Exhibit 10.1

OMNIBUS AGREEMENT

OMNIBUS AGREEMENT, dated as of October 30, 2007 (this “ Agreement ”), by and among Loral Space & Communications Inc., a Delaware corporation (“ Parent ”), Loral Skynet Corporation, a Delaware corporation and an indirect wholly owned subsidiary of Parent (“ Skynet ”), Public Sector Pension Investment Board, a Canadian Crown corporation (“ PSP ”), Red Isle Private Investments Inc., a Canadian corporation and an Affiliate of PSP (“ Red Isle ”), and Telesat Holdings Inc. (formerly 4363205 Canada Inc.), a Canadian corporation (“ Holdco ”). Capitalized, undefined terms used herein shall have the respective meanings ascribed to them in the Asset Transfer Agreement (as hereinafter defined). Unless otherwise specified herein, all dollar amounts expressed in this Agreement as (i) “$” are to United States dollars and (ii) “C$” are to Canadian dollars.

R E C I T A L S:

WHEREAS, on December 16, 2006, Telesat Interco Inc. (formerly 4363213 Canada Inc.), a Canadian corporation and a wholly owned subsidiary of Holdco (“ Acquisition Sub ”), BCE Inc., a Canadian corporation (“ BCE ”), and Telesat Canada, a Canadian corporation (“ Telesat ”), entered into a Share Purchase Agreement (as amended from time to time, the “ Share Purchase Agreement ”), pursuant to which Acquisition Sub has agreed to purchase from BCE, and BCE has agreed to sell to Acquisition Sub, all of the outstanding shares of Telesat and certain “Safe Income Notes” upon the terms and subject to the conditions set forth in the Share Purchase Agreement;

WHEREAS, in connection with the Share Purchase Agreement, Parent has committed to acquire shares of Holdco simultaneously with the consummation of the transactions contemplated by the Share Purchase Agreement, the terms of which transaction are set forth in (i) an Alternative Subscription Agreement, dated as of August 7, 2007 (as amended from to time, the “ Alternative Subscription Agreement ”), by and among Parent, Skynet and Holdco and (ii) an Asset Transfer Agreement, dated as of August 7, 2007 (as amended from time to time, the “ Asset Transfer Agreement ”), by and among Skynet, Holdco and Parent;

WHEREAS, in connection with the Share Purchase Agreement, Red Isle has committed to acquire shares of Holdco simultaneously with the consummation of the transactions contemplated by the Share Purchase Agreement, the terms of which transaction are set forth in a Subscription Agreement, dated as of August 7, 2007 (as amended from time to time, the “ PSP Subscription Agreement ”), by and between PSP, Red Isle and Holdco;

WHEREAS, an Asset Purchase Agreement, dated as of August 7, 2007 (as amended from time to time, the “ Asset Purchase Agreement ”), has been entered into by and among Skynet, Skynet Satellite Corporation, a Delaware corporation (“ Buyer ”), and Parent;

WHEREAS, upon the consummation of the transactions contemplated by the Share Purchase Agreement, the Alternative Subscription Agreement, the PSP Subscription Agreement, the Asset Transfer Agreement, the Asset Purchase Agreement and an Ancillary Agreement, , dated as of August 7, 2007 (as amended from time to time, the “ Ancillary Agreement ”), by and among Skynet, Holdco, Parent, and 4363230 Canada Inc., a Canadian corporation and a wholly owned subsidiary of Holdco (collectively, including this Agreement and the agreements entered into by Holdco and its subsidiaries with respect to the Financing, the “ Transaction Documents ”),

(i) Parent is to own, directly or indirectly, shares of Holdco representing 64% of the economic equity interests and 33 ¹ / ₃ % of the voting equity interests of Holdco, and (ii) PSP is to own, directly or indirectly, shares of Holdco representing 36% of the economic equity interests and 66 ² / ₃ % of the non-director voting equity interests of Holdco;

WHEREAS, in connection with the transactions contemplated by the Transaction Documents, (i) Parent caused Skynet to enter into certain foreign currency exchange transactions, the terms and conditions of which transactions are set forth in the contracts listed on Schedule I attached hereto (such contracts, the “ Skynet Hedge Agreements ”) and (ii) PSP entered into certain foreign currency exchange transactions, the terms and conditions of which transactions are set forth in the contracts listed on Schedule II attached hereto (such contracts, the “ PSP Hedge Agreements ”);

WHEREAS, in connection with the Transaction Documents, (i) Skynet desires to transfer to Holdco, for subsequent transfer to Acquisition Sub, Skynet’s right, title and interest in, to and under the Skynet Hedge Agreements and (ii) PSP desires to pay to Holdco, for subsequent transfer to Acquisition Sub, an amount in cash equal to the economic value of the PSP Hedge Agreements;

WHEREAS, on October 23, 2007, Acquisition Sub entered into a foreign currency transaction to hedge $316,000,000 to Canadian dollars, which transaction is to be settled on October 31, 2007 (the “ Interco Hedge ”);

WHEREAS, the parties hereto anticipate that Acquisition Sub will settle the transactions contemplated by the Skynet Hedge Agreements and the Interco Hedge on the Closing Date and that PSP will settle the transactions contemplated by the PSP Hedge Agreements on or around December 27, 2007;

WHEREAS, Skynet has entered into the Basis Swap, which the parties now desire to include as part of the Transferred Property;

WHEREAS, Red Isle desires to pay a portion of the consideration payable by it under the PSP Subscription Agreement for Equity Shares (as defined in the PSP Subscription Agreement) in the form of Marketable Securities (as defined in the Asset Purchase Agreement) having an aggregate fair market value on the Closing Date equal to the “Purchase Price” of $25,472,000 under the Asset Purchase Agreement; and

WHEREAS, the parties desire to provide for certain amendments, modifications and/or clarifications of the provisions of the Asset Transfer Agreement so as to reflect the transactions contemplated by this Agreement;

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

SECTION 1. TRANSFER AND PAYMENT .

SECTION 1.1. Transfer by Skynet . On or before October 30, 2007, Skynet (on behalf of Parent) shall transfer, convey, assign and deliver unto Holdco, for subsequent transfer to Acquisition Sub, all of Skynet’s right, title and interest in, to and under the Skynet Hedge Agreements.

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SECTION 1.2. Payment by PSP; Treatment .

(a) At the Closing, Red Isle shall pay to Holdco, for subsequent transfer to Acquisition Sub, C$55,163,172 (the “ PSP Hedge Amount ”) in cash, representing the economic value of the PSP Hedge Agreements.

(b) The payment by PSP of the PSP Hedge Amount as provided in Section 1.2(a) hereof shall be made in addition to the amounts otherwise due under the PSP Subscription Agreement and without regard to the “PSP Cap” under the Ancillary Agreement, and the PSP Hedge Amount shall not be taken into consideration for the purpose of (i) determining whether the PSP Cap is met or exceeded or (ii) calculating or determining the PSP Common Equity Amount or the Required Equity Contribution Amount (as defined in the Alternative Subscription Agreement).

SECTION 1.3. Consideration . In consideration for the transfer and payment (as applicable) set forth in Sections 1.1 and 1.2 hereof, Holdco shall (a) issue to Skynet, on the date of the transfer to Holdco of Skynet’s right, title and interest in, to and under the Skynet Hedge Agreements, non-voting participating preferred shares of Holdco in such number as shall equal the value of (i) the Skynet Hedge Agreements on such date, less (ii) the amount of any positive Tranche Differential with respect to any Tranche that is the subject of any such Skynet Hedge Agreement, at an issue price of C$10.00 per share, and (b) issue to PSP, at the Closing (upon payment to Holdco of the PSP Hedge Amount), such number of voting participating preferred shares and common shares of Holdco as shall equal the number of shares issued to Skynet under this Section 1.3, divided by 64 and multiplied by 36. For greater certainty, as a result of the issuances of shares of Holdco under this Agreement and under the Transaction Documents: (A) Parent will own, directly or indirectly, shares of Holdco representing 64% of the economic equity interests and 33 ¹ / ₃ % of the voting equity interests of Holdco; and (B) PSP will own, directly or indirectly, shares of Holdco representing 36% of the economic equity interests and 66 ² / ₃ % of the non-director voting equity interests of Holdco.

SECTION 2. SUBSCRIPTION CONSIDERATION .

SECTION 2.1. Subscription Consideration; Transaction Expenses . On the Closing Date, Red Isle shall pay a portion of the consideration payable by it for Equity Shares pursuant to the PSP Subscription Agreement in the form of Marketable Securities having an aggregate fair market value on the Closing Date equal to the “Purchase Price” of $25,472,000 under the Asset Purchase Agreement, it being understood that such Purchase Price amount denominated in United States dollars shall be translated into Canadian dollars for the purposes of the PSP Subscription Agreement at the exchange rate at which PSP or Red Isle, as the case may be, converts Canadian dollars into United States dollars in order to purchase such Marketable Securities. For the avoidance of doubt, any costs or expenses that either PSP or Red Isle incurs in connection with the acquisition or transfer of such Marketable Securities are Transaction Expenses (as defined in the Ancillary Agreement) with respect to which PSP or Red Isle, as the case may be, shall be entitled to reimbursement pursuant to the Ancillary Agreement.

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SECTION 3. BASIS SWAP; AMENDMENT, MODIFICATION AND CLARIFICATION OF ASSET TRANSFER AGREEMENT .

SECTION 3.1. Basis Swap . On or before October [29], 2007, Skynet (on behalf of Parent) shall transfer, convey, assign and deliver unto Holdco, for subsequent transfer to Acquisition Sub, all of Skynet’s right, title and interest in, to and under the Basis Swap (which transfer shall be deemed to satisfy Parent’s obligations under Section 3.6(b) of the Ancillary Agreement). Notwithstanding anything to the contrary contained in any Transaction Document, including, without limitation, the Asset Transfer Agreement, the parties agree that: (a) the Basis Swap shall form part of the “Transferred Property” under the Asset Transfer Agreement for which the consideration therefor is being paid under Article II thereof; and (b) “Interim Taxes” under the Asset Transfer Agreement shall include any and all Taxes payable by Skynet or any of its Affiliates in respect of taxable income realized thereby in connection with such transfer of the Basis Swap as part of the Transferred Property (“ Basis Swap Taxes ”), provided that, for the purposes of Section 2.6 of the Asset Transfer Agreement, the portion of the Interim Taxes that constitutes Basis Swap Taxes shall be expressed in Canadian dollars at the Closing Date Exchange Rate.

