AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT

Exhibit 10.2

AMENDED AND RESTATED

RECEIVABLES PURCHASE AGREEMENT

Dated as of July 26, 2005

among

POLYONE FUNDING CORPORATION,

as the Seller,

POLYONE CORPORATION,

as the Servicer,

THE BANKS AND OTHER FINANCIAL INSTITUTIONS PARTY HERETO,

as Purchasers,

CITICORP USA, INC.,

as the Agent,

and

NATIONAL CITY BUSINESS CREDIT, INC.,

as the Syndication Agent

TABLE OF CONTENTS

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EXHIBITS

SCHEDULES

AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT

     This AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT , dated as of July 26, 2005 (this “ Agreement ”), among POLYONE FUNDING CORPORATION, a Delaware corporation (the “ Seller ”), POLYONE CORPORATION, an Ohio corporation (“ PolyOne ”), as the Servicer (as hereinafter defined), the banks and other financial institutions listed on the signature pages hereof, as the Initial Purchasers (the “ Initial Purchasers ”), CITICORP USA, INC., a Delaware corporation (“ Citicorp ”), as administrative agent (the “ Agent ”) for the Purchasers and the other Owners (as hereinafter defined), CITIBANK, N.A., a national association (“ CNA ”), and National City Bank, as issuing banks (the “ Issuing Banks ”), and NATIONAL CITY BUSINESS CREDIT, INC., an Ohio corporation (“ NCBC ”), as the syndication agent (the “ Syndication Agent ”) amends in certain respects and restates in its entirety, the Receivables Purchase Agreement, dated as of May 6, 2003, as amended by Amendment No. 1, dated as of September 25, 2003, and Amendment No. 2, dated as of August 5, 2004 (the “ Original Agreement ”).

PRELIMINARY STATEMENTS:

     (1) It is the intent of the parties hereto that this Agreement not constitute a novation of any of the obligations or liabilities under the Original Agreement nor constitute a discharge thereof, that this Agreement amend and restate in its entirety the Original Agreement and that, from and after the Amendment and Restatement Effective Date, the Original Agreement be of no further force and effect except to evidence the obligations of the parties thereto prior to the Amendment and Restatement Effective Date and the representations and warranties made thereunder.

     (2) The Seller will from time to time purchase or otherwise acquire from the Originators Pool Receivables in which the Seller intends to sell interests referred to herein as Receivable Interests.

     (3) The Purchasers may at any time and from time to time purchase Receivable Interests from the Seller.

     (4) In consideration of the reinvestment in Pool Receivables of daily Collections (other than with regard to accrued Yield and any fees) attributable to a Receivable Interest, the Seller will sell to each Owner of such Receivable Interest additional interests in the Pool Receivables as part of such Receivable Interest until such reinvestment is terminated.

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

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

     (7) The Issuing Banks have been requested and are willing to make available to the Seller a letter of credit sub-facility upon the terms and subject to the conditions set forth herein.

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

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

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

ARTICLE I

DEFINITIONS

      Section 1.01. Certain Defined Terms.

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

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

     “ Adjusted LIBO Rate ” means, with respect to any Yield Period for any Capital Investment, an interest rate per annum equal to the rate per annum obtained by dividing (a) the LIBO Rate by (b) a percentage equal to (i) 100% minus (ii) the reserve percentage applicable 2 Business Days before the first day of such Yield Period under regulations issued from time to time by the Federal Reserve Board for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) for a member bank of the Federal Reserve System in New York City with respect to liabilities or assets consisting of or including Eurocurrency Liabilities (or with respect to any other category of liabilities that includes deposits by reference to which the LIBO Rate is determined) having a term equal to such Yield Period.

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

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

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

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

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

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

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

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

     “ Amendment and Restatement Effective Date ” means July 26, 2005.

     “ Amended and Restated Commitment Termination Date ” means the fifth anniversary of the Amendment and Restatement Effective Date.

     “ Amended and Restated Consent and Agreement ” means the Amended and Restated Consent and Agreement, dated as of the Amendment and Restatement Effective Date, in substantially the form of Exhibit E hereto, with respect to the Amended and Restated Receivables Sale Agreement, duly executed by the Seller and each Originator.

     “ Amended and Restated Fee Letter ” means the Amended and Restated Fee Letter agreement, dated July 26, 2005, among the Seller, Citicorp and Citigroup Global Markets Inc., as the same may from time to time be amended, supplemented or otherwise modified.

     “ Amended and Restated Letter of Credit Agreement ” means a letter of credit reimbursement agreement between Seller and each Originator in form and substance acceptable to Agent.

     “ Amended and Restated Parent Undertaking ” means the Amended and Restated Undertaking Agreement in the form attached hereto as Exhibit K hereto, dated as of July 26, 2005, by PolyOne in favor of the Agent, the Issuing Banks, the Syndication Agent, the Purchasers and the other Owners, as the same may from time to time be amended, supplemented or otherwise modified with the prior written consent of the Agent.

     “ Amended and Restated Projections ” means those financial projections, dated June 23, 2005, covering the Fiscal Years ending in December 2005 through December 2010 inclusive, to be delivered to the Purchasers by PolyOne.

     “ Amended and Restated Receivables Sale Agreement ” means the Amended and Restated Receivables Sale Agreement, dated as of July 26, 2005, in substantially the form of Exhibit D hereto, among each Originator, the Seller and PolyOne as the Buyer’s Servicer thereunder, as the same may from

time to time be amended, supplemented or otherwise modified with the prior written consent of the Required Purchasers.

