8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 17, 2008

WORLDSPACE, INC.

(Exact Name of Registrant as Specified in Charter)

STATE OF DELAWARE	000-51466	52-1732881
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

8515 Georgia Avenue, Silver Spring, MD	20910
(Address of Principal Executive Offices)	(Zip Code)

(301) 960-1200

(Registrant’s telephone number, including area code)

(Former Name or Former address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12(b))

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into Material Definitive Agreement

On July 17, 2008, WorldSpace, Inc. (the “Company”) entered into a Second Forbearance Agreement and Amendment (each an “Agreement” and collectively, the “Agreements”) with each of the four holders (the “Investors”) of its amended and restated bridge loan notes (the “Bridge Loan Notes”) and second amended and restated convertible notes (the “Convertible Notes”) to extend until July 31, 2008 the due date for the payment of approximately $19.0 million in aggregate principal amount of the Bridge Loan Notes (including all accrued and unpaid interest and late fees, if any, on the Bridge Loan Notes) and approximately $1 million in past due interest on the Convertible Notes. As a result of this extension and the earlier Forbearance Agreement and Amendment, dated July 3, 2008 between the Company and each of the Investors, the Bridge Loan Notes are required to be paid in full no later than July 31, 2008.

In connection with the extension of the due date, the Company and the Investors agreed to exchange the 6.5 million amended forbearance warrants to acquire shares of Class A Common Stock issued to the Investors on June 13, 2008 for second amended warrants in the aggregate amount of 8 million warrants exercisable to acquire shares of the Company’s Class A Common Stock (the “Second Amended and Restated Warrants”). The Second Amended and Restated Warrants grant the holders the right to acquire shares of Class A Common Stock at $1.55 per share, subject to certain anti-dilution adjustments, including, inter alia, certain issuances of shares below the then prevailing market price. The shares of Class A Common Stock issuable to the Investors upon exercise of the Second Amended and Restated Warrants will be subject to the rights for registration on a shelf registration statement on Form S-3 in accordance with the terms of the registration rights agreement entered into between the Company and the Investors in June 2007.

Under the terms of the Agreements, the Company also agreed, on or before July 29, 2008, to pledge up to 100% (but in no event less than 66  ²/3%) of the equity interests of WorldSpace Europe Holdings ApS (“WorldSpace Europe”) in favor of the collateral agent under the Bridge Loan Notes and Convertible Notes (“Collateral Agent”), for the benefit of the Investors. The Company also agreed to cause WorldSpace Europe to: (A) become a Guarantor, as defined in the security documents securing the Bridge Loan Notes and Convertible Notes (the “Security Documents”), by executing and delivering, to the extent legally permissible, a guaranty in favor of the Collateral Agent, for the benefit of the Investors, in form and substance reasonably acceptable to the Required Holders (i.e., the holders of a majority in interest of the Convertible Notes), (B) become a Pledgor (as defined in the Security Documents) by executing and delivering, to the extent legally permissible, a joinder to the security agreement, in form and substance reasonably acceptable to the Required Holders, pledging all of its assets in favor of the Collateral Agent, for the benefit of the Investors (C) pledge, to the extent legally permissible, its 65% equity interest in WorldSpace Italia SpA in favor of the Collateral Agent, for the benefit of the Investors.

The forms of the Agreement and the Second Amended and Restated Warrant are attached hereto as Exhibits 99.1 and 99.2.

In connection with the Agreement the Company also agree to pay up to $500,000 for the fees and expenses of a financial adviser and legal counsel to the Investors for purposes of conducting financial and legal due diligence in respect of the Company’s business, operations and assets. $250,000 of this amount was paid on July 21, 2008 with the remainder to be paid on or before July 31, 2008.

In accordance with applicable rules of The Nasdaq Global Market, the Second Amended and Restated Warrants contain a cap on the exercise of the Warrants, such that no more than an aggregate of 19.9% of the Company’s outstanding shares may be issued pursuant to exercises of Second Amended and Restated Warrants until the stockholder approval required by The Nasdaq Global Market has been obtained. The Company has agreed to solicit the requisite stockholder approval for the issuance of the shares pursuant to Second Amended and Restated Warrants at a special meeting of stockholders to be held not later than August 29, 2008.

The foregoing descriptions do not purport to be a complete description of the terms of the documents, and this description is qualified in its entirety by the terms of the definitive documents or forms thereof which are attached as exhibits to this Current Report on Form 8-K, and which are incorporated by reference.

The Company and the Investors are in discussions regarding amendments to the Agreements that would, inter alia, further extend the Company’s time for repayment of certain of the obligations owed by the Company to the Investors. Any such further forbearance would be subject to the finalization of terms and the execution and delivery of definitive agreements and no assurance can be given that an agreement regarding any further forbearance will be reached.

Item 3.02 Unregistered Sales of Equity Securities

The description of the issuance and terms of Second Amended and Restated Warrants is set forth above in Item 1.01 and is hereby incorporated by reference into this Item 3.02.

The issuance of Second Amended and Restated Warrants was done in reliance on Section 3(a)(9) of the Securities Act of 1933, as amended.

