COMSAT CORPORATION

                       1995 KEY EMPLOYEE STOCK PLAN











          Adopted by the Board of Directors on January 20, 1995,
             and approved by the Shareholders on May 19, 1995






     Amendments adopted by the Board of Directors on February 16, 1996


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                            COMSAT CORPORATION
                       1995 KEY EMPLOYEE STOCK PLAN

     1.   Purpose.  The  purpose of this plan  ("Plan")  is to  promote  the
interests  of  COMSAT  Corporation  ("Corporation")  by  affording  its key
employees  an  incentive,  by  means  of  an  opportunity  to  acquire  the
Corporation's common stock without par value ("Common Stock"), to remain in
the employ of the  Corporation  and to exert their  maximum  efforts in its
behalf.

     2.   Administration.  The Plan shall be administered by the Committee on
Compensation  and  Management  Development  ("Committee")  of the  Board of
Directors  of the  Corporation  ("Board").  In  addition to its duties with
respect to the Plan stated  elsewhere in the Plan, the Committee shall have
full  authority,  consistently  with the Plan,  to interpret  the Plan,  to
promulgate such rules and regulations  with respect to the Plan as it deems
desirable and to make all other  determinations  necessary or desirable for
the   administration  of  the  Plan.  All  decisions,   determinations  and
interpretations of the Committee shall be binding upon all persons.

     3.   Shares  Subject  to the Plan.  The  aggregate  number of shares of
Common  Stock  which may be covered  by stock  options  ("Options"),  stock
appreciation  rights ("SARs"),  restricted stock units  ("Restricted  Stock
Units") and restricted  stock awards  ("Restricted  Stock Awards")  granted
pursuant  to the Plan is  5,000,000  shares,  subject to  adjustment  under
Section  11.  No 

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more than 1,665,000 of the shares may be covered by Restricted  Stock Units
and Restricted  Stock Awards.  Shares which may be delivered on exercise or
settlement of Options,  SARs,  Restricted  Stock Units or Restricted  Stock
Awards may be previously  issued shares  reacquired by the  Corporation  or
authorized but unissued  shares.  Shares covered by Restricted  Stock Units
and  Restricted  Stock  Awards  that are  forfeited  and shares  covered by
Options that expire  unexercised  (without having been surrendered upon the
exercise of SARs,  whether  settled in cash or Common Stock) shall again be
available  for grant  under the Plan.  Shares  tendered  in  payment of the
purchase price of shares purchased pursuant to the exercise of Options also
shall be available for grant under the Plan.  Any SAR or  Restricted  Stock
Unit, or any portion thereof, which is payable in cash shall not be counted
against the various share limits on grants set forth in this Section 3.

     4.   Eligibility.  The Committee shall from time to time in its
discretion select the employees to whom Options, SARs, Restricted Stock Units
and Restricted Stock Awards shall be granted ("Participants") from among the
key employees of the Corporation and its subsidiary corporations
("Subsidiaries").

     5.   Options.
          (a) The Committee  shall in its discretion  determine the time or
times  when  Options  shall be  granted  and the number of shares of Common
Stock to be subject to each Option. In the case of incentive stock options,
as defined in Section 422 of the Internal  Revenue Code of 1986, as amended
(the "Code"),  the 

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<PAGE>

aggregate  fair  market  value  (determined  as of the date the Options are
granted) of the stock with  respect to which such  Options are  exercisable
for the first time by any  Participant  during any calendar year (under all
stock  option  plans of the  Corporation  and its  Subsidiaries)  shall not
exceed $100,000,  or such other amount as may be provided by Section 422 of
the  Code.  Options  may be  granted  under  the  Plan  on such  terms  and
conditions as the Committee  considers  appropriate,  which may differ from
those provided in the Plan,  where such Options are granted in substitution
for stock  options held by employees of other  companies  who  concurrently
become  employees of the  Corporation  or a  Subsidiary  as the result of a
merger or consolidation  of the employing  company with, or the acquisition
of the property or stock of the employing  company by, the Corporation or a
Subsidiary.

          (b) Each  Option  shall be for such term as the  Committee  shall
determine,  but not more than 10 years from the date it is granted,  except
that the term of an Option other than an incentive  stock option may extend
up to 11 years from the date the Option is granted if the Participant  dies
within the 10th year following the date of grant.