     “ Amended and Restated Subordinated Note ” has the meaning specified in the Amended and Restated Receivables Sale Agreement.

     “ Applicable L/C Margin ” means (a) for an initial period commencing on the Amendment and Restatement Effective Date and ending on the first day of the month immediately following the month in which the Servicer delivers PolyOne’s financial statements for the Fiscal Period ending September 30, 2005, 1.50% per annum and (b) thereafter, as of any date of determination, a per annum rate equal to the rate set forth below opposite the then applicable Average Monthly Excess Availability (determined on the last day of the most recently concluded calendar month):

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

     “ Applicable Margin ” means (a) for an initial period commencing on the Amendment and Restatement Effective Date and ending on the first day of the month immediately following the month in which the Servicer delivers PolyOne’s financial statements for the Fiscal Period ending September 30, 2005, (i) in the case of Capital Investments having a Yield determined with reference to the Alternate Base Rate 0.75% per annum and, (ii) in the case of Capital Investments having a Yield determined with reference to the Adjusted LIBO Rate, 1.75% per annum and (b) thereafter, as of any date of determination, a per annum rate equal to the rate set forth below opposite the then applicable Average Monthly Excess Availability (determined on the last day of the most recently concluded calendar month):

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

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

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

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

     “ Approved Electronic Communications ” means each notice, demand, communication, information, document and other material that the Seller or Servicer is obligated to, or otherwise chooses to, provide to the Agent pursuant to any Transaction Document or the transactions contemplated therein, including any financial statement, financial and other report, notice, request, certificate and other information material; provided , however , that “ Approved Electronic Communication ” shall exclude (x) any Notice of Purchase, Letter of Credit Request, Swing Purchase Request, Notice of Conversion or Continuation, and any other notice, demand, communication, information, document and other material relating to a request for a new, or a conversion of an existing, Purchase, (ii) any notice relating to the payment due under any Transaction Document prior to the scheduled date therefor, (iii) any notice of any Potential Event of Termination or Event of Termination and (iv) any notice, demand, communication, information, document and other material required to be delivered to satisfy any of the conditions set forth in Article III or Section 2.04(a) or any other condition to any Purchase or extension of credit hereunder or any condition precedent to the effectiveness of this Agreement.

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

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

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

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

     “ Average Monthly Excess Availability ” means, for any calendar month, the average daily Receivables Excess Availability for such calendar month.

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

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

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

     “ Capital Investment ” means (a) in respect of any Receivable Interest, the original amount paid to the Seller for such Receivable Interest at the time of its acquisition by the Purchasers, or the Swing Purchaser, as the case may be, pursuant to Sections 2.01, 2.02, 2.03 or 2.04, reduced from time to time by Collections received and distributed on account of such Capital pursuant to Section 2.07 or 2.08; provided , however , that if such Capital Investment of such Receivable Interest shall have been reduced by any distribution of any portion of Collections and thereafter such distribution is rescinded or must otherwise be returned for any reason, such Capital Investment of such Receivable Interest shall be increased by the amount of such distribution, all as though such distribution had not been made; and (b) any Reimbursement Obligation (solely to the extent not included in clause (a) of this definition).

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

     “ Change of Control ” means the occurrence of any of the following: (a) any Person or 2 or more Persons acting in concert, other than a trustee or other fiduciary holding securities under an employee benefit plan of PolyOne or a corporation owned, directly or indirectly, by PolyOne or by the stockholders of PolyOne in substantially the same proportions as their ownership of stock of PolyOne (e.g., a holding company reorganization), shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934), directly or indirectly, of Voting Interests of PolyOne (or other securities convertible into such Voting Interests of PolyOne) representing 25% or more of the combined voting power of all Voting Interests of PolyOne; or (b) any Person or 2 or more Persons acting in concert shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation, will result in its or their acquisition of the power to exercise, directly or indirectly, a controlling influence over the management or policies of PolyOne; or (c) PolyOne, or a corporation owned, directly or indirectly, by the stockholders of PolyOne in substantially the same proportions as their ownership of stock of PolyOne, shall cease to own, directly or indirectly, 100% of the Equity Interests in the Seller, PolyOne or any other Originator unless, in the case of such other Originator, such Originator is, upon at least 5 Business Days’ prior written notice to the Agent, sold by PolyOne and thereupon ceases to be an Originator hereunder without causing an Event of Termination or a Potential Event of Termination to occur, or (d) any “ Change of Control ” under and as defined in the Senior Note Indenture or any “ Event of Default ” pursuant to Section 6.01(h) of the Revolving Credit Agreement.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

     “ Documentary Letter of Credit ” means any Letter of Credit that is drawable upon presentation of documents evidencing the sale or shipment of goods purchased by an Originator in the ordinary course of its business.

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

     “ Eligible Assignee ” means (i) each Initial Purchaser or any of its Affiliates, and (ii) any commercial bank, finance company, insurance company or other financial institution or any other Person, in each case approved by the Agent and the Seller (which approval shall not (x) be unreasonably withheld or delayed or (y) required following the occurrence and during the continuance of an Event of Termination); provided, however, that neither an Originator nor the Seller nor any of their respective Affiliates may be an Eligible Assignee.