Item 9.01 Financial Statements and Exhibits

(a) Not applicable

(b) Not applicable

(c) Not applicable

(d) The following exhibit is filed as part of this report:

99.1	Form of Second Forbearance Agreement and Amendment among the Company, each of the Guarantors and the Investor named therein
99.2	Form of Second Amended and Restated Warrant to Purchase Common Stock

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: July 23, 2008

WORLDSPACE, INC.
(Registrant)
By:	/s/ Donald J. Frickel
Name:	Donald J. Frickel
Title:	Executive Vice President, General Counsel and Secretary

EXHIBIT INDEX

Number	Exhibit
99.1	Form of Second Forbearance Agreement and Amendment among the Company, each of the Guarantors and the Investor named therein
99.2	Form of Second Amended and Restated Warrant to Purchase Common Stock

EX-99.1

Exhibit 99.1

[FORM OF SECOND FORBEARANCE AGREEMENT AND AMENDMENT]

Second Forbearance Agreement and Amendment, dated as of July 17, 2008 (this “Agreement”), to (a) the Second Amended and Restated Secured Convertible Note issued by WorldSpace, Inc., a Delaware corporation (the “Company”) to [Highbridge International LLC] [Other Investors] (the “Investor”) on June 13, 2008 in the original principal amount of $                 as amended, restated, supplemented or otherwise modified from time to time, including all schedules thereto, the “Convertible Note” and together with all other Second Amended and Restated Secured Convertible Notes issued on June 13, 2008, the “Convertible Notes”), and (b) the Amended and Restated Secured Note issued by the Company to the Investor on June 13, 2008, in the original principal amount of $                 (as amended, restated, supplemented or otherwise modified from time to time, including all schedules thereto, the “Bridge Note”, and together with all other Amended and Restated Secured Notes issued on June 13, 2008, the “Bridge Notes”). Capitalized terms used in this Agreement and not defined herein shall have the applicable meanings given to such terms in the Amendment Agreement (as defined below), the Convertible Note and the Bridge Note (the Convertible Notes and Bridge Notes, collectively, the “WorldSpace Notes”).

WITNESSETH:

WHEREAS, the Company issued to the Investor on June 13, 2008 the Bridge Note, the Convertible Note and warrants (the “Existing Forbearance Warrants”), which are exercisable to acquire shares of the Company’s Class A Common Stock, par value $0.01 per share (the “Common Stock”), each pursuant to the terms and conditions of that certain Amendment and Exchange Agreement (as amended, restated, supplemented or otherwise modified from time to time, including all schedules thereto, the “Amendment Agreement”), dated as of June 13, 2008, by and among the Company, certain of the Company’s subsidiaries which are guarantors of the WorldSpace Notes (the “Guarantors”) and the Investor;

WHEREAS, pursuant to (a) Section 6 of the Bridge Note, the Company was required to redeem (the “June Mandatory Redemption”) $                 in Principal amount of the Bridge Note and accrued and unpaid Interest thereon (the “June Redemption Price”) on June 30, 2008 and (b) Section 2 of the Convertible Note, the Company was required to pay $                 (the “June Interest Payment”) in overdue Interest on the Convertible Note on June 30, 2008;

WHEREAS, the Company failed to effect the June Mandatory Redemption and make the June Interest Payment;

WHEREAS, the failure by the Company to (a) pay the Mandatory Redemption Price to the Investor on June 30, 2008 gave rise to an Event of Default pursuant to Section 4(a)(i) of the Bridge Note and pursuant to Section 4(a)(xvii) of the Convertible Note and (b) pay the June Interest Payment on June 30, 2008 gave rise to an Event of Default on July 4, 2008 pursuant to Section 4(a)(iv) of the Convertible Note and Section 4(a)(xvii) of the Bridge Note (each a “Specified Default” and collectively, the “Specified Defaults”);

WHEREAS, the Company and the Investor entered into that certain Forbearance Agreement and Amendment (the “Initial Forbearance Agreement”) dated July 3, 2008 whereby the Investor agreed to forbear from exercising remedies with respect to the Specified Defaults set forth in clause (i) above until July 9, 2008 (such period being hereinafter called, the “Initial Forbearance Period”) in exchange for Amended and Restated Forbearance Warrants; (the “Amended and Restated Forbearance Warrants”);

WHEREAS, the Company failed to effect the June Mandatory Redemption during the Initial Forbearance Period;

WHEREAS, the Company has requested that the Investor agree and, subject to the terms and conditions of this Agreement, the Investor has agreed to forbear from exercising remedies with respect to the Specified Defaults for the period commencing on the Forbearance Effective Date (as defined below) and ending on the earlier to occur of the following dates: (a) the date on which any Default or Event of Default (other than the Specified Defaults) shall occur or exist, including, without limitation, any Default or Event of Default arising from the failure to comply with the terms and provisions contained in this Agreement and (b) July 31, 2008 (such period being hereinafter called, the “Forbearance Period”);

WHEREAS, in connection with the Investor’s forbearance, the Company and the Investor shall exchange all of the Investor’s Amended and Restated Forbearance Warrants for warrants in the form attached hereto as Exhibit A (the “Second Amended and Restated Forbearance Warrants”) which shall be exercisable to acquire that number of shares of Common Stock set forth opposite the Investor’s name in column (3) on the Securities Schedule attached hereto (the “Second Amended and Restated Forbearance Warrant Shares”). The exchange of the Amended and Restated Forbearance Warrants for the Second Amended and Restated Forbearance Warrants is being made in reliance upon the exemption from registration provided by Section 3(a)(9) of the 1933 Act.

NOW, THEREFORE, the Investor, the Company and the Guarantors hereby agree as follows:

1. The Company and Guarantors’ Acknowledgments and Covenants. The Company and the Guarantors hereby acknowledge, confirm and agree that:

(a) As of the close of business on July 11, 2008, (i) the aggregate outstanding principal amount of the Bridge Notes is $36,145,361.59, (ii) the aggregate outstanding principal amount of the Convertible Notes is $53,149,779.73 and (ii) the Company is unconditionally indebted and liable for the repayment in full of the outstanding amount of all obligations under the WorldSpace Notes, without offset, defense or counterclaim of any kind, nature or description.

