EX-10.1






Loral Space & Communications Inc. Severance Policy

for Corporate Officers




(Amended and Restated as of December 17, 2008)




Plan Document




1. General Information.



(a) The Loral Space & Communications Inc. Severance Policy for Corporate Officers (the “Plan”)
provides eligible employees of Loral Space & Communications Inc. (the “Company”) with severance
benefits if they are terminated from employment with the Company or undergo a Separation from
Service for the reasons described herein.



(b) Notwithstanding any other provision of the Plan, the Plan supersedes any and all prior
plans, policies and practices, written or oral, which may have previously applied governing the
payment of severance benefits to “Eligible Employees.”



(c) The Plan is adopted and effective as of June 14, 2006, as amended and restated as of
December 17, 2008.



2. Eligibility.



(a) You are an “Eligible Employee” for purposes of this Plan if (1) you are the Chief
Executive Officer of the Company (the “CEO”) or (2) (A) you are a regular, full-time employee of
the Company who is the President, the Chief Operating Officer, the Chief Financial Officer, an
Executive Vice President or a Vice President, (B) your primary place of employment is the Company’s
corporate headquarters located in New York, NY, or such other place designated by the Plan
Administrator, (C) you have been employed by the Company for at least six months and (D) you have
been designated by the Plan Administrator to be an Eligible Employee and have not thereafter been
disqualified by the Plan Administrator; provided, however, that if the terms and
conditions of your employment are covered by a collective bargaining agreement (unless such
agreement provides for participation in the Plan) or you have entered into a written agreement with
the Company, or received an offer letter from the Company, that provides for benefits upon
termination of employment, and such agreement or offer letter has not expired or lapsed, you shall
not be considered an “Eligible Employee” and shall not be eligible to participate in this Plan. No
individual other than the CEO shall be eligible to participate in the Plan as an Eligible Employee
unless and until such individual meets all of the requirements of sub-clauses (A), (B), (C) and (D)
of clause (2) above. Except as specifically prohibited under Section 6 herein, any Eligible
Employee other than the CEO may be disqualified by the Plan Administrator at any time for any
reason. At any time upon your becoming an Eligible Employee or subsequently becoming disqualified
hereunder, the Plan Administrator shall provide you with written notice of your status as such.



(b) You are a “Participant” for purposes of this Plan if you are an Eligible Employee whose
employment with the Company and all Affiliates is terminated by the Company or an Affiliate without
Cause (a “Qualifying Termination”); provided, however, that none of the following
shall be deemed a Qualifying Termination and you will not be entitled to severance benefits
if:




(1) Your employment is terminated for Cause;




(2) You voluntarily resign from employment or




(3) You cease to be an Eligible Employee due to death, disability or
retirement.



For purposes of this Plan, a Category I Employee who becomes a Participant pursuant to this
Section 2(b) shall be referred to as a Category I Participant, and a Category II Employee who
becomes a Participant pursuant to this Section 2(b) shall be referred to as a Category II
Participant.



(c) Notwithstanding anything in the Plan to the contrary, no Participant will be eligible to
receive any severance benefit or Payment (as defined below) under the Plan unless, and all
severance benefits and Payments hereunder shall be delayed until, the Participant executes and
delivers to the Company a general release of all claims against the Company and its subsidiaries
and Affiliates that contains all of the provisions set forth in Exhibit A hereto and is otherwise
satisfactory to the Company, and all applicable revocation periods described in such release have
expired without such Participant’s having revoked all or a portion of such release. If a
Participant fails to execute such release on or prior to the Release Expiration Date or timely
revokes his acceptance of such release thereafter, the Participant shall not be entitled to any
severance benefits or Payments hereunder. Notwithstanding anything herein to the contrary, in any
case where the date of termination and the Release Expiration Date fall in two separate taxable
years, all Payments or benefits required to be made to a Participant that are treated as deferred
compensation for purposes of Section 409A shall be delayed until the later taxable year, and in all
cases a Participant shall receive in a lump sum on the date such release of claims becomes
effective all severance benefits and Payments, if any, that, pursuant to the applicable payment
schedule herein would have been paid prior to such date but for this Section 2(c). For purposes of
this Section 2(c), the term “Release Expiration Date” means the date that is twenty-one (21) days
following the date upon which the Company timely delivers the release contemplated above, or in the
event that such termination of employment is “in connection with an exit incentive or other
employment termination program” (as such phrase is defined in the Age Discrimination in Employment
Act of 1967), the date that is forty-five (45) days following such delivery date; provided,
however, that in no event shall the Company deliver the release to a Participant later than
January 15 following the year of such Qualifying Termination.



3. Severance Benefits.



(a) Severance Benefit Amounts.




(1) Lump Sum Payment. Subject to Section 2(c) above and Section 3(d)
below, in the event an Eligible Employee becomes a Participant pursuant to Section
2(b), such Participant shall receive a lump sum payment, not subject to Mitigation
(the “Initial Payment”), within twenty days following such Participant’s Qualifying
Termination, equal to either (x) in the case of a Category I Participant, the
greater of (A) six calendar months’ Pay (i.e., 50% of Pay) (the “Six-Months’-Pay
Amount”) and (B) the sum of (i) three calendar months’ Pay (i.e., 25% of Pay) plus
(ii) two weeks’ Base Salary for every Year of Service plus (iii) one twelfth
(1/12th) of two weeks’ Base Salary for every Month of Service in excess
of such Participant’s Years of Service (the “Three-Plus-Two Amount”), or (y) in the
case of a Category II Participant, the Three-Plus-Two Amount. Subject to
Section 2(c) above and Section 3(d) below, to the extent that such Participant’s
option agreements or other equity award agreements or incentive compensation
agreements with the Company provide for less than 100% vesting upon such Qualifying
Termination, such Participant shall be entitled to accelerated vesting of such
Participant’s unvested options and other equity awards and incentive compensation
awards upon such Qualifying Termination of (i) with respect to time-vested awards,
the next full tranche that would have vested on the next vesting date under such
agreements following such Qualifying Termination, and (ii) with respect to awards
scheduled to vest upon the occurrence of achieving certain performance or
stock-price thresholds, that portion of such awards that would have vested during
the twelve (12) months following such Qualifying Termination based on the actual
achievement of such thresholds; provided, however, that if such
Participant’s Qualifying Termination occurs within six calendar months following a
Corporate Event, such Participant shall be entitled upon such Qualifying
Termination to accelerated vesting of all outstanding unvested options and other
equity awards and incentive compensation awards, unless the Plan Administrator
determines, in his or its sole discretion, that such Qualifying Termination is for
a reason other than that such Participant’s position with the Company is no longer
necessary or is redundant as a result of such Corporate Event.