     “ Eligible Receivable ” means each Pool Receivable arising out of the sale of merchandise, goods or services in the ordinary course of business by an Originator to a Person that is not an Affiliate of any

Originator; provided, however, that a Pool Receivable shall not be an “ Eligible Receivable ” if any of the following shall be true:

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

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

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

     (d) the sale represented by such Receivable is to an Obligor located outside the United States, unless the sale is on letter of credit or acceptance terms acceptable to the Agent, in its sole discretion; provided , however , if the Obligor is located in Canada, this clause (d) shall not apply provided the inventory giving rise to the Receivable was shipped from the United States; or

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

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

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

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

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

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

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

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

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

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

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

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

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

     (r) such Receivable shall not be payable into a Lock-Box Account which is the subject of a Lock-Box Agreement; or

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

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

privacy) or with respect to which any party to the Contract related thereto is in violation of any such law, rule or regulation in any material respect; or

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

     (v) such Receivable shall not constitute an “account” within the meaning of Section 9-102(a)(2) of the UCC of the jurisdiction the law of which governs the perfection of the interest created by a Receivable Interest; or

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

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

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

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

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

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

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

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

     “ Fair Market Value ” means (a) with respect to any asset or group of assets (other than a marketable security) at any date, the value of the consideration obtainable in a sale of such asset at such date assuming a sale by a willing seller to a willing purchaser dealing at arm’s length and arranged in an orderly manner over a reasonable period of time having regard to the nature and characteristics of such asset, and, with respect to the sale of assets with a book value in excess of $25,000,000, as such sale is

reasonably approved by the Board of Directors of PolyOne or, if such asset shall have been the subject of a relatively contemporaneous appraisal by an independent third party appraiser, the basic assumptions underlying which have not materially changed since its date, the value set forth in such appraisal and (b) with respect to any marketable security at any date, the closing sale price of such security on the Business Day next preceding such date, as appearing in any published list of any national securities exchange or the NASDAQ Stock Market or, if there is no such closing sale price of such Security, the final price for the purchase of such security at face value quoted on such Business Day by a financial institution of recognized standing regularly dealing in securities of such type and selected by the Agent.

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

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

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

     “ Fixed Charge Coverage Ratio ” means, at any date of determination, the ratio of (i) Adjusted EBITDA of PolyOne less Consolidated Capital Expenditures of PolyOne and its Subsidiaries to (ii) Consolidated Interest Expense of PolyOne and its Subsidiaries plus scheduled repayments of principal on Debt to be made by PolyOne or its Subsidiaries during the immediately succeeding four fiscal quarter period plus Restricted Payments, plus net cash payment of taxes to the extent included in the calculation of EBITDA, in each case (other than in the case of scheduled repayments of principal on Debt) for the four fiscal quarter period ending on such date or, if such date is not the last day of a fiscal quarter, for the immediately preceding four fiscal quarter period.

     “ GAAP ” means generally accepted accounting principles in the United States consistently applied, in effect from time to time.

     “ Geon Notes ” means the 6.875% Medium Term Notes with an aggregate principal amount of $75,000,000 due December 15, 2005, issued by The Geon Company.

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

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

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

     “ Intercreditor Agreement ” means the intercreditor agreement, dated May 6, 2003, between the Agent, Citicorp USA, Inc, as agent for the lenders under the Revolving Credit Agreement, U.S. Bank Trust National Association, not in its individual capacity but solely as corporate trustee (the “ Corporate Trustee ”) and Angelita Pena, as individual collateral trustee for the lenders under the Revolving Credit Agreement and the other secured holders.

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

     “ Issue ” means, with respect to any Letter of Credit, to issue, extend the expiry of, renew or increase the maximum face amount (including by deleting or reducing any scheduled decrease in such maximum face amount) of, such Letter of Credit. The terms “ Issued ” and “ Issuance ” shall have a corresponding meaning.

     “ L/C Fee ” has the meaning specified in Section 2.11.

     “ L/C Issuance Fee ” has the meaning specified in Section 2.11.

     “ L/C Issuance Fee Rate ” means 0.25% per annum.

     “ Letter of Credit ” means any letter of credit Issued or deemed Issued pursuant to Section 2.04.

     “ Letter of Credit Obligations ” means, at any time, the aggregate of all liabilities at such time of the Seller to the Issuing Banks with respect to Letters of Credit, whether or not any such liability is contingent.

     “ Letter of Credit Reimbursement Agreement ” has the meaning specified in Section 2.04.

     “ Letter of Credit Request ” has the meaning specified in Section 2.04.

     “ Letter of Credit Sublimit ” means the lesser of (i) $40,000,000 or (ii) the maximum amount, that when added to all other applicable indebtedness of PolyOne and its Subsidiaries (including, without limitation, any Indebtedness as defined in the Indenture(s) governing the Geon Notes), would not require PolyOne or any of its Subsidiaries to provide collateral to secure any existing or future indebtedness of PolyOne or such Subsidiary.

     “ Letter of Credit Undrawn Amounts ” means, at any time, the aggregate undrawn face amount of all Letters of Credit outstanding at such time.

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

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

     “ Liquidation Day ” means, for any Receivable Interest, each day which occurs on or after the Termination Date.

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

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

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

     “ MA Hanna Notes ” means, collectively, the following:

     (i) the 7.70% Medium Term Notes due June 26, 2006, issued by M.A. Hanna Company; and

     (ii) the 6.740% Medium Term Notes due September 22, 2005, issued by M.A. Hanna Company.

