EX-10.6



 



Exhibit 10.6


August 8,
2007




MHR Fund Management LLC

40 West 57th Street, 24th Floor

New York, NY 10019

Attention: Hal Goldstein

Telephone: 212-262-0005

Facsimile: 212-262-9356



Ladies and Gentlemen:


     Reference
is made to that certain Securities Purchase Agreement, dated as of October 17, 2006, as
amended and restated on February 27, 2007 (as so amended and
restated, the “Securities Purchase Agreement”), by and
among Loral Space & Communications Inc., a
Delaware corporation (the “Corporation”), and MHR Fund
Management LLC (“Fund Management”) or any of its permitted assignees. Capitalized
terms used but not defined herein shall have the meanings ascribed thereto in the Securities Purchase Agreement.



     In
your Notice of Confirmation, dated July 10, 2007, you requested that the Corporation issue 13,886 shares
of Series A-1 Preferred Stock as provided in the
Corporation’s Threshold Conversion Notice dated July 3, 2007. This letter confirms our
agreement that, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged:




     1.     The
Corporation will issue only 880 shares of Series A-1 Preferred Stock to the MHR entities
(in the names and amounts set forth on Annex A hereto) instead of the amount set
forth in the Threshold Conversion Notice. The balance of the PIK Dividends to be
issued for the quarterly period ended July 15, 2007 is equal to 17,949 shares and
shall be issued in shares of Series B-1 Preferred Stock to the MHR entities
(in the names and amounts set forth on Annex A hereto).



     2.     For purposes
of the calculations required for any Threshold Conversion Notice, Notice of
Confirmation and Notice of Disagreement delivered pursuant to Section 5.06 of the
Securities Purchase Agreement after the date hereof:


     (I)  
the number of shares of Series A-1 Preferred Stock and/or Common Stock deemed to be held by the MHR entities
shall be increased by a number of shares (a) equal to the number
of shares of restricted stock and the number of shares subject to stock options of the Corporation then
held personally by Dr. Mark H. Rachesky, and (b) equal to 50% of the
number of shares of Common Stock reserved for issuance
(the “Reserved Shares”) pending

 










 



MHR Fund
Management LLC
August 8, 2007
Page 2




resolution
of certain disputed third party claims under that certain Fourth
Amended Joint Plan of Reorganization Under Chapter 11 of the
Bankruptcy Code, as modified, dated as of June 3, 2005 of Loral
Space & Communications Ltd. and certain of its
subsidiaries that are a party thereto (the “Plan”), such number of Reserved Shares not to exceed 71,500 shares; and


     (II)  the
number of outstanding shares of Common Stock of the Corporation shall be decreased by a number of shares equal
to 45% of the total number of shares of restricted stock (issued to
persons other than directors pursuant to the Corporation’s Amended and Restated 2005 Stock
Incentive Plan) that are then subject to vesting but have not yet vested as of the
date of the applicable Threshold Conversion Notice, Notice of Confirmation and
Notice of Disagreement, such number of shares of restricted stock not to exceed 1,000,000 shares.


     If
you agree with and accept the foregoing, please sign below.




	 	 	 	 	 
	 	Sincerely,
 
LORAL
SPACE & COMMUNICATIONS INC.

 	 
	 	By:  	/s/  Richard J.
Townsend
 	 
	 	 	Name:  Richard J.
Townsend	 	 
	 	 	Title:  Executive Vice
President and Chief
Financial Officer	 	 


AGREED
AND ACCEPTED:
 
 
MHR FUND MANAGEMENT LLC


By:  /s/  Hal
Goldstein

       Name:  Hal
Goldstein
       Title:    Vice
President


 








 







ANNEX A






	 	 	 	 	 
	 
	MHR Entity
	 	Shares of Series A-1
Preferred
Stock	 	Shares of Series B-1
Preferred
Stock
	 
	MHR Capital Partners Master Account LP	 	101	 	2,056
	 
	MHR Capital Partners (100) LP	 	12	 	237
	 
	MHR Institutional Partners II LP	 	50	 	1,020
	 
	MHR Institutional Partners IIA LP	 	126	 	2,570
	 
	MHR Institutional Partners III LP	 	591	 	12,066
	 
	Total:	 	880	 	17,949