LORAL SPACE & COMMUNICATIONS LTD
1996 AMENDED AND RESTATED STOCK OPTION PLAN
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<TYPE>EX-10.7
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<DESCRIPTION>1996 AMENDED AND RESTATED STOCK OPTION PLAN
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                        LORAL SPACE & COMMUNICATIONS LTD.
                             1996 STOCK OPTION PLAN
                            (AS AMENDED AND RESTATED)

         1.       PURPOSES.

                  The Loral Space & Communications Ltd. 1996 Stock Option Plan
(the "Plan") is intended to attract and retain the best available personnel for
positions of substantial responsibility with Loral Space & Communications Ltd.,
a Bermuda corporation (the "Company"), and certain entities directly or
indirectly controlled by or affiliated with the Company, and to provide
additional incentive to such persons to exert their maximum efforts toward the
success of the Company. The above aims will be effectuated through the granting
of certain options ("Options") to purchase shares of the Company's common stock,
par value $0.01 per share (the "Common Stock"), and shares of Common Stock
subject to certain restrictions ("Restricted Stock," and together with Options,
"Awards"). Under the Plan, the Company may grant "incentive stock options"
("ISOs") within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"), or Options which are not intended to be ISOs
("Non-Qualified Options"), provided that ISOs may be granted only to employees
of the Company or any "subsidiary corporation" within the meaning of Section 424
of the Code (a "Subsidiary").

                  By action of the Board of Directors on April 11, 1996, the
Plan was amended to increase from 500,000 to 2,000,000 the maximum number of
shares of Common Stock for which Options may be granted to any single Holder (as
hereinafter defined) during any partial or full calendar. By action of the Board
of Directors on June 18, 1996, the Plan was amended to allow for limited
transferability of Options at the discretion of the Committee (as hereinafter
defined). By action of the Board of Directors on March 10, 1998, and with the
approval of the Company's shareholders on April 28, 1998, the Plan was amended
to increase the number of shares of Common Stock available for issuance under
the Plan to 18,000,000. By action of the Board of Directors on November 11,
2002, the Plan was amended and restated to allow for the grant of Restricted
Stock. The Plan as set forth herein reflects such amendments and the amendment
and restatement.

         2.       ADMINISTRATION OF THE PLAN.

                  The Plan shall be administered by a committee (the
"Committee") consisting of at least two persons, appointed by the Board of
Directors of the Company (the "Board of Directors"), each of whom shall be an
"outside director" for purposes of Section 162(m) of the Code. To the extent
necessary or appropriate to qualify Awards granted under the Plan for the
exemption provided by Rule 16b-3 promulgated under the Securities Exchange Act
of 1934 (the "Exchange Act"), such grants may be approved or ratified by the
full Board or by a separate committee thereof. Subject to the preceding sentence
and within the limits of the express provisions of the Plan, the Committee shall
have the authority, in its discretion, to take the following actions under the
Plan:

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                  (a)      to determine the individuals to whom, and the time or
times at which, Awards shall be granted, the number of shares of Common Stock to
be subject to each Award and, in the case of Options, whether such Options shall
be ISOs or Non-Qualified Options;

                  (b)      to interpret the Plan;

                  (c)      to prescribe, amend and rescind rules and regulations
relating to the Plan;

                  (d)      to determine the terms and provisions of the
respective stock option or restricted stock agreements granting Options or
Restricted Stock, including the date or dates upon which Options shall become
exercisable or Restricted Stock shall vest, which terms need not be identical;

                  (e)      to accelerate the vesting of any outstanding Awards;
and

                  (f)      to make all other determinations and take all other
actions necessary or advisable for the administration of the Plan.

                  In making such determinations, the Committee may take into
account the nature of the services rendered by such individuals, and such other
factors as the Committee, in its discretion, shall deem relevant. An individual
to whom an Award has been granted under the Plan is referred to herein as a
"Holder". The Committee's determinations on the matters referred to in this
Section 2 shall be conclusive.

                  The Committee may, in its discretion, delegate some or all of
its authority hereunder to one or more officers of the Company or its
Subsidiaries, provided that the Committee shall not delegate such authority with
respect to any grant of Awards to persons who are subject to the provisions of
Section 16 of the Exchange Act ("Insiders").

         3.       SHARES SUBJECT TO THE PLAN.

                  (a)      The total number of shares of Common Stock which may
be issued pursuant to Awards granted under the Plan shall not exceed 18,000,000,
subject to adjustment as provided in Section 8 hereof. The Company shall at all
times while the Plan is in force reserve such number of shares of Common Stock
as will be sufficient to satisfy the requirements of outstanding Options. The
shares of Common Stock to be issued upon exercise of Options shall be authorized
and unissued or reacquired shares of Common Stock. The shares of Common Stock
relating to the unexercised portion of any expired, terminated or cancelled
Option shall thereafter be available for the grant of Options under the Plan.