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

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

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

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

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

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

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

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

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

     “ Original Receivables Sale Agreement ” means that certain Receivables Sale Agreement, dated as of May 26, 2003 (as amended, supplemented or otherwise modified prior to the Amendment and Restatement Effective Date), among each Originator, the Seller and PolyOne as the Buyer’s Servicer thereunder.

     “ Originator ” means PolyOne, PEFI, and such other of PolyOne’s wholly owned Subsidiaries as determined from time to time by PolyOne and consented to in writing by the Agent; provided, however, that any Originator shall cease to be an Originator upon (i) the occurrence of any event set forth in Section 7.01(f) as to such Originator, (ii) PolyOne, one or more direct or indirect wholly-owned Subsidiaries of PolyOne, or a corporation owned directly or indirectly by the stockholders of PolyOne in substantially the same proportions as their ownership of stock of PolyOne ceasing to own, directly or indirectly, 100% of the Equity Interests of such Originator, or (iii) 3 Business Days’ notice to such effect by the Agent (with the consent or at the request of the Required Purchasers) to the Seller following the occurrence of any Event of Termination as to such Originator; provided, however, that such Originator shall continue to be an Originator for purposes of all Pool Receivables existing, and in which interests have been created hereunder, prior to the occurrence of any event set forth in clauses (i) through (iii) in the preceding proviso (and all terms and conditions of all Transaction Documents to which such Originator is a party shall remain binding on such Originator generally and specifically with respect to such Pool Receivables until no such Pool Receivables remain outstanding and such Originator shall have satisfied in full all of its obligations under the Transaction Documents).

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

     “ Outstanding Balance ” of any Receivable at any time means the then outstanding principal balance thereof.

     “ Owner ” means, in respect of each Receivable Interest, upon its purchase by any of the Purchasers or the Swing Purchaser, as the case may be, the purchaser thereof; provided, however, that, upon any assignment thereof pursuant to Article IX, the Assignee thereof shall be an Owner thereof.

     “ PEFI ” means PolyOne Engineered Films, Inc., a Virginia corporation and a wholly owned Subsidiary of PolyOne.

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

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

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

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

     “ Purchase ” means a purchase by the Purchasers or the Swing Purchaser of a Receivable Interest from the Seller pursuant to Article II.

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

     “ Receivable ” means the indebtedness (whether constituting accounts or general intangibles or chattel paper or otherwise) of any Obligor under a Contract, and includes the right to payment of any interest or finance charges and other obligations of such Obligor with respect thereto.

     “ Receivable Interest ” means, at any time, an undivided percentage ownership interest at such time in (a) all then outstanding Pool Receivables arising prior to the time of the most recent computation or recomputation of such undivided percentage interest pursuant to Section 2.06, (b) all Related Security with respect to such Pool Receivables and (c) all Collections with respect to, and other proceeds of, such Pool Receivables. Such undivided percentage interest for such Receivable Interest shall be computed as:

C + AR
NRPB

where:

C = the outstanding Capital Investment made in connection with such Receivable Interest at the time of such computation;

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

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

provided, however, that upon the occurrence of any Termination Date that results from the occurrence and continuance of an Event of Termination pursuant to Section 7.01 (such Termination Date being the “ Special Termination Date ”), the Receivable Interests then outstanding under this Agreement, if more than one Receivable Interest, shall be combined into one Receivable Interest hereunder (such one Receivable Interest, whether the one Receivable Interest then outstanding or the one Receivable Interest resulting from such combination of Receivable Interests, being the “ Special Receivable Interest ”) and such Special Receivable Interest shall then be recomputed to be, and shall be fixed at all times thereafter at, an undivided percentage ownership interest of one hundred percent (100%) in (i) all then outstanding Pool Receivables arising prior to the Special Termination Date, (ii) all Related Security with respect to such Pool Receivables and (iii) all Collections with respect to, and other proceeds of, such Pool Receivables.

Each Receivable Interest shall be determined from time to time pursuant to the provisions of Section 2.06.

     “ Receivables Excess Availability ” means Available Capital plus cash proceeds of Pool Receivables in a Deposit Account in the Agent’s name.

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

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

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

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

     “ Reimbursement Date ” has the meaning specified in Section 2.04(h).

     “ Reimbursement Obligations ” means all matured reimbursement or repayment obligations of the Seller to the Issuing Banks with respect to amounts drawn under Letters of Credit.

     “ Related Security ” means with respect to any Receivable:

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

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

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

     (iv) all Records relating to such Receivable;

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

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

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

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

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

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

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

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

     “ Revolving Credit Agreement ” means the amended and restated credit agreement, dated May 6, 2003, between PolyOne Corporation and Citicorp USA Inc., as administrative agent and the financial institutions party thereto as lenders and under which the aggregate commitments of the lenders do not exceed $50,000,000 and the maturity date is not earlier than May 6, 2006, as such agreement may be amended, restated or otherwise modified with the prior written consent of the Agent (except for modifications that do not materially adversely affect the interests of the Purchasers under the Transaction Documents or in the Receivables with respect to which no written consent shall be required).

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

     “ Seller’s Account ” means the Deposit Account of the Seller (account number 104-9893) maintained with Mellon Financial Corporation at its office at 500 Ross Street, Room 154-0490, Pittsburgh, Pennsylvania 15262-0001, Attention: Tim Friday.

