AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT

E XHIBIT 10.2

AMENDED AND RESTATED

RECEIVABLES SALE AGREEMENT

DATED AS OF OCTOBER 6, 2009

among

ARCH CHEMICALS, INC.,

as an Originator,

ARCH TREATMENT TECHNOLOGIES, INC.

as an Originator,

ARCH WOOD PROTECTION, INC.,

as an Originator,

ARCH PERSONAL CARE PRODUCTS, L.P.,

as an Originator,

and

ARCH CHEMICALS RECEIVABLES CORP.,

as Buyer

TABLE OF CONTENTS

 

 

i

 

ii

RECEIVABLES SALE AGREEMENT

THIS RECEIVABLES SALE AGREEMENT, dated as of October 6, 2009, is by and among ARCH CHEMICALS, INC., a Virginia corporation, ARCH TREATMENT TECHNOLOGIES, INC., a Virginia corporation, ARCH WOOD PROTECTION, INC., a Delaware corporation, ARCH PERSONAL CARE PRODUCTS, L.P., a New Jersey limited partnership (each, an “ Originator ” and collectively, the “ Originators ”), and ARCH CHEMICALS RECEIVABLES CORP., a Delaware corporation (“ Buyer ”). Unless defined elsewhere herein, capitalized terms used in this Agreement shall have the meanings assigned to such terms in Exhibit I hereto (or, if not defined in Exhibit I hereto, the meaning assigned to such term in Exhibit I to the Purchase Agreement).

PRELIMINARY STATEMENTS

The Originators and the Seller are parties to that certain Receivables Sale Agreement dated as of June 27, 2005 as amended, supplemented or otherwise modified through the date hereof (the “ Existing Agreement ”).

The parties hereto wish to amend and restate the Existing Agreement on the terms set forth herein.

Each Originator now owns, and from time to time hereafter will own, Receivables. Such Originator wishes to sell and assign to Buyer, and Buyer wishes to purchase from such Originator, all of such Originator’s right, title and interest in and to such Receivables, together with the Related Security and Collections with respect thereto.

Each Originator and Buyer intend the transactions contemplated hereby to be true sales of the Receivables from such Originator to Buyer, providing Buyer with the full benefits of ownership of the Receivables, and the Originators and Buyer do not intend these transactions to be, or for any purpose to be characterized as, loans from Buyer to any Originator.

Following the purchase of Receivables from the Originators, Buyer will sell the Receivables, the associated Related Security and Collections pursuant to that certain Amended and Restated Receivables Purchase Agreement dated as of October 6, 2009 (as the same may from time to time hereafter be amended, supplemented, restated or otherwise modified, the “ Purchase Agreement ”) among Buyer, Arch Chemicals, Inc. (“ Arch Chemicals ”), as initial Servicer, Market Street Funding LLC ( “ Market Street ” ), PNC Bank, National Association ( “ PNC ” ), as agent and administrator pursuant to the terms of the Purchase Agreement (in such capacity, the “ Administrator ”) and PNC, as LC Bank (in such capacity, the “ LC Bank ”).

 

3

NOW, THEREFORE, in consideration of the foregoing premises and the mutual agreements herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

Article I

Amounts and Terms of the Purchase

Section 1.1 Initial Contribution of Receivables .

On June 27, 2005 (the “ Initial Cutoff Date ” ), each Originator contributed, assigned, transferred, set-over and otherwise conveyed to Buyer, and Buyer accepted from such Originator, Receivables originated by such Originator and existing as of the close of business on the Business Day immediately prior to the Initial Cutoff Date having an aggregate Outstanding Balance in the amount set forth on Schedule 1.1 (the “ Initial Contributed Receivables ”), together with all Related Security relating thereto and all Collections thereof.

Section 1.2 Purchase of Receivables .

(a)(i) Effective on the Initial Cutoff Date, in consideration for the Purchase Price and upon the terms and subject to the conditions set forth in the Existing Agreement, each Originator thereby sold, assigned, transferred, set-over and otherwise conveyed to Buyer, without recourse (except to the extent expressly provided therein), and Buyer thereby purchased from each Originator, all of such Originator’s right, title and interest in and to all Receivables existing as of the close of business on the Initial Cutoff Date (other than the Initial Contributed Receivables) and all Receivables thereafter arising through and immediately prior to the date hereof, together, in each case, with all Related Security relating thereto and all Collections thereof. In accordance with the preceding sentence, on the Initial Cutoff Date Buyer acquired all of each Originators’ right, title and interest in and to all Receivables existing as of the Initial Cutoff Date and thereafter arising through and the date immediately prior to the date hereof, together with all Related Security relating thereto and all Collections thereof. Buyer was obligated to pay the Purchase Price for the Receivables purchased hereunder in accordance with Section 1.3 of the Existing Agreement.

