Loral Space & Communications Inc. (Form: 8-K)

This General Release and Separation Agreement (the “Agreement”) is made by and between Loral Space & Communications Inc. (“Loral” or the “Company”) and Richard J. Townsend (the “Employee”). This Agreement is made in light of the following facts:

A. The Company intends to terminate Employee’s employment without cause and Employee’s last day of employment with the Company (including his position as Executive Vice President and Chief Financial Officer and his position as an officer of certain of the Company’s subsidiaries and affiliates) will be January 4, 2008.

B. Employee is a participant in the Loral Space & Communications Inc. Severance Policy for Corporate Officers (the “Severance Plan”) and pursuant thereto is entitled to certain benefits upon his termination of employment which benefits are to be determined in accordance with certain provisions of Amendment No. 1 to the Employment Agreement dated as of June 19, 2006 between the Company and Employee (“Amendment No. 1”). Employee and the Company hereby seek to set forth all of the Company’s obligations to Employee pursuant to the Severance Plan and otherwise upon his termination of employment and to obtain a full and final resolution of any and all claims and potential claims of Employee, known and unknown, related to Employee’s employment with the Company and the termination of that employment.

C. Nothing contained in this Agreement, nor the payment of any consideration, shall be taken or construed to be an admission or concession of any kind by the Company that it has been accused of or engaged in any wrongdoing, and the Company expressly denies any liability or wrongdoing in its treatment of Employee.

In consideration of the terms and conditions contained herein, the parties agree as follows:

1. Employee’s last day of employment with the Company (including his position as Executive Vice President and Chief Financial Officer and his position as an officer of certain of the Company’s subsidiaries and affiliates) will be January 4, 2008. Separate and apart from any consideration received under this Agreement, Employee will be paid all wages earned through his termination date, less any outstanding advances or monies owed to the Company. Employee has used or forfeited all accrued vacation time and, as of January 4, 2008, will not be entitled to any compensation for accrued but unused vacation time. Pursuant to the terms of the Severance Plan and provided Employee has executed and delivered this Agreement to the Company, and the seven-day revocation period set forth in Section 8 hereof (the “Revocation Period”) has expired without Employee’s revocation of this Agreement in whole or in part, Employee will be entitled to receive the following benefits; provided, however, that if Employee fails to execute and deliver this Agreement to the Company prior to the 46th day after the date of his termination or revokes this Agreement in whole or in part prior to the end of the Revocation Period, all benefits and payments hereunder shall be forfeited.

(a) Subject to any Mitigation as required by Section 1(a)(ii) and Section 1(a)(iii) hereof, Employee will be entitled to receive severance payments equal to $2,259,001.50, payable as follows:

(i) $688,540.75, less appropriate federal and state withholding, will be payable to Employee in a lump sum as soon as practicable following January 4, 2008, but in no event prior to the end of the Revocation Period, provided Employee has not revoked this Agreement in whole or in part. As required under the terms of the Severance Plan, this lump sum payment is equal to 50% of Employee’s Pay (as defined in the Severance Plan as determined in accordance with Amendment No. 1). Pay is defined in the Severance Plan as Employee’s Base Salary (as defined in the Severance Plan) plus the average annual Management Incentive Bonus (“MIB”) paid to Employee in the last two years (the “Average MIB”). For purposes of this calculation, Employee’s Base Salary (as determined in accordance with Amendment No. 1) is $881,920.00 and Employee’s Average MIB for the last two years is $495,161.50 for total Pay equal to $1,377,081.50. This lump sum payment is not subject to Mitigation (as defined below). This lump sum payment shall be a separately identified amount under Treasury Regulation Section 1.409A-2(b)(2) that is required to be paid on or before the 15th day of the third month following Employee’s taxable year in which the right to such payment is no longer subject to a substantial risk of forfeiture and as such shall qualify as a “short-term deferral” under Treasury Regulation Section 1.409A-1(b)(4) and exempt from Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”).

(ii) $688,540.75, less appropriate federal and state withholding, will be payable to Employee in a series of thirteen (13) substantially equal biweekly installments of $52,964.67 each (the “First Installment Payments”) on each of the Company’s regular payroll dates for a period (the “First Mitigation Period”) commencing on July 18, 2008 (the “Six Month Anniversary”) and ending on January 2, 2009, which First Installment Payments shall be (i) subject to forfeiture, on a prospective basis, if on the Six Month Anniversary or at any time thereafter during the First Mitigation Period Employee is or becomes engaged in Employment (as defined below) at an annual rate of pay equal to or greater than $1,377,081.50 and (ii) subject to Mitigation as defined below.

