Document:

EX-10.1

Loral Space & Communications Inc. Severance Policy

for Corporate Officers

Summary Plan Description/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 for the reasons described herein.

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

(c) The Plan is adopted and effective as of June 14, 2006.

2. Eligibility

(a) You are an “Eligible Employee,” for purposes of this Plan, if (A) you are the Chief
Executive Officer of the Company (the “CEO”) or (B) (i) you are a regular, full-time employee of
the Company who is the President, Chief Operating Officer, Chief Financial Officer, an Executive
Vice President or a Vice President of the Company, (ii) your primary place of employment is the
Company’s corporate headquarters located at 600 Third Avenue, New York, NY 10016, (iii) you have
been employed by the Company for at least six (6) months, and (iv) you have been designated by the
Plan Administrator (as defined below) to be an Eligible Employee and have not thereafter been
disqualified by the Plan Administrator; provided, however, that if your terms and
conditions of 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 (i), (ii) and (iii)
of clause (B) above and such individual has been designated as an Eligible Employee by the Plan
Administrator and not thereafter disqualified. The Plan Administrator shall provide each Eligible
Employee other than the CEO with written notice of his/her status as an Eligible Employee and any
disqualification from such status thereafter.

(b) You are a “Participant,” for purposes of this Plan, if you are an Eligible Employee whose
employment is terminated by the Company without “Cause” (as defined in Section 4 below);
provided, however, that you will not be entitled to severance benefits if
you:

(i) Are terminated for Cause;

(ii) Voluntarily resign; or

(iii) Cease to be an Eligible Employee due to death, disability or retirement;

(c) Notwithstanding anything in the Plan to the contrary, no Participant will be eligible to
receive any severance benefit or payment under the Plan unless and until, prior to the receipt of a
severance payment, the Participant executes a general release of all claims against the Company and
its subsidiaries and affiliates satisfactory to the Company, and any applicable revocation period
described in such release has expired without such Participant having revoked all or a portion of
such release.

3. Severance Benefits

(a) Severance Benefit Amounts.

(i) Category I Employees. Subject to Section 3(b) below, in the event
a Participant who is a Category I Employee (a “Category I Participant”) becomes
entitled to benefits pursuant to Section 2(b), such Category I Participant shall
receive a lump sum payment (not subject to Mitigation), within twenty days
following such Category I Participant’s termination of employment with the Company,
equal to six months Pay. Subject to Section 3(b) below, to the extent that such
Category I Participant’s option agreements or other equity award agreements or
incentive compensation agreements with the Company provide for less than full
vesting upon such termination of employment with the Company, such Category I
Participant shall be entitled to accelerated vesting upon such termination of
employment of the next full tranche that would have vested on the next vesting date
following such termination for all of such Category I Participant’s unvested
options and other equity awards and incentive compensation awards;
provided, however, that if such Category I Participant becomes
entitled to benefits pursuant to Section 2(b) within six months following a
Corporate Event, such Category I Participant shall be entitled to accelerated
vesting upon such termination of employment of all outstanding unvested options and
other equity awards and incentive compensation awards (unless the Plan
Administrator, in his or its sole discretion, determines that such termination of
employment is not because such Category I Participant’s position with the
Company is no longer necessary or is redundant as a result of such Corporate
Event). Subject to Section 3(b) below, in the event a Category I Participant is
unemployed on the date that is six months following such Category I Participant’s
termination of employment with the Company or is employed on such date but at a
rate of pay less than such Participant’s rate of pay immediately prior to such
termination based on such Category I Participant’s Pay, such Category I Participant
shall, for a period of six months thereafter, receive (subject to Mitigation) an
amount equal to six months Pay in substantially equal biweekly installments on the
Company’s regular payroll dates. Subject to Section 3(b) below, in the event a
Category I Participant is unemployed on the date that is twelve months following
such Category I Participant’s termination of employment with the Company or is
employed on such date but at a rate of pay less than such Category I Participant’s
rate of pay immediately prior to such termination based on such Category I
Participant’s Base Salary, such Category I Participant shall, for a period of
twelve months thereafter, receive (subject to Mitigation) an amount equal to twelve
months Base Salary in substantially equal biweekly installments on the Company’s
regular payroll dates.

