Document:

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[LOGO NATIONAL CITY (R)]
LEASING CORPORATION

                        MASTER EQUIPMENT LEASE AGREEMENT
                        --------------------------------

                                                                       NO. 08321

This is a MASTER EQUIPMENT LEASE AGREEMENT between NATIONAL CITY LEASING
CORPORATION, a Kentucky corporation, whose principal office is located at 101
South Fifth Street, Louisville, Kentucky 40202 ("NATIONAL CITY") and COLD METAL
PRODUCTS, INC., a New York corporation whose principal office is located at 8526
South Avenue, Youngstown, Ohio 44514 ("LESSEE").

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1. LEASE. National City agrees to lease to Lessee and Lessee agrees to lease
from National City, subject to the terms and conditions set forth herein, the
items of personal property (the "EQUIPMENT") described in each Equipment
Schedule (a "SCHEDULE") executed and delivered by the parties hereto and
incorporating the terms of this Master Equipment Lease Agreement by reference
therein (the "LEASE"). The terms "AGREEMENT", "HEREOF", "HEREIN", and
"HEREUNDER", when used in this Lease, shall mean this Lease, each Schedule and
any schedule thereto. This Agreement constitutes an agreement of lease and
nothing herein contained shall be construed as conveying to Lessee any right,
title, or interest in the Equipment except as lessee only. The parties agree
that this Lease is a "FINANCE LEASE" as defined in Sec. 2A-103(g) of the Uniform
Commercial Code ("UCC"). Lessee acknowledges either (a) that Lessee has reviewed
and approved any written Supply Contract (as defined in UCC Sec. 2A-103(y))
covering the Equipment purchased from the Supplier (as defined in UCC
Sec. 2A-103(x)) thereof for lease to Lessee or (b) that National City has
informed or advised Lessee, in writing, either previously or by this Lease of
the following: (i) the identity of the Supplier; (ii) that Lessee may have
rights under the Supply Contract; and (iii) that Lessee may contact the Supplier
for a description of any such rights Lessee may have under the Supply Contract.

2. TERM; ACCEPTANCE; RENT; RETURN. The term of lease of each item of Equipment
shall commence on the date the Lessee accepts the Equipment (the "COMMENCEMENT
DATE") as evidenced by the Certificate of Delivery and Acceptance pertaining to
such Equipment and, unless earlier terminated pursuant to the provisions hereof,
shall continue for the term specified in each Schedule. Lessee's execution and
delivery of a Certificate of Delivery and Acceptance shall constitute Lessee's
irrevocable acceptance of the Equipment covered thereby for all purposes of this
Agreement. Lessee shall pay to National City (at National City's office
specified above, or as National City may otherwise designate), rent as specified
in each Schedule. Each date on which an installment of rent is payable is
hereinafter called a "RENT PAYMENT DATE". As to each Schedule, the first Rent
Payment Date shall be the Rent Payment Date set forth therein, with the
succeeding Rent Payment Dates as set forth therein. In addition, if applicable,
Lessee shall pay interim rent for the period between the Commencement Date and
the first Rent Payment Date, based on a 30-day month and the number of days
between the Commencement Date and the first Rent Payment Date. Lessee shall also
pay to National City, on demand, a late payment charge of 5% of each installment
of rent and any other amount owing hereunder which is not paid when due. Upon
the expiration or earlier termination of the term of lease of each item of
Equipment leased hereunder, Lessee shall at its expense return such item to
National City at such location as National City may designate, in the condition
required to be maintained by Section 7 hereof, provided that Lessee may elect an
alternative disposition of the Equipment pursuant to Section 20 hereof.

3. NO WARRANTIES. Lessee acknowledges that: National City is not the
manufacturer of the Equipment nor the manufacturer's agent nor a dealer therein;
and NATIONAL CITY HAS NOT MADE AND DOES NOT MAKE ANY REPRESENTATION OR WARRANTY
WHATSOEVER, EITHER EXPRESS OR IMPLIED, AS TO THE MERCHANTABILITY, FITNESS,
CONDITION, DESIGN OR OPERATION OF THE EQUIPMENT, ITS FITNESS FOR A PARTICULAR
PURPOSE, THE QUALITY OR CAPACITY OF THE MATERIALS IN THE EQUIPMENT OR
WORKMANSHIP IN THE EQUIPMENT, NOR ANY OTHER REPRESENTATION OR WARRANTY OF ANY
KIND WHATSOEVER. Lessee confirms that it has made (or will make) the selection
of each item of Equipment on the basis of its own judgment and expressly
disclaims reliance upon any statements, representations or warranties made by
National City. National City shall not be liable to Lessee for any matter
relating to the ordering, manufacture, purchase, delivery, assembly,
installation, testing, operation or expense of any kind caused by the Equipment.
National City shall not be liable for any consequential damages as that term is
used in UCC Sec. 2-719(3). National City hereby assigns to Lessee all rights
which National City has or may acquire against any manufacturer, supplier, or
contractor with respect to any warranty and representation relating to the
Equipment leased hereunder. Lessee acknowledges that Lessee has reviewed and
approved the Purchase Order, Supply Contract or Purchase Agreement covering the
Equipment purchased from the vendor or Supplier thereof for lease to Lessee.

4. EQUIPMENT TO REMAIN PERSONAL PROPERTY; LOCATION; IDENTIFICATION; INSPECTION.
Lessee represents that the Equipment shall be and at all times remain separately
identifiable personal property. Lessee shall, at its expense, take such action
as may be necessary to prevent any third party from acquiring any right to or
interest in the Equipment by virtue of the Equipment being deemed to be real
property or a part of other personal property and shall indemnify National City
against any loss which it may sustain by reason of Lessee's failure to do so.
Except for maintenance or repairs permitted or required in Section 7 hereof, the
Equipment may not be removed from the location specified in the Schedule
pertaining thereto without National City's prior written consent and Lessee's
provision of reasonable documentation as requested by National City. If
requested by National City, Lessee shall attach to and maintain on the Equipment
a conspicuous plate or marking disclosing ownership therein. National City or
its representatives may, at reasonable times, inspect the Equipment.

5. TAXES; INDEMNITY. Lessee agrees to pay, and to indemnify and hold National
City harmless from, all license fees, assessments, and sales, use, property,
excise and other taxes and charges (other than federal income taxes and taxes
imposed by any other jurisdiction which are based on, or measured by, the net
income of National City) imposed upon or with respect to (a) the Equipment or
any part thereof arising out of or in connection with the shipment of Equipment
or the possession, ownership, use or operation thereof, or (b) this Agreement or
the consummation of the transactions herein contemplated. National City shall
prepare and file any and all returns required in connection with the obligations
which Lessee has assumed under this section, except such filings as National
City may, at its option, direct

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[LOGO NATIONAL CITY (R)]
LEASING CORPORATION

Lessee to make. Each party shall upon request furnish the other a copy of any
such filing made or governmental invoice received covering such obligations.
Lessee further agrees to assume liability for, and to indemnify and hold
National City harmless against, all claims, costs, expenses, damages and
liabilities arising from or pertaining to the manufacture, assembly,
installation, ownership, use, possession and operation of the Equipment,
including, without limitation, latent and other defects, whether or not
discoverable by Lessee or any other person, any expense, liability or loss
directly or indirectly related to or arising out of any injury to any person or
tangible or intangible property, whether arising from negligence or under any
theory of strict or absolute liability or any other cause, or any claim for
patent or copyright infringement, together with all legal fees and expenses
reasonably incurred by National City in connection with any liability asserted
against it, whether groundless or otherwise. Lessee shall, and shall cause all
other persons, if any, operating or in possession of the Equipment, to comply at
all times and in all respects with all laws and regulations (whether federal,
state, or local and whether statutory, administrative, judicial, or other) and
with every lawful governmental order (whether administrative or judicial)
pertaining to the operation and use of the Equipment and, without limiting the
generality of the foregoing, will, and will cause each such person to, (i)
operate, and use the Equipment in compliance with all Environmental Laws and
handle all Hazardous Materials in compliance therewith, and (ii) comply with and
keep in full effect each approval, certification, license, permit, or other
authorization required by any Environmental Law for the conduct of any activity
upon or within the Equipment, and will indemnify National City from and against
any and all liabilities and any and all fees, costs and expenses arising out of
use of the Equipment.

"ENVIRONMENTAL LAW" means the Clean Air Act (42 USC Sec. 7401 et seq.),
Comprehensive Environmental Response, Compensation, and Liability Act (42 USC
Sec. 9601 et seq.), the Hazardous Material Transportation Act (49 USC Sec. 1801
et seq.), the Resource Conservation and Recovery Act (42 USC Sec. 6901 et seq.),
the Federal Water Pollution Control Act (33 USC Sec. 1251 et seq.), the Toxic
Substances Control Act (15 USC Sec. 2601 et seq.) and the Occupational Safety
and Health Act (29 USC Sec. 651 et seq.), as such laws have been or hereafter
may be amended, and the regulations promulgated pursuant thereto, and any and
all similar present or future federal, state, or local laws and the regulations
promulgated pursuant thereto and "HAZARDOUS MATERIAL" means any chemical,
material, or substance which could be detrimental to animal health, human
health, vegetation, the environment or the Equipment which is, or the disposal,
manufacture, release, storage or transport of which is, or exposure to which is,
prohibited, restricted, or otherwise regulated under any Environmental Law;

The agreements and indemnities contained in this section shall survive the
expiration or earlier termination of this Agreement.

6.  ASSIGNMENTS; SUBLETTING; ENCUMBRANCES.
(a) LESSEE WILL NOT WITHOUT NATIONAL CITY'S PRIOR WRITTEN CONSENT, ASSIGN OR
TRANSFER THIS LEASE OR ANY INTEREST HEREIN, OR SUBLEASE OR RELINQUISH POSSESSION
OF, OR CREATE OR SUFFER TO EXIST ANY LIEN, MORTGAGE, SECURITY INTEREST OR
ENCUMBRANCE UPON THE EQUIPMENT.

(b) NATIONAL CITY MAY ASSIGN OR TRANSFER THIS LEASE OR NATIONAL CITY'S INTEREST
IN THE EQUIPMENT WITHOUT NOTICE TO LESSEE. ANY ASSIGNEE OF NATIONAL CITY SHALL
HAVE ALL OF THE RIGHTS, BUT NONE OF THE OBLIGATIONS, OF NATIONAL CITY UNDER THIS
LEASE AND LESSEE AGREES THAT IT WILL NOT ASSERT AGAINST ANY ASSIGNEE OF NATIONAL
CITY ANY DEFENSE, COUNTERCLAIM, OR OFFSET THAT LESSEE MAY HAVE AGAINST NATIONAL
CITY(LESSEE RESERVES ITS RIGHTS TO HAVE RECOURSE DIRECTLY AGAINST NATIONAL CITY
ON ACCOUNT OF SUCH DEFENSE, COUNTERCLAIM OR OFFSET). No assignment shall relieve
National City of its obligations, and no assignee shall be required to perform
National City's obligations under this Agreement or under any Schedule except as
set forth herein, it being the intent of National City to assign the benefits
but not the obligations hereunder. Lessee acknowledges that any assignment or
transfer by National City shall not materially change Lessee's duties or
obligations under this Lease nor increase the burdens or risks imposed on
Lessee.

7. USE; REPAIRS; ETC. Lessee will cause the Equipment to be operated in
accordance with the manufacturer's or supplier's instructions or manuals by
competent and duly qualified personnel only and in compliance with all laws and
regulations and the insurance policies required to be maintained hereunder.
Lessee shall, at its own cost and expense, enter into and keep in force during
the term hereof a maintenance agreement with the manufacturer of the Equipment
or such other maintenance vendor as may be approved in writing by National City,
to maintain, service and repair the Equipment so as to keep it in as good
operating condition as it was when it first became subject to this Lease,
ordinary wear and tear excepted. National City shall have the right to approve
such maintenance agreement (which approval shall not be unreasonably withheld)
and shall be furnished with an executed copy thereof. Lessee shall, at its own
cost and expense, to the extent not covered by the aforesaid maintenance
agreement, maintain the Equipment in good operating condition. Replacement parts
shall be free and clear of any mortgage, lien, charge, or encumbrance (and title
thereto shall vest in National City immediately upon installation, attachment or
incorporation of the same in, on or into such Unit). Upon termination of this
Lease, at the expiration of the Lease Term or otherwise, the Equipment shall be
returned to National City in as good operating condition as when it became
subject to this Lease, ordinary wear and tear excepted, and in such condition as
to be acceptable to the manufacturer for regular maintenance without any
remedial maintenance. Lessee will not alter or add to the Equipment without
National City's prior written consent. Lessee will remove any attachments,
alterations or accessories and return the Equipment to its original condition,
normal wear and tear excepted, at the termination of this Lease if National City
shall so demand. In the absence of such demand, all attachments, alterations or
accessories shall become part of the Equipment at the time of their attachment
thereto.

8. LOSS; DAMAGE. If National City determines that any Equipment is lost, stolen,
destroyed, damaged beyond repair or rendered permanently unfit for normal use
for any reason, or in the event of any condemnation, confiscation, seizure, or
requisition of title to or use of such Equipment (a "CASUALTY OCCURRENCE"),
Lessee will, at the option of National City, either (a) replace the same with
Equipment in good repair or (b) promptly pay to National City an amount equal to
the Rent in respect of the Equipment suffering a Casualty Occurrence due and
payable on the first Rent Payment Date following the date of the Casualty
Occurrence, plus a sum equal to the Stipulated Loss Value of such Equipment
determined as of the Rent Payment Date next following the date of the Casualty
Occurrence as set out in the appropriate Schedule, less any physical damage
insurance proceeds paid to National City as a result of said Casualty
Occurrence.

As of the Rent Payment Date next following the Casualty Occurrence, the Rent for
such Equipment shall cease to accrue and the term of this Lease as to such
Equipment shall terminate and (except in the case of loss, theft or complete
destruction of the Equipment) National City shall be entitled to recover
possession of the Equipment. National City hereby appoints Lessee its agent to
dispose of any Equipment

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[LOGO NATIONAL CITY (R)]
LEASING CORPORATION

suffering a Casualty Occurrence at the best price obtainable on an "AS IS, WHERE
IS" basis without recourse or warranties of any kind. Provided that National
City has been paid the Stipulated Loss Value and all Rent and other sums due and
owing as to such Equipment, Lessee shall be entitled to the net proceeds of such
sale to the extent such proceeds do not exceed the Stipulated Loss Value of such
Equipment. Any excess shall be paid to National City .

9. INSURANCE. Lessee shall maintain at all times, at Lessee's expense, insurance
as specified in the applicable Schedule, including, but not limited to: (a) "all
risk" or broad form property insurance, as well as flood, earthquake and boiler
and machinery coverage, where applicable, as specified in the applicable
Schedule or full replacement value, whichever is greater, naming National City
as the loss payee; (b) comprehensive general liability insurance as specified in
the applicable Schedule, including coverage for products/completed operations,
broad contractor liability, broad contractual liability, fire legal liability
and personal injury, naming National City as an additional insured as respects
its interests under this Agreement; and (c) umbrella liability coverage as
provided in the applicable Schedule.

Lessee agrees that the insurance coverage required hereunder shall be placed
with insurers with at least an "A/IX" rating from A. M. Best or with such
insurers as shall be satisfactory to National City.

Each insurance policy shall contain a clause requiring the insurer to give to
National City at least 30-days prior written notice of any cancellation or
non-renewal of any policy, with 10 days prior written notice if cancellation is
due to non-payment of premiums and shall provide that no act, omission or breach
of warranty by Lessee under the terms of the policy shall give rise to any
defense against payment of the insurance proceeds to National City. Lessee shall
furnish to National City a certificate or other evidence satisfactory to
National City that such insurance coverage is in effect on the Commencement Date
of each Schedule (or, if progress payments and/or interim funding is provided
hereunder, on the date the applicable Progress Payment and Interim Funding Rider
is signed by Lessee), on an annual basis thereafter, provided, however, that
National City shall be under no duty to ascertain as to the existence or
adequacy of such insurance. National City makes no representation that the
minimum insurance coverage requirements in a Schedule will be adequate at all
times to satisfy Lessee's obligations hereunder. Lessee is fully responsible for
payment of all deductibles under such insurance polices and shall indemnify and
hold National City harmless from any deductible related to such insurance
polices. Lessee has the responsibility to provide additional insurance coverage
to maintain coverage hereunder in an amount adequate to fulfill its obligation
hereunder and is consistent with insurance coverage for similar risks in
Lessee's industry or line of business.

10. NONCANCELLABLE AGREEMENT; LESSEE'S OBLIGATIONS UNCONDITIONAL. This Agreement
cannot be canceled or terminated except as expressly provided herein. Lessee
agrees that its obligation to pay all rent and other amounts payable hereunder
and to perform its duties with respect hereto shall be absolute and
unconditional under any and all circumstances, including, without limitation,
the following: (a) any setoff, counterclaim, recoupment, defense or other right
which Lessee may have against National City, the manufacturer, or supplier of
any Equipment or anyone else for any reason whatsoever; (b) any defect in the
condition, design, title, operation or fitness for use, or any damage to or loss
of any Equipment; (c) any insolvency, reorganization or similar proceedings by
or against Lessee; or (d) any other event or circumstances whatsoever, whether
or not similar to the foregoing.

Each rent or other payment made by Lessee hereunder shall be final and Lessee
will not seek to recover all or any part of such payment from National City for
any reason whatsoever.

11.  EVENTS OF DEFAULT AND REMEDIES.
(a) An Event of Default shall occur hereunder if: (i) Lessee shall fail to make
any payment of rent or other amount owing hereunder when due and such failure
shall continue for a period of 10 days; (ii) Lessee shall fail to perform or
observe any other covenant, agreement or condition hereunder within 30 days of
written notice thereof being given by National City to Lessee, or if more than
30 days are reasonably required, Lessee fails to commence to diligently perform
such obligations within such 30 days; (iii) Lessee shall make any representation
or warranty to National City herein or in any document or certificate furnished
National City in connection herewith which shall prove to be incorrect at the
time made and on the date of any Schedule entered into hereunder; (iv) Lessee or
any guarantor of Lessee's obligations hereunder (a "GUARANTOR") shall become
insolvent or make an assignment for the benefit of creditors or consent to the
appointment of a trustee or receiver, (v) a trustee or receiver shall be
appointed for Lessee or a Guarantor or for a substantial part of its property or
for the Equipment, or reorganization, arrangement, insolvency, dissolution or
liquidation proceedings shall be instituted by or against Lessee or a Guarantor
and such appointment or proceedings are not terminated after 60 days; (vi)
Lessee or a Guarantor liquidates, dissolves, or enters into any consolidation,
merger, or other combination (unless Lessee is the surviving entity after such
consolidation or merger), or sells, leases or disposes of a substantial portion
of its business or assets, unless (x) the entity formed by the consolidation, or
into which Lessee or a Guarantor is merged or the person or entity that acquires
all or substantially all of Lessee's or a Guarantor's assets shall be organized
under the laws of the United States or any state thereof and (y) National City
is reasonably satisfied as to the creditworthiness of such person or entity and
(z) not less than 30 days prior thereto such person or entity assumes all the
obligations of Lessee or a Guarantor hereunder pursuant to an assignment and
assumption agreement in form and substance satisfactory to National City; (vii)
the current holders of 51% of the outstanding capital stock of a Lessee or a
Guarantor that is not a publicly traded corporation shall cease to be the
shareholders of Lessee or a Guarantor or cease to have the unconditional right
to elect a majority of Lessee's or a Guarantor's board of directors (unless
Lessee or a Guarantor shall have provided 60-days' prior written notice to
National City of the proposed disposition of stock and National City shall have
consented thereto in writing); (viii) an individual Guarantor shall become
legally incapacitated or die; (ix) Lessee and/or a Guarantor shall suffer an
adverse material change in its financial condition from the date hereof, and as
a result thereof National City deems itself or any of its Equipment to be
insecure; or (x) Lessee and/or a Guarantor shall be in default under any other
agreement at any time executed with National City or any affiliate or subsidiary
of National City Corporation.

(b) If an Event of Default occurs hereunder then National City may declare this
Agreement to be in default and may do one or more of the following with respect
to any or all of the Equipment as National City in its sole discretion may
elect, to the extent permitted by, and subject to compliance with any mandatory
requirements of applicable law then in effect: (i) terminate this Lease
effective immediately; or (ii) demand that Lessee, and Lessee shall at its
expense upon such demand, return the Equipment promptly to National City in the
manner and condition required by and otherwise in accordance with the provisions
of Section 2 hereof, as if the Equipment were being returned at the expiration
of its term of lease hereunder, or National City, at its option, may enter upon
the premises where the Equipment is located and take

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[LOGO NATIONAL CITY (R)]
LEASING CORPORATION

possession of and remove the same by summary proceedings or otherwise, all
without liability to Lessee for damage to property or otherwise; or (iii) take
possession of any or all Equipment and remove the same without liability for
injuries suffered through or loss caused by such repossession; LESSEE WAIVES ANY
AND ALL RIGHTS TO NOTICE AND JUDICIAL HEARING WITH RESPECT TO THE REPOSSESSION
OR ATTACHMENT OF THE EQUIPMENT BY NATIONAL CITY IN THE EVENT OF DEFAULT
HEREUNDER BY LESSEE; in the event National City proceeds pursuant to this
subsection (iii), National City may sell any or all Equipment at public or
private sale as is commercially reasonable given the existing conditions on an
"AS IS, WHERE IS" basis without recourse or warranties of any kind, or otherwise
hold, use, operate, or keep idle such Equipment, as National City in its sole
discretion determines is commercially reasonable free and clear of all rights of
Lessee; or (iv) whether or not National City has exercised any other right
hereunder, by written notice to Lessee, cause Lessee to pay National City (as
liquidated damages for loss of a bargain and not as a penalty) on the date
specified in such notice an amount equal to the Rent due and payable on the
first Rent Payment Date following the date of the notice of Lease termination
plus a sum equal to the appropriate Stipulated Loss Value determined as of the
Rent Payment Date next following the date of the notice of Lease termination as
set out in the applicable Schedule; or (v) National City may exercise any other
right or remedy which may be available to it under applicable law or proceed by
appropriate court action to enforce the terms hereof or to recover damages for
the breach hereof.

In addition, Lessee shall pay National City all costs and expenses incurred by
National City as a result of Lessee's default hereunder or the termination
hereof, including, without limitation, reasonable attorney's fees and costs
arising out of repossession and disposal of the Equipment.

Provided Lessee has previously paid to National City the sum of the Stipulated
Loss Value, Rent due and owing and other costs and expenses incurred pursuant
hereto, Lessee shall be entitled to the net proceeds of any such sale,
disposition or re-lease of the Equipment to the extent they do not exceed the
Stipulated Loss Value. Any excess shall be retained by National City. To the
extent the Equipment is re-leased by National City, Lessee shall be credited the
present value of the lease rental stream at the discount rate of National City
Prime as of the date the re-lease is agreed to between the parties. Furthermore,
to the extent the parties to this Lease need to determine the present value of
any moneys due under the Lease, the parties agree that the discount rate shall
be National City Prime.

"NATIONAL CITY PRIME" means the fluctuating rate of interest which is publicly
announced from time to time by National City Bank, Cleveland, Ohio, at its
principal place of business as being its "prime rate" or "base rate" thereafter
in effect, with each change in the Prime Rate automatically, immediately and
without notice changing the fluctuating interest rate thereafter applicable
hereunder. The Prime Rate is not necessarily the lowest rate of interest then
available from National City Bank on fluctuating rate loans

In addition, Lessee shall continue to be liable for all indemnities under this
Lease and for all reasonable attorney fees and other costs and expenses
resulting from the termination hereof and/or the exercise of National City's
remedies, including placing any Equipment in the condition required by Section 7
hereof. Except as expressly provided above, no remedy referred to in this
section is exclusive, but each shall be cumulative and in addition to any other
remedy referred to herein or otherwise available to National City at law or
equity; and the exercise or beginning of exercise by National City of any one or
more of such remedies shall not preclude the simultaneous or later exercise by
National City of any other remedies. No express or implied waiver by National
City of an Event of Default shall constitute a waiver of any other or subsequent
Event of Default. To the extent permitted by law, Lessee waives any rights now
or hereafter conferred by statute or otherwise which may require National City
to sell, re-lease or otherwise use the Equipment in mitigation of National
City's damages or which may otherwise limit or modify any of National City's
rights or remedies.

12. INDEMNIFICATION FOR TAX BENEFITS.

(a) National City, as the owner of the Equipment, shall be entitled to such
deductions, credits and other benefits as are provided by the Internal Revenue
Code of 1986, as amended, (hereinafter called the "CODE") to an owner of
property.

(b) Lessee agrees that neither it nor any entity controlled by it, in control of
it, or under common control with it, directly or indirectly, will at any time
take any action or file any returns or other documents inconsistent with the
foregoing and that each of such corporations will file such returns, take such
action and execute such documents as may be reasonable and necessary to
facilitate accomplishment of the intent thereof. Lessee agrees to copy or make
available for inspection and copying by National City such records as will
enable National City to determine whether it is entitled to the benefit of any
amortization or depreciation deduction which may be available from time to time
with respect to the Equipment.

(c) If National City, under any circumstances or for any reason whatsoever,
except for acts of National City or future changes in the Code, shall lose,
shall not have or shall lose the right to claim, or there shall be disallowed or
recaptured all or any portion of the federal tax depreciation deductions with
respect to any item of Equipment based on depreciation or National City's full
cost of such item of Equipment and computed on the basis of a method of
depreciation provided by the Code as National City in its complete discretion
may select, then Lessee agrees to pay National City upon demand an amount which,
after deduction of all taxes required to be paid by National City in respect to
the receipt thereof under the laws of any federal, state or local government or
taxing authority of the United States or of any taxing authority or governmental
authority of any foreign country, shall be equal to the sum of (i) an amount
equal to the additional income taxes paid or payable by National City in
consequence of the failure to obtain the benefit of a depreciation deduction,
and (ii) any interest and/or penalty which may be assessed in connection with
any of the foregoing.

(d) The provisions of this Section 12 shall survive the expiration or earlier
termination of this Agreement.

13. NATIONAL CITY'S RIGHTS TO PERFORM. If Lessee fails to make any payment
required to be made hereunder or fails to comply with any other agreements
contained herein, National City may make such payment or comply with such
agreement, and the amount of such payment and the reasonable expenses of
National City incurred in connection with such payment or compliance, shall be
payable by Lessee on demand.

14. FURTHER ASSURANCES. Lessee will, at its expense, promptly and duly execute
and deliver to National City such further documents and assurances and take such
further action as National City may from time to time request in order to more
effectively carry out the intent and purpose of this Agreement so as to
establish and protect the rights, interest and remedies intended to be created
in favor of National City hereunder, including, without limitation, the
execution

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[LOGO NATIONAL CITY (R)]
LEASING CORPORATION

and filing of financing statements and continuation statements with respect to
the Equipment and this Agreement. Lessee authorizes National City or its agents
or assigns to effect any such filing (including signing any financing statements
in the name of Lessee with the same force and effect as if signed by Lessee or
the filing of any financing statements without the signature of Lessee, if
permitted in the relevant jurisdiction) and National City's expenses with
respect thereto shall be payable by Lessee on demand.

15. NOTICES. All notices and other communications required to be given to any
party hereunder shall be in writing and delivered by a recognized overnight
courier service or mailed by regular mail to such party at the address set forth
above or at such other address as it may designate to other parties. All
communications mailed by regular mail shall be assumed to arrive within 3
business days after the postmarked date.

16. MISCELLANEOUS. Any provision of this Agreement which is unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such unenforceability without invalidating the remaining provisions hereof, and
any such unenforceability in any jurisdiction shall not render unenforceable
such provision in any other jurisdiction. To the extent permitted by applicable
law, Lessee waives (a) any provision of law which renders any provision hereof
unenforceable in any respect; (b) any and all rights and remedies conferred upon
a Lessee by Article 2A of the UCC and any rights conferred by statute or
otherwise that may limit or modify National City's rights as described in this
Agreement.

Provided the Lessee is not in default under any provision of this Lease,
National City shall not interfere with Lessee's quiet enjoyment of the use of
the Equipment pursuant to the terms of this Agreement and National City shall
defend and protect such quiet enjoyment against all persons claiming by, through
or under National City. This Agreement and the provisions hereof shall inure to
the benefit of National City and its successors and assigns, and shall be
binding on and inure to the benefit of Lessee and its successors and assigns.

17. CONDITIONS PRECEDENT. The obligation of National City contained in Section 1
hereof shall be subject to the following conditions precedent: (a) there shall
have occurred no material adverse change in the business or the financial
condition of Lessee from the date hereof until the Commencement Date of any
Schedule; (b) Lessee shall have furnished National City with a certificate or
other evidence satisfactory to National City that insurance coverage as required
by Section 9 hereof is in effect as to the item of Equipment desired to be
leased; (c) upon the request of National City, Lessee shall furnish National
City opinions of counsel in form and substance acceptable to National City; (d)
unless specifically waived by National City, Lessee shall have furnished
National City waivers, in form and substance acceptable to National City, of all
rights in or to Equipment of any landlord or mortgagee of any real property upon
which the Equipment is or is to be situated; and (e) all other instruments and
legal and corporate proceedings in connection with the transactions contemplated
herein shall be satisfactory in form and substance to National City, and counsel
to National City shall have received copies of all documents which it may have
requested in connection therewith.

If any of the above conditions is not satisfied at the time Lessee submits any
Schedule, National City shall have no obligation under this Agreement to lease
the items of personal property covered thereby to Lessee.

18. FINANCIALS. Lessee agrees that for so long as any item of Equipment shall be
leased under this Agreement, Lessee will deliver or cause to be delivered to
National City (a) as soon as practicable, and in any event within 60 days after
the end of each quarterly period (other than the fourth quarterly period) for
each fiscal year of Lessee, the balance sheet of Lessee as of the end of such
quarterly period together with the related statements of income and expenses for
such quarterly period all in reasonable detail prepared in accordance with
generally accepted accounting principles consistently applied throughout the
period involved and certified by Lessee's chief financial officer; and (b) as
soon as practicable, and in any event within 120 days after the close of each
fiscal year of Lessee, the audited balance sheet of Lessee as of the end of such
fiscal year together with related statements of income and surplus for such
fiscal year all in reasonable detail, prepared in accordance with generally
accepted accounting principles consistently applied throughout the period
involved and certified by an independent public accountant acceptable to
National City.

19. REPRESENTATION, WARRANTIES AND COVENANTS. Lessee represents, warrants and
covenants that (a) if Lessee is a corporation, Lessee is duly organized and
validly existing in good standing under the laws of the state of its
incorporation and is duly qualified and licensed to do business as a foreign
corporation in good standing in those jurisdictions where such qualifications
are necessary to authorize Lessee to carry on its present business and
operations and to own its properties or to perform its obligations hereunder;
(b) if Lessee is a partnership, Lessee is duly organized and validly existing
under the partnership laws of its state of domicile and is duly authorized in
any foreign jurisdiction where such qualification is necessary to authorize
Lessee to carry on it present business and operations and to own its properties
and to perform its obligations hereunder; (c) if Lessee is a limited liability
company, Lessee is duly organized and validly existing under the laws of its
state of domicile and is duly authorized in any foreign jurisdiction where such
qualification is necessary to authorize Lessee to carry on it present business
and operations and to own its properties and to perform its obligations
hereunder; (d) Lessee has full power, authority and legal right to execute,
deliver and carry out as Lessee the terms and provisions of this Agreement and
any other documents in connection with this lease transaction; (e) if Lessee is
a corporation, Lessee's execution, delivery and performance of this Agreement
and the other documents and agreements referred to herein, and the performance
of its obligations under this Agreement have all been authorized by all
necessary corporate action, do not require the approval or consent of
stockholders, or of any trustee or holders of any indebtedness or obligation of
Lessee and will not violate any law, governmental rule, regulation or order
binding upon Lessee or any provision of any indenture, mortgage, contract or
other agreement to which Lessee is a party or by which it is bound or to which
it is subject, and will not violate any provision of the Certificate of
Incorporation, By-laws or any preferred stock agreement of Lessee; (f) if Lessee
is a partnership, Lessee's execution, delivery and performance of this Agreement
and the other documents and agreements referred to herein, and the performance
of its obligations under this Agreement have all been authorized by all
necessary partnership actions; (g) if Lessee is a limited liability company,
Lessee's execution, delivery and performance of this Agreement and the other
documents and agreements referred to herein, and the performance of its
obligations under this Agreement have all been authorized by all necessary
member action; (h) there are no pending or threatened investigations, actions or
proceedings before any court or administrative agency or other tribunal body,
which seek to question or set aside any of the transactions contemplated by this
Agreement, or which, if adversely determined, would materially affect the
condition, business or operation of Lessee; (i) Lessee is not in default in any
material manner in the payment or performance of any of its obligations or in
the

                                       5

<PAGE>   6

[LOGO NATIONAL CITY (R)]
LEASING CORPORATION

performance of any contract, agreement or other instrument to which it is a
party or by which it or any of its assets may be bound; (j) the balance sheet of
Lessee as of the end of its most recent fiscal year and the related profit and
loss statement of Lessee for the fiscal year ended on said date, including the
related schedules and notes, together with the report of an independent
certified public accountant, heretofore delivered to National City, are all true
and correct and present fairly (x) the financial position of Lessee as at the
date of said balance sheet and (y) the results of the operations of Lessee for
said fiscal year; (k) all proceedings required to be taken by Lessee to
authorize the lease of the Equipment from National City and to protect National
City's interest in such Equipment, free and clear of all liens and encumbrances
whatsoever, have been taken; (l) Lessee has no significant liabilities
(contingent or otherwise) which are not disclosed by or reserved against the
financial statements referred to in (j) above; (m) all the financial statements
referred to in (j) above have been prepared in accordance with generally
accepted accounting principles and practices applied on a basis consistently
maintained throughout the period involved; (n) there has been no change which
would have a material adverse effect on the business or financial condition of
Lessee from that set forth in the balance sheet referred to in (j) above; (o) no
authorization, consent, approval, license, exemption of or filing or
registration with court, governmental unit or department, commission, board,
bureau, agency, instrumentality or the like is required or necessary for the
valid execution and delivery of the Agreement, any bill of sale and the other
documents and agreements referred to herein; (p) this Master Lease Agreement,
the Schedules and any accompanying documents, having been duly authorized,
executed and delivered to National City, constitute legal, valid and binding
obligations of Lessee, enforceable against Lessee in accordance with the terms
thereof except as such terms may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditor's rights generally; and (q) the
Equipment is personal property and neither real property nor a fixture.

The foregoing representations, warranties and covenants shall be deemed to be
made on the date hereof and again on the date Lessee executes each Schedule.

20. OPTIONS. National City and Lessee hereby agree that so long as no Event of
Default shall have occurred and be continuing Lessee may have such options as
are set forth in the applicable Schedule.

21. CHOICE OF LAW. The rights and liabilities of the parties under this
Agreement and each Schedule shall be interpreted, enforced and governed in all
respects by the laws of State of Ohio. Lessee hereby consents and subjects
itself to the jurisdiction of every local, state and federal court within
State of Ohio, agrees that except as otherwise required by law, Lessee shall
never file or maintain any action or proceeding in connection with this
Agreement or any Schedule in any court outside State of Ohio, waives personal
service of any and all process in connection therewith and consents to the
service of such process upon Lessee in the manner provided in the Agreement
for giving notice. LESSEE HEREBY KNOWINGLY AND VOLUNTARILY WAIVES JURY TRIAL
IN RESPECT OF ANY ACTION OR PROCEEDING IN CONNECTION WITH THIS AGREEMENT OR
ANY SCHEDULE.

22. ATTORNEY'S FEES. If National City commences any action to enforce or define
any right or obligation of Lessee under this Agreement or any Schedule, Lessee
shall pay to National City all reasonable attorney's fees and all other legal
expenses (including for expert and other witnesses) for preparation,
negotiation, filing, maintenance, defense, settlement and appeal of litigation
paid or incurred by National City.

23. HEADINGS. The headings for the various sections of this Agreement are
intended solely for convenience of reference and are not intended nor shall they
be used to construe, explain, modify or place any meaning upon any provision
hereof.

24. MODIFICATION. Neither this Agreement nor any Schedule can be modified or
amended except by written agreement signed and currently dated by both
signatories hereto. Lessee's Initials: ________

25. COUNTERPARTS; ORIGINALS. The parties may execute this Agreement and any
Schedule in any number of counterparts. All such counterparts of this Agreement
shall constitute one Agreement. One copy of the Agreement and each Schedule
shall be designated as the "ORIGINAL" and all other copies shall be
"DUPLICATES". Only the "ORIGINAL" shall constitute chattel paper.

26. LESSEE'S ACKNOWLEDGMENT OF NO EXTRINSIC PROMISES. LESSEE AGREES THAT THERE
HAVE BEEN NO REPRESENTATIONS, AGREEMENTS, STATEMENTS, PROMISE, UNDERSTANDINGS OR
INDUCEMENTS (COLLECTIVELY IN THIS SECTION "PROMISES") MADE TO LESSEE BY OR ON
BEHALF OF NATIONAL CITY OR ANY THIRD PERSON IN CONNECTION WITH THIS AGREEMENT,
ANY SCHEDULE, ANY EQUIPMENT LEASED HEREUNDER, OR ANY PRESENT OR FUTURE
TRANSACTION OF WHICH THIS AGREEMENT AND/OR ANY SCHEDULE IS OR BECOMES A PART
OTHER THAN THOSE PROMISES, IF ANY, EXPRESSLY IN WORDS MADE IN THIS AGREEMENT AND
EACH SCHEDULE.

27. ENTIRE AGREEMENT. THIS AGREEMENT IS AN INTEGRATION AND EACH SCHEDULE IS AN
INTEGRATION AND RESPECTIVELY THE ENTIRE AGREEMENT BETWEEN THE PARTIES RELATING
TO THE SUBJECT MATTER OF EACH TRANSACTION EMBRACED THEREBY. ALL AGREEMENTS,
REPRESENTATIONS, PROMISES, INDUCEMENTS, STATEMENTS AND UNDERSTANDINGS, PRIOR TO
AND CONTEMPORANEOUS WITH THIS AGREEMENT AND PRIOR TO AND CONTEMPORANEOUS WITH
EACH SCHEDULE, WRITTEN OR ORAL, BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT
MATTER OF EACH SUCH TRANSACTION, IF ANY, ARE AND EACH IS SUPERSEDED BY THIS
AGREEMENT AND BY EACH SCHEDULE AS IT IS EXECUTED.

--------------------------------------------------------------------------------
                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
                            [SIGNATURE PAGE FOLLOWS]
--------------------------------------------------------------------------------

                                       6

<PAGE>   7

[LOGO NATIONAL CITY (R)]
LEASING CORPORATION

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

Executed as of the 30th day of December, 1999.

By execution hereof, the signer hereby certifies that he/she has read this
Agreement and that he/she is duly authorized to execute this Master Equipment
Lease Agreement on behalf of the Lessee.

COLD METAL PRODUCTS,INC.
(a New York corporation)

By:    /s/ Joseph C. Horvath
       ---------------------

Title: Chief Financial Officer
       -----------------------

NATIONAL CITY LEASING CORPORATION
(a Kentucky corporation)

By:    /s/ Mary L. Scott
       -----------------

Title: Vice President
       --------------

                                       7
<PAGE>   8

                          EQUIPMENT SCHEDULE NO. 00001

                             DATED DECEMBER 30, 1999
                                   -----------------
                                       TO
          MASTER EQUIPMENT LEASE AGREEMENT NO. 08321 (THE "AGREEMENT")
                             DATED DECEMBER 30, 1999
                                   -----------------
                                 BY AND BETWEEN
               NATIONAL CITY LEASING CORPORATION ("NATIONAL CITY")
                                       AND
                     COLD METAL PRODUCTS, INC. ("LESSEE").

THIS EQUIPMENT SCHEDULE (the "SCHEDULE") is executed and delivered by National
City and Lessee, pursuant to and in accordance with the Agreement, including
defined terms used herein.

A.  EQUIPMENT. The Equipment covered by this Schedule consists of the following
    items:

    QUANTITY      MANUFACTURER/MODEL        DESCRIPTION        SERIAL #
    --------      ------------------        -----------        --------

    ONE (1)       ALCOS 52" X .250" X 50,000 LB SLITTING
                  LINE FURTHER DESCRIBED PER THE
                  ATTACHED SCHEDULE A

                                          SALES TAX
                                          TOTAL ACQUISITION COST: $2,100,000.00

                   NAME AND ADDRESS OF SUPPLIER OF EQUIPMENT:
                   ------------------------------------------
                   Alcos Machinery Inc.
                   190 Harry Walker Parkway
                   Newmarket, Ontario L3Y 784

B.  LOCATION. The Equipment shall be located at:

    2301 South Holt Road, Indianapolis, Indiana 46251

C.  TERM. The term of lease of said Equipment under the Agreement shall commence
    on the date Lessee accepts the Equipment as evidenced by the Certificate of
    Delivery and Acceptance pertaining to such Equipment and, unless terminated
    pursuant to the provisions of the Agreement, shall terminate on December 30,
    2006.

D.  RENT. As Rent for said Equipment throughout the terms of lease referred to
    in the preceding paragraph C, Lessee shall pay to National City in
    accordance with the terms of the Agreement, forty eight (48) consecutive
    rental payments of $24,453.33 each, immediately followed by forty eight (48)
    consecutive rental payments of $29,887.40. Rent payments shall be made
    monthly in advance. The first Rent Payment Date shall be December 30, 1999,
    with subsequent Rent payments commencing January 30, 2000, to and including
    November 30, 2006. Lessee shall pay Interim Rent in an amount equal to
    $815.11 multiplied by the number of days between the Commencement Date and
    the first Rent Payment Date. Lessee shall also pay the applicable sales tax
    or use tax as invoiced by National City.

<PAGE>   9

E.  INSURANCE. The insurance required pursuant to Section 9 of the Agreement
    shall include:

    1.  PHYSICAL DAMAGE TO ALL EQUIPMENT LEASED UNDER THIS SCHEDULE:
        a.  Minimum Scope of Coverage: All-Risk Property coverage, including
            flood, earthquake and boiler and machinery where applicable.
        b.  Minimum Dollar Limits of Coverage: Not less than the full
            replacement value of the Equipment at the time of payment to
            National City of insurance proceeds.
        c.  Maximum Deductibles: Not more than $10,000.00 per occurrence. Lessee
            is liable for all deductible amounts.

    2.  GENERAL LIABILITY:
        a.  MINIMUM SCOPE OF COVERAGE: Commercial general liability coverage,
            occurrence form, for bodily injury and property damage, including
            products and completed operations, broad contractor liability, broad
            contractual liability;, fire legal liability and personal injury.
        b.  Minimum Dollar Limits of Coverage: (i) $1,000,000.00 combined single
            limit per occurrence; (ii) $2,000,000.00 annual general aggregate.
        c.  Maximum Loss Retention: Not more than $10,000.00 per occurrence.
            Lessee is liable for all retention amounts.

    3.  UMBRELLA LIABILITY INSURANCE:
        a.  Minimum Scope of Coverage: General liability, employer's liability
            and automobile liability.
        b.  Minimum Dollar Limits of Coverage: $N/A per occurrence and annual
            aggregate.
        c.  Maximum Deductible/Retention: Not more than $N/A per occurrence.
            Lessee is liable for all deductible/retention amounts.

F.  TAX ASSUMPTIONS. National City has made certain tax assumptions pursuant to
    Section 12 of the Agreement, these assumptions are as follows:

        The Modified Accelerated Cost Recovery System (MACRS) property class for
        the Equipment is seven (7) years.

G.  OPTIONS. See Rider(s) I, II and III, attached hereto and by this reference
    made a part hereof.

H.  STIPULATED LOSS VALUE. The Stipulated Loss Value of the Equipment or any
    item of Equipment as of any particular computation date shall be determined
    on the basis of and be equal in amount to

    (a)     the value of the item of Equipment that would be obtained in a
            transaction between an informed and willing buyer and seller as of
            the date the Stipulated Loss Value is to be computed pursuant to the
            Agreement, net of all expenses and costs whatsoever which would be
            incidental to the reclamation of the Equipment and the sale thereof
            as determined (at Lessee's expense) by an independent appraiser
            selected by National City, but in no event shall be less than
            fifteen percent (15%) of the original cost of such item of
            Equipment, plus

    (b)     the present value of all future rental payments reserved in the
            Lease relating to such Equipment or item of Equipment and contracted
            to be paid over the unexpired term of the Lease discounted at a rate
            equal to National City Bank Prime as of the date of computation,
            plus

    (c)     interest at the rate of 18% per annum, or the highest rate permitted
            by law, on the total of (a) and (b) from the computation date until
            paid to National City.

                                       2
<PAGE>   10

I.  INCORPORATION OF AGREEMENT. All provisions of the Agreement are hereby
    incorporated by reference in this Equipment Schedule to the same extent as
    if fully set forth herein, and Lessee confirms that each representation and
    warranty made in Section 19 of the Agreement is true and correct as of the
    date hereof.

APPROVED AND AGREED to by the parties hereto as of the date set forth above.

COLD METAL PRODUCTS, INC.
(a New York corporation)
(The undersigned affirms that he/she is duly authorized to execute and deliver
this Equipment Schedule on behalf of Lessee.)

By:    /s/ Joseph C. Horvath
       ---------------------

Title: Chief Financial Officer
       -----------------------

NATIONAL CITY LEASING CORPORATION
(a Kentucky corporation)

By:    /s/ Mary L. Scott
       -----------------

Title: Vice President
       --------------

                                       3

<PAGE>   11

                            COLD METAL PRODUCTS, INC.
                            -------------------------

                                   SCHEDULE A
                                   ----------
                                       TO
                            MASTER LEASE NO. 08321-01

                                 EQUIPMENT LIST
                                 --------------

QUANTITY           DESCRIPTION
--------           -----------
1                  .52" X .250" X 50,000 LBS SLITTING LINE, COMPRISED OF
                   THE FOLLOWING:

1                  COIL STORAGE RACKS
                   MODEL # CSR-50K-52
                   S/N     CMP 825-19-7-99

1                  AUTOMATIC EDGE GUIDE CONTROL
                   MODEL #EG-52
                   S/N     CMP-829-19-7-99

1                  RETRACTABLE OUTBOARD SUPPORT MODEL # OBS-50K-52
                   S/N     CMP-827-19-7-99

1                  TRANSFER TURNSTILE MODEL # TT4-50K-52
                   S/N     CMP-854-19-7-99

1                  TRAVERSING DOWNENDER WITH PROGRAMMABLE DOWNENDER
                   S/N     CMP-855-19-7-99

1                  FLIPPER & CARRY OVER TABLE MODEL FT-52
                   S/N     CMP-835-19-7-99

1                  SLITTER ENTRY UNIT
                   WITH ALLIGATOR TYPE DRAG BOARD MODEL # EU-52-250
                   S/N     CMP-836-19-7-99

1                  SCRAP CHOPPER

2                  INTERCHANGEABLE RECOILER DRUMS AND MANDRELS
                   S/N     CMP-850/851-19-7-99

1                  DRIVE UNIT (PART OF STRIP TENSION UNIT)

1                  SLITTER DRIVE UNIT
                   S/N     CMP-837-19-7-99

1                  SLITTER STORAGE CAROUSEL (CENTRE PART ONLY)
                   MODEL SSCI-3-52
                   S/N     CMP-840-19-7-99

1                  SLITTER INJECTOR UNIT MODEL SIU-3-52
                   S/N     CMP-839-19-7-99

1                  SCRAP CONVEYOR SYSTEM

<PAGE>   12

                                                                          PAGE 2

                            COLD METAL PRODUCTS, INC.
                            -------------------------

                                   SCHEDULE A
                                   ----------
                                       TO
                            MASTER LEASE NO. 08321-01

                                 EQUIPMENT LIST
                                 --------------

QUANTITY           DESCRIPTION
--------           -----------
1                  RECOILER THREADING TABLE MODEL # RTT-52
                   S/N     CMP-849-19-7-99

1                  LOOP THREADING TABLE MODEL # LTT-52
                   S/N     CMP-843-19-7-99

1                  STRIP TENSION UNIT WITH STRIP OILING FACILITY MODEL
                   # STU-52-250
                   S/N     CMP-844-19-7-99

1                  EXIT CROP SHEAR MODEL #EXCS-52-250
                   S/N     CMP-848-19-7-99

1                  SLITTER STORAGE CAROUSEL
                   MODEL # SSCI-3-52
                   S/N     CMP-19-7-99

1                  PIT TYPE ENTRY COIL CAR (WITH DRIVEN SNUBBER ROLL FEATURE)
                   MODEL # PCC-50K-52
                   S/N     CMP-826-19-7-99

1                  DOUBLE TELESCOPING COIL PEELER
                   MODEL # DTCP-52-250
                   S/N     CMP-830-19-7-99

1                  ENTRY PINCH ROLL MODEL #EPR-52-250
                   S/N     CMP-831-19-7-99

1                  FLATTENER
                   MODEL 4F-52-250
                   S/N     CMP-832-19-7-99

1                  ENTRY CROP SHEAR
                   MODEL # ENCS-52-250
                   S/N     CMP-833-19-7-99

1                  RECOILER DRIVE UNIT

1                  SINGLE MANDREL UNCOILER WITH "PUP" COIL DISCHARGE UNIT AND
                   POLYURELHANE SADDLES
                   MODEL # SMU-50K-52
                   S/N     CMP-827-19-7-88

1                  ROTATING COIL CAR TABLE WITH 260 DEG CAPABILITY
                   MODEL # CCT-50K-52
                   S/N     CMP-853-19-7-99

1                  HYDRAULIC POWER UNIT

<PAGE>   13

                                                                          PAGE 3

                            COLD METAL PRODUCTS, INC.
                            -------------------------

                                   SCHEDULE A
                                   ----------
                                       TO
                            MASTER LEASE NO. 08321-01

                                 EQUIPMENT LIST
                                 --------------

QUANTITY           DESCRIPTION
--------           -----------
1                  TRIPLE SEPARATOR CADDY FOR TENSION UNIT
                   MODEL # STC-52
                   S/N     CMP-846-19-7-99

1                  SINGLE SEPARATOR CADDY FOR TENSION UNIT
                   MODEL #RTC-52
                   S/N     CMP-847-19-7-99

2                  INTERCHANGEABLE 3M COVERED TENSION ROLLS

3                  TRANSFORMERS
                   1 @ 330KVA: 1@ 275  KVA; 1 @ 51 KVA

5                  HYDRAULIC MANIFOLDS

4                  HYDRAULIC CYLINDERS

2                  ELECTRICAL CONTROL CABINETS
                   (1 FOR SLITTER, 1 FOR RECOILER)

1                  ELECTRICAL CONTROL CONSOLE

1                  AUTOMATIC EDGE GUIDE SYSTEM (INCLUDING SERVO UNIT)

1                  BOX THREAD PRORECTORS

2                  TABLES AND GUARDS

1                  HYDRAULIC CYLINDER FOR TRAVERSING DOWNENDER

1                  TURRET RECOILER WITH OVERARM STRIP SEPARATOR AND 2
                   RECOILING DRUMS
                   MODEL # TR-50K-52-16/20
                   S/N     CMP-850-19-7-99

2                  INTERCHANGEABLE SLITTER HEAD
                   MODEL # SU-6-52/28
                   S/N     CMP-837-19-7-99
                           CMP-838-19-7-99

2                  SLITTER HEADS

                   (3 SETS 80 KNIVES PER SET)
                   COWLES "MAXCUT" ROTARY SLITTING KNIVES
                   14.000" OD X 9.0015/9.0025" HOLE X .32000" (+\- .000040")
                   THICK 1.000" WIDE HALF ROUND KEYWAY

<PAGE>   14

                                                                          PAGE 4

                            COLD METAL PRODUCTS, INC.
                            -------------------------

                                   SCHEDULE A
                                   ----------
                                       TO
                            MASTER LEASE NO. 08321-01

                                 EQUIPMENT LIST
                                 --------------

QUANTITY           DESCRIPTION
--------           -----------
55                 COWLES "MAXCUT" ROTARY SLITTING KNIVES
                   14.000" OD X 9.0015/9.0025" HOLE X .50000" (+\- .000040")
                   THICK 1.000" WIDE HALF ROUND KEYWAY

<PAGE>   15

                                     RIDER I
                                       TO
                  EQUIPMENT SCHEDULE NO. 00001 (THE "SCHEDULE")
                             DATED DECEMBER 30, 1999
                                   -----------------
                                       TO
          MASTER EQUIPMENT LEASE AGREEMENT NO. 08321 (THE "AGREEMENT")
                             DATED DECEMBER 30, 1999
                                   -----------------
                                 BY AND BETWEEN
               NATIONAL CITY LEASING CORPORATION ("NATIONAL CITY")
                                       AND
                      COLD METAL PRODUCTS, INC. ("LESSEE")

THIS RIDER is executed and delivered by National City and Lessee in regard to
the Schedule.

                                PURCHASE OPTION.
                                ----------------

Provided no event of default has occurred and is continuing under the Lease, the
purchase option for the Equipment pursuant to Section 20 of the Agreement shall
be a price equal to the then appraised Fair Market Sales Value of the Equipment,
as determined (at Lessee's expense) by an independent appraiser selected by
National City. In order to exercise its option, as regards each Schedule and for
not less than all of the Equipment identified to that Schedule, Lessee must give
National City written notice at least 90 days prior to the expiration of the
lease term with respect thereto, and remit the purchase price in cash to
National City or its assigns on or before said expiration date. After receipt of
the purchase price in accordance herewith, National City will transfer to Lessee
all of its right, title and interest in the Equipment purchased AS-IS, WHERE-IS,
without recourse, representation or warranty of any kind, express or implied,
except as to title and the absence of liens or encumbrances arising by, through
or under National City. "FAIR MARKET SALES VALUE" for the purpose hereof shall
be determined on the basis of and be equal in amount to the value that would be
obtained in a transaction between an informed and willing buyer and an informed
and willing seller, and the cost of moving the Equipment from the location of
current use shall not be a deduction from such value.

Dated:   December 30, 1999
         -----------------

COLD METAL PRODUCTS, INC.
(a New York corporation)

By:    /s/ Joseph C. Horvath
       ---------------------

Title: Chief Financial Officer
       -----------------------

NATIONAL CITY LEASING CORPORATION
(a Kentucky corporation)

By:    /s/ Mary L. Scott
       -----------------

Title: Vice President
       --------------

<PAGE>   16

                                    RIDER II
                                       TO
                  EQUIPMENT SCHEDULE NO. 00001 (THE "SCHEDULE")
                             DATED DECEMBER 30, 1999
                                   -----------------
                                       TO
          MASTER EQUIPMENT LEASE AGREEMENT NO. 08321 (THE "AGREEMENT")
                             DATED DECEMBER 30, 1999
                                   -----------------
                                 BY AND BETWEEN
               NATIONAL CITY LEASING CORPORATION ("NATIONAL CITY")
                                       AND
                      COLD METAL PRODUCTS, INC. ("LESSEE")

THIS RIDER is executed and delivered by National City and Lessee in regard to
the Schedule.

                              EARLY BUY-OUT OPTION
                              --------------------

Provided no event of default has occurred and is continuing under the Lease,
pursuant to Section 20 of the Agreement, Lessee has a one time election on the
85th rental payment date under the Lease to terminate the lease and purchase
all, but not less than all, of the Equipment for 31.67% of the Total Acquisition
Cost as set forth in the Schedule. Lessee must give National City written notice
of its election of this option at least 90-days prior to such rental payment
date that Lessee wishes to exercise such election. Provided all payments,
including, but not limited to rental payments, have been made pursuant to the
Lease up to and including the date of the termination hereunder and after
receipt of the purchase price in accordance herewith, National City will
transfer to Lessee all of its right, title and interest in the Equipment
purchased AS-IS, WHERE-IS, without recourse, representation or warranty of any
kind, express or implied, except as to title and the absence of liens or
encumbrances arising by, through or under National City.

Dated: December 30, 1999
       -----------------

COLD METAL PRODUCTS, INC.
(a New York corporation)

By:    /s/ Joseph C. Horvath
       ---------------------

Title: Chief Financial Officer
       -----------------------

NATIONAL CITY LEASING CORPORATION
(a Kentucky corporation)

By:    /s/ Mary L. Scott
       -----------------

Title: Vice President
       --------------

<PAGE>   17

                                    RIDER III
                                       TO
                  EQUIPMENT SCHEDULE NO. 00001 (THE "SCHEDULE")
                             DATED DECEMBER 30, 1999
                                   -----------------
                                       TO
          MASTER EQUIPMENT LEASE AGREEMENT NO. 08321 (THE "AGREEMENT")
                             DATED DECEMBER 30, 1999
                                   -----------------
                                 BY AND BETWEEN
               NATIONAL CITY LEASING CORPORATION ("NATIONAL CITY")
                                       AND
                      COLD METAL PRODUCTS, INC. ("LESSEE")

 THIS RIDER is executed and delivered by National City and Lessee in regard to
the Schedule.

                                   MAINTENANCE
                                   -----------

1.       In addition to the requirements of Section 7 of the Agreement relating
         to the condition of the Equipment upon return thereof by the Lessee to
         National City, the Equipment upon its return shall be in compliance
         with the following conditions:

         A. Lessee will maintain the Equipment in a condition and manner
            suggested by the original manufacturer as required to validate any
            warranty.

         B. Lessee will maintain the Equipment in good operating condition and
            appearance, and cannot discriminate such maintenance between owned
            or leased equipment.

         C. Lessee will use only manufacturer's approved replacement parts and
            components in the performance of any maintenance and repair of the
            Equipment.

         D. Lessee will maintain current maintenance and repair records for the
            Equipment in a useable manner.

         E. Lessee will not make any alterations to the leased Equipment without
            prior written approval of the Lessor.

         F. Lessee will not make any alterations to the Equipment that will
            damage or restrict the Equipment from its initial use and design.
            ANY EQUIPMENT UPGRADES, ADDITIONS OR MODIFICATIONS, PREVIOUSLY
            APPROVED IN WRITING BY LESSOR, SHALL BECOME A PART OF THE EQUIPMENT
            AND WILL BE RETURNED WITH THE EQUIPMENT.

         G. Lessee shall, at its sole cost and expense, enter into and maintain
            in force, for the term of each Equipment Schedule, a maintenance
            contract with the manufacturer of the Equipment or such party as
            shall be acceptable to Lessor, and shall provide Lessor with a copy
            of such contract and all related supplements thereto.

         H. If Lessee has the Equipment maintained by a party other than the
            manufacturer, Lessee assumes and agrees to pay any costs necessary
            to have the manufacturer re-certify that the Equipment will be
            eligible upon resale for the manufacturer's maintenance contract at
            the manufacturer's standard rates.

2.       All defined terms in the Agreement shall have the same meaning herein.

<PAGE>   18

3.     All provisions of the Agreement and the Schedule, unless specifically
       modified herein, are hereby ratified and shall continue in full force and
       effect without change or amendment.

Dated: December 30, 1999
       -----------------

COLD METAL PRODUCTS, INC.
(a New York corporation)

By:    /s/ Joseph C. Horvath
       ---------------------

Title: Chief Financial Officer
       -----------------------

NATIONAL CITY LEASING CORPORATION
(a Kentucky corporation)

By:    /s/ Mary L. Scott
       -----------------

Title: Vice President
       --------------

<PAGE>   19

                     CERTIFICATE OF DELIVERY AND ACCEPTANCE
                     --------------------------------------

The undersigned hereby certifies that COLD METAL PRODUCTS, INC. ("LESSEE") has
inspected, received, approved and hereby accepts delivery and installation of
the following Equipment upon the terms and conditions set forth herein and in
that certain Master Equipment Lease Agreement (the "AGREEMENT") No. 08321 dated
DECEMBER 30, 1999, Equipment Schedule No. 00001, dated DECEMBER 30, 1999, with
NATIONAL CITY LEASING CORPORATION ("NATIONAL CITY").

1.  DESCRIPTION OF EQUIPMENT:

    QUANTITY      MANUFACTURER/MODEL        DESCRIPTION        SERIAL #
    --------      ------------------        -----------        --------

    ONE (1)       ALCOS 52" X .250" X 50,000 LB SLITTING
                  LINE FURTHER DESCRIBED PER THE
                  ATTACHED SCHEDULE A

2.  LOCATION OF EQUIPMENT: 2301 South Holt Road, Indianapolis, Indiana 46251

3.  DATE OF ACCEPTANCE:    December 30, 1999.
                           -----------------

4.  REPRESENTATIONS AND WARRANTIES:

    (a)      Lessee confirms that each item of Equipment listed herein:

             (i)      has been delivered to it, is duly assembled and
                      installed in good order and condition and is of the
                      size, design, capacity and manufacture selected by it
                      and meets the provisions of any purchase order
                      pursuant to which National City has acquired title
                      thereto; and

             (ii)     if applicable, has been marked as showing National
                      City's interest in the items of Equipment in
                      accordance with Section 4 of the Agreement.

    (b)      Lessee acknowledges that National City is not responsible for
             the performance, maintenance or service of the Equipment and
             that any payment, rent and all other sums payable under the
             Agreement shall be paid as such become due irrespective of the
             performance or condition of the Equipment.

    (c)      Lessee further confirms that no event has occurred and is
             continuing or would result from the purchase or lease of the
             Equipment above which constitutes an Event of Default under
             the Agreement or would constitute an Event of Default but for
             the requirement that notice be given or time elapse or both.

    (d)      Lessee's execution of this Certificate constitutes irrevocable
             acceptance of the Equipment herein described, AS-IS, WHERE-IS
             for all purposes of the Agreement and authorizes National City
             to pay the cost of such Equipment as shown on the Equipment
             Schedule to any supplier or vendor of the Equipment.

<PAGE>   20

Date of Certificate:  December 30, 1999
                      -----------------

COLD METAL PRODUCTS, INC.
(a New York corporation)

By:    /s/ Joseph C. Horvath
       ---------------------

Title: Chief Financial Officer
       -----------------------

Receipt is hereby acknowledged by National City this 30th day of December, 1999.

NATIONAL CITY LEASING CORPORATION
(a Kentucky corporation)

By:    /s/ Mary L. Scott
       -----------------

Title: Vice President
       --------------

                                       2<PAGE>   1

================================================================================

                                CREDIT AGREEMENT

                                  by and among

                              OMNOVA SOLUTIONS INC.
                                  as Borrower,

                             BANK OF AMERICA, N.A.,
                             as Agent and as Lender

                                       and

                   THE LENDERS PARTY HERETO FROM TIME TO TIME

                                       and

                         BANC OF AMERICA SECURITIES, LLC
                   as Sole Lead Arranger and Sole Book Manager

                                       and

                               BANK ONE, MICHIGAN
                                       and
                          KEYBANK NATIONAL ASSOCIATION
                           as Co-Documentation Agents

                                       and

                              THE BANK OF NEW YORK,
                     THE INDUSTRIAL BANK OF JAPAN, LIMITED,
                                MELLON BANK, N.A.
                                       and
                                  COMERICA BANK
                                  as Co-Agents

                               September 30, 1999

================================================================================

<PAGE>   2
<TABLE>
<CAPTION>

                                TABLE OF CONTENTS

                                                                                                                Page

                                    ARTICLE I

                              Definitions and Terms
<S>                                                                                                              <C>
1.1. Definitions..................................................................................................2
1.2. Rules of Interpretation.....................................................................................27

                                   ARTICLE II

                              The Credit Facilities

2.1. Revolving Loans.............................................................................................29
2.2. Use of Proceeds.............................................................................................32
2.3. Notes.......................................................................................................32
2.4. Swing Line..................................................................................................32

                                   ARTICLE III

                                Letters of Credit

3.1. Letters of Credit...........................................................................................34
3.2. Reimbursement and Participations............................................................................34

                                   ARTICLE IV

                Eurodollar Funding, Fees, and Payment Conventions

4.1. Interest Rate Options.......................................................................................38
4.2. Conversions and Elections of Subsequent Interest Periods....................................................38
4.3. Payment of Interest.........................................................................................39
4.4. Prepayments of Eurodollar Rate Loans........................................................................39
4.5. Manner of Payment...........................................................................................39
4.6. Fees........................................................................................................40
4.7. Pro Rata Payments...........................................................................................41
4.8. Computation of Rates and Fees...............................................................................41
4.9. Deficiency Advances; Failure to Purchase Participations.....................................................41
4.10. Intraday Funding...........................................................................................42

                                    ARTICLE V

                             Change in Circumstances

5.1. Increased Cost and Reduced Return...........................................................................43
</TABLE>

                                       i

<PAGE>   3

<TABLE>
<CAPTION>

<S>                                                                                                              <C>
5.2. Limitation on Types of Loans................................................................................44
5.3. Illegality..................................................................................................45
5.4. Treatment of Affected Loans.................................................................................45
5.5. Compensation................................................................................................45
5.6. Taxes.......................................................................................................46

                                   ARTICLE VI

            Conditions to Making Loans and Issuing Letters of Credit

6.1. Conditions of Initial Advance...............................................................................48
6.2. Conditions of Revolving Loans and Letter of Credit..........................................................51

                                   ARTICLE VII

                         Representations and Warranties

7.1. Organization and Authority..................................................................................53
7.2. Transaction Documents.......................................................................................53
7.3. Governmental Authorization..................................................................................54
7.4. Capitalization; Subsidiaries; Investments...................................................................54
7.5. Financial Condition.........................................................................................55
7.6. Title to Properties.........................................................................................55
7.7. Litigation; Loss Contingencies..............................................................................55
7.8. No Default or Breach........................................................................................56
7.9. Material Contracts..........................................................................................56
7.10. Related Party Agreements...................................................................................56
7.11. Environmental Matters......................................................................................56
7.12. Compliance with Law........................................................................................57
7.13. Taxes......................................................................................................57
7.14. Employee Benefit Plans.....................................................................................58
7.15. Employment Matters.........................................................................................59
7.16. Intellectual Property......................................................................................59
7.17. Insurance..................................................................................................59
7.18. Books and Records..........................................................................................59
7.19. Judgments and Other Restrictions...........................................................................60
         Investment Company; Margin Stock........................................................................60
7.21. Disclosure.................................................................................................60
7.22. Hedging Arrangements.......................................................................................60
7.23. Solvency...................................................................................................61
7.24. No Consents, Etc...........................................................................................61
7.25. Year 2000 Compliance.......................................................................................61
7.26. Tax Treatment of Spinoff...................................................................................61

</TABLE>

                                       ii

<PAGE>   4

                                  ARTICLE VIII

                              Affirmative Covenants
                              ---------------------
<TABLE>
<CAPTION>

<S>                                                                                                              <C>

8.1. Financial Reports, Etc......................................................................................62
8.2. Maintain Properties.........................................................................................63
8.3. Existence, Qualification, Etc...............................................................................64
8.4. Regulations and Taxes.......................................................................................64
8.5. Insurance, Proceeds and Condemnation........................................................................64
8.6. True Books..................................................................................................64
8.7. Year 2000 Compliance........................................................................................64
8.8. Right of Inspection.........................................................................................65
8.9. Observe all Laws............................................................................................65
8.10. Governmental Licenses......................................................................................65
8.11. Covenants Extending to Other Persons.......................................................................65
8.12. Officer's Knowledge of Default.............................................................................65
8.13. Suits or Other Proceedings.................................................................................65
8.14. Environmental Laws.........................................................................................65
8.15. Further Assurances.........................................................................................66
8.16. Employee Benefit Plans.....................................................................................66
8.17. Continued Operations.......................................................................................67
8.18. New Subsidiaries...........................................................................................67
8.19. Compliance with Material Contracts.........................................................................68

                                   ARTICLE IX

                               Negative Covenants

9.1. Financial Covenants.........................................................................................69
9.2. Acquisitions................................................................................................69
9.3. Capital Expenditures........................................................................................69
9.4. Liens.......................................................................................................69
9.5. Indebtedness................................................................................................71
9.6. Transfer of Assets..........................................................................................71
9.7. Investments.................................................................................................72
9.8. Merger or Consolidation.....................................................................................72
9.9. Transactions with Affiliates................................................................................73
9.10. Compliance with ERISA, the Code and Foreign Benefit Laws...................................................73
9.11. Fiscal Year................................................................................................74
9.12. Dissolution, etc...........................................................................................74
9.13. Limitations on Sales and Leasebacks........................................................................74
9.14. Rate Hedging Obligations...................................................................................74
9.15. Negative Pledge Clauses....................................................................................74
9.16. Restricted Payments........................................................................................75
9.17. Redemption, Prepayment, or Amendment of Senior Notes and Other Indebtedness................................75
9.18. Amendment of Line of Business Transfer Documents and Spinoff Documents.....................................75
</TABLE>

                                      iii

<PAGE>   5

                                    ARTICLE X

                       EVENTS OF DEFAULT AND ACCELERATION
<TABLE>
<CAPTION>

<S>                                                                                                              <C>

10.1. Events of Default..........................................................................................76
10.2. Agent to Act...............................................................................................79
10.3. Cumulative Rights..........................................................................................79
10.4. No Waiver..................................................................................................80
10.5. Allocation of Proceeds.....................................................................................80

                                   ARTICLE XI

                                    THE AGENT

11.1. Appointment, Powers, and Immunities........................................................................81
11.2. Reliance by Agent..........................................................................................81
11.3. Defaults...................................................................................................82
11.4. Rights as Lender...........................................................................................82
11.5. Indemnification............................................................................................82
11.6. Non-Reliance on Agent and Other Lenders....................................................................83
11.7. Resignation of Agent.......................................................................................83

                                   ARTICLE XII

                                  Miscellaneous

12.1. Assignments and Participations.............................................................................84
12.2. Notices....................................................................................................86
12.3. Right of Set-off; Adjustments..............................................................................87
12.4. Survival...................................................................................................88
12.5. Expenses...................................................................................................88
12.6. Amendments and Waivers.....................................................................................88
12.7. Counterparts...............................................................................................89
12.8. Termination................................................................................................89
12.9. Indemnification; Limitation of Liability...................................................................90
12.10. Severability..............................................................................................90
12.11. Entire Agreement..........................................................................................91
12.12. Agreement Controls........................................................................................91
12.13. Usury Savings Clause......................................................................................91
12.14. Payments..................................................................................................91
12.15. Confidentiality...........................................................................................92
12.16. Governing Law; Waiver of Jury Trial.......................................................................92
12.17. Special Funding Option....................................................................................93

EXHIBIT A             Applicable Commitment Percentages...................................................A-1
</TABLE>

                                       iv

<PAGE>   6

<TABLE>
<CAPTION>

<S>                                                                                                              <C>

EXHIBIT B             Form of Assignment and Acceptance...................................................B-1
EXHIBIT C             Notice of Appointment (or Revocation) of Authorized Representative..................C-1
EXHIBIT D-1           Form of Borrowing Notice............................................................D-1-1
EXHIBIT D-2           Form of Borrowing Notice--Swing Line Loans..........................................D-2-1
EXHIBIT E             Form of Interest Rate Selection Notice..............................................E-1
EXHIBIT F-1           Form of Revolving Note..............................................................F-1-1
EXHIBIT F-2           Form of Swing Line Note.............................................................F-2-1
EXHIBIT G             Form of Opinion of Borrower's Counsel...............................................G-1
EXHIBIT H             Compliance Certificate..............................................................H-1
EXHIBIT I             Form of Facility Guaranty...........................................................I-1
EXHIBIT J             Form of LC Account Agreement........................................................J-1

Schedule 7.4          Capital Stock, Subsidiaries and Investments in Other Persons........................S-1
Schedule 7.5          Indebtedness........................................................................S-2
Schedule 7.6          Liens and Real Property.............................................................S-3
Schedule 7.7          Litigation..........................................................................S-4
Schedule 7.8          Defaults............................................................................S-5
Schedule 7.10         Related Party Agreements............................................................S-6
Schedule 7.11         Environmental Matters...............................................................S-7
Schedule 7.14         Employee Benefit Plans..............................................................S-8
Schedule 7.15         Employment Matters..................................................................S-9
Schedule 7.16         Intellectual Property...............................................................S-10
Schedule 7.17         Insurance...........................................................................S-11
Schedule 7.22         Hedging Arrangements................................................................S-12
</TABLE>

                                       v

<PAGE>   7

                                CREDIT AGREEMENT

         THIS CREDIT AGREEMENT, dated as of September 30, 1999 (the
"Agreement"), is made by and among OMNOVA SOLUTIONS INC., an Ohio corporation
having its principal place of business in Fairlawn, Ohio (the "Borrower"), BANK
OF AMERICA, N.A., a national banking association organized and existing under
the laws of the United States, in its capacity as a Lender ("Bank of America"),
and each other financial institution executing and delivering a signature page
hereto and each other financial institution which may hereafter execute and
deliver an instrument of assignment with respect to this Agreement pursuant to
SECTION 12.1 (hereinafter such financial institutions may be referred to
individually as a "Lender" or collectively as the "Lenders"), and BANK OF
AMERICA, N.A., a national banking association organized and existing under the
laws of the United States, in its capacity as agent for the Lenders (in such
capacity, and together with any successor agent appointed in accordance with the
terms of SECTION 11.7, the "Agent");

                              W I T N E S S E T H:
                              --------------------

         WHEREAS, the Borrower has requested that the Lenders make available to
the Borrower a revolving credit facility in the maximum aggregate principal
amount at any time outstanding of up to $300,000,000, the proceeds of which are
to be used for working capital, capital expenditures, the making of the Special
Distribution (as defined below), permitted acquisitions and other lawful general
corporate purposes and which shall include a letter of credit facility of up to
$25,000,000 for the issuance of standby and commercial letters of credit and a
swing line facility of up to $10,000,000; and

         WHEREAS, the Lenders are willing to make such revolving credit, letter
of credit and swing line facilities available to the Borrower upon the terms and
conditions set forth herein;

         NOW, THEREFORE, the Borrower, the Lenders and the Agent hereby agree as
follows:

<PAGE>   8

                                    ARTICLE I

                              Definitions and Terms

         1.1. DEFINITIONS. For the purposes of this Agreement, in addition to
the definitions set forth above, the following terms shall have the respective
meanings set forth below:

                  "Acquisition" means the acquisition of (i) a controlling
         equity interest in another Person (including the purchase of an option,
         warrant or convertible or similar type security to acquire such a
         controlling interest at the time it becomes exercisable by the holder
         thereof), whether by purchase of such equity interest or upon exercise
         of an option or warrant for, or conversion of securities into, such
         equity interest, or (ii) assets of another Person which constitute all
         or any material part of the assets of such Person or of a line or lines
         of business conducted by such Person.

                  "Advance" means a borrowing under the Revolving Credit
         Facility consisting of a Base Rate Loan or a Eurodollar Rate Loan.

                  "Affected Loans" and "Affected Type" have the meanings
therefor provided in SECTION 5.4.

                  "Affiliate" means any Person other than a wholly owned
         Subsidiary or an Employee Benefit Plan (i) which directly or indirectly
         through one or more intermediaries controls, or is controlled by, or is
         under common control with the Borrower; or (ii) which beneficially owns
         or holds 10% or more of any class of the outstanding voting stock
         (calculated after giving effect pro forma to the conversion of all
         issued and outstanding capital stock convertible into voting stock of
         the Borrower) (or in the case of a Person which is not a corporation,
         10% or more of the equity interest) of the Borrower; or (iii) 10% or
         more of any class of the outstanding voting stock (or in the case of a
         Person which is not a corporation, 10% or more of the equity interest)
         of which is beneficially owned or held by the Borrower. The term
         "control" means the possession, directly or indirectly, of the power to
         direct or cause the direction of the management and policies of a
         Person, whether through ownership of voting stock, by contract or
         otherwise.

                  "Applicable Commitment Percentage" means, for each Lender at
         any time, a fraction, with respect to the Revolving Credit Facility and
         the Letter of Credit Facility the numerator of which shall be such
         Lender's Revolving Credit Commitment and the denominator of which shall
         be the Total Revolving Credit Commitment, which Applicable Commitment
         Percentage for each Lender as of the Closing Date is as set forth in
         EXHIBIT A; PROVIDED that the Applicable Commitment Percentage of each
         Lender shall be increased or decreased to reflect any assignments to or
         by such Lender effected in accordance with SECTION 12.1.

                  "Applicable Lending Office" means, for each Lender and for
         each Type of Loan, the "Lending Office" of such Lender (or of an
         affiliate of such Lender) designated for

                                       2
<PAGE>   9

         such Type of Loan on the signature pages hereof or such other office of
         such Lender (or an affiliate of such Lender) as such Lender may from
         time to time specify to the Agent and the Borrower by written notice in
         accordance with the terms hereof as the office by which its Loans of
         such Type are to be made and maintained.

                  "Applicable Margin" means:

                  (i) except as otherwise selected by the Borrower pursuant to
         clause (ii) below and applicable in accordance with the terms of clause
         (ii), that percent per annum set forth below, which shall be based upon
         the Consolidated Leverage Ratio for the Four-Quarter Period most
         recently ended as specified below:

                                                                  Applicable
         Level    Consolidated Leverage Ratio                        Margin
         -----    ---------------------------                        ------

         I        Greater than 2.25 to 1.00                          1.50%

         II       Less than or equal to 2.25 to 1.00
                  but greater than 1.50 to 1.00                      1.25%

         III      Less than or equal to 1.50 to 1.00
                  but greater than 0.75 to 1.00                      1.00%

         IV       Less than or equal to 0.75 to 1.00                 0.75%

         The Applicable Margin shall be established at the end of each fiscal
         quarter of the Borrower (each, a "Determination Date"). Any change in
         the Applicable Margin following each Determination Date shall be
         determined based upon the computations set forth in the certificate
         furnished to the Agent pursuant to SECTION 8.1(a)(ii) and SECTION
         8.1(b)(ii), subject to review and approval of such computations by the
         Agent, and shall be effective commencing on the fifth Business Day
         following the date such certificate is received until the fifth
         Business Day following the date on which a new certificate is delivered
         or is required to be delivered, whichever shall first occur; PROVIDED
         HOWEVER, if the Borrower shall fail to deliver any such certificate
         within the time period required by SECTION 8.1, then the Applicable
         Margin shall be Level I for Eurodollar Rate Loans from the date such
         certificate was due until the appropriate certificate is so delivered.
         Subject to the proviso in the preceding sentence, from the Closing Date
         to and including the Determination Date as to which the Borrower has
         delivered the certificate described above demonstrating the Borrower's
         Consolidated Leverage Ratio for two Complete Fiscal Quarters occurring
         after the Spinoff (the "Fixed Margin Period"), the Applicable Margin
         for Eurodollar Rate Loans shall be no lower than Level III; or

                  (ii) if the Borrower selects at any time after the Fixed
         Margin Period that the Applicable Margin shall be determined based on
         the Borrower's Debt Rating (as defined below), then at such time and at
         all times thereafter until the Revolving Credit

                                       3
<PAGE>   10

         Termination Date, that percent per annum set forth below in the
         applicable column, which shall be (a) determined based upon the rating
         of each rated class of the Borrower's long-term, senior unsecured
         Indebtedness for Money Borrowed (the "Rated Debt"), assigned by S&P and
         Moody's (the "Debt Rating") as specified below and (b) applicable to
         all Eurodollar Loans existing on and after the first date a specific
         Debt Rating is effective and continuing until, but not including, the
         date any change in such Debt Rating is effective (the "Debt Rating
         Date"):
<TABLE>
<CAPTION>

                                                                           Applicable
         Level        Debt Rating                                            Margin
         -----        -----------                                            ------
         <S>          <C>                                                    <C>
             I        Less than or equal to BB by S&P and Ba2 by Moody's      1.50%

            II        BB+ by S&P and Ba1 by Moody's                           1.25%

           III        BBB- by S&P and Baa3 by Moody's                         1.00%

           IV         BBB by S&P and Baa2 by Moody's                          0.875%

             V        Greater than or equal to BBB+ by S&P and Baa1 by
                      Moody's                                                 0.75%
</TABLE>

                  In the event that the Debt Ratings assigned by S&P and Moody's
         differ by one rating level, the Applicable Margin shall be determined
         by reference to the rating level having the higher Debt Rating (and
         lower Applicable Margin) without regard to the lower Debt Rating. In
         the event that the Debt Ratings assigned by S&P and Moody's differ by
         more than one rating level, the Applicable Margin shall be determined
         by reference to the Debt Rating which is one rating level higher than
         the lower assigned Debt Rating without regard to the higher assigned
         Debt Rating. The final Debt Rating level by which the Applicable Margin
         is determined is referred to herein as a "Level". By way of
         illustration and not limitation, if S&P assigned a rating of BB+ (i.e.,
         Level II) and Moody's assigns a rating of Baa3 (i.e., Level III), the
         Applicable Margin will be 1.00% (i.e. Level III); however if S&P
         assigns a rating of BB (i.e., Level I) and Moody's assigns a rating of
         Baa1 (i.e., Level V), the Applicable Margin will be 1.25% (i.e. Level
         II). In the event that both S&P and Moody's do not make a Debt Rating,
         the Applicable Margin shall be determined based on the Consolidated
         Leverage Ratio pursuant to clause (i) above.

                  "Applicable Unused Fee" means:

                  (i) except as otherwise selected by the Borrower pursuant to
         clause (ii) below and applicable in accordance with the terms of clause
         (ii), that percent per annum set forth below, which shall be based upon
         the Consolidated Leverage Ratio for the Four-Quarter Period most
         recently ended as specified below:

                                       4
<PAGE>   11

                                                                    Applicable
                                                                       Unused
         Level     Consolidated Leverage Ratio                           Fee
         -----     ---------------------------                      ----------

         I        Greater than 2.25 to 1.00                            0.35%

         II       Less than or equal to 2.25 to 1.00
                  but greater than 1.50 to 1.00                        0.30%

         III      Less than or equal to 1.50 to 1.00
                  but greater than 0.75 to 1.00                        0.25%

         IV       Less than or equal to 0.75 to 1.00                   0.20%

         The Applicable Unused Fee shall be established at each Determination
         Date. Any change in the Applicable Unused Fee following each
         Determination Date shall be determined based upon the computations set
         forth in the certificate furnished to the Agent pursuant to SECTION
         8.1(a)(ii) and SECTION 8.1(b)(ii), subject to review and approval of
         such computations by the Agent and shall be effective commencing on the
         fifth Business Day following the date such certificate is received
         until the fifth Business Day following the date on which a new
         certificate is delivered or is required to be delivered, whichever
         shall first occur; PROVIDED HOWEVER, if the Borrower shall fail to
         deliver any such certificate within the time period required by SECTION
         8.1, then the Applicable Unused Fee shall be Level I from the date such
         certificate was due until the appropriate certificate is so delivered.
         Subject to the proviso in the preceding sentence, during the Fixed
         Margin Period the Applicable Unused Fee shall be no lower than Level
         III; or

                  (ii) if the Borrower selects at any time after the Fixed
         Margin Period that the Applicable Margin shall be determined based on
         the Borrower's Debt Rating, then at such time and at all times
         thereafter until the Revolving Credit Termination Date, that percent
         per annum set forth below in the applicable column, which shall be (a)
         determined based upon the Debt Rating as specified below and (b)
         applicable on and after the first date a specific Debt Rating is
         effective and continuing until, but not including, the date any change
         in such Debt Rating is effective:
<TABLE>
<CAPTION>

                                                                                 Applicable
         Level             Debt Rating                                           Unused Fee
         -----             -----------                                           ----------
         <S>               <C>                                                    <C>
             I             Less than or equal to BB by S&P and Ba2 by Moody's       0.30%

            II             BB+ by S&P and Ba1 by Moody's                            0.25%

           III             BBB- by S&P and Baa3 by Moody's                          0.20%

           IV              BBB by S&P and Baa2 by Moody's                           0.175%
</TABLE>

                                       5
<PAGE>   12

<TABLE>
<CAPTION>

         <S>               <C>                                                    <C>
             V             Greater than or equal to BBB+ by S&P and Baa1 by
                           Moody's                                                  0.15%
</TABLE>

                  In the event that the Debt Ratings assigned by S&P and Moody's
         differ by one rating level, the Applicable Unused Fee shall be
         determined by reference to the rating level having the higher Debt
         Rating (and lower Applicable Unused Fee) without regard to the lower
         Debt Rating. In the event that the Debt Ratings assigned by S&P and
         Moody's differ by more than one rating level, the Applicable Unused Fee
         shall be determined by reference to the Debt Rating which is one rating
         level higher than the lower assigned Debt Rating without regard to the
         higher assigned Debt Rating. The final Debt Rating level by which the
         Applicable Unused Fee is determined is referred to herein as a "Level".
         By way of illustration and not limitation, if S&P assigned a rating of
         BB+ (i.e., Level II) and Moody's assigns a rating of Baa3 (i.e., Level
         III), the Applicable Unused Fee will be 0.20% (i.e. Level III); however
         if S&P assigns a rating of BB (i.e., Level I) and Moody's assigns a
         rating of Baa1 (i.e., Level V), the Applicable Unused Fee will be 0.25%
         (i.e. Level II). In the event that both S&P and Moody's do not make a
         Debt Rating, the Applicable Unused Fee shall be determined based on the
         Consolidated Leverage Ratio pursuant to clause (i) above.

                  "Applications and Agreements for Letters of Credit" means,
         collectively, the Applications and Agreements for Letters of Credit, or
         similar documentation, executed by the Borrower from time to time and
         delivered to the Issuing Bank to support the issuance of Letters of
         Credit.

                  "Assignment and Acceptance" shall mean an Assignment and
         Acceptance in the form of EXHIBIT B (with blanks appropriately filled
         in) delivered to the Agent in connection with an assignment of a
         Lender's interest under this Agreement pursuant to SECTION 12.1.

                  "Authorized Representative" means the Chief Financial Officer
         of the Borrower, or any other Person expressly designated by a
         Responsible Officer or the Board of Directors of the Borrower (or the
         appropriate committee thereof) as an Authorized Representative of the
         Borrower, as set forth from time to time in a certificate in the form
         of EXHIBIT C.

                  "Bank of America" means Bank of America, N.A.

                  "BAS" means Banc of America Securities LLC and its successors.

                  "Base Rate" means, for any day, the rate per annum equal to
         the higher of (i) the Federal Funds Rate for such day plus one-half of
         one percent (0.5%) and (ii) the Prime Rate for such day. Any change in
         the Base Rate due to a change in the Prime Rate or the Federal Funds
         Rate shall be effective on the effective date of such change in the
         Prime Rate or Federal Funds Rate.

                                       6
<PAGE>   13

                  "Base Rate Loan" means a Loan for which the rate of interest
         is determined by reference to the Base Rate.

                  "Base Rate Refunding Loan" means a Base Rate Loan or Swing
         Line Loan made either to (i) satisfy Reimbursement Obligations arising
         from a drawing under a Letter of Credit or (ii) pay Bank of America in
         respect of Swing Line Outstandings.

                  "Board" means the Board of Governors of the Federal Reserve
         System (or any successor body).

                  "Borrower's Account" means a demand deposit account number
         3751372974 or any successor account with the Agent, which may be
         maintained at one or more offices of the Agent or an agent of the
         Agent.

                  "Borrowing Notice" means the notice delivered by an Authorized
         Representative in connection with an Advance under the Revolving Credit
         Facility or a Swing Line Loan, in the forms of EXHIBITS D-1 AND D-2,
         respectively.

                  "Business Day" means, (i) except as expressly provided in
         clause (ii), any day which is not a Saturday, Sunday or a day on which
         banks in the States of New York and North Carolina are authorized or
         obligated by law, executive order or governmental decree to be closed
         and, (ii) with respect to the selection, funding, interest rate,
         payment, and Interest Period of any Eurodollar Rate Loan, any day which
         is a Business Day, as described above, and on which the relevant
         international financial markets are open for the transaction of
         business contemplated by this Agreement in London, England, New York,
         New York and Charlotte, North Carolina.

                  "Capital Expenditures" means, with respect to the Borrower and
         its Subsidiaries, for any period the SUM of (without duplication) (i)
         all expenditures (whether paid in cash or accrued as liabilities) by
         the Borrower or any Subsidiary during such period for items that would
         be classified as "property, plant or equipment" or comparable items on
         the consolidated balance sheet of the Borrower and its Subsidiaries,
         including without limitation all transactional costs incurred in
         connection with such expenditures provided the same have been
         capitalized, excluding, however, the amount of any Capital Expenditures
         paid for with proceeds of casualty insurance as evidenced in writing
         and submitted to the Agent together with any compliance certificate
         delivered pursuant to SECTION 8.1(a) or (b), and (ii) with respect to
         any Capital Lease entered into by the Borrower or its Subsidiaries
         during such period, the present value of the lease payments due under
         such Capital Lease over the term of such Capital Lease applying a
         discount rate equal to the interest rate provided in such lease (or in
         the absence of a stated interest rate, that rate used in the
         preparation of the financial statements described in SECTION 8.1(a),
         all the foregoing in accordance with GAAP applied on a Consistent
         Basis.

                                       7
<PAGE>   14

                  "Capital Leases" means all leases which have been or should be
         capitalized in accordance with GAAP as in effect from time to time
         including Statement No. 13 of the Financial Accounting Standards Board
         and any successor thereof.

                  "Change of Control" means, at any time:

                           (i) any "person" or "group" (each as used in Sections
                  13(d)(3) and 14(d)(2) of the Exchange Act) either (A) becomes
                  the "beneficial owner" (as defined in Rule 13d-3 of the
                  Exchange Act ), directly or indirectly, of Voting Securities
                  of the Borrower (or securities convertible into or
                  exchangeable for such Voting Securities) representing thirty
                  percent (30%) or more of the combined voting power of all
                  Voting Securities of the Borrower (on a fully diluted basis)
                  or (B) otherwise has the ability, directly or indirectly, to
                  elect a majority of the board of directors of the Borrower; or

                          (ii) during any period of up to 24 consecutive months,
                  commencing on the Closing Date, individuals who at the
                  beginning of such 24-month period were directors of the
                  Borrower shall cease for any reason to constitute a majority
                  of the board of directors of the Borrower, unless the
                  nomination for election by the Borrower's stockholders of each
                  new director of the Borrower was approved by a vote of at
                  least two-thirds of the directors of the Borrower still in
                  office who were directors of the Borrower at the beginning of
                  any such period.

                  "Closing Date" means the date as of which this Agreement is
         executed by the Borrower, the Lenders and the Agent and on which the
         conditions set forth in SECTION 6.1 have been satisfied.

                  "Code" means the Internal Revenue Code of 1986, as amended,
         and any regulations promulgated thereunder.

                  "Complete Fiscal Quarter" means a full fiscal quarter of the
         Borrower including the first and last days of such fiscal quarter.

                  "Consistent Basis" in reference to the application of GAAP
         means the accounting principles observed in the period referred to are
         comparable in all material respects to those applied in the preparation
         of the audited financial statements of the Borrower referred to as of
         the Closing Date in SECTION 7.6(a).

                  "Consolidated Cash Interest Expense" means, with respect to
         any period of computation thereof, the gross interest expense of the
         Borrower and its Subsidiaries paid in cash, including without
         limitation (i) all fees paid during such period and (ii) the portion of
         any payments made in connection with Capital Leases allocable to
         interest expense, all determined on a consolidated basis in accordance
         with GAAP applied on Consistent Basis.

                                       8
<PAGE>   15

                  "Consolidated EBITDA" means, with respect to the Borrower and
         its Subsidiaries for any Four-Quarter Period ending on the date of
         computation thereof, the SUM of, without duplication, (i) Consolidated
         Net Income, (ii) Consolidated Interest Expense, (iii) taxes on income,
         (iv) amortization, and (v) depreciation, all determined on a
         consolidated basis in accordance with GAAP applied on a Consistent
         Basis.

                  "Consolidated Interest Coverage Ratio" means with respect to
         the Borrower and its Subsidiaries, for any Four-Quarter Period ending
         on the date of computation thereof, the ratio of (i) Consolidated
         EBITDA for such period to (ii) Consolidated Cash Interest Expense for
         such period.

                  "Consolidated Interest Expense" means, with respect to any
         period of computation thereof, the gross interest expense of the
         Borrower and its Subsidiaries, including without limitation (i) the
         current amortized portion of debt discounts to the extent included in
         gross interest expense, (ii) the current amortized portion of all fees
         (including fees payable in respect of any Swap Agreement) payable in
         connection with the incurrence of Indebtedness to the extent included
         in gross interest expense and (iii) the portion of any payments made in
         connection with Capital Leases allocable to interest expense, all
         determined on a consolidated basis in accordance with GAAP applied on a
         Consistent Basis.

                  "Consolidated Leverage Ratio" means, as of the date of
         computation thereof, the ratio of (i) Consolidated Total Funded Debt
         (determined as at such date) to (ii) Consolidated EBITDA (for the
         Four-Quarter Period ending on (or most recently ended prior to) such
         date).

                  "Consolidated Net Income" means, for any period of computation
         thereof, the gross revenues from operations of the Borrower and its
         Subsidiaries (including payments received by the Borrower and its
         Subsidiaries of (i) interest income, and (ii) dividends and
         distributions made in the ordinary course of their businesses by
         Persons in which investment is permitted pursuant to this Agreement and
         not related to an extraordinary event), less all operating and
         non-operating expenses of the Borrower and its Subsidiaries including
         taxes on income, all determined on a consolidated basis in accordance
         with GAAP applied on a Consistent Basis; but excluding as income: (i)
         net gains on the sale, conversion or other disposition of capital
         assets, (ii) net gains on the acquisition, retirement, sale or other
         disposition of capital stock and other securities of the Borrower or
         its Subsidiaries, (iii) net gains on the collection of proceeds of life
         insurance policies, (iv) any write-up of any asset, and (v) any other
         net gain or credit of an extraordinary nature as determined in
         accordance with GAAP applied on a Consistent Basis; PROVIDED FURTHER,
         HOWEVER, that Consolidated Net Income shall be determined without
         giving effect to FASB 133 Adjustments as may be required by GAAP.

                  "Consolidated Total Assets" means, as of any date on which the
         amount thereof is to be determined, the net book value of all assets of
         the Borrower and its Subsidiaries as

                                       9
<PAGE>   16

         determined on a consolidated basis in accordance with GAAP applied on a
         Consistent Basis.

                  "Consolidated Total Funded Debt" means all Indebtedness for
         Money Borrowed of the Borrower and its Subsidiaries, all determined on
         a consolidated basis.

                  "Contingent Obligation" of any Person means all contingent
         liabilities required to be included in the financial statements, or
         disclosed in the footnotes thereto, of such Person in accordance with
         GAAP applied on a Consistent Basis, including Statement No. 5 of the
         Financial Accounting Standards Board, all Rate Hedging Obligations and
         any obligation of such Person guaranteeing or in effect guaranteeing
         any Indebtedness, dividend or other obligation of any other Person (the
         "primary obligor") in any manner, whether directly or indirectly,
         including the obligations of such Person however incurred:

                  (1) to purchase such Indebtedness or other obligation or any
                  property or assets constituting security therefor;

                  (2) to advance or supply funds in any manner (i) for the
                  purchase or payment of such Indebtedness or other obligation,
                  or (ii) to maintain a minimum working capital, net worth or
                  other balance sheet condition or any income statement
                  condition of the primary obligor;

                  (3) to grant or convey any Lien on any property or assets of
                  such Person to secure the payment of such Indebtedness or
                  other obligation;

                  (4) to lease property or to purchase securities or other
                  property or services primarily for the purpose of assuring the
                  owner or holder of such Indebtedness or obligation of the
                  ability of the primary obligor to make payment of such
                  Indebtedness or other obligation; or

                  (5) otherwise to assure the owner of such Indebtedness or such
                  obligation of the primary obligor against loss in respect
                  thereof.

                  "Continue", "Continuation", and "Continued" shall refer to the
         continuation pursuant to SECTION 4.2 hereof of a Eurodollar Rate Loan
         of one Type as a Eurodollar Rate Loan of the same Type from one
         Interest Period to the next Interest Period.

                  "Convert", "Conversion", and "Converted" shall refer to a
         conversion pursuant to SECTION 4.2 of one Type of Loan into another
         Type of Loan.

                  "Credit Parties" means, collectively, the Borrower and each
         Guarantor.

                  "Debt Rating" and "Debt Rating Date" shall have the meanings
         provided therefor in the definition of "Applicable Margin."

                                       10
<PAGE>   17

                  "Default" means any event or condition which, with the giving
         or receipt of notice or lapse of time or both, would constitute an
         Event of Default hereunder.

                  "Default Rate" means (i) with respect to each Eurodollar Rate
         Loan, until the end of the Interest Period applicable thereto, a rate
         of two percent (2%) above the Eurodollar Rate applicable to such Loan,
         and thereafter at a rate of interest per annum which shall be two
         percent (2%) above the Base Rate, (ii) with respect to Base Rate Loans,
         Swing Line Loans, Reimbursement Obligations, fees, and other amounts
         payable in respect of Obligations (other than Obligations arising under
         or in connection with Swap Agreements) or (except as otherwise
         expressly provided therein) the obligations of any other Credit Party
         under any of the other Loan Documents, a rate of interest per annum
         which shall be two percent (2%) above the Base Rate and (iii) in any
         case, the maximum rate permitted by applicable law, if lower.

                  "Determination Date" has the meaning therefor provided in the
         definition of "Applicable Margin."

                  "Distribution Agreement" means the Distribution Agreement
         dated as of September 30, 1999 between GenCorp and the Borrower
         providing for the Line of Business Transfer and other related matters.

                  "Dollars" and the symbol "$" means dollars constituting legal
         tender for the payment of public and private debts in the United States
         of America.

                  "Domestic Material Subsidiary" means any Domestic Subsidiary
         which is also a Material Subsidiary.

                  "Domestic Subsidiary" means any Subsidiary of the Borrower
         organized under the laws of the United States of America, any state or
         territory thereof or the District of Columbia.

                  "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 12.1, the Borrower,
         in each case, such approval not to be unreasonably withheld (provided
         that the incurrence by the Borrower of additional costs pursuant to
         SECTION 5.6 as a result of such assignment shall constitute a
         reasonable basis for withholding such consent) or delayed by the
         Borrower and such approval to be deemed given by the Borrower (in the
         absence of notice to the contrary, effective upon receipt) within five
         Business Days after notice of such proposed assignment has been
         provided by the assigning Lender to the Borrower; PROVIDED, HOWEVER,
         that neither the Borrower nor an affiliate of the Borrower shall
         qualify as an Eligible Assignee.

                  "Eligible Securities" means the following obligations and any
         other obligations previously approved in writing by the Agent:

                                       11
<PAGE>   18

                           (a) Government Securities;

                           (b) obligations of any corporation organized under
                  the laws of any state of the United States of America or under
                  the laws of any other nation, payable in the United States of
                  America, expressed to mature not later than 92 days following
                  the date of issuance thereof and rated in an investment grade
                  rating category by S&P and Moody's;

                           (c) interest bearing demand or time deposits issued
                  by any Lender or certificates of deposit maturing within one
                  year from the date of issuance thereof and issued by a bank or
                  trust company organized under the laws of the United States or
                  of any state thereof having capital surplus and undivided
                  profits aggregating at least $400,000,000 and being rated "A"
                  or better by S&P or "A" or better by Moody's;

                           (d) Repurchase Agreements;

                           (e) Municipal Obligations; or

                           (f) shares of mutual funds which invest in
                  obligations described in paragraphs (a) through (e) above, the
                  shares of which mutual funds are at all times rated "AAA" by
                  S&P.

                  "Employee Benefit Plan" means (i) any employee benefit plan,
         including any Pension Plan, within the meaning of Section 3(3) of ERISA
         which (A) is maintained for employees of the Borrower or any of its
         ERISA Affiliates, or any Subsidiary or is assumed by the Borrower or
         any of its ERISA Affiliates, or any Subsidiary in connection with any
         Acquisition or (B) has at any time within the previous six (6) years
         been maintained by the Borrower for the employees of the Borrower, any
         current or former ERISA Affiliate, or any Subsidiary and (ii) any plan,
         arrangement, understanding or scheme maintained by the Borrower or any
         Subsidiary that provides retirement, deferred compensation, employee or
         retiree medical or life insurance, severance benefits or any other
         benefit covering any employee or former employee and which is
         administered under any Foreign Benefit Law or regulated by any
         Governmental Authority other than the United States of America.

                  "Employee Matters Agreement" means the Agreement on Employee
         Matters dated as of September 30, 1999 between GenCorp and the Borrower
         providing for the treatment of employee benefit matters and other
         compensation arrangements for former and current employees of the
         Borrower and its Subsidiaries.

                  "Environmental Laws" means, collectively, any (i) Federal,
         state, local or foreign statute, law, ordinance, code, rule or
         regulation, or (ii) order or decree issued to or against the Borrower
         or any Subsidiary, in either case regulating, relating to, or imposing
         liability

                                       12
<PAGE>   19

         or standards of conduct concerning, any environmental matters or
         conditions, environmental protection or conservation, including without
         limitation, the Comprehensive Environmental Response, Compensation and
         Liability Act of 1980, as amended; the Superfund Amendments and
         Reauthorization Act of 1986, as amended; the Resource Conservation and
         Recovery Act, as amended; the Toxic Substances Control Act, as amended;
         the Clean Air Act, as amended; the Clean Water Act, as amended;
         together with all regulations promulgated thereunder, and any other
         "Superfund" or "Superlien" law.

                  "ERISA" means the Employee Retirement Income Security Act of
         1974, as amended from time to time, and any successor statute and all
         rules and regulations promulgated thereunder.

                  "ERISA Affiliate", as applied to the Borrower, means any
         Person or trade or business which is a member of a group which is under
         common control with the Borrower, who together with the Borrower, is
         treated as a single employer within the meaning of Section 414(b) and
         (c) of the Code.

                  "Eurodollar Rate Loan" means a Loan for which the rate of
         interest is determined by reference to the Eurodollar Rate.

                  "Eurodollar Rate" means the interest rate per annum calculated
         according to the following formula:

         Eurodollar  =  Interbank Offered Rate   +    Applicable
                       ------------------------
         Rate          1-  Reserve Requirement        Margin

                  "Event of Default" means any of the occurrences set forth as
         such in SECTION 10.1.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
         amended, and the regulations promulgated thereunder.

                  "Existing GenCorp Credit Agreement" means, collectively, (i)
         that certain Credit Agreement dated as of May 17, 1996 among GenCorp,
         NationsBank, N.A. (predecessor in interest to Bank of America)
         ("NationsBank") as agent and lender, and the other lenders party
         thereto, as amended.

                  "Facility Guaranty" means each Guaranty Agreement
         substantially in the form of EXHIBIT I between one or more Guarantors
         and the Agent for the benefit of the Agent and the Lenders, delivered
         as of the Closing Date and otherwise pursuant to SECTION 8.18, as the
         same may be amended, modified or supplemented.

                  "Facility Termination Date" means such date as all of the
         following shall have occurred: (a) the Borrower shall have permanently
         terminated the Revolving Credit Facility and the Swing Line by payment
         in full of all Revolving Credit Outstandings and Letter of Credit
         Outstandings and Swing Line Outstandings, together with all accrued and

                                       13
<PAGE>   20

         unpaid interest thereon, except for the undrawn portion of Letters of
         Credit as have been fully cash collateralized in a manner consistent
         with the terms of SECTION 10.1(B), (b) all Swap Agreements shall have
         been terminated, expired or cash collateralized, (c) all Revolving
         Credit Commitments and Letter of Credit Commitments shall have
         terminated or expired and (d) the Borrower shall have fully, finally
         and irrevocably paid and satisfied in full all Obligations (other than
         Obligations consisting of continuing indemnities and other Contingent
         Obligations of the Borrower or any Guarantor that may be owing to the
         Lenders pursuant to the Loan Documents and expressly survive
         termination of this Agreement);

                  "FASB 133 Adjustments" means entries on or adjustments to any
         balance sheet or statement of income in respect of derivatives or
         hedging instruments as required or permitted by Statement of Financial
         Accounting Standards No. 133.

                  "Federal Funds Rate" means, for any day, the rate per annum
         (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to
         the weighted average of the rates on overnight Federal funds
         transactions with members of the Federal Reserve System arranged by
         Federal funds brokers on such day, as published by the Federal Reserve
         Bank of New York on the Business Day next succeeding such day; PROVIDED
         that (a) if such day is not a Business Day, the Federal Funds Rate for
         such day shall be such rate on such transactions on the next preceding
         Business Day as so published on the next succeeding Business Day, and
         (b) if no such rate is so published on such next succeeding Business
         Day, the Federal Funds Rate for such day shall be the average rate
         charged to the Agent (in its individual capacity) on such day on such
         transactions as determined by the Agent.

                  "Fiscal Year" means the twelve month fiscal period of the
         Borrower and its Subsidiaries commencing on December 1 of each calendar
         year and ending on November 30 of the subsequent calendar year.

                  "Fixed Margin Period" shall have the meaning therefor provided
         in the definition of "Applicable Margin."

                  "Foreign Benefit Law" means any applicable statute, law,
         ordinance, code, rule, regulation, order or decree of any foreign
         nation or any province, state, territory, protectorate or other
         political subdivision thereof regulating, relating to, or imposing
         liability or standards of conduct concerning, any Employee Benefit
         Plan.

                  "Four-Quarter Period" means a period of four full consecutive
         fiscal quarters of the Borrower and its Subsidiaries, taken together as
         one accounting period; PROVIDED, HOWEVER, (i) for each of the first
         three fiscal quarters ending after the Closing Date, the Four-Quarter
         Period ending on such date shall include so many of the most recent
         fiscal quarterly periods of the Borrower reflected in the Historical
         Unaudited Quarterly Statements as shall be necessary to result in a
         period of four full consecutive fiscal quarters, (ii) to the extent the
         first fiscal quarter ending after the Closing Date is included in any
         Four-Quarter Period for the purposes of determining financial or
         accounting

                                       14
<PAGE>   21

         matters hereunder, all calculations with respect to such fiscal quarter
         shall be made on a pro forma basis giving effect to the Line of
         Business Transfer and the Spinoff as of the first day of such fiscal
         quarter, and (iii) the assets, liabilities and results of operations
         reflected in such Historical Unaudited Quarterly Statements shall be
         deemed to be the assets, liabilities and results of operations of the
         Borrower and its Subsidiaries for the purpose of making any
         determination or computation as to financial or accounting matters
         hereunder that includes any period of operations covered by the
         Historical Unaudited Quarterly Statements.

                  "GAAP" or "Generally Accepted Accounting Principles" means
         generally accepted accounting principles, being those principles of
         accounting set forth in pronouncements of the Financial Accounting
         Standards Board, the American Institute of Certified Public
         Accountants, or which have other substantial authoritative support and
         are applicable in the circumstances as of the date of a report.

                  "GenCorp" means GenCorp Inc.

                  "GenCorp Prepayable Debt" means Indebtedness for Money
         Borrowed of GenCorp in the aggregate principal amount of approximately
         $188,000,000 and in no event to exceed $225,000,000 outstanding as of
         the Closing Date under the Existing GenCorp Credit Agreement.

                  "Government Securities" means direct obligations of, or
         obligations the timely payment of principal and interest on which are
         fully and unconditionally guaranteed by, the United States of America.

                  "Governmental Authority" shall mean any Federal, state,
         municipal, national or other governmental department, commission,
         board, bureau, court, agency or instrumentality or political
         subdivision thereof or any entity or officer exercising executive,
         legislative, judicial, regulatory or administrative functions of or
         pertaining to any government or any court, in each case whether
         associated with a state of the United States, the United States, or a
         foreign entity or government.

                  "Guaranties" means all obligations of the Borrower or any
         Subsidiary directly or indirectly guaranteeing, or in effect
         guaranteeing, any Indebtedness for Money Borrowed of any other Person.

                  "Guarantors" means, at any date, the Domestic Subsidiaries in
         existence at the Closing Date together with each additional Domestic
         Material Subsidiary required to execute and deliver a Facility Guaranty
         by such date pursuant to SECTION 8.18.

                  "Hazardous Material" means and includes any hazardous, toxic
         or dangerous waste, substance or material the generation, handling,
         storage, disposal, treatment, release, discharge or emission of which
         is subject to any Environmental Law.

                                       15
<PAGE>   22

                  "Historical Unaudited Quarterly Statements" means the
         historical unaudited consolidated balance sheets and stockholders'
         equity as at and for each of the fiscal quarters ended February 28,
         1999, May 31, 1999 and August 31, 1999, statements of income as at and
         or the fiscal quarter ended May 31, 1999 and cash flows as at and for
         each of the fiscal quarters ended February 28, 1999 and May 31, 1999,
         prepared by GenCorp and previously furnished to the Agent reflecting
         the assets, liabilities and results of operations of the Transferred
         Business.

                  "Indebtedness" means as to any Person, without duplication,
         (a) all Indebtedness for Money Borrowed of such Person, (b) all Rate
         Hedging Obligations of such Person, (c) all indebtedness secured by any
         Lien on any property or asset owned or held by such Person regardless
         or whether the indebtedness secured thereby shall have been assumed by
         such Person or is non-recourse to the credit of such Person, and (d)
         all Contingent Obligations of such Person.

                  "Indebtedness for Money Borrowed" means with respect to any
         Person, without duplication, all indebtedness in respect of money
         borrowed, including without limitation, all obligations under Capital
         Leases, the deferred purchase price of any property or services, the
         principal balance outstanding under any synthetic lease or tax
         retention operating lease, and payment and reimbursement obligations in
         respect of surety bonds, letters of credit, and bankers' acceptances,
         whether or not matured, evidenced by a promissory note, bond, debenture
         or similar written obligation for the payment of money (including
         reimbursement agreements and conditional sales or similar title
         retention agreements), other than trade payables and accrued expenses
         incurred in the ordinary course of business.

                  "Intellectual Property" has the meaning therefor provided in
         SECTION 7.16.

                   "Interbank Offered Rate" means, with respect to any
         Eurodollar Rate Loan for the Interest Period applicable thereto, the
         rate per annum (rounded upwards, if necessary), to the nearest 1/100 of
         1% appearing on Telerate Page 3750 (or any successor page) as the
         London interbank offered rate for deposits in Dollars at approximately
         11:00 A.M. (London time) two Business Days prior to the first day of
         such Interest Period for a term comparable to such Interest Period. If
         for any reason such rate is not available, the term "Interbank Offered
         Rate" shall mean, with respect to any Eurodollar Rate Loan for the
         Interest Period applicable thereto, the rate per annum (rounded
         upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters
         Screen LIBO Page as the London interbank offered rate for deposits in
         Dollars at approximately 11:00 A.M. (London time) two Business Days
         prior to the first day of such Interest Period for a term comparable to
         such Interest Period, PROVIDED, HOWEVER; if more than one rate is
         specified on Reuters Screen LIBO Page, the applicable rate shall be the
         arithmetic mean of all such rates (rounded upwards, if necessary, to
         the nearest 1/100 of 1%).

                  "Interest Period" means, for each Eurodollar Rate Loan, a
         period commencing on the date such Eurodollar Rate Loan is made or
         Converted or Continued and ending, at the

                                       16
<PAGE>   23

         Borrower's option, on the date one, two, three or six months thereafter
         as notified to the Agent by the Authorized Representative in accordance
         with the terms hereof; PROVIDED that,

                           (i) if an Interest Period for a Eurodollar Rate Loan
                  would end on a day which is not a Business Day, such Interest
                  Period shall be extended to the next Business Day (unless such
                  extension would cause the applicable Interest Period to end in
                  the succeeding calendar month, in which case such Interest
                  Period shall end on the next preceding Business Day); and

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

                  "Interest Rate Selection Notice" means the written notice
         delivered by an Authorized Representative in connection with the
         election of a subsequent Interest Period for any Eurodollar Rate Loan
         or the Conversion of any Eurodollar Rate Loan into a Base Rate Loan or
         the Conversion of any Base Rate Loan into a Eurodollar Rate Loan, in
         the form of EXHIBIT E.

                  "IRS Ruling Letter" has the meaning provided therefor in
         SECTION 6.1(a)(xix).

                  "Issuing Bank" means initially Bank of America and thereafter
         any Lender which is successor to Bank of America as issuer of Letters
         of Credit under ARTICLE III.

                  "LC Account Agreement" means the LC Account Agreement dated as
         of the date hereof between the Borrower and the Agent, as amended,
         modified or supplemented from time to time.

                  "Lending Party" means, collectively, the Agent and each
         Lender.

                  "Letter of Credit" means a standby or commercial letter of
         credit issued by the Issuing Bank pursuant to ARTICLE III hereof for
         the account of the Borrower in favor of a Person advancing credit or
         securing an obligation on behalf of the Borrower.

                  "Letter of Credit Commitment" means, with respect to each
         Lender, the obligation of such Lender to acquire Participations in
         respect of Letters of Credit and Reimbursement Obligations up to an
         aggregate amount at any one time outstanding equal to such Lender's
         Applicable Commitment Percentage of the Total Letter of Credit
         Commitment as the same may be increased or decreased from time to time
         pursuant to this Agreement.

                  "Letter of Credit Facility" means the facility described in
         ARTICLE III hereof providing for the issuance by the Issuing Bank for
         the account of the Borrower of Letters

                                       17
<PAGE>   24

         of Credit in an aggregate stated amount at any time outstanding not
         exceeding the Total Letter of Credit Commitment minus outstanding
         Reimbursement Obligations.

                  "Letter of Credit Outstandings" means, as of any date of
         determination, the aggregate amount available to be drawn under all
         Letters of Credit plus Reimbursement Obligations then outstanding.

                  "Lien" means any interest in property securing any obligation
         owed to, or a claim by, a Person other than the owner of the property,
         whether such interest is based on the common law, statute or contract,
         and including but not limited to the lien or security interest arising
         from a mortgage, encumbrance, pledge, security agreement, conditional
         sale or trust receipt or a lease, consignment or bailment for security
         purposes. For the purposes of this Agreement, the Borrower and any
         Subsidiary shall be deemed to be the owner of any property which it has
         acquired or holds subject to a conditional sale agreement, financing
         lease, or other arrangement pursuant to which title to the property has
         been retained by or vested in some other Person for security purposes.

                   "Line of Business Transfer" means the transfer of the
         Transferred Business to Borrower by GenCorp on the Closing Date
         immediately prior to the closing of the Revolving Credit Facility.

                   "Line of Business Transfer Documents" means all documentation
         (including all schedules and exhibits thereto) relating to the Line of
         Business Transfer, including without limitation the Distribution
         Agreement.

                  "Loans" means, collectively, the Swing Line Loan and the
         Revolving Loans.

                  "Loan Documents" means this Agreement, the Notes, the Facility
         Guaranties, the LC Account Agreement, the Applications and Agreements
         for Letter of Credit, and all other instruments and documents
         heretofore or hereafter executed or delivered to or in favor of any
         Lender or the Agent in connection with the Loans made and transactions
         contemplated under this Agreement, as the same may be amended,
         supplemented or replaced from time to time.

                  "Material Adverse Effect" means a material adverse effect on
         (i) the business, properties, operations, or condition, financial or
         otherwise, of the Borrower and its Subsidiaries, taken as a whole, (ii)
         the ability of any Credit Party to pay or perform its respective
         obligations, liabilities and indebtedness under the Loan Documents as
         such payment or performance becomes due in accordance with the terms
         thereof, or (iii) the rights, powers and remedies of the Agent or any
         Lender under any Loan Document or the validity, legality or
         enforceability thereof.

                  "Material Contracts" means, collectively, any contract, lease,
         agreement or commitment of the Borrower or any Subsidiary the
         expiration or termination of which could be reasonably likely to result
         in a Material Adverse Effect.

                                       18
<PAGE>   25

                  "Material Subsidiary" means, as of any date of determination,
         any direct or indirect Subsidiary of the Borrower which has assets
         equal to at least 10% of Consolidated Total Assets (calculated as of
         the most recent fiscal period with respect to which the Agent shall
         have received financial statements required to be delivered pursuant to
         SECTIONS 8.1(a) or (b) hereof (or if such determination shall be made
         prior to delivery of such financial statements, then calculated with
         respect to the Fiscal Year end financial statements referenced in
         SECTION 7.6(a) hereof)); provided, however, that notwithstanding the
         foregoing, if the Borrower and the Domestic Subsidiaries, as defined
         above, have less than 90% of domestic Consolidated Total Assets or have
         net income of less than 90% of domestic Consolidated Net Income, then
         the term "Material Subsidiaries" shall mean Domestic Subsidiaries of
         the Borrower, as specified by the Borrower, that together with the
         Borrower have assets equal to not less than 90% of domestic
         Consolidated Total Assets and net income of not less than 90% of
         domestic Consolidated Net Income.

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

                  "Multiemployer Plan" means a "multiemployer plan" as defined
         in Section 4001(a)(3) of ERISA to which the Borrower or any ERISA
         Affiliate is making, or is accruing an obligation to make,
         contributions or has made, or been obligated to make, contributions
         within the preceding six (6) Fiscal Years.

                  "Municipal Obligations" means general obligations issued by,
         and supported by the full taxing authority of, any state of the United
         States of America or of any municipal corporation or other public body
         organized under the laws of any such state which are rated in the
         highest investment rating category by both S&P and Moody's.

                  "Notes" means, collectively, the Swing Line Note and the
         Revolving Notes.

                  "Obligations" means the obligations, liabilities and
         Indebtedness of the Borrower with respect to (i) the principal and
         interest on the Loans as evidenced by the Notes, (ii) the Reimbursement
         Obligations and otherwise in respect of the Letters of Credit, (iii)
         all liabilities of Borrower to any Lender (or any affiliate of any
         Lender) which arise under a Swap Agreement, and (iv) the payment and
         performance of all other obligations, liabilities and Indebtedness of
         the Borrower to the Lenders, the Agent or BAS hereunder, under any one
         or more of the other Loan Documents or with respect to the Loans.

                  "Operating Documents" means with respect to any corporation,
         limited liability company, partnership, limited partnership, limited
         liability partnership or other legally authorized incorporated or
         unincorporated entity, the bylaws, operating agreement, partnership
         agreement, limited partnership agreement or other applicable documents
         relating to the operation, governance or management of such entity.

                                       19
<PAGE>   26

                  "Organizational Action" means with respect to any corporation,
         limited liability company, partnership, limited partnership, limited
         liability partnership or other legally authorized incorporated or
         unincorporated entity, any corporate, organizational or partnership
         action (including any required shareholder, member or partner action),
         or other similar official action, as applicable, taken by such entity.

                  "Organizational Documents" means with respect to any
         corporation, limited liability company, partnership, limited
         partnership, limited liability partnership or other legally authorized
         incorporated or unincorporated entity, the articles of incorporation,
         certificate of incorporation, articles of organization, certificate of
         limited partnership or other applicable organizational or charter
         documents relating to the creation of such entity.

                  "Outstandings" means, collectively, at any date, the Letter of
         Credit Outstandings, Swing Line Outstandings and Revolving Credit
         Outstandings on such date.

                  "Participation" means, (i) with respect to any Lender (other
         than the Issuing Bank) and a Letter of Credit, the extension of credit
         represented by the participation of such Lender hereunder in the
         liability of the Issuing Bank in respect of a Letter of Credit issued
         by the Issuing Bank in accordance with the terms hereof and (ii) with
         respect to any Lender (other than Bank of America) and a Swing Line
         Loan, the extension of credit represented by the participation of such
         Lender hereunder in the liability of Bank of America in respect of a
         Swing Line Loan made by Bank of America in accordance with the terms
         hereof.

                  "PBGC" means the Pension Benefit Guaranty Corporation and any
         successor thereto.

                  "Pension Plan" means any employee pension benefit plan within
         the meaning of Section 3(2) of ERISA, other than a Multiemployer Plan,
         which is subject to the provisions of Title IV of ERISA or Section 412
         of the Code and which (i) is maintained for employees of the Borrower
         or any of its ERISA Affiliates or is assumed by the Borrower or any of
         its ERISA Affiliates in connection with any Acquisition or (ii) has at
         any time within the previous six (6) years been maintained by the
         Borrower for the employees of the Borrower or any current or former
         ERISA Affiliate.

                  "Permitted Asset Securitization" means any securitization of
         accounts receivable of the Borrower or its Subsidiaries having an
         aggregate contract value not exceeding $75,000,000 when added to all
         other securitization transactions consummated during the term of this
         Agreement and upon such terms as are acceptable to and approved in
         writing by the Required Lenders.

                  "Person" means an individual, partnership, corporation,
         limited liability company, limited liability partnership, trust,
         unincorporated organization, association, joint venture or a government
         or agency or political subdivision thereof.

                                       20
<PAGE>   27

                  "Prime Rate" means the per annum rate of interest established
         from time to time by Bank of America as its prime rate, which rate may
         not be the lowest rate of interest charged by Bank of America to its
         customers.

                  "Principal Office" means the principal office of Bank of
         America, presently located at 101 North Tryon Street, 15th Floor, NC1
         001-15-04, Charlotte, North Carolina 28255, Attention: Agency Services,
         or such other office and address as the Agent may from time to time
         designate.

                  "Proxy Statement" means the definitive proxy statement first
         mailed by GenCorp to its shareholders on or about July 7, 1999
         describing the Spinoff and soliciting such shareholder vote to proceed
         therewith.

                  "Rate Hedging Obligations" means, without duplication, any and
         all obligations of the Borrower or any Subsidiary, whether absolute or
         contingent and howsoever and whensoever created, arising, evidenced or
         acquired (including all renewals, extensions and modifications thereof
         and substitutions therefor), under (i) any and all agreements, devices
         or arrangements designed to protect at least one of the parties thereto
         from the fluctuations of interest rates, exchange rates or forward
         rates applicable to such party's assets, liabilities or exchange
         transactions, including, but not limited to, Dollar-denominated or
         cross-currency interest rate exchange agreements, forward currency
         exchange agreements, interest rate cap or collar protection agreements,
         forward rate currency or interest rate options, puts, warrants and
         those commonly known as interest rate "swap" agreements; (ii) all other
         "derivative instruments" as defined in FASB 133 and which are subject
         to the reporting requirements of FASB 133; and (iii) any and all
         cancellations, buybacks, reversals, terminations or assignments of any
         of the foregoing.

                  "Rated Debt" has the meaning therefor provided in the
         definition of "Applicable Margin."

                  "Regulation D" means Regulation D of the Board as the same may
         be amended or supplemented from time to time.

                  "Reimbursement Obligation" shall mean at any time, the
         obligation of the Borrower with respect to any Letter of Credit to
         reimburse the Issuing Bank and the Lenders to the extent of their
         respective Participations (including by the receipt by the Issuing Bank
         of proceeds of Loans pursuant to SECTION 2.1(c)(iii)) for amounts
         theretofore paid by the Issuing Bank pursuant to a drawing under such
         Letter of Credit.

                  "Related LC Documents" has the meaning therefor provided in
         SECTION 3.2(i)(i).

                  "Repurchase Agreement" means a repurchase agreement entered
         into with any financial institution whose debt obligations or
         commercial paper are rated "A" by either of S&P or Moody's or "A-1" by
         S&P or "P-1" by Moody's.

                                       21
<PAGE>   28

                  "Required Lenders" means, as of any date, Lenders on such date
         having Credit Exposures (as defined below) aggregating greater than 50%
         of the aggregate Credit Exposures of all the Lenders on such date. For
         purposes of the preceding sentence, the amount of the "CREDIT EXPOSURE"
         of each Lender shall be equal at all times (a) other than following the
         occurrence and during the continuance of an Event of Default, to its
         Revolving Credit Commitment, and (b) following the occurrence and
         during the continuance of an Event of Default, to the sum of (i) the
         aggregate principal amount of such Lender's Applicable Commitment
         Percentage of Revolving Credit Outstandings plus (ii) the amount of
         such Lender's Applicable Commitment Percentage of Letter of Credit
         Outstandings and Swing Line Outstandings; PROVIDED that, for the
         purpose of this definition only, (A) if any Lender shall have failed to
         fund its Applicable Commitment Percentage of any Advance, then the
         Revolving Credit Commitment of such Lender shall be deemed reduced by
         the amount it so failed to fund for so long as such failure shall
         continue and such Lender's Credit Exposure attributable to such failure
         shall be deemed held by any Lender making more than its Applicable
         Commitment Percentage of such Advance to the extent it covers such
         failure, (B) if any Lender shall have failed to pay to the Issuing Bank
         upon demand its Applicable Commitment Percentage of any drawing under
         any Letter of Credit resulting in an outstanding Reimbursement
         Obligation (whether by funding its Participation therein or otherwise),
         such Lender's Credit Exposure attributable to all Letter of Credit
         Outstandings shall be deemed to be held by the Issuing Bank until such
         Lender shall pay such deficiency amount to the Issuing Bank together
         with interest thereon as provided in SECTION 4.9 and (C) if any Lender
         shall have failed to pay to Bank of America on demand its Applicable
         Commitment Percentage of any Swing Line Loan (whether by funding its
         Participation therein or otherwise), such Lender's Credit Exposure
         attributable to all Swing Line Outstandings shall be deemed to be held
         by Bank of America until such Lender shall pay such deficiency amount
         to Bank of America together with interest thereon as provided in
         SECTION 4.9.

                  "Requirements of Law" means, with respect to a Person, the
         charter and bylaws or other organizational or governing documents of
         such Person, and any law, treaty, rule, regulation, right, privilege,
         qualification, license or franchise or final and nonappealable
         determination of an arbitrator or a court or other Governmental
         Authority, in each case applicable to or binding upon such Person or to
         which any of its property is subject or pertaining to any or all of the
         transactions contemplated or referred to herein.

                  "Reserve Requirement" means, at any time, the maximum rate at
         which reserves (including, without limitation, any marginal, special,
         supplemental, or emergency reserves) are required to be maintained
         under regulations issued from time to time by the Board of Governors of
         the Federal Reserve System (or any successor) by member banks of the
         Federal Reserve System against "Eurocurrency liabilities" (as such term
         is used in Regulation D). Without limiting the effect of the foregoing,
         the Reserve Requirement shall reflect any other reserves required to be
         maintained by such member banks with respect to (i) any category of
         liabilities which includes deposits by reference to which the
         Eurodollar Rate is to be determined, or (ii) any category of extensions
         of credit or other

                                       22
<PAGE>   29

         assets which include Eurodollar Rate Loans. The Eurodollar Rate shall
         be adjusted automatically on and as of the effective date of any change
         in the Reserve Requirement.

                  "Responsible Officer" means the Chief Executive Officer, the
         Chief Financial Officer, any Senior Vice President, the Secretary or
         the Treasurer of the Borrower.

                  "Restricted Payment" means (a) any dividend or other
         distribution, direct or indirect, on account of any shares of any class
         of stock of Borrower or any of its Subsidiaries (other than those
         payable or distributable solely to the Borrower) now or hereafter
         outstanding, except a dividend payable solely in shares of a class of
         stock to the holders of that class; (b) any redemption, conversion,
         exchange, retirement or similar payment, purchase or other acquisition
         for value, direct or indirect, of any shares of any class of stock of
         Borrower or any of its Subsidiaries (other than those payable or
         distributable solely to the Borrower) now or hereafter outstanding; (c)
         any payment made to retire, or to obtain the surrender of, any
         outstanding warrants, options or other rights to acquire shares of any
         class of stock of Borrower or any of its Subsidiaries now or hereafter
         outstanding.

                  "Revolving Credit Commitment" means, with respect to each
         Lender, the obligation of such Lender to make Revolving Loans to the
         Borrower up to an aggregate principal amount at any one time
         outstanding equal to such Lender's Applicable Commitment Percentage of
         the Total Revolving Credit Commitment.

                  "Revolving Credit Facility" means the facility described in
         SECTION 2.1 hereof providing for Loans to the Borrower by the Lenders
         in the aggregate principal amount of the Total Revolving Credit
         Commitment.

                  "Revolving Credit Outstandings" means, as of any date of
         determination, the aggregate principal amount of all Revolving Loans
         then outstanding.

                  "Revolving Credit Termination Date" means (i) the Stated
         Termination Date or (ii) such earlier date of termination of Lenders'
         obligations pursuant to SECTION 10.1 upon the occurrence of an Event of
         Default, or (iii) such date as the Borrower may voluntarily and
         permanently terminate the Revolving Credit Facility by payment in full
         of all Revolving Credit Outstandings, Swing Line Outstandings and
         Letter of Credit Outstandings and cancellation of all Letters of
         Credit, together with all accrued and unpaid interest thereon.

                  "Revolving Loan" means any borrowing pursuant to an Advance
         under the Revolving Credit Facility in accordance with SECTION 2.1.

                  "Revolving Notes" means, collectively, the promissory notes of
         the Borrower evidencing Revolving Loans executed and delivered to the
         Lenders as provided in SECTION 2.3 substantially in the form of EXHIBIT
         F-1, with appropriate insertions as to amounts, dates and names of
         Lenders.

                                       23
<PAGE>   30

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

                  "Senior Notes" means the senior notes of the Borrower to be
         issued in the aggregate principal amount not to exceed $150,000,000.

                  "Solvent" means, when used with respect to any Person, that at
         the time of determination:

                           (i) the fair value of its assets (both at fair
                  valuation and at present fair saleable value on an orderly
                  basis) is in excess of the total amount of its liabilities,
                  including Contingent Obligations; and

                           (ii) it is then able and expects to be able to pay
                  its debts as they mature; and

                           (iii) it has capital sufficient to carry on its
                  business as conducted and as proposed to be conducted.

                  "Special Distribution" means the cash dividend of
         approximately $188,000,000 and in no event to exceed $225,000,000 paid
         on the Closing Date, immediately following the Line of Business
         Transfer and the effectiveness of this Agreement and immediately
         preceding the Spinoff, by the Borrower to GenCorp, the proceeds of
         which are to be used by GenCorp to repay the GenCorp Prepayable Debt
         substantially simultaneously with the receipt thereof by GenCorp.

                  "Spinoff" means the special dividend of all outstanding shares
         of capital stock of the Borrower to the holders of the outstanding
         shares of GenCorp Common Stock on a pro rata basis and on the basis of
         one share of common stock of the Borrower for each share of common
         stock of GenCorp, all as described in the Proxy Statement.

                  "Spinoff Documents" means (i) the Proxy Statement, (ii) the
         Registration Statement of the Borrower on Form 10, including all
         amendments thereto, initially filed on July 9, 1999 with the Securities
         and Exchange Commission and (iii) all other documentation (including
         all schedules and exhibits thereto) relating to the Spinoff, including
         without limitation the Tax Matters Agreement, the Employee Matters
         Agreement and the Transition Services Agreement.

                  "Stated Termination Date" means September 30, 2004.

                  "Subsidiary" means any corporation or other entity in which
         more than 50% of its outstanding Voting Securities or more than 50% of
         all equity interests is owned directly or indirectly by the Borrower
         and/or by one or more of the Borrower's Subsidiaries.

                                       24
<PAGE>   31

                  "Swap Agreement" means one or more agreements between the
         Borrower and any Lender or any affiliate of any Lender with respect to
         Indebtedness evidenced by any or all of the Notes, on terms mutually
         acceptable to Borrower and such Person, which agreements create Rate
         Hedging Obligations.

                  "Swing Line" means the revolving line of credit established by
         Bank of America in favor of the Borrower pursuant to SECTION 2.4.

                  "Swing Line Loans" means loans made by Bank of America to the
         Borrower pursuant to SECTION 2.4.

                  "Swing Line Note" means the promissory note of the Borrower
         evidencing the Swing Line executed and delivered to Bank of America as
         provided in SECTION 2.3 substantially in the form of EXHIBIT F-2.

                  "Swing Line Outstandings" means, as of any date of
         determination, the aggregate principal amount of all Swing Line Loans
         then outstanding.

                  "Tax Matters Agreement" means the Tax Sharing Agreement dated
         as of September 30, 1999 between GenCorp and the Borrower providing for
         matters regarding Federal, state, local and foreign tax liabilities for
         periods prior to and including the effective date of the Spinoff.

                  "Taxes" has the meaning therefor provided in SECTION 5.6(a).

                  "Termination Event" means, other than the reorganization of
         any Employee Benefit Plan in connection with the Spinoff or Line of
         Business Transfer, (i) a "Reportable Event" described in Section 4043
         of ERISA and the regulations issued thereunder (unless the notice
         requirement has been waived by applicable regulation); or (ii) the
         withdrawal of the Borrower or any ERISA Affiliate from a Pension Plan
         during a plan year in which it was a "substantial employer" as defined
         in Section 4001(a)(2) of ERISA or was deemed such under Section 4062(e)
         of ERISA; or (iii) the termination of a Pension Plan, the filing of a
         notice of intent to terminate a Pension Plan or the treatment of a
         Pension Plan amendment as a termination under Section 4041 of ERISA; or
         (iv) the institution of proceedings to terminate a Pension Plan by the
         PBGC; or (v) any other event or condition which would constitute
         grounds under Section 4042(a) of ERISA for the termination of, or the
         appointment of a trustee to administer, any Pension Plan; or (vi) the
         partial or complete withdrawal of the Borrower or any ERISA Affiliate
         from a Multiemployer Plan; or (vii) the imposition of a Lien pursuant
         to Section 412 of the Code or Section 302 of ERISA; or (viii) any event
         or condition which results in the reorganization or insolvency of a
         Multiemployer Plan under Section 4241 or Section 4245 of ERISA,
         respectively; or (ix) any event or condition which results in the
         termination of a Multiemployer Plan under Section 4041A of ERISA or the
         institution by the PBGC of proceedings to terminate a Multiemployer
         Plan under Section 4042 of ERISA; or (x) any event or condition with
         respect to any Employee Benefit Plan which is

                                       25
<PAGE>   32

         regulated by any Foreign Benefit Law that results in the termination of
         such Employee Benefit Plan or the revocation of such Employee Benefit
         Plan's authority to operate under the applicable Foreign Benefit Law.

                  "Total Letter of Credit Commitment" means an amount not to
         exceed $25,000,000.

                  "Total Revolving Credit Commitment" means a principal amount
         equal to $300,000,000, as reduced from time to time in accordance with
         SECTION 2.1(e).

                  "Transaction Documents" means, collectively, or individually
         as the context may dictate, the Loan Documents, the Spinoff Documents
         and the Line of Business Transfer Documents.

                  "Transferred Business" means the assets, liabilities and
         operations of the Performance Chemicals and Decorative & Building
         Products businesses of GenCorp immediately prior to the Line of
         Business Transfer and includes the GenCorp Technology Center, corporate
         flight operations of GenCorp, the GenCorp corporate headquarters
         building in Fairlawn, Ohio and the tangible and intangible assets owned
         and leased for such businesses.

                  "Transition Services Agreement" means the Services and Support
         Agreement dated as of September 30, 1999 between GenCorp and the
         Borrower providing for certain transitional administrative services and
         for reimbursement of all direct and indirect costs of providing such
         services.

                  "Type" shall mean any type of Loan (i.e., a Base Rate Loan or
         a Eurodollar Rate Loan).

                  "Voting Securities" means shares of 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.

                  "Year 2000 Compliant" means all computer applications and
         other systems and operations of the Borrower and all of its
         Subsidiaries that are material to the Borrower's or any of its
         Subsidiaries' business and operations will on a timely basis be able to
         perform properly date-sensitive functions involving all dates on and
         after January 1, 2000;

                  "Year 2000 Problem" means the risk that computer applications
         or other systems or operations used by the Borrower or any of its
         Subsidiaries, suppliers, vendors or customers may be unable to
         recognize and perform properly date-sensitive functions involving
         certain dates on and after January 1, 2000.

                                       26
<PAGE>   33

         1.2.     RULES OF INTERPRETATION.

                  (a) All accounting terms not specifically defined herein shall
         have the meanings assigned to such terms and shall be interpreted in
         accordance with GAAP applied on a Consistent Basis.

                  (b) Each term defined in Articles 1, 8 or 9 of the New York
         Uniform Commercial Code shall have the meaning given therein unless
         otherwise defined herein, except to the extent that the Uniform
         Commercial Code of another jurisdiction is controlling, in which case
         such terms shall have the meaning given in the Uniform Commercial Code
         of the applicable jurisdiction.

                  (c) The headings, subheadings and table of contents used
         herein or in any other Loan Document are solely for convenience of
         reference and shall not constitute a part of any such document or
         affect the meaning, construction or effect of any provision thereof.

                  (d) Except as otherwise expressly provided, references in any
         Loan Document to articles, sections, paragraphs, clauses, annexes,
         appendices, exhibits and schedules are references to articles,
         sections, paragraphs, clauses, annexes, appendices, exhibits and
         schedules in or to such Loan Document.

                  (e) All definitions set forth herein or in any other Loan
         Document shall apply to the singular as well as the plural form of such
         defined term, and all references to the masculine gender shall include
         reference to the feminine or neuter gender, and vice versa, as the
         context may require.

                  (f) When used herein or in any other Loan Document, words such
         as "hereunder", "hereto", "hereof" and "herein" and other words of like
         import shall, unless the context clearly indicates to the contrary,
         refer to the whole of the applicable document and not to any particular
         article, section, subsection, paragraph or clause thereof.

                  (g) References to "including" means including without limiting
         the generality of any description preceding such term, and for purposes
         hereof the rule of ejusdem generis shall not be applicable to limit a
         general statement, followed by or referable to an enumeration of
         specific matters, to matters similar to those specifically mentioned.

                  (h) Except as otherwise expressly provided, all dates and
         times of day specified herein shall refer to such dates and times at
         Charlotte, North Carolina.

                  (i) Whenever interest rates or fees are established in whole
         or in part by reference to a numerical percentage expressed as "___%",
         such arithmetic expression shall be interpreted in accordance with the
         convention that 1% = 100 basis points.

                                       27
<PAGE>   34

                  (j) Any reference to an officer of the Borrower or any other
         Person by reference to the title of such officer shall be deemed to
         refer to each other officer of such Person, however titled, exercising
         the same or substantially similar functions.

                  (k) All references to any agreement or document as amended,
         modified or supplemented, or words of similar effect, shall mean such
         document or agreement, as the case may be, as amended, modified or
         supplemented from time to time only as and to the extent permitted
         therein and in the Loan Documents.

                                       28
<PAGE>   35

                                   ARTICLE II

                              The Credit Facilities
                              ---------------------

         2.1.     REVOLVING LOANS.

                 (a) COMMITMENT. Subject to the terms and conditions of this
         Agreement, each Lender severally agrees to make Advances to the
         Borrower under the Revolving Credit Facility from time to time from the
         Closing Date until the Revolving Credit Termination Date on a pro rata
         basis as to the total borrowing requested by the Borrower on any day
         determined by such Lender's Applicable Commitment Percentage up to but
         not exceeding the Revolving Credit Commitment of such Lender, PROVIDED,
         however, that the Lenders will not be required and shall have no
         obligation to make any such Advance (i) so long as a Default or an
         Event of Default has occurred and is continuing or (ii) if the Agent
         has accelerated the maturity of any of the Notes as a result of an
         Event of Default; PROVIDED further, however, that immediately after
         giving effect to each such Advance, the amount of Revolving Credit
         Outstandings plus Letter of Credit Outstandings plus Swing Line
         Outstandings shall not exceed the Total Revolving Credit Commitment.
         Within such limits and subject to the other terms and conditions of
         this Agreement, the Borrower may borrow, repay and reborrow under the
         Revolving Credit Facility on a Business Day from the Closing Date
         until, but (as to borrowings and reborrowings) not including, the
         Revolving Credit Termination Date.

                  (b) AMOUNTS. Except as otherwise permitted by the Lenders from
         time to time, the amount of Revolving Credit Outstandings plus Letter
         of Credit Outstandings plus Swing Line Outstandings shall not exceed at
         any time the Total Revolving Credit Commitment, and, in the event there
         shall be outstanding any such excess, the Borrower shall immediately
         make such payments and prepayments as shall be necessary to comply with
         this restriction. Each Advance under the Revolving Credit Facility,
         other than Base Rate Refunding Loans, shall be in an amount of at least
         $5,000,000, and, if greater than $5,000,000, an integral multiple of
         $1,000,000.

                  (c)      ADVANCES.

                           (i) An Authorized Representative shall give the Agent
                  (1) at least three (3) Business Days' irrevocable telephonic
                  notice of each Eurodollar Rate Loan (whether representing an
                  additional borrowing or the Continuation of a borrowing
                  hereunder or the Conversion of a borrowing hereunder from a
                  Base Rate Loan to a Eurodollar Rate Loan) prior to 11:00 A.M.
                  and (2) irrevocable telephonic notice of each Base Rate Loan
                  (other than Base Rate Refunding Loans to the extent the same
                  are effected without notice pursuant to SECTION 2.1(c)(iii)
                  and whether representing an additional borrowing hereunder or
                  the Conversion of borrowing hereunder from Eurodollar Rate
                  Loans to Base Rate Loans) prior to 11:00 A.M. on the day of
                  such proposed Revolving Loan. Each such notice shall be
                  effective upon receipt by the Agent, shall specify the amount
                  of the borrowing,

                                       29
<PAGE>   36

                  the type of Revolving Loan (Base Rate or Eurodollar Rate), the
                  date of borrowing and, if a Eurodollar Rate Loan, the Interest
                  Period to be used in the computation of interest. The
                  Authorized Representative shall provide the Agent written
                  confirmation of each such telephonic notice in the form of a
                  Borrowing Notice or Interest Rate Selection Notice (as
                  applicable) with appropriate insertions but failure to provide
                  such confirmation shall not affect the validity of such
                  telephonic notice. Notice of receipt of such Borrowing Notice
                  or Interest Rate Selection Notice, as the case may be,
                  together with the amount of each Lender's portion of an
                  Advance requested thereunder, shall be provided by the Agent
                  to each Lender by telefacsimile transmission with reasonable
                  promptness, but (provided the Agent shall have received such
                  notice by 10:30 A.M.) not later than 1:00 P.M. on the same day
                  as the Agent's receipt of such notice.

                           (ii) Not later than 2:00 P.M. on the date specified
                  for each borrowing under this SECTION 2.1, each Lender shall,
                  pursuant to the terms and subject to the conditions of this
                  Agreement, make the amount of the Advance or Advances to be
                  made by it on such day available by wire transfer to the Agent
                  in the amount of its pro rata share, determined according to
                  such Lender's Applicable Commitment Percentage of the
                  Revolving Loan or Revolving Loans to be made on such day. Such
                  wire transfer shall be directed to the Agent at the Principal
                  Office and shall be in the form of Dollars constituting
                  immediately available funds. The amount so received by the
                  Agent shall, subject to the terms and conditions of this
                  Agreement, be made available to the Borrower by delivery of
                  the proceeds thereof to the Borrower's Account or otherwise as
                  shall be directed in the applicable Borrowing Notice by the
                  Authorized Representative and reasonably acceptable to the
                  Agent.

                           (iii) Notwithstanding the foregoing, if a drawing is
                  made under any Letter of Credit, such drawing is honored by
                  the Issuing Bank, and the Borrower shall not immediately fully
                  reimburse the Issuing Bank in respect of such drawing from
                  other funds available to the Borrower, (A) provided that the
                  conditions to making a Revolving Loan as herein provided shall
                  then be satisfied, the Reimbursement Obligation arising from
                  such drawing shall be paid to the Issuing Bank by the Agent
                  without the requirement of notice to or from the Borrower from
                  immediately available funds which shall be advanced as a Base
                  Rate Refunding Loan to the Agent at its Principal Office by
                  each Lender under the Revolving Credit Facility in an amount
                  equal to such Lender's Applicable Commitment Percentage of
                  such Reimbursement Obligation, and (B) if the conditions to
                  making a Revolving Loan as herein provided shall not then be
                  satisfied, each of the Lenders shall fund by payment to the
                  Agent (for the benefit of the Issuing Bank) at its Principal
                  Office in immediately available funds the purchase from the
                  Issuing Bank of their respective Participations in the related
                  Reimbursement Obligation based on their respective Applicable
                  Commitment Percentages of the Total Letter of Credit
                  Commitment. If a drawing is presented under any Letter of
                  Credit in accordance with the terms thereof and the Borrower

                                       30
<PAGE>   37

                  shall not immediately reimburse the Issuing Bank in respect
                  thereof, then notice of such drawing or payment shall be
                  provided promptly by the Issuing Bank to the Agent and the
                  Agent shall provide notice to each Lender by telephone or
                  telefacsimile transmission. If notice to the Lenders of a
                  drawing under any Letter of Credit is given by the Agent at or
                  before 12:00 noon on any Business Day, each Lender shall
                  either make a Base Rate Refunding Loan or fund the purchase of
                  its Participation as specified above in the amount of such
                  Lender's Applicable Commitment Percentage of such drawing or
                  payment and shall pay such amount to the Agent for the account
                  of the Issuing Bank at the Principal Office in Dollars and in
                  immediately available funds before 2:30 P.M. on the same
                  Business Day. If such notice to the Lenders is given by the
                  Agent after 12:00 noon on any Business Day, each Lender shall
                  either make such Base Rate Refunding Loan or fund such
                  purchase before 12:00 noon on the next following Business Day.

                  (d) REPAYMENT OF REVOLVING LOANS. The principal amount of each
         Revolving Loan shall be due and payable to the Agent for the benefit of
         each Lender in full on the Revolving Credit Termination Date, or
         earlier as specifically provided herein. The principal amount of any
         Revolving Loan may be prepaid in whole or in part on any Business Day,
         upon (A) at least three (3) Business Days' irrevocable telephonic
         notice, in the case of each Revolving Loan that is a Eurodollar Rate
         Loan, from an Authorized Representative (effective upon receipt) to the
         Agent prior to 10:30 A.M. and (B) irrevocable telephonic notice, in the
         case of each Revolving Loan that is a Base Rate Loan, from an
         Authorized Representative (effective upon receipt) to the Agent prior
         to 10:30 A.M. on the day of such proposed repayment. The Authorized
         Representative shall provide the Agent written confirmation of each
         such telephonic notice but failure to provide such confirmation shall
         not effect the validity of such telephonic notice. All prepayments of
         Revolving Loans made by the Borrower shall be in the amount of
         $10,000,000 or such greater amount which is an integral multiple of
         $5,000,000, or the amount equal to all Revolving Credit Outstandings,
         or such other amount as necessary to comply with SECTION 2.1(b).

                  (e) REDUCTIONS. The Borrower shall, by notice from an
         Authorized Representative, have the right from time to time but not
         more frequently than once each calendar month, upon not less than three
         (3) Business Days' written notice to the Agent, effective upon receipt,
         to reduce the Total Revolving Credit Commitment. The Agent shall give
         each Lender, within one (1) Business Day of receipt of such notice,
         telefacsimile notice, or telephonic notice (confirmed in writing), of
         such reduction. Each such reduction shall be in the aggregate amount of
         $10,000,000 or such greater amount which is in an integral multiple of
         $5,000,000, or the entire remaining Total Revolving Credit Commitment,
         and shall permanently reduce the Total Revolving Credit Commitment.
         Each reduction of the Total Revolving Credit Commitment shall be
         accompanied by payment of the Revolving Loans to the extent that the
         principal amount of Revolving Credit Outstandings plus Letter of Credit
         Outstandings plus Swing Line Outstandings exceeds the Total Revolving
         Credit Commitment after giving effect to such reduction, together with
         accrued and unpaid interest on the amounts prepaid.

                                       31
<PAGE>   38

         2.2. USE OF PROCEEDS. The proceeds of the Loans made pursuant to the
Revolving Credit Facility hereunder shall be used by the Borrower for general
working capital needs and other corporate purposes, including the payment of the
Special Distribution and the making of Acquisitions and Capital Expenditures
permitted hereunder.

         2.3.     NOTES.

                  (a) REVOLVING NOTES. Revolving Loans made by each Lender shall
         be evidenced by the Revolving Note payable to the order of such Lender
         in the respective amount of its Applicable Commitment Percentage of the
         Total Revolving Credit Commitment, which Revolving Note shall be dated
         the Closing Date or a later date pursuant to an Assignment and
         Acceptance and shall be duly completed, executed and delivered by the
         Borrower.

                  (b) SWING LINE NOTE. The Swing Line Outstandings shall be
         evidenced by a separate Swing Line Note payable to the order of the
         Bank of America in the amount of the Swing Line, which Note shall be
         dated the Closing Date and shall be duly completed, executed and
         delivered by the Borrower.

         2.4.     SWING LINE.

                  (a) Notwithstanding any other provision of this Agreement to
         the contrary, in order to administer the Revolving Credit Facility in
         an efficient manner and to minimize the transfer of funds between the
         Agent and the Lenders, Bank of America shall make available Swing Line
         Loans to the Borrower prior to the Revolving Credit Termination Date.
         Bank of America shall not be obligated to make any Swing Line Loan
         pursuant hereto (i) if to the actual knowledge of Bank of America the
         Borrower is not in compliance with all the conditions to the making of
         Revolving Loans set forth in this Agreement, (ii) if after giving
         effect to such Swing Line Loan, the Swing Line Outstandings exceed
         $10,000,000, or (iii) if after giving effect to such Swing Line Loan,
         the sum of the Swing Line Outstandings, Revolving Credit Outstandings
         and Letter of Credit Outstandings exceeds the Total Revolving Credit
         Commitment. The Borrower may, subject to the conditions set forth in
         the preceding sentence, borrow, repay and reborrow under this SECTION
         2.4. Unless notified to the contrary by Bank of America, borrowings
         under the Swing Line shall be made in the minimum amount of $1,000,000
         or, if greater, in amounts which are integral multiples of $100,000, or
         in the amount necessary to effect a Base Rate Refunding Loan, upon
         written request by telefacsimile transmission, effective upon receipt,
         by an Authorized Representative of the Borrower made to Bank of America
         not later than 12:30 P.M. on the Business Day of the requested
         borrowing. Each such Borrowing Notice shall specify the amount of the
         borrowing and the date of borrowing, and shall be in the form of
         EXHIBIT D-2, with appropriate insertions. Unless notified to the
         contrary by Bank of America, each repayment of a Swing Line Loan shall
         be in an amount which is an integral multiple of $100,000 or the
         aggregate amount of all Swing Line Outstandings.

                                       32
<PAGE>   39

                  (b) The interest payable on Swing Line Loans is solely for the
         account of Bank of America. Swing Line Loans shall bear interest solely
         at the Base Rate or, if applicable, the Default Rate. All accrued and
         unpaid interest on Swing Line Loans shall be payable, on the dates and
         in the manner provided in SECTION 4.3 with respect to interest on Base
         Rate Loans.

                  (c) Upon the making of a Swing Line Loan, each Lender shall be
         deemed to have purchased from Bank of America a Participation therein
         in an amount equal to that Lender's Applicable Commitment Percentage of
         such Swing Line Loan. Upon demand made by Bank of America, each Lender
         shall, according to its Applicable Commitment Percentage of such Swing
         Line Loan, promptly provide to Bank of America its purchase price
         therefor in an amount equal to its Participation therein. Any Advance
         made by a Lender pursuant to demand of Bank of America of the purchase
         price of its Participation shall when made be deemed to be (i) provided
         that the conditions to making Revolving Loans shall be satisfied, a
         Base Rate Refunding Loan under SECTION 2.1, and (ii) in all other
         cases, the funding by each Lender of the purchase price of its
         Participation in such Swing Line Loan. The obligation of each Lender to
         so provide its purchase price to Bank of America shall be absolute and
         unconditional and shall not be affected by the occurrence of an Event
         of Default or any other occurrence or event.

         The Borrower, at its option and subject to the terms hereof, may
request an Advance pursuant to SECTION 2.1 in an amount sufficient to repay
Swing Line Outstandings on any date and the Agent shall provide from the
proceeds of such Advance to Bank of America the amount necessary to repay such
Swing Line Outstandings (which Bank of America shall then apply to such
repayment) and credit any balance of the Advance in immediately available funds
in the manner directed by the Borrower pursuant to SECTION 2.1(c)(ii). The
proceeds of such Advances shall be paid to Bank of America for application to
the Swing Line Outstandings and the Lenders shall then be deemed to have made
Loans in the amount of such Advances. The Swing Line shall continue in effect
until the Revolving Credit Termination Date, at which time all Swing Line
Outstandings and accrued interest thereon shall be due and payable in full.

                                       33
<PAGE>   40

                                   ARTICLE III

                                Letters of Credit
                                -----------------

         3.1. LETTERS OF CREDIT. The Issuing Bank agrees, subject to the terms
and conditions of this Agreement, upon request of the Borrower to issue from
time to time for the account of the Borrower Letters of Credit upon delivery to
the Issuing Bank of an Application and Agreement for Letter of Credit relating
thereto in form and content acceptable to the Issuing Bank; PROVIDED, that (i)
the Issuing Bank shall not be obligated to issue any Letter of Credit if it has
been notified by the Agent or has actual knowledge that a Default or Event of
Default has occurred and is continuing, (ii) the Letter of Credit Outstandings
shall not exceed the Total Letter of Credit Commitment and (iii) no Letter of
Credit shall be issued if, after giving effect thereto, Letter of Credit
Outstandings plus Revolving Credit Outstandings plus Swing Line Outstandings
shall exceed the Total Revolving Credit Commitment. No Letter of Credit shall
have an expiry date (including all rights of the Borrower or any beneficiary
named in such Letter of Credit to require renewal) or payment date occurring
later than the seventh Business Day prior to the Stated Termination Date.

         3.2.     REIMBURSEMENT AND PARTICIPATIONS.

                  (a) The Borrower hereby unconditionally agrees to pay to the
         Issuing Bank immediately on demand at the Principal Office all amounts
         required to pay all drafts drawn or purporting to be drawn under the
         Letters of Credit and all reasonable expenses incurred by the Issuing
         Bank in connection with the Letters of Credit, and in any event and
         without demand to place in possession of the Issuing Bank (which shall
         include Advances under the Revolving Credit Facility if permitted by
         SECTION 2.1 and Swing Line Loans if permitted by SECTION 2.4)
         sufficient funds to pay all debts and liabilities arising under any
         Letter of Credit. The Issuing Bank agrees to give the Borrower prompt
         notice of any request for a draw under a Letter of Credit. The Issuing
         Bank may charge any account the Borrower may have with it for any and
         all amounts the Issuing Bank pays under a Letter of Credit, plus
         charges and reasonable expenses as from time to time agreed to by the
         Issuing Bank and the Borrower; provided that to the extent permitted by
         SECTION 2.1(c)(iii) and SECTION 2.4, amounts shall be paid pursuant to
         Advances under the Revolving Credit Facility or, if the Borrower shall
         elect, by Swing Line Loans. The Borrower agrees to pay the Issuing Bank
         interest on any Reimbursement Obligations not paid when due hereunder
         at the Default Rate.

                  (b) In accordance with the provisions of SECTION 2.1(c), the
         Issuing Bank shall notify the Agent of any drawing under any Letter of
         Credit promptly following the receipt by the Issuing Bank of such
         drawing.

                  (c) Each Lender (other than the Issuing Bank) shall
         automatically acquire on the date of issuance thereof, a Participation
         in the liability of the Issuing Bank in respect of each Letter of
         Credit in an amount equal to such Lender's Applicable Commitment
         Percentage of such liability, and to the extent that the Borrower is
         obligated to pay the

                                       34
<PAGE>   41

         Issuing Bank under SECTION 3.2(a), each Lender (other than the Issuing
         Bank) thereby shall absolutely, unconditionally and irrevocably assume,
         and shall be unconditionally obligated to pay to the Issuing Bank, its
         Applicable Commitment Percentage of the liability of the Issuing Bank
         under such Letter of Credit in the manner and with the effect provided
         in SECTION 2.1(c)(iii).

                  (d) Simultaneously with the making of each payment by a Lender
         to the Issuing Bank pursuant to SECTION 2.1(c)(iii)(B), such Lender
         shall, automatically and without any further action on the part of the
         Issuing Bank or such Lender, acquire a Participation in an amount equal
         to such payment (excluding the portion thereof constituting interest
         accrued prior to the date the Lender made its payment) in the related
         Reimbursement Obligation of the Borrower. Each Lender's obligation to
         make payment to the Agent for the account of the Issuing Bank pursuant
         to SECTION 2.1(c)(iii) and SECTION 3.2(c), and the right of the Issuing
         Bank to receive the same, shall be absolute and unconditional, shall
         not be affected by any circumstance whatsoever and shall be made
         without any offset, abatement, withholding or reduction whatsoever. In
         the event the Lenders have purchased Participations in any
         Reimbursement Obligation as set forth above, then at any time payment
         (in fully collected, immediately available funds) of such Reimbursement
         Obligation, in whole or in part, is received by the Issuing Bank from
         the Borrower, the Issuing Bank shall promptly pay to each Lender an
         amount equal to its Applicable Commitment Percentage of such payment
         from the Borrower.

                  (e) Promptly following the end of each calendar quarter, the
         Issuing Bank shall deliver to the Agent a notice describing the
         aggregate undrawn amount of all Letters of Credit at the end of such
         quarter. Upon the request of any Lender from time to time, the Issuing
         Bank shall deliver to the Agent, and the Agent shall deliver to such
         Lender, any other information reasonably requested by such Lender with
         respect to each Letter of Credit outstanding.

                  (f) The issuance by the Issuing Bank of each Letter of Credit
         shall, in addition to the conditions precedent set forth in ARTICLE VI,
         be subject to the conditions that such Letter of Credit be in such form
         and contain such terms as shall be reasonably satisfactory to the
         Issuing Bank consistent with the then current practices and procedures
         of the Issuing Bank with respect to similar letters of credit, and the
         Borrower shall have executed and delivered such other instruments and
         agreements relating to such Letters of Credit as the Issuing Bank shall
         have reasonably requested consistent with such practices and
         procedures. All Letters of Credit shall be issued pursuant to and
         subject to the Uniform Customs and Practice for Documentary Credits,
         1993 revision, International Chamber of Commerce Publication No. 500
         or, if the Issuing Bank shall elect by express reference in an affected
         Letter of Credit, the International Chamber of Commerce International
         Standby Practices commonly referred to as "ISP98", or any subsequent
         amendment or revision of either thereof.

                  (g) The Borrower agrees that the Issuing Bank may, in its sole
         discretion, accept or pay, as complying with the terms of any Letter of
         Credit, any drafts or other

                                       35
<PAGE>   42

         documents otherwise in order which may be signed or issued by an
         administrator, executor, trustee in bankruptcy, debtor in possession,
         assignee for the benefit of creditors, liquidator, receiver, attorney
         in fact or other legal representative of a party who is authorized
         under such Letter of Credit to draw or issue any drafts or other
         documents.

                  (h) Without limiting the generality of the provisions of
         SECTION 12.9, the Borrower hereby agrees to indemnify and hold harmless
         the Issuing Bank, each other Lender and the Agent from and against any
         and all claims and damages, losses, liabilities, reasonable costs and
         expenses which the Issuing Bank, such other Lender or the Agent may
         incur (or which may be claimed against the Issuing Bank, such other
         Lender or the Agent) by any Person by reason of or in connection with
         the issuance or transfer of or payment or failure to pay under any
         Letter of Credit; provided that the Borrower shall not be required to
         indemnify the Issuing Bank, any other Lender or the Agent for any
         claims, damages, losses, liabilities, costs or expenses to the extent,
         but only to the extent, (i) caused by the willful misconduct or gross
         negligence of the party to be indemnified or (ii) caused by the failure
         of the Issuing Bank to pay under any Letter of Credit after the
         presentation to it of a request for payment strictly complying with the
         terms and conditions of such Letter of Credit, unless such payment is
         prohibited by any law, regulation, court order or decree. The
         indemnification and hold harmless provisions of this SECTION 3.2(h)
         shall survive repayment of the Obligations, occurrence of the Revolving
         Credit Termination Date, the Facility Termination Date and expiration
         or termination of this Agreement.

                  (i) Without limiting Borrower's rights as set forth in SECTION
         3.2(h), the obligation of the Borrower to immediately reimburse the
         Issuing Bank for drawings made under Letters of Credit and the Issuing
         Bank's right to receive such payment shall be absolute, unconditional
         and irrevocable, and such obligations of the Borrower shall be
         performed strictly in accordance with the terms of this Agreement and
         such Letters of Credit and the related Application and Agreement for
         any Letter of Credit, under all circumstances whatsoever, including the
         following circumstances:

                           (i) any lack of validity or enforceability of the
                  Letter of Credit, the obligation supported by the Letter of
                  Credit or any other agreement or instrument relating thereto
                  (collectively, the "Related LC Documents");

                           (ii) any amendment or waiver of or any consent to or
                  departure from all or any of the Related LC Documents;

                           (iii) the existence of any claim, setoff, defense
                  (other than the defense of payment in accordance with the
                  terms of this Agreement) or other rights which the Borrower
                  may have at any time against any beneficiary or any transferee
                  of a Letter of Credit (or any persons or entities for whom any
                  such beneficiary or any such transferee may be acting), the
                  Agent, the Lenders or any other Person, whether in connection
                  with the Loan Documents, the Related LC Documents or any
                  unrelated transaction;

                                       36
<PAGE>   43

                          (iv) any breach of contract or other dispute between
                  the Borrower and any beneficiary or any transferee of a Letter
                  of Credit (or any persons or entities for whom such
                  beneficiary or any such transferee may be acting), the Agent,
                  the Lenders or any other Person;

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

                          (vi) any delay, extension of time, renewal, compromise
                  or other indulgence or modification granted or agreed to by
                  the Agent, with or without notice to or approval by the
                  Borrower in respect of any of Borrower's Obligations under
                  this Agreement; or

                           (vii) any other circumstance or happening whatsoever,
                  whether or not similar to any of the foregoing;

         provided, however, that nothing contained herein shall be deemed to
         release the Issuing Bank or any other Lender of any liability for
         actual loss arising as a result of its gross negligence or willful
         misconduct; and provided further, however, that to the extent any
         conflict exists between this Agreement and any Application and
         Agreement for Letters of Credit or other document or agreement required
         by the Issuing Bank in connection with the issuance of Letters of
         Credit, the terms of this Agreement shall control.

                                       37
<PAGE>   44

                                   ARTICLE IV

                EURODOLLAR FUNDING, FEES, AND PAYMENT CONVENTIONS

         4.1. INTEREST RATE OPTIONS. Eurodollar Rate Loans and Base Rate Loans
may be outstanding at the same time and, so long as no Default or Event of
Default shall have occurred and be continuing, the Borrower shall have the
option to elect the Type of Loan and the duration of the initial and any
subsequent Interest Periods and to Convert Revolving Loans in accordance with
SECTIONS 2.1(c)(i) AND 4.2, as applicable; PROVIDED, HOWEVER, (a) there shall
not be outstanding at any one time Eurodollar Rate Loans having more than eight
(8) different Interest Periods, (b) each Eurodollar Rate Loan (including each
Conversion into and each Continuation as a Eurodollar Rate Loan) shall be in an
amount of $5,000,000 or, if greater than $5,000,000 an integral multiple of
$1,000,000 and (c) no Eurodollar Rate Loan shall have an Interest Period that
extends beyond the Stated Termination Date. If the Agent does not receive a
Borrowing Notice or an Interest Rate Selection Notice giving notice of election
of the duration of an Interest Period or of Conversion of any Loan to or
Continuation of a Loan as a Eurodollar Rate Loan by the time prescribed by
SECTIONS 2.1(c)(i) AND 4.2, as applicable, the Borrower shall be deemed to have
elected to obtain or Convert such Loan to (or Continue such Loan as) a Base Rate
Loan until the Borrower notifies the Agent in accordance with SECTION 4.2. The
Borrower shall not be entitled to elect to Continue any Loan as or Convert any
Loan into a Eurodollar Rate Loan if a Default or Event of Default shall have
occurred and be continuing.

         4.2. CONVERSIONS AND ELECTIONS OF SUBSEQUENT INTEREST PERIODS. Subject
to the limitations set forth in the definition of "Interest Period" and in
SECTION 4.1 and ARTICLE V, the Borrower may:

                  (a) upon delivery of telephonic notice to the Agent (which
         shall be irrevocable) on or before 10:30 A.M. on any Business Day,
         Convert any Eurodollar Rate Loan to a Base Rate Loan on the last day of
         the Interest Period for such Eurodollar Rate Loan; and

                  (b) provided that no Default or Event of Default shall have
         occurred and be continuing, upon delivery of telephonic notice to the
         Agent (which shall be irrevocable) on or before 10:30 A.M. three (3)
         Business Days' prior to the date of such Conversion or Continuation:

                           (i) elect a subsequent Interest Period for any
                  Eurodollar Rate Loan to begin on the last day of the then
                  current Interest Period for such Eurodollar Rate Loan; or

                           (ii) Convert any Base Rate Loan to a Eurodollar Rate
                  Loan on any Business Day.

         Each such notice shall be effective upon receipt by the Agent, shall
         specify the amount of the Eurodollar Rate Loan affected, and, if a
         Continuation as or Conversion into a

                                       38
<PAGE>   45

         Eurodollar Rate Loan, the Interest Period to be used in the computation
         of interest. The Authorized Representative shall provide the Agent
         written confirmation of each such telephonic notice in the form of a
         Borrowing Notice or Interest Rate Selection Notice (as applicable) with
         appropriate insertions but failure to provide such confirmation shall
         not affect the validity of such telephonic notice. Notice of receipt of
         such Borrowing Notice or Interest Rate Selection Notice, as the case
         may be, shall be provided by the Agent to each Lender by telefacsimile
         transmission with reasonable promptness, but (provided the Agent shall
         have received such notice by 10:30 A.M.) not later than 3:00 P.M. on
         the same day as the Agent's receipt of such notice. All such
         Continuations or Conversions of Loans shall be effected pro rata based
         on the Applicable Commitment Percentages of the Lenders.

         4.3. PAYMENT OF INTEREST. The Borrower shall pay interest on the
outstanding and unpaid principal amount of each Revolving Loan, commencing on
the first date of such Revolving Loan until such Revolving Loan shall be repaid,
at the applicable Base Rate or Eurodollar Rate as designated by the Borrower in
the related Borrowing Notice or Interest Rate Selection Notice or as otherwise
provided hereunder. Interest on each Revolving Loan shall be paid on the earlier
of (a) in the case of any Base Rate Loan, quarterly in arrears of the last
Business Day of each November, February, May and August, commencing on November
30, 1999, until the Revolving Credit Termination Date, at which date the entire
principal amount of and all accrued interest on the Revolving Loans shall be
paid in full, (b) in the case of any Eurodollar Rate Loan, on last day of the
applicable Interest Period for such Eurodollar Rate Loan and if such Interest
Period extends for more than three (3) months, at intervals of three (3) months
after the first day of such Interest Period, and (c) upon payment in full of the
related Revolving Loan; PROVIDED, HOWEVER, that if any Event of Default shall
occur and be continuing, all amounts outstanding hereunder shall bear interest
thereafter until paid in full at the Default Rate.

         4.4. PREPAYMENTS OF EURODOLLAR RATE LOANS. Whenever any payment of
principal shall be made in respect of any Loan hereunder, whether at maturity,
on acceleration, by optional or mandatory prepayment or as otherwise required or
permitted hereunder, with the effect that any Eurodollar Rate Loan shall be
prepaid in whole or in part prior to the last day of the Interest Period
applicable to such Eurodollar Rate Loan, such payment of principal shall be
accompanied by the additional payment, if any, required by SECTION 5.5.

         4.5.     MANNER OF PAYMENT.

                  (a) Each payment of principal (including any prepayment) and
         payment of interest and fees, and any other amount required to be paid
         by or on behalf of the Borrower to the Lenders, the Issuing Bank, the
         Agent, or Bank of America with respect to any Loan, Letter of Credit,
         Reimbursement Obligation, or Swing Line Loan, shall be made to the
         Agent at the Principal Office in Dollars in immediately available funds
         without condition or deduction or for any setoff, recoupment, deduction
         or counterclaim on or before 12:30 P.M. on the date such payment is
         due. The Agent may, but shall not

                                       39
<PAGE>   46

         be obligated to, debit the amount of such payment from any one or more
         ordinary deposit accounts of the Borrower with the Agent.

                  (b) Any payment made by or on behalf of the Borrower that is
         not made both in Dollars in immediately available funds and prior to
         12:30 P.M. on the date such payment is to be made shall constitute a
         non-conforming payment. Any such non-conforming payment shall not be
         deemed to be received until the later of (i) the time such funds become
         available funds and (ii) the next Business Day. Any non-conforming
         payment may constitute or become a Default or Event of Default as
         otherwise provided herein. Interest shall continue to accrue at the
         Default Rate on any principal or fees as to which no payment or a
         non-conforming payment is made from the date such amount was due and
         payable until the later of (i) the date such funds become available
         funds or (ii) the next Business Day.

                  (c) In the event that any payment hereunder or under any of
         the Notes becomes due and payable on a day other than a Business Day,
         then such due date shall be extended to the next succeeding Business
         Day unless provided otherwise under the definition of "Interest
         Period"; PROVIDED, however, that interest shall continue to accrue
         during the period of any such extension; and PROVIDED further, however,
         that in no event shall any such due date be extended beyond the
         Revolving Credit Termination Date.

         4.6.     FEES.

                  (a) UNUSED FEE. For the period beginning on the Closing Date
         and ending on the Revolving Credit Termination Date, the Borrower
         agrees to pay to the Agent, for the pro rata benefit of the Lenders
         based on their Applicable Commitment Percentages, a commitment fee
         equal to the Applicable Unused Fee multiplied by the average daily
         amount by which the Total Revolving Credit Commitment exceeds the sum
         of (i) Revolving Credit Outstandings without giving effect to Swing
         Line Outstandings plus (ii) Letter of Credit Outstandings. Such fees
         shall be due in arrears on the last Business Day of each November,
         February, May and August, commencing November 30, 1999 to and on the
         Revolving Credit Termination Date. Notwithstanding the foregoing, so
         long as any Lender fails to make available any portion of its Revolving
         Credit Commitment when required to do so in accordance with the terms
         hereof, such Lender shall not be entitled to receive payment of its pro
         rata share of such fee until such Lender shall make available such
         portion.

                  (b) LETTER OF CREDIT FACILITY FEES. The Borrower shall pay to
         the Agent, for the pro rata benefit of the Lenders based on their
         Applicable Commitment Percentages, a fee on the aggregate amount
         available to be drawn on each outstanding Letter of Credit at a rate
         equal to the Applicable Margin for Eurodollar Rate Loans. Such fees
         shall be due with respect to each Letter of Credit quarterly in arrears
         on the last day of each December, March, June and September, the first
         such payment to be made on the first such date occurring after the date
         of issuance of a Letter of Credit.

                                       40
<PAGE>   47

                  (c) LETTER OF CREDIT FRONTING AND ADMINISTRATIVE FEES. From
         and after the date on which there is more than one Lender, the Borrower
         shall pay to the Issuing Bank a fronting fee of one-eighth of one
         percent per annum (.125%) on the aggregate amount available to be
         drawn on each outstanding Letter of Credit, such fee to be payable
         quarterly in arrears with respect to each Letter of Credit on the dates
         established in SECTION 4.6(b) for the payment of Letter of Credit
         facility fees with respect to such Letter of Credit. The Borrower shall
         also pay to the Issuing Bank such administrative fee and other fees, if
         any, in connection with the Letters of Credit in such amounts and at
         such times as the Issuing Bank and the Borrower shall agree from time
         to time.

                  (d) AGENCY ADMINISTRATIVE FEES. The Borrower agrees to pay to
         the Agent, for the Agent's individual account, an annual administrative
         fee, such fee to be payable in such amounts and on such dates as from
         time to time agreed to by the Borrower and Agent in writing.

         4.7. PRO RATA PAYMENTS. Except as otherwise specified herein, (a) each
payment on account of the principal of and interest on Loans, the fees described
in SECTION 4.6(a) AND (b), and Swing Line Loans and Reimbursement Obligations as
to which the Lenders have funded their respective Participations which remain
outstanding, shall be made to the Agent for the account of the Lenders pro rata
based on their Applicable Commitment Percentages, and (b) the Agent will
promptly distribute to the Lenders in immediately available funds payments
received in fully collected, immediately available funds from the Borrower.

         4.8. COMPUTATION OF RATES AND FEES. Except as may be otherwise
expressly provided, (i) the Base Rate shall be computed on the basis of the
365/366 day year and calculated for actual days elapsed, and (ii) all other
interest rates (including each Eurodollar Rate, and the Default Rate) and fees
shall be computed on the basis of a year of 360 days and calculated for actual
days elapsed.

         4.9. DEFICIENCY ADVANCES; FAILURE TO PURCHASE PARTICIPATIONS. No Lender
shall be responsible for any default of any other Lender in respect to such
other Lender's obligation to make any Loan or Advance hereunder or to fund its
purchase of any Participation hereunder nor shall the Revolving Credit
Commitment or Letter of Credit Commitment of any Lender hereunder be increased
as a result of such default of any other Lender. Without limiting the generality
of the foregoing or the provisions of SECTION 4.10, in the event any Lender
shall fail to advance funds to the Borrower as herein provided, the Agent may in
its discretion, but shall not be obligated to, advance under the applicable Note
in its favor as a Lender all or any portion of such amount or amounts (each, a
"deficiency advance") and shall thereafter be entitled to payments of principal
of and interest on such deficiency advance in the same manner and at the same
interest rate or rates to which such other Lender would have been entitled had
it made such Advance under its Note; provided that, (i) such defaulting Lender
shall not be entitled to receive payments of principal, interest or fees with
respect to such deficiency advance until such deficiency advance (together with
interest thereon as provided in clause (ii)) shall be paid by such Lender and
(ii) upon payment to the Agent from such other Lender of the entire outstanding
amount of each such deficiency advance, together with accrued and unpaid
interest thereon, from

                                       41
<PAGE>   48

the most recent date or dates interest was paid to the Agent by a Borrower on
each Loan comprising the deficiency advance at the Federal Funds Rate, then such
payment shall be credited against the applicable Note of the Agent in full
payment of such deficiency advance and such Borrower shall be deemed to have
borrowed the amount of such deficiency advance from such other Lender as of the
most recent date or dates, as the case may be, upon which any payments of
interest were made by such Borrower thereon. In the event any Lender shall fail
to fund its purchase of a Participation after notice from the Issuing Bank or
Bank of America as the Swing Line lender, as applicable, such Lender shall pay
to the Issuing Bank or Bank of America as the Swing Line lender, as applicable,
such amount on demand, together with interest on the amount so due from the date
of such notice at the Federal Funds Rate to the date such purchase price is
received by the Issuing Bank or Bank of America as the Swing Line lender, as
applicable.

         4.10. INTRADAY FUNDING. Without limiting the provisions of SECTION 4.9,
unless the Borrower or any Lender has notified the Agent not later than 12:00
Noon of the Business Day before the date any payment (including in the case of
Lenders any Advance) to be made by it is due, that it does not intend to remit
such payment, the Agent may, in its discretion, assume that Borrower or each
Lender, as the case may be, has timely remitted such payment in the manner
required hereunder and may, in its discretion and in reliance thereon, make
available such payment (or portion thereof) to the Person entitled thereto as
otherwise provided herein. If such payment was not in fact remitted to the Agent
in the manner required hereunder, then:

                  (i) if Borrower failed to make such payment, each Lender shall
         forthwith on demand repay to the Agent the amount of such assumed
         payment made available to such Lender, together with interest thereon
         in respect of each day from and including the date such amount was made
         available by the Agent to such Lender to the date such amount is repaid
         to the Agent at the Federal Funds Rate; and

                  (ii) if any Lender failed to make such payment, the Agent
         shall be entitled to recover such corresponding amount forthwith upon
         the Agent's demand therefor, the Agent promptly shall notify the
         Borrower, and the Borrower shall promptly pay such corresponding amount
         to the Agent in immediately available funds upon receipt of such
         demand. The Agent also shall be entitled to recover interest on such
         corresponding amount in respect of each day from the date such
         corresponding amount was made available by the Agent to the Borrower to
         the date such corresponding amount is recovered by the Agent, (A) from
         such Lender at a rate per annum equal to the daily Federal Funds Rate
         or (B) from the Borrower, at a rate per annum equal to the interest
         rate applicable to the Loan which includes such corresponding amount.
         Until the Agent shall recover such corresponding amount together with
         interest thereon, such corresponding amount shall constitute a
         deficiency advance within the meaning of SECTION 4.9. Nothing herein
         shall be deemed to relieve any Lender from its obligation to fulfill
         its commitments hereunder or to prejudice any rights which the Agent or
         the Borrower may have against any Lender as a result of any default by
         such Lender hereunder.

                                       42
<PAGE>   49

                                    ARTICLE V

                             Change in Circumstances
                             -----------------------

         5.1.     INCREASED COST AND REDUCED RETURN.

                  (a) If, after the date hereof, the adoption of any applicable
         law, rule, or regulation, or any change in any applicable law, rule, or
         regulation, or any change in the interpretation or administration
         thereof by any governmental authority, central bank, or comparable
         agency charged with the interpretation or administration thereof, or
         compliance by any Lender (or its Applicable Lending Office) with any
         request or directive (whether or not having the force of law) of any
         such governmental authority, central bank, or comparable agency:

                           (i) shall subject such Lender (or its Applicable
                  Lending Office) to any tax, duty, or other charge with respect
                  to any Eurodollar Rate Loans, its Note, or its obligation to
                  make Eurodollar Rate Loans, or change the basis of taxation of
                  any amounts payable to such Lender (or its Applicable Lending
                  Office) under this Agreement or its Note in respect of any
                  Eurodollar Rate Loans (other than taxes imposed on the overall
                  net income of such Lender by the jurisdiction in which such
                  Lender has its principal office or such Applicable Lending
                  Office);

                           (ii) shall impose, modify, or deem applicable any
                  reserve, special deposit, assessment, or similar requirement
                  (other than the Reserve Requirement utilized in the
                  determination of the Eurodollar Rate) relating to any
                  extensions of credit or other assets of, or any deposits with
                  or other liabilities or commitments of, such Lender (or its
                  Applicable Lending Office), including the Revolving Credit
                  Commitment of such Lender hereunder; or

                           (iii) shall impose on such Lender (or its Applicable
                  Lending Office) or on the London interbank market any other
                  condition affecting this Agreement or its Note or any of such
                  extensions of credit or liabilities or commitments;

         and the result of any of the foregoing is to increase the cost to such
         Lender (or its Applicable Lending Office) of making, Converting into,
         Continuing, or maintaining any Loans or to reduce any sum received or
         receivable by such Lender (or its Applicable Lending Office) under this
         Agreement or its Note with respect to any Eurodollar Rate Loans, then
         the Borrower shall pay to such Lender on demand such amount or amounts
         as will compensate such Lender for such increased cost or reduction. If
         any Lender requests compensation by the Borrower under this SECTION
         5.1(a), the Borrower may, by notice to such Lender (with a copy to the
         Agent), suspend the obligation of such Lender to make or Continue Loans
         of the Type with respect to which such compensation is requested, or to
         Convert Loans of any other Type into Loans of such Type, until the
         event or condition giving rise to such request ceases to be in effect
         (in which case the provisions of SECTION

                                       43
<PAGE>   50

         5.4 shall be applicable); PROVIDED that such suspension shall not
         affect the right of such Lender to receive the compensation so
         requested.

                  (b) If, after the date hereof, any Lender shall have
         determined that the adoption of any applicable law, rule, or regulation
         regarding capital adequacy or any change therein or in the
         interpretation or administration thereof by any governmental authority,
         central bank, or comparable agency charged with the interpretation or
         administration thereof, or any request or directive regarding capital
         adequacy (whether or not having the force of law) of any such
         governmental authority, central bank, or comparable agency, has or
         would have the effect of reducing the rate of return on the capital of
         such Lender or any corporation controlling such Lender as a consequence
         of such Lender's obligations hereunder to a level below that which such
         Lender or such corporation could have achieved but for such adoption,
         change, request, or directive (taking into consideration its policies
         with respect to capital adequacy), then from time to time upon demand
         the Borrower shall pay to such Lender such additional amount or amounts
         as will compensate such Lender for such reduction.

                  (c) Each Lender shall promptly notify the Borrower and the
         Agent of any event of which it has knowledge, occurring after the date
         hereof, which will entitle such Lender to compensation pursuant to this
         SECTION 5.1 and will designate a different Applicable Lending Office if
         such designation will avoid the need for, or reduce the amount of, such
         compensation and will not, in the judgment of such Lender, be otherwise
         disadvantageous to it. Any Lender claiming compensation under this
         SECTION 5.1 shall furnish to the Borrower and the Agent a statement
         setting forth the additional amount or amounts to be paid to it
         hereunder which shall be conclusive in the absence of manifest error.
         In determining such amount, such Lender may use any reasonable
         averaging and attribution methods.

         5.2. LIMITATION ON TYPES OF LOANS. If on or prior to the first day of
any Interest Period for any Eurodollar Rate Loan:

                  (a) the Agent determines (which determination shall be
         conclusive) that by reason of circumstances affecting the relevant
         market, adequate and reasonable means do not exist for ascertaining the
         Eurodollar Rate for such Interest Period; or

                  (b) the Required Lenders determine (which determination shall
         be conclusive) and notify the Agent that the Eurodollar Rate will not
         adequately and fairly reflect the cost to the Lenders of funding
         Eurodollar Rate Loans for such Interest Period;

then the Agent shall give the Borrower prompt notice thereof specifying the
relevant Type of Loans and the relevant amounts or periods, and so long as such
condition remains in effect, the Lenders shall be under no obligation to make
additional Loans of such Type, Continue Loans of such Type, or to Convert Loans
of any other Type into Loans of such Type and the Borrower shall, on the last
day(s) of the then current Interest Period(s) for the outstanding Loans of the

                                       44
<PAGE>   51

affected Type, either prepay such Loans or Convert such Loans into another Type
of Loan in accordance with the terms of this Agreement.

         5.3. ILLEGALITY. Notwithstanding any other provision of this Agreement,
in the event that it becomes unlawful for any Lender or its Applicable Lending
Office to make, maintain, or fund Eurodollar Rate Loans hereunder, then such
Lender shall promptly notify the Borrower thereof and such Lender's obligation
to make or Continue Eurodollar Rate Loans and to Convert other Types of Loans
into Eurodollar Rate Loans shall be suspended until such time as such Lender may
again make, maintain, and fund Eurodollar Rate Loans (in which case the
provisions of SECTION 5.4 shall be applicable).

         5.4. TREATMENT OF AFFECTED LOANS. If the obligation of any Lender to
make a Eurodollar Rate Loan or to Continue, or to Convert Loans of any other
Type into, Loans of a particular Type shall be suspended pursuant TO SECTION 5.1
OR 5.3 hereof (Loans of such Type being herein called "Affected Loans" and such
Type being herein called the "Affected Type"), such Lender's Affected Loans
shall be automatically Converted into Base Rate Loans on the last day(s) of the
then current Interest Period(s) for Affected Loans (or, in the case of a
Conversion required by SECTION 5.3 hereof, on such earlier date as such Lender
may specify to the Borrower with a copy to the Agent) and, unless and until such
Lender gives notice as provided below that the circumstances specified in
SECTION 5.1 OR 5.3 hereof that gave rise to such Conversion no longer exist:

                  (a) to the extent that such Lender's Affected Loans have been
         so Converted, all payments and prepayments of principal that would
         otherwise be applied to such Lender's Affected Loans shall be applied
         instead to its Base Rate Loans; and

                  (b) all Loans that would otherwise be made or Continued by
         such Lender as Loans of the Affected Type shall be made or Continued
         instead as Base Rate Loans, and all Loans of such Lender that would
         otherwise be Converted into Loans of the Affected Type shall be
         Converted instead into (or shall remain as) Base Rate Loans.

If such Lender gives notice to the Borrower (with a copy to the Agent) that the
circumstances specified in SECTION 5.1 OR 5.3 hereof that gave rise to the
Conversion of such Lender's Affected Loans pursuant to this SECTION 5.4 no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Loans of the Affected Type made by other
Lenders are outstanding, such Lender's Base Rate Loans shall be automatically
Converted, on the first day(s) of the next succeeding Interest Period(s) for
such outstanding Loans of the Affected Type, to the extent necessary so that,
after giving effect thereto, all Loans held by the Lenders holding Loans of the
Affected Type and by such Lender are held pro rata (as to principal amounts,
Types, and Interest Periods) in accordance with their respective Revolving
Credit Commitments.

         5.5. COMPENSATION. Upon the request of any Lender, the Borrower shall
pay to such Lender such amount or amounts as shall be sufficient (in the
reasonable opinion of such Lender)

                                       45
<PAGE>   52

to compensate it for any loss, cost, or expense (including loss of anticipated
profits) incurred by it as a result of:

                  (a) any payment, prepayment, or Conversion of a Eurodollar
         Rate Loan for any reason (including, without limitation, the
         acceleration of the Loans pursuant to SECTION 10.1) on a date other
         than the last day of the Interest Period for such Loan; or

                  (b) any failure by the Borrower for any reason (including,
         without limitation, the failure of any condition precedent specified in
         ARTICLE VI to be satisfied) to borrow, Convert, Continue, or prepay a
         Eurodollar Rate Loan on the date for such borrowing, Conversion,
         Continuation, or prepayment specified in the relevant notice of
         borrowing, prepayment, Continuation, or Conversion under this
         Agreement.

         5.6.     TAXES.

                  (a) Any and all payments by the Borrower to or for the account
         of any Lender or the Agent hereunder or under any other Loan Document
         shall be made free and clear of and without deduction for any and all
         present or future taxes, duties, 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, by the jurisdiction under the laws
         of which such Lender (or its Applicable Lending Office) or the Agent
         (as the case may be) is organized or any political subdivision thereof
         (all such non-excluded taxes, duties, levies, imposts, deductions,
         charges, withholdings, and liabilities being hereinafter referred to as
         "Taxes"). If the Borrower shall be required by law to deduct any Taxes
         from or in respect of any sum payable under this Agreement or any other
         Loan Document to any Lender or the Agent, (i) the sum payable shall be
         increased as necessary so that after making all required deductions
         (including deductions applicable to additional sums payable under this
         SECTION 5.6) such Lender or the Agent receives an amount equal to the
         sum it would have received had no such deductions been made, (ii) the
         Borrower shall make such deductions, (iii) the Borrower shall pay the
         full amount deducted to the relevant taxation authority or other
         authority in accordance with applicable law, and (iv) the Borrower
         shall furnish to the Agent, at its address referred to in SECTION 12.2,
         the original or a certified copy of a receipt evidencing payment
         thereof.

                  (b) In addition, the Borrower agrees to pay any and all
         present or future stamp or documentary taxes and any other excise or
         property taxes or charges or similar levies which arise from any
         payment made under this Agreement or any other Loan Document or from
         the execution or delivery of, or otherwise with respect to, this
         Agreement or any other Loan Document (hereinafter referred to as "Other
         Taxes").

                  (c) The Borrower agrees to indemnify each Lender and the Agent
         for the full amount of Taxes and Other Taxes (including, without
         limitation, any Taxes or Other Taxes imposed or asserted by any
         jurisdiction on amounts payable under this SECTION 5.6)

                                       46
<PAGE>   53

         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.

                  (d) 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 Lender listed on the
         signature pages hereof and on or prior to the date on which it becomes
         a Lender in the case of each other Lender, and from time to time
         thereafter if requested in writing by the Borrower or the Agent (but
         only so long as such Lender remains lawfully able to do so), shall
         provide the Borrower and the Agent with (i) Internal Revenue Service
         Form 1001 or 4224, as appropriate, or any successor form prescribed by
         the Internal Revenue Service, certifying that such Lender is entitled
         to benefits under an income tax treaty to which the United States is a
         party which reduces the rate of withholding tax on payments of interest
         or certifying that the income receivable pursuant to this Agreement is
         effectively connected with the conduct of a trade or business in the
         United States, (ii) Internal Revenue Service Form W-8 or W-9, as
         appropriate, or any successor form prescribed by the Internal Revenue
         Service, and (iii) any other form or certificate required by any taxing
         authority (including any certificate required by Sections 871(h) and
         881(c) of the Internal Revenue Code), certifying that such Lender is
         entitled to an exemption from or a reduced rate of tax on payments
         pursuant to this Agreement or any of the other Loan Documents.

                  (e) For any period with respect to which a Lender has failed
         to provide the Borrower and the Agent with the appropriate form
         pursuant to SECTION 5.6(d) (unless such failure is due to a change in
         treaty, law, or regulation occurring subsequent to the date on which a
         form originally was required to be provided), such Lender shall not be
         entitled to indemnification under SECTION 5.6(a) OR 5.6(b) with respect
         to Taxes imposed by the United States; PROVIDED, HOWEVER, that should a
         Lender, which is otherwise exempt from or subject to a reduced rate of
         withholding tax, become subject to Taxes because of its failure to
         deliver a form required hereunder, the Borrower shall take such steps
         as such Lender shall reasonably request to assist such Lender to
         recover such Taxes.

                  (f) If the Borrower is required to pay additional amounts to
         or for the account of any Lender pursuant to this SECTION 5.6, then
         such Lender will agree to use reasonable efforts to change the
         jurisdiction of its Applicable Lending Office so as to eliminate or
         reduce any such additional payment which may thereafter accrue if such
         change, in the judgment of such Lender, is not otherwise
         disadvantageous to such Lender.

                  (g) Within thirty (30) days after the date of any payment of
         Taxes, the Borrower shall furnish to the Agent the original or a
         certified copy of a receipt evidencing such payment.

                  (h) Without prejudice to the survival of any other agreement
         of the Borrower hereunder, the agreements and obligations of the
         Borrower contained in this SECTION 5.6 shall survive the termination of
         the Revolving Credit Commitments, the payment in full of the Notes and
         the Facility Termination Date.

                                       47
<PAGE>   54

                                   ARTICLE VI

            Conditions to Making Loans and Issuing Letters of Credit
            --------------------------------------------------------

         6.1. CONDITIONS OF INITIAL ADVANCE. The obligation of the Lenders to
make the initial Advance under the Revolving Credit Facility, and of the Issuing
Bank to issue any Letter of Credit, and of Bank of America to make any Swing
Line Loan, is subject to the conditions precedent that:

                  (a) the Agent shall have received on the Closing Date, in form
         and substance satisfactory to the Agent and Lenders, the following:

                           (i) executed originals of each of this Agreement, the
                  Notes, the initial Facility Guaranties, the LC Account
                  Agreement and the other Loan Documents, together with all
                  schedules and exhibits thereto;

                          (ii) the favorable written opinion or opinions with
                  respect to the Loan Documents and the transactions
                  contemplated thereby of General Counsel to the Credit Parties
                  dated the Closing Date, addressed to the Agent and the Lenders
                  and satisfactory to Smith Helms Mulliss & Moore, L.L.P.,
                  special counsel to the Agent, substantially in the form of
                  EXHIBIT G;

                         (iii) resolutions of the boards of directors or other
                  appropriate governing body (or of the appropriate committee
                  thereof) of each Credit Party certified by its secretary or
                  assistant secretary as of the Closing Date, (x) approving and
                  adopting the Loan Documents to be executed by such Person, and
                  authorizing the execution and delivery thereof, (y) declaring
                  and authorizing the Special Distribution and (z) approving and
                  adopting the Line of Business Transfer Documents and the
                  Spinoff Documents, and authorizing the execution and delivery
                  thereof;

                          (iv) specimen signatures of officers or other
                  appropriate representatives executing the Loan Documents on
                  behalf of each of the Credit Parties, certified by the
                  secretary or assistant secretary of such Credit Party;

                           (v) the Organizational Documents of each of the
                  Credit Parties certified as of a recent date by the Secretary
                  of State of its state of organization;

                           (vi) Operating Documents of each of the Credit
                  Parties certified as of the Closing Date as true and correct
                  by its secretary or assistant secretary;

                         (vii) certificates issued as of a recent date by the
                  Secretaries of State of the respective jurisdictions of
                  formation of each of the Credit Parties as to the due
                  existence and good standing of such Person;

                                       48
<PAGE>   55

                        (viii) appropriate certificates of qualification to do
                  business, good standing and, where appropriate, authority to
                  conduct business under assumed name, issued in respect of the
                  Borrower as of a recent date by the Secretary of State or
                  comparable official of each of Pennsylvania, Ohio,
                  Mississippi, North Carolina, South Carolina, New Hampshire,
                  Wisconsin and Massachussetts, and in respect of each of the
                  Guarantors as of a recent date by the Secretary of State or
                  comparable official of Ohio, in each case constituting all of
                  the jurisdictions in which the failure to be qualified to do
                  business or authorized so to conduct business could have a
                  Material Adverse Effect;

                           (ix) notice of appointment of the initial Authorized
                  Representative(s);

                           (x) certificate of an Authorized Representative dated
                  the Closing Date demonstrating compliance with the financial
                  covenants contained in SECTIONS 9.1(a) and 9.1(b) as of the
                  end of the fiscal quarter of GenCorp and its subsidiaries most
                  recently ended prior to the Closing Date and based on the
                  historical pro forma financial statements furnished to the
                  Agent reflecting the Transferred Business as at and for the
                  four fiscal quarter period ended on such date, substantially
                  in the form of EXHIBIT H;

                           (xi) the Historical Unaudited Quarterly Statements
                  and all other financial statements and projections referred to
                  in SECTION 7.6(a);

                         (xii) evidence that all notices required to be given to
                  effect on the Closing Date the repayment of the GenCorp
                  Prepayable Debt and termination of the Existing GenCorp Credit
                  Agreement substantially simultaneously with payment of the
                  Special Distribution shall have been given;

                        (xiii) a certificate of an officer of the Borrower
                  reasonably satisfactory to the Agent and the Lenders as to the
                  matters set forth in SECTIONS 6.1(b)(i)(x) and 6.1(b)(ii) and
                  6.1(b)(iii) and, with respect to the operations, assets and
                  affairs of the Borrower and its Subsidiaries only, SECTIONS
                  6.1(c)(i) through 6.1(c)(iii);

                         (xiv) a certificate of an officer of GenCorp reasonably
                  satisfactory to the Agent and the Lenders as to the matters
                  set forth in SECTIONS 6.1(b)(i)(y), 6.1(b)(i)(z) and
                  6.1(b)(ii) and, with respect to the operations, assets and
                  affairs of GenCorp and its subsidiaries only, SECTIONS
                  6.1(c)(i) through 6.1(c)(iii);

                           (xv) evidence of all insurance required by the Loan
                  Documents;

                           (xvi) an initial Borrowing Notice, if any, and, if
                  elected by the Borrower, Interest Rate Selection Notice;

                                       49
<PAGE>   56

                           (xvii) copies of the executed Line of Business
                  Transfer Documents and Spinoff Documents certified by the
                  secretary or an assistant secretary of the Borrower, which
                  shall be satisfactory in form and substance to the Agent;

                           (xviii) copies certified by an Authorized
                  Representative of executed employment contracts by the
                  Borrower with key executives of the Transferred Business,
                  including Messrs. Yasinsky, McMullen and Mass;

                           (xix) a copy, certified by a Responsible Officer of
                  the Borrower, of the ruling letter dated June 30, 1999 from
                  the Internal Revenue Service ("IRS") to the effect that
                  Section 335 of the Code would apply to the Spinoff such that
                  the Spinoff will constitute a tax-free distribution by GenCorp
                  for U.S. Federal income tax purposes (the "IRS Ruling
                  Letter");

                           (xx) such other documents, instruments, certificates
                  and opinions as the Agent or any Lender may reasonably request
                  on or prior to the Closing Date in connection with the
                  consummation of the transactions contemplated hereby; and

                           (xxi) evidence that all fees payable by the Borrower
                  on the Closing Date to the Agent, BAS and the Lenders have
                  been paid in full;

                  (b)      Each of the following shall have occurred or be true:

                           (i) substantially simultaneously with the making of
                  the initial Advance hereunder (x) the Borrower shall make the
                  Special Distribution, (y) GenCorp shall prepay in full the
                  GenCorp Prepayable Debt and terminate and cancel the Existing
                  GenCorp Credit Agreement, and (z) the Spinoff and the Line of
                  Business Transfer shall be effected in accordance with, and
                  upon satisfaction of, each of the conditions to effectiveness
                  thereof without any waiver thereof as set forth in the Spinoff
                  Documents and the Line of Business Transfer Documents,
                  respectively;

                           (ii) there is no material asset or interest of
                  GenCorp scheduled or described in the Distribution Agreement
                  to be contributed to the Borrower in the Line of Business
                  Transfer which has not been assigned or transferred by GenCorp
                  to the Borrower as permitted pursuant to the Distribution
                  Agreement; and

                           (iii) there shall not have been any material
                  amendment, revision, alteration or supplement to any of the
                  Spinoff Documents or any of the Line of Business Transfer
                  Documents from the forms thereof from time to time delivered
                  to and reviewed by the Lenders without the written consent of
                  the Agent.

                  (c) In the good faith judgment of the Agent and the Lenders:

                           (i) there shall not have occurred or become known to
                  the Agent or the Lenders any event, condition, situation or
                  status since the date of the information

                                       50
<PAGE>   57

                  contained in the financial and business projections, budgets,
                  pro forma data and forecasts concerning the Borrower and its
                  Subsidiaries delivered to the Agent prior to the Closing Date
                  that has had or could reasonably be expected to result in a
                  Material Adverse Effect or adversely affect the consummation
                  of the Spinoff or the Line of Business Transfer in accordance
                  with the terms of the Spinoff Documents or the Line of
                  Business Transfer Documents, respectively;

                          (ii) no order, decree, judgment, ruling, injunction,
                  litigation, action, suit, investigation or other arbitral,
                  administrative or judicial proceeding shall be pending or
                  threatened, and there shall exist no order, decree, judgment,
                  injunction or arbitral award or ruling, which could reasonably
                  be likely to result in a Material Adverse Effect, or restrain
                  or otherwise adversely affect the consummation of the Spinoff
                  or the Line of Business Transfer in accordance with the terms
                  of the Spinoff Documents or the Line of Business Transfer
                  Documents, respectively;

                           (iii) in connection with the Line of Business
                  Transfer, the Spinoff and the transactions contemplated
                  thereby, (A) each of GenCorp (or its applicable subsidiary)
                  and the Credit Parties shall have received all approvals,
                  consents and waivers, and shall have made or given all
                  necessary filings and notices as shall be required to
                  consummate the transactions contemplated hereby (including the
                  Spinoff and the Line of Business Transfer) without the
                  occurrence of any default under, conflict with or violation of
                  (I) any applicable law, rule, regulation, order or decree of
                  any Governmental Authority or arbitral authority or (II) any
                  agreement, document or instrument to which GenCorp, any of its
                  subsidiaries, or any of the Credit Parties is a party or by
                  which any of them or their properties is bound; and (B) such
                  approvals, consents and waivers shall be in force and effect,
                  (C) all waiting periods shall have expired without any action
                  being taken to restrain or prevent or impose any adverse
                  material conditions on the Line of Business Transfer, the
                  Spinoff and the transactions contemplated thereby, and (D) no
                  law or regulation shall be applicable which, in the sole
                  judgment of the Agent, could restrain or prevent or impose any
                  adverse material conditions on the Line of Business Transfer,
                  the Spinoff and the transactions contemplated thereby or be
                  violated by the consummation of any thereof;

         6.2. CONDITIONS OF REVOLVING LOANS AND LETTER OF CREDIT. The
obligations of the Lenders to make any Revolving Loans, and the Issuing Bank to
issue Letters of Credit and Bank of America to make Swing Line Loans, hereunder
on or subsequent to the Closing Date are subject to the satisfaction of the
following conditions:

                  (a) the Agent or, in the case of Swing Line Loans, Bank of
         America shall have received a Borrowing Notice if required by ARTICLE
         II;

                  (b) the representations and warranties of the Credit Parties
         set forth in ARTICLE VII and in each of the other Loan Documents shall
         be true and correct in all material respects on and as of the date of
         such Advance, Swing Line Loan or Letter of Credit

                                       51
<PAGE>   58

         issuance or renewal, with the same effect as though such
         representations and warranties had been made on and as of such date,
         except to the extent that such representations and warranties expressly
         relate to an earlier date (specifically, as to SECTION 7.4, Borrower
         agrees to provide an updated SCHEDULE 7.4 annually, and further
         specifically excepting the last sentence of SECTION 7.6 , all of
         Sections 7.7(b), 7.10, 7.11 AND 7.14(a), and the last sentence of
         SECTION 7.17) and except that the financial statements referred to in
         SECTION 7.5(a) shall be deemed (solely for the purpose of the
         representation and warranty contained in such SECTION 7.5(a) but not
         for the purpose of any cross reference to such SECTION 7.5(a) or to the
         financial statements described therein contained in any other provision
         of SECTION 7.5 or elsewhere in ARTICLE 7) to be those financial
         statements most recently delivered to the Agent and the Lenders
         pursuant to SECTION 8.1 from the date financial statements are
         delivered to the Agent and the Lenders in accordance with such Section;

                  (c) in the case of the issuance of a Letter of Credit, the
         Borrower shall have executed and delivered to the Issuing Bank an
         Application and Agreement for Letter of Credit in form and content
         acceptable to the Issuing Bank together with such other instruments and
         documents as it shall request;

                  (d) at the time of (and after giving effect to) each Advance,
         Swing Line Loan or the issuance of a Letter of Credit, no Default or
         Event of Default specified in ARTICLE X shall have occurred and be
         continuing; and

                  (e)      immediately after giving effect to:

                           (i) a Revolving Loan, the aggregate principal balance
                  of all outstanding Revolving Loans for each Lender shall not
                  exceed such Lender's Revolving Credit Commitment;

                          (ii) a Letter of Credit or renewal thereof, the
                  aggregate principal balance of all outstanding Participations
                  in Letters of Credit and Reimbursement Obligations (or in the
                  case of the Issuing Bank, its remaining interest after
                  deduction of all Participations in Letters of Credit and
                  Reimbursement Obligations of other Lenders) for each Lender
                  and in the aggregate shall not exceed, respectively, (X) such
                  Lender's Letter of Credit Commitment or (Y) the Total Letter
                  of Credit Commitment;

                           (iii) a Swing Line Loan, the Swing Line Outstandings
                  shall not exceed $10,000,000; and

                           (iv) a Revolving Loan, Swing Line Loan or a Letter of
                  Credit or renewal thereof, the sum of Letter of Credit
                  Outstandings plus Revolving Credit Outstandings plus Swing
                  Line Outstandings shall not exceed the Total Revolving Credit
                  Commitment.

                                       52
<PAGE>   59

                                   ARTICLE VII

                         Representations and Warranties
                         ------------------------------

         The Borrower represents and warrants with respect to itself and to its
Subsidiaries (which representations and warranties shall survive the delivery of
the documents mentioned herein and the making of Loans), that:

         7.1.     ORGANIZATION AND AUTHORITY.

                  (a) The Borrower and each Subsidiary is a corporation duly
         organized and validly existing under the laws of the jurisdiction of
         its formation;

                  (b) The Borrower and each Subsidiary (i) has the requisite
         power and authority to own its properties and assets and to carry on
         its business as now being conducted and as contemplated in the
         Transaction Documents, and (ii) is qualified to do business in every
         jurisdiction in which failure so to qualify would have a Material
         Adverse Effect;

                  (c) The Borrower has the power and authority to execute,
         deliver and perform this Agreement and the Notes, and to borrow
         hereunder, and to execute, deliver and perform each of the other
         Transaction Documents to which it is a party;

                  (d) Each Guarantor has the power and authority to execute,
         deliver and perform the Facility Guaranty and each of the other
         Transaction Documents to which it is a party; and

                  (e) When executed and delivered, each of the Transaction
         Documents to which any Credit Party is a party will be the legal, valid
         and binding obligation or agreement, as the case may be, of such Credit
         Party, enforceable against such Credit Party in accordance with its
         respective terms, subject to the effect of any applicable bankruptcy,
         moratorium, insolvency, reorganization or other similar law affecting
         the enforceability of creditors' rights generally and to the effect of
         general principles of equity which may limit the availability of
         remedies (whether considered in a proceeding at law or in equity).

         7.2. TRANSACTION DOCUMENTS. The execution, delivery and performance by
each Credit Party of each of the Transaction Documents to which it is a party:

                  (a) have been duly authorized by all requisite Organizational
         Action of such Credit Party required for the lawful execution, delivery
         and performance thereof;

                  (b) do not violate any provisions of (i) any applicable law,
         rule or regulation (ii) any judgment, writ, order, determination,
         decree or arbitral award of any Governmental Authority or arbitral
         authority binding on such Credit Party or its properties, (iii) the
         Organizational Documents or Operating Documents of such Credit

                                       53
<PAGE>   60

         Party, in each case in clauses (i) and (ii) hereof, which violation
         could reasonably be expected to have a Material Adverse Effect;

                  (c) does not and will not be in conflict with, result in a
         breach of or constitute an event of default, or an event which, with
         notice or lapse of time or both, would constitute an event of default,
         under any contract, indenture, agreement or other instrument or
         document to which such Credit Party or GenCorp or any of its
         subsidiaries is a party, or by which the properties or assets of such
         Credit Party or GenCorp or any of its subsidiaries are bound which
         conflict, breach or event of default could reasonably be expected to
         have a Material Adverse Effect; and

                  (d) does not and will not result in the creation or imposition
         of any Lien upon any of the properties or assets of such Credit Party
         except any Liens in favor of the Agent and the Lenders created by the
         Loan Documents.

         7.3. GOVERNMENTAL AUTHORIZATION. Except as set forth in SCHEDULE 7.3,
neither the respective businesses or properties of the Borrower or any
Subsidiary, nor any relationship between the Borrower or any Subsidiary and any
other Person, nor the execution, delivery and performance of the Transaction
Documents and the transactions contemplated hereby, is such as to require a
consent, approval or authorization of, or filing, registration or qualification
with, any Governmental Authority or other authority or any other Person on the
part of the Borrower or any Subsidiary as a condition to the execution, delivery
and performance of, or consummation of the transactions contemplated by, this
Agreement or the other Transaction Documents, or if so, such consent, approval,
authorization, filing, registration or qualification has been obtained or
effected, as the case may be.

         7.4. CAPITALIZATION; SUBSIDIARIES; INVESTMENTS. All outstanding shares
of capital stock of the Borrower have been duly authorized and are listed on
SCHEDULE 7.4. Except as set forth on SCHEDULE 7.4, there are no outstanding
subscriptions, warrants, options, calls, commitments or other rights (preemptive
or otherwise) or agreements to which the Borrower or, to the knowledge of the
Borrower, any shareholder is bound relating to the issuance, sale or redemption
of shares of common stock of the Borrower. The Borrower has no Subsidiaries
other than those Persons listed as Subsidiaries in SCHEDULE 7.4 and such
schedule states the authorized and issued capitalization of each Subsidiary
listed thereon, the number of shares or other equity interests of each class of
capital stock or interest issued and outstanding of each such Subsidiary and the
number and percentage of outstanding shares or other equity interest (including
options, warrants and other rights to acquire any interest) of each such class
of capital stock or other equity interest owned by the Borrower or by any such
Subsidiary; the outstanding shares or other equity interests of each such
Subsidiary have been duly authorized and validly issued and are fully paid and
nonassessable; and the Borrower and each such Subsidiary owns beneficially and
of record all the shares and other interests it is listed as owning in SCHEDULE
7.4, free and clear of any Lien other than Liens permitted under SECTION 9.4.
The Borrower has no investments and owns no interest in any other Person
(excluding Subsidiaries) other than as listed in SCHEDULE 7.4.

                                       54
<PAGE>   61

         7.5.     FINANCIAL CONDITION.

                  (a) The Borrower has heretofore furnished to the Agent and
         each Lender (i) audited consolidated financial statements of the
         Borrower and its Subsidiaries for the Fiscal Years ending November 30,
         1997 and November 30, 1998, consisting of a consolidated balance sheet
         and the notes thereto and the related consolidated statements of
         income, divisional equity and cash flows for the fiscal periods then
         ended as examined and certified by Ernst & Young, LLP, and (ii)
         Historical Unaudited Quarterly Statements, and (iii) pro forma
         five-year projections, beginning with the Fiscal Year ending November
         30, 1999, including pro forma balance sheets and income and cash flow
         statements. Except as set forth therein, the financial statements
         described in (i) and (ii) above (including the notes thereto) present
         fairly after giving effect to the Business Transfer and the Spinoff,
         the financial condition of the Borrower and its Subsidiaries as of the
         end of such Fiscal Years and such quarterly periods and results of
         their operations, cash flows and the changes in its divisional equity
         for the Fiscal Years and interim period then ended, all in conformity
         with GAAP applied on a Consistent Basis, subject however, in the case
         of unaudited interim statements to year end audit adjustments and the
         absence or reduced scope of footnote disclosures;

                  (b) since the later of (i) the date of the audited financial
         statements delivered pursuant to SECTION 7.5(a)(i) hereof or (ii) the
         date of the audited financial statements most recently delivered
         pursuant TO SECTION 8.1(a) hereof, there has been no material adverse
         change in the condition, financial or otherwise, of the Borrower, any
         of its Subsidiaries or, in respect of clause (i), the Transferred
         Business or in the businesses, properties, performance or operations of
         the Borrower or any of its Subsidiaries, nor have such businesses or
         properties been materially adversely affected as a result of any fire,
         explosion, earthquake, accident, strike, lockout, combination of
         workers, flood, embargo or act of God;

                  (c) except as set forth in the financial statements referred
         to in SECTION 7.5(a) or in SCHEDULE 7.5 or permitted by SECTION 9.5,
         neither Borrower nor any Subsidiary has incurred any material
         Indebtedness which remains outstanding or unsatisfied.

         7.6. TITLE TO PROPERTIES. The Borrower and each of its Subsidiaries has
good and marketable title to all its real and personal properties, subject to no
transfer restrictions or Liens of any kind, except for (i) the transfer
restrictions and Liens described in SCHEDULE 7.6, (ii) Liens permitted by
SECTION 9.4, (iii) with respect to any personal property that constitutes a
security, transfer restrictions imposed under Federal and state securities laws
and regulations, and (iv) the lack of title or the presence of such transfer
restrictions that could not reasonably be expected to have a Material Adverse
Effect. All real property owned or leased by the Borrower and its Subsidiaries
are described on SCHEDULE 7.6 hereto.

         7.7. LITIGATION; LOSS CONTINGENCIES. Except as set forth in SCHEDULE
7.7 hereto, there are no legal actions, suits, proceedings, claims or disputes
pending, or to the knowledge of the Borrower threatened, at law, in equity, in
arbitration or before any Governmental Authority

                                       55
<PAGE>   62

against or, to the Borrower's knowledge, directly affecting the Borrower or any
of its Subsidiaries (a) with respect to this Agreement or any of the other
Transaction Documents, or any of the transactions contemplated hereby, or (b)
which, in the opinion of management, after reviewing the information which is
currently available with respect to such matters and consulting with the
Borrower's counsel, could reasonably be expected to have a Material Adverse
Effect. No injunction, writ, temporary restraining order, decree or order of any
nature has been issued by any court or other Governmental Authority purporting
to enjoin or restrain the execution, delivery or performance of this Agreement
or any of the other Transaction Documents. Except as set forth in SCHEDULE 7.7
hereto, there are no material Contingent Obligations which are not, or are not
in effect, Guaranties or "loss contingencies" (as defined in Statement of
Financial Accounting Standards No. 5 issued by the Financial Accounting
Standards Board in March 1975 ("FAS 5")), which would be required by FAS 5 to be
disclosed or accrued in consolidated financial statements of the Borrower were
such financial statements prepared at the time this representation and warranty
is made or deemed made.

         7.8. NO DEFAULT OR BREACH. No default or event has occurred and is
continuing or would result from the consummation of the transactions
contemplated hereunder and under the other Transaction Documents which
constitutes or, with the giving of notice or passage of time or both, would
constitute an Event of Default. Except as set forth on SCHEDULE 7.8 hereto,
after giving effect to the transactions contemplated hereby and by the other
Transaction Documents, neither the Borrower nor any of its Subsidiaries nor, to
the best of the Borrower's knowledge, with respect to any Material Contract, any
other party thereto, is or will be in default under or with respect to any
contractual obligation in any respect, which, individually or together with all
such defaults, could reasonably be expected to have a Material Adverse Effect.

         7.9. MATERIAL CONTRACTS. Each Material Contract is, and after giving
effect to the consummation of the transactions contemplated hereby and by the
other Transaction Documents will be, in full force and effect in accordance with
the terms thereof, except to the extent any such Material Contract expires or
terminates in accordance with its terms as in effect on the Closing Date.

         7.10. RELATED PARTY AGREEMENTS. Except with respect to the Line of
Business Transfer Documents and the Spinoff Documents or as set forth on
SCHEDULE 7.10, neither the Borrower nor any of its Subsidiaries is a party to
any material contract, agreement or commitment (a) with any director, officer or
shareholder of the Borrower (both before and after giving effect to the
transactions contemplated hereby and by the other Transaction Documents), or,
(b) to the Borrower's knowledge, with any Person in which any such director,
officer or shareholder has any direct or indirect interest.

         7.11. ENVIRONMENTAL MATTERS. Based upon currently available information
and reasonable investigation and inquiry, to the best of management's knowledge,
except as set forth in SCHEDULE 7.11 hereto:

                                       56
<PAGE>   63

                  (a) The Borrower and its Subsidiaries are in compliance with
         all Environmental Laws, except to the extent that any non-compliance
         would not reasonably be expected to have a Material Adverse Effect.

                  (b) Neither the Borrower nor any of its Subsidiaries has
         received any notice of violation, alleged violation, non-compliance,
         liability or potential liability regarding environmental matters or
         compliance with Environmental Laws that would reasonably be expected to
         have a Material Adverse Effect, nor does the Borrower have knowledge or
         reason to believe that any such notice will be received or is being
         threatened.

                  (c) No judicial, governmental or administrative proceedings
         are pending or are threatened against the Borrower or any of its
         Subsidiaries under any Environmental Law, nor are there any consent
         decrees or court decrees, consent orders, or administrative orders
         outstanding under any Environmental Law with respect to the Borrower or
         any of its Subsidiaries that would reasonably be expected to have a
         Material Adverse Effect.

                  (d) There has been no release of Hazardous Materials arising
         from, generated by or related to the operations of the Borrower or any
         of its Subsidiaries, or for which the Borrower or any of its
         Subsidiaries has retained or assumed liability in amounts or in a
         manner that would reasonably be expected to result in a Material
         Adverse Effect.

                  (e) Environmental liabilities with respect to continued and
         discontinued operations of GenCorp other than the Transferred Business
         have not been assumed by the Borrower, will remain the obligations of
         GenCorp after the Spinoff, and GenCorp has agreed to indemnify the
         Borrower for any such environmental liabilities pursuant to the terms
         of the Distribution Agreement.

         7.12.    COMPLIANCE WITH LAW.

                  (a) CONDUCT OF BUSINESS. The Borrower and its Subsidiaries
         have conducted their business so as to comply with, and are in
         compliance with, all Requirements of Law, except where the failure to
         so comply could not reasonably be expected to have a Material Adverse
         Effect.

                  (b) LICENSES. The Borrower and its Subsidiaries have all
         permits, certificates, licenses, approvals and other authorizations
         required by any Governmental Authority in connection with the operation
         of their business, except where the failure to obtain such requirements
         could not reasonably be expected to have a Material Adverse Effect.

         7.13. TAXES. The Borrower and each of its Subsidiaries has filed or
caused to be filed all Federal, state, local and foreign tax returns which are
required to be filed by it and which the failure to file could reasonably be
expected to have a Material Adverse Effect and, except for taxes and assessments
being contested in good faith by appropriate proceedings diligently conducted
and against which reserves reflected in the financial statements described in
SECTION 7.5(a) or more recently delivered pursuant to SECTION 8.1(a) and as
required by GAAP have been

                                       57
<PAGE>   64

established, have paid or caused to be paid all taxes as shown on said returns
or on any assessment received by it, to the extent that such taxes have become
due unless the failure to pay the same could not reasonably be expected to have
a Material Adverse Effect.

         7.14. EMPLOYEE BENEFIT PLANS. Except as set forth in SCHEDULE 7.14
hereto:

                  (a) Neither the Borrower nor any ERISA Affiliate maintains or
         contributes to, or has any obligation under, any Employee Benefit Plans
         other than those identified on SCHEDULE 7.14 hereto;

                  (b) The Borrower and each ERISA Affiliate is in compliance
         with all applicable provisions of ERISA and the regulations and
         published interpretations thereunder and in compliance with all Foreign
         Benefit Laws with respect to all Employee Benefit Plans except where
         failure to comply could not reasonably be expected to have a Material
         Adverse Effect and except for any required amendments for which the
         remedial amendment period as defined in Section 401(b) of the Code has
         not yet expired. Each Employee Benefit Plan that is intended to be
         qualified under Section 401(a) of the Code has been determined by the
         Internal Revenue Service to be so qualified (or an application for such
         a determination by the Internal Revenue Service has been submitted to
         the Internal Revenue Service on a timely basis so as to preserve the
         remedial amendment period), and each trust related to such plan has
         been determined to be exempt under Section 501(a) of the Code. No
         material liability has been incurred by the Borrower or any ERISA
         Affiliate which remains unsatisfied for any taxes or penalties with
         respect to any Employee Benefit Plan or any Multiemployer Plan;

                  (c) No Pension Plan has been terminated, nor has any
         accumulated funding deficiency (as defined in Section 412 of the Code)
         been incurred (without regard to any waiver granted under Section 412
         of the Code), nor has any funding waiver from the IRS been received or
         requested with respect to any Pension Plan, nor has the Borrower or any
         ERISA Affiliate failed to make any contributions or to pay any amounts
         due and owing as required by Section 412 of the Code, Section 302 of
         ERISA or the terms of any Pension Plan prior to the due dates of such
         contributions under Section 412 of the Code or Section 302 of ERISA,
         nor has there been any event requiring any disclosure under Section
         4041(c)(3)(C), 4063(a) or 4068(f) of ERISA with respect to any Pension
         Plan;

                  (d) Neither the Borrower nor any ERISA Affiliate has: (i)
         engaged in a nonexempt prohibited transaction described in Section 406
         of ERISA or Section 4975 of the Code, (ii) incurred any liability to
         the PBGC which remains outstanding other than the payment of premiums
         and there are no premium payments which are due and unpaid, (iii)
         failed to make a required contribution or payment to a Multiemployer
         Plan or (iv) failed to make a required installment or other required
         payment under Section 412 of the Code, unless such action or failure to
         act could not reasonably be expected to have a Material Adverse Effect;

                                       58
<PAGE>   65

                  (e) No Termination Event has occurred or is reasonably
         expected to occur with respect to any Pension Plan or Multiemployer
         Plan;

                  (f) No material proceeding, claim, lawsuit and/or
         investigation exists or, to the best knowledge of the Borrower after
         due inquiry, is threatened concerning or involving any Employee Benefit
         Plan.

         7.15. EMPLOYMENT MATTERS. Except as disclosed on SCHEDULE 7.15 hereto,
the Borrower and all Subsidiaries are in compliance with all applicable laws,
rules and regulations pertaining to labor or employment matters, including
without limitation those pertaining to wages, hours, occupational safety and
taxation, the noncompliance with which could reasonably be expected to have a
Material Adverse Effect, and there is neither pending nor, to the knowledge of
the Borrower, any threatened litigation, administrative proceeding or
investigation in respect of such matters an adverse ruling or determination in
which could reasonably be expected to have a Material Adverse Effect. Except as
disclosed on SCHEDULE 7.15 hereto, neither the Borrower nor any of its
Subsidiaries is party to any collective bargaining agreement with any labor
union or similar organization.

         7.16. INTELLECTUAL PROPERTY. The Borrower and its Subsidiaries own, or
have a license or otherwise have the right to continue to use, without violating
the rights of any other Person, in all jurisdictions in which they carry on
business, all patents (including all applications, renewals, reissues,
extensions, divisions, continuations and extensions thereof), trademarks
(including both registered and unregistered trademarks and applications
therefor), service marks, trade names, copyrights (including all registrations,
renewals, modifications and extensions thereof), and know-how and trade secrets
(collectively, the "Intellectual Property"), currently in use but, to the extent
there is a failure to so own, license or possess the right to use such
Intellectual Property, such failure could not reasonably be expected to have a
Material Adverse Effect. Except as set forth on SCHEDULE 7.16 hereto, none of
the Intellectual Property is subject to any Lien other than Liens permitted
under SECTION 9.4. To the knowledge of the Borrower, no claim which could
reasonably be expected to have a Material Adverse Effect of any Person is
pending or threatened to the effect that any current use or ownership of the
Intellectual Property infringes upon or conflicts with any such rights of any
Person.

         7.17. INSURANCE. The Borrower and its Subsidiaries maintain, to the
extent that reasonable commercial efforts permit them to, insurance with
financially sound and reputable insurance companies, or self-insure where the
Borrower deems appropriate, on all their properties in at least such amounts and
against at least such risks (but, including in any event, public liability,
product liability and business interruption) as are usually insured against or
self-insured in the same general area by companies engaged in the same or a
similar business. All policies of insurance owned or maintained by the Borrower
and its Subsidiaries and the coverages provided thereby are described on
SCHEDULE 7.17 hereto.

         7.18. BOOKS AND RECORDS. The books and records of the Borrower and its
Subsidiaries, including the minutes of director and shareholder meetings,
consents or actions, are accurate, current and complete in all material
respects.

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         7.19. JUDGMENTS AND OTHER RESTRICTIONS. Neither the Borrower nor any
Subsidiary is a party to any judgment, order, decree or any agreement or
instrument or subject to restrictions which could reasonably be likely to have a
Material Adverse Effect or to materially adversely affect the ability of the
Borrower or any Guarantor to observe the covenants and agreements contained
herein.

         7.20 INVESTMENT COMPANY; MARGIN STOCK. Neither the Borrower nor any
Subsidiary is an "investment company," or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company," as such
terms are defined in the Investment Company Act of 1940, as amended (15 U.S.C.
ss. 80a-1, et seq.). The application of the proceeds of the Loans and repayment
thereof by the Borrower and the performance by the Borrower of the transactions
contemplated by this Agreement will not violate any provision of said Act, or
any rule, regulation or order issued by the Securities and Exchange Commission
thereunder, in each case as in effect on the date hereof. Neither the Borrower
nor any Subsidiary owns any "margin stock" as such term is defined in Regulation
U, as amended (12 C.F.R. Part 221), of the Board. The proceeds of the borrowings
made pursuant to ARTICLES II hereof will be used by the Borrower and its
Subsidiaries only for the purposes set forth in SECTION 2.2 hereof. None of such
proceeds will be used, directly or indirectly, for the purpose of purchasing or
carrying any margin stock or for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry margin stock or
for any other purpose which might constitute any of the Loans under this
Agreement a "purpose credit" within the meaning of said Regulation U or
Regulation X (12 C.F.R. Part 224) of the Board. Neither the Borrower nor any
agent acting on its behalf has taken or will take any action which might cause
this Agreement or any of the documents or instruments delivered pursuant hereto
to violate any regulation of the Board or to violate the Securities Exchange Act
of 1934, as amended, or the Securities Act of 1933, as amended, or any state
securities laws, in each case as in effect on the date hereof.

         7.21.    DISCLOSURE.

                  (a) THIS AGREEMENT AND OTHER TRANSACTION DOCUMENTS. This
         Agreement and the other Transaction Documents (including any and all
         schedules and exhibits thereto), and all other documents and
         certificates furnished to the Agent by the Borrower or its Subsidiaries
         on or prior to the Closing Date did not and do not contain any untrue
         statement of a material fact or omit, to the extent such agreements,
         documents and certificates are taken as a whole, to state a material
         fact necessary in order to make the statements contained herein or
         therein, in the light of the circumstances under which they were made,
         not misleading.

                  (b) MATERIAL ADVERSE EFFECT. There is no fact known to the
         Borrower or any of its Subsidiaries which the Borrower has not
         disclosed to the Agent in writing that has had or could be reasonably
         expected to have a Material Adverse Effect.

         7.22. HEDGING ARRANGEMENTS. The Borrower and its Subsidiaries have no
interest rate or currency swap arrangements nor is the Borrower or any of its
Subsidiaries party to any

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<PAGE>   67

transaction involving derivatives or other hedging arrangements, except as set
forth on SCHEDULE 7.22 hereto and permitted under SECTION 9.14 hereof.

         7.23. SOLVENCY. Each Credit Party is Solvent after giving effect to the
transactions contemplated by the Transaction Documents.

         7.24. NO CONSENTS, ETC. Neither the respective businesses or properties
of the Credit Parties or any Subsidiary, nor any relationship among the Credit
Parties or any Subsidiary and any other Person, nor any circumstance in
connection with the execution, delivery and performance of the Transaction
Documents and the transactions contemplated thereby, is such as to require a
consent, approval or authorization of, or filing, registration or qualification
with, any Governmental Authority or any other Person on the part of any Credit
Party as a condition to the execution, delivery and performance of, or
consummation of the transactions contemplated by the Transaction Documents,
which, if not obtained or effected, would be reasonably likely to have a
Material Adverse Effect, or if so, such consent, approval, authorization,
filing, registration or qualification has been duly obtained or effected, as the
case may be.

         7.25. YEAR 2000 COMPLIANCE. The Borrower and its Subsidiaries have (i)
initiated a review and assessment of all areas within its and each of its
Subsidiaries' business and operations (including those affected by information
received from suppliers and vendors) that could reasonably be expected to be
adversely affected by the Year 2000 Problem, (ii) developed a plan and timeline
for addressing the Year 2000 Problem affecting material computer applications
and other systems and operations of the Borrower and its Subsidiaries and their
key vendors and customers not later September 30, 1999, with the exception of
GenCorp Wallcoverings (UK) Limited, whose Year 2000 Problem will be addressed
not later than October 31, 1999, and (iii) to date, implemented that plan
substantially in accordance with that timetable. The Borrower reasonably
believes that all computer applications and other systems and operations that
are material to its or any of its Subsidiaries' business and operations will on
a timely basis be Year 2000 Compliant, except to the extent that a failure to do
so could not reasonably be expected to have Material Adverse Effect.

         7.26. TAX TREATMENT OF SPINOFF. The Spinoff has been accomplished
substantially simultaneously with the making of the initial advance hereunder
consistent with the factual representations and assumptions presented to the IRS
by GenCorp in its request for the IRS Ruling Letter.

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<PAGE>   68

                                  ARTICLE VIII

                              Affirmative Covenants
                              ---------------------

         Until the Facility Termination Date, unless the Required Lenders shall
otherwise consent in writing, the Borrower will, and where applicable will cause
each Subsidiary to:

         8.1.     FINANCIAL REPORTS, ETC.

                  (a) As soon as practical and in any event within 95 days after
         the end of each Fiscal Year of the Borrower, deliver or cause to be
         delivered to the Agent and each Lender (i) consolidated and, if there
         are any Material Subsidiaries, consolidating balance sheets of the
         Borrower and its Subsidiaries as of the end of such Fiscal Year, and
         the notes thereto, and the related consolidated and, if there are any
         Material Subsidiaries, consolidating statements of income,
         stockholders' equity and cash flows, and the respective notes thereto,
         for such Fiscal Year, setting forth (other than for consolidating
         statements) comparative financial statements for the preceding Fiscal
         Year, all prepared in accordance with GAAP applied on a Consistent
         Basis and containing, with respect to the consolidated financial
         statements, opinions of Ernst & Young, LLP or other such independent
         certified public accountants selected by the Borrower and approved by
         the Agent, which are unqualified as to the scope of the audit performed
         and as to the "going concern" status of the Borrower and without any
         exception not acceptable to the Lenders, and (ii) a certificate of a
         Responsible Officer demonstrating compliance with SECTIONS 9.1(a) and
         9.1(b) and 9.3, which certificate shall be in the form of EXHIBIT H;

                  (b) as soon as practical and in any event within 50 days after
         the end of each fiscal quarter (except the last fiscal quarter of any
         Fiscal Year), deliver to the Agent and each Lender (i) consolidated
         and, if there are any Material Subsidiaries, consolidating balance
         sheets of the Borrower and its Subsidiaries as at the end of such
         fiscal quarter, and the related consolidated and, if there are any
         Material Subsidiaries, consolidating statements of income,
         stockholders' equity and cash flows for such fiscal quarter and for the
         period from the beginning of the then current Fiscal Year through the
         end of such reporting period, and accompanied by a certificate of a
         Responsible Officer to the effect that such financial statements
         present fairly the financial position of the Borrower and its
         Subsidiaries as of the end of such fiscal period and the results of
         their operations and the changes in their financial position for such
         fiscal period, in conformity with the standards set forth in SECTION
         7.5(a) with respect to interim financial statements, and (ii) a
         certificate of a Responsible Officer containing computations for such
         quarter comparable to that required pursuant to SECTION 8.1(a)(ii);

                  (c) together with each delivery of the financial statements
         required by SECTION 8.1(a)(i), deliver to the Agent and each Lender a
         letter from the Borrower's accountants specified in SECTION 8.1(a)(i)
         stating that in performing the audit necessary to render an opinion on
         the financial statements delivered under SECTION 8.1(a)(i), they
         obtained no knowledge of any Default or Event of Default by the
         Borrower in the fulfillment of the

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<PAGE>   69

         terms and provisions of this Agreement insofar as they relate to
         financial matters (which at the date of such statement remains
         uncured); or if the accountants have obtained knowledge of such Default
         or Event of Default, a statement specifying the nature and period of
         existence thereof;

                  (d) promptly upon their becoming available to the Borrower,
         deliver to the Agent and each Lender a copy of (i) all regular or
         special reports or effective registration statements which Borrower or
         any Subsidiary shall file with the Securities and Exchange Commission
         (or any successor thereto) or any securities exchange and (ii) any
         proxy statement distributed by the Borrower or any Subsidiary to its
         shareholders, bondholders or the financial community in general;

                  (e) concurrently with the delivery of the financial statements
         referred to in SECTION 8.1(a) and the delivery of the financial
         statements required to be delivered under SECTION 8.1(b) at the end of
         the second quarterly period of each Fiscal Year of the Borrower,
         deliver or cause to be delivered to the Agent and each Lender a report
         of the Borrower with respect to the environmental matters affecting the
         Borrower and the Subsidiaries in the same level of detail and of the
         same scope as that furnished to the lenders under the Existing GenCorp
         Credit Agreement;

                  (f) concurrently with the delivery of the financial statements
         required to be delivered under SECTION 8.1(a) OR (b), deliver or cause
         to be delivered to the Agent and each Lender notice of any request for
         indemnity under the terms of the Spinoff Documents and the Line of
         Business Transfer Documents either delivered to, or received from,
         GenCorp which, when aggregated with all other such requests would
         exceed $10,000,000 and, with respect to such requests from GenCorp, the
         position of the Borrower in response to such request; and

                  (g) promptly, from time to time, deliver or cause to be
         delivered to the Agent and each Lender such other information regarding
         Borrower's and any Subsidiary's operations, business affairs and
         financial condition as the Agent or such Lender may reasonably request.

         Subject to the provisions of SECTION 12.1(h), the Agent and the Lenders
are hereby authorized to deliver a copy of any such financial or other
information delivered hereunder to the Lenders (or any affiliate of any Lender
as necessary or beneficial to fulfill the obligations of any Lender hereunder)
or to the Agent, to any Governmental Authority having jurisdiction over the
Agent or any of the Lenders pursuant to any written request therefor or in the
ordinary course of examination of loan files, or to any other Person who shall
acquire or consider the assignment of, or acquisition of any participation
interest in, any Obligation permitted by this Agreement.

         8.2. MAINTAIN PROPERTIES. Maintain all properties necessary to its
operations in good working order and condition and make all needed repairs,
replacements and renewals to such properties, in each case as are reasonably
necessary to conduct its business as currently conducted or as contemplated
hereby, all in accordance with customary and prudent business practices.

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<PAGE>   70

         8.3. EXISTENCE, QUALIFICATION, ETC. Except as otherwise expressly
permitted under SECTION 9.8, do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and all material rights
and franchises, and maintain its qualification to do business as a foreign
corporation and good standing in each jurisdiction in which its ownership or
lease of property or the nature of its business makes such license or
qualification necessary except where the failure to so qualify could not
reasonably be expected to have a Material Adverse Effect.

         8.4. REGULATIONS AND TAXES. Comply in all material respects with all
statutes and governmental regulations and pay all taxes, assessments,
governmental charges, claims for labor, supplies, rent and any other obligation
which, if unpaid, would become a Lien against any of its properties except any
thereof being contested in good faith by appropriate proceedings diligently
conducted, as to which no Lien has attached to and is enforceable against any of
its properties and against which adequate reserves as required by GAAP have been
established.

         8.5. INSURANCE, PROCEEDS AND CONDEMNATION. (a) Keep all of its
insurable properties adequately insured at all times with responsible insurance
carriers against loss or damage by fire and other hazards to the extent and in
the manner as are currently maintained and are prudent when considered in light
of the Borrower's properties and businesses, (b) maintain general public
liability insurance at all times with responsible insurance carriers against
liability on account of damage to persons and property having such limits,
deductibles, exclusions, co-insurance and other provisions providing coverages
that are currently maintained and are prudent when considered in light of the
Borrower's properties and businesses, and (c) maintain existing insurance under
all applicable workers' compensation laws (or in the alternative, maintain
required reserves if self-insured for workers' compensation purposes). Each of
the policies of insurance described in this SECTION 8.5(a) and (b) shall provide
that the insurer shall give the Agent not less than thirty (30) days' prior
written notice before any such policy shall lapse or be terminated or cancelled.

         8.6. TRUE BOOKS. Keep true books of record and account in which full,
true and correct entries will be made of all of its dealings and transactions,
and set up on its books such reserves as may be required by GAAP with respect to
doubtful accounts and all taxes, assessments, charges, levies and claims and
with respect to its business in general, and include such reserves in interim as
well as year-end financial statements.

         8.7. YEAR 2000 COMPLIANCE. The Borrower will (i) promptly notify the
Agent and the Lenders in the event the Borrower discovers or determines that any
computer application or other system or operation (including those affected by
information received from its suppliers and vendors) that is material to its or
any of its Subsidiaries' business and operations will not be Year 2000 Compliant
on a timely basis, and (ii) take all actions reasonably necessary to make such
computer applications or other systems or operations Year 2000 Compliant, except
to the extent that such failure could not reasonably be expected to have a
Material Adverse Effect.

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<PAGE>   71

         8.8. RIGHT OF INSPECTION. Permit any Person designated by any Lender or
the Agent to visit and inspect any of the properties, corporate books and
financial reports of the Borrower or any Subsidiary and to discuss its affairs,
finances and accounts with its principal officers and independent certified
public accountants, all at reasonable times, at reasonable intervals and with
reasonable prior notice to a Responsible Officer; PROVIDED, HOWEVER, that prior
to the occurrence and continuance of an Event of Default, the costs associated
with all such visits and inspections by a Lender shall be borne by such Lender
and the costs associated with such visits and inspections by the Agent, in
excess of one visit and inspection each calendar year (the reasonable costs with
respect to which shall be borne by the Borrower) shall be borne by the Agent.
After the occurrence and during the continuation of an Event of Default, all
costs associated with such visits and inspections by the Agent or any Lender
shall be borne by the Borrower.

         8.9. OBSERVE ALL LAWS. Conform to and duly observe in all material
respects all laws, rules and regulations and all other valid requirements of any
Governmental Authority applicable to the Borrower or any of its Subsidiaries
with respect to the conduct of its business.

         8.10. GOVERNMENTAL LICENSES. Obtain and maintain all licenses, permits,
certifications and approvals of all applicable Governmental Authorities as are
required for the conduct of its business as currently conducted, except where
the failure to do so could not reasonably be expected to have a Material Adverse
Effect.

         8.11. COVENANTS EXTENDING TO OTHER PERSONS. Cause each of its
Subsidiaries to do with respect to itself, its business and its assets, each of
the things required of the Borrower in SECTIONS 8.2 through 8.10, and 8.14
through 8.19 inclusive.

         8.12. OFFICER'S KNOWLEDGE OF DEFAULT. Upon any senior executive officer
of the Borrower obtaining knowledge of any Default or Event of Default hereunder
or under any other obligation of the Borrower or any Subsidiary to any Lender,
cause such officer or a Responsible Officer to promptly notify the Agent of the
nature thereof, the period of existence thereof, and what action the Borrower or
such Subsidiary proposes to take with respect thereto.

         8.13. SUITS OR OTHER PROCEEDINGS. Upon any Responsible Officer of the
Borrower obtaining knowledge of any litigation or other proceedings being
instituted against the Borrower or any Subsidiary by any Person, including
without limitation any Governmental Authority, or any attachment, levy,
execution or other process being instituted against any assets of the Borrower
or any Subsidiary, making a claim or claims in an aggregate amount greater than
$10,000,000 not otherwise covered by insurance, reasonably promptly deliver to
the Agent written notice thereof stating the nature and status of such
litigation, dispute, proceeding, levy, execution or other process.

         8.14.    ENVIRONMENTAL LAWS.

                  (a) Comply with Environmental Laws, or contest in good faith
         the applicability of any such Environmental Laws or liability
         thereunder, except to the extent that failure to do so would not
         reasonably be expected to have a Material Adverse Effect.

                                       65
<PAGE>   72

                  (b) Promptly give notice to the Agent if the Borrower or any
         of its Subsidiaries is in violation of or is not in compliance with or
         has incurred liability or potential liability under Environmental Laws,
         unless such violation or noncompliance could not reasonably be expected
         to have a Material Adverse Effect, and promptly provide to the Agent
         accurate and complete copies of any and all letters, notices,
         complaints, orders, directives, claims or citations received by the
         Borrower or any of its Subsidiaries relating to (i) violation or
         alleged violation by the Borrower or any of its Subsidiaries of any
         applicable Environmental Laws; (ii) release or threatened release into
         the environment by the Borrower or any of its Subsidiaries, or by any
         person handling, transporting or disposing of any Hazardous Materials
         on behalf of the Borrower or any of its Subsidiaries, or any facility
         or property owned or leased or operated by the Borrower or any of its
         Subsidiaries, of any Hazardous Material, except where occurring
         legally; or (iii) liability or alleged liability of the Borrower or any
         of its Subsidiaries for the costs of cleaning up, removing, remediating
         or responding to a release of Hazardous Materials, unless such
         violation, release or liability could not reasonably be expected to
         have a Material Adverse Effect.

                  (c) Defend, indemnify and hold harmless the Agent and the
         Lenders, and their respective employees, agents, officers and
         directors, from and against any claims, demands, penalties, fines,
         liabilities, settlements, damages, costs and expenses of whatever kind
         or nature known or unknown, contingent or otherwise, arising out of, or
         in any way relating to the violation of or noncompliance with or
         liability under any Environmental Laws applicable to the operations of,
         liabilities assumed by, or real property owned or operated by the
         Borrower or any of its Subsidiaries, or any orders, requirements or
         demands of Governmental Authorities related thereto, including, without
         limitation, attorneys' and consultants' fees, investigation and
         laboratory fees, court costs and litigation expenses, except to the
         extent that any of the foregoing arise out of the gross negligence or
         willful misconduct of the party seeking indemnification therefor. The
         provisions of this SECTION 8.14(c) shall survive repayment of the
         Obligations and occurrence of the Facility Termination Date.

         8.15. FURTHER ASSURANCES. At the Borrower's cost and expense, upon
request of the Agent, duly execute and deliver or cause to be duly executed and
delivered, to the Agent such further instruments, documents, certificates,
financing and continuation statements, and do and cause to be done such further
acts that may be reasonably necessary or advisable in the reasonable opinion of
the Agent to carry out more effectively the provisions and purposes of this
Agreement and the other Loan Documents.

         8.16.    EMPLOYEE BENEFIT PLANS.

                  (a) With reasonable promptness, and in any event within thirty
         (30) days after the end of the Fiscal Year in which such event occurs,
         give notice to the Agent of (i) the establishment of any new Employee
         Benefit Plan (which notice shall include a copy of such plan), (ii) the
         commencement of contributions to any Employee Benefit Plan to

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<PAGE>   73

         which the Borrower or any of its ERISA Affiliates was not previously
         contributing, (iii) any material increase in the benefits of any
         existing Employee Benefit Plan, (iv) each funding waiver request filed
         with respect to any Employee Benefit Plan and all communications
         received or sent by the Borrower or any ERISA Affiliate with respect to
         such request and (v) the failure of the Borrower or any ERISA Affiliate
         to make a required installment or payment under Section 302 of ERISA or
         Section 412 of the Code (in the case of Employee Benefit Plans
         regulated by the Code or ERISA) or under any Foreign Benefit Law (in
         the case of Employee Benefit Plans regulated by any Foreign Benefit
         Law) by the due date;

                  (b) Promptly and in any event within thirty (30) days of
         becoming aware of the occurrence or forthcoming occurrence of any (i)
         Termination Event or (ii) nonexempt "prohibited transaction," as such
         term is defined in Section 406 of ERISA or Section 4975 of the Code, in
         connection with any Pension Plan or any trust created thereunder, and
         unless such occurrence could not reasonably be expected to have a
         Material Adverse Effect, deliver to the Agent a notice specifying the
         nature thereof, what action the Borrower or any ERISA Affiliate has
         taken, is taking or proposes to take with respect thereto and, when
         known, any action taken or threatened by the Internal Revenue Service,
         the Department of Labor or the PBGC with respect thereto; and

                  (c) With reasonable promptness but in any event within fifteen
         (15) days deliver to the Agent copies of (i) any unfavorable
         determination letter from the Internal Revenue Service regarding the
         qualification of an Employee Benefit Plan under Section 401(a) of the
         Code, (ii) all notices received by the Borrower or any ERISA Affiliate
         of the PBGC's or any Governmental Authority's intent to terminate any
         Pension Plan or to have a trustee appointed to administer any Pension
         Plan, (iii) each Schedule B (Actuarial Information) to the annual
         report (Form 5500 Series) filed by the Borrower or any ERISA Affiliate
         with the Internal Revenue Service with respect to each Pension Plan and
         (iv) all notices received by the Borrower or any ERISA Affiliate from a
         Multiemployer Plan sponsor concerning the imposition or amount of
         withdrawal liability pursuant to Section 4202 of ERISA unless any such
         notice relates to an event or condition that could not reasonably be
         expected to have a Material Adverse Effect. The Borrower will notify
         the Agent in writing within five (5) Business Days of the Borrower or
         any ERISA Affiliate obtaining knowledge or reason to know that the
         Borrower or any ERISA Affiliate has filed or intends to file a notice
         of intent to terminate any Pension Plan under a distress termination
         within the meaning of Section 4041(c) of ERISA.

         8.17. CONTINUED OPERATIONS. Continue at all times to conduct its
business and engage principally in the same line or lines of business
substantially as heretofore conducted.

         8.18. NEW SUBSIDIARIES. Within thirty (30) days after (i) the
acquisition or creation of any new Subsidiary which is a Domestic Material
Subsidiary, or (ii) an existing Domestic Subsidiary becoming a Material Domestic
Subsidiary, cause to be delivered to the Agent for the benefit of the Lenders
each of the following:

                                       67
<PAGE>   74

                  (a) a Facility Guaranty executed by such Domestic Material
         Subsidiary substantially in the form of EXHIBIT I;

                  (b) an opinion of counsel to the Domestic Material Subsidiary
         dated as of the date of delivery of the Facility Guaranty provided for
         in this SECTION 8.18 and addressed to the Agent and the Lenders, in
         form and substance reasonably acceptable to the Agent (which opinion
         may include assumptions and qualifications of similar effect and in the
         form of and addressing the matters relating to Guarantors set forth in
         the opinions delivered pursuant to SECTION 6.1(a)(ii) hereof, where
         applicable); and

                  (c) current copies of the Organizational Documents and
         Operating Documents of such Domestic Material Subsidiary, certified
         resolutions (or duly effected consent actions) of the Board of
         Directors, partners, or appropriate committees thereof (and, if
         required by such Organizational Documents, Operating Documents or
         applicable law, of the shareholders, members or partners) of such
         Domestic Material Subsidiary authorizing the actions and the execution
         and delivery of documents described in this SECTION 8.18.

         8.19. COMPLIANCE WITH MATERIAL CONTRACTS. Comply with the terms of all
Material Contracts and maintain the terms of such Material Contracts as in
effect on the Closing Date, except to the extent such noncompliance or failure
to maintain could not reasonably be expected to have and does not have a
Material Adverse Effect.

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                                   ARTICLE IX

                               Negative Covenants
                               ------------------

         Until the Facility Termination Date, unless the Required Lenders shall
otherwise consent in writing, the Borrower will not, nor will it permit any
Subsidiary to:

         9.1.     FINANCIAL COVENANTS.

                  (a) CONSOLIDATED LEVERAGE RATIO. Permit the Consolidated
         Leverage Ratio as of the end of any Four-Quarter Period to be greater
         than 3.25 to 1.00.

                  (b) CONSOLIDATED INTEREST COVERAGE RATIO. Permit the
         Consolidated Interest Coverage Ratio as of the end of any Four-Quarter
         Period to be less than 3.50 to 1.00.

         9.2. ACQUISITIONS. Enter into any agreement, contract, binding
commitment or other arrangement providing for any Acquisition, or take any
action to solicit the tender of securities or proxies in respect thereof in
order to effect any Acquisition, unless (i) the Person to be (or whose assets
are to be) acquired does not oppose such Acquisition and the line or lines of
business of the Person to be acquired are substantially the same as one or more
line or lines of business conducted by the Borrower and its Subsidiaries, (ii)
no Default or Event of Default shall have occurred and be continuing either
immediately prior to or immediately after giving effect to such Acquisition,
(iii) the Borrower shall have furnished to the Agent (A) pro forma historical
financial statements as of the end of the most recently completed Fiscal Year of
the Borrower and most recent interim fiscal quarter, if applicable, giving
effect to such Acquisition and (B) a certificate in the form of EXHIBIT H
prepared on a historical pro forma basis as of the most recent date for which
financial statements have been furnished pursuant to SECTION 7.5(a) or SECTION
8.1(a) OR (b) giving effect to such Acquisition, which certificate shall
demonstrate that no Default or Event of Default would exist immediately after
giving effect thereto, and (iv) the Person acquired shall be a wholly-owned
Subsidiary, or be merged into the Borrower or a wholly-owned Subsidiary,
immediately upon consummation of the Acquisition (or if assets are being
acquired, the acquiror shall be the Borrower or a wholly-owned Subsidiary).

         9.3. CAPITAL EXPENDITURES. Make or become committed to make Capital
Expenditures, which exceed $75,000,000 in the aggregate in any Fiscal Year of
the Borrower (on a noncumulative basis, with the effect that amounts not
expended in any Fiscal Year may not be carried forward to a subsequent period).

         9.4. LIENS. Incur, create or permit to exist any Lien, charge or other
encumbrance of any nature whatsoever with respect to any property or assets now
owned or hereafter acquired by the Borrower or any Subsidiary, other than the
following (all of which shall be collectively referred to as "Permitted Liens"):

                  (a) Liens existing as of the date hereof and as set forth in
         SCHEDULE 7.6;

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<PAGE>   76

                  (b) Liens imposed by law for taxes, assessments or charges of
         any Governmental Authority for claims not yet due or which are being
         contested in good faith by appropriate proceedings diligently conducted
         and with respect to which adequate reserves or other appropriate
         provisions are being maintained as required by GAAP;

                  (c) statutory Liens of landlords and Liens of carriers,
         warehousemen, mechanics, materialmen and other Liens imposed by law or
         created in the ordinary course of business and in existence less than
         30 days from the date of creation thereof for amounts not yet due or
         which are being contested in good faith by appropriate proceedings
         diligently conducted and with respect to which adequate reserves or
         other appropriate provisions are being maintained as required by GAAP;

                  (d) Liens incurred or deposits made in the ordinary course of
         business (including, without limitation, surety bonds and appeal bonds)
         in connection with workers' compensation, unemployment insurance and
         other types of social security benefits or to secure the performance of
         tenders, bids, leases, contracts (other than for the repayment of
         Indebtedness), statutory obligations and other similar obligations or
         arising as a result of progress payments under government contracts;

                  (e) easements (including reciprocal easement agreements and
         utility agreements), rights-of-way, covenants, consents, reservations,
         encroachments, variations and zoning and other restrictions, charges or
         encumbrances (whether or not recorded), which do not interfere
         materially with the ordinary conduct of the business of the Borrower or
         any Subsidiary and which do not materially detract from the value of
         the property to which they attach or materially impair the use thereof
         to the Borrower or any Subsidiary;

                  (f) purchase money Liens to secure Indebtedness on any real
         property or equipment otherwise permitted hereunder and incurred to
         purchase such fixed assets, provided such Indebtedness represents not
         more than 75% of the purchase price of such fixed assets as of the date
         of purchase thereof and no property other than the assets so purchased
         is subject to such Liens;

                  (g) Liens incurred in connection with Capital Leases otherwise
         permitted hereunder provided that no other property other than the
         property subject to such Capital Leases is subject to such Liens;

                  (h) Liens on assets acquired in an Acquisition permitted under
         SECTION 9.2 so long as such Liens (i) are not incurred in contemplation
         of such Acquisition and (ii) do not extend to any assets other than the
         assets being acquired in such Acquisition; and

                  (i) other Liens securing Indebtedness in de minimis amounts,
         but in no event securing Indebtedness in an aggregate amount in excess
         of $5,000,000.

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<PAGE>   77

         9.5.     INDEBTEDNESS.

                  (a) Incur, create, assume or permit to exist any Indebtedness
         or any Guaranties, other than the following to the extent that an Event
         of Default does not exist at the time of or occurs as a result of the
         incurrence of such Indebtedness:

                           (i) the Senior Notes, subject to their issuance
                  pursuant to documentation and upon terms acceptable to the
                  Agent, which terms shall be no more restrictive than the terms
                  of this Agreement;

                           (ii) Rate Hedging Obligations not in excess of the
                  amounts permitted under SECTION 9.14;

                           (iii) Incurrence of indemnification obligations under
                  the terms of the Spinoff Documents or the Line of Business
                  Transfer Documents not to exceed $35,000,000, which
                  obligations have been either agreed to by the Borrower or
                  finally determined by appropriate judicial or alternate
                  dispute resolution proceedings without further appeal or
                  action available to or pursued by the Borrower; and

                           (iv) other Indebtedness in an aggregate principal
                  amount at any time outstanding not to exceed $50,000,000;

                  (b) Prepay, redeem or repurchase any Indebtedness or any
         Guaranties prior to the stated maturity thereof or make any payment in
         violation of any subordination terms or agreements applicable thereto,
         other than prepayments of the Revolving Credit Facility in accordance
         with the terms of this Agreement; and

                  (c) Amend, modify or supplement any of the instruments and
         agreements evidencing or governing any Indebtedness or any Guaranties
         to add or change any terms of subordination, events of default,
         repayment or interest payable thereon or rights of conversion, put,
         exchange or other rights from such terms and rights as in effect on the
         Closing Date, except to the extent any such amendment, modification or
         supplement could not be reasonably expected to have a Material Adverse
         Effect or materially impair the position or interests of the Agent and
         the Lenders.

         9.6. TRANSFER OF ASSETS. Sell, lease, transfer or otherwise dispose of
any assets of Borrower or any Subsidiary other than (a) dispositions of
inventory in the ordinary course of business, (b) dispositions of assets of the
Borrower or any Subsidiary to a wholly owned Domestic Subsidiary which has
delivered all documents required under SECTION 8.18, or by any Subsidiary to the
Borrower, (c) dispositions of equipment, inventory or other assets (in addition
to dispositions thereof permitted under clause (a) above) which, in the
aggregate during any calendar year, have a fair market value or book value,
whichever is greater, of (i) less than 7.5% of Consolidated Total Assets as
calculated as of the Determination Date immediately prior to such disposition
and set forth on the corresponding balance sheet delivered pursuant to SECTION

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<PAGE>   78

8.1(b) and (ii) when aggregated with the fair market value or book value,
whichever is greater, of all other asset dispositions during the term of this
Agreement, does not exceed 20% of Consolidated Total Assets as calculated on
November 30, 1998, (d) dispositions of equipment which is replaced by equipment
of equal or greater utility and value within thirty (30) days of the date of
disposition thereof, (e) dispositions of property that is substantially worn,
damaged, obsolete or, in the judgment of the Borrower, no longer best used or
useful in its business or that of any Subsidiary, (f) transfers of assets
necessary to give effect to merger or consolidation transactions permitted by
SECTION 9.8, (g) the disposition of Eligible Securities in the ordinary course
of management of the investment portfolio of the Borrower and its Subsidiaries,
(h) sales of accounts receivable in connection with any Permitted Asset
Securitization and (i) the disposition of corporate flight operations
transferred to the Borrower by GenCorp in the Line of Business Transfer.

         9.7. INVESTMENTS. Purchase, own, invest in or otherwise acquire,
directly or indirectly, any stock or other securities, or make or permit to
exist any interest whatsoever in any other Person or permit to exist any loans
or advances to any Person, except that Borrower may maintain investments or
invest in:

                  (a) securities of any Person acquired in an Acquisition
         permitted hereunder;

                  (b)      Eligible Securities;

                  (c) investments existing as of the date hereof and as set
         forth in SCHEDULE 7.4;

                  (d) accounts receivable arising and trade credit granted in
         the ordinary course of business and any securities received in
         satisfaction or partial satisfaction thereof in connection with
         accounts of financially troubled Persons to the extent reasonably
         necessary in order to prevent or limit loss;

                  (e) loans and advances to and investments in Subsidiaries
         which are Guarantors;

                  (f) investments, loans and advances to Persons who are not
         Guarantors provided the aggregate outstanding principal amount of such
         loans and advances shall not at any time exceed $25,000,000;

                  (g) loans and advances to employees of the Borrower for
         travel, entertainment and relocation expenses in the ordinary course of
         business;

                  (h) required investments in or contributions to (i) Employee
         Benefit Plans, (ii) executive compensation plans, and (iii) stock or
         option purchase or bonus plans or as required under ERISA or the Code
         or the fiduciary standards thereunder.

         9.8. MERGER OR CONSOLIDATION. (a) Consolidate with or merge into any
other Person, or (b) permit any other Person to merge into it, or (c) sell,
transfer or lease or otherwise dispose of

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<PAGE>   79

all or a substantial part of its assets (other than sales permitted under
SECTION 9.6; PROVIDED, HOWEVER, if no Default or Event of Default shall have
occurred and be continuing or otherwise result therefrom, (i) any Subsidiary of
the Borrower may merge or transfer all or substantially all of its assets into
or consolidate with the Borrower or any wholly owned domestic Material
Subsidiary of the Borrower which has delivered all documents required under
SECTION 8.18, and (ii) any other Person may merge into the Borrower or any
Subsidiary, and any Subsidiary may merge into any other Person in order to
consummate an Acquisition permitted by SECTION 9.2 provided (A) such Person
shall assume all obligations of such Subsidiary under any Loan Document and
deliver such agreements and other documents, including a Facility Guaranty, and
take such other action as the Agent may require to evidence or confirm its
express assumption of the obligations and liabilities of its predecessor
entities under the Loan Documents and shall be engaged in substantially the same
or similar lines of business of such Subsidiary and (B) the Borrower shall be
the surviving corporation if a party to any merger.

         9.9. TRANSACTIONS WITH AFFILIATES. Enter into any transaction after the
Closing Date, including, without limitation, the purchase, sale, lease or
exchange of property, real or personal, or the rendering of any service, with
any Affiliate of the Borrower, except (a) that such Persons may render services
to the Borrower or its Subsidiaries for compensation at the same rates generally
paid by Persons engaged in the same or similar businesses for the same or
similar services, (b) that the Borrower or any Subsidiary may render services to
such Persons for compensation at the same rates generally charged by the
Borrower or such Subsidiary and (c) in either case in the ordinary course of
business and upon terms no less favorable to the Borrower (or any Subsidiary)
than would be obtained in a comparable arm's-length transaction with a Person
not an Affiliate of the Borrower.

         9.10. COMPLIANCE WITH ERISA, THE CODE AND FOREIGN BENEFIT LAWS. With
respect to any Pension Plan, Employee Benefit Plan or Multiemployer Plan:

                  (a) permit the occurrence of any Termination Event which would
         result in a liability on the part of the Borrower or any ERISA
         Affiliate to the PBGC or to any Governmental Authority; or

                  (b) permit for a period of thirty (30) or more consecutive
         days the aggregate present value of all benefit liabilities under all
         Pension Plans to exceed the current value of the assets of such Pension
         Plans allocable to such benefit liabilities; or

                  (c) permit any accumulated funding deficiency (as defined in
         Section 302 of ERISA and Section 412 of the Code) to exist with respect
         to any Pension Plan, whether or not waived for a period in excess of
         twelve (12) consecutive months; or

                  (d) fail to make any contribution or payment to any
         Multiemployer Plan which the Borrower or any ERISA Affiliate may be
         required to make under any agreement relating to such Multiemployer
         Plan, or any law pertaining thereto; or

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<PAGE>   80

                  (e) engage, or permit any Borrower or any ERISA Affiliate to
         engage, in any prohibited transaction under Section 406 of ERISA or
         Sections 4975 of the Code for which a civil penalty pursuant to Section
         502(I) of ERISA or a tax pursuant to Section 4975 of the Code may be
         imposed unless such occurrence could not reasonably be expected to have
         a Material Adverse Effect; or

                  (f) permit the establishment of any Employee Benefit Plan
         providing post-retirement welfare benefits or establish or amend any
         Employee Benefit Plan which establishment or amendment could result in
         liability to the Borrower or any ERISA Affiliate or increase the
         obligation of the Borrower or any ERISA Affiliate to a Multiemployer
         Plan which liability or increase, individually or together with all
         similar liabilities and increases, could reasonably be expected to have
         a Material Adverse Effect; or

                  (g) fail, or permit the Borrower or any ERISA Affiliate to
         fail, to establish, maintain and operate each Employee Benefit Plan in
         compliance in all respects with the provisions of ERISA, the Code, all
         applicable Foreign Benefit Laws and all other applicable laws and the
         regulations and interpretations thereof except where the failure to do
         so would not have a Material Adverse Effect.

         9.11.    FISCAL YEAR.  Change its Fiscal Year.

         9.12. DISSOLUTION, ETC. Wind up, liquidate or dissolve (voluntarily or
involuntarily) or commence or suffer any proceedings seeking any such winding
up, liquidation or dissolution, except in connection with (a) the dissolution or
liquidation of a Subsidiary in which all proceeds thereof are paid to the
Borrower or (b) a merger or consolidation permitted pursuant to SECTION 9.8.

         9.13. LIMITATIONS ON SALES AND LEASEBACKS. Enter into any arrangement
or arrangements with any Person providing for the leasing by the Borrower or any
Subsidiary of real or personal property with an aggregate value in excess of
$15,000,000, whether now owned or hereafter acquired in a single transaction or
series of transactions, which has been or is to be sold or transferred by the
Borrower or any Subsidiary to the Person leasing such property to the Borrower
or any Subsidiary or to any other Person to whom funds have been or are to be
advanced by such Person on the security of such property or rental obligations
of the Borrower or any Subsidiary.

         9.14. RATE HEDGING OBLIGATIONS. Incur any Rate Hedging Obligations or
enter into any agreements, arrangements, devices or instruments relating to Rate
Hedging Obligations, except (a) pursuant to Swap Agreements in an aggregate
notional amount not to exceed at any time $375,000,000 and (b) forward currency
exchange agreements; PROVIDED, HOWEVER, that no Rate Hedging Obligations shall
be incurred for speculative purposes.

         9.15. NEGATIVE PLEDGE CLAUSES. Enter into any agreement with any Person
other than the Agent and the Lenders pursuant to this Agreement or any other
Loan Documents which

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<PAGE>   81

prohibits or limits the ability of any of the Borrower or any Subsidiary to
create, incur, assume or suffer to exist any Lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired, PROVIDED that the
Borrower and any Subsidiary may enter into such an agreement in connection with,
and that applies only to, property acquired with the proceeds of purchase money
Indebtedness permitted hereunder.

         9.16. RESTRICTED PAYMENTS. Make any Restricted Payment, issue or sell
capital stock of any Subsidiary of the Borrower (or any option, warrant or right
to acquire such stock) other than to the Borrower, or apply or set apart any of
their assets therefor or agree to do any of the foregoing other than (a) cash
dividends payable in the ordinary course of business on its capital stock and
(b) open-market or negotiated purchases of its common stock in an aggregate
amount of up to $25,000,000 during the term of this Agreement; PROVIDED,
HOWEVER, no such Restricted Payments under clause (a) or (b) above shall be made
if an Event of Default exists at the time of or occurs as a result of such
Restricted Payment.

         9.17. REDEMPTION, PREPAYMENT, OR AMENDMENT OF SENIOR NOTES AND OTHER
INDEBTEDNESS.

                  (a) Prepay, redeem, purchase, defease or otherwise satisfy
         prior to the scheduled maturity thereof in any manner any Indebtedness
         (i) subordinated or junior in rights of payment to the Obligations
         except for all of the foregoing not exceeding $25,000,000 in the
         aggregate since the Closing Date, or (ii) in violation of any
         subordination terms; or

                  (b) amend, modify or change in any manner any term or
         condition of any of the Senior Notes so that the terms and conditions
         thereof are less favorable to the Agent and the Lenders than the terms
         thereof or more restrictive than the terms of this Agreement, in each
         case as of the Closing Date.

         9.18. AMENDMENT OF LINE OF BUSINESS TRANSFER DOCUMENTS AND SPINOFF
DOCUMENTS. Amend, modify or change in any manner any term or condition of any of
the Line of Business Transfer Documents or any of the Spinoff Documents (i) so
that the terms and conditions thereof are less favorable to the Agent and the
Lenders than the terms and conditions of such documents as of the Closing Date,
or (ii) that may be reasonably likely to result in a Material Adverse Effect.

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                                    ARTICLE X

                       Events of Default and Acceleration
                       ----------------------------------

         10.1. EVENTS OF DEFAULT. If any one or more of the following events
(herein called "Events of Default") shall occur for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
Governmental Authority), that is to say:

                  (a) if default shall be made in the due and punctual payment
         of the principal of any Loan, Reimbursement Obligation or other
         Obligation, when and as the same shall be due and payable whether
         pursuant to any provision of ARTICLE II or ARTICLE III or ARTICLE IV,
         at maturity, by acceleration or otherwise; or

                  (b) if default shall be made in the due and punctual payment
         of any amount of interest on any Loan, Reimbursement Obligation or
         other Obligation or of any fees or other amounts, other than principal
         of any Obligation, payable to any of the Lenders or the Agent on the
         date on which the same shall be due and payable and such default shall
         continue for a period of three (3) or more days; or

                  (c) if default shall be made in the performance or observance
         of any covenant set forth in SECTION 8.8, 8.12, 8.13, 8.18 or ARTICLE
         IX;

                  (d) if a default shall be made in the performance or
         observance of, or shall occur under, any covenant, agreement or
         provision contained in this Agreement or the Notes (other than as
         described in clauses (a), (b) or (c) above) and such default shall
         continue for thirty (30) or more days after the earlier of receipt of
         notice of such default by a Responsible Officer from the Agent or a
         senior executive officer of the Borrower becomes aware of such default,
         or if a default shall be made in the performance or observance of, or
         shall occur under, any covenant, agreement or provision contained in
         any of the other Loan Documents (beyond any applicable grace period, if
         any, contained therein) or in any instrument or document evidencing or
         creating any obligation, guaranty, or Lien in favor of the Agent or any
         of the Lenders or delivered to the Agent or any of the Lenders in
         connection with or pursuant to this Agreement or any of the
         Obligations, or if any Loan Document ceases to be in full force and
         effect (other than as expressly provided for hereunder or thereunder or
         with the express written consent of the Agent or by reason of any
         action by the Agent or the Lenders), or any Credit Party shall so state
         in writing, or if without the written consent of the Lenders, this
         Agreement or any other Loan Document shall be disaffirmed or shall
         terminate, be terminable or be terminated or become void or
         unenforceable for any reason whatsoever (other than as expressly
         provided for hereunder or thereunder or with the express written
         consent of the Agent or by reason of any action by the Agent or the
         Lenders); or

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<PAGE>   83

                  (e) if there shall occur (i) a default, which is not waived,
         in the payment of any principal, interest, premium or other amount with
         respect to the Senior Notes or any other Indebtedness (other than the
         Loans and other Obligations) of the Borrower or any Subsidiary in an
         amount not less than $5,000,000 with respect to any individual
         Indebtedness or $10,000,000 with respect to all Indebtedness in the
         aggregate outstanding, or (ii) a default, which is not waived, in the
         performance, observance or fulfillment of any term or covenant
         contained in any agreement or instrument under or pursuant to which the
         Senior Notes or any other such Indebtedness may have been issued,
         created, assumed, guaranteed or secured by the Borrower or any
         Subsidiary, or (iii) any other event of default as specified in any
         agreement or instrument under or pursuant to which the Senior Notes or
         any other such Indebtedness may have been issued, created, assumed,
         guaranteed or secured by the Borrower or any Subsidiary, and such
         default or event of default shall continue for more than the period of
         grace, if any, therein specified, or such default or event of default
         shall permit the holder of any such Indebtedness (or any agent or
         trustee acting on behalf of one or more holders) to accelerate the
         maturity thereof or to require the mandatory redemption, repurchase or
         call thereof; or

                  (f) if any representation, warranty or other statement of fact
         contained in any Loan Document or in any writing, certificate, report
         or statement at any time furnished to the Agent or any Lender by or on
         behalf of the Borrower or any Subsidiary pursuant to or in connection
         with any Loan Document, or otherwise, shall be false or misleading in
         any material respect when given; or

                  (g) if the Borrower or any Subsidiary shall be unable to pay
         its debts generally as they become due; file a petition to take
         advantage of any insolvency statute; make an assignment for the benefit
         of its creditors; commence a proceeding for the appointment of a
         receiver, trustee, liquidator or conservator of itself or of the whole
         or any substantial part of its property; file a petition or answer
         seeking liquidation, reorganization or arrangement or similar relief
         under the Federal bankruptcy laws or any other applicable law or
         statute; or

                  (h) if a court of competent jurisdiction shall enter an order,
         judgment or decree appointing a custodian, receiver, trustee,
         liquidator or conservator of the Borrower or any Subsidiary or of the
         whole or any substantial part of its properties and such order,
         judgment or decree continues unstayed and in effect for a period of
         sixty (60) days, or approve a petition filed against the Borrower or
         any Subsidiary seeking liquidation, reorganization or arrangement or
         similar relief under the Federal bankruptcy laws or any other
         applicable law or statute of the United States of America or any state,
         which petition is not dismissed within sixty (60) days; or if, under
         the provisions of any other law for the relief or aid of debtors, a
         court of competent jurisdiction shall assume custody or control of the
         Borrower or any Subsidiary or of the whole or any substantial part of
         its properties, which control is not relinquished within sixty (60)
         days; or if there is commenced against the Borrower or any Subsidiary
         any proceeding or petition seeking reorganization, arrangement or
         similar relief under the Federal bankruptcy laws or any other
         applicable law or statute of the United States of America or any state
         which

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<PAGE>   84

         proceeding or petition remains undismissed for a period of sixty (60)
         days; or if the Borrower or any Subsidiary takes any action to indicate
         its consent to or approval of any such proceeding or petition; or

                  (i) if (i) one or more judgments or orders where the amount
         not covered by insurance (or the amount as to which the insurer denies
         liability) is in excess of $10,000,000 is rendered against the Borrower
         or any Subsidiary, or (ii) there is any attachment, injunction or
         execution against any of the Borrower's or Subsidiaries' properties for
         any amount in excess of $10,000,000 (individually or in the aggregate);
         and such judgment, attachment, injunction or execution remains unpaid,
         unstayed, undischarged, unbonded or undismissed for a period of sixty
         (60) days; or

                  (j) if the Borrower or any Subsidiary shall (i) substantially
         change the nature of its business from that currently engaged in or,
         other than (A) in the ordinary course of business (as determined by
         past practices), (B) in connection with any asset sale permitted under
         SECTION 9.6 hereof or (C) (with respect only to a Subsidiary) as a
         result of a merger permitted under SECTION 9.8 hereof, or (ii) suspend
         all or any part of its operations material to the conduct of the
         business of the Borrower or any Subsidiary for a period of more than
         sixty (60) days; or

                  (k) if the Borrower or any Subsidiary shall breach any of the
         material terms or conditions of any Swap Agreement or any operative
         agreement relating to any Permitted Asset Securitization and such
         breach shall continue beyond any grace period, if any, relating thereto
         pursuant to the terms of such agreement, or if the Borrower or any
         Subsidiary shall disaffirm or seek to disaffirm any such Swap Agreement
         or any such operative agreement relating to any Permitted Asset
         Securitization or any of its obligations thereunder; or

                  (l) if there shall occur and not be waived an Event of Default
         as defined in any of the other Loan Documents; or

                  (m) if there shall occur or exist any Change of Control;
         or

                  (n) if the Borrower or any of its Subsidiaries receives notice
         of any violation, non-compliance, or liability or potential liability
         under Environmental Laws, or the Borrower or any of its Subsidiaries is
         in violation of or is not in compliance with or has incurred liability
         or potential liability under Environmental Laws, which in either case
         would reasonably be expected to result in a Material Adverse Effect and
         which, with respect to any violation or non-compliance has not been
         cured in all material respects during any applicable cure period,
         PROVIDED that the Required Lenders have given the Borrower notice that
         the same constitutes an Event of Default;

then, and in any such event and at any time thereafter, if such Event of Default
or any other Event of Default shall have not been waived,

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<PAGE>   85

                           (A) either or both of the following actions may be
                  taken: (i) the Agent may, and at the direction of the Required
                  Lenders shall, declare any obligation of the Lenders and the
                  Issuing Bank to make further Revolving Loans and Swing Line
                  Loans or to issue additional Letters of Credit terminated,
                  whereupon the obligation of each Lender to make further
                  Revolving Loans, of Bank of America to make further Swing Line
                  Loans, and of the Issuing Bank to issue additional Letters of
                  Credit, hereunder shall terminate immediately, and (ii) the
                  Agent shall at the direction of the Required Lenders, at their
                  option, declare by notice to the Borrower any or all of the
                  Obligations to be immediately due and payable, and the same,
                  including all interest accrued thereon and all other
                  obligations of the Borrower to the Agent and the Lenders,
                  shall forthwith become immediately due and payable without
                  presentment, demand, protest, notice or other formality of any
                  kind, all of which are hereby expressly waived, anything
                  contained herein or in any instrument evidencing the
                  Obligations to the contrary notwithstanding; PROVIDED,
                  however, that notwithstanding the above, if there shall occur
                  an Event of Default under clause (g) or (h) above, then the
                  obligation of the Lenders to make Revolving Loans, of Bank of
                  America to make Swing Line Loans, and of the Issuing Bank to
                  issue Letters of Credit hereunder shall automatically
                  terminate and any and all of the Obligations shall be
                  immediately due and payable without the necessity of any
                  action by the Agent or the Required Lenders or notice to the
                  Agent or the Lenders;

                           (B) The Borrower shall, upon demand of the Agent or
                  the Required Lenders, deposit cash with the Agent in an amount
                  equal to the amount of any Letter of Credit Outstandings, as
                  collateral security for the repayment of any future drawings
                  or payments under such Letters of Credit, and such amounts
                  shall be held by the Agent pursuant to the terms of the LC
                  Account Agreement; and

                           (C) the Agent and each of the Lenders shall have all
                  of the rights and remedies available under the Loan Documents
                  or under any applicable law.

         10.2. AGENT TO ACT. In case any one or more Events of Default shall
occur and not have been waived, the Agent may, and at the direction of the
Required Lenders shall, proceed to protect and enforce their rights or remedies
either by suit in equity or by action at law, or both, whether for the specific
performance of any covenant, agreement or other provision contained herein or in
any other Loan Document, or to enforce the payment of the Obligations or any
other legal or equitable right or remedy.

         10.3. CUMULATIVE RIGHTS. No right or remedy herein conferred upon the
Lenders or the Agent is intended to be exclusive of any other rights or remedies
contained herein or in any other Loan Document, and every such right or remedy
shall be cumulative and shall be in addition to every other such right or remedy
contained herein and therein or now or hereafter existing at law or in equity or
by statute, or otherwise.

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<PAGE>   86

         10.4. NO WAIVER. No course of dealing between the Borrower and any
Lender or the Agent or any failure or delay on the part of any Lender or the
Agent in exercising any rights or remedies under any Loan Document or otherwise
available to it shall operate as a waiver of any rights or remedies and no
single or partial exercise of any rights or remedies shall operate as a waiver
or preclude the exercise of any other rights or remedies hereunder or of the
same right or remedy on a future occasion.

         10.5. ALLOCATION OF PROCEEDS. If an Event of Default has occurred and
not been waived, and the maturity of the Notes has been accelerated pursuant to
ARTICLE X hereof, all payments received by the Agent hereunder, in respect of
any principal of or interest on the Obligations or any other amounts payable by
the Borrower hereunder, shall be applied by the Agent in the following order:

                  (a) amounts due to the Lenders and the Issuing Bank pursuant
         to SECTIONS 4.6(a), 4.6(b), 4.6(c), AND 12.5;

                  (b) amounts due to the Agent pursuant to SECTION 4.6(d);

                  (c) payments of interest on Loans, Swing Line Loans and
         Reimbursement Obligations, to be applied for the ratable benefit of the
         Lenders(with amounts payable in respect of Swing Line Outstandings
         being included in such calculation and paid to Bank of America);

                  (d) payments of principal of Loans, Swing Line Loans and
         Reimbursement Obligations, to be applied for the ratable benefit of the
         Lenders(with amounts payable in respect of Swing Line Outstandings
         being included in such calculation and paid to Bank of America);

                  (e) payments of cash amounts to the Agent in respect of
         outstanding Letters of Credit pursuant to SECTION 10.1(B);

                  (f) amounts due to the Issuing Bank, the Agent and the Lenders
         pursuant to SECTIONS 3.2(h), 8.14(c) and 12.9;

                  (g) payments of all other amounts due under any of the Loan
         Documents, if any, to be applied for the ratable benefit of the
         Lenders;

                  (h) amounts due to any of the Lenders or their affiliates in
         respect of Obligations consisting of liabilities under any Swap
         Agreement with any of the Lenders or their affiliates on a pro rata
         basis according to the amounts owed; and

                  (i) any surplus remaining after application as provided for
         herein, to the Borrower or otherwise as may be required by applicable
         law.

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<PAGE>   87

                                   ARTICLE XI

                                    The Agent
                                    ---------

         11.1. APPOINTMENT, POWERS, AND IMMUNITIES. Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent under this
Agreement and the other Loan Documents with such powers and discretion as are
specifically delegated to the Agent by the terms of this Agreement and the other
Loan Documents, together with such other powers as are reasonably incidental
thereto. The Agent (which term as used in this sentence and in SECTION 11.5 and
the first sentence of SECTION 11.6 hereof shall include its affiliates and its
own and its affiliates' officers, directors, employees, and agents):

                  (a) shall not have any duties or responsibilities except those
         expressly set forth in this Agreement and shall not be a trustee or
         fiduciary for any Lender;

                  (b) shall not be responsible to the Lenders for any recital,
         statement, representation, or warranty (whether written or oral) made
         in or in connection with any Loan Document or any certificate or other
         document referred to or provided for in, or received by any of them
         under, any Loan Document, or for the value, validity, effectiveness,
         genuineness, enforceability, or sufficiency of any Loan Document, or
         any other document referred to or provided for therein or for any
         failure by any Credit Party or any other Person to perform any of its
         obligations thereunder;

                  (c) shall not be responsible for or have any duty to
         ascertain, inquire into, or verify the performance or observance of any
         covenants or agreements by any Credit Party or the satisfaction of any
         condition or to inspect the property (including the books and records)
         of any Credit Party or any of its Subsidiaries or affiliates;

                  (d) shall not be required to initiate or conduct any
         litigation or collection proceedings under any Loan Document; and

                  (e) shall not be responsible for any action taken or omitted
         to be taken by it under or in connection with any Loan Document, except
         for its own gross negligence or willful misconduct.

The Agent may employ agents and attorneys-in-fact and shall not be responsible
for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care.

         11.2. RELIANCE BY AGENT. The Agent shall be entitled to rely upon any
certification, notice, instrument, writing, or other communication (including,
without limitation, any thereof by telephone or telefacsimile) believed by it to
be genuine and correct and to have been signed, sent or made by or on behalf of
the proper Person or Persons, and upon advice and statements of legal counsel
(including counsel for any Credit Party), independent accountants, and other
experts selected by the Agent. The Agent may deem and treat the payee of any
Note as the holder thereof

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<PAGE>   88

for all purposes hereof unless and until the Agent receives and accepts an
Assignment and Acceptance executed in accordance with SECTION 12.1 hereof. As to
any matters not expressly provided for by this Agreement, 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 on all of the Lenders; 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 any Loan Document or applicable law or
unless it shall first be indemnified to its satisfaction by the Lenders against
any and all liability and expense which may be incurred by it by reason of
taking any such action.

         11.3. DEFAULTS. The Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default or Event of Default unless the Agent has
received written notice from a Lender or the Borrower specifying such Default or
Event of Default and stating that such notice is a "Notice of Default". In the
event that the Agent receives such a notice of the occurrence of a Default or
Event of Default, the Agent shall give prompt notice thereof to the Lenders. The
Agent shall (subject to SECTION 11.2 hereof) take such action with respect to
such Default or Event of Default as shall reasonably be directed by the Required
Lenders, PROVIDED THAT, unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interest of the Lenders.

         11.4. RIGHTS AS LENDER. With respect to its Revolving Credit Commitment
and the Loans made by it and Letters of Credit issued by it, Bank of America
(and any successor acting as Agent) in its capacity as a Lender hereunder shall
have the same rights and powers hereunder as any other Lender and may exercise
the same as though it were not acting as the Agent, and the term "Lender" or
"Lenders" shall, unless the context otherwise indicates, include the Agent in
its individual capacity. Bank of America (and any successor acting as Agent) and
its affiliates may (without having to account therefor to any Lender) accept
deposits from, lend money to, make investments in, provide services to, and
generally engage in any kind of lending, trust, or other business with any
Credit Party or any of its Subsidiaries or affiliates as if it were not acting
as Agent, and Bank of America (and any successor acting as Agent) and its
affiliates may accept fees and other consideration from any Credit Party or any
of its Subsidiaries or affiliates for services in connection with this Agreement
or otherwise without having to account for the same to the Lenders.

         11.5. INDEMNIFICATION. The Lenders agree to indemnify the Agent (to the
extent not reimbursed under SECTION 12.9 hereof, but without limiting the
obligations of the Borrower under such Section) ratably in accordance with their
respective Revolving Credit Commitments, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including attorneys' fees), or disbursements of any kind and nature
whatsoever that may be imposed on, incurred by or asserted against the Agent
(including by any Lender) in any way relating to or arising out of any Loan
Document or the transactions contemplated thereby or any action taken or omitted
by the Agent under any Loan Document; PROVIDED that no Lender shall be liable
for any of the foregoing to the extent they arise from the gross negligence or

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<PAGE>   89

willful misconduct of the Person to be indemnified. Without limitation of the
foregoing, each Lender agrees to reimburse the Agent promptly upon demand for
its ratable share of any costs or expenses payable by the Borrower under SECTION
12.5, to the extent that the Agent is not promptly reimbursed for such costs and
expenses by the Borrower. The agreements contained in this SECTION 11.5 shall
survive payment in full of the Loans and all other amounts payable under this
Agreement.

         11.6. NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender agrees that
it has, independently and without reliance on the Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis of the Credit Parties and their Subsidiaries and decision to
enter into this Agreement and 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 analysis and
decisions in taking or not taking action under the Loan Documents. Except for
notices, reports, and other documents and information expressly required to be
furnished to the Lenders by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the affairs, financial condition, or business of any
Credit Party or any of its Subsidiaries or affiliates that may come into the
possession of the Agent or any of its affiliates.

         11.7. RESIGNATION OF AGENT. The Agent may resign at any time by giving
notice thereof to the Lenders and the Borrower. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Required Lenders and shall
have accepted such appointment within thirty (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 having combined capital
and surplus of at least $500,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor, such successor 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 hereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this ARTICLE XI shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent.

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<PAGE>   90

                                   ARTICLE XII

                                  Miscellaneous
                                  -------------

         12.1.    ASSIGNMENTS AND PARTICIPATIONS.

                  (a) Each Lender may assign to one or more Eligible Assignees
         all or a portion of its rights and obligations under this Agreement
         (including, without limitation, all or a portion of its Loans, its
         Revolving Note, and its Revolving Credit Commitment); PROVIDED,
         HOWEVER, that

                           (i) each such assignment shall be to an Eligible
                  Assignee;

                           (ii) except in the case of an assignment to another
                  Lender or an assignment of all of a Lender's rights and
                  obligations under this Agreement, any such partial assignment
                  shall be in an amount at least equal to $5,000,000 or an
                  integral multiple of $5,000,000 in excess thereof;

                           (iii) each such assignment by a Lender shall be of a
                  constant, and not varying, percentage of all of its rights and
                  obligations under this Agreement and its Revolving Note
                  (except that any assignment by Bank of America shall not
                  include its rights, benefits or duties as the Issuing Bank or
                  as the provider of Swing Line Loans); and

                           (iv) the parties to such assignment shall execute and
                  deliver to the Agent for its acceptance an Assignment and
                  Acceptance in the form of EXHIBIT B hereto, together with any
                  Revolving Note subject to such assignment and a processing fee
                  of $3,500.

         Upon execution, delivery, and acceptance of such Assignment and
         Acceptance, the assignee thereunder shall be a party hereto and, to the
         extent of such assignment, have the obligations, rights, and benefits
         of a Lender hereunder and the assigning Lender shall, to the extent of
         such assignment, relinquish its rights and be released from its
         obligations under this Agreement. Upon the consummation of any
         assignment pursuant to this Section, the assignor, the Agent and the
         Borrower shall make appropriate arrangements so that, if required, new
         Revolving Notes are issued to the assignor and the assignee. If the
         assignee is not incorporated under the laws of the United States of
         America or a state thereof, it shall deliver to the Borrower and the
         Agent certification as to exemption from deduction or withholding of
         Taxes in accordance with SECTION 5.6.

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<PAGE>   91

                  (b) The Agent shall maintain at its address referred to in
         SECTION 12.2 a copy of each Assignment and Acceptance delivered to and
         accepted by it and a register for the recordation of the names and
         addresses of the Lenders and the Revolving Credit Commitment of, and
         principal amount of the Revolving Loans owing to, each Lender from time
         to time (the "Register"). The entries in the Register shall be
         conclusive and binding for all purposes, absent manifest error, and the
         Borrower, the Agent and the Lenders may treat each Person whose name is
         recorded in the Register as a Lender hereunder for all purposes of this
         Agreement. The Register shall be available for inspection by the
         Borrower or any Lender at any reasonable time and from time to time
         upon reasonable prior notice.

                  (c) Upon its receipt of an Assignment and Acceptance executed
         by the parties thereto, together with any Note subject to such
         assignment and payment of the processing fee, the Agent shall, if such
         Assignment and Acceptance has been completed and is in substantially
         the form of EXHIBIT B hereto, (i) accept such Assignment and
         Acceptance, (ii) record the information contained therein in the
         Register and (iii) give prompt notice thereof to the parties thereto.

                  (d) Each Lender may sell participations to one or more Persons
         in all or a portion of its rights, obligations or rights and
         obligations under this Agreement (including all or a portion of its
         Revolving Credit Commitment or its Loans); PROVIDED, HOWEVER, that (i)
         such Lender's obligations under this Agreement shall remain unchanged,
         (ii) such Lender shall remain solely responsible to the other parties
         hereto for the performance of such obligations, (iii) the participant
         shall be entitled to the benefit of the yield protection provisions
         contained in ARTICLE V and the right of set-off contained in SECTION
         12.3, and (iv) the Borrower shall continue to deal solely and directly
         with such Lender in connection with such Lender's rights and
         obligations under this Agreement, and such Lender shall retain the sole
         right to enforce the obligations of the Borrower relating to its Loans
         and its Note and to approve any amendment, modification, or waiver of
         any provision of this Agreement (other than amendments, modifications,
         or waivers decreasing the amount of principal of or the rate at which
         interest is payable on such Loans or Note, extending any scheduled
         principal payment date or date fixed for the payment of interest on
         such Loans or Note, or extending its Revolving Credit Commitment).

                  (e) Notwithstanding any other provision set forth in this
         Agreement, any Lender may at any time assign and pledge all or any
         portion of its Loans and its Note to any Federal Reserve Bank as
         collateral security pursuant to Regulation A and any Operating Circular
         issued by such Federal Reserve Bank. No such assignment shall release
         the assigning Lender from its obligations hereunder.

                  (f) Any Lender may furnish any information concerning the
         Borrower or any of its Subsidiaries in the possession of such Lender
         from time to time to assignees and participants (including prospective
         assignees and participants).

                                       85
<PAGE>   92

                  (g) Whenever in this Agreement any of the parties hereto is
         referred to, such reference shall be deemed to include the successors
         and permitted assigns of such party and all covenants, provisions and
         agreements by or on behalf of the Borrower which are contained in the
         Loan Documents shall inure to the benefit of the successors and
         permitted assigns of the Agent, the Lenders, or any of them. The
         Borrower may not assign or otherwise transfer to any other Person any
         right, power, benefit, or privilege (or any interest therein) conferred
         hereunder or under any of the other Loan Documents, or delegate (by
         assumption or otherwise) to any other Person any duty, obligation, or
         liability arising hereunder or under any of the other Loan Documents,
         and any such purported assignment, delegation or other transfer shall
         be void.

                  (h) Neither the Agent nor any Lender shall deliver to any
         Person who is a potential assignee or participant hereunder any
         financial or other information with respect to the Borrower not
         otherwise publicly available which was received by the Agent or such
         Lender from the Borrower unless the Borrower has consented to such
         Person being a potential assignee or participant (which consent shall
         not be unreasonably withheld or delayed) and such Person has executed
         and delivered to the Borrower an agreement to be bound by the terms of
         SECTION 12.15 as if it were a Lender.

         12.2. NOTICES. Any notice shall be conclusively deemed to have been
received by any party hereto and be effective (i) on the day on which delivered
(including hand delivery by commercial courier service) to such party (against
receipt therefor), (ii) on the date of transmission to such party, in the case
of notice by telefacsimile (where the proper transmission of such notice is
either acknowledged by the recipient or electronically confirmed by the
transmitting device), or (iii) on the fifth Business Day after the day on which
mailed to such party, if sent prepaid by certified or registered mail, return
receipt requested, in each case delivered, transmitted or mailed, as the case
may be, to the address or telefacsimile number, as appropriate, set forth below
or such other address or number as such party shall specify by notice hereunder:

                  (a)      if to the Borrower:

                           OMNOVA Solutions Inc.
                           175 Ghent Road
                           Fairlawn, Ohio 44333
                           Attn:  Michael E. Hicks, Senior Vice President and
                           Chief Financial Officer
                           Telephone:     (330) 869-4200
                           Telefacsimile: (330) 869-4514

                           with a copy to:

                           OMNOVA Solutions Inc.
                           175 Ghent Road
                           Fairlawn, Ohio 44333
                           Attn:  Cynthia A. Slack, Secretary

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<PAGE>   93

                           Telephone:     (330) 869-4256
                           Telefacsimile: (330) 869-4272

                  (b)      if to the Agent:

                           Bank of America, N.A.
                           101 North Tryon Street, 15th Floor
                           NC1-001-15-04
                           Charlotte, North Carolina  28255
                           Attention: Agency Services
                           Telephone:       (704) 388-3917
                           Telefacsimile:   (704) 409-0019

                           with a copy to:

                           Bank of America, N.A.
                           231 South LaSalle Street
                           9th Floor
                           Chicago, Illinois 60697
                           Attention:  Ms. Valerie Mills, Managing Director
                           Telephone:       (312) 828-6859
                           Telefacsimile:   (312) 978-7384

                  (c)      if to the Lenders:

                           At the addresses set forth on the signature pages
                           hereof and on the signature page of each Assignment
                           and Acceptance;

                  (d)      if to any Guarantor, at the address set forth on the
                           signature page of the Facility Guaranty executed by
                           such Credit Party.

         12.3.    RIGHT OF SET-OFF; ADJUSTMENTS.

                  (a) Upon the occurrence and during the continuance of any
         Event of Default, each Lender (and each of its affiliates) is hereby
         authorized at any time 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 any of its
         affiliates) to or for the credit or the account of the Borrower against
         any and all of the obligations of the Borrower now or hereafter
         existing under this Agreement and the Note held by such Lender,
         irrespective of whether such Lender shall have made any demand under
         this Agreement or such Note and although such obligations may be
         unmatured. Each Lender agrees promptly to notify the Borrower after any
         such set-off and application made by such Lender; PROVIDED, HOWEVER,
         that the failure to give such notice shall not affect the validity of
         such set-off and application. The rights of each Lender under this
         SECTION 12.3 are in addition to other

                                       87
<PAGE>   94

         rights and remedies (including, without limitation, other rights of
         set-off) that such Lender may have.

                  (b) If any Lender (a "benefitted Lender") shall at any time
         receive any payment of all or part of the Loans owing to it, or
         interest thereon, or receive any collateral in respect thereof (whether
         voluntarily or involuntarily, by set-off, or otherwise), in a greater
         proportion than any such payment to or collateral received by any other
         Lender, if any, in respect of such other Lender's Loans owing to it, or
         interest thereon, such benefitted Lender shall purchase for cash from
         the other Lenders a participating interest in such portion of each such
         other Lender's Loans owing to it, or shall provide such other Lenders
         with the benefits of any such collateral, or the proceeds thereof, as
         shall be necessary to cause such benefitted Lender to share the excess
         payment or benefits of such collateral or proceeds ratably with each of
         the Lenders; PROVIDED, HOWEVER, that if all or any portion of such
         excess payment or benefits is thereafter recovered from such benefitted
         Lender, such purchase shall be rescinded, and the purchase price and
         benefits returned, to the extent of such recovery, but without
         interest. The Borrower agrees that any Lender so purchasing a
         participation from a Lender pursuant to this SECTION 12.3 may, to the
         fullest extent permitted by law, exercise all of its rights of payment
         (including the right of set-off) with respect to such participation as
         fully as if such Person were the direct creditor of the Borrower in the
         amount of such participation.

         12.4. SURVIVAL. All covenants, agreements, representations and
warranties made herein shall survive the making by the Lenders of the Loans and
the issuance of the Letters of Credit and the execution and delivery to the
Lenders of this Agreement and the Notes and shall continue in full force and
effect so long as any of Obligations remain outstanding or any Lender has any
Revolving Credit Commitment hereunder or the Borrower has continuing obligations
hereunder unless otherwise provided herein.

         12.5. EXPENSES. The Borrower agrees to pay on demand all costs and
expenses of the Agent in connection with the syndication, preparation,
execution, delivery, administration, modification, and amendment of this
Agreement, the other Loan Documents, and the other documents to be delivered
hereunder, including, without limitation, the reasonable fees and expenses of
counsel for the Agent (including the cost of internal counsel) with respect
thereto and with respect to advising the Agent as to its rights and
responsibilities under the Loan Documents. The Borrower further agrees to pay on
demand all costs and expenses of the Agent and the Lenders, if any (including,
without limitation, reasonable attorneys' fees and expenses and the cost of
internal counsel), in connection with the enforcement (whether through
negotiations, legal proceedings, or otherwise) of the Loan Documents and the
other documents to be delivered hereunder.

         12.6. AMENDMENTS AND WAIVERS. Any provision of this Agreement or any
other Loan Document may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by the Borrower or other applicable Credit
Party party to such Loan Document and either the Required Lenders or (as to Loan
Documents other than this Agreement) the Agent on

                                       88
<PAGE>   95

behalf of the Required Lenders (and, if ARTICLE XI or the rights or duties of
the Agent are affected thereby, by the Agent); PROVIDED that no such amendment
or waiver shall, unless signed by all the Lenders, (i) increase the Revolving
Credit Commitments of the Lenders or the Total Revolving Credit Commitment, (ii)
reduce the principal of or rate of interest on any Revolving Loan or any fees or
other amounts payable hereunder, (iii) postpone any date fixed for the payment
of any scheduled installment of principal of or interest on any Loan or any fees
or other amounts payable hereunder or for termination of any Revolving Credit
Commitment, (iv) change the percentage of the Revolving Credit Commitment or of
the unpaid principal amount of the Notes, or the number of Lenders, which shall
be required for the Lenders or any of them to take any action under this SECTION
12.6 or any other provision of this Agreement or (v) release any Guarantor which
is a Material Subsidiary or in connection with transactions permitted pursuant
to SECTIONS 9.6, 9.8 OR 9.12; and PROVIDED, FURTHER, that no such amendment or
waiver that affects the rights, privileges or obligations of Bank of America as
provider of Swing Line Loans, shall be effective unless signed in writing by
Bank of America or that affects the rights, privileges or obligations of the
Issuing Bank as issuer of Letters of Credit, shall be effective unless signed in
writing by the Issuing Bank.

         No notice to or demand on the Borrower in any case shall entitle the
Borrower to any other or further notice or demand in similar or other
circumstances, except as otherwise expressly provided herein. No delay or
omission on any Lender's or the Agent's part in exercising any right, remedy or
option shall operate as a waiver of such or any other right, remedy or option or
of any Default or Event of Default.

         12.7. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such fully-executed counterpart.

         12.8. TERMINATION. The termination of this Agreement shall not affect
any rights of the Borrower, the Lenders or the Agent or any obligation of the
Borrower, the Lenders or the Agent, arising prior to the effective date of such
termination, and the provisions hereof shall continue to be fully operative
until all transactions entered into or rights created or obligations incurred
prior to such termination have been fully disposed of, concluded or liquidated
and the Obligations arising prior to or after such termination have been
irrevocably paid in full. The rights granted to the Agent for the benefit of the
Lenders under the Loan Documents shall continue in full force and effect,
notwithstanding the termination of this Agreement, until all of the Obligations
have been paid in full after the termination hereof (other than Obligations in
the nature of continuing indemnities or expense reimbursement obligations not
yet due and payable, which shall continue) or the Borrower has furnished the
Lenders and the Agent with an indemnification satisfactory to the Agent and each
Lender with respect thereto. Notwithstanding the foregoing, if after receipt of
any payment of all or any part of the Obligations, any Lender is for any reason
compelled to surrender such payment to any Person because such payment is
determined to be void or voidable as a preference, impermissible setoff, a
diversion of trust funds or for any other reason, this Agreement shall continue
in full force and the Borrower shall be liable to, and shall indemnify and hold
the Agent or such Lender harmless for, the amount of such payment surrendered
until

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<PAGE>   96

the Agent or such Lender shall have been finally and irrevocably paid in full.
The provisions of the foregoing sentence shall be and remain effective
notwithstanding any contrary action which may have been taken by the Agent or
the Lenders in reliance upon such payment, and any such contrary action so taken
shall be without prejudice to the Agent or the Lenders' rights under this
Agreement and shall be deemed to have been conditioned upon such payment having
become final and irrevocable.

         12.9. INDEMNIFICATION; LIMITATION OF LIABILITY. The Borrower agrees to
indemnify and hold harmless the Agent, BAS and each Lender and each of their
affiliates and their respective officers, directors, employees and counsel to
the Agent (each, an "Indemnified Party") from and against any and all claims,
damages, losses, liabilities, costs, and expenses (including, without
limitation, reasonable fees and expenses of counsel and, without duplication,
the allocated cost of internal counsel) that may be incurred by or asserted or
awarded against any Indemnified Party, in each case arising out of or in
connection with or by reason of (including, without limitation, in connection
with any investigation, litigation, or proceeding or preparation of defense in
connection therewith) the Spinoff, the Line of Business Transfer or the
Revolving Credit Facility, the Transaction Documents, any of the transactions
specified therein or herein or the actual or proposed use of the proceeds of the
Loans, except to the extent such claim, damage, loss, liability, cost, or
expense is found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from (i) such Indemnified Party's gross negligence
or willful misconduct or (ii) legal proceedings commenced against such
Indemnified Party by any other Indemnified Party. In the case of an
investigation, litigation or other proceeding to which the indemnity in this
SECTION 12.9 applies, such indemnity shall be effective whether or not the
transactions contemplated hereby are consummated. The Borrower agrees that no
Indemnified Party shall have any liability (whether direct or indirect, in
contract or tort or otherwise) to it, any of its Subsidiaries or any Guarantor,
arising out of, related to or in connection with the transactions contemplated
herein or in any of the Transaction Documents, except to the extent that such
liability is found in a final non-appealable judgment by a court of competent
jurisdiction to have directly resulted from such Indemnified Party's gross
negligence or willful misconduct. The Borrower agrees not to assert any claim
against the Agent, any Lender, any of their affiliates, or any of their
respective directors, officers, employees, attorneys, agents, and advisers, for
special, indirect, consequential, or punitive damages arising out of or
otherwise relating to the Transaction Documents, any of the transactions
contemplated therein or herein or the actual or proposed use of the proceeds of
the Loans, except for claims for such special, indirect, consequential, or
punitive damages directly arising out of such party's gross negligence or
willful misconduct. Without prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the Borrower contained
in this SECTION 12.9 shall survive the payment in full of the Loans and all
other amounts payable under this Agreement.

         12.10. SEVERABILITY. If any provision of this Agreement or the other
Loan Documents shall be determined to be illegal or invalid as to one or more of
the parties hereto, then such provision shall remain in effect with respect to
all parties, if any, as to whom such provision is neither illegal nor invalid,
and in any event all other provisions hereof shall remain effective and binding
on the parties hereto.

                                       90
<PAGE>   97

         12.11. ENTIRE AGREEMENT. This Agreement, together with the other Loan
Documents, constitutes the entire agreement among the parties with respect to
the subject matter hereof and supersedes all previous proposals, negotiations,
representations, commitments and other communications between or among the
parties, both oral and written, with respect thereto (except that those
provisions (if any) which by the express terms of the commitment letter dated as
of July 1, 1999, executed by Bank of America and BAS and accepted by the
Borrower, survive the closing of the Revolving Credit Facility and Letter of
Credit Facility, shall survive and continue in effect).

         12.12. AGREEMENT CONTROLS. In the event that any term of any of the
Loan Documents other than this Agreement conflicts with any express term of this
Agreement, the terms and provisions of this Agreement shall control to the
extent of such conflict.

         12.13. USURY SAVINGS CLAUSE. Notwithstanding any other provision
herein, the aggregate interest rate charged under any of the Notes, including
all charges or fees in connection therewith deemed in the nature of interest
under applicable law shall not exceed the Highest Lawful Rate (as such term is
defined below). If the rate of interest (determined without regard to the
preceding sentence) under this Agreement at any time exceeds the Highest Lawful
Rate (as defined below), the outstanding amount of the Loans made hereunder
shall bear interest at the Highest Lawful Rate until the total amount of
interest due hereunder equals the amount of interest which would have been due
hereunder if the stated rates of interest set forth in this Agreement had at all
times been in effect. In addition, if when the Loans made hereunder are repaid
in full the total interest due hereunder (taking into account the increase
provided for above) is less than the total amount of interest which would have
been due hereunder if the stated rates of interest set forth in this Agreement
had at all times been in effect, then to the extent permitted by law, the
Borrower shall pay to the Agent an amount equal to the difference between the
amount of interest paid and the amount of interest which would have been paid if
the Highest Lawful Rate had at all times been in effect. Notwithstanding the
foregoing, it is the intention of the Lenders and the Borrower to conform
strictly to any applicable usury laws. Accordingly, if any Lender contracts for,
charges, or receives any consideration which constitutes interest in excess of
the Highest Lawful Rate, then any such excess shall be cancelled automatically
and, if previously paid, shall at such Lender's option be applied to the
outstanding amount of the Loans made hereunder or be refunded to the Borrower.
As used in this paragraph, the term "Highest Lawful Rate" means the maximum
lawful interest rate, if any, that at any time or from time to time may be
contracted for, charged, or received under the laws applicable to such Lender
which are presently in effect or, to the extent allowed by law, under such
applicable laws which may hereafter be in effect and which allow a higher
maximum nonusurious interest rate than applicable laws now allow.

         12.14. PAYMENTS. All principal, interest, and other amounts to be paid
by the Borrower under this Agreement and the other Loan Documents shall be paid
to the Agent at the Principal Office in Dollars and in immediately available
funds, without setoff, deduction or counterclaim. Subject to the definition of
"Interest Period" herein, whenever any payment under this Agreement or any other
Loan Document shall be stated to be due on a day that is not a Business Day,
such payment may be made on the next succeeding Business Day, and such extension
of time in such

                                       91
<PAGE>   98

case shall be included in the computation of interest and fees, as applicable,
and as the case may be.

         12.15. CONFIDENTIALITY. Each Lending Party agrees to keep confidential
any information furnished or made available to it by the Borrower pursuant to
this Agreement that is marked confidential; PROVIDED that nothing herein shall
prevent any Lending Party from disclosing such information (a) to any other
Lending Party or any affiliate of any Lending Party, or any officer, director,
employee, agent, or advisor of any Lending Party or affiliate of any Lending
Party, (b) to any other Person if reasonably incidental to the administration of
the credit facility provided herein, (c) as required by any law, rule, or
regulation, (d) upon the order of any court or administrative agency, (e) upon
the request or demand of any regulatory agency or authority, (f) that is or
becomes available to the public or that is or becomes available to any Lending
Party other than as a result of a disclosure by any Lending Party prohibited by
this Agreement, (g) in connection with any litigation to which such Lending
Party or any of its affiliates may be a party, (h) to the extent necessary in
connection with the exercise of any remedy under this Agreement or any other
Loan Document, and (i) subject to provisions substantially similar to those
contained in this Section, to any actual or proposed participant or assignee.

         12.16.   GOVERNING LAW; WAIVER OF JURY TRIAL.

                  (A) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN
         THOSE SECURITY INSTRUMENTS WHICH EXPRESSLY PROVIDE THAT THEY SHALL BE
         GOVERNED BY THE LAWS OF ANOTHER JURISDICTION) SHALL BE GOVERNED BY, AND
         CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
         APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH
         STATE.

                  (B) THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND
         CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
         TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE
         INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY OF NEW
         YORK, STATE OF NEW YORK, UNITED STATES OF AMERICA AND, BY THE EXECUTION
         AND DELIVERY OF THIS AGREEMENT, THE BORROWER EXPRESSLY WAIVES ANY
         OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN,
         OR TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY BY, ANY
         SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING, AND THE BORROWER
         HEREBY IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO THE
         JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.

                  (C) THE BORROWER AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
         PERSONAL SERVICE OF A COPY OF THE SUMMONS AND

                                       92
<PAGE>   99

         COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR
         PROCEEDING, OR BY REGISTERED OR CERTIFIED MAIL (POSTAGE PREPAID) TO THE
         ADDRESS OF THE BORROWER PROVIDED IN SECTION 12.2, OR BY ANY OTHER
         METHOD OF SERVICE PROVIDED FOR UNDER THE APPLICABLE LAWS IN EFFECT IN
         THE STATE OF NEW YORK.

                  (D) NOTHING CONTAINED IN SUBSECTIONS (b) OR (c) HEREOF SHALL
         PRECLUDE THE AGENT OR ANY LENDER FROM BRINGING ANY SUIT, ACTION OR
         PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT IN THE
         COURTS OF ANY JURISDICTION WHERE THE BORROWER OR ANY OF THE BORROWER'S
         PROPERTY OR ASSETS MAY BE FOUND OR LOCATED. TO THE EXTENT PERMITTED BY
         THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, THE BORROWER HEREBY
         IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND EXPRESSLY
         WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING, OBJECTION TO
         THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY BY ANY SUCH OTHER
         COURT OR COURTS WHICH NOW OR HEREAFTER MAY BE AVAILABLE UNDER
         APPLICABLE LAW.

                  (E) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
         RIGHTS OR REMEDIES UNDER OR RELATED TO ANY LOAN DOCUMENT OR ANY
         AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN
         THE FUTURE BE DELIVERED IN CONNECTION THEREWITH, THE BORROWER, THE
         AGENT AND THE LENDERS HEREBY AGREE, TO THE EXTENT PERMITTED BY
         APPLICABLE LAW, THAT ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE TRIED
         BEFORE A COURT AND NOT BEFORE A JURY AND HEREBY IRREVOCABLY WAIVE, TO
         THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PERSON MAY HAVE
         TO TRIAL BY JURY IN ANY SUCH ACTION, SUIT OR PROCEEDING.

                           (F) THE BORROWER HEREBY EXPRESSLY WAIVES ANY
         OBJECTION IT MAY HAVE THAT ANY COURT TO WHOSE JURISDICTION IT HAS
         SUBMITTED PURSUANT TO THE TERMS HEREOF IS AN INCONVENIENT FORUM.

         12.17.   SPECIAL FUNDING OPTION.

                  (a) Notwithstanding anything to the contrary contained herein,
         any Lender (for the purposes of this SECTION 12.17, a "Granting
         Lender") may grant to a special purpose funding vehicle (for the
         purposes of this SECTION 12.17, an "SPC") the option to make, on behalf
         of such Granting Lender, all or a portion of the Advances which such
         Granting Lender is obligated to make (a "Funding Obligation") under the
         Revolving Credit

                                       93
<PAGE>   100

         Facility, such option to be exercisable in the sole discretion of the
         SPC, PROVIDED, HOWEVER, that

                           (i) such Granting Lender's obligations under this
                  Agreement and the Loan Documents shall remain unchanged,
                  including without limitation the indemnification obligations
                  of the Granting Lender pursuant to SECTION 11.5 hereof;

                                       94
<PAGE>   101

                           (ii) such Granting Lender shall remain solely
                  responsible to the other parties hereto for the performance of
                  all Funding Obligations;

                           (iii) the Borrower and the Lenders shall continue to
                  deal solely and directly with such Granting Lender in
                  connection with such Granting Lender's rights and obligations
                  under this Agreement; the Agent shall continue to deal
                  directly with the Granting Lender as agent for the SPC with
                  respect to distribution of payment of principal, interest and
                  fees, notices of Conversion and Continuation and all other
                  matters;

                           (iv) such Granting Lender shall retain the sole right
                  to enforce the obligations of the Borrower relating to its
                  Loans and its Notes and its Participations and to approve any
                  amendment, modification, or waiver of any provisions of this
                  Agreement, each of which may, if so agreed in writing between
                  the Granting Lender and the SPC, require the prior consent of
                  any such SPC which has exercised the option to undertake the
                  Funding Obligation in connection with such Granting Lender's
                  Commitments and Participations and Obligations owing thereto
                  before the Granting Lender approves any such amendment,
                  modification or waiver;

                           (v) the granting of such option shall not constitute
                  an assignment to or participation of such SPC of or in the
                  Granting Lender's Commitments and Participations and
                  Obligations owing thereto;

                           (vi) such SPC shall not become a Lender hereunder as
                  a result of the granting of such option;

                           (vii) such SPC shall not become obligated or
                  committed to make Advances as a result of the granting of such
                  option;

                           (viii) if such SPC elects not to exercise such option
                  or otherwise fails to make all or any part of an Advance, the
                  Granting Lender shall retain its Funding Obligation and be
                  obligated to make the entire Advance or any portion of such
                  Advance not made by such SPC; and

                  (b) Advances made by an SPC hereunder shall be deemed to
         satisfy the Funding Obligation and utilize the Revolving Credit
         Commitment of the Granting Lender as if, and to the same extent, such
         Advances were made by such Granting Lender.

                  (c) Each party hereto agrees that no SPC shall be liable for
         any indemnity or payment under this Agreement for which a Granting
         Lender would otherwise be liable so long as, and to the extent that,
         the Granting Lender provides such indemnity or makes such payment.

                                       95
<PAGE>   102

                  (d) Notwithstanding anything to the contrary contained in this
         Agreement, an SPC may disclose on a confidential basis any nonpublic
         information relating to Advances made by such SPC hereunder to any
         rating agency, commercial paper dealer or provider of any surety or
         guarantee to such SPC.

                  (e) This SECTION 12.17 may not be amended without the prior
         written consent of the Granting Lender on behalf of which such SPC has
         made all or any part of its Advances which remain outstanding at the
         time of such amendment.

                         [Signatures on following pages]

                                       96
<PAGE>   103

         IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be made, executed and delivered by their duly authorized officers as of the day
and year first above written.

                        OMNOVA SOLUTIONS INC.

                        By:               /S/
                           ---------------------------
                        Name:    M. E. HICKS
                             -------------------------------------------
                        Title:   SR. VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
                              -------------------------------------------------

                         BANK OF AMERICA, N.A.,
                         as Agent for the Lenders

                         By:              /S/
                            ---------------------------
                         Name:  VALERIE C. MILLS
                              --------------------------------------------------
                         Title: MANAGING DIRECTOR
                               -------------------------------------------------

                             SIGNATURE PAGE 1 OF 15

<PAGE>   104

                         BANK OF AMERICA, N.A.

                         By:             /S/
                            ----------------------------------------------
                         Name:     VALERIE C. MILLS
                              ---------------------------------------------
                         Title:    MANAGING DIRECTOR
                               ---------------------------------------------

                         Lending Office for Base Rate Loans:
                                  Bank of America, N.A.
                                  101 North Tryon Street, 15th Floor
                                  NC1-001-15-04
                                  Charlotte, North Carolina  28255
                                  Attention:  Corporate Credit Services
                                  Telephone:        (704) 388-3917
                                  Telefacsimile:    (704) 409-0019

                         Wire Transfer Instructions:
                                  Bank of America, N.A.
                                  ABA# 053000196
                                  Account No.: 13662122506
                                  Reference: Omnova Solutions Inc.
                                  Attention: Corporate Credit Services

                         Lending Office for Eurodollar Rate Loans:
                                  Bank of America, N.A.
                                  101 North Tryon Street, 15th Floor
                                  NC1-001-15-04
                                  Charlotte, North Carolina  28255
                                  Attention:  Corporate Credit Services
                                  Telephone:        (704) 388-3917
                                  Telefacsimile:    (704) 409-0019

                         Wire Transfer Instructions:
                                  Bank of America, N.A.
                                  ABA# 053000196
                                  Account No.: 13662122506
                                  Reference: Omnova Solutions Inc.
                                  Attention: Corporate Credit Services

                             SIGNATURE PAGE 2 OF 15

<PAGE>   105

                         BANK ONE, MICHIGAN

                         By:       /S/
                           ---------------------------------------------
                         Name:    PAUL R. DEMELO
                             -------------------------------------------
                         Title:   VICE PRESIDENT
                              ---------------------------------------------

                         Lending Office for Base Rate Loans:
                                  Bank One, Michigan
                                  611 Woodward
                                  Detroit, Michigan  48226
                                  Attention:  Karen Graham, Loan Services
                                  Telephone:        (313) 225-2911
                                  Telefacsimile:    (313) 225-1576

                         Wire Transfer Instructions:
                                  Bank One, Michigan
                                  ABA# 072-000-326
                                  Account No.: 2891000007
                                  Reference: Omnova
                                  Attention:  Detroit LSA Group

                         Lending Office for Eurodollar Rate Loans:
                                  Bank One, Michigan
                                  611 Woodward
                                  Detroit, Michigan  48226
                                  Attention:  Karen Graham, Loan Services
                                  Telephone:        (313) 225-2911
                                  Telefacsimile:    (313) 225-1576

                         Wire Transfer Instructions:
                                  Bank One, Michigan
                                  ABA# 072-000-326
                                  Account No.: 2891000007
                                  Reference: Omnova
                                  Attention:  Detroit LSA Group

                             SIGNATURE PAGE 3 0F 15

<PAGE>   106

                         DEUTSCHE BANK AG, New York or Cayman Islands
                         Branch

                         By:        /S/
                             ----------------------------------------------
                         Name:     PAUL L. HARINSTEIN
                               ----------------------------------------------
                         Title:    MANAGING DIRECTOR
                                ---------------------------------------------

                         By:        /S/
                             ----------------------------------------------
                         Name:     JACK WESOLEK
                               --------------------------------------------
                         Title:    ASSOCIATE
                                ---------------------------------------------

                         Lending Office for Base Rate Loans:
                                  Deutsche Bank AG, New York
                                  31 W. 52nd Street
                                  New York, New York  10019
                                  Attention: Noble Samuel
                                  Telephone:        (212) 469-4091
                                  Telefacsimile:    (212) 469-4138

                         Wire Transfer Instructions:
                                  Deutsche Bank AG, New York
                                  ABA# 026-00-3780
                                  Account No.: N/A
                                  Reference: Omnova Solutions
                                  Attention: Noble Samuel

                         Lending Office for Eurodollar Rate Loans:
                                  Deutsche Bank AG, C.I. Branch
                                  31 W. 52nd Street
                                  New York, New York  10019
                                  Attention: Noble Samuel
                                  Telephone:        (212) 469-4091
                                  Telefacsimile:    (212) 469-4138

                         Wire Transfer Instructions:
                                  Deutsche Bank AG, C.I. Branch
                                  ABA# 026-00-3780
                                  Account No.: N/A
                                  Reference: Omnova Solutions
                                  Attention: Noble Samuel

                             SIGNATURE PAGE 4 OF 15

<PAGE>   107

                         COMERICA BANK

                         By:        /S/
                            ----------------------------------------------
                         Name:      JEFFREY J. JUDGE
                              ----------------------------------------------
                         Title:     VICE PRESIDENT
                               ---------------------------------------------

                         Lending Office for Base Rate Loans:
                                  Comerica Bank
                                  500 Woodward Avenue
                                  9th Floor, MC 3268
                                  Detroit, Michigan 48226
                                  Attention:  Stacie L. McVeigh
                                  Telephone:        (313) 222-4515
                                  Telefacsimile:    (313) 222-9514

                         Wire Transfer Instructions:
                                  Comerica Bank
                                  ABA# 072000096
                                  Account No.: 02-21585-90010
                                  Reference:  Omnova Solutions Inc.
                                  Attention: Commercial Loan Servicing

                         Lending Office for Eurodollar Rate Loans:
                                  Comerica Bank
                                  500 Woodward Avenue
                                  9th Floor, MC 3268
                                  Detroit, Michigan 48226
                                  Attention:  Stacie L. McVeigh
                                  Telephone:        (313) 222-4515
                                  Telefacsimile:    (313) 222-9514

                          Wire Transfer Instructions:
                                  Comerica Bank
                                  ABA# 072000096
                                  Account No.: 02-21585-90010
                                  Reference:  Omnova Solutions Inc.
                                  Attention: Commercial Loan Servicing

                             SIGNATURE PAGE 5 OF 15

<PAGE>   108

                         FIFTH THIRD BANK, NORTHEASTERN OHIO

                         By:        /S/
                            ----------------------------------------------
                         Name:      JAMES P. BYRNES
                              ---------------------------------------------
                         Title:     VICE PRESIDENT
                               ----------------------------------------------

                         Lending Office for Base Rate Loans:
                                  Fifth Third Bank, Northeastern Ohio
                                  1404 East Ninth Street
                                  Cleveland, Ohio 44114
                                  Attention: Anne Jones
                                  Telephone:        (216) 274-5578
                                  Telefacsimile:    (216) 274-5507

                         Wire Transfer Instructions:
                                  Fifth Third Bank, Northeastern Ohio
                                  ABA# 042000314
                                  Account No.: 99208599
                                  Reference: Omnova Solutions, Inc.
                                  Attention: Ann Jones

                         Lending Office for Eurodollar Rate Loans:
                                  Fifth Third Bank, Northeastern Ohio
                                  1404 East Ninth Street
                                  Cleveland, Ohio 44114
                                  Attention: Ann Jones
                                  Telephone:        (216) 274-5578
                                  Telefacsimile:    (216) 274-5507

                         Wire Transfer Instructions:
                                  Fifth Third Bank, Northeastern Ohio
                                  ABA# 042000314
                                  Account No.: 99208599
                                  Reference: Omnova Solutions, Inc.
                                  Attention: Ann Jones

                             SIGNATURE PAGE 6 OF 15

<PAGE>   109

                         FIRST UNION NATIONAL BANK

                         By:        /S/
                            ----------------------------------------------
                         Name:     ROGER PELZ
                              --------------------------------------------
                         Title:    SENIOR VICE PRESIDENT
                               -----------------------------------------------

                         Lending Office for Base Rate Loans:
                                  First Union National Bank
                                  201 S. College Street
                                  Charlotte, North Carolina 28288-1183
                                  Attention:  Gary Burkart
                                  Telephone:      (704) 374-6613
                                  Telefacsimile:  (704) 383-7999

                         Wire Transfer Instructions:
                                  First Union National Bank
                                  ABA# 053000219
                                  Account No.: 4659060001805
                                  Reference: Omnova
                                  Attention: Gary Burkart

                         Lending Office for Eurodollar Rate Loans:
                                  First Union National Bank
                                  201 S. College Street
                                  Charlotte, North Carolina 28288-1183
                                  Attention:  Gary Burkart
                                  Telephone:        (704) 374-6613
                                  Telefacsimile:    (704) 383-7999

                         Wire Transfer Instructions:
                                  First Union National Bank
                                  ABA# 053000219
                                  Account No.: 4659060001805
                                  Reference: Omnova
                                  Attention: Gary Burkart

                             SIGNATURE PAGE 7 OF 15

<PAGE>   110

                         KEYBANK NATIONAL ASSOCIATION

                         By:        /S/
                             ----------------------------------------------
                         Name:      LAWRENCE A. MACK
                               -------------------------------------------
                         Title:     SENIOR VICE PRESIDENT
                                -----------------------------------------------

                         Lending Office for Base Rate Loans:
                                  KeyBank National Association
                                  127 Public Square
                                  OH-01-27-06-06
                                  Cleveland, Ohio 44114
                                  Attention: Dianne Cox
                                  Telephone:        (216) 689-4450
                                  Telefacsimile:    (216) 689-4981

                         Wire Transfer Instructions:
                                  KeyBank National Association
                                  ABA# 041001039
                                  Account No.: N/A
                                  Reference: Omnova
                                  Attention: Commercial Loans

                         Lending Office for Eurodollar Rate Loans:
                                  KeyBank National Association
                                  127 Public Square
                                  OH-01-27-06-06
                                  Cleveland, Ohio 44114
                                  Attention: Dianne Cox
                                  Telephone:        (216) 689-4450
                                  Telefacsimile:    (216) 689-4981

                         Wire Transfer Instructions:
                                  KeyBank National Association
                                  ABA# 041001039
                                  Account No.: N/A
                                  Reference: Omnova
                                  Attention: Commercial Loans

                             SIGNATURE PAGE 8 OF 15

<PAGE>   111

                         NATIONAL CITY BANK

                         By:        /S/
                            ----------------------------------------------
                         Name: Davis R. Bonner
                         Title: Senior Vice President/ Senior Lending Officer

                         Lending Office for Base Rate Loans:
                                  National City Bank
                                  23000 Mill Creek
                                  Highland  Hills, Ohio  44122
                                  Attention: Revette Vickerstaff
                                  Telephone:        (216) 488-7080
                                  Telefacsimile:    (216) 488-7110

                         Wire Transfer Instructions:
                                  National City Bank
                                  ABA# 041000124
                                  Account No.: 151804
                                  Reference: Omnova Solutions Inc.
                                  Attention: Commercial Loan Ops.

                         Lending Office for Eurodollar Rate Loans:
                                  National City Bank
                                  2300 Mill Creek
                                  Highland  Hills, Ohio  44122
                                  Attention: Revette Vickerstaff
                                  Telephone:        (216) 488-7080
                                  Telefacsimile:    (216) 488-7110

                         Wire Transfer Instructions:
                                  National City Bank
                                  ABA# 041000124
                                  Account No.: 151804
                                  Reference: Omnova Solutions Inc.
                                  Attention: Commercial Loan Ops.

                             SIGNATURE PAGE 9 OF 15

<PAGE>   112

                         PNC BANK, NATIONAL ASSOCIATION

                         By:        /S/
                            ----------------------------------------------
                         Name:      JEFFERSON M. GREEN
                              ---------------------------------------------
                         Title:     VICE PRESIDENT
                                ----------------------------------------------

                         Lending Office for Base Rate Loans:
                                  PNC  Bank, National Association
                                  249 Fifth Avenue
                                  P2-PTPP-03-1
                                  Pittsburgh, Pennsylvania 15222
                                  Attention: Peggy Collier
                                  Telephone:        (412) 762-7946
                                  Telefacsimile:    (412) 768-4586

                         Wire Transfer Instructions:
                                  PNC  Bank, National Association
                                  ABA# 0430-00096
                                  Account No.: N/A
                                  Reference: Omnova
                                  Attention: Commercial Loans

                         Lending Office for Eurodollar Rate Loans:
                                  PNC  Bank, National Association
                                  249 Fifth Avenue
                                  P2-PTPP-03-1
                                  Pittsburgh, Pennsylvania 15222
                                  Attention: Peggy Collier
                                  Telephone:        (412) 762-7946
                                  Telefacsimile:    (412) 768-4586

                         Wire Transfer Instructions:
                                  PNC  Bank, National Association
                                  ABA# 0430-00096
                                  Account No.: N/A
                                  Reference: Omnova
                                  Attention: Commercial Loans

                             SIGNATURE PAGE 10 OF 15

<PAGE>   113

                         THE BANK OF NEW YORK

                         By:        /S/
                            ----------------------------------------------
                         Name:      ROBERT J. JOYCE
                              ---------------------------------------------
                         Title:     VICE PRESIDENT
                               ----------------------------------------------

                         Lending Office for Base Rate and Eurodollar Loans:
                                  The Bank of New York
                                  101 Barclay Street
                                  New York, New York 10007
                                  Attention: Lorna Alleyne
                                  Telephone:        (212) 635-6787
                                  Telefacsimile:    (212) 635-6426

                         Wire Transfer Instructions For Base Rate Loans:
                                  The Bank of New York
                                  101 Barclay Street
                                  New York, New York 10007
                                  ABA# 021000018
                                  Commercial Loan Servicing Department
                                  GLA# 111-556
                                  Reference: Omnova Solutions
                                  Specify Interest, Principal, Reserves and the
                                  Period
                                  Attention:  Lorna Alleyne

                         Wire Transfer Instructions for Eurodollar Rate Loans:
                                  The Bank of New York
                                  101 Barclay Street
                                  New York, New York 10007
                                  ABA# 021000018
                                  Commercial Loan Servicing Department
                                  GLA# 111-556
                                  Reference: Omnova Solutions
                                  Specify Interest, Principal, Fee and the
                                  Period
                                  Attention:  Lorna Alleyne

                             SIGNATURE PAGE 11 OF 15

<PAGE>   114

                         THE INDUSTRIAL BANK OF JAPAN, LIMITED

                         By:        /S/
                            ----------------------------------------------
                         Name:      WALTER R. WOLFF
                              ---------------------------------------------
                         Title:     JOINT GENERAL MANAGER
                               ----------------------------------------------

                         Lending Office for Base Rate Loans:
                                  The Industrial Bank of Japan, Limited
                                  1251 Avenue of the Americas
                                  New York, New York 10020
                                  Attention: Jaikisoon Sanichar
                                  Telephone:        (212) 282-4061
                                  Telefacsimile:    (212) 282-4478

                         Wire Transfer Instructions:
                                  The Industrial Bank of Japan, Limited,
                                  New York Branch
                                  ABA# 026-008-345
                                  Account No.: N/A
                                  Reference: Omnova Solutions Inc.
                                  Attention: Credit Administration Department

                         Lending Office for Eurodollar Rate Loans:
                                  The Industrial Bank of Japan, Limited
                                  1251 Avenue of the Americas
                                  New York, New York 10020
                                  Attention: Jaikisoon Sanichar
                                  Telephone:        (212) 282-4061
                                  Telefacsimile:    (212) 282-4478

                           Wire Transfer Instructions:
                                  The Industrial Bank of Japan, Limited,
                                  New York Branch
                                  ABA# 026-008-345
                                  Account No.: N/A
                                  Reference: Omnova Solutions Inc.
                                  Attention: Credit Administration Department

                             SIGNATURE PAGE 12 OF 15

<PAGE>   115

                         MELLON BANK, N.A.

                         By:        /S/
                            ----------------------------------------------
                         Name:      MARK F. JOHNSTON
                              --------------------------------------------
                         Title:     VICE PRESIDENT
                               ----------------------------------------------

                         Lending Office for Base Rate Loans:
                                  Mellon Bank, N.A.
                                  Three Mellon Bank Center
                                  Pittsburgh, Pennsylvania
                                  Attention: Lloyd Martin, Loan Administrator
                                  Telephone:        (412) 234-9448
                                  Telefacsimile:    (412) 209-6138

                         Wire Transfer Instructions:
                                  Mellon Bank, N.A.
                                  ABA# 043000261
                                  Account No.: 990873800
                                  Reference: Omnova Solutions
                                  Attention:Loan Administration

                         Lending Office for Eurodollar Rate Loans:
                                  Mellon Bank, N.A.
                                  Three Mellon Bank Center
                                  Pittsburgh, Pennsylvania
                                  Attention: Lloyd Martin, Loan Administrator
                                  Telephone:        (412) 234-9448
                                  Telefacsimile:    (412) 209-6138

                         Wire Transfer Instructions:
                                  Mellon Bank, N.A.
                                  ABA# 043000261
                                  Account No.: 990873800
                                  Reference: Omnova Solutions
                                  Attention:Loan Administration

                             SIGNATURE PAGE 13 OF 15

<PAGE>   116

                         THE NORTHERN TRUST COMPANY

                         By:        /S/
                            ----------------------------------------------
                         Name:      MARK E. TAYLOR
                              --------------------------------------------
                         Title:     SECOND VICE PRESIDENT
                               -------------------------------------------

                         Lending Office for Base Rate Loans:
                                  The Northern Trust Company
                                  50 South LaSalle
                                  Chicago, Illinois  60675
                                  Attention: Linda Honda
                                  Telephone:        (312) 444-4715
                                  Telefacsimile:    (312) 630-1566

                         Wire Transfer Instructions:
                                  The Northern Trust Company
                                  ABA# 071000152
                                  Account No.: 518640000
                                  Reference: Omnova Solutions Inc.
                                  Attention: Commerical Loan Department

                         Lending Office for Eurodollar Rate Loans:
                                  The Northern Trust Company
                                  50 South LaSalle
                                  Chicago, Illinois  60675
                                  Attention: Linda Honda
                                  Telephone:        (312) 444-4715
                                  Telefacsimile:    (312) 630-1566

                         Wire Transfer Instructions:
                                  The Northern Trust Company
                                  ABA# 071000152
                                  Account No.: 518640000
                                  Reference: Omnova Solutions Inc.
                                  Attention: Commerical Loan Department

                             SIGNATURE PAGE 14 OF 15

<PAGE>   117

                         THE SUMITOMO BANK, LIMITED

                         By:        /S/
                            ----------------------------------------------
                         Name:     JOHN H. KEMPER
                              --------------------------------------------
                         Title:    SENIOR VICE PRESIDENT
                               -------------------------------------------

                         Lending Office for Base Rate Loans:
                                  The Sumitomo Bank Limited
                                  277 Park Avenue
                                  Ne York, New York 10172
                                  Attention: Lissette Villanueva-Ruiz
                                  Telephone:        (212) 224-4185
                                  Telefacsimile:    (212) 224-5197

                         Wire Transfer Instructions:
                                  Citibank, N.A. New York
                                  ABA# 021000089
                                  Account No.: 36023837
                                  Reference:The Sumitomo Bank, Limited, New York
                                  Attention: Loan Operations

                         Lending Office for Eurodollar Rate Loans:
                                  The Sumitomo Bank Limited
                                  277 Park Avenue
                                  Ne York, New York 10172
                                  Attention: Lissette Villanueva-Ruiz
                                  Telephone:        (212) 224-4185
                                  Telefacsimile:    (212) 224-5197

                         Wire Transfer Instructions:
                                  Citibank, N.A. New York
                                  ABA# 021000089
                                  Account No.: 36023837
                                  Reference:The Sumitomo Bank, Limited, New York
                                  Attention: Loan Operations

                             SIGNATURE PAGE 15 OF 15

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