(iii) $881,920.00, less appropriate federal and state withholding, will be payable to Employee in a series of twenty (26) substantially equal biweekly installments of $33,920.00 each (the “Second Installment Payments” and, together with the First Installment Payments, the “Installment Payments”) on each of the Company’s regular payroll dates for a period (the “Second Mitigation Period” and, together with the First Mitigation Period, the “Mitigation Period”) commencing on January 5, 2009 (the “Twelve Month Anniversary”) and ending on January 1, 2010, which Second Installment Payments shall be (i) subject to forfeiture, on a prospective basis, if on the Twelve Month Anniversary or at any time thereafter during the Second Mitigation Period Employee is or becomes engaged in Employment (as defined below) at an annual rate of pay equal to or greater than $881,920.00 and (ii) subject to Mitigation as defined below.

For purposes of this Agreement, (x) “Mitigation” means the reduction of the Installment Payments by an amount equal to the Compensation then being received by Employee or owed or promised to Employee from Employment with any entity other than the Company; (y) “Employment” means the state of being an employee, consultant, sole proprietor, director or any other position (including self employment) through which Employee receives Compensation; and (z) “Compensation” means compensation income derived from rendering services, other than Equity-Based Compensation. “Equity-Based Compensation” means equity-based Compensation, 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. During the Mitigation Period, Employee is required to report to the Company in writing the amount of any Compensation earned by, promised to, or owed to Employee on account of Employee’s Employment. Employee agrees to submit to the Company a Mitigation Certification in the form attached hereto as Exhibit A upon commencement of the Mitigation Period, every three months thereafter and, in any event, promptly upon becoming engaged in Employment.

Each Installment Payment shall be a separately identified amount under Treasury Regulation Section 1.409A-2(b)(2), and each Installment Payment required to be paid on or before the 15th day of the third month following Employee’s taxable year in which the right to such payment is no longer subject to a substantial risk of forfeiture shall qualify as a “short-term deferral” under Treasury Regulation Section 1.409A-1(b)(4) and exempt from Section 409A. Each Installment Payment, or portion thereof, payable following the 15th day of the third month following Employee’s taxable year in which the right to such payment is no longer subject to a substantial risk of forfeiture up to an aggregate of $460,000 shall qualify as “separation pay due to involuntary separation from service” pursuant to a “separation pay plan” within the meaning of Treasury Regulation Section 1.409A-1(b)(9)(iii) and as such shall be exempt from Section 409A. Each Installment Payment, or portion thereof, payable following the 15th day of the third month following Employee’s taxable year in which the right to such payment is no longer subject to a substantial risk of forfeiture in excess of $460,000 shall qualify as being made in compliance with Section 409A.

(b) When the Management Incentive Bonus (“MIB”) determinations are made for fiscal year 2007 (which determinations are in the sole discretion of the Company), if MIB payments are awarded to comparable eligible corporate officers, Employee will receive a bonus payment in accordance with the MIB plan. Employee’s target bonus payment (at the 100% payout level) is $400,200.00 [representing 69.6% of Base Salary in effect as of January 4, 2008]; provided, however, that any such MIB payment shall be paid to Employee in a lump sum on or before March 15, 2008. Such lump sum is not subject to Mitigation. Such lump sum MIB payment shall be a separately identified amount under Treasury Regulation Section 1.409A-2(b)(2) that is required to be paid on or before the 15th day of the third month following Employee’s taxable year in which the right to such payment is no longer subject to a substantial risk of forfeiture and as such shall qualify as a “short-term deferral” under Treasury Regulation Section 1.409A-1(b)(4) and exempt from Section 409A.

(c) Employee may continue medical, prescription, dental and vision coverage through one of the following two alternatives:

(1) Employee may elect to participate in the Loral Retiree Medical Plan under the “Rule of 60.” Employee shall remain eligible to participate in the Loral Retiree Medical Plan for so long as Employee 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. Employee shall make contributions toward the cost of his medical insurance in accordance with the Loral Retiree Medical Plan, provided, however, that, if Employee elects to participate in the Loral Retiree Medical Plan after expiration of COBRA continuation coverage, during the period commencing on expiration of COBRA continuation coverage through the end of the Mitigation Period, Employee’s retiree medical insurance premiums will be subsidized by the Company as follows: Employee shall contribute to the premium at the same rate as corporate employees of the Company contribute to the Company’s medical, prescription, dental and vision insurance programs during the relevant period and the Company shall pay the remainder of the premium; provided, however, if during the Mitigation Period Employee obtains employment that offers medical, prescription, dental or vision insurance coverage, the Company’s subsidy shall end when Employee becomes eligible for and an active participant under such new coverage. Prior to Employee receiving pension plan benefits, Employee will receive coupons from, and will be responsible for making his contribution on a post-tax basis directly to, the Company’s benefit payment administrator. After Employee begins receiving pension benefits, Employee’s contributions will be deducted from Employee’s monthly benefit payment. Employee’s participation in the Medical Executive Reimbursement Program (“MERP”) shall end at December 31, 2009.

