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2ND Amended/Restated Receivables Sales Agreement

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Sectors: Chemicals
Governing Law: New York, View New York State Laws
Effective Date: August 16, 2004
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EXHIBIT 10.44


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SECOND AMENDED AND RESTATED
RECEIVABLES SALE AGREEMENT


DATED AS OF AUGUST 16, 2004


AMONG


CROMPTON & KNOWLES RECEIVABLES CORPORATION,
AS THE SELLER,


CROMPTON CORPORATION,
as the Initial Collection Agent,


ABN AMRO BANK N.V.,
AS THE AGENT,


THE LIQUIDITY PROVIDERS
FROM TIME TO TIME PARTY HERETO,


AND


AMSTERDAM FUNDING CORPORATION


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TABLE OF CONTENTS


PAGE


ARTICLE I PURCHASES FROM SELLER AND SETTLEMENTS....................1


Section 1.1. Sales....................................................1
Section 1.2. Interim Liquidations.....................................3
Section 1.3. Section of Discount Rates and Tranche Periods............4
Section 1.4. Fees and Other Costs and Expenses........................5
Section 1.5. Maintenance of Sold Interest; Deemed Collection..........5
Section 1.6. Reduction in Commitments.................................6
Section 1.7. Repurchases..............................................6
Section 1.8. Assignment of Purchase Agreements........................7
Section 1.9. Extension of Liquidity Termination Date..................7


ARTICLE II SALES TO AND FROM AMSTERDAM; ALLOCATIONS.................7


Section 2.1. Required Purchases from Amsterdam........................7
Section 2.2. Purchases by Amsterdam...................................8
Section 2.3. Allocations and Distributions............................8


ARTICLE III ADMINISTRATION AND COLLECTIONS..........................10


Section 3.1. Appointment of Collection Agent.........................10
Section 3.2. Duties of Collection Agent..............................10
Section 3.3. Reports.................................................11
Section 3.4. Lock-Box Arrangements...................................11
Section 3.5. Enforcement Rights......................................11
Section 3.6. Collection Agent Fee....................................12
Section 3.7. Responsibilities of the Seller..........................12
Section 3.8. Actions by Seller.......................................12
Section 3.9. Indemnities by the Collection Agent.....................13
Section 3.10. Exchange Agent; Currency Conversion.....................14


ARTICLE IV REPRESENTATIONS AND WARRANTIES..........................14


Section 4.1. Representations and Warranties..........................14


ARTICLE V COVENANTS...............................................16


Section 5.1. Covenants of the Seller.................................16


ARTICLE VI INDEMNIFICATION.........................................21


Section 6.1. Indemnities by the Seller...............................21
Section 6.2. Increased Cost and Reduced Return.......................23
Section 6.3. Other Costs and Expenses................................23


Section 6.4. Withholding Taxes.......................................24
Section 6.5. Payments and Allocations................................24


ARTICLE VII CONDITIONS PRECEDENT....................................24


Section 7.1. Conditions to Closing...................................24
Section 7.2. Conditions to Each Purchase.............................25


ARTICLE VIII THE AGENT...............................................25


Section 8.1. Appointment and Authorization...........................25
Section 8.2. Delegation of Duties....................................26
Section 8.3. Exculpatory Provisions..................................26
Section 8.4. Reliance by Agent.......................................26
Section 8.5. Assumed Payments........................................26
Section 8.6. Notice of Termination Events............................26
Section 8.7. Non-Reliance on Agent and Other Purchasers..............27
Section 8.8. Agent and Affiliates....................................27
Section 8.9. Indemnification.........................................27
Section 8.10. Successor Agent.........................................27


ARTICLE IX MISCELLANEOUS...........................................28


Section 9.1. Termination.............................................28
Section 9.2. Notices.................................................28
Section 9.3. Payments and Computations...............................28
Section 9.4. Sharing of Recoveries...................................29
Section 9.5. Right of Setoff.........................................29
Section 9.6. Amendments..............................................29
Section 9.7. Waivers.................................................30
Section 9.8. Successors and Assigns; Participations; Assignments.....30
Section 9.9. Intended Tax Characterization...........................32
Section 9.10. Waiver of Confidentiality...............................32
Section 9.11. Confidentiality of Agreement............................32
Section 9.12. Agreement Not to Petition...............................32
Section 9.13. Excess Funds............................................33
Section 9.14. No Recourse.............................................33
Section 9.15. Limitation of Liability.................................33
Section 9.16. Headings; Counterparts..................................33
Section 9.17. Cumulative Rights and Severability......................33
Section 9.18. Governing Law; Submission to Jurisdiction...............34
Section 9.19. WAIVER OF TRIAL BY JURY.................................34
Section 9.20. Entire Agreement........................................34
Section 9.21. Elimination of Enhancer.................................34
Section 9.22. Original Agreement......................................34


