EX-10.4



 





Exhibit 10.4




CANADIAN




RECEIVABLES PURCHASE AGREEMENT




Dated as of July 13, 2007




among




POLYONE FUNDING CANADA CORPORATION,




as the Seller,




POLYONE CORPORATION,




as the Servicer,




THE BANKS AND OTHER FINANCIAL INSTITUTIONS PARTY HERETO,




as Purchasers,




CITICORP USA, INC.,




as the Agent,




and




NATIONAL CITY BUSINESS CREDIT, INC.,




as the Syndication Agent









 









 











TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	ARTICLE I DEFINITIONS	 	 	1	 
	Section 1.01.
	 	Certain Defined Terms	 	 	1	 
	Section 1.02.
	 	Other Terms	 	 	21	 
	Section 1.03.
	 	Computation of Time Periods	 	 	21	 
	 
	 	 	 	 	 	 
	ARTICLE II AMOUNTS AND TERMS OF THE PURCHASES	 	 	21	 
	Section 2.01.
	 	Commitment	 	 	21	 
	Section 2.02.
	 	Making the Purchase and Capital Increases	 	 	21	 
	Section 2.03.
	 	Swing Increases	 	 	23	 
	Section 2.04.
	 	[Deleted]	 	 	25	 
	Section 2.05.
	 	Termination or Reduction of the Commitments	 	 	25	 
	Section 2.06.
	 	Receivable Percentage	 	 	25	 
	Section 2.07.
	 	Non-Liquidation Settlement Procedures	 	 	25	 
	Section 2.08.
	 	Liquidation Settlement Procedures	 	 	26	 
	Section 2.09.
	 	General Settlement Procedures	 	 	27	 
	Section 2.10.
	 	Payments and Computations, Etc	 	 	28	 
	Section 2.11.
	 	Yield and Fees	 	 	29	 
	Section 2.12.
	 	Special Provisions Governing
Capital Investments at the Citicorp LIBO Rate	 	 	30	 
	Section 2.13.
	 	Increased Capital	 	 	31	 
	Section 2.14.
	 	Taxes	 	 	32	 
	Section 2.15.
	 	Sharing of Payments, Etc	 	 	33	 
	Section 2.16.
	 	Conversion/Continuation Option	 	 	33	 
	 
	 	 	 	 	 	 
	ARTICLE III CONDITIONS OF PURCHASES	 	 	34	 
	Section 3.01.
	 	Conditions Precedent to the Effectiveness of this Agreement	 	 	34	 
	Section 3.02.
	 	Conditions Precedent to All
Purchases, All Capital Increases and Reinvestments	 	 	37	 
	Section 3.03.
	 	Conditions Precedent to Initial Purchase	 	 	37	 
	Section 3.04.
	 	Financing Statement Terminations and Releases	 	 	38	 
	 
	 	 	 	 	 	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES	 	 	38	 
	Section 4.01.
	 	Representations and Warranties of the Seller	 	 	38	 
	Section 4.02.
	 	Representations and Warranties of the Servicer	 	 	41	 






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TABLE OF CONTENTS

(continued)







	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	ARTICLE V GENERAL COVENANTS OF THE SELLER AND THE SERVICER	 	 	42	 
	Section 5.01.
	 	Affirmative Covenants of the Seller	 	 	42	 
	Section 5.02.
	 	Reporting Requirements of the Seller	 	 	45	 
	Section 5.03.
	 	Negative Covenants of the Seller	 	 	45	 
	Section 5.04.
	 	Affirmative Covenants of the Servicer	 	 	48	 
	Section 5.05.
	 	Reporting Requirements of the Servicer	 	 	50	 
	Section 5.06.
	 	Negative Covenants of the Servicer	 	 	51	 
	Section 5.07.
	 	Affirmative Financial Covenants of the Servicer	 	 	53	 
	Section 5.08.
	 	Negative Financial Covenants of the Servicer	 	 	53	 
	 
	 	 	 	 	 	 
	ARTICLE VI ADMINISTRATION AND COLLECTION	 	 	54	 
	Section 6.01.
	 	Designation of Servicer	 	 	54	 
	Section 6.02.
	 	Duties of Servicer	 	 	55	 
	Section 6.03.
	 	Rights of the Agent	 	 	56	 
	Section 6.04.
	 	Responsibilities of the Seller	 	 	56	 
	Section 6.05.
	 	Further Action Evidencing Purchases	 	 	57	 
	 
	 	 	 	 	 	 
	ARTICLE VII EVENTS OF TERMINATION	 	 	57	 
	Section 7.01.
	 	Events of Termination	 	 	57	 
	 
	 	 	 	 	 	 
	ARTICLE VIII THE AGENT	 	 	59	 
	Section 8.01.
	 	Authorization and Action	 	 	59	 
	Section 8.02.
	 	Agent's Reliance, Etc	 	 	60	 
	Section 8.03.
	 	Citicorp and Affiliates	 	 	60	 
	Section 8.04.
	 	Purchase Decisions	 	 	60	 
	Section 8.05.
	 	Indemnification	 	 	61	 
	Section 8.06.
	 	Posting of Approved Electronic Communications	 	 	61	 
	
	 	 	 	 	 	 
	ARTICLE IX ASSIGNMENT OF RECEIVABLE INTERESTS	 	 	62	 
	Section 9.01.
	 	Purchaser’s Assignment of Rights and Obligations	 	 	62	 
	 
	 	 	 	 	 	 
	ARTICLE X INDEMNIFICATION	 	 	64	 
	Section 10.01.
	 	Indemnities	 	 	64	 
	Section 10.02.
	 	Currency	 	 	66	 
	 
	 	 	 	 	 	 
	ARTICLE XI MISCELLANEOUS	 	 	66	 
	Section 11.01.
	 	Amendments, Etc	 	 	66	 






ii









 






TABLE OF CONTENTS

(continued)







	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	Section 11.02.
	 	Notices, Etc	 	 	68	 
	Section 11.03.
	 	Binding Effect; Assignability	 	 	69	 
	Section 11.04.
	 	Costs and Expenses	 	 	69	 
	Section 11.05.
	 	Confidentiality	 	 	69	 
	Section 11.06.
	 	Governing Law	 	 	70	 
	Section 11.07.
	 	Jurisdiction, Etc	 	 	70	 
	Section 11.08.
	 	Execution in Counterparts	 	 	71	 
	Section 11.09.
	 	Intent of the Parties	 	 	71	 
	Section 11.10.
	 	Entire Agreement	 	 	71	 
	Section 11.11.
	 	Severability of Provisions	 	 	71	 
	Section 11.12.
	 	No Liability of Syndication Agent	 	 	72	 
	Section 11.13.
	 	Waiver of Jury Trial	 	 	72	 






iii









 






EXHIBITS




	 	 	 
	 
	 	 
	EXHIBIT A
	 	Form of Assignment and Acceptance
	 
	 	 
	EXHIBIT B-1
	 	Form of Seller Report
	 
	 	 
	EXHIBIT B-2
	 	Form of Receivables Report
	 
	 	 
	EXHIBIT C
	 	Form of Lock-Box Agreement
	 
	 	 
	EXHIBIT D
	 	Form of Canadian Receivables Sale Agreement
	 
	 	 
	EXHIBIT E
	 	Form of Canadian Consent and Agreement
	 
	 	 
	EXHIBIT F
	 	Form of Notice of Purchase
	 
	 	 
	EXHIBIT G
	 	Form of Swing Increase Request
	 
	 	 
	EXHIBIT H
	 	[deleted]
	 
	 	 
	EXHIBIT I
	 	Form of Notice of Conversion or Continuation
	 
	 	 
	EXHIBIT J
	 	Form of Opinion of Gowling LaFleur
Henderson LLP, Counsel to the Seller and the Canadian Originator






 









 






SCHEDULES




	 	 	 
	 
	 	 
	SCHEDULE I
	 	Lock-Box Banks and Lock-Box Accounts
	 
	 	 
	SCHEDULE II
	 	Credit and Collection Policy
	 
	 	 
	SCHEDULE III
	 	Jurisdiction of Incorporation,
Organizational Identification Number and Location of the Seller’s
Principal Place of Business, Chief Executive Office and Office Where Records are Kept
	 
	 	 
	SCHEDULE IV
	 	Forms of Invoices
	 
	 	 
	SCHEDULE V
	 	Changes in Financial Conditions or Operations
	 
	 	 
	SCHEDULE VI
	 	PPSA Filing Jurisdictions
	 
	 	 
	SCHEDULE VII
	 	Commitments







 









 





CANADIAN RECEIVABLES PURCHASE AGREEMENT




     This CANADIAN RECEIVABLES PURCHASE AGREEMENT, dated as of July 13, 2007 (this
“Agreement”), among POLYONE FUNDING CANADA CORPORATION, a Canadian corporation (the
“Seller”), POLYONE CORPORATION, an Ohio corporation (“PolyOne”), as the Servicer
(as hereinafter defined), the banks and other financial institutions listed on the signature pages
hereof, as the Initial Purchasers (the “Initial Purchasers”), CITICORP USA, INC., a
Delaware corporation (“Citicorp”), as administrative agent (the “Agent”) for the
Purchasers and the other Owners (as hereinafter defined), and NATIONAL CITY BUSINESS CREDIT, INC.,
an Ohio corporation (“NCBC”), as the syndication agent (the “Syndication Agent”).



PRELIMINARY STATEMENTS:




     (1) The Seller will from time to time purchase or otherwise acquire from the Canadian
Originator Pool Receivables which the Seller intends to sell hereunder.



     (2) The Purchasers may at any time purchase such Pool Receivables from the Seller and from
time to time make Capital Increases.



     (3) In consideration of the reinvestment in Pool Receivables of daily Collections (other than
with regard to accrued Yield and any fees), the Seller will sell to the Agent on behalf of the
Owners additional Pool Receivables until such reinvestment is terminated.



     (4) PolyOne has been requested and is willing to act as the Servicer.



     (5) Citicorp has been requested and is willing to act as the Agent.



     (6) NCBC has been requested and is willing to act as the Syndication Agent.



     (7) Certain terms which are capitalized and used throughout this Agreement (in addition to
those defined above) are defined in Article I of this Agreement.



     NOW, THEREFORE, in consideration of the premises, the parties hereto agree as follows:



ARTICLE I




DEFINITIONS




Section 1.01. Certain Defined Terms.




     As used in this Agreement, the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the terms defined):



     “Adjusted EBITDA” means, with respect to any Person, EBITDA of such Person and its
Subsidiaries plus any net cash received from Equity Affiliates, minus any net cash
paid to Equity Affiliates, minus any income from Equity Affiliates plus any income
to Equity Affiliates.



     “Adjusted LIBO Rate” means, with respect to any Yield Period for any Capital
Investment, an interest rate per annum equal to the rate per annum obtained by dividing (a) the
LIBO Rate by (b) a percentage equal to (i) 100% minus (ii) the reserve percentage
applicable 2 Business Days before the first



 









 







day of such Yield Period under regulations issued from time to time by the Federal Reserve
Board for determining the maximum reserve requirement (including any emergency, supplemental or
other marginal reserve requirement) for a member bank of the Federal Reserve System in New York
City with respect to liabilities or assets consisting of or including Eurocurrency Liabilities (or
with respect to any other category of liabilities that includes deposits by reference to which the
LIBO Rate is determined) having a term equal to such Yield Period.



     “Adverse Claim” means any mortgage, deed of trust, pledge, hypothecation, assignment,
charge, deposit arrangement, encumbrance, lien (statutory or other), security interest or
preference, priority or other security agreement or preferential arrangement of any kind or nature
whatsoever intended to assure payment of any Debt or the performance of any other obligation,
including any conditional sale or other title retention agreement, the interest of a lessor under a
capital lease and any financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the PPSA or comparable law of any
jurisdiction naming the owner of the asset to which such Adverse Claim relates as debtor.



     “Affiliate” means as to any Person, any other Person that, directly or indirectly, is
in control of, is controlled by or is under common control with such Person. The term
“control” means the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability to exercise voting
power, by contract or otherwise.



     “Agent’s Account” means the Deposit Account of the Agent (account number 30537802, ABA
021000089, Reference: CUSA f/a/o PolyOne Concentration) maintained with CNA at its office at 399
Park Avenue, New York, New York 10043, Attention: Hien Nugent, or such other account as the Agent
shall specify in writing to the Seller, the Servicer and the Purchasers.



     “Agent’s Fee” means those agency fees set forth in the Second Amended and Restated Fee
Letter.



     “Alternate Base Rate” means, for any period, a fluctuating interest rate per annum as
shall be in effect from time to time, which rate per annum shall be equal at all times to the
highest of the following:




     (a) the rate of interest announced publicly by CNA in New York, New York, from time to
time, as CNA’s base rate (or equivalent rate otherwise named);




     (b) the sum (adjusted to the nearest 0.25% or, if there is no nearest 0.25%, to the
next higher 0.25%) of (i) 0.5% per annum, (ii) the rate per annum obtained by dividing (A)
the latest three-week moving average of secondary market morning offering rates in the
United States for three-month certificates of deposit of major United States money market
banks, such three-week moving average being determined weekly on each Monday (or, if any
such day is not a Business Day, on the next succeeding Business Day) for the three-week
period ending on the previous Friday by CNA on the basis of such rates reported by
certificate of deposit dealers to and published by the Federal Reserve Bank of New York or,
if such publication shall be suspended or terminated, on the basis of quotations for such
rates received by CNA from 3 New York certificate of deposit dealers of recognized standing
selected by CNA, by (B) a percentage equal to 100% minus the average of the daily
percentages specified during such three-week period by the Federal Reserve Board for
determining the maximum reserve requirement (including any emergency, supplemental or other
marginal reserve requirement) for CNA in respect of liabilities consisting of or including
(among other liabilities) three-month U.S. dollar nonpersonal time deposits in the United
States and (iii) the average during such three-week period of the maximum annual assessment
rates estimated by CNA for determining the then current annual assessment



2









 







payable by CNA to the Federal Deposit Insurance Corporation (or any successor) for
insuring U.S. Dollar deposits in the United States; and




     (c) 0.5% per annum plus the Federal Funds Rate.



     “Amended and Restated Projections” means those financial projections, dated April,
2007, covering the Fiscal Years ending in December 2007 through December 2011 inclusive, to be
delivered to the Purchasers by PolyOne.



     “Applicable Margin” means (a) for an initial period commencing on the Effective Date
and ending on the first day of the month immediately following the month in which the Servicer
delivers PolyOne’s financial statements for the Fiscal Period ending June 30, 2007, (i) in the case
of Capital Investments having a Yield determined with reference to the Alternate Base Rate, 0.50%
per annum and, (ii) in the case of Capital Investments having a Yield determined with reference to
the Adjusted LIBO Rate, 1.50% per annum and (b) thereafter, as of any date of determination, a per
annum rate equal to the rate set forth below opposite the then applicable Average Monthly Excess
Availability (determined on the last day of the most recently concluded calendar month):



	 	 	 	 	 	 	 	 	 
	Average Monthly Excess Availability	 	Alternate Base Rate	 	Adjusted LIBO Rate
	Greater than $120,000,000
	 	 	0.25	%	 	 	1.25	%
	Less than or equal to $120,000,000
and greater than $60,000,000
	 	 	0.50	%	 	 	1.50	%
	Less than or equal to $60,000,000
	 	 	0.75	%	 	 	1.75	%





provided,
however, that upon the occurrence and during the continuance of an Event of Termination,
the “Applicable Margin” shall be the sum of the highest rate set forth in the table above
(as may be converted pursuant to Section 2.16) plus 2.00% per annum. Changes in the
Applicable Margin resulting from a change in the Average Monthly Excess Availability for any month
shall become effective as to all Capital Investments on the first day of the next consecutive
calendar month.




     “Applicable Reserve” means, at any date, an amount equal to (NRPB x RP) plus
such reserves as mutually agreed upon, with adjustments effective upon at least three Business
Days’ notice by the Agent, where:




NRPB = the Net Receivables Pool Balance at the close of business of the Servicer on
such date.




RP = the Reserve Percentage at the close of business of the Servicer on such date.



     “Approved Electronic Communications” means each notice, demand, communication,
information, document and other material that the Seller or Servicer is obligated to, or otherwise
chooses to, provide to the Agent pursuant to any Transaction Document or the transactions
contemplated therein, including any financial statement, financial and other report, notice,
request, certificate and other information material; provided, however, that
“Approved Electronic Communication” shall exclude (x) any Notice of Purchase,



3









 







Swing Increase Request, Notice of Conversion or Continuation, and any other notice, demand,
communication, information, document and other material relating to a request for a new, or a
conversion of an existing, Purchase, (ii) any notice relating to the payment due under any
Transaction Document prior to the scheduled date therefor, (iii) any notice of any Potential Event
of Termination or Event of Termination and (iv) any notice, demand, communication, information,
document and other material required to be delivered to satisfy any of the conditions set forth in
Article III or any other condition to any Purchase hereunder or any condition precedent to the
effectiveness of this Agreement.



     “Approved Electronic Platform” has the meaning specified in Section 8.06.



     “Assignee” means in the case of any assignment of any rights and obligations pursuant
to Section 9.01, any Eligible Assignee as the assignee of such rights and obligations.



     “Assignment and Acceptance” means an assignment and acceptance, in substantially the
form of Exhibit A hereto, entered into by any Purchaser and an Assignee pursuant to
Section 9.01.



     “Available Capital” means, at any time, (a) the lesser of (i) the then effective Total
Commitments and (ii) (x) the Net Receivables Pool Balance at such time minus (y) any
Applicable Reserve in effect at such time, minus (b) the Capital at such time.



     “Average Monthly Excess Availability” has the meaning set out in the U.S. RPA.



     “Business Day” means any day (other than a Saturday or Sunday) on which (i) banks are
not authorized or required to close in Toronto, Ontario, Canada, New York, New York or the State of
Ohio and (ii) if the term “Business Day” is used in connection with the Adjusted LIBO Rate,
dealings in United States dollars are carried on in the London interbank market.



     “Canadian Consent and Agreement” means the Canadian Consent and Agreement, dated as of
the Effective Date, in substantially the form of Exhibit E hereto, duly executed by
the Seller and the Canadian Originator.



     “Canadian Dollars” means the lawful currency of Canada.



     “Canadian Dollar Receivables” means any Receivable in Canadian Dollars.



     “Canadian Insolvency Statutes” means collectively, the Companies’ Creditors
Arrangement Act (Canada), the Bankruptcy and Insolvency Act (Canada), the Assignments and
Preferences Act (Ontario) and the Fraudulent Conveyances Act (Ontario).



     “Canadian Originator” means PolyOne Canada, Inc. and its successors.



     “Canadian Receivables Sale Agreement” means the Canadian Receivables Sale Agreement,
dated as of July 13, 2007, in substantially the form of Exhibit D hereto, among the
Canadian Originator, the Seller and PolyOne as the Buyer’s Servicer thereunder, as the same may
from time to time be amended, supplemented or otherwise modified with the prior written consent of
the Required Purchasers.



     “Canadian Subordinated Note” has the meaning specified in the Canadian Receivables
Sale Agreement.



     “Capital” means, at any time, the sum of all Capital Investments outstanding at such
time.



4









 





     “Capital Expenditures” means, with respect to any Person, expenditures (whether paid
in cash or other consideration or accrued as a liability) for fixed or capital assets (excluding
any capitalized interest and any such asset acquired in connection with normal replacement and
maintenance programs to the extent properly charged to current operations and excluding any
replacement assets to the extent acquired with the proceeds of insurance) made by such Person, all
as determined in accordance with GAAP.



     “Capital Increase” means any increase in the aggregate outstanding Capital hereunder
pursuant to Sections 2.01 and 2.02, other than in connection with the initial Purchase.



     “Capital Investment” means, in respect of the initial Purchase or any Capital Increase
(including any Swing Increase), the original amount paid to the Seller on account of Capital at the
time thereof, pursuant to Sections 2.01, 2.02 or 2.03, reduced from time to time by Collections
received and distributed on account of such Capital pursuant to
Section 2.07 or 2.08; provided,
however, that if such Capital Investment shall have been reduced by any distribution of any portion
of Collections and thereafter such distribution is rescinded or must otherwise be returned for any
reason, such Capital Investment shall be increased by the amount of such distribution, all as
though such distribution had not been made.



     “Cash Management Obligation” means, as applied to the Seller, any direct or indirect
liability, contingent or otherwise, of the Seller in respect of cash management services (including
treasury, depository, overdraft, credit or debit card, electronic funds transfer and other cash
management arrangements) provided after the date hereof (regardless of whether these or similar
services were provided prior to the date hereof by the Agent, any Purchaser or any Affiliate or any
of them) by the Agent in connection with this Agreement or any Transaction Document, including
obligations for the payment of fees, interest, charges, expenses, reasonable legal fees and
disbursements in connection therewith.



     “Change of Control” means the occurrence of any of the following: (a) any Person or 2
or more Persons acting in concert, other than a trustee or other fiduciary holding securities under
an employee benefit plan of PolyOne or a corporation owned, directly or indirectly, by PolyOne or
by the stockholders of PolyOne in substantially the same proportions as their ownership of stock of
PolyOne (e.g., a holding company reorganization), shall have acquired beneficial ownership (within
the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange
Act of 1934), directly or indirectly, of Voting Interests of PolyOne (or other securities
convertible into such Voting Interests of PolyOne) representing 25% or more of the combined voting
power of all Voting Interests of PolyOne; or (b) any Person or 2 or more Persons acting in concert
shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement
that, upon consummation, will result in its or their acquisition of the power to exercise, directly
or indirectly, a controlling influence over the management or policies of PolyOne; or (c) PolyOne,
or a corporation owned, directly or indirectly, by the stockholders of PolyOne in substantially the
same proportions as their ownership of stock of PolyOne, shall cease to own, directly or
indirectly, 100% of the Equity Interests in the Seller, PolyOne or the Canadian Originator, or (d)
any “Change of Control” under and as defined in the Senior Note Indenture.



     “Citicorp” has the meaning assigned to such term in the recital of parties hereto.



     “Citicorp Base Rate” for any period for any Capital Investment, an interest rate per
annum equal to the sum of (a) the Alternate Base Rate in effect from time to time plus (b)
the Applicable Margin.



     “Citicorp LIBO Rate” for any Yield Period for any Capital Investment, an interest rate
per annum equal to the sum of (a) the Adjusted LIBO Rate for such Yield Period plus (b) the
Applicable Margin.



5









 





     “Citicorp Rate” means (a) for any Capital Investment (other than Swing Increases), at
the Seller’s election upon written notice to the Agent, given not later than 11:00 A.M. (New York
City time) on the third Business Day prior to such Capital Investment (in the case of the Citicorp
LIBO Rate) or the Business Day prior to such Capital Investment (in the case of the Citicorp Base
Rate), either the Citicorp LIBO Rate or the Citicorp Base Rate, as applicable, and (b) for any
Capital Investment that is a Swing Increase and for each other obligation hereunder, the Citicorp
Base Rate.



     “CNA” means Citibank, N.A., a national association, and its successors.



     “Code” means the Internal Revenue Code of 1986, as amended from time to time.



     “Collections” means, with respect to any Pool Receivable, all cash collections and
other cash proceeds of such Pool Receivable, including, without limitation, (i) all cash proceeds
of the Related Security with respect to such Pool Receivable and (ii) any Collections of such Pool
Receivable deemed to have been received, and actually paid, pursuant to Section 2.09(a).



     “Commitment” means from and after the Effective Date, in respect of each Purchaser
party to this Agreement on the Effective Date after giving effect to this Agreement, the commitment
of such Purchaser to make Purchases and acquire other Capital Investments in the aggregate
principal amount set forth as the “Commitment” of such Purchaser on Schedule VII and in
respect of each other Purchaser that became a Purchaser by entering into an Assignment and
Acceptance from and after the Effective Date, the amount set forth as the “Commitment” for
such Purchaser in the Register maintained by the Agent pursuant to Section 9.01(c); in the case of
clauses (i) and (ii), as each such amount may be reduced from time to time as the result of any
assignment of any Commitment or any portion thereof pursuant to Section 9.01 or as such amount may
be reduced from time to time pursuant to Section 2.05.



     “Commitment Termination Date” means the fifth anniversary of the Effective Date.



     “Consolidated” means, with respect to any Person, the consolidation of accounts of
such Person and its Subsidiaries in accordance with GAAP.



     “Consolidated Interest Expense” means, with respect to any Person for any period, (a)
cash interest expense of such Person and its Subsidiaries determined on a Consolidated basis in
accordance with GAAP (including, in the case of PolyOne, the cash interest expense (including, but
not limited to, Yield payable hereunder) of the Seller determined in accordance with GAAP), in each
case, including interest capitalized during such period and net costs under all interest rate swap,
cap, collar or similar agreements and interest rate insurance for such period minus (b)
Consolidated net gains of such Person and its Subsidiaries (including, in the case of PolyOne, the
Seller) under all interest rate swap, cap, collar or similar agreements and interest rate insurance
for such period and minus (c) the Consolidated interest income of such Person and its
Subsidiaries (including, in the case of PolyOne, the Seller) for such period.



     “Consolidated Net Income” means, for any Person for any period, the net income (or
loss) of such Person and its Subsidiaries for such period, determined on a Consolidated basis in
conformity with GAAP.



     “Contract” means an agreement between the Canadian Originator and an Obligor in any
written form acceptable to the Canadian Originator, or in the case of any open account agreement as
evidenced by one of the forms of invoices set forth in Schedule IV hereto or otherwise approved by
the Agent from time to time (which approval shall not be unreasonably withheld), pursuant to or
under which such Obligor shall be obligated to pay for goods.



6









 





     “Credit and Collection Policy” means those credit and collection policies and
practices in effect on the date hereof relating to Contracts and Receivables and described in
Schedule II hereto, as modified from time to time in compliance with Section 5.03(c).



     “Debt” means, without duplication, (i) indebtedness for borrowed money, (ii)
obligations evidenced by bonds, debentures, notes or other similar instruments, (iii) obligations
to pay the deferred purchase price of property or services other than accounts payable arising in
the ordinary course of business that are not outstanding for more than 60 days after first becoming
due, (iv) obligations as lessee under leases which shall have been or should be, in accordance with
GAAP, recorded as capital leases, (v) indebtedness of others secured by liens, and (vi) obligations
under direct or indirect guaranties in respect of, and obligations (contingent or otherwise) to
purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of,
indebtedness or obligations of others of the kinds referred to in clauses (i) through (iv) above.



     “Deposit Account” has the meaning set forth in Article 9 of the UCC.



     “Designated
Obligor” means, at any time, each Obligor; provided,
however, that any
Obligor shall cease to be a Designated Obligor upon 3 Business Days’ notice by the Agent to the
Seller given in accordance with the Agent’s then current credit guidelines and with the consent or
at the request of the Required Purchasers.



     “Dollar Equivalent” of any amount means, at the time of determination thereof, (a) if
such amount is expressed in U.S. Dollars, such amount and (b) if such amount is expressed in
Canadian Dollars, the equivalent of such amount in U.S. Dollars determined by using the rate of
exchange quoted by Citibank in New York, New York at 11:00 a.m. (New York time) on the date of
determination (or, if such date is not a Business Day, the most recent Business Day prior thereto)
to prime banks in New York for the spot purchase in the New York foreign exchange market of such
amount of U.S. Dollars with Canadian Dollars.



