Document:

<PAGE>

                                                                     EXHIBIT 4.2

               CARDIOGENESIS CORPORATION SHARE PURCHASE AGREEMENT

        This SHARE PURCHASE AGREEMENT (this "Agreement"), is made and entered
into as of April 10, 2002, by and among CARDIOGENESIS CORPORATION, a California
corporation (the "Company"), and the purchasers listed on Schedule A attached
hereto (collectively, the "Purchasers" and individually, a "Purchaser").

1.      AUTHORIZATION OF SALE OF THE SHARES

        Subject to the terms and conditions of this Agreement, the Company has
authorized the sale of 500,000 shares (the "Shares") of common stock, no par
value (the "Common Stock"), of the Company.

2.      AGREEMENT TO SELL AND PURCHASE THE SHARES

        2.1 PURCHASE AND SALE

        Subject to the terms and conditions of this Agreement, each Purchaser
severally agrees to purchase, and the Company agrees to sell and issue to each
Purchaser, at the Closing (as defined below) that number of Shares set forth
opposite such Purchaser's name on Schedule A attached hereto.

        2.2 PURCHASE PRICE

        The purchase price of each Share shall be $1.00 (the "Per Share Price").
The Company shall not, during the period beginning on the date of this Agreement
and ending ninety (90) days after the Closing Date (as defined below), sell (i)
shares of Common Stock at a price per share of less than the Per Share Price, or
(ii) options, warrants or any other securities that can be converted into, or
otherwise exchanged for, shares of the Company's common stock at a conversion,
exchange or exercise price per share of less than the Per Share Price. In the
event the Company shall, during the period beginning on the date of this
Agreement and ending ninety (90) days after the Closing Date, sell any shares of
the Company's common stock at, or any instruments that can be converted into or
otherwise exchanged for the Company's common stock (the "Subsequent Sale")
exercisable at, a price per share (the "Subsequent Purchase Price") of less than
the Per Share Price, the Company shall, within ten (10) business days of the
Subsequent Sale, pay to the Purchaser a cash amount equal to the number of
Shares times the difference between the Per Share Price and the Subsequent
Purchase Price.

3.      DELIVERY OF THE SHARES AT THE CLOSING

                                       2
<PAGE>

        (a)     The completion of the purchase and sale of the Shares (the
                "Closing") shall occur at the offices of Gibson, Dunn & Crutcher
                LLP, counsel to the Company, at 2029 Century Park East, 40th
                Floor, Los Angeles, California, at 9:00 a.m. local time on April
                11, 2002 or such other time and date as may be agreed by the
                parties (the "Closing Date").

        (b)     At the Closing, the Company shall authorize its transfer agent
                (the "Transfer Agent") to issue to each Purchaser one or more
                stock certificates registered in the name of such Purchaser, or
                in such nominee name(s) as designated by such Purchaser in
                writing, representing the number of Shares set forth in Section
                2 above and bearing an appropriate legend referring to the fact
                that the Shares were sold in reliance upon the exemption from
                registration provided by Section 4(2) of the Securities Act of
                1933, as amended (the "Securities Act"), and Rule 506 under the
                Securities Act. The Company will deliver one certificate
                representing 400,000 Shares and one certificate representing
                100,000 Shares (the "Certificates") against delivery of payment
                for the Shares by the Purchasers. Prior to the Purchasers'
                delivery of payment for the Shares, the Company will deliver via
                facsimile a copy of the Certificates to be delivered upon
                Closing to the office of the Purchasers (at the fax number
                indicated on the signature pages attached hereto).

        (c)     The Company's obligation to complete the purchase and sale of
                the Shares shall be subject to the following conditions, any one
                or more of which may be waived by the Company:

        (i)     receipt by the Company from stockholders holding rights to
                require the Company to register the sale of any securities owned
                by such holder in the Registration Statement (as defined below)
                of waivers of such rights (including the waiver of any notice
                requirements related to such rights);

        (ii)    receipt by the Company of same-day funds in the full amount of
                the purchase price for the Shares being purchased under this
                Agreement; and

        (iii)   the accuracy in all material respects of the representations and
                warranties made by the Purchasers and the fulfillment in all
                material respects of those undertakings of the Purchasers to be
                fulfilled before the Closing.

        (d)     The Purchasers' obligations to accept delivery of such stock
                certificates and to pay for the Shares evidenced by the
                certificates shall be subject to the following conditions, any
                one or more of which may be waived by a Purchaser with respect
                to such Purchaser's obligation:

        (i)     the representations and warranties made by the Company in this
                Agreement shall be accurate in all material respects and the
                undertakings of the Company shall have been fulfilled in all
                material respects on or before the Closing;

        (ii)    the Company shall have delivered to the Purchasers a certificate
                executed by the chairman of the board or president and the chief
                financial or accounting officer of the Company, dated the
                Closing Date, in form and substance reasonably satisfactory to

                                       3
<PAGE>

                the Purchasers, to the effect that the representations and
                warranties of the Company set forth in Section 4 hereof are true
                and correct in all material respects as of the date of this
                Agreement and as of the Closing Date, and that the Company has
                complied with all the agreements and satisfied all the
                conditions in this Agreement on its part to be performed or
                satisfied on or before the Closing Date; and

        (iii)   the Company shall have delivered to Purchasers a legal opinion
                in substantially the form attached hereto as Exhibit A.

        (iv)    the Company shall have obtained gross proceeds of at least
                $500,000.00 from the sale of the Shares at the Closing.

4.      REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY

        Except as set forth on the Schedule of Exceptions attached hereto as
Exhibit B, the Company hereby represents and warrants to the Purchasers as
follows (which representations and warranties shall be deemed to apply, where
appropriate, to each subsidiary of the Company):

        4.1 ORGANIZATION AND QUALIFICATION

        The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of California. The
Company has the corporate power and authority to own, lease and operate its
properties and to conduct its business as currently conducted and to enter into
and perform its obligations under this Agreement. The Company is duly qualified
as a foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure to so qualify would not, singly or in the aggregate, have a material
adverse effect on the condition, financial or otherwise, or the earnings,
assets, business affairs or business prospects of the Company.

        4.2 CAPITALIZATION

        (a)     The authorized capital stock of the Company consists of
                50,000,000 shares of Common Stock and 6,600,000 shares of
                Preferred Stock.

        (b)     As of March 31, 2002, the issued and outstanding capital stock
                of the Company consists of 36,477,723 shares of Common Stock.
                The shares of issued and outstanding capital stock of the
                Company have been duly authorized and validly issued, are fully
                paid and nonassessable and have not been issued in violation of
                or are not otherwise subject to any preemptive or other similar
                rights.

        (c)     The Company has reserved 5,925,000 shares of Common Stock for
                issuance upon the exercise of stock options granted or available
                for future grant under the Company's stock option plans.

        (d)     The Company has reserved 75,000 shares of Common Stock for
                issuance upon the exercise of outstanding warrants to purchase
                Common Stock.

                                       4
<PAGE>

        With the exception of the foregoing, there are no outstanding
subscriptions, options, warrants, convertible or exchangeable securities or
other rights granted to or by the Company to purchase shares of Common Stock or
other securities of the Company and there are no commitments, plans or
arrangements to issue any shares of Common Stock or any security convertible
into or exchangeable for Common Stock.

        4.3 ISSUANCE, SALE AND DELIVERY OF THE SHARES

        (a)     The Shares have been duly authorized for issuance and sale to
                the Purchasers pursuant to this Agreement and, when issued and
                delivered by the Company pursuant to this Agreement against
                payment of the consideration set forth in this Agreement, will
                be validly issued and fully paid and nonassessable and free and
                clear of all pledges, liens and encumbrances. The certificates
                evidencing the Shares are in due and proper form under
                California law.

        (b)     The issuance of the Shares is not subject to preemptive or other
                similar rights. No further approval or authority of the
                shareholders or the Board of Directors of the Company will be
                required for the issuance and sale of the Shares to be sold by
                the Company as contemplated in this Agreement.

        (c)     Subject to the accuracy of the Purchasers' representations and
                warranties in Section 5 of this Agreement, the offer, sale, and
                issuance of the Shares in conformity with the terms of this
                Agreement constitute transactions exempt from the registration
                requirements of Section 5 of the Securities Act and from the
                registration or qualification requirements of the laws of any
                applicable state or United States jurisdiction.

        4.4 FINANCIAL STATEMENTS

        The financial statements included (as exhibits or otherwise) in the
Company Documents (as defined below) present fairly the financial position of
the Company as of the dates indicated and the results of their operations for
the periods specified. Except as otherwise stated in such Company Documents,
such financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis, and any supporting
schedules included with the financial statements present fairly the information
stated in the financial statements. The financial and statistical data set forth
in the Company Documents were prepared on an accounting basis consistent with
such financial statements.

        4.5 NO MATERIAL CHANGE

        Since January 18, 2002,

        (a)     there has been no material adverse change or any development
                involving a prospective material adverse change in or affecting
                the condition, financial or otherwise, or in the earnings,
                assets, business affairs or business prospects of the Company,
                whether or not arising in the ordinary course of business;

                                       5
<PAGE>

        (b)     there have been no transactions entered into by the Company
                other than those in the ordinary course of business, which are
                material with respect to the Company; and

        (c)     there has been no dividend or distribution of any kind declared,
                paid or made by the Company on any class of its capital stock.

        The Company has no material contingent obligations.

        4.6 ENVIRONMENTAL

        Except as would not, singly or in the aggregate, reasonably be expected
to have a material adverse effect on the condition, financial or otherwise, or
the earnings, assets, business affairs or business prospects of the Company,

        (a)     the Company is in compliance with all applicable Environmental
                Laws (as defined below);

        (b)     the Company has all permits, authorizations and approvals
                required under any applicable Environmental Laws and is in
                compliance with the requirements of such permits authorizations
                and approvals;

        (c)     there are no pending or, to the best knowledge of the Company,
                threatened Environmental Claims (as defined below) against the
                Company; and

        (d)     under applicable law, there are no circumstances with respect to
                any property or operations of the Company that are reasonably
                likely to form the basis of an Environmental Claim against the
                Company.

        For purposes of this Agreement, the following terms shall have the
following meanings: "Environmental Law" means any United States (or other
applicable jurisdiction's) Federal, state, local or municipal statute, law,
rule, regulation, ordinance, code, policy or rule of common law and any judicial
or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
health, safety or any chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority. "Environmental
Claims" means any and all administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or violation,
investigations or proceedings relating in any way to any Environmental Law.

        4.7 NO DEFAULTS

        The Company is not in violation of its certificate of incorporation or
bylaws or in material default in the performance or observance of any
obligation, agreement, covenant or condition contained in any material contract,
indenture, mortgage, loan agreement, deed, trust, note, lease, sublease, voting
agreement, voting trust, or other instrument or material agreement to which the
Company is a party or by which it may be bound, or to which any of the property
or assets of the Company is subject.

        4.8 LABOR MATTERS

                                       6
<PAGE>

        No labor dispute with the employees of the Company exists or, to the
best knowledge of the Company, is imminent.

        4.9 NO ACTIONS

        There is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened, against or affecting the Company which,
singly or in the aggregate, might result in any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company, or which, singly or in the aggregate, might
materially and adversely affect the properties or assets thereof or which might
materially and adversely affect the consummation of this Agreement, nor, to the
best knowledge of the Company, is there any reasonable basis therefor. The
Company is not in default with respect to any judgment, order or decree of any
court or governmental agency or instrumentality which, singly or in the
aggregate, would have a material adverse effect on the assets, properties or
business of the Company.

        4.10 INTELLECTUAL PROPERTY

        (a)     The Company, to the best of its knowledge in the course of
                diligent inquiry, owns or is licensed to use all patents, patent
                applications, inventions, trademarks, trade names, applications
                for registration of trademarks, service marks, service mark
                applications, copyrights, know-how, manufacturing processes,
                formulae, trade secrets, licenses and rights in any thereof and
                any other intangible property and assets that are material to
                the business of the Company as now conducted and as proposed to
                be conducted (in this Agreement called the "Proprietary
                Rights"), or is seeking, or will seek, to obtain rights to use
                such Proprietary Rights that are material to the business of the
                Company as proposed to be conducted.

        (b)     The Company does not have any knowledge of, and the Company has
                not given or received any notice of, any pending conflicts with
                or infringement of the rights of others with respect to any
                Proprietary Rights or with respect to any license of Proprietary
                Rights which are material to the business of the Company.

        (c)     No action, suit, arbitration, or legal, administrative or other
                proceeding, or investigation is pending, or, to the best
                knowledge of the Company, threatened, which involves any
                Proprietary Rights, nor, to the best knowledge of the Company,
                is there any reasonable basis therefor.

        (d)     The Company is not subject to any judgment, order, writ,
                injunction or decree of any court or any Federal, state, local,
                foreign or other governmental department, commission, board,
                bureau, agency or instrumentality, domestic or foreign, or any
                arbitrator, and has not entered into or is not a party to any
                contract which restricts or impairs the use of any such
                Proprietary Rights in a manner which would have a material
                adverse effect on the use of any of the Proprietary Rights.

        (e)     The Company has not received written notice of any pending
                conflict with or infringement upon any third-party proprietary
                rights.

                                       7
<PAGE>

        (f)     The Company has not entered into any consent, indemnification,
                forbearance to sue or settlement agreement with respect to
                Proprietary Rights other than in the ordinary course of
                business. No claims have been asserted by any person with
                respect to the validity of the Company's ownership or right to
                use the Proprietary Rights and, to the best knowledge of the
                Company, there is no reasonable basis for any such claim to be
                successful.

        (g)     The Company has complied, in all material respects, with its
                obligations relating to the protection of the Proprietary Rights
                which are material to the business of the Company used pursuant
                to licenses.

        (h)     To the best knowledge of the Company, no person is infringing on
                or violating the Proprietary Rights.

        4.11 PERMITS

        The Company possesses and is operating in compliance with all material
licenses, certificates, consents, authorities, approvals and permits from all
state, federal, foreign and other regulatory agencies or bodies necessary to
conduct the businesses now operated by it, and the Company has not received any
notice of proceedings relating to the revocation or modification of any such
permit or any circumstance which would lead it to believe that such proceedings
are reasonably likely which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially and adversely affect
the condition, financial or otherwise, or the earnings, assets, business affairs
or business prospects of the Company.

        4.12 DUE EXECUTION, DELIVERY AND PERFORMANCE

        (a)     This Agreement has been duly executed and delivered by the
                Company and constitutes a valid and binding obligation of the
                Company, enforceable against the Company in accordance with its
                terms.

        (b)     The execution, delivery and performance of this Agreement and
                the consummation of the transactions contemplated in this
                Agreement and the fulfillment of the terms of this Agreement,
                including the sale, issuance and delivery of the Shares, (i)
                have been duly authorized by all necessary corporate action on
                the part of the Company, its directors and stockholders; (ii)
                will not conflict with or constitute a breach of, or default
                under, or result in the creation or imposition of any lien,
                charge or encumbrance upon any property or assets of the Company
                pursuant to, any contract, indenture, mortgage, loan agreement,
                deed, trust, note, lease, sublease, voting agreement, voting
                trust or other instrument or agreement to which the Company is a
                party or by which it may be bound, or to which any of the
                property or assets of the Company is subject; (iii) will not
                trigger anti-dilution rights or other rights to acquire
                additional equity securities of the Company; and (iv) will not
                result in any violation of the provisions of the articles of
                incorporation or bylaws of the Company or any applicable
                statute, law, rule, regulation, ordinance, decision, directive
                or order.

        4.13 PROPERTIES

                                       8
<PAGE>

        The Company has good and marketable title to its properties, free and
clear of all material security interests, mortgages, pledges, liens, charges,
encumbrances and claims of record. The properties of the Company are, in the
aggregate, in good repair (reasonable wear and tear excepted), and suitable for
their respective uses. Any real property held under lease by the Company is held
under valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the conduct of the business of the Company.
The Company owns or leases all such properties as are necessary to its business
or operations as now conducted.

        4.14 COMPLIANCE

        The Company has conducted and is conducting its business in compliance
with all applicable Federal, state, local and foreign statutes, laws, rules,
regulations, ordinances, codes, decisions, decrees, directives and orders,
except where the failure to do so would not, singly or in the aggregate, have a
material adverse effect on the condition, financial or otherwise, or on the
earnings, assets, business affairs or business prospects of the Company.

        4.15 SECURITY MEASURES

        The Company takes security measures designed to enable the Company to
assert trade secret protection in its non-patented technology.

        4.16 CONTRIBUTIONS

        To the best of the Company's knowledge, neither the Company nor any
employee or agent of the Company has made any payment of funds of the Company or
received or retained any funds in violation of any law, rule or regulation.

        4.17 USE OF PROCEEDS; INVESTMENT COMPANY

        The Company intends to use the proceeds from the sale of the Shares for
working capital and other general corporate purposes. The Company is not now,
and after the sale of the Shares under this Agreement and under all other
agreements and the application of the net proceeds from the sale of the Shares
described in the proceeding sentence will not be, an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.

        4.18 PRIOR OFFERINGS

        All offers and sales of capital stock of the Company before the date of
this Agreement were at all relevant times duly registered or exempt from the
registration requirements of the Securities Act and were duly registered or
subject to an available exemption from the registration requirements of the
applicable state securities or Blue Sky laws.

        4.19 TAXES

        The Company has filed all material tax returns required to be filed,
which returns are true and correct in all material respects, and the Company is
not in default in the payment of any taxes, including penalties and interest,
assessments, fees and other charges, shown thereon due or

                                       9
<PAGE>

otherwise assessed, other than those being contested in good faith and for which
adequate reserves have been provided or those currently payable without interest
which were payable pursuant to said returns or any assessments with respect
thereto.

        4.20 OTHER GOVERNMENTAL PROCEEDINGS

        To the Company's knowledge, there are no rulemaking or similar
proceedings before any Federal, state, local or foreign government bodies that
involve or affect the Company, which, if the subject of an action unfavorable to
the Company, could involve a prospective material adverse change in or effect on
the condition, financial or otherwise, or in the earnings, assets, business
affairs or business prospects of the Company.

        4.21 NON-COMPETITION AGREEMENTS

        To the knowledge of the Company, any full-time employee who has entered
into any non-competition, non-disclosure, confidentiality or other similar
agreement with any party other than the Company is neither in violation of nor
is expected to be in violation of that agreement as a result of the business
currently conducted or expected to be conducted by the Company or such person's
performance of his or her obligations to the Company. The Company has not
received written notice that any consultant or scientific advisor of the Company
is in violation of any non-competition, non-disclosure, confidentiality or
similar agreement.

        4.22 TRANSFER TAXES

        On the Closing Date, all stock transfer or other taxes (other than
income taxes) that are required to be paid in connection with the sale and
transfer of the Shares to be sold to the Purchasers under this Agreement will
be, or will have been, fully paid or provided for by the Company and all laws
imposing such taxes will be or will have been fully complied with.

        4.23 INSURANCE

        The Company maintains insurance of the type and in the amount that the
Company reasonably believes is adequate for its business, including, but not
limited to, insurance covering all real and personal property owned or leased by
the Company against theft, damage, destruction, acts of vandalism and all other
risks customarily insured against by similarly situated companies, all of which
insurance is in full force and effect.

        4.24 GOVERNMENTAL/ REGULATORY CONSENTS

        No registration, authorization, approval, qualification or consent with
or required by any court or governmental/ regulatory authority or agency is
necessary in connection with the execution and delivery of this Agreement or the
offering, issuance or sale of the Shares under this Agreement.

        4.25 SECURITIES AND EXCHANGE COMMISSION FILINGS

                                       10
<PAGE>

        The Company has timely filed with the Securities and Exchange Commission
(the "Commission") all documents required to be filed by the Company under the
Securities Exchange Act of 1934, as amended (the "Exchange Act.")

        4.26 ADDITIONAL INFORMATION

        The Company represents and warrants that the information contained in
the following documents (the "Company Documents"), which will be provided to
Purchaser before the Closing, is or will be true and correct in all material
respects as of their respective final dates:

        (a)     the Company's Annual Report on Form 10-K for the fiscal year
                ended December 31, 2000;

        (b)     the Company's Quarterly Reports on Form 10-Q for the fiscal
                quarters ended March 31, 2001, June 30, 2001 and September 30,
                2001;

        (c)     the Company's Proxy Statement for its 2001 Annual Meeting of
                Shareholders; and

        (d)     all other documents, if any, filed by the Company with the
                Commission since January 24, 2002 pursuant to the reporting
                requirements of the Securities Exchange Act.

        4.27 CONTRACTS

        The contracts described in the Company Documents or incorporated by
reference therein are in full force and effect on the date hereof, except for
contracts the termination or expiration of which would not, singly or in the
aggregate, have a material adverse effect on the business, properties or assets
of the Company. Neither the Company nor, to the best knowledge of the Company,
any other party is in material breach of or default under any such contracts.

        4.28 NO INTEGRATED OFFERING

        Neither the Company, nor any of its affiliates, nor any person acting on
its or their behalf, has directly or indirectly made any offers or sales in any
security or solicited any offers to buy any security under circumstances that
would require registration under the Securities Act of the issuance of the
Shares to the Purchasers. The issuance of the Shares to the Purchasers will not
be integrated with any other issuance of the Company's securities (past, current
or future) for purposes of the Securities Act or any applicable rules of Nasdaq
(or of any national securities exchange on which the Company's Common Stock is
then traded). The Company will not make any offers or sales of any security
(other than the Shares) that would cause the offering of the Shares to be
integrated with any other offering of securities by the Company for purposes of
any registration requirement under the Securities Act or any applicable rules of
Nasdaq (or of any national securities exchange on which the Company's Common
Stock is then traded).

        4.29 LISTING OF SHARES

                                       11
<PAGE>

        The Company agrees to promptly secure the listing of the Shares upon
each national securities exchange or automated quotation system upon which
shares of Common Stock are then listed and, so long as any Purchaser owns any of
the Shares, shall maintain such listing of all Shares. The Company has taken no
action designed to delist, or which is likely to have the effect of delisting,
the Common Stock from any of the national securities exchange or automated
quotation system upon which the shares of Common Stock are then listed.

        4.30 NO MANIPULATION OF STOCK

        The Company has not taken and will not, in violation of applicable law,
take any action outside the ordinary course of business designed to or that
might reasonably be expected to cause or result in unlawful manipulation of the
price of the Common Stock to facilitate the sale or resale of the Shares.

        4.31 STARK II AND ANTI-KICKBACK

        Company represents and warrants that it shall not knowingly sell, lease
or provide services to an entity which Company knows is in violation of the
federal Stark II (42 USCA 1395nn) law ("Stark II Law") and/or the federal
anti-kickback (42 USCA 1320a-7b) law ("Anti-kickback Law"). In the event Company
breaches the warranties, representations and covenants contained in this Section
4.31, Company agrees to purchase from Purchaser, upon prior written notice from
the Purchaser, the Shares purchased by Purchaser under this Agreement at a price
per share equal to the Per Share Price plus an additional 20%.

5.      REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS

        5.1 SECURITIES LAW REPRESENTATIONS AND WARRANTIES

        Each Purchaser represents, warrants and covenants to the Company as
follows:

        (a)     The Purchaser is knowledgeable, sophisticated and experienced in
                making, and is qualified to make, decisions with respect to
                investments in shares representing an investment decision like
                that involved in the purchase of the Shares, including
                investments in securities issued by the Company, and has
                requested, received, reviewed and considered all information it
                deems relevant in making an informed decision to purchase the
                Shares.

        (b)     The Purchaser is acquiring the number of Shares set forth in
                Section 2 above in the ordinary course of its business and for
                its own account for investment (as defined for purposes of the
                Hart-Scott-Rodino Antitrust Improvement Act of 1976 and the
                regulations thereunder) only, and has no present intention of
                distributing any of the Shares nor any arrangement or
                understanding with any other persons regarding the distribution
                of such Shares within the meaning of Section 2(11) of the
                Securities Act, other than as contemplated in Section 7 of this
                Agreement.

        (c)     The Purchaser will not, directly or indirectly, offer, sell,
                pledge, transfer or otherwise dispose of (or solicit any offers
                to buy, purchase or otherwise acquire or

                                       12
<PAGE>

                take a pledge of) any of the Shares except in compliance with
                the Securities Act and the rules and regulations promulgated
                thereunder (the "Rules and Regulations").

        (d)     The Purchaser has completed or caused to be completed the Stock
                Certificate Questionnaire and the Registration Statement
                Questionnaire, attached to this Agreement as Appendices I and
                II, for use in preparation of the Registration Statement (as
                defined in Section 7.3 below), and the answers to the
                Questionnaires are true and correct as of the date of this
                Agreement and will be true and correct as of the effective date
                of the Registration Statement; provided that the Purchasers
                shall be entitled to update such information by providing notice
                thereof to the Company before the effective date of such
                Registration Statement.

        (e)     The Purchaser has, in connection with its decision to purchase
                the number of Shares set forth in Section 2 above, relied solely
                upon the Company Documents and the representations and
                warranties of the Company contained in this Agreement.

        (f)     The Purchaser is an "accredited investor" within the meaning of
                Rule 501 of Regulation D promulgated under the Securities Act.

        5.2 RESALES OF SHARES

        (a)     The Purchaser hereby covenants with the Company not to make any
                sale of the Shares without satisfying the requirements of the
                Securities Act and the Rules and Regulations, including, in the
                event of any resale under the Registration Statement, the
                prospectus delivery requirements under the Securities Act, and
                the Purchaser acknowledges and agrees that such Shares are not
                transferable on the books of the Company pursuant to a resale
                under the Registration Statement unless the certificate
                submitted to the transfer agent evidencing the Shares is
                accompanied by a separate officer's certificate

        (i)     in the form of Appendix III to this Agreement;

        (ii)    executed by an officer of, or other authorized person designated
                by, the Purchaser; and

        (iii)   to the effect that (A) the Shares have been sold in accordance
                with the Registration Statement and (B) the requirement of
                delivering a current prospectus has been satisfied.

        (b)     The Purchaser acknowledges that there may occasionally be times
                when the Company determines, in good faith following
                consultation with its Board of Directors or a committee thereof,
                the use of the prospectus forming a part of the Registration
                Statement (the "Prospectus," as further defined in Section 7.3.1
                below) should be suspended until such time as an amendment or
                supplement to the Registration Statement or the Prospectus has
                been filed by the Company and any such amendment to the
                Registration Statement is declared effective by the Commission,
                or until such time as the Company has filed an appropriate
                report with the Commission pursuant to the Exchange Act. The
                Purchaser hereby covenants that it will not sell any Shares

                                       13
<PAGE>

                pursuant to the Prospectus during the period commencing at the
                time at which the Company gives the Purchaser written notice of
                the suspension of the use of the Prospectus and ending at the
                time the Company gives the Purchaser written notice that the
                Purchaser may thereafter effect sales pursuant to the
                Prospectus. The Company may, upon written notice to the
                Purchasers, suspend the use of the Prospectus for up to thirty
                (30) days in any 365-day period based on the reasonable
                determination of the Company's Board of Directors that there is
                a significant business purpose for such determination, such as
                pending corporate developments, public filings with the SEC or
                similar events. The Company shall in no event be required to
                disclose the business purpose for which it has suspended the use
                of the Prospectus if the Company determines in its good faith
                judgment that the business purpose should remain confidential.
                In addition, the Company shall notify each Purchaser (i) of any
                request by the SEC for an amendment or any supplement to such
                Registration Statement or any related prospectus, or any other
                information request by any other governmental agency directly
                relating to the offering, and (ii) of the issuance by the SEC of
                any stop order suspending the effectiveness of such Registration
                Statement or of any order preventing or suspending the use of
                any related prospectus or the initiation or threat of any
                proceeding for that purpose.

