Document:

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                                                                    Exhibit 10.1

                                                                  EXECUTION COPY

                             GUARANTEE AND AGREEMENT

                            Dated as of June 6, 2006

          GUARANTEE AND AGREEMENT, dated as of June 6, 2006 (this "Agreement"),
among POLYONE CORPORATION, an Ohio corporation, as guarantor (the "Guarantor"),
CITICORP USA, INC., as beneficiary ("Citicorp"), KEYBANK NATIONAL ASSOCIATION,
as beneficiary ("KeyBank"), NATIONAL CITY BANK, as beneficiary ("National City";
and together with Citicorp and KeyBank, the "Beneficiaries"), and CITICORP USA,
INC., as administrative agent (the "Agent") for the Beneficiaries.

                                    ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

          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):

          "Affiliate" means, as to any Person, any other Person that, directly
     or indirectly, controls, 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" has the meaning specified in the preamble hereto.

          "Agreement" has the meaning specified in the preamble hereto.

          "Amended and Restated Credit Agreement" means the Amended and Restated
     Credit Agreement, dated as of May 6, 2003, among the Guarantor, the banks,
     institutional lenders and other financial institutions parties thereto and
     the Agent, as amended.

          "Beneficiaries" has the meaning specified in the preamble hereto.

          "Business Day" means a day of the year on which banks are not required
     or authorized by law to close in New York City.

          "Certification Date" has the meaning specified in Section 5.01(g)(iv).

          "Change of Control" has the meaning specified in the Receivables
     Purchase Agreement.

          "Citicorp" has the meaning specified in the preamble hereto

          "Collateral" means all "Collateral" referred to in the Collateral
     Documents and all other property that is or is intended to be subject to
     any Lien in favor of the Collateral Trustee for the benefit of the Secured
     Parties.

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          "Collateral Documents" means the Security Agreement, the Collateral
     Trust Agreement, the Intercreditor Agreement and any other agreement that
     creates or purports to create a Lien in favor of the Agent for the benefit
     of the Secured Parties.

          "Collateral Trust Agreement" means the Collateral Trust Agreement,
     dated as of January 25, 2002, between the Guarantor and the Collateral
     Trustee or its predecessor, as corporate trustee, and Angelita Pena, an
     individual residing in the State of New Jersey, or her predecessor, in each
     case not in an individual capacity but as individual trustee, as amended.

          "Collateral Trustee" has the meaning specified in the Collateral Trust
     Agreement.

          "Confidential Information" means the information that the Guarantor
     furnishes to the Agent or any Beneficiary in a writing designated as
     confidential or otherwise on a confidential basis if such information
     otherwise furnished is reduced to a writing designated as confidential
     within 30 days of the initial disclosure thereof to the Agent or any
     Beneficiary, but does not include any such information that is or becomes
     generally available to the public other than as a result of a breach by the
     Agent or any Beneficiary of its obligations hereunder or that is or becomes
     available to the Agent or such Beneficiary from a source other than the
     Guarantor or any consultant employed by the Agent to provide technical
     advice that is not, to the best of the Agent's or such Beneficiary's
     knowledge, acting in violation of a confidentiality agreement with the
     Guarantor.

          "Consolidated" refers to the consolidation of accounts in accordance
     with GAAP.

          "Debt" of any Person means, without duplication, (a) all indebtedness
     of such Person for borrowed money, (b) all obligations of such Person for
     the deferred purchase price of property or services (other than trade
     payables not overdue by more than 60 days incurred in the ordinary course
     of such Person's business), (c) all obligations of such Person evidenced by
     notes, bonds, debentures or other similar instruments, (d) all obligations
     of such Person created or arising under any conditional sale or other title
     retention agreement with respect to property acquired by such Person (even
     though the rights and remedies of the seller or lender under such agreement
     in the event of default are limited to repossession or sale of such
     property), (e) all obligations of such Person as lessee under leases that
     have been or should be, in accordance with GAAP, recorded as capital
     leases, (f) all Capital, Yield and Reimbursement Obligations (each as
     defined in the Receivables Purchase Agreement) under the Receivables
     Financing, (g) all obligations, contingent or otherwise, of such Person in
     respect of acceptances, letters of credit or similar extensions of credit
     and (h) obligations under direct or indirect guarantees in respect of, and
     obligations (contingent or otherwise) to in effect guarantee, any Debt of
     others of the kinds referred to in clauses (a) through (g) above through an
     agreement (1) to pay or purchase such Debt or to advance or supply funds
     for the payment or purchase of such Debt, (2) to supply funds to or in any
     other manner invest in the debtor (including any agreement to pay for
     property or services irrespective of whether such property is received or
     such services are rendered) primarily for the purpose of enabling the
     debtor to make payment of such Debt or to assure the holder of such Debt
     against loss or (3) otherwise to assure a creditor against loss.

          "Debt Coverage Limit" means, as of any date, the lesser of (a) the
     product of (i) (1 divided by 1.50) and (ii) the Loan Value of the aggregate
     amount of Eligible Inventory at such date and (b) the product of (i) (1
     divided by 1.50) and (ii) the Indenture Limit.

          "Default" means any Event of Default or any event that would
     constitute an Event of Default but for the requirement that notice be given
     or time elapse or both.

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          "Disclosed Litigation" has the meaning specified in Section 3.01(b).

          "Dollars" and the "$" sign each means lawful currency of the United
     States of America.

          "Dollar Equivalent" of any amount on any date means the equivalent in
     Dollars of such amount determined by using the WM/Reuters Closing Spot Rate
     on such date as is required pursuant to the terms of this Agreement or, if
     the WM/Reuters Closing Spot Rate is not available, the Agent shall request
     the Beneficiaries to provide the Agent with their respective rates of
     exchange which are offered by the principal office of each of the
     Beneficiaries in New York, New York at approximately 11:00 a.m. (New York
     time) for such date and calculate the rate of exchange using the average of
     such quotations (or, if fewer than all the Beneficiaries provide such
     quotations, the average of the quotations received).

          "Effective Date" has the meaning specified in Section 3.01.

          "Eligibility Reserve" means, effective as of three Business Days after
     the date of written notice of any determination thereof to the Borrower by
     the Agent, such amounts as the Agent, in its reasonable discretion, may
     from time to time establish against the gross amounts of Eligible Inventory
     to reflect risks or contingencies arising after the Effective Date that may
     affect any one or more class of Eligible Inventory and that have not
     already been taken into account in the calculation of the Debt Coverage
     Limit.

          "Eligible Inventory" means the Inventory of the Guarantor (other than
     any Inventory that has been consigned by the Guarantor), including raw
     materials, finished goods, parts and supplies (a) that are owned solely by
     the Guarantor, (b) with respect to which the Agent has a valid, perfected
     and enforceable first-priority Lien, (c) with respect to which each
     representation or warranty contained in any Transaction Document is true,
     (d) that is not, in the Agent's reasonable discretion, obsolete or
     unmerchantable, (e) with respect to which (in respect of any Inventory
     labeled with a brand name or trademark and sold by such Person pursuant to
     a trademark owned by such Person or a license (whether written or oral)
     granted to such Person) the Agent would have rights under such trademark or
     license pursuant to the Security Agreement or other agreement satisfactory
     to the Agent to sell such Inventory in connection with a liquidation
     thereof and (f) that the Agent deems to be Eligible Inventory based on such
     credit and collateral considerations as the Agent may, in its reasonable
     discretion in accordance with its customary business practice and regular
     criteria, deem appropriate. No Inventory shall be Eligible Inventory if
     such Inventory consists of (i) goods returned or rejected by customers
     other than goods that are undamaged or are resalable in the normal course
     of business, (ii) goods to be returned to suppliers, (iii) goods in transit
     outside of the United States, (iv) goods the title to which remains in the
     seller thereof, (v) promotional, marketing, packaging or shipping materials
     and supplies, (vi) goods consisting of work in process, (vii) goods in
     respect of which the Security Agreement, after giving effect to the related
     filings of financing statements that have then been made, if any, does not
     or has ceased to create a valid and perfected first priority lien or
     security interest in favor of the Collateral Trustee for the benefit of the
     Secured Parties securing the Secured Obligations, or (viii) goods located,
     stored, used or held at the premises of a third party unless (A)(1) the
     Agent shall have received a copy of a collateral access agreement
     satisfying the requirements set forth in Section 7(b) of the Security
     Agreement executed by such third party or (2) in the case of Inventory
     located at a leased premises after the date that is sixty (60) days after
     the Effective Date, an Eligibility Reserve satisfactory to the Agent shall
     have been established with respect thereto and (B) an appropriate UCC 1
     financing statement shall have been prepared and properly filed.

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          "Environmental Action" means any administrative, regulatory or
     judicial action, suit, demand, demand letter, claim, notice of
     non-compliance or violation, notice of liability or potential liability,
     investigation, proceeding, consent order or consent agreement arising under
     any Environmental Law or Environmental Permit or relating to Hazardous
     Materials or arising from alleged injury or threat of injury to health,
     safety or the environment, including, without limitation, (a) by any
     governmental or regulatory authority for enforcement, cleanup, removal,
     response, remedial or other actions or damages and (b) by any governmental
     or regulatory authority or any third party for damages, contribution,
     indemnification, cost recovery, compensation or injunctive relief.

          "Environmental Law" means any federal, state, local or foreign
     statute, law, ordinance, rule, regulation, code, order, judgment, decree or
     judicial or agency interpretation, policy or guidance relating to the
     environment or Hazardous Materials.

          "Environmental Permit" means any permit, approval, identification
     number, license or other authorization required under any Environmental
     Law.

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

          "Events of Default" has the meaning specified in Section 6.01.

          "GAAP" has the meaning specified in Section 1.03.

          "Guaranteed Obligations" has the meaning specified in Section 2.01.

          "Guarantor" has the meaning specified in the preamble hereto.

          "Hazardous Materials" means petroleum and petroleum products,
     byproducts or breakdown products, radioactive materials,
     asbestos-containing materials, polychlorinated biphenyls and radon gas and
     any other chemicals, materials or substances designated, classified or
     regulated as being "hazardous" or "toxic" or words of similar import under
     any federal, state, local or foreign statute, law ordinance, rule,
     regulation, code, order, judgment, decree or judicial or agency
     interpretation, policy or guidance.

          "Hedge Agreements" means interest rate swap, cap or collar agreements,
     interest rate future or option contracts, currency swap agreements,
     currency future or option contracts and other similar agreements.

          "Indenture Limit" means (a) the maximum amount permitted under the
     Guarantor's public debt indentures that may be outstanding as secured
     obligations without requiring the Guarantor to equally and ratably secure
     the Guarantor's public debt multiplied by (b) 95% minus (c) all then
     outstanding secured obligations of the Guarantor and its Subsidiaries
     (other than the aggregate amount of obligations then outstanding under the
     Subject Agreements) that are subject to such public debt indentures'
     limitations on secured obligations.

          "Intercreditor Agreement" means the Intercreditor Agreement, dated as
     of May 6, 2003, among the Guarantor, the Collateral Trustee, the Agent and
     the other parties thereto, as amended.

          "Internal Revenue Code" means the Internal Revenue Code of 1986, as
     amended from time to time, and the regulations promulgated and rulings
     issued thereunder.

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          "Inventory" means all Inventory referred to in Section 1 of the
     Security Agreement.

          "Lien" means any lien, security interest or other charge or
     encumbrance of any kind, or any other type of preferential arrangement,
     including, without limitation, the lien or retained security title of a
     conditional vendor and any easement, right of way or other encumbrance on
     title to real property.

          "Loan Value" means, with respect to any Eligible Inventory, an amount
     which is equal to the product of (i) 85% multiplied by (ii) the Net Orderly
     Liquidation Value of such Eligible Inventory.

          "Material Adverse Change" means any material adverse change in the
     business, condition (financial or otherwise), operations, performance,
     prospects, material obligations or properties of the Guarantor or the
     Guarantor and its Subsidiaries taken as a whole.

          "Material Adverse Effect" means a material adverse effect on (a) the
     business, condition (financial or otherwise), operations, performance,
     prospects, material obligations or properties of the Guarantor or the
     Guarantor and its Subsidiaries taken as a whole, (b) the rights and
     remedies of the Collateral Trustee, the Agent or any Beneficiary under this
     Agreement or any other Transaction Document or (c) the ability of the
     Guarantor to perform its obligations under this Agreement or any other
     Transaction Document to which it is a party.

          "National City" has the meaning specified in the preamble hereto.

          "Net Orderly Liquidation Value" means the orderly liquidation value,
     on an as-is-where-is basis, net of costs and expenses incurred in
     connection with liquidation, of Inventory expressed as a Dollar amount,
     which amount shall be determined by reference to the most recent
     third-party appraisal of such Inventory received by the Agent.

          "Obligor" means any Person which incurs any obligation or liability in
     favor of any Beneficiary or any Affiliate of such Beneficiary pursuant to
     any Subject Agreement.

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

          "PolyOne Funding" means PolyOne Funding Corporation, a Delaware
     corporation.

          "Receivables Financing" means, collectively, the transactions
     contemplated by the Amended and Restated Receivables Purchase Agreement
     dated as of July 26, 2005 (the "Receivables Purchase Agreement"), among
     PolyOne Funding, as seller, the Guarantor, as seller and as servicer, the
     banks and other financial institutions party thereto, as purchasers,
     Citicorp USA, Inc., as agent, and National City Business Credit, Inc., as
     syndication agent, and the Transaction Documents (as defined in such
     Receivables Purchase Agreement).

          "Required Beneficiary" means Citigroup.

