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                       SECURITIES AND EXCHANGE COMMISSION
                                  SCHEDULE 14A
                                 (RULE 14A-101)

                     INFORMATION REQUIRED IN PROXY STATEMENT


                                AMENDMENT NO. 3
                                       TO

                            SCHEDULE 14A INFORMATION
  PROXY STATEMENT PURSUANT TO SECTION 14 OF THE SECURITIES EXCHANGE ACT OF 1934


                           Filed by the Registrant /x/
                 Filed by a Party other than the Registrant / /

                           Check the appropriate box:

               /x/    Preliminary Proxy Statement
               / /    Confidential, for the use of the Commission
                      only (as permitted by Rule 14a-6(e)(2))
               / /    Definitive Proxy Statement
               / /    Definitive Additional Materials
               / /    Soliciting Material Pursuant to Rule 14a-12

                      INTERNATIONAL SPECIALTY PRODUCTS INC.
                ------------------------------------------------
                (Name of Registrant As Specified In Its Charter)


    ------------------------------------------------------------------------
    (Name of Person(s) Filing Proxy Statement, if other than the Registrant)

               Payment of Filing Fee (Check the appropriate box):

               / /    No fee required.
               /x/    Fee computed on table below per Exchange Act
                      Rules 14a-6(i)(1) and 0-11.

               (1) Title of each class of securities to which transaction
               applies:
               Common Stock, par value $0.01 per share of International
               Specialty Products Inc.
               (2) Aggregate number of securities to which transaction applies:
               12,810,336 Shares of International Specialty Products Inc. Common
               Stock, options to purchase 1,700,156 shares of Common Stock
               (3) Per unit price or other underlying value of transaction
               computed pursuant to Exchange Act Rule 0-11 (set forth the amount
               on which the filing fee is calculated and state how it was
               determined):
               The transaction valuation was based upon the sum of (i) the
               product of 12,810,336 shares of International Specialty
               Products Inc. Common Stock at a price of $10.30 per share in cash
               and (ii) a cash-out of 1,700,156 shares of Common Stock covered
               by outstanding options at an aggregate cost of $2,414,103.
               (4) Proposed maximum aggregate value of transaction:
               $134,360,564
               (5) Total fee paid:
               $26,873:
               /X/ Fee paid previously with preliminary materials.
               / / Check box if any part of the fee is offset as provided by
               Exchange Act Rule 0-11(a)(2) and identify the filing for which
               the offsetting fee was paid previously. Identify the previous
               filing by registration statement number, or the form or schedule
               and the date of its filing.
               (1) Amount previously paid: N/A
               (2) Form, Schedule or Registration Statement No.: N/A
               (3) Filing party: N/A
               (4) Date filed: N/A




                                   [LOGO] ISP

                      International Specialty Products Inc.
                                 1361 Alps Road
                                Wayne, New Jersey
                                      07470

Fellow Stockholder:

     You are cordially  invited to attend a special  meeting of  stockholders of
International Specialty Products Inc. ("ISP"), to be held on February___,  2003,
at _ _.m.,  local  time,  at the  offices of  Simpson  Thacher &  Bartlett,  425
Lexington Avenue, New York, New York.

     At the  special  meeting,  you will be asked to  consider  and vote  upon a
proposal  to adopt the  Agreement  and Plan of Merger,  dated as of  November 8,
2002,  between ISP and International  Specialty Products Holdings Inc. ("ISPH").
Samuel J. Heyman,  our Chairman,  formed ISPH for purposes of entering into this
transaction  and is currently  the sole  "beneficial  owner" (as defined in Rule
13d-3 under the  Securities  Exchange Act of 1934) of all of ISPH's common stock
and  approximately 81% of ISP's common stock.  Under the merger agreement,  ISPH
will be merged with and into ISP, with ISP as the surviving corporation.

     Pursuant to the merger, you will be entitled to receive $10.30 per share in
cash,  without  interest,  for each share of ISP common stock that you own. This
price represents a 30% premium over the closing price per share of $7.95 on July
8, 2002, the last trading day before Mr. Heyman's public proposal to acquire the
shares of ISP that he does not already beneficially own. No merger consideration
will be paid for shares Mr. Heyman  beneficially owns at the time of the merger,
except shares held by qualified charitable organizations (which will be entitled
to receive the $10.30 per share merger consideration).  SINCE YOU WILL ONLY HAVE
THE RIGHT TO RECEIVE CASH PURSUANT TO THE MERGER,  AFTER THE MERGER OCCURS,  YOU
WILL  NO  LONGER  BE A  STOCKHOLDER  OF ISP  AND MR.  HEYMAN  WILL  BE THE  SOLE
BENEFICIAL OWNER OF ISP.

     Based on the number of our  outstanding  shares of common stock and options
to  purchase  common  stock,  the  aggregate  cash  consideration  to be paid in
connection with the merger is approximately $134.4 million.

     Details  of the  merger  and the  merger  agreement  are  discussed  in the
accompanying  proxy  statement.  A copy of the merger  agreement  is attached as
Exhibit A to the proxy  statement.  We encourage you to read the proxy statement
and the merger agreement carefully.

     The  receipt of cash in  exchange  for your  shares of common  stock in the
merger  will  constitute  a taxable  transaction  for U.S.  federal  income  tax
purposes.  Please read the accompanying proxy statement  carefully regarding the
tax consequences of the merger.

     Our board of directors formed a special committee of independent  directors
who are not officers or employees of ISP and who are  otherwise  independent  of
Mr.  Heyman to review and  evaluate  the merger  and the merger  agreement.  The
special  committee  unanimously  recommended  to our board of directors that the
merger  agreement be approved.  In connection with its evaluation of the merger,
the special  committee  engaged Lehman  Brothers Inc. as its financial  advisor.
Lehman  Brothers has rendered its opinion  that,  as of the date of that opinion
and, based upon and subject to the assumptions,  limitations and  qualifications
set forth in that  opinion,  the $10.30 per share cash merger  consideration  is
fair, from a financial point of view, to the  unaffiliated  stockholders of ISP.
The  written  opinion  of  Lehman  Brothers  is  attached  as  Annex  B  to  the
accompanying proxy statement,  and you should read it carefully for a discussion
of the assumptions made, procedures followed, factors considered and limitations
upon the review undertaken by Lehman Brothers in rendering its opinion.

     Our  board of  directors,  based  on the  unanimous  recommendation  of the
special  committee,  has approved and  declared the  advisability  of the merger
agreement.  The board of directors and special  committee believe that the terms
of the merger  are fair to, and in the best  interests  of,  ISP's  unaffiliated
stockholders.  Our board of directors  recommends  that the  stockholders of ISP
vote  "FOR"  the  adoption  of the  merger  agreement.  When  you  consider  the
recommendation  of our board of  directors  to adopt the merger  agreement,  you
should be aware that some of our directors and executive officers have interests
in the merger  that may be  different  than the  interests  of our  stockholders
generally.



     Your vote is very  important.  We cannot  complete  the  merger  unless the
merger  agreement  is  adopted  by the  affirmative  vote of a  majority  of the
outstanding  shares of ISP common  stock.  As of the record date for the special
meeting, Mr. Heyman and our directors and officers beneficially owned a total of
54,331,518 shares,  which is approximately  83.3% of all outstanding shares. Mr.
Heyman has agreed to vote all of the shares of common stock  beneficially  owned
by him at the  time  of the  special  meeting  (but  excluding  shares  held  by
qualified  charitable  organizations) in favor of the merger, and we also expect
our  directors  and  executive  officers  to vote for the  transaction.  If that
occurs,  we will have obtained the requisite vote under the General  Corporation
Law of the State of  Delaware.  In  addition,  while not required by the General
Corporation  Law  of the  State  of  Delaware  or  ISP's  amended  and  restated
certificate of incorporation or by-laws, the merger also is conditioned upon the
affirmative vote of a majority of shares of common stock voting on the merger at
the special  meeting that are not owned  beneficially or of record by Mr. Heyman
or any other officer or director of ISP or ISPH.

     Please  complete and sign the enclosed  proxy card and return it as soon as
possible  in the  enclosed  postage  paid  envelope.  This will ensure that your
shares are represented at the special meeting.

                                           Sincerely,

                                           /s/ Sunil Kumar
                                           ---------------
                                           Sunil Kumar
                                           PRESIDENT AND CHIEF EXECUTIVE OFFICER


     This proxy  statement is dated  February _, 2003, and is first being mailed
to stockholders of ISP on or about February _, 2003.


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THIS  TRANSACTION  HAS NOT BEEN APPROVED OR  DISAPPROVED  BY THE  SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES  COMMISSION.  NEITHER THE SECURITIES
AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES  COMMISSION HAS PASSED UPON THE
FAIRNESS OR MERITS OF THIS  TRANSACTION  OR UPON THE ACCURACY OR ADEQUACY OF THE
INFORMATION CONTAINED IN THIS DOCUMENT.  ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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                                   [LOGO] ISP
                      INTERNATIONAL SPECIALTY PRODUCTS INC.


                    NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

     A special meeting of stockholders of International  Specialty Products Inc.
will be held at __ _.m.,  local  time,  February  ___,  2003 at the  offices  of
Simpson Thacher & Bartlett,  425 Lexington  Avenue,  New York, New York, for the
following purposes:

     o  To vote on a proposal to adopt the Agreement  and Plan of Merger,  dated
        as of November 8, 2002, by and between ISP and  International  Specialty
        Products Holdings Inc.; and

     o  To consider  any other  matters  that are  properly  brought  before the
        special  meeting or any  adjournments  or  postponements  of the special
        meeting.

     Our board of directors  has fixed the close of business on January 10, 2003
as the record date for the determination of stockholders  entitled to notice of,
and to vote at, the special meeting and any adjournments or postponements of the
special meeting.

     The accompanying  proxy statement forms a part of this notice.  We urge you
to read it carefully.

     Under the General Corporation Law of the State of Delaware,  holders of our
common  stock who do not vote in favor of the  adoption of the merger  agreement
will  have the  right to seek  appraisal  of the fair  value of their  shares as
determined  by the Court of  Chancery  of the State of Delaware if the merger is
completed,  but only if they submit a written demand for such an appraisal prior
to the vote on the merger  agreement  and they comply with the other  procedures
required  by the  General  Corporation  Law of the State of  Delaware.  See "The
Merger--Appraisal Rights" in the accompanying proxy statement and Annex D to the
proxy statement for more information  concerning appraisal rights under Delaware
law.

                                           By Order of the Board of Directors,

                                           /s/ Richard A. Weinberg
                                           -----------------------
                                           Richard A. Weinberg
                                           SECRETARY

Wayne, New Jersey

Dated February ___, 2003


     Return of your  signed  proxy is the only way your  shares  can be  counted
unless you personally cast a ballot at the meeting.

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YOUR VOTE IS  IMPORTANT.  WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE SPECIAL
MEETING, PLEASE COMPLETE THE ENCLOSED PROXY CARD AND SIGN, DATE AND RETURN IT IN
THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
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                                TABLE OF CONTENTS



                                                                                              PAGE
                                                                                             
SUMMARY TERM SHEET ..............................................................................1
   The Merger ...................................................................................1
   What You Will Be Entitled to Receive in the Merger ...........................................1
   Recommendations of the Special Committee and our Board of Directors ..........................1
   Opinion of Lehman Brothers Inc. ..............................................................1
   Our Position as to the Fairness of the Merger ................................................2
   Mr. Heyman and ISPH's Position as to the Fairness of the Merger ..............................2
   Interests of Directors and Executive Officers in the Merger ..................................2
   Material U.S. Federal Income Tax Consequences ................................................3
   Appraisal Rights .............................................................................3
   The Special Meeting ..........................................................................3
   Accounting Treatment .........................................................................5
   The Merger Agreement .........................................................................5
   Information About ISP, Mr. Heyman and ISPH ...................................................6
   Selected Consolidated Financial Data of ISP ..................................................6
   Trading Market and Price; Dividends ..........................................................7

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS ...............................................8

SPECIAL FACTORS .................................................................................9
   Background of the Merger .....................................................................9
   Recommendations of the Special Committee ....................................................16
   Recommendations of our Board of Directors ...................................................17
   Special Committee's Position as to Fairness of the Merger ...................................17
   Board of Directors' Position as to the Fairness of the Merger ...............................19
   Mr. Heyman and ISPH's Positions as to the Fairness of the Merger ............................20
   Opinion of Lehman Brothers ..................................................................21
   ISP's Forecasts .............................................................................28
   Reasons for the Merger; Purpose and Structure of the Merger .................................30
   Effects of the Merger; Plans or Proposals After the Merger ..................................31
   Interests of Directors and Executive Officers in the Merger .................................32
   Material U.S. Federal Income Tax Consequences of the Merger to our Stockholders .............33
   Litigation ..................................................................................34

THE SPECIAL MEETING ............................................................................36
   Date, Time and Place of the Special Meeting .................................................36
   Proposal to be Considered at the Special Meeting ............................................36
   Record Date .................................................................................36
   Voting Rights; Vote Required for Approval ...................................................36
   Voting and Revocation of Proxies ............................................................37
   Solicitation of Proxies .....................................................................37


                                       i




                                                                                              PAGE
                                                                                            
THE MERGER .....................................................................................37
   Effective Time of Merger ....................................................................38
   Payment of Merger Consideration and Surrender of Stock Certificates .........................38
   Accounting Treatment ........................................................................38
   Fees and Expenses of the Merger .............................................................39
   Financing of the Merger .....................................................................39
   Appraisal Rights ............................................................................39
   Regulatory Approvals and Other Consents .....................................................42
   The Merger Agreement ........................................................................42

OTHER MATTERS ..................................................................................47
   Security Ownership of Specified Beneficial Owners and Management ............................47
   Transactions in Capital Stock by Certain Persons ............................................48
   Certain Transactions ........................................................................49
   Future Stockholder Proposals ................................................................50
   Independent Auditors ........................................................................50

WHERE YOU CAN FIND MORE INFORMATION ............................................................51
   Annex A--Agreement and Plan of Merger ......................................................A-1
   Annex B--Opinion of Lehman Brothers Inc.. ..................................................B-1
   Annex C--Stockholder Voting Agreement ......................................................C-1
   Annex D--Section 262 of the DGCL ...........................................................D-1



                                       ii



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                               SUMMARY TERM SHEET

     This  summary term sheet  highlights  important  information  in this proxy
statement and does not contain all of the information  that is important to you.
You should carefully read this entire proxy statement and the other documents we
refer you to for a more complete  understanding  of the matters being considered
at the special  meeting.  In addition,  we  incorporate  by reference  important
business and financial information about International  Specialty Products Inc.,
or ISP, into this proxy statement.  You may obtain the information  incorporated
by  reference  into  this  proxy  statement  without  charge  by  following  the
instructions in the section entitled "Where You Can Find More Information."

THE MERGER (SEE PAGE 37)

     In the merger,  International  Specialty  Products  Holdings Inc., or ISPH,
will merge into ISP, with ISP as the surviving corporation in the merger.

     As a result of the merger,  we will cease to be a publicly held company and
will become a private corporation. Our Chairman and major stockholder, Samuel J.
Heyman, will beneficially own all of our stock after the merger.

WHAT YOU WILL BE ENTITLED TO RECEIVE IN THE MERGER (SEE PAGE 38)

     If we complete the merger,  holders of our common stock, other than holders
of common stock  beneficially  owned by Mr.  Heyman and other than  stockholders
that validly exercise appraisal rights under the General  Corporation Law of the
State of Delaware,  or DGCL, will be entitled to receive $10.30 in cash for each
share of common stock that they own.  Shares  beneficially  owned by Mr. Heyman,
other than 525,000 shares held by a qualified charitable  organization,  will be
canceled in the merger,  and the shares of ISPH,  all of which are  beneficially
owned by Mr.  heyman,  will be converted  into shares of ISP in the merger.  The
525,000 shares held by the qualified  charitable  organization  are deemed to be
beneficially  owned by Mr. Heyman  because he is a director and the president of
the  organization.  In  accordance  with the  merger  agreement,  the  qualified
charitable organization will receive $10.30 in cash for each of these shares.

RECOMMENDATIONS  OF THE SPECIAL  COMMITTEE AND OUR BOARD OF DIRECTORS  (SEE PAGE
16)

     Because Mr. Heyman is our majority  stockholder and proposed the merger and
because Mr. Heyman and Sunil Kumar, ISP's President and Chief Executive Officer,
are both directors of ISP and ISPH, our board of directors established a special
committee to consider and evaluate the proposed  merger.  The special  committee
consists  of three of our  directors  who are not members of our  management  or
affiliated with Mr. Heyman. After careful  consideration,  the special committee
unanimously:

     o   determined that the merger agreement is advisable,  fair to, and in the
         best interests of, the unaffiliated holders of our common stock, and

     o   recommended to our board of directors that it

         -  approve the merger agreement,

         -  declare its advisability and

         -  recommend that our stockholders vote to adopt the merger agreement.

     Based on this unanimous  recommendation,  our board of directors determined
the merger  agreement to be advisable and the terms and conditions of the merger
to be fair to, and in the best  interests  of, the  unaffiliated  holders of our
common  stock,  and approved  the merger  agreement.  ACCORDINGLY,  OUR BOARD OF
DIRECTORS  RECOMMENDS  THAT YOU VOTE  "FOR" THE  PROPOSAL  TO ADOPT  THE  MERGER
AGREEMENT.

     For a  discussion  of  the  material  factors  considered  by  the  special
committee  and our board of  directors  in reaching  their  conclusions  and the
reasons why the special committee and the board of directors determined that the
merger is fair, see "Special  Factors--Recommendations of the Special Committee"
and "Special Factors--Recommendations of our Board of Directors."

OPINION OF LEHMAN BROTHERS INC. (SEE PAGE 21)

     In  connection  with the  merger,  the special  committee  and our board of
directors   considered  the  opinion  of  Lehman   Brothers  Inc.,  the  special
committee's financial advisor.  Lehman Brothers delivered its written opinion to
the special  committee on November 8, 2002 to the effect that,  as of that date,
the $10.30 per share cash merger consideration is fair, from a financial

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point of view, to the unaffiliated  holders of ISP's common stock. You should be
aware,  however,  that  the  opinion  was  based  on and  subject  to  important
assumptions,  limitations and  qualifications.  The full text of this opinion is
attached as Annex B to this proxy statement. We urge you to read that opinion in
its entirety for a description of the  assumptions  made,  procedures  followed,
factors considered and limitations on the review undertaken.

OUR POSITION AS TO THE FAIRNESS OF THE MERGER (SEE PAGE 19)

     We  believe  the merger is fair to the  unaffiliated  holders of our common
stock. Many facts support this conclusion, including:

     o   the proposed  merger would entitle each  stockholder of ISP, other than
         holders  of  common  stock  beneficially  owned by Mr.  Heyman  (except
         525,000 shares held by a qualified  charitable  organizations that will
         be converted into the $10.30 per share cash merger  consideration),  to
         the right to receive $10.30 in cash;

     o   the opinion of Lehman  Brothers to the effect  that,  as of the date of
         the opinion, and based upon and subject to the assumptions, limitations
         and  qualifications  set forth in its written  opinion,  the $10.30 per
         share cash merger  consideration is fair, from a financial view, to the
         unaffiliated holders of our common stock;

     o   the fact that the terms and  conditions  of the  proposed  merger  were
         determined   through   negotiations   between   Mr.   Heyman   and  his
         representatives  and the special  committee and its  advisors,  none of
         whom were affiliated with Mr. Heyman; and

     o   the merger is conditioned  upon the  affirmative  vote of a majority of
         shares of common stock voting on the merger at the special meeting that
         are not owned  beneficially  or of  record  by Mr.  Heyman or any other
         officer  or  director  of  ISP or  ISPH.  We  refer  to  this  approval
         requirement as the majority of the minority condition.

MR. HEYMAN AND ISPH'S POSITION AS TO THE FAIRNESS OF THE MERGER (SEE PAGE 20)

     Although neither Mr. Heyman nor ISPH has performed,  or engaged a financial
advisor to perform,  any  valuation  analysis for the purposes of assessing  the
fairness of the merger to the  unaffiliated  holders of ISP common  stock,  both
believe that the merger is substantively and procedurally fair to those holders.
Mr.  Heyman  and ISPH  believe  this  conclusion  is  supported  by the  factors
described above and by other factors, including:

     o   the merger  consideration  of $10.30 per share represents a 30% premium
         over our  common  stock's  $7.95  closing  price on the New York  Stock
         Exchange  on July 8, 2002,  the last  trading  day  before  Mr.  Heyman
         announced  his initial  merger  proposal,  and a 49%  premium  over the
         average closing price for the 30 days prior to that announcement;

     o   the S&P 500 Index and the S&P Midcap Specialty Chemicals Index declined
         5.5% and 9.3%, respectively,  between July 8, 2002 and November 6, 2002
         (the  date  the  special  committee  agreed  to  recommend  the  merger
         agreement),  indicating  that the  premium  represented  by the  $10.30
         merger  consideration  might have been even  greater  had ISP's  common
         stock performed  consistently  with the broader market and its industry
         peers in absence of the pending merger proposal;

     o   the merger was approved and recommended by  the special  committee  and
         the board of directors; and

     o   stockholders  who do not vote in favor of the merger would be entitled,
         subject to  compliance  with certain  procedures  described  under "The
         Merger--Appraisal  Rights",  to exercise Delaware  statutory  appraisal
         rights in the merger,  which allow  stockholders to have the fair value
         of their  shares  determined  by the Court of  Chancery of the State of
         Delaware and paid to them in cash.

INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS IN THE MERGER (SEE PAGE 32)

     In  considering  the  recommendation  of our board of directors  that ISP's
stockholders  vote to adopt the merger  agreement  so that the merger can occur,
you should be aware that our executive  officers and directors have interests in
the merger that may conflict with the interests of our  stockholders  generally.
These interests include:

     o   Mr.  Heyman is the Chairman of our board of directors  and, as a result
         of the merger,  will  increase his  beneficial  ownership of our common
         stock from approximately 81% to 100%;

     o   Mr. Heyman and Mr. Kumar are  members of  both ISP  and ISPH's board of
         directors;

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     o   each of  ISPH's officers,  consisting of Mr. Kumar (President and Chief
         Executive  Officer),   Richard A. Weinberg  (Executive  Vice President,
         General  Counsel  and  Secretary)  and  Susan B. Yoss  (Executive  Vice
         President--Finance and Treasurer), is also an officer of ISP;

     o   some of our  officers  and  directors  will  receive  cash  payments in
         connection with the merger in exchange for their holdings of our common
         stock or stock options, as described under "Special  Factors--Interests
         of Directors and Executive Officers in the Merger";

     o   in addition, officers and directors holding restricted ISP common stock
         have  agreed to  forfeit  the stock in  connection  with the  merger in
         exchange  for a cash  payment  equal to the number of shares  that were
         forfeited,  multiplied by the merger consideration,  payable subject to
         the  vesting  restrictions  applicable  to  the  underlying  restricted
         shares; and

     o   after the merger,  ISP will continue  indemnification  arrangements and
         directors' and officers' liability insurance for our present and former
         directors and officers.

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES (SEE PAGE 33)

     The receipt of $10.30 in cash for each share of our common  stock  pursuant
to the  merger  will be a  taxable  transaction  for  U.S.  federal  income  tax
purposes.  For  U.S.  federal  income  tax  purposes,  each of our  stockholders
generally will realize  taxable gain or loss as a result of the merger  measured
by the difference,  if any,  between $10.30 per share and the adjusted tax basis
in that share owned by the  stockholder.  For additional  information  regarding
material U.S. federal income tax consequences of the merger to our stockholders,
see "Special  Factors--Material  U.S.  Federal  Income Tax  Consequences  of the
Merger to our Stockholders."

APPRAISAL RIGHTS (SEE PAGE 39)

     Stockholders  who  do  not  wish  to  accept  the  $10.30  per  share  cash
consideration  payable pursuant to the merger may seek, under the DGCL, judicial
appraisal  of the fair  value of their  shares by the Court of  Chancery  of the
State of  Delaware.  This  value  could be more or less  than or the same as the
merger  consideration of $10.30 in cash per share.  This "right of appraisal" is
subject to a number of restrictions and technical  requirements.  Generally,  in
order to exercise appraisal rights, among other things:

     o   you must NOT vote in favor of the merger agreement;

     o   you must make a  written  demand for appraisal in  compliance  with the
         DGCL before the vote on the merger agreement; and

     o   you must  continuously  hold your  shares  from the date of making  the
         demand through the  effectiveness  of the merger.  A stockholder who is
         the  record  holder of shares of common  stock on the date the  written
         demand for appraisal is made, but who thereafter transfers those shares
         prior  to the  effectiveness  of the  merger  will  lose  any  right to
         appraisal in respect of those shares.

     Merely voting against the merger  agreement will not preserve your right of
appraisal under the DGCL.  Also, since a submitted proxy not marked "against" or
"abstain" will be voted for the adoption of the merger agreement, the submission
of a proxy not so marked will result in the waiver of appraisal  rights.  If you
hold shares in the name of a broker or other  nominee,  you must  instruct  your
nominee to take the steps necessary to exercise your appraisal  right. If you or
your  nominee  fails to follow all of the steps  required  by Section 262 of the
DGCL, you will lose your right of appraisal.

     Annex D to this proxy statement  contains  Section 262 of the DGCL relating
to your right of appraisal.

THE SPECIAL MEETING (SEE PAGE 36)

     DATE, TIME, PLACE AND MATTERS TO BE CONSIDERED (SEE PAGE 36).

     Our  special  meeting  will be held at the  offices  of  Simpson  Thacher &
Bartlett,  425 Lexington Avenue, New York, New York, on February ___, 2003 at _,
local time. At the special meeting, you will be asked to vote on the adoption of
the merger  agreement.  A copy of the merger agreement is attached as Annex A to
this proxy statement.

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     RECORD DATE FOR VOTING (SEE PAGE 36).

     You may vote at the special meeting if you owned shares of our common stock
at the  close of  business  on  January  10,  2003.  On that  date,  there  were
65,210,670  shares of our common stock  outstanding and Mr. Heyman  beneficially
owned 52,567,240 shares of our common stock. Each share of common stock entitles
the holder to cast one vote at the special meeting.

     PROCEDURES RELATING TO YOUR VOTE AT THE SPECIAL MEETING (SEE PAGE 36).

     o   In order to have a quorum at the  special  meeting,  a majority  of all
         outstanding  shares  of  common  stock as of the  record  date  must be
         present,  in person or by proxy.  Mr. Heyman has agreed,  pursuant to a
         voting agreement,  to cause all of the shares beneficially owned by him
         at the time of the meeting  (but  excluding  shares  held by  qualified
         charitable  organizations)  to be  represented in person or by proxy at
         the meeting. Accordingly, a quorum at the meeting is assured. A copy of
         the voting agreement is attached as Annex C to this proxy statement.

     o   In order to adopt the merger  agreement  under the DGCL, we must obtain
         the  affirmative  vote of the  holders of a  majority  of the shares of
         common stock  outstanding and entitled to vote at the special  meeting.
         As of the  record  date for the  special  meeting,  Mr.  Heyman and our
         directors and officers beneficially owned a total of 54,331,518 shares,
         which is approximately  83.3% of all outstanding shares. Mr. Heyman has
         agreed in a voting  agreement  to cause all of the shares  beneficially
         owned by him at the time of the special  meeting (but excluding  shares
         held by qualified charitable  organizations) to vote "FOR" the adoption
         of the merger  agreement,  which  will  assure  adoption  of the merger
         agreement  under the DGCL.  We also  expect  our  other  directors  and
         executive officers to vote to adopt the merger agreement.

     o   In addition,  although not required  under  Delaware law or the amended
         and restated certificate of incorporation or by-laws of ISP, the merger
         agreement  requires that the majority of the minority condition must be
         satisfied before we can complete the merger.

     o   After carefully  reading and  considering the information  contained in
         this proxy  statement,  you should  complete,  date and sign your proxy
         card and mail it in the enclosed return envelope as soon as possible so
         that your shares are  represented at the special  meeting,  even if you
         plan to attend  the  meeting  in  person.  Unless  you  specify  to the
         contrary, all of your shares represented by valid proxies will be voted
         "FOR" the adoption of the merger  agreement.  Abstentions,  failures to
         vote and broker  non-votes  will have the same effect as a vote against
         the  adoption  of the merger  agreement  for  purposes  of  obtaining a
         majority  of all  shares of ISP  common  stock.  However,  abstentions,
         failures to vote and broker  non-votes will not affect  satisfaction of
         the majority of the minority condition.

     o   If your shares are held in "street  name" by your  broker,  your broker
         will vote your shares, but only if you provide written  instructions to
         your broker on how to vote. You should follow the  procedures  provided
         by your  broker  regarding  how to  instruct  it to vote  your  shares.
         Without instructions, your shares will not be voted by your broker.

     o   Until exercised at the special  meeting,  you can revoke your proxy and
         change your vote in any of the following ways:

         o    by delivering written  notification of revocation to our Secretary
              at our  executive  offices  at 1361 Alps Road,  Wayne,  New Jersey
              07470,

         o    by delivering a proxy of a later date,

         o    by  attending  the  special  meeting  and voting in  person.  Your
              attendance at the special meeting will not, by itself,  revoke any
              proxy previously  delivered by you; you must vote in person at the
              meeting, or

         o    if you have instructed a broker to vote your shares,  by following
              the   directions   received  from  your  broker  to  change  those
              instructions.

     For  additional  information  regarding the procedure for  delivering  your
proxy see "The  Special  Meeting--Voting  and  Revocation  of Proxies"  and "The
Special Meeting--Solicitation of Proxies."

     If you have more questions about the merger or how to submit your proxy, or
if you need additional copies of this proxy statement or the enclosed proxy card
or voting instructions,  you should contact Georgeson Shareholder Communications
Inc., 17 State Street - 10th Floor, New York, NY 10004, (212) 440-9800.

--------------------------------------------------------------------------------

                                       4


--------------------------------------------------------------------------------

ACCOUNTING TREATMENT (SEE PAGE 38)

     We will account for the merger under the purchase method of accounting. See
"The Merger--Accounting Treatment."

THE MERGER AGREEMENT (SEE PAGE 42)

     CONDITIONS TO THE MERGER (SEE PAGE 46).

     The  completion of the merger  depends on the  satisfaction  or waiver of a
number of conditions, including the following:

     o   we must obtain the affirmative vote of the holders of a majority of the
         outstanding shares of ISP common stock;

     o   the majority of the minority condition must be satisfied;

     o   no injunction or similar prohibition to completion of the merger may be
         in effect and no proceeding by a  governmental  authority may have been
         commenced seeking to impose such an injunction or prohibition;

     o   our and ISPH's respective  representations and warranties in the merger
         agreement  must be true and correct,  subject to exceptions  that would
         not  have  a  material   adverse   effect  on  the  party   making  the
         representations or warranties or the consummation of the merger; and

     o   we and ISPH must each be in  compliance  in all material  respects with
         our respective covenants in the merger agreement.

     TERMINATION OF THE MERGER AGREEMENT (SEE PAGE 46).

     We (with  the  approval  of the  special  committee)  and ISPH may agree to
terminate the merger agreement at any time before the completion of the merger.

     ISPH may terminate the merger agreement without our consent if our board of
directors or the special committee withdraws, qualifies or modifies its approval
of the merger agreement or its recommendation to ISP's stockholders to adopt the
merger  agreement,  or publicly  proposes to do so, or takes any other action or
makes any other statement  inconsistent with that  recommendation.  However,  if
ISPH chooses not to terminate the merger agreement in such an event, we will not
be entitled to terminate the merger agreement and will be required to submit the
merger agreement to our stockholders for consideration at the special meeting.

     In addition,  we (with the approval of the special  committee)  or ISPH may
terminate the merger agreement by written notice to the other if:

     o   any  governmental  entity  issues a final  nonappealable  injunction or
         other governmental order permanently enjoining or otherwise prohibiting
         the merger;

     o   the  merger is not  completed  on or before  May 31,  2003,  unless the
         failure  to  complete  the  merger is due to the  failure  of the party
         seeking to terminate  the merger  agreement to fulfill its  obligations
         under the merger agreement;

     o   the other  party  materially  breaches a  representation,  warranty  or
         covenant in the merger  agreement and the breach is not cured within 30
         days  after  notice of the  breach or cannot be cured  prior to May 31,
         2003; or

     o   at the  special  meeting,  the merger  agreement  is not adopted by the
         required  votes of the  holders of ISP common  stock;  except that this
         right to  terminate  will not be  available  to ISPH if Mr.  Heyman has
         failed to cause the shares beneficially owned by him at the time of the
         special  meeting (but  excluding  shares held by  qualified  charitable
         organizations)  to  vote  in  favor  of  the  adoption  of  the  merger
         agreement.

     EFFECT OF TERMINATION (SEE PAGE 47).

     If the merger  agreement is terminated by either ISP or ISPH, there will be
no liability  on the part of ISP,  ISPH or any of their  affiliates,  directors,
officers,  employees or  stockholders.  However,  no party will be relieved from
liability for willful breaches of the merger agreement.

--------------------------------------------------------------------------------

                                       5


--------------------------------------------------------------------------------

INFORMATION ABOUT ISP, MR. HEYMAN AND ISPH

     o   ISP.  ISP,   formerly   known  as  ISP  Holdings  Inc.,  is  a  leading
         multinational manufacturer of specialty chemicals and mineral products.
         We are a Delaware  corporation  incorporated  in 1996.  We operate  our
         business  exclusively  through  direct and indirect  subsidiaries.  The
         address and  telephone  number of our principal  executive  offices are
         1361 Alps Road, Wayne, New Jersey 07470 (800) 526-5315.

     o   SAMUEL J.  HEYMAN.  Mr.  Heyman has been a director and Chairman of the
         Board of Directors of ISP since its formation.  Mr. Heyman beneficially
         owns approximately 81% of ISP's common stock. The address and telephone
         number for Mr. Heyman are 1361 Alps Road, Wayne, New Jersey 07470 (800)
         526-5315.

     o   ISPH. ISPH is a Delaware corporation,  all of the common stock of which
         is beneficially owned by Mr. Heyman. ISPH was formed for the purpose of
         facilitating a transaction with ISP and has not engaged in any business
         except in furtherance of the merger.  The address and telephone  number
         of ISPH's principal  executive offices are 2711 Centerville Road, Suite
         400, Wilmington, Delaware 19808 (302) 636-5400.

SELECTED CONSOLIDATED FINANCIAL DATA OF ISP

     Set forth below are our selected consolidated  financial data. The selected
financial data were derived from the historical financial statements and related
notes of ISP. On July 15, 1998,  International  Specialty  Products Inc.  merged
with  and  into ISP  Holdings  Inc.,  which  changed  its name to  International
Specialty  Products  Inc.  The  financial  data for periods  prior to the merger
represent the results of the former ISP Holdings Inc. Interim unaudited data for
the nine months ended September 29, 2002 and September 30, 2001 reflect,  in the
opinion of our management,  all adjustments (consisting only of normal recurring
adjustments)  necessary for a fair  presentation  of that data.  Results for the
nine months ended  September 29, 2002 do not necessarily  indicate  results that
may be obtained for any other interim period or for the year as a whole.




                                        NINE MONTHS ENDED
                                    ------------------------
                                     SEPTEMBER    SEPTEMBER                  YEAR ENDED DECEMBER 31,
                                      29, 2002    30, 2001     ------------------------------------------------------
                                     (UNAUDITED) (UNAUDITED)     2001       2000       1999        1998        1997
                                    ------------ -----------   -------    -------     -------     -------     -------
                                                      ($ in thousands, except per share and ratio data)
                                                                                         
OPERATING DATA:
Net Sales ..........................   $642,211    $595,124    $787,216   $783,941    $787,356    $784,616    $708,971
Gross Profit .......................    226,074     224,633     286,379    269,054     304,959     321,105     295,199
Operating Income ...................    110,650      92,004     112,589     81,353     145,978      66,177     137,689
Interest Expense ...................     64,604      62,780      86,198     81,166      78,552      75,564      73,612
Income from Continuing
  Operations Before
  Extraordinary Item and
  Cumulative Effect of Change
  in Accounting Principle ..........     43,545      21,178         607     94,106      49,632       2,779      51,702
Net Income (Loss) ..................   (116,580)     20,738         167     94,106      74,930       4,812      54,005
OTHER DATA:
Depreciation .......................   $ 42,503    $ 39,542    $ 53,120   $ 51,293    $ 48,590    $ 49,272    $ 41,236
Amortization of Goodwill and
  Intangibles ......................        680      12,144      17,229     16,192      16,344      15,025      13,294
Capital Expenditures and
  Acquisitions .....................     42,551      58,716     101,375     58,382     108,955     163,850      67,674
Ratio of Earnings to
  Fixed Charges(1) .................      1.95x       1.48x       1.01x      2.64x       1.88x       1.32x       2.39x
COMMON STOCK DATA, PER SHARE:
Income from Continuing
  Operations:
  Basic ............................       $.67        $.32        $.01         $1.38     $.72        $.05        $.96
  Diluted ..........................        .67         .32         .01       1.38         .72         .05         .96
Book Value(2) ......................      $8.14       $9.01       $9.33     $10.41       $8.54       $7.29       $4.86


--------------------------------------------------------------------------------

                                       6




                                      SEPTEMBER    SEPTEMBER                          DECEMBER 31,
                                       29, 2002    30, 2001    ------------------------------------------------------
                                     (UNAUDITED) (UNAUDITED)    2001        2000       1999        1998        1997
                                     ----------- ----------    -------    -------     -------     -------     -------
                                                                      ($ in thousands)
                                                                                       
BALANCE SHEET DATA:
Total Working Capital ............   $  602,184  $  462,447  $  564,516 $  339,751  $  438,083  $  406,654  $  322,080
Total Assets .....................    1,846,705   2,134,468   2,172,568  1,960,284   1,835,308   1,763,870   1,483,977
Long-Term Debt Less
  Current Maturities .............      834,332     912,540     919,557    524,780     820,141     896,095     798,762
Stockholders' Equity .............      529,621     588,122     604,057    691,335     587,261     501,723     261,841


-------------
(1)  For  purposes  of  calculating  the  ratio of  earnings  to fixed  charges,
     "earnings"  consist of income  from  continuing  operations  before  income
     taxes,  plus fixed  charges.  Fixed  charges  consist of  interest  expense
     (including  amortization of debt issuance costs), plus capitalized interest
     and that  portion  of  lease  rental  expense  representative  of  interest
     (estimated to be one-third of lease rental expense).

(2)  Book value per share of common stock  outstanding  is  calculated  as total
     common stockholders' equity divided by the number of shares of common stock
     outstanding at the end of the period.

TRADING MARKET AND PRICE; DIVIDENDS

     Our common stock is traded on the New York Stock  Exchange under the symbol
"ISP." We have set forth below our quarterly per share data:


                                                            SALES PRICE
                                                            -----------
                                                      HIGH               LOW
                                                     -------           -------
             2003
             First Quarter (through
               January 22, 2003) .................   $10.26           $10.18

             2002
             Fourth Quarter ......................   $10.26            $8.90
             Third Quarter .......................    10.80             7.48
             Second Quarter ......................    10.20             5.45
             First Quarter .......................     9.83             8.20

             2001
             Fourth Quarter ......................   $ 9.60            $7.85
             Third Quarter .......................    11.25             7.95
             Second Quarter ......................    11.25             7.80
             First Quarter .......................     8.74             6.63

             2000
             Fourth Quarter ......................   $ 7.00            $5.00
             Third Quarter .......................     6.19             5.31
             Second Quarter ......................     6.50             5.19
             First Quarter .......................     9.31             5.75

     During the time periods set forth above,  ISP has paid no cash dividends to
holders of ISP common stock. On July 8, 2002, the last full trading day prior to
the initial  announcement of the merger  proposal,  the last reported sale price
per share was $7.95.  On January 30, 2003, the most recent  practicable  trading
day prior to the date of this proxy statement, the last reported sales price per
share was $10.25. Stockholders should obtain current market price quotations for
the common stock in connection with voting their shares.


     The merger  agreement  provides that neither our board of directors nor any
committee of our board of directors  will declare or pay any dividend  until the
closing  of the  merger,  except  with  the  consent  of  ISPH.  Several  of our
significant  subsidiaries  are subject to  financial  and  operating  covenants,
including  limitations  on the  payment  of cash  dividends,  under  the  credit
agreement and indentures to which the subsidiaries are party.

     We have not  provided  any pro forma  data  giving  effect to the  proposed
merger.  We do not believe that  information is material to our  stockholders in
evaluating the merger agreement  because the proposed merger is all cash and, if
completed, our common stock would cease to be publicly traded.

     We also have not provided any separate financial information for ISPH since
it is a special purpose entity formed in connection with the proposed merger and
has no independent operations.

--------------------------------------------------------------------------------

                                       7


                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     The Securities  and Exchange  Commission  encourages  companies to disclose
forward-looking  information so that investors can better understand a company's
future prospects and make informed  investment  decisions.  This proxy statement
contains "forward-looking  statements." These statements may be made directly in
this proxy  statement  referring to us, and they may also be made a part of this
proxy  statement by reference to other documents filed by us with the Securities
and Exchange  Commission,  which is known as  "incorporation  by reference." Any
reference to forward-looking statements is not covered by the Private Securities
Litigation  Reform Act of 1995 and is not covered by the safe harbor  provisions
of that act. No part of that act is incorporated  into, nor is it applicable to,
this proxy statement.

     Words such as  "anticipate,"  "estimate,"  "expect,"  "project,"  "intend,"
"plan," "believe," "target,"  "objective," "goal" and words and terms of similar
substance  used in  connection  with  any  discussion  of  future  operating  or
financial   performance,   or   the   consummation   of  the   merger   identify
forward-looking   statements.   Our  forward-looking  statements  are  based  on
management's  current  views about future  events and are subject to a number of
factors and  uncertainties  that could cause actual results to differ materially
from those  described in the  forward-looking  statements.  The following  risks
related to our  business,  among  others,  could cause or  contribute  to actual
results  differing  materially  from  those  described  in  the  forward-looking
statements:

     o   general economic, capital market and business conditions,

     o   risks arising from litigation or similar proceedings,

     o   risks and  uncertainties  inherent in the  satisfaction  of the closing
         conditions to the merger and the consummation of the merger, and

     o   the  risks  and  uncertainties  disclosed  in  filings  by ISP  and its
         subsidiaries  with the  Securities  and Exchange  Commission  under the
         Securities Exchange Act of 1934.

     We  caution  you  not  to  place  undue  reliance  on  our  forward-looking
statements,  which speak only as of the date of this proxy statement or the date
of the document incorporated by reference in this proxy statement.  We are under
no obligation,  and expressly  disclaim any  obligation,  to update or alter any
forward-looking  statements,  whether  as a result  of new  information,  future
events or otherwise.


     For additional information about factors that could cause actual results to
differ materially from those described in the forward-looking statements, please
see the  quarterly  reports on Form 10-Q and the annual report on Form 10-K that
ISP and its subsidiaries have filed with the Securities and Exchange  Commission
as described under "Where You Can Find More Information."


     All forward-looking  statements  attributable to us or any person acting on
our  behalf  are  expressly  qualified  in  their  entirety  by  the  cautionary
statements contained or referred to in this section.



