EXHIBIT 10.44
**EXECUTION COPY**
**CASH COLLATERAL AGREEMENT**
     CASH COLLATERAL AGREEMENT dated as of April 2, 2004 (this “Agreement”),between Space Systems/Loral, Inc. (the “Pledgor”), a corporation existing underthe laws of the State of Delaware and a debtor and debtor-in-possession in acase pending under Chapter 11 of the Bankruptcy Code in the United StatesBankruptcy Court for the Southern District of New York, and JPMorgan ChaseBank, a New York banking corporation (the “Bank”).
W I T N E S S E T H
     WHEREAS, pursuant to the Letter of Credit Reimbursement Agreement, datedas of even date herewith (as amended, supplemented or otherwise modified fromtime to time, the “Reimbursement Agreement”), between the Pledgor and the Bank,the Bank may issue from time to time at the request of, and for the account of,the Pledgor letters of credit (collectively, the “Letters of Credit”) in anaggregate face amount not to exceed $20,000,000; and
     WHEREAS, the Bank and the Pledgor agree that a condition to the issuanceof any Letter of Credit is that each such Letter of Credit be secured fully bycash collateral in accordance with the terms of the Reimbursement Agreement andthis Agreement;
     NOW, THEREFORE, in consideration of the premises, the Pledgor herebyagrees as follows:
     Section 1. **Definitions**. Capitalized terms used herein but not otherwisedefined shall have the meaning ascribed thereto in the Reimbursement Agreement.
     Section 2. **Pledge and Assignment**. As security for the payment of allObligations of the Pledgor in respect of the Letters of Credit, under theReimbursement Agreement and under this Agreement, the Pledgor herebyirrevocably assigns and pledges to the Bank, and hereby grants to the Bank, (i)pursuant to Section 364(c)(1) of the Bankruptcy Code, an allowed superpriorityadministrative expense claim in the Bankruptcy Proceeding and (ii) pursuant toSection 364(c)(2) of the Bankruptcy Code a first priority security interest in(w) the Pledgor’s account, number 323-351832 (for credit to Space Systems LoralInc.), with the Bank at its offices at 270 Park Avenue, 20th Floor, New York,NY 10017 (hereinafter called the “Cash Collateral Account”) which CashCollateral Account shall be under the sole dominion and control of the Bank,(x) all cash from time to time deposited into the Cash Collateral Account, (y)all Investments (as defined in Section 5 hereof) and certificates andinstruments, if any, from time to time representing or evidencing the CashCollateral Account and (z) to the extent not covered by clauses (w) through (y)above, all proceeds and products of any and all of the foregoing (collectively,the “Collateral”). Cash, Investments, security entitlements or otherinvestments held or carried in the Cash Collateral Account shall not beavailable for use by the Pledgor, whether pursuant to Section 363 of theBankruptcy Code or otherwise.
 

 