          "Secured Obligations" has the meaning specified in the Collateral
     Trust Agreement.

          "Secured Parties" has the meaning specified in the Collateral Trust
     Agreement.

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          "Security Agreement" means the Amended and Restated Security
     Agreement, dated as of May 6, 2003, from the Guarantor to the Collateral
     Trustee or its predecessor, as corporate trustee, and Angelita Pena, an
     individual residing in the State of New Jersey, or her predecessor, in each
     case not in an individual capacity but as individual trustee, as amended.

          "Subject Agreements" means all agreements and other documents relating
     to any treasury management services provided by any of the Beneficiaries
     and any of its Affiliates to the Guarantor or any of its Subsidiaries, all
     agreements evidencing any other obligations of the Guarantor or any of its
     Subsidiaries owing to any of the Beneficiaries or any of its Affiliates
     including, without limitation, all letters of credit issued by any of the
     Beneficiaries or any of its Affiliates for the benefit of the Guarantor or
     any of its Subsidiaries, all Hedge Agreements and Capitalized Leases
     entered into with the Guarantor or any of its Subsidiaries by any of the
     Beneficiaries or any of its Affiliates, and each agreement or instrument
     delivered by the Guarantor or any of its Subsidiaries pursuant to any of
     the foregoing, as the same may be amended from time to time in accordance
     with the provisions thereof, provided that "Subject Agreements" shall not
     include (i) any agreement or other document evidencing Debt of the type
     described in clause (f) of the definition of "Debt" or (ii) or any
     agreement or document which would otherwise be included in this definition
     of "Subject Agreements" the obligations under which are secured by cash
     collateral, or the breach of which would permit the applicable creditor to
     draw under a letter of credit issued by a creditworthy financial
     institution under terms reasonably acceptable to such creditor, so long as
     such cash collateral continues to secure such obligations or such letter of
     credit remains available to be drawn by such creditor.

          "Subsidiary" means any corporation, partnership, joint venture,
     limited liability company, trust or estate of which (or in which) more than
     50% of (a) the issued and outstanding capital stock or the equivalent
     ownership or controlling interest, in either case having ordinary voting
     power to elect a majority of the board of directors, managers or trustees
     thereof (irrespective of whether at the time capital stock (or other
     evidence of ownership) of any other class or classes of such entity shall
     or might have the voting power upon the occurrence of any contingency) or
     (b) the beneficial interest in such trust or estate is at the time owned or
     controlled directly or indirectly, by the Guarantor, by the Guarantor and
     one or more of its other Subsidiaries or by one or more of the Guarantor's
     other Subsidiaries.

          "Termination Date" has the meaning specified in Section 8.12.

          "Transaction Documents" means (a) this Agreement, (b) the Collateral
     Documents and (c) the Subject Agreements.

          SECTION 1.02. Computation of Time Periods. In this Agreement in the
computation of periods 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
mean "to but excluding".

          SECTION 1.03. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles, as in effect December 31, 2005, consistent with those
applied in the preparation of the financial statements referred to in Section
4.01(e) ("GAAP").

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                                   ARTICLE II

                                    GUARANTEE

          SECTION 2.01. Guarantee. The Guarantor hereby absolutely,
unconditionally and irrevocably, under any and all circumstances, guarantees to
each Beneficiary and its successors, transferees and assigns the due and
punctual payment and performance by each other Obligor of all of the obligations
and liabilities of each other Obligor now or hereafter existing under or in
respect of the Subject Agreements, whether at scheduled maturity or on any date
of a required prepayment or by acceleration, demand or otherwise (including,
without limitation, any extensions, modifications, substitutions, amendments or
renewals of any or all of the foregoing), whether direct or indirect, absolute
or contingent, and whether for principal, interest, premiums, fees, indemnities,
contract causes of action, costs, expenses or otherwise (the "Guaranteed
Obligations"). The Guarantor further agrees to pay any and all expenses
(including, without limitation, fees and expenses of counsel) incurred by the
Agent or any Beneficiary in enforcing any rights under any Transaction Document.
Without limiting the generality of the foregoing, the Guarantor's liability
shall extend to all amounts that constitute part of the Guaranteed Obligations
and would be owed by the Guarantor to the Agent or any Beneficiary under or in
respect of this Agreement but for the fact that they are unenforceable or not
allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving any other Obligor.

          SECTION 2.02. Guarantee Absolute. The Guarantor guarantees that the
Guaranteed Obligations will be paid or performed strictly in accordance with
their terms regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the
Agent or any Beneficiary with respect thereto. The obligations of the Guarantor
under or in respect of this Agreement are independent of any other obligations
and a separate action or actions may be brought and prosecuted against the
Guarantor to enforce this Agreement, irrespective of whether any action is
brought against the Guarantor or whether the Guarantor is joined in any such
action or actions. The liability of the Guarantor under this Agreement shall be
irrevocable, absolute and unconditional irrespective of, and, to the extent
permitted by applicable law, the Guarantor hereby irrevocably waives any
defenses it may now have or hereafter acquire in any way relating to, any or all
of the following:

          (a) any lack of validity or enforceability of any Subject Agreement or
     any agreement or instrument relating hereto;

          (b) any change in the time, manner or place of payment of, or in any
     other term of, all or any of the Guaranteed Obligations or any other
     obligations of any other Obligor under or in respect of any Subject
     Agreement, or any other amendment or waiver of or any consent to departure
     from any Subject Agreement, including, without limitation, any increase in
     the Guaranteed Obligations resulting from the extension of additional
     credit to any Obligor or otherwise;

          (c) any taking, exchange, release or non-perfection of any Collateral
     or any other collateral, or any taking, release or amendment or waiver of,
     or consent to departure from, any other guarantee, for all or any of the
     Guaranteed Obligations;

          (d) any manner of application of the Collateral or any other
     collateral, or proceeds thereof, to all or any of the Guaranteed
     Obligations, or any manner of sale or other disposition of the Collateral
     or any other collateral for all or any of the Guaranteed Obligations or any
     other obligations of any Obligor under the Subject Agreements or any other
     assets of any Obligor;

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          (e) any change, restructuring or termination of the corporate
     structure or existence of any Obligor;

          (f) any failure of the Agent or any Beneficiary to disclose to the
     Guarantor any information relating to the business, condition (financial or
     otherwise), operations, performance, properties or prospects of any other
     Obligor now or hereafter known to the Agent or such Beneficiary (the
     Guarantor waiving any duty on the part of the Agent and the Beneficiaries
     to disclose such information);

          (g) the failure of any other Person to execute or deliver any other
     guarantee or agreement or the release or reduction of liability of any
     other guarantor or surety with respect to the Guaranteed Obligations; or

          (h) any other circumstance (including, without limitation, any statute
     of limitations) or any existence of or reliance on any representation by
     the Agent or any Beneficiary that might otherwise constitute a defense
     available to, or a discharge of, the Guarantor or any other guarantor or
     surety.

This Agreement shall continue to be effective or be reinstated, as the case may
be, if at any time any payment or performance of any of the Guaranteed
Obligations is rescinded or must otherwise be returned by the Agent or any
Beneficiary or any other Person upon the insolvency, bankruptcy or
reorganization of any other Obligor or otherwise, all as though such payment had
not been made.

          SECTION 2.03. Waivers and Acknowledgments.  (a) The Guarantor hereby
unconditionally and irrevocably waives promptness, diligence, notice of
acceptance, presentment, demand for performance, notice of nonperformance,
default, acceleration, protest or dishonor and any other notice with respect to
any of the Guaranteed Obligations and any requirement that the Agent or any
Beneficiary protect, secure, perfect or insure any Lien or any property subject
thereto or exhaust any right or take any action against the Guarantor or any
other Person or any Collateral. The Guarantor hereby unconditionally and
irrevocably waives any right to revoke this Agreement and acknowledges that this
Agreement is continuing in nature and applies to all Guaranteed Obligations,
whether existing now or in the future.

          (b) The Guarantor hereby unconditionally and irrevocably waives (i)
any defense arising by reason of any claim or defense based upon an election of
remedies by the Agent or any Beneficiary that in any manner impairs, reduces,
releases or otherwise adversely affects the subrogation, reimbursement,
exoneration, contribution or indemnification rights of the Guarantor or other
rights of the Guarantor to proceed against any other Obligor, any other
guarantor or any other Person or any collateral and (ii) any defense based on
any right of set-off or counterclaim against or in respect of the obligations of
the Guarantor hereunder.

          (c) The Guarantor hereby unconditionally and irrevocably waives any
duty on the part of the Agent or any Beneficiary to disclose to the Guarantor
any matter, fact or thing relating to the business, condition (financial or
otherwise), operations, performance, properties or prospects of any other
Obligor or any of its Subsidiaries now or hereafter known by the Agent or such
Beneficiary.

          (d) The Guarantor acknowledges that it will receive substantial direct
and indirect benefits from the guarantee arrangements contemplated by this
Agreement and that the waivers set forth in Section 2.02 and this Section 2.03
are knowingly made in contemplation of such benefits.

          SECTION 2.04. Subrogation. The Guarantor hereby unconditionally and
irrevocably agrees not to exercise any rights that it may now have or hereafter
acquire against any other Obligor or any other insider guarantor that arise from
the existence, payment, performance or enforcement of the

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obligations under or in respect of this Agreement or any Subject Agreement,
including, without limitation, any right of subrogation, reimbursement,
exoneration, contribution or indemnification and any right to participate in any
claim or remedy of the Agent or any Beneficiary against any other Obligor or any
other insider guarantor or any collateral, whether or not such claim, remedy or
right arises in equity or under contract, statute or common law, including,
without limitation, the right to take or receive from any other Obligor or any
other insider guarantor, directly or indirectly, in cash or other property or by
set-off or in any other manner, payment or security on account of such claim,
remedy or right, unless and until all of the Guaranteed Obligations and all
other amounts payable under this Agreement shall have been paid in full and
performed in full. If any amount shall be paid to the Guarantor in violation of
the immediately preceding sentence at any time prior to the later of (a) the
payment in full in cash of the Guaranteed Obligations and all other amounts
payable under this Agreement and (b) the Termination Date, such amount shall be
received and held in trust for the benefit of the Agent and the Beneficiaries,
shall be segregated from other property and funds of the Guarantor and shall
forthwith be paid or delivered to the Agent in the same form as so received
(with any necessary endorsement or assignment) to be credited and applied to the
Guaranteed Obligations and all other amounts payable under this Agreement,
whether matured or unmatured, in accordance with the terms of the Subject
Agreements, or to be held as collateral for any obligations or other amounts
payable under this Agreement thereafter arising. If (i) the Guarantor shall make
payment to the Agent of all or any part of the Guaranteed Obligations, (ii) all
of the Guaranteed Obligations and all other amounts payable under this Agreement
shall have been paid in full in cash and (iii) the Termination Date shall have
occurred, the Agent and the Beneficiaries will, at the Guarantor's request and
expense, execute and deliver to the Guarantor appropriate documents, without
recourse and without representation or warranty, necessary to evidence the
transfer by subrogation to the Guarantor of an interest in the Guaranteed
Obligations resulting from such payment made by the Guarantor pursuant to this
Agreement.

          SECTION 2.05. Continuing Agreement; Assignments. The guarantee in this
Article II is a continuing guarantee and shall (a) remain in full force and
effect until the later of (i) the payment and performance in full of the
Guaranteed Obligations and all other amounts payable under this Agreement and
(ii) the Termination Date, (b) be binding upon the Guarantor, its successors and
assigns and (c) inure to the benefit of and be enforceable by the Agent and the
Beneficiaries and their successors, transferees and assigns. The Guarantor shall
not have the right to assign its rights hereunder or any interest herein without
the prior written consent of the Agent and the Required Beneficiary.

          SECTION 2.06. Fees. The Guarantor shall pay to the Agent for its own
account such fees as may from time to time be agreed between the Guarantor and
the Agent.

          SECTION 2.07. Taxes. (a) Any and all payments by the Guarantor
hereunder shall be made 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
Beneficiary and the Agent, taxes imposed on its income, and franchise taxes
imposed on it in lieu of income taxes, by the jurisdiction under the laws of
which such Beneficiary or the Agent (as the case may be) is organized or any
political subdivision thereof and, in the case of each Beneficiary, taxes
imposed on its income, and franchise taxes imposed on it in lieu of income
taxes, by the jurisdiction of such Beneficiary's office referred to in Section
8.02 or any political subdivision thereof (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes"). If the Guarantor shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder to any Beneficiary or the
Agent, (i) the sum payable shall be increased as may be necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 2.07) such Beneficiary or the Agent (as the case
may be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Guarantor shall make

                                        9

<PAGE>

such deductions and (iii) the Guarantor shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with applicable
law.

          (b) In addition, the Guarantor agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement
(hereinafter referred to as "Other Taxes").

          (c) The Guarantor will indemnify each Beneficiary and the Agent for
the full amount of Taxes or Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section 2.07) paid by such Beneficiary or the Agent (as the case may be) and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto. This indemnification shall be made within 30 days from the date
such Beneficiary or the Agent (as the case may be) makes written demand therefor
in reasonable detail.

          (d) Within 30 days after the date of any payment of Taxes, the
Guarantor will furnish to the Agent, at its address referred to in Section 8.02,
the original or a certified copy of a receipt evidencing payment thereof. In the
case of any payment hereunder by or on behalf of the Guarantor through an
account or branch outside the United States or by or on behalf of the Guarantor
by a payor that is not a United States person, if the Guarantor determines that
no Taxes are payable in respect thereof, the Guarantor shall furnish, or shall
cause such payor to furnish, to the Agent, at such address, an opinion of
counsel acceptable to the Agent stating that such payment is exempt from Taxes.
For purposes of this subsection (d), the terms "United States" and "United
States person" shall have the meanings specified in Section 7701 of the Internal
Revenue Code.