(b) Each of the Bridge Notes and the Convertible Notes shall continue to accrue Interest on the outstanding principal amount of such notes until the date each such note is paid in full in accordance with the terms thereof. From July 1, 2008 until the June Redemption Amount is paid in full, the Bridge Notes and Convertible Notes shall accrue interest at the default interest rates of eleven and eighteen one-hundredths percent (11.18%) and fifteen percent

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(15.0%), respectively, in accordance with the terms of the WorldSpace Notes; provided, however, that if at the time the Company pays the June Redemption Amount in full an Event of Default has occurred and is continuing under the WorldSpace Notes, the Bridge Notes and Convertible Notes shall continue to accrue Interest at such default rates until such time as set forth in the WorldSpace Notes.

(c) All obligations under the Bridge Note and the Convertible Note are secured by valid, enforceable and perfected Liens in favor of the Collateral Agent, in such respective priorities set forth in the Security Documents, for the benefit of the Investor (other than Permitted Liens) in all of the Collateral (as defined in the Security Documents), which Liens are enforceable without offset, defense or counterclaim.

(d) (i) Each of the New Transaction Documents to which the Company or each Guarantor is a party has been duly executed and delivered to the Investor and each is in full force and effect as of the date hereof, (ii) the agreements and obligations of the Company and the Guarantors contained in the New Transaction Documents to which they are a party constitute the legal, valid and binding obligations of the Company and the Guarantors, enforceable against them in accordance with their terms, and the Company and the Guarantors have no offset, defense or counterclaim to the enforcement of such obligations, and (iii) the Investor is and shall be entitled to the rights, remedies and benefits provided for in the New Transaction Documents, subject to the terms of this Agreement.

(e) (i) The Specified Defaults occurred as of July 1, 2008 under the WorldSpace Notes; (ii) the Specified Defaults entitle the Investor to (A) declare all or any portion of the Bridge Note and the Convertible Note to be immediately due and payable under the terms of such notes and the other New Transaction Documents and (B) exercise its rights and remedies under the WorldSpace Notes, the other New Transaction Documents, applicable law or otherwise; and (iii) the Investor’s agreement (subject to the terms and conditions hereof) to forbear from exercising its existing rights and remedies in respect of the Specified Defaults during the Forbearance Period is not, and shall in no way be deemed or construed as, a waiver by the Investor of the Specified Defaults or any other Default or Event of Default under the WorldSpace Notes or any other New Transaction Document whether now existing or hereafter occurring.

(f) The Investor’s execution of this Agreement shall not constitute a novation, refinancing, discharge, extinguishment or refunding nor is it to be construed as a release, waiver or modification of any of the terms, conditions, representations, warranties, covenants, rights or remedies set forth in the WorldSpace Notes or any of the other New Transaction Documents, except as expressly provided herein.

(g) (i) Neither the Company, the Guarantors nor any of their Subsidiaries or Affiliates has any claim or cause of action against the Investor or any Affiliate of the Investor (or any of the directors, officers, employees, agents, Affiliates or attorneys of the foregoing), and (ii) the Investor has heretofore properly performed and satisfied in a timely manner all of its obligations to the Company, the Guarantors and all of their Subsidiaries and Affiliates (if any) under the WorldSpace Notes and the other New Transaction Documents. Notwithstanding the foregoing, the Company and the Guarantors wish (and the Investor agrees)

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to eliminate any possibility that any past conditions, acts, omissions, events or circumstances would impair or otherwise adversely affect the Investor’s rights, interests, security and/or remedies under the WorldSpace Notes and the other New Transaction Documents. Accordingly, for and in consideration of the agreements contained in this Agreement and other good and valuable consideration, the Company and the Guarantors for themselves and their Affiliates and the successors, assigns, heirs and representatives of each of the foregoing (collectively, the “Releasors”) do hereby fully, finally, unconditionally and irrevocably release, waive and forever discharge the Investor or any Affiliates of the Investor, together with their respective successors, assigns, subsidiaries, affiliates, agents and attorneys (collectively, the “Released Parties”) from: (x) any and all liabilities, obligations, duties, responsibilities, promises or indebtedness of any kind of the Released Parties to the Releasors or any of them and (y) all claims, demands, disputes, offsets, causes of action (whether at law or equity), suits or defenses of any kind whatsoever (if any), which the Releasors or any of them had from the beginning of the world, now has or might hereafter have against the Released Parties or any of them, in either case of clauses (x) or (y) on account of any condition, act, omission, event, contract, liability, obligation, indebtedness, claim, cause of action, defense, circumstance or matter of any kind (1) that existed, arose or occurred at any time from the beginning of the world to the execution of this Agreement or (2) that could hereafter arise as a result, directly or indirectly, of the execution of (or the observance of the terms of) this Agreement, the WorldSpace Notes or any of the other New Transaction Documents. For purposes of the release contained in this clause (f), any reference to any Releasor shall mean and include, as applicable, such Person’s successors and assigns, including, without limitation, any receiver, trustee or debtor-in-possession, acting on behalf of such Person. As to each and every claim released hereunder, the Company and the Guarantors hereby represent that they have received the advice of legal counsel with regard to the releases contained herein and agrees that no such common law or statutory rule or principle shall affect the validity or scope or any other aspect of such release.

(h) All remaining unpaid obligations under the Bridge Note (including, without limitation, all amounts that were payable in respect of the June Mandatory Redemption) shall be paid in cash no later than the Maturity Date, July 31, 2008, as provided in Section 1 of the Bridge Note and the June Interest Payment under the Convertible Note shall be paid in cash no later than July 31, 2008.