SECTION 3.2. Section 1.1; Definition of Basis Swap . Section 1.1 of the Asset Transfer Agreement is hereby amended by deleting the definition of “Basis Swap” contained therein in its entirety and inserting the following in lieu thereof:

“‘ Basis Swap ” means that certain letter agreement, dated December 27, 2006, between Morgan Stanley Capital Services Inc. and Skynet relating to $1,054,000,000 in respect of the term loan B under the Financing;”

SECTION 3.3. Sections 2.6(h) and 2.6(i) of the Asset Transfer Agreement . Sections 2.6(h) and 2.6(i) of the Asset Transfer Agreement are hereby amended by deleting them in their entirety and inserting the following in lieu thereof:

“(h) “ Tranche Differential ” means for each Tranche, the share of such Tranche that is hedged by Parent, multiplied by the Tranche Differential Rate.

(i) “ Tranche Differential Rate ” means, (a) in respect of the Note Tranche, the difference between the exchange rate obtained by Parent and the exchange rate obtained by PSP and (b) in respect of the Remaining Term Loan B Tranche, the difference between the exchange rate obtained by Parent and the exchange rate at which Canadian dollars are purchased with respect to the remaining $282,566,500 of the Remaining Term Loan B Tranche at the Telesat Closing (which purchase may be made pursuant to a hedge contract entered into by Holdco or one of its subsidiaries). The Tranche Differential Rate will be (i) positive, if the exchange rate obtained by Parent in respect of the applicable Tranche is greater than the PSP exchange rate (in the case of the Note Tranche) or the actual exchange rate (in the case of the Remaining Term Loan B Tranche), (ii) negative, if the exchange rate obtained by Parent in respect of the applicable Tranche is less than the PSP exchange rate (in the case of the Note Tranche) or the actual exchange rate (in the case of the Remaining Term Loan B Tranche), or (iii) zero, if the exchange rate obtained by Parent in respect of the applicable Tranche is the same as the PSP exchange rate (in the case of the Note Tranche) or the actual exchange rate (in the case of the Remaining Term Loan B Tranche).”

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SECTION 3.4. Section 4.20 of the Asset Transfer Agreement . Section 4.20 of the Asset Transfer Agreement is hereby amended by deleting it in its entirety and inserting the following in lieu thereof:

“ 4.20 Currency Hedging.

(a) For the purposes of calculating the Total Hedging Differential, the parties acknowledge and agree that Parent and PSP have entered into the following hedge transactions:

(i) Parent and PSP have hedged $594,000,000 and $316,000,000, respectively, of the $910,000,000 of unsecured debt tranche under the Financing (the “Note Tranche ”); and

(ii) Parent has hedged $103,433,500 of the $386,000,000 of original term loan B-1 under the Financing that is not hedged by the Basis Swap (the “ Remaining Term Loan B Tranche ”).

(b) Each of the Note Tranche and the Remaining Term Loan Tranche is a Tranche for purposes of calculating the Total Hedging Differential pursuant to Section 2.6 hereof. For purposes of this Section 4.20, hedges procured by an Affiliate of Parent shall be deemed to be hedges procured by Parent.”

SECTION 3.5. Exhibit D to Asset Transfer Agreement . Exhibit D to the Asset Transfer Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof Exhibit A to this Agreement.

SECTION 4. MISCELLANEOUS .

SECTION 4.1. Successors and Assigns . No party may transfer or assign any of its rights or obligations hereunder without the express written consent of the other party hereto, and any such attempted transfer or assignment in violation of this Section 4.1 shall be null and void ab initio ; provided , however , that a party hereto may, without the prior written consent of any other party hereto, (a) assign (in whole or in part) this Agreement and all of its rights hereunder to its lenders and debt providers (or any administrative or collateral agent therefor) for collateral security purposes, and (b) assign (in whole or in part) this Agreement and its rights and obligations hereunder to any of its Subsidiaries; provided , further , that, notwithstanding any such assignment described in the immediately preceding clauses (a) and (b), the assigning party shall remain liable to perform all of its obligations hereunder.

SECTION 4.2. Governing Law and Waiver of Jury Trial . This Agreement, and all matters arising out of or relating to this Agreement and the transactions contemplated hereby, including (a) its negotiation, execution, and validity, and (b) any claim or cause of action, whether in contract, tort or otherwise (including any representation or warranty made in or in connection with this Agreement or as an inducement to enter into this Agreement), shall be

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governed by, construed and interpreted in accordance with the laws of the State of New York, without regard to the conflicts of law rules and principles thereof; provided that, to the extent that the provisions of this Agreement amend the terms of the PSP Subscription Agreement, such provisions of this Agreement shall be governed by, construed and interpreted in accordance with the laws of the Province of Ontario, Canada. Any suit, action or proceeding against any party or any of its assets arising out of or relating to this Agreement shall be brought in the federal or state courts located in New York, New York, and each party hereby irrevocably and unconditionally attorns and submits to the exclusive jurisdiction of such courts over the subject matter of any such suit, action or proceeding. Each party irrevocably waives and agrees not to raise any objection it might now or hereafter have to any such suit, action or proceeding in any such court including any objection that the place where such court is located is an inconvenient forum or that there is any other suit, action or proceeding in any other place relating in whole or in part to the same subject matter. EACH PARTY HEREBY ACKNOWLEDGES AND AGREES THAT ANY DISPUTE OR CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. Each party irrevocably consents to process being served by any party to this Agreement in any legal proceeding by delivery of a copy thereof in accordance with the provisions of Section 4.4 hereof.

SECTION 4.3. Severability . If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible.

SECTION 4.4. Notices . Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be given by hand, courier (with a copy sent by facsimile), by facsimile or other means of electronic communication (with a copy sent by courier) or by delivery as hereafter provided. Any such notice or other communication, if sent by courier or if sent by facsimile or other means of electronic communication, shall be deemed to have been received on the Business Day following the confirmation of receipt, or if delivered by hand shall be deemed to have been received at the time it is delivered to the applicable address noted below. Notice of change of address shall also be governed by this Section 4.4. Notices and other communications shall be addressed as follows or to such other address as the parties shall notify each other in writing from time to time:

(a) If to Parent, Skynet or Holdco, as provided in the Asset Transfer Agreement; and

(b) If to PSP, as provided in the Ancillary Agreement.

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SECTION 4.5. Amendments; Waivers . The parties hereto may modify or amend this Agreement only by written agreement executed and delivered by duly authorized officers of such parties. No amendment or waiver of any provision of this Agreement shall be binding on any party unless consented to in writing by the parties hereto. No waiver of any provision of this Agreement shall constitute a waiver of any other provision, nor shall any waiver constitute a continuing waiver unless otherwise expressly provided.

SECTION 4.6. Entire Agreement . Except as agreed to in writing on or after the date hereof, this Agreement and the Transaction Documents constitute the entire agreement, and supersede all other prior agreements, understandings, representations and warranties (both written and oral), among the parties with respect to the subject matter hereof.

SECTION 4.7. Parties in Interest . This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person or entity any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement; provided that, from the date hereof through the date of the Telesat Closing, PSP shall have the right to take any action on behalf of Holdco, and to exercise all remedies and rights on behalf of and for the benefit of Holdco, under this Agreement, and shall be entitled to full indemnity from Holdco in respect of, and Holdco shall pay to PSP an amount equal to, any Losses incurred by PSP in doing so (including any costs and expenses incurred by PSP incident to exercising any such remedies or rights) unless PSP shall have acted in bad faith or shall have been grossly negligent, provided , further , that nothing contained in this Section 4.7 shall be deemed to create any liability on PSP’s part to any of the other parties hereto in connection with, and no such other party hereto shall have any recourse against PSP for, any action so taken, or any exercise of such remedies or rights made, by PSP on behalf of or for the benefit of Holdco prior to the Telesat Closing pursuant to this Section 4.7.

SECTION 4.8. Section and Paragraph Headings . The section and paragraph headings in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

SECTION 4.9. Counterparts . For the convenience of the parties hereto, this Agreement may be executed in any number of counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts shall together constitute the same agreement.

SECTION 4.10. Successors . This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors.

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IN WITNESS WHEREOF, the parties hereto have duly executed this Omnibus Agreement as of the date first above written.

[Omnibus Agreement]

Exhibit 10.2

AMENDING AGREEMENT

THIS AGREEMENT is made as of the 31st day of October , 2007

B E T W E E N:

RED ISLE PRIVATE INVESTMENTS INC. , a corporation incorporated under the laws of Canada (hereinafter referred to as “ Red Isle ”)

– and –

PUBLIC SECTOR PENSION INVESTMENT BOARD , a corporation incorporated under the laws of Canada (hereinafter referred to as “ PSPIB ”)

– and –

TELESAT HOLDINGS INC. (formerly 4363205 CANADA INC. ), a corporation incorporated under the laws of Canada (hereinafter referred to as “ Holdco ”)

– and –

LORAL SPACE & COMMUNICATIONS INC. , a corporation incorporated under the laws of Delaware (hereinafter referred to as “ Loral ”)

– and –

LORAL SKYNET CORPORATION , a corporation incorporated under the laws of Delaware (hereinafter referred to as “ Skynet ”)

WHEREAS Red Isle, PSPIB and Holdco have entered into a Subscription Agreement for Shares dated August 7, 2007 (the “ Subscription Agreement ”) pursuant to which Red Isle has agreed to purchase, inter alia , Senior Preferred Shares of the Corporation having the rights, privileges, restrictions and conditions contemplated by the Subscription Agreement;

AND WHEREAS the parties hereto wish to change the rights, privileges, restrictions and conditions of the Senior Preferred Shares in the manner set out herein;

AND WHEREAS Loral has agreed to enter into a Consulting Services Agreement with Telesat Canada in the form attached as Exhibit C to an Asset Transfer Agreement (the “ Asset Transfer Agreement ”) dated August 7, 2007 entered into among Loral, Skynet and Holdco, which Consulting Services Agreement will be entered into on the date (the “ Closing Date ”) of the acquisition by Telesat Interco Inc. (formerly 4363213 Canada Inc. ) , a wholly-owned subsidiary of Holdco, of all of the shares of Telesat Canada pursuant to a Share Purchase Agreement dated December 16, 2006 between Telesat Interco Inc., BCE Inc. and Telesat Canada;

AND WHEREAS the parties hereto wish to change the terms of such Consulting Services Agreement in the manner set out herein;

AND WHEREAS Red Isle, PSPIB, Holdco and Loral have agreed to enter into a Unanimous Shareholders Agreement in the form attached as Exhibit E to the Asset Transfer Agreement, which Unanimous Shareholders Agreement will be entered into on the Closing Date;

AND WHEREAS the parties hereto wish to change the terms of such Unanimous Shareholders Agreement in the manner set out herein;

NOW THEREFORE, in consideration of the covenants contained herein and for other consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

“The Corporation shall pay any governmental or other taxes imposed on the Corporation in respect of the conversion of [Common Shares], but shall not pay any governmental or other taxes imposed on the holder of [Common Shares] in respect of any conversion of [Common Shares].”