     Section 3. **Remedies Upon Default**.
     (a) The Pledgor hereby agrees that if any amount payable by it in respectof the Obligations is not paid when due (whether upon demand, at statedmaturity, by acceleration or otherwise), without further order of orapplication to the Bankruptcy Court, the Bank may, by giving five (5) BusinessDays’ notice to the Pledgor (with a copy to counsel for the Committee and tothe Office of the United States Trustee for the Southern District of New York):(i) charge, set-off and otherwise apply all or any part of the Cash Collateralagainst the Obligations then due (or which become due) or any part thereof or(ii) exercise in respect of the Collateral, in addition to other rights andremedies provided for herein or otherwise available to it, all the rights andremedies of a secured party under the Uniform Commercial Code in effect in theState of New York at that time. Without limiting the generality of clause (ii)above, the Bank may sell, redeem, collect or otherwise realize on theCollateral or any portion thereof in one or more parcels at public or privatesale, at its offices or elsewhere, for cash, on credit or for future deliveryand on such other terms as the Bank may deem commercially reasonable andwithout notice or demand except to the extent required by law (and if any suchnotice may be required by law the Pledgor agrees that at least 5 Business Days’notice shall constitute reasonable notification). The Bank shall not beobligated to make any such sale of Collateral regardless of whether notice ofsale has been given and may adjourn any such sale from time to time byannouncement at the time and place fixed therefor and such sale may, withoutfurther notice, be made at the time and place to which it was so adjourned.
     (b) Any cash held by the Bank as Collateral and all cash proceeds receivedby the Bank in respect of any sale of, collection from, or other realizationupon all or any part of the Collateral may, in the discretion of the Bank, thenor at any time thereafter be applied in whole or in part by the Bank withoutfurther order of or application to the Bankruptcy Court against all or any partof the Obligations then due (or which become due) in such order as the Bank mayelect. Any surplus of such cash or cash proceeds held by the Bank andremaining after payment in full of all of the Obligations after expiry ortermination of all Letters of Credit shall be paid over to the Pledgor or towhomsoever may be lawfully entitled to receive such surplus.
     Section 4. **Maintaining the Cash Collateral Account**. (a) The Pledgorhereby further agrees that so long as any Letters of Credit or Obligations areoutstanding, it will deposit and maintain at all times an amount in the CashCollateral Account equal to (x) in the case of Letters of Credit or Obligationsdenominated in Dollars at least one hundred five percent (105%) of the LCExposure in respect of such Letters of Credit, and (y) in the case of Lettersof Credit denominated in an Alternative Currency at least one hundred tenpercent (110%) of the LC Exposure in respect of such Letters of Credit.
     (b) If at any time the Collateral maintained in the Cash CollateralAccount in respect of any outstanding Alternative Currency Letters of Credit isless than 110% of the then Dollar Equivalent of the LC Exposure relating tosuch Alternative Currency Letters of Credit, then the Pledgor shall, withinthree (3) Business Days after receipt of notice from the Bank delivered inaccordance with Section 3.02 of the Reimbursement Agreement, deposit an amountin Dollars in the Cash Collateral Account equal to the amount required suchthat the Collateral in the Cash Collateral Account is not less than 110% of theDollar Equivalent of the LC Exposure
2
 

 

relating to such Alternative Currency Letters of Credit. In the eventthat the Collateral maintained in the Cash Collateral Account in respect of anyoutstanding Alternative Currency Letters of Credit is more than 110% of thethen Dollar Equivalent of the LC Exposure relating to such Alternative CurrencyLetter of Credit, or in the event that the Collateral maintained in the CashCollateral Account in respect of any other Letter of Credit is more than 105%of the LC Exposure relating to such other Letter of Credit, so long as noDefault or Event of Default has occurred and is continuing, the Bank will, nomore often than one time per each fiscal quarter, upon request from theBorrower, transfer such excess, as determined by the Bank in Good Faith, to theaccount of the Borrower.
     Section 5. **Investing Amounts in the Accounts**. If requested by thePledgor, the Bank will, from time to time, (a) invest amounts on deposit in theCash Collateral Account in such deposits, commercial paper and securities (the“Investments”) as the Pledgor may select and the Bank may approve in itsreasonable discretion and (b) invest interest or dividends paid on theInvestments and reinvest other proceeds of such Investments which may mature orbe sold in new deposits, commercial paper or securities as the Pledgor mayselect and the Bank may approve in its discretion. Interest and proceeds whichare not invested or reinvested shall be deposited and held in the CashCollateral Account; provided that the Pledgor may at any time or from time totime request release of such interest and proceeds in accordance with Section 4hereof. The Bank will only approve Investments in which it can obtain afirst-priority, perfected security interest, which may require the Pledgor toexecute necessary documents.
     Section 6. **Representations and Warranties**. The Pledgor hereby representsto the Bank that: (a) the execution, delivery and performance by it of thisAgreement have been duly authorized by all necessary corporate action, and donot and will not violate any law or regulation applicable to it or will notviolate any law or regulation applicable to it or contravene any loan, creditor other agreement to which it is a party or by which it or its properties arebound, (b) it is the legal and beneficial owner of the Collateral free andclear of any lien, security interest or other charge or encumbrance except forthe security interest created by this Agreement, (c) this Agreement constitutesa legal, valid and binding obligation of the Pledgor enforceable in accordancewith its terms, except as the enforceability thereof may be limited byapplicable bankruptcy, insolvency, reorganization or other similar lawsaffecting creditors’ rights generally and by general equitable principles(regardless of whether the issue of enforceability is considered in aproceeding in equity or at law), and creates in favor of the Bank a perfected,first priority security interest in the Collateral, enforceable in accordancewith its terms, (d) no consent of any other person (including, withoutlimitation, stockholders or creditors of the Pledgor or any of its subsidiariesor of any parent company of the Pledgor), and no consent, license, permit,approval or authorization of, exemption by, or registration, filing ordeclaration with, any governmental authority is required in connection with theexecution, delivery, performance, validity or enforceability of this Agreementby or against the Pledgor, other than consents that have already been obtainedand which remain in full force and effect, (e) the execution, delivery andperformance of this Agreement will not result in the creation or imposition ofany lien (other than the Liens in favor of the Bank under this Agreement) onany of its properties or assets pursuant to the provisions of any contractualobligation, and (f) there is no litigation, suit, action, investigation,inquiry or other proceeding presently pending (other than the BankruptcyProceeding) which could reasonably be expected to affect the value of theCollateral
3
 