(ii) Effective on the date hereof, in consideration for the Purchase Price and upon the terms and subject to the conditions set forth herein, each Originator does hereby sell, assign, transfer, set-over and otherwise convey to Buyer, without recourse (except to the extent expressly provided herein), and Buyer does hereby purchase from each Originator, all of such Originator’s right, title and interest in and to all Receivables existing as of the close of business on the date hereof and all Receivables thereafter arising through and including the Termination Date, together, in each case, with all Related Security relating thereto and all Collections thereof. In accordance with the preceding sentence, on the date hereof Buyer shall acquire all of each Originators’ right, title and interest in and to all Receivables existing as of the date hereof and thereafter arising through and including the Termination Date, together with all Related Security relating thereto and all Collections thereof. Buyer shall be obligated to pay the Purchase Price for the Receivables purchased hereunder in accordance with Section 1.3 .

(b) On the Monthly Reporting Date, each Originator shall (or shall require the Servicer to) deliver to Buyer a report containing substantially the same information as the form of report set forth in Exhibit VII hereto (each such report being herein called a “ Purchase Report ”) with respect to the Receivables sold by each Originator to Buyer

 

4

during the Settlement Period then most recently ended. In addition to, and not in limitation of, the foregoing, in connection with the payment of the Purchase Price for any Receivables purchased hereunder, Buyer may request that each Originator deliver, and each Originator shall deliver, such approvals, opinions, information or documents as Buyer may reasonably request.

(c) It is the intention of the parties hereto that the Purchase of Receivables made under the Existing Agreement and hereunder shall constitute a sale and/or contribution, which sale and/or contribution, as the case may be, is absolute and irrevocable and provides Buyer with the full benefits of ownership of the Receivables. Except for the Purchase Price Credits owed pursuant to Section 1.4 , the sale of Receivables under the Existing Agreement was made and the Sale of Receivables hereunder is made without recourse to any Originator; provided , however , that (i) each Originator shall be liable to Buyer for all representations, warranties, covenants and indemnities made by such Originator pursuant to the terms of the Transaction Documents to which such Originator is a party, and (ii) such sale does not constitute and is not intended to result in an assumption by Buyer or any assignee thereof of any obligation of any Originator or any other Person arising in connection with the Receivables, the related Contracts and/or other Related Security or any other obligations of any Originator. In view of the intention of the parties hereto that the Purchase of Receivables made under the Existing Agreement and hereunder shall constitute a sale of such Receivables rather than loans secured thereby, each Originator agrees that it will, on or prior to the date hereof and in accordance with Section 4.1(e)(iii) , mark its master data processing system and all accounts receivable reports generated thereby with a legend reasonably acceptable to Buyer and to the Administrator (as Buyer’s assignee), evidencing that Buyer has purchased such Receivables as provided in this Agreement and to note in its financial statements that its Receivables have been absolutely transferred to Buyer. Upon the request of Buyer or the Administrator (as Buyer’s assignee), each Originator will execute and file such financing or continuation statements, or amendments thereto or assignments thereof, and such other instruments or notices, as may be necessary or appropriate to perfect and maintain the perfection of Buyer’s ownership interest in the Receivables and the Related Security and Collections with respect thereto, or as Buyer or the Administrator (as Buyer’s assignee) may reasonably request; provided , however , that unless and until an Amortization Event or an Unmatured Amortization Event has occurred, none of the Originators shall be required to take any actions to establish, maintain or perfect the Buyer’s ownership interest in the Related Security other than the filing of financing statements under the UCC of all appropriate jurisdictions.

Section 1.3 Payment for the Purchase .

(a) The Purchase Price for the Purchase of Receivables in existence as of the close of business on the Initial Cutoff Date (other than the Initial Contributed Receivables) was paid in full by Buyer to each Originator on June 27, 2005, and was paid to each Originator in the following manner:

(i) by delivery of immediately available funds, to the extent of funds on hand to Buyer or made available to Buyer in connection with its subsequent sale of an interest in such Receivables to Three Pillars Funding, LLC (“ TPF ”) under the Receivables Purchase Agreement dated as of June 27, 2005 (as

 

5

amended, supplemented and modified through the date hereof among Buyer, Servicer, TPF and SunTrust Robinson Humphrey, Inc. (formerly known as SunTrust Capital Markets), as administrator; provided that a portion of such funds was offset by amounts such Originator agreed to make as capital contributions such that after giving effect thereto, the Buyer’s Net Worth was not less than the Required Capital Amount, and

(ii) the balance, by delivery of the proceeds of the related subordinated revolving loan from such Originator to Buyer (each, a “ Subordinated Loan ” and collectively, the “ Subordinated Loans ”) in an amount not to exceed the lesser of (A) the remaining unpaid portion of such Purchase Price and (B) the maximum Subordinated Loan that could be borrowed without rendering Buyer’s Net Worth less than the Required Capital Amount. Each Originator is hereby authorized by Buyer to endorse on the schedule attached to the related Subordinated Note an appropriate notation evidencing the date and amount of each advance thereunder, as well as the date of each payment with respect thereto, provided that the failure to make such notation shall not affect any obligation of Buyer thereunder.

