Pledge And Security Agreement

Exhibit 10.3


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PLEDGE AND SECURITY AGREEMENT


dated as of


June 27, 2001


among


ISP CHEMCO INC.,
as a Borrower and the Lead Borrower


and


ISP CHEMICALS INC.,


ISP TECHNOLOGIES INC. and


ISP MINERALS INC.,
as additional Borrowers


The SUBSIDIARY GUARANTORS Party Hereto


and


THE CHASE MANHATTAN BANK,
as Administrative Agent


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J.P. MORGAN SECURITIES INC.,
as Advisor, Lead Arranger and Bookrunner


BEAR STEARNS CORPORATE LENDING INC. and UBS WARBURG LLC,
as Co-Syndication Agents


DEUTSCHE BANC ALEX. BROWN INC. and THE BANK OF NOVA SCOTIA,
as Co-Documentation Agents


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TABLE OF CONTENTS


Page
---- Section 1. Definitions................................................... 1


Section 2. Representations and Warranties................................ 4


Section 3. Collateral.................................................... 6


Section 4. Cash Proceeds of Collateral................................... 8
4.01 Collateral Account......................................... 8
4.02 Proceeds of Accounts....................................... 8
4.03 Investment of Balance in Collateral Account................ 9
4.04 Cover for LC Exposure...................................... 9
4.05 Dispositions and Net Available Proceeds.................... 9


Section 5. Further Assurances; Remedies.................................. 10
5.01 Delivery and Other Perfection.............................. 10
5.02 Other Financing Statements and Liens....................... 11
5.03 Preservation of Rights..................................... 11
5.04 Special Provisions Relating to Certain Collateral.......... 11
5.05 Events of Default, Etc..................................... 14
5.06 Deficiency................................................. 16
5.07 Locations; Names........................................... 16
5.08 Private Sale............................................... 16
5.09 Application of Proceeds.................................... 16
5.10 Attorney-in-Fact........................................... 17


Section 6. Miscellaneous................................................. 17
6.01 Notices.................................................... 17
6.02 No Waiver.................................................. 17
6.03 Amendments, Etc............................................ 17
6.04 Expenses................................................... 17
6.05 Successors and Assigns..................................... 18
6.06 Counterparts............................................... 18
6.07 Governing Law.............................................. 18
6.08 Captions................................................... 18
6.09 Agents and Attorneys-in-Fact............................... 18
6.10 Severability............................................... 18
6.11 Additional Subsidiary Guarantors........................... 18
6.12 Termination................................................ 18


Annex 1 - Changes of Name Annex 2 - New Debtor Events Annex 3 - Pledged Stock Annex 4 - Copyrights Annex 5 - Patents Annex 6 - Trademarks Annex 7 - Licenses Annex 8 - Locations Annex 9 - Permitted Exceptions


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PLEDGE AND SECURITY AGREEMENT dated as of June 27, 2001, among ISP CHEMCO INC., ISP CHEMICALS INC., ISP TECHNOLOGIES INC. and ISP MINERALS INC., each a Delaware corporation (individually, a "Borrower", and, collectively, the "Borrowers"), ISP CHEMCO INC., as agent for the Obligors hereunder (in such capacity, the "Lead Borrower"), each of the SUBSIDIARY GUARANTORS party hereto from time to time and THE CHASE MANHATTAN BANK, as administrative agent for the Lenders and the LC Bank under (and as defined in) the Credit Agreement referred to below (in such capacity, the "Administrative Agent").


The Borrowers, the Subsidiary Guarantors (as defined below), certain lenders and the Administrative Agent are parties to a Credit Agreement dated as of June 27, 2001 (the "Credit Agreement"), providing, subject to the terms and conditions thereof, for extensions of credit to be made by said lenders to the Borrowers in an aggregate principal or face amount not exceeding $450,000,000 at any one time outstanding. In addition, the Obligors (as defined below) may from time to time be obligated to one or more of said lenders in respect of one or more Hedge Agreements under and as defined in the Credit Agreement, cash management arrangements and foreign exchange contracts and facilities.


To induce said lenders to enter into the Credit Agreement and to extend credit thereunder and under the Hedge Agreements, cash management arrangements and foreign exchange contracts and facilities, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Obligor has agreed to grant a security interest in the Collateral (as defined below) as security for the Secured Obligations (as defined below).


Accordingly, the parties hereto agree as follows:


Section 1. Definitions.


(a) As used in this Agreement, the following terms have the meanings specified below:


"Collateral" has the meaning assigned thereto in Section 3.


"Collateral Account" has the meaning assigned thereto in
Section 4.01.


