EXHIBIT 10.12


                                                                  Execution Copy


                      RESTATED DEFINITIVE AGREEMENT BETWEEN

          LORAL ORION, INC. (FORMERLY ORION NETWORK SYSTEMS, INC.) AND

                      THE REPUBLIC OF THE MARSHALL ISLANDS


     This  restated  agreement  is made  this  ____ day of  October,  1998  (the
"Effective  Date"),  by and between Loral Orion,  Inc., a Delaware  Corporation,
hereinafter  referred to as "LORAL  ORION" and formerly  known as Orion  Network
Systems,  Inc. ("ONS"),  and the Republic of the Marshall  Islands,  through the
Ministry of Transportation and  Communications,  hereinafter  referred to as the
"RMI."

                                   WITNESSETH

     WHEREAS,  the RMI and Asia Pacific Space and Communications,  Ltd. ("APSC")
entered  into a  Definitive  Agreement  dated  April 26,  1990 (the  "Definitive
Agreement");

     WHERAS, the RMI and APSC agreed to the assignment of all APSC rights to and
obligations  under the  Definitive  Agreement  to ONS along with  certain  other
modifications  to be restated  herein in a Restated  Amendment to the Definitive
Agreement dated May 25, 1997;

     WHEREAS, ONS was acquired in a merger by Loral Space & Communications, Ltd.
("Loral SC") on March 30, 1998 (the  "Merger") and as a result  thereof the name
of ONS was changed to Loral Orion, Inc.;

     WHEREAS, LORAL ORION is an international  communications company developing
a  satellite  communications  system to serve  significant  areas of the Pacific
Ocean Region, including coverage of the RMI;

     WHEREAS, the RMI is a sovereign nation located in the Central Pacific Ocean
Region;

     WHEREAS,  the RMI  desires  to enhance  and  expand its  telecommunications
capability and infrastructure;

     WHEREAS,  the parties  desire to do those things  necessary to enable LORAL
ORION to launch a satellite over the Pacific Ocean Region; and

     WHEREAS,  the RMI and LORAL ORION have reached  certain  understandings  in
principle and believe  there are mutual  benefits to be derived by restating the
Definitive  Agreement  with certain  modifications  as this Restated  Definitive
Agreement (along with the Appendices hereto, the "Agreement");


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     NOW THEREFORE, it is mutually agreed as follows:

1.   [ * ]

2.   [ * ]

3.   The parties  acknowledge that the RMI is a member of the ITU and understand
     that  matters  critical  to the  success  of the  Satellite  System  may be
     significantly affected by various actions of the ITU. [ * ]


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4.   The  parties  acknowledge  that the RMI  desires to enhance  and expand its
     communications capabilities and infrastructure. [ * ]





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5.   [ * ]


6.   [ *



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     ]

7.   The  parties  acknowledge  that the  provisions  substantially  in the form
     contained in paragraphs 4,5,6 &7 shall be set forth in a separate agreement
     between Loral Orion and NTA.  Performance of the terms of such agreement by
     Loral Orion shall  satisfy its  obligations  to the RMI with respect to the
     Deliverables.  However,  in the event that NTA  declines to enter into such
     agreement for any reason,  such event shall not be deemed a breach or cause
     for termination of this agreement.  In such case, the Minister of Transport
     & Communications of the RMI will become the recipient of the Deliverables.

8.   [ * ]

9.   Within  forty-five  (45) days  after  the  Effective  Date  (the  "Purchase
     Period"),  LORAL ORION shall  purchase or otherwise  procure such number of
     shares of common stock of Loral SC equal to [


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     ] Within  forty-five  (45) days [ * ], LORAL  ORION  shall  deliver the RMI
     Stock to the RMI. [ * ]


     In consideration of the foregoing, the Non-Qualified Stock Option Agreement
     between  LORAL ORION  (formerly  ONS) and the RMI,  dated  effective  as of
     December 10, 1996 [ * ] is hereby terminated without liability and shall be
     deemed null and void.

10.  [ * ]

11.  It is understood  that matters  affecting  the Satellite  System are highly
     confidential  and  proprietary.  The RMI agrees to take all  necessary  and
     reasonable  steps to limit the information  concerning the Satellite System
     to the fewest number of persons  possible within the RMI and to assure that
     such persons do not  communicate  matters  regarding LORAL ORION to others.
     Furthermore,  the existence of this Agreement or the  relationship  between
     the parties  hereto shall not be disclosed to any party except as necessary
     to carry out the purposes of this  Agreement  or as required by  applicable
     law.  Loral  Orion  acknowledges  that such  confidential  and  proprietary
     information  may be  disclosed  by the  RMI to the  extent  reasonable  and
     necessary to fulfill or satisfy any obligation  imposed by its constitution
     or laws or in the pursuit of a free and open Government.

12.  This  Agreement  shall become  effective  upon the Effective  Date continue
     until terminated under the terms and conditions of this Agreement.

13.  In the event either party is in default in the  performance of any material
     provision of this Agreement,  the nondefaulting party, upon written notice,
     may  terminate  this


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     Agreement;   provided,  however,  that  prior  to  such  termination,   the
     non-defaulting  party must notify the defaulting party, in writing,  of the
     specific  provision which has not been performed,  the conduct  required to
     complete  performance and cure the alleged  default,  and a request to cure
     the alleged default. Upon receipt of the notice specifying the default, the
     other party shall have 45 days to submit a written Response.  Said Response
     shall state either that there has been no failure to perform and no default
     has occurred and an explanation  thereof, or that the default will be cured
     and describing the actions it intends to take and a reasonable  schedule to
     complete these actions.  If the default continues after the expiration of a
     reasonable time to cure, as set forth in the Response,  the  non-defaulting
     party,  in addition to any other remedy at law or equity,  may then forward
     to the defaulting party a Notice of Termination

14.  Neither party to this Agreement  shall be in default because of its failure
     to perform or delay in  performance  caused by actions or failures of third
     parties,   acts  of  God,  acts  of  War,   natural   disasters,   acts  of
     subcontractors  beyond the  control of their  prime  contractor,  delays in
     shipment  of  goods,  or other  acts or  events  beyond  its  control  that
     materially  affect the  ability  of a party to perform  under the terms and
     conditions of this Agreement.

15.  Except as otherwise  provided herein,  this Agreement may not be terminated
     except by mutual agreement of the parties.

16.  [ * ]

17.  This  Agreement  constitutes  the entire  agreement  between the parties in
     connection  with the subject  matter of this  Agreement and may be altered,
     amended or replaced only by a duly executed  written  instrument.  No prior
     oral or written  understanding  or agreement  with respect to the terms and
     conditions  agreed  to  in  this  Agreement,   except  the  Confidentiality
     Agreement or as otherwise expressly  incorporated herein, shall be valid or
     enforceable.

18.  This Agreement may be altered or amended only by mutual agreement set forth
     in writing and properly executed by the respective parties hereto.

19.  This  Agreement  may be executed in two or more  counterparts,  which taken
     together constitute one single contract between the parties.


                            {signature page follows}


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     IN WITNESS  WHEREOF,  the parties have  executed  this  Agreement as of the
     Effective Date:


     Republic of the Marshall Islands         Loral Orion, Inc.

     -------------------------                ------------------------
     Kunio D. Lemari                          Richard H. Shay
     Minister of Transportation               Sr. Vice President, Law and Admin.
     P.O. Box 2                               2440 Research Boulevard
     Majuro, Marshall Islands                 Rockville, Maryland
     MH  96960                                USA 20850


     Approved as to form:                     Certified no current
                                              appropriation is required:

     --------------------                     --------------------
     Attorney General                         Secretary of Finance


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                                   APPENDIX I

           [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR APPENDIX I]








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                                   APPENDIX II

          [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR APPENDIX II]








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                                  APPENDIX III

          [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR APPENDIX III]










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