The Purchase Price for each Receivable coming into existence and purchased by the Buyer after the Initial Cutoff Date shall be due and owing in full by Buyer to the related Originator or its designee on the date each such Receivable came into existence (except that Buyer may, with respect to any such Purchase Price, offset against such Purchase Price any amounts owed by such Originator to Buyer under the Existing Agreement and hereunder and which have become due but remain unpaid) and shall be paid to such Originator in the manner provided in the following paragraphs (b) , (c)  and (d) .

(b) With respect to any Receivables coming into existence after the Initial Cutoff Date, on each Settlement Date, Buyer shall pay, to the relevant Originator, the Purchase Price therefor in accordance with Section 1.3(d) and in the following manner:

first, by delivery of immediately available funds, to the extent of funds available to Buyer from its subsequent sale of an interest in the Receivables to Market Street under the Purchase Agreement or other cash on hand;

second, if such Originator has requested a Letter of Credit pursuant to Section 1.8, by Buyer’s obtaining and delivering such Letter of Credit; and

third, either (i) by delivery of the proceeds of the related Subordinated Loan, provided that the making of any such Subordinated Loan shall be subject to the provisions set forth in Section 1.3(a)(ii) or (ii) unless such Originator or Buyer has declared the Termination Date to have occurred pursuant to this Agreement, by accepting a contribution to its capital in an amount equal to the remaining unpaid balance of such Purchase Price.

Subject to the limitations set forth in Section 1.3(a)(ii) , each Originator irrevocably agrees to advance each related Subordinated Loan requested by Buyer on or prior to the Termination Date. The Subordinated Loans shall be evidenced by, and shall be payable in accordance with the terms and provisions of the related Subordinated Note and shall be payable solely from funds which Buyer is not required under the Purchase Agreement to set aside for the benefit of, or otherwise pay over to, Market Street.

 

6

(c) From and after the Termination Date, no Originator shall be obligated to (but may, at its option): (i) sell Receivables to Buyer, or (ii) contribute Receivables to Buyer’s capital pursuant to clause third of Section 1.3(b) unless, in either case, such Originator reasonably determines that the Purchase Price therefor will be satisfied with funds available to Buyer from sales of interests in the Receivables pursuant to the Purchase Agreement, Collections, proceeds of Subordinated Loans, other cash on hand or otherwise.

(d) Although the Purchase Price for each Receivable coming into existence after the Initial Cutoff Date shall be due and payable in full by Buyer to the related Originator on the date such Receivable came into existence, settlement of the Purchase Price between Buyer and such Originator shall be effected on a monthly basis on Settlement Dates with respect to all Receivables coming into existence during the same Calculation Period and based on the information contained in the Purchase Report delivered by such Originator for the Calculation Period then most recently ended. Although settlement shall be effected on Settlement Dates, increases or decreases in the amount owing under the related Subordinated Note made pursuant to Section 1.3 and any contribution of capital by an Originator to Buyer made pursuant to Section 1.3(b) shall be deemed to have occurred and shall be effective as of the last Business Day of the Calculation Period to which such settlement relates.

Section 1.4 Purchase Price Credit Adjustments .

If on any day:

(a) the Outstanding Balance of a Receivable is:

(i) reduced or cancelled as a result of any defective or rejected goods or services, any cash discount or any other adjustment or otherwise by any Originator or any Affiliate thereof, or as a result of any governmental or regulatory action, or,

(ii) reduced or canceled as a result of a setoff in respect of any claim by the Obligor thereof (whether such claim arises out of the same or a related transaction or an unrelated transaction), or

(iii) reduced on account of the obligation of any Originator or any Affiliate thereof to pay to the related Obligor any rebate or refund; or

(iv) less than the amount included in calculating the Outstanding Balance for purposes of any Purchase Report (for any reason other than such Receivable becoming a Defaulted Receivable or payment in full of the entire Outstanding Balance being made on such Receivable); or

(b) any of the representations and warranties set forth in Section 2.1(h) , Section 2.1(i) , Section 2.1(j) , Section 2.1(r) , Section 2.1(s) , Section 2.1(t) are not true when made or deemed made with respect to any Receivable,

 

7

then, in such event, Buyer shall be entitled to a credit (each, a “ Purchase Price Credit ”) against the Purchase Price otherwise payable hereunder equal to, in the case of clause (a)  above, the amount of such reductions relating to such Receivable and, in the case of clause (b)  above, the Outstanding Balance of such Receivable (calculated before giving effect to the applicable reduction or cancellation). If such Purchase Price Credit exceeds the Original Balance of the Receivables coming into existence on any day, then the related Originator shall pay the remaining amount of such Purchase Price Credit in cash immediately, provided that if the Termination Date has not occurred, such Originator shall be allowed to deduct the remaining amount of such Purchase Price Credit from any indebtedness owed to it under its Subordinated Note.