"Commercial Tort Claims" has the meaning assigned thereto in
the UCC and, if not defined therein, such term means a claim arising in
tort with respect to which (a) the claimant is an organization or (b)
the claimant is an individual and the claim (i) arose in the course of
the claimant's business or profession and (ii) does not include damages
arising out of personal injury to or the death of an individual.


"Copyright Collateral" means all Copyrights, whether now owned
or hereafter acquired by any Obligor, including each Copyright
identified in Annex 4.


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"Copyrights" means (i) all copyrights arising under the laws
of the United States, any other country or any political subdivision
thereof, whether registered or unregistered and whether published or
unpublished, all registrations and recordings thereof, and all
applications in connection therewith, including all registrations,
recordings and applications in the United States Copyright Office, and
(ii) the right to obtain all renewals thereof.


"Intellectual Property" means with respect to any Obligor,
collectively, all Copyright Collateral, all Patent Collateral and all
Trademark Collateral of such Obligor, together with (a) all trade
secrets of such Obligor; (b) all licenses and other agreements
providing for the grant of rights to such Obligor with respect to any
of the foregoing, including the licenses and other agreements listed in
Annex 7; (c) all licenses, consents, permits, variances, certifications
and approvals of governmental agencies now or hereafter held by such
Obligor with respect to any of the foregoing; and (d) the right to sue,
and to receive damages and payments, for past or future infringements
thereof.


"Issuer" means, with respect to any Pledged Stock, each Person
identified beneath the names of the Obligors on Annex 3 under the
caption "Issuer".


"LC Exposure Sub-Account" has the meaning assigned thereto in
Section 4.04.


"Letter-of-Credit Right" has the meaning assigned thereto in
the UCC and, if not defined therein, such term means a right to payment
or performance under a letter of credit, whether or not the beneficiary
has demanded or is at the time entitled to demand payment or
performance and does not include the right of a beneficiary to demand
payment or performance under a letter of credit.


"Motor Vehicles" means motor vehicles, tractors, trailers and
other like property, whether or not the title thereto is governed by a
certificate of title or ownership.


"New Debtor" has the meaning assigned thereto in the UCC and,
if not defined therein, such term means a Person that hereafter becomes
an Obligor under this Agreement pursuant to Section 6.11 or other
Person that by operation of law (other than Article 9 of the UCC) or
contract becomes generally obligated for the obligations of an existing
Obligor hereunder, including the Secured Obligations, and acquires or
succeeds to all or substantially all of the assets of such existing
Obligor.


"Obligor" means each of the Borrowers and the Subsidiary
Guarantors.


"Patent Collateral" means all Patents, whether now owned or
hereafter acquired by any Obligor, including each Patent identified in
Annex 5.


"Patents" means (a) all letters patents of the United States
or any other country, (b) all applications for letters patents of the
United States or any other country, (c) rights to obtain reissues,
divisions, continuations, renewals, extensions and continuations-in-
part thereof and (d) all rights throughout the world to income,
royalties, damages and payments now or hereafter due and/or payable
under and with respect thereto.


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"Pledged Stock" has the meaning assigned thereto in Section
3(k).


"Secured Obligations" means, collectively, (a) all principal
of and interest on the Loans, all reimbursement obligations in respect
of LC Disbursements (and all interest thereon), and all fees, expenses,
indemnities and other amounts whatsoever now or hereafter from time to
time owing by the Borrowers to the Secured Parties, or any of them,
under the Credit Documents, (b) all present and future obligations of
the Subsidiary Guarantors under the Credit Documents (including in
respect of their Guarantee under Article III of the Credit Agreement),
(c) all obligations of any Obligor in respect of Hedge Agreements, cash
management arrangements (including overdraft facilities and other
extensions of credit in connection therewith) and foreign exchange
contracts to which such Obligor and any Lender are parties, (d) all
present and future obligations of the Obligors under Guarantees in
favor of any Lender in respect of obligations described under clause
(c) above and like obligations to which any other Subsidiary or
Affiliate of Chemco and such Lender are parties and (e) all present and
future obligations of the Obligors to the Secured Parties, or any of
them, hereunder.


"Secured Parties" means, collectively, the Lenders, the LC
Bank and the Administrative Agent.


"Special Reserve Sub-Account" has the meaning assigned thereto
in Section 4.04.


"Stock Collateral" has the meaning assigned thereto in Section
3(k).


"Subsidiary Guarantor" means each of the Subsidiaries of
Chemco identified under the caption "SUBSIDIARY GUARANTORS" on the
signature pages hereto and each Subsidiary of Chemco that becomes a
"Subsidiary Guarantor" after the date hereof pursuant to Section 6.11.