(ii) Category II Employees. Subject to Section 3(b) below, in the
event a Participant who is a Category II Employee (a “Category II Participant”)
becomes entitled to benefits pursuant to Section 2(b), such Category II Participant
shall receive a lump sum payment (not subject to Mitigation), within twenty days
following such Category II Participant’s termination of employment with the
Company, equal to three months Pay. Subject to Section 3(b) below, to the extent
that such Category II Participant becomes entitled to benefits pursuant to Section
2(b), such Category II Participant’s option agreements or other equity award
agreements or incentive compensation award agreements with the Company provide for
less than full vesting upon such termination of employment with the Company, such
Category II Participant shall be entitled to accelerated vesting upon such
termination of employment of the next full tranche that would have vested on the
next vesting date following such termination for all of such Category II
Participant’s unvested options and other equity awards and incentive compensation
awards; provided, however, that if such Category II Participant
becomes entitled to benefits pursuant to Section 2(b) within six months following a
Corporate Event, such Category II Participant shall be entitled to accelerated
vesting upon such termination of employment of all outstanding unvested options and
other equity awards and incentive compensation awards (unless the Plan
Administrator, in his or its sole discretion, determines that such termination of
employment is not because such Category II Participant’s position with the
Company is no longer necessary or is redundant as a result of such Corporate
Event). Subject to Section 3(b) below, in the event a Category II Participant, is
unemployed on the date that is three months following such Category II
Participant’s termination of employment with the Company or is employed on such
date but at a rate of pay less than such Category II Participant’s rate of pay
immediately prior to such termination based on such Category II Participant’s Pay,
such Category II Participant shall thereafter receive (subject to Mitigation) an
amount equal to (A) three months Pay plus (B) two weeks Base Salary for every Year
of Service plus (C) one-twelfth (1/12) of two weeks Base Salary for every Month of
Service in excess of such Category II Participant’s full Years of Service, subject
to a limit of twenty-six Years of Service, in substantially equal biweekly
installments on the Company’s regular payroll dates for the number of biweekly pay
periods derived by dividing the sum of (A), (B) and (C) by such Category II
Participant’s biweekly Base Salary. Any fractional number resulting from such
calculation shall be rounded up to the nearest whole number.

(b) Discretionary Severance Option. Notwithstanding Section 3(a) above, in the event
any Participant becomes entitled to severance benefits 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) above. In that event, the
Participant will have a choice between the severance benefits set forth in Section 3(a) and the
alternative severance benefit offered under this Section 3(b).

(c) Taxes on Severance Pay. The severance benefits pursuant to this Section 3 are
considered taxable income. All appropriate federal, state and local taxes will be withheld from
all severance benefits.

(d) Severance Benefit Offsets. Notwithstanding anything herein to the contrary, the
amount of the severance benefit which 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,
which 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 statute. 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.

(e) Forfeiture of Severance Benefits. If the Plan Administrator determines, in its
sole discretion, after the commencement of severance benefits hereunder to any Participant that (A)
the Company had Cause to terminate such Participant’s employment with the Company prior to actual
termination, (B) 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(d), or
has falsely responded or (C) following termination of employment, such Participant acts in a manner
detrimental to the best interest of the Company in any material respect, all rights to receive
further severance benefits will be forfeited.

(f) 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 portion of such severance benefit shall continue to be paid, in
the same form as it was scheduled to be paid prior to death, to the Participant’s spouse, or if the
Participant is not married on the date of death, in a lump sum to the Participant’s estate.

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

(a) “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.

(b) “Break in Service” for any Participant shall mean the termination of such Participant’s
full-time employment with the Company followed by such Participant’s re-employment with the Company
on a full-time basis.

