Document:

<PAGE>
                                                                    Exhibit 10.1

                                                                  EXECUTION COPY

                                U.S. $50,000,000

                      AMENDED AND RESTATED CREDIT AGREEMENT

                             Dated as of May 6, 2003

                                      Among

                               POLYONE CORPORATION
                                   as Borrower

                                       and

                        THE INITIAL LENDERS NAMED HEREIN
                               as Initial Lenders

                                       and

                               CITICORP USA, INC.
                             as Administrative Agent

                                       and

                     NATIONAL CITY COMMERCIAL FINANCE, INC.
                              as Syndication Agent

                                       and

                          KEYBANK NATIONAL ASSOCIATION
                             as Documentation Agent

                                       and

                         CITIGROUP GLOBAL MARKETS, INC.
                              as Sole Lead Arranger

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                                            <C>
                                    ARTICLE I DEFINITIONS AND ACCOUNTING TERMS

Section 1.01. Certain Defined Terms.....................................................................        1
Section 1.02. Computation of Time Periods...............................................................       12
Section 1.03. Accounting Terms..........................................................................       12

                        ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES AND LETTERS OF CREDIT

Section 2.01. The Advances and Letters of Credit........................................................       13
Section 2.02. Making the Advances.......................................................................       13
Section 2.03. Issuance of and Drawings and Reimbursement Under Letters of Credit........................       14
Section 2.04. Fees......................................................................................       15
Section 2.05. Termination or Reduction of the Commitments...............................................       16
Section 2.06. Repayment of Advances.....................................................................       16
Section 2.07. Interest on Advances......................................................................       16
Section 2.08. Interest Rate Determination...............................................................       17
Section 2.09. Optional Conversion of Advances...........................................................       18
Section 2.10. Prepayments of Advances...................................................................       18
Section 2.11. Increased Costs...........................................................................       18
Section 2.12. Illegality................................................................................       19
Section 2.13. Payments and Computations.................................................................       19
Section 2.14. Taxes.....................................................................................       20
Section 2.15. Sharing of Payments, Etc..................................................................       21
Section 2.16. Evidence of Debt..........................................................................       21
Section 2.17. Use of Proceeds...........................................................................       22

                                ARTICLE III CONDITIONS TO EFFECTIVENESS AND LENDING

Section 3.01. Conditions Precedent to Effectiveness of Sections 2.01 and 2.03...........................       22
Section 3.02. Conditions Precedent to Each Borrowing and Issuance.......................................       24
Section 3.03. Determinations Under Section 3.01.........................................................       24

                                     ARTICLE IV REPRESENTATIONS AND WARRANTIES

Section 4.01. Representations and Warranties of the Borrower............................................       25

                                        ARTICLE V COVENANTS OF THE BORROWER

Section 5.01. Affirmative Covenants.....................................................................       27
Section 5.02. Negative Covenants........................................................................       31
Section 5.03. Financial Covenants.......................................................................       34

                                           ARTICLE VI EVENTS OF DEFAULT

Section 6.01. Events of Default.........................................................................       35
Section 6.02. Actions in Respect of the Letters of Credit upon Default..................................       37

                                               ARTICLE VII THE AGENT

Section 7.01. Authorization and Action..................................................................       37
</TABLE>

<PAGE>

<TABLE>
<S>                                                                                                            <C>
Section 7.02. Agent's Reliance, Etc.....................................................................       37
Section 7.03. Citicorp and Affiliates...................................................................       38
Section 7.04. Lender Credit Decision....................................................................       38
Section 7.05. Indemnification...........................................................................       38
Section 7.06. Successor Agent...........................................................................       39
Section 7.07. Other Agents..............................................................................       39

                                            ARTICLE VIII MISCELLANEOUS

Section 8.01. Amendments, Etc...........................................................................       39
Section 8.02. Notices, Etc..............................................................................       40
Section 8.03. No Waiver; Remedies.......................................................................       40
Section 8.04. Costs and Expenses........................................................................       40
Section 8.05. Right of Set-off..........................................................................       41
Section 8.06. Binding Effect............................................................................       42
Section 8.07. Assignments and Participations............................................................       42
Section 8.08. Confidentiality...........................................................................       44
Section 8.09. Governing Law.............................................................................       44
Section 8.10. Execution in Counterparts.................................................................       45
Section 8.11. Jurisdiction, Etc.........................................................................       45
Section 8.12. No Liability of the Issuing Banks.........................................................       45
Section 8.13. Authorization of Agent and Collateral Trustees............................................       45
Section 8.14. Waiver of Jury Trial......................................................................        1
</TABLE>

                                       ii
<PAGE>

Schedules

Schedule I - List of Applicable Lending Offices

Schedule II - Mortgaged Properties

Schedule 2.01(b) - Letters of Credit

Schedule 3.01(b) - Disclosed Litigation

Schedule 5.02(a) - Existing Liens

Schedule 5.02(d) - Asset Sales

Schedule 5.02(i) - Existing Foreign Subsidiary Debt

Schedule 8.13 - Released Collateral

Exhibits

Exhibit A   -   Form of Note

Exhibit B   -   Form of Notice of Borrowing

Exhibit C   -   Form of Assignment and Acceptance

Exhibit D   -   Form of Security Agreement

Exhibit E   -   Form of Opinion of Counsel for the Borrower

Exhibit F   -   Form of Escrow Agreement

                                       iii
<PAGE>

                      AMENDED AND RESTATED CREDIT AGREEMENT

                             Dated as of May 6, 2003

            AMENDED AND RESTATED CREDIT AGREEMENT dated as of May 6, 2003 among
POLYONE CORPORATION, an Ohio corporation (the "Borrower"), the banks, financial
institutions and other institutional lenders (the "Initial Lenders") and initial
issuing banks (the "Initial Issuing Banks") listed on the signature pages
hereof, CITIGROUP GLOBAL MARKETS INC., as sole lead arranger, NATIONAL CITY
COMMERCIAL FINANCIAL, INC., as syndication agent, KEYBANK NATIONAL ASSOCIATION,
as documentation agent, and CITICORP USA, INC. ("Citicorp"), as administrative
agent (the "Agent") for the Lenders (as hereinafter defined).

PRELIMINARY STATEMENT:

            The Borrower, certain lenders and the Agent are parties to a
Five-Year Credit Agreement dated as of October 30, 2000, as amended and restated
as of March 28, 2002 and as further amended by Amendment No. 1 dated as of
December 26, 2002 (such Credit Agreement, as so modified, the "Existing Credit
Agreement"). Subject to the satisfaction of the conditions precedent set forth
in Section 3.01, the Borrower and the Initial Lenders have agreed to amend the
Existing Credit Agreement in full to read as follows:

                                    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):

            "Adjusted EBITDA" means EBITDA of the Borrower and its Subsidiaries
      plus any net cash received from Equity Affiliates, minus any net cash paid
      to Equity Affiliates, minus any income from Equity Affiliates plus any
      income to Equity Affiliates.

            "Advance" means an advance by a Lender to any Borrower as part of a
      Borrowing and refers to a Base Rate Advance or a Eurodollar Rate Advance
      (each of which shall be a "Type" of Advance).

            "Affiliate" means, as to any Person, any other Person that, directly
      or indirectly, controls, is controlled by or is under common control with
      such Person or is a director or officer of such Person. For purposes of
      this definition, the term "control" (including the terms "controlling",
      "controlled by" and "under common control with") of a Person means the
      possession, direct or indirect, of the power to vote 5% or, if such Person
      is the Borrower, 15%, or more of the Voting Stock of such Person or to
      direct or cause the direction of the management and policies of such
      Person, whether through the ownership of Voting Stock, by contract or
      otherwise.

            "Agent's Account" means the account of the Agent maintained by the
      Agent at Citicorp at its office at 388 Greenwich Street, New York, New
      York 10013, Account No. 36852248, Attention: Bank Loan Syndications or
      such other account of the Agent as is designated in writing from time to
      time by the Agent to the Borrower and the Lenders for such purpose.

<PAGE>

            "Applicable Lending Office" means, with respect to each Lender, such
      Lender's Domestic Lending Office in the case of a Base Rate Advance and
      such Lender's Eurodollar Lending Office in the case of a Eurodollar Rate
      Advance.

            "Applicable Margin" means, as of any date of determination, a rate
      per annum determined by reference to the Performance Level applicable on
      such date as set forth below:

<TABLE>
<CAPTION>
                     PERFORMANCE       APPLICABLE MARGIN FOR BASE       APPLICABLE MARGIN FOR
                       LEVEL                  RATE ADVANCES            EURODOLLAR RATE ADVANCES
                     -----------       --------------------------      ------------------------
<S>                                    <C>                             <C>
                        I                         1.75%                          2.75%
                        II                        2.00%                          3.00%
                        III                       2.50%                          3.50%
</TABLE>

      The Applicable Margin shall be adjusted (if necessary) upward or downward
      as of the first day of each fiscal quarter to reflect the Performance
      Level as of the last day of the immediately preceding fiscal quarter;
      provided that if such compliance certificate is delivered after the first
      day of a fiscal quarter, such adjustment shall be made on the first day
      following the delivery of such compliance certificate and shall be deemed
      to have become effective as of the first day of such fiscal quarter.

            "Applicable Percentage" means, for any fiscal quarter, a rate per
      annum determined by reference to a fraction, expressed as a decimal, (a)
      the numerator of which is the average daily amount of the Advances plus
      the Available Amount of Letters of Credit outstanding during such quarter
      and (b) the denominator of which is the average daily aggregate amount of
      the Revolving Credit Commitments during such quarter as set forth below:

<TABLE>
<CAPTION>
                             USAGE                      APPLICABLE PERCENTAGE
                             -----                      ---------------------
<S>                                                     <C>
                          50% or less                           0.875%
                More than 50% but less than 75%                 0.750%
                          75% or more                           0.500%
</TABLE>

            "Assignment and Acceptance" means an assignment and acceptance
      entered into by a Lender and an Eligible Assignee, and accepted by the
      Agent, in substantially the form of Exhibit C hereto.

            "Available Amount" of any Letter of Credit means, at any time, the
      maximum amount available to be drawn under such Letter of Credit at such
      time (assuming compliance at such time with all conditions to drawing).

            "Base Rate" means a fluctuating interest rate per annum in effect
      from time to time, which rate per annum shall at all times be equal to the
      highest of:

            (a) the rate of interest announced publicly by Citibank in New York,
      New York, from time to time, as Citibank's base rate;

            (b) the sum (adjusted to the nearest 1/4 of 1% or, if there is no
      nearest 1/4 of 1%, to the next higher 1/4 of 1%) of (i)1/2 of 1% per
      annum, plus (ii) the rate obtained by dividing (A) the latest three-week
      moving average of secondary market morning offering rates in the United
      States for three-month certificates of deposit of major United States
      money market banks, such three-week moving average (adjusted to the basis
      of a year of 360 days) being determined weekly on each Monday (or, if such
      day is not a Business Day, on the next succeeding Business Day) for the
      three-week period ending on the previous Friday by Citibank on the basis
      of such rates reported by certificate of deposit dealers to and published
      by the Federal Reserve Bank of New York or, if such publication shall be
      suspended or terminated, on the

                                       2
<PAGE>

      basis of quotations for such rates received by Citibank from three New
      York certificate of deposit dealers of recognized standing selected by
      Citibank, by (B) a percentage equal to 100% minus the average of the daily
      percentages specified during such three-week period by the Board of
      Governors of the Federal Reserve System (or any successor) for determining
      the maximum reserve requirement (including, but not limited to, any
      emergency, supplemental or other marginal reserve requirement) for
      Citibank with respect to liabilities consisting of or including (among
      other liabilities) three-month U.S. dollar non-personal time deposits in
      the United States, plus (iii) the average during such three-week period of
      the annual assessment rates estimated by Citibank for determining the then
      current annual assessment payable by Citibank to the Federal Deposit
      Insurance Corporation (or any successor) for insuring U.S. dollar deposits
      of Citibank in the United States; and

            (c) 1/2 of one percent per annum above the Federal Funds Rate.

            "Base Rate Advance" means an Advance that bears interest as provided
      in Section 2.07(a)(i).

            "Borrowed Debt" means Debt described in clauses (a) through (f) of
      the definition thereof.

            "Borrowed Debt/Adjusted EBITDA Ratio" means, as of any date, the
      ratio computed by dividing (a) Borrowed Debt of the Borrower and its
      Subsidiaries, including their pro rata share of the Borrowed Debt of
      Sunbelt, on a Consolidated basis as of such date by (b) the sum of (x)
      Adjusted EBITDA of the Borrower and its Subsidiaries plus (y) Consolidated
      Interest Expense, depreciation, depletion and amortization of intangibles
      or financing or acquisitions costs for Sunbelt, each on a Consolidated
      basis for the four consecutive fiscal quarters of the Borrower most
      recently ended as of such date; provided that clause (b) of this
      definition shall be calculated to include the Adjusted EBITDA for such
      period of four consecutive fiscal quarters of any business acquired by the
      Borrower or its Subsidiaries during such period.

            "Borrowing" means a borrowing consisting of simultaneous Advances of
      the same Type made by each of the Lenders pursuant to Section 2.01(a).

            "Business Day" means a day of the year on which banks are not
      required or authorized by law to close in New York City and, if the
      applicable Business Day relates to any Eurodollar Rate Advances, on which
      dealings are carried on in the London interbank market.

            "Capital Expenditures" means, for any Person for any period, the sum
      of, without duplication, (a) all expenditures made, directly or
      indirectly, by such Person or any of its Subsidiaries during such period
      for equipment, fixed assets, real property or improvements, or for
      replacements or substitutions therefor or additions thereto, that have
      been or should be, in accordance with GAAP, reflected as additions to
      property, plant or equipment on a Consolidated balance sheet of such
      Person or have a useful life of more than one year plus (b) the aggregate
      principal amount of all Debt (including obligations under Capitalized
      Leases) assumed or incurred in connection with any such expenditures.

            "Capitalized Leases" means all leases that have been or should be,
      in accordance with GAAP, recorded as capitalized leases.

            "Cash Interest Expense" means, for any fiscal period of any Person,
      interest expense on all Debt of such Person and its Subsidiaries, net of
      interest income, in accordance with GAAP and including, without
      limitation, to the extent not otherwise included in accordance with GAAP,
      (a) interest expense in respect of Debt resulting from Advances, (b) the
      interest component of obligations under leases that have or should have
      been or should be, in accordance with GAAP, recorded as capital leases,
      (c) commissions, discounts and other fees and charges payable in
      connection with letters of credit issued for the account of such Person or
      any of its Subsidiaries, (d) the net payment, if any, payable in
      connection with Hedge Agreements and (e) fees paid pursuant to Section
      2.04(a), but excluding, in each case, (x) amortization of original issue
      discount, (y) the interest portion of any deferred payment obligation and
      (z) other interest not payable in cash.

                                       3
<PAGE>

            "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 Trustees for the benefit of the
      Secured Parties.

            "Collateral Account" has the meaning specified in the Security
      Agreement.

            "Collateral Documents" means the Security Agreement, the Mortgages,
      the Collateral Trust Agreements, 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 Agreements" has the meaning specified in Section
      3.01(h)(vi).

            "Collateral Trustees" has the meaning specified in the Collateral
      Trust Agreements.

            "Commitment" means a Revolving Credit Commitment or a Letter of
      Credit Commitment.

            "Confidential Information" means the Projections, information
      provided to the Lenders pursuant to Section 5.01(i)(iv) and any other
      information that the Borrower furnishes to the Agent or any Lender 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 Lender, 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 Lender of its obligations hereunder or that is
      or becomes available to the Agent or such Lender from a source other than
      the Borrower or any consultant employed by the Agent to provide technical
      advice that is not, to the best of the Agent's or such Lender's knowledge,
      acting in violation of a confidentiality agreement with the Borrower.

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

            "Consolidated Interest Expense" means, for any period, cash interest
      expense of any Person and its Subsidiaries determined on a Consolidated
      basis in accordance with GAAP including, in any event, interest
      capitalized during such period and net costs under all Hedge Agreements
      and interest rate insurance for such period minus (b) Consolidated net
      gains of such Person and its Subsidiaries under all Hedge Agreements and
      interest rate insurance for such period and minus (c) any Consolidated
      interest income of such Person and its Subsidiaries for such period.

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

            "Convert", "Conversion" and "Converted" each refers to a conversion
      of Advances of one Type into Advances of the other Type pursuant to
      Section 2.08 or 2.09.

            "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 guaranties in respect of, and obligations (contingent or
      otherwise) to in effect guaranty, 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

                                       4
<PAGE>

      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.

            "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.

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

            "Domestic Lending Office" means, with respect to any Lender, the
      office of such Lender specified as its "Domestic Lending Office" opposite
      its name on Schedule I hereto or in the Assignment and Acceptance pursuant
      to which it became a Lender, or such other office of such Lender as such
      Lender may from time to time specify to the Borrower and the Agent.

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

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

            "Eligible Assignee" means (i) a Lender; (ii) an Affiliate of a
      Lender; and (iii) any other Person approved by the Agent and, unless an
      Event of Default has occurred and is continuing at the time any assignment
      is effected in accordance with Section 8.07, the Borrower, such approval
      not to be unreasonably withheld or delayed; provided, however, that
      neither the Borrower nor an Affiliate of the Borrower shall qualify as an
      Eligible Assignee.

            "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.

                                       5
<PAGE>

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

            "Equity Interests" means, with respect to any Person, shares of
      capital stock of (or other ownership or profit interests in) such Person,
      warrants, options or other rights for the purchase or other acquisition
      from such Person of shares of capital stock of (or other ownership or
      profit interests in) such Person, securities convertible into or
      exchangeable for shares of capital stock of (or other ownership or profit
      interests in) such Person or warrants, rights or options for the purchase
      or other acquisition from such Person of such shares (or such other
      interests), and other ownership or profit interests in such Person
      (including, without limitation, partnership, member or trust interests
      therein), whether voting or nonvoting, and whether or not such shares,
      warrants, options, rights or other interests are authorized or otherwise
      existing on any date of determination.

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

            "ERISA Affiliate" means any Person that for purposes of Title IV of
      ERISA is a member of the Borrower's controlled group, or under common
      control with the Borrower, within the meaning of Section 414 of the
      Internal Revenue Code.

            "ERISA Event" means (a) the occurrence of a reportable event, within
      the meaning of Section 4043 of ERISA, with respect to any Plan unless the
      30-day notice requirement with respect to such event has been waived by
      the PBGC; (b) the application for a minimum funding waiver with respect to
      a Plan; (c) the provision by the administrator of any Plan of a notice of
      intent to terminate such Plan pursuant to Section 4041(a)(2) of ERISA
      (including any such notice with respect to a plan amendment referred to in
      Section 4041(e) of ERISA); (d) the cessation of operations at a facility
      of the Borrower or any of its ERISA Affiliates in the circumstances
      described in Section 4062(e) of ERISA; (e) the withdrawal by the Borrower
      or any of its ERISA Affiliates from a Multiple Employer Plan during a plan
      year for which it was a substantial employer, as defined in Section
      4001(a)(2) of ERISA; (f) the failure by the Borrower or any of its ERISA
      Affiliates to make a payment to a Plan if the conditions for the
      imposition of a lien under Section 302(f)(1) of ERISA are satisfied; (g)
      the adoption of an amendment to a Plan requiring the provision of security
      to such Plan pursuant to Section 307 of ERISA; or (h) the institution by
      the PBGC of proceedings to terminate a Plan pursuant to Section 4042 of
      ERISA, or the occurrence of any event or condition described in Section
      4042 of ERISA that could reasonably be expected to constitute grounds for
      the termination of, or the appointment of a trustee to administer, a Plan.

            "Eurocurrency Liabilities" has the meaning assigned to that term in
      Regulation D of the Board of Governors of the Federal Reserve System, as
      in effect from time to time.

            "Eurodollar Lending Office" means, with respect to any Lender, the
      office of such Lender specified as its "Eurodollar Lending Office"
      opposite its name on Schedule I hereto or in the Assignment and Acceptance
      pursuant to which it became a Lender (or, if no such office is specified,
      its Domestic Lending Office), or such other office of such Lender as such
      Lender may from time to time specify to the Borrower and the Agent.

            "Eurodollar Rate" means, for any Interest Period for each Eurodollar
      Rate Advance comprising part of the same Borrowing, an interest rate per
      annum equal to the rate per annum obtained by dividing (a) the rate per
      annum (rounded upward to the nearest whole multiple of 1/16 of 1% per
      annum) appearing on Moneyline Telerate Markets Page 3750 (or any successor
      page) as the London interbank offered rate for deposits in US dollars at
      approximately 11:00 A.M. (London time) two Business Days prior to the
      first day of such Interest Period for a term comparable to such Interest
      Period or, if for any reason such rate is not available, the rate per
      annum at which deposits in US dollars is offered by the principal office
      of Citibank in London, England to prime banks in the London interbank
      market at 11:00 A.M. (London time) two

                                       6
<PAGE>

      Business Days before the first day of such Interest Period in an amount
      substantially equal to Citicorp's Eurodollar Rate Advance comprising part
      of such Borrowing to be outstanding during such Interest Period and for a
      period equal to such Interest Period by (b) a percentage equal to 100%
      minus the Eurodollar Rate Reserve Percentage for such Interest Period. If
      the Moneyline Telerate Markets Page 3750 (or any successor page) is
      unavailable, the Eurodollar Rate for any Interest Period for each
      Eurodollar Rate Advance comprising part of the same Borrowing shall be
      determined by the Agent on the basis of applicable rates furnished to and
      received by the Agent from Citibank two Business Days before the first day
      of such Interest Period, subject, however, to the provisions of Section
      2.08.

            "Eurodollar Rate Advance" means an Advance that bears interest as
      provided in Section 2.07(a)(ii).

            "Eurodollar Rate Reserve Percentage" for any Interest Period for all
      Eurodollar Rate Advances comprising part of the same Borrowing means the
      reserve percentage applicable two Business Days before the first day of
      such Interest Period under regulations issued from time to time by the
      Board of Governors of the Federal Reserve System (or any successor) for
      determining the maximum reserve requirement (including, without
      limitation, any emergency, supplemental or other marginal reserve
      requirement) for a member bank of the Federal Reserve System in New York
      City with respect to liabilities or assets consisting of or including
      Eurocurrency Liabilities (or with respect to any other category of
      liabilities that includes deposits by reference to which the interest rate
      on Eurodollar Rate Advances is determined) having a term equal to such
      Interest Period.

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

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

            "GAAP" has the meaning specified in Section 1.03.

            "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
      Borrower's public debt indentures that may be outstanding as secured
      obligations without requiring the Borrower to equally and ratably secure
      the Borrower's public debt multiplied by (b) 95% minus (c) all then
      outstanding secured obligations of the Borrower and its Subsidiaries
      (other than the Advances and the Letters of Credit) that are subject to
      such public debt indentures' limitations on secured obligations.

            "Information Memorandum" means the information memorandum dated
      April, 2003 used by Citicorp in connection with the syndication of the
      Receivables Financing.

            "Insufficiency" means, with respect to any Plan, the amount, if any,
      of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of
      ERISA.

                                       7
<PAGE>

            "Intercreditor Agreement" has the meaning specified in Section
      3.01(h)(vii).

            "Interest Coverage Ratio" means, with respect to any fiscal quarter,
      the ratio of (a) Adjusted EBITDA of the Borrower and its Subsidiaries,
      including, at any time after demand for performance of the Borrower's
      guaranty of the obligations of Sunbelt has been made, the Borrower's pro
      rata share of the Consolidated Interest Expense, depreciation, depletion
      and amortization of intangibles or financing or acquisitions costs for
      Sunbelt, on a Consolidated basis to (b) Cash Interest Expense of the
      Borrower and its Subsidiaries, including, at any time after demand for
      performance of the Borrower's guaranty of the obligations of Sunbelt has
      been made, the Borrower's pro rata share of the Cash Interest Expense of
      Sunbelt, on a Consolidated basis, in each case in the aggregate for the
      period of four consecutive fiscal quarters ended at the end of such fiscal
      quarter; provided that clause (a) of this definition shall be calculated
      to include the Adjusted EBITDA for such period of four consecutive fiscal
      quarters of any business acquired by the Borrower or its Subsidiaries
      during such period.

            "Interest Period" means, for each Eurodollar Rate Advance comprising
      part of the same Borrowing, the period commencing on the date of such
      Eurodollar Rate Advance or the date of the Conversion of any Base Rate
      Advance into such Eurodollar Rate Advance and ending on the last day of
      the period selected by the Borrower pursuant to the provisions below and,
      thereafter, each subsequent period commencing on the last day of the
      immediately preceding Interest Period and ending on the last day of the
      period selected by the Borrower pursuant to the provisions below and
      subject to the delivery to the Agent of a certificate as contemplated by
      Section 5.01(i)(v). The duration of each such Interest Period shall be
      one, two, three or six months or, if available by all Lenders, nine or
      twelve months, as the Borrower may, upon notice received by the Agent not
      later than 11:00 A.M. (New York City time) on the third Business Day prior
      to the first day of such Interest Period, select; provided, however, that:

                  (i) the Borrower may not select any Interest Period that ends
            after the Termination Date;

                  (ii) Interest Periods commencing on the same date for
            Eurodollar Rate Advances comprising part of the same Borrowing shall
            be of the same duration;

                  (iii) whenever the last day of any Interest Period would
            otherwise occur on a day other than a Business Day, the last day of
            such Interest Period shall be extended to occur on the next
            succeeding Business Day, provided, however, that, if such extension
            would cause the last day of such Interest Period to occur in the
            next following calendar month, the last day of such Interest Period
            shall occur on the next preceding Business Day; and

                  (iv) whenever the first day of any Interest Period occurs on a
            day of an initial calendar month for which there is no numerically
            corresponding day in the calendar month that succeeds such initial
            calendar month by the number of months equal to the number of months
            in such Interest Period, such Interest Period shall end on the last
            Business Day of such succeeding calendar month.

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

            "Investment" in any Person means any loan or advance to such Person,
      any purchase or other acquisition of any Equity Interests or Debt or the
      assets comprising a division or business unit or a substantial part or all
      of the business of such Person, any capital contribution to such Person or
      any other direct or indirect investment in such Person, including, without
      limitation, any acquisition by way of a merger or consolidation and any
      arrangement pursuant to which the investor incurs Debt of the types
      referred to in clause (g) of the definition of "Debt" in respect of such
      Person.

            "Issuing Bank" means an Initial Issuing Bank or any Eligible
      Assignee to which a portion of the Letter of Credit Commitment hereunder
      has been assigned pursuant to Section 8.07 so long as such Eligible

                                       8
<PAGE>

      Assignee expressly agrees to perform in accordance with their terms all of
      the obligations that by the terms of this Agreement are required to be
      performed by it as an Issuing Bank and notifies the Agent of its
      Applicable Lending Office (which information shall be recorded by the
      Agent in the Register), for so long as the Initial Issuing Bank or
      Eligible Assignee, as the case may be, shall have a Letter of Credit
      Commitment.

            "L/C Cash Collateral Account" means an interest bearing cash
      collateral account to be established and maintained by the Agent, over
      which the Agent shall have sole dominion and control, upon terms as may be
      satisfactory to the Agent.

            "L/C Related Documents" has the meaning specified in Section
      2.06(b)(i).

            "Lenders" means the Initial Lenders, each Issuing Bank and each
      Person that shall become a party hereto pursuant to Section 8.07.

            "Letter of Credit Agreement" has the meaning specified in Section
      2.03(a).

            "Letter of Credit Commitment" means, with respect to each Initial
      Issuing Bank, the amount set forth opposite the Initial Issuing Bank's
      name on the signature pages hereto under the caption "Letter of Credit
      Commitment" or, if such Initial Issuing Bank has entered into one or more
      Assignment and Acceptances, the amount set forth for such Issuing Bank in
      the Register maintained by the Agent pursuant to Section 8.07(d) as such
      Issuing Bank's "Letter of Credit Commitment", as such amount may be
      reduced at or prior to such time pursuant to Section 2.05.

            "Letter of Credit Facility" means, at any time, an amount equal to
      the lesser of (a) the aggregate amount of the Issuing Banks' Letter of
      Credit Commitments at such time and (b) $35,000,000, as such amount may be
      reduced at or prior to such time pursuant to Section 2.05.

            "Letters of Credit" has the meaning specified in Section 2.01(b).

            "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 Documents" means (a) for purposes of this Agreement and the
      Notes and any amendment, supplement or modification hereof or thereof, (i)
      this Agreement, (ii) the Notes, (iv) the L/C Related Documents and (v) the
      Collateral Documents and (b) for purposes of the Collateral Documents and
      for all other purposes other than for purposes of this Agreement and the
      Notes, (i) this Agreement, (ii) the Notes, (iv) the L/C Related Documents,
      (v) the Collateral Documents and (vi) each Hedge Agreement entered into by
      and between the Borrower and any Lender or any Affiliate of a Lender.

            "Material Adverse Change" means any material adverse change in the
      business, condition (financial or otherwise), operations, performance,
      prospects, material obligations or properties of the Borrower or the
      Borrower 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 Borrower or the
      Borrower and its Subsidiaries taken as a whole, (b) the rights and
      remedies of the Agent or any Lender under this Agreement or any other Loan
      Document or (c) the ability of the Borrower to perform its obligations
      under this Agreement or any other Loan Document.

            "Mortgage" has the meaning specified in Section 3.01(h)(v).

                                       9
<PAGE>

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

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

            "Net Cash Proceeds" means, with respect to any issuance of any Debt
      or the sale or issuance of any Equity Interests (including, without
      limitation, any capital contribution) by any Person, the aggregate amount
      of cash received from time to time (whether as initial consideration or
      through payment or disposition of deferred consideration) by or on behalf
      of such Person in connection with such transaction after deducting
      therefrom only (without duplication) (a) reasonable and customary
      brokerage commissions, underwriting fees and discounts, legal fees,
      finder's fees and other similar fees and commissions and (b) the amount of
      taxes payable in connection with or as a result of such transaction in
      each case to the extent, but only to the extent, that the amounts so
      deducted are, at the time of receipt of such cash, actually paid to a
      Person that is not an Affiliate of such Person and are properly
      attributable to such transaction or to the asset that is the subject
      thereof.

            "Note" means a promissory note payable to the order of any Lender,
      delivered pursuant to a request made under Section 2.16 in substantially
      the form of Exhibit A hereto, evidencing the aggregate indebtedness of the
      Borrower to such Lender resulting from the Advances made by such Lender.

            "Notice of Borrowing" has the meaning specified in Section 2.02(a).

            "Notice of Issuance" has the meaning specified in Section 2.03(a).

            "PBGC" means the Pension Benefit Guaranty Corporation (or any
      successor).

            "Performance Level" means, as of any date of determination, the
      level set forth below as then applicable:

            I     Borrowed Debt/Adjusted EBITDA Ratio is less than or equal to
                  3.75:1.00.

            II    Borrowed Debt/Adjusted EBITDA Ratio is greater than 3.75:1.00
                  but less than or equal to 5.50:1.00.

            III   Borrowed Debt/Adjusted EBITDA Ratio is greater than 5.50:1.00.

      For purposes of this definition, the Performance Level shall be determined
      as at the end of each fiscal quarter of the Borrower based upon the
      calculation of the Borrowed Debt/Adjusted EBITDA Ratio for such fiscal
      quarter. The Borrowed Debt/Adjusted EBITDA Ratio shall be determined on
      the date on which the Borrower delivers to the Agent a Consolidated
      balance sheet of the Borrower and its Subsidiaries as of the end of a
      fiscal quarter and Consolidated statements of income and cash flows of the
      Borrower and its Subsidiaries for the period commencing at the end of the
      previous fiscal quarter and ending with the end of such quarter, duly
      certified (subject to year end audit adjustments) by the chief financial
      officer or the controller of the Borrower as having been prepared in
      accordance with generally accepted accounting principles, together with a
      certificate of said officer setting forth in reasonable detail the
      calculations necessary to demonstrate the Borrowed Debt/Adjusted EBITDA
      Ratio for the fiscal period then ended.

                                       10
<PAGE>

            "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.

            "Plan" means a Single Employer Plan or a Multiple Employer Plan.

            "Projections" means those financial projections dated May 6, 2003
      covering the fiscal years ending in 2003 through 2006 inclusive, to be
      delivered to the Lenders by the Borrower.

            "Ratable Share" of any amount means, with respect to any Lender at
      any time, the product of (a) a fraction the numerator of which is the
      amount of such Lender's Revolving Credit Commitment at such time (or, if
      the Commitments have been terminated in full, the amount of such Lender's
      Revolving Credit Commitment immediately prior to such termination) and the
      denominator of which is the aggregate Revolving Credit Commitments at such
      time (or, if the Commitments have been terminated in full, the aggregate
      amount of the Revolving Credit Commitments immediately prior to such
      termination)and (b) such amount.

            "Receivables Financing" means, collectively, the transactions
      contemplated by the Receivables Purchase Agreement to be dated on or
      before May 6, 2003 (the "Receivables Purchase Agreement"), among PolyOne
      Funding Corporation, as Seller, the Borrower, as servicer, the banks and
      other financial institutions party thereto and Citicorp USA, Inc., as
      agent, and National City Commercial Finance, Inc., as syndication agent,
      and the Transaction Documents (as defined in such Receivables Purchase
      Agreement).

            "Register" has the meaning specified in Section 8.07(d).

            "Required Lenders" means at any time Lenders owed at least 75% of
      the then aggregate unpaid principal amount of the Advances owing to
      Lenders, or, if no such principal amount is then outstanding, Lenders
      having at least 75% of the Revolving Credit Commitments.

            "Restricted Payment" means with respect to the Borrower (a) any
      dividend, distribution or any other payment whether direct or indirect, on
      account of any Equity Interest of the Borrower now or hereafter
      outstanding and (b) any redemption, retirement, sinking fund or similar
      payment, purchase or other acquisition for value, direct or indirect, of
      any Equity Interest of the Borrower now or hereafter outstanding, provided
      that (x) dividends, distributions or any other payment made on account of
      any Equity Interest of the Borrower payable only in common stock of the
      Borrower and (y) cash dividends paid by any Subsidiary of the Borrower to
      the Borrower or any other wholly owned Subsidiary of the Borrower of which
      it is a Subsidiary shall not constitute "Restricted Payments" hereunder.

            "Revolving Credit Commitment" means as to any Lender (a) the amount
      set forth opposite such Lender's name on the signature pages hereof or (b)
      if such Lender has entered into any Assignment and Acceptance, the amount
      set forth for such Lender in the Register maintained by the Agent pursuant
      to Section 8.07(d), as such amount may be reduced pursuant to Section
      2.05.

            "Scheduled Other Debt Payment" means, with respect to:

                  (i) the 7.070% Medium Term Notes due June 26, 2006, issued by
            MA Hanna Company, the payment of $20,000,000 of principal on or
            after June 26, 2006;

                  (ii) the 6.740% Medium Term Notes due December 22, 2005,
            issued by MA Hanna Company, the payment of $20,000,000 of principal
            on or after December 22, 2005;

                  (iii) the 6.875% Medium Term Notes due December 1, 2004,
            issued by MA Hanna Company, the payment of $20,000,000 of principal
            on or after December 1, 2004; and

                                       11
<PAGE>

                  (iv) the 8.75% Medium Term Notes due December 15, 2005, issued
            by The Geon Company, the payment of $75,000,000 of principal on or
            after December 15, 2005.

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

            "Security Agreement" has the meaning specified in Section
      3.01(h)(ii).

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

            "SPC" has the meaning specified in Section 8.07(f) hereto.

            "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 Borrower, by the Borrower and
      one or more of its other Subsidiaries or by one or more of the Borrower's
      other Subsidiaries.

            "Sunbelt" means SunBelt Chlor Alkali Partnership, a joint venture
      between a Subsidiary of the Borrower and a subsidiary of The Olin Corp.

            "Termination Date" means the earlier of (a) May 6, 2006 and (b) the
      date of termination in whole of the Commitments pursuant to Section 2.05
      or 6.01.

            "Total Excess Availability" means (a) Receivables Excess
      Availability (as defined in the Receivables Financing Agreement), plus (b)
      the lesser of (i) an amount equal to the aggregate Unused Commitments at
      such time and (ii) an amount equal to (A) the Indenture Limit at such time
      minus (B) the sum of (1) the aggregate principal amount of all Advances
      outstanding at such time and (2) the aggregate Available Amount of all the
      Letters of Credit outstanding at such time.

            "Type" refers to the distinction between Base Rate Advances and
      Eurodollar Rate Advances.

            "Unused Commitment" means, with respect to each Lender at any time,
      (a) such Lender's Revolving Credit Commitment at such time minus (b) the
      sum of (i) the aggregate principal amount of all Advances made by such
      Lender (in its capacity as a Lender) and outstanding at such time, plus
      (ii) such Lender's Ratable Share of the aggregate Available Amount of all
      the Letters of Credit outstanding at such time.

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

            "Withdrawal Liability" has the meaning specified in Part I of
      Subtitle E of Title IV of ERISA.

            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".

                                       12
<PAGE>

            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, 2002, consistent with
those applied in the preparation of the financial statements referred to in
Section 4.01(e) ("GAAP").

                                   ARTICLE II

             AMOUNTS AND TERMS OF THE ADVANCES AND LETTERS OF CREDIT

            SECTION 2.01. The Advances and Letters of Credit. (a) Advances. Each
Lender severally agrees, on the terms and conditions hereinafter set forth, to
make Advances to the Borrower from time to time on any Business Day during the
period from the Effective Date until the Termination Date in an amount not to
exceed such Lender's Unused Commitment. Each Borrowing shall be in an aggregate
amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof and
shall consist of Advances of the same Type made on the same day by the Lenders
ratably according to their respective Commitments. Within the limits of each
Lender's Commitment, the Borrower may borrow under this Section 2.01(a), prepay
pursuant to Section 2.10 and reborrow under this Section 2.01(a).

            (b) Letters of Credit. Each Issuing Bank agrees, on the terms and
conditions hereinafter set forth, to issue letters of credit (each, a "Letter of
Credit") for the account of the Borrower from time to time on any Business Day
during the period from the Effective Date until 30 days before the Termination
Date in an aggregate Available Amount (i) for all Letters of Credit issued by
each Issuing Bank not to exceed at any time the lesser of (x) the Letter of
Credit Facility at such time and (y) such Issuing Bank's Letter of Credit
Commitment at such time and (ii) for each such Letter of Credit not to exceed an
amount equal to the Unused Commitments of the Lenders at such time. Each Letter
of Credit shall be in an amount of $1,000,000 or more. No Letter of Credit shall
have an expiration date (including all rights of the Borrower or the beneficiary
to require renewal) later than 10 Business Days before the Termination Date.
Within the limits referred to above, the Borrower may request the issuance of
Letters of Credit under this Section 2.01(b), repay any Advances resulting from
drawings thereunder pursuant to Section 2.03(c) and request the issuance of
additional Letters of Credit under this Section 2.01(b). Each letter of credit
listed on Schedule 2.01(b) shall be deemed to constitute a Letter of Credit
issued hereunder, and each Lender that is an issuer of such a Letter of Credit
shall, for purposes of Section 2.03, be deemed to be an Issuing Bank for each
such letter of credit, provided than any renewal or replacement of any such
letter of credit shall be issued by an Issuing Bank pursuant to the terms of
this Agreement.

            SECTION 2.02. Making the Advances. (a) Each Borrowing shall be made
on notice, given not later than (x) 11:00 A.M. (New York City time) on the third
Business Day prior to the date of the proposed Borrowing in the case of a
Borrowing consisting of Eurodollar Rate Advances or (y) 11:00 A.M. (New York
City time) on the date of the proposed Borrowing in the case of a Borrowing
consisting of Base Rate Advances, by the Borrower to the Agent, which shall give
to each Lender prompt notice thereof by telecopier or telex. Each such notice of
a Borrowing (a "Notice of Borrowing") shall be by telephone, confirmed
immediately in writing, or telecopier or telex in substantially the form of
Exhibit B hereto, specifying therein the requested (i) date of such Borrowing,
(ii) Type of Advances comprising such Borrowing, (iii) aggregate amount of such
Borrowing, and (iv) in the case of a Borrowing consisting of Eurodollar Rate
Advances, initial Interest Period for each such Advance. Each Lender shall,
before 1:00 P.M. (New York City time) on the date of such Borrowing, make
available for the account of its Applicable Lending Office to the Agent at the
applicable Agent's Account, in same day funds, such Lender's ratable portion of
such Borrowing. After the Agent's receipt of such funds and upon fulfillment of
the applicable conditions set forth in Article III, the Agent will make such
funds available to the Borrower by depositing such funds into an account of the
Borrower maintained with the Agent or to such other account as the Borrower
shall designate.

            (b) Anything in subsection (a) above to the contrary
notwithstanding, (i) the Borrower may not select Eurodollar Rate Advances for
any Borrowing if the aggregate amount of such Borrowing is less than $5,000,000
or if the obligation of the Lenders to make Eurodollar Rate Advances shall then
be suspended pursuant to Section 2.08 or 2.12 and (ii) the Eurodollar Rate
Advances may not be outstanding as part of more than five separate Borrowings.

                                       13
<PAGE>

            (c) Each Notice of Borrowing shall be binding on the Borrower. In
the case of any Borrowing that the related Notice of Borrowing specifies is to
be comprised of Eurodollar Rate Advances, the Borrower shall indemnify each
Lender against any loss, cost or expense incurred by such Lender as a result of
any revocation of such Notice of Borrowing by the Borrower or failure to fulfill
on or before the date specified in such Notice of Borrowing for such Borrowing
the applicable conditions set forth in Article III, including, without
limitation, any loss, cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund the
Advance to be made by such Lender as part of such Borrowing when such Advance,
as a result of such revocation or failure, is not made on such date.

            (d) Unless the Agent shall have received notice from a Lender prior
to the date of any Borrowing that such Lender will not make available to the
Agent such Lender's ratable portion of such Borrowing, the Agent may assume that
such Lender has made such portion available to the Agent on the date of such
Borrowing in accordance with subsection (a) of this Section 2.02 and the Agent
may, in reliance upon such assumption, make available to the Borrower on such
date a corresponding amount. If and to the extent that such Lender shall not
have so made such ratable portion available to the Agent and the Agent has made
such corresponding amount available to the Borrower, such Lender and the
Borrower severally agree to repay to the Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Agent, at (i) in the case of the Borrower, the higher of (A) the
interest rate applicable at the time to Advances comprising such Borrowing and
(B) the cost of funds incurred by the Agent in respect of such amount and (ii)
in the case of such Lender, the Federal Funds Rate. If such Lender shall repay
to the Agent such corresponding amount, such amount so repaid shall constitute
such Lender's Advance as part of such Borrowing for purposes of this Agreement.

            (e) The failure of any Lender to make the Advance to be made by it
as part of any Borrowing shall not relieve any other Lender of its obligation,
if any, hereunder to make its Advance on the date of such Borrowing, but no
Lender shall be responsible for the failure of any other Lender to make the
Advance to be made by such other Lender on the date of any Borrowing. Nothing
herein shall prejudice any rights that the Borrower may have against any Lender
as a result of any default by such Lender hereunder.

            SECTION 2.03. Issuance of and Drawings and Reimbursement Under
Letters of Credit. (a) Request for Issuance. (i) Each Letter of Credit shall be
issued upon notice, given not later than 11:00 A.M. (New York City time) on the
fifth Business Day prior to the date of the proposed issuance of such Letter of
Credit (or on such shorter notice as the applicable Issuing Bank may agree), by
the Borrower to any Issuing Bank, and such Issuing Bank shall give the Agent
prompt notice thereof by telex, telecopier or cable. Each such notice of
issuance of a Letter of Credit (a "Notice of Issuance") shall be by telephone,
confirmed immediately in writing, or telecopier or telex, specifying therein the
requested (A) date of such issuance (which shall be a Business Day), (B)
Available Amount of such Letter of Credit, (C) expiration date of such Letter of
Credit (which shall not be later than one year after the issuance thereof), (D)
name and address of the beneficiary of such Letter of Credit and (E) form of
such Letter of Credit, and shall be accompanied by such customary application
and agreement for letters of credit as such Issuing Bank may specify to the
Borrower for use in connection with such requested Letter of Credit (a "Letter
of Credit Agreement"). If (x) the requested form of such Letter of Credit is
acceptable to such Issuing Bank in its sole discretion and (y) it has not
received notice of objection of such issuance from the Required Lenders, such
Issuing Bank will, upon fulfillment of the applicable conditions set forth in
Article III, make such Letter of Credit available to the Borrower at its office
referred to in Section 8.02 or as otherwise agreed with the Borrower in
connection with such issuance. In the event and to the extent that the
provisions of any Letter of Credit Agreement shall conflict with this Agreement,
the provisions of this Agreement shall govern.

