EXHIBIT 10.17


CONFIDENTIAL  TREATMENT HAS BEEN  REQUESTED FOR PORTIONS OF THIS  DOCUMENT.  THE
CONFIDENTIAL   PORTIONS  HAVE  BEEN  REDACTED  AND  FILED  SEPARATELY  WITH  THE
COMMISSION.

The portions of this Exhibit for which confidential treatment has been requested
are marked by bracket ([ ]). In addition, an asterisk ( * ) appears in the right
hand margin of each paragraph in which confidential treatment is included.


                           ORION-Z SPACECRAFT PURCHASE

                                    CONTRACT

                                 BY AND BETWEEN

                       LORAL ORION NETWORK SERVICES, INC.

                                       AND

                            SPACE SYSTEMS/LORAL, INC.

                            CONTRACT NO. SS/L-TP98024

                               PROPRIETARY NOTICE


THIS CONTRACT AND THE INFORMATION CONTAINED HEREIN IS PROPRIETARY TO LORAL ORION
NETWORK SYSTEMS, INC. AND SPACE SYSTEMS/LORAL,  INC. AND SHALL NOT BE PUBLISHED,
REPRODUCED,  COPIED,  DISCLOSED,  OR USED FOR OTHER  THAN ITS  INTENDED  PURPOSE
WITHOUT THE EXPRESS WRITTEN CONSENT OF A DULY AUTHORIZED REPRESENTATIVE OF LORAL
ORION NETWORK SERVICES, INC. AND SPACE SYSTEMS/LORAL, INC.


Part 1(A) Terms and Conditions

<PAGE>



                                      PARTS

PART 1 (A)     TERMS AND CONDITIONS, dated May 15, 1998

PART 1 (B)     PAYMENT MILESTONE SCHEDULE AND TERMINATION LIABILITY AMOUNTS

PART 1(C)      KEY CONTRACTOR POSITIONS, dated May 11, 1998

PART 2(A)      ORION-Z STATEMENT OF WORK (SOW), dated May 11, 1998

PART 2(B)      ORION-Z CONTRACT  DOCUMENTATION  REQUIREMENTS LIST (CDRL),  dated
               May 11, 1998

PART 3(A)      TECHNICAL  SPECIFICATIONS FOR ORION-Z  SPACECRAFT,  dated May 11,
               1998

PART 3(A)      ANNEX A, RADIATION ENVIRONMENT SPECIFICATION, dated May 11, 1998

PART 3(B)      ORION-Z  SPACECRAFT PRODUCT ASSURANCE  REQUIREMENTS,  dated April
               14, 1998

PART 3(C)      ORION-Z  SPACECRAFT  ON-GROUND TEST  REQUIREMENTS,  dated May 11,
               1998

PART 3(D)      ORION-Z IN-ORBIT  COMMISSIONING AND ACCEPTANCE TEST REQUIREMENTS,
               dated May 11, 1998

PART 3(E)      DYNAMIC SPACECRAFT SIMULATOR SPECIFICATION, dated May 11, 1998

PART 3(F)      ORION-Z  SPACECRAFT SCF AND SOFTWARE  REQUIREMENTS  SPECIFICATION
               (E191269), dated May 11, 1998

PART 4         RESERVED

PART 5         SATELLITE STORAGE PLAN, dated May 11, 1998



Part 1(A) Terms and Conditions

<PAGE>






                          ORION NETWORK SERVICES, INC.

                                    PART 1(A)

                              TERMS AND CONDITIONS









Part 1(A) Terms and Conditions


<PAGE>



                                TABLE OF CONTENTS

1.   DEFINITIONS AND CONSTRUCTION ...........................................  1

1.1  CERTAIN DEFINITIONS ....................................................  1

1.2  OTHER TERMS ............................................................  7

1.3  PARTS ..................................................................  8

1.4  INTEGRATION AND CONSTRUCTION ...........................................  8

1.5  HEADINGS ...............................................................  9


2.   CONTRACTOR SCOPE OF WORK ...............................................  9

2.1  SCOPE OF WORK ..........................................................  9


3.   ORION SCOPE OF WORK ....................................................  9

3.1  SCOPE OF WORK ..........................................................  9


4.   CONTRACT PRICE AND OTHER CHARGES .......................................  9

4.1  GENERAL ................................................................  9

4.2  CONTRACT PRICE ......................................................... 10


5.   INVOICING AND PAYMENT .................................................. 10

5.1  INVOICING .............................................................. 10

5.2  PAYMENT ................................................................ 11

5.3  METHOD OF PAYMENT ...................................................... 13

5.4  LATE PAYMENT FEE ....................................................... 13

5.5  OTHER PAYMENTS ......................................................... 13

5.6  RIGHT OF SET-OFF ....................................................... 13

5.7  DISPUTED CHARGES ....................................................... 14


6.   DELIVERY ............................................................... 14

6.1  DELIVERY SCHEDULE ...................................................... 14

6.2  DELAY .................................................................. 15

6.3  EXCUSABLE DELAY ........................................................ 15


7.   ACCEPTANCE TESTING AND FINAL ACCEPTANCE ................................ 16

7.1  GENERAL ................................................................ 16

7.2  ACCEPTANCE TESTING ..................................................... 16


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7.3  PRE-LAUNCH CERTIFICATION ............................................... 16

7.4  FINAL ACCEPTANCE OF DATA AND DOCUMENTATION ............................. 16

7.5  FINAL ACCEPTANCE OF ORION-Z SPACECRAFT ................................. 17


8.   TITLE TO DELIVERABLE ITEMS AND RISK OF LOSS ............................ 18

8.1  ORION-Z SPACECRAFT ..................................................... 18

8.2  DATA AND DOCUMENTATION ................................................. 19

8.3  OTHER DELIVERABLE ITEMS ................................................ 19


9.   CHANGES IN SCOPE OF WORK ............................................... 19

9.1  CHANGES REQUESTED BY ORION ............................................. 19

9.2  CHANGES REQUESTED BY CONTRACTOR ........................................ 20


10.  CORRECTIVE MEASURES IN UNLAUNCHED SATELLITES ........................... 20

10.1 CORRECTIVE MEASURES .................................................... 20

10.2 MANUFACTURERS' WARRANTIES .............................................. 22

10.3 REPLACED EQUIPMENT ..................................................... 23

10.4 IN-ORBIT DATA .......................................................... 23


11.  REPRESENTATIONS AND WARRANTIES ......................................... 23

11.1 CONTRACTOR PERSONNEL ................................................... 23

11.2 SOFTWARE AND INVENTION OWNERSHIP ....................................... 23

11.3 AUTHORIZATION .......................................................... 23

11.4 INDUCEMENTS ............................................................ 23


12.  IN-ORBIT PERFORMANCE WARRANTY AND INCENTIVE PAYMENTS ................... 24

12.1 IN-ORBIT PERFORMANCE WARRANTY .......................................... 24

12.2 ADVANCE INCENTIVE PAYMENT AT FINAL ACCEPTANCE .......................... 24

12.3 MONTHLY TRANSPONDER INCENTIVE AMOUNT ................................... 28

12.4 MONTHLY POWER INCENTIVE AMOUNT ......................................... 33

12.5 MEASURING IN-ORBIT PERFORMANCE ......................................... 37

12.6 ECLIPSE ................................................................ 37

12.7 DISPUTED PERFORMANCE ................................................... 37


13.  INSURANCE .............................................................. 38

13.1 GENERAL ................................................................ 38

13.2 REQUIRED INSURANCE ..................................................... 38


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13.3 SUBCONTRACTS............................................................ 40

13.4 DOCUMENTARY EVIDENCE.................................................... 40

13.5 CLAIMS.................................................................. 40


14.  ADDITIONAL SATELLITE OPTION............................................. 40

14.1 DELIVERY SCHEDULE....................................................... 40

14.2 PRICE................................................................... 41

14.3 ADDITIONAL SATELLITE CONTRACT PROVISIONS................................ 41


15.  INDEMNIFICATION,  INTER-PARTY WAIVER OF LIABILITY, AND LIMITATION
     OF LIABILITY AND DISCLAIMER OF WARRANTY ................................ 41

15.1 INDEMNITY BY CONTRACTOR................................................. 41

15.2 INDEMNITY BY ORION...................................................... 42

15.3 INFRINGEMENT............................................................ 43

15.4 INDEMNIFICATION PROCEDURES.............................................. 43

15.5 INTER-PARTY WAIVER OF LIABILITY FOR LAUNCH OPERATIONS................... 44

15.6 WAIVER OF SUBROGATION................................................... 45

15.7 LIMITATION OF LIABILITY................................................. 45

15.8 DISCLAIMER OF WARRANTY.................................................. 45


16.  DISPUTE RESOLUTION...................................................... 46

16.1 INFORMAL DISPUTE RESOLUTION............................................. 46

16.2 ARBITRATION............................................................. 46

16.3 LITIGATION.............................................................. 48


17.  TERMINATION............................................................. 49

17.1 TERMINATION FOR CONVENIENCE............................................. 49

17.2 TERMINATION FOR CONTRACTOR'S DEFAULT.................................... 50

17.3 TERMINATION FOR EXCUSABLE DELAY......................................... 52

17.4 TERMINATION FOR ORION'S DEFAULT......................................... 53

17.5 MITIGATION OF DAMAGES................................................... 54

17.6 RESOLUTION EFFORTS...................................................... 55

17.7 CONTINUED PERFORMANCE................................................... 55


18.  KEY CONTRACTOR PERSONNEL................................................ 55

18.1 KEY POSITIONS........................................................... 55

18.2 ASSIGNMENT OF KEY CONTRACTOR PERSONNEL.................................. 55


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18.3 APPROVED KEY CONTRACTOR PERSONNEL....................................... 56


19.  PERMITS, LICENSES AND GOVERNMENT APPROVALS.............................. 56

19.1 CONTRACTOR RESPONSIBILITY AND EXPENSES.................................. 56

19.2 ORION REVIEW OF GOVERNMENT APPLICATIONS................................. 56

19.3 COMPLIANCE WITH GOVERNMENT REQUIREMENTS................................. 56


20.  ACCESS TO WORK IN PROGRESS.............................................. 57

20.1 GENERAL................................................................. 57

20.2 OFFICE SPACE AND FACILITIES............................................. 57

20.3 DOCUMENTATION........................................................... 58

20.4 MEETINGS AND REVIEWS.................................................... 58

20.5 SUBCONTRACTS............................................................ 59


21.  LICENSE RIGHTS.......................................................... 59

21.1 SOFTWARE, INVENTIONS AND DATA AND DOCUMENTATION......................... 59

21.2 TECHNICAL DATA AND INFORMATION.......................................... 60


22.  CONFIDENTIALITY AND NONDISCLOSURE OF PROPRIETARY INFORMATION............ 63

22.1 DEFINITION AND EXEMPTIONS............................................... 63

22.2 PRIOR APPROVAL OF CERTAIN DISCLOSURES................................... 64

22.3 CONFIDENTIALITY OBLIGATIONS............................................. 64

22.4 COPYING................................................................. 65


23.  YEAR 2000 COMPLIANCE.................................................... 65


24.  CONTRACT MANAGEMENT..................................................... 65

24.1 GENERAL................................................................. 65

24.2 APPROVALS AND ACCEPTANCES............................................... 65

24.3 CONTRACT MONITORING..................................................... 66

24.4 ORION CONSULTANTS....................................................... 66

24.5 SUBCONTRACTING.......................................................... 66


25.  GROUND STORAGE OPTION................................................... 69

25.1 NOTIFICATION............................................................ 69

25.2 STORAGE LOCATION........................................................ 69

25.3 STORAGE PRICES.......................................................... 69

25.4 INVOICING AND PAYMENT................................................... 69


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25.5  TITLE AND RISK OF LOSS................................................. 69

25.6  NOTIFICATION OF INTENTION TO LAUNCH A STORED SPACECRAFT................ 69

25.7  IN-ORBIT PERFORMANCE WARRANTY AND PAYMENTS............................. 70


26.   LAUNCH VEHICLE AGENCY.................................................. 70

26.1  INSURANCE.............................................................. 70

26.2  COMPLIANCE WITH LAWS AND REGULATIONS................................... 70


27.   RESPONSIBILITY FOR THE CONTRACT........................................ 71

27.1  ABILITY TO PERFORM..................................................... 71

27.2  FIXED CONTRACT PRICE................................................... 71

27.3  INCONSISTENCIES IN CONTRACT............................................ 71

27.4  SUBCONTRACTOR COOPERATION.............................................. 72


28.   GENERAL................................................................ 72

28.1  EFFECTIVE DATE OF CONTRACT............................................. 72

28.2  ASSIGNMENT............................................................. 72

28.3  ENTIRE AGREEMENT....................................................... 72

28.4  AMENDMENTS............................................................. 73

28.5  WAIVER OF BREACH OF CONTRACT........................................... 73

28.6  CUMULATIVE REMEDIES.................................................... 73

28.7  SEVERABILITY........................................................... 73

28.8  APPLICABLE LAW......................................................... 73

28.9  NOTICES................................................................ 73

28.10 CONTRACTOR NOT AGENT................................................... 74

28.11 SURVIVAL............................................................... 74

28.12 RELEASE OF INFORMATION................................................. 75

28.13 GOVERNMENT FILINGS..................................................... 75

28.14 IMPROPER PAYMENTS, KICKBACKS, GIFTS, AND GRATUITIES.................... 75

28.15 COMPLIANCE WITH APPLICABLE LAWS........................................ 76

28.16 FINANCING.............................................................. 76


Part 1(A) Terms and Conditions
Issue 1

<PAGE>



                              TERMS AND CONDITIONS

     THIS ORION-Z  SPACECRAFT  PURCHASE  CONTRACT (the  "Contract")  is made and
entered  into this 15th day of May,  1998 by and  between  Loral  Orion  Network
Services,  Inc., a Delaware  corporation  with its principal  offices located at
2440 Research Boulevard,  Rockville, Maryland 20850, U.S.A. ("ORION"), and Space
Systems/Loral, Inc., a company organized and existing under the laws of Delaware
with its principal  offices  located at 3825 Fabian Way,  Palo Alto,  California
94303  ("Contractor").  As used in the  Contract,  "Party" means either ORION or
Contractor, as appropriate, and "Parties" means ORION and Contractor.

     WHEREAS,  the primary object of ORION is the carrying on of the business of
providing a telecommunications system by the use of space satellites;

     WHEREAS, ORION anticipates providing the business referred to above through
the ORION satellite system ("ORIONSAT System");

     WHEREAS,  the ORION-Z Spacecraft to be constructed pursuant to the Contract
is intended to form part of the space segment of the ORIONSAT System;

     WHEREAS,  ORION and Contractor have agreed that Contractor will perform the
Work as  defined  below  and that  ORION  will pay for the Work on the terms and
conditions set out in the Contract;

     NOW,  THEREFORE,  in  consideration  of the above  premises  and the mutual
covenants and agreements contained herein, the Parties agree as follows:

1.   DEFINITIONS AND CONSTRUCTION

1.1  CERTAIN DEFINITIONS.

          In the  Contract,  the following  terms shall have the meaning  stated
hereunder:

          (a) "ADDITIONAL  SATELLITE"  shall have the meaning  ascribed to it in
Article 14 (Additional Satellite).

          (b) "ADVANCE  INCENTIVE PAYMENT" means that portion of the Transponder
Orbital  Incentive  Amount and Power Orbital  Incentive  Amount paid by ORION to
Contractor as an advance incentive payment under Article 12.2 (Advance Incentive
Payment at Final Acceptance).

          (c)  "AGGREGATE  PREDICTED  TRANSPONDER  LIFE"  means  the  sum of the
Predicted Transponder Life of each and every Serviceable Transponder embodied in
the Launched ORION-Z Spacecraft.


                                       1

<PAGE>



          (d)  "ASSOCIATES"  means with  respect to an  entity,  its  directors,
officers, employees, agents, consultants, and assigns.

          (e) "BUSINESS DAY" means any day other than the following: a Saturday,
Sunday or other day on which banks are  authorized  to be closed in the State of
New York.

          (f)  "CONSTRUCTIVE  TOTAL  LOSS"  shall have the  meaning set forth in
ORION's applicable launch insurance policy.

          (g) "CONSULTANT"  means any third party authorized by ORION to provide
technical and program  support and assistance in connection with the performance
of the Contract.

          (h) "CONTRACT" means the written  instrument  herein dated the day and
year first written above, including any amendments made pursuant to Article 28.4
(Amendments), embodying the agreement between Contractor and ORION and including
the Parts attached hereto and made a part of the Contract.

          (i)  "CONTRACT  DOCUMENTATION  REQUIREMENTS  LIST" or "CDRL" means the
documentation  requirements  listed in Part 2(B) to the Contract and provided to
Contractor.

          (j)  "CONTRACT  PRICE" means the total amount set forth in Article 4.2
(Contract Price).

          (k)  "CORRECTION  PLAN" means a plan  submitted  by  Contractor  which
details how  Contractor  shall correct (i) a failure to make  adequate  progress
towards completion of the Work or (ii) a default or breach under the Contract in
accordance with Article 17.2.

          (l) "DATA AND  DOCUMENTATION"  means that data and documentation to be
supplied by Contractor  pursuant to the  requirements of Part 2(A) (Statement of
Work) and Part 2(B) (Contract Documentation Requirements List).

          (m) "DEFECT"  means (i) with regard to the ORION-Z  Spacecraft and all
components thereof, any defect in design, material or workmanship, or failure to
perform in accordance with the  specifications  and requirements of the Contract
that results in , or is likely to result in , non-compliant  ORION-Z  Spacecraft
performance;  (ii) with  regard to  services,  a failure  to  conform  to a high
standard  consistent with industry  practice;  and (iii) with regard to Data and
Documentation, a failure to meet any specifications or requirements set forth in
the Contract.

          (n) "DELIVERABLE  ITEM" means the items listed in Table 6.1 of Article
6 (Delivery),  including the ORION-Z Spacecraft delivered in-orbit, and Data and
Documentation, and other items so identified in amendments to the Contract.

          (o) "DELIVER" and its derivatives (such as "Delivered" and "Delivery")
shall have the  meaning  set forth in Article  5.2  (Payment)  and  Article  6.1
(Delivery Schedule).


                                       2
<PAGE>



          (p) "DELIVERY DATES" means those dates set forth in Article 6.1.

          (q) "DELIVERY SCHEDULE" means the schedule for Delivery of the Work as
set forth in Table 6.1 of Article 6 (Delivery).

          (r) "DEMAND"  means, in the context of Article 17.2  (Termination  for
Contractor's  Default),  a demand by ORION made of Contractor  for Contractor to
provide a  Correction  Plan in the event  that  Contractor  is  failing  to make
adequate progress in the performance of the Contract or is in default or breach.

          (s) "EFFECTIVE DATE" or "EDC" means the effective date of the Contract
as set forth in Article 28.1 (Effective Date of Contract).

          (t)  "EQUIPMENT"  means  individual  assemblies,   parts  thereof  and
complete systems.

          (u)  "EXCUSABLE  DELAY"  has the  meaning  set  forth in  Article  6.3
(Excusable Delay).

          (v) "FINAL ACCEPTANCE" has the meaning set forth in Article 7.5 (Final
Acceptance of ORION-Z Spacecraft).

          (w)  "IN-ORBIT  ACCEPTANCE  REQUIREMENTS"  means  Part 3(D)  (In-Orbit
Commissioning and Acceptance Test Requirements).

          (x)  "IN-ORBIT  ACCEPTANCE  TEST PLAN" means that  document  that is a
Deliverable Item under Part 2(B) (Contract Documentation  Requirements List) and
as  described  in  Part  3(D)  (In-Orbit   Commissioning   and  Acceptance  Test
Requirements) of the Contract.

          (y) "IN-ORBIT  ACCEPTANCE TEST REPORT" or "IN-ORBIT ACCEPTANCE REPORT"
means  that  document  that is a  Deliverable  Item  under  Part 2(B)  (Contract
Documentation  Requirements  List) and as described in Part 2(A)  (Statement  of
Work) and Part 3(D) (In-Orbit Commissioning and Acceptance Test Requirements) of
the Contract.

          (z)  "IN-ORBIT  PERFORMANCE  WARRANTY  PERIOD"  shall have the meaning
ascribed to it in Article 12.1 (In-Orbit Performance Warranty).

          (aa)   "INCLUDING"  and  its   derivatives   (such  as  "include"  and
"includes")  shall mean including without  limitation.  This term is as defined,
whether or not capitalized in this Agreement.

          (bb)  "INITIAL  PAYMENT"  means  the  aggregate  amount   representing
cumulative  Milestone Payments due to Contractor as of the Effective Date of the
Contract as determined in accordance with Part 1(B) (Payment  Milestone Schedule
and Termination Liability Amounts).


                                       3
<PAGE>



          (cc)  "INTENTIONAL  IGNITION"  means the point in time in the ignition
process of an Ariane 44LP Launch  Vehicle,  for the purpose of Launch,  when the
command  signal sent from the launch  control  console is received by the Launch
Vehicle,  which  command  signal is intended  to and does ignite the  propellant
system for the purpose of Launch.

          (dd)  "INVOICE"  means an  invoice in the form of Annex A to this Part
1(A) of the Contract.

          (ee) "L-X" means x months  prior to the  Scheduled  Launch  Date.  For
example, if the Scheduled Launch Date is January 1, 1999, then L-6 means July 1,
1998.

          (ff)  "L+X"  means x months  after  the  Scheduled  Launch  Date.  For
example,  if the  Scheduled  Launch  Date is  January  1,  1999,  then L+1 means
February 1, 1999.

          (gg) "LAUNCH" means  Intentional  Ignition  followed by the opening of
the table clamps.

          (hh) "LAUNCH AGENCY" means Arianespace or such other  Subcontractor as
is  selected to supply,  integrate  and launch the Launch  Vehicle,  and provide
other launch services until separation of the ORION-Z Spacecraft from the Launch
Vehicle.

          (ii) "LAUNCH AGREEMENT" means the agreement between Contractor and the
Launch Agency to perform the launch of the ORION-Z Spacecraft.

          (jj)  "LAUNCH  SERVICES"  means  the  launch  campaign/transportation,
launch services,  mission planning and launch/early operations phase services as
more particularly set forth in Section 7 of Part 2(A) (Statement of Work).

          (kk)  "LAUNCH  TERMINATION"  means the point in time  when,  following
Terminated  Ignition,  the launch pad is officially  declared safe by the Launch
Agency

          (ll) "LAUNCH VEHICLE" means the Ariane 44LP.

          (mm) "LAUNCHED ORION-Z  SPACECRAFT" means the ORION-Z Spacecraft after
its Launch.

          (nn) "LOSSES" mean all losses, liabilities,  damages, royalty payments
and claims, and all related costs and expenses (including  reasonable legal fees
and disbursements and costs of investigation,  litigation, settlement, judgment,
interest and penalties).

          (oo)  "MAJOR  SUBCONTRACT"  means  a  Subcontract  that  is of a value
exceeding  Two  Million,  Five  Hundred  Thousand  Dollars  ($2,500,000)  or  of
importance or critical in nature to



                                       4
<PAGE>



the overall program (e.g., a Subcontract for major or critical units, subsystems
or other items or services).

          (pp)  "MILESTONE  PAYMENT"  means those  payments  listed as Milestone
Payments in Part l(B)  (Payment  Milestone  Schedule and  Termination  Liability
Amounts) of the Contract.

          (qq) "MISSION  SPECIFIC  HARDWARE AND  SOFTWARE"  means those items of
hardware and software  described in Section 10 of Part 2(A)  (Statement of Work)
of the Contract.

          (rr) "MONTHLY POWER INCENTIVE AMOUNT" means the Power Incentive Amount
paid at Final Acceptance  divided into one hundred fifty-six (156) equal monthly
amounts.

          (ss) "MONTHLY  TRANSPONDER  INCENTIVE  AMOUNT"  means the  Transponder
Incentive  Amount paid at Final  Acceptance  divided into one hundred  fifty-six
(156) equal monthly amounts.

          (tt)  "ON-GROUND  TEST  REQUIREMENTS"  means  the test  plans and test
procedures set forth in Part 3(C) (On-Ground Test Requirements) of the Contract.

          (uu)  "ORBITAL  INCENTIVE  AMOUNT" means a firm fixed sum of [ ] * [ ]
equivalent to the sum of the Power Orbital  Incentive Amount and the Transponder
* Orbital Incentive Amount.

          (vv) "ORION PERSONNEL" mean ORION's employees or  representatives,  or
its Consultant's employees or representatives.

          (ww) "ORION-Z  SPACECRAFT"  means the satellite to be constructed  and
Delivered to ORION as part of the Work and as identified in Part 2(A) (Statement
of Work) of the Contract.

          (xx)  "PAYMENT  MILESTONE"  means the task to be performed or event to
occur before  payment is due under Article 5 (Invoicing  and Payment) and Part 1
(B) (Payment Milestone Schedule and Termination Liability Amounts).

          (yy) "POWER ORBITAL  INCENTIVE AMOUNT" means a firm fixed sum of [ ] *
[ ]. *

          (zz) "PREDICTED  TRANSPONDER LIFE" means the period of time,  measured
in years and  portions  thereof,  over which a  Serviceable  Transponder  can be
operated,  commencing  from the date of  Delivery  of the  Preliminary  In-Orbit
Acceptance Report,  this period of time being equal to whichever is the shortest
of:

               (1)  thirteen (13) years, or


                                       5
<PAGE>



               (2)  the ORION-Z Spacecraft  predicted propellant life calculated
                    in  accordance   with  Section  5  of  Part  3(D)  (In-Orbit
                    Commissioning  and  Acceptance  Test  Requirements)  of  the
                    Contract, or

               (3)  the  period  of time over  which  there is  predicted  to be
                    sufficient  solar  array power to operate  such  Serviceable
                    Transponder   co-extensively   with  all  other  Serviceable
                    Transponders,  calculated  in  accordance  with Section 5 of
                    Part  3(D)  (In-Orbit   Commissioning  and  Acceptance  Test
                    Requirements) of the Contract.

          (aaa)   "PRIMARY   TRANSPONDER"   means  a   transponder   where   the
communication signals are received from and transmitted to the ground.

          (bbb) "REVENUE" means all amounts received by ORION with respect to an
individual Primary Transponder,  whether as a result of its sale, lease, license
or other disposition, it being understood that, if said amounts are not received
in equal monthly  installments,  the total amount  received or to be received by
ORION shall be deemed received in equal monthly  installments over the remainder
of the Predicted Transponder Life of such Transponder.

          (ccc)  "SATISFACTORILY  OPERATING PRIMARY TRANSPONDER" means a Primary
Transponder  which is  capable  of  meeting  (i) the  requirements  of Part 3(A)
(Technical  Specifications for ORION-Z Spacecraft) regarding Primary Transponder
performance and (ii) the Primary Transponder Test Requirements set forth in Part
3(D) (In-Orbit Commissioning and Acceptance Test Requirements).

          (ddd) "SATURATED TRANSPONDER" means a Primary Transponder whose output
power  amplifier is driven at its maximum  designed  end-of-life RF power output
point.

          (eee) "SCHEDULED  LAUNCH DATE" means the calendar date on which Launch
is scheduled to occur.

          (fff)  "SENIOR   EXECUTIVE"  means  each  of  the  senior   executives
designated  from  time  to  time  in  writing,   by  ORION  and  by  Contractor,
respectively, to be their representatives for the purposes of dispute resolution
under the Contract.

          (ggg) "SERVICEABLE TRANSPONDER" means a Primary Transponder that meets
the requirements set forth in Section 5 of Part 3(D) (In-Orbit Commissioning and
Acceptance  Test  Requirements)  of the Contract and is determined,  pursuant to
Section  5.2  thereof,  to be  capable  of  operation  in  accordance  with such
requirements  during a period of eclipse. In the event that the Launched ORION-Z
Spacecraft has insufficient  energy to operate [ ] Serviceable * Transponders at
2.2 dB output  backoff and single  amplifier  mode in beginning of life eclipse,
those specific  Transponders,  if any, which failed the testing  requirements of
Section  5.2 of Part


                                       6

<PAGE>



3(D) will only be counted once in determining  the total number of  Transponders
that are Serviceable Transponders.

          (hhh)  "STATEMENT  OF WORK" or "SOW" means the Work  described in Part
2(A) (Statement of Work) to the Contract and to be provided by Contractor.

          (iii)  "SUBCONTRACT"  means a  contract  awarded  by  Contractor  to a
Subcontractor  or  a  contract  awarded  by  a  Subcontractor  at  any  tier  of
performance of any work specified in the Contract.

          (jjj)  "SUBCONTRACTOR"  means a person, firm,  corporation or business
entity  that  has  been  awarded  a   Subcontract   by   Contractor  or  another
Subcontractor to provide a portion of the Work covered by the Contract.

          (kkk) "TECHNICAL  SPECIFICATIONS"  means the technical  specifications
set forth in Part 3(A) (Technical  Specifications for ORION-Z Spacecraft) of the
Contract.

          (lll) "TERMINATED IGNITION" means, following Intentional Ignition, the
Launch sequence is shut down before Launch.

          (mmm)  "TERMINATION  LIABILITY  AMOUNTS"  means the amounts  listed as
Termination Liability Amounts in Part 1(B).

          (nnn)  "TRANSPONDER"  means  an  individual  transmission  channel  of
defined  bandwidth  providing  a path,  inclusive  of  amplification,  frequency
translation  and frequency  channelization,  from a receive antenna with defined
coverage and  polarization to a transmit  antenna also with defined coverage and
polarization.

          (ooo) "TRANSPONDER ORBITAL INCENTIVE AMOUNT" means a firm fixed sum of
[ ] * [ ]. *

          (ppp)  "WORK"  means  the  whole of the work  described  in Part  2(A)
(Statement  of Work) and  elsewhere  in the  Contract  and where the  context so
permits or requires,  "Work"  includes  any part or parts of the Work.  The Work
includes  all  elements  and  phases  of  delivering  the  operational   ORION-Z
Spacecraft in-orbit from design and manufacture, through Launch, Launch Services
and  in-orbit  testing,  including  provision  of all  Equipment  and  Data  and
Documentation related thereto,  including Deliverable Items, as specified in the
Contract.

1.2  OTHER TERMS.

     Other  terms in the  Contract  are defined in the context in which they are
used and shall have the meanings there indicated.