(2) Installment Payments. Subject to Section 2(c) above and
Section 3(d) below, in addition to the Initial Payment, a Participant shall be
entitled to an additional severance benefit (the “Additional Severance”). The
following table sets forth, with respect to each category of Participant, (x) the
aggregate amount of the Additional Severance (which, notwithstanding anything in
the table below to the contrary, shall in no event be less than zero) and (y) the
maximum number of the Company’s regular biweekly pay periods during which the
Additional Severance shall be payable (the “Installment Period”).



	 	 	 	 	 
	Category of

Participant

	 	

Category I Participants
	 	

Category II Participants
	 

	 	 
	 	 
	Aggregate Amount of

Additional Severance

	 	Either (x) to the extent

the Initial Payment

equals the

Six-Months’-Pay Amount,

an amount equal to the

Six-Months’-Pay Amount

plus one year’s Base

Salary, or (y) to the

extent the Initial

Payment equals the

Three-Plus-Two Amount, an

amount equal to the

Six-Months’-Pay Amount

plus one year’s Base

Salary minus the excess

of the Three-Plus-Two

Amount over the

Six-Months’-Pay Amount
	 	































Three calendar months’

Pay (i.e., 25% of Pay)
	 

	 	 
	 	 
	Installment Period

	 	39 biweekly pay periods
	 	6 biweekly pay periods
	 

	 	 
	 	 







The Additional Severance shall be payable, subject to the schedule set forth
below in this Section 3(a)(2), in a series of consecutive biweekly installments
(each such installment deemed a separate Payment pursuant to Section 3(i) below).
With respect to Category I Participants, the first 13 Payments of the Additional
Severance, if any, shall be payable in substantially equal biweekly installments
aggregating to the lesser of (x) the Six-Months’-Pay Amount and (y) the aggregate
amount of the Additional Severance, and the next 26 Payments of the Additional
Severance, if any, shall be payable in substantially equal biweekly installments
aggregating to the lesser of (i) one year’s Base Salary and (ii) the excess of the
aggregate amount of the Additional Severance over the Six-Months’-Pay Amount. With
respect to Category II Participants, the Additional Severance shall be payable in
substantially equal biweekly installments during the Installment Period.




The intent of this payment schedule is to classify the greatest possible portion of
the Additional Severance allowable under law as exempt from the requirements of
Section 409A and to provide for a payment schedule that is compliant with
Section 409A with respect to Payments that cannot be made exempt from the
provisions thereof. As such, Payments that qualify as Exempt STD Payments, if any,
shall be made first, followed by Payments that qualify as Exempt Safe Harbor
Payments, if any, followed by 409A Payments, if any.




Exempt STD Payments. The Payments constituting the
Additional Severance shall commence on the first biweekly payroll
date following either (x) in the case of a Category I Participant,
the six-calendar-month anniversary of such Participant’s Qualifying
Termination, or (y) in the case of a Category II Participant, the
three-calendar-month anniversary of such Participant’s Qualifying
Termination, and shall end on the earlier of (i) the date on which
the entire Additional Severance has been paid to the Participant and
(ii) the last biweekly payroll date that is prior to or concurrent
with March 15th of the calendar year following the
calendar year in which such Qualifying Termination occurred. Such
Payments shall be deemed Exempt STD Payments as defined in
Section 3(j)(1) below. For purposes of clarification, no Payments of
Additional Severance shall be either deemed Exempt STD Payments or
paid pursuant to this paragraph in the event such Qualifying
Termination occurs on or after the date such that pursuant to the
payment schedule above the first Payment of the Additional Severance
would be made to the Participant after March 15th of the
calendar year following the calendar year in which the Qualifying
Termination occurred.




Exempt Safe Harbor Payments. In the event any Payments
constituting Additional Severance remain unpaid after payment of the
Exempt STD Payments above (or if no Payments may be classified as
Exempt STD Payments), and provided such Participant has undergone an
Involuntary Separation from Service, such unpaid Payments shall
commence on the first biweekly payroll date following the latest of
(i) March 15th of the calendar year following the calendar
year in which the Qualifying Termination occurred, (ii) the date of
such Participant’s Involuntary Separation from Service and
(iii) (1) in the case of a Category I Participant, the
six-calendar-month anniversary of such Participant’s Qualifying
Termination, or (2) in the case of a Category II Participant, the
three-calendar-month anniversary of such Participant’s Qualifying
Termination; and shall cease on the earliest of (x) the date on which
the entire Additional Severance has been paid to the Participant,
(y) the last biweekly payroll date that is prior to or concurrent
with the last day of the second calendar year following the calendar
year in which such Involuntary Separation from Service occurred and
(z) the date on which the aggregate value of the Additional Severance
theretofore paid to the Participant (less the value of the Exempt STD
Payments, if any) equals two times the lesser of (A) such
Participant’s annualized compensation based upon the annual rate of
pay for services provided to the Company for the calendar year prior
to the calendar year in which such Participant undergoes such
Involuntary Separation from Service and (B) the maximum amount that
may be taken into account under Section 401(a)(17) of the Code with
respect to a plan qualified pursuant to Section 401(a) of the Code
for the calendar year in which such Participant undergoes such
Involuntary Separation from Service. Such Payments shall be deemed
Exempt Safe Harbor Payments as defined in Section 3(j)(2) below. For
purposes of clarification, no Payments may be deemed Exempt Safe
Harbor Payments or paid pursuant to this paragraph unless and until
the Participant has undergone an Involuntary Separation from Service.