                                   ARTICLE III

                           CONDITIONS TO EFFECTIVENESS

          SECTION 3.01. Conditions Precedent to Effectiveness of this Agreement.
This Agreement shall become effective on and as of the first date (the
"Effective Date") on which the following conditions precedent have been
satisfied:

          (a) There shall have occurred no Material Adverse Change since
     December 31, 2005.

          (b) There shall exist no action, suit, investigation, litigation or
     proceeding affecting the Guarantor or any of its Subsidiaries pending or,
     to its or their knowledge, threatened before any court, governmental agency
     or arbitrator that (i) could be reasonably likely to have a Material
     Adverse Effect other than the matters described on Schedule 3.01(b) hereto
     (the "Disclosed Litigation") or (ii) purports to affect the legality,
     validity or enforceability of this Agreement or the consummation of the
     transactions contemplated hereby, and there shall have been no adverse
     change in the status, or financial effect on the Guarantor or any of its
     Subsidiaries, of the Disclosed Litigation from that described on Schedule
     3.01(b) hereto that could reasonably be expected to have a Material Adverse
     Effect.

          (c) The Beneficiaries shall have been given such access to the
     management, records, books of account, contracts and properties of the
     Guarantor and its Subsidiaries as they shall have reasonably requested.

                                       10

<PAGE>

          (d) All governmental and third party consents and approvals necessary
     in connection with the transactions contemplated hereby shall have been
     obtained (without the imposition of any conditions that are not acceptable
     to the Beneficiaries) and shall remain in effect, and no law or regulation
     shall be applicable in the reasonable judgment of the Beneficiaries that
     restrains, prevents or imposes materially adverse conditions upon the
     transactions contemplated hereby.

          (e) The Guarantor shall have notified each Beneficiary and the Agent
     in writing as to the proposed Effective Date.

          (f) The Guarantor shall have paid all invoiced accrued fees and
     expenses of the Agent and the Beneficiaries (including the invoiced accrued
     reasonable fees and expenses of counsel to the Agent).

          (g) On the Effective Date, the following statements shall be true and
     the Agent shall have received for the account of each Beneficiary a
     certificate signed by a duly authorized officer of the Guarantor, dated the
     Effective Date, stating that:

               (i) The representations and warranties contained in Section 4.01
          and in each other Transaction Document to which it is a party are
          correct on and as of the Effective Date, and

               (ii) No event has occurred and is continuing that constitutes a
          Default.

          (h) The Agent shall have received on or before the Effective Date the
     following, each dated such day, in form and substance satisfactory to the
     Agent and in sufficient copies for each Beneficiary:

               (i) An amendment and restatement of the Security Agreement, in
          substantially the form of Exhibit A hereto, duly executed by the
          parties thereto, together with:

                    (A) acknowledgment copies of proper financing statements,
               duly filed on or before such day under the Uniform Commercial
               Code of all jurisdictions that the Agent may deem necessary or
               desirable in order to perfect and protect the first priority
               liens and security interests created under the Security
               Agreement, covering the Collateral described in the Security
               Agreement,

                    (B) completed requests for information, dated on or before
               such day, listing the financing statements referred to in clause
               (A) above and all other effective financing statements filed in
               the jurisdictions referred to in clause (A) above that name the
               Guarantor as debtor, together with copies of such other financing
               statements,

                    (C) evidence of the completion of all other recordings and
               filings of or with respect to the Security Agreement and that all
               other action that the Agent may deem necessary or desirable in
               order to perfect and protect the Liens and security interests
               created under the Security Agreement has been taken (including,
               without limitation, receipt of duly executed payoff letters,
               UCC-3 termination statements and landlords' and bailees' waiver
               and consent agreements) that the Agent may deem necessary or
               desirable in order to perfect and protect the Liens created
               thereby,

                                       11

<PAGE>

               (ii) Evidence of the insurance required by the terms of the
          Collateral Documents,

               (iii) An amendment and restatement of the Collateral Trust
          Agreement, in substantially the form of Exhibit B hereto, duly
          executed by the parties thereto.

               (iv) An amendment and restatement of the Intercreditor Agreement,
          in substantially the form of Exhibit C hereto, duly executed by the
          parties thereto.

               (v) Certified copies of the resolutions of the Board of Directors
          of the Guarantor authorizing this Agreement and each other Transaction
          Document to which it is a party, and of all documents evidencing other
          necessary corporate action and governmental approvals, if any, with
          respect to this Agreement and each other Transaction Document to which
          it is a party.

               (vi) A certificate of the Secretary or an Assistant Secretary of
          the Guarantor certifying the names and true signatures of the officers
          of the Guarantor authorized to sign this Agreement and each other
          Transaction Document to which it is a party and the other documents to
          be delivered hereunder.

               (vii) A favorable opinion of counsel of the Guarantor,
          substantially in the form of Exhibit D hereto and as to such other
          matters as Citibank through the Agent may reasonably request.

          SECTION 3.02. Determinations Under Section 3.01. For purposes of
determining compliance with the conditions specified in Section 3.01, each
Beneficiary shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Beneficiaries unless an
officer of the Agent responsible for the transactions contemplated by this
Agreement shall have received notice from such Beneficiary prior to the proposed
Effective Date, as notified by the Guarantor to the Beneficiaries, specifying
its objection thereto. The Agent shall promptly notify the Beneficiaries of the
occurrence of the Effective Date.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

          SECTION 4.01. Representations and Warranties of the Guarantor. The
Guarantor represents and warrants as follows:

          (a) The Guarantor is a corporation duly organized, validly existing
     and in good standing under the laws of the State of Ohio, 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 Guarantor of this
     Agreement and the other Transaction Documents to which it is a party, and
     the consummation of the transactions contemplated hereby and thereby, are
     within the Guarantor's corporate powers, have been duly authorized by all
     necessary corporate action, and do not (i) contravene the Guarantor's
     charter or

                                       12

<PAGE>

     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 Guaranteed Obligation
     of the Guarantor under, or result in or require the creation of any Lien
     upon any property of the Guarantor pursuant to the terms of any agreement
     or instrument binding on or affecting the Guarantor or any of its
     properties other than in favor of the Collateral Trustee for the benefit of
     the Secured Parties.

          (c) No authorization or approval or other action by, and no notice to
     or filing with, any governmental authority or regulatory body or any other
     third party is required for the due execution, delivery and performance by
     the Guarantor of this Agreement or the other Transaction Documents to which
     it is a party. All filings and other actions necessary or desirable to
     perfect and protect the security interest in the Collateral created under
     the Collateral Documents have been duly made or taken and are in full force
     and effect, and the Collateral Documents create in favor of the Collateral
     Trustee for the benefit of the Secured Parties a valid and, together with
     such filings and other actions, perfected first priority security interest
     in the Collateral, securing the payment of the Guaranteed Obligations, and
     all filings and other actions necessary or desirable to perfect and protect
     such security interest have been duly taken. The Guarantor is the legal and
     beneficial owner of the Collateral free and clear of any Lien, except for
     the liens and security interests created or permitted under the Collateral
     Documents.

          (d) This Agreement has been, and each of the other Transaction
     Documents to which it is a party when delivered hereunder will have been,
     duly executed and delivered by the Guarantor. This Agreement is, and each
     of the other Transaction Documents to which it is a party when delivered
     hereunder will be, the legal, valid and binding obligation of the Guarantor
     enforceable against the Guarantor 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) The Consolidated balance sheet of the Guarantor and its
     Subsidiaries as at December 31, 2005, and the related Consolidated
     statements of income and cash flows of the Guarantor and its Subsidiaries
     for the fiscal year then ended, accompanied by an opinion of Ernst & Young
     LLP, independent public accountants, copies of which have been furnished to
     each Beneficiary, fairly present the Consolidated financial condition of
     the Guarantor and its Subsidiaries as at such date and the Consolidated
     results of the operations of the Guarantor and its Subsidiaries for the
     period ended on such date, all in accordance with generally accepted
     accounting principles consistently applied.

               (i) Since December 31, 2005, 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) To the best of the Guarantor's knowledge, there is no pending or
     threatened action, suit, investigation, litigation or proceeding,
     including, without limitation, any Environmental Action, affecting the
     Guarantor or any of its Subsidiaries before any court, governmental agency
     or arbitrator that (i) could be reasonably likely to have a Material
     Adverse Effect (other than the Disclosed Litigation) or, if adversely
     determined, could reasonably be expected to result in a Material Adverse
     Change or (ii) purports to affect the legality, validity or enforceability
     of this Agreement or the consummation of the transactions contemplated
     hereby, and there has been no adverse change in the status, or financial
     effect on the Guarantor or any of its Subsidiaries, of the Disclosed
     Litigation from that described on Schedule 3.01(b) hereto.

                                       13

<PAGE>

          (g) The Guarantor is not engaged in the business of extending credit
     for the purpose of purchasing or carrying margin stock (within the meaning
     of Regulation U issued by the Board of Governors of the Federal Reserve
     System).

          (h) The Guarantor is not an "investment company", or a company
     "controlled" by an "investment company", within the meaning of the
     Investment Company Act of 1940, as amended.

          (i) The Guarantor is, individually and together with its Subsidiaries,
     Solvent. "Solvent" means, with respect to any Person on a particular date,
     that on such date (i) the fair value of the property of such Person is
     greater than the total amount of liabilities, including, without
     limitation, contingent liabilities, of such Person, (ii) the present fair
     salable value of the assets of such Person is not less than the amount that
     will be required to pay the probable liability of such Person on its debts
     as they become absolute and matured, (iii) such Person does not intend to,
     and does not believe that it will, incur debts or liabilities beyond such
     Person's ability to pay such debts and liabilities as they mature and (iv)
     such Person is not engaged in business or a transaction, and is not about
     to engage in business or a transaction, for which such Person's property
     would constitute an unreasonably small capital. The amount of contingent
     liabilities at any time shall be computed as the amount that, in the 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.

                                    ARTICLE V

                           COVENANTS OF THE GUARANTOR

          SECTION 5.01. Affirmative Covenants. So long as any Guaranteed
Obligation shall remain unpaid or unperformed, the Guarantor will:

          (a) Compliance with Laws, Etc. Comply, and cause each of its
     Subsidiaries to comply, in all material respects, with all applicable laws,
     rules, regulations and orders, such compliance to include, without
     limitation, compliance with ERISA and Environmental Laws.

          (b) Payment of Taxes, Etc. Pay and discharge, and cause each of its
     Subsidiaries to pay and discharge, before the same shall become delinquent,
     (i) all taxes, assessments and governmental charges or levies imposed upon
     it or upon its property and (ii) all lawful claims that, if unpaid, might
     by law become a Lien upon its property; provided, however, that neither the
     Guarantor nor any of its Subsidiaries shall be required to pay or discharge
     any such tax, assessment, charge or claim that is being contested in good
     faith and by proper proceedings and as to which appropriate reserves are
     being maintained, unless and until any Lien resulting therefrom attaches to
     its property and becomes enforceable against its other creditors.

          (c) Maintenance of Insurance. Maintain, and cause each of its
     Subsidiaries to maintain, insurance with responsible and reputable
     insurance companies or associations in such amounts and covering such risks
     as is usually carried by companies engaged in similar businesses and owning
     similar properties in the same general areas in which the Guarantor or such
     Subsidiary operates; provided, however, that the Guarantor and its
     Subsidiaries may self-insure to the same extent as is consistent with past
     practice and to the extent consistent with prudent business practice.

          (d) Preservation of Corporate Existence, Etc. Preserve and maintain,
     and cause each of its Subsidiaries to preserve and maintain, its corporate
     existence, rights (charter and statutory) and franchises; provided,
     however, that the Guarantor and its Subsidiaries may consummate any

                                       14

<PAGE>

     merger or consolidation permitted under Section 5.02(b) and provided
     further that neither the Guarantor nor any of its Subsidiaries shall be
     required to preserve any right or franchise if the Board of Directors of
     the Guarantor or such Subsidiary shall determine that the preservation
     thereof is no longer desirable in the conduct of the business of the
     Guarantor or such Subsidiary, as the case may be, and that the loss thereof
     is not disadvantageous in any material respect to the Guarantor, such
     Subsidiary or the Beneficiaries.

          (e) Keeping of Books. Keep, and cause each of its Subsidiaries to
     keep, 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 Guarantor and each such Subsidiary in accordance with generally
     accepted accounting principles in effect from time to time.

          (f) Maintenance of Properties, Etc. Maintain and preserve, and cause
     each of its Subsidiaries to maintain and preserve, all of its properties
     that are used or useful in the conduct of its business in good working
     order and condition, ordinary wear and tear excepted.