(i) On or before July 29, 2008, the Company shall pledge up to 100% (but in no event less than 66  ²/3%) of the equity interests of WorldSpace Europe Holdings ApS (“WorldSpace Europe”) in favor of the Collateral Agent, for the benefit of the Investor and the other holders of the WorldSpace Notes, and the Company shall also cause WorldSpace Europe to (A) become a Guarantor (as defined in the Security Documents) by executing and delivering, to the extent legally permissible, a guaranty in favor of the Collateral Agent, for the benefit of the Investor and the other holders of WorldSpace Notes, in form and substance reasonably acceptable to the Required Holders, (B) become a Pledgor (as defined in the Security Documents) by executing and delivering, to the extent legally permissible, a joinder to the Security Agreement, in form and substance reasonably acceptable to the Required Holders, pledging all of its assets in favor of the Collateral Agent, for the benefit of the Investor and the other holders of the WorldSpace Notes and (C) pledge, to the extent legally permissible, its 65% equity interest in WorldSpace Italia SpA in favor of the Collateral Agent, for the benefit of the Investor and the other holders of the WorldSpace Notes.

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2. Investor Acknowledgments. In reliance upon the representations and covenants and acknowledgments of the Company and the Guarantors contained in this Agreement and subject to the terms and conditions contained herein, during the Forbearance Period, the Investor agrees to forbear from exercising its rights and remedies under the New Transaction Documents or applicable law, solely with respect to the Specified Defaults.

3. No Waiver; Reservation of Rights. The Investor has not waived, is not by this Agreement waiving, and has no present intention of waiving, the Specified Defaults or any other Events of Default which may be continuing on the date hereof or any Events of Default which may occur after the date hereof (whether the same or similar to the Specified Defaults or otherwise), and nothing contained herein shall be deemed or constitute any such waiver. Subject to Section 2 above, the Investor reserves the right, in its discretion, to exercise any or all rights or remedies under the WorldSpace Notes, the other New Transaction Documents, applicable law and otherwise as a result of the Specified Defaults or any other Events of Default that may be continuing on the date hereof or any Events of Default that may occur after the date hereof, and the Investor has not waived any of such rights or remedies and nothing in this Agreement, and no delay on the Investor’s part in exercising such rights or remedies, should be construed as a waiver of any such rights or remedies. Upon the termination of the Forbearance Period, the agreement of the Investor to forbear and the other agreements of the Investor, in each case as set forth in Section 2 above, shall automatically and without further action terminate and be of no force and effect, it being understood and agreed that the effect of such termination will be to permit the Investor and the Collateral Agent (acting upon the instructions of the Investor and on behalf of the Investor) to exercise any and all of its rights and remedies at any time and from time to time thereafter, including, without limitation, the right to accelerate all or any portion of the obligations under the WorldSpace Notes and exercise any other rights and remedies set forth in the WorldSpace Notes, the other New Transaction Documents, applicable law or otherwise, in each case, without any notice, passage of time or forbearance of any kind. The Investor reserve the right to request any additional information (financial or otherwise) with respect to the Specified Defaults or any other Event of Default or otherwise.

4. Amendments. The Company, the Guarantors and the Investor wish to amend the WorldSpace Notes. Accordingly, on the Forbearance Effective Date, the parties hereto hereby agree as follows:

(a) Section 1 of the Bridge Note is hereby amended and restated in its entirety as follows:

“(1) MATURITY. On the Maturity Date, the Holder shall surrender this Bridge Note to the Company and the Company shall pay to the Holder an amount in cash representing all outstanding Principal, accrued and unpaid Interest and accrued and unpaid Late Charges, if any, including, without limitation, the June Redemption Amount. The “Maturity Date” shall be July 31, 2008.”

(b) Section 6 of the Bridge Note is hereby amended and restated in its entirety as follows:

“(6) INTENTIONALLY OMITTED.”

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(c) The second sentence of Section 11(a) of the Bridge Note is hereby amended and restated in its entirety as follows:

“The Company shall deliver (i) the Mandatory Prepayment Price to the Holder on or before the Mandatory Prepayment Date and (ii) the Company Optional Redemption Price on or before the applicable Company Optional Redemption Date.”

(d) Section 25(xlvii) of the Bridge Note is hereby deleted.

(e) The following definition is hereby added in alphabetical order to Section 25 of the Bridge Note:

““June Redemption Amount”: $18,995,943.33 in aggregate Principal amount plus accrued and unpaid Interest and any Late Charges thereon.”

(f) Each of Section 4(a)(ix) of the Convertible Note and Section 4(a)(vi) of the Bridge Note is amended and restated in its entirety as follows:

“the Company breaches any representation, warranty, covenant or agreement in any Transaction Document that would have a Material Adverse Effect (as defined in the Securities Purchase Agreement), or the Company breaches any of the representations or warranties set forth in Sections 3(b)(xxxi), 3(b)(xxxii), 3(b)(xxxiii) or 3(b)(xxxiv) of the Amendment Agreements or the covenant set forth in Section 7.16 of the Securities Purchase Agreement or Section 10 of those certain Second Forbearance Agreement and Amendments, dated as of July 17, 2008, by and among the Company, the Guarantors and the investors listed on the signature pages thereto (collectively, the “Second Forbearance Agreement and Amendments”) except, in the case of a breach of a covenant (other than Section 7.16 of the Securities Purchase Agreement and Section 10 of the Second Forbearance Agreement and Amendments) which is curable, only if such breach continues for a period of at least ten (10) consecutive Business Days”

(g) The first sentence of Section 2 of the Convertible Note is hereby amended and restated in its entirety as follows:

“Interest on this Convertible Note shall commence accruing on the Amendment Date and shall be computed on the basis of a 365-day year and actual days elapsed and shall be payable in arrears on August 31, 2008 and the Maturity Date (the period of such accruing interest being referred to as an “Interest Period” and each such date, an “Interest Date”); provided, that accrued and unpaid Interest on this Convertible Note in an amount equal to $                 (the “June Interest Payment”) shall be paid to the Holder on or prior to July 31, 2008 (any such date for purposes hereof, also an Interest Date). Upon receipt by the Holder of the June Interest Payment, the Principal amount of this Note shall be automatically reduced by the amount of such payment.”