Signature.....................................................................35


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SCHEDULES DESCRIPTION


Schedule I Definitions Schedule II Liquidity Providers and Commitments of Committed Purchasers


EXHIBITS DESCRIPTION


Exhibit A Form of Incremental Purchase Request Exhibit B Form of Notification of Assignment from the Committed
Purchasers to Amsterdam Exhibit C-1 Form of Periodic Report Exhibit C-2 Form of Weekly Report Exhibit C-3 Form of Daily Report Exhibit D Addresses and Names of Seller and Originator Exhibit E Subsidiaries Exhibit F Lock-Boxes and Lock-Box Banks Exhibit G Form of Lock-Box Letter Exhibit H Compliance Certificate Exhibit I Credit and Collection Policy


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SECOND AMENDED AND RESTATED
RECEIVABLES SALE AGREEMENT


THIS SECOND AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT, dated as of August 16, 2004, among Crompton & Knowles Receivables Corporation, a Delaware corporation, as Seller (the "Seller"), Crompton Corporation, a Delaware corporation, as the initial Collection Agent (the "Initial Collection Agent"), ABN AMRO Bank N.V., as agent for the Purchasers (the "Agent"), the liquidity providers party hereto (the "Liquidity Providers") and Amsterdam Funding Corporation ("Amsterdam"). Certain capitalized terms used herein, and certain rules of construction, are defined in Schedule I. The sole initial Liquidity Provider and the Commitments of all Committed Purchasers are listed on Schedule II.


PRELIMINARY STATEMENT


The Seller, Initial Collection Agent, Amsterdam, ABN AMRO Bank N.V., as provider of the Program LOC (the "Enhancer"), the Liquidity Provider and the Agent are parties to an Amended and Restated Receivables Sale Agreement, dated as of January 18, 2002 (as amended, modified or supplemented prior to the date hereof, the "Original Agreement"); and


Subject to and upon the terms and conditions set forth herein, the parties desire to remove the Enhancer, remove Crompton Europe B.V. and Crompton B.V. as Originators hereunder and to amend and restate the Original Agreement in the form of this Agreement. This Agreement amends and replaces in its entirety the Original Agreement and, from and after the date hereof, all references made to the Original Agreement in any Transaction Document or in any other instrument or document shall, without more, be deemed to refer to this Agreement.


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


ARTICLE I
PURCHASES FROM SELLER AND SETTLEMENTS


Section 1.1. Sales.


(a) The Sold Interest. Subject to the terms and conditions hereof, the Seller may, from time to time before the Liquidity Termination Date, sell to Amsterdam, or, only if Amsterdam declines to make the applicable purchase, ratably to the Committed Purchasers an undivided percentage ownership interest in the Receivables and all related Collections. Any such purchase (a "Purchase") shall be made by each relevant Purchaser remitting funds to the Seller, through the Agent, pursuant to Section 1.1(c) or by the Collection Agent remitting Collections to the Seller pursuant to Section 1.1(d). The aggregate percentage ownership interest so acquired by a Purchaser in the Receivables and related Collections (its "Purchase Interest") shall equal at any time the following quotient:


I + PRP
-----------
ER


where:


I = the outstanding Investment of such Purchaser at such time;


ER = the Eligible Receivables Balance at such time; and


PRP = the Purchaser Reserve Percentage at such time.


Except during a Liquidation Period for a Purchaser, such Purchaser's Purchase Interest will change whenever its Investment, its Purchaser Reserve Percentage or the Eligible Receivables Balance changes. During a Liquidation Period for a Purchaser its Purchase Interest shall remain constant, except for redeterminations to reflect Investment acquired from or transferred to another Purchaser hereunder or under the Transfer Agreement. The sum of all Purchasers' Purchase Interests at any time is referred to herein as the "Sold Interest", which at any time is the aggregate percentage ownership interest then held by the Purchasers in the Receivables and Collections.