            (b) Participations. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the applicable Issuing Bank or the Lenders, such
Issuing Bank hereby grants to each Lender, and each Lender hereby acquires from
such Issuing Bank, a participation in such Letter of Credit equal to such
Lender's Ratable Share of the Available Amount of such Letter of Credit. The
Borrower hereby agrees to each such participation. In consideration and in
furtherance of the foregoing, each Lender hereby absolutely and unconditionally
agrees to pay to the Agent, for the account of such Issuing Bank, such Lender's
Ratable Share of each drawing made under a Letter of Credit funded by such
Issuing Bank and not reimbursed by the Borrower on the date made, or of any
reimbursement payment required to be refunded to the Borrower for any reason.
Each Lender acknowledges and agrees that its obligation to acquire

                                       14
<PAGE>

participations pursuant to this paragraph in respect of Letters of Credit is
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including any amendment, renewal or extension of any Letter of
Credit or the occurrence and continuance of a Default or reduction or
termination of the Revolving Credit Commitments, and that each such payment
shall be made without any offset, abatement, withholding or reduction
whatsoever.

            (c) Drawing and Reimbursement. The payment by an Issuing Bank of a
draft drawn under any Letter of Credit shall constitute for all purposes of this
Agreement the making by any such Issuing Bank of an Advance, which shall be a
Base Rate Advance, in the amount of such draft. Each Issuing Bank shall give
prompt notice (and such Issuing Bank will use its commercially reasonable
efforts to deliver such notice within one Business Day) of each drawing under
any Letter of Credit issued by it to the Borrower and the Agent. Upon written
demand by such Issuing Bank, with a copy of such demand to the Agent, each
Lender shall pay to the Agent such Lender's Ratable Share of such outstanding
Advance, by making available for the account of its Applicable Lending Office to
the Agent for the account of such Issuing Bank, by deposit to the Agent's
Account, in same day funds, an amount equal to the portion of the outstanding
principal amount of such Advance to be funded by such Lender. Promptly after
receipt thereof, the Agent shall transfer such funds to such Issuing Bank. Each
Lender agrees to fund its Ratable Share of an outstanding Advance on (i) the
Business Day on which demand therefor is made by such Issuing Bank, provided
that notice of such demand is given not later than 11:00 A.M. (New York City
time) on such Business Day, or (ii) the first Business Day next succeeding such
demand if notice of such demand is given after such time. If and to the extent
that any Lender shall not have so made the amount of such Advance available to
the Agent, such Lender agrees to pay to the Agent forthwith on demand such
amount together with interest thereon, for each day from the date of demand by
any such Issuing Bank until the date such amount is paid to the Agent, at the
Federal Funds Rate for its account or the account of such Issuing Bank, as
applicable. If such Lender shall pay to the Agent such amount for the account of
any such Issuing Bank on any Business Day, such amount so paid in respect of
principal shall constitute an Advance made by such Lender on such Business Day
for purposes of this Agreement, and the outstanding principal amount of the
Advance made by such Issuing Bank shall be reduced by such amount on such
Business Day.

            (d) Letter of Credit Reports. Each Issuing Bank shall furnish (A) to
the Agent on the first Business Day of each week a written report summarizing
issuance and expiration dates of Letters of Credit issued during the previous
week and drawings during such week under all Letters of Credit, (B) to each
Lender on the first Business Day of each month a written report summarizing
issuance and expiration dates of Letters of Credit during the preceding month
and drawings during such month under all Letters of Credit and (C) to the Agent
and each Lender on the first Business Day of each calendar quarter a written
report setting forth the average daily aggregate Available Amount during the
preceding calendar quarter of all Letters of Credit.

            (e) Failure to Make Advances. The failure of any Lender to make the
Advance to be made by it on the date specified in Section 2.03(c) shall not
relieve any other Lender of its obligation hereunder to make its Advance on such
date, but no Lender shall be responsible for the failure of any other Lender to
make the Advance to be made by such other Lender on such date.

            SECTION 2.04. Fees. (a) Commitment Fee. The Borrower agrees to pay
to the Agent for the account of each Lender a commitment fee on the aggregate
amount of such Lender's Unused Commitment from the Effective Date in the case of
each Initial Lender and from the effective date specified in the Assignment and
Acceptance pursuant to which it became a Lender in the case of each other Lender
until the Termination Date at a rate per annum equal to the Applicable
Percentage in effect from time to time, payable in arrears quarterly on the last
day of each March, June, September and December, commencing June 30, 2003, and
on the Termination Date.

            (b) Letter of Credit Fees. (i) The Borrower shall pay to the Agent
for the account of each Lender a commission on such Lender's Ratable Share of
the average daily aggregate Available Amount of all Letters of Credit made at
the request of the Borrower and outstanding from time to time at a rate per
annum equal to the Applicable Margin for Eurodollar Rate Advances in effect from
time to time, payable in arrears quarterly on the last day of each March, June,
September and December, commencing June 30, 2003, and on the Termination Date,
and after the Termination Date payable upon demand; provided that the Applicable
Margin shall increase by 2% upon the occurrence and during the continuation of
an Event of Default if the Borrower is required to pay default interest pursuant
to Section 2.07(b).

                                       15
<PAGE>

            (ii) The Borrower shall pay to each Issuing Bank for its own account
      such fees as may from time to time be agreed in writing between the
      Borrower and such Issuing Bank.

            (c) Agent's Fees. The Borrower shall pay to the Agent for its own
account such fees as may from time to time be agreed between the Borrower and
the Agent.

            SECTION 2.05. Termination or Reduction of the Commitments. The
Borrower shall have the right, upon at least three Business Days' notice to the
Agent, to terminate in whole or reduce ratably in part the unused portions of
the respective Commitments of the Lenders, provided that each partial reduction
shall be in the aggregate amount of $5,000,000 or an integral multiple of
$1,000,000 in excess thereof.

            SECTION 2.06. Repayment of Advances. (a) Advances. The Borrower
shall repay to the Agent for the ratable account of the Lenders on the
Termination Date the aggregate principal amount of the Advances then
outstanding.

            (b) Letter of Credit Reimbursements. The obligations of the Borrower
under this Agreement, any Letter of Credit Agreement and any other agreement or
instrument, in each case, relating to any Letter of Credit shall be
unconditional and irrevocable, and shall be paid strictly in accordance with the
terms of this Agreement, such Letter of Credit Agreement and such other
agreement or instrument under all circumstances, including, without limitation,
the following circumstances (it being understood that any such payment by the
Borrower is without prejudice to, and does not constitute a waiver of, any
rights the Borrower might have or might acquire as a result of the payment by
any Issuing Bank of any draft or the reimbursement by the Borrower thereof):

            (i) any lack of validity or enforceability of this Agreement, any
      Note, any Letter of Credit Agreement, any Letter of Credit or any other
      agreement or instrument relating thereto (all of the foregoing being,
      collectively, the "L/C Related Documents");

            (ii) any change in the time, manner or place of payment of, or in
      any other term of, all or any of the obligations of the Borrower in
      respect of any L/C Related Document or any other amendment or waiver of or
      any consent to departure from all or any of the L/C Related Documents;

            (iii) the existence of any claim, set-off, defense or other right
      that the Borrower may have at any time against any beneficiary or any
      transferee of a Letter of Credit (or any Persons for which any such
      beneficiary or any such transferee may be acting), any Issuing Bank, any
      Agent, any Lender or any other Person, whether in connection with the
      transactions contemplated by the L/C Related Documents or any unrelated
      transaction;

            (iv) any statement or any other document presented under a Letter of
      Credit proving to be forged, fraudulent, invalid or insufficient in any
      respect or any statement therein being untrue or inaccurate in any
      respect;

            (v) payment by any Issuing Bank under a Letter of Credit against
      presentation of a draft or certificate that does not strictly comply with
      the terms of such Letter of Credit;

            (vi) any exchange, release or non-perfection of any collateral, or
      any release or amendment or waiver of or consent to departure from any
      guarantee, for all or any of the obligations of the Borrower in respect of
      the L/C Related Documents; or

            (vii) any other circumstance or happening whatsoever, whether or not
      similar to any of the foregoing, including, without limitation, any other
      circumstance that might otherwise constitute a defense available to, or a
      discharge of, the Borrower or a guarantor.

            SECTION 2.07. Interest on Advances. (a) Scheduled Interest. The
Borrower shall pay interest on the unpaid principal amount of each Advance made
to it from the date of such Advance until such principal amount shall be paid in
full, at the following rates per annum:

                                       16
<PAGE>

            (i) Base Rate Advances. During such periods as such Advance is a
      Base Rate Advance, a rate per annum equal at all times to the sum of (x)
      the Base Rate in effect from time to time plus (y) the Applicable Margin
      in effect from time to time, payable in arrears quarterly on the last day
      of each March, June, September and December during such periods and on the
      date such Base Rate Advance shall be Converted or paid in full.

            (ii) Eurodollar Rate Advances. During such periods as such Advance
      is a Eurodollar Rate Advance, a rate per annum equal at all times during
      each Interest Period for such Advance to the sum of (x) the Eurodollar
      Rate for such Interest Period for such Advance plus (y) the Applicable
      Margin in effect from time to time, payable in arrears on the last day of
      such Interest Period and, if such Interest Period has a duration of more
      than three months, on each day that occurs during such Interest Period
      every three months from the first day of such Interest Period and on the
      date such Eurodollar Rate Advance shall be Converted or paid in full.

            (b) Default Interest. Upon the occurrence and during the continuance
of an Event of Default, the Borrower shall pay interest on (i) the unpaid
principal amount of each Advance made to it owing to each Lender, payable in
arrears on the dates referred to in clause (a)(i) or (a)(ii) above, at a rate
per annum equal at all times to 2% per annum above the rate per annum required
to be paid on such Advance pursuant to clause (a)(i) or (a)(ii) above and (ii)
to the fullest extent permitted by law, the amount of any interest, fee or other
amount payable hereunder that is not paid when due, from the date such amount
shall be due until such amount shall be paid in full, payable in arrears on the
date such amount shall be paid in full and on demand, at a rate per annum equal
at all times to 2% per annum above the rate per annum required to be paid on
Base Rate Advances pursuant to clause (a)(i) above.

            SECTION 2.08. Interest Rate Determination. (a) The Agent shall give
prompt notice to the Borrower and the Lenders of the applicable interest rate
determined by the Agent for purposes of Section 2.07(a)(i) or (ii), and the
rate, if any, furnished by Citibank for the purpose of determining the interest
rate under Section 2.07(a)(ii).

            (b) If, with respect to any Eurodollar Rate Advances, the Required
Lenders notify the Agent that (i) they are unable to obtain matching deposits in
the London inter-bank market at or about 11:00 A.M. (London time) on the second
Business Day before the making of a Borrowing in sufficient amounts to fund
their respective Advances as a part of such Borrowing during its Interest Period
or (ii) the Eurodollar Rate for any Interest Period for such Advances will not
adequately reflect the cost to such Required Lenders of making, funding or
maintaining their respective Eurodollar Rate Advances for such Interest Period,
the Agent shall forthwith so notify the Borrower and the Lenders, whereupon (A)
the Borrower will, on the last day of the then existing Interest Period
therefor, either (x) prepay such Advances or (y) Convert such Advances into Base
Rate Advances and (B) the obligation of the Lenders to make, or to Convert
Advances into, Eurodollar Rate Advances shall be suspended until the Agent shall
notify the Borrower and the Lenders that the circumstances causing such
suspension no longer exist.

            (c) If the Borrower shall fail to select the duration of any
Interest Period for any Eurodollar Rate Advances in accordance with the
provisions contained in the definition of "Interest Period" in Section 1.01, the
Agent will forthwith so notify the Borrower and the Lenders and such Advances
will automatically, on the last day of the then existing Interest Period
therefor, Convert into Base Rate Advances.

            (d) On the date on which the aggregate unpaid principal amount of
Eurodollar Rate Advances comprising any Borrowing shall be reduced, by payment
or prepayment or otherwise, to less than $5,000,000, such Advances shall
automatically Convert into Base Rate Advances.

            (e) Upon the occurrence and during the continuance of any Event of
Default, (i) each Eurodollar Rate Advance will automatically, on the last day of
the then existing Interest Period therefor, be Converted into Base Rate Advances
and (ii) the obligation of the Lenders to make, or to Convert Advances into,
Eurodollar Rate Advances shall be suspended.

            (f) If Moneyline Telerate Markets Page 3750 is unavailable and
Citibank shall not furnish timely information to the Agent for determining the
Eurodollar Rate for any Eurodollar Rate Advances,

                                       17
<PAGE>

            (i) the Agent shall forthwith notify the Borrower and the Lenders
      that the interest rate cannot be determined for such Eurodollar Rate
      Advances,

            (ii) with respect to Eurodollar Rate Advances, each such Advance
      will automatically, on the last day of the then existing Interest Period
      therefor, at the option of the Borrower, be prepaid by the Borrower or be
      automatically Converted into a Base Rate Advance, and

            (iii) the obligation of the Lenders to make Eurodollar Rate Advances
      or to Convert Advances into Eurodollar Rate Advances shall be suspended
      until the Agent shall notify the Borrower and the Lenders that the
      circumstances causing such suspension no longer exist.

            SECTION 2.09. Optional Conversion of Advances. The Borrower may on
any Business Day, upon notice given to the Agent not later than 11:00 A.M. (New
York City time) on the third Business Day prior to the date of the proposed
Conversion and subject to the provisions of Sections 2.08 and 2.12, Convert all
Advances of one Type comprising the same Borrowing into Advances of the other
Type; provided, however, that any Conversion of Eurodollar Rate Advances into
Base Rate Advances shall be made only on the last day of an Interest Period for
such Eurodollar Rate Advances, any Conversion of Base Rate Advances into
Eurodollar Rate Advances shall be in an amount not less than the minimum amount
specified in Section 2.02(b) and no Conversion of any Advances shall result in
more separate Borrowings than permitted under Section 2.02(b) and provided
further that as a condition to each Conversion the Borrower shall have delivered
to the Agent a certificate as contemplated by Section 5.01(i)(v). Each such
notice of a Conversion shall, within the restrictions specified above, specify
(i) the date of such Conversion, (ii) the Advances to be Converted, and (iii) if
such Conversion is into Eurodollar Rate Advances, the duration of the initial
Interest Period for each such Advance. Each notice of Conversion shall be
binding on the Borrower. In the case of any Conversion of Base Rate Advances
into Eurodollar Rate Advances, the Borrower shall indemnify each Lender against
any loss, cost or expense incurred by such Lender as a result of any revocation
of such notice of Conversion, including, without limitation, any loss, cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Lender to fund the Advance to be Converted by such
Lender as a result of such revocation.

            SECTION 2.10. Prepayments of Advances. (a) Optional. The Borrower
may, upon notice at least two Business Days' prior to the date of such
prepayment, in the case of Eurodollar Rate Advances, and not later than 11:00
A.M. (New York City time) on the date of such prepayment, in the case of Base
Rate Advances, to the Agent stating the proposed date and aggregate principal
amount of the prepayment, and if such notice is given the Borrower shall, prepay
the outstanding principal amount of the Advances comprising part of the same
Borrowing in whole or ratably in part, together with accrued interest to the
date of such prepayment on the principal amount prepaid; provided, however, that
(x) each partial prepayment shall be in an aggregate principal amount of
$5,000,000 or an integral multiple of $1,000,000 in excess thereof and (y) in
the event of any such prepayment of a Eurodollar Rate Advance, the Borrower
shall be obligated to reimburse the Lenders in respect thereof pursuant to
Section 8.04(c).

            (b) Mandatory. The Borrower shall, on each Business Day, prepay an
aggregate principal amount of the Advances comprising part of the same
Borrowings and deposit an amount in the L/C Cash Collateral Account in an amount
equal to the amount by which the sum of the aggregate principal amount of the
Advances then outstanding plus the aggregate Available Amount of all Letters of
Credit then outstanding exceeds the Indenture Limit on such Business Day. All
prepayments under this subsection (b) shall be made together with accrued
interest to the date of such prepayment on the principal amount prepaid.

            SECTION 2.11. Increased Costs. (a) If, due to either (i) the
introduction of or any change in or in the interpretation of any law or
regulation or (ii) the compliance with any guideline or request from any central
bank or other governmental authority including, without limitation, any agency
of the European Union or similar monetary or multinational authority (whether or
not having the force of law) which becomes effective after the date hereof,
there shall be any increase in the cost to any Lender of agreeing to make or
making, funding or maintaining Eurodollar Rate Advances or agreeing to issue or
of issuing or maintaining or participating in Letters of Credit (excluding for
purposes of this Section 2.11 any such increased costs resulting from (i) Taxes
or Other Taxes (as to which Section 2.14 shall govern) and (ii) changes in the
basis of taxation of overall net income or overall gross income by the United
States or by the foreign jurisdiction or state under the laws of which such
Lender is organized

                                       18
<PAGE>

or has its Applicable Lending Office or any political subdivision thereof), then
the Borrower shall from time to time, upon demand by such Lender (with a copy of
such demand to the Agent), pay to the Agent for the account of such Lender
additional amounts sufficient to compensate such Lender for such increased cost.
A certificate as to the amount of such increased cost setting forth the basis
thereof in reasonable detail and submitted to the Borrower and the Agent by such
Lender shall be conclusive and binding for all purposes, absent manifest error.

            (b) If, due to either (i) the introduction of or any change in or in
the interpretation of any law or regulation or (ii) the compliance with any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law) which becomes effective after the date
hereof, there shall be any increase in the amount of capital required or
expected to be maintained by such Lender or any corporation controlling such
Lender as a result of or based upon the existence of such Lender's commitment to
lend hereunder and other commitments of this type, then, upon demand by such
Lender (with a copy of such demand to the Agent), the Borrower shall pay to the
Agent for the account of such Lender, from time to time as specified by such
Lender, additional amounts sufficient to compensate such Lender or such
corporation in the light of such circumstances, to the extent that such Lender
reasonably determines such increase in capital to be allocable to the existence
of such Lender's commitment to lend hereunder. A certificate as to such amounts
setting forth the basis thereof in reasonable detail and submitted to the
Borrower and the Agent by such Lender shall be conclusive and binding for all
purposes, absent manifest error. Notwithstanding the foregoing and except in the
case of any such law, regulation, guideline or request having retroactive
effect, the Borrower shall not be required to pay to the Agent or any Lender
such additional amounts to the extent such amounts relate to periods prior to
six months before the Borrower's receipt of such notice.

            SECTION 2.12. Illegality. Notwithstanding any other provision of
this Agreement, if any Lender shall notify the Agent that the introduction of or
any change in or in the interpretation of any law or regulation makes it
unlawful, or any central bank or other governmental authority asserts that it is
unlawful, for any Lender or its Eurodollar Lending Office to perform its
obligations hereunder to make Eurodollar Rate Advances or to fund or maintain
Eurodollar Rate Advances hereunder, (a) each Eurodollar Rate Advance will
automatically, upon such demand, be Converted into a Base Rate Advance and (b)
the obligation of the Lenders to make Eurodollar Rate Advances or to Convert
Advances into Eurodollar Rate Advances shall be suspended until the Agent shall
notify the Borrower and the Lenders that the circumstances causing such
suspension no longer exist.

            SECTION 2.13. Payments and Computations. (a) The Borrower shall make
each payment hereunder not later than 11:00 A.M. (New York City time) on the day
when due to the Agent at the Agent's Account in same day funds. The Agent will
promptly thereafter cause to be distributed like funds relating to the payment
of principal or interest or fees ratably (other than amounts payable pursuant to
Section 2.11, 2.14 or 8.04(c)) to the Lenders for the account of their
respective Applicable Lending Offices, and like funds relating to the payment of
any other amount payable to any Lender to such Lender for the account of its
Applicable Lending Office, in each case to be applied in accordance with the
terms of this Agreement. Upon its acceptance of an Assignment and Acceptance and
recording of the information contained therein in the Register pursuant to
Section 8.07(c), from and after the effective date specified in such Assignment
and Acceptance, the Agent shall make all payments hereunder and under the Notes
in respect of the interest assigned thereby to the Lender assignee thereunder,
and the parties to such Assignment and Acceptance shall make all appropriate
adjustments in such payments for periods prior to such effective date directly
between themselves.

            (b) The Borrower hereby authorizes each Lender, if and to the extent
payment owed to such Lender is not made when due hereunder or under the Note
held by such Lender, to charge from time to time against any or all of the
Borrower's accounts with such Lender any amount so due.

            (c) All computations of interest based on the Base Rate shall be
made by the Agent on the basis of a year of 365 or 366 days, as the case may be,
all computations of interest based on the Eurodollar Rate or the Federal Funds
Rate and of fees and Letter of Credit commissions shall be made by the Agent on
the basis of a year of 360 days, in each case for the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such interest, fees or commissions are payable. Each determination by the
Agent of an interest rate hereunder shall be conclusive and binding for all
purposes, absent manifest error.

                                       19
<PAGE>

            (d) Whenever any payment hereunder or under the Notes shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of payment of interest, fee or commission,
as the case may be; provided, however, that, if such extension would cause
payment of interest on or principal of Eurodollar Rate Advances to be made in
the next following calendar month, such payment shall be made on the next
preceding Business Day.

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

            SECTION 2.14. Taxes. (a) Any and all payments by the Borrower
hereunder or under the Notes shall be made, in accordance with Section 2.13,
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 Lender 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 Lender or the Agent (as
the case may be) is organized or any political subdivision thereof and, in the
case of each Lender, taxes imposed on its income, and franchise taxes imposed on
it in lieu of income taxes, by the jurisdiction of such Lender's Applicable
Lending Office 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 Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder or under any
Note to any Lender 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 2.14) such Lender 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 Borrower shall make such
deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law.

            (b) In addition, the Borrower 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 under the Notes or
from the execution, delivery or registration of, or otherwise with respect to,
this Agreement or the Notes (hereinafter referred to as "Other Taxes").

            (c) The Borrower will indemnify each Lender 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
2.14) paid by such Lender 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
Lender 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
Borrower 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 or under the Notes by or on behalf of the Borrower
through an account or branch outside the United States or by or on behalf of the
Borrower by a payor that is not a United States person, if the Borrower
determine that no Taxes are payable in respect thereof, the Borrower 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) and subsection (e), the terms
"United States" and "United States person" shall have the meanings specified in
Section 7701 of the Internal Revenue Code.

            (e) Each Lender organized under the laws of a jurisdiction outside
the United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Initial Lender and on the date of the Assignment
and Acceptance pursuant to which it becomes a Lender in the case of each other
Lender, and from

                                       20
<PAGE>

time to time thereafter if requested in writing by the Borrower (but only so
long as such Lender remains lawfully able to do so), shall provide each of the
Agent and the Borrower with two original Internal Revenue Service forms W-8BEN
or W-8ECI, as appropriate, or any successor or other form prescribed by the
Internal Revenue Service, certifying that such Lender is exempt from or entitled
to a reduced rate of United States withholding tax on payments of interest by
the Borrower pursuant to this Agreement or the Notes. If the form provided by a
Lender at the time such Lender first becomes a party to this Agreement indicates
a United States interest withholding tax rate in excess of zero, withholding tax
at such rate shall be considered excluded from "Taxes" as defined in this
Section 2.14 unless and until such Lender provides the appropriate forms
certifying that a lesser rate applies, whereupon withholding tax at such lesser
rate only shall be considered excluded from Taxes for periods governed by such
form; provided, however, that, if at the date of the Assignment and Acceptance
pursuant to which a Lender assignee becomes a party to this Agreement, the
Lender assignor was entitled to payments under subsection (a) in respect of
United States withholding tax with respect to interest paid at such date, then,
to such extent, the term Taxes shall include (in addition to withholding taxes
that may be imposed in the future or other amounts otherwise includable in
Taxes) United States withholding tax, if any, applicable with respect to the
Lender assignee on such date. If any form or document referred to in this
subsection (e) requires the disclosure of information, other than information
necessary to compute the tax payable and information required on the date hereof
by Internal Revenue Service form W-8BEN or W-8ECI, that the Lender reasonably
considers to be confidential, the Lender shall give notice thereof to the
Borrower and shall not be obligated to include in such form or document such
confidential information.

            (f) For any period with respect to which a Lender has failed to
provide the Borrower with the appropriate form described in Section 2.14(e)
(other than if such failure is due to a change in law occurring subsequent to
the date on which a form originally was required to be provided, or if such form
otherwise is not required under subsection (e) above), such Lender shall not be
entitled to indemnification under Section 2.14(a) or (c) with respect to Taxes
imposed by the United States by reason of such failure; provided, however, that
should a Lender become subject to Taxes because of its failure to deliver a form
required hereunder, the Borrower shall take such steps as the Lender shall
reasonably request to assist the Lender to recover such Taxes.

            SECTION 2.15. Sharing of Payments, Etc. If any Lender shall obtain
any payment (whether voluntary, involuntary, through the exercise of any right
of set-off, or otherwise) on account of the Advances owing to it (other than
pursuant to Section 2.11, 2.14 or 8.04(c)) in excess of its Ratable Share of
payments on account of the Advances obtained by all the Lenders, such Lender
shall forthwith purchase from the other Lenders such participations in the
Advances owing to them as shall be necessary to cause such purchasing Lender to
share the excess payment ratably with each of them; provided, however, that if
all or any portion of such excess payment is thereafter recovered from such
purchasing Lender, such purchase from each Lender shall be rescinded and such
Lender shall repay to the purchasing Lender the purchase price to the extent of
such recovery together with an amount equal to such Lender's ratable share
(according to the proportion of (i) the amount of such Lender's required
repayment to (ii) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered. The Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section 2.15
may, to the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Lender were the direct creditor of the Borrower in the amount of such
participation.

            SECTION 2.16. Evidence of Debt. (a) Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from each Advance owing to
such Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time hereunder in respect of
Advances. The Borrower agrees that upon notice by any Lender to the Borrower
(with a copy of such notice to the Agent) to the effect that a Note is required
or appropriate in order for such Lender to evidence (whether for purposes of
pledge, enforcement or otherwise) the Advances owing to, or to be made by, such
Lender, the Borrower shall promptly execute and deliver to such Lender a Note
payable to the order of such Lender in a principal amount up to the Revolving
Credit Commitment of such Lender.

            (b) The Register maintained by the Agent pursuant to Section 8.07(d)
shall include a control account, and a subsidiary account for each Lender, in
which accounts (taken together) shall be recorded (i) the date and amount of
each Borrowing made hereunder, the Type of Advances comprising such Borrowing
and, if appropriate, the Interest Period applicable thereto, (ii) the terms of
each Assignment and Acceptance delivered to

                                       21
<PAGE>

and accepted by it, (iii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender hereunder
and (iv) the amount of any sum received by the Agent from the Borrower hereunder
and each Lender's share thereof.

            (c) Entries made in good faith by the Agent in the Register pursuant
to subsection (b) above, and by each Lender in its account or accounts pursuant
to subsection (a) above, shall be evidence of the amount of principal and
interest due and payable or to become due and payable from the Borrower to, in
the case of the Register, each Lender and, in the case of such account or
accounts, such Lender, under this Agreement, absent manifest error; provided,
however, that the failure of the Agent or such Lender to make an entry, or any
finding that an entry is incorrect, in the Register or such account or accounts
shall not limit or otherwise affect the obligations of the Borrower or affect
the rights of the Lenders under this Agreement.

            SECTION 2.17. Use of Proceeds. The proceeds of the Advances shall be
available (and the Borrower agrees that it shall use such proceeds) solely for
working capital and general corporate purposes of the Borrower and its
Subsidiaries, provided, however, that proceeds of the Advances shall not be used
for repayment of third-party Debt.

                                  ARTICLE III

                     CONDITIONS TO EFFECTIVENESS AND LENDING

            SECTION 3.01. Conditions Precedent to Effectiveness of Sections 2.01
and 2.03. Sections 2.01 and 2.03 of 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, 2002.

            (b) There shall exist no action, suit, investigation, litigation or
      proceeding affecting the Borrower 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 any Note or the
      consummation of the transactions contemplated hereby, and there shall have
      been no adverse change in the status, or financial effect on the Borrower
      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 Lenders shall have been given such access to the management,
      records, books of account, contracts and properties of the Borrower and
      its Subsidiaries as they shall have reasonably requested.

            (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 Lenders) and shall remain in effect, and no law or
      regulation shall be applicable in the reasonable judgment of the Lenders
      that restrains, prevents or imposes materially adverse conditions upon the
      transactions contemplated hereby.

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

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

                                       22
<PAGE>

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

                  (i) The representations and warranties contained in Section
            4.01 and in each other Loan Document 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 (except for the Notes) in sufficient copies for each Lender:

                  (i) The Notes to the order of the Lenders to the extent
            requested by any Lender pursuant to Section 2.16.

                  (ii) An amended and restated security agreement in
            substantially the form of Exhibit D hereto (as amended, modified or
            otherwise supplemented from time to time, the "Security Agreement"),
            duly executed by the Borrower, 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 Borrower 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,

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

                  (iv) Favorable opinions of local counsels with respect to the
            Security Agreement , in form and substance satisfactory to the
            Agent.

                  (v) Amendments in form and substance satisfactory to the Agent
            of the deeds of trust and mortgages covering the properties listed
            in Schedule II hereto and delivered pursuant to the Existing Credit
            Agreement (as amended, modified or otherwise supplemented from time
            to time, the "Mortgages"), each duly executed by the Borrower,
            together with a Mortgage Modification Endorsement to the Lender's
            title insurance policy delivered with respect to each such Mortgage
            under the Existing Credit Agreement in form and substance
            satisfactory to the Agent.

                  (vi) Amendments in form and substance satisfactory to the
            Agent of the Collateral Trust Agreements, each dated as of January
            25, 2002 (as amended, modified or otherwise supplemented from time
            to time, the "Collateral Trust Agreements") between the Collateral

                                       23
<PAGE>

            Trustees named therein and the Borrower, duly executed by the
            Collateral Trustees and the Borrower.

                  (vii) An agreement in form and substance satisfactory to the
            Agent among the Collateral Trustees, the Borrower, the Agent and the
            duly authorized representative of the creditors parties to the
            Receivables Financing (as amended, modified or otherwise
            supplemented from time to time, the "Intercreditor Agreement").

                  (viii) Certified copies of the resolutions of the Board of
            Directors of the Borrower approving this Agreement and each other
            Loan Document, and of all documents evidencing other necessary
            corporate action and governmental approvals, if any, with respect to
            this Agreement and each other Loan Document.

                  (ix) A certificate of the Secretary or an Assistant Secretary
            of the Borrower certifying the names and true signatures of the
            officers of the Borrower authorized to sign this Agreement and each
            other Loan Document and the other documents to be delivered
            hereunder.

                  (x) A favorable opinion of in-house counsel of the Borrower,
            substantially in the form of Exhibit E hereto and as to such other
            matters as any Lender through the Agent may reasonably request.

                  (xi) A favorable opinion of Shearman & Sterling, counsel for
            the Agent, in form and substance satisfactory to the Agent.

            (i) The Receivables Financing shall have been consummated having a
      Total Commitment Amount (as defined in the Receivable Purchase Agreement)
      of not less than $225,000,000 and having a tenor of not less than three
      years.

            (j) The Borrower shall have received cash proceeds of not less than
      $190,000,000 from the issuance of senior notes in the debt markets having
      a maturity no earlier than 90 days after the Termination Date, and
      $87,775,000 of such cash proceeds shall have been delivered to Citibank in
      accordance with an escrow agreement in substantially the form of Exhibit F
      hereto.

            SECTION 3.02. Conditions Precedent to Each Borrowing and Issuance.
The obligation of each Lender to make an Advance on the occasion of each
Borrowing and the obligation of each Issuing Bank to issue a Letter of Credit
shall be subject to the conditions precedent that the Effective Date shall have
occurred and on the date of such Borrowing or issuance (a) the following
statements shall be true (and each of the giving of the applicable Notice of
Borrowing, Notice of Issuance and the acceptance by the Borrower of the proceeds
of such Borrowing shall constitute a representation and warranty by the Borrower
on the date of such Borrowing or issuance such statements are true):

            (i) the representations and warranties contained in Section 4.01 and
      in each other Loan Document are correct on and as of such date, before and
      after giving effect to such Borrowing or issuance the application of the
      proceeds therefrom, as though made on and as of such date, other than any
      such representations and warranties that, by their terms, refer to a
      specific date other than the date of such Borrowing,

            (ii) no event has occurred and is continuing, or would result from
      such Borrowing or issuance or from the application of the proceeds
      therefrom, that constitutes a Default,

            (iii) the Indenture Limit exceeds the aggregate principal amount of
      the Advances plus the aggregate Available Amount of all Letters of Credit
      to be outstanding after giving effect to such Advance or issuance,
      respectively, and

                                       24
<PAGE>

            (iv) for each Borrowing, the Available Capital (as defined in the
      Receivables Purchase Agreement) under the Receivables Financing, after
      giving effect to all Capital Investments (as defined in the Receivables
      Purchase Agreement) shall be less than $5,000,000;

and (b) the Agent shall have received such other approvals, opinions or
documents as any Lender through the Agent may reasonably request.

            SECTION 3.03. Determinations Under Section 3.01. For purposes of
determining compliance with the conditions specified in Section 3.01, each
Lender 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 Lenders unless an officer
of the Agent responsible for the transactions contemplated by this Agreement
shall have received notice from such Lender prior to the proposed Effective
Date, as notified by the Borrower to the Lenders, specifying its objection
thereto. The Agent shall promptly notify the Lenders of the occurrence of the
Effective Date.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

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

            (a) The Borrower 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 Borrower of this
      Agreement and the other Loan Documents, and the consummation of the
      transactions contemplated hereby, are within the Borrower's corporate
      powers, have been duly authorized by all necessary corporate action, and
      do not (i) contravene the Borrower's charter or code of regulations, (ii)
      violate any applicable law, rule, regulation, order, writ judgment,
      injunction, decree, determination or award, or (iii) breach or result in a
      default under, or result in the acceleration of (or entitle any party to
      accelerate) the maturity of any obligation of the Borrower under, or
      result in or require the creation of any Lien upon any property of the
      Borrower pursuant to the terms of any agreement or instrument binding on
      or affecting the Borrower 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 Borrower of this Agreement or the other Loan Documents,
      except for the filing of UCC financing statements and the amendments to
      the Mortgages contemplated by Section 3.01.

            (d) This Agreement has been, and each of the other Loan Documents
      when delivered hereunder will have been, duly executed and delivered by
      the Borrower. This Agreement is, and each of the other Loan Documents when
      delivered hereunder will be, the legal, valid and binding obligation of
      the Borrower enforceable against the Borrower 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) (i) The Consolidated balance sheet of the Borrower and its
      subsidiaries as at December 31, 2002, and the related Consolidated
      statements of income and cash flows of the Borrower 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 Lender, fairly present the

                                       25
<PAGE>

      Consolidated financial condition of the Borrower and its subsidiaries as
      at such date and the Consolidated results of the operations of the
      Borrower and its subsidiaries for the period ended on such date, all in
      accordance with generally accepted accounting principles consistently
      applied.

                  (ii) Since December 31, 2002, 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 Borrower's knowledge, there is no pending or
      threatened action, suit, investigation, litigation or proceeding,
      including, without limitation, any Environmental Action, affecting the
      Borrower 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 any Note or the consummation of the transactions
      contemplated hereby, and there has been no adverse change in the status,
      or financial effect on the Borrower or any of its Subsidiaries, of the
      Disclosed Litigation from that described on Schedule 3.01(b) hereto.

            (g) The Borrower 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), and no proceeds of any Advance will be used to purchase or carry
      any margin stock or to extend credit to others for the purpose of
      purchasing or carrying any margin stock.

            (h) No ERISA Event has occurred or is reasonably expected to occur
      with respect to any Plan.

            (i) Neither the Borrower nor any of its ERISA Affiliates has
      incurred or is reasonably expected to incur any Withdrawal Liability to
      any Multiemployer Plan.

            (j) Neither the Borrower nor any of its ERISA Affiliates has been
      notified by the sponsor of a Multiemployer Plan that such Multiemployer
      Plan is in reorganization or has been terminated, within the meaning of
      Title IV of ERISA, and no such Multiemployer Plan is reasonably expected
      to be in reorganization or to be terminated, within the meaning of Title
      IV of ERISA.

            (k) The operations and properties of the Borrower and each of its
      Subsidiaries comply in all material respects with all Environmental Laws,
      all necessary Environmental Permits have been obtained and are in effect
      for the operations and properties of the Borrower and its Subsidiaries,
      the Borrower and its Subsidiaries are in compliance in all material
      respects with all such Environmental Permits, and no circumstances exist
      that could be reasonably likely to (i) form the basis of an Environmental
      Action against the Borrower or any of its Subsidiaries or any of their
      properties that could have a Material Adverse Effect or (ii) cause any
      such property to be subject to any restrictions on ownership, occupancy,
      use or transferability under any Environmental Law that could have a
      Material Adverse Effect.

            (l) None of the properties currently or formerly owned or operated
      by the Borrower or any of its Subsidiaries is listed or proposed for
      listing on the National Priorities List under the Comprehensive
      Environmental Response, Compensation and Liability Act of 1980 ("NPL") or
      on the Comprehensive Environmental Response, Compensation and Liability
      Information System maintained by the U.S. Environmental Protection Agency
      ("CERCLIS") or any analogous state list of sites requiring investigation
      or cleanup, the listing, or proposed listing of which would be reasonably
      likely to have a Material Adverse Effect, except as described in the
      annual report of the Borrower on Form 10-K filed with the Securities and
      Exchange Commission, for the period ending December 31, 2002 or, to the
      best knowledge of the Borrower, is adjacent to any such property.

            (m) Except where noncompliance would not individually or in the
      aggregate have a Material Adverse Effect (i) neither the Borrower nor any
      of its Subsidiaries has transported or arranged for the

                                       26
<PAGE>

      transportation of any Hazardous Materials to any location that is listed
      or proposed for listing on the NPL or on the CERCLIS or any analogous
      state list, and (ii) all Hazardous Materials generated, used, treated,
      handled or stored at or transported to or from any property currently or
      formerly owned or operated by the Borrower or any of its Subsidiaries have
      been disposed of in compliance with all Environmental Laws and
      Environmental Permits,

            (n) Following application of the proceeds of each Advance, not more
      than 25 percent of the value of the assets (either of the Borrower only or
      of the Borrower and its Subsidiaries on a Consolidated basis) subject to
      the provisions of Section 5.02(a) or subject to any restriction contained
      in any agreement or instrument between the Borrower and any Lender or any
      Affiliate of any Lender relating to Debt and within the scope of Section
      6.01(d) will be margin stock (within the meaning of Regulation U issued by
      the Board of Governors of the Federal Reserve System).

            (o) The Borrower 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.

            (p) The Borrower 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 BORROWER

            SECTION 5.01. Affirmative Covenants. So long as any Advance shall
remain unpaid, any Lender shall have any Commitment hereunder or any Letter of
Credit shall be outstanding, the Borrower 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 as provided in
      Section 5.01(j).

            (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 Borrower 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 Borrower
      or such Subsidiary operates; provided, however, that the Borrower and its
      Subsidiaries may self-insure to the same extent as is consistent with the
      past practice and to the extent consistent with prudent business practice.

                                       27
<PAGE>

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

            (e) Visitation Rights. At any reasonable time and from time to time,
      permit the Agent or any of the Lenders or any agents or representatives
      thereof, to examine and make copies of and abstracts from the records and
      books of account of, and visit the properties of, the Borrower and any of
      its Subsidiaries, and to discuss the affairs, finances and accounts of the
      Borrower and any of its Subsidiaries with any of their officers or
      directors and with their independent certified public accountants.

            (f) 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 Borrower and each such Subsidiary in accordance with
      generally accepted accounting principles in effect from time to time.

            (g) 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.

            (h) Transactions with Affiliates. Conduct, and cause each of its
      Subsidiaries to conduct, all transactions otherwise permitted under this
      Agreement with any of their Affiliates on terms that are fair and
      reasonable and no less favorable to the Borrower or such Subsidiary than
      it would obtain in a comparable arm's-length transaction with a Person not
      an Affiliate.

            (i) Reporting Requirements. Furnish to the Lenders:

                  (i) within 50 days after the end of each of the first three
            fiscal quarters of each fiscal year, financial information regarding
            the Borrower 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 or, if applicable, the latest business plan provided
            pursuant to clause (iv) below for the current fiscal year, together
            with a certificate of the chief financial officer or treasurer of
            the Borrower (a) that such financial statements fairly presenting
            the Consolidated financial position of the Borrower 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 Borrower 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 Borrower and its Subsidiaries
            consisting of Consolidated balance sheets of the Borrower and its
            Subsidiaries as of the end of such year and related statements of
            income and cash flows of the Borrower 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 Borrower being a going concern by the Borrower'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

                                       28
<PAGE>

            Borrower 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 Borrower'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 Borrower's independent public accountants in connection with
            such Consolidated financial statements has been made in accordance
            with generally accepted auditing standards, and accompanied by a
            certificate stating that in the course of the regular audit of the
            business of the Borrower 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 Borrower 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 Borrower
            having knowledge of or responsibility for such matters setting forth
            details of such Default and the action that the Borrower has taken
            and proposes to take with respect thereto;

                  (iv) not later than the earlier of (A) 15 days after the
            Borrower has received the approval of its board of directors
            therefor and (B) 90 days after the commencement of each fiscal year:
            (1) the annual business plan of the Borrower and its Subsidiaries
            for such fiscal year approved by the Board of Directors of the
            Borrower, (2) forecasts prepared by management of the Borrower for
            each fiscal month in such fiscal year and (3) forecasts prepared by
            management of the Borrower for such fiscal year and each of the
            succeeding fiscal years through the Termination Date, including, in
            each instance described in clauses (2) and (3) above, (x) a
            projected year-end Consolidated balance sheet and income statement
            and statement of cash flows and (y) a statement of all of the
            material assumptions on which such forecasts are based and (z)
            containing the types of financial information contained in the
            Projections.

                  (v) as soon as possible and in any event within 50 days after
            the end of each fiscal quarter, and on each date that the Borrower
            gives notice of a Conversion in accordance with Section 2.09 or
            notice of a subsequent Interest Period in accordance with the
            definition of "Interest Period", a certificate of the chief
            financial officer, treasurer or the controller of the Borrower
            setting forth in reasonable detail the calculations necessary to
            demonstrate that the sum of the aggregate principal amount of the
            Advances plus the Available Amount of all Letters of Credit
            outstanding as of the last day of such fiscal quarter do not exceed
            the Indenture Limit.

                  (vi) promptly after the sending or filing thereof, the
            Borrower shall send the Agent copies of (A) all reports the Borrower
            sends to its security holders generally, (B) all reports and
            registration statements that the Borrower 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 Borrower made available by the Borrower or any of
            its Subsidiaries to the public or any other creditor.

                  (vii) 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 Borrower or
            any of its Subsidiaries of the type described in Section 4.01(f);

                  (viii) promptly and in any event within 10 days after the
            Borrower or any of its ERISA Affiliates knows or has reason to know
            that any ERISA Event has occurred, a statement of an officer of the
            Borrower having knowledge of or responsibility for such matters
            describing such ERISA Event and the action, if any, that the
            Borrower or such ERISA Affiliate has taken and proposes to take with
            respect thereto;

                                       29
<PAGE>

                  (ix) promptly and in any event within seven Business Days
            after receipt thereof by the Borrower or any of its ERISA
            Affiliates, copies of each notice from the PBGC stating its
            intention to terminate any Plan or to have a trustee appointed to
            administer any such Plan;

                  (x) promptly and in any event within 30 days after the receipt
            thereof by the Borrower or any of its ERISA Affiliates, a copy of
            the latest annual actuarial report for each Plan if the ratio of the
            fair market value of the assets of such Plan to its current
            liability (as defined in Section 412 of the Internal Revenue Code)
            is less than 60%;

                  (xi) promptly and in any event within five Business Days after
            receipt thereof by the Borrower or any of its ERISA Affiliates from
            the sponsor of a Multiemployer Plan, copies of each notice
            concerning (A) the imposition of Withdrawal Liability by any such
            Multiemployer Plan, (B) the reorganization or termination, within
            the meaning of Title IV of ERISA, of any such Multiemployer Plan or
            (C) the amount of liability incurred, or that may be incurred, by
            the Borrower or any of its ERISA Affiliates in connection with any
            event described in clause (A) or (B); and

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

            (j) Compliance with Environmental Laws. Comply, and cause each of
      its Subsidiaries and all lessees and other Persons operating or occupying
      its properties to comply, in all material respects, with all applicable
      Environmental Laws and Environmental Permits; obtain and renew and cause
      each of its Subsidiaries to obtain and renew all Environmental Permits
      necessary for its operations and properties; and conduct, and cause each
      of its Subsidiaries to conduct, any investigation, study, sampling and
      testing, and undertake any cleanup, removal, remedial or other action
      necessary to remove and clean up all Hazardous Materials from any of its
      properties pursuant to the order of any regulatory authority and generally
      in accordance with the requirements of all Environmental Laws; provided,
      however, that neither the Borrower nor any of its Subsidiaries shall be
      required to undertake any such cleanup, removal, remedial or other action
      to the extent that its obligation to do so is being contested in good
      faith and by proper proceedings and appropriate reserves are being
      maintained with respect to such circumstances.