“4.04 Payment in Kind

If and for so long as the terms of the Acquisition Debt (as defined in the terms of the Senior Preferred Shares of Telesat Holdings Inc. as they exist on the date hereof) (the “ Acquisition Financing ”) permit the payment of the fees set out in Section 4.01 in cash without recourse to any

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provision of the Acquisition Financing providing for a fixed or calculated amount available for such purposes and other purposes (including without limitation the Applicable Amount defined in the credit agreement originally forming part of the Acquisition Debt (each such provision a “ basket provision ”; provided, that, for the avoidance of doubt, a basket provision does not include a covenant that requires compliance with a financial ratio other than with respect to the financial ratios in the Applicable Amount)), Telesat shall pay such fees in cash. Otherwise, unless the Directors determine to utilize such basket provision in order to pay all or part of such fee in cash, Telesat shall not be required to pay such fees in cash but shall issue to Loral, on each payment date provided in Section 4.01, a promissory note of Telesat for the amount of such payment. Such promissory notes shall be payable in full, or to the extent then permitted, 10 days after (i) a determination being made, by way of the certification provided in this Section 4.04, that such promissory notes, or a portion of such promissory notes, may be paid pursuant to the terms of the Acquisition Financing without recourse to a basket provision, or (ii) if the Directors subsequently determine to utilize such basket provision to pay some or all of such promissory notes, that such determination has been made by the Directors, or if not then paid in full, all such promissory notes shall be paid in full on ·October 31, 2018. Any such payment shall be made in the manner provided in Section 4.03 without necessity of delivery to Telesat of any promissory notes for cancellation. Telesat shall provide Loral with a quarterly certificate to be delivered by not later than 60 days after each fiscal quarter-end of Telesat certifying whether any such promissory notes, or a portion thereof, may be paid pursuant to the terms of the Acquisition Financing without recourse to a basket provision or whether the Directors shall have determined to pay any promissory notes by utilizing and reducing any such basket provision, and shall specify in such certificate the amount of such promissory notes that may then be paid, and shall provide to Loral details in support of such certificate. Interest on all such promissory notes shall be payable on the outstanding principal balance of each promissory note at the rate of 7% per annum, compounded quarterly, from the date of issue of any such promissory note to the date of payment thereof. Promissory notes, including all accrued interest thereon, shall be repaid in order of issuance. Loral shall deliver to Telesat all promissory notes that have been paid in full as soon as practicable after payment in full thereof.”

“10.13 Effectiveness

Article 3 (Corporate Governance) of this Agreement shall come into effect upon the release from escrow on the date of this Agreement of all documents contemplated by the closing agenda for the acquisition of the shares of Telesat, and the contribution to the

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Company of assets from Loral Skynet pursuant to the Skynet Asset Transfer Agreement and subscription and purchase of shares of the Company by PSP pursuant to the PSP Subscription Agreement, including the corporate reorganizations contemplated by such closing agenda and all documents necessary for the financings of the acquisition of such Telesat Shares. The remainder of this Agreement shall come into effect immediately upon execution of this Agreement.”

(signature page follows)

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

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SCHEDULE A

SHARE CONDITIONS – SENIOR PREFERRED SHARES

SHARE CONDITIONS – SENIOR PREFERRED SHARES

The Annual Dividend Amount (i) shall be paid in cash, if such amount may be paid in cash on the dividend payment date under the terms of the agreements or instruments governing the Acquisition Debt, without recourse to any provision of such agreements or instruments providing for a fixed or calculated amount available for such purposes and other purposes (including without limitation the Applicable Amount as defined in the Senior Secured Credit Facilities (each such provision a “basket provision” provided, that (a) for the avoidance of doubt, a basket provision does not include a covenant that requires compliance with a financial ratio other than with respect to the financial ratio in the Applicable Amount, and (b) a reduction in the “Restricted Payments Basket “ (as defined in the form of indenture for each of the senior exchange notes and the subordinate exchange notes attached to the Senior Bridge Loan Facility and the Senior Subordinate Bridge Facility, as applicable, forming part of the Acquisition Debt) in respect of cash dividend payments on the Senior Preferred Shares will not constitute recourse to a basket provision if the Company is otherwise in compliance with the financial ratio permitting cash dividend

1A

payments on the Senior Preferred Shares)) or (ii) may be paid in cash by utilizing any such basket provisions, if the Directors determine to utilize such basket provisions in order to pay all or part of such Annual Dividend Amount in cash. The Annual Dividend Amount, to the extent not paid in cash on the dividend payment date, shall be paid in additional Senior Preferred Shares (“PIK Shares”). Not later than thirty (30) days prior to any dividend payment date, the Directors shall determine whether the Corporation shall pay any portion or all of the Annual Dividend Amount in cash or in PIK Shares in accordance with the terms of the Acquisition Debt.

If the Directors determine to pay any portion or all of any dividend in PIK Shares, the Corporation shall pay such portion of the Annual Dividend Amount in newly-issued Senior Preferred Shares, at the rate of one Senior Preferred Share per $1,000 of Annual Dividend Amount in respect of which the Directors have determined to pay such dividend in PIK Shares (rounded to the nearest whole Senior Preferred Share in respect of the aggregate dividend paid in PIK Shares to any registered holder of Senior Preferred Shares). Such Senior Preferred Shares shall be duly and validly issued as fully-paid and non-assessable, in the name of the registered holder of the Senior Preferred Shares on which such dividend is to be paid (according to the shareholder register of the Corporation) and certificates evidencing such Senior Preferred Shares shall be mailed to the address of such shareholders as set out in the shareholder register of the Corporation. On and after a dividend payment date, until certificates representing additional Senior Preferred Shares shall have been issued, the certificates representing such shares held by a holder on the dividend payment date shall represent not only such existing shares, but also the additional Senior Preferred Shares issued to such holder pursuant to such dividend.

The Directors shall declare and the Corporation shall pay all dividends on the Senior Preferred Shares to the full extent that they are legally entitled to do so, and the Corporation shall not take any action solely to prevent it from being legally entitled to do so. If the Directors determine that any Annual Dividend Amount may not legally be declared, such Annual Dividend Amount, or the portion thereof which may not legally be declared, shall cumulate from the date on which such annual dividend should have been paid until such dividend is paid in full and at the same rate as is then otherwise payable on the Senior Preferred Shares, and shall be compounded annually.

If the Directors determine to pay any portion or all of any dividend in cash, all such cash dividends shall be paid in the manner provided in By-law Number 1 of the Corporation.

So long as any Senior Preferred Shares remain outstanding, the Corporation shall not pay or declare any dividend, or make any distribution, upon the Common Shares, the Voting Participating Preferred Shares, the Non-Voting Participating Preferred Shares, the Redeemable Common Shares, the Redeemable Non-Voting Participating Preferred Shares and the Director Voting Preferred Shares or the

1B

shares of any other class which ranks junior to the Senior Preferred Shares with respect to dividends unless and until all accrued and unpaid dividends shall have been paid in cash or in PIK Shares in respect of the Senior Preferred Shares.

1C

With respect to the right described in clause (i) of the first paragraph of this clause (e), such offer of redemption shall be made to all holders of Senior Preferred Shares upon the later of (i)(A) at least 30 days prior to the occurrence of the Change of Control or (B) in the event that the Common Shares are publicly traded and a Change of Control occurs without the Corporation being aware of such event, as promptly as possible upon the Corporation acquiring knowledge of such Change of Control; (ii) the Corporation being able to redeem the Senior Preferred Shares pursuant to Section 36(2) of the Canada Business Corporations Act and (iii) such redemption not being prohibited by the terms of the Acquisition Debt, but excluding, for such purposes, any indebtedness described in clause (iii) of the definition of Acquisition Debt incurred in contemplation of such Change of Control or incurred after such Change of Control (it being understood that no agreement or instrument governing any Obligation of the type described in clause (iii) of the definition of Acquisition Debt that was incurred in contemplation of such Change of Control or incurred after such Change of Control shall restrict the ability of the Corporation to redeem the Senior Preferred Shares in cash pursuant to this clause (e)). Each holder of Senior Preferred Shares to whom an offer of redemption is made may accept such offer of redemption by delivering to the Corporation a redemption acceptance notice, in the form provided by the Corporation with its offer of redemption, within 25 days of the date of the Corporation’s offer of redemption, in which case all Senior Preferred Shares in respect of which an accepted offer of redemption has been received by the Corporation within 25 days of the date of the Corporation’s offer of redemption shall be called for redemption by the Corporation with effect from the later of the date of Change of Control and such 25th day after the date of the offer of redemption (and such date shall be the redemption date referred to in clause (g) below).

With respect to the right described in clause (ii) of the first paragraph of this clause (e), such offer of redemption shall be made to all holders of Senior Preferred Shares upon the later of (i) 30 days prior to ·October 31, 2012, (ii) the Corporation being able to redeem the Senior Preferred Shares pursuant to Section 36(2) of the Canada Business Corporations Act and (iii) such redemption not

1D

being prohibited by the terms of the Acquisition Debt, but excluding, for such purposes, any term contained in any agreement or instrument governing Obligations, described in clause (iii) of the definition of Acquisition Debt incurred in contemplation of the applicable Change of Control or incurred after such Change of Control (it being understood that no agreement or instrument governing any Obligation of the type described in clause (iii) of the definition of Acquisition Debt that was incurred in contemplation of such Change of Control, or incurred after such Change of Control, shall restrict the ability of the Corporation to redeem the Senior Preferred Shares in cash pursuant to this clause (e)). Each holder of Senior Preferred Shares to whom an offer of redemption is made may accept such offer of redemption by delivering to the Corporation a redemption acceptance notice, in the form provided by the Corporation with its offer of redemption, within 45 days of the date of the Corporation’s offer of redemption, in which case all Senior Preferred Shares in respect of which an accepted offer of redemption has been received by the Corporation within 45 days of the date of the Corporation’s offer of redemption shall be called for redemption by the Corporation with effect from October 31, 2012 (and such date shall be the redemption date referred to in clause (g) below).

Any such partial optional redemption shall be made on a pro rata basis with respect to all Senior Preferred Shares then outstanding.

