Document:

EX-10.3

[Execution Copy]

AMENDMENT NO. 1

TO

EMPLOYMENT AGREEEMENT

This Amendment No. 1 (“Amendment No. 1”) to the Employment Agreement dated as of November 21,
2005 (the “Employment Agreement”) between Loral Space & Communications Inc., a Delaware corporation
(the “Company”), and Avi Katz (the “Executive”) is entered into as of June 19, 2006.

WHEREAS, the Company and Executive are presently parties to the Employment Agreement; and

WHEREAS, the Company and Executive desire to amend the Employment Agreement as set forth
herein;

NOW, THEREFORE, the Employment Agreement is hereby amended as follows:

	 	1.	 	Capitalized terms used herein without definition shall have the meaning
ascribed thereto in the Agreement.

	 	2.	 	Executive’s Base Salary in effect prior to July 1, 2006 (the “Effective Date”)
was $438,048 per annum (the “Original Base Salary”). Effective as of the Effective
Date and for the period ending on the day preceding the expiration of the Term,
Executive’s Base Salary as set forth in Section 4(a) of the Employment Agreement, shall
be $394,243 per annum (the “New Base Salary”). Except as otherwise set forth in this
Amendment No. 1, the New Base Salary shall be and become the “Base Salary” for purposes
of the Employment Agreement.

	 	3.	 	Executive’s Target Annual Bonus in effect prior to the Effective Date was forty
percent (40%) of Executive’s Original Base Salary (the “Original Target Bonus”). With
respect to the Company’s MIB Program for the 2006 fiscal year or any subsequent fiscal
year during the Term and Executive’s entitlement to an Annual Bonus thereunder,
Executive’s “Target Annual Bonus” under Section 4(b) of the Employment Agreement shall
be fifty percent (50%) of Executive’s Original Base Salary (the “New Target Annual
Bonus”). The New Target Annual Bonus shall be and become the “Target Annual Bonus” for
purposes of the Employment Agreement, provided, however, that if at any time during the
Term Executive’s Base Salary shall be increased, for purposes of calculating
Executive’s Target Annual Bonus the Original Base Salary shall be adjusted to reflect
the same percentage increase as the percentage by which his Base Salary was increased
(“Adjusted Original Base Salary”). For example, if Executive’s Base Salary is
increased by 5%, for purposes of calculating the Target Annual Bonus, the Original Base
Salary shall be increased by 5%. For purposes of calculating Executive’s Annual Bonus
for 2006, any Annual Bonus paid shall be reduced by the amount of Base Salary Executive
received in the period from January 1, 2006 to the Effective Date (the “Interim
Period”) that is in excess of the New Base Salary he would have received had the New
Base Salary been in effect during the Interim Period. In addition, if during the Term
Executive becomes a participant in a long term incentive plan or other similar plan
under which annual grants of stock options or other equity based awards are awarded to
Executive based on target multiples of Base Salary, Executive’s Base Salary for this
purpose shall mean his Adjusted Original Base Salary.

	 	4.	 	On the day preceding the expiration of the Term, Executive’s Base Salary shall
revert to and shall be and become his Adjusted Original Base Salary and, with respect
to his participation in the Company’s MIB program in respect of periods after
expiration of the Term, his Target Annual Bonus shall revert to and shall be and become
40% of his Adjusted Original Base Salary (the “Restored Target Annual Bonus”) (for the
avoidance of doubt, this means that Executive’s Target Annual Bonus for the 2007 fiscal
year payable on or before March 15, 2008, if earned, shall be the sum of (x) his New
Target Annual Bonus for the period commencing January 1, 2007 and ending on the
expiration of the Term plus (y) the Restored Target Annual Bonus for the period
commencing upon expiration of the Term and ending on December 31, 2007).

	 	5.	 	If (x) Executive’s employment with the Company is terminated upon the
expiration of the Term or (y) the Term under the Employment Agreement is not renewed or
extended and Executive continues to be employed by the Company after the Term on an “at
will” basis and Executive’s employment is thereafter terminated, Executive shall be
designated by the Plan Administrator thereunder as an “Eligible Employee” and covered
by, and entitled to severance benefits under, the severance policy adopted by the Board
of Directors and in effect on the date hereof (a copy of which has been provided to
Executive and is attached hereto as Exhibit A) or such other severance policy generally
applicable to employees of the corporate office as may then have been adopted in good
faith by the Board of Directors and then be in effect. For purposes of calculating
severance to which Executive may be entitled with respect to a termination of
Executive’s employment upon or after expiration of the Term, references in the
applicable severance policy to Base Salary shall mean Executive’s Adjusted Original
Base Salary in effect upon expiration of the Term as such may have been further
increased after expiration of the Term and prior to the date of termination. Adjusted
Original Base Salary shall also be used for purposes of calculating any earned and
accrued, but unused vacation pay to which Executive may be entitled upon termination
either during or after the Term.