(2) Employee may elect COBRA continuation coverage (generally 18 months) of medical, prescription, dental and vision insurance. During the period from termination through the end of the Mitigation Period or the end of the COBRA continuation period if earlier, Employee’s COBRA insurance premiums will be subsidized by the Company as follows: Employee shall contribute to the premium at the same rate as corporate employees of the Company contribute to the Company’s medical, prescription, dental and vision insurance programs during the relevant period and the Company shall pay the remainder of the premium; provided, however, if during the Mitigation Period Employee obtains employment that offers medical, prescription, dental or vision insurance coverage, the Company’s subsidy shall end when Employee becomes eligible for and an active participant under such new coverage. To the extent that Employee declines any such new coverage, Employee may continue COBRA coverage but will be responsible for the full COBRA premium. After the Mitigation Period if the COBRA continuation period is still in effect, Employee may continue insurance coverage under COBRA at the full cost (102% of total cost) for the remainder of the COBRA continuation period (generally 18 months). If Employee elects COBRA coverage, commencing February 2008, Employee will receive coupons from, and will be responsible for making his contribution on a post-tax basis directly to, the Company’s COBRA administrator. Employee shall continue to participate in the MERP, at no cost, through the end of the year in which the Installment Payments end.

With respect to either option (1) or (2) above, Employee 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 Employee’s taxable year following the taxable year in which such expenses are incurred.

Employee’s group life and disability insurance shall cease on his termination date. Retiree life and death benefits will commence in accordance of the Loral Retiree Life and Death program. Employee’s executive life insurance benefits shall continue, and, therefore, the Company shall pay premiums with respect to Employee’s executive life insurance policies, through the end of the Mitigation Period as follows: (i) with respect to Employee’s MetLife policy (#981250085—Initial Insured Amount $500,000), the Company shall pay $6,020 on December 24, 2008 and December 24, 2009 or, in each case, as soon as practicable thereafter; and (ii) with respect to Employee’s Reliastar policy (#2023887R—Initial Insured Amount $500,000), the Company shall pay $8,215 on May 9, 2008 and May 9, 2009 or, in each case, as soon as practicable thereafter, provided, however, if during the Mitigation Period Employee obtains employment that offers comparable executive life insurance benefits, Employee’s executive life insurance benefits shall end when Employee becomes eligible for such benefits. Employee shall be responsible for payment of all applicable payroll taxes with respect to premiums paid by the Company. After the Mitigation Period, Employee may elect to continue his executive life insurance policies but shall be responsible for payment of all premiums with respect thereto.

(d) All payments and benefits under this paragraph 1 are subject to and contingent upon Employee’s continued compliance with the terms of this Agreement, including, without limitation, the terms of this paragraph 1 relating to Mitigation and paragraphs 4, 6, 7 and 8 below. If Employee violates any of the terms of this Agreement, the Company is entitled to immediately terminate all payments under this Agreement and to recover all previously made payments under this Agreement, in addition to any and all other remedies available to it.

2. (a) Pursuant to a Non-Qualified Stock Option Agreement dated December 21, 2005 (the “2005 Option Agreement”) under the Loral Space & Communications Inc. 2005 Stock Incentive Plan (as amended and restated as of April 16, 2007, the “Option Plan”), Employee has been granted options to purchase 85,000 shares of Loral common stock with an exercise price of $28.441 (the “2005 Options”) and a corresponding Deferred Compensation Account (the “Deferred Compensation Account”). In accordance with the terms of the 2005 Option Agreement, the Option Plan and the Severance Plan, (i) all 85,000 2005 Options are vested as of January 4, 2008 and shall remain exercisable until January 4, 2010; and (ii) the Deferred Compensation Account in an amount equal to $802,485.00 is vested as of January 4, 2008 and will be paid to Employee on or after July 4, 2008, in each case, in accordance with and subject to all terms and conditions of the 2005 Option Agreement and the Option Plan, all of which remain in full force and effect. Notwithstanding any provisions to the contrary in the 2005 Option Agreement or Option Plan, as of the date of termination of Employee’s employment, the Deferred Compensation Account shall cease to be linked to the value of the stock and shall automatically be converted into an interest-bearing account from such date through the date of distribution. Once converted, the amounts credited to this interest bearing Deferred Compensation Account shall earn interest as set forth in Section 2(c) of the 2005 Option Agreement.