            (k) Preparation of Environmental Reports. If an Event of Default
      shall have occurred and be continuing, at the request of the Agent with
      respect to any Environmental Action, condition or occurrence that the
      Agent or the Required Lenders reasonably deem to be material, provide to
      the Lenders within 90 days after such request, at the expense of the
      Borrower, an environmental site assessment report for the properties
      described in such request, prepared by an environmental consulting firm
      acceptable to the Agent, indicating the presence or absence of Hazardous
      Materials and the estimated cost of any compliance, removal or remedial
      action in connection with any Hazardous Materials on such properties;
      without limiting the generality of the foregoing, if the Agent determines
      at any time that a material risk exists that any such report will not be
      provided within the time referred to above, the Agent may retain an
      environmental consulting firm to prepare such report at the expense of the
      Borrower, and the Borrower hereby grants and agrees to cause any
      Subsidiary that owns any property described in such request to grant at
      the time of such request, to the Agent, the Lenders, such firm and any
      agents or representatives thereof an irrevocable non-exclusive license,
      subject to the rights of tenants, to enter onto their respective
      properties to undertake such an assessment.

            (l) Real Estate Matters. Deliver to the Agent, within 30 days after
      the Effective Date, a title search for each property listed in Schedule II
      showing no Liens of record other than those created or permitted by the
      Mortgages. Deliver to the Agent, within 30 days after the occurrence of
      any Actionable Default (as defined in the Collateral Trust Agreement), an
      endorsement to each lender's title insurance policy for the properties
      listed in Schedule II showing no Liens of record other than those created
      or permitted by the Mortgages and down-dating such title insurance
      policies to a then current date.

                                       30
<PAGE>

            SECTION 5.02. Negative Covenants. So long as any Advance shall
remain unpaid, any Lender shall have any Commitment hereunder or any Letter of
Credit shall be outstanding, the Borrower will not:

            (a) Liens, Etc. Create or suffer to exist, or permit any of its
      Subsidiaries to create or suffer to exist, any Lien on or with respect to
      any of its properties, whether now owned or hereafter acquired, or assign,
      or permit any of its Subsidiaries to assign, any right to receive income,
      other than:

                  (i) (A) Liens for taxes, assessments and governmental charges
            or levies to the extent not required to be paid under Section
            5.01(b) hereof (including contracts entered into in connection with
            major construction projects); (B) Liens imposed by law, such as
            materialmen's, mechanics', carriers', workmen's and repairmen's
            Liens and other similar Liens arising in the ordinary course of
            business securing obligations; (C) pledges or deposits to secure
            obligations under workers' compensation laws or similar legislation
            or to secure public or statutory obligations; and (D) easements,
            rights of way and other encumbrances on title to real property that
            do not materially adversely affect the use of such property for its
            present purposes, provided in each case, that no enforcement,
            execution, levy or foreclosure proceeding shall have been commenced
            that is not being contested in good faith and by proper proceedings
            with appropriate reserves being maintained,

                  (ii) purchase money Liens upon or in any property acquired or
            held by the Borrower or any Subsidiary in the ordinary course of
            business to secure the purchase price of such property or to secure
            Debt incurred solely for the purpose of financing the acquisition of
            such property, or Liens existing on such property at the time of its
            acquisition (other than any such Lien created in contemplation of
            such acquisition or extensions, renewals or replacements of any of
            the foregoing for the same or a lesser amount, provided, however,
            that no such Lien shall extend to or cover any property other than
            the property being acquired, and no such extension, renewal or
            replacement shall extend to or cover any property not theretofore
            subject to the Lien being extended, renewed or replaced, provided
            further that the aggregate principal amount of the indebtedness
            secured by the Liens referred to in this clause (ii) shall not
            exceed $25,000,000, at any time outstanding,

                  (iii) the Liens existing on the Effective Date and described
            on Schedule 5.02(a) hereto,

                  (iv) the replacement, extension or renewal of any Lien
            permitted by clause (iii) above upon or in the same property
            theretofore subject thereto or the replacement, extension or renewal
            (without increase in the amount or change in any direct or
            contingent obligor) of the Debt secured thereby,

                  (v) Liens, if any, resulting from the documents evidencing the
            Receivables Financing,

                  (vi) Liens created under the Collateral Documents, and

                  (vii) Liens not otherwise permitted by clauses (i) through
            (vi) securing Debt or other obligations in an aggregate amount not
            to exceed $10,000,000 at any time outstanding.

            (b) Mergers, Etc. Merge or consolidate with or into, or convey,
      transfer, lease or otherwise dispose of (whether in one transaction or in
      a series of transactions) all or substantially all of its assets (whether
      now owned or hereafter acquired) to, any Person, or permit any of its
      Subsidiaries to do so, except that any Subsidiary of the Borrower may
      merge or consolidate with or into, or dispose of assets to, any other
      Subsidiary of the Borrower, and except that any Subsidiary of the Borrower
      may merge into or dispose of assets to the Borrower, provided, in each
      case, that no Default shall have occurred and be continuing at the time of
      such proposed transaction or would result therefrom.

                                       31
<PAGE>

                  (c) Accounting Changes. Make or permit, or permit any of its
            Subsidiaries to make or permit, any change (i) in accounting
            policies or reporting practices, except as required by generally
            accepted accounting principles or applicable law and disclosed to
            the Lenders and the Agent or (ii) in its fiscal year.

                  (d) Sales, Etc. of Assets. Sell, lease, transfer or otherwise
            dispose of any of its assets or any interest therein (including the
            sale or factoring at maturity or collection of any account) to any
            Person, or permit or suffer any other Person to acquire any interest
            in any of its assets other than (i) in connection with the
            Receivables Financing, (ii) the assets listed on Schedule 5.02(d)
            hereto, (iii) sales of inventory in the ordinary course of business
            and (iv) assets having a book value of not more than $25,000,000,
            provided, in the case of clauses (ii) and (iv) above, (x) no Default
            has occurred and is continuing or would result therefrom, (y) such
            sale or other transfer is for Fair Market Value and (z) 75% of the
            proceeds of such sale or transfer are payable in cash to the seller
            upon the consummation of such sale. "Fair Market Value" means (a)
            with respect to any asset or group of assets (other than a
            marketable security) at any date, the value of the consideration
            obtainable in a sale of such asset at such date assuming a sale by a
            willing seller to a willing purchaser dealing at arm's length and
            arranged in an orderly manner over a reasonable period of time
            having regard to the nature and characteristics of such asset and
            with respect to the sale of assets with a book value in excess of
            $25,000,000, as such sale is reasonably approved by the Board of
            Directors of the Borrower or, if such asset shall have been the
            subject of a relatively contemporaneous appraisal by an independent
            third party appraiser, the basic assumptions underlying which have
            not materially changed since its date, the value set forth in such
            appraisal and (b) with respect to any marketable security at any
            date, the closing sale price of such security on the Business Day
            next preceding such date, as appearing in any published list of any
            national securities exchange or the NASDAQ Stock Market or, if there
            is no such closing sale price of such Security, the final price for
            the purchase of such security at face value quoted on such Business
            Day by a financial institution of recognized standing regularly
            dealing in securities of such type and selected by the Agent.

                  (e) Investments in Other Persons. Make, or permit any of its
            Subsidiaries to make, any Investment in any Person, except:

                        (i) equity Investments or Investments consisting of
                  intercompany Debt by the Borrower and its Subsidiaries in
                  their Subsidiaries outstanding on the date hereof and
                  additional investments in wholly owned Subsidiaries;

                        (ii) loans and advances to employees in the ordinary
                  course of the business of the Borrower and its Subsidiaries as
                  presently conducted; and

                        (iii) Investments by the Borrower and its Subsidiaries
                  in deposit accounts maintained in the ordinary course of
                  business; and

                        (iv) other Investments made during the term of this
                  Agreement of not more than $10,000,000 in the aggregate;
                  provided that with respect to Investments made under this
                  clause (iv): (1) any newly acquired or organized Subsidiary of
                  the Borrower or any of its Subsidiaries shall be a wholly
                  owned Subsidiary thereof; (2) immediately before and after
                  giving effect thereto, no Default shall have occurred and be
                  continuing or would result therefrom; (3) any company or
                  business acquired or invested in pursuant to this clause (iv)
                  shall be in the same line of business as the business of the
                  Borrower or any of its Subsidiaries; (4) immediately after
                  giving effect to the acquisition of a company or business
                  pursuant to this clause (iv), the Borrower shall be in pro
                  forma compliance with the covenants contained in Section 5.03,
                  calculated based on the financial statements most recently
                  delivered to the Lenders pursuant to Section 5.01(i) and as
                  though such acquisition had occurred at the beginning of the
                  four-quarter period covered thereby, as evidenced by a
                  certificate of the chief financial officer of the Borrower
                  delivered to the Lenders demonstrating such compliance.

                  (f) Restricted Payments. Directly or indirectly, declare,
            order, pay, make or set apart any sum for any Restricted Payment
            unless, after giving effect to such Restricted Payment, (i) Total
            Excess

                                       32
<PAGE>

            Availability (calculated on a pro forma basis using the average
            Total Excess Availability for each day during the immediately
            preceding calendar month) is not less than the greater of (A)
            $210,000,000, reduced by the amount of any Scheduled Other Debt
            Payment made during said immediately preceding month, and (B)
            $150,000,000, and (ii) the Adjusted EBITDA of the Borrower and its
            Subsidiaries for the twelve month period ending on the last day of
            the most recently completed calendar month is not less than
            $200,000,000.

                  (g) Negative Pledge. Enter into or suffer to exist, or permit
            any of its Subsidiaries to enter into or suffer to exist, any
            agreement prohibiting or conditioning the creation or assumption of
            any Lien upon any of its property or assets except (i) in favor of
            the Collateral Trustees for the benefit of the Secured Parties or
            (ii) in connection with (A) any Debt (including the Receivables
            Financing and the Debt contemplated by Section 3.01(j)) or operating
            lease outstanding on the Effective Date, (B) any purchase money Debt
            solely to the extent that the agreement or instrument governing such
            Debt prohibits a Lien on the property acquired with the proceeds of
            such Debt, (C) any Capitalized Lease solely to the extent that such
            Capitalized Lease prohibits a Lien on the property subject thereto
            or (D) any Debt outstanding on the date any Subsidiary of the
            Borrower becomes such a Subsidiary (so long as such agreement was
            not entered into solely in contemplation of such Subsidiary becoming
            a Subsidiary of the Borrower).

                  (h) Capital Expenditures. Make or incur, or permit its
            Subsidiaries to make or incur, Capital Expenditures during each of
            the fiscal years set forth below, in an aggregate amount in excess
            of the maximum amount set forth below for such fiscal year:

<TABLE>
<CAPTION>
                                                     Maximum Amount of Capital
                   Fiscal Year Ending                       Expenditures
                   ------------------                -------------------------
<S>                                                  <C>
                     December 2003                           $75,000,000
                     December 2004                           $90,000,000
            and each fiscal year thereafter
</TABLE>

            provided, however, that to the extent that actual Capital
      Expenditures for any such fiscal year shall be less than the maximum
      amount set forth above for such fiscal year (without giving effect to the
      carryover permitted by this proviso), 50% of the difference between said
      stated maximum amount and such actual Capital Expenditures shall, in
      addition, be available for Capital Expenditures in the next succeeding
      fiscal year.

            (i) Foreign Subsidiary Debt. Permit any of its Subsidiaries
      organized under the laws of any jurisdiction outside the United States to
      create, incur, assume or suffer to exist, any Debt, other than:

                  (i) Debt owed to the Borrower or a wholly owned Subsidiary of
            the Borrower,

                  (ii) Debt existing on the Effective Date and described on
            Schedule 5.02(i) hereto (the "Existing Foreign Subsidiary Debt"),
            and any Debt extending the maturity of, or refunding or refinancing,
            in whole or in part, the Existing Debt, provided that the principal
            amount of such Existing Debt shall not be increased above the
            principal amount thereof outstanding immediately prior to such
            extension, refunding or refinancing, and the direct and contingent
            obligors therefor shall not be changed, as a result of or in
            connection with such extension, refunding or refinancing

                  (iii) unsecured Debt aggregating for all of such Subsidiaries
            not more than $25,000,000 at any time outstanding, and

                  (iv) endorsement of negotiable instruments for deposit or
            collection or similar transactions in the ordinary course of
            business.

            (j) Prepayments of Debt. Prepay, redeem, purchase, defease or
      otherwise satisfy prior to the scheduled maturity thereof in any manner,
      or make any payment in violation of any subordination terms of, any Debt
      and will not permit any of its Subsidiaries to do any of the foregoing;
      provided, however, that the Borrower or any Subsidiary of the Borrower may
      (i) prepay any obligations hereunder in accordance with

                                       33
<PAGE>

      the terms of this Agreement, (ii) make regularly scheduled or otherwise
      required repayments or redemptions of Debt, (iii) prepay Debt under the
      Receivables Financing, (iv) prepay any Debt payable to the Borrower by any
      of its Subsidiaries, (v) prepay the Borrower's 9 3/8% Senior Notes due
      2003 with the proceeds of the proceeds of the Debt contemplated by Section
      3.01(j) deposited into escrow on the Effective Date, (vi) renew, extend,
      refinance and refund Debt on terms no less favorable to the Borrower or
      its Subsidiary obligated thereunder, including as to weighted average
      maturity and final maturity, than the Debt referred to in Section 3.01(j),
      and (vii) prepay any other obligations on any Debt with funds other than
      proceeds of Advances provided that before and after giving effect to such
      prepayment, (A) Total Excess Availability (calculated on a pro forma basis
      using the average Total Excess Availability for each day during the
      immediately preceding calendar month) is not less than the greater of (x)
      $210,000,000 reduced by the amount of any Scheduled Other Debt Payment
      made during said preceding month, and (y) $150,000,000, and (B) the
      Adjusted EBITDA of the Borrower and its Subsidiaries for the twelve-month
      period ending on the last day of the most recently completed Fiscal Period
      is not less than $200,000,000.

            (k) Partnerships, Etc. Become a general partner in any general or
      limited partnership or joint venture, or permit any of its Subsidiaries to
      do so, other than any Subsidiary the sole assets of which consist of its
      interest in such partnership or joint venture or as permitted pursuant to
      Section 5.02(e)(iv),

            SECTION 5.03. Financial Covenants. So long as any Advance shall
remain unpaid, any Lender shall have any Commitment hereunder or any Letter of
Credit shall be outstanding, the Borrower will:

            (a) Interest Coverage Ratio. Maintain an Interest Coverage Ratio
      during each fiscal quarter set forth below of not less than the ratio set
      opposite such fiscal period:

<TABLE>
<CAPTION>
                              Period                             Ratio
              --------------------------------------             ------
<S>                                                              <C>
              July 1, 2003 through December 31, 2003             1.00:1

              January 1, 2003 through March 31, 2004             1.25:1

              April 1, 2004 through June 30, 2004                1.50:1

              July 1, 2004 through September 30, 2004            2.00:1

              October 1, 2004 through March 31, 2005             2.25:1

              April 1, 2005 through June 30, 2005                2.50:1

              July 1, 2005 through March 31, 2006                2.75:1

              April 1, 2006 through June 30, 2006                3.00:1

              July 1, 2006 and thereafter                        3.25:1
</TABLE>

            (b) Borrowed Debt/Adjusted EBITDA Ratio. Maintain a Borrowed
      Debt/Adjusted EBITDA Ratio during each fiscal quarter set forth below of
      not more than the ratio set opposite such fiscal period:

<TABLE>
<CAPTION>
                              Period                             Ratio
              --------------------------------------             ------
<S>                                                              <C>
              July 1, 2003 through September 30, 2003            11.00:1

              October 1, 2003 through December 31, 2003           9.00:1

              January 1, 2004 through March 31, 2004              7.85:1

              April 1, 2004 through June 30, 2004                 6.85:1

              July 1, 2004 through September 30, 2004             5.50:1

              October 1, 2004 through March 31, 2005              4.85:1

              April 1, 2005 through June 30, 2005                 4.50:1

              July 1, 2005 through September 30, 2005             4.25:1

              October 1, 2005 through March 31, 2006              3.85:1

              April 1, 2006 through June 30, 2006                 3.75:1

              July 1, 2006 and thereafter                         3.25:1
</TABLE>

                                       34
<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 Borrower shall fail to pay any principal of any Advance when
      the same becomes due and payable; or the Borrower shall fail to pay any
      interest on any Advance or make any other payment of fees or other amounts
      payable under this Agreement or any Note within three days after the same
      becomes due and payable; or

            (b) Any representation or warranty made by the Borrower herein or in
      any other Loan Document or by the Borrower (or any of its officers) in
      connection with this Agreement shall prove to have been incorrect in any
      material respect when made; or

            (c) (i) The Borrower shall fail to perform or observe any term,
      covenant or agreement contained in Section 5.01(d), (i)(iv), 5.02 or 5.03,
      or (ii) the Borrower shall fail to perform or observe any other term,
      covenant or agreement contained in any Loan Document on its part to be
      performed or observed if such failure shall remain unremedied for 30 days
      after written notice thereof shall have been given to the Borrower by the
      Agent or any Lender; or

            (d) The Borrower or any of its Subsidiaries shall fail to pay any
      principal of or premium or interest on any Debt that is outstanding in a
      principal or notional amount of at least $15,000,000 in the aggregate (but
      excluding Debt outstanding hereunder) of the Borrower or such Subsidiary
      (as the case may be), 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 Borrower or any of its Subsidiaries 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 Borrower or any of its Subsidiaries 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), either
      such proceeding shall remain undismissed or unstayed for a period of 30
      days, or any of the actions sought in such proceeding (including, without
      limitation, the entry of an order for relief against, or the appointment
      of a receiver, trustee, custodian or other similar official for, it or for
      any substantial part of its property) shall occur; or the Borrower or any
      of its Subsidiaries shall take any corporate action to authorize any of
      the actions set forth above in this subsection (e); or

            (f) Judgments or orders for the payment of money in excess of
      $15,000,000 in the aggregate shall be rendered against the Borrower or any
      of its Subsidiaries and either (i) enforcement proceedings shall have been
      commenced by any creditor upon such judgment or order or (ii) there shall
      be any period of 30 consecutive days during which a stay of enforcement of
      such judgment or order, by reason of a pending appeal or otherwise, shall
      not be in effect; provided, however, that any such judgment or order shall
      not be

                                       35
<PAGE>

      an Event of Default under this Section 6.01(f) if and for so long as (i)
      the amount of such judgment or order is covered by a valid and binding
      policy of insurance between the defendant and the insurer covering payment
      thereof and (ii) such insurer, which shall be rated at least "A" by A.M.
      Best Company, has been notified of, and has not disputed the claim made
      for payment of, the amount of such judgment or order; or

            (g) Any non-monetary judgment or order shall be rendered against the
      Borrower or any of its Subsidiaries that could be reasonably expected to
      have a Material Adverse Effect, and there shall be any period of 30
      consecutive days during which a stay of enforcement of such judgment or
      order, by reason of a pending appeal or otherwise, shall not be in effect;
      or

            (h) (i) Any Person or two or more Persons acting in concert shall
      have acquired beneficial ownership (within the meaning of Rule 13d-3 of
      the Securities and Exchange Commission under the Securities Exchange Act
      of 1934), directly or indirectly, of Voting Stock of the Borrower (or
      other securities convertible into such Voting Stock) representing 33-1/3%
      or more of the combined voting power of all Voting Stock of the Borrower;
      or (ii) during any period of up to 24 consecutive months, commencing after
      the date of this Agreement, individuals who at the beginning of such
      24-month period were directors of the Borrower shall cease for any reason
      (other than due to death, disability or voluntary retirement) to
      constitute a majority of the board of directors of the Borrower (except to
      the extent that individuals who at the beginning of such 24-month period
      were replaced by individuals (x) elected by 50% of the remaining members
      of the nominating committee of the board of directors of the Borrower or
      (y) nominated for election by a majority of the remaining members of the
      nominating committee of the board of directors of the Borrower and
      thereafter elected as directors by the shareholders of the Borrower); or
      (iii) any Person or two or more Persons acting in concert shall have
      acquired by contract or otherwise, or shall have entered into a contract
      or arrangement that, upon consummation prior to the Termination Date, will
      result in its or their acquisition of the power to exercise, directly or
      indirectly, a controlling influence over the management or policies of the
      Borrower; or

            (i) Any ERISA Event shall have occurred and the sum (determined as
      of the date of occurrence of such ERISA Event) of the Insufficiency of the
      Plan with respect to which such ERISA Event shall have occurred and the
      Insufficiency of any and all other Plans with respect to which an ERISA
      Event shall have occurred and then exist (or the liability of the Borrower
      and its ERISA Affiliates related to any such ERISA Event) has, or is
      reasonably likely to have, a Material Adverse Effect; or

            (j) The Borrower or any of its ERISA Affiliates shall have been
      notified by the sponsor of a Multiemployer Plan that it has incurred
      Withdrawal Liability to such Multiemployer Plan in an amount that, when
      aggregated with all other amounts required to be paid to Multiemployer
      Plans by the Borrower and its ERISA Affiliates as Withdrawal Liability
      (determined as of the date of such notification), exceeds $15,000,000 or
      requires payments exceeding $5,000,000 per annum; or

            (k) The Borrower or any of its ERISA Affiliates shall have been
      notified by the sponsor of a Multiemployer Plan that such Multiemployer
      Plan is in reorganization or is being terminated, within the meaning of
      Title IV of ERISA, and as a result of such reorganization or termination
      the aggregate annual contributions of the Borrower and its ERISA
      Affiliates to all Multiemployer Plans that are then in reorganization or
      being terminated have been or will be increased over the amounts
      contributed to such Multiemployer Plans for the plan years of such
      Multiemployer Plans immediately preceding the plan year in which such
      reorganization or termination occurs by an amount exceeding $15,000,000;
      or

            (l) Any provision of any Loan Document after delivery thereof
      pursuant to Section 3.01 shall for any reason cease to be valid and
      binding on or enforceable against the Borrower, or the Borrower shall so
      state in writing; or

            (m) Any Collateral Document or financing statement after delivery
      thereof pursuant to Section 3.01 shall for any reason (other than pursuant
      to the terms thereof or as otherwise permitted by the Loan Documents)
      cease to create a valid and perfection first priority lien on and security
      interest in the Collateral purported to be covered thereby;

                                       36
<PAGE>

then, and in any such event, the Agent (i) shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, declare the
obligation of each Lender to make Advances (other than Advances by an Issuing
Bank or a Lender pursuant to Section 2.03(c)) and of the Issuing Banks to issue
Letters of Credit to be terminated, whereupon the same shall forthwith
terminate, and (ii) shall at the request, or may with the consent, of the
Required Lenders, by notice to the Borrower, declare the Advances, all interest
thereon and all other amounts payable under this Agreement to be forthwith due
and payable, whereupon the Advances, all such interest and all such amounts
shall become and be forthwith due and payable, without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived
by the Borrower; provided, however, that in the event of an actual or deemed
entry of an order for relief with respect to the Borrower under the Federal
Bankruptcy Code or other applicable bankruptcy statute, (A) the obligation of
each Lender to make Advances (other than Advances by an Issuing Bank or a Lender
pursuant to Section 2.03(c)) and of the Issuing Banks to issue Letters of Credit
shall automatically be terminated and (B) the Advances, all such interest and
all such amounts shall automatically become and be due and payable, without
presentment, demand, protest or any notice of any kind, all of which are hereby
expressly waived by the Borrower.

            SECTION 6.02. Actions in Respect of the Letters of Credit upon
Default. If any Event of Default shall have occurred and be continuing, the
Agent may with the consent, or shall at the request, of the Required Lenders,
irrespective of whether it is taking any of the actions described in Section
6.01 or otherwise, make demand upon the Borrower to, and forthwith upon such
demand the Borrower will, (a) pay to the Agent on behalf of the Lenders in same
day funds at the Agent's office designated in such demand, for deposit in the
L/C Cash Collateral Account, an amount equal to the aggregate Available Amount
of all Letters of Credit then outstanding or (b) make such other arrangements in
respect of the outstanding Letters of Credit as shall be acceptable to the
Required Lenders. If at any time the Agent determines that any funds held in the
L/C Cash Collateral Account are subject to any right or claim of any Person
other than the Agent and the Lenders or that the total amount of such funds is
less than the aggregate Available Amount of all Letters of Credit, the Borrower
will, forthwith upon demand by the Agent, pay to the Agent, as additional funds
to be deposited and held in the L/C Cash Collateral Account, an amount equal to
the excess of (a) such aggregate Available Amount over (b) the total amount of
funds, if any, then held in the L/C Cash Collateral Account that the Agent
determines to be free and clear of any such right and claim. Upon the drawing of
any Letter of Credit, to the extent funds are on deposit in the L/C Cash
Collateral Account, such funds shall be applied to reimburse the Issuing Banks
to the extent permitted by applicable law. After all such Letters of Credit
shall have expired or been fully drawn upon and all other obligations of the
Borrower hereunder and under the Notes shall have been paid in full, the
balance, if any, in such LC Cash Collateral Account shall be returned to the
Borrower.

                                  ARTICLE VII

                                    THE AGENT

            SECTION 7.01. Authorization and Action. Each Lender (in its
capacities as a Lender and Issuing Bank, as applicable) 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 the
Notes), 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 Lenders, and such instructions shall be binding upon all Lenders
and all holders of Notes; 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 Lender prompt notice of each notice given to it by the Borrower pursuant to
the terms of this Agreement.

            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
the Lender that made any Advance as the holder of the Debt resulting therefrom
until the Agent receives an Assignment and Acceptance entered into by such
Lender, as assignor, and an

                                       37
<PAGE>

Eligible Assignee, as assignee, as provided in Section 8.07; (ii) may consult
with legal counsel (including counsel for the Borrower), 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 Lender and shall not be responsible to any Lender 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 Borrower or to inspect the
property (including the books and records) of the Borrower; (v) shall not be
responsible to any Lender 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, telegram or telex) believed
by it to be genuine and signed or sent by the proper party or parties.

            SECTION 7.03. Citicorp and Affiliates. With respect to its
Commitments, the Advances made by it and the Note issued to it, Citicorp shall
have the same rights and powers under this Agreement as any other Lender and may
exercise the same as though it were not the Agent; and the term "Lender" or
"Lenders" 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
Borrower, any of its Subsidiaries and any Person who may do business with or own
securities of the Borrower or any such Subsidiary, all as if Citicorp were not
the Agent and without any duty to account therefor to the Lenders.

            SECTION 7.04. Lender Credit Decision. Each Lender acknowledges that
it has, independently and without reliance upon the Agent or any other Lender
and based on the financial statements referred to in Section 4.01(e) and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.

            SECTION 7.05. Indemnification. (a) The Lenders agree to indemnify
the Agent (to the extent not reimbursed by the Borrower), ratably according to
the respective principal amounts of the Advances then owed to each of them (or
if no Advances are at the time outstanding, ratably according to the respective
amounts of their Commitments), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by, or asserted against the Agent in any way relating to or arising
out of this Agreement or any action taken or omitted by the Agent under this
Agreement (collectively, the "Indemnified Costs"), provided that no Lender 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 Lender 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 Borrower. 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 Lender or a third party (other than a
third party with which a Lender contracts to obtain deposits to fund an Advance
with respect to claims arising from such contract).

            (b) Each Lender severally agrees to indemnify the Issuing Banks (to
the extent not promptly reimbursed by the Borrower) from and against such
Lender's ratable share (determined as provided below) of any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever that may be
imposed on, incurred by, or asserted against any such Issuing Bank in any way
relating to or arising out of this Agreement or any action taken or omitted by
such Issuing Bank hereunder or in connection herewith; provided, however, that
no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from such Issuing Bank's gross negligence or willful
misconduct. Without limitation of the foregoing, each Lender agrees to reimburse
any

                                       38
<PAGE>

such Issuing Bank promptly upon demand for its ratable share of any costs and
expenses (including, without limitation, fees and expenses of counsel) payable
by the Borrower under Section 8.04, to the extent that such Issuing Bank is not
promptly reimbursed for such costs and expenses by the Borrower.

            (c) For purposes of this Section 7.05, the Lenders' respective
Ratable Shares of any amount shall be determined, at any time, according to the
sum of (a) the aggregate principal amount of the Advances outstanding at such
time and owing to the respective Lenders and (b) their respective Unused
Commitments at such time. The failure of any Lender to reimburse the Agent
promptly upon demand for its ratable share of any amount required to be paid by
the Lenders to the Agent as provided herein shall not relieve any other Lender
of its obligation hereunder to reimburse the Agent for its ratable share of such
amount, but no Lender shall be responsible for the failure of any other Lender
to reimburse the Agent for such other Lender's ratable share of such amount.
Without prejudice to the survival of any other agreement of any Lender
hereunder, the agreement and obligations of each Lender contained in this
Section 7.05 shall survive the payment in full of principal, interest and all
other amounts payable hereunder and under the Notes.

            SECTION 7.06. Successor Agent. The Agent may resign at any time by
giving written notice thereof to the Lenders and the Borrower. Upon any such
resignation, the Required Lenders 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 Borrower, which approval shall not be
unreasonably withheld or delayed. If no successor Agent shall have been so
appointed by the Required Lenders 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 Lenders, 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.

            SECTION 7.07. Other Agents. Each Lender hereby acknowledges that
neither the documentation agent, syndication agent nor any other Lender
designated as any "Agent" on the signature pages hereof has any liability
hereunder other than in its capacity as a Lender.

                                  ARTICLE VIII

                                  MISCELLANEOUS

            SECTION 8.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the Notes, nor consent to any departure by the
Borrower therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Required Lenders, 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 all the Lenders, do any of the following: (a)
waive any of the conditions specified in Section 3.01, (b) increase the
Revolving Credit Commitments of the Lenders or subject the Lenders to any
additional obligations, (c) reduce the principal of, or interest on, the
Advances or any fees or other amounts payable hereunder, (d) postpone any date
fixed for any payment or mandatory prepayment of principal of, or interest on,
the Advances or any fees or other amounts payable hereunder, (e) change the
percentage of the Commitments or of the aggregate unpaid principal amount of the
Advances, or the number of Lenders, that shall be required for the Lenders or
any of them to take any action hereunder, (f) release any Collateral in any
transaction other than (x) sales of Inventory in the ordinary course of business
or (y) in connection with the sale of any assets listed on Schedule 5.02(d) or
permit the creation, incurrence, assumption or existence of any Lien on any
Collateral to secure any obligations other than obligations owing to the Secured
Parties under the Loan Documents or (g) amend this Section 8.01; and provided
further that (x) no amendment, waiver or consent shall, unless in writing and
signed by the Agent in addition to the Lenders required above to take such
action, affect the rights or duties of the

                                       39
<PAGE>

Agent under this Agreement or any other Loan Document, (y) no amendment, waiver
or consent of Section 8.07(i) shall, unless in writing and signed by each Lender
that has granted a funding option to an SPC in addition to the Lenders required
above to take such action, affect the rights or duties of such Lender or SPC
under this Agreement or any other Loan Document and (z) no amendment, waiver or
consent shall, unless in writing and signed by the Issuing Banks in additions to
the Lenders required above to take such action, adversely affect the rights or
obligations of the Issuing Banks under this Agreement.

            SECTION 8.02. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic or
telex communication) and mailed, telecopied, telegraphed, telexed or delivered,
if to the Borrower, at the address of the Borrower at 33587 Walker Road, Avon
Lake, Ohio 44012, Attention: Treasurer; if to any Initial Lender, at its
Domestic Lending Office specified opposite its name on Schedule I hereto; if to
any other Lender, at its Domestic Lending Office specified in the Assignment and
Acceptance pursuant to which it became a Lender; and if to the Agent, at its
address at Two Penns Way, Suite 200, New Castle, Delaware 19720, Attention: Bank
Loan Syndications Department; or, as to the Borrower 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 Borrower 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 the Notes 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
Lender or the Agent to exercise, and no delay in exercising, any right hereunder
or under any Note 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.

            SECTION 8.04. Costs and Expenses. (a) The Borrower 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, the Notes 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 Borrower further agrees to pay on demand all costs and expenses
of the Agent and the Lenders, 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, the Notes and
the other documents to be delivered hereunder, including, without limitation,
reasonable fees and expenses of counsel for the Agent and each Lender in
connection with the enforcement of rights under this Section 8.04(a).

            (b) The Borrower agrees to indemnify and hold harmless the Agent and
each Lender 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) the Notes, this Agreement, any of the transactions
contemplated herein or the actual or proposed use of the proceeds of the
Advances or (ii) the actual or alleged presence of Hazardous Materials on any
property of the Borrower or any of its Subsidiaries or any Environmental Action
relating in any way to the Borrower 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 Borrower, 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 Borrower also agrees not to assert
any claim against the Agent, any Lender, 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 the Notes, this Agreement, any of the transactions contemplated
herein or the actual or proposed use of the proceeds of the Advances.

                                       40
<PAGE>

            (i) 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 Borrower
      pursuant to this Section 8.04(b), notify the Borrower 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 Borrower of
      the commencement thereof, the Borrower may participate therein or assume
      the defense thereof and after notice from the Borrower 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 Borrower 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 Borrower, which consent shall not be unreasonably withheld or delayed;
      provided, however, that unless and until the Borrower so assumes the
      defense of any such action, the Borrower 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 Borrower 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 Borrower (in which
      case the Borrower 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 Borrower;
      provided that the Borrower 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 Borrower shall not be
      liable for any settlement of any action or claim effected without its
      consent.

            (ii) The Borrower 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.

            (c) If any payment of principal of, or Conversion of, any Eurodollar
Rate Advance is made by the Borrower to or for the account of a Lender (i) other
than on the last day of the Interest Period for such Advance, as a result of a
payment or Conversion pursuant to Section 2.08, 2.10 or 2.12, acceleration of
the maturity of the Notes pursuant to Section 6.01 or for any other reason, or
by an Eligible Assignee to a Lender other than on the last day of the Interest
Period for such Advance upon an assignment of rights and obligations under this
Agreement pursuant to Section 8.07 as a result of a demand by the Borrower
pursuant to Section 8.07(a) or (ii) as a result of a payment or Conversion
pursuant to Section 2.08, 2.10 or 2.12, the Borrower shall, upon demand by such
Lender (with a copy of such demand to the Agent), pay to the Agent for the
account of such Lender any amounts required to compensate such Lender for any
additional losses, costs or expenses that it may reasonably incur as a result of
such payment or Conversion or as a result of any inability to Convert or
redenominate in the case of Section 2.08 or 2.12, including, without limitation,
any loss, cost or expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by any Lender to fund or maintain such
Advance.

            (d) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
Sections 2.11, 2.14 and 8.04 shall survive the payment in full of principal,
interest and all other amounts payable hereunder and under the Notes.

            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
declare the Notes due and payable pursuant to the provisions of Section 6.01,
each Lender and each of its Affiliates is hereby authorized at any time that
payment owed to such Lender is not made by the Borrower 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 Lender
or such Affiliate to or for the credit or the account of the Borrower against
any and all of the obligations of the Borrower now or hereafter existing under
this Agreement and the Note held by such Lender, whether or not such Lender
shall have made any demand under this Agreement or such Note and although such
obligations may be unmatured. Each Lender agrees promptly to notify the Borrower
after any such set-off and application, provided that the failure to give such
notice shall not affect the validity of

                                       41
<PAGE>

such set-off and application. The rights of each Lender and its Affiliates under
this Section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) that such Lender and its Affiliates may
have.

            SECTION 8.06. Binding Effect. This Agreement shall become effective
(other than Sections 2.01 and 2.03, which shall only become effective upon
satisfaction of the conditions precedent set forth in Section 3.01) when it
shall have been executed by the Borrower and the Agent and when the Agent shall
have been notified by each Initial Lender and each Initial Issuer that such
Initial Lender or Initial Issuer has executed it and thereafter shall be binding
upon and inure to the benefit of the Borrower, the Agent and each Lender and
their respective successors and assigns, except that the Borrower shall not have
the right to assign its rights hereunder or any interest herein without the
prior written consent of the Lenders.

            SECTION 8.07. Assignments and Participations. (a) Each Lender may
and, if demanded by the Borrower (following a demand by such Lender pursuant to
Section 2.11 or 2.14) upon at least 20 Business Days' notice to such Lender and
the Agent, will assign to one or more Persons all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Revolving Credit Commitment, the Advances owing to it and the
Note or Notes held by it); provided, however, that (i) each such assignment
shall be of a constant, and not a varying, percentage of all rights and
obligations under this Agreement, (ii) except in the case of an assignment to a
Person that, immediately prior to such assignment, was a Lender or an assignment
of all of a Lender's rights and obligations under this Agreement, the amount of
the Revolving Credit Commitment of the assigning Lender being assigned pursuant
to each such assignment (determined as of the date of the Assignment and
Acceptance with respect to such assignment) shall in no event be less than
$2,500,000 or an integral multiple of $500,000 in excess thereof, (iii) each
such assignment shall be to an Eligible Assignee, (iv) each such assignment made
as a result of a demand by the Borrower pursuant to this Section 8.07(a) shall
be arranged by the Borrower after consultation with the Agent and shall be
either an assignment of all of the rights and obligations of the assigning
Lender under this Agreement or an assignment of a portion of such rights and
obligations made concurrently with another such assignment or other such
assignments that together cover all of the rights and obligations of the
assigning Lender under this Agreement, (v) no Lender shall be obligated to make
any such assignment as a result of a demand by the Borrower pursuant to this
Section 8.07(a) unless and until such Lender shall have received one or more
payments from either the Borrower or one or more Eligible Assignees in an
aggregate amount at least equal to the aggregate outstanding principal amount of
the Advances owing to such Lender, together with accrued interest thereon to the
date of payment of such principal amount and all other amounts payable to such
Lender under this Agreement, and (vi) the parties to each such assignment shall
execute and deliver to the Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance, together with any Note subject to such
assignment and a processing and recordation fee of $3,500 payable by the parties
to each such assignment, provided, however, that in the case of each assignment
made as a result of a demand by the Borrower, such recordation fee shall be
payable by the Borrower except that no such recordation fee shall be payable in
the case of an assignment made at the request of the Borrower to an Eligible
Assignee that is an existing Lender, and (vii) any Lender may, without the
approval of the Borrower and the Agent, assign all or a portion of its rights to
any of its Affiliates. Upon such execution, delivery, acceptance and recording,
from and after the effective date specified in each Assignment and Acceptance,
(x) the assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
and (y) the Lender assignor thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights (other than its rights under Section 2.11,
2.14 and 8.04 to the extent any claim thereunder relates to an event arising
prior such assignment) and be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such Lender shall cease to be a party hereto).

            (b) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the 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; (ii) such assigning

                                       42
<PAGE>

Lender makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrower or the performance or
observance by the Borrower of any of its obligations under this Agreement or any
other instrument or document furnished pursuant hereto; (iii) such assignee
confirms that it has received a copy of this Agreement, together with copies of
the financial statements referred to in Section 4.01 and such other documents
and information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the Agent, such assigning Lender or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such assignee confirms that it is an
Eligible Assignee; (vi) such assignee appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers and discretion
under this Agreement as are delegated to the Agent by the terms hereof, together
with such powers and discretion as are reasonably incidental thereto; and (vii)
such assignee agrees that it will perform in accordance with their terms all of
the obligations that by the terms of this Agreement are required to be performed
by it as a Lender.

            (c) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee representing that it is an Eligible Assignee,
together with any Note or Notes subject to such assignment, the Agent shall, if
such Assignment and Acceptance has been completed and is in substantially the
form of Exhibit C hereto, (i) accept such Assignment and Acceptance, (ii) record
the information contained therein in the Register and (iii) give prompt notice
thereof to the Borrower.

            (d) The Agent shall maintain at its address referred to in Section
8.02 a copy of each Assignment and Acceptance delivered to and accepted by it
and a register for the recordation of the names and addresses of the Lenders,
with respect to Lenders, and the Commitment of, and principal amount of the
Advances owing to, each Lender from time to time (the "Register"). The entries
in the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrower, the Agent and the Lenders may treat each
Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.

            (e) Each Lender may sell participations to one or more banks or
other entities (other than the Borrower or any of its Affiliates) in or to all
or a portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of its Commitment, the Advances owing to it
and any Note or Notes held by it); provided, however, that (i) such Lender's
obligations under this Agreement (including, without limitation, its Commitment
to the Borrower hereunder) shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, (iii) such Lender shall remain the holder of any such Note for all
purposes of this Agreement, (iv) the Borrower, the Agent and the other Lenders
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement and (v) no participant
under any such participation shall have any right to approve any amendment or
waiver of any provision of this Agreement or any Note, or any consent to any
departure by the Borrower therefrom, except to the extent that such amendment,
waiver or consent would reduce the principal of, or interest on, the Notes or
any fees or other amounts payable hereunder, in each case to the extent subject
to such participation, or postpone any date fixed for any payment of principal
of, or interest on, the Notes or any fees or other amounts payable hereunder, in
each case to the extent subject to such participation.

            (f) Each Lender may grant to a special purpose funding vehicle (an
"SPC") the option to fund all or any part of any Advance that such Lender is
obligated to fund under this Agreement (and upon the exercise by such SPC of
such option to fund, such Lender's obligations with respect to such Advance
shall be deemed satisfied to the extent of any amounts funded by such SPC);
provided, however, that (i) such Lender's obligations under this Agreement
(including, without limitation, its Commitment to the Borrower hereunder) shall
remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) the Borrower, the
Agent and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement, (iv) any such option granted to an SPC shall not constitute a
commitment by such SPC to fund any Advance, (v) neither the grant nor the
exercise of such option to an SPC shall increase the costs or expenses or
otherwise increase or change the obligations of the Borrower under this
Agreement (including, without limitation, its obligations under Section 2.09)
(vi) the SPC shall be bound by the provisions of Section 8.08 and (vii) no SPC
shall have any right to approve any

                                       43
<PAGE>

amendment or waiver of any provision of this Agreement or any Note, nor any
consent to any departure by the Borrower therefrom, except to the extent that
such amendment, waiver or consent would reduce the principal of, or interest on,
the Notes or any fees or other amounts payable hereunder, in each case to the
extent subject to such grant of funding option, or postpone any date fixed for
any payment of principal of, or interest on, the Notes or any fees or other
amounts payable hereunder, in each case to the extent subject to such grant of
funding option. Each party to this Agreement hereby agrees that no SPC shall be
liable for any indemnity or payment under this Agreement for which a Lender
would otherwise be liable. Subject to the foregoing provisions of this clause
(f), an SPC shall have all the rights of the granting Lender. An SPC may assign
or participate all or a portion of its interest in any Advances to the granting
Lender or to any financial institution providing liquidity or credit support to
or for the account of such SPC without paying any processing fee therefor and,
in connection therewith may disclose on a confidential basis any information
relating to the Borrower to any rating agency, commercial paper dealer or
provider of any surety, guarantee or credit or liquidity enhancements to such
SPC. In furtherance of the foregoing, each party hereto agrees (which agreements
shall survive the termination of this Agreement) that, prior to the date that is
one year and one day after the payment in full of all outstanding commercial
paper or other senior indebtedness of any SPC, it will not institute against, or
join any other Person in instituting against, such SPC any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under the
laws of the United States or any State thereof.

            (g) Any Lender may, in connection with any assignment, participation
or grant of funding option or proposed assignment, participation or grant of
funding option pursuant to this Section 8.07, disclose to the assignee,
participant or SPC or proposed assignee, participant or SPC, any information
relating to the Borrower furnished to such Lender by or on behalf of the
Borrower; provided that, prior to any such disclosure, the assignee, participant
or SPC or proposed assignee, participant or SPC shall agree to preserve the
confidentiality of any Confidential Information relating to the Borrower
received by it from such Lender.