1E

The Corporation shall have the right, at any time on or after the date for redemption of Senior Preferred Shares or the mailing or delivery of notice of its intention to redeem Senior Preferred Shares, to deposit the redemption price of the Senior Preferred Shares so called for redemption, or of such of the Senior Preferred Shares which are represented by certificates which have not at the date of such deposit been surrendered by the holders thereof in connection with such redemption, to a special account maintained by the Corporation with a branch of a Canadian chartered bank or trust company designated by the Corporation in the notice of redemption (the “Trustee”) which has offices in the City of Ottawa, to be paid without interest to or to the order of the respective holders of Senior Preferred Shares whose shares have been called for redemption, upon presentation and surrender to the Trustee of the certificates representing such shares. Upon such deposit being made or upon the date specified for redemption, whichever is later, the Senior Preferred Shares in respect of which such deposit shall have been made shall be deemed to have been redeemed and the rights of the holders thereof after such deposit or such redemption date, as the case may be, shall be limited to receiving their proportion of the amount so deposited without interest, upon presentation and surrender to the Trustee of the certificate or certificates representing the Senior Preferred Shares being redeemed. Any interest allowed on any such deposit shall belong to the Corporation. Redemption moneys that are represented by a cheque that has not been presented for payment or that otherwise remain unclaimed (including moneys held on deposit in a special account as provided for above) for a period of six years from the date specified for redemption shall be forfeited to the Corporation. If less than all Senior Preferred Shares represented by a certificate are redeemed, the holder shall be entitled to receive, at the expense of the Corporation, a new certificate representing Senior Preferred Shares of such holder which have not been redeemed.

No Senior Preferred Shares acquired by the Corporation shall be reissued, and all such shares shall be cancelled, retired and eliminated from the Senior Preferred Shares which the Corporation shall be authorized to issue.

1F

Subject to compliance with the terms of all agreements and instruments governing the Acquisition Debt relating to the subject matter of this clause (h), the approval of the holders of the Senior Preferred Shares to add to, change or remove any right, privilege, restriction or condition attaching to the Senior Preferred Shares, or any other matter as may by law require the consent of the holders of the Senior Preferred Shares, may be given by the affirmative vote of holders of Senior Preferred Shares holding not less than 66-  ² / 3 % of the Senior Preferred Shares voting on a resolution in respect of such matter or by such other percentage as may then be permitted by law. An increase in the number of Senior Preferred Shares, or the creation of a new class of shares having priority, or ranking pari passu, as to payment of dividends or return of capital upon liquidation, dissolution or winding up of the Corporation, or as to any other distribution of assets of the Corporation among its shareholders for the purpose of winding up its affairs, whether voluntary or involuntary, shall not require the consent of the holders of the Senior Preferred Shares. The formalities to be observed in respect of the giving of notice of any meeting or any adjourned meeting of the holders of the Senior Preferred Shares for such purpose, and in the conduct thereof, shall be those from time to time prescribed by law and by the by-laws of the Corporation with respect to meetings of shareholders of the Corporation.

“ Acquisition Debt ” means collectively, (i) Obligations incurred in respect of the Senior Secured Credit Facilities and in respect of the Senior Bridge Loan Facility and the Senior Subordinated Bridge Loan Facility, including the Rollover Loans and Exchange Notes (each as defined in the Senior Bridge Loan Facility or Senior Subordinated Bridge Loan Facility, as applicable), (ii) any indebtedness incurred to refinance the Senior Bridge Loan Facility and/or the Senior Subordinated Bridge Loan Facility and (iii) Obligations incurred in respect of any Refinancing of any indebtedness described in the foregoing clauses (i) and (ii) or this clause (iii);

1G

“ Affiliate ” has the meaning set forth in the Canada Business Corporations Act;

“ Annual Dividend Amount ” means the amount of dividends payable on each Senior Preferred Share in any year in accordance with Section 7(a);

“ Change of Control ” means and shall be deemed to occur if:

(x) a person or group of persons acting jointly or in concert pursuant to the provisions of the Securities Act (Ontario) (other than (A) the Public Sector Pension Investment Board or any of its Affiliates, (“ PSP Permitted Persons ”), Loral Space & Communications Inc. or any of its subsidiaries (“ Loral Permitted Persons ”) or MHR Fund Management LLC (“MHR”) or any investment funds controlled by MHR (“ MHR Permitted Persons ”) and together with PSP Permitted Persons and Loral Permitted Persons, “ Permitted Persons ”) or (B) a group of persons who are acting jointly or in concert pursuant to the provisions of the Securities Act (Ontario) in which Loral Permitted Persons and/or MHR Permitted Persons, as part of such group of persons, will own, collectively, 10% or more of the securities having a participating equity interest in the Corporation, 4363213 Canada Inc. (“ Acquireco ”) or Telesat Canada, or any of their respective successors, as the case may be, immediately following the Change of Control) acquires after ·October 31, 2007, directly or indirectly, ownership of securities of the Corporation, Acquireco or Telesat Canada or any of their respective successors, as the case may be, having (i) participating equity interest that is greater than fifty-one percent (51%) of the participating equity interest of the Corporation, Acquireco or Telesat Canada, or any of their respective successors, as the case may be, and (ii) aggregate votes that may be cast to elect directors of the Corporation, Acquireco or Telesat Canada, or any of their respective successors, as the case may be, that is greater than fifty-one percent (51%) of the aggregate votes that may be cast for the election of directors of the Corporation, Acquireco or Telesat Canada, or their respective successors, as the case may be (including for such purpose any votes that may be cast for the election of directors that would attach to shares issuable upon exercise of rights of conversion into voting shares which are then exercisable); provided, however, that if a group of persons described in this clause (x) would have caused a Change of Control but for the fact that Loral Permitted Persons and/or MHR Permitted Persons collectively own securities having a 10% or greater participating equity interest in the Corporation, Acquireco or Telesat Canada, or any of their respective successors, as the case may be, immediately following such Change of Control, there shall thereafter be a Change of Control on the date that the Loral Permitted Persons and/or MHR Permitted Persons cease to own, collectively, securities having a 10% or greater participating equity interest in the Corporation, Acquireco or Telesat Canada, or any of their respective successors, as the case may be; or (y) PSP Permitted Persons no longer hold any participating equity in the Corporation, and the Loral Permitted Persons and/or MHR Permitted Persons cease to own, collectively, at least 10% of the participating equity interests of the Corporation, Acquireco or Telesat Canada, or any of their respective successors;

1H

“ Liquidation Value ” means the aggregate per Senior Preferred Share of (i) $1,000 and (ii) all accrued and unpaid preferential cumulative dividends on such Senior Preferred Share which, for such purpose, shall be calculated as if such cumulative dividends were accruing from day to day for the period from the expiration of the last period for which cumulative dividends have been paid up to the date of determination;

“ Obligation ” means any principal, interest, penalties, fees, indemnification, reimbursements, costs, expenses, damages and other liabilities, including any interest accruing subsequent to the date of filing of a petition of bankruptcy or the occurrence of any insolvency, bankruptcy, liquidation, dissolution, receivership, reorganization, winding-up or other similar proceedings;

“ Performance Failure ” means that any of the following events has occurred and is continuing: (i) the failure of the Corporation to pay the Annual Dividend Amount on all Senior Preferred Shares in any year on the date that such payment is due either in cash or in Senior Preferred Shares, while such failure shall be continuing, (ii) the failure of the Corporation to redeem all Senior Preferred Shares when required pursuant to section 7(d) and (iii) the failure of the Corporation to redeem such Senior Preferred Shares for which an offer of redemption is accepted in accordance with Section 7(e);

“ Refinance ” means, in respect of any indebtedness, Obligations incurred to refinance, extend, renew, defease, amend, restate, modify, supplement, restructure, replace, refund or repay or to issue other indebtedness in exchange or replacement for such indebtedness, including any indentures or credit facilities or commercial paper facilities with banks or other institutional lenders or investors that replace, refund or refinance any part of the such indebtedness, including any such replacement, refunding or refinancing facility or indenture that increases the amount borrowable thereunder or alters the maturity thereof;

“Senior Bridge Loan Facility” means the Senior Bridge Loan Agreement dated as of October 31, 2007 by and among Telesat Interco Inc., 4363230 Canada Inc. (before its amalgamation with Telesat Canada, and thereafter, Telesat Canada), the other borrowers thereunder, the guarantors party thereto, the lenders party thereto, Morgan Stanley Senior Funding, Inc., as Administrative Agent, UBS Securities LLC, as Syndication Agent, and the other agents party thereto, including any guarantees, instruments and agreements executed in connection therewith;

“ Senior Secured Credit Facilities ” means the Credit Agreement dated as of October 31, 2007 by and among Telesat Interco Inc., 4363230 Canada Inc. (before its amalgamation with Telesat Canada, and thereafter, Telesat Canada), the other borrowers thereunder, the guarantors party thereto, the lenders party thereto, Morgan Stanley Senior Funding, Inc., as Administrative Agent, UBS Securities LLC, as Syndication Agent, and the other agents party thereto, including any guarantees, collateral documents, instruments and agreements executed in connection therewith;

1I

“ Senior Subordinated Bridge Loan Facility ” means the Senior Subordinated Bridge Loan Agreement dated as of October 31, 2007 by and among Telesat Interco Inc., 4363230 Canada Inc. (before its amalgamation with Telesat Canada, and thereafter, Telesat Canada), the other borrowers thereunder, the guarantors party thereto, the lenders party thereto, Morgan Stanley Senior Funding, Inc., as Administrative Agent, UBS Securities LLC, as Syndication Agent, and the other agents party thereto, including any guarantees, instruments and agreements executed in connection therewith;

1J

Exhibit 10.3

SHAREHOLDERS AGREEMENT

B ETWEEN

PUBLIC SECTOR PENSION INVESTMENT BOARD

AND

RED ISLE PRIVATE INVESTMENTS INC.

AND

LORAL SPACE & COMMUNICATIONS INC.

AND

LORAL SPACE & COMMUNICATIONS HOLDINGS CORPORATION

AND

LORAL HOLDINGS CORPORATION

AND

LORAL SKYNET CORPORATION

( FOR PURPOSES ENUNCIATED IN S ECTION  10.10)

AND

JOHN P. CASHMAN

AND

COLIN D. WATSON

AND

TELESAT HOLDINGS INC. ( FORMERLY 4363205 CANADA INC .)

AND

TELESAT INTERCO INC. ( FORMERLY 4363213 CANADA INC .)