(b) Pursuant to a Non-Qualified Stock Option Agreement dated June 14, 2006 (the “2006 Option Agreement”) under the Option Plan, Employee has been granted options to purchase 20,000 shares of Loral common stock with an exercise price of $27.135 (the “2006 Options”). In accordance with the terms of the 2006 Option Agreement, the Option Plan and the Severance Plan, 15,000 of the 2006 Options are vested as of January 4, 2008 and shall remain exercisable until January 4, 2010. Employee shall have no right or entitlement to the remaining 2006 Options (i.e. 5,000 options) which shall be cancelled and of no further force or effect.

3. Following Employee’s termination of employment hereunder, the Company will retain Employee as a consultant to perform services at the direction of the Chief Executive Officer or his designee pursuant to the Consultant Agreement attached hereto as Exhibit B. For purposes of the Severance Plan and this Agreement, Employee 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 Employee’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 (the “Allowable Level of Services”) and as such the Consulting Agreement shall limit the services to be provided by Employee to less than the Allowable Level of Services. For the avoidance of doubt, compensation earned for services performed under the Consulting Agreement shall not mitigate the Installment Payments described in paragraphs 1(a)(ii) and 1(a)(iii).

4. Employee hereby waives and releases any and all claims and potential claims, known and unknown, he has against the Company, parent companies, related corporations, subsidiaries, affiliates and their officers, directors, employees or agents, relating to or arising out of, his employment with the Company and the termination of his employment, including, without limitation, claims as to tax consequences to Employee of any payments hereunder. This waiver and release applies to all claims relating to Employee’s 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, 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 and the Fair Labor Standards Act. In addition, Employee waives any right to initiate or otherwise voluntarily participate in any shareholders’ derivative action with respect to the Company and its majority-owned subsidiaries by reason of any act or omission that occurred prior to the end of the Mitigation Period, including without limitation, being named plaintiff in or causing to be filed on Employee’s behalf or as a class action any such derivative action; provided, however, Employee may file a claim and receive a share of any proceeds as a member of a class in any shareholders’ derivative class action initiated by any other person.

5. This waiver and release does not apply to any claim that Employee may have under the Employee Retirement Income Security Act of 1974, as amended, including, but not limited to, claims relating to the Company’s 401(k) plan or pension plan, or to any claim Employee may have for unemployment benefits or workers’ compensation benefits. This waiver and release does not apply to any claims not covered herein that arise after the date this Agreement is executed by employee and delivered to the Company, nor does this waiver and release limit Employee’s ability to enforce the terms of this Agreement. For the avoidance of doubt, this waiver and release does not apply to any claim for indemnification that Employee may have under the Indemnification Agreement dated as of November 21, 2005 among the Company, Loral Skynet Corporation, Space Systems/Loral, Inc. and Employee or otherwise.

6. Employee acknowledges and agrees that the Company may disclose this Agreement and its terms and conditions in its public disclosures. Employee shall not disclose the nature or terms of this Agreement or the negotiations that led to this Agreement to any person or entity, other than Employee’s spouse, tax advisors and legal counsel, without the written consent of the Company, unless required to do so by law, provided, however, that this restriction shall not apply after and to the extent of the Company’s public disclosures.

7. During the period commencing on the date of his termination and ending on January 4, 2010, Employee agrees not to hire, employ or solicit for employment any of the employees of the Company or any of its subsidiaries or affiliates.

8. Employee agrees to refrain from making any disparaging, negative or uncomplimentary statements regarding the Company, any related companies and/or any officers or employees of the Company or related companies. For the avoidance of doubt, nothing herein shall prohibit or restrict Employee from testifying truthfully under oath in depositions or trials. In addition, Employee will not make use of or disclose in any way, confidential, proprietary or trade secret information belonging to the Company or its affiliated or related companies.

9. Employee acknowledges that he has been advised to consult an attorney prior to executing this Agreement. Employee has 45 days within which to decide whether he will execute this Agreement, although Employee may sign the Agreement before the 45 days expire. Following his signature of the Agreement, Employee has seven days to revoke his signature of the Agreement. Any revocation must be in writing and personally delivered to Avi Katz before expiration of the seventh day following Employee’s signature of the Agreement.