     “ Senior Note Indenture ” means the Indenture, dated as of May 6, 2003, between PolyOne Corporation and The Bank of New York, as Trustee governing the 10 5/8% Senior Notes, as such indenture may be amended, restated or otherwise modified with the prior written consent of the Agent (except for modifications that do not materially adversely affect the interests of the Purchasers under the Transaction Documents or in the Receivables with respect to which no written consent shall be required).

     “ Servicer ” has the meaning specified in Section 6.01.

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

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

     “ Solvent ” means, with respect to any Person as of any date of determination, that, as of such date, (a) the value of the assets of such Person (both at fair value and present fair saleable value) is greater than

the total amount of liabilities (including contingent and unliquidated liabilities) of such Person, (b) such Person is able to pay all liabilities of such Person as such liabilities mature and (c) such Person does not have unreasonably small capital. In computing the amount of contingent or unliquidated liabilities at any time, such liabilities shall be computed at the amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

     “ Special Receivable Interest ” has the meaning specified in the definition of “ Receivable Interest ” contained in this Section 1.01.

     “ Special Termination Date ” has the meaning specified in the definition of “ Receivable Interest ” contained in this Section 1.01.

     “ Standby Letter of Credit ” means any Letter of Credit that is not a Documentary Letter of Credit.

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

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

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

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

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

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

     “ Swing Purchase Sublimit ” means $25,000,000.

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

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

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

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

     “ Total Commitment ” means $175,000,000 as such amount may be reduced from time to time pursuant to Section 2.05.

     “ Total Excess Availability ” means the sum of (i) Receivables Excess Availability plus (ii) the total amount actually available to be borrowed by PolyOne and its Subsidiaries, or any of them, under the Revolving Credit Agreement, and after the Revolving Credit Agreement has been terminated and all obligations thereunder paid and satisfied in full, any refinancing, replacement or substitution for the working capital facility under the Revolving Credit Agreement, whether entered into at or after termination thereof.

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

     “ UCC ” means, at any time, the Uniform Commercial Code as from time to time in effect in the State of New York at such time; provided , however , that in the event that, by reason of mandatory provisions of law, any or all of the interests of the Agent or the Purchasers under any Transaction Document is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term “ UCC ” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such attachment, perfection or priority and for purposes of definitions related to such provisions, regardless of whether the same would be so shown.

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

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

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

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

     “ Unused Commitment Fee Rate ” means(i) for an initial period commencing on the Amendment and Restatement Effective Date and ending on the first day of the month immediately following the month in which the Servicer delivers PolyOne’s financial statements for the Fiscal Period ending September 30, 2005, 0.375% per annum, and (ii) thereafter, as of any date of determination, a per annum rate equal to the rate set forth below opposite the then applicable Average Monthly Excess Availability (determined on the last day of the most recently concluded calendar month for which financial statements have been delivered):

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

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

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

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

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

     where:

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

     where:

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

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

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

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

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

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

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

      Section 1.02. Other Terms.

     All accounting terms not specifically defined herein shall be construed in accordance with GAAP. All terms used in Article 9 of the UCC in the State of New York and not specifically defined herein are used herein as defined in such Article 9.

      Section 1.03. Computation of Time Periods.

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

ARTICLE II

AMOUNTS AND TERMS OF THE PURCHASES

      Section 2.01. Commitment.

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

     (b) On the terms and conditions hereinafter set forth, the Agent on behalf of the Owners of each Receivable Interest shall, at the request of the Seller, have the Collections attributable to such Receivable Interest reinvested pursuant to Section 2.07 in additional undivided percentage interests in the Pool Receivables by making an appropriate adjustment of such Receivable Interest.

      Section 2.02. Making Purchases.

     (a) Each Purchase of a Receivable Interest by the Purchasers shall be made on notice from the Seller to the Agent, given not later than 11:00 a.m. (New York City time) (i) on the third Business Day before the date of such Purchase in the case of the Purchase of any Receivable Interest initially bearing Yield at the Citicorp LIBO Rate and (ii) on the Business Day before the date of such Purchase in the case of the Purchase of any Receivable Interest initially bearing Yield at the Citicorp Base Rate. Each such notice of a proposed Purchase of a Receivable Interest (a “ Notice of Purchase ”) shall be by telephone (confirmed promptly thereafter in writing) or facsimile, in substantially the form of Exhibit F hereto, and shall specify the requested aggregate amount of such Purchase to be paid to the Seller and the requested Business Day of such Purchase. Each Purchase of any Receivable Interest initially bearing Yield at the Citicorp LIBO Rate shall be in an aggregate amount of not less than $10,000,000 or an

integral multiple of $1,000,000 in excess thereof and each Purchase of any Receivable Interest initially bearing Yield at the Citicorp Base Rate shall be in an aggregate amount of not less than $1,000,000 or an integral multiple of $1,000,000 in excess thereof.