     “EBITDA” means, with respect to any Person for any period, an amount equal to (a)
Consolidated Net Income of such Person for such period plus (b) the sum of, in each case to
the extent included as a deduction in the calculation of such Consolidated Net Income of such
Person for such period in accordance with GAAP, but without duplication, (i) any provision for
income taxes, (ii) Consolidated Interest Expense, (iii) loss from extraordinary items, (iv)
depreciation, depletion and amortization of intangibles or financing or acquisition costs, and (iv)
all other non-cash charges and non-cash losses for such period, including the amount of any
compensation deduction as the result of any grant of Stock or Stock Equivalents to employees,
officers, directors or consultants, other than charges representing accruals of future cash
expenses minus (c) the sum of, in each case to the extent included in the calculation of
Consolidated Net Income of such Person for such period in accordance with GAAP, but without
duplication, (i) any credit for income tax, (ii) gains from extraordinary items for such period,
(iii) any aggregate net gain (but not any aggregate net loss) from the sale, exchange or other
disposition of capital assets by such Person, (iv) cash payments for previously reserved charges
and (v) any other non-cash gains which have been added in determining Consolidated Net Income,
including any reversal of a charge referred to in clause (b)(iv) above by reason of a decrease in
the value of any Stock or Stock Equivalent.



     “Effective Date” means July 13, 2007.



     “Eligible Assignee” means (i) each Initial Purchaser or any of its Affiliates, and
(ii) any commercial bank, finance company, insurance company or other financial institution or any
other Person,



7









 







in each case approved by the Agent and the Seller (which approval shall not (x) be
unreasonably withheld or delayed or (y) required following the occurrence and during the
continuance of an Event of Termination); provided,
however, that neither the Canadian Originator
nor the Seller nor any of their respective Affiliates may be an Eligible Assignee.



     “Eligible Receivable” means each Pool Receivable arising out of the sale of
merchandise or, goods in the ordinary course of business by the Canadian Originator to a Person
that is not an Affiliate of the Canadian Originator; provided,
however, that a Pool Receivable
shall not be an “Eligible Receivable” if any of the following shall be true:




     (a) any warranty contained in this Agreement or any other Transaction Document with
respect to such specific Receivable is not true and correct with respect to such Receivable;
or




     (b) the Obligor on such Receivable has disputed liability or made any claim with
respect to such Receivable or any other Receivable due from such Obligor to the Seller or
the Canadian Originator but only to the extent of such dispute or claim; or




     (c) the Obligor in respect of such Receivable or any of its Affiliates is also a
supplier to or creditor of the Seller or the Canadian Originator unless such supplier or
creditor has executed a no-offset letter satisfactory to the Agent, in its sole discretion;
provided, however, in the event no such no-offset letter has been executed,
such Receivable shall be ineligible pursuant to this clause (c) only to the extent of an
amount equal to 150% of the aggregate amount of accounts payable or other Debt owing by the
Canadian Originator to such Obligor or any of its Affiliates as at such date; or




     (d) the sale represented by such Receivable is to an Obligor located outside the United
States or Canada, unless the sale is on letter of credit or acceptance terms acceptable to
the Agent, in its sole discretion; or




     (e) the sale to such Obligor on such Receivable is on a bill-and-hold, guaranteed sale,
sale-and-return, sale-on-approval or consignment basis; or




     (f) such Receivable is subject to an Adverse Claim in favor of any Person other than
the Agent; or




     (g) such Receivable is subject to any deduction, offset, counterclaim, return privilege
or other conditions other than volume sales discounts given in the ordinary course of the
Canadian Originator’s business; provided, however, such Receivable shall be ineligible
pursuant to this clause (g) only to the extent of such deduction, offset, counterclaim,
return privilege or other condition; or




     (h) the Obligor on such Receivable is located in any jurisdiction requiring the holder
of such Receivable, as a precondition to commencing or maintaining any action in the courts
of such jurisdiction either to (i) receive a certificate of authorization to do business in
such jurisdiction or be in good standing in such jurisdiction or (ii) file a Notice of
Business Activities Report with the appropriate office or agency of such jurisdiction, in
each case unless the holder of such Receivable has received such a certificate of authority
to do business, is in good standing or, as the case may be, has duly filed such a notice in
such jurisdiction; or



8









 






     (i) the Obligor on such Receivable is a Governmental Authority, unless the Canadian
Originator and the Seller have each assigned its rights to payment of such Receivable to the
Agent pursuant to the Assignment of Claims Act of 1940, as amended, in the case of a federal
U.S. Governmental Authority, and pursuant to applicable law, if any, in the case of any
other Governmental Authority, and such assignment has been accepted, acknowledged and where
required to create an effective assignment thereof, consented to by the appropriate
government officers; or




     (j) 50% or more of the outstanding Receivables of the Obligor are not, or have been
determined by the Agent, in accordance with the provisions hereof, not to be, Eligible
Receivables; or




     (k) the payment obligation represented by such Receivable is denominated in a currency
other than U.S. Dollars or Canadian Dollars; or




     (l) such Receivable is not evidenced by an invoice or other writing in form acceptable
to the Agent, in its sole discretion; or




     (m) the Canadian Originator, the Seller or any other Person, in order to be entitled to
collect such Receivable, is required to deliver any additional goods or merchandise to,
perform any additional service for, or perform or incur any additional obligation to, the
Person to whom or to which it was made; or




     (n) the total Receivables of such Obligor to the Canadian Originator (taken as a whole)
represent more than 15% (or such lesser percentage with respect to certain Obligors as the
Agent may determine in its sole discretion in accordance with its customary criteria) of the
Eligible Receivables of the Canadian Originator at such time, but only to the extent of such
excess; or




     (o) such Receivable is more than (i) 60 days past due according to the original terms
of sale, or (ii) 91 days past the original invoice date thereof; provided,
however, that a Receivable with extended original terms not in excess of 90 days
which are acceptable to the Agent, in accordance with its customary criteria, may be an
“Eligible Receivable” provided such Receivable is not more than 120 days past the
original invoice date thereof; or




     (p) the Obligor on such Receivable has (i) filed a petition for bankruptcy or any other
relief under the Bankruptcy Code, the Bankruptcy and Insolvency Act, any other Canadian
Insolvency Statutes or any other law relating to bankruptcy, insolvency, arrangement,
reorganization or relief of debtors, (ii) made an assignment for the benefit of creditors,
(iii) had filed against it any petition or other application for relief under the Bankruptcy
Code or any such other law, (iv) failed, suspended business operations, become insolvent,
called a meeting of its creditors for the purpose of obtaining any financial concession or
accommodation or (v) had or suffered a receiver or a trustee to be appointed for all or a
significant portion of its assets or affairs; or




     (q) consistent with the Credit and Collection Policy, such Receivable should be written
off the Seller’s or the Canadian Originator’s books as uncollectible; or



9









 






     (r) at any time following the 60th day after the date hereof (or such later
date to which the Agent may consent in writing) such Receivable shall not be payable into a
Lock-Box Account which is the subject of a Lock-Box Agreement; or




     (s) such Receivable shall not arise under a Contract which has been duly authorized and
which, together with such Receivable, is in full force and effect and constitutes the legal,
valid and binding obligation of the Obligor of such Receivable enforceable against such
Obligor in accordance with its terms; or




     (t) such Receivable, together with the Contract related thereto, shall contravene in
any material respect any laws, rules or regulations applicable thereto (including, without
limitation, laws, rules and regulations relating to usury, consumer protection, truth in
lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy) or with respect to which any party to the Contract related
thereto is in violation of any such law, rule or regulation in any material respect; or




     (u) such Receivable shall not (i) satisfy all applicable requirements of the Credit and
Collection Policy or (ii) comply with such other reasonable criteria and requirements (other
than those relating to the collectibility of such Receivable) as the Agent may from time to
time specify to the Seller upon 30 days’ notice; or




     (v) such Receivable shall not constitute an “account” within the meaning of the PPSA;




     (w) such Receivable arises under a Contract which contains a legally enforceable
provision either requiring the Obligor thereunder to consent to the transfer, sale or
assignment of the right to payment thereunder unless a written consent of the Obligor has
been obtained, or otherwise restricting the right of the Canadian Originator to sell or
transfer such Receivable;




     (x) PST is payable in connection with such Receivable or any Obligor thereof is an
individual; or




     (y) the Agent, in accordance with its customary criteria, determines, in its sole
discretion, that such Receivable might not be paid or is otherwise ineligible.


For the avoidance of doubt, it is acknowledged and agreed that any calculation of ineligibility
made pursuant to more than one clause above shall be made without duplication.




     “Equity Affiliate” means, with respect to any Person, any corporation, partnership,
limited liability company or other business entity of which an aggregate of less than 50% of the
Voting Interests is, at the time, directly or indirectly, owned or controlled by such Person or one
or more Subsidiaries or Equity Affiliates of such Person and which such Person accounts for in its
consolidated financial statements on an equity basis pursuant to GAAP.



     “Equity Interest” means, with respect to any Person, shares of capital stock of (or
other ownership or profit interests in) such Person, warrants, options or other rights for the
purchase or other acquisition from such Person of shares of capital stock of (or other ownership or
profit interests in) such Person, securities convertible into or exchangeable for shares of capital
stock of (or other ownership or profit interests in) such Person or warrants, rights or options for
the purchase or other acquisition from such Person of such shares (or such other interests), and
other ownership or profit interests in such Person



10









 




(including, without limitation, partnership, member or trust interests therein), whether
voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests
are authorized or otherwise existing on any date of determination.




     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.



     “ERISA Affiliate” means any Person that for purposes of Title IV of ERISA is a member
of the Seller’s controlled group, or under common control with the Seller, within the meaning of
Section 414 of the Code.



     “Eurocurrency Liabilities” has the meaning assigned to that term in Regulation D of
the Federal Reserve Board.



     “Events of Termination” has the meaning specified in Section 7.01.



     “Fair Market Value” means (a) with respect to any asset or group of assets (other than
a marketable security) at any date, the value of the consideration obtainable in a sale of such
asset at such date assuming a sale by a willing seller to a willing purchaser dealing at arm’s
length and arranged in an orderly manner over a reasonable period of time having regard to the
nature and characteristics of such asset, and, with respect to the sale of assets with a book value
in excess of $25,000,000, as such sale is reasonably approved by the Board of Directors of PolyOne
or, if such asset shall have been the subject of a relatively contemporaneous appraisal by an
independent third party appraiser, the basic assumptions underlying which have not materially
changed since its date, the value set forth in such appraisal and (b) with respect to any
marketable security at any date, the closing sale price of such security on the Business Day next
preceding such date, as appearing in any published list of any national securities exchange in the
U.S. or the NASDAQ Stock Market or, if there is no such closing sale price of such Security, the
final price for the purchase of such security at face value quoted on such Business Day by a
financial institution of recognized standing regularly dealing in securities of such type and
selected by the Agent.



     “Federal Funds Rate” means, for any period, a fluctuating interest rate per annum
equal for each day during such period to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a
Business Day, the average of the quotations for such day on such transactions received by the Agent
from three Federal funds brokers of recognized standing selected by it.



     “Fiscal Period” means a calendar month, a fiscal quarter or a Fiscal Year.



     “Fiscal Year” means each twelve-month period ending on December 31.



     “Fixed Charge Coverage Ratio” means, at any date of determination, the ratio of (i)
Adjusted EBITDA of PolyOne less Consolidated Capital Expenditures of PolyOne and its
Subsidiaries to (ii) Consolidated Interest Expense of PolyOne and its Subsidiaries plus
scheduled repayments of principal on Debt to be made by PolyOne or its Subsidiaries during the
immediately succeeding four fiscal quarter period plus Restricted Payments, plus
net cash payment of taxes to the extent included in the calculation of EBITDA, in each case (other
than in the case of scheduled repayments of principal on Debt) for the



11









 







four fiscal quarter period
ending on such date or, if such date is not the last day of a fiscal quarter, for the immediately
preceding four fiscal quarter period.



     “GAAP” means generally accepted accounting principles in the United States, or with
respect to the Canadian Originator and the Seller, generally accepted accounting principles in
Canada, in each case consistently applied and in effect from time to time.



     “Governmental Authority” means any nation, sovereign or government, any state,
province or other political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government, including any
central bank.



     “GST” means all goods and services tax payable under Part IX of the Excise Tax Act
(Canada), all QST and all harmonized sales tax in the Provinces of Nova Scotia, Newfoundland and
New Brunswick payable under the Excise Tax Act (Canada), as such statutes may be amended, modified,
supplemented or replaced from time to time, including any successor statute.



     “Indemnified Amounts” has the meaning specified in Section 10.01.



     “Indemnified Party” means any or all of the Purchasers, the Assignees and the Agent
and their respective Affiliates and successors and assigns and their respective officers,
directors, managers, managing members, partners and employees.



     “Intercreditor Agreement” means the amended and restated intercreditor agreement,
dated June 6, 2006, between the Agent, Citicorp USA, Inc, as agent for the beneficiaries under the
Guarantee and Agreement (as defined therein) and, U.S. Bank Trust National Association, not in its
individual capacity but solely as collateral trustee (the “Corporate Trustee”).



     “Investment” in any Person means any loan or advance to such Person, any purchase or
other acquisition of any capital stock or other ownership or profit interest, warrants, rights,
options, obligations or other securities of such Person, any capital contribution to such Person or
any other investment in such Person.



     “LIBO Rate” means, with respect to any Yield Period for any Capital Investment made at
the Citicorp LIBO Rate, the rate determined by the Agent to be the offered rate for deposits in
U.S. Dollars for the applicable Yield Period appearing on the MoneyLine Telerate Page 3750 as of
11:00 a.m., London time, on the second full Business Day next preceding the first day of each Yield
Period. In the event that such rate does not appear on the MoneyLine Telerate Page 3750 (or
otherwise on the MoneyLine screen), the LIBO Rate for the purposes of this definition shall be
determined by reference to such other comparable publicly available service for displaying
eurodollar rates as may be selected by the Agent, or, in the absence of such availability the LIBO
Rate shall be the rate of interest determined by the Agent to be the rate per annum at which
deposits in U.S. Dollars are offered by the principal office of CNA in London to major banks in the
London interbank market at 11:00 a.m. (London time) 2 Business Days before the first day of such
Yield Period in an amount substantially equal to the Capital Investment of CNA for a period equal
to such Yield Period.



     “Liquidation Cost” has the meaning set forth in Section 2.12.



     “Liquidation Day” means each day which occurs on or after the Termination Date.



12









 





     “Lock-Box Account” means a Deposit Account (including, without limitation, any
concentration account) maintained at a Lock-Box Bank for the purpose of receiving Collections and
subject to a valid Lock-Box Agreement.



     “Lock-Box Agreement” means an agreement, in substantially the form of Exhibit
C hereto (with such modifications thereto as consented to by the Agent), between the
Canadian Originator or the Seller, as the case may be, the Agent, and a Lock-Box Bank.



     “Lock-Box Bank” means any of the banks specified on Schedule I hereof and any other
bank specified as a “Lock-Box Bank” in accordance with this Agreement, in each case holding
one or more Lock-Box Accounts.



     “Material Adverse Change” means a material adverse change in any of (a) the condition
(financial or otherwise), business, performance, prospects, operations, contingent liabilities,
material obligations, or properties of the Seller, PolyOne, the Canadian Originator, or PolyOne and
its Subsidiaries taken as a whole, (b) the collectibility of the Pool Receivables, or the ability
of the Servicer (if PolyOne or any of its Affiliates) to collect Pool Receivables, (c) the
legality, validity or enforceability of any Transaction Document, (d) the ability of the Seller,
the Servicer, PolyOne or any Subsidiaries of PolyOne to perform their respective obligations under
the Transaction Documents or (e) the rights and remedies of the Seller, Agent or the Purchasers
under the Transaction Documents.



     “Material Adverse Effect” means an effect that results in or causes, or could
reasonably be expected to result in or cause, a Material Adverse Change.



     “Multiemployer Plan” means a multiemployer plan, as defined in Section 4001(a)(3) of
ERISA, to which the Seller or any ERISA Affiliate is making or accruing an obligation to make
contributions, or has within any of the preceding five plan years made or accrued an obligation to
make contributions.



     “Multiple Employer Plan” means a single employer plan, as defined in Section
4001(a)(15) of ERISA, that (a) is maintained for employees of the Seller or any ERISA Affiliate and
at least one Person other than the Seller and the ERISA Affiliates or (b) was so maintained and in
respect of which the Seller or any ERISA Affiliate could have liability under Section 4064 or 4069
of ERISA in the event such plan has been or were to be terminated.



     “Net Receivables Pool Balance” means at any time the Outstanding Balance of the
Eligible Receivables in the Receivables Pool as at such time reduced by Unapplied Cash and Credits,
volume rebates, credits in past due, offsets and other dilution and such other reductions as the
Agent in its sole discretion deems appropriate.



     “Notice of Conversion or Continuation” has the meaning specified in Section 2.16(a).



     “Notice of Purchase” has the meaning specified in Section 2.02(a).



     “Obligor” means a Person obligated to make payments pursuant to a Contract.



     “Other Taxes” has the meaning specified in Section 2.14(b).



     “Outstanding Balance” of any Receivable at any time means the Dollar Equivalent of the
then outstanding principal balance thereof, as of the date of determination, excluding any PST, but
including any GST or QST owing in connection therewith.



13









 





     “Owner” means any of the Purchasers or the Swing Purchaser, as the case may be, who
has made all or a portion of the initial Purchase or any Capital
Increase; provided, however, that,
upon any
assignment of their interests hereunder pursuant to Article IX, the Assignee thereof shall be
an Owner thereof.



     “Person” means an individual, partnership, corporation (including a business trust),
limited liability company, joint stock company, trust, unincorporated association, joint venture or
other entity, or a government or any political subdivision or agency thereof.



     “Plan” means a Single Employer Plan or a Multiple Employer Plan.



     “PolyOne Canada” means PolyOne Canada, Inc., a corporation organized under the laws of
Canada and a wholly owned Subsidiary of PolyOne.



     “Pool Receivable” means a Receivable in the Receivables Pool.



     “Potential Event of Termination” means any event that, with the giving of notice or
the passage of time or both, would constitute an Event of Termination.



     “PPSA” means the Personal Property Security Act (Ontario), as amended from time to
time, and any regulations promulgated thereunder.



     “PST” means all taxes payable under the Retail Sales Tax Act (Ontario) or any similar
statute of another jurisdiction of Canada, but in any event, excluding any GST.



     “Purchase” means a purchase by the Agent on behalf of the Purchasers of the Purchased
Property from the Seller pursuant to Article II, and any such purchase in consideration of the
remittance by the Servicer to the Seller of Collections of Pool Receivables pursuant to Section
2.07, and for greater certainty, includes any reinvestment pursuant to Section 2.07 and any
purchase under Section 2.02(f) whether or not there is a reinvestment on such day.



     “Purchased Property” means (a) at any time prior to the Termination Date, (i) all then
outstanding Receivables, (ii) all Related Security relating to such Receivables and (iii) all
Collections with respect to, and other proceeds of, Receivables and (b) at all times on and after
the Termination Date, (i) all Receivables outstanding as of the close of business of the Servicer
on the date preceding the Termination Date, (ii) all Related Security related to such Receivables
and (iii) all Collections with respect to, and other proceeds of, such Receivables.



     “Purchasers” means the Initial Purchasers and each Assignee that shall become a party
hereto pursuant to Section 9.01.



     “QST” means the Quebec sales tax imposed pursuant to An Act respecting the Quebec
sales tax.



     “Receivable” means the indebtedness (whether constituting accounts or intangibles or
chattel paper or otherwise) of any Obligor under a Contract, and, subject to the following,
includes the right to payment of any interest or finance charges and other obligations of such
Obligor with respect thereto; provided that for Receivables in respect of which the Obligor is
Canadian (unless otherwise agreed by the Agent), any such interest or finance charges as well as
any PST owing in connection therewith shall be excluded, but GST and QST shall be included.



14









 





     “Receivable Percentage” means, at any time, a percentage computed as:


C + AR

NRPB



where:





C = the outstanding Dollar Equivalent of the Capital Investments made at the time of such
computation;




AR = the Dollar Equivalent of the aggregate Applicable Reserve at the time of such
computation;




NRPB = the Net Receivables Pool Balance at the time of such computation.


The Receivable Percentage shall be determined from time to time pursuant to the provisions of
Section 2.06.




     “Receivables Excess Availability” has the meaning set out in the U.S. RPA.



     “Receivables Pool” means at any time the aggregation of the Dollar Equivalent of each
then outstanding Receivable in respect of which the Obligor is a Designated Obligor or, as to any
Receivable in existence on such date, was a Designated Obligor on the date of the initial creation
of an interest in such Receivable under this Agreement.



     “Receivables Report” means a report, in substantially the form of Exhibit
B-2 hereto, furnished by the Servicer to the Agent for the Owners pursuant to Section 2.09.



     “Records” means, with respect to any Receivable, all Contracts and other documents,
books, records and other information (including, without limitation, computer programs, tapes,
disks, punch cards, data processing software and related property and rights) relating to such
Receivable and the related Obligor.



     “Register” has the meaning specified in Section 9.01(c).



     “Related Security” means with respect to any Receivable:




     (i) all of the Seller’s interest in the goods (including returned goods), if any,
relating to the sale which gave rise to such Receivable;




     (ii) all other security interests or liens and property subject thereto from time to
time purporting to secure payment of such Receivable, whether pursuant to the Contract
related to such Receivable or otherwise, together with all financing statements signed by an
Obligor describing any collateral securing such Receivable;




     (iii) all letter of credit rights, guarantees, insurance and other agreements or
arrangements of whatever character from time to time supporting or securing payment of such
Receivable, whether pursuant to the Contract related to such Receivable or otherwise;




     (iv) all Records relating to such Receivable;



15









 






     (v) all of the Seller’s right, title and interest in and to the following: the
Canadian Receivables Sale Agreement, including, without limitation, (i) all rights to
receive moneys due and to become due under or pursuant to the Canadian Receivables Sale
Agreement, (ii) all rights
to receive proceeds of any indemnity, warranty or guaranty with respect to the Canadian
Receivables Sale Agreement, (iii) claims for damages arising out of or for breach of or
default under the Canadian Receivables Sale Agreement, and (iv) the right to perform under
the Canadian Receivables Sale Agreement and to compel performance and otherwise exercise all
remedies thereunder; and




     (vi) all proceeds of any and all of the foregoing (including, without limitation,
proceeds which constitute property of the types described in clause (v) above).



     “Required Net Receivables Pool Balance” means, at any time, the sum of (i) the
aggregate outstanding Capital at such time plus (ii) the aggregate Applicable Reserve at
such time.



     “Required Purchasers” means at any time Purchasers holding more than 50% of the
aggregate Commitments of the Purchasers.



     “Requirement of Law” means, with respect to any Person, the common law and all
federal, state, provincial, local and foreign laws, rules and regulations, orders, judgments,
decrees and other determinations of any Governmental Authority or arbitrator, applicable to or
binding upon such Person or any of its property or to which such Person or any of its property is
subject.



     “Reserve Percentage” means 15%, provided that the Reserve Percentage may, upon at
least one Business Day’s notice by the Agent to the Seller and the Servicer, be increased or
decreased by the Agent at any time and in its discretion in accordance with its then current credit
guidelines and provided, further, that the Reserve Percentage may not be decreased to less than 15%
by the Agent at any time except with the written consent or at the written request of all of the
Purchasers in accordance with Section 11.01.



     “Responsible Officer” means, with respect to any Person, the chief executive officer,
the president, the chief financial officer, vice president, corporate controller, treasurer,
assistant treasurer, secretary, assistant secretary, managing members or general partners of such
Person but, in any event, with respect to financial matters, the chief financial officer, treasurer
or controller of such Person.



     “Restricted Payment” means, with respect to the Servicer, (a) any dividend,
distribution or any other payment whether direct or indirect, on account of any Stock or Stock
Equivalent of the Servicer now or hereafter outstanding (other than dividends or distributions
payable solely in common Stock of the Servicer) and (b) any redemption, retirement, sinking fund or
similar payment, purchase or other acquisition for value, direct or indirect, of any Stock or Stock
Equivalent of the Servicer now or hereafter outstanding.



     “Second Amended and Restated Fee Letter” has the meaning set out in the U.S. RPA.



     “Second Amended and Restated Parent Undertaking” has the meaning set out in the U.S.
RPA.



     “Seller Report” means a report, in substantially the form of Exhibit
B-1 hereto, furnished by the Servicer to the Agent for each Owner pursuant to Section 2.09.



     “Seller’s Account” means a deposit account of the Seller to be established not later
than the time of the initial Purchase at a financial institution to be agreed to between the Agent
and the Seller.



16









 





     “Senior Note Indenture” means the Indenture, dated as of May 6, 2003, between PolyOne
Corporation and The Bank of New York, as Trustee governing the 105/8% Senior Notes, as such indenture
may be amended, restated or otherwise modified with the prior written consent of the Agent
(except for modifications that do not materially adversely affect the interests of the Purchasers
under the Transaction Documents or in the Receivables with respect to which no written consent
shall be required).



     “Servicer” has the meaning specified in Section 6.01.



     “Servicer Fee” has the meaning specified in Section 2.11.



     “Single Employer Plan” means a single employer plan, as defined in Section 4001(a)
(15) of ERISA, that (a) is maintained for employees of the Seller or any ERISA Affiliate and no
Person other than the Seller and the ERISA Affiliates or (b) was so maintained and in respect of
which the Seller or any ERISA Affiliate could have liability under Section 4069 of ERISA in the
event such plan has been or were to be terminated.



     “Solvent” means, with respect to any Person as of any date of determination, that, as
of such date, (a) the value of the assets of such Person (both at fair value and present fair
saleable value) is greater than the total amount of liabilities (including contingent and
unliquidated liabilities) of such Person, (b) such Person is able to pay all liabilities of such
Person as such liabilities mature and (c) such Person does not have unreasonably small capital. In
computing the amount of contingent or unliquidated liabilities at any time, such liabilities shall
be computed at the amount that, in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or matured liability.



     “Stock” means shares of capital stock (whether denominated as common stock or
preferred stock), beneficial, partnership or membership interests, participations or other
equivalents (regardless of how designated) of or in a corporation, partnership, limited liability
company or equivalent entity, whether voting or non-voting.



     “Stock Equivalents” means all securities convertible into or exchangeable for Stock
and all warrants, options or other rights to purchase or subscribe for any Stock, whether or not
presently convertible, exchangeable or exercisable.



     “Subsidiary” means, with respect to any Person, any corporation, partnership, limited
liability company or other business entity of which an aggregate of more than 50% of the Voting
Interests is, at the time, directly or indirectly, owned or controlled by such Person or one or
more Subsidiaries of such Person.



     “Super-Majority Purchasers” means at any time Purchasers holding at least 80% of the
aggregate Commitments of the Purchasers.



     “Swing Increase” has the meaning specified in Section 2.03.



     “Swing Increase Request” has the meaning specified in Section 2.03(b).



     “Swing Increase Sublimit” means US$5,000,000.



17









 





     “Swing Purchaser” means Citicorp or any other Purchaser that becomes the Agent or
agrees, with the approval of the Agent and the Seller, to act as the Swing Purchaser hereunder, in
each case in its capacity as the Swing Purchaser hereunder.



     “Taxes” has the meaning specified in Section 2.14(a).



     “10
5/8%
Senior Notes” means the 10 5/8% Senior Notes due May 6, 2010 issued by PolyOne.



     “Termination Date” means the earlier of (i) the Commitment Termination Date, and (ii)
the date of termination in whole of the aggregate Commitments pursuant to Section 2.05 or 7.01.



     “Total Commitment” means $25,000,000 as such amount may be reduced from time to time
pursuant to Section 2.05.



     “Total Excess Availability” has the meaning set out in the U.S. RPA.