409A Payments. In the event any Payments constituting
Additional Severance remain unpaid after payment of all Payments that
may be classified as Exempt Payments (or if no Payments may be
classified as Exempt Payments), and the Participant has undergone a
Separation from Service, such unpaid Payments shall commence on the
first biweekly payroll date following either (i) the date on which
the last Exempt Safe Harbor Payment was paid to the Participant, or
(ii) if no Payments may be deemed Exempt Safe Harbor Payments, the
latest of (1) March 15th of the calendar year following
the calendar year in which the Qualifying Termination occurred,
(2) the date of such Participant’s Separation from Service and
(3) (x) in the case of a Category I Participant, the
six-calendar-month anniversary of such Participant’s Qualifying
Termination, or (y) in the case of a Category II Participant, the
three-calendar-month anniversary of such Participant’s Qualifying
Termination; subject in all cases to possible delay as set forth in
Section 3(k) below.




The Additional Severance shall be subject to Mitigation (as defined in
Section 4 below).



(b) Continued Medical Insurance Coverage. In addition to the cash severance provided
in Section 3(a) of the Plan, subject to Section 2(c) above and Section 3(d) below, each Participant
shall be entitled to continued participation in the Company’s medical, prescription, dental and
vision insurance coverage following the Participant’s Qualifying Termination through one of the
following two alternatives:




(1) A Participant may elect to participate in the Loral Retiree Medical Plan
if such Participant elects to begin receiving benefits from the Retirement Plan of
Space Systems/Loral, Inc. (the “SS/L Retirement Plan”). The Participant shall
remain eligible to participate in the Loral Retiree Medical Plan for so long as the
Participant is covered under other medical insurance coverage (e.g., COBRA
continuation or coverage provided by other employment) and has not allowed such
medical coverage to lapse at any time. The Participant shall make contributions
toward the cost of such Participant’s medical insurance in accordance with the
Loral Retiree Medical Plan. The Participant’s contributions will be deducted from
the Participant’s monthly retirement benefit payment from the SS/L Retirement Plan.




(2) The Participant may elect COBRA continuation coverage of medical,
prescription, dental and vision insurance. During the Severance Period, the
Participant’s COBRA insurance premiums will be subsidized by the Company as
follows: The Participant shall contribute to the premium at the same rate at which
corporate employees of the Company contribute to the Company’s medical,
prescription, dental and vision insurance programs during the relevant period, and
the Company shall pay the remainder of the premium; provided,
however, if during the Severance Period the Participant obtains employment
that offers medical, prescription, dental or vision insurance coverage, the
Company’s subsidy with respect to such coverage shall end on the earlier of (x) the
date the Participant becomes an active participant under the new coverage if the
Participant elects to be covered thereunder and (y) the date the Participant
declines the new coverage. To the extent that the Participant declines any such
new coverage, the Participant may elect to continue COBRA coverage but will be
responsible for the full COBRA premium (102% of total cost). After the Severance
Period, the Participant may elect to continue COBRA coverage at the full premium
(102% of total cost) for the remainder of the COBRA continuation period (generally
18 months from the date of termination). For purposes of Section 3(b) and (c), the
term “Severance Period” means the period commencing on an Eligible Employee’s
Qualifying Termination and continuing for either (i) for a Category I Participant,
twenty-four calendar months, or (ii) for a Category II Participant, (x) three
calendar months plus (y) the number of full calendar months of Pay and/or Base
Salary plus (z) one additional calendar month for any partial calendar month of
Base Salary, in each case of (y) and (z) as covered by Section 3(a)(2) herein with
respect to calculating a Category II Participant’s Additional Severance. Any such
participation in the Company’s medical, prescription, dental, and vision insurance
coverage following a Participant’s termination of employment shall be subject to
all changes to the Company’s medical, prescription, dental and vision insurance
program following the Participant’s termination of employment, including, but not
limited to, any increases in the employee premium amounts payable by the employees
and the Participant.



If a Participant elects option (1) above, such Participant’s participation, if any, in the
Medical Executive Reimbursement Program (“MERP”) shall end on the last day of the calendar year in
which such Participant’s Qualifying Termination occurs; if a Participant elects option (2) above
and such Participant participated in the MERP immediately prior to such Participant’s Qualifying
Termination, such Participant shall continue to participate in the MERP, at no cost, through the
end of the year in which the Severance Period ends.



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



(c) Continued Executive Life Insurance Coverage. In addition to the cash severance
provided in Section 3(a) of the Plan and the continued medical coverage provided in Section 3(b) of
the Plan, subject to Section 2(c) above and Section 3(d) below, to the extent the Company provided
executive life insurance benefits to any Participant immediately prior to such Participant’s
Qualifying Termination, such Participant shall be entitled following a Qualifying Termination that
is a Separation from Service to continued participation in the executive life insurance benefits
provided to such Participant immediately prior to such Participant’s Qualifying Termination. Such
benefits shall commence on the date of such Participant’s Separation from Service and shall
continue through the end of the Participant’s Severance Period (such period of continued executive
life insurance is referred to hereafter as the “Continued Insurance Coverage Period”). As such,
each year during the Continued Insurance Coverage Period, the Company shall pay to the insurance
company or companies pursuant to which such Participant was insured while employed in accordance
with the terms of such policy or policies covering such Participant, the annual premium(s) due on
the individual executive life insurance policy or policies. Such payment(s) shall be made on the
date or dates during each such year on which such premiums are due; provided,
however, if during the Continued Insurance Coverage Period the Participant obtains
Employment that offers comparable executive life insurance benefits, the Company’s obligation to
make premium payments hereunder shall end on the date such Participant becomes eligible for such
comparable executive life insurance benefits. Each Participant shall be responsible for payment of
all applicable payroll taxes with respect to such premiums paid by the Company.



