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                                                                   EXHIBIT 10.40

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK

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                                          :
IN RE                                     :       CHAPTER 11 CASE NOS.
                                          :
LORAL SPACE                               :       LEAD CASE 03-41710 (RDD)
  & COMMUNICATIONS LTD., ET AL.,          :       03-41709 (RDD) THROUGH
                                          :       03-41728 (RDD)
                  DEBTORS.                :       (JOINTLY ADMINISTERED)
                                          :
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             CONSENT ORDER APPROVING KEY EMPLOYEE RETENTION PLAN AND
           THER RELIEF FOR SPACE SYSTEMS/LORAL, INC. AND LORAL SKYNET
               DIVISION OF LORAL SPACECOM CORPORATION PURSUANT TO
               SECTIONS 105(A) AND 363(B) OF THE BANKRUPTCY CODE

            By motion dated November 3, 2003 (the "Motion"), Loral Space &
Communications Ltd. ("Loral") and its affiliated debtors (collectively, with
Loral, the "Debtors") moved, inter alia, for the approval of (i) a key employee
retention plan (the "Retention Plan") for certain employees of Space
Systems/Loral ("SS/L"), for certain employees of the Loral Skynet Division
("Loral Skynet") of Loral SpaceCom Corporation ("SpaceCom") and for certain
employees of the Debtors' corporate headquarters ("Corporate"); (ii) enhanced
severance (the "Enhanced Severance Arrangements") for certain employees of SS/L
and Corporate; and (iii) certain "change in control" severance agreements for
SS/L (the "Change in Control Agreements" and, together with the Retention Plan
and the Enhanced Severance Arrangements, the "Employee Retention Programs"), as
more fully set forth in the Motion; and the Motion having been continued to
December 2, 2003 at 2 o'clock in the afternoon of that day at the request of the
statutory Creditors' Committee (the "Creditors' Committee") to enable
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the Creditors' Committee fully to consider the Debtors' requests, and the
Debtors and the Creditors' Committee having considered and agreed to certain
amendments to the Employee Retention Programs as they relate to SS/L and Loral
Skynet as hereinafter set forth, and there being no objections to the Employee
Retention Program for Loral Skynet and SS/L, as amended; and the Debtors, the
Committee, the agents for the Debtors' secured bank creditors (the "Agent") and
the Ad Hoc Committee of Preferred Shareholders of Loral having agreed to defer
further consideration of the Debtors' requests as to the Employee Retention
Programs as it relates to Corporate and as to the Change in Control Agreements,
and to continue the hearing as to those portions of the Motion; and it appearing
that due and sufficient notice of the Motion having been provided in accordance
with the order of the Court dated July 15, 2003, establishing notice procedures
in these chapter 11 cases, and it further appearing that no other or further
notice need be provided; and the Court having jurisdiction to consider the
Motion and the relief requested by the Debtors and having deemed that the relief
requested as to SS/L, as amended, and Loral Skynet, as amended, is in the best
interests of the Debtors and all parties in interest; and upon the Motion and
all the proceedings had before the Court and after due deliberation and
sufficient cause appearing therefor, it hereby is, ORDERED, ADJUDGED AND
DECREED:

      I.    Loral Skynet Retention Plan. The Loral Skynet Employee Retention
            Plan as hereinafter set forth, be and the same hereby is, approved.

            A.    Thirteen identified employees at Loral Skynet will be eligible
                  for Retention Plan payments (which shall be in addition to
                  their 2003 Management Incentive Bonus) as stated below:

                        (i)   Group 1 - two employees. These employees will be
                              entitled to receive an amount equal to 20% of each
                              employee's 2003 annual base salary.


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                        (ii)  Group 2 - five employees. These employees will be
                              entitled to receive an amount equal to 30% of each
                              employee's 2003 annual base salary.

                        (iii) Group 3 - six employees (inclusive of the
                              President of Loral Skynet and other senior
                              management persons). These employees will be
                              entitled to receive an amount equal to 50% of each
                              employee's 2003 annual base salary.

            B.    Retention Plan payments will be made as follows, provided the
                  employee is in the employment of Loral Skynet on the payment
                  date:

                        (i)   Loral Skynet President - 100% upon the occurrence
                              of Triggering Event(s) (as defined below) for both
                              of Loral Orion, Inc. ("Orion") and SpaceCom. If
                              the Triggering Event(s) do not occur by September
                              1, 2004, then 25% of the total retention payment
                              will be paid on September 1, 2004, and the balance
                              of 75% of the total retention payment shall be
                              paid upon the occurrence of the Triggering
                              Event(s).

                        (ii)  For all other participants, 25% of the total
                              retention payment will be paid on each of December
                              1, 2003, and July 1, 2004, and the balance of 50%
                              shall be paid upon the occurrence of the
                              Triggering Event(s) for both of Orion and
                              SpaceCom.

            C.    The Maximum amount of retention payments of the Loral Skynet
                  Retention Plan will not exceed $1 million.

      II.   SS/L Retention Plan. The SS/L Retention Plan as hereinafter set
            forth, be and the same hereby is, approved:

            A.    The SS/L Retention Plan is in lieu of annual bonuses under the
                  Management Incentive Plan for 2003 and will include 447
                  employees.

            B.    Each participating employee shall receive Retention Plan
                  payments equal to the greater of the employee's 2002
                  Management Incentive Bonus or 15% of the employee's 2003
                  annual base salary.