 

or, to the knowledge of the Pledgor, threatened against the Pledgor or anyof its subsidiaries or any of their properties or assets, by or before anyarbitrator or any governmental authority and no preliminary or permanentinjunction or order by a state or Federal court has been entered in connectionwith this Agreement.
     Section 7. **Covenants**. The Pledgor covenants and agrees with the Bankthat:
     (a) The Pledgor will not (1) sell, assign, transfer, exchange, orotherwise dispose of, or grant any option with respect to, the Collateral, or(2) create, incur or permit to exist any lien or option in favor of, or anyclaim of any person with respect to, any of the Collateral, or any interesttherein, except for the security interest created by this Agreement.
     (b) The Pledgor will maintain the security interest created by thisAgreement as a first priority, perfected security interest and defend theright, title and interest of the Bank in and to the Collateral against theclaims and demands of all persons whomsoever. At any time and from time totime, upon the written request of the Bank, and at the sole expense of thePledgor, the Pledgor will promptly and duly execute and deliver such furtherinstruments and documents and take such further actions as the Bank reasonablymay request for the purposes of obtaining or preserving the full benefits ofthis Agreement and of the rights and powers herein granted.
     Section 8. **No Discharge; Survival of Claims**. The Pledgor agrees that (i)the Obligations shall not be discharged by the Confirmation Order (and thePledgor, pursuant to Section 1141(d)(4) of the Bankruptcy Code, hereby waivesany such discharge) and (ii) the Liens and claims granted to the Bank pursuantto the Order and described herein shall not be adversely affected in any mannerby the Confirmation Order or the occurrence of the Plan Effective Date.
     Section 9. **Waiver**. The Pledgor hereby waives presentation of anyinstrument or document evidencing any indebtedness or liability to the Bank,demand of payment, protest and notice of non-payment or protest.
     Section 10. **Expenses**. The Pledgor further agrees that it will pay theBank upon written demand any and all reasonable expenses (including reasonablefees and expenses of its counsel) which the Bank may incur in connection withthe exercise or enforcement of any of the rights of the Bank hereunder.
     Section 11. **Continuing Security Interest**. This Agreement shall create acontinuing security interest in the Collateral and shall, notwithstanding theentry of the Confirmation Order or, subject to Section 2.15(a) of theReimbursement Agreement, the occurrence of the Plan Effective Date, (a) remainin full force and effect until the payment in full (after the expiration of allLetters of Credit) of the Obligations, (b) be binding upon the Pledgor and itssuccessors and assigns (provided that any assignment by the Pledgor must bemade only with the prior written consent of the Bank), and (c) inure to thebenefit of the Bank and its successors, transferees and assigns. Upon thepayment in full (after the expiration of all Letters of Credit) of theObligations, the Pledgor shall be entitled to the return, upon its request andat its expense, of such of the Collateral as shall not have been appliedpursuant to the terms of this
4
 

 