                                       8


                                 SPECIAL FACTORS

BACKGROUND OF THE MERGER

     Throughout  ISP's  existence  as a public  company,  the  market  value and
liquidity of ISP's common stock has been  negatively  impacted  generally by the
inherent  difficulty  of attracting  analyst and investor  interest to a company
with a majority  stockholder  and a small public float and, more  recently,  the
general  stock market  downturn.  As a result,  the  liquidity of the market for
ISP's common  stock has remained  consistently  limited,  with an average  daily
trading  volume of only 21,850 shares during the 360 days prior to July 8, 2002.
ISP has from time to time taken  steps to attempt to improve the  liquidity  and
trading  value of its common stock.  In  particular,  in 1998,  ISP explored the
possibility of publicly offering  additional shares of its common stock in order
to increase the liquidity of the public  trading  market for ISP's common stock.
At that time,  ISP filed a "shelf"  registration  statement on Form S-3 with the
Securities and Exchange Commission.  However, in light of market conditions, and
the reluctance of institutional  investors to purchase stock of a company with a
small public  float,  ISP  concluded  that such a public  offering  would not be
feasible  on  terms  that  were   economically   attractive   and  withdrew  the
registration statement. Upon concluding that its common stock was undervalued in
the market,  ISP from time to time engaged in share  repurchases in an effort to
enhance  stockholder  value.  These  repurchases,  however,  further limited the
liquidity of the trading market for ISP's common stock.

     In light of the failure of the foregoing  actions to significantly  improve
the market  performance  of ISP's  common  stock,  and for the  reasons  further
described  below under  "Reasons  for the Merger;  Purpose and  Structure of the
Merger",  in  March  2002,  Mr.  Heyman  began  to  explore   preliminarily  the
possibility of pursuing a going private  transaction.  Mr. Heyman's  decision to
begin  considering  such a  transaction  at  that  time  was  influenced  by the
combination  of the factors  described  above and Mr.  Heyman's  belief that the
recent stock market downturn, together with ISP's relatively small public float,
would have a further  long-term  negative  impact on ISP's  efforts to  increase
investor interest and enhance the market performance of ISP's common stock. As a
result,  Mr. Heyman began to believe that a transaction that would provide ISP's
stockholders  with a near-term  cash premium for their shares while  eliminating
the costs and other burdens of maintaining ISP as a public company might benefit
all of ISP's stockholders.  During that period, he conducted an analysis as more
fully  described  under  "--Position  of Mr.  Heyman  Regarding  Fairness of the
Merger." Based on that analysis,  Mr. Heyman  determined  preliminarily  that it
might be  advisable  to seek to effect a  transaction  in which the  holders  of
common stock of ISP (other than shares  beneficially  owned by Mr. Heyman) would
each  receive a cash payment in exchange for their  shares.  In April 2002,  Mr.
Heyman  retained  Simpson  Thacher & Bartlett as legal counsel to provide advice
regarding a possible transaction.

     Mr. Heyman considered several  transaction  structures,  including making a
direct offer to ISP's  stockholders  through a cash tender offer or  negotiating
with an  independent  special  committee of ISP's board of directors to effect a
merger with ISP. During May and early June 2002, Mr. Heyman, with the assistance
of certain members of ISP's management,  explored  financing  alternatives for a
tender offer for the public  shares of ISP and held  numerous  discussions  with
potential  lenders to determine the viability of such a transaction.  Mr. Heyman
ultimately  concluded  that a merger  structure  would be preferable to a tender
offer because a merger would (1) enable ISP's independent directors to negotiate
directly for a price they  believed to be fair and to reject any  proposal  they
concluded  was not in the best  interests of ISP's public  stockholders  and (2)
eliminate the need for third party tender offer financing.  During the remainder
of June  and  through  July  8,  2002,  Mr.  Heyman  continued  to  explore  the
desirability of pursuing such a going private transaction by means of a merger.

     On July 8, 2002,  Mr.  Heyman  decided to  proceed  with the going  private
proposal and  delivered a letter to the board of  directors  of ISP  proposing a
transaction  that would result in Mr. Heyman acquiring  beneficial  ownership of
all of the common stock of ISP not beneficially owned by him for a cash purchase
price of $10 per share. The closing price for ISP's common stock on the New York
Stock Exchange on July 8, 2002 was $7.95. Thus, the price proposed by Mr. Heyman
represented a 26% premium over this closing price on the day before the proposal
was announced.


                                       9


     The letter delivered to the board of directors of ISP is set forth below:

                                                                    July 8, 2002

                      International Specialty Products Inc.
                               Board of Directors
                                 1361 Alps Road
                                 Wayne, NJ 07470

Gentlemen:

     The focus of our  interest at ISP has always  been to increase  shareholder
value for all ISP shareholders.  Nonetheless, our efforts have been hampered, at
least in part, by the following:  first,  attracting analyst coverage and public
investors to a Company with a majority  shareholder  and a small public float is
inherently  difficult  and has been made  more so by the  general  stock  market
downturn;  and,  second,  I believe that  investors have not given us sufficient
credit for the not insubstantial  earnings which have in the past been generated
by  the  Company's   investment   portfolio,   notwithstanding  our  outstanding
investment performance over the years.

     As you know,  we have  sought to take steps in the past to address  some of
these  issues.  For  example,  on  several  occasions,   ISP  has  explored  the
possibility  of  offering  additional  common  shares to increase  stock  market
liquidity,  but  concluded  that such offering  would not make  economic  sense.
Alternatively,  believing  that our common stock was  undervalued in the market,
ISP has from  time to time  engaged  in share  repurchases  in order to  enhance
shareholder value. While these repurchases had a compelling  economic rationale,
they inevitably had the adverse effect of further  limiting the liquidity of the
trading market for ISP stock.

     As a result,  ISP has been unable to realize many of the benefits  normally
associated with public ownership.  The following are just two examples:  (1) ISP
has not been able to utilize its common stock as currency for acquisitions;  and
(2) the lack of liquidity  with respect to the Company's  stock has impaired its
ability to use stock options or  equity-based  incentives as a meaningful way to
attract and retain employees.

     Accordingly,  I am  proposing  that  the  Company  be  taken  private  in a
transaction  in which the  shareholders,  other than my  affiliates  and myself,
would receive $10 per share in cash. This price represents an almost 45% premium
over the average price for the prior 30 days.

     I expect that the Board will form a committee of independent  Board members
to evaluate my proposal,  and wish to assure you that I am most  interested,  as
I'm sure you are,  in  providing  for the utmost of  procedural  fairness in the
interests of ISP's minority  shareholders.  In this connection,  we propose that
approval  of any  transaction  require  the vote of a majority  of the  minority
shareholders.  I am willing to meet with you  promptly in order to discuss  this
proposal,  and I would hope that we could move forward expeditiously to consider
this proposed transaction.

                                                 Sincerely,

                                                 /s/ Samuel J. Heyman


     ISP issued a press release  shortly  after its board of directors  received
the letter announcing the proposal and the price suggested by Mr. Heyman.

     Shortly  after ISP issued the press  release,  six  purported  class action
suits were filed in the Court of Chancery  of the State of Delaware  against ISP
and members of its board of directors.  These six suits have been  consolidated.
On July 12,  2002,  a purported  class  action suit was also filed in the United
States  District Court,  District of New Jersey,  against ISP and members of its
board. The New Jersey claim was subsequently amended to assert derivative claims
as well. The Delaware and New Jersey complaints allege, among other things, that
the defendants  have breached  fiduciary and other duties in connection with the
proposed  transaction.  These complaints  variously seek a court order enjoining
the proposed  transaction,  an award of unspecified damages and attorneys' fees,
the unwinding of any transaction and other unspecified equitable relief.

                                       10


     After  receiving  the  proposal  letter from Mr.  Heyman,  the  independent
members of ISP's board of directors  (Robert  Englander,  Sanford  Kaplan,  Burt
Manning  and Alan M.  Meckler)  met to discuss an  appropriate  response  to the
proposal.  The  independent  directors  decided  to  investigate  and  interview
potential financial and legal advisors.

     During the remainder of July and early August, ISP's independent  directors
held several  conversations  with each other and with ISP's other  directors and
management  concerning  the  foregoing  matters.  In addition,  the  independent
directors  also discussed the possible  composition  of a special  committee and
discussed  with the other  directors  and ISP's  general  counsel,  the possible
compensation and indemnification arrangements that might apply to the members of
such a special  committee.  During that period,  the independent  directors also
determined  that Willkie  Farr & Gallagher  should be retained as counsel to the
special committee.  Among the factors considered by the independent directors in
making this  determination  was the fact that Willkie  Farr & Gallagher  had not
previously  acted as counsel to ISP or, during the past  approximately 20 years,
Mr.  Heyman.  The  independent  directors met on August 1, 2002 to interview and
discuss several investment banking firms as potential financial advisors.

     On August 7, 2002, the board of directors of ISP held a telephonic  meeting
for the  purpose  of  appointing  a special  committee  to  evaluate  the merger
proposal.  In  addition to ISP's  directors,  attending  the meeting  were ISP's
general counsel, representatives of Willkie Farr & Gallagher and representatives
of  Simpson  Thacher &  Bartlett,  counsel to Mr.  Heyman  and ISPH.  During the
meeting,  Mr. Heyman confirmed his continuing  interest in acquiring  beneficial
ownership  of  100%  of  ISP,   briefly   summarized  his  merger  proposal  and
acknowledged the  appropriateness  of the appointment of a special  committee of
directors who are not members of  management  or  affiliated  with Mr. Heyman to
negotiate on behalf of ISP's minority stockholders. Mr. Heyman also informed the
board of directors  that he had no present  intention to cause the shares of ISP
common stock  beneficially  owned by him to be sold. The board of directors then
voted to form a  special  committee  composed  of three  independent  directors,
Robert  Englander,  Burt Manning and Alan M. Meckler.  The board  authorized the
special committee to:

     o   review and evaluate the merger proposal;

     o   negotiate  to the extent it deemed  appropriate  with Mr.  Heyman  with
         respect to the proposal;

     o   determine,  on behalf of the board of  directors,  whether the proposed
         transaction  was fair to,  and in the best  interests  of,  ISP and the
         unaffiliated holders of ISP's common stock;

     o   recommend  what  action,  if any,  should be taken with  respect to the
         merger proposal; and

     o   otherwise  exercise the power of the board of  directors in  connection
         with the merger proposal.

The board also  determined not to authorize or recommend the merger  proposal in
absence of a favorable recommendation by the special committee.

     Because  Mr.  Heyman  informed  ISP's  board of  directors  that he was not
interested in having the shares he beneficially  owns in ISP sold, the board did
not  authorize  the special  committee,  and the special  committee did not seek
authority,  to solicit the interest of third-parties in a potential sale of ISP.
In  addition,  the board  determined  that each member of the special  committee
would receive $18,000 for his services and  reimbursement of expenses related to
the special committee's  activities,  which compensation and reimbursement would
be payable whether or not the special committee  recommended the merger proposal
and whether or not any  proposed  transaction  was  consummated.  The board also
authorized  ISP to enter  into  indemnity  agreements  with the  members  of the
special  committee and formally  authorized the committee to engage  independent
legal, financial and other advisors selected by the special committee.

     Pursuant  to  indemnity  agreements  dated  August 7,  2002,  ISP agreed to
indemnify Messrs. Englander,  Manning and Meckler for any expenses,  liabilities
and losses relating to their service as members of the special  committee and/or
the board of directors  in  connection  with the  transaction.  These  indemnity
agreements are in addition to the indemnity  available to the special  committee
members pursuant to ISP's amended and restated  certificate of incorporation and
by-laws.

     Following  the board meeting on August 7, 2002,  the special  committee met
with Willkie Farr & Gallagher to further discuss  potential  financial  advisors
and to review the terms of the draft  merger  agreement  received  from  Simpson
Thacher & Bartlett. The special committee authorized Willkie Farr & Gallagher to
commence  negotiations  with Mr.  Heyman and his  representatives  regarding the
terms of the merger  agreement.  The special  committee also authorized  Willkie
Farr & Gallagher to commence  negotiations  with Lehman Brothers  concerning the
terms of its possible engagement as financial advisor to the special

                                       11


committee.  Among  the  factors  considered  by  the  special  committee  in its
selection of Lehman Brothers was its consideration of past relationships between
Lehman  Brothers  and ISP and Mr.  Heyman  and  its  determination  that  Lehman
Brothers had not had a material relationship with, nor had it acted as financial
advisor to, ISP, ISPH or Mr. Heyman within the past two years.

     In August  2002,  Simpson  Thacher & Bartlett  and Willkie Farr & Gallagher
held preliminary discussions regarding the terms of the merger agreement,  other
than the price per share to be paid pursuant to the merger agreement.

     On August 29, 2002, the special committee entered into an engagement letter
with  Lehman  Brothers  to act as the  committee's  financial  advisor  and,  on
September 4, 2002, ISP issued a press release announcing the engagement.

     Over the course of mid- to  late-August,  2002,  Lehman  Brothers  reviewed
financial and other information  provided by ISP,  including ISP's business plan
and other materials.  On September 3, 2002,  members of ISP's senior  management
met with  representatives  of Lehman  Brothers  and Willkie  Farr & Gallagher in
connection with Lehman  Brothers' due diligence  review of ISP. ISP's management
made a formal  presentation  regarding  the  financial  condition and results of
operations of ISP's chemical  business (which is conducted by ISP's  subsidiary,
ISP Chemco Inc.) and also reviewed copies of ISP's capitalization  structure and
sales and five-year  projections  through 2006 of ISP's  chemical  business (the
"Five-Year Plan"),  which had been prepared by ISP's management in December 2001
and presented to ISP's board of directors in April 2002.

     ISP's  management  summarized  ISP's  earnings  forecasts  for the  various
business segments reflected in the Five-Year Plan and also provided a comparison
of the financial performance of those businesses for the first half of 2002 with
its planned first half financial performance as reflected in the Five-Year Plan.
ISP's management informed Lehman Brothers that operating income of $63.0 million
for the first six months of 2002 for the  chemicals  businesses  (excluding  the
investment  activities of ISP's  investment  subsidiary) was $1.4 million higher
than projected. They also reported that better-than-expected results in the fine
chemical business ($4.9 million above projections), the industrial segment ($4.0
million  above  projections)  and  the  minerals  segment  ($4.6  million  above
projections)  had  been  mostly  offset  by   substantially-lower-than-projected
results in ISP's core chemicals business ($12.1 million below projections).  See
"--ISP's  Forecasts" below.  ISP's management  explained to Lehman Brothers that
much of the  better-than-expected  operating  income  for the  industrial,  fine
chemicals and minerals segments resulted from  non-recurring  events,  including
(1) in the case of the industrial segment, a significant delay in the opening of
a  competing  plant by a major  competitor  of ISP,  (2) in the case of the fine
chemicals  segment,  resolution of a contractual  obligation of a major customer
that filed bankruptcy and (3) in the case of the minerals segment, a significant
increase in granules sales to the roofing  industry driven by the strong housing
market in the first half of 2002. ISP's management also informed Lehman Brothers
that ISP's core  chemicals  business was facing  substantially  greater  pricing
pressure  than  management  had  anticipated  when it had prepared its Five-Year
Plan.

     Based  on  the  first-half  results,  ISP's  management  revised  its  2002
full-year  budget from the Five-Year  Plan and  presented the revised  full-year
2002  projections to Lehman Brothers  during the September 3, 2002 meeting.  The
revised  current-year  projections  were prepared  consistent  with ISP's normal
financial  planning and reporting  practices,  pursuant to which ISP  management
updates its current-year  internal forecasts from time to time during the course
of the year to take into account  actual results  achieved  during the year. The
revised full-year 2002 projections and the original projections reflected in the
Five-Year Plan prepared in December 2001 are set forth under "--ISP's Forecasts"
below.

     ISP's  management  informed  Lehman  Brothers  that,  since the time of the
preparation  of the Five-Year Plan in December  2001,  ISP's  management had not
revised any of its  projections  for any period after calendar year 2002 because
while, as noted above,  ISP updates its  current-year  forecasts  throughout the
year as part of its ongoing financial  planning  process,  projections for later
years and the Five-Year Plan as a whole would ordinarily be reviewed and updated
in the  fourth  quarter of each year in  connection  with  ISP's  normal  annual
budgeting process. Accordingly, the effects of the revisions and trends observed
in 2002 with respect to individual business segments were not taken into account
in the  projections  contained in the  Five-Year  Plan for  calendar  years 2003
through 2006. In addition, management noted that the weakened performance in the
core chemicals  segment,  which resulted from substantial  pricing pressure from
competitors  and from price  discounts  demanded by  customers,  was expected to
continue into 2003 and potentially beyond.

     On September 18, 2002, Lehman Brothers presented the special committee with
a preliminary  financial review of the proposed transaction based on information
it had  received  or  reviewed  to date,  including  a review of ISP's  business
segments, competitors,  financial forecasts from the Five-Year Plan and a review
of various valuation  methodologies  that it would perform.  Although it had not
yet finalized its due  diligence,  Lehman  Brothers also presented a preliminary
valuation  of ISP based on the  forecasts  from the  Five-Year  Plan and using a
comparable trading analysis, an industry transaction analysis, a discounted cash
flow analysis and a  transactions  premia paid analysis.  Lehman  Brothers noted
that it had not discussed its preliminary financial analysis with

                                       12


ISP management.  Based on these points, the special committee  instructed Lehman
Brothers to  undertake  further  steps as it deemed  necessary  to complete  its
analyses,  including  scheduling  additional  meetings with ISP's  management to
share its  approach  to value and  obtain  any  further  information  management
believed relevant to Lehman Brothers' evaluation.

     On  September  20,  2002,  Lehman  Brothers met again with members of ISP's
senior management team to discuss its preliminary  financial analyses (excluding
any preliminary  valuation ranges derived from those analyses).  Also present at
that  meeting  were  representatives  of Willkie  Farr &  Gallagher  and Simpson
Thacher & Bartlett.  During the course of the September 20, 2002 meeting,  Susan
B. Yoss, ISP's Executive Vice President,  Finance and Treasurer, Neal E. Murphy,
ISP's  Senior  Vice  President  and Chief  Financial  Officer,  and  Richard  A.
Weinberg,  ISP's  Executive  Vice  President,  General  Counsel  and  Secretary,
indicated  their  disagreement  with a  number  of  the  assumptions  and  other
parameters reflected in Lehman Brothers' preliminary analysis.  Ms. Yoss and Mr.
Weinberg  are also  officers  of ISPH.  In light of the fact  that  ISPH and Mr.
Heyman had not engaged a separate financial  advisor,  Ms. Yoss and Mr. Weinberg
were present at this meeting as  representatives of ISPH and Mr. Heyman in order
to review the methodology and analysis of Lehman  Brothers.  Mr. Murphy,  who is
not an officer of ISPH, was acting as a representative  of ISP management during
these meetings  primarily in order to address  factual  matters  relating to the
financial  information and projections  underlying  Lehman  Brothers'  analysis.
ISP's board of directors recognized that members of senior management, including
Ms. Yoss and Mr. Weinberg, would continue to work for ISP after the consummation
of any possible merger and have a potential conflict of interest with respect to
pricing  issues.  The board of  directors,  therefore,  established  the special
committee to negotiate on behalf of ISP and engaged Lehman  Brothers and Willkie
Farr & Gallagher to assist the special  committee in representing  the interests
of ISP and its unaffiliated  stockholders during  negotiations.  Notwithstanding
these potential conflicts of interest,  Lehman Brothers'  representatives agreed
to listen to the views of Ms. Yoss and Mr.  Weinberg and accorded their opinions
the same  consideration  customarily  given to  those  of a  separate  financial
advisor representing an acquiror. In addition,  Lehman Brothers' representatives
solicited the views of Mr. Murphy, as a representative of ISP management.

     During the  September  20,  2002  discussions,  Ms.  Yoss and Mr.  Weinberg
expressed their belief that certain of the companies included by Lehman Brothers
in ISP's  peer  group  were not  comparable  to ISP  because  of the  companies'
differing product offerings, core businesses and size. In addition, Ms. Yoss and
Mr.  Weinberg  noted their belief that the  universe of  precedent  transactions
chosen  for  purposes  of  Lehman   Brothers'   comparative   analyses  was  not
sufficiently comprehensive. They expressed their belief that the analysis should
have  included (1)  additional  transactions  from a broader time range so as to
include  acquisitions that took place during periods of weak economic growth and
stock  market  performance  (and  not just  those  effected  during a period  of
unusually strong economic growth) and (2) only transactions  involving companies
with  a  controlling  stockholder  and a  proportionately  small  public  float.
Finally,  Ms. Yoss stated her opinion  that the discount  factor and  perpetuity
growth rates used by Lehman  Brothers in its  discounted  cash flow analysis did
not  adequately   reflect  ISP's  cost  of  capital  and  historical   operating
performance and,  therefore,  resulted in a higher than  appropriate  discounted
cash flow valuation.  In addition,  Ms. Yoss and Mr. Weinberg noted their belief
that the substantial  decline in the  performance of the stock market  generally
and of the  S&P  Midcap  Specialty  Chemicals  Index,  in  particular,  was  not
adequately  factored into Lehman Brothers'  analysis of ISP's trading price. Ms.
Yoss  and  Mr.  Weinberg  believed  that  ISP's  stock  price  would  likely  be
substantially  lower than the closing price  immediately  prior to Mr.  Heyman's
merger proposal.  Finally, Mr. Weinberg and Ms. Yoss expressed their belief that
ISP's  ability  to achieve  the  results  reflected  in the  Five-Year  Plan was
uncertain and that there were greater  downside risks than upside  opportunities
in the plan.  Specifically,  they  expressed  their  view  that,  based on their
preliminary  review of developments  and operating  results since December 2001,
there was  approximately  $5 million to $10 million in risk to operating  profit
relative to the Five-Year Plan in 2003, with the risk growing in line with sales
through 2006.  The Lehman  Brothers  representatives  indicated  that while they
would consider the input received at the meeting, they were bound to rely on the
written  projections  of  ISP's  management  for  purposes  of  their  financial
analysis. Accordingly, Lehman Brothers noted that if ISP management believed the
projections  in the  Five-Year  Plan were no longer up to date,  ISP  management
should provide more current projections.

     At a special committee meeting later that day, Lehman Brothers reviewed the
perspectives  conveyed by Ms. Yoss and Mr. Weinberg  regarding  Lehman Brothers'
valuation  methodology.   Lehman  Brothers  also  discussed  the  views  of  ISP
management,  as described by Mr. Murphy,  regarding the  projections  previously
provided  to Lehman  Brothers.  Lehman  Brothers  did not  provide  a  valuation
analysis to the special committee at this meeting.

     On September  27, 2002,  the special  committee met to discuss the proposed
transaction and to hear a supplemental  presentation  from Lehman Brothers.  The
supplemental   presentation  was  substantially   similar  to  Lehman  Brothers'
presentation  on September  18, 2002,  except that Lehman  Brothers  updated its
written materials to provide revised  valuations based on recent market activity
and certain additional expenses of ISP that ISP management had identified at the
meeting on September 20,

                                       13



2002 as having been omitted from Lehman  Brothers'  September 18, 2002 analysis.
In  addition,  in response  to  discussions  with Ms.  Yoss and Mr.  Weinberg on
September 20, 2002,  Lehman Brothers  supplemented its earlier  presentations to
provide the special committee with additional  information suggested by Ms. Yoss
and Mr. Weinberg regarding additional comparable companies,  additional industry
transactions and an analysis of the "unaffected"  trading price of ISP. Although
Lehman Brothers considered the additional information,  such information did not
change its  conclusion  as to the  fairness of the merger  consideration  from a
financial point of view. Following that meeting, representatives of Willkie Farr
& Gallagher  communicated  the special  committee's  view that,  based on Lehman
Brothers'  preliminary  financial  analysis to date and discussions  with Lehman
Brothers on the methods of valuations  utilized,  the performance of ISP's stock
in the  marketplace,  the  projections  of ISP's  management  provided to Lehman
Brothers on  September 3, 2002,  and the special  committee's  belief  that,  if
requested by the special  committee,  Lehman Brothers would be unable to issue a
fairness  opinion at that time,  the special  committee was not then prepared to
recommend the $10 merger proposal.


     On October 3, 2002,  representatives  of Lehman Brothers met again with Mr.
Weinberg  and  Ms.  Yoss  to  further  discuss  their  respective  views  on the
appropriate assumptions and methodologies for conducting a financial analysis of
ISP  and the  pending  merger  proposal.  Also  present  at  that  meeting  were
representatives of Willkie Farr & Gallagher and Simpson Thacher & Bartlett.  Ms.
Yoss and Mr. Weinberg once again expressed their views regarding the assumptions
and  methodologies   underlying  Lehman  Brothers'  valuation   analyses.   They
reiterated  their belief that ISP's ability to achieve the results  reflected in
the Five-Year Plan was highly uncertain and again summarized the trends in ISP's
various  business  segments  that  lead to that  uncertainty.  Furthermore,  Mr.
Weinberg noted that Mr. Heyman had indicated that, in light of the severe market
downturn  since the date of the  merger  proposal,  Mr.  Heyman  was  finding it
increasingly  difficult to sustain a merger proposal at the $10 per share price.
Following that meeting,  in light of the continued belief by ISP management that
the  analyses  performed  by Lehman  Brothers  did not  adequately  reflect  the
uncertainty inherent in ISP's financial outlook and diminished prospects for the
company since the preparation of the Five-Year Plan, ISP's management  agreed to
provide  Lehman  Brothers  with more current  projections  that would more fully
reflect the impact of business  developments -- primarily  substantially greater
than  anticipated  pricing  pressures  in  ISP's  core  chemicals  and  minerals
businesses -- that had occurred  subsequent to the  preparation of the Five-Year
Plan in December 2001.

     On October 10, 2002,  Lehman  Brothers met with ISP's  management  team and
other ISP  personnel at ISP, at which time ISP's  management  presented  updated
five-year projections (the "Updated Projections") to Lehman Brothers,  including
those set forth under "--ISP's  Forecasts"  below.  The discussions  highlighted
certain differences  between the original Five-Year  Projections and the Updated
Projections.  ISP's management  provided a detailed  presentation  regarding the
manner in which the  Updated  Projections  were  prepared  and the  factors  and
developments  leading to the differences between the Updated Projections and the
projections reflected in the Five-Year Plan and answered questions regarding the
Updated Projections.  In particular,  ISP's management explained that, while the
revised 2002  projections  presented  on  September  3, 2002 were  substantially
accurate, the projections for the subsequent four years had not been updated for
developments  in the business of ISP, the specialty  chemicals  industry and the
economy generally since December 2001. ISP's management  advised Lehman Brothers
that as a  result  of  these  changes,  the  Updated  Projections  replaced  the
Five-Year Plan as management's best currently  available estimates and judgments
as to the future  financial  performance  of ISP. The Updated  Projections  were
based on several changed factors,  including  pricing  pressures in the personal
care and specialty chemicals segments, softness of demand in growth markets such
as Asia  and  contemplated  changes  in the  pricing  terms  of a  major  supply
contract.

     On October 21, 2002, the special committee met with members of ISP's senior
management  and  Mr.  Heyman  to  discuss,   among  other  things,  the  Updated
Projections and to continue its discussions regarding the merger proposal.  Also
present at that  meeting  were  representatives  from  Willkie Farr & Gallagher,
Simpson Thacher & Bartlett and Lehman  Brothers.  After  presenting  information
concerning the Updated  Projections to the special  committee,  ISP's management
and Mr. Heyman  answered  questions posed by the special  committee  members and
representatives from Lehman Brothers.

     After ISP's management, Mr. Heyman and representatives from Simpson Thacher
& Bartlett left the meeting,  Lehman Brothers gave a presentation to the special
committee  highlighting  certain differences between the original Five-Year Plan
and the  Updated  Projections,  as well as a  preliminary  valuation  using  the
Updating  Projections based on the same  methodologies  that had previously been
presented to the special committee.  After considerable discussion regarding the
Updated  Projections,  the  special  committee  concluded  that,  based  on  the
performance  of  ISP's  stock  in the  marketplace,  the  projections  of  ISP's
management,   consideration  of  Lehman  Brothers'   methods  of  valuation  and
preliminary  financial  analysis  to date,  as well as the  special  committee's
belief that $10 per share did not represent the highest price available to ISP's
stockholders,  the special  committee would not recommend the merger proposal at
$10 per share. Following the October 21, 2002 meeting, the special

                                       14


committee's   legal  advisor  and  Mr.   Heyman's  legal  advisor  had  numerous
conversations regarding the parties' respective views concerning the appropriate
per share price in the merger. Although the special committee had not identified
a specific  price or range of prices that would be an acceptable  alternative to
Mr.  Heyman's  $10  merger  proposal,  the  special  committee's  legal  advisor
indicated to Mr.  Heyman's  legal  advisors  that the special  committee was not
prepared to recommend  the merger at the $10 per share price  because it did not
believe  that  the  offer  represented  the  highest  price  available  to ISP's
stockholders, and, accordingly, sought to negotiate a higher price per share.

     Mr. Heyman continued to believe the proposed merger  consideration was fair
and,  accordingly,  instructed his legal advisors that,  while he was willing to
explore  non-price  contractual  changes to the merger  agreement and a possible
settlement of the pending  stockholder  litigation referred to above, Mr. Heyman
would not authorize an increase in the merger  consideration.  Furthermore,  Mr.
Heyman's  representatives  informed the special  committee's legal advisors that
Mr. Heyman  continued to be concerned  about the  advisability of sustaining the
merger proposal in light of the  deterioration in market conditions and that Mr.
Heyman might consider  withdrawing the merger proposal if the special  committee
concluded it could not recommend the proposed  transaction at $10 per share.  On
October 25, 2002,  counsel for Mr.  Heyman met with  plaintiffs'  counsel in the
stockholder  litigation  in Delaware to discuss a  potential  settlement  of the
litigation. Counsel for Mr. Heyman also attempted to include plaintiffs' counsel
in  the  stockholder   litigation  pending  in  New  Jersey  in  the  settlement
discussions.  In light of the firm  position  of the special  committee  that it
would not recommend a  transaction  at $10 per share,  on October 30, 2002,  Mr.
Heyman concluded that exploring an increase in the merger consideration would be
preferable to  abandoning  the proposed  transaction  and  authorized  his legal
advisors  to explore  with the  special  committee's  legal  advisors a possible
increase in the per share merger consideration to $10.25,  subject to the prompt
negotiation of a mutually acceptable merger agreement, approval of the agreement
by the entire special committee and settlement of the stockholder litigation.

     On October 30, 2002, in a meeting of the special committee, representatives
of Willkie  Farr & Gallagher  reported  that Mr.  Heyman's  representatives  had
advised  them that Mr.  Heyman would be willing to increase the per share merger
consideration  to $10.25.  The  special  committee  discussed  whether to accept
$10.25  per  share  but,  in  an  effort  to  increase   the  per  share  merger
consideration  and  achieve  the best  possible  price for  ISP's  stockholders,
instructed Willkie Farr & Gallagher to advise Mr. Heyman's  representatives that
the  special  committee  was  not  in  a  position  to  recommend  the  proposed
transaction  at $10.25 at that  time,  and  further  instructed  Willkie  Farr &
Gallagher to propose an offer price of $10.50 per share.

     On October 31, 2002, the special  committee's  legal advisors  conveyed the
special  committee's  views to Mr.  Heyman's legal  advisors.  In response,  Mr.
Heyman's representatives advised the special committee's legal advisors that Mr.
Heyman would not increase the merger  consideration to $10.50 and that if prompt
agreement  could not be reached by the  parties at a merger  price of $10.25 per
share, Mr. Heyman would consider withdrawing his offer.

     On November 1, 2002, the special committee met, along with  representatives
of Willkie Farr & Gallagher and Lehman  Brothers to further discuss the proposed
transaction.

     On November 4, 2002,  Mr. Heyman  authorized his legal advisors to indicate
his  potential  willingness  to increase the per share merger  consideration  to
$10.30 per share. In a meeting on that day, the special committee  discussed the
fairness of the proposal to ISP's unaffiliated stockholders and agreed to reject
the proposal of $10.30 per share,  but, in an effort to maximize value for ISP's
stockholders,  to inform Mr. Heyman's representative that, while it was not in a
position to recommend the proposed transaction at $10.30 per share at that time,
it would consider  recommending  the proposal at $10.35 per share.  Mr. Heyman's
representative  stated that Mr.  Heyman would not accept that share  price,  and
that if the special  committee  could not recommend the proposed  transaction at
$10.30 per share that Mr. Heyman would withdraw the offer.

     The  special  committee  evaluated  the  possibility  of  turning  down the
proposed merger  consideration and remaining a public company, but was concerned
that  such  decision  might  result  in the  minority  stockholders  losing  the
opportunity  to receive  $10.30 per share.  If Mr.  Heyman were to withdraw  the
offer, the price of ISP's  publicly-traded stock would likely fall significantly
from its closing price of $9.40 on November 1, 2002. The special committee noted
that the market in general or the specialty  chemical  sector could  deteriorate
further,  lowering the market price of the shares.  The special  committee  also
considered each of Lehman Brothers'  preliminary financial analyses presented to
it on October 21,  2002,  the implied  valuations  resulting  from each of those
analyses and that Lehman  Brothers would most likely be in a position to issue a
fairness  opinion  with  respect to a proposal of $10.30 per share.  The special
committee  further  considered that the proposed price was within the comparable
trading,  premiums  paid in going  private  transactions  with  less  than a 50%
minority ownership, premiums paid in going private transactions with less than a
20% minority ownership,  premiums paid in unaffected going private transactions,
premiums paid in full  acquisitions  and discounted  cash flow valuation  ranges
analyzed in Lehman Brothers' presentations.  The special committee further noted
that if the special committee rejected the proposed merger consideration and Mr.
Heyman withdrew his offer, the

                                       15


stockholders  would lose the opportunity to vote on the proposed  merger,  which
would likely  prove to be the best option  available  to the  stockholders.  For
further  discussion of valuation  methods and ranges that the special  committee
considered,  see  "--Opinion of Lehman  Brothers"  below.  Finally,  the special
committee  noted  that it was  unlikely  that a third  party  would  attempt  to
purchase ISP stock held by minority stockholders due to Mr. Heyman's substantial
beneficial ownership interest in ISP.

     Between  November 4 and November 6, the parties' legal  advisors  completed
negotiations of the open  contractual  terms in the merger  agreement and voting
agreement.

     Settlement  discussions  between  counsel  for Mr.  Heyman and  plaintiffs'
counsel in the pending  stockholder  litigation  in Delaware and New Jersey also
continued during this period.

     On November  6, 2002,  the special  committee  met to discuss Mr.  Heyman's
response to the  special  committee's  attempts  to increase  the offer price of
$10.30 per share.  Lehman Brothers  presented a financial  analysis of the offer
and orally  delivered  its  opinion,  which it  committed  to  deliver  later in
writing,  that,  as of that date and based upon and subject to the  assumptions,
limitations  and  qualifications  set  forth  in the  Lehman  Brothers'  written
opinion, the proposed transaction at $10.30 per share was fair, from a financial
point of view,  to ISP's  unaffiliated  stockholders.  Ultimately,  the  special
committee  concluded that the proposed merger was substantively and procedurally
fair to ISP's  unaffiliated  stockholders  and that the  opportunity  to receive
$10.30 cash per share  should be presented  to ISP's  stockholders.  In reaching
that  conclusion,  the special  committee  noted that the adoption of the merger
agreement  at that price  would be subject to  acceptance  by a majority  of the
minority  stockholders voting at the special meeting to consider approval of the
merger. After further discussion and deliberation and taking into account all of
the factors noted above,  the special  committee  unanimously (1) concluded that
the proposed  transaction was advisable,  fair to, and in the best interests of,
the unaffiliated stockholders of ISP, and (2) agreed to recommend that our board
approve the terms of the proposed  transaction.  Later that day,  Willkie Farr &
Gallagher reported the special committee's decision to ISP.

     On  November  7, the  parties  announced  that Mr.  Heyman and the  special
committee  had  reached an  agreement  with  respect to the merger at a price of
$10.30 per share in cash, subject to approval by ISP's board of directors.

     On November  8, 2002,  the special  committee  met to approve the  proposed
resolutions,  which (1) concluded  that the proposed  transaction  at $10.30 per
share was  advisable,  fair to, and in the best  interests of, the  unaffiliated
stockholders of ISP, and (2)  recommended  that the full board approve the terms
of the proposed transaction.

     Later that day,  our board of  directors  met to  consider  approval of the
merger  agreement.  At the  meeting,  Lehman  Brothers  once again  presented  a
financial  analysis of the transaction that was  substantially  identical to the
analysis  presented to the special  committee on November 6, 2002 in  connection
with Lehman Brothers' rendering of its oral opinion. The board also reviewed the
terms of the merger agreement. Thereafter, based on the unanimous recommendation
of the special  committee,  the board  determined  that the proposed  merger was
advisable,   fair  to,  and  in  the  best  interests  of,  ISP's   unaffiliated
stockholders.  Each  director  (other  than Mr.  Heyman  and  Sunil  Kumar,  who
abstained) voted to approve the merger and voting  agreements and recommend that
ISP's stockholders vote to adopt the merger agreement.

     Following settlement discussions between counsel for Mr. Heyman and counsel
for  plaintiffs in the Delaware and New Jersey  litigations,  the parties to the
stockholder  litigation pending in Delaware agreed on and, on November 19, 2002,
executed a memorandum of understanding  to reflect a proposed  settlement of the
Delaware litigation.  The parties also agreed, subject to various conditions, to
enter into a settlement  agreement,  cooperate in public disclosures  related to
the  settlement  and use best efforts to gain approval of the  settlement by the
Delaware  courts.  Without  any  admission  of  fault  by  the  defendants,  the
memorandum  of  understanding  contemplates  a  dismissal  of  all  claims  with
prejudice and a release in favor of all defendants of any and all claims related
to the merger that have been or could have been  asserted by the  plaintiffs  or
any members of the  purported  class  (including  the pending  claims in the New
Jersey  litigation).   The  settlement  is  subject  to,  among  other  factors,
completion of confirmatory  discovery,  execution of a settlement  agreement and
final  approval  of the  settlement  by the  Court of  Chancery  of the State of
Delaware and completion of the merger.

RECOMMENDATIONS OF THE SPECIAL COMMITTEE

     The special committee has unanimously  determined that the merger agreement
is advisable, fair to and in the best interests of the unaffiliated stockholders
of ISP, and  unanimously  determined to recommend to our board of directors that
the board of directors:

     o   approve the merger agreement and the voting agreement;

                                       16


     o   declare the advisability of the merger agreement; and

     o   recommend  that  the  stockholders  of ISP  vote to  adopt  the  merger
         agreement.

RECOMMENDATIONS OF OUR BOARD OF DIRECTORS

     The board of  directors  of ISP  consists of six  directors,  three of whom
served on the special  committee and two of whom are also directors of ISPH and,
therefore,  abstained from voting with regard to the merger.  At the November 8,
2002 meeting of the board of directors,  the special  committee,  with its legal
and financial advisors participating, reported to the other members of the board
of  directors  on the course of its  negotiations  with Mr.  Heyman and ISPH and
their legal counsel,  its review of the merger agreement and the factors it took
into  account  in  reaching  its  determination  that the  merger  agreement  is
advisable, fair to and in the best interests of the unaffiliated stockholders of
ISP.

     Based on the unanimous  recommendation of the special committee,  our board
of directors has:

     o   approved the merger agreement and the voting agreement;

     o   determined that the merger and the merger  agreement are  substantively
         and procedurally fair to the unaffiliated stockholders of ISP; and

     o   recommended  that the  stockholders  of ISP vote to  adopt  the  merger
         agreement.

SPECIAL COMMITTEE'S POSITION AS TO FAIRNESS OF THE MERGER

     In  reaching  the  conclusions   described  above,  the  special  committee
considered a number of factors,  including the following factors, each of which,
in the special  committee's  judgment supported its conclusion as to substantive
fairness:

     o   the  proposed  merger  in which the  stockholders  of ISP,  other  than
         holders of common stock beneficially owned by Mr. Heyman, except shares
         held by  qualified  charitable  organizations  (which will be converted
         into the $10.30 per share merger  consideration),  would be entitled to
         receive  $10.30  cash per  share as merger  consideration,  a price the
         special committee viewed as attractive in light of ISP's historical and
         current  financial  performance  and in light of general  economic  and
         stock market conditions;

     o   the written opinion of Lehman  Brothers to the special  committee dated
         November 8, 2002, which was adopted by the special committee, a copy of
         which is attached to this proxy  statement as Annex B, that,  as of the
         date of the  opinion  and based upon and  subject  to the  assumptions,
         limitations and  qualifications  set forth in that opinion,  the merger
         consideration  is  fair,  from  a  financial  point  of  view,  to  the
         unaffiliated stockholders of ISP;

     o   the special  committee's  belief,  based on,  among other  things,  the
         detailed  financial  and  valuation  advice  provided  to  the  special
         committee by its  financial  advisor,  that the $10.30 per share merger
         consideration:

         o  represented  an  attractive  multiple of  historical  and  projected
            earnings per share and cash flow per share;

         o  was  within  the  range of  implied  per share  valuations  based on
            comparable   trading  for   non-controlled   companies  that  Lehman
            Brothers,   the  special  committee's   financial  advisor,   deemed
            comparable to ISP;

         o  compared  favorably  to an  implied  per  share  value  based on the
            hypothetical  performance of ISP stock assuming the  announcement of
            Mr.  Heyman's  proposal,  dated  July 8,  2002 had not been  made by
            applying the return of the Lehman Brothers  Specialty Chemical Index
            from July 8, 2002  through  November 4, 2002 to ISP's stock price of
            $7.95 the day prior to the announcement of the July 8, 2002 proposal
            letter;

         o  was within the range of implied per share valuations based on recent
            full  acquisitions  as well  as  going-private  transactions  with a
            remaining  minority  interest  of  less  than  50%  and a  remaining
            minority interest of less than 20%; and

         o  was within the ranges of value produced by the discounted  cash flow
            analysis based on ISP's Updated Projections;

     o   the  historical  market prices of ISP's common stock and recent trading
         activity,  including the substantial premiums implied by the $10.30 per
         share merger consideration of 29.6% and 48.8%, respectively, over ISP's
         stock prices one day and one month prior to the initial announcement of
         Mr. Heyman's proposal on July 8, 2002;

                                       17


     o   that the increase in the market  price of ISP's common stock  following
         the  initial  proposal  by Mr.  Heyman  may  have  reflected,  in part,
         anticipation of a possible merger, rather than a higher intrinsic value
         for ISP common stock;

     o   the presentations of Lehman Brothers  regarding its financial  analyses
         of the proposed  merger.  See  "--Background  of the Merger"  above and
         "--Opinion of Lehman Brothers" below;

     o   that the terms and  conditions of the proposed  merger were  determined
         through lengthy negotiations between Mr. Heyman and his representatives
         and  the  special   committee  and  its  advisors,   all  of  whom  are
         unaffiliated with Mr. Heyman;

     o   Mr. Heyman's  controlling  beneficial ownership interest in ISP and his
         unwillingness to cause ISP or his beneficial interest in ISP to be sold
         to a  possible  third  party  buyer,  which  suggested  to the  special
         committee that the proposed merger was an attractive alternative to the
         minority stockholders;

     o   the availability of capital necessary to fund the merger  consideration
         payable pursuant to the merger;

     o   current difficult  economic,  industry and market conditions  affecting
         ISP; and

     o   that stockholders who do not waive their appraisal rights will have the
         opportunity  in connection  with the merger to demand  appraisal of the
         fair value of their shares under Section 262 of the DGCL.