	 	6.	 	Notwithstanding any provision in the Employment Agreement to the contrary, if
any provision of the Employment Agreement (or of any award of compensation, including
equity compensation or benefits) would cause Executive to incur any additional tax or
interest under Code Section 409A or any regulations or Treasury guidance promulgated
thereunder, the Company shall, after consulting with Executive, reform such provision
to comply with Code Section 409A; provided that the Company agrees to maintain, to the
maximum extent practicable, the original intent and economic benefit to Executive of
the applicable provision without violating the provisions of Code Section 409A.
Notwithstanding any provision in the Employment Agreement to the contrary, any payment
otherwise required to be made thereunder to Executive at any date as a result of the
termination of Executive’s employment shall be delayed for such period of time as may
be necessary to satisfy Section 409A(a)(2)(B)(i) of the Internal Revenue Code of 1986,
as amended from time to time (the “Code”). On the earliest date on which such delayed
payments can be made without violating the requirements of section 409A(a)(2)(B)(i) of
the Code, there shall be paid to Executive, in a single cash lump sum, an amount equal
to the aggregate amount of all payments delayed pursuant to the preceding sentence.

	 	7.	 	Provisions of this Amendment shall survive any termination of employment and
the expiration of the Term if so provided herein or if necessary or desirable fully to
accomplish the purposes of such provision, including, without limitation, the
obligations of the Company under Section 5 hereof.

	 	8.	 	Except as expressly amended by this Amendment No. 1, the Employment Agreement
remains in full force and effect and nothing in this Amendment No. 1 shall otherwise
affect any other provision of the Employment Agreement or the rights and obligations of
the parties thereto.

IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment No. 1 as of the day
and year first above written.

LORAL SPACE & COMMUNICATIONS INC.

By:  /s/ Michael B. Targoff

Name: Michael B. Targoff

Title: Chief Executive Officer

/s/ Avi Katz 

Avi KatzEX-10.4

EXECUTION COPY

NON-QUALIFIED

STOCK OPTION AGREEMENT

UNDER

LORAL SPACE & COMMUNICATIONS INC.

2005 STOCK INCENTIVE PLAN

THIS AGREEMENT, made as of this 19th day of June, 2006 (the “Grant Date”), by and
between Loral Space & Communications Inc., a Delaware corporation (the “Company”), and
Richard J. Townsend (the “Optionee”).

WHEREAS, the Optionee is employed by or is providing services to the Company or an Affiliate
in a key capacity, and the Company desires to afford Optionee the opportunity to acquire the
Company’s Common Stock, par value $.01 per share (the “Stock”), so that Optionee may have a
direct proprietary interest in the Company’s success;

WHEREAS, all capitalized terms not otherwise defined herein shall have the same meaning as set
forth in Company’s 2005 Stock Incentive Plan (the “Plan”); and

WHEREAS, the Company and the Optionee have entered into an Employment Agreement dated November
21, 2005, as amended by Amendment No. 1 thereto dated June 19, 2006 (as amended, the
“Employment Agreement”); and

WHEREAS, the Company intends to seek shareholder and any other necessary approvals required to
amend the Plan to increase the number of shares available for grant thereunder (the
“Approvals”).

NOW, THEREFORE, in consideration of the covenants and agreements herein contained, the parties
hereto hereby agree as follows:

1. Grant of Option. Subject to the terms and conditions set forth herein and in the
Plan, and subject to obtaining the Approvals, the Company hereby grants to the Optionee, during the
period commencing on the Grant Date and ending on the date that is seven years from the Grant Date
(the “Option Period”), the right and option (the right to purchase any one share of Stock
hereunder being an “Option”) to purchase from the Company, at an exercise price of $26.52
per share (the “Option Price”), an aggregate of 20,000 shares of Stock. The Options are
not intended to be “incentive stock options,” as defined in Section 422 of the Internal Revenue
Code of 1986, as amended.