        (c)     The Purchaser further covenants to notify the Company promptly
                of the sale of any of its Shares, other than sales pursuant to a
                Registration Statement contemplated in Section 7 of this
                Agreement or sales upon termination of the transfer restrictions
                pursuant to Section 7.4 of this Agreement.

        5.3 DUE EXECUTION, DELIVERY AND PERFORMANCE

        (a)     This Agreement has been duly executed and delivered by the
                Purchaser and constitutes a valid and binding obligation of the
                Purchaser, enforceable against the Purchaser in accordance with
                its terms.

        (b)     The execution, delivery and performance of this Agreement and
                the consummation of the transactions contemplated in this
                Agreement and the fulfillment of the terms of this Agreement
                have been duly authorized by all necessary corporate, agency or
                other action and will not conflict with or constitute a breach
                of, or default under, or result in the creation or imposition of
                any lien, charge or encumbrance upon any property or assets of
                the Purchaser pursuant to, any contract, indenture, mortgage,
                loan agreement, deed, trust, note, lease, sublease, voting
                agreement, voting trust or other instrument or agreement to
                which the Purchaser is a party or by which it or any of them may
                be bound, or to which any of the property or assets of the
                Purchaser is subject, nor will such action result in any
                violation of the provisions of the charter or bylaws of the
                Purchaser or any applicable statute, law, rule, regulation,
                ordinance, decision, directive or order.

6.      SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.

        Notwithstanding any investigation made by any party to this Agreement,
all covenants, agreements, representations and warranties made by the Company
and the Purchasers in this

                                       14
<PAGE>

Agreement and in the certificates for the Shares delivered pursuant to this
Agreement shall survive the execution of this Agreement, the delivery to the
Purchasers of the Shares being purchased and the payment therefor.

7.      FORM D FILING; REGISTRATION; COMPLIANCE WITH THE SECURITIES ACT;
        COVENANTS

        7.1 FORM D FILING; REGISTRATION OF SHARES

               7.1.1 REGISTRATION STATEMENT; EXPENSES

        The Company shall:

        (a)     file in a timely manner a Form D relating to the sale of the
                Shares under this Agreement, pursuant to Securities and Exchange
                Commission Regulation D.

        (b)     as soon as practicable after the Closing Date, but in no event
                later than the 30th day following the Closing Date, prepare and
                file with the Commission a Registration Statement on Form S-3
                (or, if the Company is ineligible to use Form S-3, then on Form
                S-1) relating to the sale of the Shares by the Purchasers from
                time to time on the Nasdaq National Market (or the facilities of
                any national securities exchange on which the Company's Common
                Stock is then traded) or in privately negotiated transactions
                (the "Registration Statement");

        (c)     provide to Purchasers any information required to permit the
                sale of the Shares under Rule 144A of the Securities Act;

        (d)     subject to receipt of necessary information from the Purchasers,
                use its best efforts to cause the Commission to notify the
                Company of the Commission's willingness to declare the
                Registration Statement effective on or before 90 days after the
                Closing Date;

        (e)     notify Purchasers promptly upon the Registration Statement, and
                any post-effective amendment thereto, being declared effective
                by the Commission;

        (f)     prepare and file with the Commission such amendments and
                supplements to the Registration Statement and the Prospectus (as
                defined in Section 7.3.1 below) and take such other action, if
                any, as may be necessary to keep the Registration Statement
                effective until the earlier of (i) the date on which the Shares
                may be resold by the Purchasers without registration and without
                regard to any volume limitations by reason of Rule 144(k) under
                the Securities Act or any other rule of similar effect or (ii)
                all of the Shares have been sold pursuant to the Registration
                Statement or Rule 144 under the Securities Act or any other rule
                of similar effect;

        (g)     promptly furnish to the Purchasers with respect to the Shares
                registered under the Registration Statement such reasonable
                number of copies of the Prospectus, including any supplements to
                or amendments of the Prospectus, in order to facilitate the
                public sale or other disposition of all or any of the Shares by
                the Purchasers;

                                       15
<PAGE>

        (h)     during the period when copies of the Prospectus are required to
                be delivered under the Securities Act or the Exchange Act, will
                file all documents required to be filed with the Commission
                pursuant to Section 13, 14 or 15 of the Exchange Act within the
                time periods required by the Exchange Act and the rules and
                regulations promulgated thereunder;

        (i)     file documents required of the Company for customary Blue Sky
                clearance in all states requiring Blue Sky clearance; provided,
                however, that the Company shall not be required to qualify to do
                business or consent to service of process in any jurisdiction in
                which it is not now so qualified or has not so consented; and

        (j)     bear all expenses in connection with the procedures in
                paragraphs (a) through (i) of this Section 7.1.1 and the
                registration of the Shares pursuant to the Registration
                Statement.

               7.1.2 DELAY IN EFFECTIVENESS OF REGISTRATION STATEMENT

        In the event that the Registration Statement is not declared effective
on or before ninety (90) days from the Closing Date (the "Penalty Date"), the
Company shall pay to each Purchaser liquidated damages in an amount equal to
0.25% of the total purchase price of the Shares purchased by such Purchaser
pursuant to this Agreement for each week after the Penalty Date that the
Registration Statement is not declared effective.

        7.2 TRANSFER OF SHARES AFTER REGISTRATION

        Each Purchaser agrees that it will not effect any disposition of the
Shares or its right to purchase the Shares that would constitute a sale within
the meaning of the Securities Act, except as contemplated in the Registration
Statement referred to in Section 7.1 or as otherwise permitted by law, and that
it will promptly notify the Company of any changes in the information set forth
in the Registration Statement regarding the Purchaser or its plan of
distribution.

        7.3 INDEMNIFICATION

        For the purpose of this Section 7.3, the term "Registration Statement"
shall include any preliminary or final prospectus, exhibit, supplement or
amendment included in or relating to the Registration Statement referred to in
Section 7.1.

               7.3.1 INDEMNIFICATION BY THE COMPANY

        The Company agrees to indemnify and hold harmless each of the Purchasers
and each person, if any, who controls any Purchaser within the meaning of the
Securities Act, against any losses, claims, damages, liabilities or expenses,
joint or several, to which such Purchasers or such controlling person may become
subject, under the Securities Act, the Exchange Act, or any other federal or
state statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of the Company, which consent shall not be unreasonably withheld),
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof as contemplated below) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained

                                       16
<PAGE>

in the Registration Statement, including the Prospectus, financial statements
and schedules, and all other documents filed as a part thereof, as amended at
the time of effectiveness of the Registration Statement, including any
information deemed to be a part thereof as of the time of effectiveness pursuant
to paragraph (b) of Rule 430A, or pursuant to Rule 434, of the Rules and
Regulations, or the Prospectus, in the form first filed with the Commission
pursuant to Rule 424(b) of the Regulations, or filed as part of the Registration
Statement at the time of effectiveness if no Rule 424(b) filing is required (the
"Prospectus"), or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state in any of them a material
fact required to be stated therein or necessary to make the statements in any of
them, in light of the circumstances under which they were made, not misleading,
or arise out of or are based in whole or in part on any inaccuracy in the
representations and warranties of the Company contained in this Agreement, or
any failure of the Company to perform its obligations under this Agreement or
under applicable law, and will reimburse each Purchaser and each such
controlling person for any legal and other expenses as such expenses are
reasonably incurred by such Purchaser or such controlling person in connection
with investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action; provided, however, that the Company
will not be liable in any such case to the extent that any such loss, claim,
damage, liability or expense arises out of or is based upon (i) an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, the Prospectus or any amendment or supplement of the
Registration Statement or Prospectus in reliance upon and in conformity with
written information furnished to the Company by or on behalf of the Purchaser
expressly for use in the Registration Statement or the Prospectus, or (ii) the
failure of such Purchaser to comply with the covenants and agreements contained
in Sections 5.2 or 7.2 of this Agreement respecting resale of the Shares, or
(iii) the inaccuracy of any representations made by such Purchaser in this
Agreement or (iv) any untrue statement or omission of a material fact required
to make such statement not misleading in any Prospectus that is corrected in any
subsequent Prospectus that was delivered to the Purchaser before the pertinent
sale or sales by the Purchaser.

                                       17
<PAGE>

               7.3.2 INDEMNIFICATION BY THE PURCHASER

        Each Purchaser will severally and not jointly indemnify and hold
harmless the Company, each of its directors, each of its officers who signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of the Securities Act, against any losses, claims, damages,
liabilities or expenses to which the Company, each of its directors, each of its
officers who signed the Registration Statement or controlling person may become
subject, under the Securities Act, the Exchange Act, or any other federal or
state statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of such Purchaser, which consent shall not be unreasonably withheld)
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof as contemplated below) arise out of or are based upon (i) any
failure on the part of such Purchaser to comply with the covenants and
agreements contained in Sections 5.2 or 7.2 of this Agreement respecting the
sale of the Shares or (ii) the inaccuracy of any representation made by such
Purchaser in this Agreement or (iii) any untrue or alleged untrue statement of
any material fact contained in the Registration Statement, the Prospectus, or
any amendment or supplement to the Registration Statement or Prospectus, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Registration Statement, the Prospectus, or any
amendment or supplement thereto, in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Purchaser expressly
for use therein; provided, however, that the Purchaser shall not be liable for
any such untrue or alleged untrue statement or omission or alleged omission of
which the Purchaser has delivered to the Company in writing a correction before
the occurrence of the transaction from which such loss was incurred, and the
Purchaser will reimburse the Company, each of its directors, each of its
officers who signed the Registration Statement or controlling person for any
legal and other expense reasonably incurred by the Company, each of its
directors, each of its officers who signed the Registration Statement or
controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action.

               7.3.3 INDEMNIFICATION PROCEDURE

        (a)     Promptly after receipt by an indemnified party under this
                Section 7.3 of notice of the threat or commencement of any
                action, such indemnified party will, if a claim in respect
                thereof is to be made against an indemnifying party under this
                Section 7.3, promptly notify the indemnifying party in writing
                of the claim; but the omission so to notify the indemnifying
                party will not relieve it from any liability which it may have
                to any indemnified party for contribution or otherwise under the
                indemnity agreement contained in this Section 7.3 or to the
                extent it is not prejudiced as a result of such failure.

        (b)     In case any such action is brought against any indemnified party
                and such indemnified party seeks or intends to seek indemnity
                from an indemnifying party, the indemnifying party will be
                entitled to participate in, and, to the extent that it may wish,
                jointly with all other indemnifying parties similarly notified,
                to assume the

                                       18
<PAGE>

                defense thereof with counsel reasonably satisfactory to such
                indemnified party; provided, however, if the defendants in any
                such action include both the indemnified party and the
                indemnifying party and the indemnified party shall have
                reasonably concluded that there may be a conflict between the
                positions of the indemnifying party and the indemnified party in
                conducting the defense of any such action or that there may be
                legal defenses available to it or other indemnified parties that
                are different from or additional to those available to the
                indemnifying party, the indemnified party or parties shall have
                the right to select separate counsel to assume such legal
                defenses and to otherwise participate in the defense of such
                action on behalf of such indemnified party or parties. Upon
                receipt of notice from the indemnifying party to such
                indemnified party of its election so to assume the defense of
                such action and approval by the indemnified party of counsel,
                the indemnifying party will not be liable to such indemnified
                party under this Section 7.3 for any legal or other expenses
                subsequently incurred by such indemnified party in connection
                with the defense thereof unless:

        (i)     the indemnified party shall have employed such counsel in
                connection with the assumption of legal defenses in accordance
                with the proviso to the preceding sentence (it being understood,
                however, that the indemnifying party shall not be liable for the
                expenses of more than one separate counsel, approved by such
                indemnifying party representing all of the indemnified parties
                who are parties to such action) or

        (ii)    the indemnifying party shall not have employed counsel
                reasonably satisfactory to the indemnified party to represent
                the indemnified party within a reasonable time after notice of
                commencement of action, in each of which cases the reasonable
                fees and expenses of counsel shall be at the expense of the
                indemnifying party. Notwithstanding the provisions of this
                Section 7.3, the Purchaser shall not be liable for any
                indemnification obligation under this Agreement in excess of the
                amount of net proceeds received by the Purchaser from the sale
                of the Shares.

               7.3.4 CONTRIBUTION

        If the indemnification provided for in this Section 7.3 is required by
its terms but is for any reason held to be unavailable to or otherwise
insufficient to hold harmless an indemnified party under this Section 7.3 in
respect to any losses, claims, damages, liabilities or expenses referred to in
this Agreement, then each applicable indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of any losses,
claims, damages, liabilities or expenses referred to in this Agreement

        (a)     in such proportion as is appropriate to reflect the relative
                benefits received by the Company and the Purchaser from the
                placement of Common Stock or

        (b)     if the allocation provided by clause (a) above is not permitted
                by applicable law, in such proportion as is appropriate to
                reflect not only the relative benefits referred to in clause (a)
                above but the relative fault of the Company and the Purchaser in
                connection with the statements or omissions or inaccuracies in
                the representations and

                                       19
<PAGE>

                warranties in this Agreement that resulted in such losses,
                claims, damages, liabilities or expenses, as well as any other
                relevant equitable considerations.

        The respective relative benefits received by the Company on the one hand
and each Purchaser on the other shall be deemed to be in the same proportion as
the amount paid by such Purchaser to the Company pursuant to this Agreement for
the Shares purchased by such Purchaser that were sold pursuant to the
Registration Statement bears to the difference (the "Difference") between the
amount such Purchaser paid for the Shares that were sold pursuant to the
Registration Statement and the amount received by such Purchaser from such sale.
The relative fault of the Company and each Purchaser shall be determined by
reference to, among other things, whether the untrue or alleged statement of a
material fact or the omission or alleged omission to state a material fact or
the inaccurate or the alleged inaccurate representation or warranty relates to
information supplied by the Company or by such Purchaser and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
Section 7.3.3, any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim. The
provisions set forth in Section 7.3.3 with respect to the notice of the threat
or commencement of any threat or action shall apply if a claim for contribution
is to be made under this Section 7.3.4; provided, however, that no additional
notice shall be required with respect to any threat or action for which notice
has been given under Section 7.3 for purposes of indemnification. The Company
and each Purchaser agree that it would not be just and equitable if contribution
pursuant to this Section 7.3 were determined solely by pro rata allocation (even
if the Purchaser were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to in this paragraph. Notwithstanding the provisions of this Section
7.3, no Purchaser shall be required to contribute any amount in excess of the
amount by which the Difference exceeds the amount of any damages that such
Purchaser has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Purchasers' obligations to contribute pursuant
to this Section 7.3 are several and not joint.

        7.4 TERMINATION OF CONDITIONS AND OBLIGATIONS

        The restrictions imposed by Section 5 or this Section 7 upon the
transferability of the Shares shall cease and terminate as to any particular
number of the Shares upon the passage of two years from the Closing Date or at
such time as an opinion of counsel satisfactory in form and substance to the
Company shall have been rendered to the effect that such conditions are not
necessary in order to comply with the Securities Act.

        7.5 INFORMATION AVAILABLE

        From the date of this Agreement through the date the Registration
Statement covering the resale of Shares owned by any Purchaser is no longer
effective, the Company will furnish to such Purchaser:

                                       20
<PAGE>

        (a)     as soon as practicable after available (but in the case of the
                Company's Annual Report to Shareholders, within 90 days after
                the end of each fiscal year of the Company), one copy of

        (i)     its Annual Report to Shareholders (which Annual Report shall
                contain financial statements audited in accordance with
                generally accepted accounting principles by a national firm of
                certified public accountants);

        (ii)    if not included in substance in the Annual Report to
                Shareholders, its Annual Report on Form 10-K;

        (iii)   if not included in substance in its Quarterly Reports to
                Shareholders, its quarterly reports on Form 10-Q; and

        (iv)    a full copy of the particular Registration Statement covering
                the Shares (the foregoing, in each case, excluding exhibits);

        (b)     upon the request of the Purchaser, a reasonable number of copies
                of the Prospectus to supply to any other party requiring the
                Prospectus.

        7.6 RULE 144 INFORMATION

        Until the earlier of (i) the date on which the Shares may be resold by
the Purchasers without registration and without regard to any volume limitations
by reason of Rule 144(k) under the Securities Act or any other rule of similar
effect or (ii) all of the Shares have been sold pursuant to the Registration
Statement or Rule 144 under the Securities Act or any other rule of similar
effect, the Company shall file all reports required to be filed by it under the
Securities Act, the Rules and Regulations and the Exchange Act and shall take
such further action to the extent required to enable the Purchasers to sell the
Shares pursuant to Rule 144 under the Securities Act (as such rule may be
amended from time to time).

8.      LEGAL FEES AND OTHER TRANSACTION EXPENSES

        At the Closing, the Company agrees to pay a flat fee of $5,000 to the
State of Wisconsin Investment Board for their legal and other transaction
expenses (whether internal or external) arising in connection with the
transactions contemplated by this Agreement.

9.      BROKER'S FEE

        The Purchasers acknowledge that the Company does not intend to pay any
fee in respect of the sale of the Shares. Each of the parties to this Agreement
hereby represents that, on the basis of any actions and agreements by it, there
are no brokers or finders entitled to compensation in connection with the sale
of the Shares to the Purchasers. The Company shall indemnify and hold harmless
the Purchasers from and against all fees, commissions or other payments owing by
the Company to any person or firm acting on behalf of the Company hereunder.

                                       21
<PAGE>

10.     NOTICES

        All notices, requests, consents and other communications under this
Agreement shall be in writing, shall be mailed by first-class registered or
certified airmail, confirmed facsimile or nationally recognized overnight
express courier postage prepaid, and shall be delivered as addressed as follows:

                                       22
<PAGE>

        (a)     if to the Company, to:

                CardioGenesis CORPORATION
                26632 Towne Centre Drive, Suite 320
                Foothill Ranch, CA 92610
                Attn:  Chief Executive Officer

or to such other person at such other place as the Company shall designate to
the Purchaser in writing; and

        (b)     if to a Purchaser, at its address as set forth on the signature
                page to this Agreement, or at such other address or addresses as
                may have been furnished to the Company in writing.

        Such notice shall be deemed effectively given upon confirmation of
receipt by facsimile, one business day after deposit with such overnight courier
or three days after deposit of such registered or certified airmail with the
U.S. Postal Service, as applicable.

11.     MODIFICATION; AMENDMENT

        This Agreement may not be modified or amended except pursuant to an
instrument in writing signed by the Company and each of the Purchasers.

12.     TERMINATION

        This Agreement may be terminated as to any Purchaser, at the option of
such Purchaser, if the Closing has not occurred on or before thirty (30) days
from the date of this Agreement.

13.     HEADINGS

        The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part of
this Agreement.

14.     SEVERABILITY

        If any provision contained in this Agreement should be held to be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained in this Agreement shall not
in any way be affected or impaired thereby.

15.     GOVERNING LAW; JURISDICTION

        This Agreement shall be governed by and construed in accordance with the
laws of the state of California and the federal law of the United States of
America. The parties hereto hereby submit to the jurisdiction of the courts of
the State of Wisconsin, or of the United States of America sitting in the State
of Wisconsin, over any action, suit, or proceeding arising out of or relating to
this Agreement. Nothing herein shall affect the right of the Purchaser to serve
process in any manner permitted by law or limit the right of the Purchaser to
bring proceedings against the Company in the competent courts of any other
jurisdiction or jurisdictions.

                                       23
<PAGE>

16.     NO CONFLICTS OF INTEREST

        The Company represents, warrants, and covenants that, to the best of its
knowledge, no trustee or employee of the State of Wisconsin Investment Board
identified on the attached list, either directly or indirectly (a) currently
holds, except as may be specifically set forth below, a personal interest in the
Company or any of its affiliates (together, the "Entity") or the Entity's
property or securities, or (b) will, in connection with the investment made
pursuant to this Agreement, receive (i) a personal interest in the Entity or the
Entity's property or securities or (ii) anything of substantial economic value
for his or her private benefit from the Entity or anyone acting on its behalf.
As to ownership of an interest in the Entity's publicly traded securities,
"knowledge" hereunder is based on an examination of record holders of the
Entity's securities and actual knowledge of the undersigned.

17.     COUNTERPARTS

        This Agreement may be executed in two or more counterparts, each of
which shall constitute an original, but all of which, when taken together, shall
constitute but one instrument, and shall become effective when one or more
counterparts have been signed by each party to this Agreement and delivered to
the other parties.

        IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.

                                            CARDIOGENESIS CORPORATION

                                            By /s/ Michael J. Quinn
                                               --------------------------------

                                            Name:  Michael J. Quinn

                                            Its:  President, Chief Executive
                                                  Officer and Chairman

                                            STATE OF WISCONSIN INVESTMENT BOARD

                                            By: /s/ John F. Nelson
                                               --------------------------------

                                            Name: John F. Nelson
                                                  -----------------------------

                                            Title: Investment Director
                                                   ----------------------------

                                            Address:

                                            121 East Wilson Street
                                            Madison, WI 53702
                                            Facsimile: (608) 266-2436

<PAGE>

                                   SCHEDULE A

                                    PURCHASER

                       STATE OF WISCONSIN INVESTMENT BOARD

   (Purchasing an aggregate of 500,000 shares of CardioGenesis Common Stock).

<PAGE>

                                   EXHIBIT A

                                 April __, 2002

(310) 557-8022                                                     C 26399-00001

State of Wisconsin Investment Board
121 East Wilson Street
Madison, Wisconsin  53702

        Re:    CardioGenesis Corporation

Dear Sir/Madam:

        We have acted as legal counsel to CardioGenesis Corporation, a
California corporation (the "Company"), in connection with (i) the issuance and
sale by the Company to you of five hundred thousand (500,000) shares (the
"Shares") of its common stock, no par value per share (the "Common Stock"),
pursuant to a Share Purchase Agreement dated as of April 10, 2001 (the "Purchase
Agreement") and (ii) the negotiation of the provisions of the Purchase
Agreement. Capitalized terms used herein, but not otherwise defined herein,
shall have the meanings ascribed to those terms in the Purchase Agreement.

        For the purpose of rendering this opinion, we have investigated such
questions of law as we have deemed necessary. As to factual matters, we have
relied, with your permission and without verification, on the representations
and warranties as to facts set forth in the Purchase Agreement and such
certificates and statements of the Company and its officers as we have deemed
necessary. In addition, we have obtained and relied upon, with your permission,
such other certificates and assurances from public officials as we have deemed
necessary, desirable or appropriate for the purpose of rendering the opinions
expressed herein.

        We have assumed, with your permission, the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to originals of all documents submitted to us as copies and the
authenticity of the originals of such copied documents. We have assumed that
each of the parties to the Purchase Agreement other than the Company have the
power, authority and legal right to enter into and perform the terms and
conditions on the part of such party to be performed, and the due authorization,
execution and

<PAGE>

delivery by such party of the Purchase Agreement. We have further assumed that
the Purchase Agreement constitutes the legal, valid and binding obligation of
the parties thereto other than the Company, enforceable against such other
parties in accordance with its terms.

        We have assumed, with your permission, that there are no documents,
agreements, understandings or negotiations between you and the Company which
would expand, modify or otherwise affect the respective rights and obligations
of the parties set forth in the Purchase Agreement and that the Purchase
Agreement correctly and completely sets forth the intent of all parties thereto.

        Based on the foregoing and in reliance thereon, and subject to the
assumptions, exceptions, qualifications and limitations set forth herein, we are
of the opinion that:

        1. The Company has been duly incorporated and is validly existing in
good standing under the laws of the State of California. The Company is duly
qualified as a foreign corporation to transact business and is in good standing
in each jurisdiction in which such qualification is required, whether by reason
of the ownership or leasing of property or the conduct of business, except where
the failure to so qualify would not, singly or in the aggregate, have a material
adverse effect on the condition, financial or otherwise, or the earnings,
assets, business affairs or business prospects of the Company. The Company has
the requisite corporate power to own or lease its property and assets and to
conduct its business as currently conducted.

        2. The Purchase Agreement has been duly authorized by all necessary
corporate action on the part of the Company and has been duly executed and
delivered on behalf of the Company and constitutes a valid and binding agreement
of the Company, enforceable against the Company in accordance with its terms
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
arrangement, moratorium and other laws of general applicability relating to or
affecting creditors' rights, and (ii) as limited by equitable principles
generally and limitations on the availability of equitable remedies, whether
such enforceability is considered in a proceeding in equity or at law.

        3. The Shares have been duly authorized and when issued, delivered and
paid for in accordance with the terms of the Agreement, will be validly issued,
fully paid and nonassessable and free of any pre-emptive or similar rights.

        4. Except as set forth in the Purchase Agreement, to our knowledge,
there is no action, proceeding or investigation pending or overtly threatened in
writing against the Company which could reasonably be anticipated to result,
either individually or in the aggregate, in any material adverse change in the
assets, financial condition or operations of the Company, or which questions the
validity or enforceability of, or seeks to enjoin or invalidate, the Purchase
Agreement or any action to be taken by the Company in connection therewith.

        5. The offer and sale of the Shares by the Company to you is exempt from
the registration requirements of the Securities Act of 1933, as amended, subject
to timely filing of a Form D pursuant to Securities and Exchange Commission
Regulation D.

        6. The execution, delivery and performance of the Purchase Agreement by
the Company and the consummation of the issuance and sale of the Shares by the
Company as

                                       3
<PAGE>

contemplated therein do not conflict with or violate any provisions of the
Company's Articles of Incorporation or By-laws or any provision of any
applicable material federal or state law, rule or regulation; or, to the best of
our knowledge, any material agreements to which the Company is a party.

        7. All consents, approvals, authorizations, or orders of, and filings,
registrations and qualifications with any regulatory authority or governmental
body in the United States required for the issuance by the Company of the Shares
as contemplated by the Purchase Agreement, have been made or obtained, except
for (i) the filing of a Form D pursuant to Securities and Exchange Commission
Regulation D, and (ii) the filing of a Form D with the Securities Commissioners
of the State of California.

        The foregoing opinions are subject to the following assumptions,
exceptions, qualifications and limitations:

        A. We express no opinion as to the legality, validity, binding effect or
enforceability of any choice of law, arbitration, submission to jurisdiction or
service of process provisions or any severability provisions.

        B. We express no opinion as to the legality, validity, binding nature or
enforceability of any provision in the Purchase Agreement: (i) indemnifying a
party or requiring contribution from a party, to the extent such provision may
be held unenforceable as contrary to or limited by federal or state securities
laws or public policy, including without limitation provisions indemnifying a
party against losses attributable to or liability for its own negligent acts;
(ii) providing for the payment or reimbursement of costs and expenses or
indemnification for claims, losses or liabilities in excess of a reasonable
amount determined by any court or other tribunal; or (iii) regarding the ability
of any party to collect attorneys' fees and costs in an action involving the
Purchase Agreement.

        C. We express no opinion as to the legality, validity, binding effect or
enforceability of any provisions of the Purchase Agreement regarding: (i) the
remedies available to any party; (ii) the ability of any party to take
discretionary action which is arbitrary, unreasonable or capricious, or is not
taken in good faith or in a commercially reasonable manner, whether or not such
action is permitted under the Purchase Agreement; or (iii) for violations or
breaches which are determined by a court to be non-material or without
substantial adverse effect upon the ability of the obligor to perform its
material obligations thereunder.

        D. We express no opinion as to the legality, validity, binding nature or
enforceability of any: (i) waiver of unknown future rights or waiver of rights
existing, or duties owed, that are broadly or vaguely stated or that do not
describe the right or duty purportedly waived with reasonable specificity, or
(ii) waiver or consent (whether or not characterized as a waiver or consent in
the Purchase Agreement) relating to the rights of the Company or duties owing to
it existing as a matter of law, to the extent such waiver or consent is found to
be against public policy.