(d) Discretionary Severance Option. Notwithstanding anything in this Section 3 to the
contrary, in the event any Eligible Employee becomes a Participant pursuant to Section 2(b), the
Plan Administrator, in his or its sole discretion, may offer such Participant an alternative
severance benefit in lieu of the severance benefit set forth in Section 3(a), (b) and (c) above,
unless such alternative severance benefit would be deemed a “substitute for a payment of deferred
compensation” within the meaning of Treasury Regulation Section 409A-3(f) that otherwise violates
Section 409A. In the event the Plan Administrator offers a Participant such an alternative
severance benefit pursuant to this Section 3(d), the Participant will have a choice between the
severance benefits set forth in Section 3(a), (b) and (c) and the alternative severance benefit
offered under this Section 3(d).



(e) Taxes on Severance Pay. The severance benefits pursuant to this Section 3,
including without limitation, with respect to Participants who are “highly compensated individuals”
for purposes of Section 105 of the Code, the Company’s subsidy of a Participant’s medical,
prescription, dental and vision insurance premiums pursuant to Section 3(b), are considered taxable
income. Except as otherwise provided herein, all appropriate federal, state and local taxes will
be withheld from all severance benefits.



(f) Severance Benefit Offsets. Notwithstanding anything herein to the contrary, the
amount of the severance benefit that any Participant is entitled to receive under the Plan shall be
the amount calculated in accordance with this Section 3 of the Plan, less all amounts, if any, that
such Participant is entitled to receive as a result of the circumstances of his or her termination
under the Federal Worker Adjustment and Retraining Notification Act (Pub. L. 100-379) and other
similar federal, state or local statutes. Each Participant shall be obligated to cooperate with
and respond to the Company’s requests for documentation, at any time such Participant is subject to
Mitigation, relating to any Compensation then earned by such Participant. During the Installment
Period, each Participant shall report to the Company in writing the amount of any Compensation
earned by, owed to or promised to such Participant on account of such Participant’s Employment, if
any. Each Participant subject to Mitigation shall submit to the Company a Mitigation Certification
in the form attached hereto as Exhibit B upon commencement of the Installment Period, every three
months thereafter and in any event, promptly upon becoming engaged in Employment.



(g) Forfeiture of Severance Benefits. All rights of a Participant to receive further
severance benefits will be forfeited if the Plan Administrator determines, in his or its sole
discretion, after the commencement of severance benefits hereunder to such Participant that (1) the
Company had Cause to terminate such Participant’s employment with the Company prior to actual
termination, (2) such Participant has failed to cooperate or respond to the Company’s request for
documentation relating to Compensation earned by such Participant, as required by Section 3(f), or
has falsely responded with respect thereto or (3) following termination of employment, such
Participant acts in a manner detrimental to the best interests of the Company in any material
respect.



(h) Continuation of Benefits in the Event of Death. In the event a Participant dies
after termination of employment with the Company but prior to receipt of his or her entire
severance benefit, the remaining Payments owing to the Participant shall be paid in a lump sum to
the Participant’s estate, and the continued medical, prescription, dental and vision insurance
coverage pursuant to Section 3(b) herein shall cease.



(i) Lump Sum and Installment Payments Deemed Separate Payments. Each lump sum payment
to a Participant pursuant to Section 3(a)(1) herein shall be deemed a separately identified amount
within the meaning of Treasury Regulation Section 1.409A-2(b)(2)(i) and by virtue of Treasury
Regulation Section 1.409A-2(b)(2)(iii) shall be a separate payment hereunder (each, a “Lump Sum
Payment”). In addition, each separate biweekly installment payment provided pursuant to Section
3(a)(2) herein shall be deemed a separately identified amount within the meaning of Treasury
Regulation Section 1.409A-2(b)(2)(i) and by virtue of Treasury Regulation Section
1.409A-2(b)(2)(iii) shall be a separate payment hereunder (each, an “Installment Payment”) (each
Lump Sum Payment and each Installment Payment, a “Payment”).



(j) Certain Payments Exempt from Section 409A.




(1) Short Term Deferral. Each Payment made to a Participant shall be
exempt from Section 409A by virtue of Treasury Regulation Section 1.409A-1(b)(4)
(the short-term deferral exemption) to the extent that, pursuant to the terms of
the applicable payment schedule hereunder for such Payment, such Payment must be
made on or prior to March 15th of the calendar year immediately
following the year in which such Participant undergoes a Qualifying Termination.
The Payments that are exempt from Section 409A pursuant to this Section 3(j)(1)
shall be referred to herein as “Exempt STD Payments.”




(2) Separation Pay Safe Harbor. Each Payment made to a Participant
shall be exempt from Section 409A by virtue of Treasury Regulation Section
1.409A-1(b)(9)(iii) (the separation pay plan exemption) to the extent that,
pursuant to the terms of the applicable payment schedule hereunder for such
Payment, such Payment (A) must be made to a Participant (x) after an Involuntary
Separation from Service, (y) following March 15th of the calendar year
immediately following the calendar year in which such Participant undergoes a
Qualifying Termination and (z) prior to the last day of the second calendar year
following the calendar year in which such Involuntary Separation from Service
occurs, and (B) is, when added together with all other Payments theretofore paid to
such Participant that satisfy the requirements of clause (A) above, no greater than
two times the lesser of (i) such Participant’s annualized compensation based upon
the annual rate of pay for services provided to the Company for the calendar year
prior to the calendar year in which such Participant undergoes such Involuntary
Separation from Service and (ii) the maximum amount that may be taken into account
under Section 401(a)(17) of the Code with respect to a plan qualified pursuant to
Section 401(a) of the Code for the year in which such Participant undergoes such
Involuntary Separation from Service. The Payments that are exempt from Section
409A pursuant to this Section 3(j)(2) shall be referred to herein as “Exempt Safe
Harbor Payments.”