2. Vesting and Exercisability of Options.

(a) Subject to the terms and conditions set forth herein and provided the Optionee’s
employment or service continues, the Options shall vest and become exercisable in accordance
with the following schedule:

(i) one-fourth of the Options shall vest and become exercisable on the one-year
anniversary of the Grant Date;

(ii) an additional one-fourth of the Options shall vest and become exercisable
on the two-year anniversary of the Grant Date;

(iii) an additional one-fourth of the Options shall vest and become exercisable
on the three-year anniversary of the Grant Date; and

(iv) the remainder of the Options shall vest and become exercisable on the
four-year anniversary of the Grant Date.

provided, however, that no Options shall become exercisable (even though
vested) prior to the date on which the Approvals have been obtained and the Options that
would have become exercisable prior to the date the Approvals are obtained, but for this
prohibition on exercisability prior to the date the Approvals are obtained, shall become
exercisable on the date that the Approvals are obtained; and further
provided, however, that, except as otherwise set forth in Optionee’s
Employment Agreement or in a severance policy of the Company applicable to Optionee, no
vesting shall occur following the Optionee’s termination of employment or service with the
Company and all Affiliates.

(b) The Options shall vest only as to full shares of Stock rounded down to the nearest
full share during the first three vesting dates and all fractions shall be amalgamated and
become exercisable on the last vesting date. Except as otherwise stated in this Agreement,
the Options shall expire on the seven-year anniversary of the Grant Date.

3. Exercisability following Termination of Employment or Service.

(a) If the Optionee’s employment or service with the Company and all Affiliates is
terminated for Cause, or if the Optionee resigns from employment or service with the Company
and all Affiliates other than for “Good Reason,” all Options (whether vested or not) shall
immediately expire.

(b) If the Optionee’s employment or service with the Company and all Affiliates is
terminated by the Company or an Affiliate other than for Cause or the Optionee resigns for
“Good Reason,” all Options that are vested at the time of termination will remain outstanding
and exercisable (but only to the extent such Options are exercisable at the time of
termination) until the earlier of (i) three months following the termination of employment of
the Optionee and (ii) the expiration of the Option Period. All Options that are not vested
at the time of such termination shall immediately expire upon such termination of employment.

(c) If the Optionee’s employment or service with the Company and all Affiliates
terminates on account of the Optionee’s death or Disability, all Options that are vested at
the time of such termination will remain outstanding and exercisable (but only to the extent
such Options are exercisable at the time of such termination) until the earlier of (i) one
year following the termination on account of death or Disability of the Optionee (in the case
of death, by the executor or administrator of the estate of the Optionee) and (ii) the
expiration of the Option Period. All Options that are not vested at the time of such
termination shall immediately expire upon such termination of employment.

4. Method of Exercising Option.

(a) Options which have become exercisable may be exercised by delivery of written notice
of exercise to the Committee accompanied by payment of the Option Price. Payment for shares
of Stock acquired pursuant to Options shall be made in full, upon exercise of the Options in
immediately available funds in United States dollars, by certified or bank cashier’s check
or, in the discretion of the Committee, (i) by surrender to the Company of Mature Shares held
by the Participant; (ii) by delivering to the Committee a copy of irrevocable instructions to
a stockbroker to deliver promptly to the Company an amount of sale or loan proceeds
sufficient to pay the aggregate Option exercise price; (iii) through a net exercise of the
Options whereby the Optionee instructs the Company to withhold that number of shares of Stock
having a fair market value equal to the aggregate Option Price of the Options being exercised
and deliver to the Optionee the remainder of the shares subject to exercise or (iv) by any
other means approved by the Committee. For purposes of this paragraph, the term “Mature
Shares” shall mean shares of Stock for which the Optionee has good title, free and clear
of all liens and encumbrances, and which the Optionee either (i) has held for at least six
months or (ii) has purchased on the open market.

(b) At the time of exercise, (i) the Company shall have the right to withhold from the
number of shares of Stock to be issued upon exercise, the minimum number of shares necessary
or (ii) at the discretion of the Committee, the Optionee shall be obligated to pay to the
Company such amount as the Company deems necessary, in either event, to satisfy its
obligation to withhold Federal, state and local income or other taxes incurred by reason of
the exercise or the transfer of shares thereupon.

5. Issuance of Shares. As promptly as practical after receipt by the Company of a
written notice of exercise and full payment to the Company of the aggregate Option Price and any
required income tax withholding amount, the Company shall issue or transfer to the Optionee the
number of shares of Stock with respect to which Options have been so exercised, or the net number
of shares of Stock in the event of an exercise pursuant to Section 4(a)(iii), or to the extent
applicable in Section 4(a)(iv), or after application of Section 4(b), or both, and shall deliver to
the Optionee (or the Optionee’s estate or beneficiary, if applicable) a certificate or certificates
therefore, registered in the name of the Optionee (or such estate or beneficiary).

6. Non-Transferability. The Options are not transferable by the Optionee otherwise
than by will or the laws of descent and distribution and are exercisable during the Optionee’s
lifetime only by Optionee. No assignment or transfer of the Options, or of the rights represented
thereby, whether voluntary or involuntary, by operation of law or otherwise (except by will or the
laws of descent and distribution), shall vest in the assignee or transferee any interest or right
herein whatsoever, but immediately upon such assignment or transfer the Options shall terminate and
become of no further effect.