AND

TELESAT CANADA

AND

MHR FUND MANAGEMENT LLC

( FOR PURPOSES ENUNCIATED IN S ECTIONS 2.04, 4.05, 10.08 AND 10.09)

M ADE AS OF O CTOBER  31, 2007

TABLE OF CONTENTS

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SHAREHOLDERS AGREEMENT

This Agreement is made as of October 31, 2007, between

PUBLIC SECTOR PENSION INVESTMENT BOARD , a Special Act Corporation formed under the laws of Canada (“ PSP Parent ”)

and

RED ISLE PRIVATE INVESTMENTS INC. , a corporation incorporated under the laws of Canada ( “PSP” )

and

LORAL SPACE & COMMUNICATIONS INC. , a corporation incorporated under the laws of the State of Delaware (“ Loral Space ”)

and

LORAL SPACE & COMMUNICATIONS HOLDINGS CORPORATION , a corporation incorporated under the laws of the State of Delaware (“ Loral Parent ”)

and

LORAL HOLDINGS CORPORATION , a corporation incorporated under the laws of the State of Delaware (“ Loral ”)

and

LORAL SKYNET CORPORATION , a corporation incorporated under the laws of the State of Delaware (“ Loral Skynet ”)

and

JOHN P. CASHMAN , of the City of Toronto, in the Province of Ontario (“ TPI #1 ”, and together with TPI #2, the “ Third Party Investors ”)

and

COLIN D. WATSON, of the City of Toronto, in the Province of Ontario (“ TPI #2 ”, and together with TPI #1, the “ Third Party Investors ”)

and

TELESAT HOLDINGS INC. (formerly 4363205 CANADA INC.), a corporation incorporated under the laws of Canada (the “ Company ”)

and

TELESAT INTERCO INC. (formerly 4363213 CANADA INC.) , a corporation incorporated under the laws of Canada (“ Interco ”)

and

TELESAT CANADA , a corporation amalgamated under the laws of Canada ( “Telesat” )

and

MHR FUND MANAGEMENT LLC , a limited liability company formed under the laws of the State of Delaware

RECITALS

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FOR VALUE RECEIVED , the parties agree as follows:

ARTICLE 1 - INTERPRETATION

In this Agreement:

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provided that in any event (i) a Loral Change of Control shall be deemed to have occurred only once, and not on any subsequent date which may be otherwise considered to be a Loral Change of Control, and (ii) a Loral Change of Control (as defined in clauses (i) and (ii) above) shall be deemed not to have occurred as a result of the voting power (including for such purposes any voting power that would attach to shares issuable upon exercise of right of conversion into voting shares whether exercisable currently or contingently) of Mark Rachesky, whether directly or through entities managed or Controlled by him, in Loral Space being reduced for any reason other than (x) to effect a decision made by him personally, whether directly or indirectly through entities managed or Controlled by him, to reduce such voting power or (y) as a result of an agreement or arrangement entered into by him personally whether directly or through entities managed or Controlled by him; provided that, in the event of a Loral Change of Control, Loral shall notify the Company and PSP promptly upon the occurrence thereof, but in no event more than 10 days after the occurrence of such Loral Change of Control, and if such notification is not made within such 10 day period, the time periods for the exercise of rights by PSP set forth in this Agreement that are triggered from the date of a Loral Change of Control shall be extended by one day for each day (commencing from the end of such 10 day period) that the Company and PSP have not received such notice; provided that, for additional clarity, all rights of PSP that arise from a Loral Change of Control, and all rights of Loral that are modified or cease as a result of a Loral Change of Control, shall arise (in the case of PSP) or be modified or cease (in the case of Loral) as of the date of such Loral Change of Control, with the effect that only the time periods which PSP has to exercise its rights shall be affected by the notice requirements in this proviso.

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provided that where Shares are to be purchased by one Person (an “ Agent ”) (whether as agent, nominee, trustee, broker or otherwise), for the benefit of or on behalf of another Person (the “Principal ”), for the purpose of determining whether the Person purchasing such Shares is a Permitted Transferee, regard shall be had to both the Agent and the Principal.

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The division of this Agreement into sections, the insertion of headings and the provision of a table of contents are for convenience of reference only and are not to affect the construction or interpretation of this Agreement.

Unless otherwise specified, references in this Agreement to Sections and Schedules are to sections of, and schedules to, this Agreement.

Unless otherwise specified, words importing the singular include the plural and vice versa and words importing gender include all genders. The term “including” shall be interpreted to mean “including without limitation”.

Unless otherwise specified, references to time of day or date mean the local time or date in the City of Toronto, Ontario.

If under this Agreement any payment or calculation is to be made or any other action is to be taken, on or as of a day which is not a Business Day, that payment or calculation is to be made, and that other action is to be taken, as applicable, on or as of the next day that is a Business Day. Any extension of time will be included for the purposes of computation of interest.

This Agreement is governed by, and is to be construed and interpreted in accordance with, the laws of the Province of Ontario and the laws of Canada applicable in the Province of Ontario.

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If there is a conflict between the provisions of this Agreement and the Articles or By-laws, the provisions of this Agreement shall prevail to the extent permitted by the CBCA and other Applicable Law. If there is a conflict between any provision of this Agreement and any other document contemplated by or delivered under or in connection with this Agreement (except an instrument delivered under Section 10.08 or changes to the shareholding set out in Schedule B as a result of consummation of the transactions contemplated by the Skynet Asset Transfer Agreement or the Loral Alternative Subscription Agreement), the relevant provision of this Agreement shall prevail.

If any provision of this Agreement is or becomes illegal, invalid or unenforceable in any jurisdiction, the illegality, invalidity or unenforceability of that provision will not affect

For every provision of this Agreement, time is of the essence.

Unless otherwise provided herein, each reference to an enactment is deemed to be a reference to that enactment, and to the regulations made under that enactment, as amended or re-enacted from time to time.

The following Schedules are attached to and form part of this Agreement:

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This Agreement, and all documents contemplated by or delivered under or in connection with this Agreement, constitute the entire agreement between the parties with respect to the subject matter thereof and supersede all prior agreements, negotiations, discussions, undertakings, representations, warranties and understandings, whether written or oral, with respect to the subject matter thereof, including the letter agreement between Loral Space and PSP Parent dated December 14, 2006, and any memoranda or statements prepared by any of the parties or their respective counsel, including any document prepared for submission, or submitted, to BCE Inc., its advisors, or any other party, in connection with the acquisition by Interco of Telesat Canada, concerning the proposed terms and conditions of this Agreement.

Unless otherwise specified, all financial statements to be prepared in respect of any accounting period are to be prepared in accordance with GAAP applied on a basis consistent with that of the prior accounting period.

This Agreement is intended to be a unanimous shareholder agreement of the Company within the meaning of Section 146 of the CBCA. To the extent that this Agreement specifies that any matter may only be, or shall be, dealt with or approved by or requires action by a Shareholder or the Shareholders, the powers of the directors of the Company to manage the business and affairs of the Company with respect to those matters are correspondingly restricted.

ARTICLE 2 - REPRESENTATIONS, WARRANTIES AND COVENANTS

Each Shareholder severally represents and warrants to the other parties that:

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(1) Shareholdings in Telesat . The Company represents and warrants to the other parties hereto that it owns, beneficially and of record, all the issued and outstanding shares in the capital of Interco. Interco represents and warrants to the other parties hereto that it owns, beneficially and of record, all of the issued and outstanding shares of Telesat. The Company and Interco each acknowledge that under Section 5.01(1)(c), any sale, lease, exchange, transfer, encumbrance or other disposition of such shares of Interco owned by the Company, or of Telesat owned by Interco, must be authorized by Special Shareholder Approval.

(2) Control Over Interco and Telesat . The Company shall cause Interco to take or cause to be taken all such actions as may reasonably be required to give effect to the intent of this Agreement. Interco shall cause Telesat to take or cause to be taken all such action as may be reasonably required to give effect to the intent of this Agreement.

(3) Unanimous Shareholder Declaration . Without limiting Section 2.02(2), immediately after the execution and delivery of this Agreement, the Company, in its capacity as sole shareholder of Interco, and Interco, in its capacity as sole shareholder of Telesat, shall each make a written declaration in accordance with subsection 146(2) of the CBCA in form and substance satisfactory to the Shareholders. Such written declarations shall (x) restrict the powers of the directors of Interco, or Telesat, as the case may be, to manage its business and affairs in the same manner as this Agreement restricts the powers of the Directors to manage the business and affairs of the Company, (y) provide that the directors and executive officers of Interco and Telesat shall be the same as the Directors and Executive Officers, and (z) apply to Interco and Telesat terms and conditions of substantially the same tenor and effect as those contained in Article 3 and Article 5 . The Company shall not amend waive, vary, rescind or terminate such written declaration, and the Company shall not permit Interco or Telesat to, and Interco and Telesat shall not, amend, waive, vary, rescind or terminate such written declaration, unless so authorized by Extraordinary Resolution.

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(1) Voting . Each of the Shareholders agrees that (1) it will vote or cause to be voted all the Shares owned by it and otherwise act, and in all other respects use its reasonable best efforts and take all such steps as may be within its power, so as to comply with, and to cause its Controlled Affiliates and the Company to comply with, and act in a manner consistent with, the provisions of this Agreement and so as to implement this Agreement; and (2) if any Shareholder Nominee nominated by it refuses or fails to exercise his or her discretion in a manner consistent with this Agreement, notwithstanding anything to the contrary in this Agreement, such Shareholder shall take all necessary actions to remove such Shareholder Nominee as a Director and as a director of Interco and Telesat and the other Shareholders shall co–operate in such action.

(2) Subsidiaries.

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(1) Defined Terms . For the purposes of this Section 2.04:

(each of the Company, Interco, Telesat and such Shareholder, being an “Owner” ), regardless of its form, that is confidential, proprietary and/or not generally available to the public, including information relating in whole or in part to present and future products, services, business plans and strategies, marketing ideas and concepts (including those with respect to unannounced products and services), unpatented inventions, software, present and future product plans, pricing, financial data, product enhancement information, business plans, marketing plans, sales strategies, customer information or technical and business information, supplier and customer lists, marketing information, product information, trade secrets and computer software, but excluding any information:

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For greater certainty, this Agreement and the unanimous shareholder declaration of Interco and Telesat referred to in Section 2.02(3) constitute Confidential Information.

(2) Prohibited Disclosure . From and after the date hereof, each Recipient shall, and shall cause its Affiliates and Associates to, keep confidential and not disclose to any Person any Confidential Information except as permitted under Section 2.04(3).