(3) Exempt STD Payments and Exempt Safe Harbor Payments shall be referred to
herein collectively as “Exempt Payments,” and the Payments that are not Exempt
Payments shall be referred to herein as “409A Payments.”



(k) Delay of Payment for Specified Employees. Notwithstanding anything herein to the
contrary, in the event that a Participant is a “specified employee” within the meaning of Treasury
Regulation Section 1.409A-1(i) as of the date such Participant undergoes a Separation from Service,
any 409A Payment otherwise required to be made to the Participant hereunder shall be delayed for
such period of time as may be necessary to meet the requirements of Section 409A(a)(2)(B)(i) of the
Code (the “Delay Period”). On the first business day following the expiration of the Delay Period,
the Participant shall be paid, in a single cash lump sum, an amount equal to the aggregate amount
of all 409A Payments delayed pursuant to the preceding sentence, and any remaining 409A Payments
not so delayed shall continue to be paid pursuant to the payment schedule set forth herein.



4. Definitions. For purposes of the Plan, the following definitions shall apply:



(a) “Affiliate” shall mean each entity, other than the Company, with whom the Company would be
considered a single employer as provided in Treasury Regulation Section 1.409A-1(h)(3).



(b) “Base Salary” with respect to any Participant, means such Participant’s annual base salary
in effect immediately prior to such Participant’s termination of employment with the Company.



(c) “Category I Employee” shall mean an Eligible Employee who is the Chief Executive Officer,
the President, the Chief Operating Officer, the Chief Financial Officer or an Executive Vice
President of the Company.



(d) “Category II Employee” shall mean an Eligible Employee with the title of Vice President
who is not a Category I Employee.



(e) “Cause” shall have the meaning set forth in the Company’s 2005 Stock Incentive Plan or any
successor thereto. The determination of whether any conduct, action or failure to act on the part
of any Eligible Employee constitutes Cause shall be made by the Plan Administrator in his or its
sole discretion.



(f) “Code” means the Internal Revenue Code of 1986, as amended from time to time.



(g) “Compensation” means compensation income derived from rendering services, other than
Equity-Based Compensation.



(h) “Corporate Event” means (i) a Change in Control (as defined in the Company’s 2005 Stock
Incentive Plan), (ii) a New Skynet Sale Event (as defined in the Company’s 2005 Stock Incentive
Plan), (iii) a New SS/L Sale Event (as defined in the Company’s 2005 Stock Incentive Plan), (iv)
the merger, consolidation or other business combination of the Company, Loral Holdings Corporation
(“Holdings”) or Space Systems/Loral, Inc. (“SS/L”), or any of their subsidiaries, with another
entity or (v) the acquisition by the Company, Holdings or SS/L, or any of their subsidiaries of all
or substantially all of the stock or assets of another entity.



(i) “Employment” means the state of being an employee, consultant, sole proprietor or
director, or having any other position (including self-employment) with or for any person or entity
other than the Company or a subsidiary of the Company, through which a Participant receives or is
or becomes entitled to receive Compensation.



(j) “Equity-Based Compensation” means equity-based compensation income derived from rendering
services, including, but not limited to, stock options, stock appreciation rights, restricted
stock, restricted stock units, phantom stock awards and other equity-based awards, provided such
Equity-Based Compensation is granted in the ordinary course of business and not in lieu of any
salary, bonus or other compensation or for the purpose of avoiding or circumventing Mitigation.



(k) “Involuntary Separation from Service” shall mean a Separation from Service due to the
independent exercise of the unilateral authority of the Company or an Affiliate to terminate an
individual’s services, other than due to the individual’s implicit or explicit request, where the
individual was willing and able to continue performing services.



(l) “Mitigation” means the reduction, on a prospective basis, of any installment severance
benefits to which a Participant is entitled pursuant to Section 3 herein (including a reduction to
but not below $0) by an amount equal to the Compensation then being received by such Participant or
owed or promised to such Participant from any Employment other than Employment with the Company or
an Affiliate for services rendered during the Installment Period.



(m) “Month” shall mean a period of 30 days.



(n) “Months of Service” shall mean a Participant’s completed full Months of full-time
employment with the Company measured from the most recent anniversary of his/her date of hire by
the Company. For purposes of this definition, a Participant will receive credit for an additional
full Month of Service in excess of the number of full Months (of 30 days each) of full-time
employment with the Company to the extent he or she has at least an additional 16 days of full-time
employment with the Company.



(o) “Pay” with respect to any Participant means the sum of (x) the Participant’s Base Salary
plus (y) the average of the annual incentive bonus compensation paid to the Participant in the
twenty-four calendar months immediately prior to such Participant’s termination of employment with
the Company.



(p) “Prior Employment” for any Participant shall mean full-time employment with the Company
prior to one or more breaks in service for such Participant.



(q) “Section 409A” means Section 409A of the Code.



(r) “Separation from Service” with respect to any Eligible Employee shall mean the termination
of such Eligible Employee’s employment from the Company and all Affiliates that qualifies as a
“separation from service” as provided in Treasury Regulation Section 1.409A-1(h); provided,
however, that a Participant shall be deemed to have undergone a “termination of employment”
within the meaning of Treasury Regulation Section 1.409A-1(h)(1)(ii) with the Company and all
Affiliates when the Participant’s level of services to the Company and all Affiliates is
permanently reduced to less than 50% of the level of services provided to the Company and all
Affiliates in the immediately preceding thirty-six (36) months.



(s) “Year” shall mean a period consisting of 365 consecutive days (or 366 consecutive days
including February 29 of a leap year) (for example, an employee who is hired on September 7 and
remains employed until the following September 6 shall receive credit for a Year, regardless of
whether such service spans February 29 of a leap year).



(t) “Years of Service” shall mean a Participant’s completed Years of full-time employment with
the Company measured from his/her date of hire by the Company.



5. Administrative Information.



(a) Plan Name. The full name of the Plan is the Loral Space & Communications Inc.
Severance Policy for Corporate Officers.