                                       7

<PAGE>



1.3  PARTS.

          The following documents hereby constitute the Contract:

          (a)  Part 1(A) - Terms and Conditions

          (b)  Part 1(B) - Payment Milestone Schedule and Termination  Liability
               Amount

          (c)  Part 1(C) - Key Contractor Positions

          (d)  Part 2(A) - ORION-Z Statement of Work (SOW)

          (e)  Part  2(B) - ORION-Z  Contract  Documentation  Requirements  List
               (CDRL)

          (f)  Part 3(A) - Technical Specifications for ORION-Z Spacecraft

          (g)  Part 3(A), Annex A - Radiation Environment Specification

          (h)  Part 3(B) - ORION-Z Spacecraft Product Assurance Requirements

          (i)  Part 3(C) - ORION-Z Spacecraft On-Ground Test Requirements

          (j)  Part 3(D) - ORION-Z  In-Orbit  Commissioning  and Acceptance Test
               Requirements

          (k)  Part 3(E) - Dynamic Spacecraft Simulator Specification

          (l)  Part  3(F) - ORION Z  Spacecraft  SCF and  Software  Requirements
               Specification

          (m)  Part 4 - RESERVED

          (n)  Part 5 - Satellite Storage Plan

1.4  INTEGRATION AND CONSTRUCTION.

          (a)  Notwithstanding  anything  herein to the contrary,  the documents
listed  in  Article  1.3  shall be deemed  to  constitute  one fully  integrated
agreement  between  the  Parties.  In the event of any  ambiguity,  conflict  or
inconsistency  among the  provisions of the various parts of the Contract,  such
conflict or  inconsistency  shall be resolved  by giving a  descending  level of
precedence to the documents listed in Article 1.3.


                                       8
<PAGE>



     (b) In the event the Parties are unable to resolve any ambiguity,  conflict
or  inconsistency  that  affects the Work,  ORION shall  direct  Contractor  and
Contractor shall follow such direction as to the  interpretation  to be followed
in carrying out the Work. If Contractor disputes ORION's interpretation and such
interpretation  results in delay and/or  increased  costs and/or  risks,  either
Party may proceed under Article 16 (Dispute Resolution) to resolve such dispute.

1.5  HEADINGS.

     The Article headings are for convenience of reference only and shall not be
considered  in  interpreting  the text of the  Contract.  Words in the  singular
include  the plural  and vice  versa and words  imputing  the  masculine  gender
include the feminine and neuter genders where the context so requires.


2.   CONTRACTOR SCOPE OF WORK

2.1  SCOPE OF WORK.

     Contractor  shall furnish the Work in accordance with the provisions of the
Contract. In the performance of the Work, Contractor shall supply all personnel,
materials and facilities necessary therefore.

3.   ORION SCOPE OF WORK

3.1  SCOPE OF WORK.

     The  primary  ORION  responsibilities  necessary  to enable  Contractor  to
perform Work in certain  defined areas are identified in Part 2(A) (Statement of
Work).

     Orion's failure to timely perform one or more of its responsibilities under
the Contract shall entitle Contractor to an equitable adjustment to the Contract
Price and Delivery  Schedule,  provided  Contractor  provides  ORION  reasonable
notice of non-performance and reasonable opportunity to cure.

4.   CONTRACT PRICE AND OTHER CHARGES

4.1  GENERAL.

     All  charges  for the Work are set forth in this  Article 4 and  Article 12
(In-Orbit  Performance  Warranty and Incentives) and, if an Additional Satellite
is ordered, Article 14 (Additional Satellite), and if ground storage is ordered,
Article 25 (Ground Storage Option),  as such articles may be amended pursuant to
Articles 8 (Changes in Scope of Work) and 28.4


                                       9

<PAGE>



(Amendments).  ORION shall not be required to pay Contractor any amounts for the
Work in addition to those  payable to  Contractor  under this Article 4, Article
12, Article 14 and Article 25.

4.2  CONTRACT PRICE.

     (a) ORION shall pay to Contractor the sum of One Hundred Fifty-Five Million
Five Hundred Thirty Thousand  Dollars  ($155,530,000)  as the Contract Price for
the  performance  of the Work  under  the  Contract.  Upon  the full and  timely
completion  and  delivery,  as required,  of the items of Work  specified in the
Contract,  and  acceptance  of such  items  by  ORION  in  accordance  with  the
requirements of the Contract,  Contractor  shall be entitled to payment by ORION
in accordance with the provisions of Article 5 (Invoicing and Payment).

     (b) The Contract Price shall comprise the following elements:


================================================================================
                            TABLE 4.2 CONTRACT PRICE
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
ITEM                                                                                 $U.S.

<S>                                                                                  <C>
1.      ORION-Z  Spacecraft  delivered in orbit  (including  cost of Ariane 44LP     $[              ] *
        Launch Vehicle, any Launch Services, Data and Documentation,  Operations
        Training,  Mission  Specific  Hardware  and  Software,  and the  Dynamic
        Software Simulator)

2.      Orbital Incentive Amount                                                     $[              ] *

        CONTRACT PRICE TOTAL                                                         $ 155,530,000
</TABLE>

     (c) The Contract  Price  includes  all charges for Data and  Documentation,
operations training,  interest,  the insurance specified in Article 13 and 26.1,
shipping costs and all other assessments, including all applicable duties and/or
taxes.  Contractor  shall pay any duty  and/or  tax  levied by any  governmental
agency as may be required by law to be paid in the  performance of  Contractor's
obligations  under the Contract.  Except as expressly  provided in the Contract,
the Contract  Price is not subject to any  escalation,  or to any  adjustment or
revision by reason of the actual cost incurred by Contractor in  performance  of
Contractor's obligations under the Contract.


                                       10

<PAGE>



5.   INVOICING AND PAYMENT

5.1  INVOICING.

     (a) Upon  successful  performance of the Work  associated with each Payment
Milestone,  Contractor  shall submit an Invoice in the amount  specified in Part
1(B) (Payment  Milestone  Schedule and Termination  Liability  Amounts) for that
Payment  Milestone.  Each such Invoice shall be  accompanied by a certificate in
the form of Annex A hereto  together  with such  supporting  data as  Contractor
deems necessary or appropriate. This Article 5.1 shall also apply to the Initial
Payment.

     (b) Except as otherwise  expressly stated herein,  all other amounts due to
Contractor  under  the  Contract  shall  be  invoiced  in  accordance  with  the
procedures set forth in this Article 5.1.

     (c) Contractor shall first submit its Invoice via electronic communications
media (e.g.,  facsimile) to be followed by the original Invoice.  Provided ORION
receives  the  original  Invoice  within  five (5)  days  after  receipt  of the
electronic  communication,  the date of receipt of the electronic  communication
shall be deemed the date of receipt of the  Invoice and the start of the payment
period;  otherwise,  the date of receipt of the original Invoice shall be deemed
the  date of  receipt  of the  Invoice  and the  start  of the  payment  period.
Contractor shall submit copies of the Invoice to:

               ORION
               2440 Research Boulevard
               Suite 400
               Rockville, Maryland 20850
               United States of America
               Fax: (301) 258-3360
               Attention: Denise Olmsted

5.2  PAYMENT.

     (a)  With  the  exception  of the  Initial  Payment,  which  shall  be paid
simultaneously  with  the  Effective  Date of the  Contract,  ORION  shall  make
Milestone  Payments to the Contractor in accordance  with the Milestone  Payment
Plan specified in Part 1(B) as adjusted by Article 28.4. Each Milestone  Payment
shall be payable by the  Contractor  submitting  to ORION a Request  for Payment
accompanied  by a certificate  in the form of Annex A hereto  together with such
supporting  documentation  the Contractor deems necessary or appropriate.  ORION
shall pay  Contractor,  within  thirty  (30) days from the date of  receipt  (as
determined in accordance with Article 5.1(c)) of such Invoice,  the total amount
claimed by  Contractor  on such Invoice;  provided,  however,  that (i) the Work
associated  with  the  applicable   Payment   Milestone  has  been  Successfully
Completed,  Conducted,  or Delivered (as each term is defined in Article  5.2(e)
below),  as applicable,  (ii) the  certificate in the form of Annex A hereto has
been  executed by



                                       11
<PAGE>



both ORION and  Contractor;  and (iii) for the month when such Invoice  would be
due for payment,  the aggregate amount (including such Invoice) paid by ORION to
that point in time would not exceed the aggregate amount scheduled to be paid to
that point in time in  accordance  with Part 1(B).  There  shall be only one (1)
payment made to Contractor per calendar month.

     (b) Where the thirty-day  period specified in (a) above causes a payment to
become due on a non-Business Day, such payment shall be due on the next Business
Day.

     (c) In the event Contractor  completes any Payment  Milestone in advance of
the time  scheduled  for payment of such Payment  Milestone as set forth in Part
1(B),  Contractor  shall  have the right to submit an Invoice  for such  Payment
Milestone  and ORION shall be required to pay such Invoice;  provided,  however,
that (i) the Work  associated with the Payment  Milestone has been  Successfully
Completed,  Conducted or Delivered,  as applicable,  and (ii) for the month when
such Invoice would be due for payment,  the  aggregate  amount  (including  such
Invoice)  paid by ORION to that point in time  would not  exceed  the  aggregate
amount scheduled to be paid to that point in time in accordance with Part 1(B).

     (d) The following terms shall have the meanings  stated herein,  applicable
to the Payment Milestones set forth in Part l(B):

          (1)  "SUCCESSFULLY  COMPLETED" as it pertains to test milestones means
          that:

                  (i)   test(s) shall have been conducted in accordance with the
                        applicable On-Ground Test Requirements;

                  (ii)  test results  shall be within the limits  prescribed  in
                        the On-Ground Test  Requirements,  or noncompliance with
                        such requirements  shall have been identified,  reviewed
                        and corrected in accordance with the Contract; and

                  (iii) test  results  shall  have been  provided  in writing to
                        ORION in accordance with the Contract.

          (2) "CONDUCTED" as it pertains to the conduct of design reviews means,
          as applicable, that:

               (i) design  review data  packages  shall have been  submitted  to
               ORION in accordance with the Contract;

               (ii)  design  review  meetings  shall have been held,  and action
               items and minutes issued, in accordance with the Contract; and

               (iii) design review action items have been completed.


                                       12

<PAGE>



               (3)  "DELIVERED"  means that the  applicable  item (for  example,
               ORION-Z Spacecraft, Launch Vehicle, Equipment, services, and Data
               and  Documentation)  described in Part 1 (B)  (Payment  Milestone
               Schedule  and  Termination  Liability  Amounts)  conforms  to the
               requirements  of the Contract and has been  delivered to ORION in
               accordance with the provisions of Article 6 (Delivery).

5.3  METHOD OF PAYMENT.

     (a) Amounts  payable to either Party shall be remitted by wire  transfer to
the following bank accounts, as applicable:

             ORION         The Chase Manhattan Bank, N.A.
                           New York, New York
                           [                               ]                  *
                           For the account of Orion Network Systems, Inc.
                           [                                   ]              *

             Contractor    Bank of America, NT & SA
                           Chicago, Illinois
                           [                            ]                     *
                           For the account of Space Systems/Loral, Inc.
                           [                            ]                     *


     (b) Any  payment  shall be deemed to have  been  made when  credit  for the
amount is  established  in the above bank  account.  Each Party shall notify the
other in  writing  within  ten  (10)  days of a change  to its  respective  bank
accounts.

5.4  LATE PAYMENT FEE.

     Each Party shall be entitled to the  interest  due on any amounts  properly
due but not paid to such  Party for each day after the date such  amount is due.
Such  interest  shall  be  paid  within  ten  (10)  days  of  the  date  of  the
determination  such interest is due.  Interest shall be at an annual  compounded
rate of LIBOR plus three percent (3%).

5.5  OTHER PAYMENTS.

     Except as otherwise  expressly  stated  herein,  all other payments due and
payable to Contractor  shall be made in accordance with the procedures set forth
in Article  5.3 (Method of  Payment)  within  thirty (30) days after the date of
receipt (as determined in accordance with Article  5.1(c)) of the  corresponding
Invoice.


                                       13

<PAGE>



5.6  RIGHT OF SET-OFF.

     Any amount payable or refundable by Contractor to ORION under the Contract,
including any payment due as a result of any price  adjustment for late delivery
or failure to earn  incentive  amounts,  and any finally  adjudicated  claim for
payment made by ORION against Contractor within the purview of the Contract, may
be deducted by ORION from any payment  due, or to become due, to  Contractor  on
any account  whatsoever  under the Contract as ORION in its sole  discretion may
decide.

5.7  DISPUTED CHARGES.

     Subject  to Article  5.6,  ORION  shall pay  undisputed  charges  when such
payments are due under this Article 5, Article 12 (In-Orbit Performance Warranty
and Incentives), Article 14 (Additional Satellite) or Article 25 (Ground Storage
Option).

6.   DELIVERY

6.1  DELIVERY SCHEDULE.

     (a) "Delivery"  shall be deemed to have occurred for each  Deliverable Item
upon its Final Acceptance by ORION. The Delivery of the ORION-Z Spacecraft is to
be in orbit.  Subject to Articles 6.3 and 28.4,  Deliverable Items, as listed in
Table 6.1 below, shall be Delivered by Contractor to the destinations indicated,
on or before the dates ("Delivery Dates") specified in such table.





                                       14

<PAGE>



================================================================================
                                    TABLE 6.1
                                DELIVERY SCHEDULE
--------------------------------------------------------------------------------

     DELIVERABLE ITEM                 DELIVERY DATE         DESTINATION

1.   ORION-Z Spacecraft               June 30, 1999         In Orbit at 12o W.L.

2.   Data & Documentation             Per CDRL              Per CDRL

3.   Operations Training              Per SOW               ORION MCC

4.   Mission Specific Hardware and    Per SOW, Annex A      MCC and TT&C
     Software

5.   Dynamic Spacecraft Software      Per SOW               Rockville, MD
     Simulator

     (b) Notwithstanding  any other provision of the Contract,  Contractor shall
advise  ORION  immediately  by  telephone  and  confirm  in  writing  any event,
circumstance  or development  that  materially  threatens (i) the quality of any
ORION-Z Spacecraft or component part thereof, as well as any services,  Data and
Documentation or Equipment to be provided hereunder,  or (ii) the Delivery Dates
established in Table 6.1 above.

6.2  DELAY.

     (a)  Contractor  acknowledges  and agrees that  failure to duly Deliver the
ORION-Z  Spacecraft in orbit on or before the Delivery  Date  specified in Table
6.1 above may be the sole or  partial  cause of  substantial  financial  loss or
damage  being  sustained  by  ORION  due to the  cost of  alternative  means  of
providing service to customers and loss of continuity of service. Subject to the
provisions  of Article 6.3  (Excusable  Delay),  if the Delivery in orbit of the
ORION-Z  Spacecraft  occurs later than the  applicable  Delivery Date due to any
reason other than Constructive Total Loss,  Contractor agrees to pay to ORION on
demand liquidated damages from and including the [ ] Calendar Day of lateness up
to and including the [ ] * [ ] Calendar Day of lateness (the "Liquidated Damages
Period) in the * amount of [ ] per day for each Calendar Day in the * Liquidated
Damages  Period.  The remedy  provided in Article 6.2(a) is not exclusive of any
other remedy provided in the Contract.

6.3  EXCUSABLE DELAY.

     (a) Any delay in the  performance  of the Work  caused by an event  that is
beyond the control of Contractor or its Subcontractors, such as, but not limited
to, any acts of  government  in



                                       15
<PAGE>



its  contractual  or  sovereign  capacity,  fire,  flood,  epidemic,  quarantine
restriction,  freight embargo, or acts of God, or any postponement by the Launch
Agency of launch of the ORION-Z  Spacecraft,  or acts or omissions of ORION that
unreasonably  delay or hinder  Contractor's  performance  or failure by ORION to
meet its  responsibilities  under the  Contract,  and which delay could not have
been avoided by Contractor or  Subcontractor  through the exercise of reasonable
foresight or reasonable  precautions  and cannot be  circumvented  by Contractor
through the use of alternate  sources,  work-around plans, or other means, shall
constitute a basis for excusable delay ("Excusable  Delay") if notice thereof is
given to ORION,  in writing,  within  three (3) Business  Days after  Contractor
shall have first learned of an occurrence of such an event or with regard to the
Launch  Vehicle,  the  probability of the occurrence of such event.  Such notice
shall include a detailed description of the portion of the Work affected by such
a delay, as well as details of any work-around plans, alternate sources or other
means  Contractor  will utilize to  forestall a delay to the  Delivery  Schedule
stated in Article 6 (Delivery).  Written notice must also be given to ORION when
the event  constituting an Excusable Delay appears to have ended. In all events,
Contractor  shall use  reasonable  efforts to avoid or minimize  such delay.  In
addition,  ORION's  exercise  of its rights  under  Article  25 (Ground  Storage
Option) due to  circumstances  caused by ORION  shall  constitute  an  Excusable
Delay.

     (b)  Contractor  shall  be  entitled  to  such  extensions  of  time as are
reasonable  for the Excusable  Delay.  In the event ORION disputes the Excusable
Delay,  ORION must inform  Contractor  in writing  within ten (10) Business Days
from  the date of  receipt  of  written  notice  of the  event  constituting  an
Excusable Delay and, if the Parties have not resolved the dispute within the ten
(10) Business Days of  Contractor's  receipt of written  notice from ORION,  the
dispute shall be resolved pursuant to Article 16 (Dispute Resolution).

     (c) In the  event  of an  Excusable  Delay,  there  shall  be an  equitable
adjustment to the Delivery Schedule set forth in Table 6.1, Article 6 (Delivery)
and the Delivery Schedule set forth in Article 14 (Additional  Satellite) to the
extent such  Excusable  Delay affects such delivery  schedules and to such other
terms in the Contract as applicable;  provided,  however, that the occurrence of
an Excusable  Delay shall not entitle  Contractor to an increase in the Contract
Price (unless such Excusable Delay is caused solely or  substantially by ORION's
acts or omissions that unreasonably delay or hinder Contractor's  performance or
ORION's  failure to meet its  responsibilities).  Any extension of time or other
relief granted under this Article 6.3 shall be formalized by the execution of an
amendment to the Contract in accordance with Article 28.4.

7.   ACCEPTANCE TESTING AND FINAL ACCEPTANCE

7.1  GENERAL.

     Each  Deliverable  Item under the Contract  shall be accepted by ORION upon
Contractor's  successful   demonstration  of  its  timely  compliance  with  the
requirements of the Contract.



                                       16

<PAGE>



7.2  ACCEPTANCE TESTING.

     Contractor  agrees to notify  ORION in writing  ten (10) days in advance of
conducting  acceptance  tests for Deliverable  Items and pre-launch tests of the
integrated   ORION-Z   Spacecraft.   Upon  compliance   with  the   notification
requirement,  ORION's absence at such tests shall neither be a cause of delaying
the acceptance tests nor invalidating the test results obtained therefrom.

7.3  PRE-LAUNCH CERTIFICATION.

     Upon  completion of the  pre-launch  tests at the launch site in accordance
with the  requirements  of the  Contract,  Contractor  shall  furnish ORION with
pre-launch certification as soon as feasible prior to Launch.

7.4  FINAL ACCEPTANCE OF DATA AND DOCUMENTATION.

     (a) "Final Acceptance" (and therefore,  Delivery) of Data and Documentation
shall occur only when:

          (1)  Contractor has fulfilled the Contract's requirements for the Data
               and Documentation; and

          (2)  the  Data  and  Documentation  has been  delivered  at the  place
               referenced  in Table 6.1 of Article 6  (Delivery)  in a condition
               fully conforming to the provisions of the Contract.

     (b) Data and  Documentation  not requiring  approval by ORION in accordance
with Part 2(B) shall be deemed to have achieved Final Acceptance unless rejected
by ORION in writing within ten (10) Business Days after receipt of said Data and
Documentation by ORION. If such Data and  Documentation  is unacceptable,  ORION
shall,  within the said ten (10) Business Days,  notify Contractor in writing in
which  respects  the  Data and  Documentation  fails to  conform  to  applicable
requirements of the Contract.  Any Data and Documentation  that fails to conform
to  applicable  requirements  of the Contract with respect to which ORION has so
notified Contractor as being non-conforming,  shall be deemed under the Contract
not to have been  delivered  unless and until the Defects that  resulted in such
rejection  have  been  remedied  or  demonstrated   not  to  exist  pursuant  to
verification  procedures  in  accordance  with  the  Contract,  and the Data and
Documentation  is at the  destination  referenced  in  Table  6.1 of  Article  6
(Delivery)  whereupon ORION shall accept the Data and  Documentation  in writing
and Final Acceptance shall occur.

     (c) Final Acceptance of any Data and  Documentation  requiring  approval by
ORION in  accordance  with Part 2(B)  shall  occur when such  approval  has been
granted by ORION in writing.  ORION shall  respond under this Article 7.4 within
ten (10) Business Days after  receipt



                                       17

<PAGE>



of such Data and  Documentation  by ORION;  failing such  response,  the Parties
shall be deemed  forthwith to be in dispute and their rights shall be determined
in accordance with the provisions of Article 16 (Dispute Resolution) hereof.

     (d) The  provisions  of this  Article  7.4  shall  not  apply to the  Final
Acceptance  of a Launched  ORION-Z  Spacecraft  or to the  Preliminary  In-Orbit
Acceptance  Report.  The Final Acceptance of the Launched ORION-Z Spacecraft and
of the In-Orbit Acceptance Report essential thereto shall be governed by Article
7.5.

7.5  FINAL ACCEPTANCE OF ORION-Z SPACECRAFT.

     (a)  In-Orbit Acceptance Report.

          (1)  Upon arrival at its designated orbital location,  Contractor will
               perform the tests and analyses  set forth in Part 3(D)  (In-Orbit
               Commissioning and Acceptance Test  Requirements) for the Launched
               ORION-Z   Spacecraft  to  determine   the   Aggregate   Predicted
               Transponder Life of the Launched ORION-Z Spacecraft.  The results
               of  such  tests  and  analyses  will be  furnished  to  ORION  in
               Preliminary  and Final In-Orbit  Acceptance  Reports  prepared by
               Contractor for the Launched ORION-Z Spacecraft in accordance with
               Part 2(A)(SOW), Part 2(B)(CDRL) and Part 3(D).

          (2)  Within   forty-five   (45)  days  after  Launch  of  the  ORION-Z
               Spacecraft,  Contractor  shall  furnish to ORION the  Preliminary
               In-Orbit  Acceptance  Report in full  compliance  with Part 2(A),
               Part  2(B) and  Part  3(D) in  respect  of the  Launched  ORION-Z
               Spacecraft,  and, within sixty (60) days after Launch, Contractor
               shall furnish to ORION the Final  In-Orbit  Acceptance  Report in
               full compliance with Part 2(A), Part 2(B) and Part 3(D).

          (3)  Unless the ORION-Z Spacecraft is a Constructive Total Loss, Final
               Acceptance  (and therefore,  Delivery) of the ORION-Z  Spacecraft
               will take place upon receipt by ORION of the Preliminary In-Orbit
               Acceptance Report demonstrating that the ORION-Z Spacecraft is in
               full compliance with Part 3(A) and Part 3(D).

          (4)  Unless  ORION  responds to the  Preliminary  In-Orbit  Acceptance
               Report  within thirty (30) days after  receipt  thereof,  or such
               other period of time acceptable to both Parties, the report shall
               be deemed acceptable.

          (5)  If ORION's response under Article 7.5(a)(4) contests the findings
               of the Preliminary  In-Orbit Acceptance Report, the Parties shall
               be deemed forthwith to be in dispute and either Party may proceed
               under Article 16 to have such dispute resolved.


                                       18

<PAGE>



          (6)  The existence of a dispute shall not affect Final  Acceptance set
               forth above.

8.   TITLE TO DELIVERABLE ITEMS AND RISK OF LOSS

8.1  ORION-Z SPACECRAFT.

     (a) Risk of loss or  damage  to the  ORION-Z  Spacecraft  shall  pass  from
Contractor  to  ORION  at the  time  of  Intentional  Ignition  of  the  ORION-Z
Spacecraft.  Title to the  ORION-Z  Spacecraft,  free and clear of all liens and
encumbrances  of any  kind  shall  pass  from  Contractor  to ORION  upon  Final
Acceptance of the ORION-Z  Spacecraft in accordance with Article 7,  (Acceptance
Testing and Final Acceptance - Deliverable Items).

     (b) In the event of the  occurrence of a Terminated  Ignition of the Launch
Vehicle used for Launch of the ORION-Z Spacecraft to be delivered hereunder, the
Parties  agree  that  Contractor  shall  re-assume  risk of loss of the  ORION-Z
Spacecraft upon Launch Termination and will thereafter immediately commence work
required  to  ready  the  ORION-Z  Spacecraft  for a  Launch  Vehicle  re-launch
(including,  as  applicable,  demating and defueling of the ORION-Z  Spacecraft,
procurement of pre-launch/transit insurance(s), storage, shipping of the ORION-Z
Spacecraft  back to Palo Alto, CA,  refurbishing,  retesting,  re-shipping,  and
re-initiation  and  performance  of a subsequent  Launch,  and any other related
effort).  It is agreed by the  Parties  that such  support  shall be provided at
ORION's expense and shall be subject to an equitable  adjustment to the Contract
Price and schedule as mutually  agreed to by the Parties.  Equitable  adjustment
for such  work  and all  affected  terms of this  Contract,  and its  Parts,  as
applicable,  shall be  negotiated  within  thirty  (30)  days of the  Terminated
Ignition  or as  otherwise  agreed to by the  Parties,  and the  Parties  agree,
pending  final  negotiation  of  an  equitable  adjustment,   to  perform  their
respective obligations described elsewhere in this Contract.

     (c) In the event of a Constructive  Total Loss, title free and clear of all
liens and  encumbrances  of any kind  shall  pass to ORION.  In such  event,  at
ORION's  direction,  Contractor  shall  surrender the ORION-Z  Spacecraft to the
insurers obligated to cover such loss.

8.2  DATA AND DOCUMENTATION

     The license  rights set forth in Article 21.1 and risk of loss or damage to
Data and  Documentation  delivered under the Contract shall pass from Contractor
to  ORION  at the  time  of  Final  Acceptance  in  accordance  with  Article  7
(Acceptance Testing and Final Acceptance - Deliverable Items).

8.3  OTHER DELIVERABLE ITEMS.

     Title,  free and clear of all liens and  encumbrances of any kind, and risk
of loss or damage to each  Deliverable  Item (other than the ORION-Z  Spacecraft
and Data and  Documentation)  delivered  under  the  Contract  shall  pass  from
Contractor to ORION at the time of Final



                                       19

<PAGE>



Acceptance by ORION in accordance  with Article 7 (Acceptance  Testing and Final
Acceptance - Deliverable Items).

9.   CHANGES IN SCOPE OF WORK

9.1  CHANGES REQUESTED BY ORION.

     (a) ORION may, at any time after the  Effective  Date of the  Contract,  by
written  change order issued by ORION make changes  within the general  scope of
the  Contract  that will add or delete  Work,  affect the design of the  ORION-Z
Satellite,  change the time or place of delivery or affect any other requirement
of the Contract.

     (b)  Contractor  shall perform the Work in accordance  with such orders and
changes as if the same had appeared in and formed part of the Contract.

     (c) If any such  change  causes an  increase or decrease in the cost of the
Work, or the time required for the completion of the Work to be provided herein,
or  otherwise  affects  any  other  provision  of  the  Contract,  an  equitable
adjustment shall be made to the Contract Price,  the Delivery  Schedule or both,
and to such other  provisions as may be affected.  The Parties  shall  consider,
negotiate and agree to such equitable  adjustments  in a timely manner,  and the
Contract shall be amended in accordance with Article 28.4 (Amendments).

     (d) ORION shall have the right to prescribe the manner in which  Contractor
shall   dispose  of  any  Work  made  obsolete  as  a  result  of  such  orders,
dispensations or changes.

     (e)  Nothing  in  this  Article  shall  excuse   Contractor  from  promptly
proceeding with the additions,  dispensations or changes specified in the change
order.

9.2  CHANGES REQUESTED BY CONTRACTOR.

     (a)  Contractor  may, at any time after the Effective Date of the Contract,
provide  ORION with a request for a change or waiver in the whole or any part of
the Work or schedules  herein,  provided that  Contractor  shall use  reasonable
efforts to submit  such  request  in  writing to ORION at least  sixty (60) days
prior to the  proposed  date of any  change or waiver  that  would add or delete
work, affect the design of the ORION-Z Spacecraft, change the method of shipment
or packing, or place or time of delivery,  or would affect any other requirement
of the Contract.

     (b) If such  Contractor-requested  change or waiver would cause an increase
or decrease in the Contract Price or Delivery Schedule,  Contractor shall submit
to ORION,  concurrent with the requested change, the details of such increase or
decrease.

     (c) Contractor shall not proceed with the requested change or waiver unless
and until ORION agrees with and accepts such change or waiver.


                                       20

<PAGE>



     (d) ORION shall notify Contractor in writing, within thirty (30) days after
receipt of a request from  Contractor for a change or waiver,  whether or not it
agrees with and accepts such change or grants such waiver.  If ORION agrees with
and accepts such change or grants such waiver, Contractor shall proceed with the
performance  of the  Contract  as  changed  or waived  and an  amendment  to the
Contract reflecting such change and price adjustment, if any, in accordance with
Article  28.4  (Amendments),  shall be issued.  If ORION does not agree with the
change or waiver as requested,  the Parties shall attempt to reach  agreement on
such change or waiver. In the event the Parties are unable to reach agreement on
the change or waiver,  or on the applicable price  adjustment,  if any, or both,
Contractor shall proceed with the performance of the Contract as unchanged.

10.  CORRECTIVE MEASURES IN UNLAUNCHED SATELLITES

10.1 CORRECTIVE MEASURES.

     (a)  Notice.

          (1)  ORION shall  notify  Contractor  in writing  when it believes any
               Defect exists in the ORION-Z Spacecraft,  the services and/or the
               Data and  Documentation.  Contractor may from time to time advise
               ORION in writing that it disagrees with ORION as to the existence
               or nature of a Defect. In such event, the Parties shall negotiate
               in good faith to determine  what Defect  exists,  if any, and any
               action required to remedy such Defect.

          (2)  Notwithstanding  any other provision of the Contract,  Contractor
               shall  advise  ORION  immediately  by  telephone  and  confirm in
               writing any event,  circumstance  or development  that materially
               threatens  the quality of the ORION-Z  Spacecraft,  or  component
               part   thereof  as  well  as  any   services   and/or   Data  and
               Documentation  to be provided  hereunder  or the  Delivery  Dates
               established.

     (b)  Defect in ORION-Z Spacecraft.

          (1)  Without  limiting the  obligations of Contractor or the rights of
               ORION  under the  provisions  of the  Contract,  prior to Launch,
               Contractor  shall,  at its  expense,  use  its  best  efforts  to
               promptly  correct any Defect  related to the  ORION-Z  Spacecraft
               that it or ORION  discovers  during the  course of the Work,  and
               notwithstanding  that a payment  may have  been  made in  respect
               thereof, and regardless of prior reviews, inspections,  approvals
               or  acceptances.  This  provision  is  subject  to the  right  of
               Contractor  to have any items  containing  a Defect  returned  at
               Contractor's  expense to Contractor's  facility for Contractor to
               verify  the  non-conformance  and  to  correct  the  Defect.  All
               transportation  costs such as packaging,  shipping and insurance,
               shall  be paid



                                       21

<PAGE>



               by Contractor,  except that if it is reasonably  determined after
               investigation that ORION directly caused the Defects in question,
               or that the item is in conformance with applicable specifications
               and  requirements,   ORION  will  reimburse  Contractor  for  the
               above-described  costs and will pay all costs associated with the
               shipment to and from Contractor's facility.