10. Pursuant to the Older Workers Benefit Protection Act, the Company discloses the information contained in Exhibit C.

11. This Agreement, the Severance Plan, the Option Agreement and the Option Plan represent the entire agreement of the parties relating to the termination of Employee’s employment with Company and his Options and Deferred Compensation Account and replaces any prior negotiations or agreements between the parties whether oral or written. If any term, condition or section of this Agreement, except for paragraph 4, is determined to be invalid or unenforceable, such invalidity and unenforceability shall not affect the remaining terms, conditions or section hereof, which shall continue in full force and effect.

12. This Agreement shall be governed and construed in accordance with the laws of the State of New York, regardless of the laws that might otherwise govern under applicable principles of conflicts of law. Employee hereby irrevocably submits himself to the exclusive jurisdiction of the courts of the State of New York and any federal courts located therein, for the purpose of any suit, action or other proceeding arising out of, or relating to, this Agreement or the subject matter hereof, and hereby waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that he is not personally subject to the jurisdiction of the above-named courts for any reason whatsoever, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. In addition, Employee hereby irrevocably waives and agrees not to assert any right to trial by jury with regard to any suit, action or other proceeding arising out of, or relating to, this Agreement or the subject matter of this Agreement.

13. Employee acknowledges that he has had an opportunity to discuss this Agreement with his counsel or other advisors and that he understands this Agreement and signs it voluntarily.


Dated: January 4, 2008		/s/ Michael B. Targoff

		Michael B. Targoff Chief Executive Officer Loral Space & Communications Inc.
Dated: January 4, 2008		/s/ Richard J. Townsend

		Richard J. Townsend

This Agreement is made by and between Loral Space & Communications Inc., a corporation organized and existing under the laws of the State of Delaware, with offices at 600 Third Avenue, New York, New York 10016 (hereinafter “Loral” or the “Company”), and Richard J. Townsend, with an address at 34 White Oak Shade Road, New Canaan, CT 06840 (hereinafter referred to as “Consultant”). Loral and Consultant are hereinafter collectively referred to collectively as the “Parties” and individually as a “Party.”

Loral makes this Agreement for the purpose of retaining the services of Consultant. This contract is expressly made conditional on Consultant’s assent to, and strict compliance with, all of the terms and conditions stated below. Each of the following terms and conditions is essential to the essence of the agreement between the Parties.

1. The term of this Agreement (the “Term”), and the period within which the services are to be rendered under this Agreement, shall commence as of January 5, 2008 and shall continue until either Party terminates the Agreement by delivering ten (10) days prior written notice to the other Party. Either Party may terminate the Agreement at any time for any reason or for no reason.

During the Term, Consultant shall be available upon reasonable notice given by the Company to consult with and advise the Company on such matters within his expertise as the Chief Executive Officer of Loral (the “CEO”) or his designee may request from time to time, including but not limited to:

Consultant shall report directly to and take direction from the CEO or his designee. Consultant’s services hereunder shall be on an as needed basis at the direction of the CEO or his designee and Consultant shall devote such time to performance of his duties hereunder as necessary to perform the tasks requested by the CEO; provided, however, that Consultant’s services shall be limited to less than 50% of the level of services provided to the Company and all affiliates in the thirty-six (36) months immediately preceding his termination of employment with the Company. Consultant shall not be entitled to perform services on any regular basis other than as requested by the CEO or his designee.

2. Loral will pay Consultant consulting fees consisting of $2,600 per day or $1,300 per half-day for his services hereunder. For purposes of this Agreement, services for a “day” shall mean services of four or more hours during a calendar day and services for a “half-day” shall mean services of one hour or more but less than four hours during a calendar day. In addition, Loral shall reimburse Consultant for all reasonable and necessary expenses actually incurred by Consultant directly in connection with the business affairs of Loral and the performance of his duties hereunder, upon presentation of proper receipts or other proof of expenditure and subject to such reasonable guidelines, reporting requirements or limitations provided by Loral from time to time.

To facilitate Consultant’s performance of his duties hereunder, the Company shall, if available, supply Consultant with the use of an office and equipment (including desk, phone, computer and access to printers) on the Company’s premises during the Term. It is currently contemplated, but subject to change in the sole discretion of the Company, that the Company’s premises will be available for use by Consultant until the Spring of 2008. The Company shall also supply Consultant with cellular telephone and blackberry email service during the Term. The Company shall transfer to Consultant, and Consultant shall acquire, ownership of his cellular telephone, blackberry and computer equipment effective on April 1, 2008 provided that this Agreement has not been terminated by either Party prior to that date. Consultant shall be charged with additional income equal to the value of the equipment acquired.