(b) Plan’s Sponsor. The Plan is sponsored by Loral Space & Communications Inc., 600
Third Avenue, New York, NY 10016, (212) 697-1105.



(c) Employer Identification Number. The employer identification number (EIN) assigned
to the Plan Sponsor by the Internal Revenue Service is 87-0748324.



(d) Type of Plan and Funding. The Plan is a severance plan for the benefit of
employees of the Company who are members of a select group of management or highly compensated
employees. The benefits provided under the Plan are paid from the Company’s general assets. No
fund has been established for the payment of Plan benefits. No contributions are required under
the Plan.



(e) Plan Administrator.




(1) The Plan shall be administered by the CEO, provided, that, with
respect to the CEO, the Plan shall be administered by Compensation Committee (the
“Compensation Committee”) of the Board of Directors of the Company (the “Board”).
The term “Plan Administrator” shall refer to the CEO or the Compensation Committee,
as applicable.




(2) The Plan Administrator has full responsibility for the operation of the
Plan. No supervisor or other officers of the Company are authorized to interpret
provisions of the Plan or make representations that are contrary to the provisions
of the Plan document as interpreted by the Plan Administrator. All correspondence
and requests for information should be directed as follows: Loral Space &
Communications Inc., Plan Administrator, Loral Space & Communications Inc.
Severance Policy for Corporate Officers, 600 Third Avenue, New York, NY 10016,
(212) 697-1105.




(3) Subject to the express provisions of this Plan, the Plan Administrator
shall have sole authority to interpret the Plan (including any vague or ambiguous
provisions) and to make all other determinations deemed necessary or advisable for
the administration of the Plan; provided, however that the Plan
Administrator shall have absolute discretion to determine whether, and the extent
to which, a Participant’s Prior Employment shall be considered in determining such
Participant’s Years of Service or Months of Service, and such determination may be
different for different Participants under similar or different circumstances. All
determinations and interpretations of the Plan Administrator shall be final,
binding, and conclusive as to all persons.



(f) Agent for Service of Process. Should it ever be necessary, legal process may be
served on the Plan Administrator at: Loral Space & Communications Inc., 600 Third Avenue, New
York, NY 10016, Attn: General Counsel.



(g) Type of Administration. The Plan is administered by Loral Space & Communications
Inc.



(h) Plan Year. January 1 — December 31.



6. Plan Amendment or Termination. The Company reserves the right, in its sole and
absolute discretion to amend or terminate, in whole or in part, any or all of the provisions of the
Plan, including an amendment that reduces or eliminates the benefits hereunder, by action of the
Board (or a duly authorized committee thereof) at any time; provided, however,
that, following a Change in Control of the Company, as defined in the Company’s 2005 Stock
Incentive Plan, no termination or amendment of the Plan that negatively affects the rights or
benefits of any Eligible Employee or Participant hereunder shall be effective as to such Eligible
Employee or Participant and no Eligible Employee may be disqualified, in either case, without such
Eligible Employee’s or Participant’s consent thereto; and further provided,
however, that no termination or amendment of the Plan that negatively affects the rights or
benefits of any Participant hereunder shall be effective as to such Participant who has undergone a
Qualifying Termination prior to the date of the amendment or termination of the Plan without such
Participant’s consent thereto.



7. Other Important Plan Information.



(a) Employment Rights Not Implied. Participation in the Plan does not give any
Eligible Employee the right to be retained in the employ of the Company, nor does it guarantee any
right to claim any benefit except as outlined in the Plan.



(b) Governing Law. This Plan shall be construed and interpreted in accordance with
the Employee Retirement Income Security Act of 1974 (“ERISA”), to the extent applicable, and the
laws of the State of New York, without regard to the principles of conflicts of law thereof.



(c) No Liability. No director, officer, agent or employee of the Company shall be
personally liable in the event the Company is unable to make any payments under the Plan due to a
lack of, or inability to access, funding or financing, legal prohibition (including statutory or
judicial limitations) or failure to obtain any required consent. In addition, neither the Plan
Administrator, the Company, any Affiliate of the Company nor any director, officer, agent or
employee of the Company or any Affiliate shall be personally liable by reason of any action taken
with respect to the Plan for any mistake of judgment made in good faith, and the Company shall
indemnify and hold harmless each director, officer, agent and employee of the Company, including
the Plan Administrator, to whom any duty or power relating to the administration or interpretation
of the Plan may be allocated or delegated, against any reasonable cost or expense (including
counsel fees) or liability (including any sum paid in settlement of a claim with the approval of
the Board) arising out of any act or omission to act in connection with the Plan unless arising out
of such person’s own fraud, bad faith or gross negligence.



(d) Section 409A Compliance. All Payments and benefits hereunder are intended to
comply with or be exempt from the provisions of Section 409A. To the extent that there are any
ambiguities in this document, they shall be interpreted and administered consistent with such
intent. Notwithstanding the immediately prior sentence, (i) if any term or provision of this Plan
intended to cause a Payment or benefit hereunder to be compliant with Section 409A is found to
cause such Payment or benefit to be noncompliant therewith or (ii) if any term or provision of this
Plan intended to cause a Payment or benefit hereunder to be exempt from Section 409A is found to
cause such Payment or benefit to be subject thereto, in each case, in any jurisdiction, such
provision shall be struck as void ab initio, and a compliant or exempt term or provision, as
applicable, shall be deemed substituted for such noncompliant or nonexempt provision, as
applicable, that preserves, to the maximum lawful extent, the intent of the Plan, and any court or
arbitrator so holding shall have authority and shall be instructed to substitute such compliant or
exempt provision; provided, however, that if any such noncompliance or
nonexemption, as applicable, is due to a deficiency of one or more terms or provisions, such
appropriate terms or provisions shall be deemed to be added to cure such noncompliance or
nonexemption, as applicable, that preserves, to the maximum lawful extent, the intent of the Plan,
and any such court or arbitrator shall have authority and shall be instructed to supplement the
Plan with such compliant or exempt terms or provisions, as applicable. If, due to the payment
schedule herein with respect to any amount payable pursuant hereto, the payment of or entitlement
to such amount would cause a Participant to incur any additional tax or interest under
Section 409A, the Company may, after consulting with such Participant, reform such applicable
payment schedule, with respect to such Participant only, to the extent necessary to comply with
Section 409A, but only if, after consultation, such payment schedule can be reformed to so comply;
provided, however, that in no event shall the Company be obligated to reform any
payment schedule herein in a manner that would result in an increased cost to the Company, and any
such reformation shall preserve, to the maximum extent practicable, the economic benefit to such
Participant of the applicable amount without violating the provisions of Section 409A. Nothing
herein, and no act taken or not taken by the Company in consultation with a Participant is intended
to guarantee compliance with Section 409A. Neither the Plan Administrator, the Company, any
Affiliate of the Company nor any employee, officer or director of the Company or any Affiliate
shall be liable to any Participant for any additional taxes or other penalties incurred or suffered
by such Participant due to the Plan’s failure to comply with Section 409A.



8. Claims Appeal Procedure.



The following information is intended to comply with the requirements of the ERISA and provides the
procedures an Eligible Employee may follow if he or she disagrees with any decision about
eligibility for Plan payments. The determination by the Plan Administrator as to whether any
person is an Eligible Employee is final and binding and is not subject to review.



(a) An Eligible Employee will be informed as to whether or not he/she will be a Participant
under the Plan, and thereby entitled to benefits under the Plan, on or before the last day worked.
Eligible Employees who believe they are entitled to benefits under the Plan and do not receive
notice of their status as a Participant, or who have questions about the amounts they receive, must
write to the Plan Administrator within thirty (30) days of the date of their respective
termination.



(b) If the Plan Administrator denies an Eligible Employee’s claim for benefits under the Plan,
the Eligible Employee will be sent a letter within ninety (90) days (in special cases, more than 90
days may be needed and he or she will be notified if this is the case) explaining:




(1) the specific reason or reasons for the denial;




(2) the specific provisions on which the denial is based;




(3) any additional material or information necessary for the Participant to
perfect the claim and an explanation of why such material or information is
necessary and




(4) an explanation of the Plan’s claim review procedure.



(c) If payment is denied or the Eligible Employee disagrees with the amount of the payment, he
or she may file a written request for review within sixty (60) days after receipt of such denial.
This request should be filed with the Plan Administrator. The letter which constitutes the filing
of an appeal should ask for a review and include the reasons why the Eligible Employee believes the
claim was improperly denied, as well as any other appropriate data, questions or comments. In
addition, an Eligible Employee is entitled to:




(1) review documents pertinent to his or her claim at such reasonable time and
location as shall be mutually agreeable to the Eligible Employee and the Plan
Administrator; and




(2) submit issues and comments in writing to the Plan Administrator relating
to his or its review of the claim.



(d) A final decision will normally be reached within sixty (60) days, unless special
circumstances require an extension of time for processing, in which case a decision will be
rendered as soon as possible. The Eligible Employee will receive a written notice of the decision
on the appeal, indicating the specific reasons for the decision as well as specific references to
the Plan provisions on which the decision is based.



9. The Plan Supersedes All Prior Severance Arrangements. Except as expressly provided
in a written employment or other agreement or written offer letter between the Company and an
individual, the Plan and the Loral Space & Communications Inc. Severance Policy for Corporate
Office Employees (the “Severance Policies”) represent the only policies, plans, arrangements and
practices providing severance benefits upon termination of employment, and the Severance Policies
supersede all prior written or oral policies, plans, arrangements and practices providing severance
benefits upon termination of employment.



1




Exhibit A




[Form of General Release]




1. Opportunity for Review and Revocation. You have twenty-one (21) days to review and
consider this release (this “Release”). Notwithstanding anything contained herein to the contrary,
this Release will not become effective or enforceable for a period of seven (7) calendar days
following the date of its execution, during which time you may revoke your acceptance of this
Release by notifying Avi Katz, in writing. To be effective, such revocation must be received by
the Company no later than 5:00 p.m. local time on the seventh calendar day following its execution.
Provided that the Release is executed and you do not revoke it, the eighth (8th) day
following the date on which this Release is executed shall be its effective date (the “Effective
Date”). In the event of your revocation of this Release pursuant to this Section 1, this Release
will be null and void and of no effect, and the Company will have no further obligations to you
hereunder or, except where explicitly provided otherwise therein, under the Plan.



2. Waiver and Release of Claims.




(a) As used in this Release, the term “claims” will include all claims,
covenants, warranties, promises, undertakings, actions, suits, causes of action,
obligations, debts, accounts, attorneys’ fees, judgments, losses and liabilities, of
whatsoever kind or nature, in law, equity or otherwise.




(b) You hereby waive and release any and all claims and potential claims, known
and unknown, you have against the Company, parent companies, related corporations,
subsidiaries or affiliates, or their officers, directors, employees or agents,
relating to or arising out of, your employment with the Company and the termination
of your employment, including, without limitation, claims as to tax consequences to
you of any payments made to you by the Company. This Release applies to all claims
relating to your employment, including, but not limited to, claims arising under the
New York State Executive Law or the New York City Civil Rights Law, any statutory,
contract or tort claims and any claims arising under Title VII of the Civil Rights
Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act
of 1967, the Older Workers Benefit Protection Act of 1990 or the Fair Labor
Standards Act. This Release does not apply to any claims not covered herein that
arise after the date this release is executed by you and delivered to the Company,
nor does this waiver and release limit your ability to enforce the terms of this
Release.




(c) You acknowledge and agree that as of the Effective Date, you have no
knowledge of any facts or circumstances that give rise or could give rise to any
claims under any of the laws listed in the preceding paragraph.




(d) You specifically release all claims relating to your employment and its
termination under ADEA, a United States federal statute that, among other things,
prohibits discrimination on the basis of age in employment and employee benefit
plans.