          (2)  If  Contractor   fails  to  so  correct  such  Defects  within  a
               reasonable  time after  notification  from  ORION,  and after the
               Parties have followed the provisions of Article 10.1 (a)(1) above
               (including agreement on the existence of such Defect), ORION may,
               by separate contract or otherwise,  correct or replace such items
               or  services,  and,  unless  it is  reasonably  determined  after
               investigation  that ORION directly caused the Defect in question,
               or that the item or service  is in  conformance  with  applicable
               specifications or requirements, Contractor shall pay to ORION the
               direct actual cost of such correction or replacement.  The amount
               payable by Contractor  shall be verified at Contractor's  request
               by an internationally recognized firm of accountants appointed by
               Contractor,  such  appointment  to be  approved by ORION and such
               approval not to be unreasonably withheld or delayed. The costs of
               such  verification  shall  be paid by  Contractor  and  shall  be
               without   prejudice   to  the  right  of  either  Party  to  seek
               arbitration  under Article 16.2.  The report of such  accountants
               may be used by either  Party in any  arbitration  proceeding  but
               shall not be binding upon the arbitrators.

     (c)  Defect in Similar Satellite.

          (1)  Without  limiting the  obligations of Contractor or the rights of
               ORION  under  other  provisions  of the  Contract,  if  the  data
               available  from  the  Launched  ORION-Z   Spacecraft  or  another
               spacecraft  of a similar  class that is being built by Contractor
               indicates  that  the  ORION-Z   Spacecraft   contains  a  Defect,
               Contractor shall inform ORION of such Defect and shall,  promptly
               upon  the  request  of  ORION,  use  its  best  efforts  to  take
               appropriate  corrective  measures  with  respect  to the  ORION-Z
               Spacecraft  and  Additional  Satellite,  if  ordered,  so  as  to
               satisfactorily  eliminate such Defect from the ORION-Z Spacecraft
               and Additional Satellite.  Contractor shall fulfill the foregoing
               obligations  at its own cost and  expense,  including  all  costs
               arising from  charges for  shipping,  insurance,  taxes and other
               matters associated with the corrective measures.

          (2)  If Contractor fails to take such corrective measures with respect
               to the ORION-Z  Spacecraft within a reasonable time after request
               from ORION, ORION may by separate contract or otherwise, have all
               such Defects corrected in accordance with Article 10.1(b)(2).


                                       22

<PAGE>



     (d) Minor Defects.  For any Defect that does not adversely affect the form,
fit, useful life, reliability or function (i.e.,  operational  performance) of a
Transponder, Contractor and ORION agree to negotiate a reasonable resolution. If
the  Parties  are unable to reach an agreed  resolution  within ten (10) days of
ORION receiving notice of the Defect from Contractor ("Notice Date"), Contractor
or ORION shall have the right to elevate the negotiations to Contractor's Senior
Executive and to ORION's Senior  Executive.  In the event the Parties are unable
to reach an agreed resolution within fifteen (15) days of the Notice Date, ORION
shall thereafter be able to exercise all of its rights under this Article 10.

     (e) No  Additional  Payment.  Subject to  Article  6.3  (Excusable  Delay),
Contractor  acknowledges and agrees that it shall not be entitled to payment for
any additional costs incurred as a consequence of any Defect.

     (f) Delay.  Contractor  shall have a reasonable time to effect  corrections
required ; however,  Contractor's  time to correct  shall not impact  Customer's
rights under Article 7 (Acceptance Testing and Final Acceptance) and Article 6.2
(Delay).

     (g) Waiver of Defect.  After  notification  of a Defect to Contractor,  the
Parties may jointly elect in writing, pursuant to Article 28.4 (Amendments), not
to require  correction or  replacement of such items or services or to waive the
Defects noted. In such event,  Contractor,  if required by ORION but pursuant to
the procedures set forth in Article 10.1 (b)(2), shall repay such portion of the
Contract Price as is equitable in the circumstances.

10.2 MANUFACTURERS' WARRANTIES.

     Subject to the  provisions  of any  applicable  law,  Contractor  agrees to
enforce any  manufacturer's  warranty given to it in connection with any Work to
be provided under the Contract and Contractor shall provide to ORION the benefit
of any warranty  protection or pledge to ORION any proceeds therefrom in respect
of that Work and other items as are given to Contractor by the  manufacturers or
service providers.

10.3 REPLACED EQUIPMENT.

     If Contractor, in accordance with this Article, replaces any Equipment that
was determined to be deficient,  such deficient Equipment shall remain or become
the property of Contractor.

10.4 IN-ORBIT DATA.

     Except to the extent  required to perform  its  obligations  under  Article
10.1, nothing in this Article requires  Contractor to disclose to ORION in-orbit
data from satellites owned by others, without prior written consent.


                                       23

<PAGE>



11.  REPRESENTATIONS AND WARRANTIES

11.1 CONTRACTOR PERSONNEL.

     Contractor  represents and warrants that it shall assign properly qualified
and experienced personnel to the program contemplated by the Contract.

11.2 SOFTWARE AND INVENTION OWNERSHIP.

     Contractor  represents  and  warrants  that it is  either  the owner of, or
authorized  to use and  incorporate,  any  software  or  invention  utilized  or
incorporated in the Work.

11.3 AUTHORIZATION.

     Each Party represents and warrants to the other that:

     (a) it has the  requisite  corporate  power and authority to enter into the
Contract and to carry out the transactions contemplated by the Contract;

     (b)  the  execution,  delivery  and  performance  of the  Contract  and the
consummation  of the  transactions  contemplated  by the Contract have been duly
authorized by the requisite corporate action on the part of such Party; and

     (c)  the  Contract  is a  valid  and  binding  obligation  of  such  Party,
enforceable in accordance with its terms.

11.4 INDUCEMENTS.

     Contractor  represents  and  warrants to ORION that it has not violated any
applicable  laws or regulations  or any ORION  policies of which  Contractor has
been given notice  regarding the offering of unlawful  inducements in connection
with the Contract.

12.  IN-ORBIT PERFORMANCE WARRANTY AND INCENTIVE PAYMENTS

12.1 IN-ORBIT PERFORMANCE WARRANTY.

     Contractor warrants that the ORION-Z Spacecraft will provide the following:

     (a) The ORION-Z  Spacecraft  will support  simultaneous  operation of [ ] *
Satisfactorily  Operating  Primary  Transponders at 2.2 dB output power back-off
commencing on the date of Final Acceptance and for a period through the last day
of the [ ] year  thereafter  * and will  support  [ ]  Satisfactorily  Operating
Primary Transponders at 2.2 dB output * power back-off commencing with the first
day of year [ ] for a period of [ ] years *


                                       24

<PAGE>



thereafter; and

     (b) The ORION-Z Spacecraft power will support simultaneous operation of [ ]
*  [  ]  Satisfactorily  Operating  Primary  Transponders  with  [  ]  Saturated
Transponders * and [ ] Transponders  at 3.0 dB output power back-off  commencing
on the date of * Final Acceptance and for a period through the last day of the [
]  year   thereafter  and  will  *  support   simultaneous   operation  of  [  ]
Satisfactorily  Operating Primary Transponders * with [ ] Saturated Transponders
and [ ] Transponders at 3.0 dB output * power back-off commencing with the first
day of year [ ] and for a period of [ ] years *  thereafter.  (collectively  the
"In-Orbit  Performance  Warranty  Period").  The Transponders will be configured
symmetrically on the north and south panels.

12.2 ADVANCE INCENTIVE PAYMENT AT FINAL ACCEPTANCE.

     (a) If, at Final Acceptance,  the ORION-Z  Spacecraft has [ ] Serviceable *
Transponders operating at 2.2 dB output power back-off and a propellant lifetime
as  calculated  in  Part  3(D)  (In-Orbit   Commissioning  and  Acceptance  Test
Requirements)  of  at  least  [  ] *  years,  ORION  shall  pay  Contractor  the
Transponder Orbital Incentive Amount as an Advance Incentive Payment.

     (b) If at  Final  Acceptance,  the  ORION-Z  Spacecraft  does  not meet the
requirements  set  forth in  Paragraph  12.2(a)  above,  then  ORION  shall  pay
Contractor,  as an Advance  Incentive  Payment,  a percentage of the Transponder
Orbital Incentive Amount in accordance with the Aggregate Predicted  Transponder
Life as provided in Table 12.2(b) below:



                                       25
<PAGE>




     ----------------------------------------------------------------------
                                  Table 12.2(b)
                    Schedule of Transponder Orbital Incentive
                           Payment at Final Acceptance
     ----------------------------------------------------------------------

         Aggregate Predicted                    Percentage of Total
          Transponder Life                       Incentive Amount
         -------------------                    -------------------

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

     (c)  If,  at  Final  Acceptance,  the  ORION-Z  Spacecraft  has  sufficient
end-of-life  power  as  calculated  in Part  3(D)  (In-Orbit  Commissioning  and
Acceptance  Test  Requirements)  to support [ ]  Serviceable  Transponders  with
eighteen (18) Saturated  Transponders * and [ ] Transponders operating at 3.0 dB
power back-off, ORION shall pay Contractor * the Power Orbital Incentive Amount,
as an Advance Incentive Payment.

     (d) If,  at Final  Acceptance,  the  ORION-Z  Spacecraft  does not meet the
requirements  set  forth in  Paragraph  12.2(c),  then  ORION  shall  pay to the
Contractor,  as an Advance Incentive  Payment, a percentage of the Power Orbital
Incentive  Amount in  accordance  with the number of Saturated  Transponders  as
provided in Table 12.2(d) below:


                                       26
<PAGE>



     ----------------------------------------------------------------------
                                  Table 12.2(d)
                       Schedule of Power Orbital Incentive
                           Payment at Final Acceptance
     ----------------------------------------------------------------------


           No. of Saturated                       Percentage of Total
             Transponders                           Incentive Amount
           ----------------                       -------------------

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *


     (e) If the ORION Z Spacecraft is rendered  inoperative  because of a Launch
Vehicle  failure or failure of the Launch  Vehicle to place the Satellite in its
geostationary  transfer orbit location or if the ORION-Z  Spacecraft is deemed a
Constructive Total Loss through no fault of Contractor, Contractor shall receive
and be entitled to retain the full Orbital  Incentive  Amount payable under this
Article 12. Payment of any amount due Contractor  shall be paid thirty (30) days
after ORION's receipt of invoice and in accordance with Article 5.


                                       27

<PAGE>



12.3 MONTHLY TRANSPONDER INCENTIVE AMOUNT.

     (a)  Contractor  shall earn and be entitled to retain a  percentage  of the
Monthly Transponder  Incentive Amount during each calendar month of the In-Orbit
Performance Warranty Period according to the number of Satisfactorily  Operating
Primary  Transponders that the ORION-Z Spacecraft has, as provided in Table 12.3
below.  Subject to Article 12.3(b),  in the event any of the Monthly Transponder
Incentive Amount is not so earned by Contractor during any calendar month of the
In-Orbit Performance Warranty Period,  Contractor shall refund to ORION all such
unearned amounts.

     (b) If a  Primary  Transponder  does  not  satisfy  the  requirements  of a
Satisfactorily  Operating Primary Transponder,  but ORION nevertheless elects to
use such  Primary  Transponder  for  Revenue-earning  purposes,  then,  when the
Revenue  (or  equivalent  consideration)  received  by ORION  for  such  Primary
Transponder  in any one calendar  monthly  period is less than the proportion of
the  Monthly  Incentive  Amount   attributable  to  such  Primary   Transponder,
Contractor  shall,  in the  succeeding  month,  refund to ORION  the  difference
between the said  proportion  of the Monthly  Incentive  Amount for such Primary
Transponder  and ORION's  actual monthly  Transponder  Revenue for such calendar
monthly period.  In no event shall any one monthly  payment by Contractor  under
this Article 12.3(b) exceed said proportion of the Monthly  Incentive Amount for
such Primary Transponder.  In the event that a Primary Transponder is determined
not to be a Satisfactorily  Operating Primary  Transponder but is later used for
Revenue-earning  purposes,  ORION shall so advise  Contractor  within  seven (7)
Business Days after commencing such use.

     (c) Payment of any refund provided for under this Article 12.3 shall be due
thirty  (30) days  after the date of receipt by  Contractor  of an invoice  from
ORION;  interest  shall be paid (at the rate  specified  in Article  5.4) on any
amounts not paid when due.  Invoices shall be accompanied by sufficient  data to
support  ORION's  refund  claim.  ORION may offset any such payments not made by
Contractor  against any outstanding  balance due under the Contract.  Contractor
shall be deemed to have  accepted  the  Invoice  ten (10)  Business  Days  after
receipt of the Invoice unless,  within such time period,  it notifies ORION of a
dispute. Contractor shall pay any undisputed part of an Invoice.


                                       28

<PAGE>



     ----------------------------------------------------------------------
                                   Table 12.3
       Schedule of Monthly Transponder Orbital Incentive Amount Earned for
                       [ ] Transponders during years [ ] *
     ----------------------------------------------------------------------


          Number of Satisfactorily             Percentage of Monthly Transponder
       Operating Primary Transponders                   Incentive Amount
       ------------------------------          ---------------------------------


        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *


                                       29
<PAGE>

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *


     ----------------------------------------------------------------------
                                   Table 12.3
       Schedule of Monthly Transponder Orbital Incentive Amount Earned for
                       [ ] Transponders during years [ ] *
     ----------------------------------------------------------------------

          Number of Satisfactorily             Percentage of Monthly Transponder
       Operating Primary Transponders                   Incentive Amount
       ------------------------------          ---------------------------------

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *


                                       30
<PAGE>



        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *


12.4 MONTHLY POWER INCENTIVE AMOUNT.

     (a)  Contractor  shall earn and be entitled to retain a  percentage  of the
Monthly  Power  Incentive  Amount  during each  calendar  month of the  In-Orbit
Performance  Warranty Period  according to the number of Saturated  Transponders
that the ORION-Z Spacecraft has, as provided in the applicable Table 12.4 below.
In the  event  any of the  Monthly  Power  Incentive  Amount is not so earned by
Contractor  during  any  calendar  month of the  In-Orbit  Performance  Warranty
Period, Contractor shall refund to ORION all such unearned amounts.

     (b) Payment of any refund provided for under this Article 12.3 shall be due
thirty (30) days after the date of receipt by  Contractor  of such  invoice from
ORION;  interest  shall be paid (at the rate  specified  in Article  5.4) on any
amounts not paid when due.  Invoices shall be accompanied by sufficient  data to
support  ORION's  refund  claim.  ORION may offset any such payments not made by
Contractor  against any outstanding  balance due under the Contract.  Contractor
shall be deemed to have  accepted  the  Invoice  ten (10)  Business  Days  after
receipt of the Invoice unless,  within such time period,  it notifies ORION of a
dispute. Contractor shall pay any undisputed part of an Invoice.


                                       31
<PAGE>



     ----------------------------------------------------------------------
                                   Table 12.4
       Schedule of Monthly Power Orbital Incentive Amount Earned for [ ] *
                      [ ] Transponders during years [ ] *
     ----------------------------------------------------------------------


     Number of Saturated Transponders         Percentage of Monthly Power
                                                    Incentive Amount

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *



                                       32
<PAGE>




     ----------------------------------------------------------------------
                                   Table 12.4
       Schedule of Monthly Power Orbital Incentive Amount Earned for [ ] *
                      [ ] Transponders during years [ ] *
     ----------------------------------------------------------------------


     Number of Saturated Transponders         Percentage of Monthly Power
                                                    Incentive Amount

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

        [                    ]                [                     ]      *

12.5 MEASURING IN-ORBIT PERFORMANCE.

     (a) For the purposes of this Article 12, in  determining  whether a Primary
Transponder is a Satisfactorily Operating Primary Transponder,  no account shall
be taken of any period of unavailability:

          (1)  less than thirty (30) cumulative seconds per day;


                                       33
<PAGE>



          (2)  attributable  to  ORION-Z  Spacecraft   maintenance   activities,
               station keeping maneuvers,  payload  reconfiguration for business
               purposes or station change maneuvers;

          (3)  attributable  to  communications  link  fading  due  to  external
               causes,  including  but  not  limited  to  weather;

          (4)  arising  directly or indirectly as a consequence of any negligent
               act or  omission  of  ORION  or any  of  its  agents,  assignees,
               consultants, employees, or customers; or

          (5)  attributable to earth station sun blinding.

     (b)  All  measurements,  computations  and  analyses,  for the  purpose  of
determining whether a Primary Transponder is a Satisfactorily  Operating Primary
Transponder  shall  be  performed  by ORION or its  Consultants,  provided  that
Contractor  may, at its expense,  assist in determining  the nature of anomalies
and corrective  measures.  Contractor  shall for this purpose be given access to
any data collected by ORION.

12.6 ECLIPSE.

     In the event the ORION-Z  Spacecraft  fails to meet the eclipse  operations
requirements as specified in Part 2(A) (Technical  Specifications),  a reduction
shall be made to that portion of the Monthly  Transponder  Incentive  Amount and
Monthly  Power  Incentive  Amount  calculated  under  Articles 12.3 and 12.4, as
having been earned by Contractor,  with such reduction  being  equivalent to the
percentage of lost communications capacity determined during eclipse.

12.7 DISPUTED PERFORMANCE.

     In the  event  ORION  claims  for any  month of  operation  of the  ORION-Z
Spacecraft  that any of the criteria  established  or referred to under Articles
12.3, 12.4 and 12.5 above have not been met,  ORION's claim shall be accompanied
by  technical  data,  reports,  analyses  and such  records as are  available to
support such claim,  and Contractor  shall be given an opportunity to verify the
data.  Should  Contractor  disagree with such claim and present  evidence to the
contrary,  then ORION shall consider such evidence and consult with  Contractor.
In the event the Parties cannot resolve such disagreement, then either Party may
proceed under Article 16 (Dispute Resolution) to have such dispute resolved.



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<PAGE>



13.  INSURANCE

13.1 GENERAL.

     (a) Contractor  shall provide and maintain,  at its expense,  the insurance
required by Article 13.2. The insurers selected by Contractor shall have an A.M.
Best rating of A-XIII or foreign equivalent or better or, if such ratings are no
longer available, a comparable rating from a recognized insurance rating agency.
Such  insurance  coverages  shall  be in  amounts  no less  than  the  insurance
coverages Contractor provides and maintains for Contractor's other customers.

     (b)  Except  as  otherwise  specifically  provided  in  the  Contract,  the
insurance  required by this Article shall not limit, bar or otherwise affect the
liability  and  obligation  of  Contractor  to complete the Work and deliver the
Deliverable Items in accordance with the Contract.

13.2 REQUIRED INSURANCE.

     (a)  Insurance of the Work.

          (1)  All Risks Policy.

               (i)  Before Contractor commences the Work,  Contractor shall have
                    an insurance policy against all risks, loss or damage to the
                    ORION-Z Spacecraft  occurring prior to Intentional  Ignition
                    (including  coverage  against damage or loss caused by earth
                    movement,  flood,  boiler,  turbine and machinery accidents)
                    subject to normal "All Risks Policy" exclusions. The details
                    of the insurer and the relevant extracts of the policy shall
                    be submitted to ORION.

               (ii) Such insurance coverage shall be maintained by Contractor up
                    to  the  point  of  Intentional   Ignition  of  the  ORION-Z
                    Spacecraft  ordered by ORION  pursuant to the  Contract  and
                    shall  provide  (i)  coverage  for  removal of  debris,  and
                    insuring the structures,  machines,  equipment,  facilities,
                    fixtures  and other  properties  constituting  a part of the
                    project,  (ii)  transit  coverage,  including  ocean  marine
                    coverage  (unless  insured by the supplier),  (iii) off-site
                    coverage  covering  any key  equipment,  and  (iv)  off-site
                    coverage  covering any  property or equipment  not stored on
                    the construction sites.

          (2)  The  insurance of the Work as required by this  Article  13.2(a),
               whether effected by Contractor or ORION,  shall not limit, bar or
               otherwise  affect the liability  and  obligation of Contractor to
               complete the Work and deliver the Deliverable Items in accordance
               with the Contract.


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<PAGE>



          (3)  Contractor  shall use best  efforts to require  its  insurers  to
               waive all rights of  subrogation  against  ORION,  save those for
               which  ORION  indemnifies  Contractor  pursuant  to Article  15.2
               (Indemnity by ORION)  provided that such coverage  shall be at no
               additional cost to the insuring Party.

     (b)  Commercial General Liability Insurance.

          (1)  Before  Contractor  commences the Work,  Contractor  shall have a
               Commercial  General  Liability  Policy of  insurance.  The policy
               shall cover Contractor and all Subcontractors  employed from time
               to time in  relation to the Work and  performance  of the ORION-Z
               Contract  for their  respective  rights and  interests  and cover
               their liabilities to third parties.

          (2)  The Commercial General Liability Policy shall be maintained until
               all Work pursuant to the Contract,  including  remedial  work, is
               Delivered  and Final  Acceptance  of the ORION-Z  Spacecraft  has
               occurred.

          (3)  Contractor   shall  require  insurers  to  waive  all  rights  of
               subrogation against ORION, save those for which ORION indemnifies
               Contractor pursuant to Article 15.2 (Indemnity by ORION) provided
               that such coverage shall be at no additional cost to the insuring
               Party.

     (c)  Insurance of Employees.

          (1)  Before  commencing  the  Work,  Contractor  shall  have  Worker's
               Compensation Insurance, including occupational illness or disease
               coverage,  or other similar social  insurance in accordance  with
               the  laws  of  the  country,   state  or   territory   exercising
               jurisdiction   over  the   employee  and   Employer's   Liability
               Insurance.  Such  insurance  shall be  maintained  until all Work
               pursuant to the Contract,  including  remedial work, is Delivered
               and Final  Acceptance  of the ORION-Z  Spacecraft  has  occurred.
               Contractor shall ensure that all  Subcontracts  contain a similar
               provision.

          (2)  Contractor  shall  require  its  insurers  to waive all rights of
               subrogation against ORION, save those for which ORION indemnifies
               Contractor pursuant to Article 15.2 (Indemnity by ORION) provided
               that such coverage shall be at no additional cost to the insuring
               Party.

     (d)  Comprehensive Automobile Liability Insurance.

          (1)  Before  commencing  the Work,  Contractor  shall  self-insure  or
               Contractor shall insure against  liability for claims of personal
               injury  (including  bodily injury and death) and property  damage
               covering all owned, leased,  non-owned and



                                       36
<PAGE>



               hired  vehicles  used at any of  Contractor's  facilities  in the
               performance of Contractor's obligations under the Contract.

13.3 SUBCONTRACTS.

     Contractor  shall  require  its  Subcontractors  to  provide  and  maintain
insurance,  and such insurance  shall be no less in kind or amount as Contractor
requires its  Subcontractors  to provide and maintain for work to be provided by
such Subcontractors to other customers of Contractor.

13.4 DOCUMENTARY EVIDENCE.

     (a) In respect of every  insurance  policy  required under this Article 13,
before  commencement  of the Work and  whenever  requested  by ORION in writing,
Contractor shall periodically  provide  documentary  evidence that the coverages
and policy  endorsements  required under the Contract have been effected and are
being  maintained  in force and  Contractor  shall  provide  ORION not less than
thirty (30) days  written  notice  prior to any  modification,  cancellation  or
non-renewal of the policies.

     (b)  Contractor  shall produce  evidence of  compliance  with the insurance
obligations applicable to Contractor pursuant to this Article 13 within fourteen
(14) days of written request by ORION. In the event  Contractor does not provide
such evidence within such time period,  ORION shall provide  Contractor  written
notice thereof.

13.5 CLAIMS.

     As soon as practicable  after any occurrence  that may give rise to a claim
under a policy of insurance required by this Article 13, Contractor shall inform
ORION in writing of such occurrence and shall  thereafter keep ORION informed of
subsequent  developments  concerning  the claim.  Contractor  shall  ensure that
Subcontractors   similarly  inform  ORION  of  any  such   occurrences   through
Contractor. Each Party shall provide to the other Party any information that may
reasonably be required to prepare and present an insurance claim.

14.  ADDITIONAL SATELLITE OPTION

14.1 DELIVERY SCHEDULE.

     Contractor  agrees to  provide an  additional  satellite  identical  to the
ORION-Z Spacecraft design,  ("Additional Satellite") for on-ground delivery to a
launch site designated by ORION and without further obligation for Contractor to
provide any launch  readiness  service no later than  nineteen (19) months after
receipt of an order from ORION or four (4) months  after  delivery  of  ORION-Z,
whichever is later.  ORION may place such order at any time after the EDC but in
no event later than two (2) months after Launch of the Satellite.


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<PAGE>



14.2 PRICE.

     (a)  The  firm  fixed  price  for  the  Additional  Satellite  ("Additional
Satellite Price"),  is [ ] provided ORION orders such Additional  Satellite no *
later than March 30, 1999.  Thereafter,  the  Additional  Satellite  Price shall
increase  to [ ] * [ ] subject  to ORION  placing  an order  for the  Additional
Satellite  * no later  than  September  30,  1999.  Thereafter,  the price of an
Additional  Satellite  shall be  negotiated  between the Parties  prior to ORION
ordering the Additional Satellite.

     (b) The Additional  Satellite payment plan shall be negotiated  between the
Parties prior to ORION ordering the Additional Satellite; the payment plan shall
match  Contractor's  actual  expenditure  profile so as to avoid prepayments and
financing costs.

     (c) Selection of the launch vehicle and launch services  contractor will be
made by ORION (with the  concurrence of Contractor) in sufficient time to permit
delivery of the Additional  Satellite on the schedule set forth in Article 14.1.
The prices for both such  items  will be  identified  and agreed to as a part of
such process.

     (d) ORION shall provide for launch insurance for the Additional Satellite.

14.3 ADDITIONAL SATELLITE CONTRACT PROVISIONS.

     (a) Contractor  shall furnish the Additional  Satellite in accordance  with
the  provisions of the documents that  constitute  the Contract,  with the dates
therein  adjusted  (if  necessary)  for the later  timeframe  of the  Additional
Satellite.

     (b) Except as otherwise  required by the terms of this Article 14, contract
terms for the Additional Satellite will be identical to the Contract,  with risk
elements  (e.g.,  liquidated  damages for late  delivery  and  warranty  payback
incentives) adjusted to the change in price from the ORION-Z Spacecraft so as to
represent the same percentage risk.

15.  INDEMNIFICATION,   INTER-PARTY  WAIVER  OF  LIABILITY,  AND  LIMITATION  OF
     LIABILITY AND DISCLAIMER OF WARRANTY

15.1 INDEMNITY BY CONTRACTOR.

     Contractor  shall  indemnify,  defend  and  hold  harmless  ORION  and  its
Associates from any and all Losses arising from, in connection with, or based on
any  allegations  made by third parties  (including  employees,  Consultants  or
customers of ORION, Contractor,  Subcontractors and all other persons performing
any of the Work hereunder) regarding any of the following:

     (a) injury to persons  (including  sickness  or death) or damage to real or
tangible personal property  (excluding the ORION-Z  Spacecraft after Intentional
Ignition),  resulting  from any act or  omission,  negligent  or  otherwise,  of
Contractor or its  Subcontractors  in the



                                       38

<PAGE>



performance  of the Work,  or any act or  omission  of ORION or ORION  Personnel
occurring at any  installation  of  Contractor  (except  acts or omissions  that
constitute willful misconduct or lack of good faith);

     (b)  any  claims  of  infringement  of any  intellectual  property  rights,
including  patent,  copyright or industrial  design,  or of unauthorized  use or
disclosure of any proprietary  technical  information,  alleged to have occurred
because of the Work performed under the Contract;

     (c)  Contractor's  breach  of its  obligations  with  respect  to  improper
payments as set forth in Article 28.14 (Improper Payments,  Kickbacks, Gifts and
Gratuities); and

     (d) Contractor's  breach of its obligations with respect to compliance with
applicable laws as set forth in Article 28.15 (Compliance With Applicable Laws).

15.2 INDEMNITY BY ORION.

     ORION  shall  indemnify,  defend  and  hold  harmless  Contractor  and  its
Associates from any and all Losses arising from, in connection with, or based on
any  allegations  made by third parties  (including  employees of Contractor and
Subcontractors,  employees,  Consultants  and  customers  of ORION and all other
persons performing any of the Work hereunder) regarding any of the following:


     (a) injury to persons  (including  sickness  or death) or damage to real or
tangible  personal  property,  resulting from any act or omission,  negligent or
otherwise, of ORION or ORION Personnel relating to the Work; provided,  however,
ORION shall have no  obligation  with respect to claims for acts or omissions of
ORION or ORION Personnel  occurring at any  installation  of Contractor  (except
acts or omissions that constitute willful misconduct or lack of good faith);

     (b)  any  claims  of  infringement  of any  intellectual  property  rights,
including  patent,  copyright or industrial  design,  or of unauthorized  use or
disclosure of any proprietary  technical  information,  alleged to have occurred
because of any resource provided to Contractor for performance of the Work;

     (c) ORION's breach of its obligations with respect to improper  payments as
set forth in Article 28.14 (Improper Payments, Kickbacks, Gifts and Gratuities);
and

     (d) ORION's  breach of its  obligations  with  respect to  compliance  with
applicable laws as set forth in Article 28.15 (Compliance With Applicable Laws).



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<PAGE>



15.3 INFRINGEMENT.

     (a) In the  event  that,  as a  result  of any  claim  or  action  alleging
infringement as described in Article  15.1(b),  the  manufacture,  use, lease or
sale of any item  thereof is  enjoined,  Contractor  agrees to utilize  its best
efforts either:

          (1)  to negotiate a license or other  agreement  with the plaintiff so
               that such item is no longer subject to such injunction; or

          (2)  to  modify  suitably  such item or  substitute  a  suitable  item
               therefor,  which modified or  substituted  item is not subject to
               such  injunction  and to extend the  provisions  of this  Article
               thereto.

     (b) In the  event  neither  of the  alternatives  set forth  under  Article
15.3(a) above is  accomplished by Contractor,  Contractor  shall refund to ORION
all  payments  made by ORION to it on account of the  Contract  Price,  plus any
orbital  incentive  payments.  Should  Contractor be required under this Article
15.3(b) to refund to ORION all  payments,  ORION shall  retransfer  title in the
enjoined item to Contractor if title has previously passed to ORION.

     (c) Contractor  agrees to promptly provide ORION with written notice of any
demand,  claim,  request,  proceeding  or action  against  Contractor  or any of
Contractor's other customers alleging that technology incorporated into the Work
provided  under the Contract  infringes  the  claimant's  intellectual  property
rights.

15.4 INDEMNIFICATION PROCEDURES.

     (a) Promptly after receipt by any entity entitled to indemnification  under
Articles 15.1 and 15.2 of notice of the commencement or threatened  commencement
of any civil,  criminal,  administrative,  or investigative action or proceeding
involving a claim in respect of which the indemnitee  will seek  indemnification
pursuant to such Article,  the indemnitee shall notify the indemnifying Party of
such claim in  writing.  Failure to so notify the  indemnifying  Party shall not
relieve the indemnifying  Party of its obligations  under the Contract except to
the extent that it can demonstrate damages attributable to such failure.  Within
fifteen  (15) days  following  receipt of  written  notice  from the  indemnitee
relating to any claim,  but no later than ten (10) days before the date on which
any  response to a complaint  or summons is due,  the  indemnifying  Party shall
notify the  indemnitee  in writing if the  indemnifying  Party  elects to assume
control of the defense  and  settlement  of that claim (a "Notice of  Election")
unless the  indemnifying  Party received  notice of the claim less than ten (10)
days before said due date,  in which case the  indemnifying  Party shall provide
the indemnitee a Notice of Election as soon as is reasonably  practicable  after
receipt of notice of the claim.