          (c) The purchase  price for each share of Common Stock subject to
an Option  shall be no less than the fair market  value of the Common Stock
on the date the  Option  is  granted.  For  this  purpose  as well as other
purposes  under  the  Plan,  fair  market  value  shall be deemed to be the
average  of the  highest  and  lowest
 
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selling   prices  of  Common  Stock  as  reported   under  New  York  Stock
Exchange-Composite Transactions on the date on which the Option was granted
or, if there were no sales of Common  Stock on that date,  then on the next
preceding date on which there were sales.

          (d) Exercise of an Option shall be by written  notice in the form
and manner determined by the Committee.  Except as otherwise  determined by
the  Committee,  no Option may be exercised to any extent before six months
from the date of grant.  The Committee in its  discretion may (1) determine
installment exercise terms for an Option under which it may be exercised in
a series of  cumulative  installments,  (2)  prescribe  rules  limiting the
frequency  of exercise of Options or the minimum  number of shares that may
be  exercised  at any one time,  (3)  determine  the form of  consideration
(including cash,  shares of Common Stock or any combination  thereof) which
may be  accepted  in  payment  of the  purchase  price of shares  purchased
pursuant to the exercise of an Option,  and (4) prescribe  such other rules
or conditions as it considers appropriate regarding the exercise of Options
granted under the Plan.

          (e) In the  case of  incentive  stock  options,  the  instruments
evidencing  such Options  shall  provide that if, within two years from the
date of grant of the Option or within one year after the transfer of shares
of  Common  Stock  to  the  Participant  on  exercise  of the  Option,  the
Participant  makes a disposition (as defined in Section 424(c) of the Code)
of any  shares of such  Common  Stock,  the  Participant  shall  notify the
Corporation  of 

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such  disposition in the manner and within the time as the Committee in its
discretion  shall  determine.  The  Committee  may  direct  that  a  legend
restricting transfer in the absence of appropriate  notification be affixed
to any stock certificates  representing  Common Stock transferred under the
Plan.

          (f) Each Option shall be evidenced by a written  instrument which
shall state such terms and conditions which are not  inconsistent  with the
provisions  of the  Plan as the  Committee  in its  sole  discretion  shall
determine  and  approve,  including  terms  and  conditions  regarding  the
exercise of Options upon termination of employment.

     6.   Stock  Appreciation  Rights.  The  Committee  may from time to time
grant SARs,  which may be  freestanding  SARs or SARs related to Options or
portions of Options granted to Participants  under the Plan. Each SAR shall
be evidenced by a written instrument and shall be subject to such terms and
conditions as the Committee may determine,  including  terms and conditions
regarding the exercise price for each share of Common Stock subject to such
SAR,  provided  that in the case of an SAR  related to an Option or portion
thereof,  such terms and  conditions may not be less  restrictive  than the
terms and conditions of the related Option. The Participant may exercise an
SAR or portion thereof,  and thereupon shall be entitled to receive payment
of an amount  equal to the  aggregate  appreciation  in value of the shares
covered  by the  SAR or  portion  thereof  exercised,  as  measured  by the
difference  between the exercise price of such shares and 

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<PAGE>

their fair market value on the date of  exercise.  Such payment may be made
in cash,  in shares of Common  Stock  valued at fair market value as of the
date of exercise,  or in any combination  thereof,  as the Committee in its
discretion  shall  determine.  Upon the  exercise  of an SAR  related to an
Option or portion  thereof,  the  Participant  shall surrender the right to
exercise the related Option or portion thereof.

     7.   Restricted Stock Units.

          (a) The  Committee  may from  time to time,  and  subject  to the
provisions of the Plan and such other terms and conditions as the Committee
may determine,  grant  Restricted Stock Units under the Plan. Each grant of
Restricted  Stock Units shall be  evidenced by a written  instrument  which
shall state the number of  Restricted  Stock Units covered by the grant and
the terms and conditions  which the Committee  shall have  determined  with
respect to such grant.  Each  Restricted  Stock Unit shall be equivalent in
value to a share of Common Stock.