Section 1.5 Payments and Computations, Etc .

All amounts to be paid or deposited by Buyer hereunder shall be paid or deposited in accordance with the terms hereof on the day when due in immediately available funds to the account of the related Originator designated from time to time by such Originator or as otherwise directed by such Originator. In the event that any payment owed by any Person hereunder becomes due on a day that is not a Business Day, then such payment shall be made on the next succeeding Business Day. If any Person fails to pay any amount hereunder when due, such Person agrees to pay, on demand, the Default Fee in respect thereof until paid in full; provided , however , that such Default Fee shall not at any time exceed the maximum rate permitted by applicable law. All computations of interest payable hereunder shall be made on the basis of a year of 360 days for the actual number of days (including the first but excluding the last day) elapsed.

Section 1.6 Transfer of Records .

(a) In connection with the Purchase of Receivables hereunder, each Originator hereby sells, transfers, assigns and otherwise conveys to Buyer all of such Originator’s right and title to and interest in the Records relating to all Receivables sold or contributed by it hereunder, without the need for any further documentation in connection with the Purchase (it being understood and agreed that any Records that are not freely assignable (whether by express provision or by virtue of confidentiality provisions) according to their terms are excluded from such sale, transfer, assignment or conveyance; provided , that upon reasonable request of the Buyer (or its assigns), the applicable Originator will use its reasonable efforts to obtain consent to the assignment from the relevant counterparty). In connection with such transfer, each Originator hereby grants to each of Buyer, the Administrator and the Servicer an irrevocable, non-exclusive license to use, without royalty or payment of any kind, all software used by such Originator to account for the Receivables, to the extent necessary to administer the Receivables, whether such software is owned by such Originator or is owned by others and used by such Originator under license agreements with respect thereto, provided that should the consent of any licensor of such software be required for the grant of the license described herein, to be effective, the applicable Originator hereby agrees that upon the reasonable request of Buyer (or Buyer’s assignee), such Originator will use its reasonable efforts to obtain the consent of such third-party licensor. The license granted hereby shall be irrevocable until the indefeasible payment in full of the Aggregate Unpaids, and shall terminate on the date this Agreement terminates in accordance with its terms.

 

8

(b) Each Originator (i) shall take such action requested by Buyer and/or the Administrator (as Buyer’s assignee), from time to time hereafter, that may be reasonably necessary or appropriate to ensure that Buyer and its assigns under the Purchase Agreement have an enforceable ownership interest in the Records relating to the Receivables purchased from the Originators hereunder; provided , however , that the applicable Originator shall not be required to take any actions with respect to its Records other than those required by Sections 1.6(a) and 4.1(e) hereto unless and until an Unmatured Amortization Event has occurred, and (ii) shall use its reasonable efforts to ensure that Buyer, the Administrator and the Servicer each has an enforceable right (whether by license or sublicense or otherwise) to use all of the computer software used to account for the Receivables and/or to recreate such Records.

Section 1.7 Characterization .

If, notwithstanding the intention of the parties expressed in Section 1.2(c) , any sale or contribution by any Originator to Buyer of Receivables hereunder shall be characterized as a secured loan and not a sale or contribution or such sale or contribution, as the case may be, shall for any reason be ineffective or unenforceable, then this Agreement shall be deemed to constitute a security agreement under the UCC and other applicable law. For this purpose and without being in derogation of the parties’ intention that the sale of Receivables hereunder shall constitute a true sale thereof, each Originator hereby grants to Buyer a security interest in all of such Originator’s right, title and interest, whether now owned or hereafter acquired, in, to and under all Receivables now existing and hereafter arising, all Collections and Related Security with respect thereto, each Lock-Box and Collection Account, all other rights and payments relating to the Receivables and all proceeds of the foregoing to secure the prompt and complete payment of a loan deemed to have been made in an amount equal to the Purchase Price of the Receivables together with all other obligations of such Originator hereunder, which security interest shall be prior to all other Adverse Claims thereto. Buyer and its assigns shall have, in addition to the rights and remedies which they may have under this Agreement, all other rights and remedies provided to a secured creditor under the UCC and other applicable law, which rights and remedies shall be cumulative.

Section 1.8 Letters of Credit .