     (b) If the indemnifying Party delivers a Notice of Election relating to any
claim  within the  required  notice  period,  the  indemnifying  Party  shall be
entitled to have sole  control



                                       40

<PAGE>



over the defense and settlement of such claim;  provided that (i) the indemnitee
shall be  entitled  to  participate  in the  defense of such claim and to employ
counsel at its own expense to assist in the  handling of such claim;  (ii) where
the  indemnitee  is so  represented,  the  indemnifying  Party  shall  keep  the
indemnitee's  counsel  informed of each step in the  handling of any such claim;
(iii) the indemnitee  shall provide,  at the  indemnifying  Party's  request and
expense,  such  assistance and information as is available to the indemnitee for
the defense and settlement of such claim; and (iv) the indemnifying  Party shall
obtain the prior written  approval of the  indemnitee  before  entering into any
settlement  of such claim or ceasing to defend  against  such  claim.  After the
indemnifying  Party has delivered a Notice of Election  relating to any claim in
accordance with the preceding  paragraph,  the  indemnifying  Party shall not be
liable to the indemnitee  for any legal  expenses  incurred by the indemnitee in
connection with the defense of that claim. In addition,  the indemnifying  Party
shall not be required to indemnify the indemnitee for any amount paid or payable
by the  indemnitee  in the  settlement  of any claim for which the  indemnifying
Party has  delivered  a timely  Notice of  Election if such amount was agreed to
without the written consent of the indemnifying Party.

     (c) If the  indemnifying  Party  does  not  deliver  a Notice  of  Election
relating to any claim within the required  notice period,  the indemnitee  shall
have the right to defend the claim in such manner as it may deem appropriate, at
the cost and expense of the indemnifying  Party.  The  indemnifying  Party shall
promptly  reimburse  the  indemnitee  for all  such  costs  and  expenses.

15.5 INTER-PARTY WAIVER OF LIABILITY FOR LAUNCH OPERATIONS.

     (a) ORION and Contractor agree to a no-fault,  no-subrogation,  inter-party
waiver of  liability  under which each Party  agrees to be  responsible  for any
damage that it sustains as a result of damage to its own property and employees,
including  death,  while  involved in launch  operations in or around the launch
site, which damage is caused by either  Contractor,  ORION, the Launch Agency or
any other party  involved in launch  operations,  and whether such damage arises
through  negligence  or  otherwise.  It is the intent of the  Parties  that this
inter-party  waiver of liability  be  construed  broadly to achieve the intended
objectives.

     (b) For purposes of this Article 15.5 only,  each Party further agrees that
if it subcontracts  with a third party to provide services that necessitate such
third party's  presence on the launch site, then it acknowledges and agrees that
such third  party  shall be  required  to agree to a  no-fault,  no-subrogation,
inter-party waiver of liability and indemnity for damages it sustains, identical
to the Parties' respective undertakings under this Article.

     (c) In the event  that a Party  fails to obtain the  aforesaid  inter-party
waiver of liability from its  subcontractor(s),  then such Party shall indemnify
and hold  harmless the other  Party,  the Launch  Agency,  other users of launch
services and their respective contractors and subcontractors from claims brought
by   such   subcontractor(s)   of  the   first   Party   for   damage   to  such
subcontractor(s)'s  property or injury to, or death of, such  subcontractor(s)'s
employees with respect to matters that otherwise  would have been covered by the
inter-party waiver of liability.


                                       41

<PAGE>



     (d) The  Parties  will take such  further  actions  as may be  required  to
implement the  provisions of this Article 15.5,  including the execution of such
agreements and waivers as are customarily used with respect to operations at the
launch site and are consistent with the provisions of this Article 15.5.

15.6 WAIVER OF SUBROGATION.

     Except as provided in Article  7.5(g)(4),  if a Party  insures  against any
loss or damage it may  suffer in respect  of which  such  Party is  required  to
indemnify  the other Party or an Associate  of the other Party  pursuant to this
Article  15, it shall be a  condition  that such  Party  shall  arrange  for the
insurer  to waive its right of  subrogation  against  the other  Party and every
Associate  of the  other  Party  provided  that  such  coverage  shall  be at no
additional cost to the insuring  Party.  Each Party shall be entitled to require
proof from time to time that the other Party has complied  with its  obligations
under  this  Article.  In the  event  that a Party  does not  comply  with  such
obligations,  the respective  indemnities  referred to in Articles 15.1 and 15.2
shall  extend,  as  applicable,  to any  claim  that  may be made by an  insurer
pursuant to an alleged right of subrogation.

15.7 LIMITATION OF LIABILITY.

     (a) EXCEPT AS OTHERWISE  EXPRESSLY  AUTHORIZED  IN THE CONTRACT IN NO EVENT
SHALL EITHER PARTY BE LIABLE  DIRECTLY OR  INDIRECTLY TO THE OTHER PARTY AND ITS
ASSOCIATES  AND  SUBCONTRACTORS  OR TO ANY ASSIGNEE OR  SUCCESSOR  OWNERS OF THE
ORION-Z  SPACECRAFT  FOR  ANY  AMOUNT  REPRESENTING  LOSS  OF  PROFITS,  LOSS OF
BUSINESS,  OR INDIRECT,  SPECIAL,  EXEMPLARY,  CONSEQUENTIAL OR PUNITIVE DAMAGES
ARISING FROM THE  PERFORMANCE OR  NONPERFORMANCE  OF THE CONTRACT OR ANY ACTS OR
OMISSIONS  ASSOCIATED  THEREWITH  OR RELATED TO THE USE OF ANY ITEMS OR SERVICES
FURNISHED  HEREUNDER,  WHETHER THE BASIS OF THE LIABILITY IS BREACH OF CONTRACT,
TORT (INCLUDING  NEGLIGENCE AND STRICT  LIABILITY),  STATUTES OR ANY OTHER LEGAL
THEORY.  EXCEPT AS OTHERWISE EXPRESSLY  AUTHORIZED IN THE CONTRACT,  IN NO EVENT
SHALL EITHER PARTY'S TOTAL  LIABILITY TO THE OTHER PARTY FOR ANY DAMAGES CLAIMED
HEREUNDER EXCEED THE CONTRACT PRICE.

     (b) The foregoing limitation of liability shall not be deemed to affect the
Contractor's duties or ORION's remedies under Article 7.5 and Article 13.

15.8 DISCLAIMER OF WARRANTY.

     EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THE CONTRACT, CONTRACTOR MAKES NO
WARRANTY,  EXPRESS OR IMPLIED,  INCLUDING  ANY



                                       42
<PAGE>



WARRANTY OF  MERCHANTABILITY  OR FITNESS FOR A PARTICULAR PURPOSE WITH REGARD TO
THE  ORION-Z  SPACECRAFT  OR ANY  OTHER  DELIVERABLE  ITEM  PROVIDED  UNDER  THE
CONTRACT.

16.  DISPUTE RESOLUTION

     Any dispute between the Parties arising out of or relating to the Contract,
including  with respect to the  interpretation  of any provision of the Contract
and/or with  respect to  performance  under the  Contract,  shall be resolved as
provided in this Article.

16.1 INFORMAL DISPUTE RESOLUTION.

     Prior to the  initiation  of  formal  dispute  resolution  procedures,  the
Parties shall first attempt to resolve their dispute informally, as follows:

     (a) If,  during the course of Work in  progress,  either Party has cause to
believe that the other Party's  performance,  or plan for  performance,  is such
that the  obligations of the other Party,  as stated in the Contract will not be
met,  the Party  shall give  written  notice of its  objections  and the reasons
therefor and may recommend  corrective  action by the other Party.  Contractor's
Program Manager shall promptly consult with ORION's Program Manager in an effort
to reach an agreement to overcome the objections  (first  instance).

     (b) In the  event  agreement  cannot  be  reached  within  ten (10) days of
receipt of written  notice,  then either  Party may request that it be escalated
and the respective  positions of the Parties shall be forwarded to  Contractor's
Senior  Executive and ORION's Senior  Executive for  discussion,  and an attempt
shall be made to reach agreement (second instance).

     (c) In the event  agreement  cannot be reached in the first  instance or in
the second instance  within thirty (30) days of the written notice  described in
Article  16.1(a),  then either Party may request  that it be  escalated  and the
positions  of the Parties  shall be  forwarded  to  Contractor's  President  and
ORION's  President  for  resolution  of  the  objections  (third  instance).  If
agreement still cannot be reached within ten (10) additional days,  either Party
may commence arbitration in accordance with Article 16.2.

     (d) In the event of a dispute as to the performance of the Launched ORION-Z
Spacecraft,  the  Parties  agree  to have an  independent  determination  of the
ORION-Z  Spacecraft   technical  status  performed  by  a  mutually   acceptable
technically  qualified  third party.  The costs  incurred in retaining the third
party shall be shared equally  between  Contractor and ORION.  Such  independent
determination may be used by either Party in any arbitration under Article 16.2,
but such determination shall not be binding upon the arbitrators.


                                       43

<PAGE>



16.2 ARBITRATION.

     If the Parties are unable to resolve any dispute as contemplated by Article
16.1 and if such dispute is not subject to Article 16.3, then such dispute shall
be  submitted  to mandatory  and binding  arbitration  at the election of either
Party (the "Disputing Party") pursuant to the following conditions:

     (a) The Disputing Party shall notify the American  Arbitration  Association
("AAA")  and the other  Party in writing  describing  in  reasonable  detail the
nature of the dispute.

     (b)  The  arbitration  shall  be  conducted  by a  tribunal  of  three  (3)
arbitrators.  Each Party shall appoint one (1) arbitrator and the third shall be
appointed by the two (2) arbitrators so previously appointed.

     (c) The  arbitration  shall be  conducted  in  accordance  with  the  AAA's
Commercial  Arbitration Rules then in effect.  The arbitral tribunal shall allow
reasonable  discovery  in the  forms  permitted  by the  Federal  Rules of Civil
Procedure,  to the  extent  consistent  with the  purpose  of  arbitration.  The
arbitral  tribunal  shall have no power or authority  to amend or disregard  any
provision  of this  Article  16.2 or any other  provision  of the  Contract  (in
particular,  the arbitral tribunal shall not have authority to exclude the right
of a Party to terminate this  Agreement  when a Party would  otherwise have such
right).   The  arbitral  hearing  shall  be  commenced  promptly  and  conducted
expeditiously,  with each Party  being  allocated  one-half  of the time for the
presentation of its case.  Unless otherwise  agreed by the Parties,  an arbitral
hearing  shall be  conducted  on  consecutive  days.  In respect of a default by
either Party in respect of any procedural  order made by the arbitral  tribunal,
the  tribunal  shall  have power to proceed  with the  arbitration  and make its
award.

     (d) The arbitration shall be held in Washington,  D.C., U.S.A. and shall be
conducted in the English language.

     (e) Any  arbitration  proceeding  held  pursuant to this  article  shall be
governed  exclusively by the United States Arbitration Act, 9 U.S.C.,  Section 1
et seq.

     (f)  The  following  time  limits  shall  be  observed  in  respect  of any
arbitration  held  pursuant to this  Article:

          (1)  each Party shall appoint its  arbitrator  within ten (10) days of
               receipt of the AAA acknowledgment of a demand for arbitration;

          (2)  the  two  (2)  appointed   arbitrators   shall  appoint  a  third
               arbitrator  within  a  further  twenty  (20)  days  from the time
               stipulated in Article  16.2(f)(1) (unless the two (2) arbitrators
               agree to an  extension  not to exceed an  additional  twenty (20)
               days); and


                                       44

<PAGE>



          (3)  any decision by the arbitrators  referred to shall be made within
               six (6) months from the date on which a Party demands arbitration
               or within such extended period as the arbitrators may allow.

     (g) Pending a decision by the arbitral tribunal,  each Party shall,  unless
directed  otherwise by the other Party in writing,  fulfill all its  obligations
under the Contract,  including,  if and so far as it is reasonably  practicable,
the obligation to take steps  necessary  during the  arbitration  proceedings to
ensure that the Work will be delivered within the time stipulated or within such
extended time as may be allowed  under the Contract.  Dispute over payment shall
not relieve Contractor of its obligations under this Article 16.2(g).

     (h) The arbital tribunal shall, after reaching judgment and award,  prepare
and  distribute  to the Parties a writing  describing  the  findings of fact and
conclusions  of law  relevant to such  judgment  and award,  and  containing  an
opinion  setting  forth the reasons  for the giving or denial of any award.  The
award of the arbitral  tribunal  shall be final and binding on the Parties,  and
any judgment thereon may be entered in a court of competent jurisdiction.  In no
event  shall  the  arbitral   tribunal  be  entitled  to  include   indirect  or
consequential damages in any damage award payable by either Party.

     (i) The arbitral  tribunal shall award  prejudgment  interest on any amount
that the tribunal determines is owing from one Party to the other, such interest
to be calculated at an annual rate equal to the Chase  Manhattan Prime Rate then
in effect for each day from  forty-five  (45) days following the date of loss or
from the date of the filing for arbitration, whichever is the earlier, until the
date full payment is made.

     (j)  The  cost  of   arbitration,   including  fees  and  expenses  of  the
arbitrators,  will be shared  equally by the Parties,  unless the arbitral award
otherwise  provides.  Each Party shall bear the cost of preparing and presenting
its own case, unless the arbitral award otherwise provides.

     (k) Notwithstanding  anything else contained herein, the Parties agree that
time is of the essence in resolving any dispute.

16.3 LITIGATION.

     (a) The Parties agree that the only circumstances in which disputes between
them shall not be subject to the provisions of Articles 16.1 and 16.2 is where a
Party  makes a good  faith  determination  that a  breach  of the  terms  of the
Contract  by the other  Party is such that the  damages to such Party  resulting
from the breach will be so  immediate,  so large or severe,  and so incapable of
adequate  redress  after the fact that a  temporary  restraining  order or other
immediate  injunctive  relief is the only  adequate  remedy.  If a Party files a
pleading with a court seeking  immediate  injunctive relief and this pleading is
challenged by the other Party and the injunctive relief sought is not awarded in
substantial  part, the Party filing the pleading  seeking  immediate



                                       45

<PAGE>



injunctive  relief  shall  pay all the costs  and  attorneys'  fees of the Party
successfully challenging the pleading.

     (b) The Parties  consent to the  non-exclusive  jurisdiction  of  competent
Maryland  state courts or federal  courts in the  District of Maryland,  for all
litigation  that may be brought  under  Article  16.3(a)  above,  subject to the
requirement  for  arbitration  hereunder,  with respect to the terms of, and the
transactions  and  relationships  contemplated  by, the  Contract.  The  Parties
further consent to the  jurisdiction of any court located within a district that
encompasses assets of a Party against which a judgment has been rendered, either
through arbitration or through litigation,  for the enforcement of such judgment
or award against the assets of such Party.


17.  TERMINATION

17.1 TERMINATION FOR CONVENIENCE.

     (a) ORION may, upon written notice to Contractor, terminate all or any part
of the Contract without cause and at any time, and Contractor shall  immediately
cease work in the manner and to the extent  specified and shall similarly direct
its  Subcontractors  and take such action as may be  reasonably  necessary or as
ORION may direct for the protection and  preservation of the Work that is in the
possession  of  Contractor  or any  Subcontractor  and in which ORION has or may
acquire an interest.

     (b) In the event of such  termination  under this Article 17.1 and provided
the  termination  was not due to the default of  Contractor  under Article 17.2,
Contractor  shall be entitled to payment of an amount  equal to, (i) in the case
of  termination  of all of the Contract,  the  Termination  Liability  Amount as
specified in Part l(B) (Payment  Milestone  Schedule and  Termination  Liability
Amounts)  corresponding to the month in which termination occurs less the sum of
the  Payment  Milestones  received  by  Contractor  and,  (ii)  in the  case  of
termination  of a part  of the  Contract,  such  amount  as  applicable  to such
terminated  part,  less the total  applicable  amount of the sum of the  Payment
Milestones  received by  Contractor;  provided  that in either case,  where such
amount is a negative number,  Contractor shall pay such amount promptly to ORION
within twenty (20) days.

     (c)  Contractor  shall  submit an Invoice to ORION  within  sixty (60) days
after the termination date which shall specify the amount due to Contractor from
ORION pursuant to this Article 17.1, and Contractor shall be entitled to payment
by ORION of such  amount  within  thirty (30) days  thereafter.  Payment of such
amount by any Financing  Entity on behalf of ORION to  Contractor  shall relieve
ORION from its obligation to make such payment.

     (d) The amount payable by ORION to Contractor  pursuant to Article  17.1(b)
shall  constitute a total  discharge of ORION's  liabilities  to Contractor  for
termination pursuant to this Article 17.1.


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<PAGE>



     (e) If the Contract is terminated as provided in this Article 17.1 and full
payment is made in accordance  with Articles 17.1 (b) and (c), ORION may require
Contractor  to  transfer to ORION,  in the manner and to the extent  directed by
ORION  and at the  expense  of  ORION,  title  to and  possession  of any  items
comprising  all  or  any  part  of  the  Work  terminated  (including,   without
limitation, all Work in progress and all inventories allocated to the Contract),
and Contractor  shall,  upon the direction and at the expense of ORION,  protect
and preserve  property in the possession of Contractor or its  Subcontractors in
which ORION has an interest and shall  facilitate  access to and  possession  by
ORION of items comprising all or any part of the Work so terminated. If ORION so
requests or ORION has not taken delivery of property in which it has an interest
within  sixty (60) days after  termination,  or such longer  period as is agreed
between the Parties,  Contractor  shall make a reasonable,  good faith effort to
sell such  property and to remit any sales  proceeds to ORION,  less a deduction
for costs of disposition reasonably incurred by Contractor.

17.2 TERMINATION FOR CONTRACTOR'S DEFAULT.

     (a) If at any time  Contractor has failed to make adequate  progress toward
the completion of the ORION-Z Spacecraft, including where such failure is due to
the unlaunched  ORION-Z  Spacecraft or any component  being damaged or destroyed
where such damage or destruction  does not constitute an Excusable  Delay,  such
that Contractor will not be able to Deliver the ORION-Z Spacecraft within ninety
(90) days  after the  ORION-Z  Spacecraft  Delivery  Date set forth in Article 6
(Delivery)  (as  such  date  may  have  been  modified  in  accordance  with the
Contract),  then ORION  shall be  entitled  to deliver  to  Contractor  a demand
("Demand")  for  correction  of the failure  within thirty (30) days after ORION
learns of such  failure.  Such Demand  shall state full  details of the failure.
Within ten (10) days after  receipt of the  Demand,  or such  longer time as the
Parties agree,  Contractor shall submit to ORION a Correction Plan for achieving
Final Acceptance of the ORION-Z Spacecraft not later than one hundred and eighty
(180) days after the ORION-Z Spacecraft  Delivery Date as specified in Article 6
(Delivery),  provided that no Correction Plan shall ever result in a change to a
Delivery  Date,  unless  the  Parties  agree in  accordance  with  Article  28.4
(Amendments).  If the Correction Plan does not reasonably  correct or offset the
effect of the failure so as to demonstrate that Final Acceptance can be achieved
not later than one  hundred and eighty  (180) days after the ORION-Z  Spacecraft
Delivery  Date (as such  date may have  been  modified  in  accordance  with the
Contract),  ORION may reject the  Correction  Plan within thirty (30) days after
receipt,  in which case the Parties  shall  negotiate in good faith to develop a
Correction  Plan that will be  satisfactory  to both Parties.  If ORION does not
reject the Correction  Plan within thirty (30) days after receipt,  the Contract
shall be deemed  modified in accordance with the Correction Plan and the failure
shall be  deemed  cured so long as  Contractor  complies  with the terms of such
Correction Plan.

     (b) If Contractor  refuses or fails to observe or perform any material duty
or obligation in the Contract,  except those obligations of Contractor for which
particular  remedies are specified elsewhere in the Contract as being exclusive,
then ORION shall be entitled to deliver to  Contractor  a Demand that it correct
the breach within thirty (30) days.  Such Demand shall state



                                       47
<PAGE>



full details of the breach. Within ten (10) days after receipt of the Demand, or
such  longer  time as the  Parties  agree,  Contractor  shall  submit to ORION a
Correction  Plan. If the Correction  Plan does not reasonably  correct or offset
the effect of the  breach in a timely  manner,  ORION may reject the  Correction
Plan within  thirty  (30) days after  receipt,  in which case the Parties  shall
negotiate in good faith to develop a Correction  Plan that will be  satisfactory
to both Parties. If ORION does not reject the Correction Plan within thirty (30)
days after receipt, the Contract shall be deemed modified in accordance with the
Correction  Plan and the  breach  shall be  deemed  cured so long as  Contractor
complies  with the terms of such  Correction  Plan.

     (c) ORION may, upon written notice to Contractor, terminate immediately for
cause all or any portion of the Contract if:

          (1)  Contractor  does not submit a Correction Plan to ORION within ten
               (10) days  after  receipt  of a  Demand,  or the  Parties  cannot
               develop a Correction Plan that reasonably corrects or offsets the
               effects  of  the   failure   or  breach  or  that  is   otherwise
               satisfactory to both ORION and Contractor within twenty (20) days
               after ORION's rejection of the Correction Plan; or

          (2)  Contractor  fails to  Deliver  in orbit  the  ORION-Z  Spacecraft
               within  one  hundred  and eighty  (180)  days  after the  ORION-Z
               Spacecraft  Delivery  Date set forth in Article 6 (Delivery)  (as
               such  date  may  have  been  modified  in  accordance   with  the
               Contract); or

          (3)  Contractor (i) files for bankruptcy,  (ii) becomes or is declared
               insolvent,  or is the subject of any  proceedings  related to its
               liquidation, insolvency or the appointment of receiver or similar
               officer for it, (iii) makes an assignment  for the benefit of all
               or  substantially  all of its  creditors;  or (iv) enters into an
               agreement for the  composition,  extension,  or  readjustment  of
               substantially all of its obligations; or

          (4)  Contractor resorted to fraudulent,  corrupt or unlawful practices
               in connection with its securing or implementing the Contract; or

          (5)  Contractor breaches its obligations under Article 28.14 (Improper
               Payments,  Kickbacks,  Gifts and  Gratuities)  or  Article  28.15
               (Compliance with Applicable Laws).

     (d) In no event  may ORION  terminate  the  Contract  with  respect  to the
ORION-Z Spacecraft after Intentional Ignition.

     (e) In the  event  ORION  terminates  the  Contract  in whole or in part as
provided in this Article 17.2, then:


                                       48

<PAGE>



          (1)  ORION may require  Contractor to transfer to ORION, in the manner
               and to the  extent  directed  by  ORION  and  at the  expense  of
               Contractor,  title to and possession of any items  comprising all
               or  any  part  of  the  Work   terminated   (including,   without
               limitation, all Work in progress and all inventories allocated to
               the  Contract).  The  transfer to ORION of Work in  progress  and
               inventories  allocated  to the  Contract  not  associated  with a
               Payment Milestone that has been Successfully Completed, Conducted
               or Delivered (as defined in Article 5) shall be  contingent  upon
               Contractor  being  paid an  amount  mutually  agreed  upon by the
               Parties for such Work in progress  and  inventories  allocated to
               the Contract,  which amount shall in no event exceed Contractor's
               reasonable  actual cost incurred  therefor.  ORION also may cause
               the ORION-Z  Spacecraft to be completed by another party,  and as
               damages (in  addition to any  applicable  liquidated  damages for
               delay  levied   pursuant  to  Article  6.2  up  to  the  date  of
               termination) may charge  Contractor for any actual and reasonable
               increased  cost  for  such  completion   incurred  in  connection
               therewith  in  excess  of  the  Contract  Price;   provided  that
               Contractor's  liability  for such  additional  damages  shall not
               exceed  [ ] * [ ],  as  may  be  adjusted  under  Article  28.4 *
               (without regard to any payments made to Contractor to the date of
               termination).  The amount payable by Contractor shall be verified
               at  Contractor's   request  and  expense  by  an  internationally
               recognized  firm of accountants  appointed by Contractor for that
               purpose  subject to approval of ORION,  such  approval  not to be
               unreasonably  withheld or  delayed.  A demand for any such excess
               costs must be made  within one (1) year after  termination  under
               this  Article  17.2 and must be paid within sixty (60) days after
               receipt of such verification.  Contractor's right to verification
               shall be without  prejudice  to the rights of either  Party under
               Article  16  (Dispute  Resolution).  The  report  issued  by  the
               accountants  may be used by either Party  during any  arbitration
               proceeding,   but  the  report   shall  not  be  binding  on  the
               arbitrator(s).  By notice in writing  received  by ORION no later
               than sixty (60) days after receipt of ORION's invoice pursuant to
               this  Article  17.2,  Contractor  may  dispute the amount of said
               invoice. In the event Contractor does not so notify ORION that it
               disputes  ORION's  invoice,  Contractor  shall be  deemed to have
               accepted said invoice; or

          (2)  ORION shall  return or dispose of any or all Work in progress (as
               requested by Contractor)  and Contractor  shall pay ORION (i) all
               amounts previously paid by ORION to Contractor,  (ii) as damages,
               direct reasonable  re-procurement costs in excess of the Contract
               Price, such damages not to exceed [ ] (as may be * adjusted under
               Article 28.4),  and (iii) all applicable  liquidated  damages for
               delay  levied   pursuant  to  Article  6.2  up  to  the  date  of
               termination.  Title to the Work in progress  shall vest or remain
               vested in Contractor.


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<PAGE>



     (f) If, after  termination  of the Contract  under this Article 17.2, it is
determined by mutual agreement of the Parties or in accordance with Article 16.2
(Arbitration)  that  Contractor  was not in default under the provisions of this
Article  17.2 or that the default was  excusable  under  Article 6.2  (Excusable
Delay),  Contractor  shall be  entitled  to its  direct  damages  caused  by the
wrongful  default  termination.  Payment shall be made within 30 days of ORION's
receipt of an invoice for such damages with reasonable supporting evidence.

17.3 TERMINATION FOR EXCUSABLE DELAY.

     ORION may, upon written notice to Contractor  terminate  immediately all or
any portion of the Contract if any Excusable  Delay (other than Excusable  Delay
resulting  from acts or  omissions  of ORION that  unreasonably  delay or hinder
Contractor's  performance or ORION's failure to meet its responsibilities  under
the  Contract or its  exercise of its rights  under  Article 25 (Ground  Storage
Option) due to circumstances  caused by ORION) exist for a cumulative  period of
time  exceeding  twelve  (12)  months.  If ORION  so  terminates  the  Contract,
Contractor shall refund to ORION all amounts paid for non-Equipment  Deliverable
Items (such as Data and Documentation and Operations  Training and software) and
all undelivered Equipment Deliverable Items (excluding the ORION-Z Spacecraft if
Launched prior to termination pursuant to this Article 17.3).

17.4 TERMINATION FOR ORION'S DEFAULT.

     (a)  Contractor  shall be entitled to  terminate  the Contract in whole or,
where severable, in part, under the following circumstances:

          (1)  if  Contractor  gives  written  notice to ORION of default in the
               payment of any Milestone  Payment when the same shall have become
               due and payable and ORION fails to cure such event within  thirty
               (30) days after receiving such written notice; or

          (2)  if  Contractor  gives  written  notice to ORION that  Contractor,
               solely as a result of ORION's  failure  (for  reasons that do not
               constitute  Excusable Delay) to perform its  responsibilities  as
               set forth in the Contract, is unable to substantially perform its
               obligations  under the Contract for a period in excess of six (6)
               months;  provided  that:  (i)  Contractor  has used  commercially
               reasonable efforts to perform  notwithstanding ORION's failure to
               perform;  and (ii)  Contractor's  inability to perform  could not
               have  been  prevented  by  reasonable   precautions   and  cannot
               reasonably  be  circumvented  by  Contractor  through  the use of
               alternate sources, work-around plans or other means; or

          (3)  ORION (i) files  for  bankruptcy,  (ii)  becomes  or is  declared
               insolvent,  or is the subject of any  proceedings  related to its
               liquidation, insolvency or the appointment of receiver or similar
               officer for it, (iii) makes an assignment  for



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<PAGE>



               the benefit of all or substantially all of its creditors; or (iv)
               enters  into an  agreement  for the  composition,  extension,  or
               readjustment of substantially all of its obligations; or

          (4)  ORION  has  resorted  to  fraudulent  or  corrupt   practices  in
               connection with its securing or implementing of the Contract.

     (b)  Except  as  specified  above,  Contractor  shall not have the right to
terminate or suspend the Contract.

     (c)  In the  event  of  such  termination,  Contractor  shall  be  entitled
forthwith to take any or all of the following actions:

          (1)  treat the  Contract as  terminated  as to any or all of the items
               then  undelivered  or services  unperformed  and cease or suspend
               manufacture of any of the items to be supplied hereunder;

          (2)  withhold  delivery of any of the items to be  supplied  hereunder
               until Contractor has received full payment under this Article and
               retain all sums then paid on account thereof,

          (3)  cease  or  suspend  performance  of  any of  the  services  to be
               provided  to ORION  hereunder,  except  those  services  that are
               specifically  intended  to  be  provided  in  connection  with  a
               termination of the Contract; and

          (4)  take  payment  of an amount  equal to the  Termination  Liability
               Amount for the ORION-Z  Spacecraft  for the  calendar  month next
               following  the  calendar  month in which the date of  termination
               occurs,  less the sum of the Milestone Payments actually received
               by  Contractor,  provided  that,  where such amount is a negative
               number,  Contractor  shall  refund such amount  promptly to ORION
               within twenty (20) days. Where Contractor is owed money by ORION,
               Contractor  shall  submit an Invoice to ORION  within  sixty (60)
               days after the  termination  date which shall  specify the amount
               due to  Contractor  from ORION  pursuant to this Article 17.4 and
               Contractor shall immediately be entitled to full payment by ORION
               immediately thereafter.

     (d) To the  extent  that full  payment  has been made  therefor,  ORION may
require Contractor to transfer to ORION in the manner and to the extent directed
by ORION, title to and possession of any items comprising all or any part of the
Work terminated  (including,  without  limitation,  all Work in progress and all
inventories allocated to the Contract),  and Contractor shall, upon direction of
ORION,  protect and preserve  property at ORION's  expense in the  possession of
Contractor  or its  Subcontractors  in which  ORION  has an  interest  and shall
facilitate  access to and possession by ORION of items comprising all or part of
the Work



                                       51

<PAGE>



terminated.  Alternatively,  ORION may request  Contractor to make a reasonable,
good faith  effort to sell such items and to remit any sales  proceeds  to ORION
less a deduction for costs of disposition  reasonably incurred by Contractor for
such efforts.

     (e)  Nothing in this  Article  17.4 shall  affect  ORION's  remedies  under
Article 6.2.