          (b) Vesting of each grant of Restricted Stock Units shall require
the  Participant  to  remain  in the  employment  of the  Corporation  or a
Subsidiary for a prescribed period  ("Restriction  Period").  The Committee
shall determine the Restriction  Period or Periods which shall apply to the
shares of Common  Stock  covered by each grant of  Restricted  Stock Units,
provided  that in no case  shall  the  Restriction  Period be less than one
year. Except as otherwise determined by the Committee, all Restricted Stock
Units  granted  to a  Participant  under  the  Plan  shall
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<PAGE>

terminate  upon  termination  of  the  Participant's  employment  with  the
Corporation or any of its  Subsidiaries  before the end of the  Restriction
Period or Periods  applicable to such Restricted  Stock Units,  and in such
event the  Participant  shall not be entitled  to receive any payment  with
respect to those  Restricted  Stock Units,  except as provided in paragraph
(d).

          (c)  Upon  expiration  of  the  Restriction   Period  or  Periods
applicable to each grant of Restricted Stock Units, the Participant  shall,
without  payment on his part,  be entitled to receive  payment in an amount
equal to the  aggregate  fair  market  value of the shares of Common  Stock
covered by such grant on the date of  expiration.  Such payment may be made
in cash, in shares of Common Stock equal to the number of Restricted  Stock
Units with  respect to which such  payment is made,  or in any  combination
thereof, as the Committee in its discretion shall determine.

          (d)  A  Participant   whose   Restricted  Stock  Units  have  not
previously  terminated  shall be entitled  to receive  payment in an amount
equal  to each  cash  dividend  the  Corporation  would  have  paid to such
Participant  during  the term of  those  Restricted  Stock  Units as if the
Participant  had been the  owner of record  of the  shares of Common  Stock
covered by such  Restricted  Stock Units on the record date for the payment
of such dividend. Payment of each such dividend equivalent shall be made on
the payment date of the cash  dividend with respect to which it is made, or
as soon as practicable thereafter.
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     8.   Restricted Stock Awards.
          -----------------------

          (a) The  Committee  may from  time to time,  and  subject  to the
provisions of the Plan and such other terms and conditions as the Committee
may  determine,   grant  Restricted  Stock  Awards  under  the  Plan.  Each
Restricted  Stock Award shall be  evidenced by a written  instrument  which
shall state the number of shares of Common  Stock  covered by the award and
the terms and conditions  which the Committee  shall have  determined  with
respect to such award.  Upon the grant of each  Restricted  Stock Award,  a
certificate  representing  the shares of Common Stock  covered by the award
shall be registered in the name of the  Participant  and shall be delivered
to the  Participant  without  payment on his part.  The  Participant  shall
generally   have  the  rights  and  privileges  of  a  shareholder  of  the
Corporation with respect to such shares, including the right to vote and to
receive dividends,  subject to the restrictions specified in paragraphs (b)
and (c).

          (b) The Committee shall  determine a period of time  ("Limitation
Period")  which shall apply to the shares of Common Stock  transferred to a
Participant with respect to each Restricted  Stock Award,  provided that in
no event  shall the  Limitation  Period  be less  than one year.  Except as
otherwise  determined  by  the  Committee,  during  the  Limitation  Period
applicable with respect to each Restricted Stock Award, the Participant may
not sell, transfer,  assign, pledge or otherwise encumber or dispose of the
shares  of  Common  Stock  covered  by such 

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<PAGE>

Restricted  Stock Award.  The  Committee in its  discretion  may  prescribe
conditions for the incremental lapse of the preceding  restrictions  during
the  Limitation   Period,   and  for  the  lapse  or  termination  of  such
restrictions upon the occurrence of certain events before the expiration of
the Limitation  Period. The Committee in its discretion also may shorten or
terminate the  Limitation  Period or waive any  conditions for the lapse or
termination of the  restrictions  with respect to all or any portion of the
shares  of  Common  Stock  covered  by  the  Restricted  Stock  Award.  The
certificate  representing  the  shares of  Common  Stock  distributed  with
respect to each Restricted Stock Award made under the Plan shall be affixed
with a legend setting forth the restrictions  applicable to the transfer of
such shares. The restrictions  applicable to a Restricted Stock Award shall
lapse and a  certificate  for the  number of  shares of Common  Stock  with
respect to which the  restrictions  have lapsed  shall be  delivered to the
Participant  free  of  all  such  restrictions  upon  the  earliest  of the
following:  (1) the expiration of the Limitation  Period  applicable to the
Restricted  Stock Award,  (2) the occurrence of an event  prescribed by the
Committee which results in the lapse of the restrictions, or (3) such other
time as the Committee may determine.