     The  special  committee  also  considered  the  following  adverse  factors
associated with the merger:

     o   that Lehman Brothers'  analysis of industry  transactions  described in
         detail  under  "Opinion of Lehman  Brothers"  on page 24 had produced a
         range per share of $13.24 to $13.39.  The special committee  determined
         that this valuation depended to a considerable  extent on the fact that
         the  transactions  analyzed  each  involved a full  change of  control,
         whereas the merger  does not involve a change of control.  Furthermore,
         each of the  transactions  analyzed had meaningful  distinctions to the
         business, operations and financial conditions of ISP;

     o   that because Mr. Heyman desired to retain his approximate 81% ownership
         interest in ISP and had indicated no intent to cause any portion of his
         beneficial  interest  in ISP to be offered  for sale to a third  party,
         public  stockholders were not afforded an opportunity to participate in
         any control  premium that might have been  generated by the sale of the
         entire company to a third party;

     o   that the  public  stockholders  of ISP  would  have no  ongoing  equity
         participation  in  the  surviving  corporation  following  the  merger,
         meaning  that the public  stockholders  would cease to  participate  in
         ISP's future earnings or growth,  if any, or to benefit from increases,
         if any, in the value of their ISP stock.


     o   that there exists  known and possible  conflicts of interest of certain
         directors and executive officers of ISP discussed below in "--Interests
         of Directors and Executive Officers in the Merger."


     After considering each of the factors outlined above, the special committee
concluded  that the  positive  factors  relating  to the merger  outweighed  the
negative  factors.  Because of the  variety of factors  considered,  the special
committee did not find it practicable to quantify or otherwise  assign  relative
weights  to, and did not make  specific  assessments  of, the  specific  factors
considered in reaching its  determination.  However,  individual  members of the
special committee may have assigned  different  weights to various factors.  The
determination  of the special  committee was made after  consideration of all of
the factors together.

     The special  committee also determined that the merger is procedurally fair
because among other things:

     o   the special  committee  consisted of directors  that are not affiliated
         with Mr. Heyman and are not executive officers of ISP;

     o   the special  committee  retained and was advised by  independent  legal
         counsel experienced in advising on similar transactions;

     o   the special committee retained and was advised by Lehman Brothers Inc.,
         an independent  financial advisor, to assist in evaluating the proposed
         merger;

     o   Lehman  Brothers  rendered an opinion  concerning the fairness,  from a
         financial  point of view,  of the  consideration  to be received by the
         unaffiliated  holders of ISP  common  stock,  which was  adopted by the
         special committee;

                                       18


     o   the proposed merger terms and conditions (including the majority of the
         minority condition), which were determined through lengthy negotiations
         between Mr. Heyman and his  representatives  and the special  committee
         and its advisors, all of whom are unaffiliated with Mr. Heyman;

     o   the nature and  duration  of the  deliberations  pursuant  to which the
         special  committee  evaluated the proposed merger and  alternatives the
         proposed merger; and

     o   that  the  special  committee  is a  mechanism  well-established  under
         Delaware law in transactions of this type.

     In its  evaluation,  the special  committee did not ask Lehman  Brothers to
consider the  liquidation  or book values of ISP because it believed  that those
measures of asset  value would be  considerably  less than the  proposed  merger
consideration  of $10.30 per share and ISP's going  concern  value.  The special
committee's  belief  regarding  liquidation  value was based upon the  committee
members  knowledge  of the  specialty  chemical  industry  and their belief that
liquidation sales generally result in proceeds  substantially less than the sale
of a going concern business.  While the special  committee  reviewed with Lehman
Brothers its various  financial  analyses  and ISP's  historical  and  projected
results,  the special committee did not independently  generate its own separate
financial analysis of the merger.

     The special  committee  did not  evaluate as  alternatives  to the proposed
merger the  possibility  of a sale to a potential  third party bidder due to Mr.
Heyman's indicated  unwillingness to cause his beneficial  interest in ISP to be
sold. Finally,  the special committee believed that the merger  consideration of
$10.30 per share in cash was fair in  relation  to the going  concern  value per
share based upon Lehman Brothers'  financial  analysis referred to in "--Opinion
of Lehman Brothers" below.

     In reaching  its  determination,  the special  committee  did not  consider
purchases by Mr. Heyman or ISPH of ISP stock during the past two years  because,
to the knowledge of the special committee, there were no purchases by Mr. Heyman
or ISPH  during  that time.  There  were no firm  offers  made that the  special
committee is aware of by any  unaffiliated  person during the past two years for
the  merger,  sale of a  substantial  portion of the  assets of, or  transaction
resulting in the change of control of ISP.

BOARD OF DIRECTORS' POSITION AS TO THE FAIRNESS OF THE MERGER

     In  reaching  the  conclusions  described  above,  the  board of  directors
considered a number of factors,  including the following factors,  which, in the
board's judgment, supported its conclusions as to substantive fairness:

     o   the conclusions and recommendations of the special committee; and

     o   the factors  referred to above as having been taken into account by the
         special committee as to substantive fairness,  including the receipt by
         the special committee of the opinion of Lehman Brothers that, as of the
         date of the  opinion  and based upon and  subject  to the  assumptions,
         limitations and  qualifications  set forth in that opinion,  the merger
         consideration  is  fair,  from  a  financial  point  of  view,  to  the
         unaffiliated stockholders of ISP.


The board of directors also considered the adverse factors described above under
"--Special  Committee's  Position as to Fairness of the Merger,"  including  the
fact that public  stockholders  were not afforded the opportunity to participate
in a control  premium  because Mr.  Heyman had no desire to cause any portion of
his  beneficial  interest  in ISP to be sold  to a third  party.  The  board  of
directors  also  considered  the conflicts of interest of certain  directors and
executive  officers of ISP  discussed  below in  "--Interests  of Directors  and
Executive Officers in the Merger."


     In concluding that the merger is procedurally  fair, the board of directors
considered a number of factors,  including the following factors,  which, in the
board's judgment, supported its conclusions as to procedural fairness:

     o   the conclusions and recommendations of the special committee;

     o   the fact that the special  committee  unanimously  determined  that the
         merger agreement is advisable,  fair to and in the best interest of the
         unaffiliated stockholders of ISP;

     o   the  engagement  by the  special  committee  of  independent  legal and
         financial advisors; and

     o   the  fact  that the  merger  agreement  contains  the  majority  of the
         minority condition.

In considering the conclusions and the recommendations of the special committee,
the board of directors  believed that the analysis of the special  committee was
reasonable and adopted the special  committee's  analysis underlying the special
committee's conclusions.

                                       19


MR. HEYMAN AND ISPH'S POSITIONS AS TO THE FAIRNESS OF THE MERGER

     The rules of the Securities and Exchange  Commission require Mr. Heyman and
ISPH  to  express  their  belief  as to  the  fairness  of  the  merger  to  the
unaffiliated  holders of ISP common stock.  Mr. Heyman and ISPH believe that the
merger is substantively and procedurally fair to the unaffiliated holders of ISP
common stock. However,  neither Mr. Heyman nor ISPH has performed,  or engaged a
financial  advisor to  perform,  any  valuation  analysis  for the  purposes  of
assessing the fairness of the merger to the  unaffiliated  holders of ISP common
stock.  Moreover,  neither Mr. Heyman nor ISPH participated in the deliberations
of the  special  committee  or  received  advice  from the  special  committee's
financial advisor.

     Mr. Heyman and ISPH's belief that the merger is  substantively  fair to the
unaffiliated holders of ISP common stock is based on the following factors:

     o   the fact  that the  special  committee  concluded  that the  merger  is
         advisable,  fair to,  and in the  best  interests  of the  unaffiliated
         holders of ISP's common  stock  (although  Mr.  Heyman and ISPH did not
         rely upon the special committee's analysis);

     o   the fact that the special  committee  received a written  opinion  from
         Lehman  Brothers  dated  November  8, 2002 as to the  fairness,  from a
         financial   point  of  view,  of  the  $10.30  per  share  cash  merger
         consideration;

     o   the  consideration  to be paid in the  merger  represents  a nearly 30%
         premium over the reported  closing price of ISP common stock on the New
         York Stock  Exchange on the last trading day prior to the  announcement
         of Mr. Heyman's proposal on July 8, 2002, and nearly a 49% premium over
         the average closing price for the 30 days prior to the  announcement of
         the proposal;

     o   the S&P 500 Index and the S&P Midcap Specialty Chemicals Index declined
         5.5% and  9.3%,  respectively,  during  the  period  from  July 8, 2002
         through  November  6,  2002,  the date on which the  special  committee
         agreed to recommend the merger agreement,  thereby  indicating that the
         premium of the merger  consideration over the unaffected share price of
         ISP (i.e.,  the market  price that would likely be in effect in absence
         of the merger  proposal) would likely have been higher than the premium
         referred to above;

     o   Mr. Heyman and ISPH's belief that the merger  consideration  is fair in
         relation to the going concern value per share of ISP (although they did
         not calculate a specific going concern value per share,  Mr. Heyman and
         ISPH believe that the merger  consideration  is fair in relation to the
         going concern  value per share based upon (1) their  knowledge of ISP's
         business and  prospects,  (2) the  projections  contained in this proxy
         statement,  including  the  assumptions  contained  therein,  (3) ISP's
         historical results of operations and (4) their general knowledge of the
         specialty chemical industry;

     o   the merger will provide consideration to ISP's stockholders entirely in
         cash and is not subject to any financing condition; and

     o   the merger would shift the risk of the future financial  performance of
         ISP from the public stockholders,  who do not have the power to control
         decisions made as to ISP's  business,  entirely to Mr. Heyman,  who has
         the power to control ISP's business.



                                       20



     Mr. Heyman and ISPH  considered  each of the  foregoing  factors to support
their  determinations as to the fairness of the merger.  Mr. Heyman and ISPH did
not consider any other material  factors in evaluating the substantive  fairness
of the merger to the  unaffiliated  holders of ISP common stock. In light of the
fact that Mr. Heyman was unwilling to cause his beneficial interest in ISP to be
sold,  Mr.  Heyman and ISPH did not consider a possible sale to a third party as
an alternative to the proposed merger. As a result,  Mr. Heyman and ISPH did not
evaluate the prices  potentially  attainable in other  transactions  in which he
would sell control of ISP.  Neither Mr. Heyman nor ISPH found it  practicable to
assign,  nor  did  they  assign,  relative  weights  to the  individual  factors
considered in reaching their conclusion as to fairness.  Mr. Heyman and ISPH did
not consider whether the merger consideration constitutes fair value in relation
to the liquidation value of ISP and gave little  consideration to the book value
of ISP,  because  they  believed  that those  measures  of asset  value were not
relevant to the market value of ISP's business and that  liquidation  valuations
result in lower valuations of leveraged  manufacturing  companies.  In addition,
the  liquidation  of ISP's assets was not  considered  to be a viable  course of
action because  substantial value results from continuing ISP as a going-concern
and any  liquidation  would  destroy  that value.  Therefore,  no  appraisal  of
liquidation  value was sought for  purposes  of valuing the shares of ISP common
stock.  Also,  Mr.  Heyman  and ISPH  believe  that  book  value is a  valuation
methodology  more  typically  used in the  banking,  utilities,  real estate and
financial services  industries.  Nonetheless,  Mr. Heyman and ISPH note that the
net book value per share of ISP, as of June 30, 2002, was $7.85 and the net book
value  per  share of ISP,  as of  September  30,  2002  was  $8.14.  The  merger
consideration represents a premium of nearly 31% over the June 30, 2002 net book
value per share and 27% over the September 30, 2002 net book value per share.

     Mr.  Heyman and ISPH's belief that the merger is  procedurally  fair to the
unaffiliated holders of ISP common stock is based on the following factors:

     o   the merger and the terms and  conditions of the merger  agreement  were
         the result of good faith negotiations between the special committee and
         Mr. Heyman and their respective advisors and representatives;

     o   the special committee retained Lehman Brothers, which is not affiliated
         with  Mr.  Heyman  or ISPH  management,  to  serve  as its  independent
         financial  advisor,  and the special committee received an opinion from
         Lehman Brothers on November 6, 2002 (subsequently  confirmed in writing
         on November 8, 2002) to the effect that as of such date and, based upon
         and subject to, the  assumptions,  limitations and  qualifications  set
         forth in its  written  opinion,  the  $10.30 in cash per  share  merger
         consideration  was  fair  from a  financial  point  of  view  to  ISP's
         unaffiliated stockholders;

     o   the merger was  approved by each  member of ISP's  board of  directors,
         other than Mr.  Heyman and Mr.  Kumar (each of whom  abstained  because
         they are also directors of ISPH); and

     o   the  fact  that  stockholders  who do not  vote  to  adopt  the  merger
         agreement  would  be  entitled,  subject  to  compliance  with  certain
         statutorily  required  procedures to exercise appraisal rights pursuant
         to Section 262 of the DGCL, which allows  stockholders to have the fair
         value of their shares  determined by the Court of Chancery of the State
         of Delaware and paid to them in cash.


     Neither Mr.  Heyman nor ISPH made any  purchases of ISP common stock during
the last two years and, therefore,  did not compare the merger  consideration to
any recent  prices paid by them for ISP common stock.  In addition,  neither Mr.
Heyman nor ISPH is aware of any offer made  during the last two years to acquire
ISP, thus no comparison of the merger  consideration  could be made to any other
comparable offer.

     The foregoing  discussion of the  information  and factors  considered  and
given  weight by Mr.  Heyman and ISPH is not intended to be  exhaustive,  but is
believed to include all material factors  considered by Mr. Heyman and ISPH. The
view  of  Mr.  Heyman  and  ISPH  as to the  fairness  of  the  merger  is not a
recommendation to any stockholder as to how that stockholder  should vote on the
merger.

OPINION OF LEHMAN BROTHERS

     In August 2002, the special committee engaged Lehman Brothers to act as its
financial  advisor with respect to Mr. Heyman's July 8, 2002 proposal to acquire
the  remaining  shares  of ISP not  already  beneficially  owned  by him and his
affiliates.  On November 6, 2002,  Lehman  Brothers  rendered  its oral  opinion
(subsequently confirmed in writing on November 8, 2002) to the special committee
that as of that date and based upon and subject to the assumptions,  limitations
and qualifications set forth in that opinion,  the consideration  offered in the
merger to the  unaffiliated  stockholders of ISP is fair, from a financial point
of view, to those stockholders.

                                       21


     THE FULL TEXT OF LEHMAN BROTHERS' WRITTEN OPINION DATED NOVEMBER 8, 2002 IS
ATTACHED  AS ANNEX B TO THIS  PROXY  STATEMENT.  STOCKHOLDERS  SHOULD  READ THAT
OPINION FOR A DISCUSSION OF THE ASSUMPTIONS MADE,  PROCEDURES FOLLOWED,  FACTORS
CONSIDERED  AND  LIMITATIONS  UPON THE REVIEW  UNDERTAKEN BY LEHMAN  BROTHERS IN
RENDERING  ITS  OPINION.  THE  FOLLOWING  IS A SUMMARY OF THAT  OPINION  AND THE
METHODOLOGY THAT LEHMAN BROTHERS USED TO RENDER ITS FAIRNESS OPINION.

     Lehman  Brothers'  advisory  services  and Lehman  Brothers'  opinion  were
provided  for  the  information  and  assistance  of the  special  committee  in
connection with its consideration of the merger agreement and the merger. Lehman
Brothers' opinion is not intended to be and does not constitute a recommendation
to any stockholder of ISP as to how such stockholder should vote with respect to
the merger.  Lehman  Brothers was not  requested to opine as to, and its opinion
does not address,  ISP's underlying  business decision to proceed with or effect
the merger.

     In arriving at its opinion, Lehman Brothers reviewed and analyzed:

     o   the merger agreement and the specific terms of the merger;

     o   publicly  available  information  concerning  ISP that Lehman  Brothers
         believed to be relevant to its analysis,  including ISP's annual report
         on Form  10-K for the  fiscal  year  ended  December  31,  2001,  ISP's
         quarterly reports on Form 10-Q for the quarters ended March 31 and June
         30, 2002,  and the amended  Schedule 13D filed by Mr. Heyman on July 9,
         2002;

     o   financial  and  operating  information  with  respect to the  business,
         operations  and prospects of ISP  furnished to Lehman  Brothers by ISP,
         including,  without  limitation,  the Five-Year Plan provided to Lehman
         Brothers on September 3, 2002 and the Updated  Projections  provided to
         Lehman  Brothers and the special  committee on October 21, 2002,  which
         were updated and lower  projections of future financial  performance of
         ISP prepared by management of ISP;

     o   a trading  history of ISP's common stock from June 25, 1991 to November
         4, 2002 and a comparison  of that  trading  history with those of other
         companies that Lehman Brothers deemed relevant;

     o   a comparison of the historical  financial results and present financial
         condition  of ISP with those of other  companies  that Lehman  Brothers
         deemed relevant; and

     o   a comparison  of the  financial  terms of the merger with the financial
         terms of certain other recent  transactions that Lehman Brothers deemed
         relevant.

In  addition,  Lehman  Brothers  had  discussions  with  the  management  of ISP
concerning its business,  operations,  assets, financial condition and prospects
and undertook such other studies, analyses and investigations as Lehman Brothers
deemed appropriate.

     In arriving at its  opinion,  Lehman  Brothers  assumed and relied upon the
accuracy and completeness of the financial and other  information used by Lehman
Brothers without  assuming any  responsibility  for independent  verification of
that  information  and further  relied upon the  assurances of management of ISP
that  they were not aware of any facts or  circumstances  that  would  make that
information inaccurate or misleading.  With respect to the financial projections
of ISP,  Lehman  Brothers was advised by ISP that the Updated  Projections  were
reasonably prepared on a basis reflecting the best currently available estimates
and judgments of the management of ISP as to the future financial performance of
ISP  and,   accordingly,   Lehman  Brothers   assumed  that  ISP  would  perform
substantially in accordance with those projections. Furthermore, Lehman Brothers
discussed  the Updated  Projections  with the  management of ISP and the special
committee,  and it was agreed that the Updated  Projections were the appropriate
projections to use in performing Lehman Brothers' analysis.

     In  arriving at its  opinion,  Lehman  Brothers  did not conduct a physical
inspection of the  properties  and  facilities of ISP and did not make or obtain
any  evaluations or appraisals of the assets or liabilities of ISP. In addition,
the special  committee did not authorize Lehman Brothers to solicit,  and Lehman
Brothers did not solicit,  any indications of interest from any third party with
respect to the purchase of all or a part of ISP's business.  Furthermore,  based
on advice of the management of ISP, Lehman  Brothers  understood that Mr. Heyman
does not  currently  intend to cause his  beneficial  interest in ISP to be sold
(other than as permitted  pursuant to the terms of the voting agreement  between
Mr. Heyman and ISP) or to solicit or entertain any proposals  from third parties
for  the  acquisition  of ISP as,  or  substantially  as,  an  entirety.  Lehman
Brothers'  opinion  was  necessarily  based  upon  market,  economic  and  other
conditions  as they  existed on, and could be  evaluated  as of, the date of the
opinion.

     In connection with rendering its opinion, Lehman Brothers performed certain
financial, comparative and other analyses as described below. The preparation of
a fairness opinion involves  various  determinations  as to the most appropriate
and relevant  methods of financial and comparative  analysis and the application
of those methods to the particular circumstances,  and therefore, is not readily
susceptible  to summary  description.  Furthermore,  in arriving at its opinion,
Lehman Brothers considered

                                       22


the results of all of its analyses and did not attribute any  particular  weight
to any  analysis  or  factor  considered  by it.  Accordingly,  Lehman  Brothers
believes that its analyses  must be  considered as a whole and that  considering
any portion of those analyses and factors,  without considering all analyses and
factors as a whole,  could create a misleading or incomplete view of the process
underlying its opinion.

     In its analyses,  Lehman Brothers made numerous assumptions with respect to
industry  performance,  general  business  and  economic  conditions  and  other
matters,  many of which are  beyond  the  control  of ISP.  None of ISP,  Lehman
Brothers  or any other  person  assumes  responsibility  if future  results  are
materially  different  from those  discussed.  Any estimates  contained in these
analyses are not necessarily indicative of actual values or predictive of future
results or values, which may be significantly more or less favorable than as set
forth  in  the  estimates.  In  addition,  analyses  relating  to the  value  of
businesses  do not  purport to be  appraisals  or to reflect the prices at which
businesses actually may be sold.

     The  following  is a summary of the  material  financial  analyses  used by
Lehman  Brothers  in  connection  with  providing  its  opinion  to the  special
committee.  In  arriving  at its  opinion,  Lehman  Brothers  did not  ascribe a
specific  range of value to ISP,  but rather  made its  determination  as to the
fairness,  from a financial point of view, to the  unaffiliated  stockholders of
ISP of the consideration offered to such stockholders in the merger on the basis
of the  financial  and  comparative  analyses  described  below.  Certain of the
summaries of financial analyses include information presented in tabular format.
In order to fully understand the financial analyses used by Lehman Brothers, the
tables must be read together with the text of each summary.  The tables alone do
not constitute a complete  description of the financial  analyses.  Accordingly,
the analyses  listed in the tables and  described  below must be considered as a
whole.  Considering any portion of those analyses and of the factors considered,
without  considering  all  analyses and  factors,  could create a misleading  or
incomplete view of the process underlying Lehman Brothers' opinion.

     STOCK TRADING HISTORY

     Lehman  Brothers  considered  historical  data with  regard to the  trading
prices of ISP common stock for the period from June 25, 1991 to November 4, 2002
and the relative stock price  performances  during this same period for ISP, the
Lehman Brothers  Specialty  Chemicals Index, or LBSCI, and the Standard & Poor's
500 Index.  During the year prior to  announcement  of Mr. Heyman's July 8, 2002
cash  proposal of $10.00 per share,  the closing  stock price of ISP ranged from
$5.60 to $11.11 per share.  Over this  approximate  one-year  period,  ISP stock
provided a negative return of 25.4%,  while the LBSCI provided a negative return
of  18.5%  and the S&P 500  Index  provided  a return  of  11.5%.  As such,  ISP
underperformed the LBSCI over this period by 6.9% and underperformed the S&P 500
Index over this period by 36.9%.  During the year prior to November 4, 2002, the
closing stock price of ISP ranged from $5.60 to $10.45 per share.  The following
table  summarizes the  historical  prices one year prior to November 4, 2002 and
one year prior to the announcement,  as well as the corresponding premium of the
merger consideration to each of these price statistics:



                                           PRIOR TO NOVEMBER 4, 2002                PRIOR TO JULY 8, 2002 ANNOUNCEMENT(1)
                                     ----------------------------------             -------------------------------------
                                      ISP PRICE               % PREMIUM             ISP PRICE                  % PREMIUM
                                      ---------               ---------             ---------                  ---------
                                                                                                       
Merger Consideration                     $10.30                      NA                $10.30                         NA
1 Day                                      9.20                   12.0%                  7.95                      29.6%
7 Days Avg.                                9.16                   12.5%                  7.82                      31.7%
30 Days Avg.                               9.26                   11.2%                  6.92                      48.8%
60 Days Avg.                               9.44                    9.2%                  7.70                      33.7%
90 Days Avg.                               9.59                    7.4%                  8.32                      23.8%
180 Days Avg.                              9.03                   14.0%                  8.61                      19.7%
1 Year Avg.                                8.98                   14.7%                  8.85                      16.4%
1 Year Median                              9.17                   12.3%                  8.80                      17.0%
1 Year High                               10.45                   (1.4%)                11.11                      (7.3%)
1 Year Low                                 5.60                   83.9%                  5.60                      83.9%



-----------------
(1) The "1 Day" trading date prior to announcement was July 8, 2002.

                                       23


     COMPARABLE TRADING ANALYSIS

     In order to assess how the public market  values shares of  non-controlled,
fully   distributed   publicly   traded   companies   with   similar   operating
characteristics as ISP, Lehman Brothers reviewed and compared specific financial
and operating data relating to ISP with selected  companies that Lehman Brothers
deemed  comparable  to ISP.  Lehman  Brothers  chose the  companies  used in the
comparable  trading  analysis  based on their  similarity  to ISP in the mix and
characteristics  of  their  businesses,   growth,  returns  and  margins.  These
companies consisted of:

     o   Albemarle Corp.,

     o   Arch Chemicals Inc.,

     o   Cambrex Corp.,

     o   Croda International PLC,

     o   Cytec Industries Inc.,

     o   Great Lakes Chemical Corp.,

     o   International Flavors & Fragrances Inc.,

     o   Penford Corp., and

     o   Sensient Technologies Corp.

     Using  publicly  available  information,  Lehman  Brothers  calculated  and
analyzed each  company's  enterprise  value  relative to certain  historical and
projected  financial  criteria such as sales,  earnings before interest,  taxes,
depreciation  and  amortization  (EBITDA) and earnings before interest and taxes
(EBIT).  The  enterprise  value of each  company  was  obtained  by  adding  its
short-term  and  long-term  debt to the sum of the  market  value of its  common
equity,  the value of any preferred  stock (at  liquidation  value) and the book
value of any minority  interest,  and subtracting its cash and cash equivalents.
The analysis indicated the following multiples as of November 4, 2002:



                                                            COMPARABLE COMPANIES
                                           -----------------------------------------------------            ISP AT
                                             HIGH                  MEAN                   LOW             TRANSACTION
                                           ---------             ---------             ---------          -----------
                                                                                                
Enterprise Value as a Multiple of:
  LTM(1) Sales                              2.36x                 1.38x                 0.66x               1.38x
  2002E Sales                               2.37x                 1.35x                 0.85x               1.35x
  2003E Sales                               2.31x                 1.27x                 0.85x               1.35x

LTM EBITDA                                  12.8x                  7.6x                  5.6x                6.8x
  2002E EBITDA                              10.2x                  7.3x                  5.4x                6.7x
  2003E EBITDA                               9.4x                  6.8x                  5.2x                6.9x

LTM EBIT                                    43.6x                 12.1x                 10.3x               10.2x
  2002E EBIT                                14.7x                 11.7x                 10.8x               10.1x
  2003E EBIT                                12.0x                 10.5x                 10.2x               10.6x



--------------
(1)  LTM means the latest  twelve  months  ending  June 30, 2002 for ISP and for
     other comparable  companies except as of May 31, 2002 for Penford Corp. and
     as of December 31, 2001 for Croda International PLC.

     Due to the  inherent  differences  between  the  business,  operations  and
prospects of ISP and the  business,  operations  and  prospects of the companies
included in the  comparable  companies,  Lehman  Brothers  believed  that it was
inappropriate to, and therefore did not, rely solely on the quantitative results
of the  comparable  trading  analysis  and  accordingly  also  made  qualitative
judgments   concerning   differences   between  the   financial   and  operating
characteristics  and  prospects  of  ISP  and  the  companies  included  in  the
comparable trading analysis that would affect the public trading values of each.
Accordingly,  using the mean  multiples  as a  general  guide,  Lehman  Brothers
selected certain  multiples that it believed  reflected the theoretical  trading
multiples for ISP on a non-controlled,  fully distributed  basis. Based on those
multiples,  this analysis indicated a range of equity values per share of $10.07
to $12.67.  Lehman  Brothers noted that the merger  consideration  of $10.30 per
share falls within this range.

                                       24


     INDUSTRY TRANSACTION ANALYSIS

     Using publicly available information, Lehman Brothers reviewed and compared
the purchase  prices and multiples  paid in 11  acquisitions  of companies  that
Lehman  Brothers  deemed  relevant to arriving at its opinion.  Lehman  Brothers
chose the transactions used in the industry transaction  analysis,  based on the
similarity  of the target  companies in the  transactions  to ISP in the mix and
characteristics of their businesses, growth, returns and margins.

     o   Acquisition of Roche Vitamins and Fine Chemicals by DSM NV,

     o   Acquisition  of  Haarmann & Reimer  (Bayer AG) by EQT  Northern  Europe
         Private Equity Fund,

     o   Acquisition of Cognis BV (Henkel KGaA) by an Investor Group,

     o   Acquisition of Ascot PLC by Dow Chemical Co.,

     o   Acquisition of Laporte PLC by Degussa AG,

     o   Acquisition of BF Goodrich Performance Materials by AEA Investors,

     o   Acquisition of Catalytica Pharmaceuticals (Catalytica Inc.) by DSM NV,

     o   Acquisition of Hickson International PLC by Arch Chemicals Inc.,

     o   Acquisition of Witco Corp. by Crompton & Knowles Corp.,

     o   Acquisition  of Zeneca  Specialties  (Astra  Zeneca  PLC) by Cinven and
         Investcorp, and

     o   Acquisition of Bio Whittaker Inc. by Cambrex Corp.

     Lehman  Brothers  considered  the  transaction  values as  multiples of LTM
sales,  EBITDA and EBIT for the four fiscal quarters  immediately  preceding the
announcement  of  each  applicable  transaction.   The  analysis  indicated  the
following multiples:



                                                       COMPARABLE TRANSACTIONS
                                          ------------------------------------------------              ISP AT
                                            HIGH                MEAN                 LOW              TRANSACTION
                                          ---------           ---------           ---------           -----------
                                                                                             
Transaction Value as a Multiple of:
  LTM Sales                                2.64x                1.57x               0.59x                1.38x
  LTM EBITDA                               10.5x                 8.6x                6.4x                 6.8x
  LTM EBIT                                 17.4x                14.0x               10.3x                10.2x


     Because  the  reasons  for and the  circumstances  surrounding  each of the
transactions analyzed were so diverse and because of the inherent differences in
the businesses,  operations,  financial conditions and prospects of ISP, and the
businesses,  operations,  and financial  conditions of the companies included in
the  industry  transactions  group,  Lehman  Brothers  believed  that  a  purely
quantitative   comparable   transaction   analysis  would  not  be  particularly
meaningful  in the  context of the merger.  Lehman  Brothers  believed  that the
appropriate use of an industry  transaction  analysis in this instance  involves
qualitative  judgments concerning the differences between the characteristics of
these  transactions and the merger which would affect the acquisition  values of
the acquired  companies  and ISP.  Lehman  Brothers also noted that the industry
transactions  all involved a full change of control  whereas the merger does not
involve a change of control. Using the mean multiples as a general guide, Lehman
Brothers selected certain  multiples that it believed  reflected the theoretical
transaction  multiples for ISP on a full change in control basis. Based on those
multiples,  this analysis indicated a range of equity values per share of $13.24
to $13.39.

     PURCHASE PRICE RATIO ANALYSIS

     Lehman Brothers reviewed for the special committee its purchase price ratio
analysis.  The purchase price ratio analysis provides enterprise value multiples
of key operating statistics for the implied transaction  valuations based on (i)
the $7.95  closing  price of ISP common  stock on July 8, 2002 (the day prior to
the announcement of Mr. Heyman's  proposal),  (ii) the original $10.00 per share
proposal and (iii) the revised $10.30 per share proposal. Based on each of these
stock prices,  Lehman Brothers calculated the ratio of ISP's enterprise value to
its forecasted  annual EBITDA and EBIT.  Lehman Brothers  calculated  enterprise
value by  adding  ISP's  short  and  long-term  debt and  certain  non-operating
liabilities to the equity value implied by the specified share prices,  and then
subtracted  the amount of ISP's cash and cash  equivalents  and the net value of
its investment portfolio.

                                       25


     The  original  $10.00 and revised  $10.30 per share  proposals  represented
premiums  to the  pre-announcement  share  price of $7.95  of 25.8%  and  29.6%,
respectively.  ISP's  implied  enterprise  value,  based on the original  $10.00
proposal,  represented multiples of 6.6x and 9.9x over estimated 2002 EBITDA and
2002 EBIT, respectively,  and 6.8x and 10.5x over estimated 2003 EBITDA and 2003
EBIT,  respectively.  The corresponding  multiples based on the $10.30 per share
proposal  were  6.7x  and  10.1x  for  2002 and 6.9x  and  10.6x  for  2003.  In
calculating the multiples, Lehman Brothers used the Updated Projections.

     The purchase  price ratio analysis  enabled Lehman  Brothers to compare the
multiples  implied by the  merger  consideration  with (i) the  pre-announcement
trading level of ISP common stock,  (ii) the current trading levels of companies
that Lehman  Brothers  deemed  comparable to ISP, as described in  "--Comparable
Company  Analysis,"  and (iii) the  multiples  of those  metrics paid in similar
transactions, as detailed in "--Industry Transaction Analysis."

     TRANSACTION PREMIA ANALYSIS

     Lehman  Brothers  reviewed  the premia paid for 30 selected  going  private
transactions  since  1998,  where (i) cash was used as  consideration,  (ii) the
remaining  minority  interest was less than 50%, and (iii) the transaction value
was greater than $100 million.  Lehman Brothers calculated the premium per share
paid by the acquiror for each respective  deal, as compared to the average share
price of the target company's common stock one day, 7 calendar days, 30 calendar
days and 90  calendar  days prior to the public  announcement  of each  selected
transaction. The analysis produced the following premia ranges:



                                                        PREMIA PAID OVER AVERAGE PRICE FOR:
                                      ----------------------------------------------------------------------
                                          1 DAY             7 DAYS             30 DAYS             90 DAYS
                                        ---------          ---------          ---------          -----------
                                                                                        
Low:                                        9.9%              13.2%              13.1%               13.5%
High:                                     140.0%             136.9%             113.3%              116.0%
Mean:                                      46.4%              47.7%              49.2%               42.2%
Median:                                    42.6%              43.4%              48.6%               36.2%
Company Share Price Data:                  $7.95              $7.82              $6.92               $8.32
Merger Consideration ($10.30):             29.6%              31.7%              48.8%               23.8%


     Based on the median  and mean  data,  this  analysis  indicated  a range of
equity values per share of $10.29 to $11.34 and $10.33 to $11.83,  respectively.
Lehman Brothers noted that the merger  consideration  of $10.30 falls within the
range based on the median data and below the range based on the mean data.

     Lehman Brothers also reviewed the premia paid for 19 selected going private
transactions  since  1992,  where (i) cash was used as  consideration,  (ii) the
remaining  minority  interest was less than 20%, and (iii) the transaction value
was greater than $100 million.  Lehman Brothers calculated the premium per share
paid by the acquiror for each respective  deal, as compared to the average share
price of the target company's common stock one day, 7 calendar days, 30 calendar
days  and  90  calendar  days  prior  to  the   announcement  of  each  selected
transaction. The analysis produced the following premia ranges:



                                                         PREMIA PAID OVER AVERAGE PRICE FOR:
                                        ----------------------------------------------------------------------
                                          1 DAY             7 DAYS              30 DAYS              90 DAYS
                                        ---------          ---------           ---------           -----------
                                                                                          
Low:                                       9.9%              13.2%               13.1%                 9.0%
High:                                    140.0%             122.7%               95.7%                73.4%
Mean:                                     40.8%              40.8%               44.3%                40.0%
Median:                                   43.5%              41.2%               42.9%                39.9%
Company Share Price Data:                 $7.95              $7.82               $6.92                $8.32
Merger Consideration ($10.30):            29.6%              31.7%               48.8%                23.8%


     Based upon the median and mean data,  this  analysis  indicated  a range of
equity  values per share of $9.89 to $11.64  and $9.99 to $11.65,  respectively.
Lehman Brothers noted that the merger  consideration of $10.30 falls within both
of these ranges.

     Lehman Brothers also reviewed the hypothetical performance of ISP stock had
the announcement of the proposal letter, dated July 8, 2002, from Mr. Heyman not
been made on July 8, 2002 by applying  the return of the LBSCI from July 8, 2002
through  November  4,  2002 to ISP's  stock  price of $7.95 the day prior to the
announcement of the July 8, 2002 proposal  letter.  Over this period,  the LBSCI
provided a negative return of 11.0%, implying a hypothetical  "unaffected" price
of $7.07 per share of ISP on  November  4,  2002 had the  announcement  not been
made. Lehman Brothers then applied the mean and

                                       26


median 1-day  premia of the two data sets  described  above to the  hypothetical
"unaffected"  ISP stock  price at November 4, 2002.  This  analysis  indicated a
range of equity values per share of $9.96 to $10.35.  Lehman Brothers noted that
the merger consideration of $10.30 falls within this range.

     Additionally, Lehman Brothers reviewed the premia paid for 60 selected full
acquisitions  since 2000 that did not  constitute  going  private  transactions,
where  (i) cash was used as  consideration,  (ii)  the  target  company  was not
classified  as a  financial  services  or  technology  company,  and  (iii)  the
transaction value was greater than $100 million.  Lehman Brothers calculated the
premium per share paid by the acquiror for each respective  deal, as compared to
the average share price of the target company's common stock one day, 7 calendar
days, 30 calendar days and 90 calendar  days prior to the  announcement  of each
selected transaction. The analysis produced the following premia ranges:



                                                        PREMIA PAID OVER AVERAGE PRICE FOR:
                                        ------------------------------------------------------------------
                                          1 DAY            7 DAYS             30 DAYS            90 DAYS
                                        ---------         ---------          ---------         -----------
                                                                                     
Low:                                      (7.8%)            (7.4%)             (3.4%)             (9.1%)
High:                                    540.0%            519.4%             411.7%             267.7%
Mean:                                     44.1%             45.6%              48.1%              51.7%
Median:                                   28.8%             31.7%              33.5%              37.6%
Company Share Price Data:                 $7.95             $7.82              $6.92              $8.32
Merger Consideration ($10.30):            29.6%             31.7%              48.8%              23.8%


     Based upon the median and mean data,  this  analysis  indicated  a range of
equity  values per share of $9.24 to $11.45 and $10.26 to $12.62,  respectively.
Lehman Brothers noted that the merger  consideration of $10.30 falls within both
of these ranges.

     DISCOUNTED CASH FLOW ANALYSIS

     Lehman Brothers  performed a discounted cash flow analysis on the projected
financial  information  of ISP for the fiscal years 2003 through 2007 based upon
the Updated Projections through 2006 and extrapolated financial results for 2007
based upon operating and financial assumptions,  forecasts and other information
provided to Lehman  Brothers by the management of ISP.  Using this  information,
Lehman  Brothers  discounted to present  (December 31, 2002) value the projected
stream of unlevered net income  (earnings  before  interest and after taxes) for
the fiscal  years 2003 to 2007 as adjusted  for (1) certain  projected  non-cash
items  (such  as  depreciation  and   amortization);   (2)  forecasted   capital
expenditures;  and (3) forecasted working capital  adjustments.  To estimate the
residual  value  of ISP at the end of the  forecast  period  ("Terminal  Value")
Lehman  Brothers  applied  a range of 3.0% to 5.0%  perpetuity  growth  rates to
projected  fiscal  2007 free cash  flow.  Lehman  Brothers  also  estimated  the
Terminal Value by applying a range of 6.7x to 8.0x multiples to projected fiscal
2007 EBITDA. Lehman Brothers used after tax discount rates of 9% to 11%.

     Based on these  discount  rates and a selected  range of  terminal  values,
Lehman Brothers  calculated the implied equity value per share at  approximately
$8.11 to $14.02.  Lehman Brothers noted that the merger  consideration of $10.30
falls within this range.

     Lehman  Brothers  performed a similar  discounted  cash flow  analysis with
regard to the  projected  financial  information  for ISP based on the Five-Year
Plan.  This  analysis   resulted  in  an  implied  equity  value  per  share  of
approximately $10.90 to $18.03.

     Lehman Brothers is an  internationally  recognized  investment banking firm
and, as part of its investment banking  activities,  is regularly engaged in the
valuation of businesses  and their  securities  in  connection  with mergers and
acquisitions,    negotiated    underwritings,    competitive   bids,   secondary
distributions  of  listed  and  unlisted  securities,   private  placements  and
valuations  for corporate and other  purposes.  The special  committee  selected
Lehman Brothers  because of its expertise,  reputation and familiarity  with ISP
and the  chemicals  industry  generally,  and  because  its  investment  banking
professionals  have  substantial  experience in  transactions  comparable to the
merger.

     As compensation  for its services in connection  with the merger,  ISP paid
Lehman Brothers $1.4 million, which was not contingent upon either the execution
of the merger  agreement or  consummation  of the merger.  In addition,  ISP has
agreed to  reimburse  Lehman  Brothers  for  reasonable  out-of-pocket  expenses
incurred in connection with its engagement and to indemnify  Lehman Brothers and
related persons for certain  liabilities that may arise out of its engagement by
the special committee and the rendering of its fairness opinion.

                                       27


     IN THE ORDINARY COURSE OF ITS BUSINESS,  LEHMAN BROTHERS MAY ACTIVELY TRADE
IN THE DEBT OR EQUITY SECURITIES OF ISP AND ITS SUBSIDIARIES FOR ITS OWN ACCOUNT
AND FOR THE ACCOUNTS OF ITS CUSTOMERS AND,  ACCORDINGLY,  MAY AT ANY TIME HOLD A
LONG OR SHORT POSITION IN SUCH SECURITIES.

ISP'S FORECASTS

     ISP does not,  as a matter of course,  publicly  disclose  forecasts  as to
future revenues or earnings. However, ISP management did prepare forecasts which
were  provided  to Mr.  Heyman in his  capacity  as  Chairman  of ISP's board of
directors and Lehman Brothers in connection  with its financial  analysis of ISP
and the merger proposal. The forecasts are included in this proxy statement only
because ISP provided that  information  to Lehman  Brothers and Lehman  Brothers
used the data in connection with its fairness  opinion and related  presentation
to the special  committee  and because Mr.  Heyman had access to that data.  See
"--Opinion of Lehman Brothers."

     ISP's  forecasts  were not prepared with a view to public  disclosure.  ISP
expects  actual and  forecasted  results to differ,  and actual  results  may be
materially  different  than  those  set forth  below.  ISP did not  prepare  the
forecasts  with a  view  to  complying  with  the  published  guidelines  of the
Securities and Exchange Commission regarding forecasts,  and ISP did not prepare
the  forecasts in accordance  with the  guidelines  established  by the American
Institute of Certified  Public  Accountants for preparation and  presentation of
financial  forecasts.  The projected  financial  information set forth below has
been prepared by and is the responsibility of ISP's management.  Moreover, ISP's
independent auditors have not examined,  compiled, or applied any procedures to,
the forecasts in accordance with standards established by the American Institute
of Certified Public Accountants and express no opinion or any assurance on their
reasonableness, accuracy or achievability.

     The projected  financial  data set forth below  constitute  forward-looking
statements.  It is not  possible  to predict  whether  the  assumptions  made in
preparing the forecasts will be valid,  and ISP cautions  stockholders  that any
such  forward-looking  statements are not guarantees of future performance.  ISP
cannot assure you that these forecasts will be realized,  and actual results may
be materially  more or less favorable than those  contained in the forecasts set
forth  below.  Investors  should  consider  the risks and  uncertainties  in our
business  that may  affect  future  performance  and that  are  discussed  under
"Special  Note  Regarding  Forward-Looking  Statements"  and  in  the  documents
incorporated by reference in this proxy statement.