                  (b)      Awards may be granted under the Plan by the Company
directly or, if authorized by the Board or the Committee, by the Company's
subsidiary, Loral SpaceCom Corporation, a Delaware corporation ("Loral
SpaceCom"), subject to such terms and conditions as shall be agreed to between
the Company and Loral SpaceCom. Without limiting the generality of the
foregoing, (i) Awards granted by Loral SpaceCom to Insiders shall be approved by
the Committee and, if appropriate, the Board; (ii) the performance of Loral
SpaceCom with respect to Awards granted by it may be guaranteed by the Company;
and (iii) as a condition to

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the issuance of Shares upon grant of Restricted Stock or exercise of Options
granted by Loral SpaceCom, the Company may require Loral SpaceCom to pay to the
Company the full Fair Market Value of the Shares then being issued, in such form
of consideration as shall be acceptable to the Company.

         4.       ELIGIBILITY.

                  (a)      ISOs may be granted under the Plan only to employees
of the Company or a Subsidiary. Non-Qualified Options may be granted under the
Plan only to employees of (i) the Company, (ii) a Subsidiary, or (iii) entities
directly or indirectly controlled by or affiliated with the Company and
designated by the Committee ("Designated Entities"). The term "Company," when
used in the context of a Holder's employment, shall be deemed to include the
Company, Subsidiaries and Designated Entities.

                  (b)      Nothing contained in the Plan shall be construed to
limit the right of the Company to grant stock options otherwise than under the
Plan for proper corporate purposes.

         5.       TERMS OF OPTIONS.

                  The terms of each Option granted under the Plan shall be
determined by the Committee consistent with the provisions of the Plan,
including the following:

                  (a)      The purchase price of the shares of Common Stock
subject to each Option shall be fixed by the Committee, in its discretion, at
the time such Option is granted; provided, that (i) in no event shall the per
share purchase price of an ISO be less than the Fair Market Value of a share of
Common Stock on the date of grant; (ii) in no event shall the per share purchase
price of a Non-Qualified Option be less than the lower of (A) 50% of the Fair
Market Value of a share of a Common Stock on the date of grant, and (B) $20
below the aforesaid Fair Market Value; and (iii) in no event shall the per share
purchase price of any Option be less than the par value per share of the Common
Stock.

                  (b)      The dates on which each Option (or portion thereof)
shall be exercisable shall be fixed by the Committee, in its discretion.

                  (c)      The expiration of each Option shall be fixed by the
Committee, in its discretion. No Option shall be exercisable after the
expiration of ten (10) years from the date of its grant and each Option shall be
subject to earlier termination as determined by the Committee, in its
discretion.

                  (d)      Options shall be exercised by the delivery to the
Company (or Loral SpaceCom, in the case of Options granted by Loral SpaceCom) at
its principal office or at such other address as may be established by the
Committee (Attention: Corporate Treasurer) of written notice of the number of
shares of Common Stock with respect to which the Option is being exercised
accompanied by payment in full of the purchase price of such shares. Unless
otherwise determined by the Committee at the time of grant, payment for such
shares may be made (i) in cash, (ii) by certified check or bank cashier's check
payable to the order of the Company in the amount of such purchase price, (iii)
by delivery to the Company of shares of

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Common Stock having a Fair Market Value equal to such purchase price, (iv) by
irrevocable instructions to a broker to deliver promptly to the Company the
amount of sale or loan proceeds necessary to pay such purchase price and to sell
the shares of Common Stock to be issued upon exercise of the Option and deliver
the cash proceeds less commissions and brokerage fees to the Holder or to
deliver the remaining shares of Common Stock to the Holder, or (v) by any
combination of the methods of payment described in (i) through (iv) above.

                  (e)      A Holder shall not have any of the rights of a holder
of the Common Stock with respect to the shares of Common Stock subject to an
Option until such shares are issued to such Holder upon the exercise of such
Option.

                  (f)      (i) Except as provided in Section 5(g)(ii), (A) an
Option shall not be transferable, except by will or the laws of descent and
distribution, and may be exercised, during the lifetime of a Holder, only by the
Holder, and (B) no Option granted under the Plan shall be subject to execution,
attachment or other process.

                           (ii) The Committee, in its sole and absolute
discretion, may provide in any option agreement or amendment thereto, that the
Holder may transfer Non-Qualified Options to his children, grandchildren or
spouse, or to one or more trusts for the benefit of such family members or
partnerships in which such family members are the only partners, provided that
(A) the Holder does not receive any consideration for such transfer, and (B) the
transferee of such Non-Qualified Options remains subject to all the terms and
conditions that were applicable to such Non-Qualified Options immediately prior
to such transfer.