          (g) Reporting Requirements. Furnish to the Beneficiaries:

               (i) within 50 days after the end of each of the first three
          fiscal quarters of each fiscal year, financial information regarding
          the Guarantor 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
          Projections, together with a certificate of the chief financial
          officer or treasurer of the Guarantor (a) that such financial
          statements fairly presenting the Consolidated financial position of
          the Guarantor 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), (y) as to compliance with the
          terms of this Agreement and (z) setting forth in reasonable detail the
          calculations necessary to demonstrate compliance with Section 5.03,
          provided, that in the event of any change in GAAP used in the
          preparation of such financial statements, the Guarantor shall also
          provide, if necessary for the determination of compliance with Section
          5.03, a statement of reconciliation conforming such financial
          statement to GAAP;

               (ii) within 95 days after the end of each fiscal year, financial
          information regarding the Guarantor and its Subsidiaries consisting of
          Consolidated balance sheets of the Guarantor and its Subsidiaries as
          of the end of such year and related statements of income and cash
          flows of the Guarantor 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 the
          Guarantor being a going concern by the Guarantor's independent public
          accountants, together with the report of such accounting firm stating
          that (A) such financial statements fairly present the Consolidated
          financial position of the Guarantor and its Subsidiaries as at the
          dates indicated and the results of 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 the
          Guarantor's independent public accountants shall concur and that shall
          have been disclosed in the notes to the financial statements) and (B)
          the examination by the Guarantor'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

                                       15

<PAGE>

          the regular audit of the business of the Guarantor and its
          Subsidiaries such accounting firm has obtained no knowledge that a
          Default has occurred and is continuing, or, if in the opinion of such
          accounting firm, a Default has occurred and is continuing, a statement
          as to the nature thereof; provided, that in the event of any change in
          GAAP used in the preparation of such financial statements, the
          Guarantor shall also provide, if necessary for the determination of
          compliance with Section 5.03, a statement of reconciliation conforming
          such financial statement to GAAP;

               (iii) as soon as possible and in any event within five Business
          Days after the occurrence of each Default continuing on the date of
          such statement, a statement of an officer of the Guarantor having
          knowledge of or responsibility for such matters setting forth details
          of such Default and the action that the Guarantor has taken and
          proposes to take with respect thereto;

               (iv) as soon as possible and in any event within 15 days after
          the end of each month, a certificate of a duly authorized officer of
          the Guarantor (A) setting forth in reasonable detail (1) the aggregate
          Dollar or Dollar Equivalent amount of obligations outstanding under
          the Subject Agreements as of the last day of such month (each such
          date, a "Certification Date"), (2) the aggregate Dollar amount of
          Eligible Inventory as of such Certification Date and (3) the
          calculations necessary to demonstrate that the aggregate Dollar or
          Dollar Equivalent amount of the obligations outstanding under the
          Subject Agreements is below the Debt Coverage Limit as of such
          Certification Date, and (B) stating that the representations and
          warranties contained in Section 4.01 and in each other Transaction
          Document to which it is a party are correct on and as of such
          Certification Date, and no event has occurred and is continuing that
          constitutes a Default.

               (v) promptly after the sending or filing thereof, the Guarantor
          shall send the Agent copies of (A) all reports the Guarantor sends to
          its security holders generally, (B) all reports and registration
          statements that the Guarantor 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 (D) all other statements concerning
          material changes or developments in the business of the Guarantor made
          available by the Guarantor or any of its Subsidiaries to the public or
          any other creditor.

               (vi) promptly after the commencement thereof, notice of the
          commencement and nature of all actions and proceedings before any
          court, governmental agency or arbitrator affecting the Guarantor or
          any of its Subsidiaries of the type described in Section 4.01(f); and

               (vii) such other information respecting the condition or
          operations, financial or otherwise, of the Guarantor or any of its
          Subsidiaries as any Beneficiary through the Agent may from time to
          time reasonably request.

          (h) Further Assurances. Promptly upon request by the Agent, or any
     Beneficiary through the Agent:

               (i) correct any material defect or error that may be discovered
          in any Transaction Document or in the execution, acknowledgment,
          filing or recordation thereof; and

                                       16

<PAGE>

               (ii) do, execute, acknowledge, deliver, file and re-file any and
          all such further acts, pledge agreements, financing statements and
          continuations thereof, termination statements, notices of assignment,
          transfers, certificates, assurances and other instruments as the
          Agent, or any Beneficiary through the Agent, may reasonably require
          from time to time in order to (A) carry out more effectively the
          purposes of the Transaction Documents, (B) to the fullest extent
          permitted by applicable law, subject the Guarantor's or any of the
          other Obligors' properties, assets, rights or interests to the Liens
          now or hereafter intended to be covered by any of the Collateral
          Documents, (C) perfect and maintain the validity, effectiveness and
          priority of any of the Collateral Documents and any of the Liens
          intended to be created thereunder and (D) assure, convey, grant,
          assign, transfer, preserve, protect and confirm more effectively unto
          the Beneficiaries the rights granted or now or hereafter intended to
          be granted to the Beneficiaries under any Transaction Document or
          under any other instrument executed in connection with any Transaction
          Document to which the Guarantor or any of the other Obligors is or is
          to be a party, and cause each of the other Obligors to do so.

          (i) Debt Coverage Limit. If, at any Certification Date, the aggregate
     amount of the obligations outstanding under the Subject Agreements (based
     in respect of any currency other than Dollars by reference to the Dollar
     Equivalent thereof determined on such date) exceeds the Debt Coverage
     Limit, the Guarantor will promptly and in any event within 5 Business Days
     of such Certification Date, either:

               (i) deliver to the Agent a letter of credit for the benefit of
          the Beneficiaries issued by a financial institution, and in form and
          substance, reasonably acceptable to the Agent, provided such letter of
          credit shall (A) have an available amount equal to or greater than the
          amount by which the Debt Coverage Limit has been so exceeded, (B)
          provide for a drawing upon such available amount by the Agent only
          upon the occurrence of any Event of Default described in Section
          6.01(a) and Section 6.01(e) and (C) be promptly returned by the Agent
          to its issuer, upon the Guarantor's request and at the Guarantor's
          sole expense, if the aggregate amount of Guaranteed Obligations
          thereafter remains below the Debt Coverage Limit for three consecutive
          Certification Dates, provided further that the aggregate amount of the
          obligations outstanding under the Subject Agreements shall be deemed
          to be reduced, only for the purpose of calculating pursuant to Section
          5.01(i) whether the Debt Coverage Limit has been exceeded, by the
          available amount of such letter of credit so long as such amount
          remains available for the Agent to draw upon;

               (ii) deposit with or deliver to the Agent cash or deposit account
          balances for the benefit of the Beneficiaries, as collateral for the
          Guaranteed Obligations, in an available amount equal to or greater
          than the amount by which the Debt Coverage Limit has been so exceeded,
          and pursuant to documentation in form and substance satisfactory to
          the Agent, provided (A) to the extent the amount by which the Debt
          Coverage Limit has been so exceeded is thereafter reduced, the Agent
          shall return such cash or deposit account balances in the amount by
          which such cash or deposit amount balances exceed the amount by which
          the Debt Coverage Limit is then exceeded, upon the Guarantor's request
          and at the Guarantor's sole expense, and (B) that the aggregate amount
          of the obligations outstanding under the Subject Agreements shall be
          deemed to be reduced, only for the purpose of calculating pursuant to
          Section 5.01(i) whether the Debt Coverage Limit has been exceeded, by
          the aggregate amount of such cash or deposit account balances which
          then remains available for the Agent to draw upon; or

                                       17
<PAGE>

               (iii) reduce, or cause to be reduced, the aggregate amount of the
          obligations outstanding under the Subject Agreements by an amount
          equal to or greater than the amount by which the Debt Coverage Limit
          has been so exceeded.

          (j) Leased Warehouse Access. No later than the date which is 60 days
     after the Effective Date, the Guarantor shall use commercially reasonable
     efforts to deliver a collateral access agreement satisfying the
     requirements set forth in Section 7(b) of the Security Agreement, in form
     and substance reasonably satisfactory to the Agent and duly executed by the
     lessor, warehouseman, bailee or agent, as applicable, of such leased
     facility on Schedule II to the Security Agreement as reasonably requested
     by the Agent.

          SECTION 5.02. Negative Covenants. So long as any Guaranteed Obligation
shall remain unpaid or unperformed, the Guarantor will not:

          (a) Liens, Etc. Create or suffer to exist any Lien upon or with
     respect to any of its properties or assets, whether now owned or hereafter
     acquired, or assign, or permit any of its Subsidiaries (other than PolyOne
     Funding) to assign, any right to receive income, except for the following:

               (i) Liens created by, pursuant to, arising under or relating to
          any Transaction Document or the Receivables Financing,

               (ii) Liens existing on the Effective Date; provided, however,
          that such Liens shall not be permitted with respect to any Collateral
          unless such Liens arose under, were created by or were incurred
          pursuant to any Transaction Document, and

               (iii) statutory Liens and other liens created in the ordinary
          course of business.

          (b) Transactions with Affiliates. Except as otherwise contemplated by
     this Agreement, any other Transaction Document or the Receivables Purchase
     Agreement: make any Investment in an Affiliate of the Guarantor that is not
     a Subsidiary of the Guarantor; (ii) transfer, sell, lease, assign or
     otherwise dispose of any asset to any Affiliate of the Guarantor that is
     not a Subsidiary of the Guarantor; (iii) merge into or consolidate with or
     purchase or acquire assets from any Affiliate of the Guarantor that is not
     a Subsidiary of the Guarantor; or (iv) prepay any indebtedness to any
     Affiliate of the Guarantor that is not a Subsidiary of the Guarantor.

          (c) Mergers, Etc. Enter into a transaction of consolidation or merger
     with any Person unless (i) before and after giving effect on a pro forma
     basis to such consolidation or merger, no event shall have occurred and be
     continuing, or would result from such consolidation or merger, that
     constitutes a Default and (ii) either (A) the Guarantor shall survive such
     consolidation or merger or (B) such other corporation or entity formed by
     such consolidation or into which the Guarantor shall be merged shall
     assume, in a writing on terms reasonably satisfactory to the Required
     Beneficiary and the Agent, all of the Guarantor's rights, obligations and
     liabilities under the Transaction Documents to which it is a party and all
     the other instruments or documents delivered or to be delivered thereunder.

          SECTION 5.03. Financial Covenant. So long as any Guaranteed Obligation
shall remain unpaid or unperformed, the Guarantor will cause, and cause its
Subsidiaries to cause, the aggregate amount of the obligations outstanding under
the Subject Agreements to remain at all times below the Debt Coverage Limit.

                                       18

<PAGE>

                                   ARTICLE VI

                                EVENTS OF DEFAULT

          SECTION 6.01. Events of Default. If any of the following events
("Events of Default") shall occur and be continuing:

          (a) The Guarantor 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

          (b) Any representation or warranty made or deemed made by the
     Guarantor or any of its Subsidiaries (or any of their respective officers)
     under or in connection with this Agreement or any other Transaction
     Document, or in any certificate delivered by the Guarantor pursuant to
     Section 5.01(g)(iv) or any other written report, certificate or information
     delivered by or on behalf of the Guarantor or any of its Subsidiaries (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 Guarantor shall fail to perform or observe any term,
     covenant or agreement contained in Section 5.01(d), 5.01(g)(iv), 5.02 or
     5.03 or (ii) the Guarantor 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 the date on
     which any officer of the Guarantor becomes aware of such failure and (B)
     the date on which written notice thereof shall have been given to the
     Guarantor by the Agent or any Beneficiary; or

          (d) The Guarantor shall fail to pay any principal of or premium or
     interest on any of its Debt that is outstanding in a principal or notional
     amount of at least $15,000,000 in the aggregate (but excluding Debt
     outstanding hereunder), 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 or
     redeemed (other than by a regularly scheduled required prepayment or
     redemption), 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) The Guarantor 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 Guarantor 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 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

                                       19

<PAGE>

     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 Guarantor shall take any corporate action to authorize any of
     the actions set forth above in this subsection (e); or

          (f) Since December 31, 2005, there shall have been any Material
     Adverse Change (other than to the extent expressly set forth on Schedule
     6.01(f) or disclosed in any public filing prior to the Effective Date with
     the Securities and Exchange Commission); or

          (g) A Change of Control shall occur;

          (h) Any provision of any Transaction Document to which the Guarantor
     is a party shall for any reason (other than by a termination of such
     Transaction Document in accordance with its terms) cease to be a legal,
     valid and binding obligation of the Guarantor, or the Guarantor shall so
     state in writing; or

          (i) Any Collateral Document or financing statement after execution and
     delivery thereof shall for any reason (other than pursuant to the terms
     thereof or as otherwise permitted by the Transaction Documents) cease to
     create a valid and perfection first priority lien on and security interest
     in the Collateral purported to be covered thereby;

then, and in any such event, the Agent shall at the request, or may with the
consent, of the Required Beneficiary, by notice to the Guarantor, direct the
Collateral Trustee to exercise the remedies set forth in Section 12 of the
Security Agreement.

                                   ARTICLE VII

                                    THE AGENT

          SECTION 7.01. Authorization and Action. Each Beneficiary 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 as are delegated to
the Agent by the terms hereof, together with such powers and discretion as are
reasonably incidental thereto. As to any matters not expressly provided for by
this Agreement (including, without limitation, enforcement or collection of any
Guaranteed Obligation), the Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Required Beneficiary, and such instructions shall
be binding upon all Beneficiaries; provided, however, that the Agent shall not
be required to take any action that exposes the Agent to personal liability or
that is contrary to this Agreement or applicable law. The Agent agrees to give
to each Beneficiary prompt notice of (i) each notice given to it by the
Guarantor pursuant to the terms of this Agreement, (ii) the execution by the
Agent of any amendment to or waiver or consent under this Agreement pursuant to
Section 8.01 and (iii) the execution by the Agent of an acknowledgement of the
termination of this Agreement pursuant to Section 8.12.