          (c) The  shares of Common  Stock  covered by a  Restricted  Stock
Award  shall  be  forfeited  by the  Participant  upon  termination  of the
Participant's  employment with the  Corporation or any of its  subsidiaries
before the  occurrence of any of the

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events  described in the last  sentence of paragraph  (b). The  Participant
shall  thereupon  immediately  transfer the shares back to the  Corporation
without payment by the Corporation.

     9.   Performance-Based Awards.
          ------------------------

          (a)  Notwithstanding  the  provisions  of  Sections  7 and 8, the
Committee in its discretion may determine  that  Restricted  Stock Units or
Restricted  Stock Awards shall be subject to performance  goals in addition
to the  provisions  of Sections 7 and 8. The terms and  conditions  of such
performance  goals shall be  determined  by the  Committee  pursuant to the
provisions of this Section 9 and shall be stated in the written  instrument
evidencing the Restricted  Stock Unit or Restricted  Stock Award grant.  No
more than 50,000 shares of Common Stock may be covered by performance-based
Restricted   Stock  Units  or  Restricted   Stock  Awards  granted  to  any
Participant in any given year.

          (b) The Committee shall determine a period of time  ("Performance
Period")  which shall apply to the shares of Common  Stock  covered by each
grant of  performance-based  Restricted  Stock  Units or  Restricted  Stock
Awards, provided that in no event shall the Performance Period be less than
one year.  The  Committee  shall  determine  the  performance  measures and
specific   targets   applicable   thereto  which  shall  apply  during  the
Performance  Period. The performance  measures shall include one or more of
the following:  improvements in revenues, earnings per share, profit before
taxes,  price/equity  ratio,  net  income or  operating  income;  return on
shareholder  equity;  return on net assets;

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or stock price performance.  If the Committee shall establish more than one
performance   measure,   the  Committee  shall  determine  the  appropriate
weighting for each performance  measure. The Committee also shall determine
whether the target established for each applicable  performance  measure is
subject to full or partial satisfaction.

          (c) In the case of a Restricted  Stock Unit grant  subject to the
provisions of this Section 9, the Committee may determine that the dividend
equivalents  otherwise  payable to a  Participant  during  the  Performance
Period shall instead be accrued and paid to the  Participant  at the end of
the  Performance  Period  to the  extent  that the  applicable  performance
measures have been achieved.

          (d) At the end of the Performance Period applicable to each grant
of  Restricted  Stock  Units or  Restricted  Stock  Awards  subject  to the
provisions  of this  Section 9, the  Committee  shall  certify  whether the
applicable  performance  measures have been achieved.  The shares of Common
Stock  covered by the  Restricted  Stock Units or  Restricted  Stock Awards
shall be forfeited  by the  Participant  to the extent that the  applicable
performance  measures have not been  achieved.  In the case of a Restricted
Stock Award,  the  Participant  shall  thereupon  immediately  transfer the
forfeited   shares  back  to  the   Corporation   without  payment  by  the
Corporation.

          (e)  Except  as  otherwise  provided  in  this  Section  9,  each
Restricted  Stock  Unit or  Restricted  Stock  Award  grant

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subject  to the  provisions  of this  Section  9 shall be  governed  by the
provisions of Section 7 or 8, whichever is applicable.  The Committee shall
administer  this Section 9 and the other  provisions  of the Plan in such a
manner as to comply with the requirements of Section 162(m) of the Code.

     10.  Change in Control.
          -----------------

          (a)  Notwithstanding  any other provision of this Plan,  Options,
SARs,  Restricted Stock Units and Restricted Stock Awards granted under the
Plan shall immediately  become  exercisable or vested, as applicable,  upon
the  occurrence of a "Change in Control" of the  Corporation  as defined in
paragraph (b).