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

(d) “Category II Employees” shall consist of any Eligible Employee with the title of Vice
President.

(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) “Compensation” means compensation income derived from rendering services.

(g) “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 Skynet Corporation
(“Skynet”), Space Systems/Loral, Inc. (“SS/L”) or any of their subsidiaries with another entity or
(v) the acquisition by the Company, Skynet, SS/L or any of their subsidiaries of all or
substantially all of the stock or assets of another entity.

(h) “Employment” means the state of being an employee, consultant, sole proprietor, director
or any other position (including self employment) through which a Participant receives
Compensation.

(i) “Mitigation” means the reduction of any severance benefits to which a Participant is
entitled to pursuant to Section 3 herein by an amount equal to the Compensation then being received
by such Participant from Employment with any entity other than the Company.

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

(k) “Months of Service” shall mean a Participant’s completed full Months of full-time
employment with 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.

(l) “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 two
years immediately prior to the year of such Participant’s termination of employment with the
Company.

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

(n) “Section 409A” means Section 409A of the Internal Revenue Code of 1986, as amended.

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

(p) “Years of Service” shall mean a Participant’s completed full 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
by the Internal Revenue Service to the Plan Sponsor 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.

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

(ii) 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 which 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.

(iii) 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 of Directors of the Company (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 impacts 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 without such Eligible Employee’s or Participant’s consent thereto; and further
provided, however, that any termination or amendment of the Plan, however, shall
not negatively affect the severance benefits payable under the Plan to any Participant whose
termination date has occurred prior to the date of the amendment or termination of the Plan without
such Participant’s consent.

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
ERISA, to the extent applicable, and the laws of the State of Delaware, 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 nor any employee, officer or director of the Company 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 employee, officer or director 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 of Directors of the Company) 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. To the extent that any payments or benefits provided
hereunder are considered deferred compensation subject to Section 409A, the Company intends for
this Plan to comply with the standards for nonqualified deferred compensation established by
Section 409A (the “409A Standards”). To the extent that any terms of the Plan would subject
Participants to gross income inclusion, interest or an additional tax pursuant to Section 409A,
those terms are to that extent superseded by the 409A Standards. The Company reserves the right to
amend the Plan to ensure that benefits hereunder comply with or are exempt from Section 409A.
Notwithstanding any provision herein to the contrary, any payment otherwise required to be made
hereunder to a Participant at any date as a result of the termination of the Participant’s
employment shall be delayed for such period of time as may be necessary to satisfy Section
409A(a)(2)(B)(i). On the earliest date on which such delayed payments can be made without
violating the requirements of section 409A(a)(2)(B)(i), there shall be paid to the Participant, in
a single cash lump sum, an amount equal to the aggregate amount of all payments delayed pursuant to
the preceding sentence.

8. Claims Appeal Procedure

The following information is intended to comply with the requirements of 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 you will be notified if this is the case) explaining:

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

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

(iii) 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

(iv) 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:

(i) 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

(ii) 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 or
practices providing severance benefits upon termination of employment and the Severance Policies
supersede all prior written or oral policies, plans, arrangements or practices providing severance
benefits upon termination of employment.EX-10.2

[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 Richard J. Townsend (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.	 	Effective as of June 15, 2006 (the “Effective Date”), Executive’s Base Salary
as set forth in Section 4(a) of the Employment Agreement shall be $575,000 per annum
(the “New Base Salary”). The New Base Salary shall be and become the “Base Salary” for
purposes of the Employment Agreement. The New Base Salary shall also be Executive’s
minimum base salary after expiration of the Employment Agreement.

	 	3.	 	With respect to the Company’s MIB Program for the 2006 fiscal year or any
subsequent fiscal year and Executive’s entitlement to an Annual Bonus thereunder,
Executive’s “Target Annual Bonus” under Section 4(b) of the Employment Agreement shall
be sixty percent (69.6%) of Executive’s 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. The New Target Annual Bonus shall also be Executive’s
minimum target annual bonus after expiration of the Employment Agreement.

	 	4.	 	Executive’s Base Salary in effect prior to the Effective Date was $881,920 per
annum (the “Original Base Salary”) and Executive’s Target Annual Bonus under the
Agreement was forty-one percent (41%) of the Original Base Salary (the “Original Target
Annual Bonus”). If, (x) after the Effective Date and on or before December 31, 2006,
Executive’s employment is terminated for any reason other than by the Company for Cause
(for the avoidance of doubt, “any reason” includes, without limitation, by the Company
without Cause, by the Executive voluntarily or by the Executive for Good Reason), (y)
on or after January 1, 2007 and prior to May 21, 2007, Executive’s employment is
terminated by the Company without Cause or by the Executive for Good Reason or (z) on
or after May 21, 2007 and prior to expiration of the Term, Executive’s Employment
Agreement is not renewed or extended on terms substantially similar to those contained
in the Employment Agreement and Executive’s employment is terminated prior to
expiration of the Term for any reason other than by the Company for Cause (for the
avoidance of doubt, “any reason” includes, without limitation, by the Company without
Cause, by the Executive voluntarily or by the Executive for Good Reason), then, in
addition to any other payments or benefits to which Executive may be entitled under the
Employment Agreement, Executive shall be entitled to receive as soon as practicable on
or after termination of his employment a lump sum payment equal to sum of the (A)
Salary Differential (as defined below) and (B) the Annual Bonus Differential (as
defined below) minus (C) the value of any vested portion of the Option (as defined
below) calculated as the difference between the fair market value of a share of Common
Stock on the date of termination minus the strike price of the Option times the number
of shares covered by the Option that are vested as of the date of termination. The
“Salary Differential” shall mean an amount equal to the difference between (v) the Base
Salary that Executive would have received had he been paid at the Original Base Salary
rate during the Make Whole Period (as defined below) and (w) the Base Salary that he
actually received during the Make Whole Period (i.e. using the New Base Salary rate).
The “Bonus Differential” shall mean an amount equal to difference between (x) the
Annual Bonus that he would have received during the Make Whole Period had he been paid
an Annual Bonus calculated using the Original Target Annual Bonus and the Original Base
Salary rate and (y) the Annual Bonus that he actually received during the Make Whole
Period (i.e. using the New Target Annual Bonus and the New Base Salary rate). The
“Make Whole Period” shall mean the period commencing on the Effective Date and ending
on the date of termination of Executive’s employment.

	 	5.	 	In connection with the execution of this Amendment No. 1, the Company shall
grant to Executive as soon as reasonably practicable a seven-year option to purchase
20,000 shares of common stock, par value per share $0.01, of the Company (the “Common
Stock”), with a per-share exercise price equal to the fair market value of one share of
the Company’s common stock at the date of grant (the “Option”), such grant to be
subject to obtaining Stockholder Approval (as defined below). The Option will vest
over a four-year period, with 25% vesting on each of the first four anniversaries of
the grant date. The Board of Directors of the Company will amend the Company’s 2005
Stock Incentive Plan (the “Stock Option Plan”) to increase the number of shares of the
Company’s Common Stock available for grant thereunder to a number adequate to cover the
Option and the LTIP (as defined below), and the Company agrees to submit the Stock
Option Plan as amended to the Company’s stockholders at the next annual meeting of
stockholders and seek stockholder approval of such Plan as amended (“Stockholder
Approval”). To the extent Stockholder Approval is not obtained, the Option shall be
void. Notwithstanding anything herein to the contrary, the Option shall not become
exercisable prior to the date the Company obtains Stockholder Approval.

	 	6.	 	If, for any reason, the Option is not granted on or before June 30, 2006, or,
if the Option is granted but Stockholder Approval is not obtained on or before June 30,
2007, then, effective immediately after such date, as the case may be (the “Unwind
Date”), Executive’s Base Salary shall be restored to the Original Base Salary in effect
before this amendment (the “Restored Base Salary”) and Executive’s Target Annual Bonus
shall be restored to the Original Target Annual Bonus in effect before this amendment
(the “Restored Target Annual Bonus”). From and after the Unwind Date, the Restored
Base Salary and the Restored Target Annual Bonus shall be and become the “Base Salary”
and “Target Annual Bonus,” respectively, for purposes of the Employment Agreement. In
addition, in such event, Executive shall be entitled to receive as soon as practicable
after the Unwind Date a lump sum payment equal to sum of the (A) Salary Unwind
Differential (as defined below) and (B) the Annual Bonus Unwind Differential (as
defined below). The “Salary Unwind Differential” shall mean an amount equal to the
difference between (v) the Base Salary that Executive would have received had he been
paid at the Original Base Salary rate during the Unwind Period (as defined below) and
(w) the Base Salary that he actually received during the Unwind Period (i.e. using the
New Base Salary rate). The “Bonus Unwind Differential” shall mean an amount equal to
difference between (x) the Annual Bonus that he would have received during the Unwind
Period had he been paid an Annual Bonus calculated using the Original Target Annual
Bonus and the Original Base Salary rate and (y) the Annual Bonus that he actually
received during the Unwind Period (i.e. using the New Target Annual Bonus and the New
Base Salary rate). The “Unwind Period” shall mean the period commencing on the
Effective Date and ending on the Unwind Date.

	 	7.	 	Subject to the approval of the Board of Directors, the Company shall establish
a long term incentive plan (the “LTIP”) that provides that certain employees shall be
eligible for annual grants of incentive awards in the form of stock options (such
grants subject to obtaining Stockholder Approval), and Executive shall be a participant
in the LTIP. Subject to the last sentence of this section, for so long as Executive is
employed by the Company, Executive’s target annual grant under the LTIP shall have a
value (calculated using the Black-Scholes method) at least equal to his base salary
then in effect multiplied by 1.4 ($800,000/$575,000) (or, if the LTIP is for any reason
not established, or, if established, not implemented or later discontinued, a cash
bonus equal to such value), provided, however, that Executive’s actual annual grant may
be increased above or decreased below the target level if and in the same proportion
that actual annual grants to other similarly situated participants in the LTIP are
increased above or decreased below their target annual grants. The Company shall
review from time to time the level of the target annual grant to which Executive is
entitled under the LTIP and may, if appropriate, increase, but not decrease, the level
of Executive’s target annual grant. If at any time the Company establishes an incentive
compensation plan that differs from the LTIP (i.e. is based on incentive compensation
other than stock options), in lieu of stock option awards under the LTIP, Executive
shall be entitled to participate in such different plan at a level equitably equivalent
to the level at which he participated or was entitled to participate in the LTIP.

	 	8.	 	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, at his
election, shall be covered by, and entitled to severance benefits under, either (A) 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)
without regard or giving effect to any changes, modifications or amendments thereto
that may be adopted by the Board of Directors after the date hereof or (B) 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 that occurs prior to September 30, 2008,
references in the applicable severance policy to Base Salary shall mean Executive’s
Original Base Salary as adjusted to reflect any increases in Base Salary effected after
this Amendment No. 1 and prior to the date of termination on a dollar for dollar basis.

	 	9.	 	The Company agrees that, without the need for further approval in writing as
contemplated by Section 3 of the Employment Agreement, Executive may serve on the board
of directors of up to three corporations, provided that in each case and in the
aggregate such service would not materially interfere with the performance of his
obligations under the Employment Agreement and, provided, further, that such service
would not result in Executive being engaged in Competition.

	 	10.	 	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.

	 	11.	 	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 Sections 2, 3, 7, 8 and 9 hereof.

	 	12.	 	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/ Richard J. Townsend

Richard J. Townsend

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