          SECTION 7.02. 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 under or in connection with this Agreement,
except for its or their own gross negligence or willful misconduct. Without
limitation of the generality of the foregoing, the Agent: (i) may treat a
Beneficiary or its Affiliate party to a Subject Agreement as the holder of the
Guaranteed Obligations resulting therefrom until the Agent receives notice from
such Beneficiary; (ii) may consult with legal counsel (including counsel for the

                                       20

<PAGE>

Guarantor), 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; (iii)
makes no warranty or representation to any Beneficiary and shall not be
responsible to any Beneficiary for any statements, warranties or representations
(whether written or oral) made in or in connection with this Agreement; (iv)
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 on the
part of the Guarantor or to inspect the property (including the books and
records) of the Guarantor; (v) shall not be responsible to any Beneficiary for
the due execution, legality, validity, enforceability, genuineness, sufficiency
or value of, or the perfection or priority of any lien or security interest
created or purported to be created under or in connection with, this Agreement
or any other instrument or document furnished pursuant hereto; and (vi) shall
incur no liability under or in respect of this Agreement by acting upon any
notice, consent, certificate or other instrument or writing (which may be by
telecopier) believed by it to be genuine and signed or sent by the proper party
or parties.

          SECTION 7.03. Citicorp and Affiliates. Citicorp shall have the same
rights and powers under this Agreement as any other Beneficiary and may exercise
the same as though it were not the Agent; and the term "Beneficiary" or
"Beneficiaries" shall, unless otherwise expressly indicated, include Citicorp in
its individual capacity. Citicorp and its Affiliates may accept deposits from,
lend money to, act as trustee under indentures of, accept investment banking
engagements from and generally engage in any kind of business with, the
Guarantor, any of its Subsidiaries and any Person who may do business with or
own securities of the Guarantor or any such Subsidiary, all as if Citicorp were
not the Agent and without any duty to account therefor to the Beneficiaries.

          SECTION 7.04. Beneficiary Credit Decision. Each Beneficiary
acknowledges that it has, independently and without reliance upon the Agent or
any other Beneficiary, decided to enter into this Agreement. Each Beneficiary
also acknowledges that it will, independently and without reliance upon the
Agent or any other Beneficiary 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.

          SECTION 7.05. Indemnification. (a) The Beneficiaries agree to
indemnify the Agent (to the extent not reimbursed by the Guarantor), ratably
according to the respective principal amounts of the Guaranteed Obligations then
owed to each of them, from and against any and all liabilities, 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
action taken or omitted by the Agent under this Agreement (collectively, the
"Indemnified Costs"), provided that no Beneficiary shall be liable for any
portion of the Indemnified Costs resulting from the Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each Beneficiary agrees
to reimburse the Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including reasonable counsel fees) incurred by the Agent
in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, to the extent that the Agent is not
reimbursed for such expenses by the Guarantor. In the case of any investigation,
litigation or proceeding giving rise to any Indemnified Costs, this Section 7.05
applies whether any such investigation, litigation or proceeding is brought by
the Agent, any Beneficiary or a third party.

          (b) The failure of any Beneficiary to reimburse the Agent promptly
upon demand for its ratable share of any amount required to be paid by the
Beneficiaries to the Agent as provided herein shall not relieve any other
Beneficiary of its obligation hereunder to reimburse the Agent for its ratable
share of such amount, but no Beneficiary shall be responsible for the failure of
any other Beneficiary to reimburse the Agent for such other Beneficiary's
ratable share of such amount. Without prejudice to the survival of

                                       21

<PAGE>

any other agreement of any Beneficiary hereunder, the obligations of each
Beneficiary contained in this Section 7.05 shall survive the payment and
performance in full of the Guaranteed Obligations.

          SECTION 7.06. Successor Agent. The Agent may resign at any time by
giving written notice thereof to the Beneficiaries and the Guarantor. Upon any
such resignation, the Required Beneficiary shall have the right to appoint a
successor Agent, which successor Agent, so long as no Default has occurred and
is continuing, shall be approved by the Guarantor, which approval shall not be
unreasonably withheld or delayed. If no successor Agent shall have been so
appointed by the Required Beneficiary in accordance with the immediately
preceding sentence, and shall have accepted such appointment, within 30 days
after the retiring Agent's giving of notice of resignation, then the retiring
Agent may, on behalf of the Beneficiaries, appoint a successor Agent, which
shall be a commercial bank organized under the laws of the United States of
America or of any State thereof and having a combined capital and surplus of at
least $500,000,000. Upon the acceptance of any appointment as Agent hereunder by
a successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, discretion, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's resignation or
removal hereunder as Agent, the provisions of this Article VII shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement.

                                  ARTICLE VIII

                                  MISCELLANEOUS

          SECTION 8.01. Amendments, Etc. No amendment or waiver of any provision
of this Agreement, nor consent to any departure by the Guarantor therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Required Beneficiary, and then such 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, unless in writing
and signed by the Agent in addition to the Beneficiary required above to take
such action, affect the rights or duties of the Agent under this Agreement or
any other Transaction Document.

          SECTION 8.02. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including telecopier communication)
and mailed, telecopied or delivered, if to the Guarantor, at the address of the
Guarantor at 33587 Walker Road, Avon Lake, Ohio 44012, Attention: Treasurer; if
to any Beneficiary, at its address specified opposite its name on Schedule I
hereto; and if to the Agent, at its address at 388 Greenwich Street, 21st Floor,
New York, New York 10013, Attention: Daniel Gouger; or, as to the Guarantor or
the Agent, at such other address as shall be designated by such party in a
written notice to the other parties and, as to each other party, at such other
address as shall be designated by such party in a written notice to the
Guarantor and the Agent. All such notices and communications shall be effective
when received. Delivery by telecopier of an executed counterpart of any
amendment or waiver of any provision of this Agreement or of any Exhibit hereto
to be executed and delivered hereunder shall be effective as delivery of a
manually executed counterpart thereof.

          SECTION 8.03. No Waiver; Remedies. No failure on the part of any
Beneficiary 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 such right preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.

                                       22

<PAGE>

          SECTION 8.04. Costs and Expenses. (a) The Guarantor agrees to pay on
demand all costs and expenses of the Agent in connection with the preparation,
execution, delivery, administration, modification and amendment of this
Agreement and the other documents to be delivered hereunder, including, without
limitation, (A) all due diligence, syndication (including printing, distribution
and bank meetings), transportation, computer, duplication, appraisal,
consultant, and audit expenses and (B) the reasonable fees and expenses of
counsel for the Agent with respect thereto and with respect to advising the
Agent as to its rights and responsibilities under this Agreement. The Guarantor
further agrees to pay on demand all costs and expenses of the Agent and the
Beneficiaries, if any (including, without limitation, reasonable counsel fees
and expenses), in connection with the enforcement (whether through negotiations,
legal proceedings or otherwise) of this Agreement and the other documents to be
delivered hereunder, including, without limitation, reasonable fees and expenses
of counsel for the Agent and each Beneficiary in connection with the enforcement
of rights under this Section 8.04(a).

          (b) The Guarantor agrees to indemnify and hold harmless the Agent and
each Beneficiary and each of their Affiliates and their officers, directors,
employees, agents and advisors (each, an "Indemnified Party") from and against
any and all claims, damages, losses, liabilities and expenses (including,
without limitation, reasonable fees and expenses of counsel) incurred by or
asserted or awarded against any Indemnified Party, in each case arising out of
or in connection with or by reason of, in connection with the preparation for a
defense of, any investigation, litigation or proceeding arising out of, related
to or in connection with (i) this Agreement or any of the transactions
contemplated herein or (ii) the actual or alleged presence of Hazardous
Materials on any property of the Guarantor or any of its Subsidiaries or any
Environmental Action relating in any way to the Guarantor or any of its
Subsidiaries, in each case of such an investigation, litigation or other
proceeding to which the indemnity in this Section 8.04(b) applies, such
indemnity shall be effective whether or not such investigation, litigation or
proceeding is brought by the Guarantor, its directors, shareholders or creditors
or an Indemnified Party or any other Person or any Indemnified Party is
otherwise a party thereto and whether or not the transactions contemplated
hereby are consummated, except to the extent such claim, damage, loss, liability
or expense resulted from such Indemnified Party's gross negligence or willful
misconduct. The Guarantor also agrees not to assert any claim against the Agent,
any Beneficiary, any of their Affiliates, or any of their respective directors,
officers, employees, attorneys and agents, on any theory of liability, for
special or indirect damages arising out of or otherwise relating to this
Agreement or any of the transactions contemplated herein.

          (c) Each Indemnified Party shall, promptly after becoming aware of any
actual or threatened action or claim against such Indemnified Party in respect
of which indemnification may be sought against the Guarantor pursuant to this
Section 8.04(b), notify the Guarantor in writing of such action or claim. In
case any such action shall be brought against any Indemnified Party and such
Indemnified Party shall notify the Guarantor of the commencement thereof, the
Guarantor may participate therein or assume the defense thereof and after notice
from the Guarantor to such Indemnified Party of an election so to assume the
defense thereof, such Indemnified Party shall cooperate fully, completely and
promptly in the defense thereof, including without limitation, the settlement of
outstanding claims, and the Guarantor will not be liable to such Indemnified
Party under this Section 8.04(b) for any legal or other expenses subsequently
incurred by such Indemnified Party in connection with the defense thereof other
than reasonable costs of investigation incurred with the consent of the
Guarantor, which consent shall not be unreasonably withheld or delayed;
provided, however, that unless and until the Guarantor so assumes the defense of
any such action, the Guarantor shall have the right to participate at its own
expense in the defense of any such action to which it is a party. If the
Guarantor shall not have so assumed the defense of any such action or if any
Indemnified Party shall have reasonably concluded that there may be defenses
available to it or them which are different from or additional to those
available to the Guarantor (in which case the Guarantor shall not have the right
to direct the defense of such action on behalf of such Indemnified Party), legal
and other expenses incurred by such Indemnified Party shall be borne by the

                                       23

<PAGE>

Guarantor; provided that the Guarantor shall be liable only for the expenses of
a single legal counsel for all Indemnified Parties in connection with any single
action. Notwithstanding the foregoing, the Guarantor shall not be liable for any
settlement of any action or claim effected without its consent.

          (d) The Guarantor will not settle or compromise or consent to the
entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification has been sought hereunder
(whether or not an Indemnified Party is a party to such claim, action, suit or
proceeding) without the prior written consent of the Agent, unless such
settlement, compromise or consent includes an unconditional release of the Agent
and each Indemnified Party from all liability arising from such claim, action,
suit or proceeding.

          (e) Without prejudice to the survival of any other agreement of the
Guarantor hereunder, the agreements and obligations of the Guarantor contained
in Sections 2.07 and 8.04 shall survive the payment and performance in full of
the Guaranteed Obligations.

          SECTION 8.05. Right of Set-off. Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by Section 6.01 to authorize the Agent to
exercise remedies pursuant to the provisions of Section 6.01, each Beneficiary
and each of its Affiliates is hereby authorized at any time that payment owed to
such Beneficiary is not made by the Guarantor to the Agent when due and from
time to time, to the fullest extent permitted by law, to set off 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 Beneficiary or
such Affiliate to or for the credit or the account of the Guarantor against any
and all of the obligations of the Guarantor now or hereafter existing under this
Agreement, whether or not such Beneficiary shall have made any demand under this
Agreement and although such obligations may be unmatured. Each Beneficiary
agrees promptly to notify the Guarantor after any such set-off and application,
provided that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Beneficiary and its Affiliates
under this Section 8.05 are in addition to other rights and remedies (including,
without limitation, other rights of set-off) that such Beneficiary and its
Affiliates may have.

          SECTION 8.06. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Guarantor and the Agent and when the
Agent shall have been notified by each Beneficiary that such Beneficiary has
executed it and thereafter shall be binding upon and inure to the benefit of the
Guarantor, the Agent and each Beneficiary and their respective successors and
assigns, except that the Guarantor shall not have the right to assign its rights
hereunder or any interest herein without the prior written consent of the
Beneficiaries.

          SECTION 8.07. Confidentiality. Neither the Agent nor any Beneficiary
shall disclose any Confidential Information to any other Person without the
consent of the Guarantor, other than (a) to the Agent's or such Beneficiary's
Affiliates and their officers, directors, employees, agents and advisors and, to
actual or prospective assignees and participants, and then only on a
confidential basis, (b) as required by any law, rule or regulation or judicial
process, (c) to any rating agency when required by it, provided that, prior to
any such disclosure such rating agency shall undertake to preserve the
confidentiality of any Confidential Information relating to the Guarantor
received by it from such Beneficiary, (d) in connection with any legal
proceedings to which such Person is a party, and then only on a confidential
basis and (e) as requested or required by any state, federal or foreign
authority or examiner regulating banks or banking.

          SECTION 8.08. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.

                                       24

<PAGE>

          SECTION 8.09. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.

          SECTION 8.10. 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 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.
The Guarantor hereby agrees that service of process in any such action or
proceeding brought in the any such New York State court or in such federal court
may be made upon the Guarantor at 33587 Walker Road, Avon Lake, Ohio 44012,
Attention: Secretary. The Guarantor hereby further irrevocably consents to the
service of process in any action or proceeding in such courts by the mailing
thereof by any parties hereto by registered or certified mail, postage prepaid,
to the Guarantor at its address specified pursuant to Section 8.02. 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.