     “Transaction Documents” means this Agreement, the Canadian Receivables Sale Agreement,
the Canadian Subordinated Notes, the Second Amended and Restated Parent Undertaking, the Lock-Box
Agreements, the Canadian Consent and Agreement, the Second Amended and Restated Fee Letter, the
Quebec Assignment and each certificate, agreement or document executed by the Seller, the Servicer,
or the Canadian Originator and delivered to the Agent or any Purchaser in connection with or
pursuant to any of the foregoing.



     “Transfer” means sell, assign, convey, set-over and transfer, or, depending upon the
context, sale, assignment, conveyance, set-over and transfer, and “Transferred” shall be
interpreted accordingly.



     “UCC” means, at any time, the Uniform Commercial Code as from time to time in effect
in the State of New York at such time.



     “Unapplied Cash and Credits” means, at any time, the Dollar Equivalent of the
aggregate amount of Collections or other cash or credits then held by or for the account of the
Servicer, the Canadian Originator or the Seller in respect of the payment of Pool Receivables, but
not yet applied or reinvested pursuant to Section 2.07 or applied pursuant to Section 2.08.



     “United States” and “U.S.” each means United States of America.



     “Unused Commitment” means, with respect to any Purchaser at any time, (a) such
Purchaser’s Commitment at such time minus (b) that aggregate outstanding Capital paid by
such Purchaser pursuant to Section 2.02 and not reduced by the Dollar Equivalent of Collections
received and distributed to such Purchaser on account of such Capital pursuant to Section 2.07 or
2.08.



     “Unused Commitment Fee” has the meaning specified in Section 2.11.



     “Unused Commitment Fee Rate” means (i) for an initial period commencing on the
Effective Date and ending on the first day of the month immediately following the month in which
the Servicer delivers PolyOne’s financial statements for the Fiscal Period ending June 30, 2007,
0.250% per annum, and (ii) thereafter, as of any date of determination, a per annum rate equal to
the rate set forth below opposite the then applicable Average Monthly Excess Availability
(determined on the last day of the most recently concluded calendar month for which financial
statements have been delivered):



18









 





	 	 	 	 	 
	Average Monthly Excess Availability	 	Unused Commitment Fee Rate
	Greater than $120,000,000
	 	 	0.375	%
	Less than or equal to $120,000,00 and
greater than $60,000,000
	 	 	0.250	%
	Less than or equal to $60,000,000
	 	 	0.250	%





provided,
however, that upon the occurrence and during the continuance of an Event of Termination,
the “Unused Commitment Fee Rate” shall be the highest rate set forth in the table above.
Changes in the Unused Commitment Fee Rate resulting from a change in the Average Monthly Excess
Availability for any month shall become effective on the first day of the next consecutive calendar
month.




     “U.S. Buyer” means PolyOne Funding Corporation, a Delaware corporation.



     “U.S. Dollars” and “$” each means the lawful currency of the United States.



     “U.S. RPA” means the Second Amended and Restated Receivables Purchase Agreement dated
as of June 26, 2007 (as the same may from time to time be amended, restated, supplemented or
otherwise modified from time to time) among the U.S. Buyer, PolyOne, as Servicer thereunder, the
Purchasers (as defined therein), Citicorp USA, Inc., as administrative agent for the Purchasers and
any other owners of Receivable Interests (as defined therein), Citibank, N.A. and National City
Bank, as issuing banks, and National City Business Credit, Inc., as the syndication agent.



     “Voting Interests” means shares of capital stock issued by a corporation, or
equivalent Equity Interests in any other Person, the holders of which are ordinarily, in the
absence of contingencies, entitled to vote for the election of directors (or persons performing
similar functions) of such Person, even if the right so to vote has been suspended by the happening
of such a contingency.



     “Welfare Plan” means a welfare plan, as defined in Section 3(1) of ERISA.



     “Yield” means (a) for each Capital Investment made at the Citicorp LIBO Rate, for any
Yield Period:


CR
x C x ED + LC

        360




	 	 	 	 	 
	 
	 	 	 	 
	where:
	 	 	 	 
	 
	 	 	 	 
	CR
	 	=	 	the Citicorp LIBO Rate for such Capital Investment for such Yield Period;
	 
	 	 	 	 
	C
	 	=	 	the amount of such Capital Investment;
	 
	 	 	 	 
	ED
	 	=	 	the actual number of days elapsed during such Yield Period; and
	LC
	 	=	 	all Liquidation Costs, if any, for such Capital Investment for such Yield Period; and






19









 






     (b) for each Capital Investment made at the Citicorp Base Rate for any period of time:


CR
x C x ED

        360




	 	 	 	 	 
	 
	 	 	 	 
	where:
	 	 	 	 
	 
	 	 	 	 
	CR
	 	=	 	the Citicorp Base Rate from time to time;
	 
	 	 	 	 
	C
	 	=	 	the amount of such Capital Investment; and
	 
	 	 	 	 
	ED
	 	=	 	the actual number of days elapsed;





provided, that no provision of this Agreement shall require the payment or permit the
collection of Yield in excess of the maximum permitted by applicable law; provided,
further, that Yield for any Capital Investment shall not be considered paid by any
distribution to the extent that at any time all or a portion of such distribution is rescinded or
must otherwise be returned for any reason.




     “Yield Payment Date” means, (a) in respect of Capital Investments made at the Citicorp
Base Rate (including but not limited to the Swing Increases) (i) the first Business Day of each
calendar month, commencing on the first such day following the making of such Capital Investment
and (ii) if not previously paid in full, on the Termination Date, (b) in respect of Capital
Investments made at the Citicorp LIBO Rate, (i) the last day of each Yield Period applicable to
such Capital Investment and, if such Yield Period has a duration of more than one month, on each
day during such Yield Period occurring every month from the first day of such Yield Period, (ii)
upon the payment or prepayment thereof in full or in part and (iii) if not previously paid in full,
on the Termination Date, (c) in respect of the Unused Commitment Fee, (i) the first Business Day of
each calendar month and (ii) if not previously paid in full, on the Termination Date, and (d) with
respect to all other obligations of the Seller hereunder, on demand by the Agent from and after the
time such obligation becomes due and payable (whether by acceleration or otherwise).



     “Yield Period” means, in the case of any Capital Investment made at the Adjusted LIBO
Rate, (a) initially, the period commencing on the date such Capital Investment is made or on the
date of conversion of a Capital Investment made at the Alternate Base Rate to a Capital Investment
made at the Adjusted LIBO Rate and ending one, two, or three months thereafter, as selected by the
Seller in its Notice of Purchase and (b) thereafter, if such Capital Investment is continued, in
whole or in part, as a Capital Investment made at the Adjusted LIBO Rate, a period commencing on
the last day of the immediately preceding Yield Period therefor and ending one, two, or three
months thereafter, as selected by the Seller in its Notice of Conversion or Continuation given to
the Agent; provided, however, that all of the foregoing provisions relating to Yield Periods in
respect of Capital Investment made at the Adjusted LIBO Rates are subject to the following:




     (i) if any Yield Period would otherwise end on a day that is not a Business Day, such
Yield Period shall be extended to the next succeeding Business Day, unless the result of
such extension would be to extend such Yield Period into another calendar month, in which
event such Yield Period shall end on the immediately preceding Business Day;




     (ii) any Yield Period that begins on the last Business Day of a calendar month (or on
a day for which there is no numerically corresponding day in the calendar month at the end
of such Yield Period) shall end on the last Business Day of a calendar month;



20









 






     (iii) the Seller may not select any Yield Period that ends after the Commitment
Termination Date; and




     (iv) there shall be outstanding at any one time no more than 7 Yield Periods in the
aggregate.



     Section 1.02. Other Terms.




     All accounting terms not specifically defined herein shall be construed in accordance with
GAAP. All terms used in the PPSA and not specifically defined herein are used herein as defined in
the PPSA. Any reference to a dollar amount herein, shall be a reference to such amount in U.S.
Dollars, unless otherwise expressly stated.



     Section 1.03. Computation of Time Periods.




     Unless otherwise stated in this Agreement, in the computation of a period of time from a
specified date to a later specified date, the word “from” means “from and
including” and the words “to” and “until” each means “to but
excluding”.



ARTICLE II




AMOUNTS AND TERMS OF THE PURCHASES




     Section 2.01. Commitment.




     (a) On the terms and conditions herein set forth, each Purchaser severally agrees to make the
initial Purchase, and to make Capital Increases from time to time, (i) after the Effective Date on
any Business Day during the period from the Effective Date to the Termination Date and (ii) in an
aggregate amount of Capital for such Purchaser not to exceed at any time outstanding such
Purchaser’s Commitment; provided, however, that no Purchaser shall be obligated to make the initial
Purchase or any Capital Increase if, after giving effect to such Purchase or such Capital Increase,
(A) the sum of the Capital then outstanding would exceed (B) the lesser of (x) the Total Commitment
and (y)(i) the Net Receivables Pool Balance minus (ii) the Applicable Reserve. The initial
Purchase and each Capital Increase shall be made by the Purchasers simultaneously and ratably in
accordance with their respective Commitments.



     (b) On the terms and conditions hereinafter set forth, the Agent on behalf of the Owners
shall, at the request of the Seller, have the Collections attributable to any reduction of Capital
reinvested pursuant to Section 2.07 in additional Purchased Property.



     Section 2.02. Making the Purchase and Capital Increases.




     (a) The initial Purchase and each Capital Increase by the Purchasers shall be made on notice
from the Seller to the Agent, given not later than 11:00 a.m. (New York City time) (i) on the third
Business Day before the date of such Purchase or Capital Increase if Yield in respect thereof is
initially calculated at the Citicorp LIBO Rate and (ii) on the Business Day before the date of such
Purchase or Capital Increase if Yield in respect thereof is initially calculated at the Citicorp
Base Rate. Each such notice of a proposed Purchase or Capital Increase (a “Notice of
Purchase”) shall be by telephone (confirmed promptly thereafter in writing) or facsimile, in
substantially the form of Exhibit F hereto, and shall specify the requested aggregate
amount of Capital for such Purchase or Capital Increase to be paid



21









 







to the Seller and the requested Business Day of such Purchase or Capital Increase. If Yield
in respect of the initial Purchase or any Capital Increase is initially calculated at the Citicorp
LIBO Rate, such Purchase or Capital Increase shall be in an aggregate amount of not less than
$10,000,000 or an integral multiple of $1,000,000 in excess thereof and if Yield in respect of the
initial Purchase or any Capital Increase is initially calculated at the Citicorp Base Rate, such
Purchase or Capital Increase shall be in an aggregate amount of not less than $1,000,000 or an
integral multiple of $1,000,000 in excess thereof.



     (b) The Agent shall give each Purchaser prompt notice of such notice of such proposed Purchase
or Capital Increase, the date of such Purchase or Capital Increase, and the amount of Capital to be
paid by such Purchaser in connection with such Purchase or Capital Increase, by telephone or
telefax. On the date of such Purchase or Capital Increase, each Purchaser shall, upon satisfaction
of the applicable conditions set forth in Article III, make available to the Agent its ratable
share of the aggregate amount of Capital in respect of such Purchase or Capital Increase by deposit
of such ratable share in same day funds to the Agent’s Account, and, after receipt by the Agent of
such funds, the Agent shall cause such funds to be made immediately available to the Seller at the
Seller’s Account.



     (c) Each Notice of Purchase delivered pursuant to Section 2.02(a) shall be irrevocable and
binding on the Seller. The Seller shall indemnify each Purchaser against any actual loss or
expense incurred by such Purchaser as a result of any failure to fulfill on or before the date of
the proposed initial Purchase or Capital Increase (as to which a Notice of Purchase has been given
pursuant to Section 2.02(a)) the applicable conditions set forth in Article III, including, without
limitation, any actual loss or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such Purchaser to fund its ratable portion of such proposed
Purchase or Capital Increase when such Purchase or Capital Increase, as a result of such failure,
is not made on such date.



     (d) Unless the Agent shall have received notice from a Purchaser prior to the date of such
Purchase or Capital Increase that such Purchaser will not make available to the Agent such
Purchaser’s ratable portion of the Capital for such Purchase or Capital Increase, the Agent may
assume that such Purchaser has made such portion available to the Agent on the date of such
Purchase or Capital Increase in accordance with Section 2.02(b), and the Agent may, in reliance
upon such assumption, make available to the Seller on such date a corresponding amount. However,
if the Agent has received such notice from such Purchaser, the Agent may not make such assumption
and may not make available to the Seller on such date such corresponding amount. If and to the
extent that such Purchaser (other than a Purchaser that has delivered to the Agent a notice of the
type described in the two immediately preceding sentences) shall not have made such ratable portion
available to the Agent and the Agent has made such ratable portion available to the Seller, such
Purchaser and the Seller severally agree to pay (to the extent not repaid by the Seller or such
Purchaser, respectively) to the Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made available to the Seller until the
date such amount is repaid to the Agent, at (i) in the case of the Seller, the Yield applicable to
such amount and (ii) in the case of such Purchaser, the Federal Funds Rate. If such Purchaser
shall repay to the Agent such corresponding amount, such amount so repaid shall constitute such
Purchaser’s ratable portion of such Purchase or Capital Increase for purposes of this Agreement.



     (e) The failure of any Purchaser to make available such Purchaser’s ratable portion of any
Purchase or Capital Increase shall not relieve any other Purchaser of its obligation, if any,
hereunder to make available such other Purchaser’s ratable portion of such Purchase or Capital
Increase on the date of such Purchase or Capital Increase, but no Purchaser shall be responsible
for the failure of any other Purchaser to make available such other Purchaser’s ratable portion of
such Purchase or Capital Increase on the date of any Purchase or Capital Increase. Nothing herein
shall prejudice any rights that the Seller may have against any Purchaser as a result of any
default by such Purchaser hereunder.



22









 





     (f) Effective upon the date of the initial Purchase, the date of each reinvestment under
Section 2.07, the date on which any reinvestment would have been made but for a requested reduction
of Capital under Section 2.05 and the date of each Capital Increase, the Seller hereby Transfers to
the Agent on behalf of the Purchasers (to the extent not then already Transferred to and held by
the Agent on behalf of the Purchasers prior to any such effective date) (i) each Receivable then
existing, (ii) all Related Security with respect to such Receivables, and (iii) all Collections
with respect to, and other proceeds of, such Receivables and Related Security. The interest of each
Owner at any time in the Purchased Property shall be its ratable share thereof, based on its
Capital Investment at such time as compared to the Capital Investments of all Owners at such time.



     (g) The aggregate purchase price for all of the Purchased Property is the aggregate of the
amounts payable to the Seller on account of Capital under Sections 2.01, 2.02 or 2.03, the amounts
payable to the Seller as reinvestments in Purchased Property and amounts payable to the Seller or
applied to discharge amounts owed by the Seller pursuant to Sections 2.07(a)(i)(C) or (v) or
2.08(i), (ii), (iii), (v) or (vi).



     Section 2.03. Swing Increases




     (a) On the terms and subject to the conditions contained in this Agreement, the Swing
Purchaser may, in its sole discretion, make, in U.S. Dollars, Capital Increases (each a “Swing
Increase”) otherwise committed to the Seller hereunder from time to time on any Business Day
during the period from the date hereof until the Termination Date in an aggregate principal amount
at any time outstanding (together with the aggregate outstanding principal amount of any other
Capital Increase made by the Swing Purchaser hereunder in its capacity as the Swing Purchaser) not
to exceed the Swing Increase Sublimit; provided, however, that at no time shall the Swing Purchaser
make any Swing Increase to the extent that, after giving effect to such Swing Increase, (A) the sum
of the Capital then outstanding, would exceed (B) the lesser of (x) the Total Commitment and (y)(i)
the Net Receivables Pool Balance minus (ii) the Applicable Reserve.



     (b) In order to request a Swing Increase, the Seller shall telecopy (or forward by electronic
mail or similar means) to the Agent a duly completed request in substantially the form of Exhibit
G, setting forth the requested amount and date of such Swing Increase (a “Swing
Increase Request”), to be received by the Agent not later than 12:00 p.m. (New York City time)
on the day of the proposed purchase. The Agent shall promptly notify the Swing Purchaser of the
details of the requested Swing Increase. Subject to the terms of this Agreement, the Swing
Purchaser may make the Capital Investment in connection with such Swing Increase available to the
Agent and, in turn, the Agent shall make such amounts available to the Seller on the date of the
relevant Swing Increase Request. The Swing Purchaser shall not make any Swing Increase in the
period commencing on the first Business Day after it receives written notice from the Agent or any
Purchaser that one or more of the conditions precedent contained in Section 3.02 shall not on such
date be satisfied, and ending when such conditions are satisfied. The Swing Purchaser shall not
otherwise be required to determine that, or take notice whether, the conditions precedent set forth
in Section 3.02 have been satisfied in connection with the making of any Swing Increase. Each
Swing Increase shall be in an aggregate amount of not less than $100,000.



     (c) The Swing Purchaser shall notify the Agent in writing (which writing may be a telecopy or
electronic mail) weekly, by no later than 10:00 a.m. (New York City time) on the first Business Day
of each week, of the aggregate principal amount of its Capital Investment in connection with Swing
Increases.



23









 





     (d) The Swing Purchaser may demand at any time that each Purchaser pay to the Agent, for the
account of the Swing Purchaser, in the manner provided in clause (e) below, such Purchaser’s
ratable portion of all or a portion of the Swing Purchaser’s Capital outstanding in connection with
Swing Increases, which demand shall be made through the Agent, shall be in writing and shall
specify the outstanding principal amount of the Capital demanded to be so reduced.



     (e) The Agent shall forward each notice referred to in clause (c) above and each demand
referred to in clause (d) above to each Purchaser on the day such notice or such demand is received
by the Agent (except that any such notice or demand received by the Agent after 2:00 p.m. (New York
City time) on any Business Day or any such demand received on a day that is not a Business Day
shall not be required to be forwarded to the Purchasers by the Agent until the next succeeding
Business Day), together with a statement prepared by the Agent specifying the amount of each
Purchaser’s ratable portion of the aggregate principal amount of the Capital in connection with
Swing Increases stated to be outstanding in such notice or demanded to be paid pursuant to such
demand, and, notwithstanding whether or not the conditions precedent set forth in Section 3.02 and
2.01 shall have been satisfied (which conditions precedent the Purchasers hereby irrevocably
waive), each Purchaser shall, before 11:00 a.m. (New York City time) on the Business Day next
succeeding the date of such Purchaser’s receipt of such notice or demand, make available to the
Agent, in immediately available funds, for the account of the Swing Purchaser, the amount specified
in such statement; provided, however, that notwithstanding anything to the contrary
in the foregoing, no Purchaser shall be obligated to purchase a ratable portion of, or otherwise
pay any sum in respect of, a Swing Increase if the purchase by such Purchaser of a ratable portion
of, or payment of other sum in respect of, such Swing Increase would cause such Purchaser’s
aggregate Capital Investment to exceed its Commitment. Upon such purchase by a Purchaser, such
Purchaser shall, except as provided in clause (f), be deemed to have made a Capital Increase with a
Capital Investment equal to the amount actually paid by such Purchaser. The Agent shall use such
funds to reduce the Swing Purchaser’s Capital in respect of Swing Increases.



     (f) Upon the occurrence of an Event of Termination under Section 7.01(f), each Purchaser shall
acquire, without recourse or warranty, an undivided participation in each Swing Increase otherwise
required to be repaid by such Purchaser pursuant to clause (e) above, which participation shall be
in a principal amount equal to such Purchaser’s ratable portion of such Swing Increase, by paying
to the Swing Purchaser on the date on which such Purchaser would otherwise have been required to
make a payment in respect of such Swing Increase pursuant to clause (e) above, in immediately
available funds, an amount equal to such Purchaser’s ratable portion of such Swing Increase. If
all or part of such amount is not in fact made available by such Purchaser to the Swing Purchaser
on such date, the Swing Purchaser shall be entitled to recover any such unpaid amount on demand
from such Purchaser together with interest accrued from such date at the Federal Funds Rate for the
first Business Day after such payment was due and thereafter at the Citicorp Base Rate.



     (g) From and after the date on which any Purchaser (i) is deemed to have made a Capital
Increase pursuant to clause (e) above with respect to any Swing Increase or (ii) purchases an
undivided participation interest in a Swing Increase pursuant to clause (f) above, the Swing
Purchaser shall promptly distribute to such Purchaser such Purchaser’s share of all payments of
Capital of and Yield received by the Swing Purchaser on account of such Swing Increase other than
those received from a Purchaser pursuant to clause (e) or (f) above.



24









 





     Section 2.04. [Deleted]




     Section 2.05. Termination or Reduction of the Commitments.




     The Seller may, upon at least 5 Business Days’ notice to the Agent, and so long as, after
giving effect to a proposed reduction, no Event of Termination or Potential Event of Termination,
including, without limitation, by reference to Section 5.07(b), would exist, terminate in whole or
reduce in part, the unused portions of the Commitments of the Purchasers; provided, however, that
for purposes of this Section 2.05, the unused portions of the Commitments of the Purchasers shall
be computed as the excess of (i) the aggregate of the Commitments of the Purchasers immediately
prior to giving effect to such termination or reduction over (ii) the aggregate Capital outstanding
at the time of such computation; provided, further, that each such partial reduction of the
unused portions of the Commitments (i) shall be in an amount equal to at least $5,000,000 and shall
be an integral multiple of $1,000,000 in excess thereof, (ii) shall be made ratably among the
Purchasers in accordance with their respective Commitments and (iii) shall reduce the Total
Commitment in an amount equal to each such reduction.



     Section 2.06. Receivable Percentage.




     The Receivable Percentage shall be initially computed as of the opening of business of the
Servicer on the date of the initial Purchase and the date of each Capital Increase. Thereafter
until the Termination Date, the Receivable Percentage shall be automatically recomputed as of the
close of business of the Servicer on each day (other than a Liquidation Day). The Receivable
Percentage shall remain constant from the time as of which any such computation or recomputation is
made until the time as of which the next such recomputation, if any, shall be made. The Receivable
Percentage, as computed as of the day immediately preceding the Termination Date, shall remain
constant at all times on and after the Termination Date. Such Receivable Percentage shall become
zero at such time as the Owners shall have irrevocably received the accrued Yield for their
Capital, shall have irrevocably recovered the related Capital Investment, and shall have
irrevocably received payment of all other amounts payable by the Seller to the Owners, and the
Servicer shall have received the accrued Servicer Fee, if any.



     Section 2.07. Non-Liquidation Settlement Procedures.




     (a) On each day (other than a Liquidation Day) the Agent shall, out of Collections of Pool
Receivables received on such day:




     (i) first, set aside and hold in trust for the Servicer and the Owners an amount in
U.S. Dollars equal to the sum of (A) the Servicer Fee, if any, accrued through such day and
not so previously set aside, (B) the aggregate Yield, the Unused Commitment Fee, the Agent’s
Fee and any other fees accrued hereunder through such day and not so previously set aside,
and (C) the aggregate of any other amounts then accrued or owed hereunder by the Seller to
such Owners and not so previously set aside;




     (ii) second, distribute an amount in U.S. Dollars equal to the aggregate Capital
Investments made in respect of Swing Increases to the Swing Purchaser, to be applied to
reduce the Capital of such Swing Increases;




     (iii) third, if such day is the second Business Day of the week, distribute to the
Owners an amount in U.S. Dollars equal to that amount, if any, which would be required to
reduce Capital so that the Receivable Percentage would not, after giving effect to the
Collections of Pool Receivables and the addition of new Pool Receivables on such day and the
resulting



25









 







recomputation of the Receivable Percentage pursuant to Section 2.06 as of the end of
such day, exceed 100%;




     (iv) fourth, set aside the remainder of such Collections in an amount not greater than
the aggregate Capital then outstanding, for the benefit, on a pari passu basis, of the
Owners; and




     (v) fifth, to the extent of any further remaining Collections and subject to Sections
2.10(f) and 11.09(b) , return the remainder of such Collections to the Seller.



     (b) On each applicable Yield Payment Date, the Agent shall distribute the amounts set aside as
described in clause (i) of Section 2.07(a) above (other than the Agent’s Fee), first, to the
Servicer in payment of the accrued Servicer Fee, if any, payable, to the Owners in payment of the
accrued Yield and the Unused Commitment Fees, pari passu, and second, in payment of any other
amounts then owed by the Seller hereunder (including, without limitation, all fees payable
hereunder and not paid above except for the Servicer Fee). On each day, the Agent shall distribute
the amounts set aside as described in clause (iv) of Section 2.07(a) above to the Seller as
reinvestment in Purchased Property, for the benefit of the Owners.



     (c) On each anniversary of the Effective Date, the Agent shall distribute the amounts set
aside as described in clause (i) of Section 2.07(a) with respect to the Agent’s Fee to the Agent in
payment of the Agent’s Fee for the twelve-month period then commencing.



     (d) In the case of Collections of Canadian Dollar Receivables, the Agent shall convert such
Collections to U.S. Dollars in accordance with Agent’s normal practices and procedures and all
distributions set forth in clauses (a) and (b) above will be in U.S. Dollars.



     (e) Any application of Collections to amounts owing by the Seller is without limitation to the
obligation of the Seller to pay such amounts and made pursuant to the rights of the Agent and the
Owners under Sections 2.10(f) and 11.09(b).



     Section 2.08. Liquidation Settlement Procedures.




     (a) On each Liquidation Day, the Agent shall, out of the Collections of Pool Receivables
received on such day, deposit to the Agent’s Account the Collections of Pool Receivables received
on such day and shall apply them as follows:




     (i) first, to pay obligations of the Seller to the Agent under any Transaction Document
in respect of any expense reimbursements, Cash Management Obligations or indemnities then
due to the Agent;




     (ii) second, to pay obligations of the Seller to the Owners under any Transaction
Document in respect of any expense reimbursements or indemnities then due to such Persons;




     (iii) third, to the Servicer in payment of the accrued Servicer Fee, if any, then
payable, to the Owners in payment of the accrued Yield, Unused Commitment Fees and the
aggregate of any other amounts then accrued or owed hereunder by the Seller to such Owners;




     (iv) fourth, to the Owners in reduction (to zero) of the Capital of each Owner;



26









 






     (v) fifth, to the Owners in ratable payment of any other amounts owed by the Seller
hereunder or under any Transaction Document (including, without limitation, all fees payable
hereunder and not paid above except for the Servicer Fee); and




     (vi) sixth, subject to Sections 2.10(f) and 11.09(b), to the Seller;


provided, however, that if sufficient funds are not available to fund all payments
to be made in respect of any obligation described in any of clauses first, second, third, fourth
and fifth above, the available funds being applied with respect to any such obligations (unless
otherwise specified in such clause) shall be allocated to the payment of the obligations referred
to in such clause ratably, based on the proportion of the Servicer’s, the Agent’s, or the Owners’
interest in the aggregate outstanding obligations described in such clause.




     (b) In the case of Collections of Canadian Dollar Receivables, the Agent shall convert such
Collections to U.S. Dollars in accordance with Agent’s normal practices and procedures and all
payments set forth in clause (a) above will be in U.S. Dollars.



     (c) Any application of the Collections to amounts owing by the Seller is without limitation to
the obligation of the Seller to pay such amounts and made pursuant to the rights of the Agent and
the Owners under Sections 2.10(f) and 11.09(b).



     Section 2.09. General Settlement Procedures.