(3) Permitted Disclosure . A Recipient may disclose Confidential Information:

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(4) Notwithstanding anything to the contrary contained in this Agreement, no press release or public statement that mentions PSP or Red Isle shall be made by any party to this Agreement without the prior consent of PSP, unless such mentioning is required by Applicable Law or the obligation of a party or its Affiliate pursuant to any listing agreement with or rules of any stock exchange or securities commission.

(5) Treatment of Confidential Information . Each Recipient shall use at least the same degree of care in maintaining the confidentiality of any Confidential Information in its possession or under its control as it uses in maintaining the confidentiality of its own confidential information of comparable nature and importance, but in no event with less care than is reasonable given the nature of the Confidential Information.

(6) Legal Compulsion . A Recipient (and its Affiliates and Associates) may disclose Confidential Information if so requested or required by any Governmental Authority of competent jurisdiction (by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process) and if at the time of such request or requirement the Recipient is reasonably satisfied (whether on the basis of express or implied undertakings or other reliable assurances, established administrative practice or requirements imposed by Applicable law) that the recipient of such Confidential Information will be required to maintain such Confidential Information in confidence.

(7) Remedies for Breach . Each party acknowledges that a breach or threatened breach of its obligations under this Section 2.04 to any Owner would result in irreparable harm to such Owner which could not be calculated or adequately compensated by recovery of damages alone. Each party therefore agrees that any Owner whose Confidential Information a Recipient discloses or threatens to disclose in breach of this Agreement shall be entitled to interim or permanent injunctive relief, specific performance and such other equitable remedies against such Recipient (or its Affiliates or Associates) to restrain or remedy such breach.

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Each of the Company, Interco and Telesat, by the execution of this Agreement, hereby acknowledges that it has actual notice of the terms hereof and hereby covenants with each of the other parties that it will at all times prior to the termination of this Agreement be governed by this Agreement in conducting its business and affairs and shall do or cause to be done all such acts, matters and things as may from time to time be necessary or appropriate to the carrying out of the terms and intent hereof.

ARTICLE 3 - CORPORATE GOVERNANCE

(1) Authority and Independence . The Board shall have overall responsibility for managing and supervising the management of the business and affairs of the Company; and the power and authority of the Directors shall be subject only to such restrictions as are imposed by Applicable Law and by this Agreement. Except as expressly restricted herein, as far as possible, the power, authority and discretion of the Board shall be exercised independently and at Arm’s Length from the Shareholders as if it were a board of directors of a publicly held corporation, with a view to the best interests of the Company as a whole, notwithstanding the fact that certain of the Directors are Shareholder Nominees.

(2) Information and Access: Business Conflicts . In order to resolve as expeditiously as possible, and in a manner that will promote the best interests of the Company, any conflicts of business objectives or interests between the Company, Interco or Telesat and any Shareholder (a “Conflicted Shareholder” ), the Board may retain, at the expense of the Company, Interco or Telesat, technical and other advisors to assist in such resolution, and the Chairperson of the Board or the Board as a whole shall have the right to consult with the Executive Officers concerning the matters giving rise to the conflict in the absence of any Shareholder Nominee that is an Interested Party of the Conflicted Shareholder and, if Loral or any of its Affiliates is the Conflicted Shareholder, any Loral Nominee. Any such conflict shall be resolved by the Board in the manner required by the CBCA and in accordance with Section 3.01(1).

(1) Composition and Term . The Board shall consist of not less than four and not more than ten Directors, with the number of Directors being initially set at ten Directors. If the number of Directors is reduced below ten, such reduction shall be made proportionately and as applicable at the relevant time between directors nominated by Loral and by PSP, and the number of Independent Directors, but there shall not be any reduction in the number of Directors except with the prior written consent of each of Loral and PSP. Each Director shall hold office until the next annual meeting of the Shareholders after his or her election.

(2) Identical Boards . The members of the board of directors of each of Interco and Telesat shall at all times be the same as the members of the Board. To accomplish this end, the resignation, removal or election of a Director of the Company shall be deemed to effect at the same time the resignation, removal or election, as the case may be, of the same director of Interco and Telesat, without further formality; however, as soon as practicable after any change

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in the composition of the Board, the Company with respect to Interco, and Interco with respect to Telesat, shall take or cause to be taken such steps as may be necessary to confirm, ratify and evidence such change in the board of directors of each of Interco and Telesat.

(3) Chairperson . The Board shall have a chairperson ( “Chairperson” ) who shall be elected annually by the affirmative vote of a majority of the Directors. The Chairperson may not be an employee or officer of either the Company, Interco or Telesat. The Chairperson shall be responsible for such matters as:

The Chairperson shall not have a tie-breaking or casting vote and, except as may be conferred upon him or her by resolution of the Directors related to the execution of contracts approved by the Board, or in respect of the negotiation and execution of contracts within parameters set by the Board, or except as conferred by him or her in the By-laws, shall not have the authority to bind the Company.

(4) Compensation . No Shareholder Nominee shall receive compensation for his or her services as a Director.

(5) Election and Qualification of Directors .

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(6) Committees of Directors . The Board may appoint from among its members and maintain an audit committee, pension committee and compensation committee and, subject to the following sentence, such other committees as the Board may approve from time to time and shall delegate to each such committee appropriate powers within its terms of reference to the extent permitted by this Agreement and by Applicable Law. The Board shall not appoint an executive committee, it being the intention of the Shareholders and the Company that such matters as would be customarily delegated to an executive committee shall be the responsibility of the full Board. Each such committee shall have three members and shall be chaired either by the Chairperson of the Company or by an Independent Director. The members of each committee shall be one of the four Independent Directors, one Loral Nominee and one PSP Nominee. No business shall be conducted, or shall continue, at any meeting of any committee unless a majority of the members present, and continuing to be present, are individual Canadians (within the meaning of section 2 of the Canadian Telecommunications Common Carrier Ownership and Control Regulations promulgated pursuant to the Telecommunications Act (Canada) who are not persons who are or have been Interested Parties in relation to any Shareholder who is a Non-Resident.

(7) Vacancies of Shareholder Nominees . If any vacancy on the Board occurs from the retirement, resignation, death or removal of a Loral Nominee, a PSP Nominee or an Independent Director, as the case may be, a replacement for such Loral Nominee or PSP Nominee may be nominated by Loral or PSP, respectively, or the Nominating Committee shall nominate a replacement Independent Director. Upon the occurrence of such a vacancy, the Directors shall call a special meeting of Shareholders, or each Shareholder shall sign a unanimous shareholders resolution, and each Shareholder agrees to exercise its voting rights at any such meeting, or sign any such unanimous shareholders resolution, in such manner as may be required to elect a replacement for the Loral Nominee, PSP Nominee or Independent Director in the manner aforesaid. The newly elected Loral Nominee, PSP Nominee or Independent Director shall serve the balance of the term of his or her predecessor.

(8) Removal of Shareholder Nominees .

(1) Qualifications . “Independent Director” means any Director who is not a Shareholder Nominee, who has been designated as a candidate for the office of Independent

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Director in accordance with this Section 3.03(3), who is qualified to act as a director under Applicable Law, and who at the time of his or her nomination:

Notwithstanding the foregoing, no action by a Director designated as an Independent Director shall be invalid by reason only that such Director did not meet the foregoing qualifications at the time such action was taken.

(2) Organizational Meeting . As soon as practicable following the Closing, the Shareholders will convene a special Shareholders’ meeting to elect the Directors.

(3) Independent Directors: Nominations and Challenges . Not later than 60 days before each meeting of Shareholders at which Independent Directors are to be elected, either of PSP or Loral may request the formation of a nominating committee to propose nominees for the Independent Directors to be elected at such meeting. Such nominating committee, once proposed, shall meet within 10 days of the date of proposal by either PSP or Loral. The members of such nominating committee shall be one director who is a Loral Nominee (designated by Loral), one director who is a PSP Nominee (designated by PSP) and in the case of the first nominating committee, TPI #1, after TPI #1 has been selected by PSP, and thereafter one Independent Director selected by the Independent Directors then in office. The nominating committee as so selected (the “Nominating Committee” ) shall meet and shall select, by majority vote, within 10 days of its first meeting, a slate of nominees of Independent Directors to be elected at the next meeting of Shareholders at which Directors are to be elected. Once a Nominating Committee is formed, each member of the Nominating Committee shall take part in, and shall vote on, the selection of each nominee for the position of Independent Director. The Nominating Committee shall report to each of PSP and Loral as to its proposed nominees, providing such information in reasonable detail as to the identity and background of each individual as will enable PSP and Loral to determine whether such individual meets the qualifications referred to in Section 3.03(1). During the 10 days following the date on which such notification is received, either PSP or Loral shall have the right and opportunity to interview each proposed nominee, to examine his or her credentials and to challenge, acting reasonably and in good faith, the proposed nomination on the basis that the proposed nominee does not meet all

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the qualifications referred to in Section 3.03(1). Upon such challenge being made in a timely manner, reasonably and in good faith, the proposed nomination shall be withdrawn and the Nominating Committee shall propose a new nominee. Any such challenge shall be presumed to be made reasonably and in good faith, but such presumption may be rebutted by satisfactory evidence to the contrary accepted as such, if required, by an Arbitrator in accordance with Article 9 or by a court of competent jurisdiction.

(4) Voting for Independent Directors . Subject to the right to challenge a nominee as set forth in Section 3.03(3), all Shareholders owning Shares which may be voted for the election of Directors shall vote all such Shares to elect as Independent Directors the nominees selected by the Nominating Committee.

(5) Removal of Independent Directors . Except as provided in Section 3.03(3), no Independent Director may be removed from office except by Extraordinary Resolution. An Independent Director who fails at any time to meet the requirements of independence set forth in Section 3.03(1) shall forthwith resign from the Board and the board of directors of Interco and Telesat and, if he or she fails to do so, the Shareholders shall cooperate with each other in convening as soon as practicable a meeting of the Nominating Committee to select a new nominee, and a Shareholder meeting to effect, and at such meeting shall vote to effect, the removal of such Director and the election of a new Independent Director.

(1) General . The Board shall hold regular meetings no less frequently than once each quarter. The Shareholders and the Corporation shall endeavour to ensure that a majority of the meetings of the Board in each calendar year shall be held in Canada. Any Director may requisition a directors’ meeting in the manner provided in the By-laws of the Company. At each meeting of the Board, the Executive Officers shall report to the Board as directed by the Board from time to time.