(a) Upon the request of any Originator and in accordance with Section 1.3, and subject to the terms and conditions for issuing Letters of Credit under the Purchase Agreement (including any limitations therein on the amount of any such issuance), the Buyer agrees to cause the LC Bank to issue, on any Business Day specified by such Originator, Letters of Credit on behalf of the Buyer (and, if applicable, on behalf of, or for the account of, any Originator in favor of such beneficiaries as such Originator may elect). The aggregate stated amount of the Letters of Credit being issued on any Business Day shall constitute a credit against the aggregate Purchase Price otherwise payable by the Buyer on such Business Day pursuant to Section 1.3. To the extent that the aggregate stated amount of the Letters of Credit being issued on any Business Day exceeds the aggregate Purchase Price payable by the Buyer on such Business Day, such excess shall be deemed to be a reduction in the outstanding principal balance of (and, to the extent necessary, the accrued but unpaid interest on) the applicable Subordinated Note. The aggregate stated amount of Letters of Credit to be issued to any Originator on any Business Day cannot exceed the sum of the aggregate Purchase Price payable on such Business Day to such Originator plus the aggregate outstanding principal balance of

 

9

and accrued but unpaid interest on the Subordinated Note related to such Originator on such Business Day. In the event that any Letter of Credit issued (i) expires or is cancelled or otherwise terminated with all or any portion of its stated amount undrawn, (ii) has its stated amount decreased (for a reason other than a drawing having been made thereunder) or (iii) the Buyer’s Reimbursement Obligation in respect thereof is reduced for any reason other than by virtue of a payment made in respect of a drawing thereunder, then an amount equal to such undrawn amount or such reduction, as the case may be, shall be paid (i) in cash to such Originator on the next Business Day and (ii) by adding such amount not paid in cash pursuant to subclause (i) above to the outstanding principal amount of the Subordinated Note issued to such Originator.

(b) In the event that any Originator requests a Letter of Credit hereunder, such Originator shall on a timely basis provide the Buyer with such information as is necessary for the Buyer to obtain such Letter of Credit from the LC Bank.

(c) Each Originator agrees to be bound by the terms of each Letter of Credit Application referenced in the Purchase Agreement and by the LC Bank’s interpretations of any Letter of Credit issued for the Buyer and by the LC Bank’s written regulations and customary practices relating to letters of credit.

Article II

Representations and Warranties

Section 2.1 Representations and Warranties of each Originator .

Each Originator with respect to itself, hereby represents and warrants to Buyer on the date hereof, on the date of the Purchase and on each date that any Receivable comes into existence that:

(a) Existence and Power . Such Originator’s jurisdiction of organization is correctly set forth in Exhibit II to this Agreement and such jurisdiction is its sole jurisdiction of organization. Such Originator is duly organized under the laws of its jurisdiction of organization and is a “registered organization” as defined in the UCC in effect in such jurisdiction. Such Originator is validly existing and in good standing under the laws of its jurisdiction of organization, and no other state or jurisdiction, and as to which such state or jurisdiction must maintain a public record showing the organization to have been organized. Such Originator is qualified to do business and is in good standing as a foreign entity, and has and holds all corporate power and all governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is conducted except where the failure to so qualify or so hold could not reasonably be expected to have a Material Adverse Effect.

(b) Power and Authority; Due Authorization, Execution and Delivery . The execution and delivery by such Originator of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder and, such Originator’s use of the proceeds of the Purchase made hereunder,

 

10

are within its organizational powers and authority and have been duly authorized by all necessary organizational action on its part. This Agreement and each other Transaction Document to which such Originator is a party has been duly executed and delivered by such Originator.

(c) No Conflict . The execution and delivery by such Originator of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder do not contravene or violate (i) its Organizational Documents, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to which it is a party or by which it or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, and do not result in the creation or imposition of any Adverse Claim on assets of such Originator or its Subsidiaries (except as created hereunder) except, in any case, where such contravention or violation could not reasonably be expected to have a Material Adverse Effect; and no transaction contemplated hereby requires compliance with any bulk sales act or similar law.

(d) Governmental Authorization . Other than the filing of the financing statements required hereunder, no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution and delivery by such Originator of this Agreement and each other Transaction Document to which it is a party and the performance of its obligations hereunder and thereunder.

(e) Actions, Suits . There are no actions, suits or proceedings pending, or to the best of such Originator’s knowledge, threatened, against it, or any of its properties, in or before any court, arbitrator or other body, that could reasonably be expected to have a Material Adverse Effect. Such Originator is not in default with respect to any order of any court, arbitrator or governmental body which default could reasonably be expected to have a Material Adverse Effect.