     ISP's  inclusion of the  forecasts  should not be regarded as an indication
that ISP, the special  committee,  the board of directors,  Mr. Heyman,  ISPH or
Lehman Brothers considered or consider the forecasts to be a reliable prediction
of future  events,  and the forecasts  should not be relied upon as such. To the
extent that these forecasts represent ISP management's best estimate of possible
future  performance,  this estimate is made only as of the date of the forecasts
and not as of any later date.  In  particular,  the  projections  for  2003-2006
included in the  Five-Year  Plan were  prepared  in December  2001 and have been
superseded by the Updated Projections.  ISP does not intend to update, revise or
correct these forecasts if they become inaccurate. Stockholders should take this
into account when evaluating any factors or analyses based on ISP's forecasts.






                                       28


     As discussed above, on September 3, 2002 ISP's  management  provided Lehman
Brothers with the Five-Year  Plan.  The Five-Year  Plan was prepared in December
2001 for  presentation  to ISP's  board of  directors  in April  2002.  Prior to
delivering  the Five-Year  Plan to Lehman  Brothers,  management  reviewed ISP's
financial performance  (excluding ISP's investment activities) for the first six
months of 2002 and  revised  the 2002  full-year  projections  contained  in the
Five-Year  Plan, but did not undertake to update or confirm the  projections for
years 2003-2006.  Therefore,  the projections in the Five-Year Plan for the 2002
year were made as of September 3, 2002,  but the  2003-2006  projections  in the
Five-Year Plan were made as of December  2001. The  projections of net sales and
operating  income  contained in the  Five-Year  Plan (as adjusted) are set forth
below:



                                                                      FIVE-YEAR PLAN
                                          ---------------------------------------------------------------------
                                                              FISCAL YEARS ENDED DECEMBER 31,
                                          ---------------------------------------------------------------------
                                           2002 (1)         2003           2004          2005           2006
                                          ----------      ---------      ---------     ---------      ---------
                                                                      ($ in millions)
                                                                                         
NET SALES:
Personal Care.........................        $207.7        $218.5         $227.8        $237.3         $248.2
Pharmaceutical, Food and
   Beverage...........................         247.3         254.8          270.4         286.7          305.0
Performance Chemicals, Fine
   Chemicals and Industrial...........         304.1         275.5          284.4         292.5          301.4
                                           ---------      --------       --------      --------       --------
   Total Specialty Chemicals..........         759.1         748.8          782.6         816.5          854.6
Mineral Products......................          92.9          93.5           98.0         100.0          102.4
                                           ---------      --------       --------      --------       --------
   Total..............................        $852.1        $842.3         $880.6        $916.5         $957.0
                                           =========      ========       ========      ========       ========

OPERATING INCOME:(2)
Personal Care.........................        $ 33.1        $ 47.0         $ 49.6        $ 52.3         $ 54.2
Pharmaceutical, Food and
   Beverage...........................          59.6          62.3           66.8          71.6           75.4
Performance Chemicals, Fine
   Chemicals and Industrial...........           8.4           1.1            4.6           8.5           11.9
                                           ---------      --------       --------      --------       --------
   Total Specialty Chemicals..........         101.1         110.4          121.0         132.4          141.5
Mineral Products......................          19.8          19.3           20.0          20.5           20.6
                                           ---------      --------       --------      --------       --------
   Total..............................        $120.9        $129.7         $141.0        $152.9         $162.1
                                           =========      ========       ========      ========       ========


-------------
(1) Updated September 3, 2002

     The  forecasts  from the original  Five-Year  Plan  prepared  December 2001
     projected  net sales for 2002 of $821.4  million and  operating  income for
     2002 of $120.7 million.  These forecasts  included $209.9 million net sales
     and $44.8 million  operating  income for the personal care segment;  $239.6
     million  and  $57.9  million  for the  pharmaceutical,  food  and  beverage
     segment;  $288.7  million and $1.6 million for the  performance  chemicals,
     fine chemicals and industrial;  and $83.2 million and $16.4 million for the
     minerals segment.

(2) Excludes investment income and loss.


                                       29


     For the reasons  described under  "--Background  of the Merger," in October
2002, ISP's management  updated the projections  reflected in the Five-Year Plan
for  developments  occurring  after  December  2001 and provided  those  Updated
Projections to Lehman  Brothers on October 10, 2002 and again to Lehman Brothers
and the special committee on October 21, 2002. The Updated Projections took into
account  changes  in  circumstances  --  primarily  substantially  greater  than
anticipated pricing pressures in ISP's core chemicals and minerals businesses --
since the  preparation in the Five-Year Plan and  represented  ISP  management's
estimates  of  future   financial   performance   (excluding   ISP's  investment
activities)  for the years 2002 through 2006, as of October 10, 2002 and October
21, 2002. The projections of net sales and operating income, as reflected in the
Updated Projections, are set forth below:



                                                                    UPDATED PROJECTIONS
                                          ----------------------------------------------------------------------
                                                              FISCAL YEARS ENDED DECEMBER 31,
                                          ----------------------------------------------------------------------
                                             2002           2003           2004          2005           2006
                                          ----------      ---------      ---------     ---------      ----------
                                                                      ($ in millions)
                                                                                         
NET SALES:
Personal Care.........................        $207.7        $215.0         $220.0        $230.0         $240.0
Pharmaceutical, Food and
   Beverage...........................         247.3         267.0          275.0         283.0          290.0
Performance Chemicals, Fine
   Chemicals and Industrial...........         304.1         283.0          291.0         298.0          309.0
                                           ---------      --------       --------      --------       --------
   Total Specialty Chemicals..........         759.1         765.0          786.0         811.0          839.0
Mineral Products......................          92.9          87.0           89.0          91.0           93.0
                                           ---------      --------       --------      --------       --------
   Total..............................        $852.1        $852.0         $875.0        $902.0         $932.0
                                           =========      ========       ========      ========       ========





                                                                    UPDATED PROJECTIONS
                                          ----------------------------------------------------------------------
                                                              FISCAL YEARS ENDED DECEMBER 31,
                                          ----------------------------------------------------------------------
                                             2002           2003           2004          2005           2006
                                          ----------      ---------      ---------     ---------      ----------
                                                                      ($ in millions)
                                                                                         
OPERATING INCOME:(1)
Personal Care.........................        $ 33.1        $ 34.5         $ 36.5        $ 39.5         $ 42.0
Pharmaceutical, Food and
   Beverage...........................          59.6          66.0           69.5          72.5           74.5
Performance Chemicals, Fine
   Chemicals and Industrial...........           8.4           3.5            7.0           9.5           11.0
                                           ---------      --------       --------      --------       ---------
   Total Specialty Chemicals..........         101.1         104.0          113.0         121.5          127.5
Mineral Products......................          19.8          14.0           14.5          15.0           15.5
                                           ---------      --------       --------      --------       --------
   Total..............................         120.9         118.0          127.5         136.5          143.0
Contingency Provision.................            --          (3.0)          (4.5)         (4.5)          (4.5)
                                           ---------      --------       --------      --------       --------
   Forecast Operating Income..........        $120.9        $115.0         $123.0        $132.0         $138.5
                                           =========      ========       ========      =========      ========


(1) Excludes investment income and loss.

REASONS FOR THE MERGER; PURPOSE AND STRUCTURE OF THE MERGER

     The  purpose of the merger is to permit  holders of ISP's  common  stock to
realize a significant cash premium to ISP's  historical  market prices for their
shares and for Mr. Heyman to increase his equity ownership  interest in ISP from
approximately  81% to 100%. Mr. Heyman decided to pursue the merger at this time
for a number of reasons.  First, Mr. Heyman believes that ISP has been unable to
realize  some of the  primary  anticipated  benefits of having  publicly  traded
equity securities. For example, as a result of ISP's small public float, ISP has
been unable to utilize the ISP common stock as a currency for  acquisitions.  In
addition,  the lack of  appreciation  of the ISP common stock has impaired ISP's
ability to use stock options and other  equity-based  incentives as a meaningful
tool to attract and retain employees.

     Moreover,  Mr. Heyman believes that the near- and medium-term  prospects of
increasing  ISP  stockholder  value are  unfavorable  for a number  of  reasons.
Attracting public investors to a company with a majority stockholder and a small
public float is  inherently  difficult  and has been made more  difficult by the
general  stock  market  downturn.  In addition,  Mr.  Heyman  believes  that the
volatility  of  ISP's  earnings  as a result  of its  substantial  portfolio  of
investment  securities  has  negatively  impacted  and will  likely  continue to
negatively impact ISP's stock performance in the public market.

                                       30


     Mr.  Heyman seeks to improve  ISP's  operating  performance  by  increasing
management's  flexibility to take actions without the constraints imposed by the
public market.  Mr. Heyman  believes that without the  constraints of the public
market,  and in particular the market's  emphasis on quarterly  earnings,  ISP's
management will have greater  flexibility to effectively manage ISP's assets and
to make decisions that may negatively  impact quarterly  earnings,  but that may
increase the value of ISP's assets or earnings  over the long term.  In a public
company  setting,  decisions that  negatively  affect  quarterly  earnings could
significantly reduce ISP's share price.

     Mr.   Heyman  also  seeks  to  permit  ISP  to  eliminate   the  costs  and
administrative burdens of being a public company. Finally, following the merger,
ISP will no longer be subject to the reporting  requirements  of the  Securities
Exchange Act of 1934,  which will allow ISP to eliminate the costs of preparing,
printing  and  mailing  certain  corporate  reports  and  proxy  statements.  In
addition,  "going  private" will allow ISP to eliminate  certain other costs and
functions  associated with being a public company,  including  certain legal and
accounting  costs,  the costs of  maintaining a transfer  agent and the costs of
investor  relations  activities.  The elimination of the foregoing  requirements
will  also  eliminate  the  time  devoted  by  employees  and  members  of ISP's
management to those activities, thereby providing more freedom to focus on ISP's
business and operations.

     Mr. Heyman has considered  certain  alternatives  to the merger,  including
having ISP remain  public  without  acquiring  additional  shares or  pursuing a
public  offering to increase the liquidity of the public  trading market for the
ISP  common  stock.  However,  in light of  capital  market  conditions  and the
reluctance  of  institutional  investors  to purchase  stock of a company with a
small public float, ISP concluded that such an offering could not be effected on
terms that were economically attractive.  In addition, as noted in "--Background
of the  Merger,"  Mr.  Heyman  considered  the  possibility  of pursuing a going
private  transaction  by means of a  tender  offer  rather  than a  merger,  but
ultimately concluded that the merger constituted a preferable means of effecting
the proposed transaction.

     As discussed in "--Background of the Merger," the special committee and the
board of directors  considered the proposed  merger and decided to recommend the
transaction because they believed that the opportunity to receive the $10.30 per
share  cash  merger  consideration  was an  attractive  option to present to the
stockholders of ISP, other than Mr. Heyman and his affiliates, in light of ISP's
historical and current  financial and trading  performance and difficult general
economic and stock market  conditions.  The special  committee  and the board of
directors  also  considered  the  offer  to be  attractive  for  other  reasons,
including  difficulties  in remaining a publicly traded company with ISP's small
public  float and Mr.  Heyman's  unwillingness  to cause  ISP or his  beneficial
interest in ISP to be sold to a third party.

EFFECTS OF THE MERGER; PLANS OR PROPOSALS AFTER THE MERGER

     After the effective time of the merger,  holders of our common stock, other
than Mr. Heyman and his  affiliates,  will cease to have ownership  interests in
ISP or rights as our stockholders,  and instead will only be entitled to receive
$10.30 in cash for each of their shares of our common stock.  As a result of the
merger,  Mr.  Heyman's  interest  in our net book  value and net  earnings  will
increase from  approximately 81% to 100%, or by approximately  $100.6 million in
the case of book  value.  ISP  reported  a loss  for the  twelve  months  ending
September 30, 2002, so Mr. Heyman is increasing his attributable  share of ISP's
recent  net  loss.  As a  result  of the  merger,  Mr.  Heyman  will be the sole
beneficiary of our future  earnings and growth,  if any.  Similarly,  Mr. Heyman
will  also  bear the risk of any  losses  generated  by our  operations  and any
decrease in our value after the merger. As a result of the merger,  ISPH will be
merged with and into ISP and will cease to be a separate legal entity.

     None of Mr.  Heyman,  ISPH and ISP will  recognize  gain or loss for United
States federal income tax purposes as a result of the merger.

     Following the merger,  our common stock will no longer be traded on the New
York Stock Exchange. In addition, the registration of our common stock under the
Securities Exchange Act of 1934 will be terminated. Due to this termination, the
periodic  reporting  requirements  under that Act, certain provisions of Section
16(b) of that Act,  and  requirements  that we  furnish  a proxy or  information
statement in connection with stockholders'  meetings will no longer apply to us.
After the  effective  time of the merger,  there will be no publicly  traded ISP
common  stock  outstanding  and we would no longer be required to file  periodic
reports  with  the   Securities   and  Exchange   Commission.   Several  of  our
subsidiaries, however, would continue to file periodic reports in respect of the
outstanding  debt  securities of those  entities.  Specifically,  our subsidiary
International  Specialty  Holdings  Inc. is currently  required to file periodic
reports  pursuant to the Exchange Act and our primary  operating  subsidiary ISP
Chemco Inc. and certain of its subsidiaries have agreed to file periodic reports
with the  Commission  pursuant  to an  indenture  for so long as ISP  Chemco has
indebtedness outstanding under that indenture.

                                       31


     From and after the  effective  time of the merger,  our  current  directors
(other than Mr.  Sanford  Kaplan and the members of the special  committee)  and
officers will remain the directors and officers of ISP,  until their  successors
are duly elected or appointed and qualified.

     Mr. Heyman expects that following  completion of the merger, ISP's business
operations  will  be  conducted   substantially  as  they  are  currently  being
conducted.  Mr. Heyman has no other  current plans or proposals or  negotiations
which  relate  to or would  result  in an  extraordinary  corporate  transaction
involving our corporate  structure,  business or  management,  such as a merger,
reorganization,  liquidation,  relocation of any operations, or sale or transfer
of a material amount of assets. Nevertheless,  Mr. Heyman may initiate from time
to time  reviews  of us and our  assets,  corporate  structure,  capitalization,
operations,  properties,  management and personnel to determine what changes, if
any,  would be desirable  following  the merger in order best to organize  ISP's
activities.  Mr. Heyman expressly reserves the right to make any changes that he
deems  necessary  or  appropriate  in light of his  review or in light of future
developments.

     In addition,  Mr. Heyman may also consider  material changes in the present
dividend  rate and  policy,  indebtedness,  capitalization  and  management  and
employee  incentive plans and may consider  pursuing  acquisition  opportunities
through ISP.

INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS IN THE MERGER

     ISP's board of directors and executive  officers have various  interests in
the merger described in this section that are in addition to, or different from,
the interests of ISP's stockholders generally. ISP stockholders should keep this
in mind when considering the recommendation of ISP's board of directors that the
stockholders vote to adopt the merger agreement.

     POSITIONS AFTER THE MERGER


     After the  merger,  Mr.  Heyman and Mr.  Kumar are  expected to be the sole
remaining  directors of ISP. In addition,  each current executive officer of ISP
is expected to remain an executive  officer of ISP after the merger.  Mr. Heyman
and ISP retain the right to name additional or different directors and executive
officers after the merger, but currently have no intention to do so. There is no
current plan or arrangement  for materially  increasing the  compensation of any
director or executive  officer of ISP after the merger  (although  ISP expressly
reserves the right to make any changes it deems  necessary or appropriate in the
future). For additional  information regarding the compensation of our directors
and executive  officers,  please see the annual report on Form 10-K that ISP and
its subsidiaries have filed with the Securities and Exchange Commission.


     STOCK OPTIONS; RESTRICTED SHARES

     The  merger  agreement   provides  that  as  of  the  effective  time,  all
outstanding and  unexercised  employee stock options on ISP common stock granted
pursuant to the 1991 Incentive Plan for Key Employees and Directors and the 2000
Stock  Option  Plan for  Non-Employee  Directors  will be  canceled.  The merger
agreement provides that, in consideration for that cancellation,  the holders of
the options  will have the right to receive a cash  payment.  The amount of this
payment will equal the excess, if any, of the merger  consideration of $10.30 in
cash per share of ISP  common  stock  over the per share  exercise  price of the
options, multiplied by the number of shares of ISP common stock subject to those
options, reduced by applicable withholding taxes.

     In addition,  the merger  agreement  provides that each share of restricted
ISP common stock will be canceled in  consideration  for the right to receive an
amount in cash equal to $10.30,  as reduced  by  applicable  withholding  taxes,
subject to the  vesting  restrictions  that were  applicable  to the  underlying
restricted shares.

     Our   executive   officers  and  directors   currently   hold  a  total  of
approximately 1,072,500 options.  Approximately 496,000 of these options have an
exercise price below the $10.30 merger consideration and all but 18,666 of those
"in-the-money"  options are vested.  The  aggregate  payment that our  executive
officers and directors  would be entitled to receive for all of their options as
of the date of this proxy statement is approximately $1.58 million. In addition,
our  executive  officers and directors  hold  approximately  500,000  restricted
shares of ISP common stock.

     The table below sets forth the number of shares of ISPcommon  stock subject
to vested and unvested  "in-the-money"  stock  options  held,  and shares of ISP
common stock beneficially owned, by each of our executive officers and directors
and the  aggregate  payment that each  executive  officer and director  would be
entitled to receive in connection with the merger as a result of such holdings.

                                       32





                                                     "IN-THE-MONEY" OPTIONS:
                                                -------------------------------
NAME                                              VESTED              UNVESTED             SHARES         TOTAL PAYMENTS
                                                ----------            ---------           ---------       ---------------
                                                                                              
Samuel J. Heyman...........................       150,000                   0            52,328,040(1)     $5,902,500(1)
Sunil Kumar................................       100,000                   0               616,526         6,902,118(2)
Richard A. Weinberg........................        95,140                   0                79,055         1,090,573
Susan B. Yoss..............................        37,700                   0               160,000         1,677,752(3)
Roger J. Cope..............................        55,605                   0                60,228           696,471
Robert Englander...........................         1,667               6,333                     0             3,434
Lawrence Grenner...........................        11,000                   0                     0            26,953
Sanford Kaplan.............................        14,000               3,000                 5,000            85,985
Burt Manning...............................        14,000               3,000                 7,000           106,585
Alan M. Meckler............................         1,667               6,333                     0             3,434
Stephen R. Olsen...........................             0                   0               101,100         1,041,330(4)
Neal E. Murphy.............................             0                   0                     0                 0
Steven E. Post.............................             0                   0                     0                 0
All directors and executive
officers as a group (13 persons)...........       480,779              18,666            53,356,949(1)    $18,032,135(1)



-------------
(1)  Pursuant to the merger  agreement,  Mr. Heyman will not receive any payment
     in  exchange  for shares of ISP  common  stock  beneficially  owned by him,
     except that (i) Mr. Heyman is entitled to receive  $495,000 in exchange for
     cancellation  of his stock options and (ii) the 525,000 shares owned by the
     qualified  charitable  organization  referred  to below that Mr.  Heyman is
     deemed to  beneficially  own will be canceled  in  exchange  for the merger
     consideration per share.

     The Annette Heyman Foundation,  Inc., a charitable  organization recognized
     as tax-exempt  pursuant to Section  501(c)(3) of the Internal Revenue Code,
     holds 525,000  shares of ISP common stock.  The Annette  Heyman  Foundation
     will be entitled to receive the merger  consideration per share for each of
     these  shares,  or  approximately  $5,400,000.  Mr.  Heyman is  deemed  the
     beneficial owner of these shares because he is a director and the president
     of the  foundation.  These shares  constitute less than 1% of the shares of
     ISPcommon stock beneficially owned by Mr. Heyman.

     Mr. Heyman expects to cause the sale of 114,336  shares of ISPcommon  stock
     beneficially owned by him prior to the merger to non-affiliated  persons in
     one or more sales  pursuant to Rule 144 under the  Securities  Act of 1933.
     These  shares  were  originally  acquired  in open  market  purchases  from
     unaffiliated  third parties for an average price per share of approximately
     $7.08 and represent less than 0.25% of the shares beneficially owned by Mr.
     Heyman.  While the sale price for these shares cannot be determined at this
     time,  it is likely  that the sale  price  will be no more than  $10.30 per
     share. Accordingly,  Mr. Heyman anticipates that the sale proceeds will not
     exceed $1,177,661. The shares are being sold for personal tax and financial
     planning purposes.

(2)  Includes  $2,575,000  to be  paid,  subject  to  vesting  restrictions,  in
     exchange for surrendering 250,000 restricted shares of ISP's common stock.

(3)  Includes  $1,545,000  to be  paid,  subject  to  vesting  restrictions,  in
     exchange for surrendering 150,000 restricted shares of ISP's common stock.

(4)  Includes  $1,030,000  to be  paid,  subject  to  vesting  restrictions,  in
     exchange for surrendering 100,000 restricted shares of ISP's common stock.

     INDEMNIFICATION AND INSURANCE

     Following  the  completion  of the merger,  ISP is  required to  indemnify,
defend and hold  harmless,  to the full  extent  permitted  by law,  all current
officers  and  directors  of ISP  against all losses,  claims,  damages,  costs,
expenses  or  liabilities  or  in  connection  with  any  claim,  action,  suit,
proceeding  or  investigation  arising  out of the fact  that the  person  is an
officer or  director  of ISP (or out of any action  taken by any such  person on
behalf of ISP),  pertaining  to any matter  existing or occurring on or prior to
the effective time of the merger (including the transactions contemplated by the
merger  agreement),  whether  asserted or claimed prior to, or on or after,  the
effective  time of the merger.  In  addition,  ISP is  required to maintain  its
directors and  officers'  liability  insurance  policies in effect for six years
after the effective time of the merger,  except that ISP will not be required to
pay annual  insurance  premiums in excess of 200% of the  premiums it  currently
pays.

     On August 7, 2002, ISP entered into indemnity  agreements  with each member
of the special committee.  Pursuant to the indemnity  agreements,  ISP agreed to
indemnify Messrs. Englander,  Manning and Meckler for any expenses,  liabilities
and losses relating to their service as members of the special  committee and/or
the board of directors  in  connection  with the  transaction.  These  indemnity
agreements are in addition to the indemnity  available to the special  committee
members pursuant to ISP's amended and restated certificate of incorporation.

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO OUR STOCKHOLDERS

     The following is a summary of United States federal income tax consequences
of the merger to  stockholders  whose shares of ISP common  stock are  converted
into the right to receive cash pursuant to the merger.  The discussion  does not
purport to consider all aspects of United States  federal  income  taxation that
might be relevant to our stockholders. The discussion is based

                                       33


on current law which is subject to change possibly with retroactive  effect. The
discussion  applies only to stockholders  who hold shares of our common stock as
capital  assets,  and may not apply to shares of our common  stock  received  in
connection  with  the  exercise  of  employee  stock  options  or  otherwise  as
compensation,  or to certain types of stockholders (such as insurance companies,
tax-exempt organizations,  financial institutions and broker-dealers) who may be
subject to special rules.  This discussion does not discuss the tax consequences
to any of our  stockholders  who, for United States federal income tax purposes,
is a non-resident alien individual, foreign corporation,  foreign partnership or
foreign  estate or trust,  and does not  address  any aspect of state,  local or
foreign tax laws.

     The receipt of cash for shares of our common  stock  pursuant to the merger
will be a taxable transaction for United States federal income tax purposes.  In
general,  a  stockholder  who  surrenders  shares of our  common  stock for cash
pursuant to the merger will  recognize  capital  gain or loss for United  States
federal income tax purposes equal to the difference,  if any, between the amount
of cash received and the  stockholder's  adjusted tax basis in the shares of ISP
common stock  surrendered.  Gain or loss will be determined  separately for each
block of shares (i.e., shares acquired at the same cost in a single transaction)
surrendered for cash pursuant to the merger. Such gain or loss will be long-term
capital  gain or loss  provided  that a  stockholder's  holding  period for such
shares is more than 12 months  at the time of the  consummation  of the  merger.
Long-term  capital  gains of  individuals  are  eligible  for  reduced  rates of
taxation. There are limitations on the deductibility of capital losses.

     In general,  cash received by stockholders who exercise statutory appraisal
rights under  Section 262 of the DGCL in respect of such  appraisal  rights will
result in the recognition of gain or loss to such stockholders.  Any stockholder
who is considering exercising statutory appraisal rights should consult with its
own tax advisor for a full  understanding of the tax consequences of the receipt
of cash in respect of appraisal rights pursuant to the merger.

     Under the U.S.  federal backup  withholding tax rules,  unless an exemption
applies, the paying agent will be required to withhold,  and will withhold,  30%
of all cash  payments  to which a holder of shares is  entitled  pursuant to the
merger agreement,  unless the stockholder  provides a tax identification  number
(social   security   number,   in  the  case  of  an  individual,   or  employer
identification  number, in the case of other stockholders),  certifies that such
number is correct,  and  otherwise  complies  with such backup  withholding  tax
rules. Each of our stockholders should complete and sign the Substitute Form W-9
included  as part of the  letter of  transmittal  to be  returned  to the paying
agent, in order to provide the information and certification  necessary to avoid
backup  withholding  tax,  unless an exemption  applies and is  established in a
manner satisfactory to the paying agent.

     THE U.S.  FEDERAL INCOME TAX  CONSEQUENCES SET FORTH ABOVE ARE NOT INTENDED
TO CONSTITUTE A COMPLETE  DESCRIPTION  OF ALL TAX  CONSEQUENCES  RELATING TO THE
MERGER.  BECAUSE  INDIVIDUAL  CIRCUMSTANCES MAY DIFFER,  EACH STOCKHOLDER SHOULD
CONSULT THE  STOCKHOLDER'S  TAX ADVISOR REGARDING THE APPLICABILITY OF THE RULES
DISCUSSED  ABOVE  TO THE  STOCKHOLDER  AND THE  PARTICULAR  TAX  EFFECTS  TO THE
STOCKHOLDER OF THE MERGER, INCLUDING THE APPLICATION OF STATE, LOCAL AND FOREIGN
TAX LAWS.

LITIGATION

     In July of 2002,  six purported  class action suits were filed on behalf of
ISP  stockholders in the Court of Chancery of the State of Delaware  against ISP
and members of its board of directors.  These six suits have been  consolidated.
On July 12, 2002, a seventh ISP stockholder  filed a purported class action suit
in the United States  District  Court,  District of New Jersey,  against ISP and
members of its board of directors. The New Jersey claim was subsequently amended
to assert  derivative  claims as well.  The  plaintiffs  in the Delaware and New
Jersey  litigations  seek to represent the same class of ISP  stockholders.  The
Delaware  and New  Jersey  complaints  allege,  among  other  things,  that  the
defendants  have  breached  fiduciary  and other duties in  connection  with Mr.
Heyman's  proposal to acquire  beneficial  ownership of all shares of ISP common
stock that he does not already beneficially own. These complaints variously seek
a court  order  enjoining  the  proposed  transaction,  an award of  unspecified
damages  and  attorneys'  fees,  the  unwinding  of any  transaction  and  other
unspecified equitable relief.

     Following settlement discussions between counsel for Mr. Heyman and counsel
for plaintiffs in the Delaware and New Jersey litigations, on November 19, 2002,
the parties to the  stockholder  litigation  pending in  Delaware  agreed on and
executed a memorandum of understanding  to reflect a proposed  settlement of the
Delaware litigation. The parties to the Delaware litigation also agreed, subject
to the  conditions  described  below,  to  enter  into a  settlement  agreement,
cooperate in public  disclosures  related to the settlement and use best efforts
to gain approval of the settlement by the Delaware courts. Without any admission
of fault by the  defendants,  the memorandum of  understanding  for the proposed
settlement  of the Delaware  litigation  contemplates  a dismissal of all claims
with  prejudice  and a release in favor of all  defendants of any and all claims
related  to the  proposed  transaction  (including  the claims in the New Jersey
litigation) that have been or could have been asserted by the plaintiffs and all
members of a plaintiff class consisting of all record and beneficial  holders of
ISP common stock from July 7, 2002 through the  completion of the merger.  These
dismissed claims are referred to in this proxy statement as the settled claims.

                                       34


     The proposed  settlement of the Delaware  litigation is subject to numerous
conditions,  including the completion of confirmatory discovery,  execution of a
settlement agreement  containing a provision permitting  defendants to terminate
the settlement if, prior to final court approval,  any action other than the New
Jersey  litigation  is pending in any state or federal  court  which  raises any
settled claims, a determination by defendants prior to final court approval that
the dismissal of the litigation in accordance with the settlement agreement will
result in the release with  prejudice of the settled  claims,  final approval of
the settlement by the Delaware courts, and completion of the merger. Because the
proposed  settlement  is  subject  to  consummation  of the merger and the other
conditions  described  above,  any settlement  will not be final at the time you
will be asked to vote on the merger.  If the parties to the Delaware  litigation
do not  proceed  with the  proposed  settlement,  or in the event  the  proposed
settlement  ultimately is not approved by the Delaware courts,  the Delaware and
New Jersey  litigations  could proceed and the plaintiffs  could seek the relief
sought in their  complaints,  including  rescission of the merger or an award of
damages in favor of the ISP  stockholders  in any plaintiff  class that might be
certified.

     If the proposed  settlement of the Delaware  litigation  becomes final, the
defendants believe that any and all settled claims against the defendants in the
New Jersey  litigation will be released and the defendants  intend to move for a
dismissal of the New Jersey  litigation based on the final order in the Delaware
litigation.







                                       35


                               THE SPECIAL MEETING

     This proxy  statement is furnished in connection  with the  solicitation of
proxies by our board of directors in  connection  with a special  meeting of our
stockholders.

DATE, TIME AND PLACE OF THE SPECIAL MEETING

     The special meeting is scheduled to be held as follows:

     DATE: February ___, 2003

     TIME:_____________

     PLACE:  Offices of Simpson Thacher & Bartlett,  425 Lexington  Avenue,  New
York, New York

PROPOSAL TO BE CONSIDERED AT THE SPECIAL MEETING

     At the  special  meeting,  you will be asked to  consider  and vote  upon a
proposal to adopt an agreement and plan of merger, dated as of November 8, 2002,
between ISP and ISPH, a corporation 100% beneficially owned by Mr. Heyman and to
consider  such other  business as may  properly  come before the meeting and all
adjournments or postponements thereof.

RECORD DATE

     The board of directors  has fixed the close of business on January 10, 2003
as the record date for the special  meeting and only  holders of common stock on
the record date are entitled to notice of and to vote at the special meeting. On
that date, there were  approximately  170 holders of record of ISP common stock,
and  65,210,670  shares of common stock  outstanding.  On the record  date,  Mr.
Heyman  beneficially  owned 52,567,240  outstanding  shares of ISP common stock,
representing approximately 80.6% of the total voting power of ISP.

VOTING RIGHTS; VOTE REQUIRED FOR APPROVAL

     Each  share of ISP  common  stock  entitles  its  holder to one vote on all
matters  properly  coming  before the special  meeting.  A majority of the total
number of all outstanding  shares of common stock entitled to vote,  represented
in person or by proxy,  will  constitute  a quorum at the special  meeting.  Mr.
Heyman has agreed,  pursuant to a voting  agreement,  to cause all of the shares
beneficially  owned by him at the time of the meeting (but excluding shares held
by qualified  charitable  organizations) to be represented in person or by proxy
at the meeting. Accordingly, a quorum at the meeting is assured.

     If you hold your  shares  in an  account  with a broker  or bank,  you must
instruct  the broker or bank on how to vote your  shares.  If an executed  proxy
card returned by a broker or bank holding  shares  indicates  that the broker or
bank does not have discretionary authority to vote on the adoption of the merger
agreement,  the shares will be considered present at the meeting for purposes of
determining  the presence of a quorum,  but will not be voted on the proposal to
adopt the merger  agreement.  This is called a broker  non-vote.  Your broker or
bank will vote your shares only if you  provide  instructions  on how to vote by
following the instructions provided to you by your broker or bank.

     Under Delaware law, the merger agreement must be adopted by the affirmative
vote of the holders of a majority of the shares of common stock  outstanding and
entitled to vote at the  special  meeting.  Mr.  Heyman has agreed in the voting
agreement  to cause all of the shares  beneficially  owned by him at the time of
the meeting (but excluding shares held by qualified charitable organizations) to
vote  "FOR" the  merger  agreement,  which will  assure  adoption  of the merger
agreement under Delaware law.

     In addition,  although not required under the Delaware General  Corporation
Law or the amended and restated  certificate of incorporation or by-laws of ISP,
the merger  agreement  requires  that the majority of the minority  condition be
satisfied.

     Abstentions,  failures  to vote and  broker  non-votes  will  have the same
effect as a vote  against the adoption of the merger  agreement  for purposes of
obtaining a majority of all shares of ISP common  stock.  However,  abstentions,
failures  to vote and  broker  non-votes  will not  affect  satisfaction  of the
majority of the minority condition.

     Each of our directors and executive  officers has indicated  that he or she
intends  to vote  his or her own  shares  in  favor of  adoption  of the  merger
agreement.  If Mr.  Heyman and each of our  directors  and  officers  vote as we
expect,  83% of the  outstanding  shares of ISP common stock will have voted for
adoption of the merger agreement.

                                       36


VOTING AND REVOCATION OF PROXIES

     Stockholders  should mark, date, sign and return the proxy card and mail it
in the enclosed envelope as soon as possible so that your shares are represented
at the special meeting, even if you plan to attend the meeting in person.

     Proxies received at any time before the special meeting, and not revoked or
superseded  before being voted,  will be voted at the special  meeting.  Where a
specification is indicated by the proxy, it will be voted in accordance with the
specification.  Where no  specification  is  indicated,  the proxy will be voted
"FOR" the proposal to adopt the merger  agreement  and in the  discretion of the
persons named in the proxy with respect to any other business which may properly
come before the meeting or any adjournment of the meeting and which is not known
a  reasonable  time  before  the  meeting.  However,  the  proxies  do not grant
authority to vote on any proposal to adjourn or postpone the special meeting for
the  purpose of  soliciting  further  proxies in favor of adoption of the merger
agreement.  Our board of directors is not currently  aware of any business to be
brought  before the  special  meeting  other than that  described  in this proxy
statement.

     Until your proxy is exercised at the special  meeting,  you can revoke your
proxy and change your vote in any of the following ways:

     o   by delivering  written  notification  of revocation to our Secretary at
         our executive offices at 1361 Alps Road, Wayne, New Jersey 07470,

     o   by delivering a proxy of a later date,

     o   by attending the special meeting and voting in person.  Your attendance
         at the special meeting will not, by itself, revoke any proxy previously
         delivered by you; you must vote in person at the meeting, or

     o   if you have  instructed a broker to vote your shares,  by following the
         directions received from your broker to change those instructions.

     Votes will be tabulated by our transfer agent, The Bank of New York.

SOLICITATION OF PROXIES

     We will bear the expenses in connection  with the  solicitation of proxies.
Arrangements  will  also be made with  brokerage  houses  and other  custodians,
nominees and  fiduciaries  for the  forwarding of  solicitation  material to the
beneficial  owners of common  stock held of record by such  persons,  and we may
reimburse  them  for  their  reasonable   transaction  and  clerical   expenses.
Solicitation  of proxies will be made  principally by mail.  Proxies may also be
solicited  in person,  or by  telephone or facsimile by our officers and regular
employees.  These  people  will  receive no  additional  compensation  for these
services,  but will be reimbursed for any transaction  expenses incurred by them
in connection with these services.

     We have also retained Georgeson  Shareholder  Communications  Inc., a proxy
solicitation firm, for a fee of $7,500 plus transaction  expenses,  to assist in
the solicitation of proxies from  stockholders,  including  brokerage houses and
other custodians, nominees and fiduciaries.

                                   THE MERGER

     This  section  of the proxy  statement  describes  material  aspects of the
proposed  merger,  including  the merger  agreement,  which is  incorporated  by
reference to this proxy  statement  and is attached  hereto as Annex A. While we
believe  that the  description  covers the  material  terms of the merger,  this
summary is qualified  in its  entirety by reference to the complete  text of the
merger agreement and may not contain all of the information that is important to
you. You should carefully read this entire proxy statement, the merger agreement
and the other documents we refer you to for a more complete understanding of the
merger.

     In the  merger,  ISPH  will  merge  into  ISP  with  ISP  as the  surviving
corporation in the merger.

     As a result of the merger, ISP will cease to be a publicly held company and
will  become  a  private  corporation,  all  of  the  stock  of  which  will  be
beneficially owned by Mr. Heyman.

                                       37


EFFECTIVE TIME OF MERGER

     If the merger  agreement is adopted by the requisite  votes of stockholders
and the other  conditions  to the merger are  satisfied  or waived to the extent
permitted,  the merger will be  consummated  and become  effective at the time a
certificate  of  merger  is filed  with the  Secretary  of State of the State of
Delaware  or any  later  time as ISP and  ISPH  agree  upon and  specify  in the
certificate  of merger.  The filing is expected to occur as soon as  practicable
after  adoption  of the merger  agreement  by ISP  stockholders  at the  special
meeting and  satisfaction  or waiver of the other  conditions  to the merger set
forth in the merger  agreement.  Upon the  completion  of the merger,  ISPH will
cease to exist  and ISP  will  continue  as the  surviving  corporation.  If our
stockholders  vote to adopt the  merger  agreement,  we expect to  complete  the
merger during the first quarter of 2003.

PAYMENT OF MERGER CONSIDERATION AND SURRENDER OF STOCK CERTIFICATES

     If we complete the merger, our common  stockholders  (other than holders of
common stock  beneficially  owned by Mr. Heyman and holders who perfected  their
appraisal  rights under Delaware law) will be entitled to receive $10.30 in cash
for each  share of ISP  common  stock  that they own.  In  addition,  charitable
organizations  that own common stock will be entitled to receive  $10.30 in cash
for each  share of ISP  common  stock  that they  own,  even if the  shares  are
beneficially  owned by Mr. Heyman.  A qualified  charitable  organization  holds
525,000 shares of ISP common stock that are deemed to be  beneficially  owned by
Mr. Heyman.  The qualified  charitable  organization will receive $10.30 in cash
for each of these shares,  as described  under  "Special  Factors--Interests  of
Directors and Executive Officers in the Merger."

     We will designate a paying agent to make the cash payments  contemplated by
the merger agreement.  From time to time after the effective time of the merger,
ISP will  deposit in trust with the paying  agent  funds  sufficient  to pay the
merger consideration to stockholders.  The paying agent will deliver your merger
consideration to you according to the procedure summarized below.

     After  the  effective  time of the  merger we will not  transfer  shares of
common stock that were  outstanding  immediately  prior to the effective time on
our stock transfer books. If you present common stock  certificates to us or our
paying  agent after the  effective  time of the  merger,  we will cancel them in
exchange for cash as described in this section.

     As soon as practicable after the effective time of the merger, we will send
you,  or  cause to be sent to you,  a letter  of  transmittal  and  instructions
advising  you how to  surrender  your  certificates  in exchange  for the merger
consideration.

     The paying  agent will pay your  merger  consideration,  together  with any
dividends  to which you are  entitled,  to you after you have  surrendered  your
certificates to the paying agent.

     Interest  will not be paid or accrue in respect of cash  payments of merger
consideration. We will reduce the amount of any merger consideration paid to you
by any applicable withholding taxes.

     If the paying agent is to pay some or all of your merger consideration to a
person  other than you,  you must have your  certificates  properly  endorsed or
otherwise  in proper form for  transfer,  and you must pay any transfer or other
taxes payable by reason of the transfer or establish to ISP's  satisfaction that
the taxes have been paid or are not required to be paid.

     YOU SHOULD NOT FORWARD YOUR STOCK  CERTIFICATES TO THE PAYING AGENT WITHOUT
A LETTER OF TRANSMITTAL,  AND YOU SHOULD NOT RETURN YOUR STOCK CERTIFICATES WITH
THE ENCLOSED PROXY.

     The transmittal instructions will tell you what to do if you have lost your
certificate,  or it has been  stolen or  destroyed.  You will have to provide an
affidavit to that fact and, if required by our paying agent or ISP,  post a bond
in an  amount  that  the  paying  agent or ISP,  as the case may be,  reasonably
directs as indemnity against any claim that may be made against those parties in
respect of the certificate.

     At the effective time of and after the merger, subject to the exceptions in
the next  sentence,  you will cease to have any rights as our  stockholder.  The
exceptions  include the right to receive dividends or other  distributions  with
respect to your  shares with a record  date  before the  effective  time and the
right to  surrender  your  certificates  in  exchange  for payment of the merger
consideration.

ACCOUNTING TREATMENT

     For U.S. accounting and financial  reporting  purposes,  the acquisition of
shares  in the  merger  will be  accounted  for  under  the  purchase  method of
accounting.

                                       38


FEES AND EXPENSES OF THE MERGER

     All fees and  expenses  in  connection  with the merger will be paid by the
party  incurring  those fees and expenses,  except that we will pay the expenses
related to the preparation, printing and mailing of this proxy statement and all
filing  and  other  fees  paid to the  Securities  and  Exchange  Commission  in
connection  with the merger.  The total fees and expenses in connection with the
merger are estimated to be approximately  $3.2 million.  This amount consists of
the following estimated fees:

     Legal and Other Professional Fees(1)              $2,750,000

     Printing, Proxy Solicitation and Mailing Costs       100,000

     Special Committee Fees                                60,000

     Filing Fees (SEC)                                     26,873

     Miscellaneous                                        250,000
     -------------                                    -----------

     Total                                            $ 3,186,873


--------------
(1) Includes fees paid to Lehman Brothers Inc.

FINANCING OF THE MERGER

     We and Mr.  Heyman  estimate  that  approximately  $134.4  million  will be
required to complete  the  purchase  of shares of our common  stock,  restricted
stock and  options  pursuant  to the  merger  (excluding  the fees and  expenses
referred  to above).  Mr.  Heyman and ISP expect  this  amount to be paid out of
available  funds  of ISP at the  effective  time  of the  merger.  We  currently
anticipate  that ISP will obtain  those funds by entering  into an  intercompany
borrowing  arrangement  immediately  prior to the closing of the merger with its
indirect  wholly  owned  subsidiary,  ISP  Investco  LLC,  pursuant to which ISP
Investco LLC will lend ISP  unrestricted  funds  sufficient to pay the costs and
expenses  of the  merger,  including  the  merger  consideration.  ISP  Investco
currently  has  sufficient  capital  to cover  the cost of  funding  the  merger
consideration. The merger is not conditioned on any financing arrangements.

APPRAISAL RIGHTS

     Under  Section  262 of the DGCL,  if you do not wish to accept  $10.30  per
share in cash for your  shares of common  stock,  you may elect to have the fair
value of your shares of common stock  judicially  determined  and paid to you in
cash, together with a fair rate of interest,  if any. The valuation will exclude
any element of value  arising  from the  accomplishment  or  expectation  of the
merger.  You may only exercise these rights if you comply with the provisions of
Section 262. The  following  discussion  is not a complete  statement of the law
pertaining to appraisal  rights under the DGCL, and is qualified in its entirety
by the full text of Section 262 set forth in Annex D.