(2) Quorum . In addition to any requirements under Applicable Law, a quorum for meetings of the Board shall be six of the Directors then in office (reduced in proportion to any reduction in the number of directors made pursuant to Section 3.02(1)), including one PSP Nominee and one Loral Nominee. No business shall be conducted, or shall continue, at any meeting of the Board if and when a quorum ceases to exist or unless a majority of the members present and continuing to be present are individual Canadians (within the meaning of Section 2 of the Canadian Telecommunications Common Carrier Ownership and Control Regulations promulgated pursuant to the Telecommunications Act (Canada)) who are not persons who are or have been Interested Parties in relation to, or nominees of, any Shareholder who is a Non-Resident. Notwithstanding the foregoing, if more than three (reduced in proportion to any reduction in the number of directors made pursuant to Section 3.02(1))of the Directors then in office are Interested Directors (as defined in Section 3.04(4)) in respect of a matter to come before the meeting, a quorum shall exist and shall be deemed to continue to exist during consideration of that matter so long as (a) a majority of the Directors who are not Interested Directors with respect to such matter is present at the meeting and at least two of the Directors present are Independent Directors and (b) if some or all of the Directors who are Interested Directors are not nominees of Non-Residents, a majority of the Directors present must be

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Canadians (within the meaning of Section 2 of the Canadian Telecommunications Common Carrier Ownership and Control Regulations promulgated pursuant to the Telecommunications Act (Canada)) who are not nominees of Non-Residents (and in order to constitute such quorum for consideration of the interested matter only, it shall be permissible for some or all of the Directors who are nominees of Non-Residents to absent themselves from that portion of the meeting at which the interested matter is being considered pursuant to Section 3.04(4)). If a quorum of directors is not present at a meeting of directors duly called because of the absence at such meeting of any Loral Nominee or any PSP Nominee, a quorum of directors at the next duly called meeting of directors shall not require the presence of a nominee of the Shareholder whose nominees prevented the formation of a quorum of directors at the last duly called meeting.

(3) Vote . Any matter put before the Directors shall be decided by the affirmative vote of a majority of the Directors present at the meeting who are not Interested Directors in respect of that matter, or a resolution signed by all of the directors.

(4) Interested Matters . In addition to any requirements under Applicable Law, at any meeting at which the Board considers any matter involving a material agreement or transaction or proposed material agreement or transaction with the Company, Interco or Telesat to which a Shareholder (an “Interested Shareholder”) or any of its Affiliates or Associates is a party, or the transfer or redemption of any Fixed Rate Preferred Shares, (in each case an “Interested Matter” ), then any Shareholder Nominee who is an Interested Party of the Interested Shareholder (collectively, the “Interested Directors” ), shall be required by the Chairperson to leave the meeting (after having an opportunity to make a presentation to the Board regarding the Interested Matter) while such Interested Matter is being considered, unless such requirement is waived by a majority vote of the Directors who are not Interested Directors, and shall abstain from voting thereon. For greater certainty, (x) a matter referred to in Section 3.05(1)(e) or Section 3.05(1)(l) shall be considered an Interested Matter in respect of each Loral Nominee and (y) a matter referred to in Section 3.05(1)(k) shall be considered an Interested Matter in respect of each PSP Nominee.

(1) The following matters must be brought to a vote of the Board and decisions thereon may not be delegated by the Board to a committee thereof or to officers or employees of the Company:

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The execution and delivery by the Company of the Skynet Asset Transfer Agreement, the Skynet Sale Agreement and the Loral Alternative Subscription Agreement and all documents required for the consummation of the transactions contemplated therein, the redemption of the Redeemable Common Shares and Redeemable Non-Voting Participating Preferred Shares, if any, held by Loral at the time of the closing of the Skynet Asset Transfer Agreement, and the issuance to Loral of Common Shares or Non-Voting Participating Preference Shares, on terms consistent with the Skynet Asset Transfer Agreement and the Loral Alternative Subscription Agreement, is hereby approved by the parties hereto and is not subject to the provisions of Section 3.04(4) or Section 3.05 (other than as specifically referred to in Section 3.05(1)(l)).

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(1) Executive Officers . Each of the Company, Interco and Telesat shall have a CEO, a Chief Financial Officer, a Chief Operating Officer and such other Executive Officers as are provided in the By-laws and the by-laws of Interco or Telesat, as the case may be. The officers of the Company shall be the same persons, and shall have the same designations, as in each of Interco and Telesat. There shall be no change in the titles or duties of the Executive Officers and no appointment of persons with similar powers or authorities except by amendment to the By-laws and the by-laws of Interco or Telesat. At the first meeting of the Board after the occurrence of any vacancy in the office of any Executive Officer, the Board shall appoint executive officers to fill such vacancies.

(2) CEO.

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(3) Term and Appointment of Other Executive Officers . The Board shall have the sole and absolute authority to elect, appoint, hire, remove or dismiss any Executive Officer of the Company. At the first meeting of the Board or after the occurrence of any vacancy among Executive Officers, the Board shall appoint each Executive Officer for which a vacancy then exists.

For so long as any PSP Nominee or any Loral Nominee, as the case may be, is a Director on the Board, each of the Company, Interco and Telesat shall permit each of PSP or Loral, as the case may be, to designate a person (any such person, an “Observer” ) to attend meetings of the Board as an observer, and each such Observer shall be entitled to receive all materials relevant to such meeting as provided to the Directors; provided that each of PSP and Loral may designate a different person to be its Observer from time to time as it wishes; provided, further, that the Shareholder who designates such Observer undertakes that such Observer shall keep all information received or observed in his or her capacity as an Observer confidential to the same extent as such Observer would be obligated to do as a Director; provided, further, that the Company reserves the right to exclude any such Observer from access to any material or meeting or portion thereof if the Company believes upon advice of counsel that such exclusion is reasonably necessary to preserve attorney-client privilege, or if the Company, acting through its Board of Directors, believes that access to any such material or meeting, or portion thereof, is inappropriate under the circumstances.

ARTICLE 4 - SCOPE AND OBJECTIVES; BUSINESS PLAN

(1) Initial Business Plan . Each party acknowledges that it has received a certified copy of the Business Plan initially prepared by management of Telesat, with the assistance of management of Loral in relation to the assumed consummation of the transactions contemplated by the Skynet Asset Transfer Agreement and the Skynet Sale Agreement with effect from September 1, 2007 (the “Initial Business Plan” ), and the Initial Business Plan is hereby approved by the parties hereto. The Initial Business Plan shall take effect on the date of this Agreement and for greater certainty shall not require the approval of the Board. The Initial Business Plan sets forth the objectives of Telesat for the period ending on December 31, 2012.

(2) Scope and Contents of Business Plans

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(3) Budgets

No later than 60 days before the end of each fiscal year, the CEO shall prepare or cause to be prepared and shall present to the Board for approval, a budget for the next fiscal year (each, an “ Annual Budget ”). Each Annual Budget shall consist of an income statement, balance sheet and statement of cash flows in detail at least equivalent to those contained in the Initial Business Plan, together with supporting schedules as would reasonably accompany an annual budget. The statement of cash flows shall include a line item for capital expenditures over $2 million, with a schedule of supporting detail. The Annual Budget shall be presented on a monthly basis showing the actual results for the previous year and the budget year budgeted forecasts.

The Business Plan shall be reviewed and updated by management in the event that the transactions contemplated by the Skynet Asset Transfer Agreement and the Skynet Sale Agreement do not occur by October 31, 2007 and/or in the event that the transactions contemplated by the Loral Alternative Subscription Agreement are consummated. The Business Plan shall also be reviewed and updated by management of the Company each year, and presented to the Board by the CEO, no later than 30 days before the end of each fiscal year (the “ Business Plan Update Date ”). This Business Plan update shall reflect the actual results for the previous year as well as the budget for the subsequent year. In addition, management will review, and if necessary, update, the Business Plan for presentation by the CEO to the Board no later than seven months after the close of each fiscal year. The Business Plan shall also be reviewed and updated by management of the Company and presented by the CEO to the Board no later than 60 days after there shall have occurred a material change to the business of the Company. Upon presentation of any draft revised Business Plan by the CEO, the Board shall review such plan and shall ratify or amend plan information so that the Business Plan in effect at any time during the term of this Agreement will constitute a rolling five-year business plan for

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the Company. If the Board is unable to agree by any Business Plan Update Date on the Business Plan for the next fiscal year, then the Business Plan then in effect shall be controlling. The Board may review and amend the Business Plan at any time during the fiscal year upon the recommendation of the CEO.

Subject to approval by the Board under Section 3.05(1)(d) in accordance with Section 3.04(4), the Company, Interco or Telesat may purchase any equipment, products and services from Loral Space and its Affiliates on commercially reasonable terms. The Company, Interco and Telesat shall provide to Loral and its Affiliates a first right to accept an offer to procure equipment, products or services that is issued by Telesat to more than one bidder or to negotiate, including in the case of a sole source procurement, for the purchase of equipment, products and services in those areas in which Loral and its Affiliates regularly carry on business, subject to the approval of the Board under Section 3.05(1)(d) in accordance with Section 3.04(4) with regard to any contract that results from such first rights of acceptance or negotiation. Such first right of acceptance or negotiation shall not constitute an obligation on the part of the Company or Telesat to deal exclusively with, or purchase from, Loral and its Affiliates.

(1) Covenant . Loral Space agrees, for the benefit of the Company and its Subsidiaries, including Interco and Telesat, that, after the completion of the transactions contemplated by the Skynet Asset Transfer Agreement and the Loral Sale Agreement, and thereafter for so long as Loral (or any Person who is a Permitted Transferee of Loral within the meaning of clause (a) of the definition of Permitted Transferee) owns any Shares, it shall not, directly or indirectly, through any Subsidiary (other than the Company and its Subsidiaries, including Interco and Telesat), engage in, manage, consult with, or invest in securities of any Person having participation rights in excess of 2% of the profits of, a Satellite Communications Business. In addition, until completion of the transactions contemplated by the Skynet Asset Transfer Agreement and the Skynet Sale Agreement, up to but not after the Alternative Subscription Date as defined in the Loral Alternative Subscription Agreement, Loral Space and its Subsidiaries shall hold any rights or interests in any Satellite Communication Business which any of them acquires after the date hereof for the benefit of Loral Skynet and to transfer such rights and interests to the Company, in conjunction with the closing of the transactions contemplated by the Skynet Asset Transfer Agreement and the Skynet Sale Agreement.