17.5 MITIGATION OF DAMAGES.

     In all  instances,  the Party  terminating or claiming other remedies shall
take all reasonable steps available to it to mitigate any claim that it may have
against the defaulting Party.

17.6 RESOLUTION EFFORTS.

     Except  in  the  case  of  a  default  under  Article  17.2(c)(3),  Article
17.4(a)(1),  and Article 17.4(a)(3),  prior to either Party exercising its right
to terminate  the Contract  under this  Article,  the Parties agree that ORION's
Senior Executive and Contractor's  Senior Executive,  and if mutually agreed, an
independent  third  party,  will meet  within  fifteen  (15) days of  receipt of
written  notice of the dispute by one Party to the other Party to try to resolve
the said dispute.  If ORION's Senior Executive and Contractor's Senior Executive
cannot agree on an  appropriate  resolution of the dispute within ten (10) days,
then the Parties shall resolve their dispute in accordance  with the  provisions
of Article 16; provided,  however, in such circumstances,  the Parties shall not
be required to comply with Articles 16.1(a) - (b).

17.7 CONTINUED PERFORMANCE.

     Each Party shall  continue the  performance  of its  obligations  under the
Contract to the extent not terminated under the provisions of this Article.

18.  KEY CONTRACTOR PERSONNEL

18.1 KEY POSITIONS.

     (a) "Key Contractor  Positions" shall be the positions set forth as such in
Part  1(C)  (Key  Contractor  Positions).  Contractor  shall  cause  each of the
personnel filling the Key Contractor Positions to devote such time and effort as
is necessary to provide the Work.

     (b) The  Contractor  Program  Manager  shall  be one of the Key  Contractor
Positions.  The  Contractor  Program  Manager shall serve as the single point of
accountability for Contractor for the Work.


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<PAGE>



18.2 ASSIGNMENT OF KEY CONTRACTOR PERSONNEL.

     (a) With respect to Key Contractor  Positions  identified in Part 1(C) (Key
Contractor  Positions) as being subject to ORION approval,  before  assigning an
individual to such a Key Contractor  Position,  whether as an initial assignment
or a  subsequent  assignment,  Contractor  shall  notify  ORION of the  proposed
assignment,  shall introduce the individual to appropriate ORION representatives
(and,  upon  request,  provide  such  representatives  with the  opportunity  to
interview  the  individual)  and shall  provide  ORION  with a resume  and other
information about the individual reasonably requested by ORION. If ORION in good
faith objects to the proposed  assignment,  the Parties shall attempt to resolve
ORION's  concerns on a mutually  agreeable  basis.  If the Parties have not been
able to resolve ORION's concerns within five (5) Business Days, Contractor shall
not  assign  the  individual  to that  position  and shall  propose to ORION the
assignment  of  another  individual  of  suitable  ability  and  qualifications.
Personnel  filling  such Key  Contractor  Positions  may not be  transferred  or
re-assigned until a suitable replacement has been approved by ORION.

     (b) With respect to Key Contractor  Positions  identified in Part 1(C) (Key
Contractor  Positions) as being subject to ORION consultation,  before assigning
an  individual  to  such  a Key  Contractor  Position,  whether  as  an  initial
assignment  or a  subsequent  assignment,  Contractor  shall notify ORION of the
proposed  assignment,  shall  introduce  the  individual  to  appropriate  ORION
representatives  (and,  upon  request,  provide  such  representatives  with the
opportunity to interview the  individual)  and shall provide ORION with a resume
and other  information  about the individual  reasonably  requested by ORION. If
ORION in good faith  objects  to the  proposed  assignment,  the  Parties  shall
attempt to resolve ORION's concerns on a mutually agreeable basis.

18.3 APPROVED KEY CONTRACTOR PERSONNEL.

     The personnel  approved as of the Effective Date to fill the Key Contractor
Positions  identified in Part 1(C) as subject to ORION  approval,  are listed in
Part 1(C).

19.  PERMITS, LICENSES AND GOVERNMENT APPROVALS

19.1 CONTRACTOR RESPONSIBILITY AND EXPENSES.

     (a) Contractor shall, at its own expense,  secure and maintain all permits,
licenses and approvals as may be required for the  performance of the Work under
the Contract,  including any  authorization  or license  relating to transfer or
export of  technology  or technical  data and any  applicable  launch  licenses.
Contractor  shall,  at its own expense,  perform the Work in accordance with the
conditions of all applicable permits and licenses.

     (b) Contractor shall submit an application to the appropriate United States
Government entity for a Technical Assistance  Agreement.  Such application shall
be  made  within



                                       53

<PAGE>



thirty (30) days after EDC provided ORION  supports the  application in a timely
manner and shall identify ORION's Consultants.

19.2 ORION REVIEW OF GOVERNMENT APPLICATIONS.

     Contractor shall review with ORION any application  Contractor makes to any
government department,  agency or entity for any permit,  license,  agreement or
approvals, as may be required to meet Contractor's contractual obligations under
the Contract,  prior to the  submission of such  application.  Contractor  shall
provide ORION a minimum of ten (10)  Business  Days to review such  applications
prior to submission to such  governmental  entity and  Contractor  shall in good
faith  consider  any  comments  made by  ORION  and  shall  incorporate  in such
application all reasonable revisions to such application proposed by ORION.

19.3 COMPLIANCE WITH GOVERNMENT REQUIREMENTS.

     Notwithstanding  any other Article in the Contract,  the Parties understand
and  agree  that  certain  restrictions,  including  those  placed  on access to
Contractor's and  Subcontractor's  plants and the use, sale or other disposition
of technical  data,  and/or Work delivered  under the Contract may be imposed by
any government which has  jurisdiction  over the Work. The Parties at all times,
both before and after  completion of the Contract,  agree to be and remain bound
by any such government requirements pertaining to the technical data or Work and
shall cooperate in obtaining all required consents and approvals.

20.  ACCESS TO WORK IN PROGRESS

20.1 GENERAL.

     (a) The provisions of this Article 20 are subject to Article 19.3.

     (b)  ORION  Personnel  shall  have  reasonable  access to any  premises  of
Contractor  or  Subcontractor  on an "as  needed"  basis  where  Work  is  being
performed  under the  Contract  and may observe all of the Work,  as well as any
associated facilities and documentation,  during regular business hours, or such
other times as Work is being  performed  under the Contract,  provided that such
access does not unreasonably  interfere with such Work. Contractor shall provide
ORION Personnel  reasonable  assistance in the performance of such  inspections.
The  Parties  agree that  non-escort  badges to agreed work areas for the period
from  commencement  of Work  through  Launch  where ORION  activities  are being
performed  shall be made  available to all ORION  Personnel  subject to adequate
notice of personnel details being provided to Contractor and security and export
clearance being granted.


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<PAGE>



20.2 OFFICE SPACE AND FACILITIES.

     (a)   Contractor   shall  provide  office  space  and  facilities  for  the
accommodation  of up to four (4) ORION Personnel at Contractor's  facilities and
shall  make  reasonable  work  space  available  for  such  ORION  Personnel  at
environmental  test  facilities (if located off site) and shall use best efforts
to ensure that office space and  facilities are provided for up to two (2) ORION
Personnel  at other  selected  Subcontractors'  plants on a  temporary  basis to
attend meetings or witness tests. At a minimum,  Contractor shall provide desks,
chairs, office supplies,  local telephone service (long distance telephone usage
to be charged to ORION),  car parking  facilities and access to meetings  rooms,
copying machines and facsimile equipment,  and, as available,  access to and use
of video conferencing facilities at Contractor's facilities (in this connection,
Contractor  will take  reasonable  measures  to  facilitate  video  conferencing
between  Contractor's  facilities  and  ORION's  premises,  provided  the  video
conferencing facilities of both Parties are fundamentally compatible).

     (b) ORION Personnel visiting or resident at Contractor's or Subcontractors'
facilities will abide by the applicable security and export regulations and will
not disclose to any third party any information that is identified by Contractor
or by Subcontractors to be of a proprietary  nature.  All ORION Personnel having
access to Contractor's  technical data or manufacturing  facilities are required
to be bound by a duly executed non-disclosure agreement.

     (c)  Notwithstanding  the fact that ORION Personnel visiting or resident at
Contractor's  or  Subcontractors'   facilities  will  be  in  consultation  with
Contractor's  or  Subcontractors'  employees,  such ORION Personnel shall remain
employees of ORION, its Consultants , as applicable,  and as such,  compensation
for their services and all liability for their actions remain the responsibility
of ORION Personnel, as applicable.

20.3 DOCUMENTATION.

     (a) ORION  Personnel  will  have  reasonable  access  to (i) any  drawings,
circuit diagrams/schematics,  specifications,  standards or process descriptions
available to Contractor  and relevant to the ORION-Z  Spacecraft,  (ii) data and
documentation  provided to Contractor by its  Subcontractors and relevant to the
ORION-Z  Spacecraft  (to  the  extent  permitted  by  the  Subcontractors  after
Contractor has used best efforts to obtain such permission),  and (iii) Data and
Documentation.  Contractor will make available to ORION Personnel copies of such
documentation,  at no  charge  to  ORION,  on the  reasonable  request  of ORION
Personnel  where such  documentation  is necessary  for  evaluation  of designs,
performance considerations, assessment of test plans and test results or for any
other  purpose  connected  with  the  design,   qualification,   testing,  Final
Acceptance  or  operation  of the  ORION-Z  Spacecraft  and its  components.  To
facilitate  their work in this respect,  Contractor  will allow ORION  Personnel
reasonable   access  to  all   indexes   related  to  such   drawings,   circuit
diagrams/schematics, and documents.


                                       55

<PAGE>



     (b) With regard to electronically  generated  information,  Contractor will
copy ORION and/or provide ORION electronic access to that information  necessary
to keep ORION advised,  on a current  basis,  of program  issues,  decisions and
problems.  To the  extent  Contractor  establishes  data links for  general  use
between  the  facilities  of  Contractor  and its  customers,  Contractor  shall
establish  data links  between  its and ORION's  facilities  such that ORION has
remote electronic  access to those project related documents  identified in Part
2(B) (CDRL).  Contractor  will also  provide  ORION  Personnel  with "real time"
access to all measured data taken at Contractor's and Subcontractors' facilities
on a  non-interference  basis.

     (c)  Subject  to  Article 9  (Changes  in Scope of Work),  the  inspection,
examination, agreement to, or approval, waiver or deviation by ORION (other than
in  accordance  with  Article  28.4  (Amendments))  with  regard to any  design,
drawing,  specification or other documentation produced under the Contract shall
not relieve Contractor from fulfilling its contractual  obligations or result in
any liability being imposed on ORION.

20.4 MEETINGS AND REVIEWS.

     (a) ORION  Personnel  shall be entitled to attend all  meetings and reviews
(including  meetings and reviews held by electronic  means) of Contractor and of
Contractor  with  any  Subcontractors   where  such  meetings  and  reviews  are
materially  related to project  schedule and  management,  engineering,  design,
manufacturing,  integration,  testing  and  launch  and shall  have the right to
participate in and make recommendations,  but not to control, give directions or
assign  actions,  in all meetings and reviews at the system,  subsystem and unit
level,  as  well  as  internal  program  reviews.  The  Parties  agree  to  work
cooperatively  in resolving issues that arise at the various meetings and, where
ORION has an objection to a recommended resolution/ implementation,  the Parties
agree to discuss it at the Senior Executive level prior to  implementation,  but
the final decision  concerning  implementation  shall remain with Contractor who
shall provide ORION with a written explanation for its decision.

     (b) In the event a  meeting  or review is  convened  at  Contractor's  or a
Subcontractor's  plant,  Contractor shall provide  reasonable  advance notice to
ORION  (e.g.,  one week for  regularly  scheduled  meetings)  and shall make the
necessary arrangements to facilitate the entry of ORION Personnel to the meeting
place.

20.5 SUBCONTRACTS.

     Contractor  shall  require  that any  Subcontract  entered  into after EDC,
contains  a  provision  substantially  similar  to  this  Article  20 to  ensure
effectiveness of ORION's rights under the Contract. With respect to Subcontracts
entered  into  before  EDC,  ORION's  rights  under this  Article 20 shall be as
permitted in such Subcontracts.


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<PAGE>



21.  LICENSE RIGHTS

21.1 SOFTWARE, INVENTIONS AND DATA AND DOCUMENTATION.

     (a)  License.  Contractor  grants  to ORION an  irrevocable,  non-exclusive
license to use and have used  throughout  the world (i) any software  covered by
any  copyright  or  patent  and any  invention  covered  by any  patent,  now or
hereafter  owned by  Contractor or for which  Contractor  has or may acquire the
right to grant such a license,  which  software  and/or  invention  is  directly
incorporated  in any  Deliverable  Item or  directly  employed in the use of any
Deliverable Item under the Contract,  and (ii) the Data and Documentation.  Such
license  shall,  in  connection  with the  operation,  maintenance,  redesign or
modification of any Deliverable Items:

          (1)  permit the copying of such software; and

          (2)  in the event Contractor no longer elects, or is able, to maintain
               such software,  permit the modification of such software by ORION
               (with  Contractor  releasing  to ORION the  source  code for such
               software upon such event); and

          (3)  permit the copying and modification of Data and  Documentation by
               ORION; and

          (4)  be deemed to be fully paid-up; and




                                       57
<PAGE>



          (5)  be on reasonable terms and conditions for other purposes.

Such license shall be transferable to any other entity,  subject to Contractor's
approval, such approval not to be unreasonably withheld. Nothing herein shall be
construed as (i) granting any rights of ownership in any  intellectual  property
contained in ORION-made  redesigns or modifications of Deliverable Items or (ii)
conferring  any  liability  on  Contractor  for  such  ORION-made  redesigns  or
modifications.

     (b) No  Limitation  of  Rights.  This  Article  shall not be  construed  as
limiting any rights of ORION or  obligations  of Contractor  under the Contract,
including  specifically  the  right of  ORION,  without  payment  of  additional
compensation to Contractor, to use, have used, deliver, lease, sell or otherwise
dispose of, any item or any part thereof, delivered under the Contract.

21.2 TECHNICAL DATA AND INFORMATION.

     (a)  Definitions. The following definitions shall apply to the Contract:

          (1)  "Technical Data and  Information"  includes but is not limited to
               technical   writings,   sound  recordings,   computer   programs,
               pictorial reproductions,  drawings,  circuit  diagrams/schematics
               and other graphic  representations  and works of similar  nature,
               and any other data  necessary  to enable the  manufacture  of any
               item or the  practice of any process  manufactured  or  practiced
               pursuant  to the  Contract,  whether or not  copyrighted,  to the
               extent that the same are of the type customarily  retained in the
               normal  course of business.  The term does not include  financial
               reports,  costs  analyses,  and other  information  incidental to
               contract administration.

          (2)  "Foreground  Data"  means  any  Technical  Data  and  Information
               generated  in the  performance  of the Work under the Contract or
               any Subcontract.

          (3)  "Background  Data" means  Technical Data and  Information,  other
               than Foreground Data,  directly  utilized in the execution of the
               Work  performed   under  the  Contract  or  any  Subcontract  and
               necessary for the reconstruction,  establishment,  maintenance or
               operation  of  any  item  delivered  under  the  Contract  or any
               Subcontract  or for the  modification  of any software  delivered
               under the Contract (as permitted  under the Contract by ORION) or
               any Subcontract.

     (b)  Foreground Data.

          (1)  Upon completion of the Work or upon  termination of the Contract,
               and also  upon  written  request  of ORION  not more  often  than
               quarterly  during  the  term



                                       58

<PAGE>



               of the  Contract,  Contractor  shall  notify ORION of any and all
               items of Foreground Data.  Notification shall be in the form of a
               list setting forth the nature of the Foreground Data, the system,
               subsystem,  or part to which  each such item of  Foreground  Data
               relates,  and the  source  of each  such  item.  ORION  shall  be
               entitled to disclose any such list of Foreground  Data  furnished
               to it hereunder,  in whole or in part, to any third party for the
               purposes of reconstructing,  establishing, maintaining, marketing
               and operating the ORIONSAT System.

          (2)  At any time after the  Effective  Date of the  Contract and until
               the end of the  twenty-fourth  (24th)  month after final  payment
               under, or termination of, the Contract, or at any time thereafter
               so long as Contractor  retains it, Contractor shall, upon written
               request of ORION,  disclose to ORION any and all Foreground  Data
               without payment of additional  compensation to Contractor.  ORION
               shall be  entitled to  disclose,  without  payment of  additional
               compensation to Contractor, any and all Foreground Data disclosed
               to it  hereunder  to any third  party for the  purposes  of or in
               connection  with   reconstructing,   establishing,   maintaining,
               marketing and operating the ORIONSAT System.

          (3)  Contractor  agrees  to and  does  hereby  grant  to  ORION or its
               assignees  pursuant to Article 28.2  (Assignment) an irrevocable,
               non-exclusive,  fully  paid-up  right and  license  to use and to
               authorize  any  third  party to use,  throughout  the  world  and
               without   payment  of  additional   compensation  to  Contractor,
               Foreground  Data for the  purposes  of,  or in  connection  with,
               reconstructing,    establishing,   maintaining,   marketing   and
               operating the ORIONSAT  System,  together  with the  irrevocable,
               nonexclusive,  fully  paid-up  and  royalty-free  right  to  have
               Contractor  grant  directly  to such  third  party such right and
               license to use.  As among all users  under this  Article  21, the
               terms and  conditions  of the rights of the use granted  shall be
               nondiscriminatory.

     (c)  Background  Data.  To the  extent  Contractor  now is or  subsequently
becomes entitled to do so,  Contractor  agrees, at the written request of ORION,
(i) to grant to ORION an  irrevocable,  non-exclusive,  fully  paid-up right and
license to use Background  Data  throughout the world,  and (ii) an irrevocable,
royalty-free  right to have  Contractor  grant  directly  to any third party the
right  and  license  to  use   Background   Data   throughout  the  world  on  a
non-discriminatory   basis,   provided   that,   subject  to   Article   21.2(e)
(Unconditional  Use),  such  use by such  third  parties  shall  be on fair  and
reasonable terms and conditions to be negotiated directly between Contractor and
such  third  party  requesting  the use of such  Background  Data.  Any right or
license to use  granted  pursuant to this  Article  shall be limited to that use
necessary for the reconstruction,  modification,  establishment, maintenance and
operation  of  (those  portions  of the  ORIONSAT  System  delivered  under  the
Contract).



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<PAGE>



     (d)  Copying Rights.

          (1)  ORION  and/or  the  person or entity to whom  Technical  Data and
               Information  is  furnished  under  the  Contract  shall  have the
               irrevocable  and  non-exclusive  right to copy for use authorized
               under the Contract in connection  with any items  delivered under
               the Contract, any Technical Data and Information that is required
               to be  furnished  to  ORION  and  such  others  pursuant  to  the
               Contract;  provided that if any of the foregoing  Technical  Data
               and Information is copyrighted, Contractor hereby grants to ORION
               and such others the  royalty-free  right to copy such copyrighted
               material  to the  extent  that  Contractor  now has or  hereafter
               acquires  the  authority  to grant to others  such  right to make
               copies.   ORION  and  such  others  shall  apply  an  appropriate
               copyright notice to all copies of such copyrighted Technical Data
               and Information.

          (2)  At the time that any Technical Data and  Information is furnished
               under the  Contract to ORION and such  others,  Contractor  shall
               notify  ORION and such others in writing of the  inclusion in the
               furnished material of any such amount of copyrighted  material or
               other  material with respect to which  Contractor is not entitled
               to grant the right to make copies to others. Any such copyrighted
               material  that  is  marked  by  Contractor  with  an  appropriate
               proprietary legend shall be protected by ORION and such others in
               the  same   manner  as  they   protect   their  own   proprietary
               information.

     (e) Unconditional Use. Notwithstanding any other provision of this Article,
with  respect  to any  Technical  Data and  Information  any person or entity is
authorized by the terms of this Article to use only under certain  conditions or
limitations,  such use shall be free, unconditional and unlimited from and after
the time such  Technical  Data and  Information  comes into the public domain or
becomes  otherwise  lawfully  available  to such  person or entity on such other
terms.

     (f)  Proprietary Markings.

          (1)  All Foreground  Data furnished  pursuant to this Article shall be
               marked by Contractor with the following legend:

                    "This document is furnished pursuant to a Contract
                    between     ORION     and     Contractor     dated
                    _________________  (adding, if appropriate,  and a
                    subcontract  thereunder  between  ____________ and
                    _____________).  This document contains Foreground
                    Data as  defined  in that  Contract,  which may be
                    used  only  in  the  manner   specified   in  that
                    Contract,   unless  such  Foreground  Data  is  or
                    lawfully  becomes  in the



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<PAGE>



                    public domain or is or lawfully becomes  available
                    to the user on other terms."

          (2)  All Background  Data furnished  pursuant to this Article shall be
               marked by Contractor with the following legend:

                    "This document is furnished pursuant to a Contract
                    between ORION and  Contractor  dated  (adding,  if
                    appropriate,  and a subcontract thereunder between
                    __________ and __________). This document contains
                    Background Data as defined in that Contract, which
                    may be used only in the manner  specified  in that
                    Contract,  and upon such terms as are agreed  upon
                    by  _______________  and  the  user,  unless  such
                    Background  Data  is or  lawfully  becomes  in the
                    public domain or is or lawfully becomes  available
                    to the user on other terms."

          (3)  ORION and/or the person or entity to whom any Technical  Data and
               Information is furnished  under the Contract shall be entitled at
               any time to modify, remove, obliterate, or ignore any marking not
               authorized  by this Article 21 on any piece of Technical  Data or
               Information furnished under the Contract,  but only after written
               notice and reasonable opportunity has been given to Contractor to
               defend such marking.

     (g)  Subcontracts.

     Contractor  shall,  unless  otherwise  authorized or directed by ORION, use
best efforts to include in each  Subcontract  hereunder a license  rights clause
pursuant to which each  Subcontractor  will grant license rights to ORION to the
same extent as the license rights granted by Contractor in this Article.

22.  CONFIDENTIALITY AND NONDISCLOSURE OF PROPRIETARY INFORMATION

22.1 DEFINITION AND EXEMPTIONS.

     (a) Definition. During the course of performance of the Contract each Party
may have access to or receive  information  from the other,  such as information
concerning  inventions,   techniques,   processes,   devices,   discoveries  and
improvements, or regarding administrative, marketing, financial or manufacturing
activities.   All  such  information,   including  any  materials  or  documents
containing such  information,  whether  disclosed orally or otherwise,  shall be



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<PAGE>



considered  proprietary  and  confidential  information of the disclosing  Party
("Proprietary Information").

     (b)  Exemptions.   For  the  purpose  of  this  Article  22,   "Proprietary
Information"  shall not include any  information  that the  receiving  Party can
establish (i) was, at the time of disclosure to it, in the public  domain;  (ii)
after  disclosure  to it, is published  or otherwise  becomes part of the public
domain through no fault of the receiving  Party;  (iii) was in the possession of
the  receiving  party  at the  time  of  disclosure  to it,  as  established  by
documentary  evidence;  (iv) was received  after  disclosure  to it from a third
party  who  had a  lawful  right  to  disclose  such  information;  and  (v) was
independently  developed  by  the  receiving  Party  without  reference  to  the
Proprietary  Information of the other,  as established by documentary  evidence.

22.2 PRIOR APPROVAL OF CERTAIN DISCLOSURES.

     (a) Contractor agrees that it will not, for the period specified in Article
22.3(a),  disclose  details of the Work to be provided  to ORION,  to the extent
that such disclosure would reveal specific performance information regarding the
ORIONSAT System and the ORION-Z  Spacecraft or any other  information that would
materially  affect  ORION's  commercial  interests or the  commercial use of the
ORIONSAT System without the prior written  consent of ORION,  which shall not be
unreasonably  withheld.  Notwithstanding  the foregoing,  the Parties  expressly
agree that Contractor shall have the  unrestricted  right at any time to use and
to supply to third  parties  services or  equipment  similar or identical to any
Work provided hereunder.

     (b) ORION agrees that it will not, for the period specified in Article 22.3
(a),  disclose  Proprietary  Information  of  Contractor to the extent that such
disclosure  would reveal  information to a direct  competitor of Contractor that
would materially affect the commercial interests of Contractor without the prior
written  consent  of  Contractor,  which  shall  not be  unreasonably  withheld.
Contractor  agrees  that for  purposes  of this  Article  22, in the event  that
TELESAT  and/or COMSAT are engaged as  Consultants  to ORION for purposes of the
Contract, they shall not be deemed direct competitors of Contractor.

22.3 CONFIDENTIALITY OBLIGATIONS.

     (a) Both during and for a period of three (3) years  after the  termination
or  expiration  of the  Contract,  each Party agrees to preserve and protect the
confidentiality  of the  Proprietary  Information  of the other and all physical
forms  thereof.   Neither  Party  shall  disclose  or  disseminate   Proprietary
Information of the other to any third party,  including  employees,  independent
consultants,  or  Subcontractors  unless  each  Party has (i) a need to know the
Proprietary Information for the purpose of establishing, maintaining, operating,
financing or marketing the ORIONSAT  System,  and (ii) has executed an agreement
obligating  the  party  to  maintain  the  confidentiality  of  the  Proprietary
Information and limiting the use of the Proprietary Information to establishing,
maintaining,  operating,  financing or marketing  the ORIONSAT  System.  Neither
Party shall use Proprietary  Information of the other for its own benefit or for
the



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<PAGE>



benefit of any third party, except as specifically  provided under the terms and
conditions of the Contract.

     (b) The  foregoing  shall not  affect any right of ORION in respect of Data
and  Documentation  provided  for under the  Contract  nor shall either Party be
prevented  from using the  general  know-how  and  abilities  gained  during the
performance of the Contract for any purpose whatsoever.

22.4 COPYING.

     (a)  Either  Party  shall  be  entitled  to make  copies  of any  documents
containing  Proprietary  Information  under the terms  and  conditions  outlined
above.

     (b) Either Party shall have the right at any time to remove,  obliterate or
ignore any proprietary/confidential  legend placed on any Data or Documentation,
or other  information  furnished  under the Contract  where the legend is not in
accordance  with the  Contract  but only  after  notice to the  other  Party and
reasonable opportunity for such Party to defend such legend.

23.  YEAR 2000 COMPLIANCE

     Contractor  represents  and  warrants  that any and all  software  provided
hereunder will accurately process date/time data (including, but not limited to,
calculating,  comparing,  and sequencing)  from, into, and between the twentieth
and  twenty-first  centuries,  and  the  years  1999  and  2000  and  leap  year
calculations   (hereinafter   "Year  2000   Compliant").   Year  2000  Compliant
information  technology,   when  used  in  combination  with  other  information
technology,  shall accurately  process  date/time data if the other  information
technology  properly  exchanges  date/time data  (hereinafter,  collectively the
"Year 2000 Warranty").

24.  CONTRACT MANAGEMENT

24.1 GENERAL.

     Contractor shall conduct and/or attend  meetings,  reviews and analyses and
shall prepare and deliver reports (including progress reports) and documentation
as required in Part 2(A) (SOW) and Part 2(B)(CDRL).

24.2 APPROVALS AND ACCEPTANCES.

     No approval,  acceptance,  waiver or deviation prior to Final Acceptance by
ORION of any  action  or item  under the  Contract  shall  waive any of  ORION's
contractual  rights with regard to Final  Acceptance of any Deliverable  Item or
otherwise change or modify  Contractor's  obligation to meet the requirements of
the Contract  except to the extent a requirement  is expressly and


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<PAGE>



specifically   waived  by  a  written   instrument   signed  by  an   authorized
representative  of ORION  and made an  Amendment  to the  Contract  pursuant  to
Article 28.4 (Amendment).

24.3 CONTRACT MONITORING.

     During the  performance  of the Contract,  Contractor  and ORION shall each
designate a person to be its Contract Program Manager,  whose duties shall be to
monitor the Work and to act as liaisons between the Parties.  Such monitoring by
ORION shall not relieve  Contractor  from  performing the Contract in accordance
with its terms and shall not in any way detract from Contractor's position as an
independent contractor.

24.4 ORION CONSULTANTS.

     ORION's  Consultants  shall  not be  employees  of  any  entity  in  direct
competition  with  Contractor's  manufacturing  operations  and  shall  have  no
authority to change any part of the Contract, or to direct Contractor or to bind
ORION.  The  Parties  agree that  TELESAT and COMSAT may be utilized by ORION as
Consultants  on the ORION-Z  program.  Any changes to the Contract shall be made
only in accordance with Article 28.4 (Amendments),  but ORION's  Consultants may
participate  in  discussions   regarding  such  changes.  Any  action  taken  by
Contractor prior to the resolution of any such question shall be at Contractor's
own risk and expense.

24.5 SUBCONTRACTING.

     (a)  Contractor  shall  provide  ORION two (2)  copies of all  Subcontracts
issued, either by Contractor or by a Major Subcontractor on an "as-needed basis"
at ORION's  request.  Such copies shall not be required to contain any financial
information.

     (b) To the extent  practical,  all Major  Subcontracts  issued at any time,
including  those  Subcontracts   entered  into  before  EDC  shall  contain  the
provisions  specified  in the  Articles of the  Contract as  appropriate  to the
particular Major Subcontract.

     (c) Major Subcontracts.

          (1)  Contractor has  represented  that in the  performance of the Work
               required by the Contract,  it will be necessary for Contractor or
               its Subcontractors to enter into Major  Subcontracts.  Initially,
               the Major Subcontractors are as provided below:


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<PAGE>



--------------------------------------------------------------------------------
                                   TABLE 24.5
                              MAJOR SUBCONTRACTORS
--------------------------------------------------------------------------------

       NAME OF MAJOR
       SUBCONTRACTOR                               DESCRIPTION OF WORK
       -------------                               -------------------

Arianespace                                     Launch Vehicle

Narda                                           Linearizers

AEG/Thomson                                     TWT

Bosch                                           EPC

ComDev                                          Switches, Diplexers

Alenia                                          Telemetry & Command RF Equipment

TecStar                                         Solar Array Panels

MELCO                                           Solar Array Panels

NEC                                             Earth Sensors

Adcole                                          Sun Sensors

Eagle-Picher                                    Battery Cells

Sharp                                           Solar Cells

Lockheed Martin Federal Systems                 SCE Processors

Pressure Systems Inc.                           Propellant Tanks

Lincoln Composites                              Pressurant Tanks

Kaiser Marquart                                 110 lb. Thrusters


                                       65
<PAGE>



Atlantic Research Corp.                         5 lb. Thrusters

Teldix                                          Momentum Wheel

Ferranti                                        Digital Integrating Rate Assy

MELCO                                           Structural Panels, Comm Panels

          (2)  In the event that Contractor or a Major Subcontractor  selects or
               has a necessity to terminate any Major  Subcontract or substitute
               Major  Subcontractors on any Major Subcontract,  Contractor shall
               consult with ORION and discuss any and all such actions  prior to
               implementation.  The foregoing  shall also apply to  Subcontracts
               and  Subcontractors  on an "as needed basis."  Subject to Article
               24.5(c)(3),  ORION  shall  have no  right or  prior  approval  of
               Contractor's actions.