        E. We express no opinion as to the legality, validity, binding nature or
enforceability of any provisions of the Purchase Agreement requiring written
amendments or waivers insofar as

                                       4
<PAGE>

it suggests that oral or other modifications, amendments or waivers could not be
effectively agreed upon by the parties.

        F. We express no opinion as to the legality, validity, binding nature or
enforceability of any provision in the Purchase Agreement to the effect that
rights or remedies are not exclusive, that every right or remedy is cumulative
and may be exercised in addition to any other right or remedy, that the election
of some particular remedy does not preclude recourse to one or more others or
that failure to exercise or delay in exercising rights or remedies will not
operate as a waiver of any such right or remedy.

        G. We express no opinion as to any anti-fraud provision of any
securities laws or antitrust laws, regulations or rules.

        H. We express no opinion as to the ability to obtain specific
performance, injunctive relief or other equitable relief as a remedy for
noncompliance with the Purchase Agreement.

        With respect to any opinion herein in regard to the existence or absence
of facts that is stated to be "to our knowledge," "to the best of our knowledge"
or "known to us," such statement means that, during the course of our
representation of the Company in this matter or any other matter, no information
has come to the attention of the lawyers in our firm participating in such
representation that has given them actual knowledge of facts contrary to the
existence or absence of the facts indicated. However, we have not undertaken any
independent investigation to determine the existence or absence of such facts,
and no inference as to our knowledge of the existence or absence of such facts
should be drawn from our representation of the Company in this matter.

        We are admitted to practice in the State of California. We render no
opinion herein as to matters involving the laws of any jurisdiction other than
the State of California and the federal laws of the United States of America.
This opinion is limited to the laws set forth above, as such laws presently
exist, to present judicial interpretations thereof and to the facts as they
presently exist. In rendering this opinion, we assume no obligation to revise or
supplement this opinion should the present laws of the jurisdictions mentioned
herein be changed by legislative action, judicial decision or otherwise. This
opinion is rendered as of the date hereof, and we express no opinion as to, and
disclaim any undertaking or obligation to update this opinion in respect of,
changes of circumstances or events which occur subsequent to this date.

        This opinion is rendered in connection with the Purchase Agreement, and
may not be relied upon by any person other than you or by you in any other
context. The opinions expressed herein are solely for your benefit in connection
with the transactions contemplated by the Purchase Agreement. This opinion may
not be quoted in whole or in part nor may copies hereof be delivered to any
other person without our prior written consent.

                                Very truly yours,

                                       5
<PAGE>

                                    EXHIBIT B

                             SCHEDULE OF EXCEPTIONS

                                     -NONE-

<PAGE>

                                    EXHIBIT C

               TRUSTEES OF THE STATE OF WISCONSIN INVESTMENT BOARD

Jon D. Hammes                                Wayne McCaffery
John Petersen III                            George F. Lightbourn
Eric O. Stanchfield                          James R. Nelsen
Andrea Steen Crawford                        William R. Sauey
James A. Senty

          RELEVANT EMPLOYEES OF THE STATE OF WISCONSIN INVESTMENT BOARD

               ALL TRANSACTIONS

Patricia Lipton       Executive Director
Jean Ledford          Chief Investment Officer -- Equities
Jon Traver            Chief Investment Officer -- Fixed Income
Keith Johnson         Chief Legal Counsel
Teresa Lau            Assistant Legal Counsel
Cynthia Richson       Assistant Legal Counsel

        FOR SMALL CAP PORTFOLIO DIRECT PLACEMENTS

John Nelson           Investment Director
Chad Neumann          Assistant Portfolio Manager
Jackie Doeler         Portfolio Manager-Health Care Sector
Ian Calame            Securities Analyst
Dan Kane              Securities Analyst

<PAGE>

                                   APPENDIX I

                            CARDIOGENESIS CORPORATION

                         STOCK CERTIFICATE QUESTIONNAIRE

        Pursuant to Section 3 of the Agreement, please provide us with the
following information:

1.      The exact name that your Shares are to be registered in (this is the
        name that will appear on your stock certificate(s)). You may use a
        nominee name if appropriate:

        __________________________________

2.      The relationship between the Purchaser of the Shares and the Registered
        Holder listed in response to item 1 above: _____________________________

3.      The mailing address of the Registered Holder listed in response to item
        1 above:

        __________________________________

        __________________________________

        __________________________________

        __________________________________

4.      The Social Security Number or Tax Identification Number of the
        Registered Holder listed in response to item 1 above:

        __________________________________

<PAGE>

                                   APPENDIX II

                            CARDIOGENESIS CORPORATION

                      REGISTRATION STATEMENT QUESTIONNAIRE

        In connection with the preparation of the Registration Statement, please
provide us with the following information:

5.      Pursuant to the "Selling Shareholder" section of the Registration
        Statement, please state your or your organization's name exactly as it
        should appear in the Registration Statement:

        ________________________________________________________

6.      Please provide the number of shares that you or your organization will
        own immediately after Closing, including those Shares purchased by you
        or your organization pursuant to this Purchase Agreement and those
        shares purchased by you or your organization through other transactions:
        _____________________________________________

7.      Have you or your organization had any position, office or other material
        relationship within the past three years with the Company or its
        affiliates?

               _____ Yes         _____ No

        If yes, please indicate the nature of any such relationships below:

        ________________________________________________________

        ________________________________________________________

        ________________________________________________________

        ________________________________________________________

<PAGE>

                                  APPENDIX III

                            CARDIOGENESIS CORPORATION

                   PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE

        The undersigned, an officer of, or other person duly authorized by

________________________________________________________________________________
              [fill in official name of individual or institution]

hereby certifies that he/she/it is the Purchaser of the shares evidenced by the
attached certificate, and as such, sold such shares on ________________, 200__
in accordance with Registration Statement number 333-________________, and
complied with the requirement of delivering a current prospectus in connection
with such sale.

PRINT OR TYPE:

Name of Purchaser (Individual or Institution):

________________________________________________________________________________

Name of Individual representing Purchaser (if an Institution)

________________________________________________________________________________

Title of Individual representing Purchaser (if an Institution):

________________________________________________________________________________

SIGNATURE:

Individual Purchaser or Individual representing Purchaser:

________________________________________________________________________________

                                       2<PAGE>
                                                                  EXHIBIT 10.26b

                           FIVE-YEAR CREDIT AGREEMENT

                          Dated as of October 30, 2000

            POLYONE CORPORATION, an Ohio corporation and successor to The Geon
Company and M.A. Hanna Company (the "Company"), the banks, financial
institutions and other institutional lenders (the "Initial Lenders") listed on
the signature pages hereof, SALOMON SMITH BARNEY INC., as sole lead arranger,
DEUTSCHE BANK SECURITIES INC. and BANK ONE, NA, as syndication agents, and
CITICORP USA, INC. ("Citicorp"), as administrative agent (the "Agent") for the
Lenders (as hereinafter defined), agree 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):

            "Acceptance" means a bankers' acceptance issued as part of a
      Competitive Bid Advance.

            "Advance" means a Revolving Credit Advance or a Competitive Bid
      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 a 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 (a) in the case of Advances denominated in
      Dollars, the account of the Agent maintained by the Agent at Citicorp at
      its office at 399 Park Avenue, New York, New York 10043, Account No.
      36852248, Attention: ____________, (b) in the case of Advances denominated
      in any Foreign Currency, the account of the Local Agent or the Sub-Agent
      designated in writing from time to time by the Agent to the Company and
      the Lenders for such purpose and (c) in any such case, such other account
      of the Agent as is designated in writing from time to time by the Agent to
      the Company and the Lenders for such purpose.

            "Amendment No. 2" means Amendment No. 2 to the Credit Agreement,
      dated as of November 21, 2001.

            "Amendment No. 4" means Amendment, Waiver and Consent No. 4 to the
      Credit Agreement, dated as of March ___, 2002.

            "Amendment No. 2 Effective Date" means the date on which the
      conditions precedent to the effectiveness of Amendment No. 2 have been
      satisfied or waived by the Required Lenders.

            "Amendment No. 4 Effective Date" means the date on which the
      conditions precedent to the effectiveness of Amendment No. 4 have been
      satisfied or waived by the Required Lenders.

<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 Eurocurrency Lending Office in the case of a Eurocurrency
      Rate Advance and, in the case of a Competitive Bid Advance, the office of
      such Lender notified by such Lender to the Agent as its Applicable Lending
      Office with respect to such Competitive Bid 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>
                              Applicable Margin for Base    Applicable Margin for Eurocurrency
Performance Level                    Rate Advances                    Rate Advances
-----------------             --------------------------    ----------------------------------
<S>                           <C>                           <C>
    I                                0.000%                               0.775%

    II                               0.500%                               1.000%

   III                               0.500%                               1.225%

    IV                               1.000%                               1.525%

    V                                1.250%                               1.750%

    VI                               1.500%                               2.200%

   VII                               2.000%                               2.700%

   VIII                              2.250%                               3.100%
</TABLE>

      provided, that for the period beginning October 1, 2001 until
December 31, 2001, the Applicable Margin shall be determined by reference to
Performance Level VI.

            "Applicable Percentage" 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 Level                Applicable Percentage
<S>                              <C>
      I                                0.100%

     II                                0.125%

     III                               0.150%

     IV                                0.225%

      V                                0.250 %

     VI                                0.300%

     VII                               0.300%

    VIII                               0.400%
</TABLE>

            provided, that for the period beginning October 1, 2001 until
December 31, 2001, the Applicable Percentage shall be determined by reference to
Performance Level VI.

            "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.

            "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 Citicorp USA, Inc. in
      New York, New York, from time to time, as Citicorp USA, Inc.'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

                                       2
<PAGE>

      (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
      Citicorp 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 Citicorp from three New York
      certificate of deposit dealers of recognized standing selected by
      Citicorp, 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
      Citicorp 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 Citicorp for determining the then
      current annual assessment payable by Citicorp to the Federal Deposit
      Insurance Corporation (or any successor) for insuring U.S. dollar deposits
      of Citicorp in the United States; and

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

            "Base Rate Advance" means a Revolving Credit Advance denominated in
      Dollars that bears interest as provided in Section 2.07(a)(i).

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

            "Borrowed Debt/EBITDA Ratio" means, as of any date, the ratio
      computed by dividing (a) Borrowed Debt of the Company and its
      Subsidiaries, including their pro rata share of Sunbelt, on a Consolidated
      basis as of such date by (b) EBITDA of the Company and its Subsidiaries,
      including their pro rata share of Sunbelt, on a Consolidated basis for the
      four consecutive fiscal quarters of the Company most recently ended as of
      such date; provided that clause (b) of this definition shall be calculated
      to include the EBITDA for such period of four consecutive fiscal quarters
      of any business acquired by the Company or its Subsidiaries during such
      period. The Borrowed Debt/EBITDA Ratio shall be determined as of the date
      on which the Company delivers to the Agent a Consolidated balance sheet of
      the Company and its Subsidiaries as of the end of a fiscal quarter and
      Consolidated statements of income and cash flows of the Company 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 Company 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/EBITDA Ratio for the fiscal period then
      ended.

            "Borrower" means the Company or any Designated Subsidiary, as the
      context requires.

            "Borrowing" means a Revolving Credit Borrowing or a Competitive Bid
      Borrowing.

            "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 Eurocurrency Rate Advances or LIBO
      Rate Advances, on which dealings are carried on in the London interbank
      market and banks are open for business in London and in the country of
      issue of the currency of such Eurocurrency Rate Advance or LIBO Rate
      Advance (or, in the case of an Advance denominated in the Euro, in
      Frankfurt, Germany) and, if the applicable Business Day relates to any
      Local Rate Advances on which banks are open for business in the principal
      financial center of the country of issue of the currency of such Local
      Rate Advance.

            "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.

                                       3
<PAGE>

            "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 the Company,
      interest expense on all Debt of the Company 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 the Company 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, (w) any amounts accrued or payable
      in connection with the Receivables Financing, (x) amortization of original
      issue discount, (y) the interest portion of any deferred payment
      obligation and (z) other interest not payable in cash.

            "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 Receivables 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 Trigger" means the earlier of the issuance of the Senior
      Notes (2002) and May 15, 2002.

            "Collateral Trust Agreements" has the meaning specified in Section
      5.01(l).

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

            "Commitment" means as to any Lender (a) the Dollar amount set forth
      opposite such Lender's name on the signature pages hereof, (b) if such
      Lender has become a Lender hereunder pursuant to an Assumption Agreement,
      the Dollar amount set forth in such Assumption Agreement or (C) if such
      Lender has entered into any Assignment and Acceptance, the Dollar amount
      set forth for such Lender in the Register maintained by the Agent pursuant
      to Section 9.07(g), as such amount may be reduced pursuant to Section
      2.05.

            "Committed Currencies" means lawful currency of the United Kingdom
      of Great Britain and Northern Ireland, lawful currency of Japan and lawful
      currency of the European Economic and Monetary Union and all other freely
      available currencies approved by all Lenders and the Agent.

            "Competitive Bid Advance" means an advance by a Lender to any
      Borrower as part of a Competitive Bid Borrowing resulting from the auction
      bidding procedure described in Section 2.03 and refers to an issue of
      Acceptances, a Fixed Rate Advance, a LIBO Rate Advance or a Local Rate
      Advance.

            "Competitive Bid Borrowing" means a borrowing consisting of
      simultaneous Competitive Bid Advances from each of the Lenders whose offer
      to make one or more Competitive Bid Advances as part of such borrowing has
      been accepted under the auction bidding procedure described in Section
      2.03.

            "Competitive Bid Note" means the promissory note of any Borrower
      payable to the order of any Lender, in substantially the form of Exhibit
      A-2 hereto, evidencing the indebtedness of such Borrower to such Lender
      resulting from the Competitive Bid Advance made by such Lender to such
      Borrower.

                                       4
<PAGE>

            "Competitive Bid Reduction" has the meaning specified in Section
      2.01.

            "Confidential Information" means information that any Borrower
      furnishes to the Agent, the Local Agent, the Sub-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, the Local Agent, the Sub-Agent or any Lender, but does not include
      any such information that is or becomes generally available to the public
      other than a result of a breach by any of the Agent, the Local Agent, the
      Sub-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 a Borrower
      or any consultant employed by the Agent to provide technical advice that
      is not, to the best of the Agent's , Local Agent's, Sub-Agent's or such
      Lender's knowledge, acting in violation of a confidentiality agreement
      with any Borrower.

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

            "Convert", "Conversion" and "Converted" each refers to a conversion
      of Revolving Credit Advances of one Type into Revolving Credit 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 obligations,
      contingent or otherwise, of such Person in respect of acceptances, letters
      of credit or similar extensions of credit and (g) 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 (f) above through an agreement (1) to pay or
      purchase such Debt or to advance or supply funds for the payment or
      purchase of such Debt, (2) to supply funds to or in any other manner
      invest in the debtor (including any agreement to pay for property or
      services irrespective of whether such property is received or such
      services are rendered) primarily for the purpose of enabling the debtor to
      make payment of such Debt or to assure the holder of such Debt against
      loss or (3) otherwise to assure a creditor against loss; provided, that
      the term "Debt" shall not include obligations under the Receivables
      Financing.

            "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.

            "Designated Bidder" means (a) an Eligible Assignee or (b) a special
      purpose corporation that is engaged in making, purchasing or otherwise
      investing in commercial loans in the ordinary course of its business and
      that issues (or the parent of which issues) commercial paper rated at
      least "Prime-1" (or the then equivalent grade) by Moody's or "A-1" (or
      the then equivalent grade) by S&P that, in the case of either clause (a)
      or (b), (i) shall have become a party hereto pursuant to Section 9.07(d),
      (e) and (f) and (ii) is not otherwise a Lender.

            "Designation Agreement" means a designation agreement entered into
      by a Lender (other than a Designated Bidder) and a Designated Bidder, and
      accepted by the Agent, in substantially the form of Exhibit D hereto.

            "Designated Subsidiary" means any Subsidiary of the Company
      designated for borrowing privileges under this Agreement pursuant to
      Section 9.09.

                                       5
<PAGE>

            "Designation Letter" means, with respect to any Designated
      Subsidiary, a letter in the form of Exhibit E hereto signed by such
      Designated Subsidiary and the Company.

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

            "Dollar Amount" means, with respect to any outstanding Advance on
      any day (a) the outstanding principal amount of such Advance if it is an
      Advance denominated in Dollars and (b) the Equivalent in Dollars
      (determined on the third business Day prior to such day) of (i) the
      outstanding principal amount of such Advance if it is an Advance
      denominated in a Foreign Currency or (ii) the aggregate face amount of
      such Advance if it is an issue of Acceptance.

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

            "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 Assumption Agreement or 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 Company and the Agent.

            "EBITDA" means, for any period, net income (or net loss) plus the
      sum of (a) interest expense, (b) income tax expense, (c) depreciation
      expense, (d) amortization expense (e) non-cash extraordinary or unusual
      losses deducted in calculating net income and resulting from business
      rationalizations and facility closures in an aggregate amount from the
      date hereof not to exceed $50,000,000 less non-cash extraordinary or
      unusual gains added in calculating net income, provided, that for the
      calendar year 2001, such amount included in this clause (e) for
      extraordinary and unusual losses resulting from business rationalizations
      and facility closures shall include cash charges for such losses in an
      aggregate amount not to exceed $14,800,000 and (f) from October 1, 2001
      through June 30, 2003, cash extraordinary or unusual losses deducted in
      calculating net income resulting from the Triple Crown restructuring as
      and when incurred (when received or expensed), rather than on an accrual
      basis, in each case determined in accordance with GAAP for such period.

            "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 9.07, the Company, such approval
      not to be unreasonably withheld or delayed; provided, however, that
      neither the Company nor an Affiliate of the Company 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.

                                       6
<PAGE>

            "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.

            "Equivalent" in Dollars of any Foreign Currency on any date means
      the equivalent in Dollars of such Foreign Currency determined by using the
      quoted spot rate at which the Sub-Agent's principal office in London
      offers to exchange Dollars for such Foreign Currency in London prior to
      4:00 P.M. (London time) (unless otherwise indicated by the terms of this
      Agreement) on such date as is required pursuant to the terms of this
      Agreement, and the "Equivalent" in any Foreign Currency of Dollars means
      the equivalent in such Foreign Currency of Dollars determined by using the
      quoted spot rate at which the Sub-Agent's principal office in London
      offers to exchange such Foreign Currency for Dollars in London prior to
      4:00 P.M. (London time) (unless otherwise indicated by the terms of this
      Agreement) on such date as is required pursuant to the terms of this
      Agreement.

            "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 Company's controlled group, or under common
      control with the Company, 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 Company or any of its ERISA Affiliates in the circumstances
      described in Section 4062(e) of ERISA; (e) the withdrawal by the Company
      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 Company 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.

            "Euro" means the lawful currency of the European Economic and
      Monetary Union.

            "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.

            "Eurocurrency Lending Office" means, with respect to any Lender, the
      office of such Lender specified as its "Eurocurrency Lending Office"
      opposite its name on Schedule I hereto or in the Assumption Agreement or
      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
      Company and the Agent.

            "Eurocurrency Rate" means, for any Interest Period for each
      Eurocurrency Rate Advance comprising part of the same Revolving Credit
      Borrowing, an interest rate per

                                       7
<PAGE>

      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 Telerate Markets Page 3750 (or any successor page) as
      the London interbank offered rate for deposits in Dollars or the
      applicable Committed Currency 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 average (rounded upward to the nearest whole multiple
      of 1/16 of 1% per annum, if such average is not such a multiple) of the
      rate per annum at which deposits in Dollars or the applicable Committed
      Currency is offered by the principal office of each of the Reference Banks
      in London, England to prime banks in the London interbank market at 11:00
      A.M. (London time) two Business Days before the first day of such Interest
      Period in an amount substantially equal to such Reference Bank's
      Eurocurrency Rate Advance comprising part of such Revolving Credit
      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
      Eurocurrency Rate Reserve Percentage for such Interest Period. If the
      Telerate Markets Page 3750 (or any successor page) is unavailable, the
      Eurocurrency Rate for any Interest Period for each Eurocurrency Rate
      Advance comprising part of the same Revolving Credit Borrowing shall be
      determined by the Agent on the basis of applicable rates furnished to and
      received by the Agent from the Reference Banks two Business Days before
      the first day of such Interest Period, subject, however, to the provisions
      of Section 2.08.

            "Eurocurrency Rate Advance" means a Revolving Credit Advance
      denominated in Dollars or a Committed Currency that bears interest as
      provided in Section 2.07(a)(ii).

            "Eurocurrency Rate Reserve Percentage" for any Interest Period for
      all Eurocurrency Rate Advances or LIBO 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 Eurocurrency Rate Advances or LIBO 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.

            "Fixed Rate Advances" has the meaning specified in Section
      2.03(a)(i), which Advances shall be denominated in Dollars or in any
      Foreign Currency.

            "Foreign Currency" means any Committed Currency, the lawful currency
      of Canada and any other lawful currency (other than Dollars) that is
      freely transferable or convertible into Dollars.

            "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.

                                       8
<PAGE>

            "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.

            "Indebtedness" means Borrowed Debt plus outstanding obligations
      under the Receivables Financing.

            "Information Memorandum" means the information memorandum dated
      September, 2000 used by the Agent in connection with the syndication of
      the Commitments.

            "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.

            "Interest Coverage Ratio" means, with respect to any fiscal quarter,
      the ratio of (a) EBITDA of the Company and its Subsidiaries, including, at
      any time after demand for performance of the Company's guaranty of the
      obligations of Sunbelt has been made, their pro rata share of Sunbelt, on
      a Consolidated basis to (b) Cash Interest Expense of the Company and its
      Subsidiaries, including, at any time after demand for performance of the
      Company's guaranty of the obligations of Sunbelt has been made, their pro
      rata share 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 EBITDA for such period of four
      consecutive fiscal quarters of any business acquired by the Company or its
      Subsidiaries during such period.

            "Interest Period" means, for each Eurocurrency Rate Advance
      comprising part of the same Revolving Credit Borrowing and each LIBO Rate
      Advance comprising part of the same Competitive Bid Borrowing, the period
      commencing on the date of such Eurocurrency Rate Advance or LIBO Rate
      Advance or the date of the Conversion of any Base Rate Advance into such
      Eurocurrency Rate Advance and ending on the last day of the period
      selected by the applicable Borrower pursuant to the provisions below and,
      thereafter, with respect to Eurocurrency Rate Advances, 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 such Borrower
      pursuant to the provisions below. The duration of each such Interest
      Period shall be one, two, three, six or nine months or, if available by
      all Lenders, twelve months, as such 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) no Borrower may select any Interest Period that ends after
            the Termination Date;

                  (ii) Interest Periods commencing on the same date for
            Eurocurrency Rate Advances comprising part of the same Revolving
            Credit Borrowing or for LIBO Rate Advances comprising part of the
            same Competitive Bid 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.

                                       9
<PAGE>

            "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.

            "Lenders" means the Initial Lenders and each Person that shall
      become a party hereto pursuant to Section 9.07(a), (b) and (c) and, except
      when used in reference to a Revolving Credit Advance, a Revolving Credit
      Borrowing, a Revolving Credit Note, a Commitment or a related term, each
      Designated Bidder.

            "LIBO Rate" means, for any Interest Period for all LIBO Rate
      Advances comprising part of the same Competitive Bid 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 Dow Jones Markets Telerate Page 3750
      (or any successor page) as the London interbank offered rate for deposits
      in Dollars or the applicable Committed Currency 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 average (rounded upward to the
      nearest whole multiple of 1/16 of 1% per annum, if such average is not
      such a multiple) of the rate per annum at which deposits in Dollars or the
      applicable Foreign Currency is offered by the principal office of each of
      the Reference Banks in London, England to prime banks in the London
      interbank market at 11:00 A.M. (London time) two Business Days before the
      first day of such Interest Period in an amount substantially equal to the
      amount that would be the Reference Banks' respective ratable shares of
      such Borrowing if such Borrowing were to be a Revolving Credit 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
      Eurocurrency Rate Reserve Percentage for such Interest Period. If the Dow
      Jones Markets Telerate Page 3750 (or any successor page) is unavailable,
      the LIBO Rate for any Interest Period for each LIBO Rate Advance
      comprising part of the same Competitive Bid Borrowing shall be determined
      by the Agent on the basis of applicable rates furnished to and received by
      the Agent from the Reference Banks two Business Days before the first day
      of such Interest Period, subject, however, to the provisions of Section
      2.08.

            "LIBO Rate Advances" means a Competitive Bid Advance denominated in
      Dollars or in any Foreign Currency and bearing interest based on the LIBO
      Rate.

            "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 this Agreement, the Notes and during the
      continuance of the Security Period, the Collateral Documents.

            "Local Agent" means Citibank Canada or any successor local agent
      that is a Canadian chartered bank so designated by the Agent.

            "Local Rate Advance" means a Competitive Bid Advance denominated in
      any Foreign Currency sourced from the jurisdiction of issuance of such
      Foreign Currency.

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

                                       10
<PAGE>

            "Moody's" means Moody's Investors Service, Inc.

            "Mortgage" has the meaning specified in Section 5.01(l).

            "Multiemployer Plan" means a multiemployer plan, as defined in
      Section 4001(a)(3) of ERISA, to which the Company 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
      Company or any of its ERISA Affiliates and at least one Person other than
      the Company and its ERISA Affiliates or (b) was so maintained and in
      respect of which the Company 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 Revolving Credit Note or a Competitive Bid Note.

            "Notice of Competitive Bid Borrowing" has the meaning specified in
      Section 2.03(a).

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

            "Payment Office" means, for Canadian dollars, such office of the
      Local Agent and, for any other Foreign Currency, such office of the
      Sub-Agent, in each case, as shall be from time to time selected by the
      Agent and notified by the Agent to the Company and the Lenders.

            "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/EBITDA Ratio is less than or equal to 2.75:1.00.

            II    Borrowed Debt/EBITDA Ratio is greater than 2.75:1.00 but less
                  than or equal to 3.00:1.00.

            III   Borrowed Debt/EBITDA Ratio is greater than 3.00:1.00 but less
                  than or equal to 3.50:1.00.

            IV    Borrowed Debt/EBITDA Ratio is greater than 3.50:1.00 but less
                  than or equal to 3.75:1.00.

            V     Borrowed Debt/EBITDA Ratio is greater than 3.75:1.00 but less
                  than or equal to 4.00:1.00.

                                       11
<PAGE>

            VI    Borrowed Debt/EBITDA Ratio is greater than 4.00:1.00 but less
                  than or equal to 4.25:1.00.

            VII   Borrowed Debt/EBITDA Ratio is greater than 4.25:1.00 but less
                  than or equal to 4.99:1.00.

            VIII  Borrowed Debt/EBITDA Ratio is equal to or greater than
                  5.00:1.00.

For purposes of this definition, the Performance Level shall be determined as at
the end of each fiscal quarter of the Company based upon the calculation of the
Debt/EBITDA Ratio for such fiscal quarter. 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.

            "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.

            "Receivables Financing" means, collectively, the transactions
      contemplated by (i) the Fifth Amended and Restated Trade Receivables
      Purchase and Sale Agreement to be dated on or before April 30, 2002, among
      PolyOne Funding Corporation, as Seller, PolyOne Corporation, individually
      and as Collection Agent, Ciesco, L.P., Corporate Receivables Corporation
      and the other Investors, if any, named therein and Citicorp North America,
      Inc., as Managing Agent and Agent for the Investors, (ii) the Fourth
      Amended and Restated Parallel Purchase Commitment to be dated on or before
      April 30, 2002 among PolyOne Funding Corporation, as Seller, PolyOne
      Corporation, individually and as Collection Agent, Citibank, N.A., as a
      Liquidity Bank and Citicorp North America, Inc., as Agent for the
      Liquidity Banks, (iii) the Receivables Contribution and Sale Agreement to
      be dated on or before April 30, 2002 between the Originators, as Sellers
      and PolyOne Funding Corporation, as Buyer and (iv) an Undertaking
      Agreement to be dated on or before April 30, 2002, entered into by PolyOne
      Corporation, in favor of the Investors, the Managing Agents, the Liquidity
      Banks, the Participants and Citicorp North America, Inc., as Agent.

