.

(2) In the ordinary course of its business, ISP Investments Inc.
purchases securities for its investment portfolio with funds obtained
from the working capital of ISP Investments, loans from affiliates
and borrowings pursuant to standard margin arrangements. Because the
securities from multiple investments are pooled in one account, the
amount of margin indebtedness incurred by ISP in connection with its
purchases of Hercules Common Stock, which purchases were numerous and
made over several months, is impossible to determine with any degree
of certainty.

A-2

To the best of the knowledge of the Participants and their
associates, none has been, within the past year, a party to any contract,
arrangement or understanding with any person with respect to any securities of
Hercules, including but not limited to joint ventures, loan or option
arrangements, puts or calls, guarantees against loss or guarantees of profits,
division of losses or profits, or the giving or withholding of proxies.

No Participant or associate owns any securities of the
Company of record but not beneficially.

ISP does not have any special arrangements with any of the
ISP Participants in connection with this proxy solicitation.

None of the Participants and none of their associates has
any arrangement or understanding with any person with respect to (i) any future
employment with Hercules or (ii) any future transactions to which Hercules or
any of its affiliates may be a party. ISP and certain of its subsidiaries
purchase and sell certain chemical products to Hercules and/or certain
subsidiaries or affiliates of Hercules in the ordinary course of business in an
aggregate amount per year that does not exceed $500,000. No family relationships
exist among the Participants' nominees or between any Hercules director or
executive officer and any of the Participants' nominees.

The following is a summary of all transactions in Hercules
securities by the Participants over the last two years.

Date of Transaction Nature of Transaction Number of Shares
--------------------------------------------------------------------------------

01/28/00 Buy 21,700
03/01/00 Buy 196,000
03/02/00 Buy 1,030,000
03/03/00 Buy 1,200,000
03/09/00 Buy 60,000
03/13/00 Buy 35,000
03/14/00 Buy 11,800
03/15/00 Buy 45,000
03/20/00 Buy 150,000
03/22/00 Buy 65,000
03/23/00 Buy 13,000
03/28/00 Buy 200,000
03/29/00 Buy 106,000
03/31/00 Buy 55,000
04/03/00 Buy 35,000
04/04/00 Buy 62,600
04/07/00 Buy 2,500
04/10/00 Buy 102,000

A-3

Date of Transaction Nature of Transaction Number of Shares
--------------------------------------------------------------------------------

04/12/00 Buy 151,000
04/13/00 Buy 165,500
04/14/00 Buy 102,000
04/17/00 Buy 55,000
04/18/00 Buy 63,000
04/19/00 Buy 60,000
04/20/00 Buy 370,000
04/24/00 Buy 34,900
04/25/00 Buy 100,000
04/26/00 Buy 81,500
04/28/00 Buy 7,500
05/01/00 Buy 200
05/02/00 Buy 35,000
05/03/00 Buy 135,000
05/04/00 Buy 95,000
05/05/00 Buy 50,000
05/08/00 Buy 35,000
05/09/00 Buy 35,000
05/10/00 Buy 1,000
6/5/00 Buy 14,100
6/6/00 Buy 41,200
6/7/00 Buy 35,000
6/8/00 Buy 14,400
6/9/00 Buy 16,000
6/19/00 Buy 70,000
6/20/00 Buy 50,000
6/22/00 Buy 2,500
6/23/00 Buy 25,000
7/10/00 Buy 35,000
7/11/00 Buy 35,000
7/12/00 Buy 11,800
7/14/00 Buy 5,355,000
7/17/00 Buy 40,000
7/20/00 Buy 3,000
7/21/00 Buy 4,000

A-4

Schedule A to Annex I

Associates of International Specialty Products Inc.
---------------------------------------------------