          (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 suit, action or
proceeding arising out of or relating to this Agreement 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 8.11. Authorization of Agent and Collateral Trustee. Upon
execution of this Agreement by the Required Beneficiary, the Beneficiaries
hereby (a) authorize the Agent to instruct the Collateral Trustee to (i) release
from the Lien of the Security Agreement the assets listed on Schedule 8.11
hereto, (ii) release the mortgages made by the Guarantor or its Subsidiaries in
favor of the Collateral Trustee pursuant to the Amended and Restated Credit
Agreement, (iii) execute and deliver an amendment and restatement of the
Collateral Trust Agreement as contemplated by Section 3.01(h)(iii), (iv) execute
and deliver an amendment and restatement of the Security Agreement as
contemplated by Section 3.01(h)(i) and (v) execute and deliver an amendment to
the Intercreditor Agreement as contemplated by Section 3.01(h)(iv), and (b)
authorize the Agent to take such other action as shall be reasonably necessary
to consummate the transactions contemplated by this Section 8.11.

          SECTION 8.12. Termination.

          Unless otherwise agreed in a writing executed by the Required
Beneficiary and acknowledged by the Agent, the term of this Agreement shall be
continuous until the date (the "Termination Date") on which occurs the later of
(i) the cash payment or performance in full of all of the Guaranteed Obligations
and (ii) the termination of all of the Subject Agreements, subject to
reinstatement pursuant to Section 2.02.

          SECTION 8.13. Waiver of Jury Trial. Each of the Guarantor, the Agent
and the Beneficiaries hereby irrevocably waives 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 the actions of the
Agent or any Beneficiary in the negotiation, administration, performance or
enforcement thereof.

                                       25

<PAGE>

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

                                        POLYONE CORPORATION
                                        as Guarantor

                                        By
                                           -------------------------------------
                                        Title:
                                               ---------------------------------

                                        CITICORP USA, INC.,
                                        as Agent

                                        By
                                           -------------------------------------
                                        Title:
                                               ---------------------------------

                                        CITICORP USA, INC.,
                                        as Beneficiary

                                        By
                                           -------------------------------------
                                        Title:
                                               ---------------------------------

                                        KEYBANK NATIONAL ASSOCIATION,
                                        as Beneficiary

                                        By
                                           -------------------------------------
                                        Title:
                                               ---------------------------------

                                        NATIONAL CITY BANK,
                                        as Beneficiary

                                        By
                                           -------------------------------------
                                        Title:
                                               ---------------------------------

<PAGE>

                                                                   Schedule 8.11

                              LIENS TO BE RELEASED

                                    [TO COME]

<PAGE>

                                                                       Exhibit A

                       FORM OF SECOND AMENDED AND RESTATED
                               SECURITY AGREEMENT

                                   [ATTACHED]

<PAGE>

                                                                       Exhibit B

                          FORM OF AMENDED AND RESTATED
                           COLLATERAL TRUST AGREEMENT

                                   [ATTACHED]

<PAGE>

                                                                       Exhibit D

                          FORM OF AMENDED AND RESTATED
                             INTERCREDITOR AGREEMENT

                                   [ATTACHED]<PAGE>

                                                                    Exhibit 10.2

                                                                  EXECUTION COPY

                           SECOND AMENDED AND RESTATED
                               SECURITY AGREEMENT

                               Dated June 6, 2006

                                      From

                              POLYONE CORPORATION,
                                   as Grantor,

                                       to

                      U.S. BANK TRUST NATIONAL ASSOCIATION,
                              as Collateral Trustee

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
Section                                                                     Page
-------                                                                     ----
<S>                                                                         <C>
Section 1.  Grant of Security............................................     3
Section 2.  Security for Obligations.....................................     3
Section 3.  Representations and Warranties...............................     3
Section 4.  Further Assurances...........................................     5
Section 5.  As to Inventory..............................................     6
Section 6.  Insurance....................................................     6
Section 7.  Changes; Bailees.............................................     7
Section 8.  Transfers and Other Liens....................................     7
Section 9.  Collateral Trustee Appointed Attorney-in-Fact................     7
Section 10. Collateral Trustee May Perform...............................     8
Section 11. The Collateral Trustee's Duties..............................     8
Section 12. Remedies.....................................................     8
Section 13. Indemnity and Expenses.......................................     9
Section 14. Amendments; Waivers..........................................    10
Section 15. Notices; Etc.................................................    10
Section 16. Continuing Security Interest; Assignments under
            the Guarantee and Agreement..................................    10
Section 17. Release; Termination.........................................    10
Section 18. Execution in Counterparts....................................    10
Section 19. Governing Law................................................    10
Section 20. Intercreditor Agreement......................................    10
</TABLE>

Schedules I  - Location, Chief Executive Office, Place Where Agreements
               Are Maintained, Type Of Organization, Jurisdiction Of
               Organization And Organizational Identification Number
Schedule II  - Locations of Inventory
Schedule III - Changes in Name, Location, Etc.

                                        i

<PAGE>

                 SECOND AMENDED AND RESTATED SECURITY AGREEMENT

          SECOND AMENDED AND RESTATED SECURITY AGREEMENT, dated as of June 6,
2006 (as amended, amended and restated, supplemented or otherwise modified from
time to time, this "Agreement"), made by POLYONE CORPORATION, an Ohio
corporation (the "Grantor"), to U.S. BANK TRUST NATIONAL ASSOCIATION ("U.S.
Bank"), a national banking association (together with any successor collateral
trustee appointed pursuant to Article VII hereof, the "Collateral Trustee"), as
trustee for the Secured Holders (as hereinafter defined).

          PRELIMINARY STATEMENTS.

1. The Geon Company, a Delaware corporation and predecessor in interest to the
Grantor ("Geon"), has made a guarantee dated as of December 22, 1997 (as
amended, supplemented or otherwise modified and in effect on the date hereof and
as the same may hereafter be further amended, modified, extended, renewed,
replaced, restated or supplemented from time to time pursuant to the terms
thereof, the "Sunbelt Guarantee") in favor of each of the holders of the
Guaranteed Secured Senior Notes due 2017, Series G (as amended, supplemented or
otherwise modified and in effect on the date hereof and as the same may
hereafter be further amended, modified, extended, renewed, replaced, restated or
supplemented from time to time pursuant to the terms thereof, the "Sunbelt
Notes") issued by Sunbelt Cholor Alkali Partnership pursuant to the Note
Purchase Agreements, each dated December 22, 1997 between Sunbelt and the
purchasers of the Sunbelt Notes.

2. The Grantor has issued (i) 7 1/2% Debentures due 2015 (as amended,
supplemented or otherwise modified and in effect on the date hereof and as the
same may hereafter be further amended, modified, extended, renewed, replaced,
restated or supplemented from time to time pursuant to the terms thereof, the
"Geon Debentures") pursuant to that certain Indenture dated as of December 1,
1995 (as amended, supplemented or otherwise modified and in effect on the date
hereof and as the same may be further amended, modified, extended, renewed,
replaced, restated or supplemented from time to time pursuant to the terms
thereof, the "Geon Indenture"), (ii) 8 7/8% Senior Notes due 2012 (as amended,
supplemented or otherwise modified and in effect on the date hereof and as the
same may hereafter be further amended, modified, extended, renewed, replaced,
restated or supplemented from time to time pursuant to the terms thereof, the
"2002 PolyOne Notes") pursuant to that certain Indenture dated as of April 23,
2002 (as amended, supplemented or otherwise modified and in effect on the date
hereof and as the same may be further amended, modified, extended, renewed,
replaced, restated or supplemented from time to time pursuant to the terms
thereof, the "2002 PolyOne Indenture") and (iii) 10 5/8% Senior Notes due 2010
(as amended, supplemented or otherwise modified and in effect on the date hereof
and as the same may hereafter be further amended, modified, extended, renewed,
replaced, restated or supplemented from time to time pursuant to the terms
thereof, the "2003 PolyOne Notes") pursuant to that certain Indenture dated as
of May 6, 2003 (as amended, supplemented or otherwise modified and in effect on
the date hereof and as the same may be further amended, modified, extended,
renewed, replaced, restated or supplemented from time to time pursuant to the
terms thereof, the "2003 PolyOne Indenture").

3. The Sunbelt Guarantee, the Sunbelt Notes, the Geon Indenture, the Geon
Debentures, the 2002 PolyOne Indenture, the 2002 PolyOne Notes, the 2003 PolyOne
Indenture and the 2003 PolyOne Notes, and each agreement and instrument
delivered by the Grantor pursuant to any of the foregoing, as the same may be
supplemented, amended or modified from time to time in accordance with the
provisions thereof, are collectively referred to herein as the "Existing
Indebtedness Agreements". Pursuant to the Sunbelt Guarantee, the Geon Indenture,
the 2002 PolyOne Indenture and the 2003 PolyOne Indenture, the Grantor has
agreed not to incur, and not to permit certain of its Subsidiaries to incur,
certain Liens (as therein defined) upon certain of its property or assets to
secure certain indebtedness without making

                                        1

<PAGE>

effective provision whereby the obligations under the Existing Indebtedness
Agreements shall be secured equally and ratably with the indebtedness secured by
such Liens.

4. The Grantor has entered into that certain Amended and Restated Security
Agreement, dated as of May 6, 2003 (as amended to, but not including the date
hereof, the "Existing Security Agreement"), with the Collateral Trustee or its
predecessor, as corporate trustee, and Angelita Pena, an individual residing in
the State of New Jersey, or her predecessor, in each case not in an individual
capacity but as individual trustee.

5. Concurrently with the execution of this Agreement, the Grantor is entering
into a Guarantee and Agreement, dated as of June 6, 2006 (as amended, amended
and restated, supplemented or otherwise modified from time to time, the
"Guarantee and Agreement), with each of the financial institutions party
thereto, as beneficiary (collectively, the "Beneficiaries"), and Citicorp USA,
Inc., as administrative agent for the Beneficiaries thereunder (together with
any successor administrative agent appointed pursuant to Article VII of the
Guarantee and Agreement, the "Beneficiary Agent").

6. Concurrently with the execution of this Agreement, the Grantor is entering
into an amendment and restatement of that certain Collateral Trust Agreement,
dated as of May 6, 2003, among the Grantor and the Collateral Trustee or its
predecessor, as corporate trustee, and Angelita Pena, an individual residing in
the State of New Jersey, or her predecessor, in each case not in an individual
capacity but as individual trustee (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "Collateral Trust
Agreement").

7. Concurrently with the execution of this Agreement, the Grantor is entering
into a an amendment and restatement to that certain Intercreditor Agreement,
dated as of May 6, 2003, among the Grantor, the Collateral Trustee or its
predecessor, as corporate trustee, and Angelita Pena, an individual residing in
the State of New Jersey, or her predecessor, in each case not in an individual
capacity but as individual trustee, and the other parties thereto (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"Intercreditor Agreement"), pursuant to which the parties thereto shall have
agreed to certain matters with respect to, inter alia, the grant of security
interests hereunder.

8. This Agreement, the Collateral Trust Agreement, each Successor Collateral
Agreement (as defined in the Collateral Trust Agreement) and each other
agreement entered into by the Collateral Trustee at the direction of the
Required Representatives, including, without limitation, the Intercreditor
Agreement, are collectively referred to herein as the "Shared Collateral
Documents". The Shared Collateral Documents are intended to secure the Existing
Indebtedness Agreements, to the extent required to comply with the provisions of
the Existing Indebtedness Agreements, and the Guarantee and Agreement and it is
a condition to the occurrence of the Effective Date under the Guarantee and
Agreement that the Grantor shall have granted to the Collateral Trustee the
pledge and assignment of, and the lien and security interest in, certain
property and assets of the Grantor pursuant to the Shared Collateral Documents.

9. Terms defined in the Guarantee and Agreement or the Collateral Trust
Agreement and not otherwise defined in this Agreement are used in this Agreement
as defined in the Guarantee and Agreement or the Collateral Trust Agreement,
respectively. Further, unless otherwise defined in this Agreement or in the
Collateral Trust Agreement, terms defined in Article 9 of the UCC (as defined
below) are used in this Agreement as such terms are defined in such Article 9.
"UCC" means the Uniform Commercial Code as in effect, from time to time, in the
State of New York; provided that, if perfection or the effect of perfection or
non-perfection or the priority of any security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State

                                        2

<PAGE>

of New York, "UCC" means the Uniform Commercial Code as in effect from time to
time in such other jurisdiction for purposes of the provisions hereof relating
to such perfection, effect of perfection or non-perfection or priority.

          NOW, THEREFORE, in consideration of the premises and in order to
induce the Beneficiaries to enter into the Guarantee and Agreement, the Grantor
hereby agrees with the Collateral Trustee for its benefit and in trust for the
ratable benefit of the Representatives and the Secured Holders to amend and
restate the Existing Security Agreement, effective as of the date hereof, as
follows:

          Section 1. Grant of Security. The Grantor hereby assigns a security
interest in and pledges to the Collateral Trustee for its benefit and in trust
for the equal and ratable benefit of the Representatives and the Secured
Holders, and hereby grants to the Collateral Trustee for its benefit and in
trust for the equal and ratable benefit of the Representatives and the Secured
Holders a lien on and a security interest in, the Grantor's right, title and
interest in and to the following, in each case, as to each type of property
described below, whether now owned or hereafter acquired by the Grantor,
wherever located, and whether now or hereafter existing or arising
(collectively, the "Collateral"):

          (a) all inventory in all of its forms, including, without limitation,
     (i) all raw materials, work in process, finished goods and materials used
     or consumed in the manufacture, production, preparation or shipping
     thereof, (ii) goods in which the Grantor has an interest in mass or a joint
     or other interest or right of any kind (including, without limitation,
     goods in which the Grantor has an interest or right as consignee) and (iii)
     goods that are returned to or repossessed or stopped in transit by the
     Grantor), and all accessions thereto and products thereof and documents
     therefor, and all software related thereto, including, without limitation,
     software that is imbedded in and is part of the inventory (any and all such
     property being the "Inventory"); and

          (b) all proceeds of the Collateral (including, without limitation,
     proceeds that constitute property of the types described in clause (a) of
     this Section 1 and, to the extent not otherwise included, (i) all payments
     under insurance (whether or not the Collateral Trustee is the loss payee
     thereof), or any indemnity, warranty or guaranty, payable by reason of loss
     or damage to or otherwise with respect to any of the foregoing Collateral
     and (ii) cash.