Agreement. It is the intention of the parties hereto that the securityinterests created hereby in favor of the Bank shall continue from and after thePlan Effective Date to constitute continuing, perfected first priority securityinterests in the Collateral, as security for the Obligations. Accordingly,effective on the Plan Effective Date, the Pledgor confirms that it has granted,and does hereby grant, to the Bank, a security interest in all right, title andinterest of the Pledgor in and to the Collateral Account and in all Cash,Investments, security entitlements and other investments held or carried at anytime in the Collateral Account, as security for the Obligations.
     Section 12. **Further Assurances**. At the cost and expense of the Borrower,the Borrower shall execute and file all such further documents and instruments,and perform such other acts, as the Bank may request to maintain the Liensgranted to the Bank in connection with this Agreement, the ReimbursementAgreement and the Interim Order (or the Final Order, as applicable) and tomaintain the priority of such Liens to be granted pursuant to this Agreement,the Reimbursement Agreement and the Interim Order (or the Final Order, asapplicable). Pursuant to Section 9-402 of the New York UCC and any otherapplicable law, the Borrower authorizes the Bank to file or record financingstatements and other filing or recording documents or instruments with respectto the Collateral without the signature of the Borrower in such form and insuch offices the Bank reasonably determines appropriate to perfect the securityinterests of the Bank under this Agreement, the Reimbursement Agreement and theInterim Order (or the Final Order, as applicable). A photographic or otherreproduction of this Agreement shall be sufficient as a financing statement orother filing or recording document or instrument for filing or recording in anyjurisdiction.
     Section 13. **Amendments, Etc.**No amendment or waiver of any provision ofthis Agreement nor consent to departure by the Pledgor herefrom shall in anyevent by effective unless the same shall be in writing and signed by the Bank,and then such waiver or consent shall be effective only in the specificinstance and for the specific purpose for which given.
     Section 14. **Notices**. All notices, requests and demands to or upon theBank or the Pledgor to be effective shall be in writing (or by telex, fax orsimilar electronic transfer) and shall be deemed to have been duly given ormade (1) when delivered by hand or (2) if given by mail, when deposited in themails by certified mail, return receipt requested, or (3) if by telex, fax orsimilar electronic transfer, when sent and receipt has been confirmed,addressed to the Bank or the Pledgor at its address or transmission number fornotices set forth below its signature hereto. The Bank and the Pledgor maychange their addresses and transmission numbers for notices by notice in themanner provided in this paragraph.
     Section 15. **Governing Law; Submission to Jurisdiction; Jury Trial**. (a)This Agreement and the rights and obligations of the parties hereunder shall beconstrued in accordance with and be governed by the law of the State of NewYork. Any legal action or proceeding between the Pledgor and any other partyto this Agreement arising out of or with respect to this Agreement may bebrought (a) prior to the Plan Effective Date, in the Bankruptcy Court and (b)at any time thereafter, in the state courts of the State of New York, locatedin the County of New York, or in the courts of the United States for theSouthern District of New York, and the Pledgor submits to the non-exclusivejurisdiction of such courts for the purpose of any such suit, action orproceeding or judgment. Each party to this Agreement irrevocably consents
5
 

 

to service of process in the manner provided for notices in Section 14,such service to become effective 30 days after such mailing. Nothing in thisAgreement will affect the right of any party to this Agreement to serve processin any other manner permitted by law. Nothing herein shall affect the right ofthe Bank to bring any legal action or proceeding against the Pledgor in anycourt having jurisdiction with respect thereto but actions and proceedingsinitiated prior to the Plan Effective Date shall be brought in the BankruptcyCourt.
     (a) Each of the Bank and the Pledgor hereby irrevocably waives, to thefullest extent it may legally and effectively do so, any objection which it maynow or hereafter have to the laying of venue of any of the aforesaid actions orproceedings arising out of or in connection with this Agreement brought in thecourts referred to in Section 15(a). Each of the Plegdor and the Bank herebyfurther irrevocably waive and agree not to plead or claim in any such courtthat any such action or proceeding brought in any such court has been broughtin an inconvenient forum.
     (b) Each of the Pledgor and the Bank waives, to the fullest extent it maylegally and effectively do so, any right it may have to jury trial in any legalproceeding directly or indirectly arising out of or relating to each of thePledgor’s and the Bank’s rights and obligations under this Agreement ortransactions contemplated hereby (whether based on contract, tort or any othertheory).
     Section 16. **Counterparts**. This Agreement may be executed in one or morecounterparts, each of which shall be deemed an original, but all of whichtogether shall constitute one and the same instrument. Delivery of an executedcounterpart of a signature page of this Agreement by telecopy shall beeffective as delivery of a manually executed counterpart of this Agreement.
6
 

 

     IN WITNESS WHEREOF, the undersigned has caused its duly authorized officerto execute and deliver this Agreement as of the date first above written.           SPACE SYSTEMS/LORAL, INC.          By:             Name:     Title:           Address:           Attention:    Fax number:    Telephone:       Agreed and Accepted:           JPMORGAN CHASE BANK           By:             Name: Anna Marie Greer     Title: Vice President    
JPMorgan Chase Bank