     (a) If on any day the Outstanding Balance of a Pool Receivable is either (i) reduced as a
result of any defective, rejected or returned goods or services, any discount, or any adjustment by
the Seller or the Canadian Originator, or (ii) reduced or cancelled as a result of a setoff in
respect of any claim by the Obligor thereof against the Seller or the Canadian Originator (whether
such claim arises out of the same or a related transaction or an unrelated transaction), the Seller
shall be deemed to have received on such day a Collection of such Receivable in the amount of such
reduction or cancellation and shall make the payment required to be made by it in connection with
such Collection on the day required by, and otherwise pursuant to, Section 5.01(g). If on any day
any of the representations or warranties in Section 4.01(h) is no longer true with respect to any
Pool Receivable, the Seller shall be deemed to have received on such day a Collection in full of
such Pool Receivable and shall make the payment required to be made by it in connection with such
Collection on the day required by, and otherwise pursuant to, Section 5.01(g). Except as stated in
the preceding sentences of this Section 2.09(a) or as otherwise required by law or the underlying
Contract, all Collections received from an Obligor of any Receivable shall be applied to
Receivables then outstanding of such Obligor in the order of the age of such Receivables, starting
with the oldest such Receivable, except if payment is designated by such Obligor for application to
specific Receivables. If at any time any Obligor is required to pay interest or finance charges in
connection with any Receivable or the related Contract, then all payments made by such Obligor in
connection with such Receivable shall, unless otherwise expressly provided for in the applicable
Contract, be applied on account of the Outstanding Balance of such Receivable and not on account of
such interest or finance charges, until such time as the Outstanding Balance thereof has been fully
repaid.



     (b) On or prior to the tenth Business Day of each calendar month, the Servicer shall prepare
and furnish to the Agent for each Owner:




     (i) a Seller Report relating to each Owner and the Capital Investment thereof, as of
the close of business of the Servicer on the last day of the immediately preceding calendar
month,



27









 






     (ii) a listing of the ten Obligors owing the greatest Dollar Equivalent amount of Pool
Receivables, together with a report setting forth (A) the name of such Obligor, (B) the
balance of the Pool Receivables owing by such Obligor as of such date, and (C) a summary of
credit terms applicable to such Pool Receivables under the applicable Contract,




     (iii) a listing by Obligor of all Pool Receivables, together with an analysis as to the
aging of such Receivables, as of such last day, and




     (iv) such other information as shall be reasonably requested from time to time by the
Agent or by the Agent at the request of the Required Purchasers.



     (c) Within 10 days after the end of each calendar month (or more frequently if (x) requested
by the Agent or (y) Total Excess Availability shall be less than $50,000,000, but, in the case of
clauses (x) and (y), in no event more frequently than once each Business Day) by no later than
12:00 noon (New York City time), the Servicer shall prepare and furnish to the Agent for the Owners
a Receivables Report relating to each Owner and the Capital Investment thereof as at the end of the
last calendar day of the immediately preceding month (or such shorter period, not earlier than the
immediately preceding Business Day, if requested by Agent) stating (i) the aggregate amount of the
Net Receivables Pool Balance as of the end of the immediately preceding reporting period, in such
detail as shall be satisfactory to the Agent, (ii) the aggregate amount of the Collections from the
Pool Receivables received by or on behalf of the Servicer as of the end of the immediately
preceding reporting period, in such detail as shall be satisfactory to the Agent, (iii) the
aggregate of sales and billings of the Canadian Originator as of the end of the immediately
preceding reporting period, and (iv) such other information as shall be specified from time to time
by the Agent or by the Agent at the request of the Required Purchasers.



     (d) The Servicer shall promptly notify the Agent in writing in the event that at any time the
Servicer receives or otherwise gains knowledge that any of the following is true: (i) the Net
Receivables Pool Balance is less than 90% of the Net Receivables Pool Balance reflected in the most
recent Receivables Report delivered pursuant to Section 2.09(c) above, or (ii) the Net Receivables
Pool Balance is less than 105% of the Required Net Receivables Pool Balance, or (iii) the
outstanding Capital exceeds the Net Receivables Pool Balance as a result of a decrease therein, in
which case such notice shall also include the amount of such excess.



     Section 2.10. Payments and Computations, Etc.




     (a) All amounts to be paid or deposited by the Seller or the Servicer hereunder shall be paid
or deposited in accordance with the terms hereof no later than 12:00 noon (New York City time) on
the day when due in U.S. Dollars in same day funds to the Agent’s Account. The Agent shall
promptly thereafter cause to be distributed (i) like funds relating to the payment out of
Collections in respect of Capital, Yield, Servicer Fee or other amounts payable out of Collections,
to the Owners (ratably in accordance with their respective interests) and the Servicer in
accordance with the provisions of Section 2.07 or 2.08, as applicable, and (ii) like funds relating
to the payment by the Seller of fees and other amounts payable by the Seller hereunder, to the
parties hereto for whose benefit such funds were paid (and if such funds are insufficient, such
distribution shall be made, subject to Section 2.07 or 2.08, as applicable, ratably in accordance
with the respective amounts thereof). Upon the Agent’s acceptance of an Assignment and Acceptance
and recording of the information contained therein in the Register pursuant to Section 9.01(c),
from and after the effective date specified in such Assignment and Acceptance, the Agent shall make
all payments hereunder in respect of the interest assigned thereby to the Assignee thereunder, and
the parties to such Assignment and Acceptance shall make all appropriate adjustments in such
payments for periods prior to such effective date directly between themselves.



28









 





     (b) The Seller shall, to the extent permitted by law, pay to the Agent interest on all amounts
not paid or deposited when due hereunder (except for those amounts with respect to which Yield
accrues) at 2.00% per annum above the Alternate Base Rate in effect from time to time, payable on
demand, provided, however, that such interest rate shall not at any time exceed the maximum rate
permitted by applicable law. Such interest shall be for the account of, and distributed by the
Agent to, the applicable Owners ratably in accordance with their respective interests in such
overdue amount.



     (c) All computations of interest and all computations of Yield, Unused Commitment Fee and
other per annum fees hereunder shall be made on the basis of a year of 360 days for the actual
number of days (including the first but excluding the last day) elapsed. For purposes of the
Interest Act (Canada), where in this Agreement a rate of interest is to be calculated on the basis
of a period of less than one year, the yearly rate of interest to which the said rate is equivalent
is the said rate divided by the actual number of days in the period for which such calculation is
made and multiplied by 365 days (or 366 days in the case of a leap year).



     (d) The Seller hereby authorizes each Owner, if and to the extent payment owed by the Seller
to such Owner is not made to the Agent when due hereunder, to charge from time to time against any
or all of the Seller’s accounts with such Owner any amount so due.



     (e) Unless the Agent shall have received notice from the Servicer or the Seller prior to the
date on which any payment is due to the Owners hereunder that the Servicer or the Seller, as the
case may be, will not make such payment in full, the Agent may assume that the Servicer or the
Seller, as the case may be, has made such payment in full to the Agent on such date and the Agent
may, in reliance upon such assumption, cause to be distributed to each Owner on such due date an
amount equal to the amount then due such Owner. If and to the extent the Servicer or the Seller,
as the case may be, shall not have so made such payment in full to the Agent, each Owner shall
repay to the Agent forthwith on demand such amount distributed to such Owner together with interest
thereon, for each day from the date such amount is distributed to such Owner until the date such
Owner repays such amount to the Agent, at the Federal Funds Rate.



     (f) The Seller hereby irrevocably and unconditionally waives and relinquishes to the fullest
extent it may legally do so any right of setoff, counterclaim, recoupment, defense and other right
or claim which the Seller may have against the Agent or any Owner as a result of or arising out of
the failure of the Agent or any Owner to pay any amount owing hereunder or in connection herewith.
The Agent may set-off and apply against, or deduct from, any amount payable to the Seller or the
Servicer by the Agent (or by the Servicer on its behalf), any amounts then due and owing by the
Seller or Servicer hereunder to any Owner or to the Agent or any other Indemnified Party, and may
instruct any Servicer to do so on its behalf out of any amounts then or thereafter held by such
Servicer that otherwise would have been paid to a Seller or Servicer on behalf of an Owner or the
Agent.



     Section 2.11. Yield and Fees.




     (a) All Capital Investments and the outstanding amount of all other obligations hereunder
shall bear a Yield, in the case of Capital Investments, on the principal amount thereof from the
date such Capital Investments are made and, in the case of such other obligations, from the date
such other obligations are due and payable until, in all cases, paid in full, at the Citicorp Rate.



     (b) The Seller shall pay to the Agent such fees as are set forth in the Second Amended and
Restated Fee Letter.



29









 





     (c) The Seller shall pay to the Agent for remittance to the Servicer (at any time that it is
not PolyOne or an Affiliate of PolyOne) from the later of the date of the initial Purchase
hereunder and the date on which such Person becomes Servicer hereunder until the later of the
Termination Date or the date on which Capital is reduced to zero, a fee (the “Servicer
Fee”) equal to the lesser of (i) 1% per annum on the average daily amount of Capital, and (ii)
120% of the costs and expenses referred to in Section 6.02(c), such fee payable in arrears on the
Yield Payment Date for each Yield Period; provided, however, that, so long as the Servicer is
PolyOne or an Affiliate of PolyOne, the Servicer shall not be paid any Servicer Fee hereunder, it
being acknowledged and agreed by PolyOne that any amounts owing to PolyOne or any such Affiliate in
consideration for such services shall be the responsibility of and paid by the Canadian Originator.
Any Servicer Fee shall be payable only from Collections pursuant to, and subject to the priority of
payment set forth in, Sections 2.07 and 2.08.



     (d) The Seller shall pay to the Agent for the account of each Purchaser, an unused commitment
fee (an “Unused Commitment Fee”) equal to the product of (i) the Unused Commitment Fee Rate
and (ii) the average daily Unused Commitment of such Purchaser. The Unused Commitment Fee will be
payable monthly in arrears and on the Termination Date.



     Section 2.12. Special Provisions Governing Capital Investments at the Citicorp LIBO Rate.




     (a) Increased Costs. If, due to either (i) a change after the date hereof in
Regulation D of the Board of Governors of the Federal Reserve System (to the extent any cost
incurred pursuant to such regulation is not included in the calculation of Adjusted LIBO Rate),
(ii) the introduction of or any change after the date hereof in or in the interpretation of any law
or regulation (other than any law or regulation relating to taxes, as to which Section 2.14 shall
govern) or (iii) the compliance with any guideline or request issued or made after the date hereof
from any central bank or other governmental authority (whether or not having the force of law),
there shall be any increase in the cost to (or, in the case of Regulation D of the Board of
Governors of the Federal Reserve System, there shall be imposed a cost on) any Indemnified Party of
agreeing to make or making any Purchase or Capital Increase or any interest therein hereunder, then
the Seller shall from time to time, upon demand and delivery to the Seller of the certificate
referred to in the last sentence of this Section 2.12(a) by such Indemnified Party (or by the Agent
for the account of such Indemnified Party) (with a copy of such demand and certificate to the
Agent), pay to the Agent for the account of such Indemnified Party additional amounts sufficient to
compensate such Indemnified Party for such increased or imposed cost. Each Indemnified Party
hereto agrees to use reasonable efforts promptly to notify the Seller of any event referred to in
clause (i), (ii) or (iii) above, provided that the failure to give such notice shall not affect the
rights of any Indemnified Party under this Section 2.12(a). Each Indemnified Party agrees that it
shall use reasonable efforts to designate another applicable office of such Indemnified Party to
hold its interest in the Purchased Property if the amounts payable to it under this Section 2.12(a)
would thereby be reduced and if the making, funding or maintenance of its interest in the Purchased
Property through such other applicable office would not otherwise adversely affect such interest or
such Indemnified Party. A certificate in reasonable detail as to the basis for and the amount of
such increased cost, submitted to the Seller and the Agent by such Indemnified Party (or by the
Agent for the account of such Indemnified Party) shall be conclusive and binding for all purposes,
absent manifest error.



     (b) Interest Rate Unascertainable, Inadequate or Unfair. In the event that
(i) the Agent determines that adequate and fair means do not exist for ascertaining the applicable
interest rates by reference to which the Adjusted LIBO Rate then being determined is to be fixed or
(ii) the Required Purchasers notify the Agent that the Adjusted LIBO Rate for any Yield Period will
not adequately reflect the cost to the Purchasers of making a Capital Investment or maintaining
such Capital Investment for such



30









 







Yield Period, the Agent shall forthwith so notify the Seller and the Purchasers, whereupon the
Citicorp Rate for such Capital Investment shall automatically, on the last day of the current Yield
Period for such Capital Investment, convert into the Citicorp Base Rate and the obligations of the
Purchasers to make a Capital Investment or maintain a Capital Investment at the Citicorp LIBO Rate
shall be suspended until the Agent shall notify the Seller that the Required Purchasers have
determined that the circumstances causing such suspension no longer exist.



     (c) Illegality. Notwithstanding any other provision of this Agreement, if any
Purchaser determines that the introduction of, or any change in or in the interpretation of, any
law, treaty or governmental rule, regulation or order after the date of this Agreement shall make
it unlawful, or any central bank or other Governmental Authority shall assert that it is unlawful,
for any Purchaser to make a Capital Investment or maintain a Capital Investment at the Citicorp
LIBO Rate, then, on notice thereof and demand therefor by such Purchaser to the Seller through the
Agent, (i) the obligation of such Purchaser to make a Capital Investment or maintain a Capital
Investment at the Citicorp LIBO Rate shall be suspended, and each such Purchaser shall make Capital
Investments at the Citicorp Base Rate and (ii) if the affected Capital Investments at the Citicorp
LIBO Rate are then outstanding, the Seller shall immediately convert each such Capital Investment
into a Capital Investment at the Citicorp Base Rate. If, at any time after a Purchaser gives
notice under this Section 2.12(c), such Purchaser determines that it may lawfully make Capital
Investments at the Citicorp LIBO Rate, such Purchaser shall promptly give notice of that
determination to the Seller and the Agent, and the Agent shall promptly transmit the notice to each
other Purchaser. The Seller’s right to request, and such Purchaser’s obligation, if any, to make
Capital Investments at the Citicorp LIBO Rate shall thereupon be restored.



     (d) Liquidation Costs. In addition to all amounts required to be paid by the Seller
hereunder, the Seller shall compensate each Purchaser, upon demand, for all losses, expenses and
liabilities (including any loss or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such Purchaser to fund or maintain such Purchaser’s Capital
Investments at the Citicorp LIBO Rate but excluding any loss of the Applicable Margin on the
relevant Capital Investments) (each, a “Liquidation Cost”) that such Purchaser may sustain
(i) if for any reason a proposed Capital Investment, conversion into or continuation of Capital
Investments at the Citicorp LIBO Rate does not occur on a date specified therefor in a Notice of
Purchase given by the Seller or in a telephonic request by it for Purchase or a successive Yield
Period does not commence after notice therefor is given hereunder, (ii) if for any reason any
Capital Investment at the Citicorp LIBO Rate is reduced (including mandatorily pursuant to Section
2.07) on a date that is not the last day of the applicable Yield Period, (iii) as a consequence of
a required conversion of a Capital Investment at the Citicorp LIBO Rate to Capital Investment at
the Citicorp Base Rate as a result of any of the events indicated in Section 2.12(c) above or (iv)
as a consequence of any failure by the Seller to reduce Capital Investment at the Citicorp LIBO
Rate when required by the terms hereof. The Purchaser making demand for such compensation shall
deliver to the Seller concurrently with such demand a written statement as to such losses, expenses
and liabilities, and this statement shall be conclusive as to the amount of compensation due to
such Purchaser, absent manifest error.



     Section 2.13. Increased Capital.




     If any Indemnified Party determines that either the introduction of or any change in or in the
interpretation of any law or regulation after the date hereof or the compliance with any guideline
or request issued or made after the date hereof from any central bank or other governmental
authority (whether or not having the force of law) affects or would affect the amount of capital
required or expected to be maintained by such Indemnified Party or any corporation controlling such
Indemnified Party and that the amount of such capital is increased by or based upon the existence
of such Indemnified Party’s



31









 







commitment, if any, to make Capital Investments, or to maintain such Capital Investments
hereunder, then, upon demand and delivery to the Seller of the certificate referred to in the last
sentence of this Section 2.13 by such Indemnified Party (or by the Agent for the account of such
Indemnified Party) (with a copy of such demand and certificate to the Agent) the Seller shall pay
to the Agent for the account of such Indemnified Party from time to time, as specified by such
Indemnified Party, additional amounts sufficient to compensate such Indemnified Party or such
corporation in the light of such circumstances, to the extent that such Indemnified Party
reasonably determines such increase in capital to be allocable to the existence of any such
commitment. Each Indemnified Party hereto agrees to use reasonable efforts promptly to notify the
Seller of any event referred to in the first sentence of this Section 2.13, provided that the
failure to give such notice shall not affect the rights of any Indemnified Party under this Section
2.13. A certificate in reasonable detail as to the basis for, and the amount of, such compensation
submitted to the Seller and the Agent by such Indemnified Party (or by the Agent for the account of
such Indemnified Party) shall be conclusive and binding for all purposes, absent manifest error.



     Section 2.14. Taxes.




     (a) Any and all payments by the Seller hereunder or deposits from Collections hereunder shall
be made, in accordance with Section 2.10, free and clear of and without deduction for any and all
present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding, in the case of each Indemnified Party, (i) taxes that are imposed
on its overall net income by the United States and (ii) taxes that are imposed on its overall net
income, assets or net worth (and franchise taxes imposed in lieu thereof) by the state or foreign
jurisdiction under the laws of which such Indemnified Party is organized or qualified to do
business or in which such Indemnified Person holds any assets in connection with this Agreement or,
in each case, any political subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities in respect of payments hereunder or deposits from
Collections hereunder being hereinafter referred to as “Taxes”). If the Seller or the
Servicer or the Agent or any Obligor shall be required by law to deduct any Taxes from or in
respect of any sum payable hereunder or deposit from Collections hereunder to any Indemnified
Party, (i) the sum payable by Seller shall be increased as may be necessary so that after making
all required deductions (including deductions applicable to additional sums payable under this
Section 2.14) such Indemnified Party receives an amount equal to the sum it would have received had
no such deductions been made, (ii) the Seller or the Servicer or the Agent shall make such
deductions and (iii) the Seller or the Servicer or the Agent shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with applicable law.



     (b) In addition, the Seller shall pay any present or future sales, stamp, documentary, excise,
property or similar taxes, charges or levies that arise from any payment made hereunder or deposit
from Collections hereunder or from the execution, delivery or registration of, performing under, or
otherwise with respect to, this Agreement, the Canadian Receivables Sale Agreement, the Canadian
Consent and Agreement or the Second Amended and Restated Fee Letter (hereinafter referred to as
“Other Taxes”).



     (c) The Seller shall indemnify each Indemnified Party for and hold it harmless against the
full amount of Taxes and Other Taxes (including, without limitation, taxes of any kind imposed by
any jurisdiction on amounts payable under this Section 2.14) imposed on or paid by such Indemnified
Party and any liability (including penalties, additions to tax, interest and expenses) arising
therefrom or with respect thereto whether or not such Taxes or Other Taxes were correctly or
legally asserted. This indemnification shall be made within 30 days from the date such Indemnified
Party makes written demand therefor (with a copy to the Agent).



32









 





     (d) Within 30 days after the date of any payment of Taxes, the Seller shall furnish to the
Agent and each applicable Purchaser, at its address referred to in Section 11.02, the original or a
certified copy of a receipt evidencing such payment.



     (e) [deleted].



     (f) [deleted].



     Section 2.15. Sharing of Payments, Etc.




     If any Purchaser shall obtain any payment (whether voluntary, involuntary, through the
exercise of any right of set-off or otherwise) on account of the Purchases made by it (other than
with respect to payments due to such Purchaser pursuant to Section 2.12, 2.13 or 2.14) in excess of
its ratable share of payments on account of the Purchases obtained by all the Purchasers, such
Purchaser shall forthwith purchase from the other Purchasers such interests in the Capital
Investments made by them as shall be necessary to cause such Purchaser to share the excess payment
ratably with each of them; provided, however, that if all or any portion of such excess payment is
thereafter recovered from such Purchaser, such purchase from each other Purchaser shall be
rescinded and such other Purchaser shall repay to the Purchaser the purchase price to the extent of
such recovery together with an amount equal to such other Purchaser’s ratable share (according to
the proportion of (i) the amount of such other Purchaser’s required repayment to (ii) the total
amount so recovered from the Purchaser) of any interest or other amount paid or payable by the
Purchaser in respect of the total amount so recovered. The Seller agrees that any Purchaser so
purchasing an interest in the Capital Investments made by another Purchaser pursuant to this
Section 2.15 may, to the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off) with respect to such interest in such Capital Investments as fully
as if such Purchaser were the direct creditor of the Seller in the amount of such Capital
Investments made by them.



     Section 2.16. Conversion/Continuation Option.




     (a) The Seller may elect (i) at any time on any Business Day, to convert Capital Investments
in respect of which Yield is calculated at the Citicorp Base Rate (other than Swing Increases) or
any portion thereof to Capital Investments in respect of which Yield is calculated at the Citicorp
LIBO Rate and (ii) at the end of any applicable Yield Period, to convert Capital Investments in
respect of which Yield is calculated at the Citicorp LIBO Rate or any portion thereof into Capital
Investments in respect of which Yield is calculated at the Citicorp Base Rate or to continue such
Capital Investments in respect of which Yield is calculated at the Citicorp LIBO Rate or any
portion thereof for an additional Yield Period; provided, however, that the aggregate amount of the
Capital Investments in respect of which Yield is calculated at the Citicorp LIBO Rate for each
Yield Period must be in an amount of at least $10,000,000 or an integral multiple of $2,500,000 in
excess thereof. Each conversion or continuation shall be allocated among the Capital Investments
of each Purchaser in accordance with such Purchaser’s ratable share of the aggregate Capital
Investments. Each such election shall be in substantially the form of Exhibit I (a
“Notice of Conversion or Continuation”) and shall be made by giving the Agent at least 3
Business Days’ prior written notice specifying (A) the amount and type of Capital Investment being
converted or continued, (B) in the case of a conversion to or a continuation of Capital Investments
in respect of which Yield is calculated at the Citicorp LIBO Rate, the applicable Yield Period and
(C) in the case of a conversion, the date of such conversion.



     (b) The Agent shall promptly notify each Purchaser of its receipt of a Notice of Conversion or
Continuation and of the options selected therein. Notwithstanding the foregoing, no conversion in
whole or in part of Capital Investments in respect of which Yield is calculated at the Citicorp
Base Rate to



33









 







Capital Investments in respect of which Yield is calculated at the Citicorp LIBO Rate and no
continuation in whole or in part of Capital Investments in respect of which Yield is calculated at
the Citicorp LIBO Rate upon the expiration of any applicable Yield Period shall be permitted at any
time at which (i) a Potential Event of Termination or an Event of Termination shall have occurred
and be continuing or (ii) the continuation of, or conversion into, a Capital Investment in respect
of which Yield is calculated at the Citicorp LIBO Rate would violate any provision of Section 2.12.
If, within the time period required under the terms of this Section 2.16, the Agent does not
receive a Notice of Conversion or Continuation from the Seller containing a permitted election to
continue any Capital Investments in respect of which Yield is calculated at the Citicorp LIBO Rate
for an additional Yield Period or to convert any such Capital Investments, then, upon the
expiration of the applicable Yield Period, such Capital Investments shall be automatically
converted to Capital Investments in respect of which Yield is calculated at the Citicorp Base Rate.
Each Notice of Conversion or Continuation shall be irrevocable.



ARTICLE III




CONDITIONS OF PURCHASES




     Section 3.01. Conditions Precedent to the Effectiveness of this Agreement.




     The effectiveness of this Agreement is subject to the satisfaction of the following conditions
precedent:



     (a) The Agent and the Syndication Agent shall have received all fees and expenses (including,
but not limited to, reasonable fees and expenses of counsel) required to be paid on the Effective
Date, pursuant to the terms of this Agreement and the Second Amended and Restated Fee Letter.



     (b) The Agent shall have received on or before the Effective Date, the following, each (unless
otherwise indicated) dated as of the Effective Date, in form and substance satisfactory to the
Agent:




     (i) This Agreement, duly executed and delivered by the Seller and the Servicer;




     (ii) The Second Amended and Restated Parent Undertaking, dated June 26, 2007 duly
executed and delivered by PolyOne;




     (iii) The Canadian Receivables Sale Agreement, duly executed by the Seller, PolyOne and
the Canadian Originator, together with:





               (A) [deleted];




               (B) Completed PPSA and other personal property security searches, dated
on or a date reasonably near to the Effective Date listing all effective
financing statements or similar filings which name the Canadian Originator
(under its present name and any previous name used by such Person) as debtor
and which are filed in the jurisdictions set forth in Schedule VI, together
with copies of such financing statements or similar filings (none of which,
except those naming the Canadian Originator as debtor, the Seller as secured
party and Citicorp, as Agent, as assignee, and those subject to the
termination and releases






34









 







to be obtained pursuant to Section 3.04 below, shall cover any
Receivables, Related Security, Collections or Contracts);




               (C) The Canadian Consent and Agreement, duly executed by the parties
thereto; and




               (D) The Canadian Subordinated Notes, in substantially the form of
Exhibit B to the Canadian Receivables Sale Agreement, payable to the
order of the Canadian Originator, and duly executed by the Seller.





     (iv) [deleted]




     (v) Certified copies, dated as of a recent date, of the charter or articles, by-laws or
code of regulations (as the case may be), as amended, of the Seller, the Servicer and the
Canadian Originator, respectively.




     (vi) Good standing certificates (or its equivalent), dated as of a recent date, issued
by the Secretary of State of the jurisdiction of incorporation of the Seller, the Servicer
and the Canadian Originator, with respect to the Seller, the Servicer and the Canadian
Originator, respectively.




     (vii) Certified copies of the resolutions of the Board of Directors of each of the
Seller and the Canadian Originator, approving the Transaction Documents to be delivered by
it hereunder and the transactions contemplated hereby and thereby.




     (viii) A certificate, dated on or a date reasonably near to the Effective Date, of an
officer of each of the Seller, the Servicer and the Canadian Originator, certifying the
names and true signatures of its officers authorized to sign the Transaction Documents and
the other documents to be delivered by it hereunder.




     (ix) Proper financing statements naming the Seller as debtor and Citicorp, as Agent, as
secured party, and other applicable filings, to be filed under the UCC, PPSA or other
comparable law of all jurisdictions that the Agent may deem necessary or desirable in order
to perfect the ownership interests created or purported to be created hereby.




     (x) Proper financing statement terminations or releases, if any, necessary to release
all security interests and other rights of any Person in the Receivables, Contracts, Related
Security or Collections previously granted by the Seller.




     (xi) Completed PPSA and other personal property security searches, dated on or a date
reasonably near to the Effective Date, listing all effective financing statements filed in
the jurisdictions referred to in subsection (b)(ix) above that name the Seller as debtor,
together with copies of such other financing statements (none of which, except those subject
to the termination and releases described in subsection (x) above, shall cover any
Receivables, Related Security, Collections or Contracts).




     (xii) Favorable opinions of Gowling LaFleur Henderson LLP, Canadian counsel to the
Canadian Originator, the Servicer and the Seller, in substantially the form of Exhibit
J hereto as to such other matters as the Agent may reasonably request, including
without limitation (1) a “true sale” opinion with respect to the sale of Receivable Assets
under and as defined in the Canadian



35









 







Receivables Sale Agreement from the Canadian Originator to the Seller and the future
sale of Purchased Property hereunder, (2) an opinion with respect to the non-substantive
consolidation of the Seller with the Canadian Originator, and (3) an opinion relating to the
enforceability of the Transaction Documents, compliance with all laws and regulations, the
perfection of all ownership and other interests purported to be granted under the
Transaction Documents (with the exception of the perfection opinion to be given under
Section 3.03(c) below), and no conflicts with material agreements.