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

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

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

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

      Section 2.03. Swing Purchases

     (a) On the terms and subject to the conditions contained in this Agreement, the Swing Purchaser may, in its sole discretion, make, in U.S. Dollars, Purchases (each a “ Swing Purchase ”) otherwise committed to the Seller hereunder from time to time on any Business Day during the period from the date hereof until the Termination Date in an aggregate principal amount at any time outstanding

(together with the aggregate outstanding principal amount of any other Purchase made by the Swing Purchaser hereunder in its capacity as the Swing Purchaser) not to exceed the Swing Purchase Sublimit; provided , however , that at no time shall the Swing Purchaser make any Swing Purchase to the extent that, after giving effect to such Swing Purchase, (A) the sum of (x) the Capital then outstanding plus (y) the Letter of Credit Undrawn Amounts, would exceed (B) the lesser of (x) the Total Commitment and (y)(i) the Net Receivables Pool Balance minus (ii) the Applicable Reserve.

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

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

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

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

Investment equal to the amount actually paid by such Purchaser. The Agent shall use such funds to reduce the Swing Purchaser’s Capital in respect of Swing Purchases.

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

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

      Section 2.04. Letters of Credit

     (a) On the terms and subject to the conditions contained in this Agreement, each Issuing Bank agrees to Issue, at the request of the Seller, and in favor of the beneficiaries requested by the Seller, one or more Letters of Credit from time to time on any Business Day during the period from the Amendment and Restatement Effective Date and to and including the earlier of the Termination Date and 30 days prior to the Amended and Restated Commitment Termination Date; provided, however, that no Issuing Bank shall be under any obligation to Issue any Letter of Credit upon the occurrence of any of the following:

     (i) any order, judgment or decree of any Governmental Authority or arbitrator shall purport by its terms to enjoin or restrain such Issuing Bank from Issuing such Letter of Credit or any Requirement of Law applicable to such Issuing Bank or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over such Issuing Bank shall prohibit, or request that such Issuing Bank refrains from, the Issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon such Issuing Bank with respect to such Letter of Credit any restriction or reserve or capital requirement (for which such Issuing Bank is not otherwise compensated) not in effect on the date of this Agreement or result in any unreimbursed loss, cost or expense that was not applicable, in effect or known to such Issuing Bank as of the date of this Agreement and that such Issuing Bank in good faith deems material to it;

     (ii) such Issuing Bank shall have received any written notice of the type described in clause (d) below;

     (iii) after giving effect to the Issuance of such Letter of Credit, the aggregate Capital plus the aggregate Letter of Credit Undrawn Amounts at such time would exceed the lesser of (a) the Total Commitment and (b)(i) the Net Receivables Pool Balance minus (ii) the Applicable Reserve;

     (iv) after giving effect to the Issuance of such Letter of Credit, the sum of (i) the Letter of Credit Undrawn Amounts at such time and (ii) the Reimbursement Obligations at such time would exceed the Letter of Credit Sublimit;

     (v) any fees due in connection with a requested Issuance have not been paid;

     (vi) such Letter of Credit is requested to be Issued in a form that is not acceptable to such Issuing Bank; or

     (vii) such Letter of Credit is requested to be denominated in any currency other than U.S. Dollars.

None of the Purchasers (other than each Issuing Bank in its capacity as such) shall have any obligation to Issue any Letter of Credit.

     (b) In no event shall the expiration date of any Letter of Credit be more than one year after the date of issuance thereof; provided, however, that any Letter of Credit with a one-year term may provide for the renewal thereof for additional one-year periods.

     (c) In connection with the Issuance of each Letter of Credit, the Seller shall give the applicable Issuing Bank and the Agent at least 3 Business Days’ prior written notice, in substantially the form of Exhibit H (or in such other written or electronic form as is acceptable to the applicable Issuing Bank), of the requested Issuance of such Letter of Credit (a “ Letter of Credit Request ”). Such notice shall be irrevocable and shall specify the face amount of the Letter of Credit requested, the date of Issuance of such requested Letter of Credit, the date on which such Letter of Credit is to expire (which date shall be a Business Day) and the Person for whose benefit the requested Letter of Credit is to be issued. Such notice, to be effective, must be received by the applicable Issuing Bank and the Agent not later than 11:00 a.m. (New York City time) on the third Business Day prior to the requested Issuance of such Letter of Credit.

     (d) Subject to the satisfaction of the conditions set forth in this Section 2.04, the applicable Issuing Bank shall, on the requested date, Issue a Letter of Credit on behalf of the Seller (or any Affiliate of the Seller acceptable to the Agent in its sole discretion) in accordance with such Issuing Bank’s usual and customary business practices. No Issuing Bank shall Issue any Letter of Credit in the period commencing on the first Business Day after it receives written notice from any Purchaser that one or more of the conditions precedent contained in Section 3.02 shall not on such date be satisfied or duly waived and ending when such conditions are satisfied or duly waived. The Issuing Banks shall not otherwise be required to determine that, or take notice whether, the conditions precedent set forth in Section 3.02 have been satisfied in connection with the Issuance of any Letter of Credit.

     (e) If requested by the applicable Issuing Bank, prior to the issuance of each Letter of Credit by such Issuing Bank and as a condition of such Issuance and of the participation of each Purchaser in the Letter of Credit Obligations arising with respect thereto, the Seller shall have delivered to the applicable Issuing Bank a letter of credit reimbursement agreement, in such form as such Issuing Bank may employ in its ordinary course of business for its own account (a “ Letter of Credit Reimbursement Agreement ”), signed by the Seller, and such other documents or items as may be required pursuant to the terms thereof. In the event of any conflict between the terms of any Letter of Credit Reimbursement Agreement and this Agreement, the terms of this Agreement shall govern.