            (h) Each Issuing Bank may assign to an Eligible Assignee its rights
and obligations or any portion of its undrawn Letter of Credit Commitment at any
time; provided, however, that (i) the amount of the Letter of Credit Commitment
of the assigning Issuing Bank being assigned pursuant to each such assignment
(determined as of the date of the Assignment and Acceptance with respect to such
assignment) shall in no event be less than $1,000,000 or an integral multiple of
$1,000,000 in excess thereof, and (ii) the parties to each such assignment shall
execute and deliver to the Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance, together with a processing and
recordation fee of $3,500.

            (i) Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time create a security interest in all or any portion of
its rights under this Agreement (including, without limitation, the Advances
owing to it and any Note or Notes held by it) in favor of any Federal Reserve
Bank in accordance with Regulation A of the Board of Governors of the Federal
Reserve System.

            SECTION 8.08. Confidentiality. Neither the Agent nor any Lender or
SPC shall disclose any Confidential Information to any other Person without the
consent of the Borrower, other than (a) to the Agent's or such Lender's
Affiliates and their officers, directors, employees, agents and advisors and, as
contemplated by Section 8.07(g), 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 Borrower received by it from such Lender, (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. Notwithstanding
anything herein to the contrary, the Agent and the Lenders may disclose to any
and all persons, without limitation of any kind, the U.S. tax treatment and tax
structure of the transactions contemplated hereby and all materials of any kind
(including opinions or other tax analyses) that are provided to the Agent or the
Lenders relating to such U.S. tax treatment and tax structure.

            SECTION 8.09. Governing Law. This Agreement and the Notes shall be
governed by, and construed in accordance with, the laws of the State of New
York.

                                       44
<PAGE>

            SECTION 8.10. 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 8.11. 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 the Notes, 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 Borrower 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 Borrower at 33587 Walker Road, Avon
Lake, Ohio 44012, Attention: Secretary. The Borrower 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 Borrower 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 or the Notes
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 8.12. No Liability of the Issuing Banks. The Borrower
assumes all risks of the acts or omissions of any beneficiary or transferee of
any Letter of Credit with respect to its use of such Letter of Credit. Neither
an Issuing Bank nor any of its officers or directors shall be liable or
responsible for: (a) the use that may be made of any Letter of Credit or any
acts or omissions of any beneficiary or transferee in connection therewith; (b)
the validity, sufficiency or genuineness of documents, or of any endorsement
thereon, even if such documents should prove to be in any or all respects
invalid, insufficient, fraudulent or forged; (c) payment by such Issuing Bank
against presentation of documents that do not comply with the terms of a Letter
of Credit, including failure of any documents to bear any reference or adequate
reference to the Letter of Credit; or (d) any other circumstances whatsoever in
making or failing to make payment under any Letter of Credit, except that the
Borrower shall have a claim against such Issuing Bank, and such Issuing Bank
shall be liable to the Borrower, to the extent of any direct, but not
consequential damages suffered by the Borrower that the Borrower proves were
caused by (i) such Issuing Bank's willful misconduct or gross negligence as
determined in a final, non-appealable judgment by a court of competent
jurisdiction in determining whether documents presented under any Letter of
Credit comply with the terms of the Letter of Credit or (ii) such Issuing Bank's
willful failure to make lawful payment under a Letter of Credit after the
presentation to it of a draft and certificates strictly complying the terms and
conditions of the Letter of Credit. In furtherance and not in limitation of the
foregoing, such Issuing Bank may accept documents that appear on their face to
be in order, without responsibility for further investigation, regardless of any
notice or information to the contrary.

            SECTION 8.13. Authorization of Agent and Collateral Trustees. Upon
execution of this Agreement by the Required Lenders, the Lenders hereby (a)
authorize the Agent to instruct the Collateral Trustees to (i) release from the
Lien of the Security Agreement dated as of January 25, 2002 the assets listed on
Schedule 8.13 hereto, (ii) release the mortgages made by the Borrower or its
Subsidiaries pursuant to the Existing Credit Agreement and related to the
properties listed on Schedule 8.13, (iii) execute the amendments to the
Mortgages described in Section 3.01(h)(v), (iv) execute and deliver the
amendments to the Collateral Trust Agreements contemplated by Section
3.01(h)(vi), (v) execute and deliver the Intercreditor Agreement, and (vi)
terminate the Shared Collateral Pledge Agreement (as defined in the Existing
Credit Agreement) and release from the Lien of the Shared Collateral Pledge
Agreement the "Collateral" as defined therein, (b) authorize the Agent to (i)
execute on behalf of the Lenders the Intercreditor Agreement, (ii) execute all
documents to be executed by it relating to the

                                       45
<PAGE>

resignation of State Street Bank and Trust Company, N.A., as corporate trustee,
the appointment of U.S. Bank Trust National Association having its principal
place of business in New York, New York, as successor corporate trustee, and the
continued appointment of Angelita Pena, as individual trustee, under the
Collateral Documents, and (iii) take such other action as shall be reasonably
necessary to consummate the transactions contemplated by this Section 8.13 and
(c) terminate the Subsidiary Guaranty, as defined in the Existing Credit
Agreement.

                                       46
<PAGE>

            SECTION 8.14. Waiver of Jury Trial. Each of the Borrower, the Agent
and the Lenders 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 Notes or the
actions of the Agent or any Lender in the negotiation, administration,
performance or enforcement thereof.

            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

                                         By_____________________________________
                                           Title:

                                         CITICORP USA, INC.,
                                                as Agent

                                         By_____________________________________
                                           Title:

Letter of Credit Commitment
$35,000,000                              NATIONAL CITY BANK

                                         By_____________________________________
                                           Title:

$35,000,000 Total of the Letter of Credit Commitments

                                 Initial Lenders

Revolving Credit Commitment
$28,000,000                              CITICORP USA, INC.

                                         By__________________
                                           Title:

$13,000,000                              NATIONAL CITY COMMERCIAL FINANCE, INC.

                                         By_____________________________________
                                           Title:

$9,000,000                               KEYBANK NATIONAL ASSOCIATION

                                         By_____________________________________
                                           Title:

$50,000,000 Total of the Revolving Credit Commitments

<PAGE>

                                                                      SCHEDULE I
                                                             POLYONE CORPORATION
                                           AMENDED AND RESTATED CREDIT AGREEMENT
                                                      APPLICABLE LENDING OFFICES

<TABLE>
<CAPTION>
      NAME OF INITIAL LENDER                        DOMESTIC LENDING OFFICE               EURODOLLAR LENDING OFFICE
      ----------------------                        -----------------------              -------------------------
<S>                                             <C>                                   <C>
Citicorp USA, Inc.                              Two Penns Way, Suite 200              Two Penns Way, Suite 200
                                                New Castle, DE 19720                  New Castle, DE 19720
                                                Attn: Pam Cole                        Attn: Pam Cole
                                                T: 302 894-6016                       T: 302 894-6016
                                                F: 302 894-6120                       F: 302 894-6120

Keybank National Association                    127 Public Square,                    127 Public Square,
                                                MC OH-01-27-0606                      MC OH-01-27-0606
                                                Cleveland, OH 44114                   Cleveland, OH 44114
                                                Attn: Marianne Meil                   Attn: Marianne Meil
                                                T: 216 689-3549                       T: 216 689-3549
                                                F: 216 689-4981                       F: 216 689-4981

National City Commercial Finance, Inc.          1965 East 6th Street, Suite 400       1965 East 6th Street, Suite 400
                                                Locator 01-3049                       Locator 01-3049
                                                Cleveland, OH 44114                   Cleveland, OH 44114
                                                Attn: James Ritchie                   Attn: James Ritchie
                                                T: (216) 222-9918                     T: (216) 222-9918
                                                F: (216) 222-9555                     F: (216) 222-9555
</TABLE>

<PAGE>

                                                                     SCHEDULE II
                                                             POLYONE CORPORATION
                                           AMENDED AND RESTATED CREDIT AGREEMENT

                              MORTGAGED PROPERTIES

<TABLE>
<CAPTION>
                        Facility Name                            State
                        -------------                            -----
<S>                                                              <C>
              Kennesaw                                             GA

              Macedonia                                            OH

              Massillon                                            OH

              Seabrook                                             TX

              Long Beach                                           CA

              Terre Haute                                          IN

              Avon Lake HQ                                         OH

              Avon Lake Mfg                                        OH

              Avon Lake PCC                                        OH

              Lehigh Valley                                        PA

              Sussex                                               WI

              North Baltimore                                      OH

              Elk Grove                                            IL

              Norwalk                                              OH

              Fort Worth                                           TX
</TABLE>

<PAGE>

                                                                SCHEDULE 2.01(b)
                                                             POLYONE CORPORATION
                                           AMENDED AND RESTATED CREDIT AGREEMENT

                               POLYONE CORPORATION
                            LETTER OF CREDIT SUMMARY
                                 AS OF 5/1/2003

<TABLE>
<CAPTION>
 ISSUING                                        OUTSTANDING                             EXPIRATION
  BANK                 BENEFICIARY                5/1/2003         LC NUMBER                DATE               PURPOSE
--------    --------------------------------    -----------    ----------------         ----------  --------------------------------
<S>         <C>                                 <C>           <C>                      <C>         <C>
Citibank    MAH Supplemental Retirement Plan    $  7,279,000   NY00928-30028011          8/16/2003  MAH Supplemental retirement Plan
Citibank    Liberty Mutual Insurance Company    $  2,400,000   NY-00928-30033915        11/20/2003  Environmental
Citibank    United Missouri Bank                $  1,528,949   NY-00928-30029111         6/30/2003  MAH Executive Insurance
Citibank    Nat Union Fire Ins., Pittsburgh     $  1,300,000   NY-00881-30035056         4/30/2004  Workers Compensation
Citibank    Nat Union Fire Ins., Pittsburgh     $    135,523   NY-00928-30032148         4/18/2004  Workers Compensation
Citibank    United Missouri Bank                $    100,000   NY-00928-30029112         6/30/2003  MAH Executive Insurance
KeyBank     State of Washington                 $    290,000   S97/94848                  7/2/2003  Environmental
NCB         Reliance National Indemnity Co.     $  5,808,381   SCL007823                 5/13/2004  Workers Compensation
NCB         B-Star, Inc                         $  1,790,000   SCL007336                 1/15/2004  Defendant lawsuit security
NCB         Commonwealth of KY                  $  1,571,612   SCL008206                  5/8/2004  Workers Compensation
NCB         NJ Dept. of Environment             $  1,000,000   SCL008341                 11/1/2003  Environmental
NCB         State of California                 $    220,000   SCL007752                 4/30/2004  Workers Compensation
NCB         The Normandy Group                  $    380,000   TO BE ISSUED - 5/1/2003   9/30/2003  Material payment security.
NCB         Commonwealth of Virginia            $     12,160   75R 356 009               7/11/2003  Environmental

                                                    TOTAL
                                                OUTSTANDING
                                                 5/1/2003
                                                -----------

                                                ------------
                     TOTAL L/C'S OUTSTANDING    $ 23,815,625
                                                ------------
</TABLE>

<PAGE>

                                                                SCHEDULE 3.01(b)
                                                            DISCLOSED LITIGATION

CALVERT CITY REMEDIATION- The Borrower has assumed remediation obligations for a
Superfund site located in Calvert City, Kentucky

CHEMICAL AND ASBESTOS EXPOSURE CASES- The Borrower and certain of its
subsidiaries currently defend chemical product exposure cases and asbestos
exposure cases. The Borrower and certain of its subsidiaries have been named in
suits involving multiple claimants and defendants relating to alleged asbestos
exposure and/or chemical exposure in the past by, among others, workers and
their families at plants owned by the Borrower, certain subsidiaries or by their
predecessors, or on board ships owned or operated by a predecessor of the
Borrower, members of the public who claim exposure to certain chemical products
manufactured by the Borrower and its predecessor(s) and (as to chemical exposure
only) workers at manufacturing facilities of others.

<PAGE>

                                                                SCHEDULE 5.02(a)
                                                                  EXISTING LIENS

<TABLE>
<CAPTION>
                                                                                             ORIGINAL
FILING LOCATION                 SECURED PARTY                           FILE NUMBER          FILE DATE    DESCRIPTION OF COLLATERAL
---------------                 -------------                           -----------          ---------    -------------------------
<S>                             <C>                                     <C>                  <C>          <C>
A. UCC FILINGS

Cuyahoga County, Ohio           Newcourt Communications                 708852               9/28/00      Equipment
                                Finance Corporation

Cuyahoga County, Ohio           CIT Communications Finance              735973/1684          3/05/01      Equipment
                                Corporation

Cuyahoga County, Ohio           Comdisco, Inc.                          744539/1700          4/17/01      Leased equipment

Cuyahoga County, Ohio           Comdisco, Inc.                          744538/1700          4/17/01      Leased equipment

Cuyahoga County, Ohio           Comdisco, Inc.                          750551/1710          5/15/01      Leased equipment

Cuyahoga County, Ohio           The Geon Company                        1288530              8/15/94      Accounts and inventory

Cuyahoga County, Ohio           Citicorp North America                  200009139066         9/13/00      Inventory

Cuyahoga County, Ohio           CIT Communications Finance              200012279125         12/27/00     Leased equipment
                                Corporation

Cuyahoga County, Ohio           Safeco Credit Co. Inc.                  200103149060         3/14/01      Lease

Cuyahoga County, Ohio           CIT Group/Equipment Financing, Inc.     200105019029         5/01/01      Equipment

Cuyahoga County, Ohio           LINC Quantum Analytics                  200106019005         06/01/01     Equipment

Cuyahoga County, Ohio           General Electric Capital Corporation    1407081                           Lease

Delaware                        Toyota Motor Credit Corp.               11179428             09/18/01     Leased equipment

Delaware                        Toyota Motor Credit Corp.               20218663             12/27/01     Lease

Delaware                        Toyota Motor Credit Corp.               20218689             12/27/01     Lease

Delaware                        CitiCorp                                20991228             4/20/02      All Accounts

Delaware                        Toyota Motor Credit Corp.               21037898             4/04/02      Lease

Delaware                        State Street Bank and Trust             21244825             5/17/02      Blanket Lien
                                Company, N.A., as
                                Corporate Trustee

Delaware                        CitiCorp                                21281264             5/22/02

Delaware                        CitiCorp                                21299605             5/24/02
</TABLE>

<PAGE>

<TABLE>
<S>                             <C>                                     <C>                  <C>          <C>
Delaware                        GFC Leasing                             21801780             6/24/02      Lease

Delaware                        GFC Leasing                             22093767             8/19/02      Leased equipment

Delaware                        Toyota Motor Credit Corp.               22352791             9/18/02      Lease

Delaware                        Toyota Motor Credit Corp.               22417834             9/25/02      Lease

Delaware                        Crompton Corporation and its wholly     30566797             3/07/03      Consignment inventory
                                owned direct and indirect
                                subsidiaries

Delaware                        State Street Bank and Trust Company,    21243884             5/17/02      Blanket Lien
                                N.A., as Corporate Trustee

Delaware                        Crompton Corporation and its wholly     30566797             3/07/03      Consignment inventory
                                owned direct and indirect
                                subsidiaries

Delaware                        General Electric Capital Corporation    22057564             8/08/02      Lease

Delaware                        BASF Corporation                        20136774             12/14/01     Consignment inventory

Depart. Of Financial            Newcourt Communications                 01938367             3/21/00      Leased equipment

Inst. Wisconsin                 Finance Corp.

Harris County Texas             1994 VCM Inc.                           ###-##-####          8/19/94      Leased equipment

Harris County Texas             1994 VCM Inc.                           ###-##-####          12/4/95      Leased equipment

Harris County Texas             1994 VCM Inc.                           ###-##-####          12/26/96     Leased equipment

Harris County Texas             1994 VCM Inc                            ###-##-####          5/5/99       Leased equipment

Harris County Texas             1994 VCM Inc.                           ###-##-####          5/5/99       Leased equipment

Iberville Parish  Louisiana     AT&T Credit Corp.                       Book 24 Entry 21676  12/11/97     Leased equipment

Iberville Parish Louisiana      AT&T Credit Corp.                       Book 24 Entry 19581  2/28/96      Leased equipment

Illinois                        GFC Leasing                             4815135              1/04/01      Lease

Illinois                        CitiCorp                                4357660              3/21/01      All Accounts

Illinois                        Toyota Motor Credit Corp.               4393993              6/05/01      Leased equipment

Illinois                        Toyota Motor Credit Corp.               4396268              6/11/01      Leased equipment

Jefferson Cnty.  Kentucky       IBM Credit Corp.                        97-00630             1/22/97      Leased equipment
</TABLE>

                                       2
<PAGE>

<TABLE>
<S>                             <C>                                     <C>                  <C>          <C>
Jefferson Cnty. Kentucky        Arrowhead Industrial Water Inc.         94-01627             2/22/94      Leased equipment

Jefferson Cnty. Kentucky        Arrowhead Industrial  Water Inc.        98-11018             12/18/98     Leased equipment

Jefferson Cnty. Kentucky        Digital Financial Services              96-01124             2/7/96       Leased equipment

Jefferson Cnty. Kentucky        TMCC                                    96-05992             7/10/96      Leased equipment

Jefferson Cnty. Kentucky        Safeco Credit Co. Inc.                  98-10779             12/11/98     Leased equipment

Lorain County, Ohio             AT&T Credit Corp.                       273701               6/28/95      Leased equipment

Lorain County, Ohio             AT&T Credit Corp.                       273700               6/28/95      Leased equipment

Lorain County, Ohio             AT&T Credit Corp.                       273770               7/5/95       Leased equipment

Lorain County, Ohio             AT&T Credit Corp.                       428076               9/30/96      Leased equipment

Lorain County, Ohio             AT&T Credit Corp.                       435714               11/8/96      Leased equipment

Lorain County, Ohio             Yale Financial Services, Inc.           438007               11/22/96     Leased equipment

Lorain County, Ohio             Yale Financial Services, Inc.           438008               11/22/96     Leased equipment

Lorain County, Ohio             Copelco Capital Inc.                    439670               12/10/96     Leased equipment

Lorain County, Ohio             IBM Credit Corp.                        447200               1/21/97      Leased equipment

Lorain County, Ohio             IBM Credit Corp.                        465494               5/5/97       Leased equipment

Lorain County, Ohio             IBM Credit Corp.                        465497               5/5/97       Leased equipment

Lorain County, Ohio             IBM Credit Corp.                        475971               6/30/97      Leased equipment

Lorain County, Ohio             IBM Credit Corp.                        482154               8/5/97       Leased equipment

Lorain County, Ohio             AT&T Credit Corp.                       484869               8/20/97      Leased equipment

Lorain County, Ohio             IBM Credit Corp.                        485823               8/26/97      Leased equipment

Lorain County, Ohio             AT&T Credit Corp.                       505835               12/10/97     Leased equipment

Lorain County, Ohio             Citicorp North America                  556926               6/24/99      Leased equipment
</TABLE>

                                       3
<PAGE>

<TABLE>
<S>                             <C>                                     <C>                  <C>          <C>
Lorain County, Ohio             KeyCorp Leasing                         557353               8/19/99      Leased equipment

Lorain County, Ohio             AT&T Credit Corp.                       560982               9/8/98       Leased equipment

Lorain County, Ohio             Advanta Business Services               273445               6/14/95      Leased equipment

Lorain County, Ohio             AT&T Credit Corp.                       276005               10/31/95     Leased equipment

Lorain County, Ohio             Citicorp North America                  556926               8/17/98      Leased equipment

Lorain County, Ohio             Newcourt Communications                 656379               12/1/99      Leased equipment
                                Finance Corp.

Lorain County, Ohio             Yale Financial Services, Inc.           438007               11/22/96     Lease

Lorain County, Ohio             CitiCorp                                556926               4/17/98      All Accounts

Lorain County, Ohio             KeyCorp Leasing                         557353               8/19/98      Lease

Lorain County, Ohio             AT&T Credit Corporation                 560982               9/08/98      Lease

Lorain County, Ohio             NewCourt Communications                 656379               12/01/98     Lease
                                Finance Corporation

Lorain County, Ohio             NewCourt Communications                 699448               8/07/00      Lease
                                Finance Corporation

Lorain County, Ohio             NewCourt Communications                 704832               9/07/00      Lease
                                Finance Corporation

Ontario                         IBM Canada Ltd.                         844821621            9/29/98      Equipment, Accounts, Other

Ontario                         Newcourt Financial Ltd.                 843754446            8/20/98      Inventory, Equipment,
                                                                                                          Accounts Other, Motor
                                                                                                          Vehicle Included

Ontario                         Hewlett-Packard (Canada) Ltd.           843396885            8/7/98       Equipment, Other

Ontario                         Xerox Canada Ltd.                       836526789            12/4/97      Equipment, Other

Ontario                         Municipal Trust Co.                     822352527            5/31/96      Equipment 1-Canon LC5500
                                                                                                          Facsimile Unit 1-Canon
                                                                                                          NP6025 Photo Copier
                                                                                                          1-Destroyit 2402CC
                                                                                                          Shredder and the proceeds
                                                                                                          of the foregoing

Ontario                         Teletech Financial Corp.                817292376            10/10/95     Equipment, Other

Ontario                         PHH Canada Inc.                         802486656            10/1/92      Equipment, Other, Motor

</TABLE>

                                       4
<PAGE>

<TABLE>
<S>                             <C>                                     <C>                  <C>          <C>
                                                                                                          Vehicle Included

Ontario                         GE Capital Canada Inc.                  859446198            2/23/00      Equipment, Other

Ontario                         Liftow Limited                          861459327            5/3/00       Equipment, Other, Motor
                                                                                                          Vehicle Included 2000
                                                                                                          Toyota 7FG18; VIN: 12194

Ontario                         GMAC Leaseco Limited                    855814365            10/14/99     Consumer Goods, Equipment,
                                                                                                          Other, Motor Vehicle
                                                                                                          Included 1999 Chevrolet S
                                                                                                          Truck VIN:
                                                                                                          1GCCS1444XK219469

Ontario                         GMAC Leaseco Limited                    855484677            10/4/99      Consumer Goods, Equipment,
                                                                                                          Other, Motor Vehicle
                                                                                                          Included 1999 Chevrolet
                                                                                                          Silverado VIN:
                                                                                                          1GCEC14T4XE224621

Ontario                         Donlen Fleet Leasing Ltd.               851461875            5/28/99      Equipment, Other, Motor
                                                                                                          Vehicle Included 1999
                                                                                                          Pontiac Bonneville SE VIN:
                                                                                                          1G2HX52K7XH221962 All
                                                                                                          improvements, additions,
                                                                                                          replacement parts or any
                                                                                                          other modifications of any
                                                                                                          nature shall be, and
                                                                                                          always remain, the
                                                                                                          property of the lessor,
                                                                                                          the whole without any
                                                                                                          compensation to the
                                                                                                          lessee.

Ontario                         Donlen Fleet Leasing Ltd.               851461884            5/28/99      Equipment, Other, Motor
                                                                                                          Vehicle Included 1999
                                                                                                          Pontiac Bonneville SE VIN:
                                                                                                          1G2HX52K4XH222065 All
                                                                                                          improvements, additions,
                                                                                                          replacement parts or any
                                                                                                          other modifications of any
                                                                                                          nature shall be, and
                                                                                                          always remain, the
                                                                                                          property of the lessor,
                                                                                                          the whole without any
                                                                                                          compensation to the
                                                                                                          lessee.

Ontario                         Donlen Fleet Leasing Ltd.               851461893            5/28/99      Equipment, Other, Motor
                                                                                                          Vehicle Included 1999 Jeep
                                                                                                          Cherokee VIN:
                                                                                                          1J4FF78S7XL579773 All
                                                                                                          improvements, additions,
</TABLE>

                                        5
<PAGE>

<TABLE>
<S>                             <C>                                     <C>                  <C>          <C>
                                                                                                          replacement parts or any
                                                                                                          other modifications of any
                                                                                                          nature shall be, and
                                                                                                          always remain, the
                                                                                                          property of the lessor,
                                                                                                          the whole without any
                                                                                                          compensation to the
                                                                                                          lessee.

Ontario                         Donlen Fleet Leasing Ltd.               851461902            5/28/99      Equipment, Other, Motor
                                                                                                          Vehicle Included 1999
                                                                                                          Pontiac Bonneville SE VIN:
                                                                                                          1G2HX52K6XH238638 All
                                                                                                          improvements, additions,
                                                                                                          replacement parts or any
                                                                                                          other modifications of any
                                                                                                          nature shall be, and
                                                                                                          always remain, the
                                                                                                          property of the lessor,
                                                                                                          the whole without any
                                                                                                          compensation to the
                                                                                                          lessee.

Ontario                         AT&T Capital Canada Inc.                837993339            2/2/98       Equipment, Other

Ontario                         Xerox Canada Ltd.                       836526789            12/4/97      Equipment, Other

Ontario                         Donlen Fleet Leasing Ltd.               836258283            11/26/97     Equipment, Other, Motor
                                                                                                          Vehicle Included 1998
                                                                                                          Pontiac Bonneville VIN:
                                                                                                          1G2HX52K7W4212135 1997
                                                                                                          Pontiac Bonneville VIN:
                                                                                                          1G2HX52K6VH254206 All
                                                                                                          improvements, additions,
                                                                                                          replacement parts or any
                                                                                                          other modifications of any
                                                                                                          nature shall be, and
                                                                                                          always remain, the
                                                                                                          property of the lessor,
                                                                                                          the whole without any
                                                                                                          compensation to the
                                                                                                          lessee.

Ontario                         AT&T Capital Canada Inc.                833882301            8/28/97      Equipment, Other

Ontario                         Associates Capital Limited              826960176            12/9/96      Equipment, Other

Ontario                         IBM Canada Limited                      825540084            10/10/96     Equipment, Accounts, Other

Ontario                         Danka Business Systems Ltd.             825392826            10/4/96      Equipment, Other

Ontario                         IBM Canada Limited                      823927986            8/1/96       Equipment, Accounts,
</TABLE>

                                        6
<PAGE>

<TABLE>
<S>                             <C>                                     <C>                  <C>          <C>
                                                                                                          Other

Ontario                         Danka Business Systems Ltd.             822325041            5/31/96      Equipment, Other

Ontario                         Hitachi Credit Canada Inc.              821219166            4/18/96      Equipment, Other Computer
                                                                                                          equipment pursuant to
                                                                                                          lease agreement No. 374-12
                                                                                                          dated April 1, 1996, and
                                                                                                          all amendments thereto,
                                                                                                          under schedule of terms
                                                                                                          for equipment lease
                                                                                                          agreement No. 374 dated
                                                                                                          March 25, 1991, and all
                                                                                                          amounts owing thereunder.

Ontario                         PHH Canada Inc.                         802486656            10/1/92      Equipment, Other Motor
                                                                                                          Vehicle Included

Quebec                          National Leasing Group Inc.             99-0132084-0003      8/17/99      RSW Technik energy
                                                                                                          optimizer and related
                                                                                                          equipment described
                                                                                                          therein

Quebec                          PHH Vehicle Management Services, Inc.   99-0228671-0001      12/22/99     All present and future
                                                                                                          motor vehicles

Quebec                          Royal Bank of Canada                    95-0078805-0001      7/7/95       Re-transfer and
                                                                                                          re-assignment of claims

Quebec                          The Bank of Nova Scotia and             94-0098896-0003      8/22/94      Universality of all
                                                                                                          property, present and
                                                                                                          future, including claims,
                                                                                                          Shintech Inc. receivables,
                                                                                                          inventory, book debts,
                                                                                                          equipment and other
                                                                                                          movable property

Quebec                          AT&T Capital Canada Inc.                95-0095395-0023      8/16/95      6 Cannon fax machines and
                                                                                                          related equipment

Quebec                          AT&T Capital Canada Inc.                96-0110426-0002      9/6/96       Copiers, collators and
                                                                                                          related equipment

Quebec                          AT&T Capital Canada Inc.                96-0025850-0005      3/5/96       Copiers, collators and
                                                                                                          related equipment

Quebec                          AT&T Capital Canada Inc.                95-0071381-0007      6/20/95      Copiers, collators and
                                                                                                          related equipment

Secretary of State,             The CIT Group                           099-19922072927      10/8/92      Leased equipment
Colorado                        Credit Finance Inc.

Secretary of State,             AT&T Credit Corp.                       9734360328           12/5/97      Leased equipment
California
</TABLE>

                                        7
<PAGE>

<TABLE>
<S>                             <C>                                     <C>                  <C>          <C>
Secretary of State,             Newcourt Communications Finance Corp.   9913360864           5/12/99      Leased equipment
California

Secretary of State,             Fidelcor Business  Credit Corp.         19882015682          3/16/88      Leased equipment
Colorado

Secretary of State,             Fidelcor Business  Credit Corp.         099-19882032426      5/4/88       Leased equipment
Colorado

Secretary of State,             The CIT Group                           099-19922072926      10/8/92      Leased equipment
Colorado                        Credit Finance Inc.

Secretary of State,             The CIT Group                           099-19942088799      12/1/94      Leased equipment
Colorado                        Credit Finance Inc.

Secretary of State,             The CIT Group                           099-19972094027      10/27/97     Leased equipment
Colorado                        Credit Finance Inc.

Secretary of State, Indiana     AT&T Credit Corp.                       2045493              4/3/96       Leased equipment

Secretary of State, Indiana     AT&T Credit Corp.                       2075526              9/24/96      Leased equipment

Secretary of State, KY          AT&T Credit Corp.                       139641               1/5/96       Leased equipment

Secretary of State, KY          AT&T Credit Corp.                       143196               8/20/97      Leased equipment

Secretary of State, KY          Newcourt Communications Finance Corp.   1602095              10/21/99     Leased equipment

Secretary of State,             Plasto-O-Meric, Inc.                    2790951              5/19/97      Leased equipment
Missouri

Secretary of State, NJ          AT&T Credit Corp.                       UC-01675659          1/4/96       Leased equipment

Secretary of State, NJ          AT&T Credit Corp.                       UC-01693815          4/23/96      Leased equipment

Secretary of State, NJ          IBM Credit Corporation                  UC-01710839          7/15/96      Leased equipment

Secretary of State, NJ          AT&T Credit Corp.                       UC-01843825          6/15/98      Leased equipment

Secretary of State, NJ          Newcourt Communications Finance Corp.   UC-01871122          11/9/98      Leased equipment

Secretary of State, NJ          IBM Credit Corporation                  UC-01883746          1/14/99      Leased equipment

Secretary of State, NJ          Newcourt Communications Finance Corp.   UC-01943976          12/1/99      Leased equipment

Secretary of State, NJ          Newcourt Communications Finance Corp.   UC-01943984          12/1/99      Leased equipment

Secretary of State, NJ          Toyota Motor Credit                     UC-01951075          12/30/99     Leased equipment

Secretary of State, NJ          Advantage Bank                          UC-01893206          3/11/99      Leased equipment
</TABLE>

                                        8
<PAGE>

<TABLE>
<S>                             <C>                                     <C>                  <C>          <C>
Secretary of State, Ohio        Citicorp North America                  AL21925              8/15/94      Leased equipment

Secretary of State, Ohio        Yale Financial Services                 AN19393              11/19/96     Leased equipment

Secretary of State, Ohio        Yale Financial Services                 AN19409              11/19/96     Leased equipment

Secretary of State, Ohio        IBM Credit Corp.                        AP0072841            8/7/98       Leased equipment

Secretary of State, Ohio        Citicorp North America                  AP0077086            8/17/98      Leased equipment

Secretary of State, Ohio        Keycorp Leasing                         AP0077677            8/19/98      Leased equipment

Secretary of State, Ohio        AT&T Credit Corp.                       AP0080076            9/2/98       Leased equipment

Secretary of State, Ohio        Safeco Credit Co. Inc.                  AP0094262            10/21/98     Leased equipment

Secretary of State, Ohio        IBM Credit Corp.                        AP0100171            11/23/98     Leased equipment

Secretary of State, Ohio        IBM Credit Corp.                        AP0112853            1/4/99       Leased equipment

Secretary of State, Ohio        IBM Credit Corp.                        AP0145718            5/24/99      Leased equipment

Secretary of State, Ohio        IBM Credit Corp.                        AP0153269            6/16/99      Leased equipment

Secretary of State, Ohio        IBM Credit Corp.                        AP0176263            9/9/99       Leased equipment

Secretary of State, Ohio        IBM Credit Corp.                        AP0180968            9/20/99      Leased equipment

Secretary of State, Ohio        IBM Credit Corp.                        AP0188619            10/22/99     Leased equipment

Secretary of State, Ohio        IBM Credit Corp.                        AP0191197            10/27/99     Leased equipment

Secretary of State, Ohio        IBM Credit Corp.                        AP0195162            11/12/99     Leased equipment

Secretary of State, Ohio        IBM Credit Corp.                        AP0196196            11/22/99     Leased equipment

Secretary of State, Ohio        Newcourt Communications Finance Corp.   AP0197242            12/1/99      Leased equipment

Secretary of State, Ohio        IBM Credit Corp.                        AP0197921            12/1/99      Leased equipment

Secretary of State, Ohio        US Bank Trust                           AP0217222            2/29/00      Leased equipment

Secretary of State, Ohio        IBM Credit Corp.                        AP0222347            3/20/00      Leased equipment
</TABLE>

                                       9
<PAGE>

<TABLE>
<S>                             <C>                                     <C>                  <C>          <C>
Secretary of State, Ohio        CitiCorp                                AL21925              8/15/94      Blanket

Secretary of State, Ohio        Minnesota Mining & Mfg                  AL44935              11/28/94     Inventory

Secretary of State, Ohio        Citicorp                                AP280153             9/12/00      All accounts

Secretary of State, Ohio        Citicorp                                AP284296             9/27/00      Equipment

Secretary of State, Ohio        CIT Communications Finance Corporation  AP304325             12/27/00     Leased equipment

Secretary of State, Ohio        Comdisco, Inc.                          AP317257             1/25/01      Leased equipment

Secretary of State, Ohio        GFC Leasing                             AP316504             2/06/01      Leased equipment

Secretary of State, Ohio        CIT Communications Finance Corporation  AP316016             3/05/01      Leased equipment

Secretary of State, Ohio        Safeco Credit Co. Inc                   AP319100             3/14/01      Lease

Secretary of State, Ohio        Comdisco, Inc.                          AP328526             4/17/01      Lease

Secretary of State, Ohio        Comdisco, Inc.                          AP328533             4/17/01      Leased equipment

Secretary of State, Ohio        LINC Quantum Analytics                  AP340867             5/30/01      Equipment

Secretary of State, Ohio        NMHG Financial Services Inc.            OH00036157912        7/19/01      Equipment

Secretary of State, Ohio        Tennant Financial Services              OH00037860712        8/27/01      Equipment

Secretary of State, Ohio        Dana Corporation                        OH00039806285        10/12/01     Equipment

Secretary of State, Ohio        CISCO Systems Capital Corporation       OH00039906742        10/15/01     Equipment

Secretary of State, Ohio        Harwick Standard Distributing Co.       OH00042190738        12/03/01     Inventory

Secretary of State, Ohio        BASF Corporation                        OH00042647474        12/13/01     Inventory-consignment

Secretary of State, Ohio        CIBA Specialty Chemicals Corporation    OH00043096355        12/24/01     Inventory

Secretary of State, Ohio        Crown Credit Company                    OH00044256124        1/22/02      Equipment

Secretary of State, Ohio        Crown Credit Company                    OH00044256457        1/22/02      Equipment

Secretary of State, Ohio        Tennant Financial Services              OH00044522301        1/28/02      Equipment

Secretary of State, Ohio        Worldcom Communications, Inc.           OH00045792636        2/28/02      Equipment

Secretary of State, Ohio        ICX Corporation                         OH00046609165        3/18/02      Equipment
</TABLE>

                                        10
<PAGE>

<TABLE>
<S>                             <C>                                     <C>                  <C>          <C>
Secretary of State, Ohio        Comdisco, Inc.                          OH00046635716        3/19/02      Leased equipment

Secretary of State, Ohio        Comdisco, Inc.                          OH00046636273        3/19/02      Leased equipment

Secretary of State, Ohio        Tennant Financial Services              OH00046725373        3/20/02      Leased equipment

Secretary of State, Ohio        Marlin Leasing Corp.                    OH00047629421        4/09/02      Leased equipment

Secretary of State, Ohio        CIT Communications Finance Corporation  OH00048194732        4/22/02      Leased equipment

Secretary of State, Ohio        Citicorp North America                  OH00048307026        4/23/02      All accounts

Secretary of State, Ohio        Citicorp North America                  OH00048359540        4/24/02

Secretary of State, Ohio        Toyota Motor Credit Corporation         OH00048716285        5/02/02      Equipment

Secretary of State, Ohio        State Street Bank and Trust             OH00049499941        5/17/02      Blanket
                                Company, N.A. and
                                Angelita Pena

Secretary of State, Ohio        AW Chesterton Company                   OH00051263300        6/28/02      Equipment

Secretary of State, Ohio        Crown Credit Company                    OH00051500455        7/05/02      Equipment

Secretary of State, Ohio        Bayer Corporation                       OH00051752337        7/10/02      Consignment inventory

Secretary of State, Ohio        Bayer Polymers LLC                      20030800302

Secretary of State, Ohio        Hewlett-Packard Financial Services      OH00052279051        7/24/02      Equipment
                                Company

Secretary of State, Ohio        NMHG Financial Services Inc.            OH00053737509        8/30/02      Leased equipment

Secretary of State, Ohio        De Lage Landen Financial Services,      OH00053819179        9/03/02      Equipment
                                Inc.

Secretary of State, Ohio        ICX Corporation                         OH00056932273        11/20/02     Leased equipment

Secretary of State, Ohio        Citicorp Del Lease, Inc.                OH00058302199        12/26/02     Equipment

Secretary of State, Ohio        Comdisco, Inc.                          OH00059308273        1/22/03      Leased equipment

Secretary of State, Ohio        Comdisco, Inc.                          OH00059308384        1/22/03      Leased equipment

Secretary of State, Ohio        Comdisco, Inc.                          OH00059308495        1/22/03      Leased equipment

Secretary of State, Ohio        Comdisco, Inc.                          OH00059308617        1/22/03      Leased equipment

Secretary of State, Ohio        Comdisco, Inc.                          OH00059308728        1/22/03      Leased equipment

Secretary of State, Ohio        Comdisco, Inc.                          OH00059308839        1/22/03      Leased equipment
</TABLE>

                                        11
<PAGE>

<TABLE>
<S>                             <C>                                     <C>                  <C>          <C>
Secretary of State, Ohio        Comdisco, Inc.                          OH00059308940        1/22/03      Leased equipment

Secretary of State, Ohio        Comdisco, Inc.                          OH00059309063        1/22/03      Leased equipment

Secretary of State, Ohio        Comdisco, Inc.                          OH00059309285        1/22/03      Leased equipment

Secretary of State, Ohio        Comdisco, Inc.                          OH00059310319        1/22/03      Leased equipment

Secretary of State, Ohio        Comdisco, Inc.                          OH00059312111        1/22/03      Leased equipment

Secretary of State, Ohio        Comdisco, Inc.                          OH00059312333        1/22/03      Leased equipment

Secretary of State, Ohio        Comdisco, Inc.                          OH00059312444        1/22/03      Leased equipment

Secretary of State, Ohio        Comdisco, Inc.                          OH00059312555        1/22/03      Leased equipment

Secretary of State, Ohio        Comdisco, Inc.                          OH00059331343        1/23/03      Leased equipment

Secretary of State, Ohio        Comdisco, Inc.                          OH00059331565        1/23/03      Leased equipment

Secretary of State, Ohio        Comdisco, Inc.                          OH00059331676        1/23/03      Leased equipment

Secretary of State, Ohio        Comdisco, Inc.                          OH00059331787        1/23/03      Leased equipment

Secretary of State, Ohio        Comdisco, Inc.                          OH00059331898        1/23/03      Leased equipment

Secretary of State, Ohio        Comdisco, Inc.                          OH00059332022        1/23/03      Leased equipment

Secretary of State, Ohio        Comdisco, Inc.                          OH00059332466        1/23/03      Leased equipment

Secretary of State, Ohio        Comdisco, Inc.                          OH00059332688        1/23/03      Leased equipment

Secretary of State, Ohio        Comdisco, Inc.                          OH00059332799        1/23/03      Leased equipment

Secretary of State, Ohio        Comdisco, Inc.                          OH00059333145        1/23/03      Leased equipment

Secretary of State, Ohio        Comdisco, Inc.                          OH00059694927        2/04/03      Leased equipment

Secretary of State, Ohio        Comdisco, Inc.                          OH00059704728        2/04/03      Leased equipment

Secretary of State, Ohio        Comdisco, Inc.                          OH00059704940        2/04/03      Leased equipment

Secretary of State, Ohio        Comdisco, Inc.                          OH00059705174        2/04/03      Leased equipment

Secretary of State, Ohio        Comdisco, Inc.                          OH00059705396        2/04/03      Leased equipment

Secretary of State, Ohio        Comdisco, Inc.                          OH00059705518        2/04/03      Leased equipment

Secretary of State, Ohio        Comdisco, Inc.                          OH00059705730        2/04/03      Leased equipment

Secretary of State, Ohio        Comdisco, Inc.                          OH00059705841        2/04/03      Leased equipment

Secretary of State, Ohio        Sun Chemical Company                    OH00059935676        2/10/03      Consignment Inventory
</TABLE>

                                        12
<PAGE>

<TABLE>
<S>                             <C>                                     <C>                  <C>          <C>
Secretary of State, Ohio        Toyota Motor Credit Company             OH00060401012        2/24/03      Equipment

Secretary of State, Ohio        Sayers Finance Corporation              OH00060687309        3/5/03       Leased equipment

Secretary of State, Ohio        Crompton Corporation                    OH00060883274        3/10/03      Consignment inventory

Secretary of State, Ohio        GFC Leasing                             OH000614285564                    Equipment

Secretary of State, Ohio        Ferro Corporation                       OH00061565362        3/27/03      Consignment inventory

Secretary of State, Ohio        Citicorp Del Lease, Inc.                OH00062065656        4/08/03      Equipment

Secretary of State, Ohio        General Electric Capital Corporation    AP0014808            1/06/98      Lease

Secretary of State, Ohio        Minnesota Mining & Mfg. 3M              AL44935              11/28/94     Consignment inventory
                                Receivables Management

Secretary of State, Ohio        Danka Financial Services                AP0073186            7/31/98      Equipment

Secretary of State, Ohio        The CIT Group/ Equipment
                                Financing, Inc.                         AP0088569            9/29/98      Equipment

Secretary of State, Ohio        The CIT Group/ Equipment                AP0098109            11/14/98     Equipment
                                Financing, Inc.