     (xiii) A favorable opinion of Weil, Gotshal & Manges LLP, counsel to the Agent, as the
Agent may reasonably request; and




     (xiv) A certificate of the chief financial officer or treasurer, in the case of the
Seller and the Canadian Originator, stating that each of the Seller and the Canadian
Originator is Solvent after giving effect to the transactions contemplated hereunder and
under the other Transaction Documents, and also satisfies the other tests set out in Section
3.01(v) of the Canadian Receivables Sale Agreement.



     (c) Each of the Seller, the Canadian Originator, the Servicer and its Subsidiaries shall have
received all necessary governmental and third party consents and approvals necessary in connection
with the Transaction Documents and the transactions contemplated thereby (without the imposition of
any conditions that are not reasonably acceptable to the Purchasers) and shall remain in effect,
and all applicable governmental filings shall have been made and all applicable waiting periods
shall have expired without in either case any action being taken by any competent authority; and no
law or regulation shall be applicable in the judgment of the Purchasers that restrains, prevents or
imposes materially adverse conditions upon the Transaction Documents or the transactions
contemplated thereby.



     (d) The Agent shall have received the Second Amended and Restated Fee Letter dated June 26,
2007, duly executed by the parties thereto.



     (e) A certificate of an officer of each of the Seller and the Canadian Originator certifying
that there exists no action, suit, investigation, litigation or proceeding pending or, to its
knowledge, threatened in any court or before any arbitrator or governmental instrumentality that
(i) could reasonably be expected to result in a Material Adverse Change or (ii) restrains, prevents
or imposes or can reasonably be expected to impose materially adverse conditions on the
transactions contemplated hereunder.



     (f) The Servicer and the Seller shall have each delivered to the Purchasers a pro forma
consolidated balance sheet for itself and its Subsidiaries, if any, which shall be in form and
substance satisfactory to the Agent and each Purchaser, and there shall not occur as a result of
the funding hereunder, a default (or any event which with the giving of notice or lapse of time or
both would be a default) under any of the Seller’s, the Canadian Originator’s or their respective
Subsidiaries’ debt instruments and other material agreements.



     (g) The Agent shall have received evidence that after giving effect to the Purchases occurring
on the Effective Date, both hereunder and under the U.S. RPA, Receivables Excess Availability is
not less than $60,000,000.



     (h) All conditions to the effectiveness of the U.S. RPA shall have been satisfied.



36









 





     Section 3.02. Conditions Precedent to All Purchases, All Capital Increases and Reinvestments.




     Each Purchase (including the initial Purchase by each Purchaser) hereunder and the right of
the Servicer to reinvest in Pool Receivables those Collections attributable to a reduction of
Capital pursuant to Section 2.07, and each Capital Increase shall be subject to the further
conditions precedent that:



     (a) with respect to any such Purchase or Capital Increase, on or prior to the date of such
Purchase or Capital Increase, the Servicer shall have delivered to the Agent, in form and substance
satisfactory to the Agent:




     (i) a completed Seller Report, dated within 31 days prior to the date of such Purchase,
together with a listing by Obligor of all Pool Receivables,




     (ii) a completed Receivables Report effective as of the end of the last Business Day of
the then immediately preceding week, and




     (iii) such additional information as may be reasonably requested by the Agent; and



     (b) on the date of such Purchase or reinvestment or Capital Increase the following statements
shall be true (and the acceptance by the Seller of the proceeds of such Purchase or reinvestment or
Capital Increase shall constitute a representation and warranty by the Seller that on the date of
such Purchase or reinvestment or Capital Increase such statements are true):




     (i) the representations and warranties contained in Section 4.01 of this Agreement and
in Section 3.01 of the Canadian Receivables Sale Agreement are correct in all material
respects on and as of the date of such Purchase or reinvestment or Capital Increase, before
and after giving effect to such Purchase or reinvestment or Capital Increase and to the
application of the proceeds therefrom, as though made on and as of such date, other than any
such representations and warranties that, by their terms, refer to a specific date other
than the date of said Purchase or reinvestment or Capital Increase, in which case as of such
dates;




     (ii) no event has occurred and is continuing, or would result from such Purchase or
reinvestment or Capital Increase or from the application of the proceeds therefrom, which
constitutes an Event of Termination or a Potential Event of Termination;




     (iii) such Purchase or reinvestment or Capital Increase shall not violate any
requirement of law and shall not be enjoined, temporarily, preliminarily or permanently; and



     (c) the Agent shall have received such other approvals, opinions or documents as the Agent may
reasonably request.



     Section 3.03. Conditions Precedent to Initial Purchase




     The initial Purchase by each Purchaser hereunder shall be subject to the further conditions
precedent that:



     (a) The Seller shall have satisfied the obligation in Section 3.04 below;



37









 





     (b) The Seller shall deliver to the Agent an assignment, similar in form and substance to the
Quebec Assignment, assigning all of the Seller’s right, title and interest to and in all of the
Purchased Assets, and shall have completed registration of same in order to perfect the ownership
interests created or purported to be created hereby; and



     (c) The Agent shall have received on or before the date of such initial Purchase, in form and
substance satisfactory to the Agent, a favorable opinion of Gowling LaFleur Henderson LLP, Canadian
counsel to the Canadian Originator, the Servicer and the Seller, in substantially the form of
Exhibit J which includes (1) a “true sale” opinion with respect to the sale of the
Purchased Property hereunder, and (2) an opinion relating to the perfection of all ownership and
other interests purported to be granted under the assignment in paragraph (b) above.



     Section 3.04. Financing Statement Terminations and Releases




     Within the 60 days following the Effective Date, Seller shall obtain and provide to the Agent,
in form and substance satisfactory to the Agent, proper financing statement terminations or
releases necessary to release all security interests and other rights of any Person in the
Receivables, Related Security, Collections or Contracts previously granted by the Canadian
Originator.



ARTICLE IV




REPRESENTATIONS AND WARRANTIES




     Section 4.01. Representations and Warranties of the Seller.




     The Seller represents and warrants, as of the date hereof and as of the date of each Purchase
and each Capital Increase, before and after giving effect to such Purchase or Capital Increase and
to the application of the proceeds therefrom, as though made on and as of such date, other than any
such representations and warranties that, by their terms, refer to a specific date other than the
date of said Purchase or Capital Increase, in which case as of such dates, as follows:



     (a) The Seller is a corporation duly incorporated, validly existing and in good standing under
the laws of the jurisdiction indicated at the beginning of this Agreement, and is duly qualified to
do business, and is in good standing, in every jurisdiction where the nature of its business
requires it to be so qualified, except to the extent that any failure to be so qualified or in good
standing as a foreign entity could not reasonably be expected to have a Material Adverse Effect.
The Seller has no Subsidiaries. All of the outstanding shares of stock of the Seller are owned by
PolyOne Canada.



     (b) The execution, delivery and performance by the Seller of the Transaction Documents to
which it is a party and the other documents delivered by it hereunder, and the transactions
contemplated hereby and thereby, including the Seller’s use of the proceeds of Purchases,
reinvestments and Capital Increases, are within the Seller’s corporate powers, have been duly
authorized by all necessary corporate action, do not (i) contravene the Seller’s articles or
by-laws, (ii) violate any applicable law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award, or (iii) breach or result in a default under, or result in the
acceleration of (or entitle any party to accelerate) the maturity of any obligation of the Seller
under, or result in or require the creation of any lien upon or security interest in any property
of the Seller pursuant to the terms of, any Contract or any other agreement or instrument (other
than any Transaction Document) binding on or affecting the Seller or any of its properties.



38









 





     (c) No authorization or approval or other action by, and no notice to or filing with, any
Governmental Authority is required for the due execution, delivery and performance by the Seller of
any Transaction Document to which it is a party or any other agreement or document delivered
hereunder or for the perfection of or the exercise by any Indemnified Party of its rights and
remedies under the Transaction Documents and such other agreements or documents, except for the
filings of the financing statements referred to in Article III.



     (d) This Agreement has been, and each other Transaction Document to which the Seller is a
party when delivered will have been, duly executed and delivered by the Seller. This Agreement is,
and the other Transaction Documents to which the Seller is or will be a party when delivered
hereunder will be, the legal, valid and binding obligations of the Seller enforceable against the
Seller in accordance with their respective terms, subject to bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors generally and to
general equitable principles.



     (e) Since December 31, 2006, there has been no Material Adverse Change and there have been no
events or developments that, in the aggregate, have had a Material Adverse Effect.



     (f) There is no action, suit, investigation, litigation or proceeding pending or, to the
knowledge of the Seller, threatened in any court or before any arbitrator or governmental
instrumentality that (i) could reasonably be expected to result in a Material Adverse Change or
(ii) restrains, prevents or imposes or can reasonably be expected to impose materially adverse
conditions upon the Transaction Documents or the transactions contemplated thereby.



     (g) No proceeds of any Purchase or reinvestment or Capital Increase will be used to acquire
any security in any transaction which is subject to Sections 13 and 14 of the Securities Exchange
Act of 1934.



     (h) Immediately prior to the time of the initial Purchase, the Seller is the legal and
beneficial owner of the Pool Receivables and Related Security with respect thereto, in each case
free and clear of any Adverse Claim. Upon each Purchase or reinvestment, the Seller shall Transfer
to the Agent on behalf of the Owners (and the Agent on behalf of the Owners shall acquire) a valid
100% ownership interest in each Pool Receivable then existing or thereafter arising and in the
Related Security and Collections with respect thereto, free and clear of any Adverse Claim, which
ownership interest shall be a perfected first priority ownership interest upon the filing of the
financing statements referred to in Section 3.01(b) (ix). No effective financing statement or
other instrument similarly in effect covering any Contract or any Pool Receivable or Related
Security or Collections with respect thereto is on file in any recording office, except those filed
in favor of the Agent relating to this Agreement or in favor of the Seller and the Agent relating
to the Canadian Receivables Sale Agreement.



     (i) Each Seller Report, Receivables Report (if prepared by the Seller or one of its
Affiliates, or to the extent that information contained therein is supplied by the Seller or any
Affiliate thereof), information, exhibit, financial statement, or other report or document
furnished or to be furnished at any time by or on behalf of the Seller to the Agent or any Owner in
connection with this Agreement is and will be accurate in all material respects as of its date or
as of the date so furnished, and no such report or document contains, or will contain, as of its
date of delivery or the date so furnished, any untrue statement of a material fact or omits to
state, or will omit to state, as of its date of delivery or the date so furnished, a material fact
necessary in order to make the statements contained therein, in the light of the circumstances
under which they were made, not misleading.



39









 





     (j) The jurisdiction of incorporation, organizational identification number (if any), and the
address(es) of the principal place of business and chief executive office of the Seller and the
office where the Seller keeps its Records concerning the Receivables, are as set forth in Schedule
III hereto (or, by notice to the Agent in accordance with Section 5.01(c), at such other locations
in jurisdictions, within Canada, where all actions required by Section 6.05(a) have been taken and
completed).



     (k) The names and addresses of all the Lock-Box Banks, together with the lock-box numbers
related to, and the account numbers and owners (the Seller or the Canadian Originator) of, the
Lock-Box Accounts at such Lock-Box Banks, are specified in Schedule I hereto (or such other
Lock-Box Banks and/or such other Lock-Box Accounts as have been notified to the Agent in accordance
with Section 5.03(d)).



     (l) Since the date of its formation, the Seller has not engaged in any activity other than as
contemplated by the Transaction Documents or entered into any commitment or incurred any Debt other
than pursuant to, or as permitted under the Transaction Documents.



     (m) The Seller has not maintained, contributed to or incurred or assumed any obligation with
respect to any Plan, Multiemployer Plan or Welfare Plan.



     (n) The Seller has not sold, assigned, transferred, pledged or hypothecated any interest in
any Pool Receivable or the Collections with respect thereto to any Person other than as
contemplated by this Agreement or that has been released by the Agent from the Receivables Pool.



     (o) The Seller has complied with the Credit and Collection Policy in all material respects and
since the date of this Agreement there has been no change in the Credit and Collection Policy
except as permitted hereunder.



     (p) The Seller has not extended or modified the terms of any Pool Receivable or the Contract
under which any such Pool Receivable arose, except in accordance with the Credit and Collection
Policy.



     (q) Except under the Lock-Box Agreements, the Seller has not granted any Person dominion or
control of any Lock-Box Account, or the right to take dominion or control over any Lock-Box Account
at a future time or upon the occurrence of a future event.



     (r) With respect to each Transfer to it of any Pool Receivables, the Seller has either (i)
purchased such Pool Receivables from the Canadian Originator in exchange for payment (made by the
Seller to the Canadian Originator in accordance with the provisions of the Canadian Receivables
Sale Agreement) in an amount which constitutes fair consideration and approximates fair market
value for such Pool Receivables and in a sale the terms and conditions of which (including, without
limitation, the purchase price thereof) reasonably approximate an arm’s-length transaction between
unaffiliated parties or (ii) acquired such Pool Receivables from the Canadian Originator as a
capital contribution in accordance with the provisions of the Canadian Receivables Sale Agreement.
No such sale, and no such contribution, has been made for or on account of an antecedent debt owed
by the Canadian Originator to the Seller and no such sale or contribution is or may be voidable or
subject to avoidance under any section of the U.S. Bankruptcy Code or any Canadian Insolvency
Statute (as defined in the Canadian Receivables Sale Agreement).



     (s) The Seller has filed, or caused to be filed or be included in, all tax reports and returns
(federal, state, provincial, local and foreign), if any, required to be filed by it and paid, or
caused to be paid, all amounts of taxes, including interest and penalties, required to be paid by
it, except for such taxes



40









 




(i) as are being contested in good faith by proper proceedings and (ii) against which adequate
reserves shall have been established in accordance with and to the extent required by GAAP, but
only so long as the proceedings referred to in clause (i) above would not subject the Agent or any
other Indemnified Party to any civil or criminal penalty or liability or involve any material risk
of the loss, sale or forfeiture of any property, rights or interests covered hereunder or under the
Canadian Receivables Sale Agreement.




     (t) The Seller is not an “investment company” or an “affiliated person” of, or
“promoter” or “principal underwriter” for, an “investment company”, as such
terms are defined in the Investment Company Act of 1940, as amended.



     (u) Both before and after giving effect to (i) each Purchase to be made on the Effective Date
or such other date as Purchases requested hereunder are made, (ii) the disbursement of the proceeds
of any Capital Investment, (iii) the consummation of each other transaction contemplated by the
other Transaction Documents and (iv) the payment and accrual of all transaction costs in connection
with the foregoing, the Seller is Solvent, and also satisfies the other tests set out in Section
3.01(v) of the Canadian Receivables Sale Agreement.



     Section 4.02. Representations and Warranties of the Servicer.




     The Servicer represents and warrants as follows:



     (a) The Servicer is a corporation duly incorporated, validly existing and in good standing
under the laws of the jurisdiction indicated at the beginning of this Agreement, and is duly
qualified to do business, and is in good standing, in every jurisdiction where the nature of its
business requires it to be so qualified, except to the extent that any failure to be so qualified
or in good standing as a foreign entity could not reasonably be expected to have a Material Adverse
Effect.



     (b) The execution, delivery and performance by the Servicer of the Transaction Documents to
which it is a party and the other documents to be delivered by it hereunder, and the transactions
contemplated hereby and thereby, are within the Servicer’s corporate powers, have been duly
authorized by all necessary corporate action, do not (i) contravene the Servicer’s charter or code
of regulations, (ii) violate any applicable law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award, or (iii) breach or result in a default under, or result
in the acceleration of (or entitle any party to accelerate) the maturity of any obligation of the
Servicer under, or result in or require the creation of any lien upon or security interest in any
property of the Servicer pursuant to the terms of, any Contract or any other agreement or
instrument (other than any Transaction Document) binding on or affecting the Servicer or any of its
properties.



     (c) No authorization or approval or other action by, and no notice to or filing with, any
Governmental Authority is required for the due execution, delivery and performance by the Servicer
of any Transaction Document to which it is a party.



     (d) This Agreement has been, and each other Transaction Document to which the Servicer is a
party when delivered will have been, duly executed and delivered by the Servicer. This Agreement
is, and the other Transaction Documents to which the Servicer is party when delivered hereunder
will be, the legal, valid and binding obligations of the Servicer enforceable against the Servicer
in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally and to general equitable
principles.



41









 





     (e) Since December 31, 2006, there has been no Material Adverse Change and there have been no
events or developments that, in the aggregate, have had a Material Adverse Effect.



     (f) There is no action, suit, investigation, litigation or proceeding pending or, to the
knowledge of the Servicer, threatened in any court or before any arbitrator or governmental
instrumentality that (i) could reasonably be expected to result in a Material Adverse Change or
(ii) restrains, prevents or imposes or can reasonably be expected to impose materially adverse
conditions upon the Transaction Documents or the transactions contemplated thereby.



     (g) Each Seller Report and Receivables Report (if prepared by the Servicer or one of its
Affiliates, or to the extent that information contained therein is supplied by the Servicer or any
Affiliate thereof), information, exhibit, financial statement, or other report or document
furnished or to be furnished at any time by or on behalf of the Servicer to the Agent or any Owner
in connection with this Agreement is and will be accurate in all material respects as of its date
or as of the date so furnished, and no such report or document contains, or will contain, as of its
date of delivery or the date so furnished, any untrue statement of a material fact or omits to
state, or will omit to state, as of its date of delivery or the date so furnished, a material fact
necessary in order to make the statements contained therein, in the light of the circumstances
under which they were made, not misleading.



     (h) Since December 31, 2006, the Servicer has complied with the Credit and Collection Policy
in all material respects and since the date of this Agreement there has been no change in the
Credit and Collection Policy except as permitted hereunder.



     (i) The Servicer has not extended or modified the terms of any Pool Receivable or the Contract
under which any such Pool Receivable arose, except in accordance with the Credit and Collection
Policy or in accordance with Section 6.02(b).



ARTICLE V




GENERAL COVENANTS OF THE SELLER AND THE SERVICER




     Section 5.01. Affirmative Covenants of the Seller.




     Until the later of (i) the Termination Date and (ii) the date upon which no Capital Investment
shall be existing and no Yield, fees or other amounts remain unpaid under this Agreement, the
Seller will:



     (a) Compliance with Laws, Etc. Comply in all material respects with all applicable
laws, rules, regulations and orders with respect to it and all Pool Receivables and related
Contracts, Related Security and Collections with respect thereto.



     (b) Preservation of Corporate Existence. Preserve and maintain its corporate
existence, rights, franchises and privileges in the jurisdiction of its incorporation, and qualify
and remain qualified in good standing as a foreign corporation in each jurisdiction where the
failure to preserve and maintain such qualification would materially adversely affect the interests
of the Owners or the Agent hereunder or in the Pool Receivables and Related Security, or the
ability of the Seller or the Servicer to perform their respective obligations hereunder or the
ability of the Seller to perform its obligations under the Contracts.



     (c) Offices, Records and Books of Accounts. (i) Keep its principal place of business
and chief executive office and the offices where it keeps its Records concerning the Pool
Receivables at the address of the Seller referred to in Section 4.01(j) or, upon at least 30 days’
prior written notice to the



42









 







Agent, at any other location in a jurisdiction where all actions required by Section 6.05(a)
shall have been taken, and (ii) maintain and implement administrative and operating procedures
(including, without limitation, an ability to recreate records evidencing Pool Receivables in the
event of the destruction of the originals thereof), and keep and maintain all documents, books,
records and other information reasonably necessary or advisable for the collection of all Pool
Receivables (including, without limitation, records adequate to permit the daily identification of
each Pool Receivable, the Outstanding Balance of each Pool Receivable and the dates which payments
are due thereon and all Collections of and adjustments to each existing Pool Receivable).



     (d) Performance and Compliance with Contracts and Credit and Collection Policy. At
its expense, timely and fully (i) perform, or cause to be performed, and comply in all material
respects with, or cause to be complied with in all material respects, all provisions, covenants and
other promises required to be observed by it under the Contracts related to the Pool Receivables,
and timely and fully comply in all material respects with the Credit and Collection Policy in
regard to the Pool Receivables and the related Contracts and (ii) as beneficiary of any Related
Security, enforce such Related Security as reasonably requested by the Agent.



     (e) Examination of Records; Audits.




     (i) From time to time upon 2 Business Days’ prior notice (except that during the
continuance of an Event of Termination, no such notice shall be required) and during regular
business hours as requested by the Agent and at the expense of the Seller, permit the Agent,
or its agents or representatives, (A) to examine and make copies of and abstracts from all
Records in the possession or under the control of the Seller, or the agents of the Seller,
relating to Pool Receivables and the Related Security, including, without limitation, the
related Contracts, and (B) to visit the offices and properties of the Seller, or the agents
of the Seller, for the purpose of examining such materials described in clause (A) above,
and to discuss matters relating to Pool Receivables and the Related Security or the Seller’s
performance hereunder or under the Contracts with any of the officers or employees of the
Seller having knowledge of such matters.




     (ii) At any time and from time to time, upon the Agent’s request (at its own election
or upon the request of the Required Purchasers) and at the expense of the Seller, the Seller
shall cause independent public or chartered accountants or others satisfactory to the Agent
to furnish to the Agent reports showing reconciliations, aging and test verifications of,
and trial balances for, the Receivables and/or a written report of an audit conducted by
such accountants with respect to the Pool Receivables, Credit and Collection Policy,
Lock-Box Account activity and the Seller’s performance of its obligations under this
Agreement and the Canadian Receivables Sale Agreement on a scope and in a form reasonably
requested by the Agent for such audit; provided, however, that unless a Event of Termination
or Potential Event of Termination shall be continuing, the Agent shall request no more than
one such report during any calendar year.




     (iii) The Seller shall conduct, or shall cause to be conducted, at its expense and upon
request of the Agent (at its own election or upon the request of the Required Purchasers),
and present to the Agent for approval, such appraisals, investigations and reviews as the
Agent shall request for the purpose of determining the Net Receivables Pool Balance, all
upon notice and at such times during normal business hours and as often as may be reasonably
requested. The Seller shall furnish to the Agent any information that the Agent may
reasonably request regarding the determination and calculation of the Net Receivables Pool
Balance including correct and complete copies of any invoices, underlying agreements,
instruments or other documents and the identity of all Obligors in respect of Receivables
referred to therein.



43









 





     (f) Keeping of Records and Books of Account. (i) Keep, or cause to be kept, proper
books of record and account, which shall be maintained or caused to be maintained by the Seller and
shall be separate and apart from those of any Affiliate of the Seller, in which full and correct
entries shall be made of all financial transactions and the assets and business of the Seller in
accordance with GAAP, (ii) to the extent Records are in written form, segregate such Records in
file cabinets or storage containers and appropriately label such file cabinets or storage
containers to reflect that the Purchased Property has been conveyed to the Agent on behalf of the
Owners, and (iii) to the extent such Records constitute computer programs and other non-written
Records, appropriately legend such Records to reflect that the Purchased Property has been conveyed
to the Agent on behalf of the Owners.



     (g) Deposits to Lock-Box Accounts. Not later than 60 days following the date hereof
(or such later date to which the Agent shall consent in writing), instruct, or cause the Servicer
to instruct, all Obligors to make payments in respect of Pool Receivables to a Lock-Box Account
and, if the Seller or the Canadian Originator shall otherwise receive any Collections (including,
without limitation, any Collections deemed to have been received by the Seller pursuant to Section
2.09), segregate and hold in trust such Collections and, if received after such 60th or
later day, deposit such Collections, or cause such Collections to be deposited, to a Lock-Box
Account within 2 Business Days following such receipt and if received prior thereto but at the time
of or after the first Purchase hereunder, pay such Collections to the Agent within two (2) Business
Days following such receipt.



     (h) Maintenance of Separate Existence. Do all things necessary to maintain its
corporate existence separate and apart from the Canadian Originator and other Affiliates of the
Seller, including, without limitation, (i) maintaining proper corporate records and books of
account separate from those of such Affiliates; (ii) maintaining its assets, funds and transactions
separate from those of such Affiliates, reflecting such assets, funds and transactions in financial
statements separate and distinct from those of such Affiliates, and evidencing such assets, funds
and transactions by appropriate entries in the records and books referred to in clause (i) above,
and providing for its own operating expenses and liabilities from its own assets and funds other
than certain expenses and liabilities relating to basic corporate overhead which may be allocated
between the Seller and such Affiliates; (iii) holding such appropriate meetings or obtaining such
appropriate consents of its Board of Directors as are necessary to authorize all the Seller’s
corporate actions required by law to be authorized by its Board of Directors, keeping minutes of
such meetings and of meetings of its stockholders and observing all other customary corporate
formalities (and any successor Seller not a corporation shall observe similar procedures in
accordance with its governing documents and applicable law); (iv) at all times entering into its
contracts and otherwise holding itself out to the public under the Seller’s own name as a legal
entity separate and distinct from such Affiliates; and (v) conducting all transactions and dealings
between the Seller and such Affiliates on an arm’s-length basis.



     (i) Compliance with Opinion Assumptions and Charter and By-Laws. Without limiting the
generality of subsection (h) above, maintain in place all policies and procedures, and take and
continue to take all actions, described in the assumptions as to facts set forth in, and forming
the basis of, the opinions set forth in the opinion delivered to the Agent pursuant to subclause
(xii)(C) of Section 3.01(b), and comply with, and cause compliance with, the provisions of the
articles and by-laws of the Seller delivered to the Agent pursuant to Section 3.01 as the same may,
from time to time, be amended, supplemented or otherwise modified with the prior written consent of
the Agent.



     (j) Purchase of Pool Receivables from Canadian Originator. With respect to each Pool
Receivable acquired from the Canadian Originator by the Seller, pay to the Canadian Originator (in
accordance with the Canadian Receivables Sale Agreement) an amount which constitutes fair
consideration and approximates fair market value for such Pool Receivable and in a sale the terms
and



44









 







conditions of which (including, without limitation, the purchase price thereof) reasonably
approximates an arm’s-length transaction between unaffiliated parties.



     (k) Nature of Business and Permitted Transactions. Engage solely in the businesses
and transactions authorized by its articles.



     (l) Transaction Documents. At its expense, timely and fully perform and comply in all
material respects with all provisions, covenants and other promises required to be observed by it
under each of the Transaction Documents, maintain each of the Transaction Documents in full force
and effect, enforce in accordance with its terms, take all such action to such end as may be from
time to time reasonably requested by the Agent, and make to any party to each of the Transaction
Documents such demands and requests for information and reports or for action as the Seller is
entitled to make thereunder and as may be from time to time reasonably requested by the Agent.



     Section 5.02. Reporting Requirements of the Seller.




     Until the later of (i) the Termination Date and (ii) the date upon which no Capital Investment
for any Owner shall be existing and no Yield, fees or other amounts remain unpaid under this
Agreement, the Seller will furnish to the Agent for distribution to the Purchasers:



     (a) Monthly Reports. Within 35 days after the end of each of the first 11 fiscal
months in each Fiscal Year, financial information regarding the Seller consisting of unaudited
balance sheets as of the close of such month and the related statements of income and cash flow for
such month and that portion of the current Fiscal Year ending as of the close of such month, in
each case certified by a chief financial officer or treasurer of the Seller as fairly presenting
the financial position of the Seller as at the dates indicated and the results of its operations
and cash flow for the periods indicated and recorded in accordance with GAAP (subject to the
absence of footnote disclosure and normal year-end audit adjustments) and in form reasonable
acceptable to the Agent and the Required Purchasers.



     (b) Annual Reports. Within 95 days after the end of each Fiscal Year, financial
information regarding the Seller consisting of balance sheets of the Seller as of the end of such
year and related statements of income and cash flows of the Seller for such Fiscal Year, all
prepared in conformity with GAAP.