          Notwithstanding anything else herein, the term "Collateral" shall not
include any Purchased Property (as such term is defined in the Intercreditor
Agreement) or any Post Default Property (as such term is defined in the
Intercreditor Agreement).

          Section 2. Security for Obligations. This Agreement secures the
payment of all of the Secured Obligations of the Grantor. To the extent that the
security interests and Liens granted herein to, and the rights and benefits
herein conferred on, the Collateral Trustee on behalf of the Secured Holders
comprised of the Sunbelt Notes Holders, the Geon Debenture Holders, the 2002
PolyOne Notes Holders and the 2003 PolyOne Notes Holders, exceed the security
interests, Liens, rights and benefits required to be so granted or conferred by
the applicable Existing Indebtedness Agreement, such security interests, Liens,
rights and benefits shall be limited so as to provide to the Collateral Trustee,
on behalf of such Secured Holders and such Secured Holders only those security
interests, Liens, rights and benefits that are required by such Existing
Indebtedness Agreement.

          Section 3. Representations and Warranties. The Grantor represents and
warrants as follows:

          (a) The Grantor is a corporation duly organized, validly existing and
     in good standing under the laws of its jurisdiction of organization.

                                        3

<PAGE>

          (b) The execution, delivery and performance by the Grantor of this
     Agreement and each other Transaction Document to which it is a party and
     the consummation of the transactions contemplated hereby and thereby, are
     within the Grantor's corporate powers, have been duly authorized by all
     necessary corporate action, and do not contravene (i) the Grantor's charter
     or code of regulations or (ii) law or any contractual restriction binding
     on or affecting the Grantor.

          (c) No authorization or approval or other action by, and no notice to
     or filing with, any governmental authority or regulatory body or any other
     third party is required for the due execution, delivery and performance by
     the Grantor of this Agreement and each other Transaction Document to which
     the Grantor is a party other than the filing of UCC financing statements in
     the relevant jurisdiction.

          (d) This Agreement and each other Transaction Document to which the
     Grantor is a party, have been duly executed and delivered by the Grantor.
     This Agreement and each other Transaction Document to which the Grantor is
     a party are the legal, valid and binding obligations of the Grantor
     enforceable against the Grantor 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) The Grantor's exact legal name, as defined in Section 9-503(a) of
     the UCC, is correctly set forth in Schedule I. The Grantor is located
     (within the meaning of Section 9-307 of the UCC) and has its chief
     executive office, in the state or jurisdiction set forth in Schedule I. The
     information set forth in Schedule I with respect to the Grantor is true and
     accurate in all respects. The Grantor has not previously changed its name,
     location, chief executive office, place where it maintains its agreements,
     type of organization, jurisdiction of organization or organizational
     identification number from those set forth in Schedule I except as
     disclosed in Schedule III.

          (f) All of the Inventory is located at the places specified therefor
     in Schedule II, as such Schedule II may be amended from time to time
     pursuant to Section 5(a). The Grantor has not previously changed the
     location of its Inventory except as set forth in Schedule III.

          (g) The Grantor is the legal and beneficial owner of the Collateral
     free and clear of any Lien, claim, option or right of others, except for
     the security interest to be created under this Agreement or permitted under
     the Guarantee and Agreement. No effective financing statement or other
     instrument similar in effect covering all or any part of such Collateral or
     listing the Grantor or any trade name of the Grantor as debtor is on file
     in any recording office, except such as may have been filed in favor of the
     Collateral Trustee relating to the Transaction Documents or as otherwise
     permitted under the Guarantee and Agreement.

          (h) The Grantor has exclusive possession and control of the Inventory,
     other than the Inventory that is (x) stored at any leased premises or
     warehouse which leased premises or warehouse is so indicated on Schedule
     II, as such Schedule II may be amended from time to time pursuant to
     Section 5(a) or (y) in transit. In the case of Inventory located on leased
     premises or in warehouses, no lessor or warehouseman of any premises or
     warehouse upon or in which such Inventory is located has (i) issued any
     warehouse receipt or other receipt in the nature of a warehouse receipt in
     respect of any Inventory, (ii) issued any document for any of the
     Inventory, (iii) to the knowledge of the Grantor, received notification of
     any secured party's interest (other than the security interest to be
     granted hereunder or previous notices sent by the Collateral Trustee) in
     the Inventory or (iv) any Lien, claim or charge (based on contract, statute
     or otherwise) on such Inventory.

                                        4

<PAGE>

          (i) Upon the filing of a financing statement with the Secretary of
     State of the jurisdiction in which the Grantor is organized, all filings
     and other actions necessary to perfect the security interest in the
     Collateral created under this Agreement will have been duly made or taken
     and will be in full force and effect, this Agreement creates in favor of
     the Collateral Trustee for the benefit of the Representatives and the
     Secured Holders a valid and, together with such filings and other actions
     and except as otherwise permitted under the Guarantee and Agreement,
     perfected first priority security interest in the Collateral, securing the
     payment of the Secured Obligations.

          (j) No authorization or approval or other action by, and no notice to
     or filing with, any governmental authority or regulatory body or any other
     third party is or will be required for (i) the grant by the Grantor of the
     assignment, pledge and security interest granted hereunder or for the
     execution, delivery or performance of this Agreement by the Grantor, (ii)
     the perfection or maintenance of the assignment, pledge and security
     interest created hereunder (including the first priority nature of such
     assignment, pledge or security interest), except for the filing of
     financing and continuation statements under the UCC, which financing
     statements will, upon filing, have been duly filed and will be in full
     force and effect, or (iii) the exercise by the Collateral Trustee of its
     rights provided for in this Agreement or the remedies in respect of the
     Collateral pursuant to this Agreement, except as may be required in
     connection with the disposition of any portion of the Collateral by laws
     affecting the offering and sale of securities generally.

          Section 4. Further Assurances. (a) The Grantor agrees that from time
to time, at the expense of the Grantor, the Grantor will promptly execute and
deliver, or otherwise authenticate, all further instruments and documents, and
take all further action that may be necessary or desirable, or that the
Collateral Trustee may request, in order to perfect and protect any pledge or
security interest granted or purported to be granted by the Grantor hereunder or
to enable the Collateral Trustee to exercise and enforce their rights and
remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, the Grantor will promptly with respect to the
Collateral: (i) mark conspicuously each document included in Inventory and each
of its records pertaining to such Collateral with a legend, in form and
substance satisfactory to the Collateral Trustee, indicating that such document
or Collateral is subject to the security interest granted hereby; (ii) execute
or authenticate and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be necessary
or desirable, or as the Collateral Trustee may request, in order to perfect and
preserve the security interest granted or purported to be granted by the Grantor
hereunder; (iii) at the request of the Collateral Trustee, take all action to
ensure that the Collateral Trustee's security interest is noted on any
certificate of ownership related to any Collateral evidenced by a certificate of
ownership; and (iv) deliver to the Collateral Trustee evidence that all other
action that the Collateral Trustee may deem reasonably necessary or desirable in
order to perfect and protect the security interest created by the Grantor under
this Agreement has been taken.

          (b) The Grantor hereby authorizes the Collateral Trustee to file one
or more financing or continuation statements, and amendments thereto, relating
to all or any part of the Collateral, in each case without the signature of the
Grantor, which shall be filed by the Collateral Trustee upon the receipt of an
instruction letter from the Beneficiary Agent requesting the taking of such
action and attaching the form of financing statement. A photocopy or other
reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.

          (c) The Grantor will furnish to the Collateral Trustee from time to
time statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as the Collateral
Trustee may reasonably request, all in reasonable detail.

                                        5

<PAGE>

          (d) The Grantor will hold and preserve its books and records
pertaining to any of the Collateral (including, without limitation, customer
lists, credit files, computer programs, owned software, printouts and other
owned computer materials and records) consistent with past practice, and will
permit representatives of the Collateral Trustee at any time during normal
business hours to inspect and make abstracts from such records and other
documents.

          Section 5. As to Inventory. (a) The Grantor will keep the Inventory
(other than Inventory sold in the ordinary course of business) at the places
therefor specified on Schedule II or, upon 30 days' prior written notice to the
Collateral Trustee, at such other places designated by the Grantor in such
notice. Upon the giving of such notice, Schedule II shall be automatically
amended to add any new locations specified in the notice.

          (b) The Grantor will cause the Inventory to be maintained and
preserved in accordance with current practices, and will forthwith, or in the
case of any loss or damage to any of such Inventory as soon as practicable after
the occurrence thereof, make or cause to be made all repairs, replacements and
other improvements in connection with the maintenance and preservation thereof
that are necessary or desirable to such end. The Grantor will promptly furnish
to the Collateral Trustee a statement respecting any loss or damage exceeding
$1,000,000 to any of the Inventory.

          (c) The Grantor will pay promptly when due all property and other
taxes, assessments and governmental charges or levies imposed upon, and all
claims (including, without limitation, claims for labor, materials and supplies)
against, the Inventory, except to the extent payment thereof is not required by
the Guarantee and Agreement. In producing its Inventory, the Grantor will comply
with all requirements of applicable law, including, without limitation, the Fair
Labor Standards Act.

          Section 6. Insurance. (a) The Grantor will, at its own expense,
maintain insurance with respect to the Inventory in such amounts, against such
risks, in such form and with such insurers, as is usually carried by companies
engaged in similar businesses and owning similar properties in the same general
areas in which the Grantor operates. The policy of the Grantor for liability
insurance shall provide for all losses with respect to the Grantor's Inventory
to be paid on behalf of the Collateral Trustee and the Grantor as their
interests may appear, and each policy for property damage insurance shall
provide for all covered losses with respect to the Grantor's Inventory (except
for losses of less than $1,000,000 per occurrence) to be paid directly to the
Collateral Trustee. Such policy shall in addition (i) name the Grantor and the
Collateral Trustee as insured parties thereunder (without any representation or
warranty by or obligation upon the Collateral Trustee) as their interests may
appear, (ii) contain the agreement by the insurer that any loss with respect to
the Grantor's Inventory thereunder shall be payable to the Collateral Trustee
notwithstanding any action, inaction or breach of representation or warranty by
the Grantor, (iii) provide that there shall be no recourse against the
Collateral Trustee for payment of premiums or other amounts with respect thereto
and (iv) provide that at least 10 days' prior written notice of cancellation or
of lapse shall be given to the Collateral Trustee by the insurer. The Grantor
will, at the request of the Collateral Trustee, deliver to the Collateral
Trustee a certificate of insurance with respect to such insurance and, as often
as the Collateral Trustee may reasonably request, a report of a reputable
insurance broker with respect to such insurance.

          (b) Reimbursement under any liability insurance maintained by the
Grantor pursuant to this Section 6 may be paid directly to the Person who shall
have incurred liability covered by such insurance.

          (c) So long as no Actionable Default shall have occurred and be
continuing, all insurance payments received by the Collateral Trustee in
connection with any loss, damage or destruction of any Inventory will be
released by the Collateral Trustee to the Grantor. Upon the occurrence and
during the

                                        6

<PAGE>

continuance of any Actionable Default, all insurance payments in respect of such
Inventory shall be paid to the Collateral Trustee and shall, in the Collateral
Trustee's sole discretion, (i) be released to the Grantor or (ii) be held as
additional Collateral hereunder or applied as specified in the Collateral Trust
Agreement.

          Section 7. Changes; Bailees. (a) The Grantor will not change its name,
type of organization, jurisdiction of organization, organizational
identification number or location from those set forth in Schedule I without
first giving at least 30 days' prior written notice to the Collateral Trustee
and taking all action required by the Collateral Trustee for the purpose of
perfecting or protecting the security interest granted by this Agreement. The
Grantor will not become bound by a security agreement authenticated by another
Person (determined as provided in Section 9-203(d) of the UCC) without giving
the Collateral Trustee 30 days' prior written notice thereof and taking all
action required by the Collateral Trustee to ensure that the perfection and
first priority nature of the Collateral Trustee's security interest in the
Collateral will be maintained. If the Grantor does not have an organizational
identification number and later obtains one, it will forthwith notify the
Collateral Trustee of such organizational identification number.

          (b) If any Collateral is at any time in the possession or control of a
lessor, warehouseman, bailee or agent, and if the Collateral Trustee so requests
at any time, the Grantor will (i) notify such lessor, warehouseman, bailee or
agent of the security interest created hereunder, (ii) instruct such lessor,
warehouseman, bailee or agent to hold all such Collateral solely for the
Collateral Trustee's account subject only to the Collateral Trustee's
instructions (which shall permit such Collateral to be removed by the Grantor in
the ordinary course of business until the Collateral Trustee notifies such
lessor, warehouseman, bailee or agent that an Actionable Default has occurred
and is continuing), (iii) use commercially reasonable efforts, to cause such
lessor, warehouseman, bailee or agent to authenticate a record acknowledging
that it holds possession of such Collateral for the Collateral Trustee's benefit
and shall act solely on the instructions of the Collateral Trustee without the
further consent of the Grantor or any other Person, and (iv) make such
authenticated record available to the Collateral Trustee, subject to Section
5.01(j) of the Guarantee and Agreement.