     (f) Each Issuing Bank shall:

     (i) give the Agent written notice (or telephonic notice confirmed promptly thereafter in writing), which writing may be a telecopy or electronic mail, of the Issuance or renewal of a Letter of Credit issued by it, of all drawings under a Letter of Credit issued by it and the payment (or the failure to pay when due) by the Seller of any Reimbursement Obligation when due (each such notice the Agent shall promptly transmit by telecopy, electronic mail or similar transmission to each Purchaser);

     (ii) upon the request of any Purchaser, furnish to such Purchaser copies of any Letter of Credit Reimbursement Agreement to which such Issuing Bank is a party and such other documentation as may reasonably be requested by such Purchaser; and

     (iii) no later than 10 Business Days following the last day of each calendar month, provide to the Agent (and the Agent shall provide a copy to each Purchaser requesting the same), a schedule for Letters of Credit issued by it, in form and substance reasonably satisfactory to the Agent, setting forth the aggregate Letter of Credit Obligations outstanding at the end of each month and any information requested by the Seller or the Agent relating thereto.

     (g) Immediately upon the issuance by an Issuing Bank of a Letter of Credit in accordance with the terms and conditions of this Agreement, such Issuing Bank shall be deemed to have sold and transferred to each Purchaser, and each Purchaser shall be deemed irrevocably and unconditionally to have purchased and received from such Issuing Bank, without recourse or warranty, an undivided interest and participation, to the extent of such Purchaser’s ratable portion, in such Letter of Credit and the obligations of the Seller with respect thereto (including all Letter of Credit Obligations with respect thereto) and any security therefor and guaranty pertaining thereto.

     (h) If, and to the extent, any Reimbursement Obligations have not been repaid pursuant to Section 2.07 or 2.08, the Seller agrees to pay to the applicable Issuing Bank the amount of all Reimbursement Obligations owing to such Issuing Bank under any Letter of Credit issued for its account or at its direction no later than the date that is the next succeeding Business Day after the Seller receives written notice from such Issuing Bank that payment has been made under such Letter of Credit (the “ Reimbursement Date ”), irrespective of any claim, set-off, defense or other right that the Seller may have at any time against such Issuing Bank or any other Person. In the event that an Issuing Bank makes any payment under any Letter of Credit and the Seller shall not have repaid such amount to such Issuing Bank pursuant to this Section 2.04(h) or any such payment by the Seller is rescinded or set aside for any reason, such Reimbursement Obligation shall be payable on demand with interest thereon computed (i) from the date on which such Reimbursement Obligation arose to the Reimbursement Date, at the rate of interest applicable during such period, with respect to past due Capital initially bearing Yield based on the Alternate Base Rate and (ii) from the Reimbursement Date until the date of repayment in full, at the rate of interest applicable during such period, with respect to past due Capital initially bearing Yield based on the Adjusted LIBO Rate, and the applicable Issuing Bank shall promptly notify the Agent, which shall promptly notify each Purchaser of such failure, and each Purchaser shall promptly and unconditionally pay to the Agent for the account of such Issuing Bank the amount of such Purchaser’s ratable share of such payment in immediately available funds. If the Agent so notifies such Purchaser prior to 11:00 a.m. (New York City time) on any Business Day, such Purchaser shall make available to the Agent for the account of the applicable Issuing Bank its ratable share of the amount of such payment on such Business Day in immediately available funds. Upon such payment by a Purchaser, such Purchaser shall, except during the continuance of an Event of Termination under Section 7.01(f) and notwithstanding whether or not the conditions precedent set forth in Section 3.02 shall have been satisfied (which conditions precedent the Purchasers hereby irrevocably waive), be deemed to have made a Purchase, and the Seller shall be deemed to have received a Collection, in respect of a Receivable Interest in the principal amount of such payment and the Capital of such Receivable Interest shall be increased by the amount of such

payment. Whenever an Issuing Bank receives from the Seller a payment of a Reimbursement Obligation as to which the Agent has received for the account of such Issuing Bank any payment from a Purchaser pursuant to this Section 2.04(h), the applicable Issuing Bank shall pay to the Agent and the Agent shall promptly pay to each Purchaser in immediately available funds, an amount equal to such Purchaser’s ratable share of the amount of such payment adjusted, if necessary, to reflect the respective amounts the Purchasers have paid in respect of such Reimbursement Obligation.

     (i) If and to the extent such Purchaser shall not have so made its ratable portion of the amount of the payment required by Section 2.04(h) above available to the Agent for the account of the applicable Issuing Bank, such Purchaser agrees to pay to the Agent for the account of such Issuing Bank forthwith on demand any such unpaid amount together with interest thereon, for the first Business Day after payment was first due at the Federal Funds Rate and, thereafter until such amount is repaid to the Agent for the account of such Issuing Bank, at the rate per annum applicable to Capital initially bearing Yield based on the Alternate Base Rate.