     Under Section 262 of the DGCL,  where a proposed  merger is to be submitted
for  approval  at a  meeting  of  stockholders,  as in the  case of our  special
meeting,  the  corporation,  not less than 20 days  prior to the  meeting,  must
notify  each  of its  stockholders  entitled  to  appraisal  rights  that  these
appraisal rights are available and include in that notice a copy of Section 262.
This proxy  statement will constitute this notice to the holders of common stock
and the applicable  statutory  provisions of the DGCL are attached to this proxy
statement as Annex D. Any  stockholder  who wishes to exercise  those  appraisal
rights or who wishes to preserve the right to do so should review  carefully the
following discussion and Annex D to this proxy statement. FAILURE TO COMPLY WITH
THE  PROCEDURES  SPECIFIED IN SECTION 262 OF THE DGCL TIMELY AND  PROPERLY  WILL
RESULT IN THE LOSS OF APPRAISAL RIGHTS.  Moreover,  because of the complexity of
the  procedures  for exercising the right to seek appraisal of the common stock,
we believe that  stockholders  who consider  exercising those rights should seek
the advice of counsel.

     All  references  in  Section  262 of the  DGCL  and in  this  summary  to a
"stockholder" are to the record holder of the shares of common stock as to which
appraisal rights are asserted.  A PERSON HAVING A BENEFICIAL  INTEREST IN SHARES
OF COMMON STOCK HELD OF RECORD IN THE NAME OF ANOTHER  PERSON,  SUCH AS A BROKER
OR NOMINEE,  MUST ACT PROMPTLY TO CAUSE THE RECORD HOLDER TO FOLLOW PROPERLY THE
STEPS SUMMARIZED BELOW AND IN A TIMELY MANNER TO PERFECT APPRAISAL RIGHTS.

                                       39


     Any  holder  of  common  stock  wishing  to  exercise  the  right to demand
appraisal  under  Section  262 of the DGCL must  satisfy  each of the  following
conditions:

     o   the holder must  deliver to us a written  demand for  appraisal  of its
         shares  before the vote on the adoption of the merger  agreement at the
         special  meeting.  This  demand  will be  sufficient  if it  reasonably
         informs us of the identity of the  stockholder and that the stockholder
         intends by that writing to demand the appraisal of its shares;

     o   the  holder  must not vote its  shares of common  stock in favor of the
         adoption of the merger agreement. A proxy which does not contain voting
         instructions will, unless revoked, be voted in favor of the adoption of
         the merger agreement.  Therefore,  a stockholder who votes by proxy and
         who wishes to exercise  appraisal rights must vote against the adoption
         of the merger agreement or abstain from voting on the merger agreement;
         and

     o   the holder  must  continuously  hold its shares from the date of making
         the demand through the  effectiveness  of the merger. A stockholder who
         is the record  holder of shares of common stock on the date the written
         demand for appraisal is made but who thereafter  transfers those shares
         prior  to the  effectiveness  of the  merger  will  lose  any  right to
         appraisal in respect of those shares.

     Voting  against,  abstaining  from  voting  on or  failing  to  vote on the
proposal to adopt the merger  agreement will not constitute a written demand for
appraisal  within the meaning of Section 262 of the DGCL. The written demand for
appraisal  must be in addition to, and separate  from,  any proxy you deliver or
vote you cast in person.

     Only a holder of record of  shares of common  stock is  entitled  to assert
appraisal rights for those shares registered in that holder's name. A demand for
appraisal should:

     (1) be executed  by or on behalf of the  stockholder  of record,  fully and
         correctly, as its name appears on those stock certificates, and

     (2) specify the following:

         o  the stockholder's name and mailing address,

         o  the number of shares of common stock owned by the stockholder, and

         o  that the  stockholder  intends thereby to demand  appraisal  of  its
            common stock.

     If the shares are owned of record by a person in a fiduciary capacity, such
as a trustee,  guardian  or  custodian,  the demand  should be  executed in that
capacity.  If the  shares are owned of record by more than one  person,  as in a
joint  tenancy  or tenancy in common,  the demand  should be  executed  by or on
behalf of all owners. An authorized  agent,  including one or more joint owners,
may execute a demand for  appraisal  on behalf of a  stockholder;  however,  the
agent must identify the record owner or owners and  expressly  disclose the fact
that,  in executing  the demand,  the agent is acting as agent for such owner or
owners. A record holder such as a broker who holds shares as nominee for several
beneficial owners may exercise  appraisal rights with respect to the shares held
for one or more beneficial owners while not exercising these rights with respect
to the shares held for one or more other  beneficial  owners.  In this case, the
written  demand  should set forth the number of shares as to which  appraisal is
sought, and where no number of shares is expressly  mentioned the demand will be
presumed to cover all shares held in the name of the record owner.  STOCKHOLDERS
WHO HOLD THEIR SHARES IN BROKERAGE  ACCOUNTS OR OTHER NOMINEE FORMS AND WHO WISH
TO  EXERCISE  APPRAISAL  RIGHTS  ARE URGED TO  CONSULT  WITH  THEIR  BROKERS  TO
DETERMINE  APPROPRIATE  PROCEDURES  FOR THE MAKING OF A DEMAND FOR  APPRAISAL BY
SUCH NOMINEE.

     A stockholder who elects to exercise  appraisal  rights pursuant to Section
262 of the DGCL  should  mail or  deliver a  written  demand  to:  International
Specialty  Products Inc., 1361 Alps Road,  Wayne,  New Jersey 07470,  Attention:
Secretary.

     Within  ten days  after  the  effective  time of the  merger,  ISP,  as the
surviving  corporation,  must  notify  each  holder of our common  stock who has
complied  with  Section  262 of the  DGCLand  who has not  voted in favor of the
adoption of the merger  agreement of the date that the merger became  effective.
Within 120 days after the effective time of the merger, but not after that date,
either ISP or any stockholder who has complied with the  requirements of Section
262 may file a  petition  in the  Court of  Chancery  of the  State of  Delaware
demanding a determination of the value of the shares of common stock held by all
stockholders demanding appraisal of their shares. We are under no obligation to,
and have no present intent to, file a petition for appraisal,  and  stockholders
seeking to  exercise  appraisal  rights  should  not assume  that we will file a
petition with respect to the fair value of the shares. Accordingly, stockholders
who desire to have their shares appraised should initiate all necessary

                                       40


action for the perfection of their appraisal  rights within the time periods and
in the manner  prescribed in Section 262.  Since we have no obligation to file a
petition,  your failure to do so within the period  specified could nullify your
previous written demand for appraisal.

     Under the merger  agreement,  we have agreed to give ISPH prompt  notice of
any demands for appraisal we receive prior to the effective  time.  Prior to the
effective time, ISPH has the right to participate in and direct all negotiations
and proceedings  with respect to demands for appraisal under the DGCL.  Prior to
the effective  time, we will not, except with the prior written consent of ISPH,
make any payment with respect to any demands for appraisal,  or offer to settle,
or settle or otherwise negotiate, any demands.

     Within 120 days after the effectiveness of the merger, any stockholder that
complies  with the  provisions  of Section  262 of the DGCLto that point in time
will be entitled to receive from us, upon written request,  a statement  setting
forth the  aggregate  number of shares not voted in favor of the adoption of the
merger  agreement  and  with  respect  to  which we have  received  demands  for
appraisal and the aggregate number of holders of those shares. We must mail this
statement to the  stockholder by the later of 10 days after receipt of a request
or 10 days after expiration of the period for delivery of demands for appraisals
under Section 262.

     A stockholder  who timely files a petition for appraisal  with the Court of
Chancery  of the State of  Delaware  must  serve a copy upon ISP.  ISP must then
within 20 days file with the  Register  in  Chancery  of the State of Delaware a
duly verified list  containing the names and addresses of all  stockholders  who
have demanded appraisal of their shares and who have not reached agreements with
us as to the  value of their  shares.  After  notice to  stockholders  as may be
ordered by the Court of Chancery of the State of Delaware, the Court of Chancery
of the State of Delaware is  empowered  to conduct a hearing on the  petition to
determine  which  stockholders  are entitled to appraisal  rights.  The Court of
Chancery of the State of Delaware may require  stockholders who have demanded an
appraisal for their shares and who hold stock  represented  by  certificates  to
submit  their  certificates  to the  Register  in Chancery  for  notation on the
certificates  of  the  pendency  of  the  appraisal  proceedings,   and  if  any
stockholder  fails to comply with the requirement,  the Court of Chancery of the
State of Delaware may dismiss the proceedings as to that stockholder.

     After  determining  which  stockholders  are entitled to an appraisal,  the
Court of Chancery of the State of Delaware  will  appraise  the "fair  value" of
their  shares.  This value will  exclude any element of value  arising  from the
accomplishment  or  expectation  of the merger,  but will include a fair rate of
interest,  if any, to be paid upon the amount  determined  to be the fair value.
The costs of the action may be  determined by the Court of Chancery of the State
of Delaware  and taxed upon the parties as the Court of Chancery of the State of
Delaware  deems  equitable.  Upon  application  of a  stockholder,  the Court of
Chancery  of the State of  Delaware  may also order that all or a portion of the
expenses incurred by any stockholder in connection with the appraisal proceeding
be  charged  pro  rata  against  the  value  of all of the  shares  entitled  to
appraisal. These expenses may include, without limitation, reasonable attorneys'
fees and the fees and  expenses of  experts.  STOCKHOLDERS  CONSIDERING  SEEKING
APPRAISAL  SHOULD BE AWARE  THAT THE FAIR  VALUE OF THEIR  SHARES AS  DETERMINED
UNDER  SECTION 262 OF THE DGCL COULD BE MORE THAN,  THE SAME AS OR LESS THAN THE
MERGER  CONSIDERATION  THEY WOULD BE ENTITLED TO RECEIVE  PURSUANT TO THE MERGER
AGREEMENT IF THEY DID NOT SEEK  APPRAISAL OF THEIR SHARES.  STOCKHOLDERS  SHOULD
ALSO BE AWARE THAT INVESTMENT  BANKING  OPINIONS AS TO FAIRNESS FROM A FINANCIAL
POINT OF VIEW ARE NOT NECESSARILY OPINIONS AS TO FAIR VALUE UNDER SECTION 262.

     In determining fair value and, if applicable,  a fair rate of interest, the
Court of Chancery of the State of Delaware is to take into  account all relevant
factors.  In WEINBERGER V. UOP, INC., the Supreme Court of the State of Delaware
discussed the factors that could be considered in  determining  fair value in an
appraisal proceeding,  stating that "proof of value by any techniques or methods
that  are  generally  considered  acceptable  in  the  financial  community  and
otherwise  admissible  in court"  should be  considered,  and that  "fair  price
obviously requires  consideration of all relevant factors involving the value of
a company."

     In  WEINBERGER,  the  Supreme  Court of the State of  Delaware  stated that
"elements of future  value,  including the nature of the  enterprise,  which are
known or  susceptible  of proof as of the date of the merger and not the product
of speculation,  may be considered."  Section 262 of the DGCLprovides,  however,
that fair value is to be  "exclusive  of any element of value  arising  from the
accomplishment or expectation of the merger."

     Any  stockholder  who has duly  demanded an  appraisal in  compliance  with
Section 262 of the  DGCLwill  not,  after the  effectiveness  of the merger,  be
entitled  to vote the  shares  subject  to that  demand  for any  purpose  or be
entitled to the payment of dividends  or other  distributions  on those  shares.
However,  stockholders  will be entitled  to  dividends  or other  distributions
payable  to  holders  of  record  of  shares  as of a record  date  prior to the
effective time of the merger.

                                       41


     If any  stockholder  who demands  appraisal  of its shares of common  stock
under  Section 262 of the  DGCLfails  to perfect,  or  effectively  withdraws or
loses,  that  holder's  right to  appraisal,  the shares of common stock of that
stockholder will be deemed to have been converted at the effective time into the
right to receive the merger  consideration.  A stockholder will fail to perfect,
or  effectively  lose or  withdraw,  its right to  appraisal  if no petition for
appraisal is filed within 120 days after the effective time of the merger, or if
the  stockholder  delivers  to ISP,  as the  surviving  corporation,  a  written
withdrawal of its demand for  appraisal and an acceptance of the merger,  except
that any attempt to withdraw made more than 60 days after the effective  time of
the  merger  will  require  the  written  approval  of  ISP,  as  the  surviving
corporation,  and,  once a  petition  for  appraisal  is  filed,  the  appraisal
proceeding may not be dismissed as to any holder absent court approval.

     If we do not  approve a  stockholder's  request  to  withdraw  a demand for
appraisal when the approval is required or if the Court of Chancery of the State
of Delaware  does not approve the  dismissal  of an  appraisal  proceeding,  the
stockholder  would be entitled to receive only the appraised value determined in
any such appraisal proceeding.  This value could be higher or lower than, or the
same as, the value of the merger consideration.

     Failure to comply  strictly with all of the procedures set forth in Section
262 of the DGCL will result in the loss of a stockholder's  statutory  appraisal
rights.  Consequently,  any stockholder  wishing to exercise appraisal rights is
urged to consult legal counsel before attempting to exercise those rights.

     Mr. Heyman and his affiliates, as the holders of ISP common stock, may also
elect to have the fair value of their  common  stock  judicially  determined  by
following the  procedures  described  above.  However,  Mr. Heyman has agreed to
vote, or cause to be voted,  all of the shares of ISP common stock  beneficially
owned by him, at the time of the  stockholder  meeting,  in favor of adoption of
the merger  agreement  and has advised us that he has no intention of exercising
appraisal rights with respect to any of its shares.

REGULATORY APPROVALS AND OTHER CONSENTS

     We believe  that there are no  significant  regulatory  approvals  or other
consents required to complete the merger.

THE MERGER AGREEMENT

     CERTIFICATE OF INCORPORATION,  BY-LAWS AND DIRECTORS AND OFFICERS OF ISP AS
THE SURVIVING CORPORATION

     When the merger is completed:

         o    the amended and restated certificate of incorporation of ISP as in
              effect  immediately prior to the effective time of the merger will
              be the amended and restated certificate of incorporation of ISP as
              the surviving corporation;

         o    the by-laws of ISPH in effect  immediately  prior to the effective
              time will be the by-laws of ISP as the surviving corporation;

         o    the  directors  of ISP  immediately  prior to the  effective  time
              (other  than  Sanford  Kaplan and those  directors  on the special
              committee)   will  be  the  directors  of  ISP  as  the  surviving
              corporation; and

         o    the officers of ISP  immediately  prior to the effective time will
              be officers of ISP as the surviving corporation.

     CONVERSION OF COMMON STOCK

     At the effective time of the merger,  each outstanding  share of ISP common
stock will  automatically be converted into the right to receive $10.30 in cash,
without interest, except for:

         o    shares of ISP common stock beneficially owned by Mr. Heyman, which
              will be  canceled  without  any  payment,  except  shares  held by
              charitable  organizations,  which will be converted into the right
              to receive $10.30 in cash, without interest;

         o    shares of ISP common stock that are held in the treasury of ISP or
              by any  subsidiary  of ISP,  which will be  canceled  without  any
              payment; and

         o    shares held by  stockholders  validly perfecting  appraisal rights
              in accordance with the DGCL.

     At the  effective  time,  each  outstanding  share of ISPH stock issued and
outstanding  prior to the  effective  time will be  converted  into one share of
common stock of ISP as the surviving corporation.

                                       42


     TREATMENT OF STOCK OPTIONS AND RESTRICTED SHARES

     Each  outstanding  option  granted  under ISP's stock  option plans will be
canceled at the  effective  time of the merger,  and in  consideration  for such
cancellation,  ISP as the  surviving  corporation  shall  pay in cash  after the
effective  time to  each  option  holder  the  excess,  if  any,  of the  merger
consideration  over the  option's  exercise  price  multiplied  by the number of
shares of ISP  common  stock  subject  to the  option  immediately  prior to the
effective  time of the  merger.  ISP  will  cause  each  holder  of a  share  of
restricted  ISP common stock to  surrender,  immediately  prior to the effective
time of the merger,  the restricted  shares in exchange for a cash payment in an
amount equal to the merger  consideration,  provided  that the cash payment will
only be  payable at the time when the  vesting  restrictions  on the  restricted
stock would have lapsed if the merger had not  occurred.  Cash  payments made in
exchange for stock options or restricted stock will be made without interest and
will be reduced by any applicable withholding taxes.

     REPRESENTATIONS AND WARRANTIES

     The merger agreement contains various  representations  and warranties made
by ISP to ISPH,  subject to various  qualifications  and limitations,  including
representations and warranties relating to:

         o    ISP's  due  organization,   valid  existence,  good  standing  and
              necessary   corporate   power  and   authority   of  ISP  and  its
              subsidiaries to carry on its business;

         o    the capitalization of ISP;

         o    the accuracy of information concerning ISP's subsidiaries in ISP's
              Securities and Exchange  Commission filings and the capitalization
              of these subsidiaries;

         o    the authorization,  execution,  delivery and enforceability of the
              merger agreement;

         o    the absence  of any  required  governmental  consents,  approvals,
              authorization,  or  permits, except those specified  in the merger
              agreement;

         o    the  absence of any  conflicts  between the merger  agreement  and
              ISP's  amended  and  restated   certificate  of  incorporation  or
              by-laws,  or a material  conflict with any applicable laws and any
              other material contracts or documents;

         o    the accuracy and adequacy of  information  concerning  ISP in this
              proxy  statement,   any  other  document  to  be  filed  with  the
              Securities and Exchange  Commission in connection  with the merger
              and all other filings made by ISP with the Securities and Exchange
              Commission;

         o    the compliance of ISP with applicable laws;

         o    the absence of any litigation or claims against ISP or any  of its
              subsidiaries;

         o    the  qualification  of each of ISP's  employee  benefit  plans and
              other  agreements  with its  employees  under  Section  401 of the
              Internal  Revenue Code, and the absence of any payments that would
              be required as a result of the merger;

         o    the  absence  of any fees owed to brokers  or  investment  bankers
              (other than Lehman Brothers) in connection with the merger;

         o    the absence of any material  changes to ISP's business,  earnings,
              assets,  liabilities,  financial or other  condition or results of
              operations  from December 31, 2001 until the effective time of the
              merger,  except for changes  disclosed  in ISP's  filings with the
              Securities and Exchange Commission;

         o    the  absence of material  liabilities  or  obligations,  except as
              disclosed  in ISP's  filings  with  the  Securities  and  Exchange
              Commission;

         o    the accuracy of information in ISP's financial reports  concerning
              the real property owned or leased by ISP;

         o    good  and  marketable  title  to all  the  properties  and  assets
              reflected on ISP's  balance  sheet as being owned by ISP or one of
              our  subsidiaries  or  acquired  after  the  date  of  the  merger
              agreement and which are material to our business; and

         o    the  receipt  by the  special  committee  of an  opinion  from the
              special   committee's   financial   advisors   that   the   merger
              consideration  is fair,  from a financial  point of view, to ISP's
              stockholders (other than Mr. Heyman).

                                       43


     The merger agreement contains various  representations  and warranties made
by ISPH to ISP, subject to various  qualifications  and  limitations,  including
representations and warranties relating to:

         o    the due organization, valid existence, good standing and necessary
              corporate power and authority of ISPH to carry on its business;

         o    the capitalization of ISPH;

         o    the  authorization,  execution, delivery and enforceability of the
              merger agreement;

         o    the absence  of any  required  governmental  consents,  approvals,
              authorization  or  permits,  except those  specified in the merger
              agreement;

         o    the  absence of any  conflicts  between the merger  agreement  and
              ISPH's  certificate of  incorporation  or by-laws,  any applicable
              laws and any other material contracts or documents;

         o    the  accuracy  and  adequacy  of  information  provided by ISPH in
              connection  with this proxy statement and the related filings with
              the Securities and Exchange Commission;

         o    the  absence  of any  knowledge  of any current  intention  of Mr.
              Heyman to sell ISP as of the date of the merger agreement; and

         o    the absence of any  knowledge of any breaches or  inaccuracies  of
              ISP's  representations  and  warranties  contained  in the  merger
              agreement.

     CONDUCT OF BUSINESS PENDING THE MERGER

     ISP has agreed that,  prior to the effective time of the merger,  except as
consented  to by ISPH,  neither our board of directors  nor any board  committee
will approve any action that would cause ISP or any of its subsidiaries to:

         o    split, combine or reclassify any capital stock;

         o    make, declare or pay dividends;

         o    repurchase,  redeem  or   otherwise  acquire  any  shares of ISP's
              capital stock;

         o    grant any  additional  options,  warrants or restricted shares, or
              any capital stock or other equity interests;

         o    enter into  any voting  agreement  or  arrangement  regarding  its
              capital stock;

         o    incur any  indebtedness  for borrowed money or assume or guarantee
              indebtedness  of any  other  person,  other  than in the  ordinary
              course of business,  consistent with past practice, or incur other
              capital expenditures, obligations or liabilities, other than those
              budgeted as of the date of the merger agreement or in the ordinary
              course of business, consistent with past practice;

         o    dispose of any material  properties or assets or cancel or release
              any material indebtedness;

         o    make any material  investment  in any entity,  other than in ISP's
              wholly owned  subsidiaries  or in the ordinary course of business,
              consistent with past practice;

         o    enter into,  terminate or make any material change to any material
              lease, contract or agreement,  other than renewals in the ordinary
              course of business, consistent with past practice;

         o    increase  compensation or benefits of current or former employees,
              consultants  or  directors,  other than in the ordinary  course of
              business,  consistent with past practice, or as required by law or
              contracts in effect as of the date of the merger agreement;

         o    settle any material claim, action or proceeding;

         o    change  accounting   methods  or  methods  of  reporting  for  tax
              purposes,  except as  required  by  changes  in GAAP or changes in
              applicable law;

         o    amend   any  certificate  of  incorporation,  by-laws  or  plan of
              consolidation, merger or reorganization;

         o    take  any  intentional   actions  that  would  result,   or  might
              reasonably be expected to result, in any of the representations or
              warranties  of ISP not being  true,  or in any  conditions  to the
              merger not being satisfied; or

                                       44


         o    agree to, commit to, or take any action described above.

     PROXY STATEMENT

     ISP and ISPH agreed to  cooperate  in  preparing  and ISP agreed to file as
soon as  practicable,  this  proxy  statement  and a  transaction  statement  on
Schedule  13E-3  along with any other  filing  required  by the  Securities  and
Exchange Commission or other regulatory authority in connection with the merger.
ISP agreed to use its  reasonable  best efforts to reply to any  Securities  and
Exchange  Commission  comments and promptly mail copies of this proxy  statement
and transaction statement on Schedule 13E-3 to its shareholders after responding
to such comments.  ISP and ISPH agreed to promptly notify one another of receipt
of any Securities and Exchange Commission comments or requests for amendments or
information and supply one another with copies of all correspondence between its
representatives  and the  Securities  and  Exchange  Commission  regarding  such
filings.  If an event occurs prior to the special meeting of  stockholders  that
would require an amendment to this proxy statement or the transaction  statement
on  Schedule  13E-3,  we agreed to  prepare  and mail such an  amendment  to our
stockholders,  provided that no such  amendment  will be made without  providing
ISPH an opportunity to comment on the amendment.

     SPECIAL MEETING; ISP'S BOARD OF DIRECTORS' COVENANT TO RECOMMEND

     ISP agreed to,  consistent  with applicable law, call and hold a meeting of
our  stockholders  as soon  as  practicable  following  the  date of the  merger
agreement for the purpose of voting on the adoption of the merger agreement. ISP
also agreed to include in this proxy statement and in the transaction  statement
on Schedule 13E-3 the  recommendation of our board of directors (acting upon the
recommendation of the special  committee) that our stockholders  (other than Mr.
Heyman) vote to adopt the merger agreement.

         Neither  the  board  of  directors  of ISP  nor  any of its  committees
     (including  the special  committee)  may  withdraw,  qualify or modify,  or
     propose   publicly  to   withdraw,   qualify  or  modify  its  approval  or
     recommendation of the approval of the merger agreement and the transactions
     it  contemplates,  or take any other action or make any other  statement in
     connection with the special meeting  inconsistent with its  recommendation.
     However,  in the event that prior to the receipt of the necessary approvals
     by ISP's  stockholders,  the special  committee  determines  in good faith,
     after  receipt of advice from  outside  counsel,  that the failure to do so
     would more likely than not  constitute a breach of its fiduciary  duties to
     the  stockholders of ISP (other than Mr. Heyman) under applicable law, then
     the board of  directors  (acting  upon the  recommendation  of the  special
     committee) or the special  committee may  withdraw,  qualify or modify,  or
     propose   publicly  to   withdraw,   qualify  or  modify  its  approval  or
     recommendation of the approval of the merger agreement and the transactions
     it contemplates. Nonetheless, the merger agreement shall still be submitted
     to the stockholders of ISP for adoption at the special meeting.

     REASONABLE EFFORTS

     Subject to the terms and conditions provided in the merger agreement,  both
ISP and ISPH agreed to use reasonable  efforts to make, or cause to be made, all
filings necessary,  proper or advisable under applicable laws and regulations to
consummate  and make  effective  the  transactions  contemplated  by the  merger
agreement.  Both ISP and ISPH  agreed to use their  reasonable  best  efforts to
furnish each other with all  information  required for any filings in connection
with the  merger  agreement.  If, at any time  after the  effective  time of the
merger,  any further  action is necessary or desirable to carry out the purposes
of the merger agreement,  including the execution of additional instruments, the
proper  officers and directors of each party to the merger  agreement  agreed to
take all such necessary action.

     ACCESS TO INFORMATION

     ISP has  agreed  that  from  the date of the  merger  agreement  until  the
effective time of the merger, we will (i) provide to the officers, stockholders,
attorneys,  financial advisors,  accountants, and other representatives of ISPH,
reasonable  access at all  reasonable  times to the offices,  records and files,
correspondence, audits and properties, as well as to all information relating to
commitments,  contracts,  titles and financial position, or otherwise pertaining
to the business and affairs,  of ISP and our subsidiaries,  (ii) furnish to ISPH
and its stockholders, counsel, financial advisors, auditors and other authorized
representatives  such financial and operating data and other information as such
persons may reasonably request and

                                       45


(iii)  instruct the  employees,  counsel and  financial  advisors of ISP and our
subsidiaries to cooperate with ISPH in its  investigation of the business of ISP
and our subsidiaries.

     CONDITIONS TO THE MERGER

     CONDITIONS TO EACH PARTY'S  OBLIGATION.  The obligations of ISP and ISPH to
complete the merger are subject to the satisfaction or waiver on or prior to the
effective time of the merger of the following conditions:

     o   the  merger  and the merger  agreement  shall have been  adopted by the
         affirmative  vote of (i) the holders of a majority  of the  outstanding
         shares of ISP common  stock,  and (ii) the holders of a majority of the
         shares of ISP common  stock cast either for or against the  adoption of
         the merger agreement  (excluding shares that are owned  beneficially or
         of record by any officer or director of ISP or ISPH); and

     o   the  absence  of any  injunction  or  order  or any  statute,  rule  or
         regulation  that would  prevent  the  completion  of the merger and the
         absence of any action brought by any governmental  authority seeking to
         obtain an  injunction  to prevent,  materially  delay,  restructure  or
         otherwise   question  the  transactions   contemplated  by  the  merger
         agreement;

CONDITIONS TO ISPH'S OBLIGATION.  The obligations of ISPH to complete the merger
are subject to the satisfaction or waiver,  on or prior to the effective time of
the merger, of the following conditions:

         o    the  representations  and  warranties  made  by ISP in the  merger
              agreement  must be true and  correct  as of the date of the merger
              agreement  and as of the effective  time,  except such failures at
              the effective time that, in the aggregate, would not reasonably be
              expected to have a material  adverse effect on ISP or consummation
              of the merger; and

         o    ISP must have performed in all material  respects all  obligations
              under the merger agreement required to be performed at or prior to
              the effective time.

     CONDITIONS  TO ISP'S  OBLIGATION.  The  obligations  of ISP to complete the
merger are subject to the  satisfaction or waiver,  on or prior to the effective
time of the merger, of the following conditions:

         o    the  representations  and  warranties  made by ISPH in the  merger
              agreement  must be true and  correct  as of the date of the merger
              agreement  and as of the  effective  time  (except with respect to
              representations  and  warranties  that speak as of another  date),
              except such failures at the effective time that, in the aggregate,
              would not reasonably be expected to have a material adverse effect
              on the consummation of the merger; and

         o    ISPH must have performed in all material  respects all obligations
              under the merger agreement required to be performed at or prior to
              the effective time.

     TERMINATION OF THE MERGER AGREEMENT

     The merger  agreement may be terminated  and the merger may be abandoned at
any time prior to the effective time of the merger:

         o    by mutual written  consent of ISP (provided that such  termination
              has been approved by the special committee) and ISPH;

         o    by either ISP (provided that such termination has been approved by
              the  special  committee)  or  ISPH  if a  governmental  entity  of
              competent jurisdiction issues a final nonappealable  injunction or
              other ruling  permanently  enjoining or otherwise  prohibiting the
              merger;

         o    by either ISP (provided that such termination has been approved by
              the special  committee)  or ISPH if the merger is not completed on
              or before May 31, 2003,  unless the failure to complete the merger
              is due to the failure of the party seeking to terminate the merger
              agreement to fulfill its obligations under the merger agreement;

         o    by either ISP (provided that such termination has been approved by
              the  special  committee)  or  ISPH if  there  is a  breach  of the
              representations,  warranties  or  covenants  as set  forth  in the
              merger agreement on the part of ISP (in the case of termination by
              ISPH) or ISPH (in the case of termination by ISP), and that breach
              is not cured in the 30-day period following  written notice to the
              party committing such a breach or cannot be cured prior to May 31,
              2003, provided that such breach would constitute,  individually or
              in  the  aggregate  with  other  breaches,   the  failure  of  the
              conditions to the obligations set forth above;

                                       46


         o    by either ISP (provided that such termination has been approved by
              the special  committee) or ISPH if the special meeting is held and
              the  stockholders  fail  to  adopt  the  merger  agreement  by the
              requisite votes described above, provided that ISPH shall not have
              the right to terminate under this section if Mr. Heyman has failed
              to cause the shares  beneficially  owned by him at the time of the
              meeting to be voted in favor of the merger; or

         o    by ISPH if the ISP board of  directors  or the  special  committee
              withdraws,  qualifies  or  modifies  its  recommendation  to ISP's
              stockholders to adopt the merger  agreement,  or publicly proposes
              to do so, or takes any other  action or makes any other  statement
              inconsistent with that recommendation.

     EFFECT OF TERMINATION

     If the merger  agreement is  terminated  by either ISP or ISPH, as provided
above,  there  will be no  liability  on the  part of ISP,  ISPH or any of their
affiliates,  directors,  officers, employers or stockholders.  However, no party
will be relieved from liability for willful breaches of the merger agreement.

     AMENDMENTS

     The merger  agreement  may be amended by ISP (acting  upon  approval of the
special committee) and ISPH at any time before or after any required approval of
matters presented in connection with the merger by the  stockholders;  provided,
however,  that after any such  approval,  no  amendment  may be made that by law
requires further approval by such stockholders  without such approval (including
the majority of the minority condition).

                                  OTHER MATTERS

SECURITY OWNERSHIP OF SPECIFIED BENEFICIAL OWNERS AND MANAGEMENT


     The following table sets forth certain information regarding the beneficial
ownership  of ISP as of  January  30,  2003 by (1) all those  known to ISP to be
beneficial  owners  of more  than 5% of our  common  stock,  (2) each  executive
officer  and  director  of ISP  and  ISPH  and (3) all  executive  officers  and
directors of ISP and ISPH as a group.  ISPH currently does not  beneficially own
any ISP common stock.  Unless otherwise  indicated,  the address for each of the
stockholders  listed below is c/o  International  Specialty  Products Inc., 1361
Alps Road, Wayne, New Jersey 07470.




                                                                          NUMBER OF SHARES
                               NAME                                      BENEFICIALLY OWNED                %
                               ----                                      ------------------               ---
                                                                                                   
Samuel J. Heyman.................................................           52,567,240(1)(2)(3)          80.6%(1)(2)(3)
Sunil Kumar......................................................              716,526(2)(4)              1.1%(2)(4)
Richard A. Weinberg..............................................              510,405(2)                   *
Susan B. Yoss....................................................              229,350(2)(5)                *
Roger J. Cope....................................................              137,563(2)                   *
Robert Englander.................................................                1,667(2)                   *
Lawrence Grenner.................................................               11,000(2)                   *
Sanford Kaplan...................................................               26,500(2)                   *
Burt Manning.....................................................               28,500(2)                   *
Alan M. Meckler..................................................                1,667(2)                   *
Stephen R. Olsen.................................................              101,100(6)                   *
Neal E. Murphy...................................................                    0                      *
Steven E. Post...................................................                    0                      *
All directors and executive officers as a group (13 persons).....           54,331,518(1)(2)(3)          83.3%(1)(2)(3)


-----------------
*    Less than 1%

(1)  Mr.  Heyman  may be deemed to  beneficially  own,  and has sole  voting and
     investment  power in  respect  of,  51,803,040  of these  shares  through a
     limited  partnership  and  two  limited  liability  companies.  Mr.  Heyman
     disclaims any pecuniary interest in these shares in excess of his interests
     in such entities. Mr. Heyman also may be deemed to beneficially own 525,000
     of these  shares in his  capacity  as  director  and the  president  of The
     Annette Heyman Foundation,  Inc., a charitable  organization  recognized as
     tax-exempt  pursuant to Section 501(c)(3) of the Internal Revenue Code. Mr.
     Heyman disclaims any pecuniary interest in these shares.

                                       47


(2)  Includes with respect to Mr. Heyman,  239,200  shares,  Mr. Kumar,  100,000
     shares,  Mr. Weinberg,  431,350 shares,  Ms. Yoss, 69,350 shares, Mr. Cope,
     77,335 shares, Mr. Englander, 1,667 shares, Mr. Grenner, 11,000 shares, Mr.
     Kaplan,  21,500 shares, Mr. Manning,  21,500 shares and Mr. Meckler,  1,667
     shares and all executive officers and directors,  974,569 shares subject to
     options  granted  under  the  1991  Incentive  Plan for Key  Employees  and
     Directors,  as  amended,  of  ISP  and  the  2000  Stock  Option  Plan  for
     Non-Employee Directors of ISP that are currently exercisable or will become
     exercisable within the next 60 days.

(3)  Mr. Heyman expects to cause 114,336 shares of ISP common stock beneficially
     owned by him to be sold  prior to the merger to  non-affiliated  persons in
     public  sales.  These  shares  represent  less  than  0.25%  of the  shares
     beneficially owned by Mr. Heyman.

(4)  Includes with respect to Mr. Kumar, a grant of 250,000 shares of restricted
     common stock of ISP, 21,927 shares held in ISP's 401(k) plan as of December
     31, 2002,  11,000 shares held by Mr. Kumar's  spouse,  5,000 shares held by
     Mr.  Kumar's  daughter and 100,000  shares in the  aggregate  gifted by Mr.
     Kumar  to  his  children,  as  to  which  Mr.  Kumar  disclaims  beneficial
     ownership.

(5)  Includes with respect to Ms. Yoss, a grant of 150,000  shares of restricted
     common stock of ISP. (6)  Includes,  with respect to Mr.  Olsen,  grants of
     100,000 shares in the aggregate of restricted common stock of ISP.

TRANSACTIONS IN CAPITAL STOCK BY CERTAIN PERSONS

     PURCHASES BY ISP

     The table  below  sets forth  information,  by fiscal  quarters,  regarding
purchases  by ISP of its  common  stock for the past two  years,  including  the
number of shares  purchased on a quarterly  basis, and the high, low and average
price paid.




                                                                            PRICE PER SHARE
                                      NUMBER OF           ---------------------------------------------------
                                       SHARES                 LOW                 HIGH              AVERAGE
                                     -----------          -----------          -----------        -----------
                                                                                          
2003
First Quarter (through
January 30, 2003) ................            0                  --                 --                  --

2002
Fourth Quarter ...................            0                  --                 --                  --
Third Quarter ....................            0                  --                 --                  --
Second Quarter ...................            0                  --                 --                  --
First Quarter ....................      177,600               $7.84              $9.00               $8.42

2001
Fourth Quarter ...................      640,900                7.99               8.35                8.29
Third Quarter ....................      822,500                8.07              10.75                9.83
Second Quarter ...................      312,900                8.00              10.32                9.23
First Quarter ....................      161,500                6.75               8.25                7.50

2000
Fourth Quarter ...................    1,273,000                5.13               6.38                5.32



     PURCHASES BY MR. HEYMAN AND HIS  AFFILIATES  AND ISPH AND ITS DIRECTORS AND
EXECUTIVE OFFICERS

     Except for the  purchases  referred  to above,  none of Mr.  Heyman and his
affiliates  and ISPH and its directors and executive  officers has purchased any
shares of ISP common stock during the past two years.

     RECENT TRANSACTIONS

     There have been no  transactions  in shares of ISP common  stock during the
past 60 days by ISP, any of its directors or executive  officers,  ISPH,  any of
its directors or executive officers, or Mr. Heyman, except the following:

         o    In accordance with the merger  agreement,  each of Mr. Kumar,  Mr.
              Olsen  and Ms.  Yoss  have  entered  into an  agreement  with  ISP
              providing  that  immediately  prior to the  effective  time of the
              merger,  their shares of restricted  stock will be  surrendered in
              exchange  for the right to receive the cash  merger  consideration
              per  share,   subject  to  the  vesting   restrictions   currently
              applicable to their restricted shares.

         o    Mr. Cope (1)  exercised  stock  options to acquire 1,219 shares of
              our common  stock on  September  29,  2002,  (2)  exercised  stock
              options to acquire  3,375  shares of our common  stock on November
              20,  2002,  and (3) sold 3,375  shares of our  common  stock at an
              average price of $9.998 per share on November 20, 2002.

                                       48


         o    On  December 5, 2002,  525,000  shares  beneficially  owned by Mr.
              Heyman were  donated to The Annette  Heyman  Foundation,  Inc.,  a
              charitable  organization  recognized  as  tax-exempt  pursuant  to
              Section  501(c)(3) of the Internal  Revenue Code.  Mr. Heyman is a
              director  and the  president  of the  foundation  and,  therefore,
              continues to be deemed a beneficial  owner of these shares.  These
              shares  constitute  less than 1% of the shares of ISP common stock
              beneficially owned by Mr. Heyman.

     PLANNED TRANSACTIONS

     Mr. Heyman expects to cause 114,336 shares of ISP common stock beneficially
owned by him to be sold prior to the special meeting to  non-affiliated  persons
in one or more  sales  pursuant  to Rule 144 under the  Securities  Act of 1933.
These shares were originally acquired in open market purchases from unaffiliated
third  parties  for an  average  price  per  share of  approximately  $7.08  and
represent less than 0.25% of the shares beneficially owned by Mr. Heyman.  While
the sale price for these shares  cannot be determined at this time, it is likely
that the sale price will be no more than  $10.30  per  share.  Accordingly,  Mr.
Heyman  anticipates  that the sale proceeds will not exceed  $1,177,660.80.  Mr.
Heyman  reserves the right not to sell these  shares.  The shares are being sold
for personal tax and financial planning purposes.

     If the merger is approved  by the  required  votes at the special  meeting,
then Mr.  Heyman  expects to cause legal  ownership  of all of the shares of ISP
common stock  beneficially  owned by him at that time to be transferred to ISPH.
The transfer will take place shortly before the merger and will have no economic
or other effect on the holders of shares not  beneficially  owned by Mr. Heyman.
Mr. Heyman reserves the right not to transfer these shares.

CERTAIN TRANSACTIONS

     STOCKHOLDER VOTING AGREEMENT

     On November 8, 2002,  Mr. Heyman and ISP entered into a stockholder  voting
agreement,  a copy of which is  included  as  Annex C to this  proxy  statement.
Pursuant to the stockholder voting agreement,  Mr. Heyman agreed, subject to the
terms,  conditions  and  exceptions  in that  agreement,  to cause the shares of
common  stock of ISP then  beneficially  owned by him at the time of the special
meeting (but excluding shares owned by charitable  organizations) to be voted in
favor of  adoption  of the merger  agreement  and to refrain  from  transferring
shares of ISP  common  stock  pending  the  merger,  except  with  regard to the
disposition  of up to 114,336  shares of ISP common  stock owned by Heyman Joint
Venture II LLC.

     INVESTMENT MANAGEMENT ACTIVITIES

     We  conduct  our  investments   business   through  ISP  Investco  and  its
subsidiaries.  We invest primarily in international  and domestic  arbitrage and
securities of companies involved in acquisition or reorganization  transactions.
Those investments  include common stock short positions which are offset against
long positions in securities which are expected,  under specific  circumstances,
to be exchanged or converted into the short  positions.  We generally make these
investments  at the same time and price  that  certain  investment  partnerships
controlled  by Mr.  Heyman  and  his  family  are  making  similar  investments.
Management  of this  investment  activity is provided by personnel of investment
partnerships controlled by Mr. Heyman and his family, assisted by certain of our
personnel, at no cost or charge to either party.

     MANAGEMENT AGREEMENT

     Pursuant to a management  agreement,  ISP,  through a subsidiary,  provides
certain   general   management,   administrative,   legal,   telecommunications,
information  and  facilities  services  to  Building  Materials  Corporation  of
America, or BMCA, an affiliate of ISP. The management  agreement charges consist
of management fees and other reimbursable  expenses attributable to, or incurred
by ISP for the  benefit  of BMCA and are based on an  estimate  of the costs ISP
incurs to provide  those  services.  ISP and BMCA also allocate a portion of the
management fees payable by BMCA under the management agreement to separate lease
payments for the use of BMCA's  headquarters.  Based on the services provided by
ISP in 2002 under the management agreement,  the aggregate amount payable to ISP
under  the  management  agreement  for  2003,  net of the  lease  payments  to a
subsidiary of G-I Holdings, is expected to be approximately $6.0 million.

                                       49


     Some of the executive  officers of ISP perform  services for  affiliates of
ISP pursuant to the management  agreement,  and ISP is indirectly reimbursed for
those services by virtue of the management fees and other reimbursable  expenses
payable under the management  agreement.  In this regard,  Mr.  Weinberg and Ms.
Yoss received $500,000 and $300,000, respectively, of additional compensation in
connection with services performed by them for BMCA in 2001. BMCA reimbursed ISP
for these payments pursuant to the management agreement.

     Although,  due to the  unique  nature of the  services  provided  under the
management  agreement,  comparisons with third party arrangements are difficult,
ISP believes that the terms of the management  agreement,  taken as a whole, are
no less  favorable  to ISP than could be  obtained  from an  unaffiliated  third
party.