     (c) Notice of Event of Termination. As soon as possible and in any event within 2
Business Days after a Responsible Officer of the Seller first becomes aware of each Event of
Termination or Potential Event of Termination continuing on the date of such statement, a statement
of a Responsible Officer of the Seller setting forth details of such Event of Termination or
Potential Event of Termination and the action which the Seller has taken and proposes to take with
respect thereto.



     (d) Other. Upon demand, such other information, documents, records or reports
respecting the Receivables, the Related Security, the Contracts or the condition or operations,
financial or otherwise, of the Seller as the Agent may from time to time reasonably request.



     Section 5.03. Negative Covenants of the Seller.




     Until the later of (i) the Termination Date and (ii) the date upon which no Capital Investment
for any Owner shall be existing and no Yield, fees or other amounts remain unpaid under this
Agreement, the Seller will not:



45









 





     (a) Sales, Adverse Claims, Etc.



     Except as otherwise provided herein, sell, assign (by operation of law or otherwise) or
otherwise dispose of, or grant any option with respect to, or create or suffer to exist any Adverse
Claim upon or with respect to, the Seller’s undivided interest in any Pool Receivable or Related
Security or Collections in respect thereof, or upon or with respect to any related Contract or any
Deposit Account to which any Collections of any Pool Receivable are sent (including, without
limitation, any Lock-Box Account), or assign any right to receive income in respect
thereof.



     (b) Extension or Amendment of Receivables.



     Except as otherwise permitted in Section 6.02, extend, amend or otherwise modify the terms of
any Pool Receivable, or amend, modify or waive any term or condition of any Contract related
thereto.



     (c) Change in Business or Credit and Collection Policy.



     Make any change in the character of its business or in the Credit and Collection Policy that
would, in either case, be reasonably likely to impair the collectibility of the Pool Receivables.



     (d) Change in Payment Instructions to Obligors.



     Add or terminate any bank as a Lock-Box Bank or any Deposit Account as a Lock-Box Account from
those listed in Schedule I, or make any change in the instructions to Obligors regarding payments
to be made to any Lock-Box Account, unless the Agent shall have received at least 20 days’ prior
written notice of such addition, termination or change and shall have received, with respect to
each new Lock-Box Account, a Lock-Box Agreement executed by the Lock-Box Bank that maintains such
Lock-Box Account and the Seller or the Canadian Originator, as applicable.



     (e) Deposits to Lock-Box Accounts.



     Deposit or otherwise credit, or cause or permit to be so deposited or credited, to any
Lock-Box Account cash or cash proceeds other than Collections of Pool Receivables.



     (f) Change of Name, Etc.




     Change its name, identity, form of legal structure, chief executive office or jurisdiction of
organization, unless, prior to the effective date of any such change, the Seller delivers to the
Agent (i) PPSA and other applicable financing statements necessary to reflect such change and to
continue the perfection of the ownership interests in the Purchased Property contemplated by this
Agreement and (ii) if the identity or structure of the Seller has changed and such change adversely
affects the rights of the Agent under then existing Lock-Box Agreements with the Seller to take
control of the Lock-Box Accounts pursuant to Section 6.03(a), new Lock-Box Agreements executed by
the Seller and the Lock-Box Banks, to the extent necessary to reflect such changes and to continue
to enable the Agent to exercise such rights.



     (g) Debt.



     Except as otherwise provided herein or in the Canadian Receivables Sale Agreement, create,
incur, assume or suffer to exist any indebtedness, other than (i) indebtedness of the Seller
representing fees, expenses and indemnities arising hereunder or under the Canadian Receivables
Sale Agreement for



46









 







the purchase price of the Receivables under the Canadian Receivables Sale Agreement, and (ii)
other indebtedness of the Seller incurred in the ordinary course of its business in an amount not
to exceed $9,500 at any time outstanding.



     (h) Lease Obligations.



     Create, incur, assume or suffer to exist any obligations as lessee for the rental or lease of
real or personal property, other than for the lease or rental of an office space or office
equipment for use by the Seller in the ordinary course of its business.



     (i) ERISA.



     Adopt, maintain, contribute to or incur or assume any obligation with respect to any Plan,
Multiemployer Plan or Welfare Plan.



     (j) Investments in Other Persons.



     Except as otherwise provided herein or in the Canadian Receivables Sale Agreement, make or
hold any Investment in any Person.



     (k) Sales, Etc., of Assets.



     Except as contemplated or otherwise permitted by this Agreement, sell, lease, transfer or
otherwise dispose of any assets.



     (l) Merger, Etc.




     Consolidate or amalgamate with or merge into any other Person.



     (m) Organizational Documents.



     Amend, supplement or otherwise modify its articles or by-laws, in each case furnished to the
Agent pursuant to clause (v) Section 3.01(b).



     (n) Accounting.



     Account for (including for accounting and tax purposes) or otherwise treat the transactions
contemplated by the Canadian Receivables Sale Agreement in any manner other than as sales of
Receivables by the Canadian Originator to the Seller, or account for (including for tax purposes)
or otherwise treat the transactions contemplated by this Agreement in any manner other than as
sales of the Purchased Property by the Seller to the Agent for the account of the Purchasers, or
otherwise change its (i) accounting treatment and reporting practices or tax reporting treatment,
except as required by GAAP or any Requirement of Law and disclosed to the Purchasers and the Agent
or (ii) fiscal year.



     (o) Canadian Receivables Sale Agreement.




     (i) Cancel or terminate the Canadian Receivables Sale Agreement or consent to or accept
any cancellation or termination thereof, (ii) amend, supplement or otherwise modify any term
or condition of the Canadian Receivables Sale Agreement or give any consent, waiver or
approval thereunder, (iii) waive any default under or breach of the Canadian Receivables
Sale



47









 







Agreement or (iv) take any other action under the Canadian Receivables Sale Agreement
not required by the terms thereof that would impair the value of any Receivable Assets (as
defined therein) or the rights or interests of the Seller thereunder or of the Agent or any
Owner or Indemnified Party hereunder or thereunder.



     (p) Adverse Claims on the Capital Stock of the Seller. Create or suffer to exist, any
Adverse Claim upon or with respect to any of the Stock of the Seller.



     Section 5.04. Affirmative Covenants of the Servicer.




     Until the later of (i) the Termination Date and (ii) the date upon which no Capital Investment
for any Owner shall be existing and no Yield, fees or other amounts remain unpaid under this
Agreement, the Servicer will:



     (a) Compliance with Laws, Etc.



     Comply in all material respects with all applicable laws, rules, regulations and orders with
respect to it and all Pool Receivables and related Contracts, Related Security and Collections with
respect thereto.



     (b) Preservation of Corporate Existence.



     Preserve and maintain its corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation, and qualify and remain qualified in good standing as a foreign
corporation in each jurisdiction where the failure to preserve and maintain such qualification
would materially adversely affect the interests of the Owners or the Agent hereunder or in the Pool
Receivables and Related Security, or the ability of the Servicer to perform its obligations
hereunder.



     (c) Books of Accounts.



     Maintain and implement administrative and operating procedures (including, without limitation,
an ability to recreate records evidencing Pool Receivables in the event of the destruction of the
originals thereof), and keep and maintain all documents, books, records and other information
reasonably necessary or advisable for the collection of all Pool Receivables (including, without
limitation, records adequate to permit the daily identification of each Pool Receivable, the
Outstanding Balance of each Pool Receivable and the dates which payments are due thereon and all
Collections of and adjustments to each existing Pool Receivable).



     (d) Performance and Compliance with Contracts and Credit and Collection Policy.



     At its expense, timely and fully (i) perform, or cause to be performed, and comply in all
material respects with, or cause to be complied with in all material respects, all provisions,
covenants and other promises required to be observed by it under the Contracts related to the Pool
Receivables, and timely and fully comply in all material respects with the Credit and Collection
Policy in regard to the Pool Receivables and the related Contracts and (ii) as beneficiary of any
Related Security, enforce and cause the Canadian Originator to enforce such Related Security as
reasonably requested by the Agent.



     (e) Examination of Records; Audits.




     (i) From time to time upon 2 Business Days’ prior notice (except that during the
continuance of an Event of Termination, no such notice shall be required) and during regular



48









 







business hours as requested by the Agent and at the expense of the Servicer, permit the
Agent, or its agents or representatives, (A) to examine and make copies of and abstracts
from all Records in the possession or under the control of the Canadian Originator, the
Servicer, their respective Affiliates (other than the Seller) or the agents of the Canadian
Originator, the Servicer or their respective Affiliates, relating to Pool Receivables and
the Related Security, including, without limitation, the related Contracts, and (B) to visit
the offices and properties of the Canadian Originator, the Servicer, their respective
Affiliates (other than the Seller) or the agents of the Canadian Originator, the Servicer,
or their respective Affiliates, for the purpose of examining such materials described in
clause (A) above, and to discuss matters relating to Pool Receivables and the Related
Security or the Servicer’s performance hereunder or under the Contracts with any of the
officers or employees of the Servicer having knowledge of such matters.




     (ii) The Agent may (at its own election or at the request of the Required Purchasers),
at the Servicer’s sole cost and expense, make test verifications of the Receivables in any
manner and through any medium that the Agent considers advisable, and the Servicer shall
furnish all such assistance and information as the Agent may require in connection
therewith.




     (iii) At any time and from time to time, upon the Agent’s request (at its own election
or at the request of the Required Purchasers) and at the expense of the Servicer, the
Servicer shall cause independent public chartered accountants or others satisfactory to the
Agent to furnish to the Agent reports showing reconciliations, aging and test verifications
of, and trial balances for, the Receivables and/or a written report of an audit conducted by
such accountants with respect to the Pool Receivables, Credit and Collection Policy,
Lock-Box Account activity and the Servicer’s performance of its obligations under this
Agreement and the Canadian Receivables Sale Agreement on a scope and in a form reasonably
requested by the Agent for such audit; provided, however, that unless a Event of Termination
or Potential Event of Termination shall be continuing, the Agent shall request no more than
4 such reports during any calendar year.




     (iv) The Servicer shall conduct, or shall cause to be conducted, at its expense and
upon request of the Agent (at its own election or at the request of the Required
Purchasers), and present to the Agent for approval, such appraisals, investigations and
reviews as the Agent shall request for the purpose of determining the Net Receivables Pool
Balance, all upon notice and at such times during normal business hours and as often as may
be reasonably requested. The Servicer shall furnish to the Agent any information that the
Agent may reasonably request regarding the determination and calculation of the Net
Receivables Pool Balance including correct and complete copies of any invoices, underlying
agreements, instruments or other documents and the identity of all Obligors in respect of
Receivables referred to therein.



     (f) Keeping of Records and Books of Account.




     (i) Keep, or cause to be kept, proper books of record and account, in which full and
correct entries shall be made of all financial transactions and the assets and business of
the Servicer in accordance with GAAP, (ii) to the extent Records are in written form,
segregate such Records in file cabinets or storage containers and appropriately label such
file cabinets or storage containers to reflect that the Purchased Property has been conveyed
to the Agent on behalf of the Owners, and (iii) to the extent such Records constitute
computer programs and other non-written Records, appropriately legend such Records to
reflect that the Purchased Property has been conveyed to the Agent on behalf of the Owners.



49









 





     (g) Deposits to Lock-Box Accounts.



     Not later than 60 days following the date hereof (or such later date to which the Agent shall
consent in writing), instruct all Obligors to make payments in respect of Pool Receivables to a
Lock-Box Account and, if the Servicer shall otherwise receive any Collections (including, without
limitation, any Collections deemed to have been received by the Seller pursuant to Section 2.09),
segregate and hold in trust such Collections and, if received after such 60th or later
day, deposit such Collections, or cause such Collections to be deposited, to a Lock-Box Account
within 2 Business Days following such receipt, and if received prior thereto but at the time of or
after the first Purchase hereunder, pay such Collections to the Agent within two (2) Business Days
following such receipt.



     Section 5.05. Reporting Requirements of the Servicer.




     Until the later of (i) the Termination Date and (ii) the date upon which no Capital Investment
for any Owner shall be existing and no Yield, fees or other amounts remain unpaid under this
Agreement, the Servicer will furnish to the Agent for distribution to the Purchasers:



     (a) Monthly Reports. Within 35 days after the end of each of the first two fiscal
months in each fiscal quarter, financial information regarding PolyOne and its Subsidiaries
consisting of Consolidated unaudited balance sheets as of the close of such month and the related
statements of income and cash flow for such month and that portion of the current Fiscal Year
ending as of the close of such month, setting forth in comparative form the figures contained in
the Amended and Restated Projections or, if applicable, the latest business plan provided pursuant
to clause (e) below for the current Fiscal Year, in each case certified by the chief financial
officer, treasurer or other Responsible Officer acceptable to the Agent of PolyOne as fairly
presenting the Consolidated financial position of PolyOne and its Subsidiaries as at the dates
indicated and the results of their operations and cash flow for the periods indicated and recorded
in accordance with GAAP (subject to the absence of footnote disclosure and normal year-end audit
adjustments) and in form reasonably acceptable to the Agent and the Required Purchasers.



     (b) Quarterly Reports. Within 50 days after the end of each of the first 3 fiscal
quarters of each Fiscal Year, financial information regarding PolyOne and its Subsidiaries
consisting of Consolidated unaudited balance sheets as of the close of such quarter and the related
statements of income and cash flow for such quarter and that portion of the Fiscal Year ending as
of the close of such quarter, setting forth in comparative form the figures contained in the
Amended and Restated Projections or, if applicable, the latest business plan provided pursuant to
clause (e) below for the current Fiscal Year in each case certified by the chief financial officer,
treasurer or other Responsible Officer acceptable to the Agent of PolyOne as fairly presenting the
Consolidated financial position of PolyOne and its Subsidiaries as at the dates indicated and the
results of their operations and cash flow for the periods indicated in accordance with GAAP
(subject to the absence of footnote disclosure and normal year-end audit adjustments) and in form
reasonably acceptable to the Agent and the Required Purchasers.



     (c) Annual Reports. Within 95 days after the end of each Fiscal Year, financial
information regarding PolyOne and its Subsidiaries consisting of Consolidated balance sheets of
PolyOne and its Subsidiaries as of the end of such year and related statements of income and cash
flows of PolyOne and its Subsidiaries for such Fiscal Year, all prepared in conformity with GAAP
and certified, in the case of such Consolidated financial statements, without qualification,
including, but not limited to, as to the scope of the audit or as to PolyOne being a going concern
by PolyOne’s independent public accountants, together with the report of such accounting firm
stating that (i) such financial statements fairly present the Consolidated financial position of
PolyOne and its Subsidiaries as at the dates indicated and the results of



50









 







their operations and cash flow for the periods indicated in conformity with GAAP applied on a
basis consistent with prior years (except for changes with which PolyOne’s independent public
accountants shall concur and that shall have been disclosed in the notes to the financial
statements) and (ii) the examination by PolyOne’s independent public accountants in connection with
such Consolidated Financial Statements has been made in accordance with generally accepted auditing
standards, and accompanied by a certificate stating that in the course of the regular audit of the
business of PolyOne and its Subsidiaries such accounting firm has obtained no knowledge that an
Event of Termination or a Potential Event of Termination has occurred and is continuing, or, if in
the opinion of such accounting firm, a Potential Event of Termination or Event of Termination has
occurred and is continuing, a statement as to the nature thereof.



     (d) Notice of Event of Termination. As soon as possible and in any event within 2
Business Days after a Responsible Officer of the Servicer, PolyOne or the Canadian Originator first
becomes aware of each Event of Termination or Potential Event of Termination continuing on the date
of such statement, a statement of the chief financial officer or treasurer of the Servicer setting
forth details of such Event of Termination or Potential Event of Termination and the action which
the Seller has taken and proposes to take with respect thereto.



     (e) Business Plan. Not later than the earlier of (i) 15 days after PolyOne has
received the approval of its board of directors therefor and (ii) 90 days after the commencement of
each Fiscal Year: (A) the annual business plan of PolyOne and its Subsidiaries for such Fiscal Year
approved by the Board of Directors of PolyOne, (B) forecasts prepared by management of PolyOne for
each fiscal month in such Fiscal Year and (C) forecasts prepared by management of PolyOne for such
Fiscal Year and each of the succeeding Fiscal Years through the Commitment Termination Date,
including, in each instance described in clauses (B) and (C) above, (x) a projected year-end
Consolidated balance sheet and income statement and statement of cash flows, (y) a statement of all
of the material assumptions on which such forecasts are based and (z) containing the types of
financial information contained in the Amended and Restated Projections.



     (f) Public and Creditors’ Reports. Promptly after the sending or filing thereof,
copies of (a) all reports PolyOne sends to its security holders generally, (b) all reports and
registration statements that PolyOne or any of its Subsidiaries files with the Securities and
Exchange Commission or any national or foreign securities exchange or the National Association of
Securities Dealers, Inc., (c) all press releases and all other statements concerning material
changes or developments in the business of PolyOne made available by PolyOne or any of its domestic
Subsidiaries to the public or any other creditor.



     (g) Other. Upon demand, such other information, documents, records or reports
respecting the Receivables, the Related Security, the Contracts or the condition or operations,
financial or otherwise, of PolyOne as the Agent may from time to time reasonably request.



     Section 5.06. Negative Covenants of the Servicer.




     Until the later of (i) the Termination Date and (ii) the date upon which no Capital Investment
for any Owner shall be existing and no Yield, fees or other amounts remain unpaid under this
Agreement, the Servicer will not:



     (a) Extension or Amendment of Receivables.



     Except as otherwise permitted in Section 6.02, extend, amend or otherwise modify the terms of
any Pool Receivable, or amend, modify or waive any term or condition of any Contract related
thereto.



51









 





     (b) Change in Business or Credit and Collection Policy.



     Make any change in the character of its business or in the Credit and Collection Policy that
would, in either case, be reasonably likely to impair the collectibility of the Pool Receivables.



     (c) Change in Payment Instructions to Obligors.



     Add or terminate any bank as a Lock-Box Bank or any Deposit Account as a Lock-Box Account from
those listed in Schedule I, or make any change in the instructions to Obligors regarding payments
to be made to any Lock-Box Account, unless the Agent shall have received at least 20 days’ prior
written notice of such addition, termination or change and shall have received, with respect to
each new Lock-Box Account, a Lock-Box Agreement executed by the Lock-Box Bank that maintains such
Lock-Box Account and the Seller or the Canadian Originator, as applicable.



     (d) Deposits to Lock-Box Accounts.



     Deposit or otherwise credit, or cause or permit to be so deposited or credited, to any
Lock-Box Account cash or cash proceeds other than Collections of Pool Receivables.



     (e) Accounting. Change its (i) accounting treatment and reporting practices or tax
reporting treatment, except as required by GAAP or any Requirement of Law and disclosed to the
Purchasers and the Agent or (ii) fiscal year.



     (f) Asset Sales. Sell, convey, transfer, lease or otherwise dispose of, any of its
assets or any interest therein (including the sale or factoring at maturity or collection of any
accounts), whether in a single transaction, or a series of related transactions, to any Person, or
permit or suffer any other Person to acquire any interest in any of its assets except:




     (i) sales pursuant to the Prior Sale Agreement (as defined in the U.S. RPA) or the
Canadian Receivables Sale Agreement;




     (ii) the sale or other disposition of inventory in the ordinary course of business;




     (iii) [Intentionally Deleted]




     (iv) the sale or other disposition of assets or any interest therein having a Fair
Market Value that is less than (x) $250,000 individually and (y) $2,000,000 in the aggregate
for all such dispositions; and




     (v) dispositions of assets or interests therein not otherwise permitted above so long
as (w) no Potential Event of Termination or Event of Termination is continuing or would
result therefrom, (x) such sale or other transfer is for Fair Market Value, (y) if such
asset or interest has a Fair Market Value of $10,000,000 or more, or if when aggregated with
all such assets or interest previously sold, conveyed, transferred, leased or disposed at
any time after the Effective Date, $25,000,000 or more, 50% of the proceeds of such sale or
transfer (or such series of related sales or transfers) are payable in cash to the Servicer
upon the consummation of each such sale or transfer, and (z) if the Fair Market Value of
such asset is in excess of $25,000,000, the Board of Directors of the Servicer has approved
such sale.



52









 





     (g) Adverse Claims on the Capital Stock of the Seller. Create or suffer to exist, any
Adverse Claim upon or with respect to any of the Stock of the Seller.



     Section 5.07. Affirmative Financial Covenants of the Servicer.




     Until the later of the Termination Date and the date upon which no Capital Investment for any
Owner shall be existing and no Yield, fees or other amounts remain unpaid under this Agreement, the
Servicer will, so long as the Servicer shall be PolyOne or an Affiliate thereof:



     (a) Minimum Fixed Charge Coverage Ratio. Maintain as of the end of any fiscal quarter
during which Total Excess Availability (calculated using the average Total Excess Availability for
each day during such fiscal quarter) is less than $40,000,000, a Fixed Charge Coverage Ratio of not
less than 1:1.



     (b) Minimum Excess Availability. Maintain on each day Receivables Excess Availability
in an amount not less than $10,000,000 and Total Excess Availability in an amount not less than
$15,000,000.



     Section 5.08. Negative Financial Covenants of the Servicer.




     Until the later of the Termination Date and the date upon which no Capital Investment for any
Owner shall be existing, and no Yield, fees or other amounts shall remain unpaid under this
Agreement, the Servicer (so long as the Servicer shall be PolyOne or an Affiliate thereof) will
not:



     (a) Capital Expenditures. Make or incur, or permit its Subsidiaries to make or incur,
Capital Expenditures during each their respective Fiscal Years in an aggregate amount in excess of
$90,000,000.



     (b) Restricted Payments. (A) Directly or indirectly, declare, order, pay, make or
set apart any sum for any Restricted Payment unless, (i) such Restricted Payment, together with all
Restricted Payments made in the then current Fiscal Year, does not exceed $20,000,000 and Total
Excess Availability (calculated on a pro forma basis and using the average Total Excess
Availability for each day during the preceding calendar month) is at least $50,000,000; or (ii)
Total Excess Availability (calculated on a pro forma basis and using the average Total Excess
Availability for each day during the preceding calendar month) is at least $75,000,000 and the
Fixed Charge Coverage Ratio for PolyOne and its Consolidated Subsidiaries for the then most
recently ended four fiscal quarter period is at least 1.5 to 1.00; or (iii) Total Excess
Availability (calculated on a pro forma basis and using the average Total Excess Availability for
each day during the preceding calendar month) is at least $100,000,000 and the Fixed Charge
Coverage Ratio for PolyOne and its Consolidated Subsidiaries for the then most recently ended four
fiscal quarter period is at least 1.0 to 1.0. (B) The Servicer may apply up to 70% of the net cash
proceeds received by the Servicer from the sale of any assets in accordance with the requirements
of Section 5.06(f) (as certified to the Agent by a Responsible Officer of the Servicer), to the
extent not used to prepay or redeem the 105/8% Senior Notes pursuant to Section 5.08(c)(v), to make
Restricted Payments; provided, that, both before and after giving effect to any such Restricted
Payment, (x) each of the representations and warranties contained in Article IV (Representations
and Warranties) of this Agreement or the other Transaction Documents (or the comparable provisions
of the U.S. RPA) is true and correct in all material respects as if made on and as of such date and
except to the extent that such representations and warranties specifically relate to a specific
date, in which case such representations and warranties shall be true and correct in all material
respects as of such specific date, (y) no Potential Event of Termination or Event of Termination
shall have occurred and be continuing on and as of such date and (z) such Restricted Payments made
under this Section 5.08(B) and asset sales under Section 5.06(f)



53









 







together with Restricted Payments and asset sales made under the corresponding provisions of
the U.S. RPA do not exceed $80,000,000 in the aggregate during the term of this Agreement.



     (c) Prepayment of Debt. Prepay, redeem, purchase, defease or otherwise satisfy prior
to the scheduled maturity thereof in any manner, or make any payment in violation of any
subordination terms of, any Debt and will not permit any of its Subsidiaries to do any of the
foregoing; provided, however, that the Servicer or any Subsidiary of the Servicer
may (i) prepay any obligations hereunder in accordance with the terms of this Agreement, (ii) make
regularly scheduled or otherwise required repayments or redemptions of Debt, (iii) prepay any Debt
payable to the Servicer by any of its Subsidiaries, (iv) renew, extend, refinance and refund Debt
on terms no less favorable to the Servicer or its Subsidiary obligated thereunder, including as to
weighted average maturity and final maturity, than the Debt being renewed, extended, refinanced or
refunded, (v) to the extent that the Servicer sells or otherwise disposes of any assets in
accordance with the requirements of Section 5.06(f) (as certified to the Agent by a Responsible
Officer of the Servicer), the Servicer may apply up to 70% of the net cash proceeds received by the
Servicer in connection with any such sale or other disposition (as such amount shall be certified
to the Agent by a Responsible Officer of the Servicer) to prepay, redeem or otherwise purchase, at
the election of the Servicer, any 105/8% Senior Notes outstanding; provided, that, both before and
after giving effect to any such prepayment, redemption or purchase, (x) each of the representations
and warranties contained in Article IV (Representations and Warranties) of this Agreement or the
other Transaction Documents is true and correct in all material respects as if made on and as of
such date and except to the extent that such representations and warranties specifically relate to
a specific date, in which case such representations and warranties shall be true and correct in all
material respects as of such specific date and (y) no Potential Event of Termination or Event of
Termination shall have occurred and be continuing on and as of such date, and (vi) prepay any other
obligations on any Debt provided, that before and after giving effect to such
prepayment (a) Total Excess Availability (calculated on a pro forma basis using the average Total
Excess Availability for each day during the preceding calendar month) is not less than $60,000,000,
reduced by the amount of any Restricted Payments made during such month and (b) the Fixed Charge
Coverage Ratio of the Servicer and its Subsidiaries for the then most recently ended four fiscal
quarter period is not less than 1.0 to 1.0



ARTICLE VI




ADMINISTRATION AND COLLECTION




     Section 6.01. Designation of Servicer.




     The Pool Receivables shall be serviced, administered and collected by the Person (the
“Servicer”) designated to do so from time to time in accordance with this Section 6.01.
Until the Agent designates a new Servicer, PolyOne is hereby designated as, and hereby agrees to
perform the duties and obligations of, the Servicer pursuant to the terms hereof. The Agent may at
any time designate as Servicer any Person (including itself) to succeed PolyOne or any successor
Servicer, if such Person (other than itself) shall agree in writing to perform the duties and
obligations of the Servicer pursuant to the terms hereof. Subject to Section 6.02(f), the Servicer
may subcontract with the Canadian Originator as an independent contractor to service, administer or
collect the Pool Receivables that the Canadian Originator creates, and may, with the prior consent
of the Agent, subcontract with any other Person as an independent contractor to service, administer
or collect the Pool Receivables, provided that the Canadian Originator or other Person with whom
the Servicer so subcontracts shall not become the Servicer hereunder and the Servicer shall remain
liable for the performance of the duties and obligations of the Servicer pursuant to the terms
hereof.



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     Section 6.02. Duties of Servicer.




     (a) The Servicer shall take or cause to be taken all such commercially reasonable actions as
may be necessary or advisable to collect each Pool Receivable from time to time, all in accordance
with applicable laws, rules and regulations, with reasonable care and diligence, and in accordance
with the Credit and Collection Policy. Each of the Seller, the Purchasers and the Agent hereby
appoints as its agent the Servicer, from time to time designated pursuant to Section 6.01, to
enforce its respective rights and interests in and under the Pool Receivables, the Related Security
and the related Contracts.