Secretary of State, Ohio        Inter-Tel Leasing Inc.                  AP0156103            6/07/99      Lease

Secretary of State, Ohio        NewCourt Communications Finance         AP0214066            2/15/00      Lease
                                Corporation

Secretary of State, Ohio        ICX Corporation                         AP0259669            8/03/00      Lease

Secretary of State, Ohio        ICX Corporation                         AP314254             12/22/00     Lease

Secretary of State, Ohio        CitiCorp                                AL21925              8/15/94      All Accounts

Secretary of State, Ohio        Yale Financial Services, Inc.           AN19409              11/19/96     Lease

Secretary of State, Ohio        IBM Credit Corporation                  AP0072841            8/07/98      Lease

Secretary of State, Ohio        CitiCorp                                AP0077086            8/17/98      All Accounts

Secretary of State, Ohio        KeyCorp Leasing                         AP0077677            8/19/98      Lease

Secretary of State, Ohio        AT&T Credit Corporation                 AP0080076            9/02/98      Lease

Secretary of State, Ohio        Safeco Credit Co. Inc.                  AP0094262            10/21/98     Lease

Secretary of State, Ohio        IBM Credit Corporation                  AP0100171            11/23/98     Lease

Secretary of State, Ohio        IBM Credit Corporation                  AP0112853            1/04/99      Lease

Secretary of State, Ohio        IBM Credit Corporation                  AP0145718            5/24/99      Lease
</TABLE>

                                        13
<PAGE>

<TABLE>
<S>                             <C>                                     <C>                  <C>          <C>
Secretary of State, Ohio        IBM Credit Corporation                  AP0153269            6/16/99      Lease

Secretary of State, Ohio        IBM Credit Corporation                  AP0176263            9/09/99      Lease

Secretary of State, Ohio        IBM Credit Corporation                  AP0180968            9/20/99      Lease

Secretary of State, Ohio        IBM Credit Corporation                  AP0188619            10/22/99     Lease

Secretary of State, Ohio        IBM Credit Corporation                  AP0191197            10/27/99     Lease

Secretary of State, Ohio        IBM Credit Corporation                  AP0195162            11/12/99     Lease

Secretary of State, Ohio        IBM Credit Corporation                  AP0196196            11/12/99     Lease

Secretary of State, Ohio        NewCourt Communications                 AP0197242            12/01/99     Lease
                                Finance Corporation

Secretary of State, Ohio        IBM Credit Corporation                  AP0197921            12/01/99     Lease

Secretary of State, Ohio        Bank of America Illinois                AP0217222            2/29/00      Lease

Secretary of State, Ohio        IBM Credit Corporation                  AP0222347            3/20/00      Lease

Secretary of State, Ohio        NewCourt Communications                 AP0260673            8/03/00      Lease
                                Finance Corporation

Secretary of State, Ohio        NewCourt Communications                 AP280998             8/31/00      Lease
                                Finance Corporation

Secretary of State, Texas       Arrowhead Industrial Water, Inc.        94-051890            3/21/94      Leased equipment

Secretary of State, Texas       Arrowhead Industrial Water, Inc.        98-750113            12/10/98     Leased equipment

Secretary of State, Texas       IBM Credit Corp.                        96-131342            7/3/96       Leased equipment

Secretary of State, Texas       Caterpillar Financial Services Corp.    97-005427            1/14/97      Leased equipment

Secretary of State, Texas       Associates Leasing, Inc.                97-141643            7/7/97       Leased equipment

Secretary of State, Texas       AT&T Credit Corp.                       97-172691            8/20/97      Leased equipment

Secretary of State, Texas       AT&T Credit Corp.                       97-246966            12/5/97      Leased equipment

State Corp. Com., VA            Unisys Corp.                            920592 1457          5/18/92      Leased equipment

State Corp. Com., VA            Unisys Corp.                            970213 7182          2/13/97      Leased equipment

State Corp. Com., VA            Unisys Corp.                            980224 7149          2/24/98      Leased equipment
</TABLE>

                                        14
<PAGE>

<TABLE>
<S>                             <C>                                     <C>                  <C>          <C>
Tennessee                       General Electric Capital Corporation    981-500049                        Lease

Texas                           PHH Vehicle Management Services         98-137367                         Lease
                                Corporation/D.L. Peterson Trust

Vigo County  Indiana            AT&T Credit Corp.                       193729               4/3/96       Leased equipment

Vigo County Indiana             AT&T Credit Corp.                       194701               9/5/96       Leased equipment

Wisconsin                       CitiCorp                                01855397             6/17/99      All Accounts

Wood County  Ohio               Plast-O-Meric, Inc.                     97-954               6/9/97       Leased equipment
</TABLE>

                                        15
<PAGE>

                                                                SCHEDULE 5.02(d)
                                                                     ASSET SALES

The following are excluded from the limitations of Section 5.02(b) of the
Agreement:

1.    The assets of Borrower's Elastomers and Performance Additives business.

2.    The assets of Borrower's Engineered Films business, including the capital
      stock interest of the Borrower in PolyOne Engineered Films, Inc.

3.    The assets of Borrower's Specialty Resins business.

<PAGE>

                                                                SCHEDULE 5.02(i)
                                                EXISTING FOREIGN SUBSIDIARY DEBT

POLYONE CORPORATION - CONSOLIDATED
TOTAL DEBT OUTSTANDING

POLYONE USA CORPORATE

<TABLE>
<S>                                                                <C>
SUBSIDIARY
 Tekno Polimer Group                                                 1,154,418
 CORPORATE
 Citibank revolver                                                  35,000,000
                                                                   -----------
                              SHORT TERM BORROWING                  36,154,418
 SUBSIDIARY
 Polibasa                                                            7,558,250
 Bergmann                                                              367,470
 Star Color                                                             10,238
 Formulators Group - Acrol GB                                               (2)
 Lincoln & Southern Railroad                                            51,699
 PolyOne Canada                                                      1,022,798
                                                                   -----------
                               SUBTOTAL SUBSIDIARY                   9,010,453
 CORPORATE
 Bank One debenture                                                 75,000,000
 Bank One debenture - deriviative fair value adjustment                     --
 Bank One debenture swap unamortized                                 3,389,514
                                                                    78,389,514
 Bank One debenture                                                 50,000,000
 9-3/8% senior note                                                 87,775,000
 9-3/8% senior note - derivative fair value adjustment                      --
 9-3/8% senior note swap unamortized                                   865,385
 debt discount at merger unamortized                                   613,100
                                                                    89,253,485
 8.875% senior note                                                200,000,000
 8.875% senior note discount unamortized                            (1,626,890)
                                                                   198,373,110
 medium term notes                                                 160,000,000
 Medium term notes - derivative fair value adjustment                       --
 Medium term notes swap unamortized                                  3,037,023
 Debt discount at merger unamortized                                (7,320,053)
                                                                   155,716,970
 Colombian loan                                                     11,257,288
 FX adjustment                                                      (2,686,283)
                                                                     8,571,005
 Capital lease obligations                                             150,252
 Other                                                                      --
                                                                   -----------
                                 LONG TERM DEBT                    589,464,789

                                                                   -----------
 TOTAL DEBT                                                        625,619,207
                                                                   ===========
</TABLE>

                                       2
<PAGE>

                                                                   SCHEDULE 8.13
                                                             RELEASED COLLATERAL

INITIAL PLEDGED SHARES- Certificates delivered under Security Agreement dated
January 25, 2002 of:

      -PolyOne Distribution Company (Bruck Plastics Company)
      -PolyOne Engineered, Films, Inc.
      -Lincoln & Southern Railroad Company
      -Burton Rubber Company
      -Polymer Diagnostics, Inc.

RECEIVABLES AND RELATED CONTRACTS

ACCOUNT COLLATERAL

MORTGAGED PROPERTIES- Mortgages delivered as to the following properties will be
released:

      -Burton, OH
      -Kennedale, TX
      -DeForest, WI
      -Wynne, AR
      -Henry, IL
      -Pedricktown, NJ
      -Dyersburg, TN
      -Jonesboro, TN
      -Winchester, VA

EQUIPMENT- Equipment located at the following properties will be released:

      -Burton, OH
      -Kennedale, TX
      -DeForest, WI
      -Wynne, AR
      -Henry, IL
      -Pedricktown, NJ
      -Dyersburg, TN
      -Jonesboro, TN
      -Winchester, VA

INTELLECTUAL PROPERTY-

            PATENTS AND APPLICATIONS RELEASED FROM SECURITY INTEREST

<TABLE>
<CAPTION>
                                        APPLICATION
PAT. NO.       ISSUE DATE  SERIAL NO.   DATE            TITLE OF PATENT
--------       ----------  ----------   -----------     ---------------
<S>            <C>         <C>          <C>             <C>
5,496,684      3/5/1996    08/122,400   9/17/1993       PHOTOSENSITIVE COMPOSITIONS AND ELEMENTS FOR
                                                        FLEXOGRAPHIC PRINTING

5,496,685      3/5/1996    08/122,682   9/17/1993       PHOTOSENSITIVE COMPOSITIONS AND ELEMENTS FOR
                                                        FLEXOGRAPHIC PRINTING

5,676,461      10/14/1997  08/617,361   3/18/1996       OIL INJECTION APPARATUS AND METHOD FOR POLYMER
                                                        PROCESSING

5,851,731      12/22/1998  08/707,862   9/9/1996        COMPOSITION FOR THE MANUFACTURE OF FLEXOGRAPHIC
                                                        PRINTING PLATES

5,865,535      2/2/1999    08/965,307   11/6/1997       DYNAMIC MIXER CONTROL IN PLASTICS AND RUBBER
                                                        PROCESSING
</TABLE>

                                       3
<PAGE>

<TABLE>
<S>            <C>         <C>          <C>             <C>

5,974,167      10/26/1999  08/887,913   6/30/1997       SYSTEM AND METHOD FOR MEASURING AND CONTROLLING THE
                                                        QUALITY OF DISPERSION OF FILLER PARTICLES IN RUBBER
                                                        COMPOUNDS

6,017,679      1/25/2000   09/150,889   9/10/1998       COMPOSITION FOR THE MANUFACTURE OF FLEXOGRAPHIC
                                                        PRINTING PLATES

                           09/975,534   10/11/2001      MOLDING COMPOSITION FOR THE TRANSFER OF
                                                        MICRO-STRUCTURED SURFACES.

                           09/975,700   10/11/2001      VACUUM FORMED THERMOPLASTIC FILMS AND ARTICLES
                                                        THEREFROM

                           10/100,830   3/18/2002       PROCESS FOR PRODUCING A MULTI-COLORED COVERSTOCK

                           60/431,308   12/6/2002       LINER WITH DIFFERENT IMPRESSMENTS AT OPPOSING
                                                        SURFACES
</TABLE>

                                       4
<PAGE>

<TABLE>
<CAPTION>
                               MARKS RELEASED FROM SECURITY INTEREST

MARK                                 APPLN. DATE          APPLN. NO.         REG. NO.     REG. DATE
----                                 -----------          ----------         --------     ---------
<S>                                  <C>                  <C>                <C>          <C>
ACCU-WAY                             21-Mar-90                               1673872      28-Jan-92

ADAPHAX                              18-Jul-69                               894862       21-Jul-70

ADVANCE                              22-Nov-95                               2015482      12-Nov-96

AMBEREX                              10-Aug-62                               755774       3-Sep-63

AUTOGUARD OEM                        22-Mar-00            76008362           2698214      18-Mar-03

AUTOMASK                             22-Mar-00            76008361

B and DESIGN                         10-Jul-72                               971697       30-Oct-73

BUR-A-LOY                            2-Dec-81                                1242470      21-Jun-83

CASTILLIAN                           18-Nov-99                               2390002      26-Sep-00

CHASE IMAGE                          10-Sep-96                               2125186      30-Dec-97

CHASE WAVE                           10-Sep-96                               2226542      23-Feb-99

COLONIAL (Stylized)                  3-Nov-77                                1132000      1-Apr-80

COPY DEFENDER                        4-Apr-00                                2519478      18-Dec-01

CREATING THE RIGHT MIX               4-Mar-96                                2052381      15-Apr-97

CSW                                  13-Jun-89                               1624843      27-Nov-90

DESICAL                              11-Oct-66                               846885       2-Apr-68

Design of Pilgrim's Head             3-Nov-77                                1110723      9-Jan-79

DLP                                  29-Apr-02            76402342

FACTICE (Stylized)                   18-Aug-34                               321475       5-Feb-35

FACTICE (Stylized)                   28-Jan-55                               642757       19-Mar-57

FLEXCLEAR                            1-Mar-90                                1622516      13-Nov-90

GRID-PAK                             17-Oct-79                               1159976      7-Jul-81

H2OKAY!                              22-Jan-88                               1569699      5-Dec-89

HANNA IMAGE ANALYSIS                 20-Nov-97                               2303370      28-Dec-99

HYDRO FLOW                           5-Aug-02             76437637

LUBREX                               24-Jan-68                               861263       3-Dec-68

MBZ                                  11-Nov-74                               1015583      15-Jul-75

MELOS                                28-Sep-00                               2492500      25-Sep-01

MULTI-PURGE                          2-Nov-90                                1683548      21-Apr-92

NEOPHAX                              9-Apr-56                                659638       25-Mar-58

OSULLIVAN                            25-Mar-91                               1723596      13-Oct-92

P.O.A.                               23-Mar-01            76229582

POLYBOUND                            29-Sep-94                               2044293      11-Mar-97

POLYMER DIAGNOSTICS & DESIGN         16-Feb-98                               2313072      1-Feb-00

POLYTRON                             14-Dec-92                               1866372      6-Dec-94

PROFLEX                              27-Apr-01            76247357

REGALITE                             28-Jul-97                               2220182      26-Jan-99

REGALTECH                            20-Jul-89                               1622502      13-Nov-90

ROLL-A-GLASS                         19-Jun-75                               1056068      11-Jan-77

S'OFFICE                             14-Jun-89                               1595364      8-May-90

STAN-MAG                             19-Mar-62                               748034       16-Apr-63

STAN-TONE (Stylized)                 7-Dec-46                                511127       21-Jun-49

ULTRALITE                            8-Feb-79                                1386714      18-Mar-86

ULTRALITE                            15-Jun-98                               2323216      28-Feb-00

ULTRASHIELD                          22-Sep-92                               1861385      1-Nov-94

ULTRASHIELD                          3-Jun-98                                2363698      4-Jul-00

ULTRASHIELD AND DESIGN               23-Jan-98                               2290539      2-Nov-99

VELVET CRUSH                         23-Mar-01            76232851
</TABLE>

                                       5
<PAGE>

<TABLE>
<CAPTION>
                               MARKS RELEASED FROM SECURITY INTEREST

MARK                                 APPLN. DATE          APPLN. NO.         REG. NO.     REG. DATE
----                                 -----------          ----------         --------     ---------
<S>                                  <C>                  <C>                <C>          <C>
VISIONS                              29-Dec-98                               2387091      19-Sep-00

VVO                                  4-Jan-94                                1978733      4-Jun-96

WAVE                                 10-Sep-96                               2226541      23-Feb-99
</TABLE>

                                       6
<PAGE>

                                                             EXHIBIT A - FORM OF
                                                                 PROMISSORY NOTE

U.S.$_______________                     Dated:  _______________, 200_

            FOR VALUE RECEIVED, the undersigned, POLYONE CORPORATION, an Ohio
corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of
_________________________ (the "Lender") for the account of its Applicable
Lending Office on the Termination Date (each as defined in the Credit Agreement
referred to below) the principal sum of U.S.$[amount of the Lender's Revolving
Credit Commitment in figures] or, if less, the aggregate principal amount of the
Advances made by the Lender to the Borrower pursuant to the Amended and Restated
Credit Agreement dated as of May 6, 2003 among the Borrower, the Lender and
certain other lenders parties thereto, and Citicorp USA, Inc. as Agent for the
Lender and such other lenders (as amended or modified from time to time, the
"Credit Agreement"; the terms defined therein being used herein as therein
defined) outstanding on the Termination Date.

            The Borrower promises to pay interest on the unpaid principal amount
of each Advance from the date of such Advance until such principal amount is
paid in full, at such interest rates, and payable at such times, as are
specified in the Credit Agreement.

            Both principal and interest in respect of each Advance are payable
in lawful money of the United States of America to the Agent at its account
maintained at 388 Greenwich Street, New York, New York 10013, in same day funds.
Each Advance owing to the Lender by the Borrower pursuant to the Credit
Agreement, and all payments made on account of principal thereof, shall be
recorded by the Lender and, prior to any transfer hereof, endorsed on the grid
attached hereto which is part of this Promissory Note.

            This Promissory Note is one of the Notes referred to in, and is
entitled to the benefits of, the Credit Agreement. The Credit Agreement, among
other things, (i) provides for the making of Advances by the Lender to the
Borrower from time to time in an aggregate amount not to exceed at any time
outstanding the U.S. dollar amount first above mentioned, the indebtedness of
the Borrower resulting from each such Advance being evidenced by this Promissory
Note and (ii) contains provisions for acceleration of the maturity hereof upon
the happening of certain stated events and also for prepayments on account of
principal hereof prior to the maturity hereof upon the terms and conditions
therein specified. The obligations of the Borrower under this Promissory Note
and the Credit Agreement are secured by collateral as provided therein.

                                           POLYONE CORPORATION

                                           By_______________________
                                              Title:

<PAGE>

                       ADVANCES AND PAYMENTS OF PRINCIPAL

<TABLE>
<CAPTION>
                                                            AMOUNT OF
                                   AMOUNT OF             PRINCIPAL PAID           UNPAID PRINCIPAL             NOTATION
           DATE                     ADVANCE                OR PREPAID                 BALANCE                   MADE BY
<S>                                <C>                   <C>                      <C>                          <C>

</TABLE>

                                       2
<PAGE>

                                                   EXHIBIT B - FORM OF NOTICE OF
                                                                       BORROWING

Citicorp USA, Inc., as Agent
  for the Lenders parties
  to the Credit Agreement
  referred to below
  Two Penns Way
  New Castle, Delaware 19720

                                     [Date]

            Attention: Bank Loan Syndications Department

Ladies and Gentlemen:

            The undersigned, PolyOne Corporation, refers to the Amended and
Restated Credit Agreement, dated as of May 6, 2003 (as amended or modified from
time to time, the "Credit Agreement", the terms defined therein being used
herein as therein defined), among the undersigned, certain Lenders parties
thereto and Citicorp USA, Inc., as Agent for said Lenders, and hereby gives you
notice, irrevocably, pursuant to Section 2.02 of the Credit Agreement that the
undersigned hereby requests a Borrowing under the Credit Agreement, and in that
connection sets forth below the information relating to such Borrowing (the
"Proposed Borrowing") as required by Section 2.02(a) of the Credit Agreement:

            (i) The Business Day of the Proposed Borrowing is _______________,
      200_.

            (ii) The Type of Advances comprising the Proposed Borrowing is [Base
      Rate Advances] [Eurodollar Rate Advances].

            (iii) The aggregate amount of the Proposed Borrowing is
      $_______________].

            [(iv) The initial Interest Period for each Eurodollar Rate Advance
      made as part of the Proposed Borrowing is _____ month[s].]

            The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the Proposed Borrowing:

            (A) the representations and warranties contained in the Loan
      Documents are correct, before and after giving effect to the Proposed
      Borrowing and to the application of the proceeds therefrom, as though made
      on and as of such date;

            (B) no event has occurred and is continuing, or would result from
      such Proposed Borrowing or from the application of the proceeds therefrom,
      that constitutes a Default; and

            (C) the Indenture Limit exceeds the aggregate principal amount of
      the Advances plus the aggregate Available Amount of all Letters of Credit
      to be outstanding after giving effect to such Proposed Borrowing, as
      evidenced by the calculations set forth on Annex I hereto.

                                         Very truly yours,

                                         POLYONE CORPORATION

                                         By_________________________
                                            Title:

<PAGE>

                                     ANNEX I

<TABLE>
<CAPTION>
                                                                                                  2002              2003
                                                                                                  POLYONE           POLYONE
INDENTURE                           AMOUNT   %     GEON INDENTURE     HANNA 9 3/8 INDENTURE       HANNA MTNS        INDENTURE
---------                           ------  ---    --------------     ---------------------       ----------        ---------
<S>                                         <C>    <C>                <C>                        <C>                <C>
Consolidated Tangible Assets                 5%
Consolidated Net Tangible Assets            10%
Consolidated Shareholders Equity            10%
Consolidated Net Tangible Assets            10%     _____________     ___________________        ____________        _________

MAXIMUM LIMIT X .95

Less - Secured Debt
(other than under Revolving Credit Agreement)

Availability under Basket - subtotal                _____________     ___________________        ____________        _________

Exceptions:

Availability under Basket                           _____________     ___________________        ____________        _________

Advances plus Available Amount of Letters of Credit to be outstanding after giving effect to Proposed Borrowing      _________
</TABLE>

<PAGE>

                                                                       EXHIBIT C
                                                       ASSIGNMENT AND ACCEPTANCE

            Reference is made to the Amended and Restated Credit Agreement dated
as of May 6, 2003 (as amended or modified from time to time, the "Credit
Agreement") among PolyOne Corporation, an Ohio corporation (the "Borrower"), the
Lenders (as defined in the Credit Agreement) and Citicorp USA, Inc., as agent
for the Lenders (the "Agent"). Terms defined in the Credit Agreement are used
herein with the same meaning.

            The "Assignor" and the "Assignee" referred to on Schedule 1 hereto
agree as follows:

            1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, an interest in and to
the Assignor's rights and obligations under the Credit Agreement as of the date
hereof equal to the percentage interest specified on Schedule 1 hereto of all
outstanding rights and obligations under the Credit Agreement together with
participations in Letters of Credit held by the Assignor on the date hereof.
After giving effect to such sale and assignment, the Assignee's Commitment and
the amount of the Advances owing to the Assignee will be as set forth on
Schedule 1 hereto.

            2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Agreement
or the 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, the Credit
Agreement or any other instrument or document furnished pursuant thereto; (iii)
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of the Borrower or the performance or observance by
the Borrower of any of its obligations under the Credit Agreement or any other
instrument or document furnished pursuant thereto; and (iv) attaches the Note[,
if any,] held by the Assignor [and requests that the Agent exchange such Note
for a new Note payable to the order of [the Assignee in an amount equal to the
Revolving Credit Commitment assumed by the Assignee pursuant hereto or new Notes
payable to the order of the Assignee in an amount equal to the Revolving Credit
Commitment assumed by the Assignee pursuant hereto and] the Assignor in an
amount equal to the Revolving Credit Commitment retained by the Assignor under
the Credit Agreement[, respectively,] as specified on Schedule 1 hereto].

            3. The Assignee (i) confirms that it has received a copy of the
Credit Agreement, together with copies of the financial statements referred to
in Section 4.01 thereof and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance; (ii) agrees that it will, independently and
without reliance upon the Agent, the Assignor or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Credit Agreement; (iii) confirms that it is an Eligible Assignee; (iv)
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers and discretion under the Credit Agreement as are
delegated to the Agent by the terms thereof, together with such powers and
discretion as are reasonably incidental thereto; (v) agrees that it will perform
in accordance with their terms all of the obligations that by the terms of the
Credit Agreement are required to be performed by it as a Lender; and (vi)
attaches any U.S. Internal Revenue Service forms required under Section 2.14 of
the Credit Agreement.

            4. Following the execution of this Assignment and Acceptance, it
will be delivered to the Agent for acceptance and recording by the Agent. The
effective date for this Assignment and Acceptance (the "Effective Date") shall
be the date of acceptance hereof by the Agent, unless otherwise specified on
Schedule 1 hereto.

            5. Upon such acceptance and recording by the Agent, as of the
Effective Date, (i) the Assignee shall be a party to the Credit Agreement and,
to the extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.

            6. Upon such acceptance and recording by the Agent, from and after
the Effective Date, the Agent shall make all payments under the Credit Agreement
and the Notes in respect of the interest assigned hereby

<PAGE>

(including, without limitation, all payments of principal, interest and fees
with respect thereto) to the Assignee. The Assignor and Assignee shall make all
appropriate adjustments in payments under the Credit Agreement and the Notes for
periods prior to the Effective Date directly between themselves.

            7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of New York.

            8. This Assignment and Acceptance 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 Schedule 1 to this Assignment and Acceptance by telecopier shall
be effective as delivery of a manually executed counterpart of this Assignment
and Acceptance.

            IN WITNESS WHEREOF, the Assignor and the Assignee have caused
Schedule 1 to this Assignment and Acceptance to be executed by their officers
thereunto duly authorized as of the date specified thereon.

                                       2
<PAGE>

                                   Schedule 1
                                       to
                            Assignment and Acceptance

<TABLE>
<S>                                                                  <C>
Percentage interest assigned:                                        _____%

Assignee's Revolving Credit Commitment:                              $______

Aggregate outstanding principal amount of Advances assigned:         $______

Principal amount of Note payable to Assignee:                        $______

Principal amount of Note payable to Assignor:                        $______

Effective Date*:  _______________, 200_
</TABLE>

                                     [NAME OF ASSIGNOR], as Assignor

                                     By_____________________________
                                       Title:

                                     Dated:  _______________, 200_

                                     [NAME OF ASSIGNEE], as Assignee

                                     By
                                          Title:

                                     Dated:  _______________, 200_

                                     Domestic Lending Office:
                                           [Address]

                                     Eurodollar Lending Office:
                                           [Address]

----------
*     This date should be no earlier than five Business Days after the delivery
      of this Assignment and Acceptance to the Agent.

                                       3
<PAGE>

Accepted and Approved this
__________ day of _______________, 200_

CITICORP USA, INC., as Agent

By_____________________________________
   Title:

Approved this __________ day
of _______________, 200_

POLYONE CORPORATION

By_____________________________________
   Title:

                                       4
<PAGE>

                                                            EXHIBIT F-1- FORM OF
                                                              OPINION OF COUNSEL
                                                                FOR THE BORROWER

                                             [Effective Date]

May 6, 2003

To each of the Lenders parties
to the Amended and Restated Credit Agreement
dated as of May 6, 2003
among PolyOne Corporation,
said Lenders and Citicorp USA, Inc.,
as Agent for said Lenders

Ladies and Gentlemen:

            This opinion is furnished to you pursuant to Section 3.01(h)(iv) of
the Amended and Restated Credit Agreement, dated as of May 6, 2003 (the "Credit
Agreement"), among PolyOne Corporation (the "Borrower"), the Lenders parties
thereto and Citicorp USA, Inc., as Agent for said Lenders. Terms defined in such
Credit Agreement are used herein as therein defined.

            We have acted as counsel for the Borrower in connection with the
preparation, execution and delivery of the Credit Agreement.

In that connection, we have examined:

      1. The Credit Agreement.

      2. The documents furnished by the Borrower pursuant to Article III of the
      Credit Agreement, including the Security Agreement.

      3. The Articles of Incorporation of the Borrower and all amendments
      thereto (the "Charter").

      4. The Regulations of the Borrower and all amendments thereto (the
      "By-laws").

      5. A certificate of the Secretary of State of Ohio, dated April 21, 2003,
      attesting to the continued corporate existence and good standing of the
      Borrower in that State.

In addition, we have examined the originals, or copies certified to our
satisfaction, of such other corporate records of the Borrower, certificates of
public officials and of officers for the Borrower, and agreements, instruments
and other documents as we have deemed necessary as a basis for the opinions
expressed below. We

<PAGE>

have assumed the due execution and delivery, pursuant to due authorization, of
the Credit Agreement by the Initial Lenders and the Agent.

Our opinions expressed below are limited to the law of the State of Ohio and the
Federal law of the United States.

            Based upon the foregoing and upon such investigation as we have
deemed necessary, we are of the following opinion:

      1. The Borrower is a corporation duly organized, validly existing and in
      good standing under the laws of the State of Ohio.

      2. The execution, delivery and performance by the Borrower of the Credit
      Agreement and the Notes, and the consummation of the transactions
      contemplated thereby, are within the Borrower's corporate powers, have
      been duly authorized by all necessary corporate action, and do not
      contravene (i) the Charter or the By-laws, or (ii) any law, rule or
      regulation applicable to the Borrower (including, without limitation,
      Regulation X of the Board of Governors of the Federal Reserve System) or
      (iii) any contractual or legal restriction applicable to the Borrower. The
      Credit Agreement and the Notes have been duly executed and delivered on
      behalf of the Borrower.

      3. No authorization, 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 Borrower of the Credit Agreement and the Notes.

      4. To the best of our knowledge, there are no pending or overtly
      threatened actions or proceedings against the Borrower or any of its
      Subsidiaries before any court, governmental agency or arbitrator that
      purport to affect the legality, validity, binding effect or enforceability
      of the Credit Agreement or the consummation of the transactions
      contemplated thereby or that, except as described in Schedule 3.01(b) to
      the Credit Agreement, are likely to have a materially adverse effect upon
      the financial condition or operations of the Borrower or any of its
      Subsidiaries.

      5. In any action or proceeding arising out of or relating to the Credit
      Agreement in any court of the State of Ohio or in any Federal court
      sitting in the State of Ohio, such court would recognize and give effect
      to the provisions of Section 8.09 of the Credit Agreement wherein the
      parties thereto agree that the Credit Agreement shall be governed by, and
      construed in accordance with, the laws of the State of New York. Without
      limiting the generality of the foregoing, a court of the State of Ohio or
      a federal court sitting in the State of Ohio would apply the usury law of
      the State of New York, and would not apply the usury law of the State of
      Ohio, to the Credit Agreement and the Notes. However, if a court of the
      State of Ohio or a Federal court sitting in the State of Ohio were to hold
      that the Credit Agreement and the Notes are governed by, and to be
      construed in accordance with, the laws of the State of Ohio, the Credit
      Agreement and the Notes would be, under the laws of the State of Ohio, the
      legal, valid and binding obligation of the Borrower enforceable against
      the Borrower in accordance with their respective terms.

      6. The Security Agreement creates in favor of the Collateral Trustees for
      the benefit of the Secured Parties, as security for the payment of the
      Secured Obligations as defined therein, a security interest in the
      Collateral described therein in which a security interest may be created
      under Article 9 of the UCC as enacted in the State of Ohio. Perfection of

<PAGE>

      the security interest in the Collateral, other than the Patents and
      Trademarks, shall occur upon the recordation of UCC-1 financing statements
      pursuant to Article 9 of the UCC as enacted in the State of Ohio.

      The opinions set forth above are subject to the following qualifications:

            (a) Our opinion in the last sentence of paragraph 5 above as to
      enforceability is subject to the effect of any applicable bankruptcy,
      insolvency (including, without limitation, all laws relating to fraudulent
      transfers), reorganization, moratorium or similar laws affecting
      creditors' rights generally.

            (b) Our opinion in the last sentence of paragraph 5 above as to
      enforceability is subject to the effect of general principles of equity,
      including, without limitation, concepts of materiality, reasonableness,
      good faith and fair dealing (regardless of whether considered in a
      proceeding in equity or at law).

            (c) We express no opinion as to (i) Section 2.14 of the Credit
      Agreement insofar as it provides that any Lender purchasing a
      participation from another Lender pursuant thereto may exercise set-off or
      other similar rights with respect to such participation and (ii) the
      effect of the law of any jurisdiction other than the State of Ohio wherein
      any Lender may be located or wherein enforcement of the Credit Agreement
      or the Notes may be sought that limits the rates of interest legally
      chargeable or collectible.

                                          Very truly yours,.

<PAGE>

                                                                       EXHIBIT F

                                ESCROW AGREEMENT

                                     BETWEEN

                               POLYONE CORPORATION

                                       AND

                                 CITIBANK, N.A.

                            DATED AS OF MAY __, 2003

<PAGE>

                                ESCROW AGREEMENT

      ESCROW AGREEMENT made this day of May, 2003 (the "Agreement") by and
between CITIBANK, N.A., a national banking institution incorporated under the
laws of the United States of America (the "Escrow Agent"), and POLYONE
CORPORATION, an Ohio corporation (the "Depositor").

      WHEREAS, this Agreement is being entered into in connection with the
Purchase Agreement, dated April 30, 2003, among the Depositor and the Initial
Purchasers (as defined below), pursuant to which, among other things, the
Depositor is issuing and selling to Citigroup Global Markets Inc., McDonald
Investments Inc., NatCity Investments, Inc. and SBK Investment Corp., on the
date hereof, $300,000,000 aggregate principal amount of the Depositor's 10 5/8%
Senior Notes due 2010 (the "Senior Notes");

      WHEREAS, the Depositor intends to use a portion of the proceeds from the
offering of the Senior Notes to repay, from time to time, all of the Depositor's
outstanding 9.375% Senior Notes due 2003 (the "September Notes"), which mature
on September 15, 2003; and

      WHEREAS, the Depositor and Escrow Agent have entered into this Agreement
in order to set forth the conditions upon which, and the manner in which, funds
will be disbursed from the Escrow Account (as defined below) so that the
Depositor may use such funds to repay the September Notes.

      NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein, the Depositor appoints Citibank, N.A. as the escrow agent for
the Escrow Property (as defined below) and directs Citibank, N.A. as the escrow
agent to maintain the Escrow Account upon the terms and conditions set forth in
this Agreement. Citibank, N.A. hereby accepts such appointment as the escrow
agent for the Escrow Property and agrees to maintain the Escrow Account and to
act as the escrow agent for the Escrow Property, in each case in accordance with
and subject to the following Instructions and Terms and Conditions:

                                I. INSTRUCTIONS:

1.    ESCROW PROPERTY

      The property and/or funds deposited or to be deposited with Escrow Agent
      by the Depositor shall be as follows:

      Cash in the amount of $87,775,000.

<PAGE>

      The foregoing property and/or funds, plus all interest, dividends and
      other distributions and payments thereon (collectively the
      "Distributions") received by Escrow Agent, less any property and/or funds
      distributed or paid in accordance with this Agreement, are collectively
      referred to herein as "Escrow Property".

      Escrow Agent shall establish an escrow account (the "Escrow Account") and
      shall maintain the Escrow Property in the Escrow Account.

2.    INVESTMENT OF ESCROW PROPERTY

      Escrow Agent shall invest or reinvest Escrow Property, without distinction
      between principal and income, in accordance with written instructions
      delivered to Escrow Agent specifying any one or more of the following
      investments from the Depositor designated herein. Initially, until
      otherwise directed in writing the Escrow Property shall be invested in
      [provide money market fund].

      (1) Any U.S. Government or U.S. Government security;

      (2) Any commercial paper rated A1/P1 or better having the best yield or
      price available at the time the trade is executed. Be advised that due to
      the potential conflict of interest, Escrow Agent will not purchase
      Citigroup or any affiliate commercial paper (collectively "Citigroup
      Paper") unless the Depositor specifically authorizes Escrow Agent, in
      writing, that it is authorized to purchase Citigroup Paper. Authorization
      for the purchase of Citigroup Paper must be given by the Depositor(s) on a
      transaction by transaction basis;

      (3) Money market funds having a rating in the highest investment category
      granted thereby by a recognized credit rating agency at the time of
      acquisition, including any fund for which Escrow Agent or an Affiliate of
      Escrow Agent serves as an investment advisor, administrator, shareholder
      servicing agent, custodian or sub-custodian, notwithstanding that (A)
      Escrow Agent or an Affiliate of Escrow Agent charges and collects fees and
      expenses from such funds for services rendered (provided that such
      charges, fees and expenses are on terms consistent with terms negotiates
      at arm's length) and (B) Escrow Agent charges and collects fees and
      expenses for services rendered, pursuant to this Agreement.

                  Escrow Agent shall have no obligation to invest or reinvest
      the Escrow Property if all or a portion of the Escrow Property is
      deposited with Escrow Agent after 11:00 a.m. (E.S.T.) on the day of
      deposit. Instructions to invest or reinvest that

<PAGE>

      are received after 11:00 a.m. (E.S.T.) will be treated as if received on
      the following business day in New York.

                  Escrow Agent shall have the power to sell or liquidate the
      foregoing investments whenever Escrow Agent shall be required to release
      the Escrow Property pursuant to the terms hereof. Escrow Agent shall have
      no responsibility for any investment losses resulting from the investment,
      reinvestment or liquidation of the Escrow Property. Any interest or other
      income received on such investment and reinvestment of the Escrow Property
      shall become part of the Escrow Property.

                  If a selection is not made, the Escrow Property shall remain
      uninvested with no liability for interest therein. It is agreed and
      understood that Escrow Agent may earn fees associated with the investments
      outlined above.

      Any investment direction contained herein may be executed through an
      affiliated broker dealer of Escrow Agent and shall be entitled to such
      usual and customary fee. Neither Citigroup nor any of its affiliates
      assume any duty or liability for monitoring the investment rating.

      Escrow Agent shall have no liability for any loss arising from or related
      to any such investment other than in accordance with paragraph 5 of the
      Terms and Conditions.

3.    WRITTEN INSTRUCTION

      All instructions, approvals or certificates required under this Agreement
      will be delivered to Escrow Agent in writing, in either original or
      facsimile form, executed by an officer of the Depositor authorized to give
      such instructions, approvals or certificates under this Agreement (an
      "Authorized Person"). The identity of the Authorized Persons, as well as
      their specimen signatures, will be delivered to Escrow Agent in the form
      of an Incumbency Certificate in the form of Exhibit A attached hereto and
      will remain in effect until the Depositor notifies Escrow Agent of any
      change. In its capacity as Escrow Agent, Escrow Agent will accept all
      instructions and documents complying with the above under the indemnities
      provided in this Agreement, and reserves the right to refuse to accept any
      instructions or documents which fail, or appear to fail, to comply.
      Further to this procedure, Escrow Agent reserves the right to telephone an
      Authorized Person to confirm the details of such instructions or documents
      if they are not already on file with us as standing instructions. Escrow
      Agent and the Depositor agree that the above constitutes a commercially
      reasonable security procedure.

<PAGE>

4.    DISTRIBUTION OF ESCROW PROPERTY

      Escrow Agent is directed to hold and distribute the Escrow Property in the
      following manner:

      Escrow Agent shall release all or any portion of the Escrow Property to
      the Depositor as soon as practicable upon receipt by Escrow Agent of an
      Officer's Certificate of the Depositor signed by an Authorized Person
      substantially in the form of Exhibit B attached hereto (an "Officer's
      Certificate"). If the Depositor requests that less than all of the Escrow
      Property be released, than the Officer's Certificate relating to such
      request shall indicate the amount of the Escrow Property to be released.

      In the event that all or any portion of the Escrow Property has not been
      released to the Depositor in accordance with the preceding paragraph by
      5:00 p.m. (New York City time) on September 15, 2003, Escrow Agent shall,
      as soon as practicable, release any and all remaining Escrow Property to
      the Depositor.

      Any release of the Escrow Property to the Depositor shall be made pursuant
      to the bank wiring instructions provided in paragraph 5 of Part I below
      unless otherwise instructed in writing by an Authorized Person.

5.    ADDRESSES AND ACCOUNT INFORMATION

      Notices, instructions and other communications shall be sent to Escrow
      Agent, Citibank Agency & Trust, 111 Wall Street, 14th Floor, New York, New
      York 10005, (telephone number: (212) 657-0955, facsimile number: (212)
      657-2762 and to the Depositor as follows:

                    PolyOne Corporation
                    200 Public Square, 36th Floor
                    Cleveland, Ohio 44114-2304
                    Attn: John L. Rastetter, Treasurer
                    Phone: (216) 589-4291
                    Facsimile: (216) 589-4280

            with a copy to:

                    PolyOne Corporation
                    PolyOne Center
                    33587 Walker Road
                    Avon Lake, Ohio 44012

<PAGE>

                    Attn: Wendy C. Shiba, Chief Legal Officer
                    Phone: (440) 930-1359
                    Facsimile: (440) 930-1002

                    Bank Wiring Instructions:

6.    COMPENSATION

      (a)   At the time of execution of this Agreement, the Depositor shall pay
            Escrow Agent a fee of $15,000.00. The Depositor agrees to reimburse
            Escrow Agent for all reasonable expenses, disbursements and advances
            incurred or made by Escrow Agent in performance of its duties
            hereunder (including reasonable fees, expenses and disbursements of
            its counsel). In addition, the Depositor shall pay Escrow Agent a
            fee of $2,500.00 for each amendment to this Agreement. It is
            understood that Escrow Agent's fees may be adjusted from time to
            time to conform to its then current guidelines.

      (b)   The Depositor shall be responsible for and shall reimburse Escrow
            Agent upon demand for all fees, expenses and disbursements incurred
            or made by Escrow Agent in connection with this Agreement.

<PAGE>

                            II. TERMS AND CONDITIONS

1.    Escrow Property shall be held by Escrow Agent either directly or through
      the Federal Reserve/Treasury Book-Entry System for United States and
      federal agency securities (the "Book-Entry System"), The Depository Trust
      Company, a clearing agency registered with the Securities and Exchange
      Commission ("DTC"), or through any other clearing agency or similar
      depository (a "Clearing Agency"). Escrow Agent shall have no
      responsibility and shall not be liable for ascertaining or acting upon any
      calls, conversions, exchange offers, tenders, interest rates changes, or
      similar matters relating to securities held at DTC or with any Clearing
      Agency unless Escrow Agent shall have received actual and timely notice of
      the same, nor shall Escrow Agent have any responsibility or liability for
      the actions or omissions to act of the Book-Entry System, DTC or any
      Clearing Agency.

2.    The duties, responsibilities and obligations of Escrow Agent shall be
      limited to those expressly set forth herein and no duties,
      responsibilities or obligations shall be inferred or implied. Escrow Agent
      shall not be subject to, nor required to comply with, any other agreement
      to which the Depositor is a party, even though reference thereto may be
      made herein, or to comply with any direction or instruction (other than
      those contained herein or delivered in accordance with this Agreement)
      from the Depositor or an entity acting on its behalf. Escrow Agent shall
      not be required to expend or risk any of its own funds or otherwise incur
      any financial or other liability in the performance of any of its duties
      hereunder.

3.    This Agreement is for the exclusive benefit of the parties hereto and
      their respective permitted successors hereunder, and shall not be deemed
      to give, either express or implied, any legal or equitable right, remedy,
      or claim to any other entity or person whatsoever except as provided in
      paragraph 14 hereof with respect to the resignation of Escrow Agent

4.    If at any time Escrow Agent is served with any judicial or administrative
      order, judgment, decree, writ or other form of judicial or administrative
      process which in any way affects the Escrow Property (including but not
      limited to orders of attachment or garnishment or other forms of levies or
      injunctions or stays relating to the transfer of the Escrow Property),
      Escrow Agent is authorized to comply therewith in any manner it or legal
      counsel of its own choosing deems appropriate; and if Escrow Agent
      complies with any such judicial or administrative order, judgment, decree,
      writ or other form of judicial or administrative process, Escrow Agent
      shall not be liable to any of the parties hereto or to any other person or
      entity even though such order, judgment, decree, writ or process may be
      subsequently modified or vacated or otherwise determined to have been
      without legal force or effect.

<PAGE>

5.    (a) Escrow Agent shall not be liable for any action taken or omitted or
      for any loss or injury resulting from its actions or its performance or
      lack of performance of its duties hereunder in the absence of gross
      negligence or willful misconduct on its part. In no event shall Escrow
      Agent be liable (i) for acting in accordance with or relying upon any
      instruction, notice, demand, certificate or document from the Depositor or
      any entity acting on behalf of the Depositor, (ii) for any indirect,
      consequential, punitive or special damages, regardless of the form of
      action and whether or not any such damages were foreseeable or
      contemplated, (iii) for the acts or omissions of its nominees,
      correspondents, designees, agents, subagents or subcustodians, (iv) for
      the investment or reinvestment of any cash held by it hereunder, in each
      case in good faith, in accordance with the terms hereof, including without
      limitation any liability for any delays (not resulting from its gross
      negligence or willful misconduct) in the investment or reinvestment of the
      Escrow Property, or any loss of interest incident to any such delays, or
      (v) for an amount in excess of the value of the Escrow Property, valued as
      of the date of deposit, but only to the extent of direct money damages.

      (b) If any fees, expenses or costs incurred by, or any obligations owed
      to, Escrow Agent or its counsel hereunder are not promptly paid when due,
      Escrow Agent may reimburse itself therefore from the Escrow Property and
      may sell, convey or otherwise dispose of any Escrow Property for such
      purpose. Escrow Agent may in its sole discretion withhold from any
      distribution of Escrow Property an amount of Escrow Property it believes
      would, upon sale or liquidation, produce proceeds equal to any unpaid
      amounts to which Escrow Agent is entitled to hereunder.

      (c) As security for the due and punctual performance of any and all of the
      Depositor's obligations to Escrow Agent hereunder, now or hereafter
      arising, the Depositor hereby pledges, assigns and grants to Escrow Agent
      a continuing security interest in, and a lien on, the Escrow Property and
      all Distributions thereon or additions thereto (whether such additions are
      the result of deposits by the Depositor or the investment of Escrow
      Property). The security interest of Escrow Agent shall at all times be
      valid, perfected and enforceable by Escrow Agent against the Depositor and
      all third parties in accordance with the terms of this Agreement.

      (d) Escrow Agent may reasonably consult with legal counsel of its own
      choosing at the expense of the Depositor as to any matter relating to this
      Agreement, and Escrow Agent shall not incur any liability in acting in
      good faith in accordance with any advice from such counsel.

      (e) Escrow Agent shall not incur any liability for not performing any act
      or fulfilling any duty, obligation or responsibility hereunder by reason
      of any occurrence beyond the control of Escrow Agent (including but not
      limited to any act or provision

<PAGE>

      of any present or future law or regulation or governmental authority, any
      act of God or war, or the unavailability of the Federal Reserve Bank wire
      or facsimile or other wire or communication facility).

      (f) Escrow Agent shall be entitled to rely upon any order, judgment,
      certification, demand, notice, instrument or other writing delivered to it
      hereunder without being required to determine the authenticity or the
      correctness of any fact stated therein or the propriety or validity or the
      service thereof. Escrow Agent may act in reliance upon any instrument or
      signature believed by it to be genuine and may assume that any person
      purporting to give receipt or advice to make any statement or execute any
      document in connection with the provisions hereof has been duly authorized
      to do so.