(b) Amsterdam Purchase Option and Other Purchasers' Commitments. Subject to Section 1.1(d) concerning Reinvestment Purchases, at no time will Amsterdam have any obligation to make a Purchase. Each Liquidity Provider (together the "Committed Purchasers" and each a "Committed Purchaser") severally hereby agrees, subject to Section 7.2 and the other terms and conditions hereof, to make Purchases before the Liquidity Termination Date, based on its Ratable Share of each Purchase by the Committed Purchasers, to the extent its Investment would not thereby exceed its Commitment, the Aggregate Investment would not thereby exceed the Purchase Limit, and the Matured Aggregate Investment would not thereby exceed the Aggregate Commitments. Each Purchaser's first Purchase and each additional Purchase by such Purchaser not made from Collections pursuant to Section 1.1(d) is referred to herein as an "Incremental Purchase." Each Purchase made by a Purchaser with the proceeds of Collections in which it has a Purchase Interest, which does not increase the outstanding Investment of such Purchaser, is referred to herein as a "Reinvestment Purchase."


(c) Incremental Purchases. In order to request an Incremental Purchase from a Purchaser, the Seller must provide to the Agent an irrevocable written request (including by telecopier or other facsimile communication) substantially in the form of Exhibit A, by 10:00 a.m. (Chicago time) three Business Days before the requested date (the "Purchase Date") of such Purchase, specifying the requested Purchase Date (which must be a Business Day) and the requested amount (the "Purchase Amount") of such Purchase, which must be in a minimum amount of $1,000,000 and multiples thereof (or, if less, an amount equal to the Maximum Incremental Purchase Amount). An Incremental Purchase may only be requested from Amsterdam unless Amsterdam, in its sole discretion, determines not to make such Incremental Purchase in which case the Seller will automatically be deemed to have requested such Incremental Purchase from the Committed Purchasers. The Agent shall promptly notify the contents of any such request to each Purchaser from which the Purchase is requested. If Amsterdam determines, in its sole discretion, to make the requested Purchase, Amsterdam shall transfer to the Agent's Account the amount of such Incremental Purchase on the requested Purchase Date. If Amsterdam refuses to make a requested Purchase, the Seller shall automatically be deemed to have requested the Incremental Purchase from the Committed Purchasers, subject to Section 7.2 and the other terms and conditions hereof, each Committed Purchaser shall transfer its Ratable Share of the requested Purchase Amount into the Agent's Account by no later than 12:00 noon (Chicago time) on the Purchase Date. The Agent shall transfer to the Designated Account the proceeds of any Incremental Purchase delivered into the Agent's Account.


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(d) Reinvestment Purchases. Unless Amsterdam has provided to the Agent, the Seller, and the Collection Agent a notice still in effect that it no longer wishes to make Reinvestment Purchases (in which case Amsterdam's Reinvestment Purchases, but not those of the Committed Purchasers, shall cease), at any time before the Liquidity Termination Date when no Interim Liquidation is in effect, on each day that any Collections are received by the Collection Agent a Purchaser's Purchase Interest in such Collections shall automatically be used to make a Reinvestment Purchase by such Purchaser, but only to the extent such Reinvestment Purchase would not cause the Purchaser's Investment to increase above the amount of such Investment at the start of the day plus any Incremental Purchases made by the Purchaser on that day. Amsterdam may revoke any notice provided under the first sentence of this Section 1.1(d) by notifying the Agent, the Seller, and the Collection Agent that it will make Reinvestment Purchases.


(e) Security Interest. To secure all of the Seller's obligations under the Transaction Documents, the Seller hereby grants to the Agent (for the benefit of the Purchasers) a security interest in all of the Seller's rights in the Receivables, the Collections, and the Lock- Box Accounts.


Section 1.2. Interim Liquidations. (a) Optional. The Seller may at any time direct that Reinvestment Purchases cease and that an Interim Liquidation commence for all Purchasers by giving the Agent and the Collection Agent at least three Business Days' written (including telecopy or other facsimile communication) notice specifying the date on which the Interim Liquidation shall commence and, if desired, when such Interim Liquidation shall cease before the Liquidity Termination Date (identified as a specific date or as when the Aggregate Investment is reduced to a specified amount). If the Seller does not so specify the date on which an Interim Liquidation shall cease, it may cause such Interim Liquidation to cease at any time before the Liquidity Termination Date, subject to Section 1.2(b) below, by notifying the Agent and the Collection Agent in writing (including by telecopy or other facsimile communication) at least three Business Days before the date on which it desires such Interim Liquidation to cease.


(b) Mandatory. If at any time before the Liquidity Termination Date any condition in Section 7.2 is not fulfilled, the Seller shall immediately notify the Agent and the Collection Agent, whereupon Reinvestment Purchases shall cease and an Interim Liquidation shall commence, which shall only cease upon the Seller confirming to the Agent that the conditions in Section 7.2 are fulfilled.


