Document:

exv10w4

Exhibit 10.4

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

PERFORMANCE-BASED RSU AWARD AGREEMENT

          This Performance-Based RSU Award Agreement (this “Agreement”) sets forth the terms and
conditions of a target award (this “Award”) consisting of restricted stock units that
settle in cash and/or Common Shares (collectively, the “RSUs”), granted to you under the
Allied World Assurance Company Holdings, AG, Third Amended and Restated 2004 Stock Incentive Plan
(the “Plan”).

     1. The Plan. This Award is made pursuant to the Plan, the terms and conditions of
which are incorporated in this Agreement. Capitalized terms used in this Agreement are defined
herein or in the attached Glossary of Terms.

     2. Award. The target number of RSUs subject to this Award (i.e., the Target
Cash-Settled RSUs and Target Share-Settled RSUs) is set forth at the end of this Agreement (this
target number assumes 100% achievement of the Selected Performance Criteria). Each Award
constitutes an unfunded and unsecured promise of Allied World to deliver (or cause to be delivered)
to you a certain number of Common Shares (the “Share” or the “Shares” as the
context requires) and/or cash on the settlement date, subject to the terms of this Agreement.
Until such delivery of Shares, except as otherwise provided in Paragraph 3, you have only the
rights of a general unsecured creditor, and no rights as a shareholder of Allied World. THIS AWARD
IS SUBJECT TO ALL TERMS, CONDITIONS AND PROVISIONS OF THE PLAN AND THIS AGREEMENT, INCLUDING,
WITHOUT LIMITATION, THE CHOICE OF FORUM PROVISIONS SET FORTH IN PARAGRAPH 14.

     3. Vesting and Delivery.

          (a) Determination of Performance Percentage. As soon as practicable following the end
of a Performance Period, the Committee shall determine the Performance Period Percentage applicable
to such Performance Period. The determination of the Committee of the Performance Period
Percentage shall be final, binding and conclusive for all purposes under this Agreement and the
Plan.

          (b) Time and Form of Payment. Except as provided in this Paragraph 3 and in
Paragraphs 4, 7 and 8, as soon as practicable following the Committee’s determination of the
Performance Period Percentage as described in Paragraph 3(a), the Company shall:

       (i) issue or transfer to you, or cause to be issued or transferred to you, the number
of Shares underlying your Share-Settled RSUs, and shall either (i) deliver, or cause to be
delivered, to you a Certificate or Certificates therefor, registered in your name; or (ii)
cause such Shares to be credited to your account at a third-party stock plan administrator
as may be arranged for by the Company or the Committee from time to time for purposes of the
administration of outstanding awards under the Plan. You shall be deemed the beneficial
owner of the Shares at the close of business on the date on which the Committee determines
the Performance Period Percentage and you shall be entitled to any dividend or distribution
that has not already been made with respect to such Shares if the record date for such
dividend or distribution is after the close of

 

business on the date on which the Committee determines the Performance Period
Percentage; and/or

          (ii) transfer to you, or cause to be transferred to you, an amount of cash equal to the
aggregate Fair Market Value of the Shares underlying your Cash-Settled RSUs, determined as
of the date on which the Performance Period Percentage is approved by the Committee pursuant
to Paragraph 3(a). Your Award shall be settled as soon as practicable following the
Committee’s determination.

               (c) Termination of Employment due to Death or Disability. In the event that your
employment is terminated due to your death or Disability at any time prior to the end of a
Performance Period, you or your estate or beneficiaries, as the case may be, shall be entitled to
(i) 25% of the Award, if such termination occurs during the first (1st) fiscal year of
the Performance Period, (ii) 50% of the Award, if such termination occurs during the second
(2nd) fiscal year of the Performance Period, or (iii) 75% of the Award, if such
termination occurs during the third (3rd) fiscal year of the Performance Period. The
Award payable under this Paragraph 3(c) shall be settled in Shares and/or cash, as applicable, as
soon as practicable following your termination of employment due to death or Disability, as the
case may be, but in no event later than March 15 of the fiscal year immediately following the year
in which such termination occurred.