(e) Notwithstanding any provision of this Release to the contrary, by executing
this Release, you are not releasing any claims relating to any indemnification
rights you may have as a former officer or director of the Company or its
subsidiaries in accordance with the Company’s or such subsidiary’s bylaws, as the
case may be.



3. Knowing and Voluntary Waiver. You expressly acknowledge and agree that you:




(a) Are able to read the language, and understand the meaning and effect, of
this Release;




(b) Have no physical or mental impairment of any kind that has interfered with
your ability to read and understand the meaning of this Release or its terms, and
that your not acting under the influence of any medication, drug or chemical of any
type in entering into this Release;




(c) Are specifically agreeing to the terms of the release contained in this
Release because the Company has agreed to pay you the amounts set forth in the Plan.
The Company has agreed to provide such amounts because of your agreement, among
others, to accept it in full settlement of all possible claims you might have or
ever had, and because of your execution of this Release;




(d) Understand that, by entering into this Release, you do not waive rights or
claims under ADEA that may arise after the Effective Date;




(e) Had or could have had twenty-one (21) calendar days in which to review and
consider this Release;




(f) Were advised to consult with your attorney regarding the terms and effect
of this Release and




(g) Have signed this Release knowingly and voluntarily.



4. No Suit. You represent that you have not filed or permitted to be filed against
the Company or any related companies, individually or collectively, any complaints or lawsuits
arising out of your employment, or any other matter arising on or prior to the date hereof.



5. Successors and Assigns. The provisions hereof shall enure to the benefit of your
heirs, executors, administrators, legal personal representatives and assigns and shall be binding
upon your heirs, executors, administrators, legal personal representatives and assigns.



6. Severability. If any provision of this Release shall be held by any court of
competent jurisdiction to be illegal, void or unenforceable, such provision shall be of no force
and effect. The illegality or unenforceability of such provision, however, shall have no effect
upon and shall not impair the enforceability of any other provision of this Release.



7. Non-Disparagement. You agree to refrain from making any disparaging, negative or
uncomplimentary statements regarding the Company, any related companies and/or any officers,
employees or other service providers of the Company or related companies.



8. Non-Disclosure. You shall not disclose the nature or terms of this Release or the
negotiations that led to this Release to any person or entity, other than your spouse, tax advisors
and legal counsel, without the written consent of the Company, unless required to do so by law.



9. Non-Admission. Nothing contained in this Release will be deemed or construed as an
admission of wrongdoing or liability on the part of you or the Company.



10. Entire Agreement. This Release and the Plan together constitute the entire
understanding and agreement of the parties hereto regarding the termination of your employment.
This Release and the Plan supersede all prior negotiations, discussions, correspondence,
communications, understandings and agreements between the parties relating to the subject matter of
this Release.



11. Governing Law. EXCEPT WHERE PREEMPTED BY FEDERAL LAW, THIS RELEASE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH FEDERAL LAW AND THE LAWS OF THE STATE OF NEW YORK,
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN THAT STATE. ANY DISPUTE OR CLAIM ARISING OUT
OF OR RELATING TO THIS RELEASE SHALL BE BROUGHT EXCLUSIVELY IN THE FEDERAL COURT IN THE STATE OF
NEW YORK. BY EXECUTION OF THE RELEASE, THE PARTIES HERETO, AND THEIR RESPECTIVE AFFILIATES,
CONSENT TO THE EXCLUSIVE JURISDICTION OF SUCH COURT, AND WAIVE ANY RIGHT TO CHALLENGE JURISDICTION
OR VENUE IN SUCH COURT WITH REGARD TO ANY SUIT, ACTION OR PROCEEDING UNDER OR IN CONNECTION WITH
THE RELEASE. EACH PARTY TO THIS RELEASE ALSO HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN
CONNECTION WITH ANY SUIT, ACTION, OR PROCEEDING UNDER OR IN CONNECTION WITH THIS RELEASE.



2




Exhibit B




[Form of Mitigation Certification]




In accordance with the Loral Space & Communications Inc. (“Loral”) Severance Policy for Corporate
Officers and a General Release and Termination Agreement effective      (the “Severance
Arrangement”), I am entitled to receive or am currently receiving severance payments that are
subject to mitigation. Pursuant to the Severance Arrangement, at the inception of the period
during which I am entitled to receive severance payments in a series of installments and every
three months thereafter during such installment payment period (the “Mitigation Period”), I am
required to certify my employment status. Pursuant to these requirements, I hereby certify that,
as of      :



? I am not currently engaged in Employment (as defined in the Severance Arrangement) nor do I have
any definitive expectations for Employment prior to my next certification.



? I am currently engaged in Employment.



My current annual salary or compensation is $     ($     /biweekly) and my target bonus or
incentive compensation for the current year is $     . The following is a list of all other
compensation that I am entitled to in connection with my current Employment, including any amount
received as a signing bonus and any amount of compensation promised or owed to me but not yet paid
to me:      



     



     



I understand that any or all of the installments severance payments due to me pursuant to the
Severance Arrangements are subject to reduction on a dollar-for-dollar basis based on the
compensation that I am entitled to receive in connection with my current Employment.



? Although I am not currently engaged in Employment as of the above date, I do expect to be
employed as of      , which is prior to my next mitigation certification. My expected annual
salary or compensation will be $     ($     /biweekly) and my target bonus or incentive
compensation for the first year of Employment will be $     . The following is a list of all
other compensation that I expect to be entitled to in connection with such Employment, including
any amount to be received as a signing bonus and any amount of compensation promised or owed to me
but that will not be paid to me immediately:
     



     



     



I understand that any or all of the installment severance payments due to me pursuant to the
Severance Arrangements are subject to reduction on a dollar-for-dollar basis based on the
compensation that I am entitled to receive in connection with such Employment.



Lastly, I understand if my Employment status changes at any time during the Mitigation Period, I am
required to and will immediately notify Loral of such change.



Signature:      



Date:      




3