     (b) The Servicer shall set aside and hold in trust for the account of the Seller and each
Owner their respective allocable shares of the Collections of Pool Receivables in accordance with
Sections 2.07 and 2.08, but shall not be required (unless otherwise requested by the Agent) to
segregate the funds constituting such portion of such Collections prior to the remittance thereof
in accordance with such Sections. If instructed by the Agent, the Servicer shall segregate and
deposit with a bank (which may be Citicorp) designated by the Agent such allocable share of
Collections of Pool Receivables set aside for each Owner on the first Business Day following
receipt by the Servicer of such Collections. If no Event of Termination or Potential Event of
Termination shall have occurred and be continuing, PolyOne, while it is the Servicer, may, in
accordance with the Credit and Collection Policy, (i) extend the maturity or adjust the Outstanding
Balance of any Receivable (that is not an Eligible Receivable) as PolyOne may determine to be
appropriate to maximize Collections thereof, (ii) extend the term of any Contract and (iii) adjust
any other terms and conditions of any Contract if, but only if (in the case of this clause (iii)),
the Servicer gives at least 2 Business Days’ prior written notice of such adjustments to the Agent
and the Agent agrees in writing to such adjustments.



     (c) The Servicer shall administer the Collections in accordance with the procedures described
herein and in Section 2.09. The Servicer shall set aside and hold in trust for the account of the
Seller in accordance with Section 6.02(b) above, (i) the Seller’s allocable share of the
Collections of Pool Receivables less all reasonable out-of-pocket costs and expenses of the
Servicer (if not PolyOne or any Affiliate thereof) of servicing, administering and collecting the
Pool Receivables to the extent not covered by the Servicer Fee received by it and (ii) the
Collections of any Receivable which is not a Pool Receivable in accordance with Section 2.09. The
Servicer shall, if not PolyOne, as soon as practicable following receipt, turn over to the Seller
any cash collections or other cash proceeds received with respect to Receivables not constituting
Pool Receivables.



     (d) The Servicer shall hold in trust for the Seller and each Owner, in accordance with their
respective interests, all Records that evidence or relate to the Pool Receivables. The Servicer
shall, upon the occurrence and during the continuance of any Event of Termination, and at the
request of the Agent, provide to the Agent the Records with respect to the Pool Receivables.



     (e) The Servicer shall, from time to time at the request of the Agent, furnish to the Agent
(promptly after any such request) a calculation of the amounts set aside for each Owner pursuant to
Section 2.07 or 2.08.



     (f) Notwithstanding anything to the contrary contained herein or in any other Transaction
Document, the Servicer may not delegate to PolyOne Canada the right to, and PolyOne Canada shall
not (and has no authority to) enter into contracts or other agreements in the name of the Seller,
the Agent, any Owner or any Purchaser or otherwise act as agent therefor; and the Servicer (or any
such delegatee) is not permitted to (and has no authority to) establish an office or other fixed
place of business of the Seller, the Agent, any Owner or any Purchaser in Canada. To the extent
any responsibilities of the Servicer or PolyOne Canada in respect of the Receivables and Related
Security hereunder or under any other



55









 







Transaction Document involve or require the Servicer or PolyOne Canada to contract for, or
conclude a contract in the name of, the Seller, the Agent, any Owner or any Purchaser, such
servicing responsibility shall be fulfilled solely by the Servicer (and not by PolyOne Canada) and
the Servicer is authorized to take such action, but only from a place of business in the United
States. Nonetheless, PolyOne Canada may engage in discussions with any Obligor regarding such
matters and negotiate the terms of any such arrangement subject to the understanding that final
approval of any such arrangement referred to in the preceding portions of this Section 6.02(f) may
only be made by the Servicer and any such arrangement so negotiated by PolyOne Canada shall not be
binding until such final approval is so provided by the Servicer



     Section 6.03. Rights of the Agent.




     (a) The Seller and the Servicer each hereby Transfer to the Agent the exclusive ownership,
dominion and control of the Lock-Box Accounts to which the Obligors of Pool Receivables shall make
payments, and shall take any further action that the Agent may reasonably request to effect such
Transfer. Further, the Agent may notify at any time and at the Seller’s expense the Obligors of
Pool Receivables, or any of them, of the ownership of the Purchased Property by the Owners.



     (b) At any time:




     (i) The Agent may direct the Obligors of Pool Receivables, or any of them, to make
payment of all amounts due or to become due to the Seller under any Pool Receivable directly
to the Agent or its designee.




     (ii) The Seller and the Servicer each shall, at the Agent’s request and at the Seller’s
and the Servicer’s expense, give notice of such ownership to such Obligors and direct them
to make such payments directly to the Agent or its designee.




     (iii) The Seller and the Servicer each shall, at the Agent’s request, (A) assemble all
of the Records which evidence or relate to the Pool Receivables, and the related Contracts
and Related Security, or which are otherwise necessary or desirable to collect the Pool
Receivables, and shall make the same available to the Agent at a place reasonably selected
by the Agent or its designee, and (B) segregate all cash, checks and other instruments
received by it from time to time constituting Collections or other proceeds of Pool
Receivables in a manner reasonably acceptable to the Agent and shall, promptly upon receipt,
remit all such cash, checks and instruments, duly endorsed or with duly executed instruments
of Transfer, to the Agent or its designee.




     (iv) The Agent may take any and all commercially reasonable steps in the Seller’s or
the Servicer’s name and on behalf of the Seller and the Owners necessary or desirable, in
the determination of the Agent, to collect all amounts due under any and all Pool
Receivables, including, without limitation, endorsing the Seller’s or the Servicer’s name on
checks and other instruments representing Collections or other proceeds of Pool Receivables,
enforcing such Pool Receivables and the related Contracts, and adjusting, settling or
compromising the amount or payment thereof, in the same manner and to the same extent as the
Seller or PolyOne might have done.



     Section 6.04. Responsibilities of the Seller.




     Anything herein to the contrary notwithstanding:



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     (a) The Seller shall perform all of its obligations under the Contracts related to the Pool
Receivables to the same extent as if the Purchased Property had not been sold hereunder and the
exercise by the Agent of its rights hereunder shall not release the Seller from such obligations or
its obligations with respect to Pool Receivables or under the related Contracts; and



     (b) Neither the Agent nor the Owners shall have any obligation or liability with respect to
any Pool Receivables or related Contracts, nor shall any of them be obligated to perform any of the
obligations of the Seller or the Canadian Originator thereunder.



     Section 6.05. Further Action Evidencing Purchases.




     (a) The Seller and the Servicer each agrees that from time to time, at its expense, it will
promptly execute and deliver all further instruments and documents, and take all further action,
that may be necessary, or that the Agent may reasonably request, in order to perfect, protect or
more fully evidence the ownership of the Purchased Property purchased by the Owners hereunder, or
to enable any of them or the Agent to exercise and enforce any of their respective rights and
remedies hereunder. Without limiting the generality of the foregoing, the Seller and the Servicer
each will upon the request of the Agent, in order to perfect, protect or evidence such ownership of
the Purchased Property: (i) execute and file such financing or continuation statements, or
amendments thereto or assignments thereof, and such other instruments or notices, as may be
necessary, or as the Agent may reasonably request; (ii) mark conspicuously each invoice evidencing
each Pool Receivable and the related Contract with a legend, acceptable to the Agent, evidencing
that the Purchased Property has been sold in accordance with this Agreement; and (iii) mark its
master data processing records evidencing such Pool Receivables and related Contracts with such
legend.



     (b) The Seller hereby authorizes the Agent to file one or more financing or continuation
statements, and amendments thereto and assignments thereof, relating to all or any of the
Contracts, or Pool Receivables and the Related Security and Collections with respect thereto, now
existing or hereafter arising, without the signature of the Seller where permitted by law. A
photocopy or other reproduction of this Agreement or any financing statement covering all or any of
the Contracts, or Pool Receivables and the Related Security and Collections with respect thereto
shall be sufficient as a financing statement where permitted by law.



     (c) If the Servicer or the Seller fails to perform any agreement contained herein, then after
notice to the Servicer or the Seller, as applicable, the Agent may itself perform, or cause
performance of, such agreement, and the reasonable costs and expenses of the Agent incurred in
connection therewith shall be payable by the Seller under Section 10.01 or Section 11.04, as
applicable.



ARTICLE VII




EVENTS OF TERMINATION




     Section 7.01. Events of Termination.




     If any of the following events (“Events of Termination”) shall occur and be
continuing:



     (a) The Seller or the Servicer shall fail to make any payment or deposit to be made by it
hereunder when due and such failure remains unremedied for 3 days; or



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     (b) Any representation or warranty made or deemed made by the Seller or the Canadian
Originator or the Servicer (or any of their respective officers) under or in connection with this
Agreement or any other Transaction Document or in any Seller Report, or Receivables Report or any
other written report, certificate or information delivered by or on behalf of the Seller or the
Canadian Originator or the Servicer (or any of their respective officers) pursuant hereto or
thereto, shall prove to have been incorrect in any material respect when made or deemed made or
delivered; or



     (c) (i) The Seller or the Servicer shall fail to perform or observe any term, covenant or
agreement contained in Section 5.01(e), 5.01(g), 5.02, 5.03, 5.04(e), 5.04(g), 5.05 or 5.06 of this
Agreement, (ii) the Canadian Originator shall fail to perform or observe any term, covenant or
agreement contained in Section 4.01(g), 4.01(i), 4.01(j)(iii) or 4.02 of the Canadian Receivables
Sale Agreement; or (iii) the Seller, the Servicer, PolyOne (other than in its capacity as Servicer)
or the Canadian Originator shall fail to perform or observe any other term, covenant or agreement
contained in any Transaction Document on its part to be performed or observed and any such failure
shall remain unremedied for 3 Business Days after the earlier of (A) the date on which a
Responsible Officer of PolyOne becomes aware of such failure and (B) the date on which written
notice thereof shall have been given to the Seller by the Agent or any Purchaser; or



     (d) The Seller or PolyOne shall fail to pay any principal of, or premium or interest on, any
of its Debt that is outstanding in a principal amount of at least $9,500, in the case of the
Seller, and $15,000,000, in the case of PolyOne or the Canadian Originator, when the same becomes
due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise), and such failure shall continue after the applicable grace period, if any, specified in
the agreement or instrument relating to such Debt; or any other event shall occur or condition
shall exist under any agreement or instrument relating to any such Debt and shall continue after
the applicable grace period, if any, specified in such agreement or instrument, if the effect of
such event or condition is to accelerate, or to permit the acceleration of, the maturity of such
Debt; or any such Debt shall be declared to be due and payable, or required to be prepaid (other
than by a regularly scheduled required prepayment), redeemed, purchased or defeased, or an offer to
prepay, redeem, purchase or defease such Debt shall be required to be made, in each case prior to
the stated maturity thereof; or



     (e) Any Purchase or any reinvestment pursuant to Section 2.07 shall for any reason (other than
pursuant to the terms hereof) cease to create, or the Owners shall otherwise cease to hold, for any
reason, a valid and perfected first priority ownership interest in the Purchased Property,
including each applicable Pool Receivable and the Related Security and Collections with respect
thereto; or



     (f) The Seller, the Servicer or the Canadian Originator shall generally not pay its debts as
such debts become due, or shall admit in writing its inability to pay its debts generally, or shall
make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or
against the Seller, the Servicer or the Canadian Originator seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of it or its debts under any law relating to bankruptcy, insolvency,
arrangement or reorganization or relief of debtors, or seeking the entry of an order for relief or
the appointment of a receiver, trustee, custodian or other similar official for it or for any
substantial part of its property and, in the case of any such proceeding instituted against it (but
not instituted by it) that is being diligently contested by it in good faith, either such
proceeding shall remain undismissed or unstayed for a period of 30 days, or any of the actions
sought in such proceeding (including, without limitation, the entry of an order for relief against,
or the appointment of a receiver, trustee, custodian or other similar official for, it or for any
substantial part of its property) shall occur; or the Seller, the Servicer or the Canadian
Originator shall take any corporate action to authorize any of the actions set forth above in this
subsection (f); or



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     (g) The Net Receivables Pool Balance shall be less than the Required Net Receivables Pool
Balance for a period of 2 consecutive Business Days or more; or



     (h) Since December 31, 2006, there shall have been any Material Adverse Change (other than to
the extent expressly set forth on Schedule V hereto or disclosed in any public filing prior to the
date hereof with the Securities and Exchange Commission); or



     (i) Any provision of any Transaction Document shall for any reason cease to be a legal, valid
and binding obligation of the Seller, the Servicer or the Canadian Originator, as applicable, or
the Seller, the Servicer or the Canadian Originator, as applicable, shall so state in writing; or



     (j) A Change of Control shall occur;



     (k) The articles or by-laws of the Seller shall be amended, supplemented or otherwise modified
without consent of the Agent;



     (l) On the date which is 60 days prior to the final maturity date of the 10?% Senior Notes,
the outstanding principal amount of the 10?% Senior Notes is $40,000,000 or more;



     (m) Any Events of Termination (as defined in the U.S. RPA), shall occur and be continuing;



     (n) After the date hereof, any Purchaser, Owner or the Agent shall determine, acting
reasonably, that it has or is deemed to have a permanent establishment within Canada solely or
primarily as a result of the transactions contemplated hereby or any act or failure to act of the
Seller, the Servicer or PolyOne Canada,


then, and in any such event, the Agent shall, at the request, or may with the consent, of the
Required Purchasers, by notice to the Seller and the Servicer declare the Termination Date to have
occurred, whereupon the Termination Date shall forthwith occur; provided, that, automatically upon
the occurrence of any event (without any requirement for the passage of time or the giving of
notice, or both) described in subsection (f) of this Section 7.01, the Termination Date shall
occur, and the Agent may replace the Servicer pursuant to Section 6.01. Upon any such occurrence
of the Termination Date, the Agent and each Owner shall have, in addition to all other rights and
remedies under this Agreement or otherwise, all other rights and remedies provided under any and
all applicable laws, which rights shall be cumulative.




ARTICLE VIII




THE AGENT




     Section 8.01. Authorization and Action.




     Each Purchaser hereby appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers and discretion under this Agreement and the other Transaction
Documents and the other instruments and documents delivered pursuant hereto as are delegated to the
Agent by the terms hereof and thereof, together with such powers and discretion as are reasonably
incidental thereto. The Agent agrees to give to each Purchaser copies of each notice (including,
without limitation, each report and financial statement received hereunder or under any other
Transaction Document) given to the Agent by the Seller, the Servicer or the Canadian Originator
pursuant to the terms of this Agreement or any other Transaction Document. The Agent further
agrees that the Required



59









 







Purchasers may compel the Agent to make any request that the Agent may but is not required to
make hereunder.



     Section 8.02. Agent’s Reliance, Etc.




     Neither the Agent nor any of its directors, officers, agents or employees shall be liable for
any action taken or omitted to be taken by it or them as Agent under or in connection with this
Agreement or any other Transaction Document or any other instrument or document delivered pursuant
hereto (including, without limitation, the Agent’s servicing, administering or collecting Pool
Receivables as Servicer pursuant to Section 6.01), except for its or their own gross negligence or
willful misconduct. Without limiting the generality of the foregoing, except as otherwise agreed
by the Agent and any Owner, the Agent: (i) may consult with legal counsel (including counsel for
the Seller, the Servicer or the Canadian Originator), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or experts; (ii) makes no
warranty or representation to any Owner and shall not be responsible to any Owner for any
statements, warranties or representations (whether written or oral) made in or in connection with
this Agreement or any other Transaction Document or any other instrument or document delivered
pursuant hereto; (iii) shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Agreement or any other Transaction
Document or any other instrument or document delivered pursuant hereto on the part of the Seller or
the Canadian Originator or to inspect the property (including the books and records) of the Seller
or the Canadian Originator; (iv) shall not be responsible to any Owner for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any
other Transaction Document or any other instrument or document furnished pursuant hereto, or the
perfection, priority or value of any ownership interest or security interest created or purported
to be created hereunder or under the Canadian Receivables Sale Agreement; and (v) shall incur no
liability under or in respect of this Agreement or any other Transaction Document or any other
instrument or document delivered pursuant hereto by acting upon any notice (including notice by
telephone), consent, certificate or other instrument or writing (which may be by telecopier,
telegram, cable or telex) reasonably believed by it to be genuine and signed or sent by the proper
party or parties.



     Section 8.03. Citicorp and Affiliates.




     With respect to any Capital Investment owned by it, Citicorp shall have the same rights and
powers under this Agreement as any other Purchaser and may exercise the same as though it were not
the Agent. Citicorp and its Affiliates may generally engage in any kind of business with the
Seller or the Canadian Originator or any Obligor, any of their respective Affiliates and any Person
who may do business with or own securities of the Seller or the Canadian Originator or any Obligor
or any of their respective Affiliates, all as if Citicorp were not the Agent and without any duty
to account therefor to the Purchasers.



     Section 8.04. Purchase Decisions.




     Each Purchaser acknowledges that it has, independently and without reliance upon the Agent or
any of its Affiliates or any other Purchaser and based on such documents and information as it has
deemed appropriate, made its own evaluation and decision to enter into this Agreement and to
purchase an interest on the Purchased Property and make Capital Increases hereunder. Each
Purchaser also acknowledges that it shall, independently and without reliance upon the Agent, any
of its Affiliates or any other Purchaser and based on such documents and information as it shall
deem appropriate at the time, continue to make its own decisions in taking or not taking action
under this Agreement.



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     Section 8.05. Indemnification.




     The Purchasers agree to indemnify the Agent (to the extent not promptly reimbursed by the
Seller), ratably according to their respective Capital Investments at the relevant time (or, if no
Capital Investments have been made at that time by them, ratably according to their respective
Commitments) from and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that
may be imposed on, incurred by, or asserted against the Agent in any way relating to or arising out
of this Agreement or any other Transaction Document or any other instrument or document furnished
pursuant hereto or any action taken or omitted by the Agent under this Agreement or any other
Transaction Document or any such instrument or document; provided that no Purchaser shall be liable
for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Agent’s gross negligence or willful
misconduct. Without limitation of the foregoing, the Purchasers agree to reimburse the Agent,
ratably according to their respective Capital Investments at the relevant time (or, if no Capital
Investments have been made at that time by them, ratably according to their respective
Commitments), promptly upon demand for any costs and expenses (including, without limitation,
reasonable fees and disbursements of counsel) payable by the Seller to the Agent under Section
11.04, to the extent that the Agent is not promptly reimbursed for such costs and expenses by the
Seller.



     Section 8.06. Posting of Approved Electronic Communications.




     (a) Subject to Section 11.05 and certain limited exceptions in respect of which the Company
has delivered prior written notice to the Agent, each of the Purchasers, the Servicer and the
Seller agree, that the Agent may, but shall not be obligated to, make the Approved Electronic
Communications available to the Purchasers by posting such Approved Electronic Communications on
“e-Disclosure”, the Agent’s internet delivery system that is part of Fixed Income Direct,
Global Fixed Income’s primary web portal, or successor electronic platform chosen by the Agent to
be its internet delivery system (the “Approved Electronic Platform”).



     (b) Although the primary web portal is secured with a dual firewall and a User ID/Password
Authorization System and the Approved Electronic Platform is secured through a single-user-per-deal
authorization method whereby each user may access the Approved Electronic Platform only on a
deal-by-deal basis, each of the Purchasers, the Servicer and the Seller acknowledges and agrees,
that the distribution of material through an electronic medium is not necessarily secure and that
there are confidentiality and other risks associated with such distribution. In consideration for
the convenience and other benefits afforded by such distribution and for the other consideration
provided hereunder, the receipt and sufficiency of which is hereby acknowledged, each of the
Purchasers, the Servicer and the Seller hereby approves, and the Servicer shall cause each other
Originator to approve, distribution of the Approved Electronic Communications through the Approved
Electronic Platform and understands and assumes the risks of such distribution.



     (c) The Approved Electronic Communications and the Approved Electronic Platform are provided
“as is” and “as available”. None of the Agent or any of its Affiliates or any of
their respective officers, directors, employees, agents, advisors or representatives (the
“Agent Affiliates”) warrant the accuracy, adequacy or completeness of the Approved
Electronic Communications and the Approved Electronic Platform and each expressly disclaims
liability for errors or omissions in the Approved Electronic Communications and the Approved
Electronic Platform. No warranty of any kind, express, implied or statutory (including, without
limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of
third party rights or freedom from viruses or other code defects) is made by the Agent Affiliates
in connection with the Approved Electronic Communications.



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ARTICLE IX




ASSIGNMENT OF RECEIVABLE INTERESTS




     Section 9.01. Purchaser’s Assignment of Rights and Obligations.




     (a) Each Purchaser may assign to any Eligible Assignee all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a portion of its
Commitment, the Capital Investments made by it and the related rights in the Purchased Property);
provided, however, that (i) each such assignment shall be a constant, and not a varying, percentage
of such Purchaser’s rights and obligations under this Agreement and the Capital Investments made by
it, (ii) in the case of any assignment by any Purchaser that is not assigning pursuant thereto all
of its right and obligations under this Agreement, (A) the amount of the Commitment (determined as
of the date of the applicable Assignment and Acceptance) being assigned pursuant to each such
assignment shall be at least $5,000,000, or (B) the aggregate amount of all Commitments (determined
as of the date of the applicable Assignments and Acceptances) being assigned by such Purchaser on
such date to two or more Eligible Assignees that are Affiliates of each other shall be at least
$5,000,000, (iii) each such assignment shall be to an Eligible Assignee, (iv) the parties to each
such assignment shall execute and deliver to the Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance, together with a processing and recording fee of $3,500 and
(v) the consent of the Agent and the Seller (which consent shall not be unreasonably withheld or
delayed and shall not be required at all following an Event of Termination) shall first have been
obtained. Upon such execution, delivery and acceptance, from and after the effective date
specified in each Assignment and Acceptance, which effective date shall be the later of (x) the
date the Agent receives the executed Assignment and Acceptance and (y) the date of such Assignment
and Acceptance, (1) the Assignee thereunder shall be a party hereto and shall have all the rights
and obligations of a Purchaser hereunder and (2) the assigning Purchaser shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such assignment and
acceptance, relinquish its rights and be released from its obligations under this Agreement.



     (b) By executing and delivering an Assignment and Acceptance, the assigning Purchaser and the
Assignee thereunder confirm to and agree with each other and the other parties hereto as follows:
(i) other than as provided in such Assignment and Acceptance, the assigning Purchaser makes no
representation or warranty and assumes no responsibility with respect to any statements, warranties
or representations made in or in connection with this Agreement or any other Transaction Document
or any other instrument or document furnished pursuant hereto or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other Transaction
Document or any other instrument or document furnished pursuant hereto, or the perfection, priority
or value of any ownership interest or security interest created or purported to be created
hereunder or under the Canadian Receivables Sale Agreement; (ii) the assigning Purchaser makes no
representation or warranty and assumes no responsibility with respect to the financial condition of
the Seller or the Canadian Originator or the performance or observance by the Seller or the
Canadian Originator of any of their respective obligations under this Agreement or any other
Transaction Document or any other instrument or document furnished pursuant hereto; (iii) such
Assignee confirms that it has received copies of this Agreement and the other Transaction
Documents, together with such other documents and information as it has deemed appropriate to make
its own analysis and decision to enter into such Assignment and Acceptance; (iv) such Assignee
will, independently and without reliance upon the Agent, any of its Affiliates, the assigning
Purchaser or any other Purchaser and based on such documents and information as it shall deem
appropriate at the time, continue to make its own decisions in taking or not taking action under
this Agreement and the other Transaction Documents and the other instruments and documents



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furnished pursuant hereto; (v) such Assignee confirms that it is an Eligible Assignee; (vi)
such Assignee appoints and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers and discretion under this Agreement and the other Transaction Documents and
the other instruments and documents furnished pursuant hereto as are delegated to the Agent by the
terms hereof and thereof, together with such powers and discretion as are reasonably incidental
thereto; (vii) such Assignee appoints as its agent the Servicer from time to time designated
pursuant to Section 6.01 to enforce its respective rights and interests in and under the Pool
Receivables and the Related Security and Collections with respect thereto and the related
Contracts; and (viii) such Assignee agrees that it will perform in accordance with their terms all
of the obligations which by the terms of this Agreement are required to be performed by it as a
Purchaser.



     (c) The Agent shall maintain at its office referred to in Section 11.02 a copy of each
Assignment and Acceptance delivered to and accepted by it and a register (the “Register”)
for the recordation of the names and addresses of the Purchasers and the Commitment of, and each
Capital Investments made by, each Purchaser from time to time, which Register shall be available
for inspection by the Seller at any reasonable time and from time to time upon reasonable prior
notice. The entries in the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Seller, the Servicer, the Purchasers and the Agent may treat each Person
whose name is recorded in the Register as a Purchaser hereunder for all purposes of this Agreement.
No Capital Investments, nor any Assignment and Acceptance, shall be effective unless it is entered
in the Register in due course.



     (d) Upon its receipt of an Assignment and Acceptance executed by any assigning Purchaser and
an assignee representing that it is an Eligible Assignee, the Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit A hereto,
(i) accept such Assignment and Acceptance, (ii) record the information contained therein in the
Register, and (iii) give prompt notice thereof to the Seller and the Servicer.



     (e) Each Purchaser may sell participations to one or more Persons in or to all or a portion of
its rights and obligations under the Transaction Documents (including all its rights and
obligations with respect to Capital Investment). The terms of such participation shall not, in any
event, require the participant’s consent to any amendments, waivers or other modifications of any
provision of any Transaction Documents, the consent to any departure by the Seller, the Servicer or
the Canadian Originator therefrom, or to the exercising or refraining from exercising any powers or
rights such Purchaser may have under or in respect of the Transaction Documents (including the
right to enforce the obligations of the Seller, the Servicer or the Canadian Originator), except if
any such amendment, waiver or other modification or consent would reduce the amount, or postpone
any date fixed for, any amount (whether of Capital, Yield or fees) payable to such participant
under the Transaction Documents, to which such participant would otherwise be entitled under such
participation. In the event of the sale of any participation by any Purchaser, (w) such
Purchaser’s obligations under the Transaction Documents shall remain unchanged, (x) such Purchaser
shall remain solely responsible to the other parties for the performance of such obligations, (y)
such Purchaser shall remain the holder of such Capital for all purposes of this Agreement and (z)
the Seller, the Agent and the other Purchasers shall continue to deal solely and directly with such
Purchaser in connection with such Purchaser’s rights and obligations under this Agreement. Each
participant shall be entitled to the benefits of Sections 2.12(a), 2.13 and 2.14 as if it were a
Purchaser; provided, however, that anything herein to the contrary notwithstanding,
the Seller shall not, at any time, be obligated to make under Section 2.12(a), 2.13 or 2.14 to the
participants in the rights and obligations of any Purchaser (together with such Purchaser) any
payment in excess of the amount the Seller would have been obligated to pay to such Purchaser in
respect of such interest had such participation not been sold.



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ARTICLE X




INDEMNIFICATION




     Section 10.01. Indemnities.