(h) Section 4(j) of the Amendment Agreement is hereby amended and restated in its entirety as follows:

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“Stockholder Approval. The Company shall provide each stockholder entitled to vote at a special or annual meeting of stockholders of the Company (the “Stockholder Meeting”), which initially shall be promptly called and held not later than August 29, 2008 (the “Stockholder Meeting Deadline”), a proxy statement, substantially in the form which has been previously reviewed by the Investor and Schulte Roth & Zabel LLP at the expense of the Company, soliciting each such stockholder’s affirmative vote at the Stockholder Meeting for approval of resolutions (the “Resolutions”) providing for the Company’s issuance of all of the Securities as described in the Transaction Documents in accordance with applicable law and the rules and regulations of the Principal Market (as defined below) (such affirmative approval being referred to herein as the “Stockholder Approval” and the date such approval is obtained, the “Stockholder Approval Date”), and the Company shall use its reasonable best efforts to solicit its stockholders’ approval of the Resolutions and to cause the Board of Directors of the Company to recommend to the stockholders that they approve the Resolutions. The Company shall be obligated to seek to obtain the Stockholder Approval by the Stockholder Meeting Deadline. If, despite the Company’s reasonable best efforts, the Stockholder Approval is not obtained on or prior to the Stockholder Meeting Deadline, the Company shall cause an additional Stockholder Meeting to be held each three month period thereafter until such Stockholder Approval is obtained.”

5. Reaffirmation of Guaranty; Agreement as New Transaction Document. Except as specifically set forth in this Agreement, the WorldSpace Notes and the other New Transaction Documents (including, without limitation, the terms of any guaranty or grant of security set forth therein) shall remain in full force and effect and are hereby ratified and confirmed. As of the Forbearance Effective Date, each reference to the WorldSpace Notes in any New Transaction Document shall mean and be a reference to the WorldSpace Notes as modified hereby and each reference to Warrants and Warrant Shares in any New Transaction Document shall mean and include the Second Amended and Restated Forbearance Warrants and the Second Amended and Restated Forbearance Warrant Shares, respectively, including without limitation for purposes of (a) determining whether issuance of Common Stock upon exercise of the Second Amended and Restated Forbearance Warrants constitute Excluded Securities and (b) obtaining the Stockholder Approval required by the Amendment Agreement. This Agreement and the Second Amended and Restated Forbearance Warrants shall each constitute a New Transaction Document and shall (unless expressly indicated herein or therein) be construed, administered, and applied, in accordance with all of the terms and provisions of the WorldSpace Notes and the other New Transaction Documents. Accordingly, it shall be an Event of Default under the WorldSpace Notes if (i) any representation or warranty made by the Company or the Guarantors under or in connection with this Agreement shall have been untrue, false or misleading when made, or (ii) the Company or the Guarantors shall fail to perform or observe any term, covenant or agreement contained in this Agreement or the Second Amended and Restated Forbearance Warrants.

6. Conditions to Effectiveness. This Agreement shall become effective and be deemed effective as of the date when, and only when, all of the following conditions have been satisfied as determined in the Investor’s discretion (the date of such effectiveness being herein called the “Forbearance Effective Date”):

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(a) The Investor shall have received a copy of this Agreement duly executed by the Company, the Guarantors and the Investor;

(b) Each other holder of Bridge Notes and Convertible Notes shall have executed a copy of a “Second Forbearance Agreement and Amendment” in form and substance substantially identical to this Agreement;

(c) The Company shall have delivered to the Investor its Second Amended and Restated Forbearance Warrants;

(d) All out-of-pocket expenses incurred by the Investor which have been invoiced in connection with this Agreement, the WorldSpace Notes or any other New Transaction Document, or the transactions contemplated by any of the foregoing, shall have been paid by the Company;

(e) The Investor shall have received an executed a copy of a letter agreement (in the form annexed hereto as Exhibit B) from Noah A. Samara in connection with his affiliation with the Company and each other holder of Bridge Notes and Convertible Notes shall have received an executed a copy of such letter in identical form; and

(f) As of the Forbearance Effective Date, the representations and warranties set forth in Section 7 hereof shall be true and correct.

7. Representation and Warranties. In order to induce the Investor to enter into this Agreement, the Company and each Guarantor hereby represent and warrant that:

(a) At and as of the date of this Agreement, and both prior to and after giving effect to this Agreement, other than the Specified Defaults, no Default or Event of Default shall have occurred and be continuing or shall result from the execution of this Agreement.

(b) At and as of the date of this Agreement and at and as of the Forbearance Effective Date and after giving effect to this Agreement, each of the representations and warranties contained in the WorldSpace Notes and the other New Transaction Documents is true and correct in all material respects (except to the extent that such representations and warranties relate solely to an earlier date).

(c) The Company and each Guarantor (i) has all requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby and (ii) has taken all action, corporate or otherwise, necessary to authorize the execution and delivery of this Agreement.

(d) The execution, delivery and performance by the Company and each Guarantor of this Agreement will not (i) violate any provision of federal, state, or local law or regulation applicable to any the Company or such Guarantor, the governing or organizational documents of any the Company or such Guarantor, or any order, judgment, or decree of any court or other Governmental Authority binding on any the Company or such Guarantor, (ii) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under loan or credit agreement, note, bond, mortgage, indenture, lease, deed of trust,

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agreement, contract, commitment, license (including, without limitation, the Communication Licenses), franchise, permit, understanding, instrument, or obligation or other arrangement to which the Company or such Guarantor is a party or by which the Company, such Guarantor or any of their properties or assets may be bound or affected of any the Company or such Guarantor, (iii) result in or require the creation or imposition of any Lien of any nature whatsoever upon any properties or assets of the Company or such Guarantor, or (iv) require any unobtained approval of any the Company’s or such Guarantor’s interest holders or any unobtained approval or consent of any Person under any loan or credit agreement, note, bond, mortgage, indenture, lease, deed of trust, agreement, contract, commitment, license (including, without limitation, the Communication Licenses), franchise, permit, understanding, instrument, or obligation or other arrangement to which the Company or such Guarantor is a party or by which the Company, such Guarantor or any of their properties or assets may be bound or affected of any the Company or such Guarantor.

(e) This Agreement has been duly executed and delivered by the Company and each Guarantor and constitutes the legal, valid and binding obligation of the Company and the Guarantors, enforceable against the any loan or credit agreement, note, bond, mortgage, indenture, lease, deed of trust, agreement, contract, commitment, license (including, without limitation, the Communication Licenses), franchise, permit, understanding, instrument, or obligation or other arrangement to which the Company or such Guarantor is a party or by which the Company, such Guarantor or any of their properties or assets may be bound or affected in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or hereafter in effect, relating to or affecting the enforcement of creditors’ rights generally, and (ii) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

8. Registration Rights. The registration rights set forth in the 2007 Registration Rights Agreement (as defined in the Amendment Agreement) shall apply to the Second Amended and Restated Forbearance Warrants and the Second Amended and Restated Forbearance Warrant Shares mutatis mutundis except that for purposes hereof all references to the “Closing Date” in the 2007 Registration Rights Agreement shall mean the date of this Agreement.

9. Holding Period. For the purposes of Rule 144, the Company acknowledges that the holding period of the Second Amended and Restated Forbearance Warrants (including the corresponding Second Amended and Restated Forbearance Warrant Shares issued by way of a Cashless Exercise (as defined in the Additional Forbearance Warrants)) may be tacked onto the holding period of the WorldSpace Notes. The Company further acknowledges that the Second Amended and Restated Forbearance Warrants (so long as such Second Amended and Restated Forbearance Warrants are exercised by way of Cashless Exercise) may be freely transferred or sold pursuant to Rule 144 under the 1933 Act without the requirement to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144. The Company agrees not to take a position contrary to this Section 9. The Company agrees to take all actions, including, without limitation, the issuance by its legal counsel of any necessary legal opinions, necessary to issue to the Investor Second Amended and Restated Forbearance Warrant Shares (so long as such Second Amended and

9

Restated Forbearance Warrants are exercised by way of a Cashless Exercise) that are freely tradable on an Eligible Market without restriction and not containing any restrictive legend without the need for any action by the Investor.

10. Forbearance Fees and Expenses. The Company, in accordance with and as required by the Transaction Documents, shall pay (the “Forbearance Fees and Expenses Reimbursement”) in cash to Highbridge International, LLC and Citadel Equity Fund Ltd. up to $500,000 (the “Forbearance Fees and Expenses Reimbursement Cap”) for the professional fees and expenses of Schulte Roth & Zabel LLP, Venable LLP and a single financial advisor (the foregoing, the “Advisors”) incurred after July 3, 2008 and to be incurred in connection with various matters under the WorldSpace Notes through July 31, 2008 including, without limitation, to conduct a due diligence review of the Company. The Company shall pay to Highbridge International, LLC and Citadel Equity Fund Ltd. (a) on July 21, 2008, $250,000 of the Forbearance Fees and Expenses Reimbursement and (b) on July 31, 2008, an amount equal to the aggregate of any additional fees and expenses of the Advisors in excess of $250,000 and up to the Forbearance Fees and Expenses Reimbursement Cap; provided, however, that in the event that the Company pays in cash the June Redemption Amount in full on or prior to July 21, 2008, the Company shall have until July 31, 2008 to pay any amount due as a Forbearance Fees and Expenses Reimbursement pursuant to clause (a) above. All amounts of the Forbearance Fees and Expenses Reimbursement shall be paid to each of Highbridge International LLC and Citadel Equity Fund Ltd. in accordance with their respective pro rata holdings of the WorldSpace Notes: forty-three percent (43.0%) and fifty-seven percent (57.0%), respectively. If and to the extent that the fees and expenses of the Advisors through July 31, 2008 are less than $250,000, the remaining amounts shall be promptly refunded to the Company. For the avoidance of doubt, the Company and the Guarantors acknowledge and agree that the Fees and Expenses Reimbursement referred to in this Section 10 is a Secured Obligation under the Transaction Documents and part of the costs of the Investor that may be collected pursuant to Section 17 of the Bridge Note and Section 21 of the Convertible Note.

11. Expenses. All fees, costs and expenses incurred by the Investor in connection with this Agreement, including, without limitation, the fees and expenses of Schulte Roth & Zabel LLP, and each of the other documents, instruments and agreements executed in connection herewith, including, but not limited to, such fees, costs and expenses incurred in connection with the negotiation, implementation and enforcement of this Agreement, shall be paid by the Company in accordance with the terms hereof and the other New Transaction Documents.