          (d) Delay in Delivery. Notwithstanding anything contained herein to the contrary, any
delivery of Shares or cash otherwise required to be made hereunder to you at any date as a result
of the termination of your employment for any reason 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 U.S. Internal Revenue
Code of 1986, as amended (the “Code”), and shall be delivered and/or paid on the earliest
date on which such delivery or payments can be made without violating the requirements of section
409A(a)(2)(B)(i) of the Code.

     4. Termination of the Awards.

          (a) Unless the Committee determines otherwise, and except as provided in Paragraph 3(c), your
rights in respect of your Award shall immediately terminate, and no Shares and/or cash shall be
delivered in respect of such Award, if at any time prior to the date on which the Committee
determines the Performance Period Percentage your employment with the Company terminates for any
reason.

          (b) Unless the Committee determines otherwise, and except as provided in Paragraph 3(c), your
rights in respect of your Award (whether or not vested) shall immediately terminate, and no Shares
and/or cash shall be delivered in respect of such Award, if at any time prior to the settlement
date:

       (i) you attempt to have any dispute under this Agreement or the Plan resolved in any
manner that is not provided for by Paragraph 14;

       (ii) you in any manner, directly or indirectly, (A) Solicit any Client to transact
business with a Competitive Enterprise or to reduce or refrain from doing any business with
the Company, (B) interfere with or damage (or attempt to interfere with or damage)

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any relationship between the Company and any such Client or (C) Solicit any person who
is an employee of the Company to resign from the Company or to apply for or accept
employment with any Competitive Enterprise; or

       (iii) you fail to certify to Allied World, in accordance with procedures established by
the Committee that you have complied, or the Committee determines that you have failed to
comply, with all of the terms and conditions of this Agreement. By accepting the delivery
of Shares and/or cash under this Agreement, you shall be deemed to have represented and
certified at such time that you have complied with all the terms and conditions of this
Agreement.

          (c) Unless the Committee determines otherwise, if on the settlement date in respect of any
Shares and/or cash that would be deliverable under the terms and conditions of this Agreement,
except that you have not complied with the conditions or your obligations under Paragraph
4(b)(iii), all of your rights with respect to your Award shall terminate prior to settlement. In
addition, except as otherwise required by law or with the express prior written consent of the
Board, you shall keep the amount of your Award strictly confidential and you expressly agree that
any breach of this Agreement to keep such information confidential may result in forfeiture of the
Award and/or immediate termination of your employment.

          (d) Without limiting the application of Paragraph 4(b) or Paragraph 4(c), your rights in
respect of your Award that become vested solely by reason of a Disability shall terminate
immediately, and no Shares and/or cash shall be delivered in respect of such Award if, following
the termination of your employment with the Company by reason of Disability prior to the settlement
date you (i) form, or acquire a 5% or greater equity ownership, voting or profit participation
interest in, any Competitive Enterprise or (ii) associate in any capacity (including, but not
limited to, association as an officer, employee, partner, director, consultant, agent or advisor)
with any Competitive Enterprise.

          (e) The settlement of the Award as set forth herein (including there being no settlement of
the Award based on a determination by the Committee that (i) the minimum Performance Period
Percentage was not met or (ii) you failed to comply with the terms and conditions of this
Agreement) shall extinguish the Company’s entire obligation hereunder in respect of your Award, and
you shall not be entitled to any further payment in respect thereof.

     5. Repayment. If following the delivery of Shares and/or cash, the Committee
determines that all terms and conditions of this Agreement in respect of such delivery were not
satisfied, the Company shall be entitled to receive, and you shall be obligated to pay the Company
immediately upon demand therefor, the Fair Market Value of the Shares and the amount of cash
received by you with respect to your Award, without reduction for any Shares and/or cash applied to
satisfy withholding tax or other obligations in respect of such Shares and/or cash.

     6. Non-transferability. Except as otherwise may be provided by the Committee, the
limitations set forth in Section 3.5 of the Plan shall apply to this entire award. Any assignment
in violation of the provisions of this Paragraph 6 shall be null and void.

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     7. Withholding, Consent and Legends.

          (a) The delivery of Shares and/or cash is conditioned on your satisfaction of any applicable
withholding taxes (in accordance with Section 3.3 of the Plan).