"Trademark Collateral" means all Trademarks, whether now owned
or hereafter acquired by any Obligor, including each Trademark
identified in Annex 6. Notwithstanding the foregoing, the Trademark
Collateral does not and shall not include any Trademark that would be
rendered invalid, abandoned, void or unenforceable by reason of its
being included as part of the Trademark Collateral.


"Trademarks" means (i) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade
styles, service marks, logos and other source or business identifiers,
together, in each case, with the goodwill associated therewith, now
existing or hereafter adopted or, acquired, all registrations and
recordings thereof, and all applications in connection therewith,
whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any
other country or any political subdivision thereof, or otherwise, and
all common-law rights related thereto and (ii) the right to obtain all
renewals thereof.


"UCC" means the Uniform Commercial Code as in effect from time
to time in the State of New York.


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(b) Terms defined in the Credit Agreement, and not defined
herein, shall have the respective meanings assigned thereto in the
Credit Agreement; and terms defined in the UCC, and not herein or in
the Credit Agreement, shall have the respective meanings assigned
thereto in the UCC.


(c) The foregoing definitions shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise (i) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, restated, supplemented or otherwise modified (subject to any restrictions on such amendments, restatements, supplements or modifications set forth herein or therein, including Section 6.17 of the Credit Agreement), (ii) references to any law, constitution, statute, treaty, regulation, rule or ordinance (each a "law") refer to that law as amended from time to time and include any successor law, (iii) any reference herein to any Person shall be construed to include such Person's successors and permitted assigns, (iv) the words "herein", "hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof and (v) all references herein to Sections and Annexes shall be construed to refer to Sections of, and Annexes to, this Agreement.


Section 2. Representations and Warranties. In addition to its representations and warranties in any of the other Credit Documents, each Obligor represents and warrants to the Secured Parties that:


(a) Collateral. Such Obligor is the sole beneficial owner of
the Collateral in which it purports to grant a security interest
pursuant to Section 3, and no Lien exists upon such Collateral, except
for the Liens created hereunder and other Permitted Liens.


(b) Creation, Perfection and Priority. The security interest
created hereby constitutes a valid and perfected security interest in
the Collateral in which such Obligor purports to grant a security
interest pursuant to Section 3, except, solely with respect to
perfection, that part of the Collateral described in clause (ii) or
(iii) of Section 6.22(a) of the Credit Agreement and specified in Annex
9; and such perfected security interest in such Collateral is subject
to no equal or prior Lien other than the other Permitted Liens set
forth in Schedule II to the Credit Agreement or in Annex 9.


(c) Goods. Any Goods now or hereafter produced by such Obligor
or any of its Subsidiaries included in the Collateral have been and
will be produced in compliance with the requirements of the Fair Labor
Standards Act.


(d) Changes in Circumstances. Such Obligor has not (i) within
the period of four months prior to the date hereof, changed the
location of its chief executive office or the jurisdiction of its
organization, (ii) except as specified in Annex 1, heretofore changed
its name, or (iii) except as specified in Annex 2, heretofore become a
New Debtor with


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respect to a currently effective security agreement previously entered
into by any other Person.


(e) Pledged Stock. (1) The Pledged Stock evidenced by the
certificates identified under the name of such Obligor in Annex 3 is,
and all other Pledged Stock in which such Obligor shall hereafter grant
a security interest pursuant to Section 3 will be, duly authorized,
validly existing, fully paid and non-assessable and none of such
Pledged Stock is or will be subject to any contractual restriction, or
any restriction under the charter or by-laws of the respective Issuer
of such Pledged Stock, upon the transfer of such Pledged Stock (except
for any such restriction contained herein or in the Credit Agreement).


(2) The Pledged Stock evidenced by the certificates identified
under the name of such Obligor in Annex 3 constitutes all of the issued
and outstanding shares of capital stock of any class of the Issuers
beneficially owned by such Obligor on the date hereof (whether or not
registered in the name of such Obligor) and Annex 3 correctly
identifies, as at the date hereof, the respective Issuers of such
Pledged Stock, the respective class and par value of the shares
constituting such Pledged Stock and the respective number of shares
(and registered owners thereof) represented by each such certificate.