7. Rights as Stockholder. Neither the Optionee nor a permitted transferee of the
Options shall have any rights as a stockholder with respect to any share of Stock covered by the
Options until the Optionee or any transferee shall have become the holder of record of such share,
and no adjustment shall be made for dividends or distributions or other rights in respect of such
share for which the record date is prior to the date upon which the Optionee or any transferee
shall become the holder of record thereof.

8. Compliance with Law. Notwithstanding any of the provisions hereof, the Optionee
hereby agrees that Optionee will not exercise the Options, and that the Company will not be
obligated to issue or transfer any shares of Stock to the Optionee hereunder, if the exercise
hereof or the issuance or transfer of such shares shall constitute a violation by the Optionee or
the Company of any provisions of any law or regulation of any governmental authority. Any
determination in this connection by the Committee shall be final, binding and conclusive. The
Company shall in no event be obliged to register any securities pursuant to the Securities Act of
1933 (as now in effect or as hereafter amended) or to take any other affirmative action in order to
cause the exercise of the Options or the issuance or transfer of shares of Stock pursuant thereto
to comply with any law or regulation of any governmental authority.

9. Notice. Every notice or other communication relating to this Agreement shall be in
writing, and shall be mailed to or delivered to the party for whom it is intended at such address
as may from time to time be designated by it in a notice mailed or delivered to the other party as
herein provided, provided that, unless and until some other address be so designated, all notices
or communications by the Optionee to the Company shall be mailed or delivered to the Company at its
principal executive office, and all notices or communications by the Company to the Optionee may be
given to the Optionee personally or may be mailed to Optionee at the Optionee’s last known address,
as reflected in the Company’s records.

10. Binding Effect. Subject to Section 6 hereof, this Agreement shall be binding upon
the heirs, executors, administrators and successors of the parties hereto.

11. Governing Law. This Agreement shall be construed and interpreted in accordance
with the laws of the state of Delaware, without regard to the principles of conflicts of law
thereof.

12. Plan. The terms and provisions of the Plan are incorporated herein by reference;
provided, however, that upon an acceleration of vesting of the Options in the event of a Change in
Control, as provided in Section 13(a) of the Plan, the Options shall not be exercisable unless the
Approvals have been obtained by the time the Change in Control occurs. In the event of a conflict
or inconsistency between discretionary terms and provisions of the Plan and the express provisions
of this Agreement, this Agreement shall govern and control. Except as specifically provided
herein, in all other instances of conflicts or inconsistencies or omissions, the terms and
provisions of the Plan shall govern and control.

13. Section 409A. The Options are not intended to be considered “nonqualified
deferred compensation” within the meaning of Section 409A of the Code. It is also intended that
(i) the Option Price per share of Stock to be purchased pursuant to any Option will never be less
than the “fair market value” (determined in a manner consistent with standards of Section 409A of
the Code and the guidance and regulations promulgated thereunder (the “409A Standards”)) of
one share of Stock on the date of the grant of the Options, (ii) the transfer or exercise of the
Options will be subject to taxation pursuant to Section 83 of the Code and Treas. Reg. §1.83-7; and
(iii) no Option will include any feature for the deferral of compensation, other than the deferral
of recognition of income until the later of exercise or disposition of the Option under Treas. Reg.
§1.83-7, or the time the Stock, acquired pursuant to the exercise of the Option, first becomes
substantially vested (as defined in Treas. Reg. §1.83-3(b)). The Company shall indemnify and hold
the Optionee harmless, on an after tax basis, for any additional tax (including interest and
penalties with respect thereto) that may be imposed on the Optionee by Code Section 409A as a
result of the Options being granted subject to the Approvals (the “409A Indemnity”). To
the extent that the Options are considered nonqualified deferred compensation subject to Section
409A of the Code, the Company and the Optionee intend for this Agreement to comply with the 409A
Standards. The Company reserves the right to amend this Agreement at any time without the
Optionee’s consent to cause this Agreement, or any terms of this Agreement, to either comply with
or be exempt from Section 409A of the Code and the 409A Standards and, upon any such amendment, the
409A Indemnity shall expire.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

LORAL SPACE & COMMUNICATIONS INC.

	 	 	 
	By:

Name:

Title:

	 	/s/ Michael B. Targoff

Michael B. Targoff

Chief Executive Officer

Accepted:

/s/ Richard J. Townsend

Optionee—Richard J. Townsend

Address

34 White Oak Shade Road

New Canaan, CT 06840

     

Social Security Number

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