          (b) Your rights in respect of your Award are conditioned on the receipt by the Company or
third-party stock plan administrator, as applicable, to the full satisfaction of the Committee of
any required consents (as defined in Section 3.4 of the Plan) that the Committee may determine to
be necessary or advisable (including, without limitation, your consenting to deductions from your
wages, or another arrangement satisfactory to the Committee, to reimburse the Company for advances
made on your behalf to satisfy withholding and other tax obligations in connection with this
Award).

          (c) Allied World may affix to Certificates representing Shares issued pursuant to this
Agreement any legend that the Committee determines to be necessary or advisable (including to
reflect any restrictions to which you may be subject under a separate agreement with Allied World).
Allied World may advise the transfer agent to place a stop transfer order against any legended
Shares.

     8. Rights of Offset. The Company shall have the right to offset, or cause to be
offset, against the obligation to deliver Shares and/or cash under this Agreement any outstanding
amounts (including, without limitation, travel and entertainment or advance account balances, loans
or amounts repayable to the Company pursuant to tax equalization, housing, automobile or other
employee programs) you then owe to the Company and any amounts the Committee otherwise deems
appropriate.

     9. No Rights to Continued Employment. Nothing in this Agreement or the Plan shall be
construed as giving you any right to continued employment by the Company or affect any right that
the Company may have to terminate or alter the terms and conditions of your employment.

     10. Successors and Assigns of Allied World. The terms and conditions of this
Agreement shall be binding upon, and shall inure to the benefit of, Allied World and its successor
entities.

     11. Committee Discretion. The Committee shall have full discretion with respect to
any actions to be taken or determinations to be made in connection with this Agreement, and its
determinations shall be final, binding and conclusive.

     12. Amendment. The Committee reserves the right at any time to amend the terms and
conditions set forth in this Agreement as permitted by the Plan, and the Board may amend the Plan
in any respect. Notwithstanding the foregoing, no such amendment shall materially adversely affect
your rights and obligations under this Agreement without your consent. Any amendment of this
Agreement shall be in writing signed by an authorized member of the Committee or a person or
persons designated by the Committee.

     13. Adjustment. In the event of a recapitalization, stock split, stock dividend,
combination or exchange of shares, merger, amalgamation, consolidation, rights offering,

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separation, reorganization or liquidation, or any other change in the corporate structure or
the Shares, subsequent to the date of the Date of Grant, the Committee or the Board shall make such
equitable adjustments, designed to protect dilution or enlargement of rights, as it may deem
appropriate in accordance with the Plan.

     14. Governing Law; Venue. THIS AWARD SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. IN CONSIDERATION OF YOUR ACCEPTANCE OF THIS
AWARD, YOU HEREBY EXPRESSLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF AND VENUE IN THE COURTS OF
SWITZERLAND WITH RESPECT TO ANY SUIT OR CLAIM INSTITUTED BY THE COMPANY OR YOU RELATING TO THIS
AWARD.

     15. Headings. The headings in this Agreement are for the purpose of convenience only
and are not intended to define or limit the construction of the provisions hereof.

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          IN WITNESS WHEREOF, Allied World has caused this Agreement to be duly executed and
delivered as of the Date of Grant.

	 	 	 	 	 
	 	ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Recipient:

Target Numbers for the Award:

• Target Share-Settled RSUs (the “Target Share-Settled RSUs”):

• Target Cash-Settled RSUs (the “Target Cash-Settled RSUs”):

Date of Grant:

	 	 	 	 	 	 
	Receipt 

Acknowledge:

	 	 	 
	 
	 	 	 	 	 
	Address:

	 	 	 
	

	 	Street	 
	 
	 	 	 	 	 
	 

	 	 	 
	 

	 	City,	 State 	Zip Code	 
	 
	 	 	 	 	 
	 

	 	 	 
	 

	 	Social Security No./Local I.D. No.	 

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Glossary of Terms

Solely for purposes of this Award, the following terms shall have the meanings set forth below.
Capitalized terms not defined in this Glossary of Terms shall have the meanings as used or defined
in the Agreement.

          “Allied World” means Allied World Assurance Company Holdings, AG or a successor entity.

          “Board” means the Board of Directors of Allied World.