            "Receivables Intercreditor Agreement" has the meaning specified in
      Section 5.01(l).

            "Reference Banks" means Citibank, Bank One, NA and Deutsche Bank AG.

            "Register" has the meaning specified in Section 9.07(g).

            "Required Lenders" means at any time Lenders owed at least a
      majority in interest of the then aggregate unpaid principal amount (based
      on the Equivalent in Dollars at such time) of the Revolving Credit
      Advances owing to Lenders, or, if no such principal amount is then
      outstanding, Lenders having at least a majority in interest of the
      Commitments.

            "Restricted Subsidiary" means any U.S. Subsidiary that is a vehicle
      for holding interests in joint ventures or as to which the pledge of stock
      would trigger other third party rights.

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

                                       12
<PAGE>

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

            "Revolving Credit Note" means a promissory note of a Borrower
      payable to the order of any Lender, delivered pursuant to a request made
      under Section 2.16 in substantially the form of Exhibit A-1 hereto,
      evidencing the aggregate indebtedness of such Borrower to such Lender
      resulting from the Revolving Credit Advances made by such Lender.

            "S&P" means Standard & Poor's Ratings Group, a division of The
      McGraw-Hill Companies, Inc.

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

            "Security Agreement" has the meaning specified in Section 5.01(l).

            "Security Period" means the period, if any, beginning with the
      occurrence of the Collateral Trigger until the date thereafter, if any, on
      which the Borrowed Debt/EBITDA Ratio is less than 3.50:1 for any two
      consecutive fiscal quarters, determined as at the end of a fiscal quarter.

            "Senior Notes (2002)" means the senior unsecured notes to be issued
      pursuant to an Indenture to be dated on or before May 31, 2002, between
      PolyOne and the trustee named therein, in an aggregate principal amount of
      not less than $200,000,000.

            "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
      Company or any of its ERISA Affiliates and no Person other than the
      Company and its ERISA Affiliates or (b) was so maintained and in respect
      of which the Company 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(i) hereto.

            "Sub-Agent" means Citibank International plc.

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

            "Subsidiary Guarantors" means all Subsidiaries of the Company
      organized under the laws of the United States or any political subdivision
      thereof that are not Restricted Subsidiaries and other Subsidiaries as may
      be agreed, but not including Burton Rubber Company or [PolyOne Funding
      Corporation].

            "Subsidiary Guaranty" has the meaning specified in Section 5.01(l).

            "Sunbelt" means Sunbelt Chlor Alkali Partnership, a joint venture
      between a Subsidiary of the Company and a subsidiary of The Olin Corp. to
      construct and operate a new chlor alkali plant in McIntosh, Alabama.

            "Termination Date" means the earlier of (a) October 30, 2004 and (b)
      the date of termination in whole of the Commitments pursuant to Section
      2.05 or 6.01.

                                       13
<PAGE>

            "Total Tangible Assets" means total assets other than assets that
      are considered to be intangible assets under GAAP.

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

            "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".

            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, 2000, 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

            SECTION 2.01. The Revolving Credit Advances. Each Lender severally
agrees, on the terms and conditions hereinafter set forth, to make Revolving
Credit Advances to any Borrower from time to time on any Business Day during the
period from the Effective Date until the Termination Date in an aggregate amount
(based in respect of any Revolving Credit Advances to be denominated in a
Committed Currency on the Equivalent in Dollars determined on the date of
delivery of the applicable Notice of Revolving Credit Borrowing) not to exceed
at any time outstanding such Lender's Commitment; provided that the aggregate
amount of the Commitments of the Lenders shall be deemed used from time to time
to the extent of the aggregate Dollar Amount of the Competitive Bid Advances
then outstanding and such deemed use of the aggregate amount of the Commitments
shall be allocated among the Lenders ratably according to their respective
Commitments (such deemed use of the aggregate amount of the Commitments being a
"Competitive Bid Reduction"). Each Revolving Credit Borrowing shall be in an
aggregate amount of $10,000,000 or an integral multiple of $1,000,000 in excess
thereof (or the Equivalent thereof in any Committed Currency determined on the
date of delivery of the applicable Notice of Revolving Credit Borrowing) and
shall consist of Revolving Credit 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 Borrowers may borrow under this Section
2.01, prepay pursuant to Section 2.10 and reborrow under this Section 2.01.

            SECTION 2.02. Making the Revolving Credit Advances. (a) Each
Revolving Credit 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 Revolving Credit Borrowing in the case of a Revolving Credit
Borrowing consisting of Eurocurrency Rate Advances denominated in Dollars, (y)
4:00 P.M. (London time) on the third Business Day prior to the date of the
proposed Revolving Credit Borrowing in the case of a Revolving Credit Borrowing
consisting of Eurocurrency Rate Advances denominated in any Committed Currency,
or (z) 11:00 A.M. (New York City time) on the date of the proposed Revolving
Credit Borrowing in the case of a Revolving Credit Borrowing consisting of Base
Rate Advances, by the applicable Borrower to the Agent (and, in the case of a
Revolving Credit Borrowing consisting of Eurocurrency Rate Advances,
simultaneously to the Sub-Agent), which shall give to each Lender prompt notice
thereof by telecopier or telex. Each such notice of a Revolving Credit Borrowing
(a "Notice of Revolving Credit Borrowing") shall be by telephone, confirmed
immediately in writing, or telecopier or telex in substantially the form of
Exhibit B-1 hereto, specifying therein the requested (i) date of such Revolving
Credit Borrowing, (ii) Type of Advances comprising such Revolving Credit
Borrowing, (iii) aggregate amount of such Revolving Credit Borrowing, and (iv)
in the case of a Revolving Credit Borrowing consisting of Eurocurrency Rate
Advances, initial Interest Period and currency for each such Revolving Credit
Advance. Each Lender shall, before

                                       14
<PAGE>

1:00 P.M. (New York City time) on the date of such Revolving Credit Borrowing,
in the case of a Revolving Credit Borrowing consisting of Advances denominated
in Dollars, and before 11:00 A.M. (London time) on the date of such Revolving
Credit Borrowing, in the case of a Revolving Credit Borrowing consisting of
Eurocurrency Rate Advances denominated in any Committed Currency, 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
Revolving Credit 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 applicable Borrower by depositing such
funds into an account of such Borrower maintained with the Agent or the
Sub-Agent or to such other account as such Borrower shall designate.

            (b) Anything in subsection (a) above to the contrary
notwithstanding, (i) the Borrowers may not select Eurocurrency Rate Advances for
any Revolving Credit Borrowing if the aggregate amount of such Revolving Credit
Borrowing is less than $10,000,000 or if the obligation of the Lenders to make
Eurocurrency Rate Advances shall then be suspended pursuant to Section 2.08 or
2.12 and (ii) the Eurocurrency Rate Advances may not be outstanding as part of
more than five separate Revolving Credit Borrowings.

            (c) Each Notice of Revolving Credit Borrowing shall be binding on
the applicable Borrower. In the case of any Revolving Credit Borrowing that the
related Notice of Revolving Credit Borrowing specifies is to be comprised of
Eurocurrency Rate Advances, the applicable 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 Revolving Credit Borrowing by such Borrower or
failure to fulfill on or before the date specified in such Notice of Revolving
Credit Borrowing for such Revolving Credit 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 Revolving Credit Advance to be
made by such Lender as part of such Revolving Credit Borrowing when such
Revolving Credit 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 Revolving Credit Borrowing that such Lender will not make
available to the Agent such Lender's ratable portion of such Revolving Credit
Borrowing, the Agent may assume that such Lender has made such portion available
to the Agent on the date of such Revolving Credit Borrowing in accordance with
subsection (a) of this Section 2.02 and the Agent may, in reliance upon such
assumption, make available to the applicable 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, such Lender and the applicable
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 such Borrower until the date such amount is
repaid to the Agent, at (i) in the case of such Borrower, the higher of (A) the
interest rate applicable at the time to Revolving Credit Advances comprising
such Revolving Credit Borrowing and (B) the cost of funds incurred by the Agent
in respect of such amount and (ii) in the case of such Lender, (A) the Federal
Funds Rate in the case of Advances denominated in Dollars or (B) the cost of
funds incurred by the Agent in respect of such amount in the case of Advances
denominated in Committed Currencies. If such Lender shall repay to the Agent
such corresponding amount, such amount so repaid shall constitute such Lender's
Revolving Credit Advance as part of such Revolving Credit Borrowing for purposes
of this Agreement.

            (e) The failure of any Lender to make the Revolving Credit Advance
to be made by it as part of any Revolving Credit Borrowing shall not relieve any
other Lender of its obligation, if any, hereunder to make its Revolving Credit
Advance on the date of such Revolving Credit Borrowing, but no Lender shall be
responsible for the failure of any other Lender to make the Revolving Credit
Advance to be made by such other Lender on the date of any Revolving Credit
Borrowing.

            SECTION 2.03. The Competitive Bid Advances. (a) Each Lender
severally agrees that any Borrower may make Competitive Bid Borrowings under
this Section 2.03 from time to time on any Business Day during the period from
the date hereof until the date occurring 30 days prior to the Termination Date
in the manner set forth below; provided that, following the making of each
Competitive Bid Borrowing, the aggregate Dollar Amount of the Advances then
outstanding shall not exceed the aggregate amount of the Commitments of the
Lenders (computed without regard to any Competitive Bid Reduction).

                                       15
<PAGE>

            (i) Any Borrower may request a Competitive Bid Borrowing under this
      Section 2.03 by delivering to the Agent (and, in the case of a Competitive
      Bid Borrowing not consisting of Fixed Rate Advances or LIBO Rate Advances
      to be denominated in Dollars or Canadian dollars, simultaneously to the
      Sub-Agent), by telecopier or telex, a notice of a Competitive Bid
      Borrowing (a "Notice of Competitive Bid Borrowing"), in substantially the
      form of Exhibit B-2 hereto, specifying therein the requested (A) date of
      such proposed Competitive Bid Borrowing, (B) aggregate amount of such
      proposed Competitive Bid Borrowing, (C) interest rate basis and day count
      convention to be offered by the Lenders, (D) currency of such proposed
      Competitive Bid Borrowing, (E) in the case of a Competitive Bid Borrowing
      consisting of LIBO Rate Advances, Interest Period, or in the case of a
      Competitive Bid Borrowing consisting of Fixed Rate Advances or Local Rate
      Advances, maturity date for repayment of each Fixed Rate Advance or Local
      Rate Advance to be made as part of such Competitive Bid Borrowing (which
      maturity date may not be earlier than the date occurring seven days after
      the date of such Competitive Bid Borrowing or later than the earlier of
      (I) 180 days after the date of such Competitive Bid Borrowing and (II) the
      Termination Date), (F) interest payment date or dates relating thereto,
      (G) location of such Borrower's account to which funds are to be advanced
      and (H) other terms (if any) to be applicable to such Competitive Bid
      Borrowing, not later than (1) 9:00 A.M. (New York City time) at least one
      Business Day prior to the date of the proposed Competitive Bid Borrowing,
      if such Borrower shall specify in the Notice of Competitive Bid Borrowing
      that the rates of interest to be offered by the Lenders shall be fixed
      rates per annum (the Advances comprising any such Competitive Bid
      Borrowing being referred to herein as "Fixed Rate Advances") and that the
      Advances comprising such proposed Competitive Bid Borrowing shall be
      denominated in Dollars, (2) 10:00 A.M. (New York City time) at least four
      Business Days prior to the date of the proposed Competitive Bid Borrowing,
      if such Borrower shall specify in the Notice of Competitive Bid Borrowing
      that the Advances comprising such Competitive Bid Borrowing shall be LIBO
      Rate Advances denominated in Dollars, (3) 10:00 A.M. (New York City time)
      at least two Business Days prior to the date of the proposed Competitive
      Bid Borrowing, if such Borrower shall specify in the Notice of Competitive
      Bid Borrowing that the Advances comprising such proposed Competitive Bid
      Borrowing shall be either Fixed Rate Advances denominated in Canadian
      dollars or Local Rate Advances denominated in Canadian dollars, (4) 10:00
      A.M. (London time) at least two Business Days prior to the date of the
      proposed Competitive Bid Borrowing, if such Borrower shall specify in the
      Notice of Competitive Bid Borrowing that the Advances comprising such
      proposed Competitive Bid Borrowing shall be either Fixed Rate Advances
      denominated in any Foreign Currency (other than Canadian dollars) or Local
      Rate Advances denominated in any Foreign Currency (other than Canadian
      dollars) and (5) 10:00 A.M. (London time) at least four Business Days
      prior to the date of the proposed Competitive Bid Borrowing, if such
      Borrower shall instead specify in the Notice of Competitive Bid Borrowing
      that the Advances comprising such Competitive Bid Borrowing shall be LIBO
      Rate Advances denominated in any Foreign Currency (other than Canadian
      dollars). Each Notice of Competitive Bid Borrowing shall be irrevocable
      and binding on the Borrower giving such notice. Any Notice of Competitive
      Bid Borrowing by a Designated Subsidiary shall be given to the Agent in
      accordance with the preceding sentence through the Company on behalf of
      such Designated Subsidiary. The Agent or the Sub-Agent, as the case may
      be, shall in turn promptly notify each Lender of each request for a
      Competitive Bid Borrowing received by it from such Borrower by sending
      such Lender a copy of the related Notice of Competitive Bid Borrowing.

            (ii) Each Lender may, if, in its sole discretion, it elects to do
      so, irrevocably offer to make one or more Competitive Bid Advances to the
      Borrower proposing the Competitive Bid Borrowing as part of such proposed
      Competitive Bid Borrowing at a rate or rates of interest specified by such
      Lender in its sole discretion, by notifying the Agent or the Sub-Agent, as
      the case may be (which shall give prompt notice thereof to such Borrower),
      (A) before 9:30 A.M. (New York City time) on the date of such proposed
      Competitive Bid Borrowing, in the case of a Competitive Bid Borrowing
      consisting of Fixed Rate Advances denominated in Dollars, (B) before 10:00
      A.M. (New York City time) three Business Days before the date of such
      proposed Competitive Bid Borrowing, in the case of a Competitive Bid
      Borrowing consisting of LIBO Rate Advances, denominated in Dollars, (C)
      before 10:00 A.M. (New York City time) on the Business Day prior to the
      date of such proposed Competitive Bid Borrowing, in the case of a
      Competitive Bid Borrowing consisting of either Fixed Rate Advances
      denominated in Canadian dollars or Local Rate Advances denominated in
      Canadian dollars, (D) before 12:00 noon (London time) on the Business Day
      prior to the date of such proposed Competitive Bid Borrowing, in the case
      of a Competitive Bid Borrowing consisting of either Fixed Rate Advances
      denominated in any Foreign Currency (other than

                                       16
<PAGE>

      Canadian dollars) or Local Rate Advances denominated in any Foreign
      Currency (other than Canadian dollars) and (E) before 12:00 noon (London
      time) on the third Business Day prior to the date of such proposed
      Competitive Bid Borrowing, in the case of a Competitive Bid Borrowing
      consisting of LIBO Rate Advances denominated in any Foreign Currency
      (other than Canadian dollars), of the minimum amount and maximum amount of
      each Competitive Bid Advance which such Lender would be willing to make as
      part of such proposed Competitive Bid Borrowing (which amounts or the
      Equivalent thereof in Dollars, as the case may be, of such proposed
      Competitive Bid may, subject to the proviso to the first sentence of this
      Section 2.03(a), exceed such Lender's Commitment, if any), the rate or
      rates of interest therefor and such Lender's Applicable Lending Office
      with respect to such Competitive Bid Advance; provided that if the Agent
      in its capacity as a Lender shall, in its sole discretion, elect to make
      any such offer, it shall notify such Borrower of such offer at least 30
      minutes before the time and on the date on which notice of such election
      is to be given to the Agent or to the Sub-Agent, as the case may be, by
      the other Lenders. If any Lender shall elect not to make such an offer,
      such Lender shall so notify the Agent before 10:00 A.M. (New York City
      time) or the Sub-Agent before 12:00 noon (London time) on the date on
      which notice of such election is to be given to the Agent or to the
      Sub-Agent, as the case may be, by the other Lenders, and such Lender shall
      not be obligated to, and shall not, make any Competitive Bid Advance as
      part of such Competitive Bid Borrowing; provided that the failure by any
      Lender to give such notice shall not cause such Lender to be obligated to
      make any Competitive Bid Advance as part of such proposed Competitive Bid
      Borrowing. Each Lender that offers to make a Competitive Bid Advance
      denominated in Canadian dollars shall (x) be deemed to have represented
      and warranted to the applicable Borrower that it is not, and for so long
      as such Competitive Bid Advance shall remain outstanding it will not
      become, a non-resident of Canada within the meaning of the Income Tax Act
      (Canada) and (y) have entered into an Acceptance Agreement in the form of
      Exhibit H hereto.

            (iii) The Borrower proposing the Competitive Bid Borrowing shall, in
      turn (A) before 10:30 A.M. (New York City time) on the date of such
      proposed Competitive Bid Borrowing, in the case of a Competitive Bid
      Borrowing consisting of Fixed Rate Advances denominated in Dollars, (B)
      before 11:00 A.M. (New York City time) three Business Days before the date
      of such proposed Competitive Bid Borrowing, in the case of a Competitive
      Bid Borrowing consisting of LIBO Rate Advances denominated in Dollars, (C)
      before 3:00 P.M. (New York City time) on the Business Day prior to the
      date of such Competitive Bid Borrowing, in the case of a Competitive Bid
      Borrowing consisting of either Fixed Rate Advances denominated in Canadian
      dollars or Local Rate Advances denominated in Canadian dollars, (D) before
      3:00 P.M. (London time) on the Business Day prior to the date of such
      proposed Competitive Bid Borrowing, in the case of a Competitive Bid
      Borrowing consisting of either Fixed Rate Advances denominated in any
      Foreign Currency (other than Canadian dollars) or Local Rate Advances
      denominated in any Foreign Currency and (E) before 3:00 P.M. (London time)
      on the third Business Day prior to the date of such Competitive Bid
      Borrowing, in the case of a Competitive Bid Borrowing consisting of LIBO
      Rate Advances denominated in any Foreign Currency (other than Canadian
      dollars), either:

                  (x) cancel such Competitive Bid Borrowing by giving the Agent
            notice to that effect, or

                  (y) accept one or more of the offers made by any Lender or
            Lenders pursuant to paragraph (ii) above, in its sole discretion, by
            giving notice to the Agent or to the Sub-Agent, as the case may be,
            of the amount of each Competitive Bid Advance (which amount shall be
            equal to or greater than the minimum amount, and equal to or less
            than the maximum amount, notified to such Borrower by the Agent or
            the Sub-Agent, as the case may be, on behalf of such Lender for such
            Competitive Bid Advance pursuant to paragraph (ii) above) to be made
            by each Lender as part of such Competitive Bid Borrowing, and reject
            any remaining offers made by Lenders pursuant to paragraph (ii)
            above by giving the Agent or the Sub-Agent, as the case may be,
            notice to that effect. Such Borrower shall accept the offers made by
            any Lender or Lenders to make Competitive Bid Advances in order of
            the lowest to the highest rates of interest offered by such Lenders.
            If two or more Lenders have offered the same interest rate, the
            amount to be borrowed at such interest rate will be allocated among
            such Lenders in proportion to the amount that each such Lender
            offered at such interest rate.

                                       17
<PAGE>

            (iv) If the Borrower proposing the Competitive Bid Borrowing
      notifies the Agent or the Sub-Agent, as the case may be, that such
      Competitive Bid Borrowing is cancelled pursuant to paragraph (iii)(x)
      above, the Agent or the Sub-Agent, as the case may be, shall give prompt
      notice thereof to the Lenders and such Competitive Bid Borrowing shall not
      be made.

            (v) If the Borrower proposing the Competitive Bid Borrowing accepts
      one or more of the offers made by any Lender or Lenders pursuant to
      paragraph (iii)(y) above, the Agent or the Sub-Agent, as the case may be,
      shall in turn promptly notify (A) each Lender that has made an offer as
      described in paragraph (ii) above, of the date and aggregate amount of
      such Competitive Bid Borrowing and whether or not any offer or offers made
      by such Lender pursuant to paragraph (ii) above have been accepted by such
      Borrower, (B) each Lender that is to make a Competitive Bid Advance as
      part of such Competitive Bid Borrowing, of the amount of each Competitive
      Bid Advance to be made by such Lender as part of such Competitive Bid
      Borrowing, and (C) each Lender that is to make a Competitive Bid Advance
      as part of such Competitive Bid Borrowing, upon receipt, that the Agent or
      the Sub-Agent, as the case may be, has received forms of documents
      appearing to fulfill the applicable conditions set forth in Article III.
      Each Lender that is to make a Competitive Bid Advance as part of such
      Competitive Bid Borrowing shall, before 11:00 A.M. (New York City time),
      in the case of Competitive Bid Advances to be denominated in Dollars or
      Canadian dollars or 11:00 A.M. (London time), in the case of Competitive
      Bid Advances to be denominated in any Foreign Currency (other than
      Canadian dollars), on the date of such Competitive Bid Borrowing specified
      in the notice received from the Agent or the Sub-Agent, as the case may
      be, pursuant to clause (A) of the preceding sentence or any later time
      when such Lender shall have received notice from the Agent or the
      Sub-Agent, as the case may be pursuant to clause (C) of the preceding
      sentence, make available for the account of its Applicable Lending Office
      to (x) the Agent in the case of a Competitive Bid Borrowing denominated in
      Dollars, at its address referred to in Section 9.02, in same day funds,
      such Lender's portion of such Competitive Bid Borrowing in Dollars, (y)
      the Local Agent in the case of a Competitive Bid Borrowing denominated in
      Canadian dollars, at the applicable Payment Office, in same day funds,
      such Lender's portion of such Competitive Bid Borrowing denominated in
      Canadian dollars and (z) in the case of a Competitive Bid Borrowing
      denominated in a Foreign Currency (other than Canadian dollars), at the
      Payment Office for such Foreign Currency as shall have been notified by
      the Agent to the Lenders prior thereto, in same day funds, such Lender's
      portion of such Competitive Bid Borrowing in such Foreign Currency. Upon
      fulfillment of the applicable conditions set forth in Article III and
      after receipt by the Agent of such funds, the Agent will make such funds
      available to such Borrower at the location specified by such Borrower in
      its Notice of Competitive Bid Borrowing. Promptly after each Competitive
      Bid Borrowing the Agent will notify each Lender of the amount of the
      Competitive Bid Borrowing, the consequent Competitive Bid Reduction and
      the dates upon which such Competitive Bid Reduction commenced and will
      terminate.

            (vi) If the Borrower proposing the Competitive Bid Borrowing
      notifies the Agent or the Sub-Agent, as the case may be, that it accepts
      one or more of the offers made by any Lender or Lenders pursuant to
      paragraph (iii)(y) above, such notice of acceptance shall be irrevocable
      and binding on such Borrower. The Borrower proposing the Competitive Bid
      Borrowing shall indemnify each Lender against any loss, cost or expense
      incurred by such Lender as a result of any failure to fulfill on or before
      the date specified in the related Notice of Competitive Bid Borrowing for
      such Competitive Bid 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 Competitive Bid Advance to be
      made by such Lender as part of such Competitive Bid Borrowing when such
      Competitive Bid Advance, as a result of such failure, is not made on such
      date.

            (b) Each Competitive Bid Borrowing shall be in an aggregate Dollar
Amount of $10,000,000 or an integral multiple of $1,000,000 in excess thereof
and, following the making of each Competitive Bid Borrowing, the Borrowers shall
be in compliance with the limitation set forth in the proviso to the first
sentence of subsection (a) above.

            (c) Within the limits and on the conditions set forth in this
Section 2.03, any Borrower may from time to time borrow under this Section 2.03,
repay or prepay pursuant to subsection (d) below, and reborrow

                                       18
<PAGE>

under this Section 2.03, provided that a Competitive Bid Borrowing shall not be
made within three Business Days of the date of any other Competitive Bid
Borrowing.

            (d) Each Borrower that has borrowed through a Competitive Bid
Borrowing shall repay to the Agent or, in the case of Competitive Bid Borrowings
denominated in a Foreign Currency, to the Sub-Agent, for the account of each
Lender that has made a Competitive Bid Advance, on the maturity date of each
Competitive Bid Advance (such maturity date being that specified by such
Borrower for repayment of such Competitive Bid Advance in the related Notice of
Competitive Bid Borrowing delivered pursuant to subsection (a)(i) above and
provided in the Competitive Bid Note evidencing such Competitive Bid Advance),
the then unpaid principal amount of such Competitive Bid Advance. Such Borrower
shall have no right to prepay any principal amount of any Competitive Bid
Advance unless, and then only on the terms, specified by such Borrower for such
Competitive Bid Advance in the related Notice of Competitive Bid Borrowing
delivered pursuant to subsection (a)(i) above and set forth in the Competitive
Bid Note evidencing such Competitive Bid Advance.

            (e) Each Borrower that has borrowed through a Competitive Bid
Borrowing (other than by the issuance of Acceptances) shall pay interest on the
unpaid principal amount of each Competitive Bid Advance from the date of such
Competitive Bid Advance to the date the principal amount of such Competitive Bid
Advance is repaid in full, at the rate of interest for such Competitive Bid
Advance specified by the Lender making such Competitive Bid Advance in its
notice with respect thereto delivered pursuant to subsection (a)(ii) above,
payable on the interest payment date or dates specified by such Borrower for
such Competitive Bid Advance in the related Notice of Competitive Bid Borrowing
delivered pursuant to subsection (a)(i) above, as provided in the Competitive
Bid Note evidencing such Competitive Bid Advance. Upon the occurrence and during
the continuance of an Event of Default, such Borrower shall pay interest on the
amount of unpaid principal of and interest on each Competitive Bid Advance owing
to a Lender, payable in arrears on the date or dates interest is payable
thereon, at a rate per annum equal at all times to 2% per annum above the rate
per annum required to be paid on such Competitive Bid Advance under the terms of
the Competitive Bid Note evidencing such Competitive Bid Advance unless
otherwise agreed in such Competitive Bid Note.

            (f) The indebtedness of any Borrower resulting from each Competitive
Bid Advance made to such Borrower as part of a Competitive Bid Borrowing shall
be evidenced by a separate Competitive Bid Note of such Borrower payable to the
order of the Lender making such Competitive Bid Advance.

            SECTION 2.04. Fees. (a) Facility Fee. The Company agrees to pay to
the Agent for the account of each Lender (other than the Designated Bidders) a
facility fee on the aggregate amount of such Lender's Commitment from the
Effective Date in the case of each Initial Lender and from the effective date
specified in the Assumption Agreement or 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 December 31, 2000, and on the
Termination Date.

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

            SECTION 2.05. Termination or Reduction of the Commitments. The
Company 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 $10,000,000 or an integral multiple of
$1,000,000 in excess thereof and provided further that the aggregate amount of
the Commitments of the Lenders shall not be reduced to an amount that is less
than the aggregate Dollar Amount of the Competitive Bid Advances then
outstanding.

            SECTION 2.06. Repayment of Revolving Credit Advances. Each Borrower
shall repay to the Agent for the ratable account of the Lenders on the
Termination Date the aggregate principal amount of the Revolving Credit Advances
then outstanding.