Consultant shall bill Loral monthly for the services provided hereunder as specified in paragraph 13 below or on terms that are agreed to in writing between Loral and Consultant.

3. In the performance of his services, Consultant’s relationship to Loral shall be solely that of an independent contractor to provide personal services. In this capacity, Consultant will not be an employee of Loral and will not be entitled to workers’ compensation coverage, unemployment insurance or any other type or form of insurance or benefit normally provided by Loral for its employees, including (but not limited to) holiday and vacation pay; and Loral will not be responsible for withholding federal income or social security taxes from the fees paid. Loral shall have no liability whatsoever on account of this Agreement except as provided in paragraph 2. Consultant shall file all tax returns and reports required to be filed pursuant to law, including, without limitation, reports required to be filed by former employees of the United States Government, if applicable.

4. Consultant shall assign, convey and transfer to Loral without further consideration, each and every work made for hire, invention, discovery, improvement, maskwork, and patent conceived or developed by Consultant during performance under this Agreement, and, upon request, shall execute any required papers and furnish all reasonable assistance to Loral to vest all right, title and interest in such inventions, discoveries, improvements and patents in Loral. Consultant warrants and represents the originality of the deliverable items under this Agreement and that no portion of the deliverable items, or their use and/or distribution, shall present any infringement or other conflict of interest. All data, copyrights, copyrightable creations and reports developed in the performance of this Agreement shall be the sole property of Loral and shall be used by Consultant solely in work for Loral. Upon termination or expiration of this Agreement, Consultant shall deliver all such records, data, information, models, tools and other documents and all copies thereof to Loral.

5. (a) Consultant shall not disclose to any person during the term of this Agreement or thereafter, without Loral’s prior written approval, any confidential and/or proprietary information of Loral (whether written or oral), including specifications, know-how, strategic or technical data, marketing research data, product research and development data, manufacturing techniques, confidential customer lists, sources of supply and trade secrets or information relating to the business, designs, inventions, plans, methods, processes or affairs of Loral or its affiliates, or third party confidential information in the possession of Loral or its affiliates, which Consultant may have acquired or developed in connection with the performance of duties hereunder or otherwise, unless and until that information shall have become public knowledge without breach of this Agreement. Consultant agrees that he will use any such information only for the purpose set forth in Paragraph 1 hereto.

(b) Consultant represents and warrants that, as of the date of this Agreement, except as may be set forth on Attachment 1 hereto, he is not engaged in Competition (as defined herein) and that there is no conflict of interest arising from the activities to be performed hereunder and other activities in which he is engaged (including other consultancy contracts, if any), or any conflict with any person, corporation or other entity in which Consultant may have an interest. During the Term, Consultant will promptly notify the Company and update Attachment 1 hereto if he intends to become engaged or becomes engaged in Competition or if a conflict of interest arises. Consultant agrees that, during the Term, (x) he will not accept any assignment hereunder if at the inception of such assignment he is then engaged or involved in activities that directly compete or conflict with, or the purpose of which activities is to directly compete or conflict with, such assignment and (y) he will not during the course of performance of any assignment hereunder engage in or become involved in any activities that directly compete or conflict with, or the purpose of which activities is to directly compete or conflict with, such assignment. For purposes of this Agreement, “Competition” shall mean, other than for or with respect to the Company, engaging in, or otherwise directly or indirectly being employed by, or acting as a consultant or advisor (paid or unpaid) to, or being a director, officer, employee, principal, agent, stockholder, member, owner or partner of (i) any satellite manufacturing business, (ii) any satellite services business, (iii) any business engaged in providing end-to-end data solutions on networks comprised of earth terminals, space segment, and, where appropriate, networking hubs, (iv) any business similar to the businesses described in clauses (i), (ii) or (iii) above that competes with the services provided by the Company, (v) any business that competes with a business in which the Company engages as described or otherwise contemplated in the Company’s business plan, or (vi) any business that competes with a business that the Company is, to the knowledge of Consultant, preparing to engage in, and any transferee or successor to any of the foregoing businesses. Notwithstanding anything to the contrary in this Agreement, Consultant may, directly or indirectly, own, solely as an investment, securities of a business enterprise in competition with the Company or its subsidiaries which are publicly traded on a national or regional stock exchange or on the over-the-counter market if Consultant (i) is not a controlling person of or a member of a group which controls such business enterprise and (ii) does not, directly or indirectly, own five percent (5%) or more of any class of securities of such business enterprise.