(f) Binding Effect . This Agreement and each other Transaction Document to which such Originator is a party constitute the legal, valid and binding obligations of such Originator enforceable against such Originator in accordance with their respective terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

(g) Accuracy of Information . All information (other than any projection or other forward-looking information) heretofore furnished by such Originator or any of its Affiliates to Buyer (or its assigns) for purposes of or in connection with this Agreement, any of the other Transaction Documents or any transaction contemplated hereby or thereby is, and all such information (other than any projection or other forward-looking information) hereafter furnished by such Originator or any of its Affiliates to Buyer (or its assigns) will be, true and accurate in every material respect on the date such information is stated or certified and does not and will not contain any material misstatement of fact.

 

11

(h) Use of Proceeds . No portion of any Purchase Price payment hereunder will be used by such Originator (i) for a purpose that violates, or would be inconsistent with, any law, rule or regulation applicable to such Originator or (ii) to acquire any security in any transaction which is subject to Section 12, 13 or 14 of the Securities Exchange Act of 1934, as amended other than the repurchase of equity securities of Arch Chemicals so long as such repurchase does not violate Sections 12, 13 or 14 of the Securities Exchange Act of 1934, as amended.

(i) Good Title . Immediately prior to the Purchase hereunder and upon the creation of each Receivable coming into existence after the Initial Cutoff Date, such Originator (i) is the legal and beneficial owner of the Receivables created by it and (ii) is the legal and beneficial owner of the Related Security with respect thereto, free and clear of any Adverse Claim, except as created by the Transaction Documents. There have been duly filed all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect such Originator’s ownership interest in each Receivable, its Collections, “Supporting Obligations” (as defined in Article 9 of the UCC in effect in each relevant jurisdiction), each Originator’s right, title and interest in, to and under each of the Transaction Documents to which it is a party, returned goods the sale of which gave rise to any Receivable, security interests in favor of any Originator that secure payment of such Receivable and all other items of Related Security in which an interest therein may be perfected by the filing of a financing statement under Article 9 of the UCC and proceeds of the foregoing.

(j) Perfection . This Agreement, together with the filing of the financing statements contemplated hereby, is effective to transfer to Buyer (and Buyer shall acquire from such Originator) (i) legal and equitable title to, with the right to sell and encumber each Receivable existing and hereafter arising, together with the Collections with respect thereto, and (ii) all of such Originator’s right, title and interest in the Related Security associated with each Receivable, in each case, free and clear of any Adverse Claim, except as created by the Transactions Documents. There have been duly filed all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Buyer’s ownership interest in the Receivables, its Collections, “Supporting Obligations” (as defined in Article 9 of the UCC in effect in each relevant jurisdiction), each Originator’s right, title and interest in, to and under each of the Transaction Documents to which it is a party, returned goods the sale of which gave rise to any Receivable, security interests in favor of any Originator that secure payment of such Receivable and all other items of Related Security in which an interest therein may be perfected by the filing of a financing statement under Article 9 of the UCC and proceeds of the foregoing. Such Originator’s jurisdiction of organization is a jurisdiction whose law generally requires information concerning the existence of a nonpossessory security interest to be made generally available in a filing, record or registration system as a condition or result of such a security interest’s obtaining priority over the rights of a lien creditor which respect to collateral.

(k) Places of Business and Locations of Records . The principal places of business of such Originator and the offices where it keeps all of its Records are located at the address(es) listed on Exhibit II . Such Originator’s Federal Employer Identification Number is correctly set forth on Exhibit II .

 

12

(l) Collections . The conditions and requirements set forth in subclause (i)  of Section 4.1(i) have at all times since the Initial Cutoff Date, been satisfied and duly performed. The conditions and requirements set forth in subclause (ii)  of Section 4.1(i) have been satisfied from and after the Initial Cutoff Date. The names and addresses of all Collection Banks, together with the account numbers of the Collection Accounts of such Originator at each Collection Bank and the post office box number of each Lock-Box, are listed on Exhibit III . Such Originator has not granted any Person, other than Buyer (and its assigns) dominion and control of any Lock-Box or Collection Account, or the right to take dominion and control of any such Lock-Box or Collection Account at a future time or upon the occurrence of a future event.

(m) Material Adverse Effect . Since June 30, 2009, no event has occurred that would have a Material Adverse Effect.

(n) Names . The name in which such Originator has executed this Agreement is identical to the name of such Originator as indicated on the public record of its state of organization which shows such Originator to have been organized. In the past five (5) years, such Originator has not used any corporate names, trade names or assumed names other than the name in which it has executed this Agreement and as listed on Exhibit II .

(o) Ownership of Buyer . Arch Chemicals owns, directly or indirectly, 100% of the issued and outstanding equity interests of Buyer, free and clear of any Adverse Claim. Such equity interests are validly issued, fully paid and nonassessable, and there are no options, warrants or other rights to acquire securities of Buyer.