          (b) For  purposes  of this  Plan,  a "Change in  Control"  of the
Corporation  shall be deemed to have occurred upon the happening of any one
of the following events:

               (i) the  acquisition  by any  individual,  entity  or  group
          (within  the  meaning of  Sections  13(d)(3)  or  14(d)(2) of the
          Securities Exchange Act of 1934, as amended (the "Exchange Act"))
          of  beneficial  ownership  (within  the  meaning  of  Rule  13d-3
          promulgated  under the Exchange  Act) of fifty  percent  (50%) or
          more of the combined voting power of the then outstanding  voting
          securities  of  the  Corporation;  provided,  however,  that  the
          following  acquisitions  shall not constitute a Change in Control
          for purposes of this  definition:  (A) any acquisitions of voting
          securities  of the  Corporation  by the  Corporation,  or (B) any
          acquisitions

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          of voting  securities of the Corporation by any employee  benefit
          or stock  ownership plan or related trust sponsored or maintained
          by the Corporation for the benefit of its employees;

               (ii) any  change in the  composition  of the Board such that
          the individuals who, as of May 17, 1996, constitute those members
          of the Board who have been  elected  by the  shareholders  of the
          Corporation  in accordance  with the provisions of Section 303(a)
          of the  Communications  Satellite  Act of 1962,  as amended  (the
          "Incumbent  Directors"),  cease for any  reason to  constitute  a
          majority of the Board at any time;  provided,  however,  that any
          individual  becoming  a  director  subsequent  to such date whose
          election,  or nomination for election,  was approved by a vote of
          at least  three-fourths  (3/4) of the  then  Incumbent  Directors
          shall be considered as though such  individual  were an Incumbent
          Director;

               (iii) approval by the  shareholders  of the Corporation of a
          merger, share exchange, swap, consolidation,  recapitalization or
          other  business  combination  involving any other  corporation or
          entity (a "Transaction"), the effect of which would result in the
          combined voting  securities of the Corporation  immediately prior
          to the effectiveness of such Transaction  continuing to represent
          less than sixty

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          percent  (60%)  of  the  combined  voting  power  of  the  voting
          securities of the Corporation,  or of any surviving entity of, or
          parent entity following,  the Transaction,  immediately after the
          effectiveness of the Transaction;

               (iv) approval by the  shareholders of the Corporation of (A)
          a complete liquidation or dissolution of the Corporation,  or (B)
          the  sale  or   disposition   by  the   Corporation   of  all  or
          substantially  all of its assets other than to a  corporation  or
          entity  with  respect  to  which  following  such  sale or  other
          disposition  more than eighty  percent (80%) of the then combined
          voting  power of the voting  securities  of such  corporation  or
          entity  is,  immediately  following  such  sale  or  disposition,
          beneficially  owned (within the meaning of Rule 13d-3 promulgated
          under  the  Exchange  Act)  by  all or  substantially  all of the
          individuals  and entities who were the  beneficial  owners of the
          voting  securities of the Corporation upon or immediately  before
          such  approval;  or 

               (v) any event  that  would be  required  to be  reported  in
          response to Item 6(e) or any successor thereto of Schedule 14A of
          Regulation  14A  promulgated  under the Exchange  Act;

provided, however, that none of the events described in clauses (i) through
(v) shall be deemed to  constitute  a Change in  Control  if,  prior to the

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occurrence  of such  event,  the  Board  adopts a  resolution  specifically
providing  that the event  shall not be  deemed to  constitute  a Change in
Control for purposes of the Plan.

     11. Adjustment Upon Changes in Capitalization. If there is a change in
the  number or kind of  outstanding  shares of the  Corporation's  stock by
reason  of  a  stock  dividend,  stock  split,  recapitalization,   merger,
consolidation,  combination  or  other  similar  event,  or if  there  is a
distribution to shareholders of the Corporation's Common Stock other than a
cash dividend,  appropriate  adjustments  shall be made by the Committee to
the number and kind of shares  subject to the Plan;  the number and kind of
shares under Options,  SARs,  Restricted  Stock Units and Restricted  Stock
Awards  then  outstanding;  the  maximum  number  of shares  available  for
Options,  SARs,  Restricted  Stock Units and Restricted  Stock Awards;  the
purchase  price for shares of Common  Stock  covered by Options;  and other
relevant  provisions,  to the  extent  that  the  Committee,  in  its  sole
discretion, determines that such change makes such adjustments necessary or
equitable.  Similar  adjustments  may also be made by the  Committee in its
discretion if substitute  Options are granted pursuant to Section 5(a). 