                                       19
<PAGE>

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

            (i) Base Rate Advances. During such periods as such Revolving Credit
      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) Eurocurrency Rate Advances. During such periods as such
      Revolving Credit Advance is a Eurocurrency Rate Advance, a rate per annum
      equal at all times during each Interest Period for such Revolving Credit
      Advance to the sum of (x) the Eurocurrency Rate for such Interest Period
      for such Revolving Credit 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
      Eurocurrency Rate Advance shall be Converted or paid in full.

            (b) Default Interest. Upon the occurrence and during the continuance
of an Event of Default, each Borrower shall pay interest on (i) the unpaid
principal amount of each Revolving Credit 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 Revolving Credit 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) Each Reference Bank
agrees to furnish to the Agent timely information for the purpose of determining
each Eurocurrency Rate and each LIBO Rate. If any one or more of the Reference
Banks shall not furnish such timely information to the Agent for the purpose of
determining any such interest rate, the Agent shall determine such interest rate
on the basis of timely information furnished by the remaining Reference Banks.
The Agent shall give prompt notice to the applicable 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 each Reference Bank for
the purpose of determining the interest rate under Section 2.07(a)(ii).

            (b) If, with respect to any Eurocurrency 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 Revolving Credit Advances as a part of such Borrowing during
its Interest Period or (ii) the Eurocurrency 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 Eurocurrency Rate Advances for
such Interest Period, the Agent shall forthwith so notify the applicable
Borrower and the Lenders, whereupon (A) the applicable Borrower will, on the
last day of the then existing Interest Period therefor, (1) if such Eurocurrency
Rate Advances are denominated in Dollars, either (x) prepay such Advances or (y)
Convert such Advances into Base Rate Advances and (2) if such Eurocurrency Rate
Advances are denominated in any Committed Currency, either (x) prepay such
Advances or (y) redenominate such Advances into an Equivalent amount of Dollars
and Convert such Advances into Base Rate Advances and (B) the obligation of the
Lenders to make, or to Convert Revolving Credit Advances into, Eurocurrency Rate
Advances shall be suspended until the Agent shall notify the Borrowers and the
Lenders that the circumstances causing such suspension no longer exist; provided
that, if the circumstances set forth in clause (ii) above are applicable, the
applicable Borrower may elect, by notice to the Agent and the Lenders, to
continue such Advances in such Committed Currency for Interest Periods of not
longer than one month, which Advances shall thereafter bear interest at a rate
per annum equal to the Applicable Margin plus, for each Lender, the cost to such
Lender (expressed as a rate per annum) of funding its Eurocurrency Rate Advances
by whatever means it reasonably determines to be appropriate. Each Lender shall
certify its cost of funds for each Interest Period to the Agent and

                                       20
<PAGE>

the Borrowers as soon as practicable (but in any event not later than ten
Business Days after the first day of such Interest Period).

            (c) If any Borrower shall fail to select the duration of any
Interest Period for any Eurocurrency Rate Advances in accordance with the
provisions contained in the definition of "Interest Period" in Section 1.01, the
Agent will forthwith so notify such Borrower and the Lenders and such Advances
will automatically, on the last day of the then existing Interest Period
therefor, (i) if such Eurocurrency Rate Advances are denominated in Dollars,
Convert into Base Rate Advances and (ii) if such Eurocurrency Rate Advances are
denominated in a Committed Currency, be redenominated into an Equivalent amount
of Dollars and be Converted into Base Rate Advances.

            (d) On the date on which the aggregate unpaid principal amount of
Eurocurrency Rate Advances comprising any Borrowing shall be reduced, by payment
or prepayment or otherwise, to less than $10,000,000, such Advances shall
automatically Convert into Base Rate Advances.

            (e) Upon the occurrence and during the continuance of any Event of
Default, (i) each Eurocurrency Rate Advance will automatically, on the last day
of the then existing Interest Period therefor, (A) if such Eurocurrency Rate
Advances are denominated in Dollars, be Converted into Base Rate Advances and
(B) if such Eurocurrency Rate Advances are denominated in any Committed
Currency, be redenominated into an Equivalent amount of Dollars and be Converted
into Base Rate Advances and (ii) the obligation of the Lenders to make, or to
Convert Advances into, Eurocurrency Rate Advances shall be suspended.

            (f) If Telerate Markets Page 3750 is unavailable and fewer than two
Reference Banks furnish timely information to the Agent for determining the
Eurocurrency Rate or LIBO Rate for any Eurocurrency Rate Advances or LIBO Rate
Advances, as the case may be,

            (i) the Agent shall forthwith notify the Borrowers and the Lenders
      that the interest rate cannot be determined for such Eurocurrency Rate
      Advances or LIBO Rate Advances, as the case may be,

            (ii) with respect to Eurocurrency Rate Advances, each such Advance
      will automatically, on the last day of the then existing Interest Period
      therefor, (A) if such Eurocurrency Rate Advance is denominated in Dollars,
      at the option of the Borrowers, be prepaid by the Borrowers or be
      automatically Converted into a Base Rate Advance and (B) if such
      Eurocurrency Rate Advance is denominated in any Committed Currency, at the
      option of the Borrowers, be prepaid by the Borrowers or be automatically
      redenominated into an Equivalent amount of Dollars and be Converted into a
      Base Rate Advance (or if such Advance is then a Base Rate Advance, will
      continue as a Base Rate Advance), and

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

      (g) For the purposes of the Interest Act (Canada) (i) the yearly rate of
interest to which any rate of interest payable under this Agreement which is
calculated on any basis that is less than a full calendar year is equivalent may
be determined by multiplying such rate of interest by a fraction the numerator
of which is the actual number of days in the relevant year and the denominator
of which is the number of days comprising such other basis of calculation, (ii)
the principle of deemed reinvestment of interest shall not apply to any interest
calculation under this Agreement and (iii) the rates of interest stipulated in
this Agreement are intended to be nominal rates and not effective rates or
yields.

      SECTION 2.09. Optional Conversion of Revolving Credit Advances. Each
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 Revolving Credit Advances denominated in Dollars of one Type
comprising the same Borrowing into Revolving Credit Advances denominated in
Dollars of the other Type; provided, however, that any Conversion of

                                       21
<PAGE>

Eurocurrency Rate Advances into Base Rate Advances shall be made only on the
last day of an Interest Period for such Eurocurrency Rate Advances, any
Conversion of Base Rate Advances into Eurocurrency Rate Advances shall be in an
amount not less than the minimum amount specified in Section 2.02(b) and no
Conversion of any Revolving Credit Advances shall result in more separate
Revolving Credit Borrowings than permitted under Section 2.02(b). Each such
notice of a Conversion shall, within the restrictions specified above, specify
(i) the date of such Conversion, (ii) the Dollar denominated Revolving Credit
Advances to be Converted, and (iii) if such Conversion is into Eurocurrency Rate
Advances, the duration of the initial Interest Period for each such Advance.
Each notice of Conversion shall be binding on the Borrower giving such notice.
In the case of any Conversion of Base Rate Advances into Eurodollar Rate
Advances, the applicable 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 Revolving Credit Advance to be Converted by
such Lender as a result of such revocation.

      SECTION 2.10. Prepayments of Revolving Credit Advances. (a) Optional. Each
Borrower may, upon notice at least two Business Days' prior to the date of such
prepayment, in the case of Eurocurrency 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 such Borrower shall,
prepay the outstanding principal amount of the Revolving Credit Advances
comprising part of the same Revolving Credit 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 $10,000,000 or an integral multiple
of $1,000,000 in excess thereof or the Equivalent thereof in a Committed
Currency (determined on the date notice of prepayment is given) and (y) in the
event of any such prepayment of a Eurocurrency Rate Advance, such Borrower shall
be obligated to reimburse the Lenders in respect thereof pursuant to Section
9.04(c). Each notice of prepayment by a Designated Subsidiary shall be given to
the Agent through the Company.

            (b) Mandatory. (i) If the Agent notifies the Company that, on any
      interest payment date, the Dollar Amount then outstanding exceeds 105% of
      the aggregate Commitments of the Lenders on such date, the Borrowers
      shall, within two Business Days after receipt of such notice, prepay the
      outstanding principal amount of any Advances owing by the Borrowers in an
      aggregate amount sufficient to reduce such Dollar Amount to an amount not
      to exceed 100% of the aggregate Commitments of the Lenders on such date.

            (ii) The Company shall, on the date of receipt of Net Cash Proceeds
      from the issuance of the Senior Notes (2002), prepay an aggregate
      principal amount of any Advances owing by the Borrowers in an amount equal
      to the amount of such Net Cash Proceeds.

            (iii) Each prepayment made pursuant to this Section 2.10(b) shall be
      made together with any interest accrued to the date of such prepayment on
      the principal amounts prepaid and, in the case of any prepayment of a
      Eurocurrency Rate Advance, a LIBO Rate Advance or a Local Rate Advance on
      a date other than the last day of an Interest Period or at its maturity,
      any additional amounts which the applicable Borrower shall be obligated to
      reimburse to the Lenders in respect thereof pursuant to Section 9.04(b).
      The Agent shall give prompt notice of any prepayment required under clause
      (b)(i) above to the Borrowers and the Lenders.

            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 Eurocurrency Rate Advances or LIBO Rate Advances
(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 or has its Applicable Lending Office or any
political subdivision thereof), then the Company 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

                                       22
<PAGE>

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 Company 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 Company 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
Company 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 Company 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 Company'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 Eurocurrency Lending Office to perform its
obligations hereunder to make Eurocurrency Rate Advances in Dollars or any
Committed Currency or LIBO Rate Advances in Dollars or any Foreign Currency or
to fund or maintain Eurocurrency Rate Advances in Dollars or any Committed
Currency or LIBO Rate Advances in Dollars or any Foreign Currency hereunder, (a)
each Eurocurrency Rate Advance or LIBO Rate Advance, as the case may be, will
automatically, upon such demand, (i) if such Eurocurrency Rate Advance or LIBO
Rate Advance is denominated in Dollars, be Converted into a Base Rate Advance or
an Advance that bears interest at the rate set forth in Section 2.07(a)(i), as
the case may be, and (ii) if such Eurocurrency Rate Advance or LIBO Rate Advance
is denominated in any Foreign Currency, be redenominated into an Equivalent
amount of Dollars and be Converted into a Base Rate Advance or an Advance that
bears interest at the rate set forth in Section 2.07(a)(i), as the case may be,
and (b) the obligation of the Lenders to make Eurocurrency Rate Advances or LIBO
Rate Advances or to Convert Revolving Credit Advances into Eurocurrency Rate
Advances shall be suspended until the Agent shall notify the Company and the
Lenders that the circumstances causing such suspension no longer exist.

            SECTION 2.13. Payments and Computations. (a) Each Borrower shall
make each payment hereunder, except with respect to principal of, interest on,
and other amounts relating to, Advances denominated in a Foreign Currency, not
later than 11:00 A.M. (New York City time) on the day when due in Dollars to the
Agent at the applicable Agent's Account in same day funds. Each Borrower shall
make each payment hereunder with respect to principal of, interest on, and other
amounts relating to, Advances made to it denominated in a Foreign Currency, not
later than 11:00 A.M. (at the Payment Office for such Foreign Currency) on the
day when due in such Foreign Currency to the Agent or, in the case of payments
denominated in Canadian dollars, to the Local Agent, by deposit of such funds to
the applicable Agent's Account in same day funds. The Agent or the Local Agent,
as the case may be, will promptly thereafter cause to be distributed like funds
relating to the payment of principal or interest or facility fees ratably (other
than amounts payable pursuant to Section 2.03, 2.11, 2.14 or 9.04(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 9.07(c), from and after the effective date
specified in such Assignment and Acceptance, the Agent or the Local Agent, as
the case may be, 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.

                                       23
<PAGE>

            (b) Each 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 such
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 Eurocurrency Rate or the Federal Funds
Rate and of fees shall be made by the Agent on the basis of a year of 360 days
and computations in respect of Competitive Bid Advances shall be made by the
Agent or the Sub-Agent, as the case may be, as specified in the applicable
Notice of Competitive Bid Borrowing (or, in each case of Advances denominated in
Foreign Currencies where market practice differs, in accordance with market
practice), 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 or
fees are payable. Each determination by the Agent of an interest rate hereunder
shall be conclusive and binding for all purposes, absent manifest error.

            (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 or facility fee, as
the case may be; provided, however, that, if such extension would cause payment
of interest on or principal of Eurocurrency Rate Advances or LIBO 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 or the Local Agent, as the case may be, shall
have received notice from the applicable Borrower prior to the date on which any
payment is due to the Lenders hereunder that such Borrower will not make such
payment in full, the Agent or the Local Agent, as the case may be, may assume
that such Borrower has made such payment in full to the Agent or the Local
Agent, as the case may be, on such date and the Agent or the Local Agent, as the
case may be, 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 such Borrower shall not have so made such payment in full
to the Agent or the Local Agent, as the case may be, each Lender shall repay to
the Agent or the Local Agent, as the case may be, 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 or the Local Agent, as the case may be,
at (i) the Federal Funds Rate in the case of Advances denominated in Dollars or
(ii) the cost of funds incurred by the Agent or the Local Agent, as the case may
be, in respect of such amount in the case of Advances denominated in Foreign
Currencies.

            SECTION 2.14. Taxes. (a) Any and all payments by any 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 any 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) such Borrower shall make such
deductions and (iii) such Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law.

            (b) In addition, each 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").

                                       24
<PAGE>

            (c) Each 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, each
Borrower will furnish to the Agent, at its address referred to in Section 9.02,
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 any Borrower
through an account or branch outside the United States or by or on behalf of any
Borrower by a payor that is not a United States person, if the Borrowers
determine that no Taxes are payable in respect thereof, the Borrowers 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 Assumption
Agreement or the Assignment and Acceptance pursuant to which it becomes a Lender
in the case of each other Lender, and from time to time thereafter if requested
in writing by the Company (but only so long as such Lender remains lawfully able
to do so), shall provide each of the Agent and the Company 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 Company 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 Company and shall not be obligated to include
in such form or document such confidential information.

            (f) Each Initial Lender hereby confirms as of the Effective Date,
and each other Lender confirms as of the effective date of the Assignment and
Acceptance pursuant to which it becomes a party hereto, in favor of the Agent
that either (i) such Lender is not resident in the United Kingdom and is
beneficially entitled to the Advances and the interest thereon or (ii) it is a
bank as defined for the purposes of Section 349 of the Income and Corporation
Taxes Act of 1988 of the United Kingdom and is beneficially entitled to the
Advances and the interest thereon, and each Lender agrees to notify the Agent if
there is any change in its position from that set forth in this clause (f).

            (g) For any period with respect to which a Lender has failed to
provide the Company 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 Borrowers shall take such steps as the Lender shall
reasonably request to assist the Lender to recover such Taxes.

                                       25
<PAGE>

            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 Revolving Credit Advances owing to
it (other than pursuant to Section 2.11, 2.14 or 9.04(c)) in excess of its
ratable share of payments on account of the Revolving Credit Advances obtained
by all the Lenders, such Lender shall forthwith purchase from the other Lenders
such participations in the Revolving Credit 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. Each 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
such 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 each Borrower to such Lender resulting from each Revolving
Credit 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 Revolving Credit Advances. Each Borrower agrees that
upon notice by any Lender to such Borrower (with a copy of such notice to the
Agent) to the effect that a Revolving Credit Note is required or appropriate in
order for such Lender to evidence (whether for purposes of pledge, enforcement
or otherwise) the Revolving Credit Advances owing to, or to be made by, such
Lender, such Borrower shall promptly execute and deliver to such Lender a
Revolving Credit Note payable to the order of such Lender in a principal amount
up to the Commitment of such Lender.

            (b) The Register maintained by the Agent pursuant to Section 9.07(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 Assumption Agreement and each Assignment and Acceptance delivered to and
accepted by it, (iii) the amount of any principal or interest due and payable or
to become due and payable from each Borrower to each Lender hereunder and (iv)
the amount of any sum received by the Agent from each 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 Borrowers 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 Borrowers 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 Company agrees that it shall use such proceeds) solely for
working capital and general corporate purposes of the Company and its
Subsidiaries, provided, however, that unless the Borrowed Debt to EBITDA Ratio
is less than 3.50:1, proceeds of the Advances shall not be used for repayment of
third-party indebtedness (other than the December 2002 principal installment of
debt of Sunbelt of which the Company's ratable share is $6,093,750).

                                  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

                                       26
<PAGE>

following conditions precedent have been satisfied it being understood and
agreed that all of the conditions set forth in this Section 3.01 were satisfied
on or about October 30, 2000:

            (a) There shall have occurred no Material Adverse Change since
      December 31, 1999.

            (b) There shall exist no action, suit, investigation, litigation or
      proceeding affecting the Company or any of its Subsidiaries pending or
      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 Company 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 Company 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 Company shall have notified each Lender and the Agent in
      writing as to the proposed Effective Date.

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

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

                  (i) The representations and warranties contained in Section
            4.01 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 Revolving Credit Notes) in sufficient copies
      for each Lender:

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

                  (ii) Certified copies of the resolutions of the Board of
            Directors of the Company approving this Agreement and the Notes, and
            of all documents evidencing other necessary corporate action and
            governmental approvals, if any, with respect to this Agreement and
            the Notes.

                  (iii) A certificate of the Secretary or an Assistant Secretary
            of the Company certifying the names and true signatures of the
            officers of the Company authorized to sign this Agreement and the
            Notes and the other documents to be delivered hereunder.

                                       27
<PAGE>

                  (iv) A favorable opinion of Inside Counsel of the Company,
            substantially in the form of Exhibit F hereto and as to such other
            matters as any Lender through the Agent may reasonably request.

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

            (i) The Company shall have terminated (or shall simultaneously
      terminate) the commitments, and paid in full all Debt, interest, fees and
      other amounts outstanding, under (i) the $150,000,000 Amended and Restated
      364-Day Credit Agreement dated as of May 26, 2000 (the "$150,000,000
      Credit Agreement") among The Geon Company, Geon Canada Inc., the lenders
      and arrangers parties thereto and Citicorp USA, Inc., as administrative
      agent, (ii) the Credit Agreement dated as of August 16, 1999 (the "Geon
      Multiyear Credit Agreement") among The Geon Company, the lenders and
      arrangers parties thereto and Citicorp USA, Inc., as administrative agent,
      and NationsBank of North Carolina, N.A., as co-agent and (iii) the
      Multi-Currency Credit and Guaranty Agreement dated as of January 31, 1997
      (the "Hanna Credit Agreement") among, M.A. Hanna Company, the lenders
      parties thereto, Bank of America, N.A., as agent, and Bank of America
      International, as subagent, and each of the Lenders that is a party to
      each such credit facility hereby waives, upon execution of this Agreement,
      the three Business Days' notice required by Section 2.05 of the
      $150,000,000 Credit Agreement, Section 2.05 of the Geon Multiyear Credit
      Agreement and Section 2.08(a) of the Hanna Credit Agreement, respectively,
      relating to the termination of commitments thereunder.

            SECTION 3.02. Initial Loan to Each Designated Subsidiary. The
obligation of each Lender to make an initial Advance to each Designated
Subsidiary following any designation of such Designated Subsidiary as a Borrower
hereunder pursuant to Section 9.09 is subject to the Agent's receipt on or
before the date of such initial Advance of each of the following, in form and
substance satisfactory to the Agent and dated such date, and (except for the
Revolving Credit Notes) in sufficient copies for each Lender:

            (a) The Revolving Credit Notes of such Borrower to the order of the
      Lenders, to the extent requested by any Lender pursuant to Section 2.16.

            (b) Certified copies of the resolutions of the Board of Directors of
      such Borrower (with a certified English translation if the original
      thereof is not in English) approving this Agreement and the Notes of such
      Borrower, and of all documents evidencing other necessary corporate action
      and governmental approvals, if any, with respect to this Agreement and
      such Notes.

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

            (d) A certificate signed by a duly authorized officer of such
      Borrower, dated as of the date of such initial Advance, certifying that
      such Borrower shall have obtained all governmental and third party
      authorizations, consents, approvals (including exchange control approvals)
      and licenses required under applicable laws and regulations necessary for
      such Borrower to execute and deliver this Agreement and the Notes and to
      perform its obligations thereunder.

            (e) The Designation Letter of such Borrower, substantially in the
      form of Exhibit E hereto.

            (f) A favorable opinion of counsel (which may be in-house counsel)
      to such Borrower, dated the date of such initial Advance, substantially in
      the form of Exhibit G hereto.

            (g) Such other approvals, opinions or documents as any Lender,
      through the Agent, may reasonably request.

                                       28
<PAGE>

            SECTION 3.03. Conditions Precedent to Each Revolving Credit
Borrowing and Extension Date. The obligation of each Lender to make a Revolving
Credit Advance on the occasion of each Revolving Credit Borrowing shall be
subject to the conditions precedent that the Effective Date shall have occurred
and on the date of such Revolving Credit Borrowing (a) the following statements
shall be true (and each of the giving of the applicable Notice of Revolving
Credit Borrowing and the acceptance by the Company of the proceeds of such
Revolving Credit Borrowing shall constitute a representation and warranty by the
Company on the date of such Borrowing such statements are true):

            (i) the representations and warranties contained in Section 4.01
      and, for each Revolving Credit Borrowing made during a Security Period, in
      each of the Collateral Documents, are correct on and as of such date,
      before and after giving effect to such Revolving Credit Borrowing the
      application of the proceeds therefrom, as though made on and as of such
      date and additionally, if such Revolving Credit Borrowing shall have been
      requested by a Designated Subsidiary, the representations and warranties
      of such Designated Subsidiary contained in its Designation Letter are
      correct on and as of the date of such Revolving Credit Borrowing, before
      and after giving effect to such Revolving Credit Borrowing and to the
      application of the proceeds therefrom, as though made on and as of such
      date, and

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

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

            SECTION 3.04. Conditions Precedent to Each Competitive Bid
Borrowing. The obligation of each Lender that is to make a Competitive Bid
Advance on the occasion of a Competitive Bid Borrowing to make such Competitive
Bid Advance as part of such Competitive Bid Borrowing is subject to the
conditions precedent that (a) the Agent shall have received the written
confirmatory Notice of Competitive Bid Borrowing with respect thereto, (b) on or
before the date of such Competitive Bid Borrowing, but prior to such Competitive
Bid Borrowing, the Agent shall have received a Competitive Bid Note payable to
the order of such Lender for each of the one or more Competitive Bid Advances to
be made by such Lender as part of such Competitive Bid Borrowing, in a principal
amount equal to the principal amount of the Competitive Bid Advance to be
evidenced thereby and otherwise on such terms as were agreed to for such
Competitive Bid Advance in accordance with Section 2.03, and (c) on the date of
such Competitive Bid Borrowing the following statements shall be true (and each
of the giving of the applicable Notice of Competitive Bid Borrowing and the
acceptance by the Borrower proposing the applicable Competitive Bid Advance of
the proceeds of such Competitive Bid Borrowing shall constitute a representation
and warranty by the Borrowers that on the date of such Competitive Bid Borrowing
such statements are true):

            (i) The representations and warranties contained in Section 4.01 are
      correct on and as of the date of such Competitive Bid Borrowing, before
      and after giving effect to such Competitive Bid Borrowing and to the
      application of the proceeds therefrom, as though made on and as of such
      date,

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

            (iii) No event has occurred and no circumstance exists as a result
      of which the information concerning the Company that has been provided to
      the Agent and each Lender by the Company in connection herewith would
      include an untrue statement of a material fact or omit to state any
      material fact or any fact necessary to make the statements contained
      therein, in the light of the circumstances under which they were made, not
      misleading.

            SECTION 3.05. 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,

                                       29
<PAGE>

as notified by the Company 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 Company. The
Company represents and warrants as follows:

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

            (b) The execution, delivery and performance by the Company of this
      Agreement and the Notes to be delivered by it, and the consummation of the
      transactions contemplated hereby, are within the Company's corporate
      powers, have been duly authorized by all necessary corporate action, and
      do not contravene (i) the Company's charter or by-laws or (ii) law or any
      contractual restriction binding on or affecting the Company.

            (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 Company of this Agreement or the Notes to be delivered
      by it.

            (d) This Agreement has been, and each of the Notes to be delivered
      by it when delivered hereunder will have been, duly executed and delivered
      by the Company. This Agreement is, and each of the Notes made by the
      Company when delivered hereunder will be, the legal, valid and binding
      obligation of the Company enforceable against the Company in accordance
      with their respective terms.

            (e) (i) The Consolidated balance sheet of the Company and its
      subsidiaries as at December 31, 2000, and the related Consolidated
      statements of income and cash flows of the Company and its subsidiaries
      for the fiscal year then ended, accompanied by an opinion of Ernst & Young
      LLP, independent public accountants, and the Consolidated balance sheet of
      the Company and its subsidiaries as at September 30, 2001 and the related
      Consolidated statements of income and cash flows of the Company and its
      subsidiaries for the nine months then ended, duly certified by the chief
      financial officer of the Company, copies of which have been furnished to
      each Lender, fairly present, subject, in the case of said balance sheet as
      at September 30, 2001, and said statements of income and cash flows for
      the nine months then ended, to year-end audit adjustments, the
      Consolidated financial condition of the Company and its subsidiaries as at
      such dates and the Consolidated results of the operations of the Company
      and its subsidiaries for the periods ended on such dates, all in
      accordance with generally accepted accounting principles consistently
      applied.

                  (ii) Since December 31, 2000, there has been no Material
            Adverse Change.

            (f) To the best of the Company's knowledge, there is no pending or
      threatened action, suit, investigation, litigation or proceeding,
      including, without limitation, any Environmental Action, affecting the
      Company 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 (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
      Company or any of its Subsidiaries, of the Disclosed Litigation from that
      described on Schedule 3.01(b) hereto.

            (g) No Borrower is 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

                                       30
<PAGE>

      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 Company nor any of its ERISA Affiliates has incurred
      or is reasonably expected to incur any Withdrawal Liability to any
      Multiemployer Plan.

            (j) Neither the Company 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 Company 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 Company and its Subsidiaries, the
      Company 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 Company 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 Company 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
      registration statement filed on Form 10-K with the Securities and Exchange
      Commission, for the period ending December 31, 2001 or, to the best
      knowledge of the Company, 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 Company nor any
      of its Subsidiaries has transported or arranged for the 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 Company 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 Company only or
      of the Company 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 any 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 Company 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.

                                       31
<PAGE>

                                   ARTICLE V

                            COVENANTS OF THE COMPANY

            SECTION 5.01. Affirmative Covenants. So long as any Advance shall
remain unpaid or any Lender shall have any Commitment hereunder, the Company
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 Company 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 Company
      or such Subsidiary operates; provided, however, that the Company 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.

            (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 Company and its Subsidiaries may consummate any merger
      or consolidation permitted under Section 5.02(b) and provided further that
      neither the Company nor any of its Subsidiaries shall be required to
      preserve any right or franchise if the Board of Directors of the Company
      or such Subsidiary shall determine that the preservation thereof is no
      longer desirable in the conduct of the business of the Company or such
      Subsidiary, as the case may be, and that the loss thereof is not
      disadvantageous in any material respect to the Company, 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 Company and any of
      its Subsidiaries, and to discuss the affairs, finances and accounts of the
      Company 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 Company 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 Company or such Subsidiary than it
      would obtain in a comparable arm's-length transaction with a Person not an
      Affiliate.