          Section 8. Transfers and Other Liens. The Grantor agrees that it will
not (i) sell, assign or otherwise dispose of, or grant any option with respect
to, any of the Collateral, other than sales of Inventory in the ordinary course
of business and sales, assignments and other dispositions of Collateral, and
options relating to Collateral, permitted under the terms of the Guarantee and
Agreement, or (ii) create or suffer to exist any Lien upon or with respect to
any of the Collateral except for the pledge, assignment and security interest
created under this Agreement and Liens permitted under the Guarantee and
Agreement.

          Section 9. Collateral Trustee Appointed Attorney-in-Fact. The Grantor
hereby irrevocably appoints the Collateral Trustee the Grantor's
attorney-in-fact, with full authority in the place and stead of the Grantor and
in the name of the Grantor or otherwise, from time to time upon the occurrence
and during the continuance of an Actionable Default in the Collateral Trustee's
discretion, to take any action and to execute any instrument that the Collateral
Trustee may deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation:

          (a) in consultation with the Grantor, to obtain and adjust insurance
     required to be paid to the Collateral Trustee pursuant to Section 6;

          (b) in consultation with the Grantor when appropriate, to ask for,
     demand, collect, sue for, recover, compromise, receive and give acquittance
     and receipts for moneys due and to become due under or in respect of any of
     the Collateral;

                                        7

<PAGE>

          (c) to receive, indorse and collect any drafts or other instruments,
     documents and chattel paper, in connection with clause (a) or (b) above;
     and

          (d) in consultation with the Grantor when appropriate, to file any
     claims or take any action or institute any proceedings that the Collateral
     Trustee may deem necessary or desirable for the collection of any of the
     Collateral or otherwise to enforce the rights of the Collateral Trustee
     with respect to any of the Collateral.

          Section 10. Collateral Trustee May Perform. If the Grantor fails to
perform any agreement contained herein, the Collateral Trustee may, as the
Collateral Trustee deem necessary to protect the security interest granted
hereunder in the Collateral or to protect the value thereof, but without any
obligation to do so and without notice, themselves perform, or cause performance
of, such agreement, and the expenses of the Collateral Trustee incurred in
connection therewith shall be payable by the Grantor under Section 13.

          Section 11. The Collateral Trustee's Duties. (a) The powers conferred
on the Collateral Trustee hereunder are solely to protect the Representatives
and the Secured Holders' interest in the Collateral and shall not impose any
duty upon it to exercise any such powers. Except for the safe custody of any
Collateral in their possession and the accounting for moneys actually received
by them hereunder, the Collateral Trustee shall have no duty as to any
Collateral, as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not any Representative or Secured Holder has or is deemed
to have knowledge of such matters, or as to the taking of any necessary steps to
preserve rights against any parties or any other rights pertaining to any
Collateral. The Collateral Trustee shall be deemed to have exercised reasonable
care in the custody and preservation of any Collateral in their possession if
such Collateral is accorded treatment substantially equal to that which they
accord their own property. The parties hereto acknowledge and agree that in
acting under this Agreement the Collateral Trustee shall be entitled to all
rights and benefits accorded to them under the Collateral Trust Agreement.

          (b) Anything contained herein to the contrary notwithstanding, the
Collateral Trustee may from time to time, when the Collateral Trustee deems it
to be reasonably necessary, appoint one or more subagent (each a "Subagent") for
the Collateral Trustee hereunder with respect to all or any part of the
Collateral. In the event that the Collateral Trustee so appoints any Subagent
with respect to any Collateral, (i) the assignment and pledge of such Collateral
and the security interest granted in such Collateral hereunder shall be deemed
for purposes of this Agreement to have been made to such Subagent, in addition
to the Collateral Trustee, for the ratable benefit of the Representatives and
the Secured Holders, as security for the Secured Obligations of the Grantor,
(ii) such Subagent shall automatically be vested, in addition to the Collateral
Trustee, with all rights, powers, privileges, interests and remedies of the
Collateral Trustee hereunder with respect to such Collateral, and (iii) the term
"Collateral Trustee," when used herein in relation to any rights, powers,
privileges, interests and remedies of the Collateral Trustee with respect to
such Collateral, shall include such Subagent; provided, however, that no such
Subagent shall be authorized to take any action with respect to any such
Collateral unless and except to the extent expressly authorized in writing by
the Collateral Trustee.

          Section 12. Remedies. Notwithstanding any other provision of this
Agreement, any exercise of remedies by the Collateral Trustee pursuant to this
Agreement shall be subject to the terms of the Intercreditor Agreement, for as
long as it shall remain in effect. If any Actionable Default shall have occurred
and be continuing:

          (a) The Collateral Trustee may, with the consent of the Required
     Representatives, and shall at the request of the Required Representatives
     (as provided in the Collateral Trust

                                        8

<PAGE>

     Agreement), exercise in respect of the Collateral, in addition to other
     rights and remedies provided for herein or otherwise available to them, all
     the rights and remedies of a secured party upon default under the UCC
     (whether or not the UCC applies to the affected Collateral) and also may:
     (i) require the Grantor to, and the Grantor hereby agrees that it will at
     its expense and upon request of the Collateral Trustee forthwith, assemble
     all or part of the Collateral as directed by the Collateral Trustee and
     make it available to the Collateral Trustee at a place and time to be
     designated by the Collateral Trustee that is reasonably convenient to all
     parties and reasonable given the nature of the Collateral ; (ii) without
     notice except as specified below, sell the Collateral or any part thereof
     in one or more parcels at public or private sale, at any of the Collateral
     Trustee's offices or elsewhere, for cash, on credit or for future delivery,
     and upon such other terms as the Collateral Trustee may deem commercially
     reasonable; (iii) occupy any premises owned or leased by the Grantor where
     the Collateral or any part thereof is assembled or located for a reasonable
     period in order to effectuate their rights and remedies hereunder or under
     law, without obligation to the Grantor in respect of such occupation; and
     (iv) exercise any and all rights and remedies of the Grantor under or in
     connection with the Collateral, or otherwise in respect of the Collateral,
     including, without limitation, those set forth in Section 9-607 of the UCC.
     The Grantor agrees that, to the extent notice of sale shall be required by
     law, at least ten days' notice to the Grantor of the time and place of any
     public sale or the time after which any private sale is to be made shall
     constitute reasonable notification. The Collateral Trustee shall not be
     obligated to make any sale of Collateral regardless of notice of sale
     having been given. The Collateral Trustee may adjourn any public or private
     sale from time to time by announcement at the time and place fixed
     therefor, and such sale may, without further notice, be made at the time
     and place to which it was so adjourned.

          (b) Any cash held by or on behalf of the Collateral Trustee and all
     cash proceeds received by or on behalf of the Collateral Trustee in respect
     of any sale of, collection from, or other realization upon all or any part
     of the Collateral may, in the discretion of the Collateral Trustee, be held
     by the Collateral Trustee as collateral for, and/or then or at any time
     thereafter applied (after payment of any amounts payable to the Collateral
     Trustee pursuant to Section 13) in whole or in part by the Collateral
     Trustee for the ratable benefit of the Representatives and the Secured
     Holders against, all or any part of the Secured Obligations, as set forth
     in Section 5.01 of the Collateral Trust Agreement.

          (c) All payments received by the Grantor in respect of the Collateral
     shall be received in trust for the benefit of the Collateral Trustee, shall
     be segregated from other funds of the Grantor and shall be forthwith paid
     over to the Collateral Trustee in the same form as so received (with any
     necessary indorsement).

          Section 13. Indemnity and Expenses. (a) The Grantor agrees to
indemnify, defend and save and hold harmless the Collateral Trustee, each
Representative and each Secured Holder and each of their Affiliates and their
respective officers, directors, employees, agents and advisors (each, an
"Indemnified Party") from and against, and shall pay on demand, any and all
claims, damages, losses, liabilities and expenses (including, without
limitation, reasonable fees and expenses of counsel) that may be incurred by or
asserted or awarded against any Indemnified Party, in each case arising out of
or in connection with or resulting from this Agreement (including, without
limitation, enforcement of this Agreement), except to the extent such claim,
damage, loss, liability or expense resulted from such Indemnified Party's gross
negligence or willful misconduct.

          (b) The Grantor will upon demand pay to the Collateral Trustee the
amount of any and all reasonable expenses, including, without limitation, the
reasonable fees and expenses of its counsel and of any experts and agents, that
the Collateral Trustee may incur in connection with (i) the administration of

                                        9

<PAGE>

this Agreement, (ii) the custody, preservation, use or operation of, or the sale
of, collection from or other realization upon, any of the Collateral, (iii) the
exercise or enforcement of any of the rights of the Collateral Trustee, the
Representatives or the other Secured Holders hereunder or (iv) the failure by
the Grantor to perform or observe any of the provisions hereof.

          Section 14. Amendments; Waivers. No amendment or waiver of any
provision of this Agreement, and no consent to any departure by the Grantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Collateral Trustee, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. No failure on the part of the Collateral Trustee, the Representatives or
any other Secured Holder 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 such right preclude any other or further exercise thereof or the
exercise of any other right.

          Section 15. Notices; Etc. All notices and other communications
provided for hereunder shall be in writing (including telegraphic, telecopier or
telex communication) and mailed, telegraphed, telecopied, telexed or delivered,
in the case of any Representative or the Collateral Trustee, addressed to each
at their respective address specified in the Collateral Trust Agreement and, in
the case of the Grantor, at 33587 Walker Road, Avon Lake, Ohio 44012, Attention:
Treasurer; or, as to any party, at such other address as shall be designated by
such party in a written notice to the other parties. All such notices and other
communications shall be effective upon receipt. Delivery by telecopier of an
executed counterpart of any amendment or waiver of any provision of this
Agreement or Schedule hereto shall be effective as delivery of an original
executed counterpart thereof.

          Section 16. Continuing Security Interest; Assignments under the
Guarantee and Agreement. This Agreement creates a continuing security interest
in the Collateral and shall (a) remain in full force and effect until all of the
Collateral is released and this Agreement is terminated in accordance with
Section 8.02 of the Collateral Trust Agreement, (b) be binding upon the Grantor,
its successors and assigns and (c) inure, together with the rights and remedies
of the Collateral Trustee hereunder, to the benefit of the Collateral Trustee,
the Representatives on behalf of themselves and on behalf of the Secured Holders
and their respective successors, transferees and assigns. Without limiting the
generality of the foregoing clause (c), any Secured Holder may assign or
otherwise transfer all or any portion of its rights and obligations under the
applicable Secured Agreement to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to such
Secured Holder herein or otherwise, in each case as provided in of the
applicable Secured Agreement.

          Section 17. Release; Termination. All or any portion of the Collateral
shall be released by the Collateral Trustee solely on the terms and subject to
the conditions set forth in Article VIII of the Collateral Trust Agreement.

          Section 18. 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 taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of an original executed
counterpart of this Agreement.

          Section 19. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.

          Section 20. Intercreditor Agreement. In the event of any conflict
between the provisions of this Agreement and the provisions of the Intercreditor
Agreement, the provisions of the Intercreditor Agreement shall govern.

                                       10

<PAGE>

          IN WITNESS WHEREOF, the Grantor has executed this Agreement or caused
     this Agreement to be duly executed and delivered by its officer thereunto
     duly authorized as of the date first above written.

Grantor:                                POLYONE CORPORATION,
                                        an Ohio corporation, as Grantor

                                        By
                                           -------------------------------------
                                        Title:
                                               ---------------------------------

<PAGE>

                                                               Schedule I to the
                                         Amended and Restated Security Agreement

             LOCATION, CHIEF EXECUTIVE OFFICE, TYPE OF ORGANIZATION,
      JURISDICTION OF ORGANIZATION AND ORGANIZATIONAL IDENTIFICATION NUMBER

<TABLE>
<CAPTION>
                           Chief Executive
                            Office Type of       Type of     Jurisdiction of   Organizational
Grantor       Location       Organization     Organization     Organization       I.D. No.
-------       --------   ------------------   ------------   ---------------   --------------
<S>           <C>        <C>                  <C>            <C>               <C>
PolyOne         Ohio     33587 Walker Road,    Corporation         Ohio          34-1730488
Corporation              Avon Lake, Ohio
                         44012
</TABLE>

                                 Schedule I - 1

<PAGE>

                                                              Schedule II to the
                                         Amended and Restated Security Agreement

                             LOCATIONS OF INVENTORY

                                   [ATTACHED]

                                 Schedule II - 1

<PAGE>

                                                             Schedule III to the
                                         Amended and Restated Security Agreement

                         CHANGES IN NAME, LOCATION, ETC.

(1)  Changes in the Grantor's Name (including new grantor with a new name and
     names associated with all predecessors in interest of the Grantor):

          PolyOne Corporation was formed on August 31, 2000 upon the
          consolidation of The Geon Company, a Delaware corporation ("Geon") and
          M.A. Hanna Company, a Delaware corporation ("Hanna"). Geon operated
          under its name from 1993 and Hanna operated under its name from 1985,
          until consolidation into PolyOne Corporation.

(2)  Changes in the Grantor's Location:

          None.

(3)  Changes in the Grantor's Chief Executive Office:

          None.

(4)  Changes in Location of Inventory:

          None.

(5)  Changes in the Type of Organization:

          None.

(6)  Changes in the Jurisdiction of Organization:

          None.

(7)  Changes in the Organizational Identification Number:

          None.

                                Schedule III - 1

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