Hercules Executive Survivor Benefit Plan II

PLAN II)


THE HERCULES EXECUTIVE SURVIVOR BENEFIT PLAN
Plan II Benefit Structure adopted January 1, 1987(1)
(See Plan I filed March 27, 1981 for Plan I Benefit Structure)


The Hercules Executive Survivor Benefit Plan (HESBP) provides selected executives with an opportunity to financially protect their survivors in the event of death. The benefits offered by this plan are of two types: preretirement and postretirement death benefits.


Preretirement Death Benefits


If you die prior to retiring from Hercules, your survivor(s) will receive a lump sum equal to your life insurance selection in the Flex Benefits Plan plus another one times your annual compensation. (For the purpose of this plan, compensation is defined as base annual compensation for the previous calendar year plus the average Bonus or Incentive paid for the past two full calendar years of employment.) This benefit comes from two sources: the broad-based Hercules Group Life Insurance Plan and Hercules' general assets. For the purpose of calculating survivor benefits, compensation is limited to $500,000, resulting in a maximum net benefit of $1,500,000.


Hercules will provide your survivors, through the Group Life Insurance Plan, with an amount equal to the amount you selected in the Flex Benefits Plan. The Flex Plan provides you with credits equal to two times your annual compensation. Ordinary income taxes will not be due on that payment since it is funded through life insurance. Your heirs also will receive a payment equal to one times annual compensation from the general assets of Hercules. This payment will be increased (grossed up) to reimburse your bene ...