ISP Acquisition Corp.
ISP Investments Inc.
ISP Opco Holdings Inc.
Belleville Realty Corp.
ISP Alginates Inc.
ISP Management Company, Inc.
ISP Chemicals Inc.
ISP Minerals Inc.
ISP Technologies Inc.
ISP Mineral Products Inc.
ISP Environmental Services Inc.
Bluehall Incorporated
ISP Realty Corporation
ISP Real Estate Company, Inc.
International Specialty Products Funding Corporation
ISP Newark Inc.
ISP Van Dyk Inc.
ISP Fine Chemicals Inc.
ISP Freetown Fine Chemicals Inc.
Verona Inc.
ISP Global Technologies Inc.
ISP International Corp.
ISP Marl Holdings GmbH
ISP Holdings (U.K.) Ltd.
ISP Ireland
ISP (Puerto Rico) Inc.
ISP Marl GmbH
ISP Acetylene GmbH
ISP Alginates (U.K.) Ltd.
ISP (Great Britain) Co. Ltd.
ISP Andina, C.A.
ISP Argentina S.A.
ISP Asia Pacific Pte Ltd.
ISP (Australasia) Pte Ltd.
ISP (Belgium) N.V.
ISP (Belgium) International N.V.
ISP do Brasil Ltda.
ISP (Canada) Inc.
ISP Ceska Republika Spol S.R.O.

A-5

ISP (China) Limited
ISP Colombia Ltda.
ISP Freight Service N.V.
ISP Global Operations (Barbados) Inc.
ISP Global Technologies (Germany) Holding GmbH
ISP Customer Service GmbH ISP Global Technologies Deutschland GmbH International
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ISP (Polska) Sp.z. o.p.
ISP Sales (Barbados) Inc.
ISP Sales (U.K.) Limited
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Chemfields Pharmaceuticals Private Limited
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Arramara Teoranta
Thorverk Hf

A-6

PROXY

HERCULES INCORPORATED

PROXY SOLICITED ON BEHALF OF INTERNATIONAL SPECIALTY
PRODUCTS INC. AND THE OTHER PARTICIPANTS IDENTIFIED IN THE
PROXY STATEMENT FURNISHED HEREWITH ("ISP") FOR THE ANNUAL MEETING
OF STOCKHOLDERS, APRIL 26, 2001 AT 11:00 A.M.

The undersigned stockholder of Hercules Incorporated ("Hercules") hereby
appoints Samuel J. Heyman and Sunil Kumar and each of them, as attorneys and
proxies, each with power of substitution and revocation, to represent the
undersigned at the Annual Meeting of Stockholders of Hercules Incorporated to be
held at the Delaware Art Museum, 2301 Kentmere Parkway, Wilmington, Delaware on
April 26, 2001 at 11:00 A.M., local time, and at any adjournment or postponement
thereof, with authority to vote all shares held or owned by the undersigned in
accordance with the directions indicated herein.

Receipt of the Proxy Statement furnished herewith is hereby
acknowledged.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED STOCKHOLDER. ON MATTERS FOR WHICH YOU DO NOT SPECIFY A CHOICE, YOUR
SHARES WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATION OF ISP. YOU MAY
APPROVE OR VOTE SEPARATELY ON ANY OR ALL OF THE PROPOSALS.

(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)

ISP RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED BELOW.
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Election of Directors

FOR all nominees listed below WITHHOLD AUTHORITY to vote NOMINEES: Samuel J. Heyman, Sunil Kumar, Gloria
(except as marked to the contrary for all nominees listed Schaffer, Raymond Troubh
hereon). below. (Instructions: To withhold authority to vote for
any individual nominee, write that nominee's name in
[_] [_] the space provided below.)

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ISP MAKES NO RECOMMENDATION ON
THE FOLLOWING MATTER TO BE VOTED ON
AT THE 2001 ANNUAL MEETING

FOR AGAINST ABSTAIN
RATIFICATION OF INDEPENDENT AUDITORS [_] [_] [_]

IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY BE PRESENTED TO THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT
THEREOF.

P Dated: _____________, 2001

R -------------------------------------------
(Signature)

O
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(Signature if held jointly)
X
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Title:
Y

Please sign exactly as name appears hereon.
When shares are held by joint tenants, both
should sign. When signing as attorney,
executor, administrator, trustee, or
guardian, please give full title as such.
If a corporation, please sign in full
corporate name by president or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person. The signer hereby
revokes all proxies heretofore given by the
signer to vote at the 2001 Annual Meeting
of Hercules Incorporated and any
adjournment or postponement thereof.