(2) Exceptions . The restrictions set out in Section 4.04(1) shall not apply to restrict Loral from (i) owning equity interests in Globalstar, Inc., Enlaces Integra, S.A. de C.V. and Xtar LLC; (ii) owning its current equity interest in Satellites Mexicanos, S.A. de C.V. and acquiring any additional equity interest therein pursuant to the exercise of rights (including rights of first offer, rights of first refusal and pre-emptive rights) under existing documents (including charter, by-laws and other organizational documents) related thereto (iii) engaging in, managing, consulting with or investing in Satellite Communications Businesses that utilize the X-band frequency or that provide service to the government of the United States to the extent the Company and its Subsidiaries are unable, whether by operation of law or otherwise, to provide such service; or (iv) owning interests in Satellite Communications Businesses, or acquiring rights

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to satellite transponders, acquired by Space Systems/Loral, Inc. ( “SS/L” ) in connection with or related to awards of satellite construction contracts from its customers, provided, that, at the Company’s option, the Company may acquire such interests from SS/L at their fair market value, (v) owning interests in any opportunity which the Board has rejected as an opportunity of the Company or Telesat, or which the Board has approved, but subsequently rejected, or which the Company was unable to pursue due to the failure of PSP to provide funding therefor upon exercise of pre-emptive rights or (vi) owning, acquiring, engaging in, managing, consulting with, or investing in such businesses or Persons as shall be approved by the Board in accordance with Section 3.04(4).

(1) Each of Loral and Loral Space shall not, and shall cause its directors, officers, employees (in their capacity as such) and Subsidiaries not to, directly or indirectly, while Loral (or any Person who is a Permitted Transferee of Loral within the meaning of clause (a) of the definition of Permitted Transferee) is a Shareholder and for a period of one year thereafter, cause, solicit, induce or encourage any employee who is a member of senior management of the Company and any of its Subsidiaries, including Interco and Telesat, to leave such employment or hire, employ or otherwise engage any such individual, provided that the foregoing shall not prohibit any general solicitation of employees that is not targeted at such persons.

(1) The covenants and undertakings contained in Sections 4.04 or 4.05 relate to matters which are of a special, unique and extraordinary character and a violation of any of the terms of Sections 4.04 or 4.05 will cause irreparable injury to the Company, Interco or Telesat, the amount of which will be impossible to estimate or determine and which cannot be adequately compensated. Accordingly, the remedy at law for any breach of Sections 4.04 or 4.05 will be inadequate. Therefore, the Company, Interco or Telesat will be entitled to a temporary and permanent injunction, restraining order or other equitable relief from any court of competent jurisdiction in the event of any breach of Sections 4.04 or 4.05 without the necessity of proving actual damage or posting any bond whatsoever. The rights and remedies provided by this Section 4.06 are cumulative and in addition to any other rights and remedies which the Company, Interco or Telesat may have hereunder or at law or in equity.

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ARTICLE 5 – SHAREHOLDER MATTERS

(1) None of the following actions shall be taken by the Company, or by the Company to authorize any such action to be taken by Interco, or by Interco to authorize any such action to be taken by Telesat, unless, in addition to any shareholder approval required as a mandatory provision of the CBCA, such action is authorized by Special Shareholder Approval:

(2) None of the following actions shall be taken by the Company, or by the Company to authorize any such action to be taken by Interco, or by Interco to authorize any such action to be taken by Telesat, unless, in addition to any shareholder approval required as a mandatory provision of the CBCA, such action is authorized by a Loral Approval:

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(1) The provision of Section 5.01(2) shall cease to apply upon a Loral Change of Control.

(2) The provisions of Section 5.01(2) shall not apply in respect of any matter where the Company is proposing to make an investment in any business in which Loral or an Affiliate of Loral is also considering making an investment.

(3) If a Loral Default shall occur, and as a result thereof and immediately thereafter, Loral shall own less than 45% of the Equity Shares, Section 5.01(2), and the drag-along rights of Loral and any other Selling Loral Shareholder contained in Section 7.08(2), shall cease to apply.

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For so long as PSP owns any Shares, any change in the business of the Company, Interco or Telesat that would be in breach of the Investment Policies of PSP (as set forth in Schedule G hereto) shall require the written approval of PSP. PSP acknowledges that the operation of satellites and the provision of satellite services to customers in the ordinary course of business of Telesat does not breach the Investment Policies of PSP. The Company, Interco and Telesat each agree to take into account PSP’s social and environmental responsibility policies in making any changes to the business of the Company, Interco or Telesat.

(1) Quorum . The quorum for the transaction of business at any meeting of the Shareholders shall be two Persons present in person or by proxy holding at least 51% of the Shares entitled to vote on each matter to be voted upon at the meeting and held by Persons who are not Non-Residents. No meeting of the Shareholders shall continue with the transaction of business if and when a quorum ceases to exist.

(2) Votes . Except as otherwise provided in this Agreement or in the CBCA, all matters before the Shareholders shall be decided by a majority of the votes cast on the matter. The chairman of a meeting of the Shareholders shall not have a second or casting vote.

(3) Any Shareholder holding more than 5% of the votes that may be cast at a meeting of shareholders shall have the right to call a meeting of the Shareholders in accordance with the procedures set out in the By-laws of the Company.

ARTICLE 6 – FINANCE AND RELATED MATTERS

(1) Restrictions on Issue . The Company may not

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otherwise than in accordance with this Section 6.01.

(2) Notice of Pre-Emptive Right . Except as permitted pursuant to this Section 6.01, every offer of Shares by the Company shall be made by notice (“ Notice of Pre-Emptive Right ”) to each holder of Equity Shares (each Shareholder for the purposes of this Section 6.01(2) being referred to as a “ Pre-Emptive Rights Shareholder ”) from the secretary of the Company which shall set forth:

(3) Limits on Subscriptions. Each Pre-Emptive Rights Shareholder may subscribe for its Pro Rata Proportion of the Offered Treasury Shares by giving notice of its subscription (“ Notice of Subscription ”) to the Company within 20 Business Days after receipt of the Notice of Pre-Emptive Right (the “ Subscription Period ”). A Pre-Emptive Rights Shareholder wishing to subscribe for Offered Treasury Shares in excess of such Pro Rata Proportion shall, in its Notice of Subscription, specify the number or dollar amount, as the case may be, of Offered Treasury Shares in excess of its Pro Rata Proportion that it wishes to purchase, subject to availability and to all necessary Regulatory Approvals being obtained.

(4) Undersubscribed Issues. If a Pre-Emptive Rights Shareholder does not subscribe for its Pro Rata Proportion of Offered Treasury Shares within the Subscription Period, the unsubscribed Offered Treasury Shares shall be used to satisfy any subscriptions of other Shareholders for Offered Treasury Shares in excess of their Pro Rata Proportions (as set out in such Shareholder’s Notice of Subscription) but no Shareholder shall be bound to take up any Offered Treasury Shares in excess of the amount it requested to purchase in its Notice of Subscription.

(5) Fractional Shares. If the Offered Treasury Shares of any issue are not capable, without division into fractions, of being offered to or being divided between the parties in their Pro Rata Proportions, the Offered Treasury Shares shall be offered to or divided between the parties as nearly as may be in these proportions.

(6) Issue and Payment. Each Pre-Emptive Rights Shareholder subscribing for Offered Treasury Shares shall pay for, and the Company shall issue, the Offered Treasury Shares on the Subscription Date.

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(7) Sales to Third Parties . If not all of the Offered Treasury Shares of any issue are subscribed for within the Subscription Period, the Company may, during the following period of 60 Business Days, offer and sell to any Permitted Purchaser all or any of the Shares not taken up by the Pre-Emptive Rights Shareholders at a price which is not less than the subscription price offered to the Pre-Emptive Rights Shareholders pursuant to this Section 6.01 and on terms and conditions which are no more favourable to the Permitted Purchaser than those offered to the Pre-Emptive Right Shareholders under this Section 6.01.

(8) Classes of Shares . Notwithstanding the description of the Offered Treasury Shares set out in the Notice of Pre-Emptive Rights, any Pre-Emptive Rights Shareholder which delivers a Notice of Subscription in respect of Offered Treasury Shares which are Equity Shares, but which would be unable to own the class of Offered Treasury Shares described in the Notice of Pre-Emptive Rights, shall be entitled to specify in its Notice of Subscription that it wishes to purchase an equivalent number of Equity Shares of a class which it is permitted to own under Applicable Laws, and in such event, the Directors shall authorize for issuance, and the Company shall issue, to such Pre-Emptive Rights Shareholder the number of Equity Shares of the class so specified, in lieu of the authorization and issuance of that number of Offered Treasury Shares to that Pre-Emptive Rights Shareholder.

If the Company shall not have completed an initial public offering of its Equity Shares by the fourth anniversary of the Effective Date, either PSP or Loral shall have the right at any time thereafter, by notice to the Company and to all other holders of Equity Shares, to cause the Company to conduct an initial public offering of its Equity Shares. Within 90 days after a Loral Change of Control, PSP shall have the right by notice to the Company and all other holders of Equity Shares to cause the Company to conduct an initial public offering (a “ Change of Control Offering ”). At any time after the Company has completed an initial public offering, each of PSP and Loral (and MHR Fund, upon becoming a direct holder of Shares, from which time it shall be a Shareholder) shall have the right, on not more than two occasions, by notice to the Company and the holders of Equity Shares, to require the Company to qualify a prospectus or registration statement for the distribution of Equity Shares held by such Shareholder or MHR Fund (a “Registration Event” ). In addition, at any time after the Company has completed a Change of Control Offering, PSP shall have the right (such right, the “ Change of Control Demand Right ”), by notice to the Company and the holders of Equity Shares, to require the Company to qualify a prospectus or registration statement for the distribution of Equity Shares held by PSP (a “ Change of Control Registration Event ”) by the later of (x) six months following the Change of Control Offering or (y) one month after the expiration of the lock-up required by the underwriters in connection with the Change of Control Offering, and such right shall not count towards the rights set forth in the immediately preceding sentence. Upon the giving of a notice of initial public offering, the Shareholders will co-operate in good faith to facilitate an initial public offering of Equity Shares of the Company (including either, or a combination of, a primary and secondary distribution) subject to the following conditions:

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In an initial public offering of the Company, and any subsequent offering of Common Shares of the Company, each of PSP and Loral (and MHR Fund, if then a holder of Equity Shares) shall be entitled to request the inclusion in such offering document all or part of such Shareholder’s

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Equity Shares. If the underwriter managing the offering advises the Shareholders who have requested inclusion of their Shares in the offering, including any Shareholder exercising demand registration rights, pursuant to a Change of Control Demand Right or upon the happening of a Registration Event (collectively, the “Included Holders” ) that marketing considerations require a limitation on the number of Shares offered, then the number of Shares to be included in such underwritten public offering shall be reduced to a number, reasonably deemed satisfactory by such managing underwriter, provided that the securities to be included in the offering shall be determined in the following sequence: