EX-10.4






GENERAL RELEASE AND SEPARATION AGREEMENT




This General Release and Separation Agreement (the “Agreement”) is made by and between Loral Space
& Communications Inc. (“Loral” or the “Company”) and Eric J. Zahler (the “Employee”). This
Agreement is made in light of the following facts:



A. The Company terminated Employee’s employment without cause effective as of November 30, 2007,
and Employee’s last day of employment with the Company (including his position as President and
Chief Operating Officer and his position as a director and officer of certain of the Company’s
subsidiaries and affiliates) was November 30, 2007.



B. Employee and the Company hereby seek to obtain a full and final resolution of any and all
claims and potential claims of Employee, known and unknown, related to Employee’s employment with
the Company and the termination of that employment.



C. Nothing contained in this Agreement, nor the payment of any consideration, shall be taken or
construed to be an admission or concession of any kind by the Company that it has been
accused of or engaged in any wrongdoing, and the Company expressly denies any liability or
wrongdoing in its treatment of Employee.



In consideration of the terms and conditions contained herein, the parties agree as follows:



1. Employee’s last day of employment with the Company (including his position as President and
Chief Operating Officer and his position as a director and officer of certain of the Company’s
subsidiaries and affiliates) was November 30, 2007. Separate and apart from any consideration
received under this Agreement, Employee will be paid all wages earned through his termination date,
less any outstanding advances or monies owed to the Company. Employee has used all accrued
vacation time and, as of November 30, 2007, will not be entitled to any compensation for accrued
but unused vacation time. Provided Employee has executed and delivered this Agreement to the
Company, and the seven-day revocation period set forth in Section 8 hereof (the “Revocation
Period”) has expired without Employee’s revocation of this Agreement in whole or in part, Employee
will be entitled to receive the following benefits, provided, however, that if
Employee fails to execute and deliver this Agreement to the Company prior to the 46th day after the
date on which this Agreement was delivered to him or revokes this Agreement in whole or in part
prior to the end of the Revocation Period, all benefits and payments hereunder shall be forfeited:



(a) Employee will be entitled to receive a severance payment equal to $1,667,500.00, less
appropriate federal and state withholding, which payment will be payable to Employee in a lump sum
as soon as practicable following the date on which Employee signs this Agreement, but in no event
prior to the end of the Revocation Period, provided Employee has not revoked this Agreement in
whole or in part. This lump sum payment is not subject to mitigation. This lump sum payment shall
be a separately identified amount under Treasury Regulation Section 1.409A-2(b)(2) that is required
to be paid on or before the 15th day of the third month following Employee’s taxable year in which
the right to such payment is no longer subject to a substantial risk of forfeiture and as such
shall qualify as a “short-term deferral” under Treasury Regulation Section 1.409A-1(b)(4) and
exempt from Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”).



(b) When the Management Incentive Bonus (“MIB”) determinations are made for fiscal year 2007
(which determinations are in the sole discretion of the Company), if MIB payments are awarded to
comparable eligible corporate officers, Employee will receive a bonus payment in accordance with
the MIB plan. Employee’s target bonus payment (at the 100% payout level) had he been employed for
a full year would have been $499,200 (representing 40% of Base Salary). Employee’s target bonus
with respect to the services actually rendered during fiscal year 2007 is $457,600 (representing a
target bonus for the full year (at the 100% payout level) of $499,200 pro rated for eleven months
of employment); provided, however, that any such MIB payment shall be paid to Employee in a lump
sum on or before March 15, 2008. Such lump sum is not subject to mitigation. Such lump sum MIB
payment shall be a separately identified amount under Treasury Regulation Section 1.409A-2(b)(2)
that is required to be paid on or before the 15th day of the third month following Employee’s
taxable year in which the right to such payment is no longer subject to a substantial risk of
forfeiture and as such shall qualify as a “short-term deferral” under Treasury Regulation Section
1.409A-1(b)(4) and exempt from Section 409A.