          “Cash-Settled RSUs” means, with respect to any Performance Period, the number of Common Shares
equal to your Target Cash-Settled RSUs multiplied by the Performance Period Percentage for such
Performance Period.

          “Certificate” means a share certificate (or other appropriate document or evidence of
ownership) representing Common Shares of Allied World.

          “Client” means any client or prospective client of the Company to whom the Company provided
services, or for whom the Company transacted business, or whose identity became known to you in
connection with your relationship with or employment by the Company.

          “Committee” means the Compensation Committee of the Board; provided, however, if at any time
during the term of the Plan the Compensation Committee is not comprised of any members, the full
Board shall be deemed to be the Committee hereunder until such time that the Compensation Committee
of the Board has at least one member.

          “Common Shares” means the registered shares of Allied World.

          “Company” means Allied World and its subsidiaries.

          “Competitive Enterprise” means a business enterprise that (i) engages in any activity, or (ii)
owns or controls a significant interest in any entity that engages in any activity, that, in either
case, competes anywhere with any activity in which the Company is engaged. The activities covered
by the previous sentence include, without limitation, all insurance and re-insurance, and insurance
and reinsurance related activities, and asset management located in Switzerland and abroad.

          “Disability” means, in the absence of any employment agreement between you and the Company
otherwise defining Disability, any physical or mental disability or infirmity that prevents the
performance of your employment duties for a period of (i) ninety (90) consecutive days or (ii) one
hundred twenty (120) non-consecutive days during any twelve (12) month period. Any question as to
the existence, extent or potentiality of your Disability upon which you and the Company cannot
agree shall be determined by a qualified, independent physician selected by the Company and
approved by you (which approval shall not be unreasonably withheld). In the event there is an
employment agreement between you and the Company defining Disability, “Disability” shall have the
meaning provided in such agreement.

 

 

          “Fair Market Value” means, with respect to a Common Share on any day, the fair market value as
determined in accordance with a valuation methodology approved by the Committee and consistent with
the requirements of Section 409A of the Code, or if there is a public market for the shares on such
date, (i) the methodology as determined by the Committee in its sole and absolute discretion, or
(ii) if the Committee has not set forth a pricing methodology, the closing price of the Common
Shares on such stock exchange on which the shares are principally trading on the date in question,
or, if there were no sales on such date, on the closest preceding date on which there were sales of
shares.

          “Performance Criteria” means one or more of the following performance metrics: (i)
consolidated earnings before or after taxes (including earnings before interest, taxes,
depreciation and amortization); (ii) net income; (iii) operating income; (iv) earnings per share;
(v) book value per share; (vi) return on shareholders’ equity; (vii) return on investment; (viii)
stock price; (ix) improvements in capital structure; (x) revenue or sales; and (xi) total return to
shareholders.

          “Performance Period” means the three consecutive fiscal year period ending on [    ].

          “Performance Period Percentage” means, unless otherwise determined by the Committee, for any
Performance Period, a percentage determined as a function of percentage achievement of the Selected
Performance Criteria, as follows:

	 	 	 
	Percentage Achievement of Selected	 	 
	Performance Criteria	 	Performance Period Percentage
	Less than 80%
	 	0%
	80%
	 	50%
	100%
	 	100%
	120% or greater
	 	150%

To the extent the percentage achievement of the Selected Performance Criteria falls between any
level set forth on the table above, the Performance Period Percentage shall be the Performance
Period Percentage for the percentage achievement level immediately below that actually obtained
plus 2.50% for each whole percentage achievement in excess of such stated level (e.g., at 90%
achievement of the Selected Performance Criteria, the Performance Period Percentage will equal 50%
plus 25%, or 75%).

          “Selected Performance Criteria” means, with respect to a Performance Period, the Performance
Criteria that are selected to measure the performance of the Company over the Performance Period.

          “Share-Settled RSUs” means, with respect to any Performance Period, the number of Common
Shares equal to your Target Share-Settled RSUs multiplied by the Performance Period Percentage for
such Performance Period.

 

 

          “Solicit” means any direct or indirect communication of any kind whatsoever, regardless of by
whom initiated, inviting, advising, encouraging or requesting any person or entity, in any manner,
to take or refrain from taking any action.Exhibit 10.5

Exhibit 10.5

Loral Space & Communications Inc.

Severance Policy for Corporate Officers

(Amended and Restated as of August 4, 2011)

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 and further amended and restated as of August 4, 2011 (the “Effective Date”).

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, a Senior 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 (i) the terms and conditions of your employment are
covered by a collective bargaining agreement (unless such agreement provides for participation in
the Plan), (ii) you have entered into a written agreement with the Company, or (iii) you have
received an offer letter from the Company, in each case, that provides for payments or 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 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 a Qualifying Termination and the Revocation Expiration Date fall in two
separate taxable years, all Payments and benefits required to be provided 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 such cases a Participant shall receive in a lump sum on the later of (i)
the date such release of claims becomes effective following the timely and proper execution of such
release and the

 

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expiration
of any applicable revocation period without revocation by the Participant, and (ii) the first day of such later taxable year, 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. For purposes of this Section 2(c), the term “Revocation
Expiration Date” means the date that is twenty-eight (28) 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
fifty-two (52) days following such delivery date.

3. Severance Benefits. Participants shall be eligible, upon execution of a release
and expiration of any applicable waiting period, as provided in Section 2(c) above, for cash
severance pay under this Plan pursuant to either Section 3(a) or Section 3(b) hereunder, but not
both.

(a) Severance Benefit Not in connection with a Corporate Event.

(1) Lump Sum Payment. Subject to Section 2(c) above and Section 3(e)
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.

 

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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.

(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.

 

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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(k)(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(k)(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.

 

- 5 -

 

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(l) below.

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

(b) Severance Benefit in connection with a Corporate Event. Subject to Section 2(c)
above and Section 3(e) below, in the event an Eligible Employee becomes a Participant pursuant to
Section 2(b) in connection with or in contemplation of a Corporate Event (whether prior to, upon or
following such Corporate Event), such Participant shall receive a lump sum payment, not subject to
Mitigation, within twenty days following such Participant’s Qualifying Termination, equal to the
following:

(1) in the case of a Category I Participant, an amount equal to one year’s Pay
plus one year’s Base Salary; or

(2) in the case of a Category II Participant, an amount equal to (i) six
calendar months’ Pay (i.e., 50% of Pay) plus (ii) two weeks’ Pay for every Year of
Service plus (iii) one twelfth (1/12th) of two weeks’ Pay for every Month of
Service in excess of such Participant’s Years of Service.

 

- 6 -

 

In addition to the lump sum payment set forth under (1) or (2) above, each 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, including any SS/L Phantom SARs
held by such Participant, and all outstanding options and other awards subject to exercise held by
each such Participant shall remain exercisable until the option or award expiration date set forth
in such Participant’s option or award agreement or agreements; provided, however,
that any SS/L Phantom SARs held by such Participant shall remain exercisable and shall be
automatically settled on the fixed dates following such Qualifying Termination set forth in such
Participant’s SS/L Phantom SAR Agreement.

For all purposes of this Plan, the determination as to whether an Employee’s Qualifying
Termination is in connection with or in contemplation of a Corporate Event shall be made by the
Plan Administrator, in his or its sole discretion, at or prior to the date of any such Employee’s
Qualifying Termination. In the absence of any such determination, an Employee’s Qualifying
Termination following the Effective Date shall be deemed to be in connection with or in
contemplation of a Corporate Event.

(c) Continued Medical Insurance Coverage. In addition to the cash severance provided
in Section 3(a) or 3(b) of the Plan, subject to Section 2(c) above and Section 3(e) 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 for the entire Severance Period (as
defined below); provided, however, that to the extent the
Participant elects to receive such coverage, the Participant shall be responsible
for payment of the full monthly COBRA premium applicable to such medical,
prescription, dental and vision insurance coverage. To the extent the Participant
elects such COBRA coverage, the Company shall pay to the Participant each month
during the Severance Period an amount equal to the excess, if any, of the full
monthly COBRA premiums for such coverage under the Company’s benefit plans under
which such medical, prescription, dental and vision insurance coverage is provided,
as in effect from time to time, over the amount of the portion of such premiums the
Participant would pay

 

- 7 -

 

if
the Participant were an active employee (such payments, the “Medical Continuation Payments”), which payments shall be
paid in advance on the first payroll day of each month during the Severance Period,
commencing with the month immediately following the date of termination;
provided, however, if during the Severance Period the Participant
obtains employment that offers medical, prescription, dental or vision insurance
coverage, the Medical Continuation Payments 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 for the
remainder of the COBRA coverage period (generally 36 months from the date of
termination), if any, but shall not receive Medical Continuation Payments
thereafter. After the Severance Period, the Participant may elect to continue
COBRA coverage for the remainder of the COBRA continuation period (generally 36
months from the date of termination), if any, provided that the Participant
shall no longer be entitled to any further Medical Continuation Payments. For
purposes of Section 3(c) and (d), 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) six calendar
months plus (y) a number of full calendar months (rounded up to the
nearest whole month) equal to: (I) the amount of cash severance to
which the Eligible Employee is entitled under Section 3(b)(2)(ii) and
(iii) above divided by (II) the monthly rate of Eligible Employee’s
Base Salary.

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.

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.

In the event that a Corporate Event occurs, the Company may arrange for alternative
post-termination coverage to be provided pursuant to one or more insurance coverage plans or
programs maintained by one or more of the Company’s Affiliates prior to any such Corporate Event or
by Telesat Canada or one or more of its affiliates, to the extent that providing such alternative
coverage is reasonably practical. In the event that an Employee’s Qualifying Termination is in
connection with or in contemplation of a Corporate Event, the Plan
Administrator may, in its absolute discretion, prior to the date of an Employee’s Qualifying
Termination determine, in lieu of the Medical Continuation Payments pursuant to Section 3(c)(2)
above, to pay to such Employee upon such Qualifying Termination an amount, not subject to
Mitigation, in a lump sum within twenty (20) days following such Participant’s Qualifying
Termination, equal to the sum of the Medical Continuation Payments that otherwise would be paid
pursuant to Section 3(c)(2) above.

 

- 8 -

 

(d) Continued Executive Life Insurance Coverage. In addition to the cash severance
provided in Section 3(a) or 3(b) of the Plan and the continued medical coverage provided in Section
3(c) of the Plan, subject to Section 2(c) above and Section 3(e) 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 or premiums due on the individual executive life insurance policy or policies (the “Life
Insurance Continuation Payments”). Such payment or payments 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. At the conclusion of the Continued
Insurance Coverage Period, a Participant may elect to continue his or her executive life insurance
benefits at his or her own expense, and, to the extent necessary or desirable, the Company will
cooperate with and assist the Participant in transferring any applicable policy or policies to the
Participant’s name and changing the address to which statements are mailed.

In the event that an Employee’s Qualifying Termination is in connection with or in
contemplation of a Corporate Event, the Plan Administrator may, in its absolute discretion, prior
to the date of an Employee’s Qualifying Termination determine, in lieu of the Life Insurance
Continuation Payments pursuant to Section 3(d) above, to pay to such Employee upon such Qualifying
Termination an amount, not subject to Mitigation, in a lump sum twenty (20) days following such
Participant’s Qualifying Termination, an amount equal to the sum of the Life Insurance Continuation
Payments that otherwise would be paid pursuant to Section 3(d) above.

 

- 9 -

 

(e) 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), (c) and (d)
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(e), the Participant will have a choice
between the severance benefits set forth in Section 3(a), (b), (c) and (d) and the alternative
severance benefit offered under this Section 3(e).

(f) Taxes on Severance Pay. All 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 Medical Continuation Payments pursuant to Section 3(b)
and executive life insurance benefits pursuant to Section 3(c), are considered taxable income.
Except as otherwise provided herein, all appropriate federal, state and local taxes will be
withheld from all severance benefits.

(g) 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.

(h) 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(g), 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.

(i) 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.

 

- 10 -

 

(j) Lump Sum and Installment Payments Deemed Separate Payments. Each lump sum payment
to a Participant pursuant to Section 3(a)(1) or 3(b) herein, or if applicable, pursuant to Section
3(c) and/or Section 3(d) 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
and each separate payment pursuant to Section 3(c) and/or Section 3(d) 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”).

(k) 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(k)(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(k)(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.”

 

- 11 -

 

(l) 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.

(m) Change in Control Acceleration of Installment Payments. In the event that a
Corporate Event occurs, which Corporate Event also constitutes a “change in control event” within
the meaning of Treasury Regulation Section 1.409A-3(i)(5), following the date that any Participant
has undergone a Qualifying Termination hereunder (but only with respect to Qualifying Terminations
occurring after the Effective Date) and during the time that any such Participant is receiving
Payments hereunder in the form of Installment Payments but before any such Participant has received
the last such Installment Payment, the Company shall pay to any such Participant in a lump sum on
the date of the consummation of such Corporate Event an amount equal to the aggregate remaining
Installment Payments, with respect to such Participant, and such Participant shall have no further
right to any further Installment Payments hereunder.

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, and with respect to severance benefits payable in the event of a
Corporate Event, a Senior 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.

 

- 12 -

 

(f) “Change in Control” shall be deemed to have occurred if: (i) any person (as defined in
Section 3(a)(9) of the Exchange Act, and as used in Sections 13(d) and 14(d) thereof, including any
“group” as defined in Section 13(d)(3) thereof (a “Person”), but excluding the Company, any
Affiliate, any employee benefit plan sponsored or maintained by the Company or any Affiliate
(including any trustee of such plan acting as trustee), and any Person who owns 20% or more of the
total number of votes that may be cast for the election of directors of the Company (the “Voting
Shares”) as of the Effective Date, becomes the beneficial owner of 35% of the “Voting Shares”; (ii)
the Company undergoes any merger, consolidation, reorganization, recapitalization or other similar
business transaction, sale of all or substantially all of the Company’s assets or combination of
the foregoing transactions (a “Transaction”), other than a Transaction involving only the Company
and one or more Affiliates, and immediately following such Transaction the shareholders of the
Company immediately prior to the Transaction do not continue to own at least a majority of the
voting power in the resulting entity; (iii) the persons who are the members of the Board as of the
Effective Date (the “Incumbent Directors”) shall cease (for any reason other than death) to
constitute at least a majority of members of the Board or the board of directors of any successor
to the Company, provided that any director who was not a director as of the Effective Date shall be
deemed to be an Incumbent Director if such director was elected to the Board by, or on the
recommendation of or with the approval of, at least a majority of the directors who then qualified
as Incumbent Directors, either actually or by prior operation of this definition; or (iv) the
shareholders of the Company approve a plan of liquidation or dissolution of the Company, or any
such plan is actually implemented.

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

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

(i) “Corporate Event” means (i) a Change in Control, (ii) a New SS/L Sale Event (as defined in
the Company’s 2005 Stock Incentive Plan) or an initial public offering, spin-off, reverse spin-off,
non pro rata spinoff, split-off, dividend, distribution to stockholders or other similar
transaction involving New SS/L or any assets of New SS/L, (iii) 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, (iv) 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 or (v) the closing or cessation or reduction in the
scope of operations, in whole or in part, of the Company’s corporate headquarters in New York, NY.

(j) “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.

(k) “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.

 

- 13 -

 

(l) “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.

(m) “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.

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

(o) “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.

(p) “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.

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

(r) “SS/L Phantom SARs” means the phantom stock appreciation rights tied to the performance of
Space Systems/Loral, Inc. granted pursuant to a Phantom Stock Appreciation Rights Agreement
Relating to Space Systems/Loral, Inc.

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

(t) “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.

 

- 14 -

 

(u) “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).

(v) “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”),
and as such the term “Plan Administrator” shall refer to the CEO or the
Compensation Committee, as applicable; provided, however, that,
following a Change in Control, the terms CEO and Compensation Committee as used in
this Section 5(e)(1) shall mean the CEO or Compensation Committee, as applicable,
immediately prior to such Change in Control.

(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.

 

- 15 -

 

(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, 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.

 

- 16 -

 

(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 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.

 

- 17 -

 

(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.

 

- 18 -

 

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.

Exhibit A
– Page 1

 

 

 

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.

Exhibit A
– Page 2

 

 

 

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.

Exhibit A
– Page 3

 

 

 

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                     :

o 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.

o 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.

Exhibit B
– Page 1

 

 

 

o 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:                                                             

Exhibit B
– Page 2

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