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Section 1.3. Selection of Discount Rates and Tranche Periods. (a)(1) The provisions of this subsection (a)(1) shall apply to all Investment of Amsterdam funded with commercial paper issued on or before the Agent makes the election described in clause (a)(2) below: All such Investment shall be allocated to one or more Tranches reflecting the Discount Rates at which such Investment accrues Discount and the Tranche Periods for which such Discount Rates apply. All such Investment of Amsterdam shall accrue Discount at the CP Rate. Each CP Tranche shall be in the minimum amount of $1,000,000 and in multiples thereof. All Discount accrued at the CP Rate during a Tranche Period shall be payable by the Seller on the last day of such Tranche Period; (2) At the Agent's option, the Agent may notify the Seller that the provisions of this subsection (a)(2) shall apply to all Investment of Amsterdam funded with Pooled Commercial Paper issued after the Agent delivers a notice to the Seller that it elects to have the provisions of this clause (a)(2) to be applicable to the Investment of Amsterdam: The Seller shall pay Funding Charges with respect to Amsterdam's Purchase Interest for each day that any Investment in respect of such Purchase Interest is outstanding. Each such Purchase Interest will accrue Funding Charges each day based on the Pooled Allocation. On each Settlement Date the Seller shall pay to the Agent (for the benefit of Amsterdam) an aggregate amount equal to all accrued and unpaid Funding Charges in respect of such Purchase Interest for the immediately preceding Discount Period; (3) All Investment of the Committed Purchasers shall be allocated to one or more Tranches reflecting the Discount Rates at which such Investment accrues Discount and the Tranche Periods for which such Discount Rates apply. In each request for an Incremental Purchase from a Committed Purchaser and three Business Days before the expiration of any Tranche Period applicable to any Committed Purchaser's Investment, the Seller may request the Tranche Period(s) to be applicable to such Investment and the Discount Rate(s) applicable thereto. All Investment of the Committed Purchasers may accrue Discount at either the Eurodollar Rate or the Prime Rate, in all cases as established for each Tranche Period applicable to such Investment. Each Tranche shall be in the minimum amount of $1,000,000 and in multiples thereof or, in the case of Discount accruing at the Prime Rate, in any amount of Investment that otherwise has not been allocated to another Tranche Period. Any Investment of the Committed Purchasers not allocated to a Tranche Period shall be a Prime Tranche. During the pendency of a Termination Event, the Agent may reallocate any outstanding Investment of the Committed Purchasers to a Prime Tranche. All Discount accrued on the Investment of the Committed Purchasers during a Tranche Period shall be payable by the Seller on the last day of such Tranche Period or, for a Eurodollar Tranche with a Tranche Period of more than three months, 90 days after the commencement, and on the last day, of such Tranche Period.


(b) The Agent shall allocate the Investment of Amsterdam to Tranche Periods in its sole discretion. If, by the time required in Section 1.3(a), the Seller fails to select a Discount Rate or Tranche Period for any Investment of the Committed Purchasers, such amount of Investment shall automatically accrue Discount at the Prime Rate for a three Business Day Tranche Period. Any Investment purchased from Amsterdam pursuant to the Transfer Agreement shall accrue Discount at the Prime Rate and have an initial Tranche Period of three Business Days.


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(c) If the Agent or any Committed Purchaser determines (i) that maintenance of any Eurodollar Tranche would violate any applicable law or regulation, (ii) that deposits of a type and maturity appropriate to match fund any of such Purchaser's Eurodollar Tranches are not available or (iii) that the maintenance of any Eurodollar Tranche will not adequately and fairly reflect the cost of such Purchaser of funding Eurodollar Tranches, then the Agent, upon the direction of such Purchaser, shall suspend the availability of, and terminate any outstanding, Eurodollar Tranche so affected. All Investment allocated to any such terminated Eurodollar Tranche shall be reallocated to a Prime Rate Tranche.


Section 1.4. Fees and Other Costs and Expenses. (a) The Seller shall pay to the Agent for the ratable benefit of the Liquidity Providers, such amounts as agreed to with the Liquidity Providers and the Agent in the Fee Letter.


(b) If the amount of Investment allocated to any CP or Eurodollar Tranche is reduced before the last day of its Tranche Period, or if a requested Incremental Purchase at the Eurodollar Rate does not take place on its scheduled Purchase Date, the Seller shall pay the Early Payment Fee to each Purchaser that had its Investment so reduced or scheduled Purchase not made.


(c) Investment shall be payable solely from Collections and from amounts payable under Sections 1.5, 1.7 and 6.1 (to the extent amounts paid under Section 6.1 indemnify against reductions in or non-payment of Receivables). The Seller shall pay, as a full recourse obligation, all other amounts payable hereunder, including, without limitation, all Discount, fees described in clauses (a) and (b) above and amounts payable under Article VI.