6.    Unless otherwise specifically set forth herein, Escrow Agent shall proceed
      as soon as practicable to collect any checks or other collection items at
      any time deposited hereunder. Should Escrow Agent in its sole discretion
      or otherwise credit Distributions before the same are finally collected,
      such credits shall be provisional and may be reversed by Escrow Agent
      without notice until such time as the same shall be finally collected. All
      such collections shall be subject to Escrow Agent's usual collections
      practices or terms regarding items received by Escrow Agent for deposit or
      collection. Escrow Agent shall not be required, or have any duty, to
      notify anyone of any payment or maturity under the terms of any instrument
      deposited hereunder, nor to take any legal action to enforce payment of
      any check, note or security deposited hereunder or to exercise any right
      or privilege which may be afforded to the holder of any such security.

7.    Escrow Agent shall provide to the Depositor monthly statements identifying
      transactions, transfers or holdings of Escrow Property, and each such
      statement shall be deemed to be correct and final upon receipt thereof by
      the Depositor unless the Depositor notifies Escrow Agent in writing to the
      contrary within thirty (30) business days of the date of such statement.

8.    Escrow Agent shall not be responsible in any respect for the form,
      execution, validity, value or genuineness of documents or securities
      deposited hereunder, or for any description therein, or for the identity,
      authority or rights of persons executing or delivering or purporting to
      execute or deliver any such document, security or endorsement. Escrow
      Agent shall not be called upon to advise any party as to the wisdom in
      selling or retaining or taking or refraining from any action with respect
      to any securities or other property deposited hereunder.

9.    Escrow Agent shall not be under any duty to give the Escrowed Property
      held by it hereunder any greater degree of care than it gives its own
      similar property and shall

<PAGE>

      not be required to invest any funds held hereunder except as directed in
      this Agreement. Uninvested funds held hereunder shall not earn or accrue
      interest.

10.   When Escrow Agent is instructed in writing to deliver securities against
      payment, or to effect payment against delivery, delivery and receipt of
      payment may not be completed simultaneously, and the Depositor agrees that
      Escrow Agent shall incur no liability for any credit risk involved, and
      that Escrow Agent may deliver and receive securities, and arrange for
      payments to be made and received, in accordance with customs prevailing
      from time to time among brokers or dealers in such securities.

11.   At any time, Escrow Agent may request an instruction in writing in English
      from the Depositor and may, at its own option, include in such request the
      course of action it proposes to take and the date on which it proposes to
      act, regarding any matter arising in connection with its duties and
      obligations hereunder. Escrow Agent shall not be liable for acting in
      accordance with such a proposal on or after the date specified therein,
      provided that the specified date shall be at least one business day after
      the Depositor receives Escrow Agent's request for instructions and its
      proposed course of action, and provided further that, prior to so acting,
      Escrow Agent has not received the written instructions requested.

12.   Notices, instructions or other communications shall be in writing in
      English and shall be given to the address set forth in the "Addresses"
      provision herein (or to such other address as may be substituted therefore
      by written notification to Escrow Agent or the Depositor). Notices to
      Escrow Agent shall be deemed to have been given when actually received by
      Escrow Administration (Global Agency Trust). Escrow Agent is authorized to
      comply with and rely upon any notices, instructions or other
      communications believed by it to have been sent or given by the Depositor
      or by a person or persons authorized by the Depositor. Whenever under the
      terms hereof the time for giving a notice or performing an act falls upon
      a Saturday, Sunday, or a banking holiday in New York, such time shall be
      extended to the next day on which Escrow Agent is open for business.

13.   The Depositor shall be liable for and shall reimburse and indemnify Escrow
      Agent (and any predecessor Escrow Agent) and hold Escrow Agent harmless
      from and against any and all claims, losses, actions. liabilities, costs,
      damages or expenses (including reasonable attorneys' fees and expenses)
      (collectively "Losses") arising from or in connection with its
      administration of this Agreement, provided, however, that nothing
      contained herein shall require Escrow Agent to be indemnified for Losses
      caused by its own gross negligence or own willful misconduct for which
      Escrow Agent has assumed liability pursuant to preceding subparagraph (a)
      of paragraph 5 hereof. In addition, when Escrow Agent acts on any
      information, instructions, communications, (including, but not limited to,
      communications with respect to the

<PAGE>

      delivery of securities or the wire transfer of funds) sent by telephone,
      telex or facsimile, Escrow Agent, absent gross negligence, shall not be
      responsible or liable in the event such communication is not an authorized
      or authentic communication of the Depositor or is not in the form the
      Depositor sent or intended to send (whether due to fraud, distortion or
      otherwise). The Depositor shall indemnify Escrow Agent against any loss,
      liability, claim or expense (including reasonable legal fees and expenses)
      it may incur with its acting in accordance with any such communication.
      This paragraph shall survive the termination of this Agreement or the
      removal of Escrow Agent.

14.   (a) The Depositor may remove Escrow Agent at any time by giving to Escrow
      Agent thirty (30) calendar days' prior notice in writing signed by the
      Depositor. Escrow Agent may resign at any time by giving the Depositor
      thirty (30) calendar days' prior written notice thereof.

      (b) Within ten (10) calendar days after giving the foregoing notice of
      removal to Escrow Agent or receiving the foregoing notice of resignation
      from Escrow Agent, the Depositor shall appoint a successor Escrow Agent.
      If a successor Escrow Agent has not accepted such appointment by the end
      of such 10-day period, Escrow Agent may, in its sole discretion, deliver
      the Escrow Property to PolyOne Corporation at the address provided herein
      or may apply to a court of competent jurisdiction for the appointment of a
      successor Escrow Agent or for other appropriate relief. The costs and
      expenses (including reasonable attorneys' fees and expenses) incurred by
      Escrow Agent in connection with such proceeding shall be paid by the
      Depositor. In the event of any such resignation or removal, Escrow Agent
      shall have no further obligation with respect to Escrow Property.

      (c) Upon receipt of the identity of the successor Escrow Agent, Escrow
      Agent shall either deliver the Escrow Property then held hereunder to the
      successor Escrow Agent, less Escrow Agent's fees, costs and expenses or
      other obligations owed to Escrow Agent, or hold such Escrow Property (or
      any portion thereof), pending distribution, until all such fees, costs and
      conclusively expenses or other obligations are paid.

      (d) Upon delivery of the Escrow Property to the success or Escrow Agent,
      Escrow Agent shall have no further duties, responsibilities or obligations
      hereunder.

15.   (a) In the event of any ambiguity or uncertainty hereunder or in any
      notice, instruction or other communication received by Escrow Agent
      hereunder, Escrow Agent may, in its sole discretion, refrain from taking
      any action other than retain possession of the Escrow Property, unless
      Escrow Agent receives written instructions, signed by the Depositor, which
      eliminates such ambiguity or uncertainty.

<PAGE>

      (b) In the event of any dispute between or conflicting claims among the
      Depositor and/or any other person or entity with respect to any Escrow
      Property, Escrow Agent shall be entitled, in its sole discretion, to
      refuse to comply with any and all claims, demands or instructions with
      respect to such Escrow Property so long as such dispute or conflict shall
      continue, and Escrow Agent shall not be or become liable in any way to the
      Depositor for failure or refusal to comply with such conflicting claims,
      demands or instructions. Escrow Agent shall be entitled to refuse to act
      until, in its sole discretion, either (i) such conflicting or adverse
      claims or demands shall have been determined by a final order, judgment or
      decree of a court of competent jurisdiction, which order, judgment or
      decree is not subject to appeal, or settled by agreement between the
      conflicting parties as evidenced in a writing satisfactory to Escrow Agent
      or (ii) Escrow Agent shall have received security or an indemnity
      satisfactory to it sufficient to hold it harmless from and against any and
      all Losses which it may incur by reason of so acting. Any court order,
      judgment or decree shall be accompanied by a legal opinion by counsel for
      the presenting party, satisfactory to Escrow Agent, to the effect that
      said order, judgment or decree represents a final adjudication of the
      rights of the parties by a court of competent jurisdiction, and that the
      time for appeal from such order, judgment or decree has expired without an
      appeal having been perfected. Escrow Agent shall act on such court order
      and legal opinions without further question. Escrow Agent may, in
      addition, elect, in its sole discretion, to commence an interpleader
      action or seek other judicial relief or orders as it may deem, in its sole
      discretion, necessary. The costs and expenses (including reasonable
      attorneys' fees and expenses) incurred in connection with such proceeding
      shall be paid by the Depositor.

      (c) Escrow Agent shall have no responsibility for the contents of any
      writing of the arbitrators or any third party contemplated herein as a
      means to resolve disputes and may conclusively rely without any liability
      upon the contents thereof.

16.   This Agreement shall be interpreted, construed, enforced and administered
      in accordance with the internal substantive laws (and not the choice of
      law rules) of the State of New York. The Depositor hereby submits to the
      personal jurisdiction of, and agrees that all proceedings relating hereto
      shall be brought in, courts located within the City and State of New York.
      The Depositor hereby waives the right to trial by jury and to assert
      counterclaims in any such proceedings. To the extent that in any
      jurisdiction the Depositor may be entitled to claim, for itself or its
      assets, immunity from suit, execution, attachment (whether before or after
      judgment) or other legal process, each hereby irrevocably agrees not to
      claim, and hereby waives, such immunity. The Depositor waives personal
      service of process and consents to service of process by certified or
      registered mail, return receipt requested, directed to it at the address
      last specified for notices hereunder, and such service shall be deemed
      completed ten (10) calendar days after the same is so mailed. Any court
      order shall be accompanied by a legal opinion by counsel for the
      presenting party satisfactory to Escrow Agent to the

<PAGE>

      effect that said opinion is final and non-appealable. Escrow Agent shall
      act on such court order and legal opinions without further question.

17.   Escrow Agent does not have any interest in the Escrowed Property deposited
      hereunder but is serving as escrow holder only and having only possession
      thereof. The Depositor shall pay or reimburse Escrow Agent upon request
      for any transfer taxes or other taxes relating to the Escrowed Property
      incurred in connection herewith and shall indemnify and hold harmless
      Escrow Agent from any amounts that it is obligated to pay in the way of
      such taxes. Any payments of income from this Escrow Account shall be
      subject to withholding regulations then in force with respect to United
      States taxes. The Depositor will provide Escrow Agent with appropriate W-9
      forms for tax I.D., number certifications, or W-8 forms for non-resident
      alien certifications. This paragraph shall survive notwithstanding any
      termination of this Agreement or the resignation or removal of Escrow
      Agent.

18.   Except as otherwise permitted herein, this Agreement may be modified only
      by a written amendment signed by all the parties hereto, and no waiver of
      any provision hereof shall be effective unless expressed in a writing
      signed by the party to be charged.

19.   The rights and remedies conferred upon the parties hereto shall be
      cumulative, and the exercise or waiver of any such right or remedy shall
      not preclude or inhibit the exercise of any additional rights or remedies.
      The waiver of any right or remedy hereunder shall not preclude the
      subsequent exercise of such right or remedy.

20.   The Depositor hereby represents and warrants (a) that this Agreement has
      been duly authorized, executed and delivered on its behalf and constitutes
      its legal, valid and binding obligation and (b) that the execution,
      delivery and performance of this Agreement by the Depositor does not and
      will not violate any applicable law or regulation.

21.   Escrow Agent hereby represents and warrants (a) that this Agreement has
      been duly authorized, executed and delivered on its behalf and constitutes
      its legal, valid and binding obligation and (b) that the execution,
      delivery and performance of this Agreement by Escrow Agent does not and
      will not violate any applicable law or regulation.

22.   The invalidity, illegality or unenforceability of any provision of this
      Agreement shall in no way effect the validity, legality or enforceability
      of any other provision; and if any provision is held to be enforceable as
      a matter of law, the other provisions shall not be affected thereby and
      shall remain in full force and effect.

<PAGE>

23.   This Agreement shall constitute the entire agreement of the parties with
      respect to the subject matter and supersedes all prior oral or written
      agreements in regard thereto.

24.   This Agreement shall terminate upon the distribution of all Escrow
      Property from the account established hereunder. The provisions of these
      Terms and Conditions shall survive termination of this Agreement and/or
      the resignation or removal of Escrow Agent.

25.   No printed or other material in any language, including prospectuses,
      notices, reports, and promotional material which mentions "Citibank, N.A."
      by name or the rights, powers, or duties of Escrow Agent under this
      Agreement shall be issued by any other parties hereto, or on such party's
      behalf, without the prior written consent of Escrow Agent.

26.   The headings contained in this Agreement are for convenience of reference
      only and shall have no effect on the interpretation or operation hereof.

27.   This Agreement may be executed by each of the parties hereto in any number
      of counterparts, each of which counterpart, when so executed and
      delivered, shall be deemed to be an original and all such counterparts
      shall together constitute one and the same agreement.

28.   No party may assign any of its rights or obligations under this Agreement
      without the written consent of the other parties.

29.   Any corporation into which Escrow Agent may be merged or converted or with
      which it may be consolidated, or any corporation resulting from any
      merger, conversion or consolidation to which Escrow Agent shall be a
      party, or any corporation succeeding to the business of Escrow Agent shall
      be the successor of Escrow Agent hereunder without the execution or filing
      of any paper with any party hereto or any further act on the part of any
      of the parties hereto except where an instrument of transfer or assignment
      is required by law to effect such succession, anything herein to the
      contrary notwithstanding.

<PAGE>

      IN WITNESS WHEREOF, each of the parties have caused this Agreement to be
executed by a duly authorized officer as of the day and year first written
above.

                                          POLYONE CORPORATION

                                          By:___________________________
                                          Name:
                                          Title:

                                          CITIBANK, N.A.,
                                          AS ESCROW AGENT

                                          By:___________________________
                                          Name:
                                          Title:

<PAGE>

                                                                       EXHIBIT A

                         FORM OF INCUMBENCY CERTIFICATE

                  The undersigned hereby certifies that she/he is the [INSERT
TITLE] of PolyOne Corporation, an Ohio corporation (the "Company"), and as such
she/he is authorized to execute this Certificate and further certifies that the
following persons have been elected or appointed, are qualified, and are now
acting as officers of the Company in the capacity or capacities indicated below,
and that the signatures set forth opposite their respective names are their true
and genuine signatures. She/he further certifies that any of the persons listed
below [is/are] authorized [please choose one] [individually or jointly] to sign
agreements and give written instructions with regard to any matters pertaining
to the Escrow Agreement, dated as of May __, 2003, and the appointment of
Citibank, N.A., as escrow agent:

<TABLE>
<CAPTION>
Name                         Title                     Phone                       Signature
----                         -----                     -----                       ---------
<S>                          <C>                       <C>                         <C>

</TABLE>

                  IN WITNESS WHEREOF, I have hereunto set my hand and affixed
the corporate seal of the Company this __ day of                , 2003.

                                                [SIGNED BY SOMEONE WHOSE NAME IS
                                                NOT INCLUDED IN THE ABOVE LIST]

                                                By:_____________________________
                                                   Name:
                                                   Title:

<PAGE>

                                                                       EXHIBIT B

                  OFFICER'S CERTIFICATE OF POLYONE CORPORATION

                  This certificate is being delivered pursuant to paragraph 4 of
part I of the Escrow Agreement, dated as of May __, 2003 (the "Escrow
Agreement"), between PolyOne Corporation (the "Company"), and Citibank, N.A., as
escrow agent (the "Escrow Agent"). Capitalized terms used herein but not defined
herein shall have the meanings given to such terms in the Escrow Agreement.

            1. The Company hereby requests through the undersigned Authorized
      Person that [$__________ of the Escrow Property / all of the Escrow
      Property] be released to the Company.

            2. The Company hereby certifies through the undersigned Authorized
      Person that:

                  (a) the Company will use all or a portion of the Escrow
            Property released pursuant to this Certificate to repay, redeem,
            purchase, defease or otherwise satisfy its obligations under any of
            its outstanding 9.375% Senior Notes due 2003 (the "Senior Notes");
            and

                  (b) the Company will use all or a portion of the Escrow
            Property released pursuant to this Certificate for general corporate
            purposes after the Company has repaid, redeemed, purchased, defeased
            or otherwise satisfied its obligations under all of the Senior
            Notes.

                  IN WITNESS WHEREOF, the Company, through the undersigned
officer, has signed this Certificate this [     ] day of [     ], 2003.

                                             POLYONE CORPORATION

                                             By:________________________________
                                                Name:
                                                Title:<PAGE>

                                                                  EXECUTION COPY

                                                                    EXHBIIT 10.2

                         RECEIVABLES PURCHASE AGREEMENT

                             DATED AS OF MAY 6, 2003

                                      AMONG

                          POLYONE FUNDING CORPORATION,

                                 AS THE SELLER,

                              POLYONE CORPORATION,

                                AS THE SERVICER,

            THE BANKS AND OTHER FINANCIAL INSTITUTIONS PARTY HERETO,

                                 AS PURCHASERS,

                               CITICORP USA, INC.,

                                  AS THE AGENT,

                                       AND

                     NATIONAL CITY COMMERCIAL FINANCE, INC.,

                            AS THE SYNDICATION AGENT

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                              PAGE
<S>                                                                                                            <C>
ARTICLE I DEFINITIONS ....................................................................................      1

         Section 1.01.   Certain Defined Terms ...........................................................      1

         Section 1.02.   Other Terms .....................................................................     22

         Section 1.03.   Computation of Time Periods .....................................................     22

ARTICLE II AMOUNTS AND TERMS OF THE PURCHASES ............................................................     22

         Section 2.01.   Commitment ......................................................................     22

         Section 2.02.   Making Purchases ................................................................     22

         Section 2.03.   Swing Purchases .................................................................     24

         Section 2.04.   Letters of Credit ...............................................................     25

         Section 2.05.   Termination or Reduction of the Commitments .....................................     29

         Section 2.06.   Receivable Interest .............................................................     29

         Section 2.07.   Non-Liquidation Settlement Procedures ...........................................     30

         Section 2.08.   Liquidation Settlement Procedures ...............................................     30

         Section 2.09.   General Settlement Procedures ...................................................     31

         Section 2.10.   Payments and Computations, Etc ..................................................     32

         Section 2.11.   Yield and Fees ..................................................................     33

         Section 2.12.   Special Provisions Governing Capital Investments at
                             the Citicorp LIBO Rate ......................................................     34

         Section 2.13.   Increased Capital ...............................................................     35

         Section 2.14.   Taxes ...........................................................................     36

         Section 2.15.   Sharing of Payments, Etc ........................................................     37

         Section 2.16.   Conversion/Continuation Option ..................................................     38

ARTICLE III CONDITIONS OF PURCHASES ......................................................................     38

         Section 3.01.   Conditions Precedent to the Effectiveness of this Agreement .....................     38

         Section 3.02.   Conditions Precedent to All Purchases, Reinvestments and Letters of Credit ......     41

ARTICLE IV REPRESENTATIONS AND WARRANTIES ................................................................     42

         Section 4.01.   Representations and Warranties of the Seller ....................................     42

         Section 4.02.   Representations and Warranties of the Servicer ..................................     45

ARTICLE V GENERAL COVENANTS OF THE SELLER AND THE SERVICER ...............................................     46

         Section 5.01.   Affirmative Covenants of the Seller .............................................     46
</TABLE>

                                       i
<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                                                              PAGE
<S>                                                                                                            <C>
         Section 5.02.   Reporting Requirements of the Seller ............................................     49

         Section 5.03.   Negative Covenants of the Seller ................................................     50

         Section 5.04.   Affirmative Covenants of the Servicer ...........................................     52

         Section 5.05.   Reporting Requirements of the Servicer ..........................................     54

         Section 5.06.   Negative Covenants of the Servicer ..............................................     55

         Section 5.07.   Affirmative Financial Covenants of the Servicer .................................     56

         Section 5.08.   Negative Financial Covenants of the Servicer ....................................     57

ARTICLE VI ADMINISTRATION AND COLLECTION .................................................................     58

         Section 6.01.   Designation of Servicer .........................................................     58

         Section 6.02.   Duties of Servicer ..............................................................     58

         Section 6.03.   Rights of the Agent .............................................................     59

         Section 6.04.   Responsibilities of the Seller ..................................................     60

         Section 6.05.   Further Action Evidencing Purchases .............................................     60

ARTICLE VII EVENTS OF TERMINATION ........................................................................     61

         Section 7.01.   Events of Termination ...........................................................     61

         Section 7.02.   Actions in Respect of Letters of Credit .........................................     62

ARTICLE VIII THE AGENT ...................................................................................     62

         Section 8.01.   Authorization and Action ........................................................     63

         Section 8.02.   Agent's Reliance, Etc ...........................................................     63

         Section 8.03.   Citicorp and Affiliates .........................................................     63

         Section 8.04.   Purchase Decisions ..............................................................     64

         Section 8.05.   Indemnification .................................................................     64

         Section 8.06.   Posting of Approved Electronic Communications ...................................     64

ARTICLE IX ASSIGNMENT OF RECEIVABLE INTERESTS ............................................................     65

         Section 9.01.   Purchaser's Assignment of Rights and Obligations ................................     65

ARTICLE X INDEMNIFICATION ................................................................................     67

         Section 10.01.  Indemnities .....................................................................     67

ARTICLE XI MISCELLANEOUS .................................................................................     69

         Section 11.01.  Amendments, Etc .................................................................     69

         Section 11.02.  Notices, Etc ....................................................................     71

         Section 11.03.  Binding Effect; Assignability ...................................................     71
</TABLE>

                                       ii
<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                                                              PAGE
<S>                                                                                                            <C>
         Section 11.04.  Costs and Expenses ..............................................................     71

         Section 11.05.  Confidentiality .................................................................     71

         Section 11.06.  Governing Law ...................................................................     72

         Section 11.07.  Jurisdiction, Etc ...............................................................     72

         Section 11.08.  Execution in Counterparts .......................................................     73

         Section 11.09.  Intent of the Parties ...........................................................     73

         Section 11.10.  Entire Agreement ................................................................     73

         Section 11.11.  Severability of Provisions ......................................................     74

         Section 11.12.  No Liability of Syndication Agent ...............................................     74

         Section 11.13.  Waiver of Jury Trial ............................................................     74
</TABLE>

                                      iii
<PAGE>

                                    EXHIBITS

<TABLE>
<S>            <C>
EXHIBIT A      Form of Assignment and Acceptance

EXHIBIT B-1    Form of Seller Report

EXHIBIT B-2    Form of Receivables Report

EXHIBIT C      Form of Lock-Box Agreement

EXHIBIT D      Form of Receivables Sale Agreement

EXHIBIT E      Form of Consent and Agreement

EXHIBIT F      Form of Notice of Purchase

EXHIBIT G      Form of Swing Purchase Request

EXHIBIT H      Form of Letter of Credit Request

EXHIBIT I      Form of Notice of Conversion or Continuation

EXHIBIT J-L    Form of Opinion of Thompson Hine LLP, Counsel to the Seller and
               each Originator

EXHIBIT J-2    Form of Opinion of Internal Counsel to the Seller and each
               Originator

EXHIBIT J-3    Form of Opinion of Thompson Hine LLP, Counsel to the Seller and
               each Originator ("true sale" and non-substantive consolidation
               opinion)

EXHIBIT K      Form of Parent Undertaking
</TABLE>

<PAGE>

                                    SCHEDULES

SCHEDULE I     Lock-Box Banks and Lock-Box Accounts

SCHEDULE II    Credit and Collection Policy

SCHEDULE III   Jurisdiction of Incorporation, Organizational Identification
               Number and Location of the Seller's Principal Place of Business,
               Chief Executive Office and Office Where Records are Kept

SCHEDULE IV    Forms of Invoices

SCHEDULE V     Changes in Financial Conditions or Operations

<PAGE>

                         RECEIVABLES PURCHASE AGREEMENT

      RECEIVABLES PURCHASE AGREEMENT dated as of May 6, 2003 (this "Agreement")
among POLYONE FUNDING CORPORATION, a Delaware corporation (the "Seller"),
POLYONE CORPORATION, an Ohio corporation ("PolyOne"), as the Servicer (as
hereinafter defined), the banks and other financial institutions listed on the
signature pages hereof as the Initial Purchasers (the "Initial Purchasers"),
CITICORP USA, INC., a Delaware corporation ("Citicorp"), as administrative agent
(the "Agent") for the Purchasers and the other Owners (as hereinafter defined),
CITIBANK, N.A., a national association ("CNA"), as issuing bank (the "Issuing
Bank"), and NATIONAL CITY COMMERCIAL FINANCE, INC., an Ohio corporation
("NCCF"), as the syndication agent (the "Syndication Agent").

                             PRELIMINARY STATEMENTS:

      (1) The Seller will from time to time purchase or otherwise acquire from
the Originators Pool Receivables in which the Seller intends to sell interests
referred to herein as Receivable Interests.

      (2) The Purchasers may at any time and from time to time purchase
Receivable Interests from the Seller.

      (3) In consideration of the reinvestment in Pool Receivables of daily
Collections (other than with regard to accrued Yield and any fees) attributable
to a Receivable Interest, the Seller will sell to each Owner of such Receivable
Interest additional interests in the Pool Receivables as part of such Receivable
Interest until such reinvestment is terminated.

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

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

      (6) The Issuing Bank has been requested and is willing to make available
to the Seller a letter of credit sub-facility upon the terms and subject to the
conditions set forth herein.

      (7) NCCF has been requested and is willing to act as the Syndication
Agent.

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

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

                                   ARTICLE I

                                   DEFINITIONS

      SECTION 1.01. CERTAIN DEFINED TERMS.

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

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

<PAGE>

      "Adjusted LIBO Rate" means, with respect to any Yield Period for any
Capital Investment, an interest rate per annum equal to the rate per annum
obtained by dividing (a) the LIBO Rate by (b) a percentage equal to (i) 100%
minus (ii) the reserve percentage applicable 2 Business Days before the first
day of such Yield Period under regulations issued from time to time by the
Federal Reserve Board for determining the maximum reserve requirement (including
any emergency, supplemental or other marginal reserve requirement) for a member
bank of the Federal Reserve System in New York City with respect to liabilities
or assets consisting of or including Eurocurrency Liabilities (or with respect
to any other category of liabilities that includes deposits by reference to
which the LIBO Rate is determined) having a term equal to such Yield Period.

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

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

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

      "Agent's Fee" means those agency fees set forth in the fee letter dated as
of March 13, 2003 between PolyOne Corporation and Citicorp USA, Inc., as the
same may be amended from time to time.

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

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

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

                                       2
<PAGE>

      consisting of or including (among other liabilities) three-month U.S.
      dollar nonpersonal time deposits in the United States and (iii) the
      average during such three-week period of the maximum annual assessment
      rates estimated by CNA for determining the then current annual assessment
      payable by CNA to the Federal Deposit Insurance Corporation (or any
      successor) for insuring Dollar deposits in the United States; and

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

      "Applicable L/C Margin" means (a) for the initial period commencing on the
Closing Date and ending on the first day of the month immediately following the
month in which the Servicer delivers PolyOne's financial statements for the
Fiscal Year ending December 2003 in accordance with Section 5.05(c), 2.75% per
annum, and (b) thereafter, as of any date of determination, a per annum rate
equal to the rate set forth below opposite the then applicable Average Monthly
Excess Availability (determined on the last day of the most recently concluded
calendar month):

<TABLE>
<CAPTION>
                 AVERAGE MONTHLY EXCESS AVAILABILITY                              APPLICABLE L/C MARGIN
                 -----------------------------------                              ---------------------
<S>                                                                                  <C>
Greater than $150,000,000                                                                 2.50%

Less than or equal to $150,000,000 and greater than $75,000,000                           2.75%

Less than or equal to $75,000,000                                                         3.00%
</TABLE>

provided, however, that upon the occurrence and during the continuance of an
Event of Termination, the "Applicable L/C Margin" shall be the sum of the
highest rate set forth in the table above plus 2.00% per annum. Changes in the
Applicable L/C Margin resulting from a change in the Average Monthly Excess
Availability for any month shall become effective as to all Issuances on the
first day of the next consecutive calendar month.

      "Applicable Margin" means (a) for the initial period commencing on the
Closing Date and ending on the first day of the month immediately following the
month in which the Servicer delivers PolyOne's financial statements for the
Fiscal Year ending December 2003 in accordance with Section 5.05(c), in the case
of Capital Investments having a Yield determined with reference to the Alternate
Base Rate, 2.00% per annum and, in the case of Capital Investments having a
Yield determined with reference to the Adjusted LIBO Rate, 3.00% per annum; and
(b) thereafter, as of any date of determination, a per annum rate equal to the
rate set forth below opposite the then applicable Average Monthly Excess
Availability (determined on the last day of the most recently concluded calendar
month):

<TABLE>
<CAPTION>
              AVERAGE MONTHLY EXCESS AVAILABILITY                  ALTERNATE BASE RATE        ADJUSTED LIBO RATE
              -----------------------------------                  -------------------        ------------------
<S>                                                                <C>                        <C>
Greater than $150,000,000                                                 1.75%                      2.75%

Less than or equal to $150,000,000 and greater than $75,000,000           2.00%                      3.00%

Less than or equal to $75,000,000                                         2.25%                      3.25%
</TABLE>

                                       3
<PAGE>

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

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

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

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

      "Approved Electronic Communications" means each notice, demand,
communication, information, document and other material that the Seller or
Servicer is obligated to, or otherwise chooses to, provide to the Agent pursuant
to any Transaction Document or the transactions contemplated therein, including
any financial statement, financial and other report, notice, request,
certificate and other information material; provided, however, that "Approved
Electronic Communication" shall exclude (x) any Notice of Purchase, Letter of
Credit Request, Swing Purchase Request, Notice of Conversion or Continuation,
and any other notice, demand, communication, information, document and other
material relating to a request for a new, or a conversion of an existing,
Purchase, (ii) any notice relating to the payment due under any Transaction
Document prior to the scheduled date therefor, (iii) any notice of any Potential
Event of Termination or Event of Termination and (iv) any notice, demand,
communication, information, document and other material required to be delivered
to satisfy any of the conditions set forth in Article III or Section 2.04(a) or
any other condition to any Purchase or extension of credit hereunder or any
condition precedent to the effectiveness of this Agreement.

      "Approved Electronic Platform" has the meaning specified in Section 8.06.

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

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

      "Available Capital" means, at any time, (a) the lesser of (i) the then
effective Total Commitments and (ii) the Net Receivables Pool Balance at such
time, minus (b) the sum of (i) the Capital at such time, (ii) the Letter of
Credit Undrawn Amounts and (iii) any Applicable Reserve in effect at such time.

      "Average Monthly Excess Availability" means, for any calendar month, the
average daily Receivables Excess Availability for such calendar month.

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

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

                                       4
<PAGE>

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

      "Capital Investment" means (a) in respect of any Receivable Interest, the
original amount paid to the Seller for such Receivable Interest at the time of
its acquisition by the Purchasers, or the Swing Purchaser, as the case may be,
pursuant to Sections 2.01, 2.02, 2.03 or 2.04, reduced from time to time by
Collections received and distributed on account of such Capital pursuant to
Section 2.07 or 2.08; provided, however, that if such Capital Investment of such
Receivable Interest shall have been reduced by any distribution of any portion
of Collections and thereafter such distribution is rescinded or must otherwise
be returned for any reason, such Capital Investment of such Receivable Interest
shall be increased by the amount of such distribution, all as though such
distribution had not been made; and (b) any Reimbursement Obligation (solely to
the extent not included in clause (a) of this definition).

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

      "Change of Control" means the occurrence of any of the following: (a) any
Person or 2 or more Persons acting in concert, other than a trustee or other
fiduciary holding securities under an employee benefit plan of PolyOne or a
corporation owned, directly or indirectly, by PolyOne or by the stockholders of
PolyOne in substantially the same proportions as their ownership of stock of
PolyOne (e.g., a holding company reorganization), shall have acquired beneficial
ownership (within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934), directly or indirectly,
of Voting Interests of PolyOne (or other securities convertible into such Voting
Interests of PolyOne) representing 25% or more of the combined voting power of
all Voting Interests of PolyOne; or (b) any Person or 2 or more Persons acting
in concert shall have acquired by contract or otherwise, or shall have entered
into a contract or arrangement that, upon consummation, will result in its or
their acquisition of the power to exercise, directly or indirectly, a
controlling influence over the management or policies of PolyOne; or (c)
PolyOne, or a corporation owned, directly or indirectly, by the stockholders of
PolyOne in substantially the same proportions as their ownership of stock of
PolyOne, shall cease to own, directly or indirectly, 100% of the Equity
Interests in the Seller, PolyOne or any other Originator unless, in the case of
such other Originator, such Originator is, upon at least 5 Business Days' prior
written notice to the Agent, sold by PolyOne and thereupon ceases to be an
Originator hereunder without causing an Event of Termination or a Potential
Event of Termination to occur, or (d) any "Change of Control" under and as
defined in the Senior Note Indenture or any Event of Default pursuant to Section
6.01(h) of the Revolving Credit Agreement.

      "Citicorp" has the meaning assigned to that term in the recital of parties
hereto.

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

                                       5
<PAGE>

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

      "Citicorp Rate" means (a) for any Capital Investment (other than Swing
Purchases and Reimbursement Obligations), at the Seller's election upon written
notice to the Agent, given not later than 11:00 A.M. (New York City time) on the
third Business Day prior (in the case of the Citicorp LIBO Rate) or the Business
Day prior (in the case of the Citicorp Base Rate), either the Citicorp LIBO Rate
or the Citicorp Base Rate, and (b) for any Capital Investment that is a Swing
Purchase, for any Reimbursement Obligation, and for each other obligation
hereunder, the Citicorp Base Rate.

      "Closing Date" means May 6, 2003.

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

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

      "Commitment" means (i) in respect of each Initial Purchaser, the
commitment of such Purchaser to make Purchases and acquire other Capital
Investments in the aggregate principal amount set forth as the "Commitment"
under the name of such Initial Purchaser on the signature pages hereto and (ii)
in respect of each other Purchaser that became a Purchaser by entering into an
Assignment and Acceptance, the amount set forth as the "Commitment" for such
Purchaser in the Register maintained by the Agent pursuant to Section 9.01(c),
in the case of clauses (i) and (ii) as such amount may be reduced from time to
time as the result of any assignment of any Commitment or any portion thereof
pursuant to Section 9.01 or as such amount may be reduced from time to time
pursuant to Section 2.05.

      "Commitment Termination Date" means the third anniversary of the Closing
Date.

      "Consent and Agreement" means a consent and agreement dated May 6, 2003,
in substantially the form of Exhibit E hereto, with respect to the Receivables
Sale Agreement, duly executed by the Seller and each Originator.

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

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

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

                                       6
<PAGE>

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

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

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

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

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

      "Documentary Letter of Credit" means any Letter of Credit that is drawable
upon presentation of documents evidencing the sale or shipment of goods
purchased by an Originator in the ordinary course of its business.

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

      "Eligible Assignee" means (i) each Initial Purchaser or any of its
Affiliates, and (ii) any commercial bank, finance company, insurance company or
other financial institution or any other Person, in each case approved by the
Agent and the Seller (which approval shall not (x) be unreasonably withheld

                                       7
<PAGE>

or delayed or (y) required following an Event of Termination); provided,
however, that neither an Originator nor the Seller nor any of their respective
Affiliates may be an Eligible Assignee.

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

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

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

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

            (d) the sale represented by such Receivable is to an Obligor located
      outside the United States, unless the sale is on letter of credit or
      acceptance terms acceptable to the Agent, in its sole discretion;
      provided, however, if the Obligor is located in Canada, this clause (d)
      shall not apply provided the inventory giving rise to the Receivable was
      shipped from the United States; or

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

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

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

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

            (i) the Obligor on such Receivable is a Governmental Authority,
      unless the applicable Originator and the Seller have each assigned its
      rights to payment of such Receivable to the Agent pursuant to the
      Assignment of Claims Act of 1940, as amended, in the case of a

                                       8
<PAGE>

      federal Governmental Authority, and pursuant to applicable law, if any, in
      the case of any other Governmental Authority, and such assignment has been
      accepted and acknowledged by the appropriate government officers; or

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

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

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

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

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

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

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

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

            (r) such Receivable shall not be payable into a Lock-Box Account
      which is the subject of a Lock-Box Agreement; or

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

                                       9
<PAGE>

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

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

            (v) such Receivable shall not constitute an "account" within the
      meaning of Section 9-102(a)(2) of the UCC of the jurisdiction the law of
      which governs the perfection of the interest created by a Receivable
      Interest; or

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

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

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

      "Equity Interest" means, with respect to any Person, shares of capital
stock of (or other ownership or profit interests in) such Person, warrants,
options or other rights for the purchase or other acquisition from such Person
of shares of capital stock of (or other ownership or profit interests in) such
Person, securities convertible into or exchangeable for shares of capital stock
of (or other ownership or profit interests in) such Person or warrants, rights
or options for the purchase or other acquisition from such Person of such shares
(or such other interests), and other ownership or profit interests in such
Person (including, without limitation, partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares, warrants,
options, rights or other interests are authorized or otherwise existing on any
date of determination.

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

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

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

      "Events of Termination" has the meaning specified in Section 7.01.

                                       10
<PAGE>

      "Existing Program" means the receivables purchasing program established
pursuant to the fifth amended and restated receivables purchase and sale
agreement dated as of April 10, 2002 by and between PolyOne Funding Corporation,
PolyOne Corporation, Corporate Receivables Corporation, CIESCO, L.P. and
Citicorp North America, Inc.

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

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

      "Fee Letter" means the fee letter agreement dated March 13, 2003 among
PolyOne, Citicorp and Salomon Smith Barney Inc., as the same may from time to
time be amended, supplemented or otherwise modified.

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

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

      "GAAP" means generally accepted accounting principles in the United States
consistently applied, in effect from time to time.

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

      "Indemnified Amounts" has the meaning specified in Section 10.01.

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

      "Initial Capital" means, in respect of each Initial Purchaser, the amount
set forth as the "Initial Capital" under the name of such Initial Purchaser on
the signature pages hereto.

                                       11
<PAGE>

      "Intercreditor Agreement" means the intercreditor agreement dated May 6,
2003 between the Agent, Citicorp USA, Inc, as agent for the lenders under the
Revolving Credit Agreement, U.S. Bank Trust National Association, not in its
individual capacity but solely as corporate trustee (the "Corporate Trustee")
and Angelita Pena, as individual collateral trustee for the lenders under the
Revolving Credit Agreement and the other secured holders which intercreditor
agreement shall confirm that the Receivables and the Related Security shall be
free of any security interest or other interest in favor of the lenders and
agent under the Revolving Credit Agreement and shall otherwise be in form an
substance satisfactory to the Agent.

      "Interest Coverage Ratio" means, at any date of determination, the ratio
of Adjusted EBITDA to Consolidated Interest Expense, in each case for the four
fiscal quarter period ending on such date or, if such date is not the last day
of a fiscal quarter, for the immediately preceding four fiscal quarter period.

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

      "Issue" means, with respect to any Letter of Credit, to issue, extend the
expiry of, renew or increase the maximum face amount (including by deleting or
reducing any scheduled decrease in such maximum face amount) of, such Letter of
Credit. The terms "Issued" and "Issuance" shall have a corresponding meaning.

      "L/C Fee" has the meaning specified in Section 2.11.

      "L/C Issuance Fee" has the meaning specified in Section 2.11.

      "L/C Issuance Fee Rate" means 0.25% per annum.

      "Letter of Credit" means any letter of credit Issued or deemed Issued
pursuant to Section 2.04.

      "Letter of Credit Obligations" means, at any time, the aggregate of all
liabilities at such time of the Seller to the Issuing Bank with respect to
Letters of Credit, whether or not any such liability is contingent.

      "Letter of Credit Reimbursement Agreement" has the meaning specified in
Section 2.04.

      "Letter of Credit Request" has the meaning specified in Section 2.04.

      "Letter of Credit Sublimit" means $50,000,000.

      "Letter of Credit Undrawn Amounts" means, at any time, the aggregate
undrawn face amount of all Letters of Credit outstanding at such time.

      "LIBO Rate" means, with respect to any Yield Period for any Capital
Investment made at the Citicorp LIBO Rate, the rate determined by the Agent to
be the offered rate for deposits in Dollars for the applicable Yield Period
appearing on the MoneyLine Telerate Page 3750 as of 11:00 a.m., London time, on
the second full Business Day next preceding the first day of each Yield Period.
In the event that such rate does not appear on the MoneyLine Telerate Page 3750
(or otherwise on the MoneyLine screen), the LIBO Rate for the purposes of this
definition shall be determined by reference to such other comparable publicly
available service for displaying eurodollar rates as may be selected by the
Agent, or, in the

                                       12
<PAGE>

absence of such availability the LIBO Rate shall be the rate of interest
determined by the Agent to be the rate per annum at which deposits in Dollars
are offered by the principal office of CNA in London to major banks in the
London interbank market at 11:00 a.m. (London time) 2 Business Days before the
first day of such Yield Period in an amount substantially equal to the Capital
Investment of CNA for a period equal to such Yield Period.

      "Liquidation Cost" has the meaning set forth in Section 2.12.

      "Liquidation Day" means, for any Receivable Interest, each day which
occurs on or after the Termination Date.

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

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

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

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

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

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

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

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

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

                                       13
<PAGE>

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

      "Obligor" means a Person obligated to make payments pursuant to a
Contract.

      "Originator" means PolyOne, PolyOne Engineered Films, Inc., a Virginia
corporation, and such other of PolyOne's wholly owned Subsidiaries as determined
from time to time by PolyOne and consented to in writing by the Agent; provided,
however, that any Originator shall cease to be an Originator upon (i) the
occurrence of any event set forth in Section 7.01(f) as to such Originator, (ii)
PolyOne, one or more direct or indirect wholly-owned Subsidiaries of PolyOne, or
a corporation owned directly or indirectly by the stockholders of PolyOne in
substantially the same proportions as their ownership of stock of PolyOne
ceasing to own, directly or indirectly, 100% of the Equity Interests of such
Originator, or (iii) 3 Business Days' notice to such effect by the Agent (with
the consent or at the request of the Required Purchasers) to the Seller
following the occurrence of any Event of Termination as to such Originator;
provided, however, that such Originator shall continue to be an Originator for
purposes of all Pool Receivables existing, and in which interests have been
created hereunder, prior to the occurrence of any event set forth in clauses (i)
through (iii) in the preceding proviso (and all terms and conditions of all
Transaction Documents to which such Originator is a party shall remain binding
on such Originator generally and specifically with respect to such Pool
Receivables until no such Pool Receivables remain outstanding and such
Originator shall have satisfied in full all of its obligations under the
Transaction Documents).

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

      "Outstanding Balance" of any Receivable at any time means the then
outstanding principal balance thereof.

      "Owner" means, in respect of each Receivable Interest, upon its purchase
by any of the Purchasers or the Swing Purchaser, as the case may be, the
purchaser thereof; provided, however, that, upon any assignment thereof pursuant
to Article IX, the Assignee thereof shall be an Owner thereof.

      "Parent Undertaking" means the Undertaking Agreement in the form attached
hereto as Exhibit K hereto, dated as of May 6, 2003, by PolyOne in favor of the
Agent, the Issuing Bank, the Syndication Agent, the Purchasers and the other
Owners, as the same may from time to time be amended, supplemented or otherwise
modified with the prior written consent of the Agent.

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

      "Plan" means a Single Employer Plan or a Multiple Employer Plan.

      "Pool Receivable" means a Receivable in the Receivables Pool.

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

      "Projections" means those financial projections dated April 1, 2003
covering the Fiscal Years ending in 2003 through 2006 inclusive, to be delivered
to the Purchasers by PolyOne.

      "Purchase" means a purchase by the Purchasers or the Swing Purchaser of a
Receivable Interest from the Seller pursuant to Article II.

                                       14
<PAGE>

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

      "Receivable" means the indebtedness (whether constituting accounts or
general intangibles or chattel paper or otherwise) of any Obligor under a
Contract, and includes the right to payment of any interest or finance charges
and other obligations of such Obligor with respect thereto.

      "Receivable Interest" means, at any time, an undivided percentage
ownership interest at such time in (a) all then outstanding Pool Receivables
arising prior to the time of the most recent computation or recomputation of
such undivided percentage interest pursuant to Section 2.06, (b) all Related
Security with respect to such Pool Receivables and (c) all Collections with
respect to, and other proceeds of, such Pool Receivables. Such undivided
percentage interest for such Receivable Interest shall be computed as:

                                     C + AR
                                     ------
                                      NRPB

where:

      C = the outstanding Capital Investment made in connection with such
      Receivable Interest at the time of such computation;

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

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

provided, however, that upon the occurrence of any Termination Date that results
from the occurrence and continuance of an Event of Termination pursuant to
Section 7.01 (such Termination Date being the "Special Termination Date"), the
Receivable Interests then outstanding under this Agreement, if more than one
Receivable Interest, shall be combined into one Receivable Interest hereunder
(such one Receivable Interest, whether the one Receivable Interest then
outstanding or the one Receivable Interest resulting from such combination of
Receivable Interests, being the "Special Receivable Interest") and such Special
Receivable Interest shall then be recomputed to be, and shall be fixed at all
times thereafter at, an undivided percentage ownership interest of one hundred
percent (100%) in (i) all then outstanding Pool Receivables arising prior to the
Special Termination Date, (ii) all Related Security with respect to such Pool
Receivables and (iii) all Collections with respect to, and other proceeds of,
such Pool Receivables.