                                       32
<PAGE>

            (i) Reporting Requirements. Furnish to the Lenders:

                  (i) as soon as available and in any event within 60 days after
            the end of each of the first three quarters of each fiscal year of
            the Company, the Consolidated balance sheet of the Company and its
            Subsidiaries as of the end of such quarter and Consolidated
            statements of income and cash flows of the Company and its
            Subsidiaries for the period commencing at the end of the previous
            fiscal year 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 Company as having been prepared in
            accordance with generally accepted accounting principles, it being
            agreed that delivery of the Company's Quarterly Report on Form 10-Q
            will satisfy this requirement together with a certificate of said
            officer as to compliance with the terms of this Agreement and
            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 Company shall also provide, if necessary for the
            determination of compliance with Section 5.03, a statement of
            reconciliation conforming such financial statements to GAAP;

                  (ii) as soon as available and in any event within 120 days
            after the end of each fiscal year of the Company, a copy of the
            annual audit report for such year for the Company and its
            Subsidiaries, containing the Consolidated balance sheet of the
            Company and its Subsidiaries as of the end of such fiscal year and
            Consolidated statements of income and cash flows of the Company and
            its Subsidiaries for such fiscal year, in each case accompanied by
            an opinion acceptable to the Required Lenders by Ernst & Young LLP
            or other "Big Five" independent public accountants, provided that in
            the event of any change in GAAP used in the preparation of such
            financial statements, the Company shall also provide, if necessary
            for the determination of compliance with Section 5.03, a statement
            of reconciliation conforming such financial statements 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 Company
            having knowledge of or responsibility for such matters setting forth
            details of such Default and the action that the Company has taken
            and proposes to take with respect thereto;

                  (iv) promptly after the sending or filing thereof, copies of
            all reports that the Company sends to any of its securityholders,
            and copies of all reports and registration statements that the
            Company or any Subsidiary files with the Securities and Exchange
            Commission or any national securities exchange;

                  (v) 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 Company or
            any of its Subsidiaries of the type described in Section 4.01(f);

                  (vi) promptly and in any event within 10 days after the
            Company 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
            Company having knowledge of or responsibility for such matters
            describing such ERISA Event and the action, if any, that the Company
            or such ERISA Affiliate has taken and proposes to take with respect
            thereto;

                  (vii) promptly and in any event within seven Business Days
            after receipt thereof by the Company 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;

                  (viii) promptly and in any event within 30 days after the
            receipt thereof by the Company 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%;

                                       33
<PAGE>

                  (ix) promptly and in any event within five Business Days after
            receipt thereof by the Company 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 Company or any of its ERISA Affiliates in connection with any
            event described in clause (A) or (B); and

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

                  (xi) as soon as available and in any event within 20 days
            after the end of each calendar month other than December, and within
            40 days after the end of each December, a certificate of the chief
            financial officer or the controller of the Company as to compliance
            with the terms of Section 5.03(c), and setting forth in reasonable
            detail the calculations necessary to demonstrate such compliance.

            (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 Company 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
      Company, 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
      Company, and the Company 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) Condition Subsequent to Amendment No. 2 Effective Date. (X)
      Within 65 days after the Amendment No. 2 Effective Date (or such later
      date as may be agreed by the Required Lenders), deliver to the Agent in
      sufficient copies for each Lender:

                  (i) A security agreement, securing among other things, the
            obligations listed on Schedule II hereto, in form and substance
            satisfactory to the Agent (the "Security Agreement"), duly executed
            by the Company and each Subsidiary Guarantor, together with evidence
            of the insurance required by the terms of the Security Agreement.

                  (ii) A guaranty in form and substance satisfactory to the
            Agent (the "Subsidiary Guaranty"), duly executed by each Subsidiary
            Guarantor.

                                       34
<PAGE>

                  (iii) Deeds of trust and mortgages, in form and substance
            satisfactory to the Agent and covering the properties listed in Part
            I of Schedule III hereto (the "Mortgages"), each duly executed by
            the Company or a Subsidiary Guarantor, as appropriate, together with
            any other documents or instruments that will be required if the
            Mortgages are recorded upon the Collateral Trigger, including,
            without limitation, tax affidavits.

                  (iv) Agreements in form and substance satisfactory to the
            Agent and the Required Lenders among the Collateral Trustees named
            therein, the Company and each Subsidiary Guarantor (the "Collateral
            Trust Agreements").

                  (v) An agreement in form and substance satisfactory to the
            Agent among the Collateral Trustees, the Company, each Subsidiary
            Guarantor that participates in the Receivables Financing, the Agent
            and the duly authorized representative of the creditors parties to
            the Receivables Financing (the "Receivables Intercreditor
            Agreement").

                  (vi) Certified copies of (A) the resolutions of the Board of
            Directors of each Subsidiary Guarantor evidencing approval for the
            Subsidiary Guaranty and the Collateral Documents to which it is a
            party and all matters contemplated thereby and (B) all documents
            evidencing other necessary corporate action and governmental
            approvals, if any, with respect to the Subsidiary Guaranty and the
            Collateral Documents to which it is a party and the matters
            contemplated thereby.

                  (vii) A certificate of the Secretary or an Assistant Secretary
            of each Subsidiary Guarantor certifying (A) the names and true
            signatures of the officers of each Subsidiary Guarantor authorized
            to sign the Subsidiary Guaranty, the Collateral Documents to which
            it is a party and the other documents to be delivered hereunder, (B)
            that no authorization or approval or other action by, and no notice
            to or filing with, any governmental authority or regulatory body, or
            any third party to any agreements and instruments is required for
            the due execution, delivery or performance by each Subsidiary
            Guarantor of the Subsidiary Guaranty or the Collateral Documents to
            which it is a party.

                  (viii) Such opinions of counsel as the Agent may request.

            (Y) Within 90 days after the Amendment No. 2 Effective Date (or such
later date as may be agreed by the Required Lenders), deliver to the Agent in
sufficient copies for each Lender, Mortgages covering the properties listed in
Part II of Schedule III hereto, each duly executed by the Company or a
Subsidiary Guarantor, as appropriate, together with any other documents or
instruments that will be required if the Mortgages are recorded upon the
Collateral Trigger, including, without limitation, tax affidavits.

            (Z) Within 120 days after Amendment No. 2 Effective Date (or such
later date as may be agreed by the Required Lenders), deliver to the Agent in
sufficient copies for each Lender, a deed of trust or mortgage, in form and
substance satisfactory to the Agent and covering the property of the Borrower
located in Winchester, State of Virginia, duly executed by the Company or a
Subsidiary Guarantor, as appropriate, together with any other documents or
instruments that will be required if the Mortgage is recorded upon the
Collateral Trigger, including, without limitation, tax affidavits.

            (m) Collateral Trigger. (X) Within 30 days after the Collateral
      Trigger (but if warranted, within 60 days), the Company shall furnish to
      the Agent in sufficient copies to each Lender:

                  (i) certificates representing the Pledged Shares referred to
            in the Security Agreement accompanied by undated stock powers
            executed in blank and instruments evidencing the Pledged Debt
            referred to in the Security Agreement indorsed in blank,

                                       35
<PAGE>

                  (ii) 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,

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

                  (iv) evidence of the completion of all other recordings and
            filings of or with respect to the Security Agreement and the Charge
            Agreement, and 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, and the Charge
            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,

                  (v) evidence of the insurance required by the terms of the
            Collateral Documents,

                  (vi) evidence that counterparts of the Mortgages have been
            duly recorded on or before such day in all filing or recording
            offices that the Agent may deem necessary or desirable in order to
            create a valid first and subsisting Lien on the property described
            therein in favor of the Collateral Trustees for the benefit of the
            Secured Parties and that all filing, recording and mortgage taxes
            and fees have been paid, and

                  (vii) favorable opinions of local counsels with respect to
            each of the Security Agreement, the Charge Agreement and each of the
            Mortgages, in form and substance satisfactory to the Agent.

            (Y) Within 60 days after the Collateral Trigger (but if warranted,
within 90 days), the Company shall furnish to the Agent in sufficient copies to
each Lender:

                  (i) fully paid American Land Title Association Lender's
            Extended Coverage title insurance policies (the "Mortgage Policies")
            in form and substance, with endorsements and in amount acceptable to
            the Agent, issued, coinsured and reinsured by title insurers
            acceptable to the Agent, insuring the Mortgages to be valid first
            and subsisting Liens on the property described therein, free and
            clear of all defects (including, but not limited to, mechanics' and
            materialmen's Liens) and encumbrances, excepting only Permitted
            Encumbrances (as defined in the Mortgages), and providing for such
            other affirmative insurance (including endorsements for future
            advances under the Credit Agreement and for mechanics' and
            materialmen's Liens) and such coinsurance and direct access
            reinsurance as the Agent may deem necessary or desirable,

                  (ii) American Land Title Association form surveys, dated no
            more than 30 days before the date of delivery to the Agent,
            certified to the Agent and the issuer of the Mortgage Policies in a
            manner satisfactory to the Agent by a land surveyor duly registered
            and licensed in the States in which the property described in such
            surveys is located and acceptable to the Agent, showing all
            buildings and other improvements, any off-site improvements, the
            location of any easements, parking spaces, rights of way, building
            set-back lines and other dimensional regulations and the absence of
            encroachments, either by such improvements or on to such property,
            and other defects, other than encroachments and other defects
            acceptable to the Agent,

                  (iii) engineering, soils and other reports as to the
            properties described in the Mortgages, in form and substance and
            from professional firms acceptable to the Agent, and

                                       36
<PAGE>

                  (iv) such consents and agreements of lessors and other third
            parties, and such estoppel letters and other confirmations, as the
            Agent may deem necessary or desirable.

                  Upon the termination of the Security Period, the security
            interests shall terminate on and subject to the terms of the
            Collateral Documents, and the parties shall take such further action
            all as provided therein.

            (n) Conditions Subsequent to Amendment No. 4 Effective Date. (i)
      Within 60 days after the Amendment No. 4 Effective Date (or such later
      date as may be agreed by the Required Lenders), issue not less than
      $200,000,000 principal amount of Senior Notes (2002), the proceeds of
      which will be used to prepay, first, Advances in accordance with Section
      2.10(b), second, the DM 90,000,000 note due 2003 and payable to Deutsche
      Bank AG and third, amounts outstanding under uncommitted bilateral credit
      lines.

                  (ii) Within 30 days after Amendment No. 4 Effective Date (or
            such later date as may be agreed by the Required Lenders), deliver
            to the Agent in sufficient copies for each Lender, Mortgages
            covering the properties listed in Part III of Schedule III, each
            duly executed by the Company or a Subsidiary Guarantor, as
            appropriate, together with any other documents or instruments that
            will be required if the Mortgages are recorded upon the Collateral
            Trigger, including without limitation, tax affidavits

            SECTION 5.02. Negative Covenants. So long as any Advance shall
remain unpaid or any Lender shall have any Commitment hereunder, the Company
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 Company 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,

                                       37
<PAGE>

                  (iv) on and after October 1, 2003, other Liens securing Debt
            in an aggregate principal amount not to exceed $40,000,000 at any
            time outstanding,

                  (v) 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,

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

                  (vii) Liens created under the Collateral Documents.

            (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 Company may merge
      or consolidate with or into, or dispose of assets to, any other Subsidiary
      of the Company, and except that any Subsidiary of the Company may merge
      into or dispose of assets to the Company and the Company may merge with
      any other Person so long as the Company is the surviving corporation,
      provided, in each case, that no Default shall have occurred and be
      continuing at the time of such proposed transaction or would result
      therefrom.

            (c) Accounting Changes. Make or permit, or permit any of its
      Subsidiaries to make or permit, any change in accounting policies or
      reporting practices, except as required or permitted by generally accepted
      accounting principles

            (d) Intentionally omitted.

            (e) Sales, Etc. of Assets. At any time prior to October 1, 2003,
      sell, lease, transfer or otherwise dispose of, or permit any of its
      Subsidiaries to sell, lease, transfer or otherwise dispose of, any assets
      that are purported to be the subject of any Collateral Document (whether
      or not the Collateral Trigger has occurred and is continuing), including,
      without limitation, pursuant to any sale and leaseback transaction, or
      grant any option or other right to purchase, lease or otherwise acquire
      any assets, except:

                  (i) sales of inventory in the ordinary course of business;

                  (ii) in a transaction authorized by Section 5.02(b), and

                  (iii) pursuant to the Receivables Financing.

            (f) Investments in Other Persons. At any time after December 31,
      2001 that the Borrowed Debt/EBITDA Ratio is equal to or greater than
      4.00:1, 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 Company 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 Company and its Subsidiaries as presently
            conducted; and

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

                  (iv) other Investments in an aggregate amount invested not to
            exceed $25,000,000 during the calendar year 2002 and Investments
            made during the calendar year 2003 consisting of acquisitions of
            Techmer, PM, LLC and So.F.teR S.p.a for an aggregate amount not to
            exceed

                                       38
<PAGE>

            $37,000,000; provided that with respect to Investments made under
            this clause (iv): (1) any newly acquired or organized Subsidiary of
            the Company 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 Company or any of its Subsidiaries;
            (4) immediately after giving effect to the acquisition of a company
            or business pursuant to this clause (iv), the Company 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 Company delivered to the Lenders
            demonstrating such compliance.

      The restrictions of this Section 5.02(f) shall cease to be operative on
      the earlier of the date that the Borrowed Debt/EBITDA Ratio is less than
      3.50:1 for any fiscal quarter and October 1, 2003.

            (g) Restricted Payments and Stock Repurchases. At any time after
      December 31, 2001 that the Borrowed Debt/EBITDA Ratio is greater than or
      equal to 4.00:1 and until the Borrowed Debt/EBITDA Ratio is less than or
      equal to 3.50:1 for two consecutive fiscal quarters, declare or pay any
      dividends, purchase, redeem, retire, defease or otherwise acquire for
      value any of its Equity Interests now or hereafter outstanding, return any
      capital to its stockholders, partners or members (or the equivalent
      Persons thereof) as such, make any distribution of assets, Equity
      Interests, obligations or securities to its stockholders, partners or
      members (or the equivalent Persons thereof) as such, or permit any of its
      Subsidiaries to do any of the foregoing, or permit any of its Subsidiaries
      to purchase, redeem, retire, defease or otherwise acquire for value any
      Equity Interests in the Company or to issue or sell any Equity Interests
      therein, except that, so long as no Default shall have occurred and be
      continuing at the time of any action described in clause (i) or (ii) below
      or would result therefrom:

                  (i) the Company may (A) declare and pay dividends and
            distributions payable only in common stock of the Company, (B)
            declare and pay cash dividends to its stockholders and purchase,
            redeem, retire or otherwise acquire shares of its own outstanding
            capital stock if after giving effect thereto the aggregate amount of
            such dividends, purchases, redemptions, retirements and acquisitions
            paid or made after the Amendment No. 2 Effective Date would not
            exceed $6,000,000 in any fiscal quarter, (C) purchase, redeem,
            retire, defease or otherwise acquire shares of its own outstanding
            capital stock with the Net Cash Proceeds received from the exercise
            of stock options issued by the Company, and (D) purchase shares of
            its capital stock in connection with the termination of (x) The Geon
            Company Share Ownership Trust created pursuant to the Trust
            Agreement dated May 5, 2000 between The Geon Company and W. David
            Wilson, as trustee, and (y) the M.A. Hanna Associates Ownership
            Trust created pursuant to the Trust Agreement dated September 12,
            1991 between M.A. Company and Wachovia Bank of North Carolina, N.A.,
            as trustee, and

                  (ii) any Subsidiary of the Company may (A) declare and pay
            cash dividends to the Company and (B) declare and pay cash dividends
            to any other wholly owned Subsidiary of the Company of which it is a
            Subsidiary.

            (h) Negative Pledge. At any time prior to October 1, 2003, 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 or operating lease outstanding on the
      Amendment No. 2 Effective Date or the Senior Notes (2002), (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 Company becomes
      such a Subsidiary (so long as such agreement was not entered into solely
      in contemplation of such Subsidiary becoming a Subsidiary of the Company).

                                       39
<PAGE>

            (i) Capital Expenditures. At any time after December 31, 2001 that
      the Borrowed Debt/EBITDA Ratio is greater than or equal to 4.00:1 and
      until the Borrowed Debt/EBITDA Ratio is less than or equal to 3.50:1 for
      two consecutive fiscal quarters, make or permit any of its Subsidiaries to
      make, Capital Expenditures that would cause the aggregate of all such
      Capital Expenditures made by the Company and its Subsidiaries in any
      fiscal quarter to exceed $33,000,000 or in any fiscal year to exceed
      $88,000,000 plus Investments permitted pursuant to Section 5.02(f).

            (j) 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 Company or a wholly owned Subsidiary of
            the Company,

                  (ii) Debt existing on Amendment No. 4 Effective Date and
            described on Schedule 5.02(j) 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 $10,000,000 at anytime outstanding, and

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

            provided, however, that the provisions of this Section 5.02(j) shall
      terminate on the earlier of October 1, 2003 and the date that the ratio of
      Borrowed Debt to EBITDA is less than or equal to 3.50:1 for two
      consecutive fiscal quarters.

            SECTION 5.03. Financial Covenants. So long as any Advance shall
remain unpaid or any Lender shall have any Commitment hereunder, the Company
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>
Amendment No. 2 Effective Date                  2.75:1
through September 30, 2002

October 1, 2002 through                         3.00:1
June 30, 2003

July 1, 2003 and thereafter                     4.00:1
</TABLE>

            (b) Borrowed Debt/EBITDA Ratio. Maintain a Borrowed Debt/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>
From April 1, 2002 through                      5.70 to 1
  June 30, 2002

From July 1, 2002 through                       5.50 to 1
  September 30, 2002

From October 1, 2002 through                    5.25 to 1
  December 31, 2002

From January 1, 2003 through                    4.75 to 1
  March 31, 2003

From April 1, 2003 through                      4.25 to 1
  June 30, 2003

From July 1, 2003 through                       4.00 to 1
September 30, 2003

From October 1, 2003 and thereafter             3.50 to 1
</TABLE>

                                       40
<PAGE>

            (c) Ratio of Tangible Assets to Indebtedness. Maintain a Ratio of
      Tangible Assets to Indebtedness at all times equal or in excess of 1.00:1.

                                   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) Any Borrower shall fail to pay any principal of any Advance when
      the same becomes due and payable; or any 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 five Business Days after
      the same becomes due and payable; or

            (b) Any representation or warranty made by any Borrower herein or by
      any Borrower (or any of its officers) in connection with this Agreement or
      by any Designated Subsidiary in the Designation Letter pursuant to which
      such Designated Subsidiary became a Borrower hereunder shall prove to have
      been incorrect in any material respect when made; or

            (c) (i) The Company shall fail to perform or observe any term,
      covenant or agreement contained in Section 5.01(d), (i)(iii), 5.02 or
      5.03, or (ii) the Company shall fail to perform or observe any other term,
      covenant or agreement contained in this Agreement 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 Company by the
      Agent or any Lender; or

            (d) The Company 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 $20,000,000 in the aggregate (but
      excluding Debt outstanding hereunder) of the Company 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

                                       41
<PAGE>

            (e) The Company 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 Company 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 Company 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
      $20,000,000 in the aggregate shall be rendered against the Company 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; or

            (g) Any non-monetary judgment or order shall be rendered against the
      Company 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 Company (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 Company; 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 Company 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 Company (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 Company or
      (y) nominated for election by a majority of the remaining members of the
      nominating committee of the board of directors of the Company and
      thereafter elected as directors by the shareholders of the Company); 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
      Company; or (iv) except as otherwise permitted by Section 5.02(b), the
      Company shall cease to own a majority of the Voting Stock of any
      Designated Subsidiary; 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 Company
      and its ERISA Affiliates related to any such ERISA Event) has, or is
      reasonably likely to have, a Material Adverse Effect; or

            (j) The Company 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 Company and its ERISA Affiliates as Withdrawal Liability
      (determined as of the date of such notification), exceeds US$25,000,000 or
      requires payments exceeding US$5,000,000 per annum; or

                                       42
<PAGE>

            (k) The Company 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 Company 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 US$20,000,000; or

            (l) SECTION 7.01 shall cease to be the valid and enforecable
      obligation of the company or the company shall so state in writing;

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 Company, declare the
obligation of each Lender to make Advances 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 Company, 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 each Borrower; provided, however, that in the
event of an actual or deemed entry of an order for relief with respect to the
Company or any Designated Subsidiary under the Federal Bankruptcy Code or other
applicable bankruptcy statute, (A) the obligation of each Lender to make
Advances 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 each Borrower.

                                  ARTICLE VII

                                    GUARANTEE

            SECTION 7.01. Unconditional Guarantee. The Company hereby
unconditionally and irrevocably guarantees to each Lender and the Agent the
punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of all obligations of any Designated Subsidiary now or hereafter
existing under this Agreement, whether for principal, interest, fees, expenses,
indemnities or otherwise (such obligations, to the extent not paid by any
Designated Subsidiary or specifically waived in accordance with Section 9.01,
being the "Obligations"), and agrees to pay any and all expenses (including
reasonable counsel fees and expenses) incurred by the Agent or the Lenders in
enforcing any rights under this Guaranty. Without limiting the generality of the
foregoing, the Company's liability shall extend to all amounts that constitute
part of the Obligations and would be owed by any Designated Subsidiary to the
Agent or any Lender under this Agreement but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving any Designated Subsidiary.

            SECTION 7.02. Guaranty Absolute. The Company guarantees that the
Obligations will be paid strictly in accordance with the terms of this
Agreement, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of any Lender or
the Agent with respect thereto. The obligations of the Company under this
Guaranty are independent of the Obligations, and a separate action or actions
may be brought and prosecuted against the Company to enforce this Guaranty,
irrespective of whether any action is brought against any Designated Subsidiary
or whether any Designated Subsidiary is joined in any such action or actions.
The liability of the Company under this Guaranty shall be irrevocable, absolute
and unconditional, irrespective of, and the Company hereby irrevocably waives
any defenses it may now or hereafter have in any way relating to, any or all of
the following:

            (a) any lack of validity or enforceability of this Agreement or any
      agreement or instrument relating thereto;

            (b) any change in the time, manner or place of payment of, or in any
      other term of, all or any of the Obligations, or any other amendment or
      waiver of or any consent to departure from this Agreement,

                                       43
<PAGE>

      including, without limitation, any increase in the Obligations resulting
      from the extension of additional credit to any Designated Subsidiary or
      otherwise;

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

            (d) any change, restructuring or termination of the corporate
      structure or existence of any Designated Subsidiary; or

            (e) any other circumstance, (including, without limitation, any
      statute of limitations to the fullest extent permitted by applicable law
      or any existence of or reliance on any representation by the Agent or any
      Lender) that might otherwise constitute a defense available to, or a
      discharge of, the Company, any Designated Subsidiary or any other
      guarantor or surety.

This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Obligations is rescinded or must
otherwise be returned by any of the Lenders or the Agent upon the insolvency,
bankruptcy or reorganization of any Designated Subsidiary or otherwise, all as
though such payment had not been made.

            SECTION 7.03. Waivers. (a) The Company hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Obligations and this Guaranty, presentment, demand for payment, protest, any
requirement that any right or power be exhausted or any action be taken against
any Designated Subsidiary or against any other guarantor of all or any portion
of the Advances, and all other notices and demands whatsoever.

            (b) The Company hereby waives any right to revoke this Guaranty, and
acknowledges that this guaranty is continuing in nature and applies to all
Obligations, whether existing now or in the future.

            (c) The Company acknowledges that it will receive direct and
indirect benefits from the financing arrangements contemplated herein and that
the waivers set forth in this Section 7.03 are knowingly made in contemplation
of such benefits.

            SECTION 7.04. Continuing Guaranty; Assignments. This Guaranty is a
continuing guaranty and shall (a) remain in full force and effect until the
later of the cash payment in full of the Obligations and all other amounts
payable under this Guaranty and the Termination Date, (b) be binding upon the
Company, its successors and assigns, (c) inure to the benefit of and be
enforceable by each Lender (including each assignee Lender pursuant to Section
9.07) and the Agent and their respective successors, transferees and assigns and
(d) shall be reinstated if at any time any payment to a Lender or the Agent
hereunder is required to be restored by such Lender or the Agent. Without
limiting the generality of the foregoing clause (c), each Lender may assign or
otherwise transfer all or any portion of its rights and obligations hereunder
(including, without limitation, all or any portion of its Commitment, the
Advances owing to it and any Note held by it) to any other Person, and such
other Person shall thereupon become vested with all the benefits in respect
thereof granted to such Lender herein or otherwise, in each case as provided in
Section 9.07.

            SECTION 7.05. Subrogation. The Company will not exercise any rights
that it may now or hereafter acquire against any Designated Subsidiary or any
other insider guarantor that arise from the existence, payment, performance or
enforcement of the Obligations under this Agreement, including, without
limitation, any right of subrogation, reimbursement, exoneration, contribution
or indemnification and any right to participate in any claim or remedy of the
Agent or any Lender against a Designated Subsidiary or any other insider
guarantor or any collateral, whether or not such claim, remedy or right arises
in equity or under contract, statute or common law, including, without
limitation, the right to take or receive from a Designated Subsidiary or any
other insider guarantor, directly or indirectly, in cash or other property or by
set-off or in any other manner, payment or security on account of such claim,
remedy or right, unless and until all of the Obligations and all other amounts
payable under this Guaranty shall have been paid in full in cash and the
Termination Date shall have occurred. If any amount shall be paid to the Company
in violation of the preceding sentence at any time prior to the later of the

                                       44
<PAGE>

payment in full in cash of the Obligations and all other amounts payable under
this Guaranty and the Termination Date, such amount shall be held in trust for
the benefit of the Agent and the Lenders and shall forthwith be paid to the
Agent to be credited and applied to the Obligations and all other amounts
payable under this Guaranty, whether matured or unmatured, in accordance with
the terms of this Agreement, or to be held as collateral for any Obligations or
other amounts payable under this Guaranty thereafter arising. If (i) the Company
shall make payment to the Agent or any Lender of all or any part of the
Obligations, (ii) all the Obligations and all other amounts payable under this
Guaranty shall be paid in full in cash and (iii) the Termination Date shall have
occurred, the Agent and the Lenders will, at the Company's request and expense,
execute and deliver to the Company appropriate documents, without recourse and
without representation or warranty, necessary to evidence the transfer by
subrogation to the Company of an interest in the Obligations resulting from such
payment by the Company. The Company acknowledges that it will receive direct and
indirect benefits from the financing arrangements contemplated by this Agreement
and that the waiver set forth in this section is knowingly made in contemplation
on such benefits.

                                  ARTICLE VIII

                                    THE AGENT

            SECTION 8.01. Authorization and Action. Each Lender 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 any Borrower pursuant to
the terms of this Agreement.

            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 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 Eligible Assignee, as assignee, as provided in
Section 9.07; (ii) may consult with legal counsel (including counsel for the
Company), 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 any Borrower
or to inspect the property (including the books and records) of any Borrower;
(v) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of 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 8.03. Citicorp and Affiliates. With respect to its
Commitment, 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 Company,
any of its Subsidiaries and any Person who may do business with or own
securities of the Company or any such Subsidiary, all as if Citicorp were not
the Agent and without any duty to account therefor to the Lenders.

                                       45
<PAGE>

            SECTION 8.04. 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 8.05. Indemnification. The Lenders (other than the
Designated Bidders) agree to indemnify the Agent (to the extent not reimbursed
by the Company), ratably according to the respective principal amounts of the
Revolving Credit Advances then owed to each of them (or if no Revolving Credit
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 (other than the Designated Bidders) 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 Company.
In the case of any investigation, litigation or proceeding giving rise to any
Indemnified Costs, this Section 8.05 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).

            SECTION 8.06. Successor Agent. The Agent may resign at any time by
giving written notice thereof to the Lenders and the Company. 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 Company, 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 8.07. Local Agent; Sub-Agent. Each of the Local Agent and
the Sub-Agent has been designated under this Agreement to carry out duties of
the Agent. Each of the Local Agent and the Sub-Agent shall be subject to each of
the obligations in this Agreement to be performed by the Local Agent or the
Sub-Agent, as the case may be, and each of the Borrowers and the Lenders agrees
that the Local Agent and the Sub-Agent shall be entitled to exercise each of the
rights and shall be entitled to each of the benefits of the Agent under this
Agreement as relate to the performance of its obligations hereunder.

            SECTION 8.08. 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.

                                       46
<PAGE>

                                   ARTICLE IX

                                  MISCELLANEOUS

            SECTION 9.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the Revolving Credit Notes, nor consent to any
departure by any 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 (other than
the Designated Bidders), do any of the following: (a) waive any of the
conditions specified in Section 3.01, (b) increase the Commitments of the
Lenders or subject the Lenders to any additional obligations, (c) reduce the
principal of, or interest on, the Revolving Credit Advances or any fees or other
amounts payable hereunder, (d) postpone any date fixed for any payment of
principal of, or interest on, the Revolving Credit 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 Revolving Credit Advances, or the
number of Lenders, that shall be required for the Lenders or any of them to take
any action hereunder, (f) release the Company from it obligations under Section
7.01 or otherwise limit the guaranty liability of the Company hereunder, (g)
release all or substantially all of the Collateral in any transaction or series
of related transactions or permit the creation, incurrence, assumption or
existence of any Lien on all or substantially all of the Collateral in any
transaction or series of related transactions to secure any obligations other
than obligations owing to the Secured Parties under the Loan Documents or (h)
amend this Section 9.01; 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
Agent under this Agreement or any Note and (y) no amendment, waiver or consent
of Section 9.07(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 Note.

            SECTION 9.02. 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 Company or any Designated Subsidiary, at the address of the Company at
200 Public Square, Cleveland, Ohio 44114, 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 Assumption Agreement or 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 Company 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 Company 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 9.03. 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 9.04. Costs and Expenses. (a) The Company 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 Company 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

                                       47
<PAGE>

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 9.04(a).

            (b) The Company 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 Company or any of its Subsidiaries or any Environmental Action
relating in any way to the Company or any of its Subsidiaries, in each case of
such an investigation, litigation or other proceeding to which the indemnity in
this Section 9.04(b) applies, such indemnity shall be effective whether or not
such investigation, litigation or proceeding is brought by the Company, 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. Each 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.

            (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 Company
      pursuant to this Section 9.04(b), notify the Company 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 Company of
      the commencement thereof, the Company may participate therein or assume
      the defense thereof and after notice from the Company 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 Company will not be liable to such Indemnified Party under
      this Section 9.04(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
      Company, which consent shall not be unreasonably withheld or delayed;
      provided, however, that unless and until the Company so assumes the
      defense of any such action, the Company 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 Company 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 Company (in which case the
      Company 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 Company; provided that the
      Company 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 Company shall not be liable for any
      settlement of any action or claim effected without its consent.

            (ii) The Company 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
Eurocurrency Rate Advance, LIBO Rate Advance or Local Rate Advance is made by
any 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

                                       48
<PAGE>

of rights and obligations under this Agreement pursuant to Section 9.07 as a
result of a demand by the Company pursuant to Section 9.07(a) or (ii) as a
result of a payment or Conversion pursuant to Section 2.08, 2.10 or 2.12, such
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. If the amount of the Committed Currency
purchased by any Lender in the case of a Conversion or redenomiation of Advances
in the case of Section 2.08 or 2.12 exceeds the sum required to satisfy such
Lender's liability in respect of such Advances, such Lender agrees to remit to
the Company such excess.

            (d) Without prejudice to the survival of any other agreement of the
Borrowers hereunder, the agreements and obligations of the Borrowers contained
in Sections 2.11, 2.14 and 9.04 shall survive the payment in full of principal,
interest and all other amounts payable hereunder and under the Notes.

            SECTION 9.05. 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 any 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 such Borrower against
any and all of the obligations of such 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 such
Borrower after any such set-off and application, provided that the failure to
give such notice shall not affect the validity of such set-off and application.
The rights of each 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 9.06. 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 Company and the Agent and when the Agent shall
have been notified by each Initial Lender that such Initial Lender has executed
it and thereafter shall be binding upon and inure to the benefit of each
Borrower, the Agent and each Lender and their respective successors and assigns,
except that no Borrower shall have the right to assign its rights hereunder or
any interest herein without the prior written consent of the Lenders.

            SECTION 9.07. Assignments, Designations and Participations. (a) Each
Lender (other than the Designated Bidders) may and, if demanded by the Company
(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 Commitment,
the Revolving Credit Advances owing to it and the Revolving Credit 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 (other than any right to make Competitive Bid Advances, Competitive
Bid Advances owing to it and Competitive Bid Notes), (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 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
$10,000,000 or an integral multiple of $1,000,000 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 Company pursuant to this Section 9.07(a) shall be
arranged by the Company 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 Company pursuant to this Section 9.07(a) unless and
until such Lender shall have received one or more payments from either the

                                       49
<PAGE>

Borrowers 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 Revolving Credit 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 Company, such recordation fee
shall be payable by the Company except that no such recordation fee shall be
payable in the case of an assignment made at the request of the Company to an
Eligible Assignee that is an existing Lender, and (vii) any Lender may, without
the approval of the Company 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 9.04 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 this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the Company
or the performance or observance by any 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 Revolving Credit 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 Company.

            (d) Each Lender (other than the Designated Bidders) may designate
one or more banks or other entities to have a right to make Competitive Bid
Advances as a Lender pursuant to Section 2.03; provided, however, that (i) no
such Lender shall be entitled to make more than three such designations, (ii)
each such Lender making one or more of such designations shall retain the right
to make Competitive Bid Advances as a Lender pursuant to Section 2.03, (iii)
each such designation shall be to a Designated Bidder and (iv) the parties to
each such designation shall execute and deliver to the Agent, for its acceptance
and recording in the Register, a Designation Agreement. Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in each Designation Agreement, the designee thereunder shall be a party hereto
with a right to make Competitive Bid Advances as a Lender pursuant to Section
2.03 and the obligations related thereto.

                                       50
<PAGE>

            (e) By executing and delivering a Designation Agreement, the Lender
making the designation thereunder and its designee thereunder confirm and agree
with each other and the other parties hereto as follows: (i) such 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 this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of any
Borrower or the performance or observance by any Borrower of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such designee 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
Designation Agreement; (iv) such designee will, independently and without
reliance upon the Agent, such designating 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 designee confirms that it is a Designated Bidder; (vi)
such designee 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 designee 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 Lender.

            (f) Upon its receipt of a Designation Agreement executed by a
designating Lender and a designee representing that it is a Designated Bidder,
the Agent shall, if such Designation Agreement has been completed and is
substantially in the form of Exhibit D hereto, (i) accept such Designation
Agreement, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Borrower.

            (g) The Agent shall maintain at its address referred to in Section
9.02 a copy of each Assumption Agreement, each Assignment and Acceptance and
each Designation Agreement delivered to and accepted by it and a register for
the recordation of the names and addresses of the Lenders, with respect to
Lenders other than Designated Bidders, 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 Borrowers, 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 Company, any other Borrower or any Lender at any reasonable time and from
time to time upon reasonable prior notice.

            (h) Each Lender may sell participations to one or more banks or
other entities (other than the Company 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
Borrowers 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 Company, each other 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 any 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.

            (i) 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
Administrative Agent and the other Lenders shall continue to deal solely and

                                       51
<PAGE>

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 9.08 and (vii) no
SPC shall have any right to approve any 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.

            (j) Any Lender may, in connection with any assignment, designation,
participation or grant of funding option or proposed assignment, designation,
participation or grant of funding option pursuant to this Section 9.07, disclose
to the assignee, designee, participant or SPC or proposed assignee, designee,
participant or SPC, any information relating to any Borrower furnished to such
Lender by or on behalf of such Borrower; provided that, prior to any such
disclosure, the assignee, designee, participant or SPC or proposed assignee,
designee, participant or SPC shall agree to preserve the confidentiality of any
Confidential Information relating to any Borrower received by it from such
Lender.

            (k) 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 9.08. Confidentiality. Neither the Agent nor any Lender or
SPC shall disclose any Confidential Information to any other Person without the
consent of the Company, 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 9.07(j), 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 Company 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.

            SECTION 9.09. Designated Subsidiaries. (a) Designation. The Company
may at any time, and from time to time, by delivery to the Agent of a
Designation Letter duly executed by the Company and the respective Subsidiary
and substantially in the form of Exhibit D hereto, designate such Subsidiary as
a "Designated Subsidiary" for purposes of this Agreement and such Subsidiary
shall thereupon become a "Designated Subsidiary" for purposes of this Agreement
and, as such, shall have all of the rights and obligations of a Borrower
hereunder. The Agent shall promptly notify each Lender of each such designation
by the Company and the identity of the respective Subsidiary.

            (b) Termination. Upon the payment and performance in full of all of
the indebtedness, liabilities and obligations under this Agreement and the Notes
of any Designated Subsidiary then, so long as at the

                                       52
<PAGE>

time no Notice of Revolving Credit Borrowing or Notice of Competitive Bid
Borrowing in respect of such Designated Subsidiary is outstanding, such
Subsidiary's status as a "Designated Subsidiary" shall terminate upon notice to
such effect from the Agent to the Lenders (which notice the Agent shall give
promptly, and only upon its receipt of a request therefor from the Company).
Thereafter, the Lenders shall be under no further obligation to make any Advance
hereunder to such Designated Subsidiary.

            SECTION 9.10. Governing Law. This Agreement and the Notes shall be
governed by, and construed in accordance with, the laws of the State of New
York.

            SECTION 9.11. 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 9.12. Currency Conversion for Judgments. (a) If for purposes
of obtaining judgment in any court it is necessary to convert a sum due
hereunder in Dollars into another currency, the parties hereto agree, to the
fullest extent that they may effectively do so, that the rate of exchange used
shall be that at which in accordance with normal banking procedures the Agent
could purchase Dollars with such other currency at Citicorp's principal office
in London at 11:00 A.M. (London time) on (i) the later of the Business Day
preceding that on which judgment is rendered and (ii) if such judgment is
appealed, the Business Day or which such judgment is upheld.

            (b) If for purposes of obtaining judgment in any court it is
necessary to convert a sum due hereunder in a Foreign Currency into Dollars, the
parties agree to the fullest extent that they may effectively do so, that the
rate of exchange used shall be that at which in accordance with normal banking
procedures the Agent could purchase such Foreign Currency with Dollars at
Citicorp's principal office in London at 11:00 A.M. (London time) on the later
of (i) the Business Day preceding that on which judgment is rendered and (ii) if
such judgment is appealed, the Business Day on which such judgment is upheld.

            (c) The obligation of each Borrower in respect of any sum due from
it in any currency (the "Primary Currency") to any Lender or the Agent hereunder
shall, notwithstanding any judgment in any other currency, be discharged only to
the extent that on the Business Day following receipt by such Lender or the
Agent (as the case may be), of any sum adjudged to be so due in such other
currency, such Lender or the Agent (as the case may be) may in accordance with
normal banking procedures purchase the applicable Primary Currency with such
other currency; if the amount of the applicable Primary Currency so purchased is
less than such sum due to such Lender or the Agent (as the case may be) in the
applicable Primary Currency, each Borrower agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify such Lender or the Agent (as the
case may be) against such loss, and if the amount of the applicable Primary
Currency so purchased exceeds such sum due to any Lender or the Agent (as the
case may be) in the applicable Primary Currency, such Lender or the Agent (as
the case may be) agrees to remit to such Borrower such excess.

            SECTION 9.13. 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. Each 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 Company at 200 Public Square, Cleveland,
Ohio 44114, Attention: Secretary. Each 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 such Borrower at its address specified pursuant to Section
9.02. 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. To the extent that
any Designated Subsidiary has or hereafter may acquire any immunity from
jurisdiction of any court or from any legal process (whether through service or
notice, attachment prior to judgment, attachment in

                                       53
<PAGE>

aid of execution, execution or otherwise) with respect to itself or its
property, such Designated Subsidiary hereby irrevocably waives such immunity in
respect of its obligations under this Agreement 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 the Notes in the courts of any
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 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 9.14. Substitution of Currency. If a change in any Foreign
Currency occurs pursuant to any applicable law, rule or regulation of any
governmental, monetary or multi-national authority, this Agreement (including,
without limitation, the definitions of Eurocurrency Rate and LIBO Rate) will be
amended to the extent determined by the Agent (acting reasonably and in good
faith consultation with the Company) to be necessary to reflect the change in
currency and to put the Lenders and the Borrowers in the same position, so far
as possible, that they would have been in if no change in such Foreign Currency
had occurred.

                                       54
<PAGE>

            SECTION 9.15. Waiver of Jury Trial. Each of the Company, each other
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:

                                 Initial Lenders

Commitment

$27,500,000                              CITICORP USA, INC.

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

$26,250,000                              BANK ONE, MICHIGAN

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

$26,250,000                              DEUTSCHE BANK AG, NEW YORK BRANCH

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

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

                                       55
<PAGE>

$20,000,000                              KEYBANK NATIONAL ASSOCIATION

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

$12,500,000                              ABN AMRO BANK N.V.

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

$12,500,000                              BANK OF AMERICA, N.A.

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

$12,500,000                              COMERICA BANK

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

$12,500,000                              MELLON BANK, N.A.

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

$12,500,000                              JP MORGAN CHASE BANK

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

$12,500,000                              NATIONAL CITY BANK

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

                                       56
<PAGE>

$12,500,000                              SCOTIABANC, INC.

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

$12,500,000                              THE BANK OF NEW YORK

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

$200,000,000                             Total of the Commitments

                                       57
<PAGE>

                                                                      SCHEDULE I
                                                             POLYONE CORPORATION
                                                      FIVE-YEAR CREDIT AGREEMENT
                                                      APPLICABLE LENDING OFFICES

<TABLE>
<CAPTION>

        Name of Initial Lender             Domestic Lending Office              Eurocurrency 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
-----------------------------------------------------------------------------------------------------------
ABN Amro Bank N.V.                       208 South LaSalle Street               208 South LaSalle Street
                                         Suite 1501                             Suite 1501
                                         Chicago, IL 60603                      Chicago, IL 60603
                                         Attn: Tom Thiakos                      Attn: Tom Thiakos
                                         T: 312 992-5119                        T: 312 992-5119
                                         F: 312 992-5111                        F: 312 992-5111
-----------------------------------------------------------------------------------------------------------
Bank of America, N.A.                    1850 Gateway Blvd.
                                         CA4-706-05-11
                                         Concord, CA 94520-3282
                                         Attn: Curtis Laney
                                         T: 925 675-8398
                                         F: 888 969-9252

                                         With copies of notices to:

                                         335 Madison Avenue                     1850 Gateway Blvd.
                                         5th Floor                              CA4-706-05-11
                                         New York, NY 10017                     Concord, CA 94520-3282
                                         Attn: Donald Chin                      Attn: Curtis Laney
                                         T: 212 503-8453                        T: 925 675-8398
                                         F: 212 503-7878                        F: 888 969-9252
-----------------------------------------------------------------------------------------------------------
The Bank of New York                     One Wall Street, 19th Floor            One Wall Street, 19th Floor
                                         New York, NY 10286                     New York, NY 10286
                                         Attn: Craig T. Anderson                Attn: Craig T. Anderson
                                         T: 212 635-7834                        T: 212 635-7834
                                         F: 212 635-7923                        F: 212 635-7923
-----------------------------------------------------------------------------------------------------------
Bank One                                 611 Woodward Avenue                    611 Woodward Avenue
                                         Detroit, MI 48226                      Detroit, MI 48226
                                         Mail Code: MI18074                     Mail Code: MI18074
                                         Attn: Kathy Elliot                     Attn: Kathy Elliot
                                         T: 313 225-1274                        T: 313 225-1274
                                         F: 313 225-1212                        F: 313 225-1212
-----------------------------------------------------------------------------------------------------------
Comerica Bank                            500 Woodward Avenue, MC 3268           500 Woodward Avenue, MC 3268
                                         Detroit, MI 48226                      Detroit, MI 48226
                                         Attn: Jeffrey Judge                    Attn: Jeffrey Judge
                                         T: 313 222-3801                        T: 313 222-3801
                                         F: 313 222-9514                        F: 313 222-9514
-----------------------------------------------------------------------------------------------------------
Deutsche Bank AG, New York Branch        New York Branch                        New York Branch
                                         24th Floor                             24th Floor
                                         31 West 52nd Street, MS 2409           31 West 52nd Street, MS 2409
                                         New York, NY 10019                     New York, NY 10019
                                         Attn: Jean Hannigan                    Attn: Jean Hannigan
                                         T: 212 469-8648                        T: 212 469-8648
                                         F: 212 469-8701                        F: 212 469-8701
-----------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
        Name of Initial Lender             Domestic Lending Office              Eurocurrency Lending Office
        ----------------------             -----------------------              ---------------------------
<S>                                      <C>                                    <C>
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
-----------------------------------------------------------------------------------------------------------
Mellon Bank, N.A.                        Three Mellon Center, Room 1203         Three Mellon Center, Room 1203
                                         Pittsburgh, PA 15259                   Pittsburgh, PA 15259
                                         Attn: Roxanne L. Gray                  Attn: Roxanne L. Gray
                                         T: 412 234-4769                        T: 412 234-4769
                                         F: 412 209-6125                        F: 412 209-6125
-----------------------------------------------------------------------------------------------------------
JP Morgan Chase Bank                     JP Morgan Services, INC                JP Morgan Services, INC
                                         500 Stanton Christiana Road            500 Stanton Christiana Road
                                         3-OPS 2                                3-OPS 2
                                         Newark, DE 19713-2107                  Newark, DE 19713-2107
                                         Attn: Jason Curley                     Attn: Jason Curley
                                         Tel: (302)-634-4228                    Tel: (302)-634-4228
                                         Fax: (302)-634-109660 Wall Street      Fax: (302)-634-109660 Wall Street
-----------------------------------------------------------------------------------------------------------
National City Bank                       1900 E. 9th Street, Loc. #2070         1900 E. 9th Street, Loc. #2070
                                         Cleveland, OH 44114                    Cleveland, OH 44114
                                         Attn: Robert S. Coleman                Attn: Robert S. Coleman
                                         T: 216 222-9714                        T: 216 222-9714
                                         F: 216 222-7005                        F: 216 222-7005
-----------------------------------------------------------------------------------------------------------
Scotiabanc, Inc.                         600 Peachtree Street N.E.              600 Peachtree Street N.E.
                                         Suite 2700                             Suite 2700
                                         Atlanta, GA 30308                      Atlanta, GA 30308
                                         Attn: Donna Gardner                    Attn: Donna Gardner
                                         T: 404 877-1559                        T: 404 877-1559
                                         F: 404 888-8998                        F: 404 888-8998
</TABLE>

                                       2
<PAGE>

                                                                     SCHEDULE II
                                                             POLYONE CORPORATION
                                                      FIVE-YEAR CREDIT AGREEMENT

                                OTHER OBLIGATIONS

<TABLE>
<S>                                          <C>
Letters Of Credit                            $  26,703,589

Borrowed Debt & Bank Guarantees              $  67,427,500
</TABLE>

Various Hedging Instruments (including those with Lenders and their Affiliates)
(Notional Amount)

                                       3
<PAGE>

                                                                    SCHEDULE III
                                                             POLYONE CORPORATION
                                                      FIVE-YEAR CREDIT AGREEMENT

                              MORTGAGED PROPERTIES

PART I
<TABLE>
<CAPTION>
                      Facility Name                            State
<S>                                                             <C>
             Kennesaw                                             GA
             Macedonia                                            OH
             Burton                                               OH
             Massilon                                             OH
             Seabrook                                             TX
             Kennedale                                            TX
             DeForest                                             WI

PART II

                       Facility Name                            State

             Wynne                                                AR
             Long Beach                                           CA
             Henry                                                IL
             Terre Haute                                          IN
             Pedricktown                                          NJ
             Avon Lake HQ                                         OH
             Avon Lake Mfg                                        OH
             Avon Lake PCC                                        OH
             Lehigh Valley                                        PA
             Dyersburg                                            TN
             Jonesboro                                            TN
             Winchester                                           VA
             Sussex                                               WI

PART III

             Facility Name                                      State
             North Baltimore                                      OH
             Elk Grove                                            IL
             Norwalk                                              OH
             Fort Worth                                           TX
</TABLE>

                                       4
<PAGE>

                                                           EXHIBIT A-1 - FORM OF
                                                                REVOLVING CREDIT
                                                                 PROMISSORY NOTE

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

            FOR VALUE RECEIVED, the undersigned, [NAME OF BORROWER], a
_________________________ 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
Commitment in figures] or, if less, the aggregate principal amount of the
Revolving Credit Advances made by the Lender to the Borrower pursuant to the
Five-Year Credit Agreement dated as of October 30, 2000 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 Revolving Credit Advance from the date of such Revolving Credit 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 Revolving Credit
Advance (i) in Dollars are payable in lawful money of the United States of
America to the Agent at its account maintained at 399 Park Avenue, New York, New
York 10043, in same day funds and (ii) in any Committed Currency are payable in
such currency at the applicable Payment Office in same day funds. Each Revolving
Credit 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 Revolving Credit 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 Revolving Credit
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 Revolving
Credit Advance being evidenced by this Promissory Note, (ii) contains provisions
for determining the Dollar Equivalent of Revolving Credit Advances denominated
in Committed Currencies and (iii) 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.

                                        [NAME OF BORROWER]

                                        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 A-2 - FORM OF
                                                                 COMPETITIVE BID
                                                                 PROMISSORY NOTE

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

            FOR VALUE RECEIVED, the undersigned, [NAME OF BORROWER], a
_________________________ corporation (the "Borrower"), HEREBY PROMISES TO PAY
to the order of _________________________ (the "Lender") for the account of its
Applicable Lending Office (as defined in the Five-Year Credit Agreement dated as
of October 30, 2000 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)), on
_______________, 200_, the principal amount of [U.S.$_______________] [for a
Competitive Bid Advance in a Foreign Currency, list currency and amount of such
Advance].

            The Borrower promises to pay interest on the unpaid principal amount
hereof from the date hereof until such principal amount is paid in full, at the
interest rate and payable on the interest payment date or dates provided below:

            Interest Rate: _____% per annum (calculated on the basis of a year
of _____ days for the actual number of days elapsed).

            Both principal and interest are payable in lawful money of
________________ to Citicorp, as agent, for the account of the Lender at the
office of Citicorp, at _________________________ in same day funds.

            This Promissory Note is one of the Competitive Bid Notes referred to
in, and is entitled to the benefits of, the Credit Agreement. The Credit
Agreement, among other things, (i) contains provisions for determining the
Dollar Equivalent of Competitive Bid Advances denominated in Foreign Currencies
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 Borrower hereby waives presentment, demand, protest and notice
of any kind. No failure to exercise, and no delay in exercising, any rights
hereunder on the part of the holder hereof shall operate as a waiver of such
rights.

            This Promissory Note shall be governed by, and construed in
accordance with, the laws of the State of New York.

                                        [NAME OF BORROWER]

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

<PAGE>

                                                 EXHIBIT B-1 - FORM OF NOTICE OF
                                                      REVOLVING CREDIT 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, [Name of Borrower], refers to the Five-Year Credit
Agreement, dated as of October 30, 2000 (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 Revolving Credit Borrowing under the Credit
Agreement, and in that connection sets forth below the information relating to
such Revolving Credit Borrowing (the "Proposed Revolving Credit Borrowing") as
required by Section 2.02(a) of the Credit Agreement:

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

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

            (iii) The aggregate amount of the Proposed Revolving Credit
      Borrowing is $_______________][for a Revolving Credit Borrowing in a
      Committed Currency, list currency and amount of Revolving Credit
      Borrowing].

            [(iv) The initial Interest Period for each Eurocurrency Rate Advance
      made as part of the Proposed Revolving Credit 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 Revolving
Credit Borrowing:

            (A) the representations and warranties contained in Section 4.01 of
      the Credit Agreement (except the representations set forth in subsection
      (e)(iv) thereof and in subsection (f)(i) thereof) are correct, before and
      after giving effect to the Proposed Revolving Credit Borrowing and to the
      application of the proceeds therefrom, as though made on and as of such
      date, and additionally, if the undersigned is a Designated Subsidiary, the
      representations and warranties contained in its Designation Letter are
      correct, before and after giving effect to the Proposed Revolving Credit
      Borrowing and to the application of the proceeds therefrom, as though made
      on and as of such date; and

<PAGE>

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

                                        Very truly yours,

                                        [NAME OF BORROWER]

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

                                       2
<PAGE>

                                                 EXHIBIT B-2 - FORM OF NOTICE OF
                                                       COMPETITIVE BID 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, [Name of Borrower], refers to the Five-Year Credit
Agreement, dated as of October 30, 2000 (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 2.03 of the Credit Agreement that the
undersigned hereby requests a Competitive Bid Borrowing under the Credit
Agreement, and in that connection sets forth the terms on which such Competitive
Bid Borrowing (the "Proposed Competitive Bid Borrowing") is requested to be
made:

         (A)  Date of Competitive Bid Borrowing           ______________________
         (B)  Amount of Competitive Bid Borrowing         ______________________
         (C)  [Maturity Date] [Interest Period]           ______________________
         (D)  Interest Rate Basis                         ______________________
         (E)  Day Count Convention                        ______________________
         (F)  Interest Payment Date(s)                    ______________________
         (G)  Currency                                    ______________________
         (H)  Borrower's Account Location                 ______________________
         (I)  _________________________________           ______________________

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

            (a) the representations and warranties contained in Section 4.01 are
      correct, before and after giving effect to the Proposed Competitive Bid
      Borrowing and to the application of the proceeds therefrom, as though made
      on and as of such date, and additionally, if the undersigned is a
      Designated Subsidiary, the representations and warranties contained in its
      Designation Letter are correct, before and after giving effect to the
      Proposed Revolving Credit Borrowing and to the application of the proceeds
      therefrom, as though made on and as of such date; and;

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

            (c) no event has occurred and no circumstance exists as a result of
      which the information concerning the undersigned that has been provided to
      the Agent and each Lender by the undersigned in connection with the Credit
      Agreement would include an untrue statement of a material fact or omit to
      state any material fact or any fact necessary to make the statements
      contained therein, in the light of the circumstances under which they were
      made, not misleading; and

            (d) the aggregate amount of the Proposed Competitive Bid Borrowing
      and all other Borrowings to be made on the same day under the Credit
      Agreement is within the aggregate amount of the unused Commitments of the
      Lenders.

            The undersigned hereby confirms that the Proposed Competitive Bid
Borrowing is to be made available to it in accordance with Section 2.03(a)(v) of
the Credit Agreement.

                                        Very truly yours,

                                        [NAME OF BORROWER]

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

                                       2
<PAGE>

                                                             EXHIBIT C - FORM OF
                                                       ASSIGNMENT AND ACCEPTANCE

            Reference is made to the Five-Year Credit Agreement dated as of
October 30, 2000 (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 I 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 (other than in respect of Competitive Bid Advances and Competitive Bid
Notes) equal to the percentage interest specified on Schedule 1 hereto of all
outstanding rights and obligations under the Credit Agreement (other than in
respect of Competitive Bid Advances and Competitive Bid Notes). After giving
effect to such sale and assignment, the Assignee's Commitment and the amount of
the Revolving Credit 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 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 Revolving Credit Note[, if any,] held by the Assignor [and
requests that the Agent exchange such Revolving Credit Note for a new Revolving
Credit Note payable to the order of [the Assignee in an amount equal to the
Commitment assumed by the Assignee pursuant hereto or new Revolving Credit Notes
payable to the order of the Assignee in an amount equal to the Commitment
assumed by the Assignee pursuant hereto and] the Assignor in an amount equal to
the 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.

<PAGE>

            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 Revolving Credit Notes in respect of the interest assigned hereby
(including, without limitation, all payments of principal, interest and facility
fees with respect thereto) to the Assignee. The Assignor and Assignee shall make
all appropriate adjustments in payments under the Credit Agreement and the
Revolving Credit 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 Commitment:                                                                  $______

Aggregate outstanding principal amount of Revolving Credit Advances assigned:           $______

Principal amount of Revolving Credit Note payable to Assignee:                          $______

Principal amount of Revolving Credit 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]

                                        Eurocurrency 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 D - FORM OF
                                                           DESIGNATION AGREEMENT

                           Dated _______________, 200_

            Reference is made to the Five-Year Credit Agreement dated as of
October 30, 2000 (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 "Designor") and
_________________________ (the "Designee") agree as follows:

            1. The Designor hereby designates the Designee, and the Designee
hereby accepts such designation, to have a right to make Competitive Bid
Advances pursuant to Section 2.03 of the Credit Agreement.

            2. The Designor makes no representation or warranty and assumes no
responsibility with respect to (i) 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 the Credit
Agreement or any other instrument or document furnished pursuant thereto and
(ii) the financial condition of any Borrower or the performance or observance by
any Borrower of any of its obligations under the Credit Agreement or any other
instrument or document furnished pursuant thereto.

            3. The Designee (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 Designation Agreement; (ii) agrees that it will, independently and without
reliance upon the Agent, the Designor 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 a Designated Bidder; (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; and (v) agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Credit
Agreement are required to be performed by it as a Lender.

            4. Following the execution of this Designation Agreement by the
Designor and its Designee, it will be delivered to the Agent for acceptance and
recording by the Agent. The effective date for this Designation Agreement (the
"Effective Date") shall be the date of acceptance hereof by the Agent, unless
otherwise specified on the signature page hereto.

            5. Upon such acceptance and recording by the Agent, as of the
Effective Date, the Designee shall be a party to the Credit Agreement with a
right to make Competitive Bid Advances as a Lender pursuant to Section 2.03 of
the Credit Agreement and the rights and obligations of a Lender related thereto.

            6. This Designation Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.

            7. This Designation 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 Designation Agreement by telecopier
shall be effective as delivery of a manually executed counterpart of this
Designation Agreement.

<PAGE>

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

Effective Date*:                        _______________, 200__

                                        [NAME OF DESIGNOR],
                                          as Designor

                                        By
                                          ______________________________________
                                          Title:

                                        [NAME OF DESIGNEE],
                                          as Designee

                                        By
                                          ______________________________________
                                          Title:

                                        Applicable Lending Office
                                        (and address for notices):
                                          [Address]

Accepted this ____ day
of _______________, 200_

CITICORP USA, INC., as Agent

By
  ______________________________________
  Title:

_______________

* This date should be no earlier than five Business Days after the delivery of
this Designation Agreement to the Agent.

                                       2
<PAGE>

                                          EXHIBIT E - FORM OF DESIGNATION LETTER

                                     [DATE]

To each of the Lenders
  parties to the Credit Agreement
  (as defined  below) and to Citicorp USA, Inc.,
  as Agent for such Lenders

Ladies and Gentlemen:

            Reference is made to the Five-Year Credit Agreement dated as of
October 30, 2000 among PolyOne Corporation (the "Borrower"), certain other
borrowers parties thereto, the Lenders named therein, and Citicorp USA, Inc., as
Agent for said Lenders (the "Credit Agreement"). Terms used herein and defined
in the Credit Agreement shall have the respective meanings ascribed to such
terms in the Credit Agreement.

            Please be advised that the Company hereby designates its undersigned
Subsidiary, ____________ ("Designated Subsidiary"), as a "Designated Subsidiary"
under and for all purposes of the Credit Agreement.

            The Designated Subsidiary, in consideration of each Lender's
agreement to extend credit to it under and on the terms and conditions set forth
in the Credit Agreement, does hereby assume each of the obligations imposed upon
a "Designated Subsidiary" and a "Borrower" under the Credit Agreement and agrees
to be bound by the terms and conditions of the Credit Agreement. In furtherance
of the foregoing, the Designated Subsidiary hereby represents and warrants to
each Lender as follows:

            (a) The Designated Subsidiary is a corporation duly organized,
      validly existing and in good standing under the laws of
      ______________________. The Designated Subsidiary is duly qualified and in
      good standing as a foreign corporation authorized to do business in each
      jurisdiction (other than the jurisdiction of its incorporation) in which
      the nature of its activities or the character of the properties it owns or
      leases makes such qualification necessary and in which the failure so to
      qualify would have a materially adverse effect on the Designated
      Subsidiary and its Subsidiaries taken as a whole.

            (b) The execution, delivery and performance by the Designated
      Subsidiary of this Designation Letter, the Credit Agreement and its Notes
      are within the Designated Subsidiary's corporate powers, have been duly
      authorized by all necessary corporate action and do not contravene (i) the
      Designated Subsidiary's charter or by-laws or (ii) any law, rule,
      regulation or contractual restriction in any material contract or, to the
      knowledge of the Chief Financial Officer of the Designated Subsidiary, any
      other contract binding on or affecting the Designated Subsidiary.

            (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 Designated
      Subsidiary of this Designation Letter, the Credit Agreement or its Notes.

            (d) This Designation Letter is, and the Notes of the Designated
      Subsidiary when delivered hereunder will be, legal, valid and binding
      obligations of the Designated Subsidiary enforceable against the
      Designated Subsidiary in accordance with their respective terms.

            (e) There is no pending or, to the best of the Designated
      Subsidiary's knowledge, threatened action or proceeding involving the
      Designated Subsidiary or any of its Subsidiaries before any court,
      governmental agency or arbitrator, (i) as of the date of this Designation
      Letter, which is likely to materially adversely affect the financial
      condition or operations of the Designated Subsidiary and its Subsidiaries
      taken as a whole or (ii) which purports to affect the legality, validity
      or enforceability of this Designation Letter, the Credit Agreement or any
      Note of the Designated Subsidiary.

<PAGE>

            (f) No proceeds of any Advance will be used to acquire any equity
      security of a class which is registered pursuant to Section 12 of the
      Securities Exchange Act of 1934, other than immaterial quantities of
      equity securities held in the investment portfolio of a Person whose stock
      is acquired with the proceeds of such Advance.

            (g) The Designated Subsidiary is not engaged in the business of
      extending credit for the purpose of purchasing or carrying margin stock
      (within the meaning of Regulation U), 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) The Designated Subsidiary 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.

                                        Very truly yours,

                                        POLYONE CORPORATION

                                        By
                                          ______________________________________
                                          Title:

                                        [THE DESIGNATED SUBSIDIARY]

                                        By
                                          ______________________________________
                                          Title:

                                       2
<PAGE>

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

                                [Effective Date]

To each of the Lenders parties
  to the Credit Agreement dated
  as of October 30, 2000
  among PolyOne Corporation,
  said Lenders and Citicorp USA, Inc.,
  as Agent for said Lenders, and
  to Citicorp USA, Inc., as Agent

                               PolyOne Corporation

Ladies and Gentlemen:

            This opinion is furnished to you pursuant to Section 3.01(h)(iv) of
the Five-Year Credit Agreement, dated as of October 30, 2000 (the "Credit
Agreement"), among PolyOne Corporation (the "Borrower"), the Lenders parties
thereto and Citicorp USA, Inc., as Agent for said Lenders. Terms defined in the
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.

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

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

            (5) A certificate of the Secretary of State of Ohio, dated
      _______________, 2000, attesting to the continued corporate existence and
      good standing of the Borrower in that State.

We have also examined the originals, or copies certified to our satisfaction, of
the documents listed in a certificate of the chief financial officer of the
Borrower, dated the date hereof (the "Certificate"), certifying that the
documents listed in such certificate are all of the indentures, loan or credit
agreements, leases, guarantees, mortgages, security agreements, bonds, notes and
other agreements or instruments, and all of the orders, writs, judgments,
awards, injunctions and decrees, that affect or purport to affect the Borrower's
right to borrow money or the Borrower's obligations under the Credit Agreement
or the Notes. 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 of the Borrower, and
agreements, instruments and other documents, as we have deemed necessary as a
basis for the opinions expressed below. As to questions of fact material to such
opinions, we have, when relevant facts were not independently established by us,
relied upon certificates of the Borrower or its officers or of public officials.
We have assumed the due execution and delivery, pursuant to due authorization,
of the Credit Agreement by the Initial Lenders and the Agent.

<PAGE>

            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
contained in any document listed in the Certificate or, to the best of our
knowledge, contained in any other similar document. 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 any of the Notes or the consummation of the transactions
contemplated thereby or[, except as described in Exhibit 3.01(d) to the Credit
Agreement,] that 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 or the Notes 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 9.09 of the Credit Agreement wherein the
parties thereto agree that the Credit Agreement and the Notes 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, legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with their respective
terms.

            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 law 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
      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,

                                       2
<PAGE>

                                                            EXHIBIT F-2- FORM OF
                                                              OPINION OF COUNSEL
                                                                FOR THE BORROWER
                                                        RELATED TO THE MORTGAGES

                                [Effective Date]

To each of the Lenders parties
  to the Credit Agreement dated
  as of October 30, 2000
  among PolyOne Corporation,
  said Lenders and Citicorp USA, Inc.,
  as Agent for said Lenders, and
  to Citicorp USA, Inc., as Agent

                               PolyOne Corporation

Ladies and Gentlemen:

                                       4
<PAGE>

                                                             EXHIBIT G - FORM OF
                                                              OPINION OF COUNSEL
                                                      TO A DESIGNATED SUBSIDIARY

                     [Effective Date of Designation Letter]

      1. The Designated Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the             .

      2. The execution, delivery and performance by the Designated Subsidiary of
the Designation Letter, the Credit Agreement and its Notes are within the
Designated Subsidiary's corporate powers, have been duly authorized by all
necessary corporate action, and do not contravene (i) the organizational
documents of the Designated Subsidiary or (ii) any law, rule or regulation
applicable to the Designated Subsidiary (including, without limitation,
Regulation X of the Board of Governors of the Federal Reserve System) or (iii)
any contractual or legal restriction contained in any indentures, loan or credit
agreements, leases, mortgages, security agreements, bonds, notes and other
agreements or instruments, or orders, writs, judgments, awards, injunctions and
decrees, which materially adversely affect or purport to materially adversely
affect the Designated Subsidiary's right to borrow money or the Designated
Subsidiary's obligations under the Credit Agreement, its Designation Letter or
its Notes. The Designation Letter and each Note of the Designated Subsidiary
delivered on the date hereof have been duly executed and delivered on behalf of
the Designated Subsidiary.

      3. No authorization, 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 Designated Subsidiary of the
Designation Letter, the Credit Agreement or the Notes of the Designated
Subsidiary.

      4. Each of the Designation Letter, the Credit Agreement and the Notes of
the Designated Subsidiary are the legal, valid and binding obligations of the
Designated Subsidiary enforceable against the Designated Subsidiary in
accordance with their respective terms.

<PAGE>

                                                            EXHIBIT H - BANKERS'
                                                            ACCEPTANCE AGREEMENT

            THIS AGREEMENT made as of the ______ day of _______________, 200_.

BETWEEN:

            ________________________, a corporation subsisting under the laws of
__________, as Borrower

                                     - and -

            _____________________________________ , a bank subsisting under laws
of Canada, as Lender

BACKGROUND:

            Pursuant to the Five-Year Credit Agreement dated as October 30, 2000
among PolyOne Corporation, the Borrower, the Lenders party thereto and Citicorp
USA, Inc., as Administrative Agent for the Lenders, the Lender may from time to
time offer to make a Competitive Bid Borrowing as referred to and defined
therein by way of the issuance of bankers' acceptances.

            This Agreement is intended to govern the rights and obligations
between the Lender and the Borrower in respect of such bankers' acceptances.

            NOW THEREFORE in consideration of the covenants in this Agreement
and for other consideration, the receipt and sufficiency of which are
acknowledged, the parties agree as follows:

- INTERPRETATION

            Definitions

            Unless the context otherwise requires, in this Agreement:

"ACCEPTANCE" means a Draft issued by the Borrower and accepted by the Lender as
part of a Competitive Bid Borrowing;

"ACCEPTANCE PROCEEDS" means the cash proceeds realized on the issuance and sale
of an Acceptance pursuant to this Agreement before deduction of the Stamping
Fee;

"APPLICABLE MARGIN" means the Applicable Margin stipulated in the Lender's offer
to make the relevant Competitive Bid Advance:

"BA RATE" means the rate of interest per annum stipulated in the Lender's offer
to make the relevant Competitive Bid Borrowing as its applicable bankers'
acceptance rate;

"CANADIAN DOLLARS" and the symbol "Cdn.$" each means the lawful currency of
Canada;

"COMPETITIVE BID ADVANCE" means a Competitive Bid Advance referred to and
defined in the Credit Agreement;

"CREDIT AGREEMENT" means the Credit Agreement referred to in the first recital
of the background to this Agreement'

<PAGE>

"DRAFT" means a blank non-interest bearing bill of exchange within the meaning
of the Bills of Exchange Act (Canada), or blank depository bill within the
meaning of the Depositary Bills and Notes Act (Canada), as applicable, drawn by
the Borrower and addressed to the Lender, made payable to the Borrower, bearer
or a clearing house, as the Lender shall require, and bearing such
distinguishing letters and numbers and being in such form as the Lender may
require;

"OVERDUE AMOUNT" means any amount payable under this Agreement which is not paid
when due and includes the face amount of any Acceptance not paid on its maturity
date;

"PRIME RATE" means the rate of interest which the Lender establishes and reports
to the Bank of Canada from time to time as the reference rate of interest for
determination of the interest rates it will charge for loans in Canadian Dollars
to its Canadian customers; and

"STAMPING FEE" means the stamping fee payable at the time each Acceptance is
issued, calculated and payable in the manner provided for in Section 2.5.

            References to Agreements

            Each reference in this Agreement to any agreement (including this
Agreement and any other defined term that is an agreement) shall be construed so
as to include such agreement (including any attached schedules) and each
amendment, supplement, amendment and restatement, novation and other
modification made to it at or before the time in question.

            Headings, etc.

            The division of this Agreement into Articles, Sections and
Subsections and the insertion of headings are for the convenience of reference
only and shall not affect the construction or interpretation of this Agreement.
The terms "THIS AGREEMENT", "HEREOF", "HEREUNDER" and similar expressions refer
to this Agreement and not to any particular Article, Section, Subsection,
paragraph, subparagraph, clause or other portion of this Agreement.

            Number and Gender

            In this Agreement, words in the singular (including defined terms)
include the plural and vice versa (the necessary changes being made to fit the
context) and words in one gender include all genders.

- ISSUING ACCEPTANCES

            Competitive Bid Borrowing

            If the Lender offers to make a Competitive Bid Advance available to
the Borrower by way of an issue of Acceptances, and such offer is accepted by
the Borrower in accordance with the provisions of the Credit Agreement, the
provisions of this Agreement shall apply to the Acceptances issued pursuant to
the Competitive Bid Advance. In its offer to make a Competitive Bid Borrower the
Lender must stipulate both its BA Rate applicable to the requested issue of
Acceptances and its offered Applicable Margin which will be used to determine
the Stamping Fee.

            Amount and Term

            The term of Drafts must be a period (subject to market availability)
of one, two, three or six months ending on or before the Maturity Date referred
to and defined in the Credit Agreement. The aggregate face amount of an issue of
Drafts to be accepted on any particular borrowing date shall be Cdn.$500,000 or
more and be equal to a whole number multiple of Cdn.$100,000. The face amount of
each Acceptance shall be a whole number multiple of Cdn.$100,000.

                                       2
<PAGE>

            Power of Attorney

            In order to facilitate issues of Acceptances pursuant to this
Agreement, the Borrower authorizes the Lender, and for this purpose appoints the
Lender the lawful attorney of the Borrower, to complete, sign and endorse Drafts
on its behalf in handwritten or by facsimile or mechanical signature and, once
so completed, signed and endorsed, to accept them as an Acceptance under this
Agreement and then purchase, discount or negotiate such Acceptances in
accordance with the provisions of this Article Two. Drafts so completed, signed
and endorsed and negotiated on behalf of the Borrower shall bind the Borrower as
if so performed by an authorized officer of the Borrower.

            Discount and Sale of Acceptances

            The Lender shall purchase the Acceptances comprised in the
Competitive Bid Advance which has been accepted by the Borrower on the requested
borrowing date of such Acceptances at the purchase price equal to the face
amount of such Acceptances less an amount equal to the amount that yields to the
Lender (excluding the Stamping Fee) an interest rate per annum equal to the BA
Rate for the applicable term of such Acceptances. The Lender shall pay the
Acceptance Proceeds of each issue of Acceptances to the Local Agent on the
requested borrowing date in exchange for delivery of such Acceptances. Such
Acceptance Proceeds when received by the Local Agent will be advanced by bank
transfer to the Borrower in accordance with the provisions of the Credit
Agreement.

            Stamping Fee

            The Stamping Fee is payable by the Borrower to the Lender on the
issuance of each Acceptance in Canadian Dollars and shall be calculated upon the
fact amount of each such Acceptance for the duration of its term on the basis of
the actual number of days to elapse from the date of its Acceptance up to the
maturity date of the Acceptance calculated on the basis of a 265 day year at the
Applicable Margin. The Lender shall be entitled to deduct from the Acceptance
Proceeds to be remitted to the Local Agent pursuant to Section 2.4, the Stamping
Fee payable to it as determined in accordance with this Section 2.5.

            Payment of Acceptances

            The Borrower shall pay the Lender the full face amount of each
Acceptance accepted by the Lender on its maturity date.

            Waivers

            The Borrower shall not claim from the Lender any days of grace for
the payment at maturity of any Drafts presented and accepted by the Lender
pursuant to this Agreement. In addition the Borrower waives demand, presentment
for payment, protest, noting of protest, dishonour, notice of dishonour and any
other notice of defence to payment which might otherwise exist if for any reason
an Acceptance is held by the Lender in its own right at the maturity thereof.

- INTEREST CALCULATIONS AND PAYMENTS

            Interest on Overdue Amounts

            The Borrower shall pay the Lender interest on each Overdue Amount
from time to time outstanding at a rate equal to the Prime Rate plus 2% per
annum.

            Calculations of Interest

Interest payable on each Overdue Amount shall be calculated upon the daily
outstanding balance of such Overdue Amount from (and including) its maturity
date until (but excluding) the date it is repaid in full, paid in the same
currency in which such Overdue Amount is denominated and payable monthly in
arrears based upon the actual

                                       3
<PAGE>

number of days elapsed in the relevant period of calculation. Interest payable
on each Overdue Amount shall be payable both before demand and judgment at the
rate set out in Section 3.1 with interest on overdue interest at the same rate.

The rates of interest per annum payable on or in respect of each Overdue Amount
are expressed on the basis of a 365 or 366 day year, as applicable. The rates of
interest per annum payable on or in respect of Acceptances are payable on the
basis of a 365 day year.

Changes in the Prime Rate will cause an immediate adjustment of interest payable
on or in respect of each Overdue Amount outstanding from time to time, without
the necessity of any notice to the Borrower.

            Interest Act (Canada)

            For the purposes of the Interest Act (Canada):

the yearly rate of interest to which the rate of interest per annum payable on
or in respect of any Acceptance is equivalent is such rate multiplied by a
fraction the numerator of which is the actual number of days in the relevant
year and the denominator of which is 365;

the principle of deemed reinvestment of interest shall not apply to any interest
calculation under this Agreement; and

the rates of interest stipulated in this Agreement are intended to be nominal
rates and not effective rates or yields.

            Evidence of Indebtedness

            The Lender shall open and maintain on its books accounts evidencing
all Acceptances and all amounts owing by the Borrower to the Lender under this
Agreement. The Lender shall enter in the accounts details of all amounts from
time to time owing, paid or repaid by the Borrower hereunder. The information
entered in the accounts shall constitute, in the absence of manifest effort,
prima facie evidence of the existence and quantum of the obligations of the
Borrower to the Lender hereunder. The Borrower shall, on reasonable notice to
the Lender, be entitled to obtain from the Lender copies of extracts of all
entries made in such accounts.

            Successors and Assigns

            The Lender may only grant participations in Acceptances made by it
hereunder or assign all or any part of its rights or obligations hereunder in
accordance with the terms and conditions of the Credit Agreement.

            Time of the Essence

            Time is the essence of each provision of this Agreement.

            Governing Law

            This Agreement shall be governed by, and interpreted and enforced in
accordance with, the laws in force in the Province of Ontario. Such choice of
law shall, however, be without prejudice to or limitation of any other rights
available to the Lender under the Credit Agreement.

            Invalidity

            If any provision of this Agreement is determined to be invalid or
unenforceable by a court of competent jurisdiction from which no further appeal
lies or is taken, that provision shall be deemed to be severed herefrom, and the
remaining provisions of this Agreement shall not be affected thereby and shall
remain valid and enforceable.

            Amendment

                                       4
<PAGE>

            This Agreement may only be amended, supplemented, otherwise
modified, restated or novated by a written agreement signed by the Borrower and
the Lender.

            Entire Agreement

            There are no representations, warranties, conditions, other
agreements or acknowledgements, whether direct or collateral, express or
implied, that form part of or affect this Agreement other than as expressed
herein or in the Credit Agreement.

            IN WITNESS WHEREOF the parties have executed this Agreement as of
the date first written above.

                                        _____________________________________

                                        By:
                                           _____________________________________

                                        By:
                                           _____________________________________

                                           _____________________________________

                                        By:
                                           _____________________________________

                                        By:
                                           _____________________________________

                                       5
<PAGE>

                                                                  CONFORMED COPY
                                                          AMENDMENTS 1 THROUGH 4

                                U.S. $200,000,000

                           FIVE-YEAR CREDIT AGREEMENT

                          Dated as of October 30, 2000

                                      Among

                               POLYONE CORPORATION
                                   as Borrower

                                       and

                        THE INITIAL LENDERS NAMED HEREIN

                               as Initial Lenders

                                       and

                               CITICORP USA, INC.

                             as Administrative Agent

                                       and

                           SALOMON SMITH BARNEY, INC.

                              as Sole Lead Arranger

                                       and

                 DEUTSCHE BANK SECURITIES INC. and BANK ONE, NA

                              as Syndication Agents

<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                   ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
<S>                                                                                                         <C>
SECTION 1.01. Certain Defined Terms.....................................................................     1
SECTION 1.02. Computation of Time Periods...............................................................    14
SECTION 1.03. Accounting Terms..........................................................................    14

                  ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES

SECTION 2.01. The Revolving Credit Advances.............................................................    14
SECTION 2.02. Making the Revolving Credit Advances......................................................    14
SECTION 2.03. The Competitive Bid Advances..............................................................    15
SECTION 2.04. Fees......................................................................................    19
SECTION 2.05. Termination or Reduction of the Commitments...............................................    19
SECTION 2.06. Repayment of Revolving Credit Advances....................................................    19
SECTION 2.07. Interest on Revolving Credit Advances.....................................................    20
SECTION 2.08. Interest Rate Determination...............................................................    20
SECTION 2.09. Optional Conversion of Revolving Credit Advances..........................................    21
SECTION 2.10. Prepayments of Revolving Credit Advances..................................................    22
SECTION 2.11. Increased Costs...........................................................................    22
SECTION 2.12. Illegality................................................................................    23
SECTION 2.13. Payments and Computations.................................................................    23
SECTION 2.14. Taxes.....................................................................................    24
SECTION 2.15. Sharing of Payments, Etc..................................................................    26
SECTION 2.16. Evidence of Debt..........................................................................    26
SECTION 2.17. Use of Proceeds...........................................................................    26

               ARTICLE III CONDITIONS TO EFFECTIVENESS AND LENDING

SECTION 3.01. Conditions Precedent to Effectiveness of Sections 2.01 and 2.03...........................    26
SECTION 3.02. Initial Loan to Each Designated Subsidiary................................................    28
SECTION 3.03. Conditions Precedent to Each Revolving Credit Borrowing and Extension Date................    29
SECTION 3.04. Conditions Precedent to Each Competitive Bid Borrowing....................................    29
SECTION 3.05. Determinations Under Section 3.01.........................................................    29

                    ARTICLE IV REPRESENTATIONS AND WARRANTIES

SECTION 4.01. Representations and Warranties of the Company.............................................    30

                       ARTICLE V COVENANTS OF THE COMPANY

SECTION 5.01. Affirmative Covenants.....................................................................    32
SECTION 5.02. Negative Covenants........................................................................    37
SECTION 5.03. Financial Covenants.......................................................................    40

                          ARTICLE VI EVENTS OF DEFAULT

SECTION 6.01. Events of Default.........................................................................    41

                              ARTICLE VII GUARANTEE

SECTION 7.01. Unconditional Guarantee...................................................................    43
</TABLE>

<PAGE>

<TABLE>
<S>                                                                                                         <C>
SECTION 7.02. Guaranty Absolute.........................................................................    43
SECTION 7.03. Waivers...................................................................................    44
SECTION 7.04. Continuing Guaranty; Assignments..........................................................    44
SECTION 7.05. Subrogation...............................................................................    44

                             ARTICLE VIII THE AGENT

SECTION 8.01. Authorization and Action..................................................................    45
SECTION 8.02. Agent's Reliance, Etc.....................................................................    45
SECTION 8.03. Citicorp and Affiliates...................................................................    45
SECTION 8.04. Lender Credit Decision....................................................................    46
SECTION 8.05. Indemnification...........................................................................    46
SECTION 8.06. Successor Agent...........................................................................    46
SECTION 8.07. Local Agent; Sub-Agent....................................................................    46
SECTION 8.08. Other Agents..............................................................................    46

                            ARTICLE IX MISCELLANEOUS

SECTION 9.01. Amendments, Etc...........................................................................    47
SECTION 9.02. Notices, Etc..............................................................................    47
SECTION 9.03. No Waiver; Remedies.......................................................................    47
SECTION 9.04. Costs and Expenses........................................................................    47
SECTION 9.05. Right of Set-off..........................................................................    49
SECTION 9.06. Binding Effect............................................................................    49
SECTION 9.07. Assignments, Designations and Participations..............................................    49
SECTION 9.08. Confidentiality...........................................................................    52
SECTION 9.09. Designated Subsidiaries...................................................................    52
SECTION 9.10. Governing Law.............................................................................    53
SECTION 9.11. Execution in Counterparts.................................................................    53
SECTION 9.12. Currency Conversion for Judgments.........................................................    53
SECTION 9.13. Jurisdiction, Etc.........................................................................    53
SECTION 9.14. Substitution of Currency..................................................................    54
SECTION 9.15. Waiver of Jury Trial......................................................................    55
</TABLE>

                                       ii

<PAGE>

Schedules

Schedule I - List of Applicable Lending Offices

Schedule II - Other Obligations

Schedule III - Mortgaged Properties

Schedule 3.01(b) - Disclosed Litigation

Schedule 5.02(a) - Existing Liens

Schedule 5.02(j) - Existing Foreign Subsidiary Debt

Exhibits

Exhibit A-1 - Form of Revolving Credit Note

Exhibit A-2 - Form of Competitive Bid Note

Exhibit B-1 - Form of Notice of Revolving Credit Borrowing

Exhibit B-2 - Form of Notice of Competitive Bid Borrowing

Exhibit C - Form of Assignment and Acceptance

Exhibit D - Form of Designation Agreement

Exhibit E - Form of Designation Letter

Exhibit F-1 - Form of Opinion of Counsel for the Company

Exhibit F-2 - Form of Opinion of Counsel for the Company Relating to Mortgages

Exhibit G - Form of Opinion of Counsel for Designated Subsidiary

Exhibit H - Form of Acceptance Agreement

                                      iii

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00037-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00037-of-00352.parquet"}]]