(p) Not a Holding Company or an Investment Company . Such Originator is not a “holding company” or a “subsidiary holding company” of a “holding company” within the meaning of the Public Utility Holding Company Act of 1935, as amended, or any successor statute. Such Originator is not an “investment company” within the meaning of the Investment Company Act of 1940, as amended, or any successor statute.

(q) Compliance with Law . Such Originator has complied in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect. Each Receivable, together with the Contract related thereto, does not contravene any laws, rules or regulations applicable thereto (including, without limitation, laws, rules and regulations relating to truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy), and no part of such Contract is in violation of any such law, rule or regulation, except where such contravention or violation could not reasonably be expected to have a Material Adverse Effect.

(r) Compliance with Credit and Collection Policy . Such Originator has complied in all material respects with the Credit and Collection Policy with regard to each Receivable and the related Contract, and has not made any material change to such Credit and Collection Policy, except such material change as to which Buyer (or its assigns) has been notified in accordance with Section 4.1(a)(vii) .

 

13

(s) Payments to Originator . With respect to each Receivable transferred to Buyer hereunder, the Purchase Price received by such Originator constitutes reasonably equivalent value in consideration therefor and such transfer was not made for or on account of an antecedent debt. No transfer by such Originator of any Receivable hereunder is or may be voidable under any section of the Bankruptcy Reform Act of 1978 (11 U.S.C. §§ 101 et seq .), as amended.

(t) Enforceability of Contracts . Each Contract with respect to each Receivable is effective to create, and has created, a legal, valid and binding obligation of the related Obligor to pay the Outstanding Balance of the Receivable created thereunder and any accrued interest thereon, enforceable against the Obligor in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

(u) Eligible Receivables . Each Receivable reflected in any Purchase Report as an Eligible Receivable was an Eligible Receivable on the date of its acquisition by Buyer hereunder.

(v) Accounting . The manner in which such Originator accounts for the transactions contemplated by this Agreement does not jeopardize the characterization of the transactions contemplated herein as being true sales.

(w) Contract Provisions . Except for customary adjustments in the ordinary course of business, no Contract with respect to any Receivable contains provisions that either (i) permit or provide for any reduction in the Outstanding Balance of the Receivable created thereunder and any accrued interest thereon or (ii) could otherwise hinder the ability to receive Collections with respect to such Receivable.

Article III

Conditions of Purchase

Section 3.1 Conditions Precedent to Purchase .

The Purchase on the Initial Cutoff Date under this Agreement is subject to the conditions precedent that (a) Buyer shall have been capitalized with the Initial Contributed Receivables, (b) Buyer shall have received on or before the Closing Date those documents listed on Schedule A and (c) all of the conditions to the initial purchase under the Purchase Agreement shall have been satisfied or waived in accordance with the terms thereof.

Section 3.2 Conditions Precedent to Subsequent Purchases .

Each Purchase after the Initial Cutoff Date shall be subject to the further conditions precedent that: (a) the Facility Termination Date shall not have occurred under the Purchase Agreement; (b) Buyer (or its assigns) shall have received such other approvals, opinions or

 

14

documents as it may reasonably request and (c) on the date such Receivable came into existence, the following statements shall be true (and acceptance of the proceeds of any payment for such Receivable shall be deemed a representation and warranty by each Originator that such statements are then true):

(i) the representations and warranties set forth in Article II are true and correct on and as of the date such Receivable came into existence as though made on and as of such date, except to the extent such representations and warranties are expressly limited to an earlier date; and

(ii) no event has occurred and is continuing that will constitute a Termination Event or an Unmatured Termination Event.

Notwithstanding the foregoing conditions precedent, upon payment of the Purchase Price for any Receivable (whether by payment of cash, by delivery of a Letter of Credit, through an increase in the amounts outstanding under the related Subordinated Note, by offset of amounts owed to Buyer and/or by offset of capital contributions), title to such Receivable and the Related Security and Collections with respect thereto shall vest in Buyer, whether or not the conditions precedent to Buyer’s obligation to pay for such Receivable were in fact satisfied. The failure of any Originator to satisfy any of the foregoing conditions precedent, however, shall give rise to a right of Buyer to rescind the related purchase and direct such Originator to pay to Buyer an amount equal to the Purchase Price payment that shall have been made with respect to any Receivables related thereto.

Article IV

Covenants

Section 4.1 Affirmative Covenants of Originators .

Until the date on which this Agreement terminates in accordance with its terms, each Originator, with respect to itself hereby covenants as set forth below:

(a) Financial Reporting . Such Originator will maintain, for itself and each of its Subsidiaries, a system of accounting established and administered in accordance with GAAP, and furnish to Buyer (or its assigns):

(i) Annual Reporting . Within 90 days after the close of each of its fiscal years, audited, unqualified consolidated financial statements (which shall include balance sheets, statements of income and retained earnings and a statement of cash flows) for Arch Chemicals and its consolidated Subsidiaries for such fiscal year certified in a manner acceptable to Buyer (or its assigns) by KPMG LLP, independent public accountants or any other independent public accountants of recognized national standing.