12. Severability. The provisions of this Agreement are severable, and if any clause or provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provision in this Agreement in any jurisdiction.

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13. Counterparts. This Agreement may be executed in any number of counterparts, each of which counterparts when executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. Delivery of an executed counterpart of this Agreement by telefacsimile or other electronic transmission shall be equally effective as delivery of a manually executed counterpart.

14. Integration. This Agreement contains the entire understanding of the parties hereto with regard to the subject matter contained herein. This Agreement supersedes all prior or contemporaneous negotiations, promises, covenants, agreements and representations of every nature whatsoever with respect to the matters referred to in this Agreement, all of which have become merged and finally integrated into this Agreement. Each of the parties understands that in the event of any subsequent litigation, controversy or dispute concerning any of the terms, conditions or provisions of this Agreement, no party shall be entitled to offer or introduce into evidence any oral promises or oral agreements between the parties relating to the subject matter of this Agreement not included or referred to herein and not reflected by a writing included or referred to herein. Any single or partial exercise of any right under this Agreement shall not preclude other or further exercise thereof or the exercise of any other right, and no waiver, amendment or other variation of the terms, conditions or provisions of this Agreement whatsoever shall be valid unless in writing signed by the Investor (or any other Person whose consent is required pursuant to the terms of the New Transaction Documents), and then only to the extent in such writing specifically set forth. All remedies contained in this Agreement or by law afforded shall be cumulative and all shall be available to the Investor until the obligations of the Company under the WorldSpace Notes have been paid in full. The failure of any party to enforce at any time any provision of this Agreement shall not be construed to be a waiver of such provisions, nor in any way to affect the validity of this Agreement or any part hereof or the right of such party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to constitute a waiver of any other or subsequent breach.

15. Binding Effect; Assignment. This Amendment shall be binding upon and inure to the benefit of the Company, the Guarantors and the Investor each of their respective successors and assigns.

16. Headings. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.

17. Governing Law; Waiver of Jury Trial. Without limiting the applicability of any other provision of the WorldSpace Notes or any other New Transaction Document, the terms and provisions set forth in Section 8(d) of the Amendment Agreements (Governing Law; Jurisdiction; Jury Trial) are expressly incorporated herein by reference.

[Remainder of page intentionally left blank.]

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IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first above written.

COMPANY:

WORLDSPACE, INC.

By:

Name:

Title:

GUARANTORS:

AFRISPACE, INC.

By:

Name:

Title:

ASIASPACE LIMITED

By:

Name:

Title:

WORLDSPACE SATELLITE COMPANY LTD.

By:

Name:

Title:

WORLDSPACE SYSTEMS CORPORATION

By:

Name:

Title:

INVESTOR:

By:

By:

Name:

Title:

SECURITIES SCHEDULE

(1)	(2)	(3)
Investor	Address and Facsimile Number	Number of Second Amended and Restated Forbearance Warrant Shares
Highbridge International LLC	c/o Highbridge Capital Management, LLC	2,838,767
	9 West 57th Street,
	27th Floor
	New York, New York 10019
	Attention: Ari J. Storch
	Adam J. Chill
	Facsimile: (212) 751-0755
	Telephone: (212) 287-4720
	Residence: Cayman Islands
OZ Master Fund, Ltd.	c/o OZ Management, L.L.C.	774,096
	9 West 57th Street, 39th Floor
	New York, New York 10019
	Attention: Joel M. Frank
	Facsimile: (212) 790-0150
	Telephone: (212) 790-0160
	Residence: Cayman Islands
AG Offshore Convertibles, Ltd.	c/o Angelo, Gordon & Co., L.P.	619,242
	245 Park Avenue - 26th Floor
	New York, New York 10167
	Attention: Gary I. Wolf
	Facsimile: (212) 867-6449
	Telephone: (212) 692-2058
	Residence:
Citadel Equity Fund Ltd.	c/o Citadel Limited Partnership	3,767,895
	131 S. Dearborn Street
	Chicago, Illinois 60603
	Attention: Dan Urchell
	Facsimile: (312) 267-7583
	Telephone: (312) 395-5338
	Residence: Cayman Islands

EX-99.2

Exhibit 99.2

WORLDSPACE, INC.

[FORM OF SECOND AMENDED AND RESTATED WARRANT TO PURCHASE COMMON STOCK]

Warrant No.:                 

Number of Shares of Common Stock: [                ]¹

Date of Issuance: June 13, 2008 (“Issuance Date”)

WorldSpace, Inc., a Delaware corporation (the “Company”), hereby certifies that, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, [HIGHBRIDGE INTERNATIONAL LLC] [OTHER INVESTORS], the registered holder hereof or its permitted assigns (the “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company, at the Exercise Price (as defined below) then in effect, upon surrender of this Warrant to Purchase Common Stock (including any Warrants to Purchase Common Stock issued in exchange, transfer or replacement hereof, the “Warrant”), at any time or times on or after the date hereof, but not after 11:59 p.m., New York time, on the Expiration Date (as defined below), [                             (            )²] fully paid nonassessable shares of Common Stock (as defined below) (the “Warrant Shares”). Except as otherwise defined herein, capitalized terms in this Warrant shall have the meanings set forth in Section 15. This Warrant amends, supplements, modifies and completely restates and supersedes (i) the amended and restated warrants (the “Amended Warrants”) dated as of July 3, 2008, issued by the Company to the Holder for the exercise of [                             (            )³] shares of Common Stock and (ii) the original warrants (the “Original Warrants”) dated as of the Issuance Date, issued by the Company to the Holder for the exercise of [                             (            )⁴] shares of Common Stock, but shall not, except as specifically amended hereby or as set forth in the Holder’s Second Forbearance Agreement and Amendment (as defined below), constitute a release, satisfaction or novation of any of the obligations under the Amended Warrants, Original Warrants or any other Transaction Document (as defined in the Amendment and Exchange Agreements). This Warrant is one of an issue of Warrants to Purchase Common Stock (the “SPA Warrants”) further amending and restating the terms of the Amended Warrants and Original Warrants pursuant to those certain Second Forbearance Agreement and Amendments, dated as of July 17, 2008 (the “Replacement Date”), by and among the Company, the