     CERTAIN OTHER TRANSACTIONS

     In connection with becoming President and Chief Executive Officer of ISP in
June 1999,  Mr.  Kumar was  granted  the right to  purchase,  and did  purchase,
318,599  shares  of  ISP  common  stock  for  an  aggregate  purchase  price  of
$3,046,762.  Under the purchase agreement,  ISP extended a loan to Mr. Kumar the
funds to purchase the shares,  which was evidenced by a recourse promissory note
in the principal  amount of $3,046,762.  The loan was converted to a demand note
and  bears  interest  at the  lowest  applicable  federal  rate  for  short-term
instruments.  The  principal  amount  of the  loan is  payable,  unless  ISP has
previously declared the loan to be due and payable, in four installments on each
June 11 of the years  2001,  2002 and 2003 and on January  11,  2004,  the first
three of which are in the amount of  $761,691  each and the last of which is for
the balance of the then outstanding  principal  amount.  If, however,  Mr. Kumar
remains  continuously  employed by ISP or any of its  subsidiaries  through each
installment  payment date, the principal amount due on such installment  payment
date will be  forgiven.  In addition,  upon the  occurrence  of certain  events,
including  a change of control  of ISP,  the  principal  amount of the loan then
outstanding shall be immediately forgiven. If Mr. Kumar's employment with ISP is
otherwise  terminated for any reason  whatsoever,  the entire principal  balance
outstanding,  together with all interest  accrued,  will be immediately  due and
payable at ISP's election.

     In January  2001,  July 2001,  January 2002 and July 2002, we made loans to
Ms. Yoss in the  principal  amounts of $44,282,  $78,855,  $71,349 and  $57,461,
respectively,  to enable her to satisfy  certain  withholding tax obligations in
connection  with her award of 150,000 shares of restricted  common stock of ISP,
18,750 shares of which vested on each of January 1, 2001, July 1, 2001,  January
1, 2002 and July 1, 2002. The remainder of those shares vest in 12.5% increments
every six months  thereafter  until full vesting on January 1, 2004,  subject to
specified  terms  and  conditions.  Each  loan  bears  interest  at  the  lowest
applicable  federal rate, as it may be adjusted from time to time.  Each loan is
due and payable in full,  together with accrued interest,  on demand and, in any
event, not later than April 15, 2003.

FUTURE STOCKHOLDER PROPOSALS

     Due to the contemplated  consummation of the merger, ISP does not currently
expect to hold a public 2003 annual meeting of stockholders  because,  following
the  merger,  ISP will not be a  publicly  held  company.  If the  merger is not
consummated for any reason,  proposals of stockholders intended to be considered
for inclusion in the proxy statement for presentation at the 2003 Annual Meeting
of  Stockholders  must have been  received  by ISP in writing  at its  principal
executive  offices on or before December 13, 2002 (or, if the date of the annual
meeting is changed by more than 30 days from May 16,  2003,  a  reasonable  time
before ISP begins to print and mail its proxy materials). All proposals received
will  be  subject  to the  applicable  rules  of  the  Securities  and  Exchange
Commission.  With regard to stockholders who intend to present a proposal at the
2003 Annual  Meeting of  Stockholders  without  including  the proposal in ISP's
proxy  statement and fail to submit the proposal on or before  February 26, 2003
(or, if the date of the annual  meeting is changed by more than 30 days from May
16,  2003,  a reasonable  time before ISP mails its proxy  materials),  then the
persons named as proxies in ISP's proxy card  accompanying  the proxy  statement
for the 2003  Annual  Meeting  of  Stockholders  will be  allowed  to use  their
discretionary  voting  authority  when the  proposal  is raised at the  meeting,
without  any  discussion  of the matter in ISP's  proxy  statement  for the 2003
Annual Meeting of Stockholders.

INDEPENDENT AUDITORS

     The  consolidated  financial  statements of ISP  incorporated in this proxy
statement by  reference  to ISP's Annual  Report on Form 10-K for the year ended
December 31, 2001,  have been  incorporated  in reliance on the report of Arthur
Andersen LLP, independent accountants.

     On June 20, 2002, the Board of Directors of ISP, upon the recommendation of
its audit  committee,  decided not to renew the  engagement  of its  independent
auditors, Arthur Andersen, and selected KPMG LLP as its independent auditors for
the  fiscal  year  ending  December  31,  2002.  The change in  auditors  became
effective June 21, 2002. It is not  anticipated  that a  representative  of KPMG
will attend the special meeting.

                                       50


                       WHERE YOU CAN FIND MORE INFORMATION

     ISP files annual, quarterly and current reports, proxy statements and other
information with the Securities and Exchange  Commission.  Stockholders may read
and copy any document  ISP files at the  Securities  and  Exchange  Commission's
public  reference  room in  Washington,  D.C.  Please  call the  Securities  and
Exchange  Commission at  1-800-SEC-0330  for further  information  on the public
reference rooms.  ISP's filings with the Securities and Exchange  Commission are
also available to the public at the Securities and Exchange Commission's website
at http://www.sec.gov.  Copies of documents filed by ISP with the Securities and
Exchange  Commission  are also  available  at the  offices of The New York Stock
Exchange, 20 Broad Street, New York, New York 10005.

     ISP and ISPH have filed a transaction  statement on Schedule 13E-3 with the
Securities and Exchange  Commission with respect to the merger.  As permitted by
the  Securities  and Exchange  Commission,  this proxy  statement  omits certain
information  contained  in the  transaction  statement  on Schedule  13E-3.  The
transaction  statement on Schedule 13E-3,  including any amendments and exhibits
filed or  incorporated by reference as a part of it, is available for inspection
or copying as set forth above.  Statements  contained in this proxy statement or
in any document  incorporated in this proxy statement by reference regarding the
contents of any contract or other document are not necessarily complete and each
such  statement is  qualified  in its entirety by reference to such  contract or
other document filed as an exhibit with the Securities and Exchange Commission.

     The  Securities  and  Exchange  Commission  allows  ISP to  incorporate  by
reference into this proxy statement  documents ISP files with the Securities and
Exchange Commission.  This means that ISP can disclose important  information by
referring  to those  documents.  The  information  incorporated  by reference is
considered to be a part of this proxy statement,  and later information that ISP
files with the Securities and Exchange Commission will update and supersede that
information.  ISP  incorporates by reference the documents  listed below and any
documents  filed by ISP  pursuant to Section  13(a),  13(c),  14 or 15(d) of the
Exchange Act after the date of this proxy  statement  and before the date of the
special meeting:

     o    ISP's Annual Report on Form 10-K for the year ended December 31, 2001;

     o    ISP's Quarterly  Reports on Form 10-Q for the quarters ended March 30,
          2002, June 30, 2002 and September 29, 2002; and

     o    ISP's  Current  Reports on Form 8-K dated June 20,  2002,  November 7,
          2002 and November 12, 2002.

     ISP  stockholders  may  request  a copy of the  documents  incorporated  by
reference into this proxy statement by writing to or telephoning ISP.

     Requests for documents should be directed to:

     Stockholder Relations Department
     International Specialty Products Inc.
     1361 Alps Road
     Wayne, New Jersey 07470
     Telephone: (800) 526-5315

     If you would like to request documents from ISP, please do so at least five
business days before the date of the special  meeting in order to receive timely
delivery of those documents prior to the special meeting.


     This proxy statement does not constitute the solicitation of a proxy in any
jurisdiction to or from any person to whom or from whom it is unlawful to make a
proxy  solicitation in that jurisdiction.  ISP stockholders  should rely only on
the  information  contained or incorporated by reference in this proxy statement
to vote their shares at the special  meeting.  ISP has not authorized  anyone to
provide  stockholders  with information that is different from what is contained
in this proxy  statement.  This proxy  statement  is dated  February ___ , 2003.
Stockholders  should not assume  that the  information  contained  in this proxy
statement  is accurate  as of any date other than that date,  and the mailing of
this proxy  statement to  stockholders  does not create any  implication  to the
contrary.


                                       51


                                                                         ANNEX A











                          AGREEMENT AND PLAN OF MERGER

                                     BETWEEN

                             INTERNATIONAL SPECIALTY
                                  PRODUCTS INC.

                                       AND

                             INTERNATIONAL SPECIALTY
                             PRODUCTS HOLDINGS INC.

                                NOVEMBER 8, 2002





                                TABLE OF CONTENTS



                                                                                    PAGE
                                                                               

                                    ARTICLE I
                                   THE MERGER

SECTION 1.01      The Merger ...................................................     A-1

SECTION 1.02      Effective Time; Closing ......................................     A-1

SECTION 1.03      Effect of the Merger .........................................     A-2

SECTION 1.04      Certificate of Incorporation; Bylaws .........................     A-2

SECTION 1.05      Directors and Officers. ......................................     A-2

                                   ARTICLE II
                            CONVERSION OF SECURITIES;
                       EXCHANGE OF CERTIFICATES; DEPOSIT;
                              DISCLOSURE SCHEDULES

SECTION 2.01      Effect on Capital Stock ......................................     A-2

SECTION 2.02      Payment Procedures ...........................................     A-3

SECTION 2.03      Company Stock Options; Company Restricted Stock Plans ........     A-3

SECTION 2.04      Shares of Dissenting Stockholders ............................     A-4

SECTION 2.05      Adjustment of Merger Consideration ...........................     A-4

                                   ARTICLE III
                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

SECTION 3.01      Organization .................................................     A-4

SECTION 3.02       Capitalization ..............................................     A-5

SECTION 3.03      Subsidiaries .................................................     A-5

SECTION 3.04      Authority Relative to This Agreement .........................     A-5

SECTION 3.05      Consents and Approvals; No Violation .........................     A-5

SECTION 3.06      Proxy Statement; Transaction Statement .......................     A-5

SECTION 3.07      SEC Documents ................................................     A-6

SECTION 3.08      Compliance with Laws .........................................     A-6

SECTION 3.09      Litigation and Claims ........................................     A-6

SECTION 3.10      Employees and Employee Plans .................................     A-6

SECTION 3.11      No Brokers ...................................................     A-6

SECTION 3.12      Absence of Certain Changes ...................................     A-7

SECTION 3.13      Absence of Undisclosed Liabilities ...........................     A-7

SECTION 3.14      Title to Properties and Related Matters ......................     A-7

SECTION 3.15      Fairness Opinion .............................................     A-7


                                        i



                                                                              
                                   ARTICLE IV
                     REPRESENTATIONS AND WARRANTIES OF ISPH

SECTION 4.01      Organization .................................................     A-7

SECTION 4.02      Capitalization ...............................................     A-7

SECTION 4.03      Authority Relative to this Agreement .........................     A-7

SECTION 4.04      Consents and Approvals; No Violation .........................     A-7

SECTION 4.05      Proxy Statement ..............................................     A-8

SECTION 4.06      No Current Intention to Sell Company .........................     A-8

SECTION 4.07      No Knowledge of Breach or Inaccuracy .........................     A-8

                                    ARTICLE V
                                    COVENANTS

SECTION 5.01      Certain Actions Pending Merger ...............................     A-8

SECTION 5.02      Proxy Statement ..............................................     A-9

SECTION 5.03      Stockholders' Meeting ........................................    A-10

SECTION 5.04      Reasonable Efforts ...........................................    A-10

SECTION 5.05      Inspection of Records ........................................    A-10

SECTION 5.06      Notification of Certain Matters ..............................    A-11

SECTION 5.07      Public Announcements .........................................    A-11

SECTION 5.08      Indemnification by Surviving Corporation .....................    A-11

                                   ARTICLE VI
           CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER


SECTION 6.01      Stockholder Approval of Agreement ............................    A-12

SECTION 6.02      Certain Proceedings ..........................................    A-12

                                   ARTICLE VII
                        CONDITIONS TO OBLIGATIONS OF ISPH

SECTION 7.01      Representations and Warranties True ..........................    A-12

SECTION 7.02      Performance of Obligations ...................................    A-12

                                  ARTICLE VIII
                    CONDITIONS TO OBLIGATIONS OF THE COMPANY

SECTION 8.01      Representations and Warranties True ..........................    A-13

SECTION 8.02      Performance of Obligations ...................................    A-13

                                   ARTICLE IX
                        TERMINATION, AMENDMENT AND WAIVER

SECTION 9.01      Termination ..................................................    A-13

SECTION 9.02      Effect of Termination ........................................    A-13

SECTION 9.03      Amendment ....................................................    A-14

SECTION 9.04      Extension; Waiver ............................................    A-14


                                       ii



                                                                              
                                    ARTICLE X
                               GENERAL PROVISIONS

SECTION 10.01     Non-Survival of Representations, Warranties and Agreements ...    A-14

SECTION 10.02     Expenses .....................................................    A-14

SECTION 10.03     Notices ......................................................    A-14

SECTION 10.04     Definitions and Usage ........................................    A-15

SECTION 10.05     Accounting Terms .............................................    A-16

SECTION 10.06     Disclosure Schedules .........................................    A-16

SECTION 10.07     Severability .................................................    A-16

SECTION 10.08     Entire Agreement; Assignment .................................    A-16

SECTION 10.09     Parties in Interest ..........................................    A-16

SECTION 10.10     Specific Performance .........................................    A-16

SECTION 10.11     Governing Law ................................................    A-17

SECTION 10.12     Headings .....................................................    A-17

SECTION 10.13     Counterparts .................................................    A-17

SECTION 10.14     Construction .................................................    A-17

SECTION 10.15     No Pecuniary Interest ........................................    A-17


                                      iii



                             INDEX OF DEFINED TERMS



                                                                                          
Adverse Company Board                                GAAP ........................................  6
   Recommendation ........................  10       Governmental Entity .........................  6
Agreement ................................   1       including ................................... 15
Balance Sheet ............................   6       ISPH ........................................  1
beneficial owner .........................  15       ISPH Stock ..................................  1
business day .............................  15       Knowledge ................................... 16
Cap ......................................  11       Liens .......................................  5
Certificate ..............................   2       Majority Stockholder ........................  1
Certificate of Merger ....................   1       Majority Stockholder Shares .................  1
Charitable Organization ..................  15       Majority-of-Minority Condition .............. 12
Closing ..................................   1       Material Adverse Effect ..................... 15
Closing Date .............................   1       Merger ......................................  1
Code .....................................  15       Merger Consideration ........................  2
Company ..................................   1       Option ......................................  3
Company Common Stock .....................   1       Option Spread ...............................  3
Company Disclosure Schedules .............  16       Options .....................................  3
Company Equity Plans .....................   4       Paying Agent ................................  3
Company Meeting ..........................  10       person ...................................... 16
Company Plans ............................   6       Proxy Statement .............................  9
Company Preferred Stock ..................   1       Restricted Share ............................  4
Company Reports ..........................   6       SEC .........................................  6
Company Stock Option Plans ...............   3       Securities Act ..............................  6
Company Stock Plans ......................   4       Significant Subsidiary ...................... 16
DGCL .....................................   1       Special Committee ...........................  1
Dissenting Shares ........................   4       Special Committee Financial Advisor .........  6
Effective Time ...........................   1       Subsidiary .................................. 16
ERISA ....................................   6       Surviving Corporation .......................  1
Exchange Act .............................   5       Transaction Statement .......................  9
Exchange Fund ............................   3       Voting Agreement ............................  1





                                       iv



                          AGREEMENT AND PLAN OF MERGER

     This  AGREEMENT  AND PLAN OF  MERGER,  dated as of  November  8, 2002 (this
"AGREEMENT"),  is by  and  between  International  Specialty  Products  Inc.,  a
Delaware  corporation  (the  "COMPANY")  and  International  Specialty  Products
Holdings Inc., a Delaware corporation ("ISPH").

                                    RECITALS

     WHEREAS,  the  Company has  authority  to issue (i)  300,000,000  shares of
Common Stock, par value $0.01 per share (the "COMPANY COMMON STOCK"), 65,105,602
of which were outstanding as of November 6, 2002, and (ii) 20,000,000  shares of
Preferred Stock (the "COMPANY PREFERRED STOCK"), none of which are outstanding;

     WHEREAS, Samuel J. Heyman, an individual (the "MAJORITY  STOCKHOLDER"),  is
the  "beneficial  owner" (as defined in Section  10.04) of 52,328,040  shares of
Company  Common Stock,  representing  approximately  80.4% of the Company Common
Stock (the  "MAJORITY  STOCKHOLDER  SHARES"),  and all of the 3,000  outstanding
shares of common stock, par value $0.001 per share (the "ISPH STOCK"), of ISPH;

     WHEREAS,  ISPH is a Delaware corporation formed for the purpose of entering
into this Agreement and consummating the transactions contemplated hereby;

     WHEREAS, the Majority Stockholder has proposed to the Board of Directors of
the  Company  that ISPH be merged  into the  Company in a  transaction  in which
shares of the  Company  beneficially  owned by persons  other than the  Majority
Stockholder  at the time of the  merger  will be  converted  into  the  right to
receive $10.30 per share in cash;

     WHEREAS,  a special  committee  (the "SPECIAL  COMMITTEE")  of the Board of
Directors  of the Company and the Board of  Directors  of the Company  (with the
Majority  Stockholder and Sunil Kumar abstaining) each has determined that it is
fair to, and in the best  interests  of, the  Company and the holders of Company
Common Stock to consummate  the merger (the  "MERGER") of ISPH with and into the
Company upon the terms and subject to the conditions set forth in this Agreement
and in accordance with the Delaware General Corporation Law (the "DGCL");

     WHEREAS, the Board of Directors of ISPH has approved and declared advisable
this  Agreement and the Merger and the other  transactions  contemplated  hereby
upon the terms and subject to the  conditions set forth in this Agreement and in
accordance with the DGCL;

     WHEREAS,  the  Majority  Stockholder  has  agreed,  pursuant  to  a  Voting
Agreement (the "VOTING AGREEMENT") dated as of the date hereof, to vote or cause
to be voted all shares of Company  Common Stock then  beneficially  owned by the
Majority Stockholder in favor of the adoption of the Agreement at any meeting of
stockholders  of the  Company  at which the  Agreement  shall be  submitted  for
adoption and at all adjournments or postponements thereof;

     NOW, THEREFORE,  in consideration of the foregoing and the mutual covenants
and agreements  herein  contained and intending to be legally bound hereby,  the
parties agree as follows:

                                    ARTICLE I
                                   THE MERGER

     SECTION  1.01 THE MERGER. Upon the terms and subject to the  conditions set
forth in Articles VI, VII and VIII, and in accordance with the provisions of the
DGCL, at the Effective Time (as defined in Section  1.02),  ISPH shall be merged
with and into the Company.  As a result of the Merger, the separate existence of
ISPH shall cease,  and the Company shall  continue as the surviving  corporation
(the "Surviving Corporation").

     SECTION  1.02 EFFECTIVE  TIME;  CLOSING. The closing  of  the  Merger  (the
"Closing")  shall take place (i) at the  offices of Simpson  Thacher & Bartlett,
425 Lexington Avenue,  New York, New York at 9:00 a.m. New York City time on the
next business day after all of the  conditions set forth in Articles VI, VII and
VIII have been satisfied or, subject to applicable law, waived (other than those
conditions that by their nature are to be satisfied at the Closing,  but subject
to the  satisfaction  or waiver of those  conditions)  in  accordance  with this
Agreement or (ii) at such other place and time and/or on such other date as ISPH
and the  Company  may agree in  writing  (the  "Closing  Date").  Subject to the
provisions of this  Agreement,  as soon as  practicable on the Closing Date, the
parties hereto shall file a certificate of merger (the  "Certificate of Merger")
with the  Secretary  of  State of the  State  of  Delaware,  in such  form as is
required by, and executed in accordance with, the DGCL. The term "Effective

                                      A-1


Time"  means the date and time that the Merger  shall  become  effective,  which
shall be the date and time of the filing of the  Certificate  of Merger with the
Secretary of State of the State of Delaware (or such later time as may be agreed
by the parties hereto and specified in the Certificate of Merger).

     SECTION 1.03 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in the  applicable  provisions of the DGCL.  Without
limiting the generality of the foregoing,  and subject thereto, at the Effective
Time, without further act or deed, all the property, rights, privileges,  powers
and  franchises of the Company and ISPH shall vest in the Surviving  Corporation
and all  debts,  liabilities  and duties of each of the  Company  and ISPH shall
become the debts, liabilities and duties of the Surviving Corporation.

     SECTION 1.04  CERTIFICATE OF INCORPORATION; BYLAWS.

     (a) CERTIFICATE OF INCORPORATION. At the Effective Time, the Certificate of
Incorporation  of the Company as in effect  immediately  prior to the  Effective
Time shall be the  Certificate  of  Incorporation  of the Surviving  Corporation
until  thereafter  amended in  accordance  with its terms and as provided by the
DGCL.

     (b)  BYLAWS.  At the  Effective  Time,  the  Bylaws  of ISPH  as in  effect
immediately  prior to the  Effective  Time shall be the Bylaws of the  Surviving
Corporation  until  thereafter  amended in  accordance  with their  terms and as
provided  by the DGCL and the  Certificate  of  Incorporation  of the  Surviving
Corporation.

     SECTION 1.05  DIRECTORS AND OFFICERS.

     (a)  DIRECTORS.  From and after the  Effective  Time,  the directors of the
Company  immediately  prior to the Effective Time (other than Sanford Kaplan and
those  directors  on  the  Special  Committee)  shall  be the  directors  of the
Surviving Corporation until the earlier of their resignation or removal or until
their respective successors are duly elected and qualified,  as the case may be,
in accordance with the Certificate of Incorporation  and Bylaws of the Surviving
Corporation, the DGCL and this Agreement.

     (b)  OFFICERS.  From and after the  Effective  Time,  the  officers  of the
Company  immediately  prior to the  Effective  Time shall be the officers of the
Surviving  Corporation  and  shall  hold  office  until  the  earlier  of  their
resignation or removal or until their  respective  successors are duly appointed
and  qualified,  as the case may be,  in  accordance  with  the  Certificate  of
Incorporation  and  Bylaws  of the  Surviving  Corporation,  the  DGCL  and this
Agreement.

                                   ARTICLE II
                            CONVERSION OF SECURITIES;
                       EXCHANGE OF CERTIFICATES; DEPOSIT;
                              DISCLOSURE SCHEDULES

     SECTION 2.01 EFFECT ON CAPITAL STOCK.  As of the Effective  Time, by virtue
of the Merger and  without  any action on the part of the holder of any  Company
Common Stock or any shares of ISPH Stock:

     (a) CONVERSION OF COMPANY COMMON STOCK.  Each share of Company Common Stock
issued and outstanding  immediately  prior to the Effective Time (other than (i)
Dissenting  Shares (as defined in Section  2.04),  (ii) shares of Company Common
Stock that are held in the treasury of the Company or by any  Subsidiary  of the
Company and (iii) shares of Company Common Stock then beneficially  owned by the
Majority Stockholder  (collectively,  the "EXCLUDED SHARES")) shall be converted
into the right to receive  from the  Surviving  Corporation  $10.30 in cash (the
"MERGER   CONSIDERATION")   without  interest  thereon  upon  surrender  of  the
certificate  previously  representing  such  share of  Company  Common  Stock as
provided in Section  2.02(c).  As of the Effective  Time,  all shares of Company
Common Stock shall cease to be outstanding and shall  automatically  be canceled
and  shall  cease  to  exist,  and  each  certificate  (a  "CERTIFICATE")  which
immediately  prior to the Effective Time  represented  any such share of Company
Common  Stock  (except  Excluded  Shares)  shall  cease to have any rights  with
respect thereto,  except the right to receive the Merger  Consideration  and any
dividends or other  distributions to which holders become entitled in accordance
with this Article II upon the surrender of such Certificate.

     (b)  CANCELLATION  OF  EXCLUDED  SHARES.  The  Excluded  Shares  issued and
outstanding  immediately  prior to the  Effective  Time  shall be  canceled  and
retired and shall  cease to exist  without any  consideration  payable  therefor
(subject, in the case of any Dissenting Shares, to such rights as exist pursuant
to the DGCL and Section 2.04).

     (c)  CONVERSION  OF ISPH  STOCK.  Each  share of ISPH  Stock (or a fraction
thereof) issued and outstanding immediately prior to the Effective Time shall be
converted  into one share of Common  Stock,  par  value  $0.001  per share (or a
fraction thereof), of the Surviving Corporation.

                                      A-2


     SECTION 2.02 PAYMENT  PROCEDURES.  At and after the  Effective  Time,  each
Certificate  formerly  representing  shares of Company  Common Stock (other than
Excluded   Shares)  shall  represent  only  the  right  to  receive  the  Merger
Consideration, without interest.

     (b) From time to time after the Effective  Time, the Surviving  Corporation
shall  deposit,  or cause to be  deposited,  with a bank or trust  company  (the
"PAYING AGENT"),  for the benefit of the holders of the  Certificates,  funds in
such amounts as are  necessary to make the  payments  required  pursuant to this
Article II in exchange for shares of Company  Common Stock (other than  Excluded
Shares).  Any cash deposited with the Paying Agent shall hereinafter be referred
to as the "EXCHANGE FUND."

     (c) As promptly as  practicable  after the  Effective  Time,  the Surviving
Corporation shall send or cause to be sent to each holder of record of shares of
Company Common Stock (other than Excluded Shares) transmittal  materials for use
in  exchanging   Certificates  for  the  Merger  Consideration.   The  Surviving
Corporation  shall  cause  any  check in  respect  of the  Merger  Consideration
(together  with any dividends or other  distributions  to which  holders  become
entitled in accordance with this Article II upon surrender of such  Certificate)
which such person  shall be entitled to receive to be  delivered  to such person
upon delivery to the Paying Agent of  Certificates  formerly  representing  such
shares of Company Common Stock owned by such person.  In the event of a transfer
of ownership of the shares of Company Common Stock that is not registered in the
transfer records of the Company,  payment may be made to a person other than the
person in whose name the  Certificate  so  surrendered  is  registered,  if such
Certificate  shall be  properly  endorsed  or  otherwise  be in proper  form for
transfer and the person  requesting such payment shall pay any transfer or other
taxes  required by reason of the payment to a person  other than the  registered
holder of such  Certificate  or establish to the  satisfaction  of the Surviving
Corporation  that such tax has been paid or is not applicable.  No interest will
be paid on any  such  cash to be paid  pursuant  to this  Article  II upon  such
delivery.  The  Surviving  Corporation  shall be entitled to deduct and withhold
from the Merger  Consideration  otherwise  payable to any holder of Certificates
such amounts (if any) as the Surviving Corporation determines are required to be
deducted or withheld under the Code, or any provision of United States, state or
local tax law or any foreign tax law  applicable  as a result of the  residence,
location,  domicile or other facts  relating to such holder.  To the extent that
amounts are so withheld by the  Surviving  Corporation,  such  withheld  amounts
shall be treated for all  purposes of this  Agreement as having been paid to the
holder of such Certificates.

     (d) Subject to Section  2.04,  at the  Effective  Time,  holders of Company
Common Stock shall cease to be, and shall have no rights as, stockholders of the
Company,  other than to receive any dividend or other  distribution with respect
to the Company Common Stock with a record date occurring  prior to the Effective
Time and payment of the Merger Consideration. From and after the Effective Time,
there shall be no transfers on the stock transfer  records of the Company of any
shares of the Company Common Stock that were  outstanding  immediately  prior to
the Effective Time. If, after the Effective Time,  Certificates are presented to
the  Surviving  Corporation  or the  Paying  Agent for  transfer,  they shall be
canceled  and  exchanged  for the Merger  Consideration  deliverable  in respect
thereof  pursuant to this Agreement in accordance  with the procedures set forth
in this Section 2.02 together with any dividends or other distributions to which
the  holder  becomes  entitled  in  accordance  with  this  Article  II upon the
surrender of such Certificates.

     (e) In the event any Certificate shall have been lost, stolen or destroyed,
upon the  making  of an  affidavit  of that  fact by the  person  claiming  such
Certificate to be lost, stolen or destroyed and, if required by the Paying Agent
or the  Surviving  Corporation,  the  posting  by such  person of a bond in such
amount as the Paying Agent or the Surviving Corporation may reasonably direct as
indemnity  against  any claim that may be made  against it with  respect to such
Certificate,  the Paying Agent or the Surviving Corporation, as the case may be,
shall issue in  exchange  for such lost,  stolen or  destroyed  Certificate  the
applicable Merger Consideration  deliverable in respect thereof pursuant to this
Agreement  and any  dividends or other  distributions  to which  holders  become
entitled  in  accordance  with  this  Article  II  upon  the  surrender  of such
Certificate.

     SECTION 2.03 COMPANY STOCK OPTIONS;  COMPANY  RESTRICTED  STOCK PLANS.  (a)
STOCK OPTIONS.  The Company shall take all actions necessary to provide that, at
the Effective  Time, each option to purchase a share of Company Common Stock (an
"OPTION" and, collectively, the "OPTIONS") outstanding and unexercised as of the
Effective Time granted pursuant to the 1991 Incentive Plan for Key Employees and
Directors,  the 2000 Stock Option Plan for Non-Employee  Directors and any other
equity-based  plans  or  agreements  of or  with  the  Company  or  any  of  its
Subsidiaries providing for the granting of Options  (collectively,  the "COMPANY
STOCK OPTION PLANS") is canceled, whether or not then exercisable or vested, and
in consideration of such  cancellation,  the Surviving  Corporation shall pay to
the holder of any such Option the excess (rounded to the nearest $0.01), if any,
of the Merger  Consideration  over such  Option's  exercise  price (the  "OPTION
SPREAD")  multiplied by the number of shares of Company  Common Stock subject to
such Option  immediately prior to the Effective Time. All payments made pursuant
to this  Section  2.03(a)  shall  be made  as soon as  commercially  practicable
following the Effective Time, as reduced by any applicable withholding taxes and
other similar charges.

                                      A-3


     (b) RESTRICTED SHARES. The Company shall take any action necessary to cause
each holder of a share of restricted Company Common Stock (a "RESTRICTED SHARE")
outstanding immediately prior to the Effective Time issued pursuant to a Company
Stock Option Plan or any other  equity-based  plans or agreements of or with the
Company or any of its  Subsidiaries  providing  for the  granting of  Restricted
Shares  (collectively,  the "COMPANY EQUITY PLANS" and together with the Company
Stock Option Plans, the "COMPANY STOCK PLANS") to surrender,  immediately  prior
to the Effective Time,  each such Restricted  Share in exchange for the right to
receive an amount in cash equal to the Merger  Consideration,  as reduced by any
applicable  withholding taxes and other similar charges;  PROVIDED that any such
cash  amount  shall only be  payable to such  holder at such time as (and to the
extent that) the vesting  restrictions that were applicable to the corresponding
Restricted Share would have lapsed if not for the Merger.

     (c) As of the Effective  Time,  the Company shall use its  reasonable  best
efforts,  in consultation with ISPH, to remove, or cause to be removed from each
and every plan,  program,  agreement or arrangement any right of any participant
thereunder to invest in, or receive a distribution in, Company Common Stock.

     SECTION  2.04  SHARES  OF  DISSENTING  STOCKHOLDERS.   (a)  Notwithstanding
anything in this  Agreement to the contrary,  any shares of Company Common Stock
that are issued and  outstanding as of the Effective Time and that are held by a
holder who has not voted in favor of the Merger or consented  thereto in writing
and who properly demands  appraisal of such shares pursuant to, and who complies
in all respects with, Section 262 of the DGCL (the "DISSENTING  SHARES"),  shall
not be converted into the right to receive the Merger  Consideration as provided
in Section  2.01(a),  unless and until such holder shall have failed to perfect,
or shall have effectively withdrawn or lost, his or her right to appraisal under
the DGCL and instead shall be entitled to receive such  consideration  as may be
determined  to be due with  respect to such  Dissenting  Shares  pursuant to and
subject to the  requirements of Section 262 of the DGCL. If, after the Effective
Time,  any such holder  shall have  failed to perfect or shall have  effectively
withdrawn or lost such right,  each share of such holder's  Company Common Stock
shall thereupon be deemed to have been converted into and to have become,  as of
the  Effective  Time,  the  right  to  receive,  without  interest,  the  Merger
Consideration,  in accordance with Section 2.01(a)  (together with any dividends
or other  distributions  to which  holders of  Certificates  become  entitled in
accordance with this Article II upon the surrender of such Certificates).

     (b) Prior to the  Effective  Time,  the Company  shall give ISPH (i) prompt
notice of any notices or demands  (or  withdrawals  of notices or  demands)  for
appraisal or payment for shares of Company  Common Stock received by the Company
and (ii) the  opportunity  to  participate  in and direct all  negotiations  and
proceedings with respect to any such demands or notices.  Prior to the Effective
Time,  the Company shall not,  without prior written  consent of ISPH,  make any
payments, or settle, offer to settle or otherwise negotiate, with respect to any
such demands.

     (c)  Dissenting  Shares,  if any,  after  payments of fair value in respect
thereof have been made to the holders  thereof  pursuant to the DGCL,  shall, to
the extent not canceled at the Effective Time, be canceled.

     SECTION  2.05  ADJUSTMENT  OF  MERGER  CONSIDERATION.  In the  event  that,
subsequent to the date of this  Agreement but prior to the Effective  Time,  the
outstanding  shares of  Company  Common  Stock  shall have been  changed  into a
different  number of shares of a different  class as a result of a stock  split,
reverse  stock split,  stock  dividend,  subdivision,  reclassification,  split,
combination, exchange, recapitalization or other similar transaction, the Merger
Consideration  and any other  number or amount which is based upon the number of
shares of Company Common Stock shall be appropriately adjusted.

                                   ARTICLE III
                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company hereby  represents and warrants to ISPH, except as set forth in
the Company Reports, as follows:

     SECTION 3.01  ORGANIZATION.  The Company is a corporation  duly  organized,
validly  existing and in good standing  under the laws of the State of Delaware,
and,  except  where such failure  would not  reasonably  be expected to,  either
individually  or in the  aggregate,  have a  Material  Adverse  Effect,  has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its  business  as now  being  conducted.  Each of the  Company's
Subsidiaries is a legal entity duly organized or formed, validly existing and in
good standing under the laws of its jurisdiction, and, except where such failure
would not  reasonably be expected to, either  individually  or in the aggregate,
have a Material Adverse Effect, has all requisite  corporate power and authority
to own,  lease and operate its  properties  and to carry on its  business as now
being conducted.

                                      A-4


     SECTION 3.02 CAPITALIZATION. The capitalization of the Company appearing in
the recitals of this  Agreement  is true and correct as of the date hereof.  All
the issued and  outstanding  shares of Company Common Stock are validly  issued,
fully paid and  nonassessable  and free from preemptive  rights.  Except for the
Options  and  Restricted  Shares set forth in  Schedule  3.02,  (i) there are no
subscriptions,   options,  warrants,  calls,  rights,  contracts,   commitments,
understandings,  restrictions  or arrangements  relating to the issuance,  sale,
transfer or voting of any equity  security of the Company,  including any rights
of conversion or exchange under any outstanding  securities or other instruments
and (ii) there are not any outstanding obligations of the Company to repurchase,
redeem or  otherwise  acquire  any  share of  Company  Common  Stock or make any
material  investment (in the form of a loan, capital  contribution or otherwise)
in any  person.  Schedule  3.02  sets  forth the  aggregate  number of shares of
Company  Common  Stock  reserved  for  issuance  pursuant  to  the  Options  and
Restricted Shares.

     SECTION  3.03  SUBSIDIARIES.  The  Company  Reports  include  a list of all
persons  deemed to be a  material  Subsidiary  of the  Company  or of any of its
Subsidiaries together with each such entity's jurisdiction of organization.  All
of the  outstanding  shares  of  capital  stock or other  securities  evidencing
ownership  of the  Company's  Subsidiaries  are validly  issued,  fully paid and
nonassessable and are owned by the Company or its wholly-owned Subsidiaries free
and  clear  of all  pledges,  claims,  liens,  charges,  options,  encumbrances,
mortgages,  pledges  or  security  interests  of any kind or  nature  whatsoever
(collectively,  "LIENS")  with  respect  thereto,  except  such  Liens  that are
described in the Company Reports.

     SECTION  3.04  AUTHORITY  RELATIVE TO THIS  AGREEMENT.  The Company has the
requisite  corporate  power to enter  into this  Agreement  and to carry out its
obligations  hereunder.  The  execution  and delivery of this  Agreement and the
consummation of the transactions  contemplated  hereby have been duly authorized
by the Board of Directors of the Company and the Special  Committee and,  except
for  the  approval  of  this  Agreement  in  accordance  with  the  DGCL  by the
stockholders of the Company,  no other  corporate  proceeding on the part of the
Company  is  necessary  to  authorize  this   Agreement  and  the   transactions
contemplated  hereby. This Agreement has been duly executed and delivered by the
Company  and  constitutes  a  valid  and  binding   obligation  of  the  Company
enforceable against it in accordance with its terms,  subject to (i) approval in
accordance with the DGCL of the  stockholders of the Company and (ii) applicable
bankruptcy,  insolvency, fraudulent conveyance,  reorganization,  moratorium and
similar laws affecting  creditors' rights and remedies generally and subject, as
to  enforceability,  to general  principles of equity,  including  principles of
commercial  reasonableness,  good faith and fair dealing  (regardless of whether
enforcement is sought in a proceeding at law or in equity).

     SECTION  3.05  CONSENTS  AND  APPROVALS;  NO  VIOLATION.   Except  for  (a)
applicable  requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange  Act"),  (b) filings with various state blue sky  authorities  and (c)
filing and recordation of appropriate  merger  documents as required by the DGCL
and the  corporate  law of the other  states in which the  Company  and ISPH are
qualified  to do  business,  no  filing  with  or  notice  to,  and  no  permit,
authorization, consent or approval of, any public body or Governmental Entity or
any other person,  the absence of which would  reasonably be expected to, either
individually or in the aggregate, have a Material Adverse Effect on the Company,
is necessary for the execution and delivery by the Company of this  Agreement or
the  consummation  by the  Company  of the  transactions  contemplated  by  this
Agreement. Except as set forth in Schedule 3.05, none of the execution, delivery
and  performance  by the Company of this Agreement nor the  consummation  by the
Company of the  transactions  contemplated  hereby nor compliance by the Company
with any of the provisions hereof will (i) conflict with or result in any breach
of any provision of the Certificate of Incorporation or Bylaws of the Company or
similar  governance  or  organizational   documents  of  any  of  the  Company's
Subsidiaries,  (ii) result in a violation or breach of, or  constitute  (with or
without  due  notice  or lapse of time or both) a  default  (or give rise to any
right of termination, amendment, cancellation or acceleration) under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, license,
lease agreement or other instrument or obligation to which the Company or any of
its  Subsidiaries is a party or by which the Company or any of its  Subsidiaries
or any of their  respective  properties  or assets may be bound or (iii) violate
any order, writ, injunction,  decree,  statute, rule or regulation applicable to
the Company or any of its Subsidiaries or any of their respective  properties or
assets, except with respect to clauses (ii) and (iii), such violations, breaches
or defaults which would not reasonably be expected to, either individually or in
the aggregate, have a Material Adverse Effect.

     SECTION  3.06  PROXY  STATEMENT;   TRANSACTION   STATEMENT.   None  of  the
information  supplied by the Company for inclusion or incorporation by reference
in (i) the Proxy  Statement (as defined in Section 5.02),  (ii) the  Transaction
Statement (as defined in Section 5.02) or (iii) any other  document  required to
be filed with the SEC or any other  regulatory  authority in connection with the
transactions  contemplated by this Agreement will, at the respective times filed
with the SEC or any other regulatory authority and, in addition,  in the case of
the Proxy  Statement,  the mailing of the Proxy  Statement  or any  amendment or
supplement  thereto, at the time of the meeting of the stockholders to which the
Proxy Statement relates and at the Effective Time,  contain any untrue statement
of a material  fact or omit to state any  material  fact  required  to be stated
therein

                                      A-5


or  necessary  in  order  to  make  the  statements  therein,  in  light  of the
circumstances  under which they are made, not misleading.  The Proxy  Statement,
the Transaction Statement and any other SEC filing in connection with the Merger
will comply (except with respect to ISPH) in all material respects,  as to form,
with  the  applicable  requirements  of the  Exchange  Act  and  the  rules  and
regulations thereunder.

     SECTION 3.07 SEC DOCUMENTS.  Each of the Company and its  Subsidiaries  has
filed all forms, reports,  registration statements, proxy statements,  schedules
and  documents  required  to be  filed by it with the  Securities  and  Exchange
Commission  ("SEC")  since July 31, 2001 through the date hereof  (collectively,
the "COMPANY  REPORTS").  As of their respective  dates, the Company Reports (i)
complied as to form in all material respects with the applicable requirements of
the Securities Act of 1933, as amended (the "SECURITIES  ACT"), the Exchange Act
and the rules and  regulations  thereunder  and (ii) did not  contain any untrue
statement of material  fact  required to be stated  therein or necessary to make
the statements made therein, in light of the circumstances under which they were
made, not misleading.  The most recent consolidated  balance sheet (the "BALANCE
SHEET")  of  the  Company  and  its  consolidated  Subsidiaries  included  in or
incorporated by reference into the Company Reports  (including the related notes
and  schedules)  fairly  presents  the  consolidated  financial  position of the
Company  and its  consolidated  Subsidiaries  as of its  date,  and  each of the
consolidated  statements  of  income,  retained  earnings  and cash flows of the
Company  and  its  consolidated  Subsidiaries  included  in or  incorporated  by
reference into the Company  Reports  (including any related notes and schedules)
fairly presents the  consolidated  results of operations,  retained  earnings or
cash flows, as the case may be, of the Company and its consolidated Subsidiaries
for the periods set forth  therein,  in each case in accordance  with  generally
accepted accounting  principles ("GAAP") consistently applied during the periods
involved,  except as may be noted  therein  (subject,  in the case of  unaudited
interim statements,  to normal and recurring year-end adjustments and exceptions
permitted by Form 10-Q).

     SECTION 3.08 COMPLIANCE WITH LAWS. Each of the Company and its Subsidiaries
has complied and is in compliance  with all  applicable  statutes,  regulations,
rules, orders, ordinances, judgments, decrees, permits, franchises, licenses and
other  laws of the  United  States of  America,  all  state,  local and  foreign
governments and other governmental  bodies and authorities,  and agencies of any
of the foregoing  ("GOVERNMENTAL  ENTITY") to which it is subject, except to the
extent noncompliance would not reasonably be expected to, either individually or
in the aggregate, have a Material Adverse Effect.

     SECTION  3.09   LITIGATION  AND  CLAIMS.   None  of  the  Company  and  its
Subsidiaries  is subject to any  continuing  order of, or written  agreement  or
memorandum of understanding  with, or continuing  material  investigation by any
Governmental Entity or any judgment,  order, writ, injunction,  decree, or award
of any  Governmental  Entity or any court or arbitrator,  and there is no claim,
action, suit, litigation, proceeding, arbitration,  investigation or controversy
affecting  the Company or its  Subsidiaries  or, to the Knowledge (as defined in
Section 10.04) of the Company, threatened, nor is there any valid basis known to
the Company or its Subsidiaries for any such claim,  action,  suit,  litigation,
proceeding,  arbitration,  investigation or controversy except for matters which
would not  reasonably be expected to, either  individually  or in the aggregate,
have a Material Adverse Effect.

     SECTION 3.10 EMPLOYEES AND EMPLOYEE PLANS. (a) Each "employee benefit plan"
(within the meaning of Section 3(3) of the Employee  Retirement  Income Security
Act of 1974,  as amended  ("ERISA")),  and all  severance,  change in control or
employment plans, programs or agreements, and vacation,  incentive, bonus, stock
option, stock purchase, and restricted stock plans, programs or policies and all
other  employee  benefit  plans,  agreements,  programs  or  other  arrangements
sponsored or  maintained  by any of the Company and its  Subsidiaries,  in which
present or former  employees  thereof  participate or any of the Company and its
Subsidiaries  has any present or future  liability  (collectively,  the "COMPANY
PLANS")  that is intended to be  qualified  within the meaning of Section 401 of
the Code has received a favorable  determination letter as to its qualification,
and  nothing  has  occurred  that could  reasonably  be  expected to affect such
qualification.