Section 1.5. Maintenance of Sold Interest; Deemed Collection. (a) General. If at any time before the Liquidity Termination Date the Eligible Receivables Balance is less than the sum of the Aggregate Investment (or, if a Termination Event exists, the Matured Aggregate Investment) plus the Aggregate Reserve, the Seller shall pay to the Agent an amount equal to such deficiency for application to reduce the Investments of the Purchasers ratably in accordance with the principal amount of their respective Investments, applied first to Prime Tranches and second to the other Tranches with the shortest remaining maturities unless otherwise specified by the Seller. Any amount so applied to reduce Amsterdam's Investment shall be deposited in the Special Transaction Subaccount.


(b) Deemed Collections. If on any day the outstanding balance of a Receivable is reduced or cancelled as a result of any defective or rejected goods or services, any cash discount or adjustment (including any adjustment resulting from the application of any special refund or other discounts or any reconciliation), any setoff or credit (whether such claim or credit arises out of the same, a related, or an unrelated transaction) or other similar reason not arising from the financial inability of the Obligor to pay undisputed indebtedness, the Seller shall be deemed to have received on such day a Collection on such Receivable in the amount of such reduction or cancellation. If on any day any representation, warranty, covenant or other agreement of the Seller related to a Receivable is not true or is not satisfied, the Seller shall be deemed to have received on such day a Collection in the amount of the outstanding balance of such Receivable. All such Collections deemed received by the Seller under this Section 1.5(b) shall be remitted by the Seller to the Collection Agent in accordance with Section 5.1(i).


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(c) Adjustment to Sold Interest. At any time before the Liquidity Termination Date that the Seller is deemed to have received any Collection under Section 1.5(b) ("Deemed Collections") that derive from a Receivable that is otherwise reported as an Eligible Receivable, so long as no Liquidation Period then exists, the Seller may satisfy its obligation to deliver such amount to the Collection Agent by instead notifying the Agent that the Sold Interest should be recalculated by decreasing the Eligible Receivables Balance by the amount of such Deemed Collections, so long as such adjustment does not cause the Sold Interest to exceed 100.0%.


(d) Payment Assumption. Unless an Obligor otherwise specifies or another application is required by contract or law, any payment received by the Seller from any Obligor shall be applied as a Collection of Receivables of such Obligor (starting with the oldest such Receivable) and remitted to the Collection Agent as such.


Section 1.6. Reduction in Commitments. The Seller may, upon thirty days' notice to the Agent, reduce the Aggregate Commitment in increments of $1,000,000, so long as the Aggregate Commitment at all times equals at least the outstanding Matured Aggregate Investment. Each such reduction in the Aggregate Commitment shall reduce the Commitment of each Committed Purchaser in accordance with its Ratable Share and shall ratably reduce the Purchase Limit so that the Aggregate Commitment remains at least 102% of the Purchase Limit.


Section 1.7. Repurchases. (a) Optional. At any time that the Aggregate Investment is less than 10% of the Aggregate Commitment in effect on the date hereof, the Seller may, upon thirty days' notice to the Agent, repurchase the entire Sold Interest from the Purchasers at a price equal to the outstanding Matured Aggregate Investment and all other amounts then owed hereunder.


(b) Mandatory. If at any time before the Liquidity Termination Date the Sold Interest exceeds 100.0%, unless the Seller remedies the situation by satisfying its obligations under Section 1.5(a), any Purchaser may direct that all Purchasers ratably reassign to the Seller, without recourse, representation or warranty, a portion of the Purchase Interest of each Purchaser so that the Sold Interest does not exceed 100.0%. The Seller shall purchase such reassigned Purchase Interests at a purchase price equal to the Matured Value of the Investment so reassigned by each Purchaser.


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Section 1.8. Assignment of Purchase Agreements. The Seller hereby assigns and otherwise transfers to the Agent (for the benefit of the Agent, each Purchaser and any other Person to whom any amount is owed hereunder), all of the Seller's right, title and interest in, to and under each Purchase Agreement. The Seller shall execute, file and record all financing statements, continuation statements and other documents required to perfect or protect such assignment. This assignment includes (a) all monies due and to become due to the Seller from each Originator or the Parent under or in connection with each Purchase Agreement (including fees, expenses, costs, indemnities and damages for the breach of any obligation or representation related to such agreement) and (b) all rights, remedies, powers, privileges and claims of the Seller against each Originator or the Parent under or in connec
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