<PAGE>   1
                 AMENDMENT NO. 2 TO AGREEMENT AND PLAN OF MERGER


            This AMENDMENT NO. 2, dated as of March 20, 1998 (the "Amendment"),
amends the AGREEMENT AND PLAN OF MERGER, dated October 7, 1997 (the "Merger
Agreement"), as amended on February 11, 1998, by and among Orion Network
Systems, Inc., a Delaware corporation ("Company"), Loral Space & Communications
Ltd., a Bermuda company ("Acquiror") and Loral Satellite Corporation, a Delaware
corporation ("Merger Sub").

            WHEREAS, the parties have entered into the Merger Agreement
(capitalized terms used in this Amendment and not otherwise defined herein shall
have the meanings set forth in the Merger Agreement);

            WHEREAS, the parties to the Merger Agreement desire to amend various
provisions of the Merger Agreement and set forth certain agreements among the
parties; and

            WHEREAS, pursuant to Section 9.4 of the Merger Agreement, the Merger
Agreement may be amended with the written consent of the parties thereto.

            NOW, THEREFORE, in consideration of the foregoing premises, it is
hereby agreed by and among, the Company, Acquiror and Merger Sub as follows:

            (1)   Section 10.1 shall be amended to read as follows:

                  "The representations, warranties and agreements in this
                  Agreement (and in any certificate delivered in connection with
                  the Closing) shall be deemed to be conditions to the Merger
                  (or the Exchange Offer, as applicable) and shall not survive
                  the Effective Time (or consummation of the Exchange Offer, as
                  applicable) or termination of this Agreement, except for the
                  agreements set forth in Articles I (the Merger) and II
                  (Conversion of Securities; Exchange of Certificates) and
                  Sections 7.7 (Indemnification and Insurance), 7.8 (Employee
                  Benefits Matters) 7.9 (Further Action) and 7.15(g) (Subsequent
                  Merger), each of which shall survive the Effective Time (or
                  consummation of the Exchange Offer, as applicable)
                  indefinitely, and Sections 7.2 (Confidentiality), 7.17
                  (Private Letter Ruling), 9.2 (Effect of Termination) and 9.3
                  (Expenses), each of which shall survive termination of this
                  Agreement indefinitely."

            (2)   Pursuant to Section 9.5(c) of the Merger Agreement, with
                  respect to the closing conditions set forth in Sections 8.2(c)
                  and 8.3(c) of the Merger Agreement, the parties hereby
                  acknowledge
<PAGE>   2
                  and agree that on February 26, 1998 the FCC granted the FCC
                  Application by initial order, and Acquiror, Merger Sub and the
                  Company waive the portions of such closing conditions that
                  require that the grant of the FCC Application be by Final
                  Order.

            (3)   The Exchange Ratio, which has been calculated in accordance
                  with Section 2.1 of the Merger Agreement as set forth on
                  Exhibit A hereto, is .71553.

            (4)   This Amendment may be executed and delivered in one or more
                  counterparts, and by the different parties hereto in separate
                  counterparts, each of which when executed and delivered shall
                  be deemed to be an original but all of which taken together
                  shall constitute one and the same agreement.
<PAGE>   3
            IN WITNESS WHEREOF, the parties hereto have caused this Amendment
No. 2 to the Agreement and Plan of Merger to be executed and delivered as of the
date first written above.


                                    LORAL SPACE & COMMUNICATIONS LTD.


                                    By: /s/ Avi Katz
                                        Avi Katz
                                        Vice President


                                    LORAL SATELLITE CORPORATION


                                    By: /s/ Avi Katz
                                        Avi Katz
                                        Vice President


                                    ORION NETWORK SYSTEMS, INC.


                                    By: /s/ David J. Frear
                                        David J. Frear
                                        Senior Vice President
<PAGE>   4
                                    EXHIBIT A


<TABLE>
<CAPTION>
 CLOSING DATE  TRADING DATE   INTRA DAY AVG   20 DAY AVG  IMPLIED EXCHANGE RATIO
 ------------  ------------   -------------   ----------  ----------------------
<S>            <C>            <C>             <C>         <C>
   2/23/98        2/6/98         23.5022
   2/24/98        2/9/98         23.8906        22.5144          0.77728
   2/25/98       2/10/98          24.495       22.75546          0.76905
   2/26/98       2/11/98         24.0362       22.92992          0.76319
   2/27/98       2/12/98         23.6283       23.07363          0.75844
    3/2/98       2/13/98         23.7657      23.213735          0.75386
    3/3/98       2/17/98         23.7887       23.33944           0.7498
    3/4/98       2/18/98         23.8853      23.448945           0.7463
    3/5/98       2/19/98         24.1456       23.52671          0.74384
    3/6/98       2/20/98          25.237       23.63675          0.74037
    3/9/98       2/23/98         25.5097       23.76496          0.73638
   3/10/98       2/24/98         25.1063      23.883955          0.73271
   3/11/98       2/25/98           25.33       23.97767          0.72985
   3/12/98       2/26/98         25.0202       24.04818          0.72771
   3/13/98       2/27/98         25.4303       24.17237          0.72397
   3/16/98        3/2/98         25.4896      24.352195          0.71862
   3/17/98        3/3/98         24.9971       24.45594          0.71557
   3/18/98        3/4/98         24.9698      24.511735          0.71553
   3/19/98        3/5/98          25.496      24.586905          0.71553
   3/20/98        3/6/98         26.0068       24.68652          0.71553
</TABLE>

         Determination Price: 24.68652

            Exchange Ratio: 0.71553