(ii) Quarterly Reporting . Within 45 days after the close of the first three (3) quarterly periods of each of its respective fiscal years, balance sheets of Arch Chemicals and its consolidated Subsidiaries as at the close of each such period and consolidated statements of income and a statement of cash flows for Arch Chemicals and its Subsidiaries for the period from the beginning of such fiscal year to the end of such quarter, all certified by its chief financial officer, principal accounting officer, treasurer or corporate controller.

 

15

(iii) Compliance Certificate . Together with the financial statements required hereunder, a compliance certificate in substantially the form of Exhibit IV signed by such Originator’s Authorized Officer and dated the date of such annual financial statement or such quarterly financial statement, as the case may be.

(iv) Shareholders Statements and Reports . Promptly after becoming publicly available to the shareholders of such Originator, copies of all financial statements, reports and proxy statements furnished to them.

(v) S.E.C. Filings . Promptly after becoming publicly available, copies of all registration statements and annual, quarterly, monthly or other regular reports which such Originator or any of its Subsidiaries files with the Securities and Exchange Commission.

(vi) Copies of Notices . Promptly upon its receipt of any notice, request for consent, financial statements, certification, report or other communication under or in connection with any Transaction Document from any Person other than Buyer, the Administrator, Market Street or the LC Bank, copies of the same if such notice, request, consent, financial statements, certification, report or other communication can reasonably be expected to have an adverse effect on the Receivables, the Related Security or the Buyer’s (or its assigns) rights therein.

(vii) Change in Credit and Collection Policy . At least thirty (30) days prior to the effectiveness of any material change in or material amendment to the Credit and Collection Policy, a copy of the Credit and Collection Policy then in effect and a notice (A) indicating such proposed change or amendment, and (B) if such proposed change or amendment would be reasonably likely to adversely affect the collectibility of the Receivables or decrease the credit quality of any newly created Receivables, requesting Buyer’s (and the Administrator’s, as Buyer’s assignee) consent thereto.

(viii) Other Information . Promptly, from time to time, such other information, documents, records or reports relating to (i) the financial condition or operations of such Originator as Buyer (or its assigns) may from time to time reasonably request in order to protect the interests of Buyer (and its assigns) under or as contemplated by this Agreement or (ii) the Receivables as the Buyer (or its assigns) may reasonably request.

Information required to be delivered pursuant to paragraphs (i) , (ii) , (iv)  and (v)  of this Section 4.1(a) shall be deemed to have been delivered by the date indicated therein, provided that such information has been filed with the Securities and Exchange Commission by such date; provided further that the Originator shall deliver paper copies of the statements, reports, financial statements and other information referred to in paragraph (i) , (ii) , (iv)  and (v)  of this Section 4.1(a) to the Buyer promptly upon request following such filing.

 

16

(b) Notices . Such Originator will notify Buyer (or its assigns) in writing of any of the following promptly upon learning of the occurrence thereof, describing the same and, if applicable, the steps being taken with respect thereto:

(i) Termination Events or Unmatured Termination Events . The occurrence of each Termination Event and each Unmatured Termination Event, by a statement of an Authorized Officer of such Originator.

(ii) Judgment and Proceedings . (A) The entry of any judgment or decree against such Originator or any of its Subsidiaries if the amount of such judgment or decree then outstanding against such Originator and its Subsidiaries exceeds $10,000,000 after deducting (1) the amount with respect to which such Originator or any such Subsidiary is insured and with respect to which the insurer has not disclaimed responsibility in writing, and (2) the amount for which such Originator or any such Subsidiary is otherwise indemnified if the terms of such indemnification are satisfactory to Buyer (or its assigns), and (B) the institution of any litigation, arbitration proceeding or governmental proceeding against such Originator which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

(iii) Material Adverse Effect . The occurrence of any event or condition that has had, or could reasonably be expected to have, a Material Adverse Effect.

(iv) Defaults Under Other Agreements . The occurrence of a default that could lead to an event of default or an event of default under any other financing arrangement in a principal amount greater than or equal to $10,000,000 pursuant to which such Originator is a debtor or an obligor.

(c) Compliance with Laws and Preservation of Existence . Such Originator will comply in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect. Such Originator will preserve and maintain its legal existence, rights, franchises and privileges in the jurisdiction of its organization, and qualify and remain qualified in good standing as a foreign entity in each jurisdiction where its business is conducted, except where the failure to so qualify or remain in good standing could not reasonably be expected to have a Material Adverse Effect. Notwithstanding the preceding sentence, it is expressly understood and agreed that any Originator may merge or consolidate with, or transfer all or substa