            C.    Retention Plan payments will be made as follows, provided the
                  employee is in the employment of SS/L on the payment date:

                        (i)   For the President of SS/L, 50% of the total
                              retention payment on March 1, 2004, and the
                              remaining 50% shall be paid upon a Triggering
                              Event for SS/L.

                        (ii)  For all other participants, 25% of the total
                              retention payment will be paid on December 1,
                              2003, 25% on March 1, 2004, 25% on July 1, 2004,
                              and the balance of 25% shall be paid upon the
                              occurrence of a Triggering Event for SS/L.

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            D.    The maximum amount of retention payments under the SS/L
                  Retention Plan will not exceed $11.5 million plus an
                  additional $1.5 million that may be disbursed in the
                  discretion of Loral and SS/L provided that Loral and SS/L will
                  give at least five business days' written notice to the
                  Creditors' Committee and the Agent of any proposed payment
                  from the discretionary fund that exceeds $65,000.00 to any
                  individual employee.

      III.  General Retention Plan Provisions.

            A.    A Triggering Event shall mean any of (i) the effective date of
                  a plan of reorganization, (ii) a liquidation, closure or
                  shutdown, or (iii) a sale of all or substantially all of the
                  capital stock or the assets (excluding the sale of assets to
                  Intelsat approved by the Court on October 24, 2003.)

            B.    Notwithstanding any requirement that an employee be employed
                  by Loral Skynet or SS/L on specified payment dates, if an
                  employee's employment is terminated as a result of death,
                  disability or termination without cause, or resignation for
                  good reason, if applicable, employee shall receive, to the
                  extent not already paid, a pro rata amount of such employee's
                  full retention payment based on employee's actual service from
                  September 1, 2003 through the applicable Triggering Event(s).
                  Any payment of a pro rata amount to an employee shall be paid
                  at the same time as payments are made pursuant to the payment
                  schedules set forth above.

      IV.   SS/L Enhanced Severance Arrangements. Certain SS/L employees who may
            be involuntarily terminated without cause will be eligible to
            receive enhanced severance payments as hereinafter set forth (such
            severance amounts being inclusive and in lieu of severance amounts
            payable under SS/L's existing severance policy).

            A.    Group 1 - 13 employees. These employees shall receive
                  severance payments equal to 100% of the employee's 2003 annual
                  base salary.

            B.    Group 2 - 37 employees. These employees shall receive
                  severance payments equal to 75% of the employee's 2003 annual
                  base salary.

            C.    Group 3 - 119 employees. These employees shall receive
                  severance payments equal to 50% of the employee's 2003 annual
                  base salary.

            D.    Group 4 - 278 employees. These employees shall receive
                  severance payments equal to 33% of the employee's 2003 annual
                  base salary.

            E.    Aggregate severance amounts in excess of the greater of (i)
                  50% of an employee's 2003 annual base salary or (ii) the
                  amount payable under SS/L's existing severance policy are
                  subject to mitigation. Any mitigation


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                  will be based on a dollar for dollar reduction for any salary
                  or similar cash compensation received from a subsequent
                  employer during the severance period. Severance payments, if
                  made, will be paid in a lump sum or, if subject to mitigation,
                  in the same manner as salaries are paid.

            F.    The potential cost of the Enhanced Severance Arrangements
                  shall not exceed $17.3 million (exclusive of severance payable
                  to both covered and noncovered employees under the existing
                  severance policy) based upon the current aggregate 2003 annual
                  salary amount.

      V.    The Debtors are authorized to execute, deliver, implement and to
            perform in accordance with any and all instruments and documents and
            to take any and all actions necessary or appropriate to effectuate
            the Skynet and SS/L portions of the Employee Retention Programs, as
            set forth above, including, without limitation, the payments
            approved by this order.

      VI.   Nothing contained in the Motion or in this order shall be deemed a
            request by the Debtor for approval to assume any executory contract
            pursuant to section 365 of the Bankruptcy Code.

      VII.  The approval of the Corporate Employee Retention Program and Change
            in Control Agreements as set forth in the Motion, is subject to
            further order of the Court and the hearing as to that aspect of the
            Motion is continued to December 18, 2003 at 10 o'clock in the
            morning of that day.

      VIII. The Court retains jurisdiction to interpret, implement, and enforce
            the terms and provisions of this Order.


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      IX.   The requirement pursuant to Rule 9013-1(b) of the Local Bankruptcy
            Rules for the Southern District of New York that the Debtors file a
            memorandum of law in support of the Motion hereby is waived.

Dated:   November 26, 2003
         New York, New York

                                                  /s/ Robert D. Drain
                                            ------------------------------------
                                            UNITED STATES BANKRUPTCY JUDGE
CONSENTED TO:

Akin, Gump, Strauss, Hauer & Feld, LLP
590 Madison Avenue
New York, New York  10022
(212) 872-1000
Attorneys for the Creditors' Committee


By:          /s/ David Botter
   ------------------------------------
         A Member of the Firm

Sonnenschein Nath & Rosenthal
1221 Avenue of the Americas
New York, New York  10020-1089
(212) 768-6700
Attorneys for Ad Hoc Committee of
  Preferred Shareholders of Loral Space
  & Communications, Ltd.


By:       /s/ John A. Bicks
   ------------------------------------
         A Member of the Firm

NO OBJECTION:

Davis Polk & Wardwell
450 Lexington Avenue
New York, New York  10017
(212) 450-4000 Attorneys for the Agent


By:      /s/ Marshall Huebner
   ------------------------------------
         A Member of the Firm


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