Each Receivable Interest shall be determined from time to time pursuant to the
provisions of Section 2.06.

      "Receivables Sale Agreement" means the Receivables Sale Agreement, dated
as of May 6, 2003, in substantially the form of Exhibit D hereto, among each
Originator, the Seller and PolyOne as the Buyer's Servicer thereunder, as the
same may from time to time be amended, supplemented or otherwise modified with
the prior written consent of the Required Purchasers.

      "Receivables Excess Availability" means Available Capital plus cash
proceeds of Pool Receivables in a Deposit Account in the Agent's name.

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

                                       15
<PAGE>

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

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

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

      "Reimbursement Date" has the meaning specified in Section 2.04(h).

      "Reimbursement Obligations" means all matured reimbursement or repayment
obligations of the Seller to the Issuing Bank with respect to amounts drawn
under Letters of Credit.

      "Related Security" means with respect to any Receivable:

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

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

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

            (iv) all Records relating to such Receivable;

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

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

      "Required Net Receivables Pool Balance" means, at any time, the sum of (i)
the aggregate outstanding Capital at such time plus (ii) the Letter of Credit
Undrawn Amounts at such time plus (iii) the aggregate Applicable Reserve at such
time.

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

      "Requirement of Law" means, with respect to any Person, the common law and
all federal, state, local and foreign laws, rules and regulations, orders,
judgments, decrees and other determinations of any

                                       16
<PAGE>

Governmental Authority or arbitrator, applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.

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

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

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

      "Revolving Credit Agreement" means the amended and restated credit
agreement dated May 6, 2003 between PolyOne Corporation and Citicorp USA Inc.,
as administrative agent and the financial institutions party thereto as lenders,
in form and substance satisfactory to the Purchasers and under which the
aggregate commitments of the lenders do not exceed $50,000,000 and the maturity
date is not earlier than the third anniversary of the Closing Date, as such
agreement may be amended, restated or otherwise modified with the prior written
consent of the Agent (except for modifications that do not materially adversely
affect the interests of the Purchasers under the Transaction Documents or in the
Receivables with respect to which no written consent shall be required).
"Scheduled Other Debt Payment" means, with respect to:

      (i) the 7.070% Medium Term Notes due June 26, 2006, issued by MA Hanna
Company, the payment of $20,000,000 of principal on or after June 26, 2006;

      (ii) the 6.740% Medium Term Notes due December 22, 2005, issued by MA
Hanna Company, the payment of $20,000,000 of principal on or after December 22,
2005;

      (iii) the 6.875% Debentures due December 1, 2004 issued by MA Hanna
Company, the payment of $20,000,000 of principal on or after December 1, 2004;
and

      (iv) the 6.875% Medium Term Notes due December 15, 2005, issued by Geon
Company, the payment of $75,000,000 of principal on or after December 15, 2005.

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

      "Seller's Account" means the Deposit Account of the Seller (account number
104-9893) maintained with Mellon Financial Corporation at its office at 500 Ross
Street, Room 154-0490, Pittsburgh, Pennsylvania 15262-0001, Attention: Tim
Friday.

                                       17
<PAGE>

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

      "Senior Notes" means the 10?% Senior Notes with an aggregate face amount
of $300,000,000 due May 15, 2010 issued by PolyOne Corporation and governed by
the terms of the Senior Note Indenture.

      "Servicer" has the meaning specified in Section 6.01.

      "Servicer Fee" has the meaning specified in Section 2.11.

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

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

      "Special Receivable Interest" has the meaning specified in the definition
of "Receivable Interest" contained in this Section 1.01.

      "Special Termination Date" has the meaning specified in the definition of
"Receivable Interest" contained in this Section 1.01.

      "Standby Letter of Credit" means any Letter of Credit that is not a
Documentary Letter of Credit.

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

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

      "Subordinated Note" has the meaning specified in the Receivables Sale
Agreement.

      "Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company or other business entity of which an
aggregate of more than 50% of the Voting Interests is, at

                                       18
<PAGE>

the time, directly or indirectly, owned or controlled by such Person or one or
more Subsidiaries of such Person.

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

      "Swing Purchase" has the meaning specified in Section 2.03.

      "Swing Purchase Request" has the meaning specified in Section 2.03(b).

      "Swing Purchase Sublimit" means $25,000,000.

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

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

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

      "Total Commitment" means $225,000,000, as such amount may be reduced from
time to time pursuant to Section 2.05.

      "Total Excess Availability" means Total Excess Availability (as defined in
and under the Revolving Credit Agreement as in effect on the Closing Date).

      "Transaction Documents" means this Agreement, the Receivables Sale
Agreement, the Subordinated Notes, the Parent Undertaking, the Lock-Box
Agreements, the Consent and Agreement, the Fee Letter, the Intercreditor
Agreement, and each certificate, agreement or document executed by the Seller,
the Servicer, or an Originator and delivered to the Agent or any Purchaser in
connection with or pursuant to any of the foregoing.

      "UCC" means, at any time, the Uniform Commercial Code as from time to time
in effect in the State of New York at such time; provided, however, that in the
event that, by reason of mandatory provisions of law, any or all of the
interests of the Agent or the Purchasers under any Transaction Document is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, the term "UCC" shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such attachment, perfection or priority and for purposes of
definitions related to such provisions, regardless of whether the same would be
so shown.

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

      "United States" and "U.S." each means United States of America.

      "Unused Commitment" means, with respect to any Purchaser at any time, (a)
such Purchaser's Commitment at such time minus (b) that aggregate outstanding
Capital of Receivable Interests paid by

                                       19
<PAGE>

such Purchaser pursuant to Section 2.02 and not reduced by Collections received
and distributed to such Purchaser on account of such Capital pursuant to Section
2.07 or 2.08.

      "Unused Commitment Fee" has the meaning specified in Section 2.11.

      "Unused Commitment Fee Rate" means (i) for the initial period commencing
on the Closing Date and ending on the first day of the month immediately
following the month in which the Servicer delivers PolyOne's financial
statements for the Fiscal Year ending December 2003 in accordance with Section
5.05(c), 0.625% per annum, and (ii) thereafter, as of any date of determination,
a per annum rate equal to the rate set forth below opposite the then applicable
Average Monthly Excess Availability (determined on the last day of the most
recently concluded calendar month for which financial statements have been
delivered):

<TABLE>
<CAPTION>
                                  AVERAGE MONTHLY
                                EXCESS AVAILABILITY                               UNUSED COMMITMENT FEE RATE
                                -------------------                               --------------------------
<S>                                                                               <C>
         Greater than $150,000,000                                                        0.75%

         Less than or equal to $150,000,000 and greater than $75,000,000                  0.625%

         Less than or equal to $75,000,000                                                0.50%
</TABLE>

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

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

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

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

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

                                CR x C x ED  +  LC
                                -----------
                                  360

where:

      CR    =     the Citicorp LIBO Rate for such Capital Investment for such
                  Yield Period;

      C     =     the amount of such Capital Investment;

                                       20
<PAGE>

      ED    =     the actual number of days elapsed during such Yield Period;
                  and

      LC    =     all Liquidation Costs, if any, for such Receivable Interest
                  for such Yield Period; and

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

                                   CR x C x ED
                                   -----------
                                       360

      where:

      CR    =     the Citicorp Base Rate from time to time;

      C     =     the amount of such Capital Investment; and

      ED    =     the actual number of days elapsed;

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

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

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

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

                                       21
<PAGE>

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

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

            (iv) there shall be outstanding at any one time no more than 5 Yield
      Periods in the aggregate.

      SECTION 1.02. OTHER TERMS.

      All accounting terms not specifically defined herein shall be construed in
accordance with GAAP. All terms used in Article 9 of the UCC in the State of New
York and not specifically defined herein are used herein as defined in such
Article 9.

      SECTION 1.03. COMPUTATION OF TIME PERIODS.

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

                                   ARTICLE II

                       AMOUNTS AND TERMS OF THE PURCHASES

      SECTION 2.01. COMMITMENT.

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

      (b) On the terms and conditions hereinafter set forth, the Agent on behalf
of the Owners of each Receivable Interest shall, at the request of the Seller,
have the Collections attributable to such Receivable Interest reinvested
pursuant to Section 2.07 in additional undivided percentage interests in the
Pool Receivables by making an appropriate adjustment of such Receivable
Interest.

      SECTION 2.02. MAKING PURCHASES.

      (a) Each Purchase of a Receivable Interest by the Purchasers shall be made
on notice from the Seller to the Agent, given not later than 11:00 a.m. (New
York City time) (i) on the third Business Day before the date of such Purchase
in the case of the Purchase of any Receivable Interest initially bearing Yield
at the Citicorp LIBO Rate and (ii) on the Business Day before the date of such
Purchase in the case of the Purchase of any Receivable Interest initially
bearing Yield at the Citicorp Base Rate. Each such notice of a proposed Purchase
of a Receivable Interest (a "Notice of Purchase") shall be by

                                       22
<PAGE>

telephone (confirmed promptly thereafter in writing) or facsimile, in
substantially the form of Exhibit F hereto, and shall specify the requested
aggregate amount of such Purchase to be paid to the Seller and the requested
Business Day of such Purchase. Each Purchase of any Receivable Interest
initially bearing Yield at the Citicorp LIBO Rate shall be in an aggregate
amount of not less than $10,000,000 or an integral multiple of $1,000,000 in
excess thereof and each Purchase of any Receivable Interest initially bearing
Yield at the Citicorp Base Rate shall be in an aggregate amount of not less than
$1,000,000 or an integral multiple of $1,000,000 in excess thereof.

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

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

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

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

                                       23
<PAGE>

      SECTION 2.03. SWING PURCHASES

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

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

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

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

      (e) The Agent shall forward each notice referred to in clause (c) above
and each demand referred to in clause (d) above to each Purchaser on the day
such notice or such demand is received by the Agent (except that any such notice
or demand received by the Agent after 2:00 p.m. (New York City time) on any
Business Day or any such demand received on a day that is not a Business Day
shall not be required to be forwarded to the Purchasers by the Agent until the
next succeeding Business Day), together with a statement prepared by the Agent
specifying the amount of each Purchaser's ratable portion of the aggregate
principal amount of the Capital in connection with Swing Purchases stated to be
outstanding in such notice or demanded to be paid pursuant to such demand, and,
notwithstanding whether or not the conditions precedent set forth in Section
3.02 and 2.01 shall have been satisfied (which conditions precedent the
Purchasers hereby irrevocably waive), each Purchaser shall, before 11:00 a.m.
(New York City time) on the Business Day next succeeding the date of such
Purchaser's receipt of such notice or demand, make available to the Agent, in
immediately available funds, for the account of the Swing

                                       24
<PAGE>

Purchaser, the amount specified in such statement; provided, however, that
notwithstanding anything to the contrary in the foregoing, no Purchaser shall be
obligated to purchase a ratable portion of, or otherwise pay any sum in respect
of, a Swing Purchase if the purchase by such Purchaser of a ratable portion of,
or payment of other sum in respect of, such Swing Purchase would cause such
Purchaser's aggregate Capital Investment to exceed its Commitment. Upon such
purchase by a Purchaser, such Purchaser shall, except as provided in clause (f),
be deemed to have made a Purchase with a Capital Investment equal to the amount
actually paid by such Purchaser. The Agent shall use such funds to reduce the
Swing Purchaser's Capital in respect of Swing Purchases.

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

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

      SECTION 2.04. LETTERS OF CREDIT

      (a) On the terms and subject to the conditions contained in this
Agreement, the Issuing Bank agrees to Issue, at the request of the Seller, and
in favor of the beneficiaries requested by the Seller, one or more Letters of
Credit from time to time on any Business Day during the period from the Closing
Date and to and including the earlier of the Termination Date and 30 days prior
to the Commitment Termination Date; provided, however, that the Issuing Bank
shall not be under any obligation to Issue any Letter of Credit upon the
occurrence of any of the following:

            (i) any order, judgment or decree of any Governmental Authority or
      arbitrator shall purport by its terms to enjoin or restrain the Issuing
      Bank from Issuing such Letter of Credit or any Requirement of Law
      applicable to the Issuing Bank or any request or directive (whether or not
      having the force of law) from any Governmental Authority with jurisdiction
      over the Issuing Bank shall prohibit, or request that the Issuing Bank
      refrain from, the Issuance of letters of credit generally or such Letter
      of Credit in particular or shall impose upon the Issuing Bank with respect
      to such Letter of Credit any restriction or reserve or capital requirement
      (for which the Issuing Bank is not otherwise compensated) not in effect on
      the date of this Agreement or result in any unreimbursed loss, cost or
      expense that was not applicable, in effect or known to the Issuing Bank as
      of the date of this Agreement and that the Issuing Bank in good faith
      deems material to it;

            (ii) the Issuing Bank shall have received any written notice of the
      type described in clause (d) below;

                                       25
<PAGE>

            (iii) after giving effect to the Issuance of such Letter of Credit,
      the aggregate Capital plus the aggregate Letter of Credit Undrawn Amounts
      at such time would exceed the lesser of (a) the Total Commitment and
      (b)(i) the Net Receivables Pool Balance minus (ii) the Applicable Reserve;

            (iv) after giving effect to the Issuance of such Letter of Credit,
      the sum of (i) the Letter of Credit Undrawn Amounts at such time and (ii)
      the Reimbursement Obligations at such time would exceed the Letter of
      Credit Sublimit;

            (v) any fees due in connection with a requested Issuance have not
      been paid;

            (vi) such Letter of Credit is requested to be Issued in a form that
      is not acceptable to such Issuing Bank; or

            (vii) such Letter of Credit is requested to be denominated in any
      currency other than U.S. Dollars.

None of the Purchasers (other than the Issuing Bank in its capacity as such)
shall have any obligation to Issue any Letter of Credit.

      (b) In no event shall the expiration date of any Letter of Credit be more
than one year after the date of issuance thereof; provided, however, that any
Letter of Credit with a one-year term may provide for the renewal thereof for
additional one-year periods.

      (c) In connection with the Issuance of each Letter of Credit, the Seller
shall give the Issuing Bank and the Agent at least 3 Business Days' prior
written notice, in substantially the form of Exhibit H (or in such other written
or electronic form as is acceptable to the Issuing Bank), of the requested
Issuance of such Letter of Credit (a "Letter of Credit Request"). Such notice
shall be irrevocable and shall specify the face amount of the Letter of Credit
requested, the date of Issuance of such requested Letter of Credit, the date on
which such Letter of Credit is to expire (which date shall be a Business Day)
and the Person for whose benefit the requested Letter of Credit is to be issued.
Such notice, to be effective, must be received by the Issuing Bank and the Agent
not later than 11:00 a.m. (New York City time) on the third Business Day prior
to the requested Issuance of such Letter of Credit.

      (d) Subject to the satisfaction of the conditions set forth in this
Section 2.04, the Issuing Bank shall, on the requested date, Issue a Letter of
Credit on behalf of the Seller (or any Affiliate of the Seller acceptable to the
Agent in its sole discretion) in accordance with the Issuing Bank's usual and
customary business practices. The Issuing Bank shall not Issue any Letter of
Credit in the period commencing on the first Business Day after it receives
written notice from any Purchaser that one or more of the conditions precedent
contained in Section 3.02 shall not on such date be satisfied or duly waived and
ending when such conditions are satisfied or duly waived. The Issuing Bank shall
not otherwise be required to determine that, or take notice whether, the
conditions precedent set forth in Section 3.02 have been satisfied in connection
with the Issuance of any Letter of Credit.

      (e) If requested by the Issuing Bank, prior to the issuance of each Letter
of Credit by the Issuing Bank and as a condition of such Issuance and of the
participation of each Purchaser in the Letter of Credit Obligations arising with
respect thereto, the Seller shall have delivered to the Issuing Bank a letter of
credit reimbursement agreement, in such form as the Issuing Bank may employ in
its ordinary course of business for its own account (a "Letter of Credit
Reimbursement Agreement"), signed by the Seller, and such other documents or
items as may be required pursuant to the terms thereof. In the event

                                       26
<PAGE>

of any conflict between the terms of any Letter of Credit Reimbursement
Agreement and this Agreement, the terms of this Agreement shall govern.

      (f) The Issuing Bank shall comply with the following:

            (i) give the Agent written notice (or telephonic notice confirmed
      promptly thereafter in writing), which writing may be a telecopy or
      electronic mail, of the Issuance or renewal of a Letter of Credit issued
      by it, of all drawings under a Letter of Credit issued by it and the
      payment (or the failure to pay when due) by the Seller of any
      Reimbursement Obligation when due (each such notice the Agent shall
      promptly transmit by telecopy, electronic mail or similar transmission to
      each Purchaser);

            (ii) upon the request of any Purchaser, furnish to such Purchaser
      copies of any Letter of Credit Reimbursement Agreement to which the
      Issuing Bank is a party and such other documentation as may reasonably be
      requested by such Purchaser; and

            (iii) no later than 10 Business Days following the last day of each
      calendar month, provide to the Agent (and the Agent shall provide a copy
      to each Purchaser requesting the same), a schedule for Letters of Credit
      issued by it, in form and substance reasonably satisfactory to the Agent,
      setting forth the aggregate Letter of Credit Obligations outstanding at
      the end of each month and any information requested by the Seller or the
      Agent relating thereto.

      (g) Immediately upon the issuance by the Issuing Bank of a Letter of
Credit in accordance with the terms and conditions of this Agreement, the
Issuing Bank shall be deemed to have sold and transferred to each Purchaser, and
each Purchaser shall be deemed irrevocably and unconditionally to have purchased
and received from the Issuing Bank, without recourse or warranty, an undivided
interest and participation, to the extent of such Purchaser's ratable portion,
in such Letter of Credit and the obligations of the Seller with respect thereto
(including all Letter of Credit Obligations with respect thereto) and any
security therefor and guaranty pertaining thereto.

      (h) If, and to the extent, any Reimbursement Obligations have not been
repaid pursuant to Section 2.07 or 2.08, the Seller agrees to pay to the Issuing
Bank the amount of all Reimbursement Obligations owing to the Issuing Bank under
any Letter of Credit issued for its account or at its direction no later than
the date that is the next succeeding Business Day after the Seller receives
written notice from the Issuing Bank that payment has been made under such
Letter of Credit (the "Reimbursement Date"), irrespective of any claim, set-off,
defense or other right that the Seller may have at any time against the Issuing
Bank or any other Person. In the event that the Issuing Bank makes any payment
under any Letter of Credit and the Seller shall not have repaid such amount to
the Issuing Bank pursuant to this Section 2.04(h) or any such payment by the
Seller is rescinded or set aside for any reason, such Reimbursement Obligation
shall be payable on demand with interest thereon computed (i) from the date on
which such Reimbursement Obligation arose to the Reimbursement Date, at the rate
of interest applicable during such period, with respect to past due Capital
initially bearing Yield based on the Alternate Base Rate and (ii) from the
Reimbursement Date until the date of repayment in full, at the rate of interest
applicable during such period, with respect to past due Capital initially
bearing Yield based on the Adjusted LIBO Rate, and the Issuing Bank shall
promptly notify the Agent, which shall promptly notify each Purchaser of such
failure, and each Purchaser shall promptly and unconditionally pay to the Agent
for the account of the Issuing Bank the amount of such Purchaser's ratable share
of such payment in immediately available funds. If the Agent so notifies such
Purchaser prior to 11:00 a.m. (New York City time) on any Business Day, such
Purchaser shall make available to the Agent for the account of the Issuing Bank
its ratable share of the amount of such payment on such Business Day in
immediately available funds. Upon such payment by a Purchaser, such Purchaser
shall, except during the continuance

                                       27
<PAGE>

of an Event of Termination under Section 7.01(f) and notwithstanding whether or
not the conditions precedent set forth in Section 3.02 shall have been satisfied
(which conditions precedent the Purchasers hereby irrevocably waive), be deemed
to have made a Purchase, and the Seller shall be deemed to have received a
Collection, in respect of a Receivable Interest in the principal amount of such
payment and the Capital of such Receivable Interest shall be increased by the
amount of such payment. Whenever the Issuing Bank receives from the Seller a
payment of a Reimbursement Obligation as to which the Agent has received for the
account of the Issuing Bank any payment from a Purchaser pursuant to this
Section 2.04(h) the Issuing Bank shall pay to the Agent and the Agent shall
promptly pay to each Purchaser in immediately available funds, an amount equal
to such Purchaser's ratable share of the amount of such payment adjusted, if
necessary, to reflect the respective amounts the Purchasers have paid in respect
of such Reimbursement Obligation.

      (i) If and to the extent such Purchaser shall not have so made its ratable
portion of the amount of the payment required by Section 2.04(h) above available
to the Agent for the account of the Issuing Bank, such Purchaser agrees to pay
to the Agent for the account of the Issuing Bank forthwith on demand any such
unpaid amount together with interest thereon, for the first Business Day after
payment was first due at the Federal Funds Rate and, thereafter until such
amount is repaid to the Agent for the account of the Issuing Bank, at the rate
per annum applicable to Capital initially bearing Yield based on the Alternate
Base Rate.

      (j) The Seller's obligation to pay each Reimbursement Obligation and the
obligations of the Purchasers to make payments to the Agent for the account of
the Issuing Bank with respect to Letters of Credit shall be absolute,
unconditional and irrevocable and shall be performed strictly in accordance with
the terms of this Agreement, under any and all circumstances whatsoever,
including the occurrence of any Event of Termination, and irrespective of any of
the following:

            (i) any lack of validity or enforceability of any Letter of Credit
      or any Transaction Document, or any term or provision therein;

            (ii) any amendment or waiver of or any consent to departure from all
      or any of the provisions of any Letter of Credit or any Transaction
      Document;

            (iii) the existence of any claim, set off, defense or other right
      that the Seller, any Subsidiary or other Affiliate thereof or any other
      Person may at any time have against the beneficiary under any Letter of
      Credit, the Issuing Bank, the Agent or any Purchaser or any other Person,
      whether in connection with this Agreement, any other Transaction Document
      or any other related or unrelated agreement or transaction;

            (iv) any draft or other document presented under a Letter of Credit
      proving to be forged, fraudulent, invalid or insufficient in any respect
      or any statement therein being untrue or inaccurate in any respect;

            (v) payment by the Issuing Bank under a Letter of Credit against
      presentation of a draft or other document that does not comply with the
      terms of such Letter of Credit; and

            (vi) any other act or omission to act or delay of any kind of the
      Issuing Bank, the Purchasers, the Agent or any other Person or any other
      event or circumstance whatsoever, whether or not similar to any of the
      foregoing, that might, but for the provisions of this Section 2.04,
      constitute a legal or equitable discharge of the Seller's obligations
      hereunder.

                                       28
<PAGE>

Any action taken or omitted to be taken by the Issuing Bank under or in
connection with any Letter of Credit, if taken or omitted in the absence of
gross negligence or willful misconduct, shall not put the Issuing Bank under any
resulting liability to the Seller or any Purchaser. In determining whether
drafts and other documents presented under a Letter of Credit comply with the
terms thereof, the Issuing Bank may accept documents that appear on their face
to be in order, without responsibility for further investigation, regardless of
any notice or information to the contrary and, in making any payment under any
Letter of Credit, the Issuing Bank may rely exclusively on the documents
presented to it under such Letter of Credit as to any and all matters set forth
therein, including reliance on the amount of any draft presented under such
Letter of Credit, whether or not the amount due to the beneficiary thereunder
equals the amount of such draft and whether or not any document presented
pursuant to such Letter of Credit proves to be insufficient in any respect, if
such document on its face appears to be in order, and whether or not any other
statement or any other document presented pursuant to such Letter of Credit
proves to be forged or invalid or any statement therein proves to be inaccurate
or untrue in any respect whatsoever, and any noncompliance in any immaterial
respect of the documents presented under such Letter of Credit with the terms
thereof shall, in each case, be deemed not to constitute willful misconduct or
gross negligence of the Issuing Bank.

      SECTION 2.05. TERMINATION OR REDUCTION OF THE COMMITMENTS.

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

      SECTION 2.06. RECEIVABLE INTEREST.

      Each Receivable Interest shall be initially computed as of the opening of
business of the Servicer on the date of Purchase of such Receivable Interest.
Thereafter until the Termination Date, such Receivable Interest shall be
automatically recomputed as of the close of business of the Servicer on each day
(other than a Liquidation Day). Such Receivable Interest shall remain constant
from the time as of which any such computation or recomputation is made until
the time as of which the next such recomputation, if any, shall be made. Each
Receivable Interest other than any Special Receivable Interest, as computed as
of the day immediately preceding the Termination Date, shall remain constant at
all times on and after the Termination Date; and any Special Receivable
Interest, as computed as of any Special Termination Date, shall remain constant
(at 100%) at all times on and after such Special Termination Date. Such
Receivable Interest shall become zero at such time as the Owners of such
Receivable Interest shall have received the accrued Yield for such Receivable
Interest, shall have recovered the Capital Investment of such Receivable
Interest, and shall have received payment of all other amounts payable by the
Seller to such Owners, and the Servicer shall have received the accrued Servicer
Fee for such Receivable Interest.

                                       29
<PAGE>

      SECTION 2.07. NON-LIQUIDATION SETTLEMENT PROCEDURES.

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

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

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

            (iii) third, if such day is the second Business Day of the week,
      distribute to the Owners an amount in U.S. Dollars equal to that amount,
      if any, which would be required to reduce Capital so that the undivided
      percentage interest of all Receivable Interests would not, after giving
      effect to the Collections of Pool Receivables and the addition of new Pool
      Receivables on such day and the resulting recomputation of such Receivable
      Interests pursuant to Section 2.06 as of the end of such day, exceed 100%;

            (iv) fourth, distribute the remainder of such Collections in an
      amount not greater than the Capital then outstanding, on a pari passu
      basis, to the Owners of each Receivable Interest to be applied to reduce
      the Capital Investment of such Receivable Interest, and to the Issuing
      Bank an amount in U.S. Dollars equal to the amount of all Reimbursement
      Obligations, if any, owing from the Seller to the Issuing Bank under any
      Letter of Credit issued for its account or at its direction; and

            (v) fifth, to the extent of any further remaining Collections,
      return the remainder of such Collections to the Seller.

      (b) On each applicable Yield Payment Date, the Agent shall distribute the
amounts set aside as described in clause (i) of Section 2.07(a) above (other
than the Agent's Fee), first, to the Servicer in payment of the accrued Servicer
Fee payable with respect to each Receivable Interest, to the Owners of each
Receivable Interest in payment of the accrued Yield, the Unused Commitment Fee
and L/C Fee for such Receivable Interest, and to the Issuing Bank in payment of
the L/C Issuance Fee, pari passu, and second, in payment of any other amounts
then owed by the Seller hereunder (including, without limitation, all fees
payable hereunder and not paid above except for the Servicer Fee).

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

      SECTION 2.08. LIQUIDATION SETTLEMENT PROCEDURES.

      (a) On each Liquidation Day (including, without limitation, the Special
Termination Date), the Agent shall deposit to the Agent's Account the
Collections of Pool Receivables received on such day and shall apply them as
follows:

                                       30
<PAGE>

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

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

            (iii) third, to the Servicer in payment of the accrued Servicer Fee
      payable with respect to such Receivable Interest, to the Owners in payment
      of the accrued Yield, Unused Commitment Fees, L/C Fees and the aggregate
      of any other amounts then accrued or owed hereunder by the Seller to such
      Owners, and to the Issuing Bank in payment of the L/C Issuance Fees;

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

            (v) fifth, to the Agent's Account to be set aside and held in trust
      for the Purchasers as security for repayment of all amounts with respect
      to undrawn Letters of Credit, an amount equal to 105% of the Letter of
      Credit Undrawn Amount with respect to each Standby Letter of Credit and an
      amount equal to 115% of each Letter of Credit Undrawn Amount with respect
      to each Documentary Letter of Credit;

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

            (vii) seventh, to the Seller;

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

      SECTION 2.09. GENERAL SETTLEMENT PROCEDURES.

      (a) If on any day the Outstanding Balance of a Pool Receivable is either
(i) reduced as a result of any defective, rejected or returned goods or
services, any discount, or any adjustment by the Seller or any Originator, or
(ii) reduced or cancelled as a result of a setoff in respect of any claim by the
Obligor thereof against the Seller or any Originator (whether such claim arises
out of the same or a related transaction or an unrelated transaction), the
Seller shall be deemed to have received on such day a Collection of such
Receivable in the amount of such reduction or cancellation and shall make the
payment required to be made by it in connection with such Collection on the day
required by, and otherwise pursuant to, Section 5.01(g). If on any day any of
the representations or warranties in Section 4.01(h) is no longer true with
respect to any Pool Receivable, the Seller shall be deemed to have received on
such day a Collection in full of such Pool Receivable and shall make the payment
required to be made by it in connection with such Collection on the day required
by, and otherwise pursuant to, Section 5.01(g). Except as stated in the
preceding sentences of this Section 2.09(a) or as otherwise required by law or
the underlying Contract, all Collections received from an Obligor of any
Receivable shall be applied to Receivables then outstanding of such Obligor in
the order of the age of such Receivables, starting with the

                                       31
<PAGE>

oldest such Receivable, except if payment is designated by such Obligor for
application to specific Receivables.

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

            (i) a Seller Report relating to each Receivable Interest, as of the
      close of business of the Servicer on the last day of the immediately
      preceding calendar month,

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

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

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

      (c) On the second Business Day of each week (or more frequently if
requested by the Agent, but in no event more frequently than once each Business
Day) by no later than 12:00 noon (New York City time), the Servicer shall
prepare and furnish to the Agent for the Owners a Receivables Report relating to
the Receivable Interests as at the end of the last Business Day of the
immediately preceding week (or such shorter period, not earlier than the
immediately preceding Business Day, if requested by Agent) stating (i) the
aggregate amount of the Net Receivables Pool Balance as of the end of the
immediately preceding reporting period, in such detail as shall be satisfactory
to the Agent, (ii) the aggregate amount of the Collections from the Pool
Receivables received by or on behalf of the Servicer as of the end of the
immediately preceding reporting period, in such detail as shall be satisfactory
to the Agent, (iii) the aggregate of sales and billings of each Originator as of
the end of the immediately preceding reporting period, and (iv) such other
information as shall be specified from time to time by the Agent or by the Agent
at the request of the Required Purchasers.

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

      SECTION 2.10. PAYMENTS AND COMPUTATIONS, ETC.

      (a) All amounts to be paid or deposited by the Seller or the Servicer
hereunder shall be paid or deposited in accordance with the terms hereof no
later than 12:00 noon (New York City time) on the day when due in U.S. Dollars
in same day funds to the Agent's Account. The Agent shall promptly thereafter
cause to be distributed (i) like funds relating to the payment out of
Collections in respect of Capital, Yield, Servicer Fee or other amounts payable
out of Collections, to the Owners (ratably in accordance with their respective
interests) and the Servicer in accordance with the provisions of Section 2.07 or
2.08, as applicable, and (ii) like funds relating to the payment by the Seller
of fees and other amounts payable by the Seller hereunder, to the parties hereto
for whose benefit such funds were paid

                                       32
<PAGE>

(and if such funds are insufficient, such distribution shall be made, subject to
Section 2.07 or 2.08, as applicable, ratably in accordance with the respective
amounts thereof). Upon the Agent's acceptance of an Assignment and Acceptance
and recording of the information contained therein in the Register pursuant to
Section 9.01(c), from and after the effective date specified in such Assignment
and Acceptance, the Agent shall make all payments hereunder in respect of the
interest assigned thereby to the Assignee thereunder, and the parties to such
Assignment and Acceptance shall make all appropriate adjustments in such
payments for periods prior to such effective date directly between themselves.

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

      (c) All computations of interest and all computations of Yield, Unused
Commitment Fee and other per annum fees hereunder shall be made on the basis of
a year of 360 days for the actual number of days (including the first but
excluding the last day) elapsed.

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

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

      SECTION 2.11. YIELD AND FEES.

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

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

      (c) The Seller shall pay to the Agent for remittance to the Servicer a fee
(the "Servicer Fee") of 1% per annum on the average daily amount of Capital of
each Receivable Interest, from the date of the initial Purchase hereunder until
the later of the Termination Date or the date on which Capital is reduced to
zero, payable in arrears on the Yield Payment Date for each Yield Period for
such Receivable Interest; provided, however, that, if at any time, the Servicer
is not PolyOne or an Affiliate of PolyOne, the Servicer shall be paid, as such
fee, the lesser of (i) such amount and (ii) 120% of the costs and expenses
referred to in Section 6.02(c); and provided further that such fee shall be
payable only from Collections pursuant to, and subject to the priority of
payment set forth in, Sections 2.07 and 2.08.

                                       33
<PAGE>

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

      (e) The Seller shall pay to the Agent for the accounts of the Purchasers,
a letter of credit fee (a "L/C Fee") equal to the product of (i) the Applicable
L/C Margin and (ii) the average daily Letter of Credit Undrawn Amounts. The L/C
Fee will be payable monthly in arrears and on the Termination Date.

      (f) The Seller shall pay to the Issuing Bank, a letter of credit fee (the
"L/C Issuance Fee") equal to the product of (i) the L/C Issuance Fee Rate and
(ii) the average daily Letter of Credit Undrawn Amounts. The L/C Issuance Fee
will be payable monthly in arrears and on the Termination Date.

      SECTION 2.12. SPECIAL PROVISIONS GOVERNING CAPITAL INVESTMENTS AT THE
CITICORP LIBO RATE.

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

      (b) Interest Rate Unascertainable, Inadequate or Unfair. In the event that
(i) the Agent determines that adequate and fair means do not exist for
ascertaining the applicable interest rates by reference to which the Adjusted
LIBO Rate then being determined is to be fixed or (ii) the Required Purchasers
notify the Agent that the Adjusted LIBO Rate for any Yield Period will not
adequately reflect the cost to the Purchasers of making a Capital Investment or
maintaining such Capital Investment for such Yield Period, the Agent shall
forthwith so notify the Seller and the Purchasers, whereupon the Citicorp Rate
for such Capital Investment shall automatically, on the last day of the current
Yield Period for such Capital Investment, convert into the Citicorp Base Rate
and the obligations of the Purchasers to make a Capital Investment or maintain a
Capital Investment at the Citicorp LIBO Rate shall be suspended until

                                       34
<PAGE>

the Agent shall notify the Seller that the Required Purchasers have determined
that the circumstances causing such suspension no longer exist.

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

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

      SECTION 2.13. INCREASED CAPITAL.

      If any Indemnified Party determines that either the introduction of or any
change in or in the interpretation of any law or regulation after the date
hereof or the compliance with any guideline or request issued or made after the
date hereof from any central bank or other governmental authority (whether or
not having the force of law) affects or would affect the amount of capital
required or expected to be maintained by such Indemnified Party or any
corporation controlling such Indemnified Party and that the amount of such
capital is increased by or based upon the existence of such Indemnified Party's
commitment, if any, to purchase any Receivable Interest or any interest therein,
or to maintain such Receivable Interest or interest hereunder, then, upon demand
and delivery to the Seller of the certificate referred to in the last sentence
of this Section 2.13 by such Indemnified Party (or by the Agent for the account
of such Indemnified Party) (with a copy of such demand and certificate to the
Agent) the Seller shall pay to the Agent for the account of such Indemnified
Party from time to time, as specified by such

                                       35
<PAGE>

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

      SECTION 2.14. TAXES.

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

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

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

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

      (e) Each Owner organized under the laws of a jurisdiction outside the
United States shall, on or prior to the date of its execution and delivery of
this Agreement in the case of each Initial Purchaser,

                                       36
<PAGE>

and on the date of the Assignment or the Assignment and Acceptance pursuant to
which it became an Owner in the case of each other Owner, and from time to time
thereafter as requested in writing by the Seller (but only so long thereafter as
such Owner remains lawfully able to do so), provide each of the Agent and the
Seller with 2 original Internal Revenue Service forms W-8ECI or W-8BEN, as
appropriate, or any successor or other form prescribed by the Internal Revenue
Service, certifying that such Owner is exempt from or entitled to a reduced rate
of United States withholding tax on payments pursuant to this Agreement. If the
forms provided by an Owner at the time such Owner first becomes a party to this
Agreement indicate a United States interest withholding tax rate in excess of
zero, withholding tax at such rate shall be considered excluded from Taxes
unless and until such Owner provides the appropriate form certifying that a
lesser rate applies, whereupon withholding tax at such lesser rate only shall be
considered excluded from Taxes for periods governed by such form; provided,
however, that if, at the effective date of the Assignment or the Assignment and
Acceptance pursuant to which an Assignee becomes an Owner hereunder, the Owner
assignor was entitled to payments under subsection (a) of this Section 2.14 in
respect of United States withholding tax with respect to amounts paid hereunder
at such date, then, to such extent, the term Taxes shall include (in addition to
withholding taxes that may be imposed in the future or other amounts otherwise
includable in Taxes) United States withholding tax, if any, applicable with
respect to such Assignee on such date. If any form or document referred to in
this subsection (e) requires the disclosure of information, other than
information necessary to compute the tax payable and information required on the
date hereof by Internal Revenue Service form W-8ECI or W-8BEN, that the Owner
reasonably considers to be confidential, the Owner shall give notice thereof to
the Seller and shall not be obligated to include in such form or document such
confidential information.

      (f) For any period with respect to which an Owner has failed to provide
the Seller with the appropriate form described in subsection (e) of this Section
2.14 (other than if such failure is due to a change in law occurring after the
date on which a form originally was required to be provided or if such form
otherwise is not required under subsection (e) of this Section 2.14), such Owner
shall not be entitled to indemnification under subsection (a) or (c) of this
Section 2.14 with respect to Taxes imposed by the United States by reason of
such failure; provided, however, that should an Owner become subject to Taxes
because of its failure to deliver a form required hereunder, the Seller shall
take such steps as such Owner shall reasonably request to assist such Owner (at
such Owner's expense) to recover such Taxes.

      SECTION 2.15. SHARING OF PAYMENTS, ETC.

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

                                       37
<PAGE>

      SECTION 2.16. CONVERSION/CONTINUATION OPTION.

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

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

                                  ARTICLE III

                             CONDITIONS OF PURCHASES

      SECTION 3.01. CONDITIONS PRECEDENT TO THE EFFECTIVENESS OF THIS AGREEMENT.

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

      (a) The Agent and the Syndication Agent shall have received all fees and
expenses (including, but not limited to, reasonable fees and expenses of
counsel) required to be paid on the Closing Date, pursuant to the terms of this
Agreement and the Fee Letter, the Proposal Letter (as defined in the Fee Letter)
and the Annex thereto.

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

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

                                       38
<PAGE>

            (ii) The Parent Undertaking, duly executed and delivered by PolyOne;

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

                  (A) Proper financing statements naming each Originator as
            debtor, the Seller as secured party and Citicorp, as Agent, as
            assignee, to be filed under the UCC of all jurisdictions that the
            Agent may deem necessary in order to perfect the Seller's interests
            created or purported to be created by the Receivables Sale
            Agreement;

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

                  (C) Completed requests for information, dated on or a date
            reasonably near to the Closing Date listing all effective financing
            statements which name each Originator (under its present name and
            any previous name) as debtor and which are filed in the
            jurisdictions in which filings are to be made pursuant to clause
            (iii)(A) above, together with copies of such financing statements
            (none of which, except those to be filed pursuant to clause (iii)(A)
            above and those subject to the termination and releases described in
            clause (iii)(B) above, shall cover any Receivables, Related
            Security, Collections or Contracts);

                  (D) The Consent and Agreement, duly executed by the Seller and
            each Originator; and

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

            (iv) A letter of credit agreement entered into between the Seller
      and each Originator.

            (v) Certified copies of the charter, by-laws or code of regulations
      (as the case may be), as amended, of the Seller, the Servicer and each
      Originator, respectively.

            (vi) Good standing certificates issued by the Secretary of State of
      the jurisdiction of incorporation of the Seller, the Servicer and each
      Originator, with respect to the Seller and such Originator, respectively.

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

            (viii) A certificate of the Secretary or Assistant Secretary of each
      of the Seller, the Servicer and each Originator, certifying the names and
      true signatures of its officers authorized to sign the Transaction
      Documents and the other documents to be delivered by it hereunder.

                                       39
<PAGE>

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

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

            (xi) Completed requests for information, dated on or a date
      reasonably near to the Closing Date, listing all effective financing
      statements filed in the jurisdictions referred to in subsection (b)(ix)
      above that name the Seller as debtor, together with copies of such other
      financing statements (none of which, except those to be filed pursuant to
      (ix) of Section 3.01(b) above and those subject to the termination and
      releases described in (x) of Section 3.01(b) above, shall cover any
      Receivables, Related Security, Collections or Contracts).

            (xii) Favorable opinions of (A) Thompson Hine LLP, counsel to the
      Seller, the Servicer and each Originator, in substantially the form of
      Exhibit J-l hereto and as to such other matters as the Agent may
      reasonably request, (B) Woodrow W. Ban, Assistant Secretary and Senior
      Counsel of PolyOne, in substantially the form of Exhibit J-2 hereto and as
      to such other matters as the Agent may reasonably request, and (C)
      Thompson Hine LLP, counsel to each Originator, the Servicer and the
      Seller, in substantially the form of Exhibit J-3 and as to such other
      matters as the Agent may reasonably request, including without limitation
      (1) a "true sale" opinion with respect to the sale of Receivable Assets
      under and as defined in the Receivables Sale Agreement from each
      Originator to the Seller, (2) an opinion with respect to the
      non-substantive consolidation of the Seller with each Originator or any of
      its Affiliates in a case under the U.S. Bankruptcy Code, and (3) an
      opinion relating to the enforceability of the Transaction Documents,
      compliance with all laws and regulations (including Regulation U of the
      Board of Governors of the Federal Reserve System), the perfection of all
      ownership and other interests purported to be granted under the
      Transaction Documents, and no conflicts with material agreements.

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

            (xiv) A Lock-Box Agreement with each Lock-Box Bank, executed by such
      Lock-Box Bank and the Seller, the Servicer or an Originator, as
      applicable.

            (xv) A certificate of the chief financial officer, in the case of
      PolyOne, or the chief financial officer or treasurer, in the case of the
      Seller and each other Originator, stating that the Seller and each
      Originator is Solvent after giving effect to the transactions contemplated
      hereunder and under the other Transaction Documents;

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

                                       40
<PAGE>

      (d) The Agent shall have received (i) the Intercreditor Agreement duly
executed by each party thereto and (ii) either those consents (in writing) to
the execution, delivery and performance by the parties hereto of this Agreement
which are required under the Intercreditor Agreement or a written agreement by
the Bank Agent (as defined in the Intercreditor Agreement) addressed to the
Agent to the effect that no such consents are required under the Intercreditor
Agreement.

      (e) The Agent shall have received the Fee Letter, duly executed by the
Seller.

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

      (g) The Servicer and the Seller shall have each delivered to the
Purchasers a pro forma consolidated balance sheet for itself and its
Subsidiaries, if any (after giving effect to the initial Purchase, the closing
of the Senior Notes and the closing of the Revolving Credit Agreement) which
shall be in form and substance satisfactory to the Agent and each Purchaser, and
there shall not occur as a result of the funding hereunder, a default (or any
event which with the giving of notice or lapse of time or both would be a
default) under any of the Seller's, the Originators' or their respective
subsidiaries' debt instruments and other material agreements.

      (h) (i) All obligations under the Existing Program shall have been paid in
full, (ii) all documentation relating to the Existing Program shall have been
terminated on terms satisfactory to the Agent and (iii) the Agent shall have
received evidence of such termination in form and substance satisfactory to the
Agent.

      (i) The Revolving Credit Agreement shall be in full force and effect.

      (j) The Purchasers shall have received a certificate of the chief
financial officer of PolyOne certifying that it has received not less than
$190,000,000 in gross cash proceeds from the issuance of the Senior Notes in a
public offering or in a Rule 144A or other private placement.

      (k) The Agent shall have received evidence that after giving effect to the
Purchases occurring on the Closing Date, Total Excess Availability is not less
than $90,000,000 and Receivables Excess Availability is not less than
$75,000,000.