     (b) Except as provided on Schedule  3.10, no Company Plan exists that could
result in the  payment to any  present or former  employee of any of the Company
and its Subsidiaries of any money or other property or accelerate or provide any
other rights or benefits to any present or former employee of any of the Company
and  its  Subsidiaries  as a  result  of the  transaction  contemplated  by this
Agreement.

     SECTION 3.11 NO BROKERS.  Except pursuant to the engagement  letter (a copy
of which has been  delivered to ISPH)  between the Special  Committee and Lehman
Brothers  Inc.,  financial  advisor  to  the  Special  Committee  (the  "SPECIAL
COMMITTEE  FINANCIAL  ADVISOR"),  no  broker,  finder  or  investment  banker is
entitled to any  brokerage,  finder's  or other  similar  fee or  commission  in
connection with the Merger based upon  arrangements  made by or on behalf of any
of the Company and its Subsidiaries.

                                      A-6


     SECTION 3.12 ABSENCE OF CERTAIN CHANGES. Since December 31, 2001, except as
disclosed in the Company  Reports,  each of the Company and its Subsidiaries has
conducted its business only in the ordinary  course of such business,  and there
has not  been  any  change  in or  effect  on the  business,  earnings,  assets,
liabilities, financial or other condition or results of operations of any of the
Company and its  Subsidiaries  that has had or would  reasonably be expected to,
either individually or in the aggregate, have a Material Adverse Effect.

     SECTION 3.13 ABSENCE OF  UNDISCLOSED  LIABILITIES.  None of the Company and
its  Subsidiaries  has any liabilities or obligations of any nature,  whether or
not accrued,  contingent or otherwise,  whether due or to become due, except (a)
liabilities  or  obligations  reflected or reserved  against or disclosed in the
Company  Reports  filed  prior  to  the  date  hereof  and  (b)  liabilities  or
obligations which would not reasonably be expected to, either individually or in
the aggregate, have a Material Adverse Effect.

     SECTION 3.14 TITLE TO PROPERTIES AND RELATED MATTERS. The Company or one of
its  Subsidiaries  (i) has good and  marketable  title to all the properties and
assets  reflected  in the Balance  Sheet as being owned by the Company or one of
its  Subsidiaries  or acquired  after the date thereof which are material to the
Company's  business on a consolidated basis (except properties sold or otherwise
disposed of since the date thereof in the ordinary course of business), free and
clear of all Liens,  except (A) statutory  Liens securing  payments not yet due,
(B) such imperfections or irregularities of title and Liens as do not materially
affect the use of the properties or assets subject  thereto or affected  thereby
or otherwise  materially  impair business  operations at such properties and (C)
such Liens that are described in the Company Reports,  and (ii) is the lessee of
all leasehold  estates  reflected in the Company  Reports or acquired  after the
date thereof  which are  material to the  Company's  business on a  consolidated
basis  (except  for  leases  that have  expired  by their  terms  since the date
thereof)  and  is in  possession  of  the  properties  purported  to  be  leased
thereunder,  and each such  lease is valid  without  default  thereunder  by the
lessee or, to the  Knowledge of the Company,  the lessor,  except in the case of
clauses  (i) and (ii)  above as would not  reasonably  be  expected  to,  either
individually or in the aggregate, have a Material Adverse Effect.

     SECTION  3.15  FAIRNESS  OPINION.  The Special  Committee  has  received an
opinion of the Special Committee Financial Advisor that the Merger Consideration
is fair,  from a financial point of view, to the Company's  stockholders  (other
than the Majority Stockholder).

                                   ARTICLE IV
                     REPRESENTATIONS AND WARRANTIES OF ISPH

     ISPH hereby represents and warrants to the Company as follows:

     SECTION 4.01  ORGANIZATION.  ISPH is a corporation duly organized,  validly
existing  and in good  standing  under the laws of the State of Delaware and has
all  requisite  corporate  power and  authority  to own,  lease and  operate its
properties and to carry on its business as now being conducted.

     SECTION 4.02  CAPITALIZATION.  The  capitalization of ISPH appearing in the
recitals to this Agreement is true and correct as of the date hereof. All of the
issued and outstanding  shares of ISPH Stock are validly issued,  fully paid and
non-assessable and free from preemptive rights and all of the outstanding shares
of ISPH Stock are beneficially owned by Majority Stockholder.

     SECTION 4.03 AUTHORITY  RELATIVE TO THIS AGREEMENT.  ISPH has the requisite
corporate  power to enter into this  Agreement and to carry out its  obligations
hereunder.  The execution and delivery of this Agreement and the consummation of
the transactions  contemplated  hereby have been duly authorized by the Board of
Directors of ISPH and,  except for the approval of this  Agreement in accordance
with the DGCL by the stockholders of ISPH, no other corporate  proceeding on the
part of ISPH is necessary  to  authorize  this  Agreement  and the  transactions
contemplated hereby. This Agreement has been duly executed and delivered by ISPH
and constitutes a valid and binding obligation of ISPH enforceable against it in
accordance  with its terms,  subject to (i) approval in accordance with the DGCL
of  the  stockholders  of  ISPH  and  (ii)  applicable  bankruptcy,  insolvency,
fraudulent  conveyance,  reorganization,  moratorium  and similar laws affecting
creditors' rights and remedies generally and subject,  as to enforceability,  to
general principles of equity  (regardless of whether  enforcement is sought in a
proceeding at law or in equity).

     SECTION  4.04  CONSENTS  AND  APPROVALS;  NO  VIOLATION.   Except  for  (a)
applicable requirements of the Exchange Act, (b) filings with various state blue
sky authorities and (c) filing and recordation of appropriate  merger  documents
as required by the DGCL and the  corporate  law of the other states in which the
Company and ISPH are qualified to do business, no fil-

                                      A-7


ing with or notice to, and no permit, authorization, consent or approval of, any
public body or  Governmental  Entity,  the absence of which would be  reasonably
expected to, either  individually or in the aggregate,  have a Material  Adverse
Effect on ISPH is  necessary  for the  execution  and  delivery  by ISPH of this
Agreement or the consummation by ISPH of the  transactions  contemplated by this
Agreement.  None of the  execution,  delivery  and  performance  by ISPH of this
Agreement nor consummation by ISPH of the transactions  contemplated  hereby nor
compliance by ISPH with any of the  provisions  hereof will (i) conflict with or
result in any breach of any provision of the  Certificate  of  Incorporation  or
Bylaws of ISPH, (ii) result in a violation or breach of, or constitute  (with or
without  due  notice  or lapse of time or both) a  default  (or give rise to any
right of termination, amendment, cancellation or acceleration) under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, license,
lease agreement or other instrument or obligation to which ISPH is a party or by
which ISPH or any of its  properties or assets may be bound or (iii) violate any
order, writ, injunction,  decree, statute, rule or regulation applicable to ISPH
or any of its  properties  or assets,  except with  respect to clauses  (ii) and
(iii), such violations,  breaches or defaults which,  either  individually or in
the  aggregate,  would not be  reasonably  expected  to have a Material  Adverse
Effect on ISPH.

     SECTION 4.05 PROXY  STATEMENT.  None of the  information  supplied or to be
supplied by ISPH for inclusion in (i) the Proxy Statement,  (ii) the Transaction
Statement or (iii) any other  document  required to be filed with the SEC or any
other regulatory  authority in connection with the transactions  contemplated by
this  Agreement,  will at the  respective  times filed with the SEC or any other
regulatory  authority and, in addition,  in the case of the Proxy Statement,  at
the time of the mailing of the Proxy  Statement or any  amendment or  supplement
thereto,  at the time of the  meeting  of the  stockholders  to which  the Proxy
Statement  relates and at the Effective Time,  contain any untrue statement of a
material fact or omit to state any material  fact required to be stated  therein
or  necessary  in  order  to  make  the  statements  therein,  in  light  of the
circumstances  under which they are made, not misleading.  The Proxy  Statement,
the Transaction Statement and any other SEC filing in connection with the Merger
will comply (with respect to ISPH and/or  Majority  Stockholder) in all material
respects, as to form, with the applicable  requirements of the Exchange Act, and
the rules and regulations thereunder.

     SECTION 4.06 NO CURRENT  INTENTION TO SELL COMPANY.  As of the date of this
Agreement and to ISPH's Knowledge,  the Majority Stockholder has no intention to
(i) sell,  transfer or otherwise  dispose of the shares of the capital  stock of
Surviving Corporation;  (ii) sell, lease, assign,  transfer or otherwise dispose
of all or a major portion of its assets; or (iii) consolidate with or merge into
another corporation or permit one or more other corporations to consolidate with
or merge into it or permit one or more other such  corporations  to  consolidate
with or merge into it, except  pursuant to this  Agreement;  but there can be no
assurance that the Majority  Stockholder or the Surviving  Corporation  will not
determine to cause such events in the future.

     SECTION  4.07 NO KNOWLEDGE  OF BREACH OR  INACCURACY.  Neither ISPH nor any
director, officer,  shareholder,  employee or agent of ISPH has Knowledge of any
breach of, or  inaccuracy  in, any of the  representations  or warranties of the
Company  contained in this Agreement,  except such breaches and  inaccuracies as
would not  reasonably be expected to, either  individually  or in the aggregate,
have a Material Adverse Effect.

                                    ARTICLE V
                                    COVENANTS

     SECTION 5.01 CERTAIN ACTIONS  PENDING MERGER.  Prior to the Effective Time,
neither the Board of Directors of the Company nor any  committee  thereof  shall
approve any action that would  result in the Company or any of its  Subsidiaries
taking any of the following actions, except with the consent of ISPH:

     (a) a split,  combination or  reclassification of the outstanding shares of
Company  Common  Stock or a  declaration,  set-aside  or payment of any dividend
payable in cash,  stock or  property  or any  distribution  with  respect to the
outstanding  shares of Company Common Stock or, a redemption,  purchase or other
acquisition (or agreement to redeem, purchase or otherwise acquire), directly or
indirectly, any shares of Company Common Stock;

     (b) an  issuance,  grant or  agreement  to issue  or grant  any  additional
capital stock of the Company or any of its Subsidiaries or any options, warrants
or rights of any kind to  acquire  any shares of any such  capital  stock or any
securities  convertible into or exchangeable for such capital stock or any right
or security the value of which is based on the value of any such capital stock;

     (c) the entering into any  agreement,  understanding  or  arrangement  with
respect to the voting of its capital stock;

     (d) the  incurrence  of (i) any  indebtedness  for  borrowed  money  or the
assumption,   guarantee,  endorsement  or  any  other  accommodation  to  become
responsible  for the  long-term  indebtedness  of any other  person  (other than
deposits and similar liabilities,  indebtedness of the Company's Subsidiaries to
the Company or any of its wholly owned Subsidiaries and indebt-

                                      A-8


edness under existing lines of credit and renewals or extensions thereof), other
than in the ordinary course of business  consistent with past practice,  or (ii)
any capital expenditures,  obligations or liabilities, other than those budgeted
as of the date hereof or in the ordinary course of business consistent with past
practice;

     (e) the sale, transfer,  mortgage,  encumbrance or other disposition of any
of its material properties or assets, including capital stock in any Significant
Subsidiaries  (as defined in Section 10.04) of the Company,  to any person other
than a direct or  indirect  wholly  owned  Subsidiary,  or the  cancellation  or
release of any  indebtedness  to any such  person or any claims held by any such
person,  except (i) sales of  inventory  or  immaterial  assets in the  ordinary
course of business  consistent  with past practice or (ii) pursuant to contracts
or agreements in force at the date of this Agreement;

     (f) except for  transactions in the ordinary course of business  consistent
with past practice,  the making of any material investment either by purchase of
stock or securities,  contributions to capital,  property transfers, or purchase
of any  property  or  assets  of any  other  person  other  than a wholly  owned
Subsidiary;

     (g) except for  transactions in the ordinary course of business  consistent
with past practice,  the entering into, or termination  of, any material  lease,
contract or agreement,  or making of any material  change in any of its material
leases,  contracts or  agreements,  other than renewals of leases,  contracts or
agreements without material changes of terms;

     (h) other than in the  ordinary  course of  business  consistent  with past
practice or as required by law or  contracts in effect as of the date hereof set
forth in Section 3.10 or Schedule  5.01, an increase in any manner of the wages,
salaries,  compensation,  pension or other fringe benefits or perquisites of any
current or former  employees,  consultants or directors of the Company or any of
its  Subsidiaries,  or  the  vesting,  funding  or  payment  of any  pension  or
retirement allowance other than as required by any existing Company Plans to any
such current or former employees, consultants or directors or the entering into,
amendment, termination or commitment to any pension, retirement,  profit-sharing
or welfare  benefit  plan or  agreement or  employment,  severance,  consulting,
retention,  change in control,  termination,  deferred compensation or incentive
pay  agreement  with or for the  benefit  of any  current  or  former  employee,
consultant or director or, except as expressly  contemplated  by this Agreement,
the acceleration of the vesting,  funding or payment of any compensation payment
or benefit;

     (i) the settlement of any material  claim,  action or proceeding  involving
money damages or a waiver or release of any material rights or claims;

     (j) the change in its methods of accounting in effect at December 31, 2001,
except as  required  by  changes in GAAP,  or a change in any of its  methods of
reporting  material  items of income and  deductions for tax purposes from those
employed  in the  preparation  of the tax returns of the Company for the taxable
years ending December 31, 2001 and 2000, except as required by changes in law or
regulation or as set forth in the Company Disclosure Schedules;

     (k) the  adoption or  implementation  of any  amendment  to its articles or
certificate  of  incorporation,  articles  of  association,  by-laws (or similar
documents) or any plan of consolidation, merger or reorganization;

     (l) the taking of any action that would, or would be reasonably  likely to,
result in any of the  representations  or warranties of the Company set forth in
this  Agreement  not  being  true  in  all  material  respects  or in any of the
conditions  to the  Merger  set  forth in  Articles  VI,  VII and VIII not being
satisfied, except, in every case, as may be required by applicable law; or

     (m) the entering into any agreement to, or the making of any commitment to,
take any of the actions prohibited by this Section 5.01.

     SECTION  5.02 PROXY  STATEMENT.  ISPH and the Company  shall  cooperate  in
preparing  and the  Company  shall,  as soon as  practicable,  file with the SEC
(after  providing  ISPH with a  reasonable  opportunity  to review  and  comment
thereon) (i)  preliminary  proxy  materials  relating to the Company Meeting (as
defined in Section 5.03)  (together with any  amendments  thereof or supplements
thereto,  the "PROXY  STATEMENT"),  (ii) the  transaction  statement on Schedule
13E-3  required by the Exchange Act  (together  with any  amendments  thereof or
supplements thereto,  the "TRANSACTION  STATEMENT") and (iii) any other document
required  to be  filed  with  the  SEC  or any  other  regulatory  authority  in
connection with the transaction contemplated by this Agreement and shall use its
reasonable  best efforts to respond to any comments of the SEC (after  providing
ISPH with a reasonable  opportunity to review and comment  thereon) and to cause
the Proxy Statement and the Transaction  Statement to be mailed to the Company's
stockholders as promptly as practicable after responding to all such comments to
the  satisfaction  of the SEC staff.  The Company and ISPH shall promptly notify
one  another of the receipt of any  comments  from the SEC and of any request by
the SEC for amendments or supplements to the Proxy  Statement or the Transaction
Statement or for additional information and shall supply one another with copies
of all  correspondence  between  it and any of its  representatives,  on the one
hand, and the SEC on the other hand,  with respect to the Proxy  Statement,  the
Transaction Statement or the trans-

                                      A-9


actions  contemplated  hereby. If at any time prior to the Company Meeting there
shall occur any event that should be set forth in an amendment or  supplement to
the Proxy  Statement or the  Transaction  Statement,  the Company shall promptly
prepare and (if  appropriate)  mail to its  stockholders  such an  amendment  or
supplement;  provided that no such  amendment or supplement  will be made by the
Company  without  providing ISPH a reasonable  opportunity to review and comment
thereon.

     (b)  Except  under the  circumstances  described  in Section  5.03(b),  the
Company shall include in the Proxy Statement and the  Transaction  Statement the
recommendation   of  the   Company's   Board  of  Directors   (acting  upon  the
recommendation  of the Special  Committee) that the  stockholders of the Company
(other than the Majority Stockholder) adopt this Agreement.

     SECTION 5.03  STOCKHOLDERS'  MEETING.  The Company shall,  consistent  with
applicable  law,  call and hold a  meeting  of its  stockholders  (the  "COMPANY
MEETING") as promptly as  practicable  following the date hereof for the purpose
of voting upon the adoption of this Agreement. The Company, through its Board of
Directors  (acting  upon the  recommendation  of the Special  Committee),  shall
recommend to its stockholders (other than the Majority  Stockholder) adoption of
this  Agreement,  which  recommendation  shall,  except under the  circumstances
described  in Section  5.03(b),  be  contained  in the Proxy  Statement  and the
Transaction Statement.

     (b) Neither the Board of Directors of the Company nor any committee thereof
(including the Special Committee) shall,  except as expressly  permitted by this
Section  5.03(b),  (i)  withdraw,  qualify or modify,  or  propose  publicly  to
withdraw,  qualify or modify its approval or  recommendation  of the approval of
this Agreement and the transactions  contemplated  hereby or (ii) take any other
action  or make any other  statement  in  connection  with the  Company  Meeting
inconsistent with such recommendation  (collectively,  an "ADVERSE COMPANY BOARD
RECOMMENDATION").  Notwithstanding the foregoing, in the event that prior to the
satisfaction of the conditions set forth in Section 6.01, the Special  Committee
determines in good faith, after receipt of advice from outside counsel, that the
failure to do so would more likely than not constitute a breach of its fiduciary
duties to  stockholders  of the Company  (other than the  Majority  Stockholder)
under  applicable  law, then the Board of Directors of the Company  (acting upon
the  recommendation of the Special  Committee) or the Special Committee may make
an Adverse Company Board Recommendation.

     (c)  Notwithstanding  any  Adverse  Company  Board   Recommendation,   this
Agreement  shall be submitted to the  stockholders of the Company at the Company
Meeting for the purpose of adopting this Agreement and nothing  contained herein
shall be deemed to relieve the Company of such obligation.

     SECTION 5.04 REASONABLE EFFORTS. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to (i) use its reasonable efforts to
take,  or cause to be taken,  all  action,  and to do, or cause to be done,  all
things  necessary,  proper or advisable under applicable laws and regulations or
required to be taken by any  Governmental  Entity or otherwise to consummate and
make effective the  transactions  contemplated  by this Agreement as promptly as
practicable,  (ii) obtain from any Governmental  Entity any consents,  licenses,
permits, waivers, approvals, authorizations or orders required to be obtained or
made by ISPH,  the Company or any of the  Company's  Subsidiaries  in connection
with  the  authorization,  execution  and  delivery  of this  Agreement  and the
consummation  of the  Merger,  and (iii) as promptly  as  practicable,  make all
necessary  filings,  and thereafter  make any other required  submissions,  with
respect to this  Agreement and the Merger  required  under (A) the Exchange Act,
and any other  applicable  federal or state  securities  laws, and (B) any other
applicable  law;  PROVIDED that ISPH and the Company shall  cooperate  with each
other in  connection  with the making of all such filings,  including  providing
copies of all such documents to the  non-filing  party and its advisors prior to
filing and, if  requested,  to accept all  reasonable  additions,  deletions  or
changes  suggested  in  connection  therewith.  The  Company  and ISPH shall use
reasonable  best efforts to furnish to each other all  information  required for
any application or other filing to be made pursuant to the rules and regulations
of any applicable law (including all information  required to be included in the
Proxy  Statement  and  the   Transaction   Statement)  in  connection  with  the
transactions  contemplated  by this  Agreement.  In case at any time  after  the
Effective  Time,  any further  action is necessary or desirable to carry out the
purposes  of  this  Agreement,   the  proper  officers  and  directors  of  each
corporation  party to this Agreement  shall take all such necessary or desirable
action.

     SECTION 5.05  INSPECTION OF RECORDS.  From the date hereof to the Effective
Time,  the  Company  shall  (i)  allow all  designated  officers,  stockholders,
attorneys,  financial  advisors,  accountants and other  representatives of ISPH
reasonable  access at all  reasonable  times to the offices,  records and files,
correspondence, audits and properties, as well as to all information relating to
commitments,  contracts,  titles and financial position, or otherwise pertaining
to the business and affairs,  of the Company and its Subsidiaries,  (ii) furnish
to ISPH and its stockholders,  counsel,  financial advisors,  auditors and other
authorized   representatives   such  financial  and  operating  data  and  other
information  as such  persons  may  reasonably  request and (iii)  instruct  the
employees, counsel and financial advisors of the Company and its Subsidiaries to
cooperate with ISPH in its investiga-

                                      A-10


tion of the business of the Company and its  Subsidiaries.  No  investigation by
any party,  whether prior to the execution of this Agreement or pursuant to this
Section 5.05, shall affect any  representation  or warranty in this Agreement of
any party hereto or any condition to the obligations of the parties hereto.

     SECTION 5.06  NOTIFICATION OF CERTAIN  MATTERS.  From and after the date of
this Agreement until the Effective Time, each party hereto shall promptly notify
the other parties hereto of:

     (a) any change or event, or series of changes or events,  having,  or which
would  reasonably  be  expected to have,  individually  or in the  aggregate,  a
Material Adverse Effect on it or would be reasonably  likely to cause any of the
conditions  in  Articles  VI, VII and VIII not to be  satisfied  or to cause the
satisfaction thereof to be materially delayed;

     (b) the receipt of any material notice or other material communication from
any person  alleging  that the  consent of such  person is or may be required in
connection with the transactions contemplated hereby;

     (c) the receipt of any material notice or other material communication from
any Governmental Entity in connection with the transactions contemplated hereby;
and

     (d) any actions, suits, claims, investigations or proceedings commenced or,
to the  Knowledge of the party,  threatened  against  ISPH or the Company  which
seeks to  prohibit  or prevent  consummation  of the  transactions  contemplated
hereby;

in each case,  to the extent such event or  circumstance  is or becomes known to
the party required to give such notice; PROVIDED,  HOWEVER, that the delivery of
any notice  pursuant to this Section 5.06 shall not be deemed to be an amendment
of this Agreement or any of the Company  Disclosure  Schedules,  as the case may
be, and shall not cure any breach of any  representation  or warranty  requiring
disclosure of such matter prior to the date of this Agreement.

     SECTION  5.07 PUBLIC  ANNOUNCEMENTS.  ISPH and the Company  shall use their
reasonable  efforts to consult with each other before  issuing any press release
or otherwise making any public  statements with respect to this Agreement or any
of the  transactions  contemplated  hereby.  Prior to the Closing,  ISPH and the
Company shall not issue any such press release or make any such public statement
without  the prior  consent of the other  parties  (which  consent  shall not be
unreasonably  withheld  or  delayed),  except  as  may  be  required  by  law or
regulation  or any  listing  agreement  with the New York Stock  Exchange or any
other  securities  exchange  to which the  Company is a party and, in such case,
shall use their reasonable  efforts to consult with all the parties hereto prior
to such release or statement  being issued.  The parties shall agree on the text
of a joint press  release by which the parties will  announce  the  execution of
this Agreement.

     SECTION 5.08 INDEMNIFICATION BY SURVIVING  CORPORATION.  (a) From and after
the Effective Time, the Surviving  Corporation shall indemnify,  defend and hold
harmless  each person who is now an officer or  director of the Company  against
all losses,  claims,  damages,  costs,  expenses or liabilities or in connection
with any claim,  action,  suit,  proceeding or investigation  arising out of the
fact that such  person is an officer or  director  of the Company (or out of any
action  taken by any such person on behalf of the  Company),  pertaining  to any
matter  existing or occurring on or prior to the Effective  Time  (including the
transactions contemplated by this Agreement),  whether asserted or claimed prior
to, or on or after, the Effective Time. In each case such indemnification  shall
be to the  full  extent  permitted  under  applicable  law  (and  the  Surviving
Corporation  will pay expenses in advance of the final  disposition  of any such
action or  proceeding  to each such  director or officer of the Company  seeking
indemnification hereunder to the full extent permitted by law).

     (b) For a period  of six years  after the  Effective  Time,  the  Surviving
Corporation shall maintain officers' and directors'  liability insurance for all
persons currently covered under the Company's officers' and directors' liability
insurance  policies,  in their  capacities as officers and  directors,  on terms
substantially  no less  advantageous  to the covered  persons than such existing
insurance,  pertaining  to any matter  existing or  occurring on or prior to the
Effective Time  (including the  transactions  contemplated  by this  Agreement),
whether  asserted  or  claimed  prior  to, or on or after  the  Effective  Time;
provided,  however,  that the  Surviving  Corporation  shall not be  required to
maintain or procure such coverage to pay an annual  premium in excess of 200% of
the current  annual  premium paid by the Company for its existing  coverage (the
"Cap"); and provided,  further,  that if equivalent coverage cannot be obtained,
or can be  obtained  only by paying an annual  premium  in excess of 200% of the
Cap, the Surviving Corporation shall only be required to obtain as much coverage
as can be obtained by paying an annual premium equal to 200% of the Cap.

                                      A-11


     (c) The  Indemnity  Agreements  dated  August 7, 2002 among the Company and
each  of  the   members  of  the   Special   Committee   (the   "Indemnification
Arrangements")  shall not in any way be limited by or be  affected by the rights
and  obligations  of the Company or of the  directors  and  officers  under this
Agreement except as expressly provided herein, and the execution and delivery of
this Agreement  shall not in any way limit or affect the rights and  obligations
of  the  Company  or  the  other  party  or  parties   thereto  under  any  such
Indemnification Arrangement.

     (d) This Section 5.08 shall  survive the  consummation  of the Merger.  The
provisions of this Section 5.08 are intended to be for the benefit of, and shall
be enforceable by the present directors or officers of the Company,  as the case
may be. The rights provided under this Section 5.08 shall be in addition to, and
not in lieu of,  any  rights to  indemnity  which  any party may have  under the
Certificate  of  Incorporation  or  Bylaws  of  the  Company  or  the  Surviving
Corporation or any other agreements.  If the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other corporation
or entity and is not the  continuing or surviving  corporation or entity of such
consolidation  or  merger  or (ii)  transfers  all or  substantially  all of its
properties or assets to any individual, corporation or any other entity, in each
such case,  proper provision shall be made so that the successors and assigns of
the Surviving Corporation shall assume the obligations set forth in this Section
5.08.

     (e) In the  event  that  any  action,  suit,  proceeding  or  investigation
relating  thereto  or to the  transactions  contemplated  by this  Agreement  is
commenced,  whether before or after the Effective Time, the parties hereto agree
to cooperate and use their respective  reasonable  efforts to vigorously  defend
against and respond thereto.

                                   ARTICLE VI
           CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER

     The  respective  obligations  of each party to effect  the Merger  shall be
subject to the  fulfillment  on or prior to the Effective  Time of the following
conditions:

     SECTION 6.01  STOCKHOLDER  APPROVAL OF  AGREEMENT.  This  Agreement and the
transactions  contemplated hereby shall have been adopted by (a) the affirmative
vote of the holders of at least a majority of the outstanding  shares of Company
Common Stock and (b) the affirmative  vote of at least majority of the shares of
Company  Common Stock cast either for or against the adoption of this  Agreement
(excluding  the  Majority  Stockholder  Shares and any shares of Company  Common
Stock held beneficially or of record by any officers or directors of ISPH or the
Company)   (the   affirmative   vote   described   in  this  clause   (b),   the
"MAJORITY-OF-MINORITY CONDITION").

     SECTION 6.02 CERTAIN PROCEEDINGS. No preliminary or permanent injunction or
restraining  order or other  order,  decree  or  ruling  issued  by any court of
competent  jurisdiction  nor any statute,  rule,  regulation  or order  entered,
promulgated or enacted by any Governmental Entity shall be in effect which would
prevent the consummation of the Merger or the other transactions contemplated by
this Agreement (each party agreeing to use its reasonable  efforts (as set forth
in  Section  5.04) to have any such  injunction  or  restraining  order or other
order,  decree or ruling lifted) and no action,  suit,  claim or proceeding by a
Governmental  Entity  before any  domestic  court,  governmental  commission  or
administrative or regulatory  authority shall have been commenced and be pending
which  seeks  to  restrain,  prevent  or  materially  delay or  restructure  the
transactions  contemplated  by this Agreement or which  otherwise  questions the
validity or legality of any such transaction,  other than actions, suits, claims
and  proceedings  which,  in the  reasonable  opinion of counsel to the relevant
party, are unlikely to result in an adverse judgment.

                                   ARTICLE VII
                        CONDITIONS TO OBLIGATIONS OF ISPH

     The  obligation  of ISPH to  effect  the  Merger  shall be  subject  to the
satisfaction  or  waiver,  on or  before  the  Closing  Date,  of the  following
conditions:

     SECTION 7.01  REPRESENTATIONS  AND WARRANTIES TRUE. The representations and
warranties of the Company  contained  herein shall be true and correct as of the
date  of  this  Agreement  and,   without  giving  effect  to  any   materiality
qualifications or limitations  therein,  on and as of the Closing Date as though
made on and as of the Closing  Date  (except to the extent such  representations
and  warranties  expressly  speak as of a specified  earlier date, in which case
such representations and warranties shall be true and correct as of such earlier
date),  except such failures to be true and correct that in the aggregate  would
not  reasonably be expected to have a Material  Adverse  Effect;  and ISPH shall
have  received  a  certificate  signed  on behalf  of the  Company  by the chief
executive officer of the Company to such effect.

     SECTION 7.02  PERFORMANCE OF OBLIGATIONS.  The Company shall have performed
in all material respects its agreements  contained in this Agreement required to
be performed by it on or prior to the Closing Date, and ISPH shall have received
a certificate  signed on behalf of the Company by the chief executive officer of
the Company to such effect.

                                      A-12


                                  ARTICLE VIII
                    CONDITIONS TO OBLIGATIONS OF THE COMPANY

     The  obligation  of the Company  under this  Agreement to effect the Merger
shall be subject to the  satisfaction or waiver,  on or before the Closing Date,
of the following conditions:

     SECTION 8.01  REPRESENTATIONS  AND WARRANTIES TRUE. The representations and
warranties of ISPH contained  herein shall be true and correct as of the date of
this Agreement and, without giving effect to any materiality  qualifications  or
limitations  therein,  on and as of the Closing Date as though made on and as of
the Closing  Date  (except to the extent  such  representations  and  warranties
expressly   speak  as  of  a  specified   earlier   date,  in  which  case  such
representations  and  warranties  shall be true and  correct as of such  earlier
date),  except such failures to be true and correct that in the aggregate  would
not reasonably be expected to have a Material  Adverse  Effect;  and the Company
shall  have  received  a  certificate  signed  on  behalf  of ISPH by the  chief
executive officer of ISPH to such effect.

     SECTION 8.02  PERFORMANCE OF OBLIGATIONS.  ISPH shall have performed in all
material  respects its  agreements  contained in this  Agreement  required to be
performed  by it on or prior to the Closing  Date,  and the  Company  shall have
received a certificate  signed on behalf of ISPH by the chief executive  officer
of ISPH to such effect.

                                   ARTICLE IX
                        TERMINATION, AMENDMENT AND WAIVER

     SECTION 9.01  TERMINATION.  This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective  Time,  notwithstanding  any
requisite adoption of this Agreement by the stockholders of the Company:

     (a)  by  mutual  written  consent  of  the  Company   (provided  that  such
termination has been approved by the Special Committee) and ISPH;

     (b) by either the Company (provided that such termination has been approved
by the  Special  Committee)  or ISPH if any  Governmental  Entity  of  competent
jurisdiction shall have issued a final nonappealable injunction,  order, decree,
judgment  or  ruling,   permanently   enjoining  or  otherwise  prohibiting  the
consummation of the transactions contemplated by this Agreement;

     (c) by either the Company (provided that such termination has been approved
by the Special  Committee) or ISPH if the Merger shall not have been consummated
on or before May 31,  2003,  unless the  failure of the Closing to occur by such
date  shall  be due to the  failure  of the  party  seeking  to  terminate  this
Agreement to perform or observe the covenants  and  agreements of such party set
forth herein;

     (d) by either the Company (provided that such termination has been approved
by the Special  Committee) or ISPH if there shall have been a material breach of
any of the covenants or agreements or any of the  representations  or warranties
set  forth  in this  Agreement  on the  part of the  Company  (in the  case of a
termination  by ISPH) or ISPH (in the  case of a  termination  by the  Company),
which breach is not cured within 30 days  following  written notice to the party
committing  such breach,  or which  breach,  by its nature or timing,  cannot be
cured  prior to the date  referred  to in Section  9.01(c);  PROVIDED  that such
breach,  if occurring  or  continuing  on the Closing  Date,  would  constitute,
individually  or in the aggregate  with other such breaches  occurring  prior to
such  time and then  continuing,  the  failure  of the  conditions  set forth in
Sections 7.01, 7.02, 8.01 or 8.02, as applicable;

     (e) by either the Company (provided that such termination has been approved
by the Special  Committee) or ISPH, if the Company  Meeting shall have been held
and the  holders  of  Company  Common  Stock  shall  have  failed to adopt  this
Agreement by the vote  specified in Section  6.01(a) and 6.01(b) at such meeting
(including any adjournment or postponement thereof in accordance with applicable
law);  PROVIDED that ISPH shall not have the right to terminate  this  Agreement
under this Section 9.01(e) if Majority Stockholder has failed to comply with its
obligation  to vote in favor of the  Merger  pursuant  to the  Voting  Agreement
delivered by it in connection with the execution and delivery of this Agreement;
or

     (f) by ISPH if the  Special  Committee  or the  Board of  Directors  of the
Company (acting upon the  recommendation  of the Special  Committee)  shall have
made an Adverse Company Board Recommendation.

     SECTION 9.02 EFFECT OF  TERMINATION.  In the event of  termination  of this
Agreement  by either  ISPH or the  Company as  provided  in Section  9.01,  this
Agreement shall forthwith  become void and have no effect,  and none of Majority
Stockholder,  ISPH, the Company, any of their respective  Subsidiaries or any of
the  officers or  directors  of any of them,  as the case may be, shall have any
liability  of  any  nature  whatsoever  hereunder,  or in  connection  with  the
transactions  contemplated hereby, except that Sections 9.02, 9.04 and Article X
shall survive any termination of this Agreement, and notwithstanding anything

                                      A-13


to the contrary contained in this Agreement, none of Majority Stockholder,  ISPH
or the Company  shall be relieved or released  from any  liabilities  or damages
arising out of its willful breach of any provision of this  Agreement;  PROVIDED
that in no event shall any party hereto be liable for any punitive damages.

     SECTION 9.03  AMENDMENT.  Subject to compliance  with  applicable law, this
Agreement  may be amended by ISPH and the Company  (acting upon  approval by the
Special Committee) at any time before or after adoption of this Agreement by the
stockholders of the Company; PROVIDED,  HOWEVER, that after any adoption of this
Agreement by the  stockholders of the Company,  no amendment shall be made which
by law  requires  further  approval by such  stockholders  without  such further
approval (including the Majority-of-Minority  Condition). This Agreement may not
be amended  except by an instrument  in writing  signed on behalf of each of the
parties hereto.

     SECTION 9.04  EXTENSION;  WAIVER.  At any time prior to the Effective Time,
subject to compliance  with  applicable  law, ISPH and the Company  (acting upon
approval  by the Special  Committee)  may, to the extent  legally  allowed,  (a)
extend the time for the  performance of any of the  obligations or other acts of
the other  parties  hereto for its benefit,  (b) waive any  inaccuracies  in the
representations  and  warranties of the other parties for its benefit  contained
herein or in any  document  delivered  pursuant  hereto,  (c)  waive any  rights
contained  herein for the waiving party's benefit and (d) waive  compliance with
any of the  agreements or conditions  contained  herein for the waiving  party's
benefit.  Any  agreement on the part of a party hereto to any such  extension or
waiver shall be valid only if set forth in a written instrument signed on behalf
of such  party,  but such  extension  or waiver or  failure  to insist on strict
compliance  with an  obligation,  covenant,  agreement  or  condition  shall not
operate as a waiver of, or estoppel  with  respect to, any  subsequent  or other
failure.

                                    ARTICLE X
                               GENERAL PROVISIONS

     SECTION 10.01 NON-SURVIVAL OF  REPRESENTATIONS,  WARRANTIES AND AGREEMENTS.
The  representations,  warranties  and  agreements  in  this  Agreement  and any
certificate  delivered  pursuant  hereto by any person  shall  terminate  at the
Effective Time or upon the  termination  of this  Agreement  pursuant to Section
9.01, as the case may be, except that the agreements set forth in Articles I and
II and Section 5.08 shall survive the Effective Time indefinitely, and those set
forth in  Section  9.02 and 9.04 and this  Article X shall  survive  termination
indefinitely.

     SECTION 10.02 EXPENSES. Except as otherwise provided in this Section 10.02,
all costs and  expenses  incurred  in  connection  with this  Agreement  and the
transactions  contemplated  hereby  shall be paid by the  party  incurring  such
expense. The cost of preparing, printing and mailing the Proxy Statement and the
Transaction Statement shall be borne by the Company.

     SECTION 10.03 NOTICES.  All notices,  requests,  claims,  demands and other
communications  hereunder  shall be in writing  and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by facsimile
or by registered or certified mail (postage prepaid,  return receipt  requested)
or by a  nationally  recognized  overnight  courier  service  to the  respective
parties at the  following  addresses  (or at such other  address  for a party as
shall be specified in a notice given in accordance with this Section 10.03):

     if to ISPH:

     c/o International Specialty Products Holdings Inc.
     1361 Alps Road
     Wayne, NJ 07470
     Telecopy:    (973) 628-3229
     Attention:   Samuel J. Heyman






                                      A-14


     with copies to:

     Simpson Thacher & Bartlett
     425 Lexington Avenue
     New York, NY 10017
     Telecopy:    (212) 455-2502
     Attention:   Maripat Alpuche, Esq.

     if to the Company:

     c/o International Specialty Products Inc.
     1361 Alps Road
     Wayne, NJ 07470
     Telecopy:    (973) 628-3229
     Attention:   Richard A. Weinberg, Esq.

                  Special Committee Members:

                  Robert Englander
                  Burt Manning
                  Alan Meckler

     with a copy to:

     Willkie Farr & Gallagher
     787 Seventh Avenue
     New York, NY 10019-6099
     Telecopy:    (212) 728-2000
     Attention:   William J. Grant, Jr.
                  Michael A. Schwartz

     SECTION 10.04  DEFINITIONS  AND USAGE.  (a) For purposes of this Agreement,
the term:

     (i) "BENEFICIAL  OWNER" with respect to any shares means a person who shall
be deemed to be the beneficial owner of such shares,  as determined  pursuant to
Rule 13d-3 under the Exchange Act,  except that,  for purposes of this Agreement
and the Voting  Agreement,  the term shall exclude (x) shares which are held by,
or for the account of, a Charitable Organization and (y) shares which are deemed
beneficially  owned  pursuant to Rule 13d-3 solely  because of the  operation of
Rule 13d-3(d)(1)(i)(A);

     (ii) "BUSINESS  DAY" means any day other than a Saturday,  Sunday or one on
which banks are authorized by law to close in New York, New York;

     (iii)  "CHARITABLE  ORGANIZATION"  means a person that is recognized as tax
exempt pursuant to Section 501(c)(3) of the Code;

     (iv) "CODE"  means the  Internal  Revenue  Code of 1986,  as  amended.  All
citations to provisions of the Code, or to the Treasury Regulations  promulgated
thereunder, shall include any amendments thereto and any substitute or successor
provisions thereto;

     (v) "INCLUDING" means including, without limitation;

     (vi) "MATERIAL ADVERSE EFFECT" means,

         (A)  with  respect  to  the  Company,   any  changes  or  effects  that
     individually or in the aggregate (1) are or could reasonably be expected to
     be  material  and  adverse  to  the  condition  (financial  or  otherwise),
     business,  assets,  liabilities or results of operations of the Company and
     its Subsidiaries,  taken as a whole, or (2) could reasonably be expected to
     prevent or  materially  impair the  ability of the  Company to perform  its
     obligations   under  this  Agreement  or  to  consummate  the  transactions
     contemplated hereby; and

         (B) with respect to ISPH,  any effect that would  prevent or materially
     impair or delay the ability of ISPH to perform its  obligations  under this
     Agreement or to consummate the transactions contemplated hereby;

         PROVIDED,  HOWEVER, that Material Adverse Effect shall not be deemed to
     include  the  impact of  changes in  general  economic  conditions,  or the
     occurrence of other events or developments affecting the specialty chemical
     manufacturing  business  generally  except to the extent that such changes,
     events  or  developments  have an  adverse  effect on the  Company  and its
     Subsidiaries  taken as a whole that is materially  greater than the adverse
     effect on comparable entities;

                                      A-15


     (vii) "PERSON" means an individual, corporation, limited liability company,
partnership,  limited  partnership,  syndicate,  person (including a "person" as
defined in Section 13(d)(3) of the Exchange Act),  trust,  association or entity
or government, political subdivision, agency or instrumentality of a government;

     (viii)  "SUBSIDIARY" and "SIGNIFICANT  SUBSIDIARY"  shall have the meanings
ascribed to them in Rule 1-02 of Regulation S-X of the SEC.  Notwithstanding the
foregoing,  for purposes of this  Agreement,  the Company  shall not be deemed a
Subsidiary or a Significant Subsidiary of Majority Stockholder.

     A reference in this  Agreement  to any statute  shall be to such statute as
amended  from  time  to  time,  and to the  rules  and  regulations  promulgated
thereunder.

     (b) A fact,  event,  circumstance or occurrence  shall be within a person's
"KNOWLEDGE"  if, with  respect to the Company or any of its  Subsidiaries,  such
fact,  event,  circumstance or occurrence is or was actually known by any of the
Company's or the relevant Subsidiary's executive officers or directors, or, with
respect to ISPH,  such  fact,  event or  circumstance  or  occurrence  is or was
actually known by any of ISPH's executive officers or directors.

     (c) The symbol "$" and the word  "dollar" or  "dollars"  shall refer to the
lawful currency of the United States of America.

     SECTION 10.05 ACCOUNTING  TERMS. All accounting terms used herein which are
not expressly defined in this Agreement shall have the respective meanings given
to them in accordance with GAAP.