(c) Consultant has carefully considered the nature, extent and duration of the restrictions and obligations contained in this Paragraph 5 and acknowledges and agrees that such restrictions are fair and reasonable in all respects to protect the legitimate interests of Loral and its affiliates and that these restrictions are designed for the reasonable protection of the business of Loral and that of its affiliates. Consultant acknowledges that remedies at law would be inadequate to protect Loral against any actual or threatened breach of this Paragraph 5 and, without prejudice to any other rights and remedies otherwise available to Loral, Consultant agrees that Loral will be entitled to suitable relief, including injunction, and further agrees to waive any requirement for security or the posting of any bond in connection with any such remedy.

6. In performing work under this Agreement, Consultant agrees to comply with provisions of Loral policies relating to standards of conduct and to ethical business practices (see: Attachment 2). By execution of this Agreement, Consultant certifies that Consultant has: (i) received a copy of Attachment 2, (ii) been advised that compliance with Attachment 2 is required, (iii) read Attachment 2 and (iv) agreed to comply with the policies as stated therein. Any questions that arise concerning the propriety of any action proposed to be taken should be directed to the Loral General Counsel (212-697-1105).

7. Concerning work under this Agreement, Consultant shall not engage in any effort on behalf of Loral to lobby (i.e., to influence or attempt to influence) Congress, any federal agency, any member of Congress, any federal officer, or any federal agency employee or employee of a member of Congress, unless such activity is expressly approved by the Loral General Counsel in writing. If such efforts are approved in writing, Consultant shall report the details to Loral and shall provide Loral with a copy of any declaration filed by Consultant pursuant to 31 U.S.C. Section 1352 in connection with such efforts.

8. If any information or material acquired or developed by Consultant in performance under this Agreement is, or becomes, classified within the meaning of the Espionage Act (Title 18, U.S.C. §§ 792-799) and Executive Order 12356 (April 1982), Consultant agrees to preserve the security of such work in compliance with all applicable laws and regulations of the United States. Any data or information of any type acquired or generated by Consultant in the performance of services under this Agreement shall be submitted to Loral for security review before publication or dissemination. Further, Consultant agrees to abide by Loral’s security rules and such other rules as are communicated from time to time to Consultant by an officer of Loral.

9. In performing under this Agreement and in addition to paragraph 7, above, Consultant agrees to comply with applicable laws and regulations, including export control laws, and to not make or permit to be made any improper payments, or to engage in any unlawful conduct. Consultant agrees not to assume any obligation which would interfere or be inconsistent with performance of this Agreement, and hereby represents and warrants to Loral that the services to be performed under this Agreement shall not result in a conflict of interest, including but not limited to, any conflict prohibited by the laws or regulations of the United States or other applicable jurisdictions. This Agreement shall terminate immediately and all payments due shall be forfeited if, in rendering services hereunder, improper payments are made to or by Consultant, unlawful conduct is engaged in by Consultant, or any part of the remuneration payable under this Agreement is used for an illegal purpose. Additionally, no remuneration shall be payable if such payment is prohibited by any law, regulation or decision of the Government of the United States, to include any agency thereof, or any foreign government involved with the subject hereof.

10. Consultant’s identity, the amount of the remuneration to be paid, and the details of this Agreement may be disclosed pursuant to the securities laws of the United States and may otherwise be disclosed to the Government of the United States or as otherwise required by law, rule or regulation.

11. A material factor in the Loral decision to retain Consultant was the response to the questionnaire entitled “Consultant Disclosure Statement” as completed by Consultant and attached hereto as Attachment 1. Any change to the information provided in the answers to the questionnaire should be reported immediately to the Loral General Counsel. Loral reserves the right to terminate this Agreement without further notice and obligation if the information provided in the questionnaire was inaccurate or if there is a material change in the information provided during the course of this Agreement.

12. Upon termination of this Agreement, (i) Consultant shall return to Loral all documents, materials or information provided to or developed by Consultant in connection with Consultant’s performance under this Agreement or certify in writing as to their destruction and (ii) Loral shall promptly pay to Consultant all consulting fees for services properly rendered by Consultant hereunder and reimburse Consultant for all expenses properly incurred by Consultant hereunder, in each case, prior to such termination, provided Consultant properly submits and documents in one or more invoices, as required by paragraph 13 herein, such services and expenses. After payment for all services properly rendered hereunder and reimbursement for all expenses properly incurred hereunder prior to such termination, Loral shall have no further obligation hereunder and Consultant shall not be entitled to any severance or termination pay or damages for termination of this Agreement.