     Without limiting any other rights that any Indemnified Party may have hereunder or under
applicable law, and whether or not any of the transactions contemplated hereby are consummated, the
Seller hereby agrees to indemnify each Indemnified Party from and against, and hold each thereof
harmless from, any and all claims, losses, liabilities, costs and expenses of any kind whatsoever
(including, without limitation, reasonable legal fees and expenses on a full indemnity basis) (all
of the foregoing being collectively referred to as “Indemnified Amounts”) arising out of,
or resulting from, in whole or in part, one or more of the following: (a) this Agreement or any
other Transaction Document or any other agreement or document delivered or to be delivered in
connection with this Agreement; (b) the use of proceeds of any Purchase or reinvestment or Capital
Increase; (c) the interest of any Owner in any Receivable, any Contract or any Related Security; or
(d) any transaction contemplated by this Agreement or any other Transaction Document or any other
agreement or document delivered or to be delivered in connection with this Agreement; excluding,
however, Indemnified Amounts to the extent resulting from either (x) the gross negligence or
willful misconduct on the part of such Indemnified Party, or (y) the failure to collect amounts in
respect of a Pool Receivable, to the extent such failure results from a discharge of the Obligor
with respect thereto in a proceeding in respect of such Obligor under applicable bankruptcy laws or
otherwise results from the Obligor’s financial inability to pay such amounts. Without limiting or
being limited by the foregoing and whether or not any of the transactions contemplated hereby are
consummated, the Seller shall pay on demand to each Indemnified Party any and all amounts necessary
to indemnify such Indemnified Party from and against any and all Indemnified Amounts which relate
to or result from, or which would not have occurred but for, one or more of the following:




     (i) any Receivable becoming a Pool Receivable which is not at the date of the initial
creation of an interest therein hereunder an Eligible Receivable;




     (ii) any representation or warranty or statement made or deemed made by the Seller (or
any of its officers) under or in connection with this Agreement or any other Transaction
Document or any Seller Report or Receivables Report or other document delivered or to be
delivered in connection herewith or with any other Transaction Document being incorrect in
any material respect when made or deemed made or delivered;




     (iii) the failure by the Seller to comply with any applicable law, rule or regulation
with respect to any Pool Receivable or the related Contract or any Related Security with
respect thereto, including Privacy Laws (as defined in the Canadian Receivables Sale
Agreement); or the failure of any Pool Receivable or the related Contract or any Related
Security with respect thereto to conform to any such applicable law, rule or regulation;




     (iv) the failure to vest in the Agent on behalf of the Owners a first priority
perfected ownership interest in each Receivable in, or purported to be in, the Receivables
Pool and the Related Security and Collections in respect thereof, free and clear of any
Adverse Claim; or the failure of the Seller to have obtained a first priority perfected
ownership interest in the Pool Receivables and the Related Security and Collections with
respect thereto Transferred or purported to be Transferred to the Seller under the Canadian
Receivables Sale Agreement, free and clear of any Adverse Claim;



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     (v) the failure of the Seller to have filed, or any delay by the Seller in filing,
financing statements or other similar instruments or documents under the PPSA or other
applicable laws with respect to any Receivable in, or purported to be in, the Receivables
Pool and the Related Security and Collections in respect thereof, whether at the time of any
Purchase or reinvestment or at any subsequent time unless such failure results directly and
solely from the Agent’s failure to take appropriate action;




     (vi) any dispute, claim, offset or defense (other than discharge in bankruptcy of the
Obligor) of any Obligor to the payment of any Receivable in, or purported to be in, the
Receivables Pool (including, without limitation, any defense based on the fact or allegation
that such Receivable or the related Contract is not a legal, valid and binding obligation of
such Obligor enforceable against it in accordance with its terms), or any other claim
resulting from the sale of the goods or services related to such Receivable or the
furnishing or failure to furnish such goods or services;




     (vii) any failure of the Seller to perform its duties or obligations in accordance with
the provisions of this Agreement or any other Transaction Document or to perform its duties
or obligations under any Contract;




     (viii) any product liability, personal injury, copyright infringement, theft of
services, property damage, or other breach of contract, antitrust, unfair trade practices or
tortious claim arising out of or in connection with the subject matter of any Contract or
out of or in connection with any transaction contemplated by this Agreement, any other
Transaction Document or any other instrument or document furnished pursuant hereto or such
Contract;




     (ix) the commingling by the Seller of Collections of Pool Receivables at any time with
other funds;




     (x) any action or omission by the Seller, reducing or impairing the rights of any Owner
under this Agreement, any other Transaction Document or any other instrument or document
furnished pursuant hereto or thereto or with respect to any Pool Receivable;




     (xi) any cancellation or modification of a Pool Receivable, the related Contract or any
Related Security, whether by written agreement, verbal agreement, acquiescence or otherwise;




     (xii) any investigation, litigation or proceeding related to or arising from this
Agreement, any other Transaction Document or any other instrument or document furnished
pursuant hereto or thereto, or any transaction contemplated by this Agreement or any
Contract or the use of proceeds from any Purchase or reinvestment pursuant to this
Agreement, or the ownership of, or other interest in, any Receivable, the related Contract
or Related Security;




     (xiii) the existence of any Adverse Claim against or with respect to any Pool
Receivable, the related Contract or the Related Security or Collections with respect
thereto;




     (xiv) any failure by the Seller to pay when due any taxes, including without limitation
sales, excise, GST, PST or other personal property taxes, payable by the Seller in
connection with any Receivable or the related Contract or any Related Security with respect
thereto;




     (xv) any claim brought by any Person other than an Indemnified Party arising from any
activity of the Seller in servicing, administering or collecting any Pool Receivable;



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     (xvi) any failure by any Lock-Box Bank to comply with the terms of the Lock-Box
Agreement to which it is a party;




     (xvii) any present or future Taxes, all interest and penalties thereon or with respect
thereto, and all out-of-pocket costs and expenses, including the reasonable fees and
expenses of counsel in defending against the same, which may arise by reason of the purchase
or ownership of the Purchased Property, the financing of such purchase or ownership by the
Owners or any other Indemnified Party or the servicing of the Pool Receivables, including
without limitation, any withholding taxes that are imposed by Canada or any political
subdivision thereof on any Indemnified Party or that are withheld from any Collections or
other payments made hereunder, and any Taxes that are imposed on any Indemnified Party as a
result of such Indemnified Party acquiring a permanent establishment in Canada as a result
of the transactions contemplated hereby or by the Canadian Receivables Sale Agreement; or




     (xviii) to the extent not covered by the foregoing clauses, the occurrence and
continuance of any Event of Termination other than an Event of Termination arising under
Section 7.01(f).



     Section 10.02. Currency




     (a) If, for the purpose of obtaining judgment in any court, it is necessary to convert a sum
owing hereunder in one currency into another currency, each party hereto agrees, to the fullest
extent that it may effectively do so, that the rate of exchange used shall be that provided for in
the definition of Dollar Equivalent.



     (b) The obligations of the Seller in respect of any sum due to any party hereto (or their
respective assigns) or any holder of the obligations owing hereunder (the “Applicable Creditor”)
shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than the currency
in which such sum is stated to be due hereunder (the “Agreement Currency”), be discharged only to
the extent that, on the Business Day following receipt by the Applicable Creditor of any sum
adjudged to be so due in the Judgment Currency, the Applicable Creditor may in accordance with
normal banking procedures in the relevant jurisdiction purchase the Agreement Currency with the
Judgment Currency; if the amount of the Agreement Currency so purchased is less than the sum
originally due to the Applicable Creditor in the Agreement Currency, the Seller agrees, as a
separate obligation and notwithstanding any such judgment, to indemnify the Applicable Creditor
against such loss.



ARTICLE XI




MISCELLANEOUS




     Section 11.01. Amendments, Etc.




     No amendment or waiver of any provision of this Agreement, and no consent to any departure by
the Seller or the Servicer therefrom, shall be effective unless in a writing signed by the Agent
and the Required Purchasers and, in the case of any such amendment, the Seller and the Servicer,
and then such amendment, waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given; provided, however, that no amendment, waiver or consent
shall:



66









 





     (a) without the prior written consent of each Purchaser,




     (i) amend the definitions of “Eligible Receivable”, “Net Receivables Pool
Balance”, “Required Net Receivables Pool Balance”, “Reserve Percentage”,
“Required Purchasers” or “Super-Majority Purchasers”, or




     (ii) amend, modify or waive any provision of this Agreement in any way which would




     (A) reduce the amount of a Capital Investment or Yield that is payable
on account of any Capital Investment or delay any scheduled date for payment
thereof or change the order of application of Collections to the payment
thereof, or




     (B) impair any rights expressly granted to such Purchaser or such Owner
under this Agreement, or




     (C) reduce fees payable by the Seller to or for the account of such
Purchaser hereunder or delay the dates on which such fees are payable, or




     (iii) amend or waive the Event of Termination contained in Section 7.01(f) relating to
the bankruptcy of the Seller, the Servicer, or the Canadian Originator, or amend or waive
the Event of Termination contained in Section 7.01(g) relating to the Net Receivables Pool
Balance, or




     (iv) change the percentage of Commitments, or the number of Owners or Purchasers, which
shall be required for the Purchasers or any of them to take any action hereunder, or




     (v) amend this Section 11.01, or




     (vi) extend the Commitment Termination Date, or




     (vii) increase the amount of the Total Commitment;



     (b) without the consent of the applicable Purchaser, increase the Commitment of such
Purchaser, subject such Purchaser to any additional obligations, or decrease the ownership interest
of such Purchaser in the Purchased Property; and



     (c) without the prior written consent of the Super-Majority Purchasers, amend Section 5.07(b)
or the definition of “Total Excess Availability” or “Receivables Excess
Availability”,


provided, however, that the Agent shall not, without the prior written consent of the Required
Purchasers, either agree to any amendment or waiver of any provision of the Intercreditor Agreement
or consent to any departure from the Intercreditor Agreement by any party thereto, and
provided further, that (x) no amendment, waiver or consent shall, unless in writing
and signed by the Agent in addition to the Purchasers required above to take such action, affect
the rights or duties of the Agent under this Agreement or the other Transaction Documents, and (y)
no amendment, waiver or consent shall, unless in writing and signed by the Swing Purchaser in
addition to the Purchasers required above to take such action, affect the rights or duties of the
Swing Purchaser under this Agreement or the other Transaction Documents.




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     (d) If, in connection with any proposed amendment, modification, waiver or termination (a
“Proposed Change”) requiring the consent of all affected Purchasers, the consent of
Required Purchasers is obtained but the consent of other Purchasers whose consent is required is
not obtained (any such Purchaser whose consent is not obtained as described in this being referred
to as a “Non-Consenting Purchaser”), then, as long as the Purchaser acting as the Agent is
not a Non-Consenting Purchaser, at the Seller’s request, any Eligible Assignee acceptable to the
Agent shall have the right with the Agent’s consent and in the Agent’s sole discretion (but shall
have no obligation) to purchase from such Non-Consenting Purchaser, and such Non-Consenting
Purchaser agrees that it shall, upon the Agent’s request, sell and assign to the Purchaser acting
as the Agent or such Eligible Assignee, all of the Commitments, Capital Investments and interests
in the Purchased Property of such Non-Consenting Purchaser for an amount equal to the Capital
Investment represented by the interest held by the Non-Consenting Purchaser and all accrued and
unpaid Yield and fees with respect thereto through the date of sale; provided,
however, that such purchase and sale shall not be effective until (x) the Agent shall have
received from such Eligible Assignee an agreement in form and substance satisfactory to the Agent
and the Seller whereby such Eligible Assignee shall agree to be bound by the terms hereof, (y) such
Non-Consenting Purchaser shall have received payments of all interests held by it in the Purchased
Property and all accrued and unpaid Yield and fees with respect thereto through the date of the
sale and (z) such purchase and sale has been recorded in the Register maintained by the Agent.
Each Purchaser agrees that, if it becomes a Non-Consenting Purchaser, it shall execute and deliver
to the Agent an Assignment and Acceptance to evidence such sale and purchase subject to such
Assignment and Acceptance; and provided, further, however, that the failure
of any Non-Consenting Purchaser to execute an Assignment and Acceptance shall not render such sale
and purchase (and the corresponding assignment) invalid.



     (e) No failure on the part of any Purchaser or the Agent to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof or the exercise of
any other right. Without limiting the foregoing, each Purchaser is hereby authorized by the Seller
upon the occurrence and during the continuance of an Event of Termination, to the fullest extent
permitted by law, to setoff and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing by such Purchaser
to or for the credit or the account of the Seller against any and all of the obligations of the
Seller now or hereafter existing under this Agreement to such Purchaser or, if such Purchaser is
Citicorp, to the Agent or any Affiliate thereof, irrespective of whether or not any formal demand
shall have been made under this Agreement and although such obligations may be unmatured. Each
Purchaser agrees promptly to notify the Seller after any such setoff and application; provided,
however, that the failure to give such notice shall not affect the validity of such setoff and
application. The rights of each Purchaser under this Section 11.01 are in addition to other rights
and remedies (including, without limitation, other rights of setoff) which such Purchaser may have.



     Section 11.02. Notices, Etc.




     All notices and other communications hereunder shall, unless otherwise stated herein, be given
in writing or by any telecommunication device capable of creating a written record (including
electronic mail), (i) to each of the Seller, the Servicer, the Agent and the Initial Purchasers, at
its address set forth under its name on the signature pages hereof, (ii) to each Purchaser other
than the Initial Purchasers, at its address specified on the Assignment and Acceptance pursuant to
which it became a Purchaser hereunder or (iii) to any party hereto at such other address as shall
be designated by such party in a notice to the other parties hereto given as provided herein. All
such notices and communications shall be effective when received.



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     Section 11.03. Binding Effect; Assignability.




     This Agreement shall be binding upon and inure to the benefit of the Seller, PolyOne, the
Agent, the Swing Purchaser and each Purchaser and their respective successors and assigns, except
that neither the Seller nor PolyOne (other than in its capacity as Servicer hereunder) shall have
the right to assign its rights or obligations hereunder or any interest herein without the prior
written consent of all Purchasers. This Agreement shall create and constitute the continuing
obligation of the parties hereto in accordance with its terms, and shall remain in full force and
effect until such time, after the Termination Date, as no Capital Investment or any obligation of
the Seller, PolyOne, the Canadian Originator or the Servicer under any Transaction Document shall
be outstanding; provided, however, that rights and remedies with respect to the provisions of
Sections 2.12, 2.13, 2.14, 10.01, 11.04, 11.06, and 11.07 shall be continuing and shall survive any
termination of this Agreement.



     Section 11.04. Costs and Expenses.




     The Seller agrees to pay, upon receipt of a written invoice, all costs and expenses in
connection with the preparation, execution, delivery and administration (including periodic
auditing of Receivables) of, and searches and filings in respect of, this Agreement, the other
Transaction Documents and the other documents and agreements to be delivered hereunder and
thereunder, including, without limitation, the reasonable fees and disbursements of (a) on a full
indemnity basis, counsel for the Agent with respect thereto and advising the Agent as to its rights
and remedies hereunder and (b) internal and external auditors. The Seller further agrees to pay on
demand all costs and expenses, if any (including, without limitation, reasonable counsel fees and
disbursements on a full indemnity basis), of each Owner, the Agent or any Affiliate thereof, in
connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of
this Agreement, the other Transaction Documents and the other documents and agreements to be
delivered in connection herewith or therewith. Each written invoice shall set forth the basis
therefor in reasonable detail and shall be conclusive and binding absent manifest error.



     Section 11.05. Confidentiality.




     (a) The Seller, the Servicer, PolyOne, the Purchasers and the Agent hereby agree that each of
the Servicer, PolyOne, the Seller, the Purchasers and the Agent (and each of their respective, and
their respective Affiliates, employees, officers, directors, agents and advisors) is, and has been
from the commencement of discussions with respect to the receivables program established hereunder,
permitted to disclose to any and all Persons, without limitation of any kind, the structure and tax
aspects (as such terms are used in Code Sections 6011, 6111 and 6112 and the regulations
promulgated thereunder) of the receivables program established hereunder, and all materials of any
kind (including opinions or other tax analyses) that are or have been provided to the Servicer,
PolyOne, the Seller, such Purchasers or the Agent related to such structure and tax aspects. In
this regard, each of the Servicer, PolyOne, the Seller, the Purchasers and the Agent acknowledges
and agrees that its disclosure of the structure or tax aspects of the receivables program
established hereunder is not limited in any way by an express or implied understanding or
agreement, oral or written (whether or not such understanding or agreement is legally binding).
Furthermore, each of the Servicer, PolyOne, the Seller, the Purchasers and the Agent acknowledges
and agrees that it does not know or have reason to know that its use or disclosure of information
relating to the structure or tax aspects of the receivables program established hereunder is
limited in any other manner (such as where the receivables program established hereunder is claimed
to be proprietary or exclusive) for the benefit of any other Person. To the extent that disclosure
of the structure or tax aspects of the receivables program established hereunder by the Servicer,
PolyOne, the Seller, the Agent or the Purchasers is limited by any existing agreement between the
Servicer, PolyOne, the Seller, the Agent or the Purchasers, such limitation is agreed to be void ab
initio and such agreement



69









 







is hereby amended to permit disclosure of the structure and tax aspects of the receivables
program established hereunder as provided in this clause (a).



     (b) Subject to clause (a) of this Section 11.05, neither the Agent nor any Purchaser may
disclose to any Person any confidential, proprietary or non-public information of the Canadian
Originator or the Seller furnished to the Agent or the Purchasers by either the Canadian Originator
or the Seller (such information being referred to collectively herein as the “Originator’s
Information”), except that each of the Agent and each of the Purchasers may disclose the
Canadian Originator’s Information (i) to its and its Affiliates’ employees, officers, directors,
agents and advisors (it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of the Canadian Originator’s Information and instructed to keep
the Canadian Originator’s Information confidential on substantially the same terms as provided
herein), (ii) to the extent requested by any regulatory authority, (iii) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (iv) to any other party
to this Agreement, (v) if reasonably necessary in connection with the exercise of any remedies
hereunder or under any other Transaction Document or any suit, action or proceeding relating to
this Agreement or any other Transaction Document or the enforcement of rights hereunder or
thereunder, (vi) subject to an agreement containing provisions substantially the same as those of
this Section 11.05 to any assignee of or participant in, or any prospective assignee of or
participant in, any of its rights or obligations under this Agreement, (vii) to the extent the
Canadian Originator’s Information (A) is or becomes generally available to the public on a
non-confidential basis other than as a result of a breach of this Section 11.05 by the Agent or
such Purchaser, or (B) is or becomes available to the Agent or such Purchaser on a non-confidential
basis from a source other than the Canadian Originator, the Servicer, PolyOne or the Seller, and
(viii) with the prior written consent of the Servicer, PolyOne or the Seller.



     (c) Subject to clause (a) of this Section 11.05, none of the Servicer, PolyOne or the Seller
may disclose to any Person the amount or terms of any fees payable to the Agent or any Purchaser
(such information being collectively referred to herein as the “Program Information”),
except that the Servicer, PolyOne or the Seller may disclose the Program Information (i) to its and
its respective Affiliates’ employees, officers, directors, agents and advisors who have a need to
know the Program Information in connection with this Agreement and the transactions contemplated
hereby or (ii) to the extent required by applicable laws or regulations or by any subpoena or
similar legal process.



     Section 11.06. Governing Law.




     THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
PROVINCE OF ONTARIO AND THE LAWS OF CANADA APPLICABLE THEREIN.



     Section 11.07. Jurisdiction, Etc.




     (a) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and
its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the
United States of America sitting in New York City, and any appellate court from any thereof, in any
action or proceeding arising out of or relating to this Agreement or any of the other Transaction
Documents to which it is a party, or for recognition or enforcement of any judgment, and each of
the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in any such New York State court or, to the
extent permitted by law, in such Federal court. Each of the parties hereto hereby agrees that
service of process in any such action or proceeding may be effected by mailing a summons and
complaint to it at its address specified in Section 11.02 by registered mail, return receipt
requested, or in any other manner permitted by applicable law.



70









 




Each of the parties hereto agrees that a final judgment in any such action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Agreement shall affect any right that any party may
otherwise have to bring any action or proceeding relating to this Agreement or any of the other
Transaction Documents in the courts of any other jurisdiction.




     (b) Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent
it may legally and effectively do so, any objection that it may now or hereafter have to the laying
of venue of any action or proceeding arising out of or relating to this Agreement or any of the
other Transaction Documents to which it is a party in any New York State or Federal court. Each of
the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any such court.



     Section 11.08. Execution in Counterparts.




     This Agreement may be executed in any number of counterparts, each of which when so executed
shall be deemed to be an original and all of which when taken together shall constitute one and the
same agreement. Delivery by telecopier of an executed counterpart of a signature page to this
Agreement shall be effective as delivery of an original executed counterpart of this Agreement.



     Section 11.09. Intent of the Parties.




     (a) It is the intention of the parties hereto that each Purchase and reinvestment shall convey
to the Agent on behalf of the Owners, a 100% ownership interest in the Pool Receivables and the
Related Security and Collections in respect thereof and that such transaction shall constitute a
purchase and sale and not a secured loan for all purposes.



     (b) In addition to any ownership interest which the Agent or any Owner may from time to time
acquire pursuant hereto and without limiting the foregoing, the Seller hereby grants to the Agent
for the benefit of itself and each such Owner a valid and perfected security interest in all of the
Seller’s right, title and interest in, to and under any Pool Receivables and the Related Security
and Collections in respect thereof and any cash collateral under this Agreement not sold hereunder,
free and clear of Adverse Claims and to secure the prompt and complete payment of all amounts
payable hereunder by the Seller (in any capacity hereunder), including fees and indemnity payments.
After the occurrence and during the continuation of an Event of Termination, the Agent and the
Owners shall have, in addition to the rights and remedies that they may have under this Agreement,
all other rights and remedies provided to a secured creditor after default under the PPSA and other
applicable law, which rights and remedies shall be cumulative.



     Section 11.10. Entire Agreement.




     This Agreement and the other Transaction Documents contain a final and complete integration of
all prior expressions by the parties hereto with respect to the subject matter hereof and shall
constitute the entire agreement and understanding among the parties hereto with respect to the
subject matter hereof and supersede all prior agreements and understandings, written or oral,
relating to the subject matter hereof.



     Section 11.11. Severability of Provisions.




     Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without



71









 







invalidating the remaining provisions hereof or affecting the validity or enforceability of
such provision in any other jurisdiction.



     Section 11.12. No Liability of Syndication Agent.




     The Syndication Agent in its capacity as such shall not have any duties or responsibilities or
shall incur any liability under this Agreement or any of the other Transaction Documents.



     Section 11.13. Waiver of Jury Trial.




     Each of the parties hereto irrevocably waives, to the fullest extent permitted by law, all
right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort
or otherwise) arising out of or relating to this Agreement or any of the other Transaction
Documents, the Purchases or the actions of the Agent or any Indemnified Party in the negotiation,
administration, performance or enforcement hereof or thereof.




72










 





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



	 	 	 	 	 
	 	POLYONE FUNDING CANADA CORPORATION,

     as Seller
 	 
	 	By:  	 	 
	 	 	Name:  	John Rastetter 	 
	 	 	Title:  	President


	 
	 	Address: 	
 940 Chippawa Creek Road

P.O. Box 1026

Niagara Falls, Ontario

Canada  L2E 6V9

	 
	 	Attention:  	President

	 
	 	Telephone No.:  	
       (440) 930-3105	 
	 	Telecopier No.: 	
      (440) 930-1839	 
	 	e-mail: 	
               John.Rastetter@Polyone.com 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	POLYONE CORPORATION,

     as Servicer

 	 
	 	By:  	 	 
	 	 	Name:  	John Rastetter 	 
	 	 	Title:  	Treasurer


	 
	 	Address: 	
      33587 Walker Road

Avon Lake, Ohio  44012


	 
	 	Attention: 	
Treasurer


	 
	 	Telephone No.:  	
(440) 930-3105
	 
	 	Telecopier No.: 	
 (440) 930-1839

	 
	 	e-mail:  	
John.Rastetter@Polyone.com 
	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	AGENT



CITICORP USA, INC., 
     as Agent

 	 
	 	By:  	 	 
	 	 	Name:  	David Jaffe 	 
	 	 	Title:  	Vice President/Director

 	 
	 	Address:  	

388 Greenwich Street

19th Floor

New York, New York  10013
 	 
	 	Attention: 	
David Jaffe


	 
	 	Telephone No.: 	
 (212) 816-2329
 	 
	 	Telecopier No.: 	
 (212) 816-2613
 	 
	 	e-mail:  	
david.jaffe@citigroup.com
 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	SYNDICATION AGENT




NATIONAL CITY BUSINESS CREDIT, INC.,

     as Syndication Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	
 	 
	 	Address: 	
1965 East 6th Street,

Suite 400

Cleveland, Ohio, 44114

 	 
	 	Attention: 	 	 
	 
	 	Telephone No.: 	 (216) 222-9918 	 
	 	Telecopier No.: 	(216) 222-9555 	 
	 	e-mail: 	
 	 
	 




 









 








	 	 	 	 	 
	 	PURCHASERS:



CITICORP USA, INC.,

     as Agent

 	 
	 	By:  	 	 
	 	 	Name:  	David Jaffe 	 
	 	 	Title:  	Vice President/Director


 	 
	 	Address: 	
388 Greenwich Street

19th Floor

New York, New York  10013

	 
	 	Attention: 	David Jaffe


	 
	 	Telephone No.: 	(212) 816-2329 	 
	 	Telecopier No.: 	(212) 816-2613 	 
	 	e-mail: 	david.jaffe@citigroup.com
 	 
	 



	 	 	 	 	 
	 	NATIONAL CITY BUSINESS CREDIT, INC.,

     as an Initial Purchaser

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	
 	 
	 	Address: 	
1965 East 6th Street

Suite 400

Cleveland, Ohio 44114

 	 
	 	Attention: 	 	 
	 
	 	Telephone No.: 	 	 
	 	Telecopier No.: 	 	 
	 	e-mail: 	
 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	WEBSTER BUSINESS CREDIT CORPORATION

     
as an Initial Purchaser

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Address: 	 One State Street

New York, New York 10004

 	 
	 	Attention: 	 	 
	 
	 	Telephone No.: 	 	 
	 	Telecopier No.: 	 	 
	 	e-mail: 	
 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	BANK OF AMERICA, N.A.,

     
as an Initial Purchaser

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	
 	 
	 	Address: 	
200 Glastonbury Blvd

Glastonbury, CT 06033

 	 
	 	Attention: 	 	 
	 
	 	Telephone No.: 	 	 
	 	Telecopier No.: 	 	 
	 	e-mail: 	
 	 
	 	
     with a copy to:
 	 
	 	Address: 	
200 Glastonbury Blvd

Glastonbury, CT 06033

 	 
	 	Attention: 	 	 
	 
	 	Telephone No.: 	 	 
	 	Telecopier No.: 	 	 
	 	e-mail: 	
 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	PNC BANK, N.A.,


     
as an Initial Purchaser

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Address: 	
1600 Market Street

31st Floor

Philadelphia, Pennsylvania 19103

 	 
	 	Attention: 	 	 
	 
	 	Telephone No.: 	 	 
	 	Telecopier No.: 	 	 
	 	e-mail: 	
 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	THE CIT GROUP/BUSINESS CREDIT, INC.,

     as an Initial Purchaser

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	
 	 
	 	Address: 	
1211 Avenue of the Americas

New York, New York 10036

 	 
	 	Attention: 	 	 
	 
	 	Telephone No.: 	 	 
	 	Telecopier No.: 	 	 
	 	e-mail: 	
 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	U. S. BANK NATIONAL ASSOCIATION,

     as an Initial Purchaser

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	
 	 
	 	Address: 	
U.S. Bank Business Credit

425 Walnut Street

14th Floor

CN-OH-W14S

Cincinnati, Ohio 45202


 	 
	 	Attention: 	 	 
	 
	 	Telephone No.: 	 	 
	 	Telecopier No.: 	 	 
	 	e-mail: 	
 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	MERRILL LYNCH CAPITAL,

     a division of Merrill Lynch Business

     Financial Services, Inc.

     as an Initial Purchaser

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	
 	 
	 	Address: 	
225 Liberty Street

5th Floor

New York, New York 10281

 	 
	 	Attention: 	 	 
	 
	 	Telephone No.: 	 	 
	 	Telecopier No.: 	 	 
	 	e-mail: