1006269--3/15/2010--LORAL_SPACE_&_COMMUNICATIONS

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We have had a history of losses. The SS/L credit agreement is subject to financial and other covenants that must be met for SS/L to utilize the revolving facility. We are projecting negative cash flow for 2010, and there can be no assurance that we will have sufficient funds to meet our cash requirements in the future. Loral Space Communications Inc., the parent company, is a holding company with no current operations; we are dependent on cash flow from our operating subsidiaries and affiliates to meet our financial obligations. While we own 64% of Telesat on an economic basis, we own only 33 1 / 3 % of its voting stock and therefore do not have the right to elect or appoint a majority of its Board of Directors. Our equity investment in Telesat may be at risk because of Telesat s leverage. Certain asset sales by Telesat may trigger material adverse tax consequences for us. The Telesat information in this report is based solely on information provided to us by Telesat. Telesat s financial results and our U.S. dollar reporting of Telesat s financial results will be affected by volatility in the Canadian/U.S. dollar exchange rate. Our potential indebtedness makes us vulnerable to adverse developments. XTAR has not generated sufficient revenues to meet all of its contractual obligations, which are substantial. Significant changes in discount rates, actual investment return on pension assets and other factors could affect our statement of operations, equity and pension contributions in future periods. Risk Factors Associated With Satellite Manufacturing The satellite manufacturing market is highly competitive and fixed costs are high. SS/L s contracts are subject to adjustments, cost overruns and termination. Certain of SS/L s customers are highly leveraged and may not fulfill their contractual payment obligations to SS/L. SS/L may forfeit payments from customers as a result of satellite failures or losses after launch or may be liable for penalty payments under certain circumstances, and these losses may be uninsured. Some satellites built by SS/L, including one satellite operated by Telesat, have experienced minor losses of power from their solar arrays. Some satellites built by SS/L have the same design as another SS/L-built satellite that has experienced a partial failure. We are subject to export control and economic sanctions laws, which may result in delays, lost business and additional costs. The recent trend toward industry consolidation in the satellite services industry may adversely affect us; we do not control satellite procurement decisions at Telesat. The availability of facility space and qualified personnel may affect SS/L s ability to perform its contracts in a timely and efficient manner. Our ability to obtain certain satellite contract awards depends, in part, on our ability to provide the customer with financing. SS/L relies on certain key suppliers whose failure or delayed performance would adversely affect us. We face risks in conducting business internationally. We rely on patents, trade secrets and know-how; infringement by SS/L of third party patents would increase our costs, and third parties may challenge our patents. Risk Factors Associated With Satellite Services A substantial amount of Telesat revenues are derived from only a few of its customers. A loss of one or more of these major customers, or a material adverse change in any such customer s business or financial condition, could materially reduce Telesat future revenues and contracted backlog. Launch delays or failures may result in delays in operations. After launch, satellites remain vulnerable to in-orbit failures which may result in reduced revenues and profits and other financial consequences. It may be difficult to obtain full insurance coverage for satellites that have, or are part of a family of satellites that has, experienced problems in the past; moreover, not all satellite-related losses will be covered by insurance. Telesat competes for market share, customers and orbital slots. Changes in the Canadian competitive environment could adversely affect Telesat. Telesat operates in a highly regulated industry and government regulations may adversely affect its business. Telesat s ability to replace one of its satellites is subject to additional risk and cannot be assured. Third parties have significant rights with respect to our affiliates. We rely on key personnel. MHR may be viewed as our controlling stockholder and may have conflicts of interest with us in the future. The future use of tax attributes is limited.

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1006269--3/15/2010--LORAL_SPACE_&_COMMUNICATIONS_INC.