                  (g)      For purposes of the Plan, as of any date when the
Common Stock is quoted on the National Association of Securities Dealers
Automated Quotation System National Market System ("NASDAQ-NMS") or listed on
one or more national securities exchanges, the "Fair Market Value" of the Common
Stock as of such date shall be deemed to be the mean between the high and low
sale prices of the Common Stock reported on the NASDAQ-NMS or the principal
national securities exchange on which the Common Stock is listed and traded on
the immediately preceding date, or, if there is no such sale on that date, then
on the last preceding date on which such a sale was reported. If the Common
Stock is not quoted on the NASDAQ-NMS or listed on an exchange, or
representative quotes are not otherwise available, the "Fair Market Value" of
the Common Stock shall mean the amount determined by the Committee to be the
fair market value based upon a good faith attempt to value the Common Stock
accurately.

                  (h)      In no event shall any single Holder be granted under
the Plan Options covering more than 2,000,000 shares of Common Stock during any
partial or full calendar year during which the Plan is existence, subject to
adjustment as provided in Section 8 hereof.

         6.       SPECIAL PROVISIONS APPLICABLE TO ISOs.

                  The following special provisions shall be applicable to ISOs
granted under the Plan.

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                  (a)      No ISOs shall be granted under the Plan after ten
(10) years from the earlier of (i) the date the Plan is adopted, or (ii) the
date the Plan is approved by the Company's shareholders.

                  (b)      ISOs may not be granted to a person who owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company, any Subsidiary, or any "parent corporation" (a "Parent")
of the Company within the meaning of Section 424(e) of the Code.

                  (c)      If the aggregate Fair Market Value of the Common
Stock with respect to which ISOs are exercisable for the first time by any
Holder during a calendar year (under all plans of the Company and its Parents
and Subsidiaries) exceeds $100,000, such ISOs shall be treated, to the extent of
such excess, as Non-Qualified Options. For purposes of the preceding sentence,
the Fair Market Value of the Common Stock shall be determined at the time the
ISOs covering such shares were granted.

         7.       RESTRICTED STOCK.

                  (a)      Restricted Stock granted hereunder shall be in such
form and shall contain such terms and conditions as the Committee shall deem
appropriate, including the purchase price of the Restricted Stock; provided,
however, that in no event shall Restricted Stock have purchase price equal to an
amount less than the par value of the Common Stock. The terms and conditions of
each Restricted Stock grant shall be evidenced by a restricted stock agreement.
Subject to the restrictions set forth in subsection (b) below, unless otherwise
provided in the restricted stock agreement, the Holder shall generally have the
rights and privileges of a stockholder as to such Restricted Stock, including
the right to vote such Restricted Stock. At the discretion of the Committee,
cash dividends and stock dividends, if any, with respect to the Restricted Stock
may be either currently paid to the Participant or withheld by the Company for
the Participant's account. Unless otherwise determined by the Committee, cash
dividends or stock dividends so withheld by the Committee shall be subject to
forfeiture to the same degree as the shares of Restricted Stock to which they
relate. No interest will accrue or be paid on the amount of any cash dividends
withheld.

                  (b)      In addition to any other restrictions set forth in a
Holder's restricted stock agreement, until the expiration of the applicable
restricted period set forth in such restricted stock agreement, the Holder shall
not be permitted to sell, transfer, pledge, or otherwise encumber the Restricted
Stock. The Committee shall have the authority to remove any or all of the
restrictions on the Restricted Stock whenever it may determine that, by reason
of changes in applicable laws or other changes in circumstances arising after
the date of grant, such action is appropriate.

                  (c)      Stock certificates for Restricted Stock shall be
registered in the name of the Holder but shall be appropriately legended and
returned to the Company by the Holder, together with a stock power, endorsed in
blank by the Holder. Notwithstanding the foregoing, the Committee may determine,
in its sole discretion, that the Restricted Stock shall be held in book entry
form rather than delivered to the Holder pending the release of the applicable
restrictions.

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                  (d)      Each certificate representing Restricted Stock
awarded under the Plan shall bear a legend in the following form until the end
of the applicable restricted period with respect to such Stock:

                  "Transfer of this certificate and the shares represented
                  hereby is restricted pursuant to the terms of a restricted
                  stock agreement, dated as of _________________, between Loral
                  SpaceCom Corporation and _______________. A copy of such
                  Agreement is on file at the offices of Loral SpaceCom
                  Corporation."