      (l) The Agent shall be satisfied with the results of a field examination
of the Originators conducted by Citicorp's internal auditors no more than 3
months prior to the Closing Date and shall have received appraisals (the
"Initial Appraisals") of all Contracts of the Originators, each in form and
substance satisfactory to the Agent.

      SECTION 3.02. CONDITIONS PRECEDENT TO ALL PURCHASES, REINVESTMENTS AND
LETTERS OF CREDIT.

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

                                       41
<PAGE>

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

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

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

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

      (b) on the date of such Purchase, Issuance or reinvestment the following
statements shall be true (and the acceptance by the Seller of the proceeds of
such Purchase or reinvestment, or the request by the Seller for an Issuance of a
Letter of Credit, shall constitute a representation and warranty by the Seller
that on the date of such Purchase, Issuance or reinvestment such statements are
true):

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

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

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

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

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

      SECTION 4.01. REPRESENTATIONS AND WARRANTIES OF THE SELLER.

      The Seller represents and warrants, as of the date hereof and as of the
date of each Purchase and Issuance, as follows:

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

                                       42
<PAGE>

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

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

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

      (e) Since December 31, 2002, there has been no Material Adverse Change and
there have been no events or developments that, in the aggregate, have had a
Material Adverse Effect.

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

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

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

                                       43
<PAGE>

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

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

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

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

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

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

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

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

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

      (r) With respect to each transfer to it of any Pool Receivables, the
Seller has either (i) purchased such Pool Receivables from an Originator in
exchange for payment (made by the Seller to an Originator in accordance with the
provisions of the Receivables Sale Agreement) in an amount which constitutes
fair consideration and approximates fair market value for such Pool Receivables
and in a sale the terms and conditions of which (including, without limitation,
the purchase price thereof) reasonably approximate an arm's-length transaction
between unaffiliated parties or (ii) acquired such Pool Receivables from an
Originator as a capital contribution in accordance with the provisions of the

                                       44
<PAGE>

Receivables Sale Agreement. No such sale, and no such contribution, has been
made for or on account of an antecedent debt owed by any Originator to the
Seller and no such sale or contribution is or may be voidable or subject to
avoidance under any section of the U.S. Bankruptcy Code.

      (s) The Seller has filed, or caused to be filed or be included in, all tax
reports and returns (federal, state, local and foreign), if any, required to be
filed by it and paid, or caused to be paid, all amounts of taxes, including
interest and penalties, required to be paid by it, except for such taxes (i) as
are being contested in good faith by proper proceedings and (ii) against which
adequate reserves shall have been established in accordance with and to the
extent required by GAAP, but only so long as the proceedings referred to in
clause (i) above would not subject the Agent or any other Indemnified Party to
any civil or criminal penalty or liability or involve any material risk of the
loss, sale or forfeiture of any property, rights or interests covered hereunder
or under the Receivables Sale Agreement.

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

      (u) Both before and after giving effect to (i) each Purchase to be made
and each Letter of Credit to be issued on the Closing Date or such other date as
Purchases and Letters of Credit requested hereunder are made or issued, (ii) the
disbursement of the proceeds of any Capital Investment, (iii) the consummation
of each other transaction contemplated by the other Transaction Documents and
(iv) the payment and accrual of all transaction costs in connection with the
foregoing, the Seller is Solvent.

      SECTION 4.02. REPRESENTATIONS AND WARRANTIES OF THE SERVICER.

      The Servicer represents and warrants as follows:

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

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

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

      (d) This Agreement has been, and each other Transaction Document to which
the Servicer is a party when delivered will have been, duly executed and
delivered by the Servicer. This Agreement is, and the other Transaction
Documents to which the Servicer is party when delivered hereunder will be, the

                                       45
<PAGE>

legal, valid and binding obligations of the Servicer enforceable against the
Servicer in accordance with their respective terms, subject to bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the rights of
creditors generally and to general equitable principles.

      (e) Since December 31, 2002, there has been no Material Adverse Change and
there have been no events or developments that, in the aggregate, have had a
Material Adverse Effect.

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

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

      (h) Since December 31, 2002, the Servicer has complied with the Credit and
Collection Policy in all material respects and since the date of this Agreement
there has been no change in the Credit and Collection Policy except as permitted
hereunder.

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

                                   ARTICLE V

                GENERAL COVENANTS OF THE SELLER AND THE SERVICER

      SECTION 5.01. AFFIRMATIVE COVENANTS OF THE SELLER.

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

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

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

                                       46
<PAGE>

      (c) Offices, Records and Books of Accounts. (i) Keep its principal place
of business and chief executive office and the offices where it keeps its
Records concerning the Pool Receivables at the address of the Seller referred to
in Section 4.01(j) or, upon at least 30 days' prior written notice to the Agent,
at any other location in a jurisdiction where all actions required by Section
6.05(a) shall have been taken, and (ii) maintain and implement administrative
and operating procedures (including, without limitation, an ability to recreate
records evidencing Pool Receivables in the event of the destruction of the
originals thereof), and keep and maintain all documents, books, records and
other information reasonably necessary or advisable for the collection of all
Pool Receivables (including, without limitation, records adequate to permit the
daily identification of each Pool Receivable, the Outstanding Balance of each
Pool Receivable and the dates which payments are due thereon and all Collections
of and adjustments to each existing Pool Receivable).

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

      (e) Examination of Records; Audits.

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

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

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

                                       47
<PAGE>

      complete copies of any invoices, underlying agreements, instruments or
      other documents and the identity of all Obligors in respect of Receivables
      referred to therein.

      (f) Keeping of Records and Books of Account. (i) Keep, or cause to be
kept, proper books of record and account, which shall be maintained or caused to
be maintained by the Seller and shall be separate and apart from those of any
Affiliate of the Seller, in which full and correct entries shall be made of all
financial transactions and the assets and business of the Seller in accordance
with GAAP, (ii) to the extent Records are in written form, segregate such
Records in file cabinets or storage containers and appropriately label such file
cabinets or storage containers to reflect that the Receivable Interests have
been conveyed to the Owners, and (iii) to the extent such Records constitute
computer programs and other non-written Records, appropriately legend such
Records to reflect that the Receivable Interests have been conveyed to the
Owners. (g) Deposits to Lock-Box Accounts. Instruct, or cause the Servicer to
instruct, all Obligors to make payments in respect of Pool Receivables to a
Lock-Box Account and, if the Seller or any Originator shall otherwise receive
any Collections (including, without limitation, any Collections deemed to have
been received by the Seller pursuant to Section 2.09), segregate and hold in
trust such Collections and deposit such Collections, or cause such Collections
to be deposited, to a Lock-Box Account within 2 Business Days following such
receipt.

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

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

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

                                       48
<PAGE>

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

      (k) Nature of Business and Permitted Transactions. Engage solely in the
businesses and transactions authorized by Section 3 of its charter.

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

      SECTION 5.02. REPORTING REQUIREMENTS OF THE SELLER.

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

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

      (b) Annual Reports. Within 95 days after the end of each Fiscal Year,
financial information regarding the Seller consisting of balance sheets of the
Seller as of the end of such year and related statements of income and cash
flows of the Seller for such Fiscal Year, all prepared in conformity with GAAP
and certified, in the case of such Financial Statements, without qualification,
including, without limitation, as to the scope of the audit or as to the Seller
being a going concern by the Seller's independent public accountants, together
with the report of such accounting firm stating that (i) such financial
statements fairly present the financial position of the Seller 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 Seller's independent public accountants shall
concur and that shall have been disclosed in the notes to the financial
statements) and (ii) the examination by the Seller's independent public
accountants in connection with such financial statements has been made in
accordance with generally accepted auditing standards, and accompanied by a
certificate stating that in the course of the regular audit of the business of
the Seller such accounting firm has obtained no knowledge that a Potential Event
of Termination or Event of Termination has occurred and is continuing, or, if in
the opinion of such accounting firm, a Potential Event of Termination or Event
of Termination has occurred and is continuing, a statement as to the nature
thereof.

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

                                       49
<PAGE>

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

      SECTION 5.03. NEGATIVE COVENANTS OF THE SELLER.

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

      (a) Sales, Adverse Claims, Etc.

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

      (b) Extension or Amendment of Receivables.

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

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

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

      (d) Change in Payment Instructions to Obligors.

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

      (e) Deposits to Lock-Box Accounts.

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

      (f) Change of Name, Etc.

      Change its name, identity, form of legal structure or jurisdiction of
organization, unless, prior to the effective date of any such change, the Seller
delivers to the Agent (i) UCC financing statements necessary to reflect such
change and to continue the perfection of the ownership interests in the
Receivable Interests contemplated by this Agreement and (ii) if the identity or
structure of the Seller has changed and such change adversely affects the rights
of the Agent under then existing Lock-Box Agreements with the Seller to take
control of the Lock-Box Accounts pursuant to Section 6.03(a), new

                                       50
<PAGE>

Lock-Box Agreements executed by the Seller and the Lock-Box Banks, to the extent
necessary to reflect such changes and to continue to enable the Agent to
exercise such rights.

      (g) Debt.

      Except as otherwise provided herein or in the Receivables Sale Agreement,
create, incur, assume or suffer to exist any indebtedness, other than (i)
indebtedness of the Seller representing fees, expenses and indemnities arising
hereunder or under the Receivables Sale Agreement for the purchase price of the
Receivables under the Receivables Sale Agreement, and (ii) other indebtedness of
the Seller incurred in the ordinary course of its business in an amount not to
exceed $9,500 at any time outstanding.

      (h) Lease Obligations.

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

      (i) ERISA.

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

      (j) Investments in Other Persons.

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

      (k) Sales, Etc., of Assets.

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

      (l) Merger, Etc.

      Consolidate with or merge into any other Person.

      (m) Organizational Documents.

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

      (n) Accounting.

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

      (o) Receivables Sale Agreement.

                                       51
<PAGE>

            (i) Cancel or terminate the Receivables Sale Agreement or consent to
      or accept any cancellation or termination thereof, (ii) amend, supplement
      or otherwise modify any term or condition of the Receivables Sale
      Agreement or give any consent, waiver or approval thereunder, (iii) waive
      any default under or breach of the Receivables Sale Agreement or (iv) take
      any other action under the Receivables Sale Agreement not required by the
      terms thereof that would impair the value of any Receivable Assets (as
      defined therein) or the rights or interests of the Seller thereunder or of
      the Agent or any Owner or Indemnified Party hereunder or thereunder.

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

      SECTION 5.04. AFFIRMATIVE COVENANTS OF THE SERVICER.

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

      (a) Compliance with Laws, Etc.

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

      (b) Preservation of Corporate Existence.

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

      (c) Books of Accounts.

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

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

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

      (e) Examination of Records; Audits.

                                       52
<PAGE>

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

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

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

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

      (f) Keeping of Records and Books of Account.

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

                                       53
<PAGE>

      (g) Deposits to Lock-Box Accounts.

      Instruct all Obligors to make payments in respect of Pool Receivables to a
Lock-Box Account and, if the Servicer shall otherwise receive any Collections
(including, without limitation, any Collections deemed to have been received by
the Seller pursuant to Section 2.09), segregate and hold in trust such
Collections and deposit such Collections, or cause such Collections to be
deposited, to a Lock-Box Account within 2 Business Days following such receipt.

      SECTION 5.05. REPORTING REQUIREMENTS OF THE SERVICER.

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

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

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

      (c) Annual Reports. Within 95 days after the end of each Fiscal Year,
financial information regarding PolyOne and its Subsidiaries consisting of
Consolidated balance sheets of PolyOne and its Subsidiaries as of the end of
such year and related statements of income and cash flows of PolyOne and its
Subsidiaries for such Fiscal Year, all prepared in conformity with GAAP and
certified, in the case of such Consolidated financial statements, without
qualification, including, but not limited to, as to the scope of the audit or as
to PolyOne being a going concern by PolyOne's independent public accountants,
together with the report of such accounting firm stating that (i) such financial
statements fairly present the Consolidated financial position of PolyOne and its
Subsidiaries as at the dates indicated and the results of their operations and
cash flow for the periods indicated in conformity with GAAP applied on a basis
consistent with prior years (except for changes with which PolyOne's independent
public accountants shall concur and that shall have been disclosed in the notes
to the financial statements) and (ii) the examination by PolyOne's independent
public accountants in connection with such Consolidated

                                       54
<PAGE>

Financial Statements has been made in accordance with generally accepted
auditing standards, and accompanied by a certificate stating that in the course
of the regular audit of the business of PolyOne and its Subsidiaries such
accounting firm has obtained no knowledge that an Event of Termination or a
Potential Event of Termination has occurred and is continuing, or, if in the
opinion of such accounting firm, a Potential Event of Termination or Event of
Termination has occurred and is continuing, a statement as to the nature
thereof.

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

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

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

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

      SECTION 5.06. NEGATIVE COVENANTS OF THE SERVICER.

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

      (a) Extension or Amendment of Receivables.

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

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

                                       55
<PAGE>

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

      (c) Change in Payment Instructions to Obligors.

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

      (d) Deposits to Lock-Box Accounts.

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

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

      (f) Asset Sales. Sell, convey, transfer, lease or otherwise dispose of,
any of its assets or any interest therein (including the sale or factoring at
maturity or collection of any accounts) to any Person, or permit or suffer any
other Person to acquire any interest in any of its assets (other than the sale
or disposition of inventory in the ordinary course of business) unless (i) no
Potential Event of Termination or Event of Termination is continuing or would
result therefrom, (ii) such sale or other transfer is for Fair Market Value,
(iii) 75% of the proceeds of such sale or transfer are payable in cash to the
Servicer upon the consummation of such sale, and (iv) if the Fair Market Value
of such asset is in excess of $25,000,000, the Board of Directors of the
Servicer has approved such sale.

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

      SECTION 5.07. AFFIRMATIVE FINANCIAL COVENANTS OF THE SERVICER.

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

      (a) Interest Coverage Ratio. Maintain as of the end of any fiscal quarter
during each period set forth below, an Interest Coverage Ratio of not less than
the applicable ratio set forth below:

<TABLE>
<CAPTION>
                  FISCAL QUARTER                               RATIO
<S>                                                            <C>
                  September 30, 2003                           1.00 to 1

                  December 31, 2003                            1.00 to 1

                  March 31, 2004                               1.15 to 1

                  June 30, 2004                                1.25 to 1
</TABLE>

                                       56
<PAGE>

<TABLE>
<S>                                                            <C>
                  September 30, 2004                           1.75 to 1

                  December 31, 2004                            2.00 to 1

                  March 31, 2005                               2.00 to 1

                  June 30, 2005                                2.25 to 1

                  September 30, 2005 and thereafter            2.5 to 1
</TABLE>

      (b) Minimum Excess Availability. Maintain on each day Total Excess
Availability in an amount not less than $25,000,000 and Receivables Excess
Availability in an amount not less than $15,000,000.

      SECTION 5.08. NEGATIVE FINANCIAL COVENANTS OF THE SERVICER.

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

      (a) Capital Expenditures. Make or incur, or permit its Subsidiaries to
make or incur, Capital Expenditures during each of the Fiscal Years set forth
below, in an aggregate amount in excess of the maximum amount set forth below
for such Fiscal Year:

<TABLE>
<CAPTION>
                                                   MAXIMUM CAPITAL
                    FISCAL YEAR ENDING              EXPENDITURES
                    ------------------              ------------
<S>                                                  <C>
                      December 2003                  $75,000,000
                      December 2004                  $90,000,000;
                    and each Fiscal Year
                       thereafter
</TABLE>

provided, however, that to the extent that actual Capital Expenditures for any
such Fiscal Year shall be less than the maximum amount set forth above for such
Fiscal Year (without giving effect to the carryover permitted by this proviso),
50% of the difference between said stated maximum amount and such actual Capital
Expenditures shall, in addition, be available for Capital Expenditures in the
next succeeding Fiscal Year.

      (b) Restricted Payments. Directly or indirectly, declare, order, pay, make
or set apart any sum for any Restricted Payment unless, after giving effect to
such Restricted Payment, (i) Total Excess Availability (calculated on a pro
forma basis using the average Total Excess Availability for each day during the
immediately preceding calendar month) is not less than the greater of (A)
$210,000,000, reduced by the amount of any Scheduled Other Debt Payment made
during said immediately preceding calendar month, and (B) $150,000,000, and (ii)
the Adjusted EBITDA of the Servicer and its Subsidiaries for the twelve-month
period ending on the last day of the most recently completed Fiscal Period is
not less than $200,000,000.

      (c) Prepayment of Debt. Prepay, redeem, purchase, defease or otherwise
satisfy prior to the scheduled maturity thereof in any manner, or make any
payment in violation of any subordination terms of, any Debt and will not permit
any of its Subsidiaries to do any of the foregoing; provided, however, that the
Servicer or any Subsidiary of the Servicer may (i) prepay any obligations
hereunder in accordance with the terms of this Agreement, (ii) make regularly
scheduled or otherwise required repayments or redemptions of Debt, (iii) prepay
Debt under the Revolving Credit Agreement, (iv) prepay any Debt

                                       57
<PAGE>

payable to the Servicer by any of its Subsidiaries, (v) prepay PolyOne's 9?%
Senior Notes due 2003 with the proceeds of the Senior Notes deposited into
escrow on the Closing Date, (vi) renew, extend, refinance and refund Debt on
terms no less favorable to the Servicer or its Subsidiary obligated thereunder,
including as to weighted average maturity and final maturity, than the Debt
being renewed, extended, refinanced or refunded, and (vii) prepay any other
obligations on any Debt provided that before and after giving effect to such
prepayment (a) Total Excess Availability (calculated on a pro forma basis using
the average Total Excess Availability for each day during the immediately
preceding calendar month) is not less than the greater of (x) $210,000,000,
reduced by the amount of any Scheduled Other Debt Payment made during said
immediately preceding calendar month, and (y) $150,000,000, and (b) the Adjusted
EBITDA of the Servicer and its Subsidiaries for the twelve-month period ending
on the last day of the most recently completed Fiscal Period is not less than
$200,000,000.

                                   ARTICLE VI

                          ADMINISTRATION AND COLLECTION

      SECTION 6.01. DESIGNATION OF SERVICER.

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

      SECTION 6.02. DUTIES OF SERVICER.

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

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

                                       58
<PAGE>

adjust any other terms and conditions of any Contract if, but only if (in the
case of this clause (iii)), the Servicer gives at least 2 Business Days' prior
written notice of such adjustments to the Agent and the Agent agrees in writing
to such adjustments.

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

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

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

      SECTION 6.03. RIGHTS OF THE AGENT.

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

      (b) At any time:

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

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

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

                                       59
<PAGE>

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

      SECTION 6.04. RESPONSIBILITIES OF THE SELLER.

      Anything herein to the contrary notwithstanding:

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

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

      SECTION 6.05. FURTHER ACTION EVIDENCING PURCHASES.

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

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

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

                                       60
<PAGE>

                                  ARTICLE VII

                              EVENTS OF TERMINATION

      SECTION 7.01. EVENTS OF TERMINATION.

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

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

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

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

      (d) The Seller or PolyOne shall fail to pay any principal of, or premium
or interest on, any of its Debt that is outstanding in a principal amount of at
least $9,500, in the case of the Seller, and $15,000,000, in the case of PolyOne
(including, without limitation, all amounts outstanding under the Revolving
Credit Agreement) or any Originator, when the same becomes due and payable
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise), and such failure shall continue after the applicable grace period,
if any, specified in the agreement or instrument relating to such Debt; or any
other event shall occur or condition shall exist under any agreement or
instrument relating to any such Debt and shall continue after the applicable
grace period, if any, specified in such agreement or instrument, if the effect
of such event or condition is to accelerate, or to permit the acceleration of,
the maturity of such Debt; or any such Debt shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled required
prepayment), redeemed, purchased or defeased, or an offer to prepay, redeem,
purchase or defease such Debt shall be required to be made, in each case prior
to the stated maturity thereof; or

      (e) Any Purchase or any reinvestment pursuant to Section 2.07 shall for
any reason (other than pursuant to the terms hereof) cease to create, or any
Receivable Interest shall for any reason cease to be, a valid and perfected
first priority undivided percentage ownership interest or security interest to
the extent of the pertinent Receivable Interest in each applicable Pool
Receivable and the Related Security and Collections with respect thereto; or

      (f) The Seller, the Servicer or any Originator shall generally not pay its
debts as such debts become due, or shall admit in writing its inability to pay
its debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against the Seller, the

                                       61
<PAGE>

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

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

      (h) Since December 31, 2002, there shall have been any Material Adverse
Change (other than to the extent expressly set forth on Schedule V hereto or
disclosed in any public filing prior to the date hereof with the Securities and
Exchange Commission); or

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

      (j) A Change of Control shall occur; or

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

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

      SECTION 7.02. ACTIONS IN RESPECT OF LETTERS OF CREDIT.

      Upon the occurrence or declaration of the Termination Date, pursuant to
Section 2.08, the Servicer shall set aside and hold in trust as security for
repayment of all amounts with respect to undrawn Letters of Credit for the
Purchasers an amount equal to (a) 105% in respect of Standby Letters Of Credit
and (b) 115% in respect of Documentary Letters of Credit, of the Letter of
Credit Undrawn Amount. The Servicer may, from time to time, apply such funds in
accordance with Section 2.08.

                                  ARTICLE VIII

                                    THE AGENT

                                       62
<PAGE>

      SECTION 8.01. AUTHORIZATION AND ACTION.

      Each Purchaser and the Issuing Bank hereby appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such powers and
discretion under this Agreement and the other Transaction Documents and the
other instruments and documents delivered pursuant hereto as are delegated to
the Agent by the terms hereof and thereof, together with such powers and
discretion as are reasonably incidental thereto. The Agent agrees to give to
each Purchaser and the Issuing Bank copies of each notice (including, without
limitation, each report and financial statement received hereunder or under any
other Transaction Document) given to the Agent by the Seller, the Servicer or an
Originator pursuant to the terms of this Agreement or any other Transaction
Document. The Agent further agrees that the Required Purchasers may compel the
Agent to make any request that the Agent may but is not required to make
hereunder.

      SECTION 8.02. AGENT'S RELIANCE, ETC.

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

      SECTION 8.03. CITICORP AND AFFILIATES.

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

                                       63
<PAGE>

      SECTION 8.04. PURCHASE DECISIONS.

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

      SECTION 8.05. INDEMNIFICATION.

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

      SECTION 8.06. POSTING OF APPROVED ELECTRONIC COMMUNICATIONS.

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

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

                                       64
<PAGE>

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

                                   ARTICLE IX

                       ASSIGNMENT OF RECEIVABLE INTERESTS

      SECTION 9.01. PURCHASER'S ASSIGNMENT OF RIGHTS AND OBLIGATIONS.

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

      (b) By executing and delivering an Assignment and Acceptance, the
assigning Purchaser and the Assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, the assigning Purchaser makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
any other Transaction Document or any other instrument or document furnished
pursuant hereto or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other Transaction
Document or any other instrument or document furnished pursuant hereto, or the
perfection, priority or value of any ownership interest or security interest
created or purported to be created hereunder or under the Receivables Sale
Agreement; (ii) the assigning Purchaser makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the Seller
or any Originator or the performance or observance by the Seller or any
Originator of any of their respective obligations under this Agreement or

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any other Transaction Document or any other instrument or document furnished
pursuant hereto; (iii) such Assignee confirms that it has received copies of
this Agreement and the other Transaction Documents, together with such other
documents and information as it has deemed appropriate to make its own analysis
and decision to enter into such Assignment and Acceptance; (iv) such Assignee
will, independently and without reliance upon the Agent, any of its Affiliates,
the assigning Purchaser or any other Purchaser and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
decisions in taking or not taking action under this Agreement and the other
Transaction Documents and the other instruments and documents furnished pursuant
hereto; (v) such Assignee confirms that it is an Eligible Assignee; (vi) such
Assignee appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers and discretion under this Agreement and the
other Transaction Documents and the other instruments and documents furnished
pursuant hereto as are delegated to the Agent by the terms hereof and thereof,
together with such powers and discretion as are reasonably incidental thereto;
(vii) such Assignee appoints as its agent the Servicer from time to time
designated pursuant to Section 6.01 to enforce its respective rights and
interests in and under the Pool Receivables and the Related Security and
Collections with respect thereto and the related Contracts; and (viii) such
Assignee agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Purchaser.

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

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

      (e) Each Purchaser may sell participations to one or more Persons in or to
all or a portion of its rights and obligations under the Transaction Documents
(including all its rights and obligations with respect to Capital Investment and
Letters of Credit). The terms of such participation shall not, in any event,
require the participant's consent to any amendments, waivers or other
modifications of any provision of any Transaction Documents, the consent to any
departure by the Seller, the Servicer or any Originator therefrom, or to the
exercising or refraining from exercising any powers or rights such Purchaser may
have under or in respect of the Transaction Documents (including the right to
enforce the obligations of the Seller, the Servicer or any Originator), except
if any such amendment, waiver or other modification or consent would reduce the
amount, or postpone any date fixed for, any amount (whether of Capital, Yield or
fees) payable to such participant under the Transaction Documents, to which such
participant would otherwise be entitled under such participation. In the event
of the sale of any participation by any Purchaser, (w) such Purchaser's
obligations under the Transaction Documents shall remain unchanged, (x) such
Purchaser shall remain solely responsible to the other parties for the
performance of such obligations, (y) such Purchaser shall remain the holder of
such Capital for all purposes of this Agreement and (z) the Seller, the Agent
and the other Purchasers shall continue to deal solely and directly with such
Purchaser in connection with such Purchaser's rights and obligations under

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this Agreement. Each participant shall be entitled to the benefits of Sections
2.12(a), 2.13 and 2.14 as if it were a Purchaser; provided, however, that
anything herein to the contrary notwithstanding, the Seller shall not, at any
time, be obligated to make under Section 2.12(a), 2.13 or 2.14 to the
participants in the rights and obligations of any Purchaser (together with such
Purchaser) any payment in excess of the amount the Seller would have been
obligated to pay to such Purchaser in respect of such interest had such
participation not been sold.

      (f) The Issuing Bank may at any time assign its rights and obligations
hereunder to any other Purchaser by an instrument in form and substance
satisfactory to the Seller, the Agent, such Issuing Bank and such Purchaser. If
the Issuing Bank ceases to be a Purchaser hereunder by virtue of any assignment
made pursuant to this Section 9.01, then, as of the effective date of such
cessation, such Issuing Bank's obligations to Issue Letters of Credit pursuant
to Section 2.4 shall terminate and such Issuing Bank shall be an Issuing Bank
hereunder only with respect to outstanding Letters of Credit issued prior to
such date.

                                   ARTICLE X

                                 INDEMNIFICATION

      SECTION 10.01. INDEMNITIES.

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

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

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

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            (iii) the failure by the Seller to comply with any applicable law,
      rule or regulation with respect to any Pool Receivable or the related
      Contract or any Related Security with respect thereto; or the failure of
      any Pool Receivable or the related Contract or any Related Security with
      respect thereto to conform to any such applicable law, rule or regulation;

            (iv) the failure to vest in the Owner of a Receivable Interest a
      first priority perfected undivided percentage ownership interest, to the
      extent of such Receivable Interest, in each Receivable in, or purported to
      be in, the Receivables Pool and the Related Security and Collections in
      respect thereof, free and clear of any Adverse Claim; or the failure of
      the Seller to have obtained a first priority perfected ownership interest
      in the Pool Receivables and the Related Security and Collections with
      respect thereto transferred or purported to be transferred to the Seller
      under the Receivables Sale Agreement, free and clear of any Adverse Claim;

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

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

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

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

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

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

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

            (xii) any investigation, litigation or proceeding related to or
      arising from this Agreement, any other Transaction Document or any other
      instrument or document furnished

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      pursuant hereto or thereto, or any transaction contemplated by this
      Agreement or any Contract or the use of proceeds from any Purchase or
      reinvestment pursuant to this Agreement, or the ownership of, or other
      interest in, any Receivable, the related Contract or Related Security;

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

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

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

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

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

                                   ARTICLE XI

                                  MISCELLANEOUS

      SECTION 11.01. AMENDMENTS, ETC.

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

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

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

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

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

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

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

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

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

            (v) amend this Section 11.01, or

            (vi) extend the Commitment Termination Date, or

            (vii) increase the amount of the Total Commitment;

      (b) without the consent of the applicable Purchaser, increase the
Commitment of such Purchaser, subject such Purchaser to any additional
obligations, or decrease the Receivable Interest of such Purchaser; and

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

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

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

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      SECTION 11.02. NOTICES, ETC.

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

      SECTION 11.03. BINDING EFFECT; ASSIGNABILITY.

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

      SECTION 11.04. COSTS AND EXPENSES.

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

      SECTION 11.05. CONFIDENTIALITY.

      (a) The Seller, the Servicer, PolyOne, the Purchasers and the Agent hereby
agree that each of the Servicer, PolyOne, the Seller, the Purchasers and the
Agent (and each of their respective, and their respective Affiliates, employees,
officers, directors, agents and advisors) is, and has been from the commencement
of discussions with respect to the receivables program established hereunder,
permitted to disclose to any and all Persons, without limitation of any kind,
the structure and tax aspects (as such terms are used in Code Sections 6011,
6111 and 6112 and the regulations promulgated thereunder) of the receivables
program established hereunder, and all materials of any kind (including opinions
or other tax analyses) that are or have been provided to the Servicer, PolyOne,
the Seller, such Purchasers or the Agent related to such structure and tax
aspects. In this regard, each of the Servicer, PolyOne, the Seller, the
Purchasers and the Agent acknowledges and agrees that its disclosure of the
structure or tax aspects of

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<PAGE>

the receivables program established hereunder is not limited in any way by an
express or implied understanding or agreement, oral or written (whether or not
such understanding or agreement is legally binding). Furthermore, each of the
Servicer, PolyOne, the Seller, the Purchasers and the Agent acknowledges and
agrees that it does not know or have reason to know that its use or disclosure
of information relating to the structure or tax aspects of the receivables
program established hereunder is limited in any other manner (such as where the
receivables program established hereunder is claimed to be proprietary or
exclusive) for the benefit of any other Person. To the extent that disclosure of
the structure or tax aspects of the receivables program established hereunder by
the Servicer, PolyOne, the Seller, the Agent or the Purchasers is limited by any
existing agreement between the Servicer, PolyOne, the Seller, the Agent or the
Purchasers, such limitation is agreed to be void ab initio and such agreement is
hereby amended to permit disclosure of the structure and tax aspects of the
receivables program established hereunder as provided in this clause (a).

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

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

      SECTION 11.06. GOVERNING LAW.

      THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.

      SECTION 11.07. JURISDICTION, ETC.

      (a) Each of the parties hereto hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of any
New York State court or Federal court of the United

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States of America sitting in New York City, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement or any of the other Transaction Documents to which it is a party, or
for recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in any such New York State
court or, to the extent permitted by law, in such Federal court. Each of the
parties hereto hereby agrees that service of process in any such action or
proceeding may be effected by mailing a summons and complaint to it at its
address specified in Section 11.02 by registered mail, return receipt requested,
or in any other manner permitted by applicable law. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that any party may otherwise have to bring any action or proceeding
relating to this Agreement or any of the other Transaction Documents in the
courts of any other jurisdiction.

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

      SECTION 11.08. EXECUTION IN COUNTERPARTS.

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

      SECTION 11.09. INTENT OF THE PARTIES.

      It is the intention of the parties hereto that each Purchase and
reinvestment shall convey to each Owner, to the extent of its Receivable
Interests, an undivided ownership interest in the Pool Receivables and the
Related Security and Collections in respect thereof and that such transaction
shall constitute a purchase and sale and not a secured loan for all purposes
other than for federal income tax purposes. If, notwithstanding such intention,
the conveyance of the Receivable Interests from the Seller to any Owner shall
ever be recharacterized as a secured loan and not a sale, it is the intention of
the parties hereto that this Agreement shall constitute a security agreement
under applicable law, and the Seller hereby grants to the Agent for the benefit
of itself, the Issuing Bank and each such Owner a duly perfected first priority
security interest in all of the Seller's right, title and interest in, to and
under the Pool Receivables and the Related Security and Collections in respect
thereof, free and clear of Adverse Claims and Seller also hereby grants to the
Agent for the benefit of itself, the Issuing Bank and each Owner a duly
perfected first priority security interest in all of the Seller's right, title
and interest in, to and under any cash collateral under this Agreement.

      SECTION 11.10. ENTIRE AGREEMENT.

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

                                       73
<PAGE>

      SECTION 11.11. SEVERABILITY OF PROVISIONS.

      Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.

      SECTION 11.12. NO LIABILITY OF SYNDICATION AGENT.

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

      SECTION 11.13. WAIVER OF JURY TRIAL.

      EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER
TRANSACTION DOCUMENTS, THE PURCHASES OR THE ACTIONS OF THE AGENT OR ANY
INDEMNIFIED PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT
HEREOF OR THEREOF.

                                       74
<PAGE>

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

                                             POLYONE FUNDING CORPORATION,
                                             as Seller

                                             By:     /s/ John Rastetter
                                             -----------------------------------
                                             Name:    John Rastetter
                                             Title:   President

                                             Address: 33587 Walker Road
                                                      Avon Lake, Ohio 44012

                                             Attention: Treasurer

                                             Telephone No.: (216) 589-4291
                                             Telecopier No.: (216) 589-4280

                        [RECEIVABLES PURCHASE AGREEMENT]

<PAGE>

                                    POLYONE CORPORATION,
                                         as Servicer

                                    By:            /s/ John Rastetter
                                       -----------------------------------------
                                         Name:     John Rastetter
                                         Title:    Treasurer

                                    Address:       33587 Walker Road
                                                   Avon Lake, Ohio  44012

                                    Attention:     Treasurer

                                    Telephone No.:   (216) 589-4291
                                    Telecopier No.:  (216) 589-4280

                        [RECEIVABLES PURCHASE AGREEMENT]
<PAGE>

                                     ISSUING BANK

                                     CITIBANK, N.A.,
                                        as Issuing Bank

                                     By:            /s/ David Jaffe
                                        ----------------------------------------
                                          Name:  David Jaffe
                                          Title: Vice President

                                     Address:    388 Greenwich Street
                                                 19th Floor
                                                 New York, New York  10013

                                     Attention:  David Jaffe

                                     Telephone No.:  (212) 816-2329
                                     Telecopier No.: (212) 816-2613

                        [RECEIVABLES PURCHASE AGREEMENT]
<PAGE>

                                AGENT

                                CITICORP USA, INC.,
                                     as Agent

                                By:             /s/ David Jaffe
                                   ---------------------------------------------
                                  Name:     David Jaffe
                                  Title:    Vice President

                                Address:    388 Greenwich Street
                                            19th Floor
                                            New York, New York  10013

                                Attention:  David Jaffe

                                Telephone No.:  (212) 816-2329
                                Telecopier No.: (212) 816-2613

                        [RECEIVABLES PURCHASE AGREEMENT]

<PAGE>

                                SYNDICATION AGENT

                                NATIONAL CITY COMMERCIAL FINANCE, INC.,
                                     as Syndication Agent

                                By:            /s/ James C. Ritchie
                                   ---------------------------------------------
                                   Name:  James C. Ritchie
                                   Title: Vice President

                                Address:   1965 East 6th Street,
                                           Suite 400
                                           Cleveland, Ohio, 44114

                                Attention: James C. Ritchie

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

                        [RECEIVABLES PURCHASE AGREEMENT]

<PAGE>

                                INITIAL PURCHASERS:

                                CITICORP USA, INC.,
                                     as an Initial Purchaser

                                By:             /s/ David Jaffe
                                   ---------------------------------------------
                                   Name:   David Jaffe
                                   Title:  Vice President

                                Address:   388 Greenwich Street
                                           19th Floor
                                           New York, New York  10013

                                Attention: David Jaffe

                                Telephone No.:   (212) 816-2329
                                Telecopier No.:  (212) 816-2613

                                Commitment:      $ 39,500,000.00

                                Percentage
                                Interest:        The quotient, expressed as a
                                                 percentage, obtained by
                                                 dividing the Commitment by
                                                 225,000,000.

                                Initial Capital:   $ 15,161,804.65

                        [RECEIVABLES PURCHASE AGREEMENT]

<PAGE>

                               NATIONAL CITY COMMERCIAL FINANCE, INC.,
                                    as an Initial Purchaser

                               By:        /s/ James C. Ritchie
                                  ----------------------------------------------
                                  Name:    James C. Ritchie
                                  Title:   Vice President

                               Address:    1965 East 6th Street,
                                           Suite 400
                                           Cleveland, Ohio, 44114

                               Attention:  James C. Ritchie

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

                               Commitment:       $ 39,500,000.00

                               Percentage
                               Interest:         The quotient, expressed as a
                                                 percentage, obtained by
                                                 dividing the Commitment by
                                                 225,000,000.

                               Initial Capital:   $ 15,161,804.65

                        [RECEIVABLES PURCHASE AGREEMENT]

<PAGE>

                               THE CIT GROUP/BUSINESS CREDIT, INC.,
                                    as an Initial Purchaser

                               By:        /s/ James A. Brennan, Jr.
                                  -------------------------------------------
                                  Name:    James A. Brennan
                                  Title:   Vice President

                               Address:    1211 Avenue of the Americas
                                           New York, New York  10036

                               Attention:  Peter Skavla

                               Telephone No.:  (212) 790-9170
                               Telecopier No.: (212) 536-1295

                               Commitment:      $ 20,000,000.00

                               Percentage
                               Interest:        The quotient, expressed as a
                                                percentage, obtained by dividing
                                                the Commitment by 225,000,000.

                               Initial Capital: $ 7,676,863.11

                        [RECEIVABLES PURCHASE AGREEMENT]

<PAGE>

                               FLEET CAPITAL CORPORATION,
                                    as an Initial Purchaser

                               By:          /s/ Michael Kerneklian
                                  ----------------------------------------------
                                  Name:   Michael Kerneklian
                                  Title:  Vice President

                               Address:   1633 Broadway
                                          29th Floor
                                          New York, New York  10019

                               Attention: Michael Kerneklian

                               Telephone No.:  (646) 366-4377
                               Telecopier No.: (646) 366-4395

                               with a copy to:

                               Address:     Fleet Capital Corporation
                                            200 Glastonbury Boulevard
                                            Glastonbury, Connecticut  06033

                               Attention:   Lisa Giampalo,
                                            Senior Documentation Administrator

                               Telephone:   (860) 657-7655
                               Telecopier:  (860) 657-7759

                               Commitment:   $ 20,000,000.00

                               Percentage
                               Interest:     The quotient, expressed as
                                             a percentage, obtained by
                                             dividing the Commitment by
                                             225,000,000.

                               Initial Capital: $ 7,676,863.11

                        [RECEIVABLES PURCHASE AGREEMENT]

<PAGE>

                              GMAC COMMERCIAL FINANCE LLC,
                                   as an Initial Purchaser

                              By:          /s/ George Grieco
                                 -----------------------------------------------
                                 Name:   George Grieco
                                 Title:  Director

                              Address:   461 Fifth Avenue
                                         21st Floor
                                         New York, New York  10017

                              Attention: George Grieco,
                                         Director

                              Telephone No.:   (212) 329-1605
                              Telecopier No.:  (212) 489-3980

                              Commitment:      $ 20,000,000.00

                              Percentage
                              Interest:        The quotient, expressed as a
                                               percentage, obtained by dividing
                                               the Commitment by 225,000,000.

                              Initial Capital: $ 7,676,863.11

                        [RECEIVABLES PURCHASE AGREEMENT]

<PAGE>

                               MERRILL LYNCH CAPITAL,
                                 a division of Merrill Lynch Business
                                 Financial Services, Inc.,
                                 as an Initial Purchaser

                               By:          /s/ Richard J. Holston
                                 -----------------------------------------------
                                  Name:    Richard Holston
                                  Title:   Vice President

                               Address:    225 Liberty Street
                                           5th Floor
                                           New York, New York  10281

                               Attention:  Tara Wrobel,
                                           Vice President

                               Telephone No.:   (212) 236-1558
                               Telecopier No.:  (212) 236-0048

                               Commitment:      $ 20,000,000.00

                               Percentage
                               Interest:        The quotient, expressed as a
                                                percentage, obtained by dividing
                                                the Commitment by 225,000,000.

                               Initial Capital: $ 7,676,863.11

                        [RECEIVABLES PURCHASE AGREEMENT]

<PAGE>

                             LASALLE BUSINESS CREDIT, LLC,
                                  as an Initial Purchaser

                             By:             /s/ Anthony J. Veith
                                ------------------------------------------------
                                Name:   Anthony J. Veith
                                Title:  Senior Vice President

                             Address:   565 Fifth Avenue
                                        27th Floor
                                        New York, New York  10017

                             Attention: Ernest Abati,
                                        First Vice President

                             Telephone No.:   (212) 931-9700
                             Telecopier No.:  (212) 986-4205

                             Commitment:      $ 15,000,000.00

                             Percentage
                             Interest:        The quotient, expressed as a
                                              percentage, obtained by dividing
                                              the Commitment by 225,000,000.

                             Initial Capital: $ 5,757,647.33

                        [RECEIVABLES PURCHASE AGREEMENT]

<PAGE>

                             PNC BANK, N.A.,
                                  as an Initial Purchaser

                             By:            /s/ James Cannella
                                ------------------------------------------------
                                Name:   James Cannella
                                Title:  Vice President

                             Address:   1600 Market Street
                                        31st Floor
                                        Philadelphia, Pennsylvania  19103

                             Attention: Jacqueline Mackenzie,
                                        Assistant Vice President

                             Telephone No.:   (215) 585-2056
                             Telecopier No.:  (215) 585-4771

                             Commitment:      $ 15,000,000.00

                             Percentage
                             Interest:        The quotient, expressed as a
                                              percentage, obtained by dividing
                                              the Commitment by 225,000,000.

                             Initial Capital: $ 5,757,647.33

                        [RECEIVABLES PURCHASE AGREEMENT]

<PAGE>

                              ORIX FINANCIAL SERVICES, INC.,
                                   as an Initial Purchaser

                              By:           /s/ D. Darby Jones
                                 ----------------------------------------------
                                 Name:   Deedra Darby-Jones
                                 Title:  Vice President

                              Address:   846 East Algonquin Road
                                         Suite 101
                                         Schaumburg, Illinois  60173

                              Attention: Deedra Darby-Jones

                              Telephone No.:  (770) 970-8009
                              Telecopier No.: (770) 970-8059

                                   with a copy to:

                              Address:   ORIX Financial Services, Inc.
                                         600 Townpark Lane
                                         Kennesaw, Georgia  30144

                              Attention: Hal Parkerson, Esq.

                              Telephone No.:  (770) 970-6327
                              Telecopier No.: (770) 970-6827

                              Commitment:      $ 12,000,000.00

                              Percentage
                              Interest:        The quotient, expressed as a
                                               percentage, obtained by dividing
                                               the Commitment by 225,000,000.

                              Initial Capital: $ 4,606,117.87

                        [RECEIVABLES PURCHASE AGREEMENT]

<PAGE>

                            U.S. BANK NATIONAL ASSOCIATION,
                                 as an Initial Purchaser

                            By:           /s/ Donald K. Mitchell
                               -------------------------------------------------
                                 Name:  Donald K. Mitchell
                                 Title: Vice President

                            Address:    U.S. Bank Business Credit
                                        425 Walnut Street
                                        14th Floor
                                        CN-OH-W14S
                                        Cincinnati, Ohio  45202

                            Attention:  Donald K. Mitchell

                            Telephone No.:   (513) 632-3274
                            Telecopier No.:  (513) 632-2040

                            Commitment:      $ 12,000,000.00

                            Percentage
                            Interest:        The quotient, expressed as a
                                             percentage, obtained by dividing
                                             the Commitment by 225,000,000.

                            Initial Capital: $ 4,606,117.87

                        [RECEIVABLES PURCHASE AGREEMENT]

<PAGE>

                              WHITEHALL BUSINESS CREDIT CORPORATION,
                              as an Initial Purchaser

                              By:       /s/ Joseph A. Klapkowski
                                 ---------------------------------------------
                                Name:   Joseph A. Klapkowski
                                Title:  Vice President and Authorized Signatory

                              Address:  One State Street
                                        New York, New York 10004

                              Attention: Joseph A. Klapkowski,
                                         Vice President

                              Telephone No.:   (212) 806-4522
                              Telecopier No.:  (212) 806-4510

                              Commitment:      $ 12,000,000.00

                              Percentage       Interest: The quotient, expressed
                                               as a percentage, obtained by
                                               dividing the Commitment by
                                               225,000,000.

                              Initial Capital: $ 4,606,117.87

                        [RECEIVABLES PURCHASE AGREEMENT]

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