     12.  Nontransferability.  Options,  SARs,  Restricted  Stock Units and
Restricted  Stock  Awards  shall  be  assignable  and  transferable  by the
Participant only to the extent permitted by applicable rules promulgated by
the Securities and Exchange

                                    15

<PAGE>

Commission or, in the case of incentive  stock  options,  by Section 422 of
the Code.  During the Participant's  lifetime,  Options,  SARs,  Restricted
Stock Units and  Restricted  Stock Awards shall only be  exercisable  by or
payable  to  the  Participant  or  his  or  her  guardian.

     13.  Laws and Regulations. The Plan, the grant and exercise of Options,
SARs,   Restricted  Stock  Units  and  Restricted  Stock  Awards,  and  the
obligation  of the  Corporation  to sell or deliver  shares of Common Stock
under the Plan shall be subject to all  applicable  laws,  regulations  and
rules. 

     14.  No  Employment  Rights.  Nothing in the Plan shall confer upon any
employee  of  the  Corporation  or a  Subsidiary  any  right  to  continued
employment,  or interfere with the right of the Corporation or a Subsidiary
to terminate his or her  employment at any time.

     15.  Tax  Withholding.  Any payment to or settlement with a Participant
in cash or Common  Stock  pursuant  to any  provision  of the Plan shall be
subject to withholding of income tax, FICA tax or other taxes to the extent
the Corporation or a Subsidiary is required to make such  withholding.  

     16.  Termination;  Amendments.
          ------------------------

          (a) The Board may at any time terminate the Plan. Unless the Plan
shall  previously  have been terminated by the Board, it shall terminate on
May 19, 2000. No Option,  SAR,  Restricted  Stock Unit or Restricted  Stock
Award may be granted after such termination.

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<PAGE>

          (b) The  Board  may at any time or times  amend the Plan or amend
any outstanding Options,  SARs,  Restricted Stock Units or Restricted Stock
Awards for the purpose of  satisfying  the  requirements  of any changes in
applicable  laws or  regulations or for any other purpose which at the time
may be permitted  by law,  provided  that no  amendment of any  outstanding
Options,  SARs,  Restricted  Stock Units or  Restricted  Stock Awards shall
contain terms or conditions inconsistent with the provisions of the Plan as
determined by the Committee.

          (c) Except as provided in Section  11, no such  amendment  shall,
without the approval of the shareholders of the  Corporation:  (i) increase
the  maximum  number of shares of  Common  Stock for which  Options,  SARs,
Restricted  Stock Units or Restricted Stock Awards may be granted under the
Plan; (ii) except to the extent required or permitted under Section 5(a) in
the case of  substitute  Options,  reduce the price at which Options may be
granted  below the price  provided  for in Section  5(c);  (iii) reduce the
Option price of  outstanding  Options;  (iv) extend the period during which
Options,  SARs,  Restricted  Stock Units or Restricted  Stock Awards may be
granted;  (v) except to the extent permitted or required under Section 5(a)
in the case of  substitute  Options,  extend  the  period  during  which an
outstanding  Option may be exercised beyond the maximum period provided for
in Section  5(b);  (vi)  materially  increase in any other way the benefits
accruing to Participants;  or (vii) change the class of persons eligible to
be  Participants.

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     17.  Effective Date. The Plan shall become  effective upon approval by
the  Board;  provided,  however,  that the Plan shall be  submitted  to the
shareholders of the  Corporation  for approval,  and if not approved by the
shareholders  within one year from the date of  approval by the Board shall
be of no force  and  effect.  Options,  SARs,  Restricted  Stock  Units and
Restricted  Stock Awards  granted by the Committee  before  approval of the
Plan by the  shareholders  shall be granted  subject to such  approval  and
shall not be exercisable or payable before such approval.

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