                  Stop transfer orders shall be entered with the Company's
transfer agent and registrar against the transfer of legended securities.

         8.       ADJUSTMENT UPON CHANGES IN CAPITALIZATION.

                  (a)      In the event that the outstanding shares of Common
Stock are changed by reason of reorganization, merger, consolidation,
recapitalization, reclassification, stock split, combination or exchange of
shares and the like, or dividends payable in shares of Common Stock, an
appropriate adjustment shall be made by the Committee in the aggregate number of
shares of Common Stock available under the Plan, the maximum number of shares
which may be granted to any Holder during any partial or full calendar year, and
in the number of shares of Common Stock and price per share of Common Stock
subject to outstanding Options. If the Company shall be sold, reorganized,
consolidated, or merged with another corporation, or if all or substantially all
of the assets of the Company shall be sold or exchanged (a "Corporate Event"), a
Holder shall at the time of issuance of the stock under such Corporate Event be
entitled to receive upon the exercise of his Option the same number and kind of
shares of stock or the same amount of property, cash or securities as he would
have been entitled to receive upon the occurrence of any such Corporate Event as
if he had been, immediately prior to such event, the holder of the number of
shares of Common Stock covered by his Option; provided, however, that the
Committee may, in its discretion, accelerate the exercisability of outstanding
Options, and shorten the term thereof, to any date within 30 days prior to or
concurrent with the occurrence of such Corporate Event.

                  (b)      Any adjustment under this Section 8 in the number of
shares of Common Stock subject to Options shall apply proportionately to only
the unexercised portion of any Option granted hereunder. If fractions of a share
would result from any such adjustment, the adjustment shall be revised to the
next lower whole number of shares.

                  (c)      Restricted Stock shall be adjusted as a result of
Corporate Events or changes in capitalization on the same basis as the Common
Stock is adjusted in such events generally.

         9.       FURTHER CONDITIONS OF EXERCISE.

                  (a)      Unless prior to the issuance of shares of Common
Stock underlying an Award such shares are the subject of a registration
statement filed with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended (the "Securities

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Act"), and there is then in effect a prospectus filed as part of such
registration statement meeting the requirements of Section 10(a)(3) of the
Securities Act, the notice of exercise with respect to such Option or the
restricted stock agreement evidencing the grant of Restricted Stock shall be
accompanied by a representation or agreement of the Holder to the Company to the
effect that such shares are being acquired for investment only and not with a
view to the resale or distribution thereof, or such other documentation as may
be required by the Company, unless, in the opinion of counsel to the Company,
such representation, agreement or documentation is not necessary to comply with
the Securities Act.

                  (b)      Anything in subparagraph (a) of this Section 9 to the
contrary notwithstanding, the Company shall not be obligated to issue or sell
any shares of Common Stock until they have been listed on each securities
exchange on which the shares of Common Stock may then be listed and until and
unless, in the opinion of counsel to the Company, the Company may issue such
shares pursuant to a qualification or an effective registration statement, or an
exemption from registration, under such state and federal laws, rules or
regulations as such counsel may deem applicable. The Company shall use
reasonable efforts to effect such listing, qualification and registration, as
the case may be.

         10.      TERMINATION, MODIFICATION AND AMENDMENT.

                  (a)      The Plan (but not Awards previously granted under the
Plan) shall terminate ten (10) years from the date of its adoption by the Board
of Directors, and no Option shall be granted after termination of the Plan.

                  (b)      The Plan may at any time be terminated or, from time
to time, be modified or amended by the Board of Directors; provided, however,
that the Board of Directors shall not, without approval by the affirmative vote
of the holders of a majority of the shares of the capital stock of the Company
present in person or by proxy and entitled to vote at a meeting duly held in
accordance with Bermuda law, (i) increase (except as provided by Section 8) the
maximum number of shares of Common Stock as to which Options may be granted
under the Plan, or (ii) reduce the minimum purchase price at which Options may
be granted under the Plan.

                  (c)      No termination, modification or amendment of the Plan
may materially and adversely affect the rights conferred by any Awards without
the consent of the affected Holder.

         11.      NOT A CONTRACT OF EMPLOYMENT.

                  Nothing contained in the Plan or in any stock option agreement
executed pursuant hereto shall be deemed to confer upon any Holder any right to
remain in the employ of the Company, any Subsidiary or any Designated Entity.

         12.      GOVERNING LAW.

                  The Plan shall be governed by the laws of Bermuda without
reference to principles of conflict of laws.

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         13.      WITHHOLDING.

                  As a condition to the exercise of any Award, the Committee may
require that a Holder satisfy, through withholding from other compensation or
otherwise, the full amount of all federal, state and local income and other
taxes required to be withheld in connection with such exercise.

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