          (3)  In the event that  Contractor  has a necessity  to  terminate  or
               substitute  any  Major  Subcontractor,   Contractor  shall  first
               consult with and obtain the approval of ORION.  If ORION does not
               approve  such  actions and  Contractor  deems such  actions to be
               necessary to meet its performance obligations under the Contract,
               then Contractor may take such action without ORION's approval.

          (4)  In the event that  Contractor  or a  Subcontractor  that has been
               awarded a Major  Subcontract has reason to waive, or to agree to,
               a deviation  in any of the  technical  requirements  of any Major
               Subcontract  that will cause a material  impact on the  technical
               parameters  of the ORION-Z  Spacecraft  as set forth in Part 3(A)
               (Technical  Specifications),  such variations shall be handled in
               accordance with Part 3(A) and shall require a formal Amendment to
               the Contract pursuant to Article 28.4.

     (d) Nothing in the Contract shall be construed as creating any  contractual
relationship   between  ORION  and  any   Subcontractor.   Contractor  is  fully
responsible  to ORION for the acts and  omissions of  Subcontractors  and of all
persons used by Contractor or a Subcontractor in connection with the performance
of the Work  under the  Contract.  Any  failure by a  Subcontractor  to meet its
obligations  to Contractor  shall not  constitute a basis for  excusable  delay,
except as  provided  in Article  6.3  (Excusable  Delay),  and shall not relieve
Contractor from meeting any of its obligations under the Contract.


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<PAGE>



25.  GROUND STORAGE OPTION

25.1 NOTIFICATION.

     ORION,  at its option to be  exercised no later than three (3) months prior
to the projected shipment date of the ORION-Z Spacecraft to the launch site, may
direct  Contractor to provide ground storage for such Spacecraft for a period of
up to eighteen (18) months. ORION's exercise of its rights under this Article 25
shall constitute an Excusable Delay as provided in Article 6.3 (Excusable Delay)
provided ORION exercises such right due to circumstances caused by ORION.

25.2 STORAGE LOCATION.

     Ground storage shall be provided at a facility controlled by Contractor and
shall be conducted in accordance  with the  satellite  storage plan set forth in
Part 5 (Satellite Storage Plan).

25.3 STORAGE PRICES.

     In the event that ORION, due to circumstances or Excusable Delay not caused
by  ORION,  elects  to  exercise  the  ground  storage  option  for the  ORION-Z
Spacecraft provided in this Article 25 from Contractor, then such ground storage
(and reverification of system flight assurance and reverification testing) shall
be provided at no charge to ORION.  Otherwise:  (i) such ground storage shall be
provided  for  the  firm  fixed  price  of [ ] per  month  while  * the  ORION-Z
Spacecraft is in ground storage and until ORION directs  Contractor  pursuant to
Article  25.6 to  remove  such  Spacecraft  from  ground  storage,  conduct  the
verification  tests, and ship such Spacecraft to the launch site; and (ii) ORION
shall pay directly or reimburse  Contractor for  reverification of system flight
assurance and reverification testing (at [ ] * [ ] of Contractor's cost) and for
such   reasonable   additional   costs  such  as  taxes,   *  tariffs,   duties,
transportation,  insurance and launch-related expenses that Contractor would not
have incurred had ORION not elected ground  storage for the ORION-Z  Spacecraft.

25.4 INVOICING AND PAYMENT.

     Contractor  shall  provide  ORION an  Invoice  for  amounts  due under this
Article 25 in arrears in  accordance  with  Article  5.1.  ORION  shall pay such
invoiced amounts in accordance with Article 5.

25.5 TITLE AND RISK OF LOSS.

     Title  and risk of loss or  damage  to the  ORION-Z  Spacecraft  shall,  as
provided in Article 8, remain with  Contractor  during ground  storage and until
Final Acceptance.


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<PAGE>



25.6 NOTIFICATION OF INTENTION TO LAUNCH A STORED SPACECRAFT.

     ORION  shall  direct  Contractor  by written  notice to remove the  ORION-Z
Spacecraft  from ground storage and Deliver the Spacecraft  in-orbit  subject to
the  availability of a Launch  Vehicle.  This  notification  must be received by
Contractor  no less than six (6) months prior to the revised  Delivery  Date for
the ORION-Z Spacecraft.

25.7 IN-ORBIT PERFORMANCE WARRANTY AND PAYMENTS.

     (a) In the event that ORION, due to circumstances or Excusable Delay caused
by ORION,  elects to exercise the ground storage option provided in this Article
25, upon placement of the ORION-Z Spacecraft in ground storage,  ORION shall pay
to Contractor  interest on the Orbital Incentive Amount at the rate specified in
Article 5.4 for the period of ground storage until ORION provides Contractor the
notice  specified  in  Article  25.6.  Upon  Final  Acceptance  of  the  ORION-Z
Spacecraft, the provisions of Article 12 shall apply.

     (b) In the event it is determined that the amount of the Advance  Incentive
Payment to which  Contractor is entitled at Final Acceptance under Article 12 is
less than one hundred  percent  (100%) of the  Orbital  Incentive  Amount,  then
Contractor  shall pay to ORION a refund in the amount of the difference  between
interest paid by ORION under (a) above and interest on the amount of the Advance
Incentive  Payment to which  Contractor  is entitled at Final  Acceptance,  such
interest at the rate  specified  in Article 5.4 for the period  specified in (a)
above.

26.  LAUNCH VEHICLE AGENCY

26.1 INSURANCE.

     Contractor shall require the Launch Agency to provide (and verify provision
of) insurance as required by any governmental  agency, for loss or damage to its
property resulting from activities to be carried out in connection with launches
to be provided under the Contract.  In  consideration  of and conditioned upon a
reciprocal waiver by the applicable government,  both ORION and Contractor agree
to waive any claim  against  that  government  or its  agencies for any property
damage or loss they  sustain or for any  personal  injury  to,  death of, or any
property damage or loss sustained by their own employees.

26.2 COMPLIANCE WITH LAWS AND REGULATIONS.

     The Launch Agency has executed  agreements with various government agencies
for use of  government-owned  property and facilities relating to the production
of launch vehicles and launch operations.  ORION agrees that it will comply with
the   applicable   government's   laws  and   regulations   as  they  relate  to
ORION-furnished  property  and  personnel.  Contractor  will  request the Launch
Agency to furnish copies of such agreements to ORION upon ORION's request. ORION
will indemnify  Contractor for any ORION  violation of the laws,  regulations or


                                       68

<PAGE>



agreements as specified  herein.  In furtherance  of the foregoing,  the Parties
shall, before launch,  execute and deliver an agreement for waiver of claims and
assumption  of  responsibility,  if the  execution  of which is  required by the
applicable government as a condition of granting Contractor's license to conduct
launch activities and launch the ORION-Z Spacecraft.

27.  RESPONSIBILITY FOR THE CONTRACT

27.1 ABILITY TO PERFORM.

     Contractor,  by  having  submitted  a  tender  to  perform  the Work and by
executing the Contract, shall be deemed to have satisfied itself as to:

     (a) all the  conditions  and  circumstances  which may affect the  Contract
Price, as defined in Article 5; and

     (b) the  feasibility  of the Work to be  performed in  accordance  with the
terms and conditions of the Contract.

Accordingly,  Contractor  warrants that it has the necessary skills,  facilities
and capacity to perform the Work in accordance  with the terms and conditions of
the Contract.

27.2 FIXED CONTRACT PRICE.

     Contractor  acknowledges  that it has fixed the Contract Price according to
its own view and  assessment of all relevant  matters and no  additional  costs,
except as otherwise expressly provided for in the Contract, will be charged over
and above the Contract Price.

27.3 INCONSISTENCIES IN CONTRACT.

     (a) By  executing  the  Contract,  the Parties  acknowledge  that they have
thoroughly examined all parts of the Contract, and agree that they are complete,
consistent and accurate.  If Contractor  decides,  during the performance of the
Work,  that any portion of the Contract is  inaccurate  or  incomplete,  or that
there are  inconsistencies,  it shall  notify ORION in writing  specifying  full
particulars and request  resolution before proceeding with the Work in question.
If Contractor proceeds before obtaining such a resolution, it does so at its own
risk and expense, and whether or not the course it has chosen is satisfactory to
ORION,  it  shall  be  entitled  to no  increase  in the  Contract  Price or any
extension of the  Delivery  Dates set out in Article 6. If  Contractor  proceeds
with  the  Work  before  obtaining  resolution  of  any  inaccuracy,  incomplete
information  or  inconsistency  and the  course of action it has  pursued is not
chosen by ORION,  it  shall,  upon  request  by ORION,  promptly  and at its own
expense,   follow  the  course  of  action   directed  by  ORION  and  make  all
readjustments that may be required.


                                       69

<PAGE>



     (b) ORION shall  within  twenty  (20) days after  written  notification  by
Contractor  pursuant to Article 27.3(a) provide a response and resolution of the
issues raised by Contractor.

27.4 SUBCONTRACTOR COOPERATION.

     Contractor  covenants that it will cooperate fully with all Subcontractors,
and  will  use  reasonable  efforts  to  ensure  the  full  cooperation  of  all
Subcontractors with ORION in order to achieve due performance of the Contract.

28.  GENERAL

28.1 EFFECTIVE DATE OF CONTRACT.

     The  effective  date of the Contract  ("EDC") shall be the date as of which
the  Contract  as been  duly  signed by both  Parties.  On the  Effective  Date,
Contractor will be paid the Initial Payment.

28.2 ASSIGNMENT.

     (a) This Contract shall be binding on the Parties and their  successors and
assigns.  Assignment of this Contract  shall not relieve the assigning  Party of
any of its  obligations nor confer upon the assigning Party any rights except as
provided in the Contract.

     (b) Contractor  shall not,  without the prior written approval of ORION and
except on such  terms and  conditions  as are  determined  in  writing by ORION,
assign,  mortgage,  charge or encumber the Contract or any part thereof,  any of
its rights, duties, or obligations hereunder,  the Work or any monies payable or
to become  payable  under the Contract,  to any person,  except to a parent or a
wholly-owned  direct or indirect  subsidiary  company of Contractor,  or for the
purpose of corporate merger, recapitalization or reconstruction.

     (c) ORION shall have the right to assign, mortgage,  charge or encumber its
rights,  duties or obligations  under the Contract to any entity,  including any
Financing Entity, subject to prior notice to Contractor.

28.3 ENTIRE AGREEMENT.

     This Contract  contains the entire Agreement  between the Parties regarding
the Work hereunder and supersedes all  communications,  negotiations,  and other
agreements  either  written or oral,  relating to the Work and made prior to the
Effective  Date of the Contract  unless the same are expressly  incorporated  by
reference into the Contract.


                                       70

<PAGE>



28.4 AMENDMENTS.

     The  Contract,  including  Parts,  may not be  modified  except by  written
instrument  of  subsequent  date signed on behalf of ORION by its  President (or
another  person  designated by the President in writing to sign such  agreement)
and on behalf of Contractor by its Executive  Vice  President,  Business or Vice
President and Chief Financial Officer (or another person designated by either in
writing to sign such agreement)  which agreement  expressly states that it is an
"Amendment to the ORION-Z Contract."

28.5 WAIVER OF BREACH OF CONTRACT.

     A waiver of any breach of a provision of the Contract  shall not be binding
upon either Party unless the waiver is in writing,  signed by a duly  authorized
representative of the Party, as applicable, and such waiver shall not affect the
rights of the Party not in breach with respect to any other or future breach.

28.6 CUMULATIVE REMEDIES.

     Except as otherwise expressly provided herein, all remedies provided for in
the Contract shall be cumulative.

28.7 SEVERABILITY.

     In the event any one or more of the  provisions  of the Contract  shall for
any reason be held to be invalid or unenforceable,  the remaining  provisions of
the Contract  shall be  unimpaired  and the invalid or  unenforceable  provision
shall be deemed to be  restated to reflect as nearly as  possible  the  original
intention of the Parties in accordance with applicable law.

28.8 APPLICABLE LAW.

     Except as provided in Article 16.2(e),  the Contract and performance  under
it shall be governed by,  construed and enforced in accordance  with the laws in
force in the State of  Maryland,  U.S.A.,  without  regard to  conflict  of laws
provisions thereof.

28.9 NOTICES.

     (a) All notices,  requests,  demands, and determinations under the Contract
(other than routine operational  communications),  shall be in writing and shall
be deemed duly given (i) when  delivered by hand,  (ii) two (2) days after being
given to an express courier with a reliable system for tracking delivery,  (iii)
when sent by facsimile  confirmed by the specific  addressee with a copy sent by
another means specified in this Article 28.9, or (iv) six (6) days after the day
of mailing, when mailed by United States mail,  registered or certified,  return
receipt requested, postage prepaid, and addressed as follows:


                                       71

<PAGE>



                  ORION
                  2440 Research Boulevard
                  Suite 400
                  Rockville, Maryland 20850
                  United States of America
                  Attention:       Richard Shay, Esq.
                                   Sr. Vice President and General Counsel
                  Telephone No.:   301-258-8101
                  Facsimile No.:   301-258-3360
                  Attention:       Dr. Denis Curtin
                                   Senior Vice President
                  Telephone No.:   301-258-3210
                  Facsimile No.:   301-258-3330

                  SPACE SYSTEMS/LORAL
                  3825 Fabian Way
                  Palo Alto, California  94303
                  Attention:       Linda Zumdahl, PS1
                                   Contract Manager
                  Telephone No.:   650-852-5482
                  Facsimile No.:   650-852-7508
                  Attention:       Josephine Stiles
                                   Program Manager
                  Telephone No.:   (650) 852-6728
                  Facsimile No.:   (650) 852-6686

     (b) A Party  may from time to time  change  its  address  or  designee  for
notification  purposes by giving the other Party prior notice of the new address
or designee and the date upon which it will be effective.

28.10 CONTRACTOR NOT AGENT.

     Contractor,  in performing the Work hereunder,  is acting as an independent
contractor,  and  Contractor  has the sole right and  obligation  to  supervise,
manage, contract, direct, procure, perform or cause to be performed, all Work to
be performed by  Contractor  under the Contract.  None of the  provisions of the
Contract, including any of its Parts, shall be construed to mean that Contractor
is appointed or is in any way authorized to act as an agent of ORION.

28.11 SURVIVAL.

     Any provision of the Contract  that can be reasonably  construed to survive
the expiration or termination of the Contract for any reason,  including Article
11 (Representations and



                                       72
<PAGE>



Warranties),  Article 12 (In-Orbit Performance Warranty and Incentive Payments),
Article 13  (Insurance),  and Article 15  (Indemnification)  shall  survive such
expiration or termination of the Contract.

28.12 RELEASE OF INFORMATION.

     (a) Release of Information.  Neither Contractor nor ORION, nor any of their
Associates,  contractors,  or  Subcontractors,  shall  release  or  publish  any
material (including articles, films, brochures, advertisements and photographs),
or  authorize  other  persons  to publish  such  material,  or deliver  speeches
(collectively,   "Release")  about  the  Work  that  is  marked  "Confidential",
"Proprietary", or with similar designation without the prior written approval of
the other  Party,  which  approval  shall  not be  unreasonably  withheld.  This
obligation  shall not  apply to (i)  ORION's  Release  of any sort  relating  to
ORION's  intellectual  property,  including  the  Technical  Specifications  and
Statement  of  Work,  and  may be  Released  as  ORION  so  determines,  or (ii)
information that is publicly  available from any governmental  agency or that is
or otherwise becomes publicly available without breach of this Agreement.

     (b) The  application  for  approval  to Release  material  required by this
Article 28.12 shall be submitted to the other Party in writing and shall include
full  particulars  of any intended  Release.  Upon receipt of the other  Party's
agreement in principle to the proposed  Release,  the applicant shall submit for
final  approval by the other Party any material to be in the form and context in
which it is intended to be used.  The other Party may then approve or decline to
approve  Release in whole or in part of the material and at its  discretion  may
specify a time for Release.

28.13 GOVERNMENT FILINGS.

     Notwithstanding  any other provision of the Contract,  Contractor and ORION
may make any public  release  or  filings  that  Contractor  or ORION  considers
advisable  or  necessary  under the  Securities  Act of 1933,  as  amended,  the
Securities  Exchange  Act of 1934,  as  amended,  the  rules  applicable  to the
National Market System, or the securities laws applicable to public companies in
the  United  States.  Prior to making  any such  filing  containing  proprietary
information  of the other Party,  the filing Party shall provide the other Party
reasonable  advance  notice of the filing and cooperate with such other Party in
obtaining confidential treatment for such proprietary information.  In addition,
if a Party desires for any  information to be contained  within such a filing to
be accorded confidential  treatment and not disclosed to the public, it shall so
indicate to the other Party and such other Party shall  cooperate with the first
Party in obtaining confidential treatment for such information.

28.14 IMPROPER PAYMENTS, KICKBACKS, GIFTS, AND GRATUITIES.

     Each Party agrees that in carrying out its  obligations  under the Contract
it will not make payments of any salary,  fee, commission or compensation of any
kind or the  granting of any



                                       73
<PAGE>



unlawful or improper gift or gratuity of any kind either directly or indirectly,
to any officer, employee, agent or representative of ORION.

28.15 COMPLIANCE WITH APPLICABLE LAWS.

     (a) Subject to Article 19  (Permits,  Licenses and  Government  Approvals),
each Party shall, at its own expense,  comply with the  requirements of any laws
of any  place  in which  any part of the Work is to be done and with the  lawful
requirements of public,  municipal and other authorities in any way affecting or
applicable to any Work.

     (b) Subject to Article 19  (Permits,  Licenses and  Government  Approvals),
neither Party shall be  responsible in any way for the  consequences,  direct or
indirect,  of any  violation  by  the  other  Party  or  its  Subcontractors  or
Consultants,  or their officers,  employees,  agents or servants of any law of a
country in which the Work is performed, or of any country whatsoever.

28.16 FINANCING.

     The Parties  recognize that the Contract may be financed  through  external
sources.  Contractor agrees to work  cooperatively to negotiate and execute such
documents  as may be  reasonably  required to  implement  such  financing to the
extent it does not adversely affect Contractor's rights.

     IN WITNESS  WHEREOF the Contract  has been issued in two (2)  counterparts,
executed and sealed on behalf of ORION by persons authorized in that behalf, and
has also been executed and sealed on behalf of CONTRACTOR by persons  authorized
in that behalf.

SPACE SYSTEMS/LORAL, INC                      LORAL ORION NETWORK SYSTEMS, INC.

BY:                                           BY:
   ----------------------------------------      -------------------------------

TITLE:  Executive Vice President, Business    TITLE:  Sr. Vice President
      -------------------------------------         ----------------------------

DATE:  May 15, 1998                           DATE:  May 15, 1998
     --------------------------------------        -----------------------------



                                       74

<PAGE>



                                  CONFIDENTIAL

                                     ANNEX A

                        MILESTONE ACHIEVEMENT CERTIFICATE


                                     [Date]


Orion  Network Services, Inc.
2440 Research Boulevard
Suite 400 Rockville, Maryland 20850
United States of America

Attention: Al Ramos

RE:  ORION-Z Spacecraft Purchase Contract, dated as of May 15, 1998 (as amended,
     supplemented  or  modified  from  time to time,  the  "ORION-Z  Contract"),
     between Orion Network  Services,  Inc.  ("ORION") and Space  Systems/Loral,
     Inc. ("Contractor")

Ladies and Gentlemen:

This Invoice is delivered to ORION pursuant to Article 5 of the ORION-Z Contract
and  constitutes  Contractor's  Invoice  for the amount of $[...] for  Milestone
Payment No. ____ and $[...] for ___________________________.

We hereby  certify that the above  Milestone  has been  Successfully  Completed,
Conducted,  or  Delivered  (as each term is  defined  in  Article  5.2(e) of the
ORION-Z Contract).

Very truly yours,

SPACE SYSTEMS/LORAL, INC.                 Agreed to on behalf of ORION:

By:                                       By:
   ---------------------------------         ---------------------------------

Name:                                     Name:
     -------------------------------           -------------------------------

Title:                                    Title:
      ------------------------------            ------------------------------

                                          Date:
                                               -------------------------------
<PAGE>




                                    PART 1(B)
                                PAYMENT SCHEDULE



            [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THIS PART]


<PAGE>



                                    PART 1(B)
                              TERMINATION LIABILITY



            [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THIS PART]

<PAGE>



                        LORAL ORION NETWORK SYSTEMS, INC.

                                     ORION 2

                                STATEMENT OF WORK

                                    PART 2(A)

                               DATED: 11 MAY 1998




--------------------------------------------------------------------------------
This document contains data and information  proprietary to Space Systems/Loral.
This data shall not be disclosed,  disseminated,  or reproduced,  in whole or in
part, without the express prior written consent of Space Systems/Loral.
--------------------------------------------------------------------------------



                                       i

    Use or disclosure of the data contained on this sheet is subject to the
                         restriction on the title page.


<PAGE>



                                    CONTENTS
<TABLE>
<CAPTION>

SECTION                                                                                           PAGE
<S>                                                                                               <C>
1 --INTRODUCTION...................................................................................1-1
         1.1 SCOPE.................................................................................1-1
         1.2 RESPONSIBILITIES......................................................................1-1
         1.3 APPLICABLE PROGRAM DOCUMENTS..........................................................1-2
2 --EQUIPMENT, DOCUMENTATION, AND SERVICES.........................................................2-1
         2.1 INTRODUCTION..........................................................................2-1
         2.2 DELIVERABLE EQUIPMENT.................................................................2-1
                  2.2.1 Flight Spacecraft..........................................................2-1
                  2.2.2 Mission Specific Hardware and Software.....................................2-2
                  2.2.3 TT&C Simulator.............................................................2-2
                  2.2.4 Dynamic Software Simulator.................................................2-2
         2.3 DELIVERABLE DOCUMENTATION.............................................................2-2
         2.4 SERVICES..............................................................................2-3
                  2.4.1 Launch Support Services....................................................2-3
                  2.4.2 Launch Services............................................................2-3
                  2.4.3 Insurance..................................................................2-3
                  2.4.4 Mission Support Services...................................................2-3
                  2.4.5 Operations Training........................................................2-4
                  2.4.6 Post Acceptance In-Orbit Support...........................................2-4
         2.5 PURCHASER FURNISHED ITEMS FOR IOT.....................................................2-4
                  2.5.1 Equipment and Personnel....................................................2-4
                  2.5.2 Data.......................................................................2-5
3 --PROGRAM MANAGEMENT.............................................................................3-1
         3.1 INTRODUCTION..........................................................................3-1
                  3.1.1 Scope......................................................................3-1
                  3.1.2 Responsibilities...........................................................3-1
                  3.1.3 Program Management Plan....................................................3-1
         3.2 PROGRAM MANAGEMENT INTERFACE..........................................................3-2
         3.3 DOCUMENTATION AND DATA MANAGEMENT.....................................................3-2
                  3.3.1 General....................................................................3-2
                  3.3.2 Documentation Center.......................................................3-2
                  3.3.3 Data Management Plan.......................................................3-2
                  3.3.4 Documentation Submission Criteria..........................................3-2
                  3.3.5 Revision and Maintenance of Documentation..................................3-2
                  3.3.6 Monthly Documentation Status Report........................................3-3
         3.4 MEETINGS..............................................................................3-3
</TABLE>

                                       ii

<PAGE>


<TABLE>
<S>      <C>                                                                                       <C>
                  3.4.1 Progress Meetings..........................................................3-3
                  3.4.2 Senior Management Meetings.................................................3-3
                  3.4.3 Quarterly Progress Meetings................................................3-3
                  3.4.4 Kick-Off Meeting...........................................................3-4
                  3.4.5 Agenda Coordination Procedure..............................................3-4
                  3.4.6 Minutes....................................................................3-4
                  3.4.7 System and Major Subsystems Integration and Test Weekly Meeting............3-4
                  3.4.8 Major Subcontractor Progress Meetings and Other Meetings....................-5
         3.5 REVIEWS...............................................................................3-5
                  3.5.1 Design Reviews.............................................................3-5
                            3.5.1.1 Review Chairperson and Review Board............................3-5
                            3.5.1.2 Review Notification............................................3-6
                            3.5.1.3 Data Packages..................................................3-6
                            3.5.1.4 Review Procedures..............................................3-6
                            3.5.1.5 Review Summary.................................................3-6
                            3.5.1.6 Review Completion..............................................3-6
                            3.5.1.7 Spacecraft System/Subsystem CDR................................3-6
                  3.5.2 System/Subsystem Test Reviews..............................................3-7
                  3.5.3 Preshipment Review.........................................................3-8
                  3.5.4 Design Review Documentation................................................3-8
                  3.5.5 Test Review Documentation..................................................3-8
         3.6 ACTION ITEM CONTROL...................................................................3-8
         3.7 MANAGEMENT OF CONTRACT CHANGES........................................................3-9
                  3.7.1 Change Classification......................................................3-9
                  3.7.2 Preliminary Change Assessment.............................................3-10
                  3.7.3 Change Request (CR).......................................................3-10
                  3.7.4 Contract Change Notice (CCN)..............................................3-10
                  3.7.5 Review and Approval of a Change...........................................3-11
                  3.7.6 Change Review Board.......................................................3-12
                  3.7.7 Implementation of a Change by the Contractor..............................3-12
                  3.7.8 Directed Changes..........................................................3-12
                  3.7.9 Go Ahead Procedure........................................................3-12
                  3.7.10 CR/CCN Log...............................................................3-13
         3.8 PROGRAM PLANNING AND STATUS INFORMATION..............................................3-14
                  3.8.1 Spacecraft Hardware Matrix................................................3-14
                  3.8.2 Qualification Status List.................................................3-14
                  3.8.3 Critical Items List.......................................................3-14
                  3.8.4 Program Schedules.........................................................3-14
                  3.8.5 Monthly Program Progress Report...........................................3-15
</TABLE>


                                      iii

<PAGE>



<TABLE>
<S>      <C>                                                                                      <C>
                  3.8.6 Executive Quarterly Summary...............................................3-16
         3.9 PROGRAM MONITORING AND NOTIFICATION REQUIREMENTS.....................................3-16
                  3.9.1 ORION Representatives.....................................................3-16
                  3.9.2 Office Accommodation and Facilities.......................................3-16
                  3.9.3 Attendance at Meetings....................................................3-17
                  3.9.4 Access to Data and Documentation..........................................3-17
                  3.9.5 ORION Presence During Development, Qualification, and Acceptance Tests....3-17
                  3.9.6 Notification Requirements.................................................3-17
                  3.9.7 Material Review Board (MRB) and Failure Review Board (FRB)................3-18
4 --DESIGN ACTIVITIES..............................................................................4-1
         4.1 GENERAL...............................................................................4-1
         4.2 SYSTEM SPECIFICATION..................................................................4-1
         4.3 DESIGN REVIEWS........................................................................4-1
         4.4 DESIGN ANALYSES.......................................................................4-2
                  4.4.1 Analyses at Spacecraft System Level........................................4-2
                            4.4.1.1 Spacecraft Failure Analysis....................................4-3
                            4.4.1.2 Dynamic Analysis...............................................4-3
                            4.4.1.3 Antenna Pointing Error Analysis................................4-3
                            4.4.1.4 Propellant Budget Analysis.....................................4-4
                            4.4.1.5 Mass Properties Analysis.......................................4-5
                            4.4.1.6 Power Budget Analysis..........................................4-5
                            4.4.1.7 Mission Analysis...............................................4-5
                            4.4.1.8 Environmental Effects Analyses.................................4-6
                            4.4.1.9 Worst Case Performance Analysis................................4-7
                            4.4.1.10 Autonomous Commands Analysis..................................4-8
                  4.4.2 Subsystem Level Analyses...................................................4-8
                            4.4.2.1 Communications Subsystem Analyses..............................4-8
                            4.4.2.2 Telemetry, Tracking, and Command (TT&C)  Subsystem Analyses...4-11
                            4.4.2.3 Attitude and Dynamics Control Subsystem (ADCS)
                                         Analysis.................................................4-12
                            4.4.2.4 Propulsion Subsystem Analyses.................................4-13
                            4.4.2.5 Power Subsystem Analyses......................................4-13
                            4.4.2.6 Thermal Subsystem Analyses....................................4-15
                            4.4.2.7 Structure Analyses............................................4-15
5 --PRODUCT ASSURANCE..............................................................................5-1
         5.1 PRODUCT ASSURANCE REQUIREMENTS........................................................5-1
         5.2 QUALITY ASSURANCE TASKS...............................................................5-1
6 --MANUFACTURING, ASSEMBLY, INTEGRATION AND TEST..................................................6-1
</TABLE>


                                       iv

<PAGE>



<TABLE>
<S>      <C>                                                                                       <C>
         6.1 GENERAL...............................................................................6-1
         6.2 TEST PLAN.............................................................................6-1
         6.3 TEST PROCEDURES, DATA, AND REPORTS....................................................6-2
                  6.3.1 Unit and Subsystem Level Test Procedures and Reports.......................6-2
                  6.3.2 Spacecraft Level Test Procedures and Reports...............................6-2
                  6.3.3 Test Data..................................................................6-2
                  6.3.4 Spacecraft Log Book........................................................6-3
         6.4 TEST REVIEWS..........................................................................6-3
         6.5 PRESHIPMENT REVIEW (PSR)..............................................................6-4
         6.6 FAILURE NOTIFICATION..................................................................6-4
         6.7 ELECTRICAL AND MECHANICAL GROUND SUPPORT EQUIPMENT (EGSE/MGSE)........................6-4
         6.8 TEST EQUIPMENT REQUIREMENTS...........................................................6-5
         6.9 SOFTWARE REQUIREMENTS.................................................................6-5
         6.10 DELIVERY  OF  DRAWINGS  AND  ENGINEERING   CONTROL  DOCUMENTS  FOR
              SPACECRAFT OPERATION AND IN ORBIT CONTROL............................................6-5
         6.11 SECURE COMMAND SYSTEM AND CERTIFICATION..............................................6-6
7 --LAUNCH AND MISSION SUPPORT SERVICES............................................................7-1
         7.1 SCOPE.................................................................................7-1
         7.2 LAUNCH VEHICLE COMPATIBILITY..........................................................7-1
         7.3 LAUNCH SUPPORT SERVICES...............................................................7-2
                  7.3.1 Spacecraft Preparation at the Launch Sites.................................7-2
                  7.3.2 Spacecraft Propellant and Pressurant.......................................7-2
                  7.3.3 Support of Meetings and Reviews............................................7-2
         7.4 SAFETY................................................................................7-3
         7.5 LAUNCH SERVICES.......................................................................7-3
         7.6 MISSION SUPPORT.......................................................................7-3
                  7.6.1 Scope......................................................................7-3
                  7.6.2 Mission Support Activities.................................................7-4
                            7.6.2.1 Preparation and Definition of Mission Support Documents........7-4
                            7.6.2.2 World-Wide Ground Segment......................................7-7
                            7.6.2.3 Mission Support Procedures and Sequence of Events..............7-7
                            7.6.2.4 Spacecraft/ORION SCF Compatibility.............................7-7
                            7.6.2.5 In Orbit Test Plan and Procedure...............................7-9
                            7.6.2.6 Mission Reviews................................................7-9
                            7.6.2.7 Spacecraft and Operations Training.............................7-9
                            7.6.2.8 Real-Time Mission Operations..................................7-10
                            7.6.2.9 Post-Mission Review...........................................7-11
                            7.6.2.10 In Orbit Testing and Test Report.............................7-11
                            7.6.2.11 Spacecraft Acceptance Review.................................7-11
</TABLE>


                                       v

<PAGE>


<TABLE>
<S>      <C>                                                                                      <C>
                            7.6.2.12 Post Acceptance Operational Support..........................7-12
         7.7 LAUNCH VEHICLE.......................................................................7-12
                  7.7.1 Launch vehicle Program Management.........................................7-12
                  7.7.2 Reviews...................................................................7-12
                            7.7.2.1 Mission Specific Critical Design Review (CDR).................7-12
                            7.7.2.2 System Review.................................................7-13
                            7.7.2.3 Launch Vehicle Quality Review.................................7-13
                            7.7.2.4 Launch Readiness Review.......................................7-13
                            7.7.2.5 Review Summary and Action Items...............................7-13
8 --SHIPPING AND STORAGE...........................................................................8-1
         8.1 SHIPPING, TRANSPORTATION, AND STORAGE PLAN............................................8-1
         8.2 SPACECRAFT SHIPMENT...................................................................8-1
         8.3 SPACECRAFT STORAGE....................................................................8-1
9 --MISSION SPECIFIC HARDWARE AND SOFTWARE.........................................................9-1
         9.1 TT&C SIMULATOR........................................................................9-1
         9.2 PROPULSION MODEL......................................................................9-1
         9.3 PROPELLANT GAUGING....................................................................9-1
         9.4 SENSOR BLINDING PREDICTION MODEL......................................................9-1
         9.5 SATELLITE CONTROL FACILITY (SCF) UPGRADE EQUIPMENT AND SOFTWARE.......................9-1
         9.6 DYNAMIC software SIMULATOR............................................................9-1
         9.7 SPACECRAFT SPECIFIC CONTROL AND MONITORING SOFTWARE...................................9-1

ANNEX A -- GROUND SYSTEM STATEMENT OF WORK
</TABLE>



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<PAGE>




                        LORAL ORION NETWORK SYSTEMS, INC.



                                     ORION 2

                                  GROUND SYSTEM

                             STATEMENT OF WORK ANNEX

                                PART 2(A) ANNEX A

                               DATED: 11 MAY 1998


--------------------------------------------------------------------------------
This document contains data and information  proprietary to Space Systems/Loral.
This data shall not be disclosed,  disseminated,  or reproduced,  in whole or in
part, without the express prior written consent of Space Systems/Loral.
--------------------------------------------------------------------------------



                                       i


            Use or disclosure of the data contained on this sheet is
                  subject to the restriction on the title page.

<PAGE>

                                    CONTENTS

SECTION                                                                     PAGE
1 --PURPOSE AND SCOPE........................................................1-1
2 --DESIGN OVERVIEW..........................................................2-1
         2.1 ROCKVILLE OVERVIEW..............................................2-1
         2.2 MT. JACKSON OVERVIEW............................................2-2
         2.3 HAWLEY OVERVIEW.................................................2-2
3 --DELIVERABLE EQUIPMENT AND SERVICES.......................................3-1
         3.1  GROUND EQUIPMENT...............................................3-1
                  3.1.1 Design Activities....................................3-1
                  3.1.2 Design Reviews.......................................3-1
                  3.1.3 Ground Facilities Interface Coordination Meetings....3-2
                  3.1.4 Non-Impact to Existing Operations....................3-2
                  3.1.5 Acceptance Tests.....................................3-2
                  3.1.6 Site System Acceptance Test..........................3-2
                  3.1.7 Shipping and Installation............................3-3
                  3.1.8 Ground Equipment Documentation.......................3-3
                  3.1.9 Warranty.............................................3-3
                  3.1.10 Special Warranty....................................3-3
         3.2 DOCUMENTATION...................................................3-3
4 --CUSTOMER FURNISHED EQUIPMENT AND SERVICES................................4-1
         4.1 OVERALL CUSTOMER FURNISHED EQUIPMENT AND SEVICES................4-1
                  4.1.1 Sites................................................4-1
                  4.1.2 Other Support Facilities Furnished By ORION..........4-1
                  4.1.3 Equipment Racks......................................4-1
                  4.1.4 Uninterruptible Power Systems (UPS)..................4-1
                  4.1.5 AC power.............................................4-1
                  4.1.6 RF and Antenna.......................................4-1
                  4.1.7 Orbital Analysis and Orbit Determination.............4-2
                  4.1.8 Tracking Data Transfer for Orbit Raising and IOT.....4-2
                  4.1.9 ORION Network Responsibilities.......................4-2
                  4.1.10 ORION Control Center Responsibilities...............4-2
         4.2 MT. JACKSON REQUIREMENTS........................................4-2
         4.3 CUSTOMER FURNISHED EQUIPMENT AT HAWLEY..........................4-2
5 --DESIGN ACTIVITIES........................................................5-1
         5.1 DESIGN REVIEWS..................................................5-1
         5.2 DESIGN DOCUMENTATION............................................5-1

                                       ii

<PAGE>


6 --SERVICES.................................................................6-1
         6.1 GROUND TT&C SERVICES............................................6-1
                  6.2 Equipment Installation.................................6-1
                  6.1.2 Spacecraft Compatibility Test........................6-1
         6.2 TRAINING OF PERSONNEL...........................................6-1
                  6.2.1 Classroom Training...................................6-1
                  6.2.2 Hands-On Training....................................6-1
7 --GROUND PROGRAM MANAGEMENT................................................7-1
         7.1 GROUND MANAGEMENT PROGRAM.......................................7-1
         7.2 PROGRAM REVIEWS.................................................7-1
                  7.2.1 Monthly Review.......................................7-1
                  7.2.2 Ground Progress Reports..............................7-1
8 --DOCUMENTATION REQUIREMENTS...............................................8-1
9 --DELIVERY DATE............................................................9-1

                                  ILLUSTRATIONS

FIGURE                                                                      PAGE
2-1      Overview of ORION 2 System..........................................2-1
2-2      Rockville Facility..................................................2-2
2-3      Mt. Jackson Facility................................................2-3
2-4      Hawley Facility.....................................................2-4


                                     TABLES

TABLE                                                                       PAGE
3-1      Deliverable Ground Equipment........................................3-1
9-1      Ground Contract Documentation Requirement List (CDRL)...............9-2



                                       iii

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<PAGE>


                       LORAL ORION NETWORK SYSTEMS, INC.




                                    ORION 2

                CONTRACT DOCUMENTATION REQUIREMENTS LIST (CDRL)

                                   PART 2(B)

                               DATED: 11 MAY 1998



--------------------------------------------------------------------------------
This document contains data and information  proprietary to Space Systems/Loral.
This data shall not be disclosed,  disseminated,  or reproduced,  in whole or in
part, without the express prior written consent of Space Systems/Loral.
--------------------------------------------------------------------------------



            Use or disclosure of the data contained on this sheet is
                  subject to the restriction on the title page.

<PAGE>



                                    CONTENTS

SECTION                                                                     PAGE

PART 2(B) CONTRACT DOCUMENTATION REQUIREMENTS LIST (CDRL)......................1

                                     TABLES

TABLE                                                                       PAGE

Table 1(a) Program Management Documentation....................................3
Table 1(b) Engineering Documentation...........................................4
Table 1(c) Test Documentation..................................................9
Table 1(d) Product Assurance Documentation....................................15




<PAGE>







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                            THROUGH 18 OF THIS PART]



<PAGE>



                        LORAL ORION NETWORK SYSTEMS, INC.





                                     ORION 2

                 TECHNICAL SPECIFICATIONS FOR ORION 2 SPACECRAFT

                                    PART 3(A)


                               DATED: 11 MAY 1998




--------------------------------------------------------------------------------
This document contains data and information  proprietary to Space Systems/Loral.
This data shall not be disclosed,  disseminated,  or reproduced,  in whole or in
part, without the express prior written consent of Space Systems/Loral.
--------------------------------------------------------------------------------



            Use or disclosure of the data contained on this sheet is
                  subject to the restriction on the title page.


<PAGE>



                                    CONTENTS
<TABLE>
<CAPTION>

SECTION                                                                                                            PAGE
<S>                                                                                                                <C>
1 --INTRODUCTION....................................................................................................1-1
         1.1 SCOPE AND PURPOSE......................................................................................1-1
         1.2 GENERAL REQUIREMENTS...................................................................................1-1
2 --MISSION REQUIREMENTS............................................................................................2-1
         2.1 LIFE 2-1
                  2.1.0 Propellant Life.............................................................................2-1
                  2.1.1 Maneuver Life...............................................................................2-1
                  2.1.2 Orbital Life................................................................................2-1
         2.2 LAUNCH CONFIGURATION AND MASS..........................................................................2-2
         2.3 AIRBORNE SUPPORT EQUIPMENT (ASE).......................................................................2-2
         2.4 SPACECRAFT RELIABILITY AND QUALITY ASSURANCE
                  REQUIREMENTS......................................................................................2-2
                  2.4.1 Piece Parts, Components and Subassemblies...................................................2-2
                  2.4.2 Parts Locations For Testing.................................................................2-4
         2.5 DESIGN REQUIREMENTS....................................................................................2-4
                  2.5.1 Reserved....................................................................................2-4
                  2.5.2 Reserved....................................................................................2-4
                  2.5.3 Mechanical Design Criteria for Units and Assemblies.........................................2-4
                  2.5.4 Thermal Design Criteria for Units and Assemblies............................................2-4
                  2.5.5 Design Criteria for Electronic Units and Onboard Software...................................2-5
                  2.5.6 Use of Connectors...........................................................................2-5
                  2.5.7 Spacecraft Testing Via the Telemetry System.................................................2-5
                  2.5.8 Hard-Line Connections for Communications and TT&C Subsystem Testing.........................2-6
                  2.5.9 Insulation of Conductors....................................................................2-6
                  2.5.10 Radiation Environment......................................................................2-6
                  2.5.11 Design Considerations Associated with Charging Phenomena...................................2-7
                  2.5.12 Zero-g Testing.............................................................................2-8
                  2.5.13 Operation Following Storage................................................................2-8
                  2.5.14 Launch Windows and Mission Profile Constraints.............................................2-8
                  2.5.15 Telemetry Transmitters Status During Launch................................................2-8
                  2.5.16 Helium Pressurant Venting (if applicable)..................................................2-9
                  2.5.17 Orbit Control Maneuvers....................................................................2-9
                  2.5.18 Operation in Inclined Orbit................................................................2-9
                  2.5.19 Attitude Control Failure Mode Recovery and Continued Operation.............................2-9
         2.6 DEFINITION OF COORDINATE AXES AND ATTITUDE ANGLES......................................................2-9
         2.7 ANTENNA BEAM POINTING ACCURACY........................................................................2-10
</TABLE>


                                       ii

<PAGE>



<TABLE>
<S>                                                                                                                <C>
3 --COMMUNICATION SUBSYSTEM.........................................................................................2-1
         3.1 GENERAL................................................................................................3-1
                  3.1.2 Conditions for Specification................................................................3-3
                  3.1.3  Primary Transmission Modes (For Information Only)..........................................3-3
         3.2 COVERAGE...............................................................................................3-5
                  3.2.1 Coverage Regions............................................................................3-5
         3.3 POLARIZATION..........................................................................................3-10
                  3.3.1 Receive Isolation and Discrimination.......................................................3-10
                  3.3.2 Cross-Polar Transmit Discrimination........................................................3-11
         3.4 CAPACITY..............................................................................................3-11
         3.5 FREQUENCY PLAN........................................................................................3-12
         3.6 COMMUNICATION SUBSYSTEM AND ANTENNA BEAM INTERCONNECTIVITY............................................3-12
                  3.6.1 Communications Subsystem Configuration.....................................................3-12
                  3.6.2 Interconnectivity..........................................................................3-14
         3.7 INPUT CHARACTERISTICS.................................................................................3-16
                  3.7.1 Receive Sensitivity (G/T)..................................................................3-16
                  3.7.2 Gain and Level Control.....................................................................3-16
                            3.7.2.1 Fixed Gain Mode................................................................3-16
                            3.7.2.2 Automatic Level Control Mode...................................................3-17
                  3.7.3 Saturation Flux Density (SFD)..............................................................3-18
                  3.7.4 Drive Conditions...........................................................................3-19
                            3.7.4.1 Overdrive Conditions...........................................................3-19
                            3.7.4.2 Pulsed Transient Response......................................................3-19
                  3.7.5 Receive Rejection..........................................................................3-20
                  3.7.6 Linearity of the Common Input Section......................................................3-20
                  3.7.7 Interference from Command Carrier..........................................................3-20
         3.8 OUTPUT CHARACTERISTICS................................................................................3-20
                  3.8.1 Effective Isotropic Radiated Power (EIRP)..................................................3-20
                  3.8.2 Spurious Outputs...........................................................................3-23
                  3.8.3 Spurious Modulation........................................................................3-24
                  3.8.4 Passive Intermodulation....................................................................3-26
                  3.8.5 Multipaction...............................................................................3-26
         3.9 TRANSFER CHARACTERISTICS..............................................................................3-26
                  3.9.1 Gain Versus Frequency......................................................................3-26
                  3.9.2 Gain Slope.................................................................................3-26
                  3.9.3 Group Delay Versus Frequency...............................................................3-29
                  3.9.4 Group Delay Slope..........................................................................3-29
                  3.9.5 Group Delay Stability......................................................................3-29
</TABLE>


                                       iii

<PAGE>



<TABLE>
<S>               <C>                                                                                             <C>
                  3.9.6 Group Delay Ripple.........................................................................3-29
                  3.9.7 Phase Linearity and AM/PM Conversion Coefficient...........................................3-29
                  3.9.8 AM/PM Transfer Coefficient.................................................................3-31
                  3.9.9 Amplitude Linearity........................................................................3-32
                  3.9.10 Frequency Stability.......................................................................3-32
                  3.9.11 Out-Of-Band Response......................................................................3-33
         3.10 RESERVED.............................................................................................3-33
         3.11 TRAFFIC ROUTING......................................................................................3-33
         3.12 REDUNDANCY...........................................................................................3-33
         3.13 HIGH POWER AMPLIFIERS................................................................................3-34
                  3.13.1 Linearized TWTAs..........................................................................3-34
                  3.13.2 TWTA Auto-Restart Capability..............................................................3-34
         3.14 TT&C INTERFACE.......................................................................................3-34
                  3.14.1 Command Requirements......................................................................3-34
                  3.14.2 Telemetry Requirements....................................................................3-35
4 --TELEMETRY, TRACKING. AND COMMAND (TT&C).........................................................................4-1
         4.1 TELEMETRY..............................................................................................4-1
                  4.1.1 Functional Requirements.....................................................................4-1
                            4.1.1.1 Purpose.........................................................................4-1
                            4.1.1.2 Function........................................................................4-1
                            4.1.1.3 Operation.......................................................................4-2
                            4.1.1.4 Interaction with the Communications Subsystem...................................4-2
                            4.1.1.5 Redundancy......................................................................4-2
                            4.1.1.6 Interfaces......................................................................4-2
                            4.1.1.7 Accuracy........................................................................4-7
                            4.1.1.8 Data Channel Dynamic Range......................................................4-8
                            4.1.1.9 Spare Capacity..................................................................4-8
                  4.1.2 RF Parameters...............................................................................4-8
         4.2  COMMAND...............................................................................................4-9
                  4.2.1 Functional Requirements.....................................................................4-9
                            4.2.1.1 Purpose.........................................................................4-9
                            4.2.1.2 Function........................................................................4-9
                            4.2.1.3 Operation.......................................................................4-9
                            4.2.1.4 Isolation.......................................................................4-9
                            4.2.1.5 Redundancy.....................................................................4-10
                            4.2.1.6 Interfaces.....................................................................4-10
                            4.2.1.7 System Test Considerations.....................................................4-10
                            4.2.1.8 Spare Capacity.................................................................4-11
                  4.2.2 RF Parameters..............................................................................4-11
</TABLE>


                                       iv

<PAGE>



<TABLE>
<S>               <C>                                                                                             <C>
                  4.2.3 Baseband Characteristics...................................................................4-11
                            4.2.3.1 Error Prevention and Detection.................................................4-12
                            4.2.3.2 Command Security...............................................................4-13
                            4.2.3.3 Command Acceptance Probability.................................................4-13
         4.3 RANGING...............................................................................................4-13
                  4.3.1 Functional Requirement.....................................................................4-13
                            4.3.1.1 Purpose........................................................................4-13
                            4.3.1.2 Function.......................................................................4-14
                            4.3.13 Operation.......................................................................4-14
                            4.3.1.4 Isolation......................................................................4-14
                            4.3.1.5 Redundancy.....................................................................4-14
                  4.3.2 Performance Requirements...................................................................4-14
5 --ATTITUDE DYNAMICS CONTROL SUBSYSTEM (ADCS)......................................................................5-1
         5.1 FUNCTIONAL DESCRIPTION.................................................................................5-1
         5.2 SUBSYSTEM PERFORMANCE AND DESIGN REQUIREMENTS..........................................................5-1
                  5.2.1 Attitude Determination......................................................................5-1
                            5.2.1.1 Orbit Raising...................................................................5-1
                            5.2.1.2 Synchronous Orbit...............................................................5-1
                  5.2.2 Attitude Control............................................................................5-2
                            5.2.2.1 Transfer to Geosynchronous Orbit and Initial Acquisition........................5-2
                            5.2.2.2 On Orbit Control................................................................5-2
                  5.2.3  Reacquisition..............................................................................5-2
                  5.2.4 Ground Control Command Capability...........................................................5-2
                  5.2.5 Control Safety Systems......................................................................5-3
                  5.2.6 Special Features............................................................................5-3
                            5.2.6.1 Antenna Pattern Measurement Capability..........................................5-3
                            5.2.6.2 Control Bias Capability.........................................................5-4
                            5.2.6.3 ADCS Switching..................................................................5-4
                            5.2.6.4 Control Electronics Fault Protection............................................5-4
                  5.2.7 Subsystem Configuration and Interfaces......................................................5-4
                            5.2.7.1 Redundancy......................................................................5-4
                            5.2.7.2 TT&C Interfaces.................................................................5-5
                            5.2.7.3 Propulsion Interfaces...........................................................5-5
6 --PROPULSION SUBSYSTEM............................................................................................6-1
         6.1 FUNCTIONAL DESCRIPTION.................................................................................6-1
         6.2 DESIGN REQUIREMENTS....................................................................................6-1
         6.3 REDUNDANCY.............................................................................................6-3
         6.4 MANEUVER LIFE AND PROPELLANT LOADING...................................................................6-3
                  6.4.1 General Requirements........................................................................6-3
</TABLE>


                                       v

<PAGE>


<TABLE>
<S>               <C>                                                                                             <C>
                  6.4.2 Propellant Budgeting Methodology............................................................6-4
                            6.4.2.1 Actual Hardware Performance Test Data...........................................6-4
                            6.4.2.2 Inefficiencies of Operation.....................................................6-4
                            6.4.2.3 Inflight Performance............................................................6-5
                            6.4.2.4 Specific Maneuver Requirements..................................................6-5
         6.5 TT&C INTERFACES........................................................................................6-5
7 --POWER SUBSYSTEM.................................................................................................7-1
         7.1 FUNCTIONAL DESCRIPTION.................................................................................7-1
         7.2 GENERAL REQUIREMENTS...................................................................................7-1
         7.3 ENERGY GENERATION......................................................................................7-2
                  7.3.1 Solar Cells.................................................................................7-2
                  7.3.2 Power Output................................................................................7-2
                  7.3.3 Power Transfer Assembly.....................................................................7-2
         7.4 ENERGY STORAGE.........................................................................................7-3
                  7.4.1 Batteries...................................................................................7-3
                  7.4.2 Battery Charge Management...................................................................7-3
                  7.4.3 Cell Failure................................................................................7-4
                  7.4.4 Battery Removal and Storage.................................................................7-4
         7.5 POWER CONDITIONING AND CONTROL.........................................................................7-5
                  7.5.1 Bus Configuration...........................................................................7-5
                  7.5.2 Failure Modes and Shutdown Sequence.........................................................7-5
                  7.5.3 Bus Undervoltage and Overvoltage............................................................7-6
                  7.5.4 Interaction Between the Communications and Power Subsystems.................................7-6
         7.6 TT&C INTERFACES........................................................................................7-6
8 --THERMAL CONTROL SUBSYSTEM.......................................................................................8-1
         8.1 FUNCTIONAL DESCRIPTION.................................................................................8-1
         8.2 PERFORMANCE REQUIREMENTS...............................................................................8-1
         8.3 SUBSYSTEM DESIGN REQUIREMENTS..........................................................................8-5
                  8.3.1 Junction Temperature........................................................................8-5
                  8.3.2 Instrumentation.............................................................................8-5
                  8.3.3 Materials...................................................................................8-6
                  8.3.4 Venting.....................................................................................8-6
                  8.3.5 Grounding...................................................................................8-6
                  8.3.6 Multi-Layer Insulating Blanket (MLI)........................................................8-6
                  8.3.7 Contamination Control.......................................................................8-7
         8.4 TT&C INTERFACES........................................................................................8-7
9 --STRUCTURE SUBSYSTEM.............................................................................................9-1
         9.1 FUNCTIONAL DESCRIPTION.................................................................................9-1
         9.2 PERFORMANCE REQUIREMENTS...............................................................................9-1
</TABLE>


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<PAGE>



<TABLE>
<S>      <C>                                                                                                       <C>
         9.3 DESIGN REQUIREMENTS....................................................................................9-1
10 --MECHANISMS....................................................................................................10-1
         10.1 DESIGN REQUIREMENTS..................................................................................10-1
         10.2 TT&C INTERFACES......................................................................................10-2
11 --PYROTECHNIC AND ELECTRO EXPLOSIVE DEVICES.....................................................................11-1

                                  ILLUSTRATIONS

FIGURE                                                                                                             PAGE
Figure 3-1.  Illustration of Europe Coverage from 12(degree)West....................................................3-9
Figure 3-2.  Illustration of American Coverage at 12(degree)West...................................................3-10
Figure 3-3.  Frequency Plan........................................................................................3-14
Figure 3-4.  Spurious Frequency Modulation Limits..................................................................3-25
Figure 3-5.  Spurious Frequency Modulation Limits..................................................................3-25
Figure 3-6.  In-Band Gain Vs. Frequency Limits For Input Section...................................................3-27
Figure 3-7.  In-Band Gain Vs. Frequency Limits For Overall Transponder.............................................3-28
Figure 3-8.  Group Delay Vs. Frequency Limits For Input Section....................................................3-30
Figure 3-9.  Group Delay Vs. Frequency Limits For Overall Transponder..............................................3-31
Figure 8-1.  Temperature Margins for Internal Mainbody and Thermally Coupled........................................8-2
Figure 8-2.  Temperature Margins for Exterior Thermally Isolated Equipment..........................................8-3
</TABLE>




                                       vii

<PAGE>



                                     TABLES

<TABLE>
<CAPTION>
TABLE                                                                                                              PAGE
<S>   <C>                                                                                                          <C>
Table 2-1.  Estimated Probability of Survival.......................................................................2-2
Table 3-1.  Definition of Europe Coverage Zones.....................................................................3-6
Table 3-2.  Definition of American Coverage.........................................................................3-7
Table 3-3.  The Minimum Co-Polar Receive Isolations................................................................3-11
Table 3-4.  The Minimum Cross-Polar Receive Isolations.............................................................3-11
Table 3-5.  The Minimum Cross-Polar Discriminations (Transmit & Receive)...........................................3-11
Table 3-6.  Frequency Plan.........................................................................................3-13
Table 3-7.  Transponder Cconnectivity Matrix.......................................................................3-15
Table 3-8.  Minimum G/T Performance................................................................................3-17
Table 3-9.  Maximum Allowable G/T Variation........................................................................3-17
Table 3-10.  SFD Variation.........................................................................................3-18
Table 3-11.  Receive Rejection.....................................................................................3-20
Table 3-12.  Minimum EIRP Performance..............................................................................3-21
Table 3-13.  Key City List.........................................................................................3-22
Table 3-14.  EIRP Variation........................................................................................3-23
Table 3-15.  Spurious Output Levels................................................................................3-24
Table 3-16.  Maximum Gain Slope....................................................................................3-29
Table 3-17.  Group Delay Slope.....................................................................................3-31
Table 3-18.  Third Order Intermodulation Products..................................................................3-32
Table 3-19.  Noise Power Ratio*....................................................................................3-32
Table 3-20.  Out-Of-Band Response..................................................................................3-33
Table 4-1.  Accuracy Requirements...................................................................................4-8
</TABLE>


<PAGE>








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                           THROUGH 11-1 OF THIS PART]





<PAGE>




                        LORAL ORION NETWORK SYSTEMS, INC.




                                     ORION 2

                       RADIATION ENVIRONMENT SPECIFICATION

                                PART 3(A) ANNEX A



                               DATED: 11 MAY 1998



--------------------------------------------------------------------------------
This document contains data and information  proprietary to Space Systems/Loral.
This data shall not be disclosed,  disseminated,  or reproduced,  in whole or in
part, without the express prior written consent of Space Systems/Loral.
--------------------------------------------------------------------------------

            Use or disclosure of the data contained on this sheet is
                  subject to the restriction on the title page.



<PAGE>



                                    CONTENTS

SECTION                                                                     PAGE

1        INTRODUCTION..........................................................1
2        SYNCHRONOUS ORBIT CONDITIONS..........................................2
         2.1      ELECTRONS....................................................2
         2.2      PROTONS......................................................4
         2.3      ALPHA PARTICLES..............................................6
         2.4      COSMIC RAY RADIATION.........................................6
         2.5      ULTRAVIOLET RADIATION........................................7
         2.6      PLASMA.......................................................9
         2.7      MICROMETEROIDS..............................................10
3        TRANSFER ORBIT CONDITIONS............................................11
         3.1      TRANSFER ORBIT ELECTRON FLUX VALUES.........................11
         3.2      TRANSFER ORBIT PROTON FLUX VALUES...........................11


                                  ILLUSTRATIONS

FIGURE                                                                      PAGE
3.1-1         Transfer Orbit Electron Flux....................................12
3.2-1         Transfer Orbit Proton Flux......................................13

                                     TABLES

TABLE                                                                       PAGE
2.1-1         Time - Averaged Integral Flux Spectrum...........................2
2.1-1a        Time-Averaged Integral Flux Spectrum  For Trapped Electrons
              (For Solar Array) (12 W).........................................3
2.2-1         Time Averaged Integral Flux Spectrum For Trapped Protons.........4
2.2-2         Proton Fluence (Including solar Flares) and Alpha Particles......5
2.2-3         Solar Flare Proton Models  To Use For Solar Array Designs........5
2.4-1         GCR Constants For GCR Energy Distribution........................6
2.4-2         Relative Abundance Of Cosmic Rays................................8
2.5-1         UV Spectrum......................................................9
2.7-1         Flux Of Penetrating Micrometeroids..............................10



<PAGE>







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<PAGE>




                        LORAL ORION NETWORK SYSTEMS, INC.





                                     ORION 2

                    SPACECRAFT PRODUCT ASSURANCE REQUIREMENTS

                                    PART 3(B)



                               Dated: 11 May 1998




--------------------------------------------------------------------------------
This document contains data and information  proprietary to Space Systems/Loral.
This data shall not be disclosed,  disseminated,  or reproduced,  in whole or in
part, without the express prior written consent of Space Systems/Loral.
--------------------------------------------------------------------------------



                                       i


            Use or disclosure of the data contained on this sheet is
                  subject to the restriction on the title page.


<PAGE>



                                    CONTENTS

<TABLE>
<CAPTION>
SECTION                                                                                 PAGE
<S>     <C>                                                                             <C>
1        INTRODUCTION....................................................................1-1
         1.1      SCOPE..................................................................1-1
         1.2      PRODUCT ASSURANCE OBJECTIVES...........................................1-1
2        PRODUCT ASSURANCE REQUIREMENTS..................................................2-1
         2.1      PRODUCT ASSURANCE PLAN.................................................2-1
         2.2      ORGANIZATION AND MANAGEMENT............................................2-1
         2.3      REPORTING..............................................................2-1
         2.4      NON-CONFORMANCE........................................................2-2
         2.5      WAIVERS AND DEVIATIONS.................................................2-2
3        REVIEWS AND AUDITS..............................................................3-1
         3.1      MRBsAND FRBs...........................................................3-1
         3.2      MRB AND FRB DOCUMENTATION..............................................3-1
         3.3      PROGRAM AUDITS.........................................................3-2
         3.4      ORION RIGHT OF ACCESS..................................................3-2
4        SUBCONTRACTOR AND SUPPLIER MANAGEMENT...........................................4-1
         4.1      SUBCONTRACTOR/SUPPLIER PRODUCT ASSURANCE PLAN..........................4-1
         4.2      REQUIREMENTS...........................................................4-1
         4.3      REVIEWS AND CONTROLS...................................................4-1
5        RELIABILITY ASSURANCE...........................................................5-1
         5.1      RELIABILITY ASSESSMENT.................................................5-1
         5.2      PARTS DERATING AND STRESS ANALYSIS.....................................5-2
         5.3      FAILURE MODES, EFFECTS, AND CRITICALITY ANALYSES.......................5-2
         5.4      WORST-CASE ANALYSIS (WCA)..............................................5-2
         5.5      LIFETIME...............................................................5-3
         5.6      CRITICAL ITEMS CONTROL.................................................5-3
         5.7      RESERVED...............................................................5-4
         5.8      QUALIFICATION STATUS LIST REPORT (QSLR)................................5-4
6        QUALITY ASSURANCE...............................................................6-1
         6.1      QUALITY ASSURANCE......................................................6-1
         6.2      PROCUREMENT AND FABRICATION............................................6-1
         6.3      TEST AND INSPECTION....................................................6-1
         6.4      WORKMANSHIP STANDARDS..................................................6-2
         6.5      QUALITY RECORDS AND TRACEABILITY.......................................6-2
         6.6      NON-CONFORMANCE CONTROL................................................6-2
</TABLE>


                                       ii

<PAGE>



<TABLE>
<S>     <C>                                                                             <C>
                  6.6.1     Non-Conformance Reporting....................................6-2
                  6.6.2     Non-Conformance/Failure Review and Disposition...............6-3
                  6.6.3     Failure Analysis and Corrective Action.......................6-3
                  6.6.4     Trend Analysis...............................................6-3
         6.7      QUALITY PROGRESS REPORTING.............................................6-3
7        PARTS PROCUREMENT...............................................................7-1
         7.1      PARTS PROCUREMENT AND CONTROL..........................................7-1
         7.2      ORGANIZATION AND RESPONSIBILITIES......................................7-1
         7.3      SELECTION AND APPLICATION..............................................7-1
         7.4      QUALITY PROVISIONS.....................................................7-2
         7.5      RADIATION..............................................................7-3
         7.6      TRACEABILITY...........................................................7-3
         7.7      HYBRIDS, BATTERY CELLS, TWTS, AND MAGNETICS............................7-3
         7.8      PARTS DOCUMENTATION....................................................7-3
8        MATERIALS AND PROCESSES.........................................................8-1
         8.1      MATERIALS AND PROCESS CONTROL..........................................8-1
         8.2      ORGANIZATION...........................................................8-1
         8.3      CRITICAL MATERIALS AND PROCESSES.......................................8-1
         8.4      MATERIALS AND PROCESS SELECTION........................................8-1
         8.5      MATERIALS AND PROCESS DOCUMENTATION....................................8-1
9        SOFTWARE QUALITY ASSURANCE......................................................9-1
         9.1      SOFTWARE QUALITY ASSURANCE PLAN........................................9-1
         9.2      SOFTWARE DEVELOPMENT...................................................9-1
         9.3      CONFIGURATION CONTROL..................................................9-1
         9.4      VERIFICATION AND ACCEPTANCE TESTING....................................9-1
         9.5      NON-CONFORMANCE CONTROL................................................9-2
10       CONFIGURATION MANAGEMENT.......................................................10-1
         10.1     CONFIGURATION MANAGEMENT..............................................10-1
         10.2     CONFIGURATION IDENTIFICATION AND CONTROL..............................10-1
         10.3     CHANGE CONTROL........................................................10-2
         10.4     CONFIGURATION VERIFICATION............................................10-2
         10.5     CONFIGURATION STATUS ACCOUNTING AND
                  DOCUMENTATION.........................................................10-2
11       SAFETY.........................................................................11-1
         11.1     SYSTEM SAFETY.........................................................11-1
         11.2     HAZARDOUS CONDITIONS..................................................11-1
         11.3     SAFETY AND HAZARD ANALYSES............................................11-1
</TABLE>


                                      iii

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<PAGE>


                        LORAL ORION NETWORK SYSTEMS INC.