     (j) The Seller’s obligation to pay each Reimbursement Obligation and the obligations of the Purchasers to make payments to the Agent for the account of the applicable Issuing Bank with respect to Letters of Credit shall be absolute, unconditional and irrevocable and shall be performed strictly in accordance with the terms of this Agreement, under any and all circumstances whatsoever, including the occurrence of any Event of Termination, and irrespective of any of the following:

     (i) any lack of validity or enforceability of any Letter of Credit or any Transaction Document, or any term or provision therein;

     (ii) any amendment or waiver of or any consent to departure from all or any of the provisions of any Letter of Credit or any Transaction Document;

     (iii) the existence of any claim, set off, defense or other right that the Seller, any Subsidiary or other Affiliate thereof or any other Person may at any time have against the beneficiary under any Letter of Credit, such Issuing Bank, the Agent or any Purchaser or any other Person, whether in connection with this Agreement, any other Transaction Document or any other related or unrelated agreement or transaction;

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

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

     (vi) any other act or omission to act or delay of any kind of such Issuing Bank, the Purchasers, the Agent or any other Person or any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section 2.04, constitute a legal or equitable discharge of the Seller’s obligations hereunder.

Any action taken or omitted to be taken by an Issuing Bank under or in connection with any Letter of Credit, if taken or omitted in the absence of gross negligence or willful misconduct, shall not put such Issuing Bank under any resulting liability to the Seller or any Purchaser. In determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof, the applicable Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary and, in making any payment

under any Letter of Credit, such Issuing Bank may rely exclusively on the documents presented to it under such Letter of Credit as to any and all matters set forth therein, including reliance on the amount of any draft presented under such Letter of Credit, whether or not the amount due to the beneficiary thereunder equals the amount of such draft and whether or not any document presented pursuant to such Letter of Credit proves to be insufficient in any respect, if such document on its face appears to be in order, and whether or not any other statement or any other document presented pursuant to such Letter of Credit proves to be forged or invalid or any statement therein proves to be inaccurate or untrue in any respect whatsoever, and any noncompliance in any immaterial respect of the documents presented under such Letter of Credit with the terms thereof shall, in each case, be deemed not to constitute willful misconduct or gross negligence of such Issuing Bank.

      Section 2.05. Termination or Reduction of the Commitments.

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

      Section 2.06. Receivable Interest.

     Each Receivable Interest shall be initially computed as of the opening of business of the Servicer on the date of Purchase of such Receivable Interest. Thereafter until the Termination Date, such Receivable Interest shall be automatically recomputed as of the close of business of the Servicer on each day (other than a Liquidation Day). Such Receivable Interest shall remain constant from the time as of which any such computation or recomputation is made until the time as of which the next such recomputation, if any, shall be made. Each Receivable Interest other than any Special Receivable Interest, as computed as of the day immediately preceding the Termination Date, shall remain constant at all times on and after the Termination Date; and any Special Receivable Interest, as computed as of any Special Termination Date, shall remain constant (at 100%) at all times on and after such Special Termination Date. Such Receivable Interest shall become zero at such time as the Owners of such Receivable Interest shall have received the accrued Yield for such Receivable Interest, shall have recovered the Capital Investment of such Receivable Interest, and shall have received payment of all other amounts payable by the Seller to such Owners, and the Servicer shall have received the accrued Servicer Fee for such Receivable Interest.

      Section 2.07. Non-Liquidation Settlement Procedures.

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

     (i) first, set aside and hold in trust for the Servicer, the Issuing Banks and the Owners of the Receivable Interests an amount in U.S. Dollars equal to the sum of (A) the

Servicer Fee accrued through such day and not so previously set aside, (B) the aggregate Yield, the Unused Commitment Fee, L/C Fees, L/C Issuance Fees, the Agent’s Fee and any other fees accrued hereunder through such day and not so previously set aside, and (C) the aggregate of any other amounts then accrued or owed hereunder by the Seller to such Owners and not so previously set aside;

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

     (iii) third, if such day is the second Business Day of the week, distribute to the Owners an amount in U.S. Dollars equal to that amount, if any, which would be required to reduce Capital so that the undivided percentage interest of all Receivable Interests would not, after giving effect to the Collections of Pool Receivables and the addition of new Pool Receivables on such day and the resulting recomputation of such Receivable Interests pursuant to Section 2.06 as of the end of such day, exceed 100%;

     (iv) fourth, distribute the remainder of such Collections in an amount not greater than the Capital then outstanding, on a pari passu basis, to the Owners of each Receivable Interest to be applied to reduce the Capital Investment of such Receivable Interest, and to the applicable Issuing Bank an amount in U.S. Dollars equal to the amount of all Reimbursement Obligations, if any, owing from the Seller to such Issuing Bank under any Letter of Credit issued for its account or at its direction; and

     (v) fifth, to the extent of any further remaining Collections, return the remainder of such Collections to the Seller.

     (b) On each applicable Yield Payment Date, the Agent shall distribute the amounts set aside as described in clause (i) of Section 2.07(a) above (other than the Agent’s Fee), first, to the Servicer in payment of the accrued Servicer Fee payable with respect to each Receivable Interest, to the Owners of each Receivable Interest in payment of the accrued Yield, the Unused Commitment Fee and L/C Fee for such Receivable Interest, and to the applicable Issuing Bank in payment of the L/C Issuance Fee, pari passu, and second, in payment of any other amounts then owed by the Seller hereunder (including, without limitation, all fees payable hereunder and not paid above except for the Servicer Fee).

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

      Section 2.08. Liquidation Settlement Procedures.

     (a) On each Liquidation Day (including, without limitation, the Special Termination Date), the Agent shall deposit to the Agent’s Account the Collections of Pool Receivables received on such day and shall apply them as follows:

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

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

     (iii) third, to the Servicer in payment of the accrued Servicer Fee payable