(f) Intellectual Property. (1) Annexes 4, 5, and 6,
respectively, set forth a complete and correct list of all letters
patents of the United States or other countries and applications
therefor, copyright registrations and applications therefor and
trademark registrations and applications therefor that are material to
the business of the Obligor and owned by such Obligor on the date
hereof. To the knowledge of such Obligor, such Obligor possesses the
right to use, and has not authorized any other Person to use, any of
the letters patents, copyright registrations, trademark registrations
or applications listed in Annexes 4, 5, and 6 except as set forth on
Annex 7. None of the registrations listed in Annexes 4, 5, and 6 have
lapsed or expired due to failure to pay any applicable maintenance
fees, annuities or applicable taxes.


(2) Annex 7 sets forth a complete and correct list of all
licenses and other agreements providing for the grant of rights by or
to such Obligor with respect to the Copyrights, Patents and Trademarks
of such Obligor on the date hereof.


(3) To such Obligor's knowledge, (i) except as set forth in
Annex 7, no third party has infringed or misappropriated the rights of
such Obligor with respect to any Copyright, Patent or Trademark of such
Obligor listed in Annexes 4, 5, and 6, respectively, and (ii) such
Obligor is not infringing in any respect any Copyright, Patent or
Trademark of any other Person, except as would not reasonably be
expected to have a material adverse effect on such Obligor's business.
To such Obligor's knowledge, except as may be set forth in Annex 7, no
proceedings have been instituted and are pending or have been
threatened against such Obligor alleging any violation of any
Copyright, Patent or Trademark of any other Person, and such Obligor
has received no claim alleging any such violation.


(4) To such Obligor's knowledge, such Obligor does not own any
trademark registrations in the United States of America to which the
last sentence of the definition


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of Trademark Collateral applies except as would not reasonably be
expected to have a material adverse effect on such Obligor's business.


Section 3. Collateral. As collateral security for the prompt payment in full when due (whether at stated maturity, by acceleration or otherwise) of the Secured Obligations, whether now existing or hereafter from time to time arising, each Obligor hereby grants to the Administrative Agent, for the benefit of the Secured Parties, a security interest in all of such Obligor's right, title and interest in, to and under all of the property, assets and revenues, whether now owned by such Obligor or hereafter acquired and whether now existing or hereafter coming into existence, including (all of the property, assets and revenues described in this Section 3 being collectively referred to herein as the "Collateral"):


(a) all Accounts;


(b) all Deposit Accounts;


(c) all Instruments;


(d) all Documents;


(e) all Chattel Paper (whether tangible or electronic);


(f) all Inventory;


(g) all Equipment;


(h) all Fixtures;


(i) all Goods not covered by the preceding clauses of this
Section 3;


(j) all Letter-of-Credit Rights;


(k) all shares of capital stock of the Issuers represented by
the certificates identified in Annex 3 (which, in the case of Issuers
that are Foreign Subsidiaries, shall not exceed 66% of the shares of
such Issuers) under the name of such Obligor and all other shares of
capital stock of whatever class of the Issuers, now or hereafter owned
by such Obligor (which, in the case of Issuers that are Foreign
Subsidiaries, shall not exceed 66% of the shares of such Issuers), in
each case together with the certificates evidencing the same
(collectively, the "Pledged Stock"), together with:


(i) all shares, securities, moneys or property
representing a dividend on any of the Pledged Stock, or
representing a distribution or return of capital upon or in
respect of the Pledged Stock, or resulting from a split-up,
revision, reclassification or other like change of the Pledged
Stock or otherwise received in exchange therefor, and any
subscription warrants, rights or options issued to the holders
of, or otherwise in respect of, the Pledged Stock, and


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(ii) without affecting the obligations of such
Obligor under any provision prohibiting such action hereunder
or under the Credit Agreement, in the event of any
consolidation or merger in which an Issuer is not the
surviving corporation, all shares of each class of the capital
stock of the successor corporation (unless such successor
corporation is such Obligor itself) formed by or resulting
from such consolidation or merger (the Pledged Stock, together
with all other certificates, shares, securities, properties or
moneys as may from time to time be pledged hereunder pursuant
to clause (i) or (ii) above and the proceeds of and to any
such property and, to the extent related to any such property
or such proceeds, all books, correspondence, credit files,
records, invoices and other papers being herein collectively
called the "Stock Collateral");


(l) the Collateral Account, including all Financial Assets and
other property and balances credited thereto from time to time;


(m) all Investment Property not covered by clause (k) or (l)
of this Section 3;


(n) all Intellectual Property;


(o) all General Intangibles not covered by the preceding
clauses of this Section 3;


(p) all Commercial Tort Claims;


(q) all policies of insurance;


(r) all other tangible and intangible personal property
whatsoever of such Obligor; and


(s) all Proceeds, products, offspring, accessions, rents,
profits, ...