                                     ORION 2

                              SPACECRAFT ON-GROUND

                                TEST REQUIREMENTS

                                    PART 3(C)



                               Dated: 11 May 1998




--------------------------------------------------------------------------------
This document contains data and information  proprietary to Space Systems/Loral.
This data shall not be disclosed,  disseminated,  or reproduced,  in whole or in
part, without the express prior written consent of Space Systems/Loral.
--------------------------------------------------------------------------------



<PAGE>



                                    CONTENTS

<TABLE>
<CAPTION>
SECTION                                                                                                            PAGE
<S>                                                                                                                 <C>
1 --INTRODUCTION....................................................................................................1-1
2 --GENERAL COMMENTS................................................................................................2-1
         2.1 TEST PHILOSOPHY........................................................................................2-1
         2.2 DEFINITIONS............................................................................................2-1
         2.3 GENERAL TEST REQUIREMENTS..............................................................................2-2
                  2.3.1 Basic Requirements..........................................................................2-2
                  2.3.2 Test Equipment and Test Facility Requirements...............................................2-4
                  2.3.3 Zero-G Testing..............................................................................2-4
                  2.3.4 Acceptance Tests............................................................................2-4
                  2.3.5 Protoflight Tests...........................................................................2-5
                  2.3.6 Qualification Tests.........................................................................2-5
         2.4 WITNESSING OF TESTS....................................................................................2-6
         2.5 UNIT/SUBSYSTEM/SYSTEM TEST DATA........................................................................2-6
         2.6 SUBSYSTEM/SYSTEM TEST REVIEWS..........................................................................2-7
         2.7 DOCUMENTATION..........................................................................................2-7
         2.8 ORGANIZATION...........................................................................................2-7
3 --UNIT, SUBSYSTEM AND SPACECRAFT TEST PROGRAM.....................................................................3-1
         3.1 EQUIPMENT CATEGORIZATION...............................................................................3-1
         3.2 TEST PROGRAM OVERVIEW..................................................................................3-2
4 --PROTOFLIGHT TESTS...............................................................................................4-1
         4.1 UNIT PROTOFLIGHT TESTS.................................................................................4-1
         4.2 SUBSYSTEM PROTOFLIGHT TESTS............................................................................4-7
                  4.2.1 Repeater Subsystem..........................................................................4-7
                  4.2.2 Antenna Subsystem...........................................................................4-7
                  4.2.3 Telemetry, Tracking, and Command (TT&C) Subsystem..........................................4-10
                  4.2.4 ADCS Subsystem Protoflight Test............................................................4-10
                            4.2.4.1 ADCS SCE In-the-Loop Test......................................................4-10
                            4.2.4.2 ADCS Servo Table Test (Already Completed)......................................4-11
                  4.2.5 Propulsion Subsystem.......................................................................4-11
                  4.2.6 Power Subsystem............................................................................4-12
                            4.2.6.1 Solar Array....................................................................4-12
                            4.2.6.2 Battery Assembly...............................................................4-12
                  4.2.7 Structure Subsystem Protoflight Test.......................................................4-13
                  4.2.8 Thermal Subsystem Protoflight Test.........................................................4-13
         4.3 SPACECRAFT PROTOFLIGHT TEST...........................................................................4-14
</TABLE>


<PAGE>

<TABLE>
<S>               <C>                                                                                             <C>
                  4.3.1 Integration Tests..........................................................................4-14
                  4.3.2 Initial Reference Performance Test.........................................................4-14
                  4.3.3 Thermal Balance/Thermal Vacuum Test........................................................4-16
                  4.3.4 Spacecraft Alignments......................................................................4-20
                  4.3.5 Sinusoidal Vibration.......................................................................4-20
                  4.3.6 Acoustic Vibration Test....................................................................4-21
                  4.3.7 Shock and Deployment Tests.................................................................4-21
                  4.3.8 Spacecraft Mass Properties Measurements....................................................4-21
                  4.3.9 Final Performance Testing..................................................................4-22
                  4.3.10 RF Range Test.............................................................................4-22
                  4.3.11 Electro Magnetic Compatibility (EMC) Test.................................................4-23
5 --FLIGHT ACCEPTANCE TESTS.........................................................................................5-1
         5.1 UNIT ACCEPTANCE TESTS..................................................................................5-1
                  5.1.1 Power Handling and Passive Intermodulation (PIM)............................................5-2
                  5.1.2 Traveling Wave Tube Amplifiers Burn-In......................................................5-2
         5.2 SUBSYSTEM  ACCEPTANCE TESTS............................................................................5-3
                  5.2.1 Antenna Subsystem...........................................................................5-3
                  5.2.2 ADCS........................................................................................5-4
                  5.2.3 Power Subsystem.............................................................................5-4
                  5.2.4 Structure Subsystem Acceptance Tests........................................................5-4
                  5.2.5 Thermal Subsystem...........................................................................5-4
                  5.2.6 Spacecraft  Harness.........................................................................5-4
         5.3 SPACECRAFT ACCEPTANCE TEST.............................................................................5-4
6 --LIFE TESTS......................................................................................................6-1
7 --DEVELOPMENT AND QUALIFICATION TEST..............................................................................7-1
         7.1 COMMUNICATIONS SUBSYSTEM TESTS.........................................................................7-1
                  7.1.1 Antenna Unit and Subsystem Test.............................................................7-1
                  7.1.2 Thermal Distortion..........................................................................7-1
                  7.1.3 Repeater Tests..............................................................................7-2
         7.2 STRUCTURE SUBSYSTEM QUALIFICATION TESTS................................................................7-2
         7.3 ATTITUDE DETERMINATION AND CONTROL SUBSYSTEM (ADCS) QUALIFICATION TESTS................................7-2
         7.4 PROPULSION SUBSYSTEM QUALIFICATION TESTS...............................................................7-2
                  7.4.1 General.....................................................................................7-2
                  7.4.2 Thrusters...................................................................................7-3
                  7.4.3 Main Spacecraft Thruster....................................................................7-3
                  7.4.4 Propellant Tanks............................................................................7-3
         7.5 THERMAL SUBSYSTEM QUALIFICATION TESTING................................................................7-3
         7.6 MECHANISMS.............................................................................................7-3
</TABLE>


<PAGE>



<TABLE>
<S>                                                                                                                <C>
8 --INTERFACE COMPATIBILITY TEST....................................................................................8-1
         8.1 GROUND CONTROL SYSTEM COMPATIBILITY....................................................................8-1
         8.2 LAUNCH VEHICLE COMPATIBILITY...........................................................................8-1
9 --LAUNCH PREPARATION TEST.........................................................................................9-1
         9.1 GENERAL................................................................................................9-1
         9.2 LAUNCH BASE SPACECRAFT FUNCTIONAL TESTS (IN PPF).......................................................9-1
         9.3 SPACECRAFT-LAUNCH VEHICLE COMBINED OPERATIONS..........................................................9-2
         9.4 LAUNCH COMPLEX OPERATIONS..............................................................................9-2
10 -- COMPLIANCE MATRIX............................................................................................10-1
11 --PAYLOAD TEST CONFIGURATION MATRICES REQUIREMENT...............................................................11-1
         11.1 INTRODUCTION.........................................................................................11-1
         11.2 OVERALL REQUIREMENTS.................................................................................11-1
                  11.2.1 Payload Panel.............................................................................11-1
                  11.2.2 Spacecraft Level..........................................................................11-1
                  11.2.3 RF Link Calibrations......................................................................11-2
                  11.2.4 Performance Parameters....................................................................11-2
         11.3 ANTENNA TEST CONFIGURATIONS..........................................................................11-3
                  11.3.1 Unit/Subsystem Level......................................................................11-3
                  11.3.2 Spacecraft Level..........................................................................11-4

                                  ILLUSTRATIONS

FIGURE                                                                                                             PAGE
3-1           ORION 2 Protoflight Spacecraft Assembly, Integration and Test Flow....................................3-8
4-1           ORION 2 Antenna Subsystem Test Flow...................................................................4-9
4-2           Temperature Profile during Spacecraft Level Thermal Vacuum Testing...................................4-17

                                     TABLES

TABLE                                                                                                              PAGE
3-1           Unit Qualification Matrix.............................................................................3-3
6-1           Unit Life Test/Orbit Life Comparison..................................................................6-2
10-1          Compliance Matrix....................................................................................10-2
10-2          System Test Matrix..................................................................................10-15
10-3          Test Procedure......................................................................................10-20
10-4          Mechanical Test Decriptions........................................................................10-29a
</TABLE>



<PAGE>






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<PAGE>


                        LORAL ORION NETWORK SYSTEMS, INC.



                                     ORION 2

                           IN-ORBIT COMMISSIONING AND

                          ACCEPTANCE TEST REQUIREMENTS

                                    PART 3(D)



                               Dated: 11 May 1998


--------------------------------------------------------------------------------
This document contains data and information  proprietary to Space Systems/Loral.
This data shall not be disclosed,  disseminated,  or reproduced,  in whole or in
part, without the express prior written consent of Space Systems/Loral.
--------------------------------------------------------------------------------



            Use or disclosure of the data contained on this sheet is
                  subject to the restriction on the title page.


<PAGE>



                                    CONTENTS
<TABLE>
<CAPTION>
SECTION                                                                                                            PAGE
<S>                                                                                                                  <C>
1 --SCOPE.............................................................................................................i
2 --DEFINITIONS.......................................................................................................1
3 --INTRODUCTION......................................................................................................2
4 --COMMISSIONING.....................................................................................................4
         4.1 COMMISSIONING ACTIVITIES.................................................................................4
         4.2 DOCUMENTATION............................................................................................5
5 --ACCEPTANCE TESTING................................................................................................6
         5.1 AGGREGATE PREDICTED TRANSPONDER LIFE.....................................................................6
         5.2 TRANSPONDER ACCEPTANCE TESTS.............................................................................7
         5.3 DETERMINATION OF OTHER SPACECRAFT PARAMETERS............................................................10
                  5.3.1 Battery Capacity.............................................................................10
                  5.3.2 Predicted Propellant Life....................................................................11
                  5.3.3 Solar Array Power............................................................................11
         5.4 DOCUMENTATION...........................................................................................13
                  5.4.1 In-Orbit Acceptance Test Plan................................................................13
                  5.4.2 In-Orbit Facility Definition Document........................................................13
                  5.4.3 In-Orbit Acceptance Test Procedure...........................................................14
                  5.4.4 In-Orbit Acceptance Test Report..............................................................14
                  5.4.5 Spacecraft In-Orbit Configuration............................................................15
6 --POST-ACCEPTANCE TRANSPONDER TESTING..............................................................................16
ANNEX A     COMMISSIONING ACTIVITIES.................................................................................17
ANNEX B      TRANSPONDER PERFORMANCE TESTS...........................................................................22

                                  ILLUSTRATIONS

FIGURE                                                                                                             PAGE
5-1           Illustration of the Assessment of the Aggregate  Predicted Transponder Life.............................7
5-2           Illustration of the variation in the number of operating  Transponders which the available array
              power will support.....................................................................................12

                                     TABLES

TABLE                                                                                                              PAGE
5-1           Transponder Acceptance Test Program.....................................................................9
6-1           Post Acceptance Transponder Test Program...............................................................16
A-1           Primary Transponder Commissioning Tests................................................................18
A-2           Platform Commissioning Activities......................................................................19
</TABLE>



<PAGE>








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<PAGE>



                        LORAL ORION NETWORK SYSTEMS, INC.


                                     ORION 2

                   DYNAMIC SPACECRAFT SIMULATOR SPECIFICATION

                                    PART 3(E)




                               DATED: 11 MAY 1998



--------------------------------------------------------------------------------
This document contains data and information  proprietary to Space Systems/Loral.
This data shall not be disclosed,  disseminated,  or reproduced,  in whole or in
part, without the express prior written consent of Space Systems/Loral.
--------------------------------------------------------------------------------


            Use or disclosure of the data contained on this sheet is
                  subject to the restriction on the title page.


<PAGE>



                                    CONTENTS

SECTION                                                                     PAGE
1 --DYNAMIC SPACECRAFT SIMULATOR GENERAL CHARACTERISTICS.....................1-1
2 --REAL-TIME SIMULATION COMPUTER AND PERIPHERALS............................2-1
3 --GROUND STATION INTERFACE.................................................3-1
4 --SIMULATOR MODELING.......................................................4-1
         4.1 ADCS PROCESSOR EMULATION........................................4-1
         4.2 ATTITUDE DYNAMIC MODELING.......................................4-1
         4.3 PROPULSION MODEL................................................4-2
         4.4 T&C SUBSYSTEM MODEL.............................................4-2
                  4.4.1 Caribou Decryptor Modeling...........................4-3
         4.5 ORBIT & EPHEMERIS MODEL.........................................4-3
         4.6 EMULATION OF THE SECOND SPACECRAFT SCE PROCESSOR................4-4
         4.7 DYNAMIC POWER MODEL.............................................4-4
         4.8 DYNAMIC THERMAL MODEL...........................................4-4
         4.9 COMMUNICATIONS PAYLOAD MODEL....................................4-5
         4.10 FAILURE MODELS.................................................4-5
5 --FAST MODE SIMULATION.....................................................5-1
6 --SIMULATOR USER INTERFACE.................................................6-1
7 --POST-PROCESSING PLOTTING.................................................7-1
8 --DESIGN REVIEWS...........................................................8-1
9 --SIMULATOR TEST AND VALIDATION............................................9-1
10 --DOCUMENTATION..........................................................10-1
11 --DELIVERY AND INSTALLATION..............................................11-1
12 --TRAINING...............................................................12-1
13 --WARRANTY & MAINTENANCE.................................................13-1


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<PAGE>

================================================================================
SPACE SYSTEMS/LORAL                                                  DOC CODE SE
3825 Fabian Way                                        Specification No. E191269
Palo Alto, California 94303-4697                                    Revision N/C
CAGE ODJH2



                                   PART 3 (F)
                       ORION 2 SPACECRAFT SCF AND SOFTWARE
                           REQUIREMENTS SPECIFICATION



                          LORAL PROPRIETARY INFORMATION

This data is being furnished  pursuant to the provisions of the ORION 2 Purchase
Contract.  ORION shall have the right to duplicate,  use or disclose the data to
the extent specified in the Purchase Contract.

================================================================================
PROGRAM                                    PRIME CONTRACT NUMBER

ORION 2

--------------------------------------------------------------------------------
TCR SIMULATOR ENGINEER                     TECHNICAL DIRECTOR

Kam Wong                                   James Marshburn

--------------------------------------------------------------------------------
GROUND SYSTEM ENGINEER                     PROGRAM OFFICE

Howard Silsdorf                            Jo Stiles

--------------------------------------------------------------------------------
GROUND SYSTEMS HW SUPERVISOR               PRODUCT ASSURANCE

Joe Hauser                                 Thuy Thi Do

--------------------------------------------------------------------------------
GROUND SYSTEM ENG. MGR                     RELEASE

Rich Yarrington                            DATE
                                                                  Page 1  of  77
================================================================================


                                      1-i

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       NUMBER
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                                      1-ii

<PAGE>



                                    CONTENTS

<TABLE>
<CAPTION>
SECTION                                                                                                PAGE
<S>     <C>                                                                                            <C>
1        SCOPE..........................................................................................1-1
         1.1      STANDARDS.............................................................................1-1
2        APPLICABLE DOCUMENTS...........................................................................2-1
         2.1      DATA TRANSMISSION STANDARD............................................................2-1
         2.2      SPACE SYSTEMS/LORAL DOCUMENTS.........................................................2-1
         2.3      TIME GENERATION AND FREQUENCY REFERENCING STANDARDS...................................2-1
         2.4      PROTOCOLS.............................................................................2-1
3        TELEMETRY & COMMAND SIMULATOR..................................................................3-1
         3.1      SECTION SCOPE.........................................................................3-1
         3.2      REQUIREMENTS..........................................................................3-1
                  3.2.1     Functional Requirements.....................................................3-1
                            3.2.1.1      General Telemetry Simulation Functions.........................3-3
                            3.2.1.2      System Functions...............................................3-5
                  3.2.2     Interface Requirements......................................................3-5
                            3.2.2.1      General User Interface Requirements............................3-5
                            3.2.2.2      Information Organization Requirements..........................3-6
                            3.2.2.3      General Remote Interface Requirements.........................3-18
                            3.2.2.4      Local Area Network Interface Requirements.....................3-19
                            3.2.2.5      Signal Interface Requirements.................................3-19
         3.3      CHARACTERISTICS......................................................................3-20
                  3.3.1     Performance Requirements...................................................3-20
                            3.3.1.1      IF Command and Ranging Requirements...........................3-20
                            3.3.1.2      IF Telemetry and Ranging Requirements.........................3-21
                            3.3.1.3      Baseband Telemetry Requirements...............................3-22
                            3.3.1.4      Command Decryptor Interface Requirements......................3-22
                            3.3.1.5      Ethernet Requirements.........................................3-23
                            3.3.1.6      Power Requirements............................................3-23
                  3.3.2     Physical Requirements......................................................3-24
                  3.3.3     Reliability................................................................3-24
                  3.3.4     Maintainability............................................................3-24
                  3.3.5     Environmental Characteristics..............................................3-24
                  3.3.6     Transportability...........................................................3-24
         3.4      DESIGN AND CONSTRUCTION..............................................................3-24
                  3.4.1     Parts, Materials, and Processes............................................3-24
                  3.4.2     Electrical Design..........................................................3-25
                  3.4.3     Mechanical Design..........................................................3-25
</TABLE>

                                     1-iii

<PAGE>



<TABLE>
<S>     <C>                                                                                            <C>
                  3.4.4     Workmanship................................................................3-25
                  3.4.5     Safety.....................................................................3-26
                  3.4.6     Interchangability..........................................................3-26
                  3.4.7     Human Engineering..........................................................3-26
         3.5      DOCUMENTATION........................................................................3-27
                  3.5.1     Drawings...................................................................3-27
                  3.5.2     Technical Manuals..........................................................3-27
                  3.5.3     Firmware Documentation.....................................................3-27
                  3.5.4     Operational Support Documentation..........................................3-27
4        BASEBAND SUBSYSTEM.............................................................................4-1
         4.1      EQUIPMENT OVERVIEW....................................................................4-1
         4.2      PERFORMANCE SPECIFICATIONS............................................................4-1
                  4.2.1     TCRU........................................................................4-1
                            4.2.1.1      Downlink PM Signal Reception...................................4-2
                            4.2.1.2      Uplink Signal Generation.......................................4-2
                            4.2.1.3      Normal Telemetry Processing....................................4-4
                            4.2.1.4      Dwell Telemetry Stream Processing..............................4-5
                            4.2.1.5      Satellite Telecommanding.......................................4-5
                            4.2.1.6      Satellite Ranging..............................................4-7
                            4.2.1.7      Telemetry Simulation...........................................4-7
                  4.2.2     Interfaces to the RF/Antenna Subsystem......................................4-9
                  4.2.3     Interfaces with the SCC.....................................................4-9
                  4.2.4     TCRU Maintainability........................................................4-9
                  4.2.5     GPS Receiver and Time Code Generator........................................4-9
                  4.2.6     Maintainability.............................................................4-9
         4.3      ENVIRONMENTAL SPECIFICATIONS..........................................................4-9
                  4.3.1     Operating Temperature.......................................................4-9
                  4-4.3.2   Humidity....................................................................4-9
         4.4      POWER REQUIREMENTS....................................................................4-9
5        ORION 2 COMMAND AND CONTROL SYSTEM AUGMENTATION (CCSA).........................................4-1
         5.1      CCSA OVERVIEW.........................................................................5-1
         5.2      TELEMETRY REQUIREMENTS................................................................5-1
                  5.2.1     Telemetry Overview..........................................................5-1
                  5.2.2     Telemetry Reception.........................................................5-1
                  5.2.3     Raw Telemetry Archiving and Retrieval.......................................5-2
                            5.2.3.1      Rockville......................................................5-2
                            5.2.3.2      Mt. Jackson....................................................5-2
                            5.2.3.3      Hawley.........................................................5-3
                  5.2.4     Summary Data Archival.......................................................5-3
</TABLE>

                                      1-iv


<PAGE>


<TABLE>
<S>     <C>                                                                                            <C>
                  5.2.5     Telemetry Data Conversion...................................................5-3
                  5.2.6     Pseudo PIDS.................................................................5-4
                  5.2.7     Data Export.................................................................5-4
         5.3      COMMANDING............................................................................5-4
                  5.3.1     Automated Command Procedures................................................5-4
                  5.3.2     Command Execution...........................................................5-4
         5.4      RANGING...............................................................................5-5
         5.5      GROUND MONITOR AND CONTROL (M&C)......................................................5-5
         5.6      DYNAMIC SATELLITE SIMULATOR (DSS) INTERFACE...........................................5-6
         5.7      CCSA USER INTERFACE PRESENTATION......................................................5-6
         5.8      PRESENTATION FUNCTIONS................................................................5-6
                  5.8.1     Multi-window monitor displays...............................................5-6
                  5.8.2     Printing Function...........................................................5-7
6        VERIFICATION OF REQUIREMENTS...................................................................6-1
         6.1      FACTORY ACCEPTANCE TEST...............................................................6-1
         6.2      SS/L ACCEPTANCE TEST..................................................................6-1
7        QUALITY ASSURANCE PROVISIONS...................................................................7-1
         7.1      GENERAL...............................................................................7-1
         7.2      TEST READINESS REVIEW.................................................................7-1
         7.3      TEST NOTIFICATION.....................................................................7-1
         7.4      ADJUSTMENT AND/OR REPAIR..............................................................7-1
         7.5      CHANGES TO TEST PROCEDURES............................................................7-1
                  7.5.1     Authority...................................................................7-1
         7.6      NON-CONFORMANCE REPORTING.............................................................7-2
                  7.6.1     Test Failures...............................................................7-2
                  7.6.2     Test Failure Definition.....................................................7-2
                  7.6.3     Test Failure Procedures.....................................................7-2
         7.7      TEST ACCEPTANCE.......................................................................7-3
                  7.7.1     Engineering Review..........................................................7-3
                  7.7.2     Product Assurance Review....................................................7-3
         7.8      DISPOSITION OF TEST DATA..............................................................7-3
8        PREPARATION FOR DELIVERY.......................................................................8-1
9 --     ABBREVIATIONS AND ACRONYMS LIST................................................................9-1
</TABLE>

                                      1-v

<PAGE>








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                            THROUGH 9-2 OF THIS PART]







<PAGE>


                        LORAL ORION NETWORK SYSTEMS, INC.



                                     ORION 2

                             SATELLITE STORAGE PLAN

                                     PART 5



                               Dated: 11 May 1998





--------------------------------------------------------------------------------
This document contains data and information  proprietary to Space Systems/Loral.
This data shall not be disclosed,  disseminated,  or reproduced,  in whole or in
part, without the express prior written consent of Space Systems/Loral.
--------------------------------------------------------------------------------


            Use or disclosure of the data contained on this sheet is
                  subject to the restriction on the title page.


<PAGE>



                                    CONTENTS

<TABLE>
<CAPTION>
SECTION                                                                                        PAGE
<S>     <C>                                                                                    <C>
1        STORAGE AND POST-STORAGE PLAN..........................................................1-1
         1.1      GENERAL REQUIREMENTS..........................................................1-1
         1.2      ENVIRONMENTAL CONDITIONS......................................................1-1
         1.3      ACCESS CONTROL................................................................1-2
         1.4      MONITORING....................................................................1-2
         1.5      DOCUMENTATION.................................................................1-2
2        FACILITIES AND EQUIPMENT...............................................................2-1
         2.1      FACILITIES....................................................................2-1
         2.2      STORAGE EQUIPMENT.............................................................2-1
3        STORAGE OPERATIONS.....................................................................3-1
         3.1      SATELLITE CONFIGURATION FOR STORAGE...........................................3-1
         3.2      SATELLITE PREPARATION FOR SHORT-TERM STORAGE..................................3-2
         3.3      SATELLITE PREPARATION FOR LONG-TERM STORAGE...................................3-2
                  3.3.1     Satellite Preparation...............................................3-2
                  3.3.2     Storage Container Preparation.......................................3-2
                  3.3.3     Satellite Installation into Protective Cover........................3-2
                  3.3.4     Final Storage Preparation...........................................3-2
         3.4      SATELLITE MONITORING..........................................................3-3
         3.5      FLIGHT BATTERY STORAGE........................................................3-3
         3.6      SOLAR ARRAY STORAGE...........................................................3-3
         3.7      GROUND SUPPORT EQUIPMENT......................................................3-3
4        POST-STORAGE OPERATIONS................................................................4-1
         4.1      CALLUP SCHEDULE...............................................................4-1
         4.2      UNIT PREPARATION..............................................................4-1
         4.3      SATELLITE PREPARATION.........................................................4-2
         4.4      SATELLITE INTEGRATION AND TEST ACTIVITY.......................................4-2
                  4.4.1     One Month to Six Months Satellite Post Storage Operations...........4-2
                  4.4.2     Greater Than Six Months Satellite Post Storage Operations...........4-2

                                     TABLES

TABLE                                                                                          PAGE
1             Storage Facilities................................................................1-1
2             Storage Monitoring Matrix.........................................................2-1
</TABLE>


<PAGE>







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                            THROUGH 4-2 OF THIS PART]






<PAGE>
                             AMENDMENT NO. 1 TO THE
                      ORION-Z SPACECRAFT PURCHASE CONTRACT
                                     BETWEEN
                         LORAL ORION SERVICES, INC. AND
                            SPACE SYSTEMS/LORAL, INC.

     THIS  AMENDMENT  No. 1 to the ORION-Z  Spacecraft  Purchase  Contract  (the
"Amendment")  effective  this 29th day of December,  1998,  by and between Loral
Orion Services, Inc. (formerly known as Loral Orion Network Services,  Inc."), a
corporation organized and existing under the laws of Delaware,  U.S.A. ("ORION")
and Space  Systems/Loral,  Inc., a corporation  organized and existing under the
laws of Delaware, U.S.A. ("Contractor").

                              W I T N E S S E T H:

     WHEREAS,  the Parties entered into the ORION-Z Spacecraft Purchase Contract
dated May 15, 1998 (the  "Contract"),  for  Contractor's  in-orbit  provision to
ORION of the ORION-Z Spacecraft  consisting of thirty-either (38) 54 MHz Ku-band
transponders; and

     WHEREAS, ORION and Contractor have agreed to increase the Contract Price as
set forth herein for the scope of work described in the Contract;

     NOW,  THEREFORE,  in  consideration  of the foregoing,  the covenants,  and
agreements  set forth  herein  and  intending  to be  legally  bound,  ORION and
Contractor agree to amend the Agreement as follows:

1. Unless otherwise defined herein, all capitalized terms used herein shall have
the meanings given those terms in the Contract.

2. Paragraph 4.2, Contract Price. The Contract Price for the ORION-Z  Spacecraft
delivered  in-orbit  (including cost of Ariane 44LP Launch  Vehicle,  any Launch
Services, Data and Documentation, Operations Training, Mission Specific Hardware
and  Software,  and the  Dynamic  Software  Simulator)  shall  be  increased  by
Fifty-Eight Million Seven Hundred Eighty One Thousand Dollars ($58,781,000) (the
"Contract  Price  Increase") to a total Contract  Price of Two Hundred  Fourteen
Million Three Hundred Eleven Thousand Dollars ($214,311,000).  The Parties agree
to negotiate in good faith a reasonable  payment schedule for the Contract Price
Increase,  the terms of which will thereafter be  incorporated,  as appropriate,
into a revised Part 1(B), Payment Schedule and Part 1(C), Termination Liability.

3.  ORION and  Contractor  have  participated  jointly  in the  negotiation  and
drafting  of  this  Amendment.   If  an  ambiguity  or  question  of  intent  or
interpretation  arises,  this Amendment shall be construed as if drafted jointly
by both Parties and no  presumption  or burden of proof shall arise  favoring or
disfavoring either Party because of the authorship


<PAGE>



of any of the  provisions of this  Amendment.  Any reference to any law shall be
deemed also to refer to all rules,  regulations,  orders or decrees  promulgated
thereunder,  unless the context requires  otherwise.  The word "including" shall
mean including without limitation.  Each  representation,  warranty and covenant
contained herein shall have independent  significance.  If either Party breaches
in any respect  any  representation,  warranty,  covenant,  or other  obligation
contained  herein  or  created  hereby,  the  fact  that  there  exists  another
representation,  warranty,  covenant, or obligation relating to the same subject
matter  (regardless of the relative  levels of  specificity)  which has not been
breached  shall detract from or mitigate the  consequences  of such breach.  The
Parts specified in this Amendment are incorporated  herein by reference and made
a part hereof.

4. Except as amended  herein,  the  Contract and any prior  amendments  thereto,
shall remain in full force and effect in all respects, including but not limited
to price, delivery, schedule, and performance.

IN WITNESS WHEREOF,  ORION and Contractor have each duly executed this Amendment
No. 1 to the ORION-Z  Spacecraft  Purchase Contract as of the day and year first
written above.

LORAL ORION SERIVCE, INC.                    SPACE SYSTEMS/LORAL, INC.

By: /s/ Denis J. Curtin                      By: /s/ R.O. Hel
   ----------------------------                 ----------------------------

Date: 1/27/99                                Date:    1/11/99
     --------------------------                   --------------------------