13. Unless otherwise approved in writing, Consultant shall submit invoices to Loral monthly for payment. Invoices shall be addressed to: Loral Space & Communications Inc., 600 Third Avenue, New York, New York 10016, Attention: Chief Executive Officer. Invoices shall specify: (i) the period covered in the invoice, (ii) a description of the work performed during the period, including the number of days or half-days worked, (iii) the details of any expenses reimbursable under paragraph 2, above, and (iv) identification of any activity covered by the Lobbying Disclosure Act, 31 U.S.C. Section 1352, or any state or local lobbying law together with any filing made by Consultant pursuant to those laws. Each invoice shall contain the following certification: SUBMISSION OF THIS INVOICE CERTIFIES COMPLIANCE WITH THE TERMS AND CONDITIONS OF THE CONSULTING AGREEMENT UNDER WHICH THIS INVOICE IS SUBMITTED, AND CERTIFIES COMPLIANCE WITH ALL LAWS, REGULATIONS AND LORAL POLICIES REFERENCED THEREIN.

14. This Agreement and the enforcement thereof shall be governed and controlled in all respects by the internal laws of the State of New York, without application of the conflict of laws provisions thereof. Any dispute or controversy arising from or relating to this Agreement and/or Consultant’s relationship with Loral shall be resolved by binding “baseball” type (also known as “final offer” arbitration (i.e. each Party will submit the amount of its claim and the arbitrator will select one such amount), to be held in New York or in any other location mutually agreed to by Loral and Consultant before one arbitrator selected in accordance with the rules and procedures of the American Arbitration Association. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.

15. The provisions of this Agreement are severable and the invalidity of any one or more provisions shall not affect the validity of any other provision. In the event that a court of competent jurisdiction shall determine that any provision of this Agreement or the application thereof is unenforceable in whole or in part because of the duration or scope thereof, the parties hereto agree that said court in making such determination shall have the power to reduce the duration and scope of such provision to the extent necessary to make it enforceable, and that the Agreement in its reduced form shall be valid and enforceable to the full extent permitted by law. This Agreement may not be modified or amended except by a written document signed by an authorized person on behalf of each Party.

16. This written Agreement constitutes the entire and complete agreement between the Parties concerning the services described herein. This Agreement supersedes all prior and collateral communications and understandings between the Parties with respect to the subject matter hereof. It is agreed that there are no terms, conditions or understandings other than as set forth herein.

17. It is agreed that no failure or delay by either Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any right, power or privilege hereunder. No Party may assign or transfer, in whole or in part, any of its rights, obligations or duties under this Agreement.

18. Notices under this Agreement shall be transmitted to the address for notices specified below or such other address as a Party shall designate to the other Party in writing. Notices shall be deemed to have been given as of the date such notice is (a) delivered to the Party intended, (b) delivered to the then designated address of the Party intended, (c) transmitted to the then designated fax number of the Party intended (provided that the original of such Notice is delivered on the same day to a nationally recognized overnight courier for delivery to the then designated address of the Party intended on the next business day), or (d) sent by nationally recognized overnight courier or by United States Certified Mail, return receipt requested, postage prepaid and addressed to the then designated address of the Party intended.

IN WITNESS WHEREOF, the Parties have hereunto caused this Agreement to be executed by their duly authorized representatives:


		Loral Space & Communications Inc.:
Consultant: Richard J. Townsend Signature: /s/ Richard J. Townsend Date: January 4, 2008		By: Michael B. Targoff Title: Chief Executive Officer Signature: /s/ Michael B. Targoff Date: January 4, 2008


Delaware	1-14180	87-0748324
_____________________ (State or other jurisdiction	_____________ (Commission	______________ (I.R.S. Employer
of incorporation)	File Number)	Identification No.)

600 Third Avenue, New York, New York		10016
_________________________________ (Address of principal executive offices)		___________ (Zip Code)


	Loral Space & Communications Inc.

January 10, 2008	By:	Avi Katz

		Name: Avi Katz
		Title: Senior Vice President, General Counsel and Secretary


Exhibit No.		Description

10.1		General Release and Separation Agreement dated January 4, 2008 between Loral Space & Communications Inc. and Richard J. Townsend (Management Compensation Plan)
10.2		Consulting Agreement dated January 4, 2008 between Loral Space & Communications Inc. and Richard J. Townsend (Management Compensation Plan)


Date of Report (Date of Earliest Event Reported):		January 4, 2008


Registrant’s telephone number, including area code:		(212) 697-1105