(c) Employee may continue medical prescription, dental and vision coverage through one of the
following two alternatives:



(1) Employee may elect to participate in the Loral Retiree Medical Plan if he elects to begin
receiving benefits from the Retirement Plan of Space Systems/Loral, Inc. (the “SS/L Retirement
Plan”). Employee shall remain eligible to participate in the Loral Retiree Medical Plan for so
long as Employee is covered under other medical insurance coverage (e.g., COBRA continuation or
coverage provided by other employment). Employee shall cease being eligible to participate in the
Loral Retiree Medical Plan if at any time his medical coverage lapses and he is not covered by
medical insurance. Employee shall make contributions toward the cost of his medical insurance in
accordance with the Loral Retiree Medical Plan, provided, however, that, if Employee elects to
participate in the Loral Retiree Medical Plan after expiration of COBRA continuation coverage,
during the period commencing on expiration of COBRA continuation coverage through the end of the
Company Subsidy Period (as defined below), Employee’s retiree medical insurance premiums will be
subsidized by the Company as follows: Employee shall contribute to the premium at the same rate as
corporate employees of the Company contribute to the Company’s medical, prescription, dental and
vision insurance programs during the relevant period and the Company shall pay the remainder of the
premium; provided, however, if during the Company Subsidy Period Employee obtains employment that
offers medical, prescription, dental or vision insurance coverage, the Company’s subsidy shall end
when Employee becomes eligible for and an active participant under such new coverage. Employee’s
contributions will be deducted from Employee’s monthly retirement benefit payment from the SS/L
Retirement Plan. Employee’s participation in the Medical Executive Reimbursement Program (“MERP”)
shall end at December 31, 2007.



(2) Employee may elect COBRA continuation coverage (generally 18 months) of medical,
prescription, dental and vision insurance. During the period from termination through November 30,
2009 (the “Company Subsidy Period”) or the end of the COBRA continuation period if earlier,
Employee’s COBRA insurance premiums will be subsidized by the Company as follows: Employee shall
contribute to the premium at the same rate as corporate employees of the Company contribute to the
Company’s medical, prescription, dental and vision insurance programs during the relevant period
and the Company shall pay the remainder of the premium; provided, however, if during the Company
Subsidy Period Employee obtains employment that offers medical, prescription, dental or vision
insurance coverage, the Company’s subsidy shall end when Employee becomes eligible for and an
active participant under such new coverage. To the extent that Employee declines any such new
coverage, Employee may continue COBRA coverage but will be responsible for the full COBRA premium.
After the Company Subsidy Period, Employee may continue insurance coverage under COBRA at the full
cost (102% of total cost) for the remainder of the COBRA continuation period (generally 18 months).
If Employee elects COBRA coverage, payments for the period from January 1, 2008 through the end of
the Company Subsidiy Period will be deducted on a pre-tax basis from Employee’s lump sum severance
payment referenced in Section 1(a) hereof; provided, however, if during the Company Subsidy Period
Employee obtains employment that offers medical, prescription, dental or vision insurance coverage
and Employee becomes eligible for and an active participant under such new coverage and
discontinues his COBRA coverage, then the Company shall reimburse Employee for amounts deducted
with respect to that portion of the Company Subsidy Period during which he is covered by his new
coverage and no longer covered by the COBRA continuation coverage. Employee shall continue to
participate in the MERP, at no cost, through the end of the year in which the Company Subsidy
Period ends.



With respect to either option (1) or (2) above, Employee must submit or arrange for the submission
of all reimbursement requests no later than 180 days following the date such expenses are incurred,
and the Company shall arrange for reimbursement of all such allowable expenses no later than the
end of Employee’s taxable year following the taxable year in which such expenses are incurred.



Employee’s group life and disability insurance shall cease on his termination date. Retiree life
and death benefits will commence in accordance of the Loral Retiree Life and Death program.
Employee’s executive life insurance benefits shall continue, and, therefore, the Company shall pay
premiums with respect to Employee’s executive life insurance policies, through the end of the
Company Subsidy Period as follows: (i) with respect to Employee’s John Hancock policy
(#9248229—Initial Insured Amount $500,000), the Company shall pay $5,316 on October 10, 2008 and
October 10, 2009 or, in each case, as soon as practicable thereafter; and (ii) with respect to
Employee’s Reliastar policy (#2024474D—Initial Insured Amount $1,000,000), the Company shall pay
$16,430 on May 9, 2008 and May 9, 2009 or, in each case, as soon as practicable thereafter,
provided, however, if during the Company Subsidy Period Employee obtains employment that offers
comparable executive life insurance benefits, Employee’s executive life insurance benefits shall
end when Employee becomes eligible for such benefits. Employee shall be responsible for payment of
all applicable payroll taxes with respect to premiums paid by the Company. After the Company
Subsidy Period, Employee may elect to continue his executive life insurance policies but shall be
responsible for payment of all premiums with respect thereto.



(d) All payments and benefits under this paragraph 1 are subject to and contingent upon Employee’s
continued compliance with the terms of this Agreement, including, without limitation, paragraphs 3,
5, 6 and 7 below. If Employee violates any of the terms of this Agreement, the Company is entitled
to immediately terminate all payments under this Agreement and to recover all previously made
payments under this Agreement, in addition to any and all other remedies available to it.



2. Pursuant to a Non-Qualified Stock Option Agreement dated December 21, 2005 (the “Option
Agreement”) under the Loral Space & Communications Inc. 2005 Stock Incentive Plan (as amended and
restated as of April 16, 2007, the “Option Plan”), Employee has been granted options to purchase
120,000 shares of Loral common stock with an exercise price of $28.441 (the “Options”) and a
corresponding Deferred Compensation Account (the “Deferred Compensation Account”). In accordance
with the terms of the Option Agreement, the Option Plan and resolutions of the Company’s
Compensation Committee thereunder, (i) all 120,000 Options are vested as of November 30, 2007 and
shall remain exercisable until November 30, 2009; and (ii) the Deferred Compensation Account in an
amount equal to $1,132,920.00 is vested as of November 30, 2007 and will be paid (with interest as
set forth below) to Employee on or after June 1, 2008, in each case, in accordance with and subject
to all terms and conditions of the Option Agreement and the Option Plan, all of which remain in
full force and effect. Notwithstanding any provisions to the contrary in the Option Agreement or
Option Plan, as of the date of termination of Employee’s employment, the Deferred Compensation
Account shall cease to be linked to the value of Loral’s common stock and shall automatically be
converted into an interest-bearing account from such date through the date of distribution. Once
converted, the amounts credited to this interest bearing Deferred Compensation Account shall earn
interest as set forth in Section 2(c) of the Option Agreement.



3. Employee hereby waives and releases any and all claims and potential claims, known and unknown,
he has against the Company, parent companies, related corporations, subsidiaries, affiliates and
their officers, directors, employees or agents, relating to or arising out of, his employment with
the Company and the termination of his employment, including, without limitation, claims as to tax
consequences to Employee of any payments hereunder. This waiver and release applies to all claims
relating to Employee’s employment, including, but not limited to, claims arising under the New York
State Executive Law or the New York City Civil Rights Law, any statutory, contract or tort claims,
claims arising under Title VII of the Civil Rights Act, the Americans with Disabilities Act, the
Age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act of 1990 and
the Fair Labor Standards Act. In addition, Employee waives any right to initiate or otherwise
voluntarily participate in any shareholders’ derivative action with respect to the Company and its
majority-owned subsidiaries by reason of any act or omission that occurred prior to November 30,
2008, including without limitation, being named plaintiff in or causing to be filed on Employee’s
behalf or as a class action any such derivative action; provided, however, Employee may file a
claim and receive a share of any proceeds as a member of a class in any shareholders’ derivative
class action initiated by any other person.



4. This waiver and release does not apply to any claim that Employee may have under the Employee
Retirement Income Security Act of 1974, as amended, including, but not limited to, claims relating
to the Company’s 401(k) plan, pension plan or supplemental executive retirement plan, or to any
claim Employee may have for unemployment benefits or workers’ compensation benefits. This waiver
and release does not apply to any claims not covered herein that arise after the date this
Agreement is executed by employee and delivered to the Company, nor does this waiver and release
limit Employee’s ability to enforce the terms of this Agreement. For the avoidance of doubt, this
waiver and release does not apply to any claim for indemnification that Employee may have under the
Indemnification Agreement dated as of November 21, 2005 among the Company, Loral Skynet
Corporation, Space Systems/Loral, Inc. and Employee or otherwise.



5. Employee acknowledges and agrees that the Company may disclose this Agreement and its terms and
conditions in its public disclosures. Employee shall not disclose the nature or terms of this
Agreement or the negotiations that led to this Agreement to any person or entity, other than
Employee’s spouse, tax advisors and legal counsel, without the written consent of the Company,
unless required to do so by law, provided, however, that this restriction shall not apply after and
to the extent of the Company’s public disclosures.



6. Employee agrees to refrain from making any disparaging, negative or uncomplimentary statements
regarding the Company, any related companies and/or any officers or employees of the Company or
related companies. For the avoidance of doubt, nothing herein shall prohibit or restrict Employee
from testifying truthfully under oath in depositions or trials. In addition, Employee will not
make use of or disclose in any way, confidential, proprietary or trade secret information belonging
to the Company or its affiliated or related companies.



7. During the period commencing on the date of his termination and ending on November 30, 2008,
Employee agrees not to solicit for employment any of the employees of the Company or any of its
subsidiaries or affiliates.



8. Employee acknowledges that he has been advised to consult an attorney prior to executing this
Agreement. Employee has 45 days within which to decide whether he will execute this Agreement,
although Employee may sign the Agreement before the 45 days expire. Following his signature of the
Agreement, Employee has seven days to revoke his signature of the Agreement. Any revocation must
be in writing and personally delivered to Avi Katz before expiration of the seventh day following
Employee’s signature of the Agreement.



9. Pursuant to the Older Workers Benefit Protection Act, the Company discloses the information
contained in Exhibit A.



10. This Agreement, the Option Agreement and the Option Plan represent the entire agreement of the
parties relating to the termination of Employee’s employment with Company and his Options and
Deferred Compensation Account and replaces any prior negotiations or agreements between the parties
whether oral or written. If any term, condition or section of this Agreement, except for paragraph
3, is determined to be invalid or unenforceable, such invalidity and unenforceability shall not
affect the remaining terms, conditions or section hereof, which shall continue in full force and
effect.



11. This Agreement shall be governed and construed in accordance with the laws of the State of New
York, regardless of the laws that might otherwise govern under applicable principles of conflicts
of law. Employee hereby irrevocably submits himself to the exclusive jurisdiction of the courts of
the State of New York and any federal courts located therein, for the purpose of any suit, action
or other proceeding arising out of, or relating to, this Agreement or the subject matter hereof,
and hereby waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any
such suit, action or proceeding, any claim that he is not personally subject to the jurisdiction of
the above-named courts for any reason whatsoever, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is improper. In
addition, Employee hereby irrevocably waives and agrees not to assert any right to trial by jury
with regard to any suit, action or other proceeding arising out of, or relating to, this Agreement
or the subject matter of this Agreement.



12. Employee acknowledges that he has had an opportunity to discuss this Agreement with his
counsel or other advisors and that he understands this Agreement and signs it voluntarily.



	 	 	 
	Dated: January 11, 2008

	 	/s/ Michael B. Targoff

Michael B. Targoff

Chief Executive Officer

Loral Space & Communications Inc.
	Dated: January 11, 2008

	 	/s/ Eric J. Zahler

Eric J. Zahler