     SECTION 10.06 DISCLOSURE SCHEDULES.  Prior to the execution and delivery of
this  Agreement,  the Company has  delivered  to ISPH  schedules  (the  "COMPANY
DISCLOSURE  SCHEDULES")  setting  forth,  among other things,  in each case with
respect to specified  sections of this Agreement,  items the disclosure of which
is  necessary  or  appropriate  either  in  response  to an  express  disclosure
requirement contained in a provision hereof or as an exception to one or more of
the Company's  representations or warranties  contained in Article III or to one
or more  of the  Company's  covenants  contained  in  Sections  5.01;  PROVIDED,
HOWEVER,  that notwithstanding  anything in this Agreement to the contrary,  the
mere inclusion of an item in the Company Disclosure Schedules as an exception to
a  representation  or warranty  shall not be deemed an admission by a party that
such  item  represents  a  material   exception  or  material  fact,   event  or
circumstance or that such item has had or would reasonably be expected to have a
Material  Adverse Effect with respect to the Company.  Matters  disclosed in any
particular section of the Company  Disclosure  Schedules shall be deemed to have
been  disclosed  in any other  section  with  respect  to which  such  matter is
relevant so long as the relevance of such disclosure is readily apparent.

     SECTION  10.07  SEVERABILITY.  If any  term  or  other  provision  of  this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy,  all other  conditions and provisions of this Agreement  shall
nevertheless  remain in full force and effect so long as the major  economic  or
legal substance of the Merger is not affected in any manner  materially  adverse
to any  party.  Upon  such  determination  that any term or other  provision  is
invalid,  illegal or  incapable  of being  enforced,  the parties  hereto  shall
negotiate  in good faith to modify this  Agreement  so as to effect the original
intent of the parties as closely as possible in a mutually  acceptable manner in
order that the Merger be consummated as originally  contemplated  to the fullest
extent possible.

     SECTION 10.08 ENTIRE AGREEMENT;  ASSIGNMENT.  This Agreement (including the
Company Disclosure  Schedules,  which are hereby  incorporated herein and made a
part  hereof for all  purposes  as if fully set forth  herein)  constitutes  the
entire agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements and  undertakings,  both written and oral, among
the parties,  or any of them,  with respect to the subject matter  hereof.  This
Agreement  shall not be assigned by operation  of law or  otherwise  without the
prior  written  consent of the other  parties,  which shall not be  unreasonably
withheld,  except that ISPH may assign all or any of its rights and  obligations
hereunder  to any  wholly-owned  Subsidiary  of ISPH or entity  wholly-owned  by
Majority Stockholder.

     SECTION 10.09 PARTIES IN INTEREST. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied,  is intended  to or shall  confer upon any other  person any
right,  benefit  or remedy of any nature  whatsoever  under or by reason of this
Agreement,  other than the  provisions of Article II and Section 5.08 (which are
intended  to be for  the  benefit  of the  persons  covered  thereby  and may be
enforced by such persons).

     SECTION  10.10  SPECIFIC   PERFORMANCE.   The  parties  hereto  agree  that
irreparable  damage would occur in the event any provision of this Agreement was
not performed in accordance  with the terms hereof and that the parties shall be
entitled to an injunction or injunctions  to prevent  breaches of this Agreement
and to specific performance of the terms hereof, in addition to any other remedy
at law or in equity.

                                      A-16


     SECTION  10.11  GOVERNING  LAW.  This  Agreement  shall be  governed by and
construed in  accordance  with the laws of the State of Delaware  applicable  to
contracts made and to be performed  entirely in such State.  Each of the parties
irrevocably  and  unconditionally  waives,  to the fullest  extent  permitted by
applicable  law,  any and all  rights  to trial by jury in  connection  with any
litigation  arising  out of or relating to this  Agreement  or the  transactions
contemplated hereby.

     SECTION  10.12  HEADINGS.   The  descriptive  headings  contained  in  this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.

     SECTION 10.13  COUNTERPARTS.  This  Agreement may be executed and delivered
(including by facsimile  transmission) in one or more  counterparts,  and by the
different parties hereto in separate  counterparts,  each of which when executed
and delivered  shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.

     SECTION 10.14 CONSTRUCTION. This Agreement and any documents or instruments
delivered  pursuant hereto or in connection  herewith shall be construed without
regard to the identity of the person who drafted the various  provisions  of the
same.  Each and every  provision of this Agreement and such other  documents and
instruments shall be construed as though all of the parties participated equally
in the drafting of the same.  Consequently,  the parties  acknowledge  and agree
that any rule of  construction  that a document is to be  construed  against the
drafting  party shall not be applicable  either to this  Agreement or such other
documents and instruments.

     SECTION 10.15 NO PECUNIARY  INTEREST.  The parties hereto  acknowledge that
the Majority  Stockholder  has disclaimed any pecuniary  interest in the Company
Common  Stock in excess of his  interests  in certain  limited  partnership  and
limited liability company entities that own shares of Company Common Stock.

                                    * * * * *

                  (remainder of page intentionally left blank)






                                      A-17


     IN WITNESS  WHEREOF,  the Company and ISPH have caused this Agreement to be
executed  as of the  date  first  written  above by  their  respective  officers
thereunto duly authorized.

                                    INTERNATIONAL SPECIALTY
                                    PRODUCTS INC.




                                    By: /s/ RICHARD A. WEINBERG
                                        ------------------------------------
                                        Name:    Richard A. Weinberg
                                        Title:   Executive Vice
                                                 President and General Counsel

                                    INTERNATIONAL SPECIALTY
                                    PRODUCTS HOLDINGS INC.




                                    By: /s/ SUNIL KUMAR
                                        ------------------------------------
                                        Name:    Sunil Kumar
                                        Title:   President and Chief
                                                 Executive Officer






                                      A-18


                                                                         ANNEX B

                                 LEHMAN BROTHERS

                                                                November 8, 2002

Special Committee of the Board of Directors
International Specialty Products Inc.
1361 Alps Road
Wayne, NJ 07470

Members of the Special Committee of the Board:

     We understand that  International  Specialty  Products Inc. (the "Company")
intends  to  enter  into an  agreement  with  International  Specialty  Products
Holdings Inc.  ("ISPH")  pursuant to which ISPH will be merged with and into the
Company (the "Proposed  Transaction"  or the "Merger").  We also understand that
Samuel J. Heyman, the Chairman of the Board of Directors of the Company,  is the
beneficial  owner of  approximately  80.9% of the shares of the Company's common
stock,  par value  $0.01 per  share  (the  "Company  Common  Stock")  and is the
beneficial  owner of 100% of the  shares of  common  stock of ISPH.  We  further
understand that, upon effectiveness of the Merger,  each share of Company Common
Stock issued and  outstanding  immediately  prior to the  effective  time of the
Merger  (other than (i) shares of Company  Common  Stock  beneficially  owned by
Samuel J.  Heyman,  (ii)  shares of  Company  Common  Stock that are held in the
treasury of the Company or by any subsidiary of the Company, and (iii) shares of
Company  Common  Stock  that are held by  holders  who  have  properly  demanded
appraisal of such shares in  accordance  with the Delaware  General  Corporation
Law) will be converted into the right to receive $10.30 in cash. Based on advice
of the management of the Company, we further understand that Mr. Heyman does not
currently  intend to sell his  interest in the Company  (other than as permitted
pursuant to the terms of the Voting  Agreement  to be entered  into  between Mr.
Heyman and the  Company) or to solicit or  entertain  any  proposals  from third
parties for the acquisition of the Company as, or substantially as, an entirety.
The terms  and  conditions  of the  Proposed  Transaction  are set forth in more
detail in the  Agreement  and Plan of Merger,  dated as of November 8, 2002 (the
"Agreement"), between the Company and ISPH.

     We have been  requested by the Special  Committee of the Board of Directors
of the  Company to render our  opinion  with  respect  to the  fairness,  from a
financial  point of view, to the Company's  shareholders  (other than Mr. Heyman
and his  affiliates) of the  consideration  offered to such  shareholders in the
Proposed Transaction. We have not been requested to opine as to, and our opinion
does not in any manner address,  the Company's  underlying  business decision to
proceed with or effect the Proposed Transaction.

     In arriving at our opinion, we reviewed and analyzed: (1) the Agreement and
the  specific  terms  of  the  Proposed  Transaction;   (2)  publicly  available
information  concerning  the  Company  that we  believe  to be  relevant  to our
analysis, including the Company's Annual Report on Form 10-K for the fiscal year
ended  December 31, 2001, the Company's  Quarterly  Reports on Form 10-Q for the
quarters ended March 31 and June 30, 2002, and the amended Schedule 13D filed by
Mr. Heyman on July 9, 2002; (3) financial and operating information with respect
to the business,  operations and prospects of the Company furnished to us by the
Company,  including,  without  limitation,  (i)  certain  projections  of future
financial  performance of the Company  prepared by management of the Company and
provided  to us on  September  3,  2002  and  (ii)  certain  updated  and  lower
projections  of  future  financial   performance  of  the  Company  prepared  by
management  of the Company and  presented  to us and the  Special  Committee  on
October  21,  2002 (the  "Updated  Projections");  (4) a trading  history of the
Company  Common Stock from June 25, 1991 to the present and a comparison of that
trading  history with those of other  companies that we deemed  relevant;  (5) a
comparison of the historical  financial results and present financial  condition
of the Company with those of other companies that we deemed relevant;  and (6) a
comparison of the financial terms of the Proposed Transaction with the financial
terms of certain other recent transactions that we deemed relevant. In addition,
we have had  discussions  with the  management  of the  Company  concerning  the
businesses, operations, assets, financial condition and prospects of the Company
and have undertaken such other studies, analyses and investigations as we deemed
appropriate.

     In arriving at our  opinion,  we have  assumed and relied upon the accuracy
and  completeness  of the  financial  and other  information  used by us without
assuming any responsibility for independent verification of such information and
have further  relied upon the  assurances of management of the Company that they
are not aware of any facts or  circumstances  that would  make such  information
inaccurate  or  misleading.  With respect to the  financial  projections  of the
Company,  we have been advised by the Company that the Updated  Projections have
been reasonably prepared on a basis reflecting the best currently avail-

                                      B-1


able  estimates and judgments of the  management of the Company as to the future
financial  performance  of the Company and,  accordingly,  have assumed that the
Company  will  perform   substantially  in  accordance  with  such  projections.
Furthermore,  we have discussed the Updated  Projections  with the management of
the Company and the Special  Committee,  and it has been agreed that the Updated
Projections are the  appropriate  projections to use in performing our analysis.
In arriving at our opinion,  we have not conducted a physical  inspection of the
properties  and  facilities  of the Company  and have not made or  obtained  any
evaluations  or  appraisals  of the assets or  liabilities  of the  Company.  In
addition, you have not authorized us to solicit, and we have not solicited,  any
indications of interest from any third party with respect to the purchase of all
or a part of the  Company's  business.  Our  opinion  necessarily  is based upon
market,  economic and other conditions as they exist on, and can be evaluated as
of, the date of this letter.

     Based upon and  subject to the  foregoing,  we are of the opinion as of the
date hereof that, from a financial point of view, the  consideration  offered to
the  Company's  shareholders  in  the  Proposed  Transaction  is  fair  to  such
shareholders (other than Mr. Heyman and his affiliates).

     We have acted as financial advisor to the Special Committee of the Board of
Directors of the Company in connection  with the Proposed  Transaction  and will
receive a fee for our services. In addition, the Company has agreed to indemnify
us for certain  liabilities that may arise out of the rendering of this opinion.
In the ordinary  course of our business,  we may actively  trade in the debt and
equity securities of the Company for our own account and for the accounts of our
customers  and,  accordingly,  may at any time hold a long or short  position in
such securities.

     This  opinion is for the use and  benefit of the Special  Committee  of the
Board of  Directors  of the Company and is rendered to the Special  Committee of
the Board of  Directors in  connection  with its  consideration  of the Proposed
Transaction.  This  opinion  is not  intended  to be and does not  constitute  a
recommendation  to any  shareholder  of the  Company as to how such  shareholder
should vote with respect to the Proposed Transaction.

                                                 Very truly yours,



                                                 LEHMAN BROTHERS








                                      B-2


                                                                         ANNEX C

                          STOCKHOLDER VOTING AGREEMENT

     THIS STOCKHOLDER VOTING AGREEMENT (this "AGREEMENT"),  dated as of November
8,  2002,  by and  among  INTERNATIONAL  SPECIALTY  PRODUCTS  INC.,  a  Delaware
corporation (the "COMPANY") and SAMUEL J. HEYMAN (the "STOCKHOLDER").

                              W I T N E S S E T H:

     WHEREAS,  concurrently herewith,  International Specialty Products Holdings
Inc., a Delaware  corporation  (the "MERGER SUB"),  and the Company are entering
into an Agreement and Plan of Merger (as such agreement may hereafter be amended
from time to time, the "MERGER AGREEMENT");

     WHEREAS, as of the date hereof, the Stockholder is the beneficial owner (as
such term is  defined  in the  Merger  Agreement)  of (x)  52,328,040  shares of
Company Common Stock, representing approximately 80.9% of all outstanding shares
of Company Common Stock, and (y) all of the capital stock of Merger Sub;

     WHEREAS,  approval of the Merger Agreement by the Company's stockholders is
required in order to consummate the Merger;

     WHEREAS,   the  board  of   directors   of  the  Company   (acting  on  the
recommendation  of a special  committee)  has,  prior to the  execution  of this
Agreement,  duly and validly  approved and adopted the Merger  Agreement and has
resolved to recommend that its stockholders  approve the Merger  Agreement,  and
such approval, adoption and resolution have not been withdrawn; and

     NOW, THEREFORE,  in consideration of the foregoing and the mutual promises,
representations,  warranties, respective covenants and agreements of the parties
contained herein and for other good and valuable consideration,  the receipt and
sufficiency of which are hereby  acknowledged by each of the parties hereto, the
parties hereto, intending to be legally bound hereby, agree as follows:

                                    ARTICLE I
                               CERTAIN DEFINITIONS

     Section 1.1 DEFINED  TERMS. Terms used in this  Agreement and not otherwise
defined herein shall have the respective  meanings ascribed to such terms in the
Merger Agreement.

                                   ARTICLE II
                                VOTING AGREEMENT

     Section 2.1 AGREEMENT TO VOTE. Upon the terms and subject to the conditions
hereof, the Stockholder  irrevocably and unconditionally agrees that, until this
Agreement is terminated  pursuant to Section 5.1 hereof, at any meeting (whether
annual or special,  and whether or not an adjourned or postponed meeting) of the
Company's  stockholders,  however  called,  or in  connection  with any  written
consent of the Company's  stockholders,  the Stockholder shall vote, or cause to
be voted  (including by written  consent,  if applicable)  all shares of Company
Common Stock then beneficially owned by the Majority Stockholder (i) in favor of
the  adoption  of the Merger  Agreement  and (ii)  against  any action  that may
reasonably be expected to result in the conditions set forth in Articles VI, VII
and VIII of the Merger Agreement not being fulfilled. The Stockholder agrees not
to enter into any agreement or commitment  with any person,  the effect of which
would  be  inconsistent  with or  violative  of the  provisions  and  agreements
contained in this Article II.

                                   ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

     Section  3.1 REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER.The  Stockholder
represents and warrants to the Company that the following  statements are, as of
the date of this Agreement, true and correct:

     (a) The  Stockholder  is the beneficial  owner of the Majority  Stockholder
Shares.  The  Stockholder has the sole power to vote (or cause to be voted) such
Majority Stockholder Shares.

                                      C-1


     (b) This Agreement has been duly executed and delivered by the Stockholder.

     (c) This  Agreement  constitutes  the valid and  binding  agreement  of the
Stockholder, enforceable against the Stockholder in accordance with its terms.

     (d) The execution and delivery of this  Agreement by the  Stockholder  does
not violate or breach,  except as will not materially  impair the ability of the
Stockholder  to  effectuate,  carry out or comply  with all of the terms of this
Agreement,  (i) any applicable law,  governmental  approval or contract to which
the Stockholder is a party or by which the Stockholder's  assets may be bound or
(ii)  require any  consent or  approval  of, or filing  with,  any  Governmental
Entity.

     Section  3.2  REPRESENTATIONS  AND  WARRANTIES  OF  COMPANY.   The  Company
represents and warrants to the Stockholder that the following statements are, as
of the date of this Agreement, true and correct:

     (a)  This  Agreement  has  been  duly  executed  and  delivered  by a  duly
authorized officer of the Company.

     (b) This  Agreement  constitutes  the valid and  binding  agreement  of the
Company, enforceable against the Company in accordance with its terms.

     (c) The  execution  and delivery of this  Agreement by the Company does not
violate or breach, and will not give rise to any violation or breach, of (i) the
Company's  certificate of  incorporation  and by-laws or (ii) except as will not
materially impair its ability to effectuate, carry out or comply with all of the
terms of this  Agreement,  (A) any  applicable  law,  governmental  approval  or
contract to which the Company or its  Subsidiaries are a party or by which their
respective  assets or  properties  may be bound or (B)  require  any  consent or
approval of, or filing with, any Governmental Entity.

                                   ARTICLE IV
                                    COVENANTS

     Section 4.1 COVENANTS OF THE  STOCKHOLDER.  The  Stockholder  covenants and
agrees with the Company  that,  during the period  commencing on the date hereof
and ending on the date this Agreement is terminated under Article V hereof:

     (a) The  Stockholder  shall not,  directly or indirectly,  sell,  transfer,
pledge,  hypothecate,  encumber,  assign or dispose of any Majority  Stockholder
Shares  (or the  beneficial  ownership  thereof)  or offer to make  such a sale,
transfer or other disposition  (collectively,  "TRANSFER") to any person, except
(i) a Transfer to a Charitable  Organization  or (ii) Transfers of up to 114,336
Majority  Stockholder  Shares  currently held by Heyman Joint Venture II LLC, so
long as, in each case,  after giving effect to such  Transfer,  the  Stockholder
remains a beneficial owner of at least seventy-five  percent (75%) of the issued
and outstanding Company Common Stock.

     (b) The  Stockholder  shall  execute and deliver such other  documents  and
instruments  and take such further  actions as are  necessary in order to ensure
that the Company receives the benefit of this Agreement.

                                    ARTICLE V
                                   TERMINATION

     Section  5.1  TERMINATION.  This  Agreement  shall  terminate  and be of no
further  force or effect upon the earlier to occur of (i) the mutual  consent of
the Company (with the approval of the Special  Committee)  and the  Stockholder,
(ii) the Effective  Time,  (iii) the termination of the Merger  Agreement,  (iv)
written  notice of termination by either party hereto if there has been a breach
by the other party of any  representation,  warranty or  agreement  contained in
this Agreement or (v) the making of an Adverse Company Board Recommendation.

     Section 5.2 EFFECT OF TERMINATION.  In the event of any termination of this
Agreement,  this  Agreement  (other than Sections 6.1 through  6.13,  inclusive)
shall  become void and of no effect with no  liability  on the part of any party
hereto;  PROVIDED that no such  termination  shall relieve any party hereto from
liability for any breach of this Agreement prior to termination thereof.

                                   ARTICLE VI
                                     GENERAL

     Section 6.1  NOTICES.  All  notices,  requests,  claims,  demands and other
communications  hereunder  shall be in writing  and shall be deemed to have been
duly given (a) on the date of delivery if delivered personally, (b) on the first
Business  Day  following  the date of  dispatch  if  delivered  by a  nationally
recognized next-day courier service, (c) on the fifth Business Day following the
date of mailing if delivered by registered  or certified  mail,  return  receipt
requested, postage prepaid or (d) if

                                      C-2


sent by facsimile transmission, with a copy mailed on the same day in the manner
provided  in (a) or (b) above,  when  transmitted  and receipt is  confirmed  by
telephone;  provided  that any notice  received by facsimile or otherwise at the
addressee's  location on any  Business  Day after 5:00 p.m.  (addressee's  local
time)  shall be deemed to have been  received  at 9:00 a.m.  (addressee's  local
time) on the next Business Day. Any party to this Agreement may notify any other
party of any changes to the  address or any of the other  details  specified  in
this paragraph,  provided that such notification  shall only be effective on the
date  specified  in such  notice or five (5)  Business  Days after the notice is
given, whichever is later. Rejection or other refusal to accept or the inability
to  deliver  because of  changed  address of which no notice was given  shall be
deemed to be receipt of the notice as of the date of such rejection,  refusal or
inability to deliver. All notices hereunder shall be delivered to the parties as
set forth below, or pursuant to such other  instructions as may be designated in
writing by the party to receive such notice:

     if to the Company, to it at:

     c/o International Specialty Products Inc.
     1361 Alps Road
     Wayne, NJ 07470
     Attention:   Richard A. Weinberg, Esq.
                  Robert Englander
                  Burt Manning
                  Alan Meckler
     Telephone: 973-628-4000
     Fax: 973-628-3229

     with a copy to:

     Willkie Farr & Gallagher
     787 Seventh Avenue
     New York, NY 10019-6099
     Attention:   William J. Grant, Jr.
                  Michael A. Schwartz
     Telephone: 212-728-8000
     Fax: 212-728-8111

     if to the Stockholder, to it at:

     Samuel J. Heyman
     1361 Alps Road
     Wayne, NJ 07470
     Telephone: 973-628-4000
     Fax: 973-628-3229

     with a copy to:

     Simpson Thacher & Bartlett
     425 Lexington Avenue
     New York, NY 10017
     Attention:   Maripat Alpuche
     Telephone: 212-455-2000
     Fax: 212-455-2502

     Section 6.2 NO THIRD-PARTY BENEFICIARIES. This Agreement is not intended to
confer third party beneficiary rights upon any person.

     Section  6.3  GOVERNING  LAW.  This  Agreement  shall  be  governed  by and
construed in  accordance  with the laws of the State of Delaware  applicable  to
contracts made and to be performed  entirely in such State.  Each of the parties
irrevocably  and  unconditionally  waives,  to the fullest  extent  permitted by
applicable  law,  any and all  rights  to trial by jury in  connection  with any
litigation  arising  out of or relating to this  Agreement  or the  transactions
contemplated hereby.

                                      C-3


     Section  6.4  SEVERABILITY.  In the  event  that  any  one or  more  of the
provisions contained herein, or the application thereof in any circumstances, is
held to be invalid, illegal or unenforceable in any respect for any reason under
any present or future law,  public policy or order,  (i) such provision shall be
fully  severable and (ii) this  Agreement  shall be construed and enforced as if
such illegal,  invalid or  unenforceable  provision  had never  comprised a part
hereof.  Upon such  determination  that any term or other  provision is invalid,
illegal or  incapable of being  enforced,  the parties  shall  negotiate in good
faith  with a view to the  substitution  therefor  of a suitable  and  equitable
solution in order to carry out to the maximum extent possible,  so far as may be
valid, legal and enforceable,  the intent and purpose of such invalid provision;
PROVIDED that the validity, legality and enforceability of any such provision in
every other respect and of the remaining  provisions  contained herein shall not
be in any way impaired  thereby,  it being  intended  that all of the rights and
privileges  of the parties  hereto shall be  enforceable  to the fullest  extent
permitted by law.

     Section  6.5  ASSIGNMENT.  Neither  this  Agreement  nor the  rights or the
obligations  of either party hereto are  assignable in whole or in part (whether
by  operation  of law or  otherwise),  without the written  consent of the other
parties  and the  Company  and any  attempt  to do so in  contravention  of this
Section 6.5 shall be void.

     Section 6.6 SUCCESSORS. This Agreement shall inure to the benefit of and be
binding upon the parties  hereto and their  respective  successors and permitted
assigns.

     Section 6.7  INTERPRETATION.  When a reference is made in this Agreement to
Sections,  such  reference  shall  be to a  Section  of  this  Agreement  unless
otherwise indicated. Whenever the words "include," "includes" or "including" are
used in this  Agreement,  they  shall be  deemed  to be  followed  by the  words
"without  limitation." The words "hereof,"  "herein" and "herewith" and words of
similar import shall,  unless  otherwise  stated,  be construed to refer to this
Agreement as a whole and not to any particular provision of this Agreement.  The
definitions  contained in this  Agreement are applicable to the singular as well
as the  plural  forms  of  such  terms  and to the  masculine  as well as to the
feminine and neuter genders of such term. Any agreement or instrument defined or
referred to herein or in any agreement or instrument  that is referred to herein
means such  agreement or instrument  as from time to time  amended,  modified or
supplemented  and  attachments  thereto and  instruments  incorporated  therein.
References to a person are also to its  successors  and permitted  assigns.  The
parties  have  participated  jointly in the  negotiation  and  drafting  of this
Agreement.  In the event an  ambiguity  or question of intent or  interpretation
arises,  this Agreement  shall be construed as if drafted jointly by the parties
and no presumption  or burden of proof shall arise  favoring or disfavoring  any
party by virtue of the  authorship of any of the  provisions of this  Agreement.
Any reference to any federal,  state,  local or foreign  statute or law shall be
deemed to also to refer to any amendments  thereto and all rules and regulations
promulgated thereunder, unless the context requires otherwise.

     Section 6.8  AMENDMENTS.  This  Agreement  may not be amended,  modified or
waived except by written  agreement  signed by the  Stockholder  and the Company
(upon the approval of the Special Committee).

     Section  6.9  ENTIRE  AGREEMENT.  This  Agreement  constitutes  the  entire
agreement  between the parties  with  respect to the subject  matter  hereof and
supersedes all prior agreements, understandings,  negotiations,  representations
and  warranties,  and  discussions,  whether oral or written,  among the parties
hereto, with respect to the subject matter hereof.

     Section 6.10 COUNTERPARTS.  This Agreement may be executed in counterparts,
each of which  shall be  deemed an  original,  but all of which  together  shall
constitute one and the same  instrument  and shall become  effective when one or
more  counterparts  have been signed by each of the parties and delivered to the
other parties.

     Section  6.11  EXECUTION.  This  Agreement  may be  executed  by  facsimile
signatures  by any party and such  signature  shall be  deemed  binding  for all
purposes  hereof,  without  delivery of an original  signature being  thereafter
required.

     Section 6.12 SPECIFIC  PERFORMANCE.  The parties  hereto  acknowledge  that
irreparable  damage  would  result  if  this  Agreement  were  not  specifically
enforced,  and agree that the rights and  obligations  of the parties under this
Agreement may be enforced by a decree of specific  performance issued by a court
of competent  jurisdiction to the extent that specific  performance is available
under applicable law. Such remedy shall,  however, not be exclusive and shall be
in addition to any other  remedies which any party may have under this Agreement
or otherwise.

     Section  6.13  ACTION  IN  BENEFICIAL   STOCKHOLDER   CAPACITY   ONLY.  The
Stockholder does not make any agreement or understanding  herein in any capacity
other than as a beneficial owner of stock of the Company. The Stockholder hereby
disclaims  any pecuniary  interest in the Company  Common Stock in excess of his
interests in certain limited  partnership and limited liability company entities
that own shares of Company Common Stock.


                                      C-4



     IN WITNESS WHEREOF,  the parties have duly executed this Stockholder Voting
Agreement as of the date first above written.

                                    INTERNATIONAL SPECIALTY
                                    PRODUCTS INC.




                                    By: /s/ RICHARD A. WEINBERG
                                        ---------------------------------
                                        Name:    Richard A. Weinberg
                                        Title:   Executive Vice
                                                 President and General Counsel



                                    SAMUEL J. HEYMAN




                                        /s/ SAMUEL J. HEYMAN
                                        ---------------------------------



                                      C-5


                                                                         ANNEX D

                GENERAL CORPORATION LAW OF THE STATE OF DELAWARE

SECTION 262. APPRAISAL RIGHTS.

     (a) Any  stockholder  of a  corporation  of this State who holds  shares of
stock on the date of the making of a demand  pursuant to subsection  (d) of this
section with respect to such shares,  who continuously holds such shares through
the effective date of the merger or  consolidation,  who has otherwise  complied
with  subsection  (d) of this section and who has neither  voted in favor of the
merger or consolidation  nor consented thereto in writing pursuant to ss. 228 of
this title  shall be entitled  to an  appraisal  by the Court of Chancery of the
fair  value  of the  stockholder's  shares  of  stock  under  the  circumstances
described in subsections  (b) and (c) of this section.  As used in this section,
the word "stockholder"  means a holder of record of stock in a stock corporation
and also a member of record of a nonstock  corporation;  the words  "stock"  and
"share"  mean and  include  what is  ordinarily  meant by those  words  and also
membership or membership interest of a member of a nonstock corporation; and the
words  "depository  receipt"  mean a  receipt  or other  instrument  issued by a
depository representing an interest in one or more shares, or fractions thereof,
solely of stock of a corporation, which stock is deposited with the depository.

     (b)  Appraisal  rights  shall be  available  for the shares of any class or
series of stock of a constituent  corporation in a merger or consolidation to be
effected  pursuant  to ss. 251 (other  than a merger  effected  pursuant  to ss.
251(g) of this title), ss. 252, ss. 254, ss. 257, ss. 258, ss. 263 or ss. 264 of
this title:

         (1)  Provided,  however,  that no  appraisal  rights under this section
     shall be  available  for the shares of any class or series of stock,  which
     stock, or depository  receipts in respect thereof, at the record date fixed
     to determine the stockholders  entitled to receive notice of and to vote at
     the  meeting  of  stockholders  to act  upon the  agreement  of  merger  or
     consolidation,  were either (i) listed on a national securities exchange or
     designated as a national market system security on an interdealer quotation
     system by the National Association of Securities Dealers, Inc. or (ii) held
     of  record  by more  than  2,000  holders;  and  further  provided  that no
     appraisal  rights  shall  be  available  for any  shares  of  stock  of the
     constituent  corporation  surviving  a merger if the merger did not require
     for its approval the vote of the stockholders of the surviving  corporation
     as provided in subsection (f) of ss. 251 of this title.

         (2) Notwithstanding paragraph (1) of this subsection,  appraisal rights
     under this section shall be available for the shares of any class or series
     of stock of a constituent  corporation if the holders  thereof are required
     by the terms of an agreement of merger or consolidation  pursuant to ss.ss.
     251, 252, 254, 257, 258, 263 and 264 of this title to accept for such stock
     anything except:

         a. Shares of stock of the corporation  surviving or resulting from such
     merger or consolidation, or depository receipts in respect thereof;

         b. Shares of stock of any other corporation,  or depository receipts in
     respect thereof,  which shares of stock (or depository  receipts in respect
     thereof)  or  depository  receipts at the  effective  date of the merger or
     consolidation  will be either listed on a national  securities  exchange or
     designated as a national market system security on an interdealer quotation
     system by the National  Association of Securities Dealers,  Inc. or held of
     record by more than 2,000 holders;

         c. Cash in lieu of fractional shares or fractional  depository receipts
     described in the foregoing subparagraphs a. and b. of this paragraph; or

         d. Any combination of the shares of stock, depository receipts and cash
     in lieu of fractional shares or fractional depository receipts described in
     the foregoing subparagraphs a., b. and c. of this paragraph.

         (3) In the event all of the stock of a subsidiary Delaware  corporation
     party to a merger  effected under ss. 253 of this title is not owned by the
     parent corporation immediately prior to the merger,  appraisal rights shall
     be available for the shares of the subsidiary Delaware corporation.

     (c) Any corporation may provide in its  certificate of  incorporation  that
appraisal  rights  under this section  shall be available  for the shares of any
class or series of its stock as a result of an amendment to its  certificate  of
incorporation,  any  merger  or  consolidation  in which  the  corporation  is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation.  If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.

                                      D-1


     (d) Appraisal rights shall be perfected as follows:

         (1) If a proposed merger or  consolidation  for which appraisal  rights
     are  provided  under this  section is to be  submitted  for  approval  at a
     meeting of stockholders,  the  corporation,  not less than 20 days prior to
     the  meeting,  shall  notify each of its  stockholders  who was such on the
     record date for such  meeting  with  respect to shares for which  appraisal
     rights  are  available  pursuant  to  subsection  (b)  or (c)  hereof  that
     appraisal  rights  are  available  for  any or all  of  the  shares  of the
     constituent  corporations,  and shall include in such notice a copy of this
     section.  Each  stockholder  electing  to  demand  the  appraisal  of  such
     stockholder's shares shall deliver to the corporation, before the taking of
     the vote on the merger or consolidation,  a written demand for appraisal of
     such stockholder's  shares. Such demand will be sufficient if it reasonably
     informs the  corporation  of the identity of the  stockholder  and that the
     stockholder  intends thereby to demand the appraisal of such  stockholder's
     shares.  A proxy or vote  against  the  merger or  consolidation  shall not
     constitute such a demand.  A stockholder  electing to take such action must
     do so by a separate written demand as herein provided. Within 10 days after
     the  effective  date of such  merger or  consolidation,  the  surviving  or
     resulting  corporation  shall notify each  stockholder of each  constituent
     corporation  who has  complied  with this  subsection  and has not voted in
     favor of or consented to the merger or  consolidation  of the date that the
     merger or consolidation has become effective; or

         (2) If the merger or consolidation  was approved  pursuant to ss.228 or
     ss.253 of this title,  then,  either a constituent  corporation  before the
     effective  date  of  the  merger  or  consolidation,  or the  surviving  or
     resulting corporation within ten days thereafter,  shall notify each of the
     holders of any class or series of stock of such constituent corporation who
     are  entitled  to  appraisal  rights  of  the  approval  of the  merger  or
     consolidation and that appraisal rights are available for any or all shares
     of such class or series of stock of such constituent corporation, and shall
     include in such notice a copy of this  section.  Such  notice may,  and, if
     given on or after the effective date of the merger or consolidation, shall,
     also  notify  such  stockholders  of the  effective  date of the  merger or
     consolidation.  Any stockholder entitled to appraisal rights may, within 20
     days after the date of mailing of such  notice,  demand in writing from the
     surviving or resulting  corporation the appraisal of such holder's  shares.
     Such demand will be sufficient if it reasonably  informs the corporation of
     the identity of the stockholder and that the stockholder intends thereby to
     demand the appraisal of such holder's shares. If such notice did not notify
     stockholders of the effective date of the merger or  consolidation,  either
     (i) each such constituent corporation shall send a second notice before the
     effective date of the merger or consolidation notifying each of the holders
     of any class or series of stock of such  constituent  corporation  that are
     entitled  to  appraisal  rights  of the  effective  date of the  merger  or
     consolidation  or (ii) the  surviving or resulting  corporation  shall send
     such a second  notice to all such  holders  on or within 10 days after such
     effective date; provided,  however, that if such second notice is sent more
     than 20 days following the sending of the first notice,  such second notice
     need only be sent to each  stockholder who is entitled to appraisal  rights
     and who has demanded  appraisal of such holder's  shares in accordance with
     this subsection. An affidavit of the secretary or assistant secretary or of
     the  transfer  agent of the  corporation  that is  required  to give either
     notice that such notice has been given shall,  in the absence of fraud,  be
     prima  facie  evidence  of  the  facts  stated  therein.  For  purposes  of
     determining  the  stockholders  entitled  to receive  either  notice,  each
     constituent  corporation  may fix, in advance,  a record date that shall be
     not more than 10 days prior to the date the notice is given, provided, that
     if the  notice is given on or after  the  effective  date of the  merger or
     consolidation,  the record date shall be such effective  date. If no record
     date is fixed and the  notice is given  prior to the  effective  date,  the
     record date shall be the close of business  on the day next  preceding  the
     day on which the notice is given.

     (e)  Within  120  days   after  the   effective   date  of  the  merger  or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with  subsections  (a) and (d) hereof and who is otherwise  entitled to
appraisal  rights,  may file a petition  in the Court of  Chancery  demanding  a
determination   of  the   value  of  the   stock   of  all  such   stockholders.
Notwithstanding  the  foregoing,  at any time within 60 days after the effective
date of the merger or  consolidation,  any  stockholder  shall have the right to
withdraw such stockholder's demand for appraisal and to accept the terms offered
upon the merger or  consolidation.  Within 120 days after the effective  date of
the  merger  or  consolidation,  any  stockholder  who  has  complied  with  the
requirements of subsections (a) and (d) hereof,  upon written request,  shall be
entitled to receive from the corporation  surviving the merger or resulting from
the  consolidation a statement  setting forth the aggregate number of shares not
voted in favor of the merger or consolidation  and with respect to which demands
for appraisal  have been  received and the  aggregate  number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10 days
after such stockholder's written request for such a statement is received by the
surviving or resulting  corporation  or within 10 days after  expiration  of the
period for  delivery  of demands  for  appraisal  under  subsection  (d) hereof,
whichever is later.


                                      D-2


     (f) Upon the filing of any such  petition  by a  stockholder,  service of a
copy thereof  shall be made upon the surviving or resulting  corporation,  which
shall  within 20 days after such  service  file in the office of the Register in
Chancery in which the petition was filed a duly  verified  list  containing  the
names and  addresses of all  stockholders  who have  demanded  payment for their
shares and with whom  agreements  as to the value of their  shares have not been
reached by the  surviving or  resulting  corporation.  If the petition  shall be
filed  by  the  surviving  or  resulting  corporation,  the  petition  shall  be
accompanied  by such a duly  verified  list.  The  Register in  Chancery,  if so
ordered by the  Court,  shall  give  notice of the time and place  fixed for the
hearing of such  petition by  registered  or certified  mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein  stated.  Such notice shall also be given by 1 or more  publications  at
least  1  week  before  the  day of  the  hearing,  in a  newspaper  of  general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems  advisable.  The forms of the notices by mail and by publication
shall be  approved  by the Court,  and the costs  thereof  shall be borne by the
surviving or resulting corporation.

     (g) At the  hearing  on  such  petition,  the  Court  shall  determine  the
stockholders who have complied with this section and who have become entitled to
appraisal  rights.  The Court may require the  stockholders who have demanded an
appraisal for their shares and who hold stock  represented  by  certificates  to
submit  their  certificates  of stock to the  Register in Chancery  for notation
thereon of the pendency of the  appraisal  proceedings;  and if any  stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.

     (h) After determining the stockholders entitled to an appraisal,  the Court
shall appraise the shares, determining their fair value exclusive of any element
of value  arising  from the  accomplishment  or  expectation  of the  merger  or
consolidation,  together  with a fair rate of interest,  if any, to be paid upon
the amount  determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors,  including the rate of
interest which the surviving or resulting  corporation  would have had to pay to
borrow money  during the pendency of the  proceeding.  Upon  application  by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion,  permit discovery
or other pretrial  proceedings and may proceed to trial upon the appraisal prior
to the final  determination  of the  stockholder  entitled to an appraisal.  Any
stockholder  whose name appears on the list filed by the  surviving or resulting
corporation  pursuant to  subsection  (f) of this section and who has  submitted
such stockholder's certificates of stock to the Register in Chancery, if such is
required,  may  participate  fully  in  all  proceedings  until  it  is  finally
determined that such  stockholder is not entitled to appraisal rights under this
section.

     (i) The Court  shall  direct the  payment of the fair value of the  shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto.  Interest may be simple or compound, as the Court
may direct.  Payment shall be so made to each such  stockholder,  in the case of
holders of  uncertificated  stock  forthwith,  and the case of holders of shares
represented  by  certificates  upon  the  surrender  to the  corporation  of the
certificates  representing  such stock.  The  Court's  decree may be enforced as
other decrees in the Court of Chancery may be enforced,  whether such  surviving
or resulting corporation be a corporation of this State or of any state.

     (j) The costs of the  proceeding  may be  determined by the Court and taxed
upon the  parties  as the  Court  deems  equitable  in the  circumstances.  Upon
application  of a  stockholder,  the Court  may  order  all or a portion  of the
expenses   incurred  by  any   stockholder  in  connection  with  the  appraisal
proceeding,  including,  without limitation,  reasonable attorney's fees and the
fees and  expenses of experts,  to be charged pro rata  against the value of all
the shares entitled to an appraisal.

     (k) From and after the effective  date of the merger or  consolidation,  no
stockholder who has demanded  appraisal  rights as provided in subsection (d) of
this section  shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other  distributions  on the stock (except  dividends or
other  distributions  payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation);  provided,  however, that
if no  petition  for an  appraisal  shall be filed  within the time  provided in
subsection  (e) of this  section,  or if such  stockholder  shall deliver to the
surviving or resulting  corporation a written  withdrawal of such  stockholder's
demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days  after the  effective  date of the  merger  or  consolidation  as
provided  in  subsection  (e) of this  section or  thereafter  with the  written
approval of the corporation,  then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court
of Chancery shall be dismissed as to any stockholder without the approval of the
Court,  and such approval may be conditioned  upon such terms as the Court deems
just.

     (l) The  shares of the  surviving  or  resulting  corporation  to which the
shares  of such  objecting  stockholders  would  have  been  converted  had they
assented to the merger or consolidation  shall have the status of authorized and
unissued shares of the surviving or resulting corporation.

                                      D-3



                 INTERNATIONAL SPECIALTY PRODUCTS INC.

                  Proxy for the Special Meeting of Stockholders
                to be held at 10:00 a.m., Eastern Standard time,
                 on __________ day, ____________ _____, 2003, at
                Simpson Thacher & Bartlett, 425 Lexington Avenue,
                               New York, New York


The  undersigned  stockholder  hereby  appoints  Kenneth E. McHugh and Andrew J.
Diamond,  and each of them,  with full power of  substitution,  the  proxies and
attorneys-in-fact   of  the   undersigned  to  attend  the  Special  Meeting  of
Stockholders  of  INTERNATIONAL  SPECIALTY  PRODUCTS  INC.  (ISP)  to be held on
_________,  2003 and any adjournments or postponements  thereof,  and to vote at
said meeting and any adjournments or  postponements  thereof all shares of stock
of ISP standing in the name of the undersigned stockholder.



This proxy is solicited on behalf of the board of  directors.  This proxy,  when
properly  executed,  will  be  voted  in  the  manner  directed  herein  by  the
undersigned  stockholder.  If no direction is made,  the proxy will be voted FOR
proposal 1 and in the  judgment of the persons  named herein on any other matter
that may properly come before the meeting or any  adjournments or  postponements
of the special meeting.  However, this proxy does not grant authority to vote on
any  proposal  to adjourn or  postpone  the  special  meeting for the purpose of
soliciting further proxies in favor of the adoption of the merger agreement.

            (Continued and To Be Dated and Signed On The Other Side)
 -------------------------------------------------------------------------------


Change of Address

------------------------------------    INTERNATIONAL SPECIALTY PRODUCTS INC.

------------------------------------    P.O. Box 11222

------------------------------------    New York, N.Y. 10203-0222




                                                                               2




Please  Sign,  Date and  Return  the Proxy  Card  Promptly  Using  the  Enclosed
Envelope.





[X]  Votes must be indicated (X) in black or blue ink.


The board of directors of ISP recommends a vote FOR adoption of the Agreement
and Plan of Merger.




--------------------------------------------------------------------------------




1.  Proposal  to  adopt  the  Agreement   and  Plan of   FOR   AGAINST   ABSTAIN
Merger,  dated as of November 8, 2002,  by and between
International     Specialty    Products    Inc.    and
International Specialty Products Holdings Inc. (as the
merger  agreement  may be  amended  from time to time)
pursuant to which holders  of ISP common stock will be
entitled to receive $10.30  per share in cash for each
share of ISP common  stock owned  (except as otherwise   [_]     [_]       [_]
provided in the merger agreement).


--------------------------------------------------------------------------------


NOTE: Stockholder(s) should sign above exactly as name(s) appear(s) hereon, but
minor discrepancies in such signatures will not invalidate this proxy. If more
than one stockholder, all should sign.

To change your address, please mark the box.             [_]


---------     -------------------------------   --------------------------------
Date              Share Owner sign here              Co-Owner sign here