¹ Insert a number equal to the sum of the Holder’s pro rata share of 1,500,000 and the number of shares of common stock underlying such Holder’s Amended Warrant.

² Insert a number equal to the sum of the Holder’s pro rata share of 1,500,000 and the number of shares of common stock underlying such Holder’s Amended Warrant.

³ Insert a number equal to the sum of the Holder’s pro rata share of 1,500,000 and the number of shares of common stock underyling such Holder’s Original Warrant.

⁴ Insert a number equal to Holder’s pro rata share of 5,000,000 of common stock underyling such Holder’s Original Warrant.

Guarantors (as defined therein) and each of the investors (collectively, the “Buyers”) referred to therein (the “Second Forbearance Agreement and Amendments”).

1. EXERCISE OF WARRANT.

(a) Mechanics of Exercise. Subject to the terms and conditions hereof (including, without limitation, the limitations set forth in Section 1(f)), this Warrant may be exercised by the Holder on any day on or after the date hereof, in whole or in part, by (i) delivery of a written notice, in the form attached hereto as Exhibit A (the “Exercise Notice”), of the Holder’s election to exercise this Warrant to the Company and (ii) (A) payment to the Company of an amount equal to the applicable Exercise Price multiplied by the number of Warrant Shares as to which this Warrant is being exercised (the “Aggregate Exercise Price”) in cash or by wire transfer of immediately available funds or (B) by notifying the Company that this Warrant is being exercised pursuant to a Cashless Exercise (as defined in Section 1(d)). The Holder shall not be required to deliver the original Warrant in order to effect an exercise hereunder. Execution and delivery of the Exercise Notice with respect to less than all of the Warrant Shares shall have the same effect as cancellation of the original Warrant and issuance of a new Warrant evidencing the right to purchase the remaining number of Warrant Shares. On or before the first (1^st) Business Day following the date on which the Company has received each of the Exercise Notice and the Aggregate Exercise Price (or notice of a Cashless Exercise) (the “Exercise Delivery Documents”), the Company shall transmit by facsimile an acknowledgment of confirmation of receipt of the Exercise Delivery Documents to the Holder and the Company’s transfer agent (the “Transfer Agent”). On or before the third (3^rd) Business Day following the date on which the Company has received all of the Exercise Delivery Documents (the “Share Delivery Date”), the Company shall (X) provided that the Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program, upon the request of the Holder, credit such aggregate number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance account with DTC through its Deposit Withdrawal Agent Commission system, or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and dispatch by overnight courier to the address as specified in the Exercise Notice, a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder is entitled pursuant to such exercise which certificates shall not bear any restrictive legends if this Warrant is exercised pursuant to a Cashless Exercise or if a registration statement covering the resale of the Warrant Shares is effective. Upon delivery of the Exercise Delivery Documents, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date such Warrant Shares are credited to the Holder’s DTC account or the date of delivery of the certificates evidencing such Warrant Shares as the case may be. If this Warrant is submitted in connection with any exercise pursuant to this Section 1(a) and the number of Warrant Shares represented by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired upon an exercise, then the Company shall as soon as practicable and in no event later than three Business Days after any exercise and at its own expense, issue a new Warrant (in accordance with Section 7(d)) representing the right to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised. No fractional shares of Common Stock are to be issued upon the exercise of this Warrant, but

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rather the number of shares of Common Stock to be issued shall be rounded up to the nearest whole number. The Company shall pay any and all taxes which may be payable with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant.

(b) Exercise Price. For purposes of this Warrant, “Exercise Price” means $1.55, subject to adjustment as provided herein.

(c) Company’s Failure to Timely Deliver Securities. If the Company shall fail for any reason or for no reason to issue to the Holder within three (3) Trading Days of receipt of the Exercise Delivery Documents, a certificate for the number of shares of Common Stock to which the Holder is entitled and register such shares of Common Stock on the Company’s share register or to credit the Holder’s balance account with DTC for such number of shares of Common Stock to which the Holder is entitled upon the Holder’s exercise of this Warrant, then, in addition to all other remedies available to the Holder, the Company shall pay in cash to the Holder on each day after such third Business Day that the issuance of such shares of Common Stock is not timely effected an amount equal to 1.5% of the product of (A) the sum of the number of shares of Common Stock not issued to the Holder on a timely basis and to which the Holder is entitled and (B) the Closing Sale Price of the shares of Common Stock on the Trading Day immediately preceding the last possible date which the Company could have issued such shares of Common Stock to the Holder without violating Section 1(a). In addition to the foregoing, if within three (3) Trading Days after the Company’s receipt of the facsimile copy of a Exercise Notice the Company shall fail to issue and deliver a certificate to the Holder and register such shares of Common Stock on the Company’s share register or credit the Holder’s balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon such holder’s exercise hereunder or if the Company fails to deliver to the Holder the certificate or certificates representing the applicable Warrant Shares (or credit the Holder’s balance account at DTC with the applicable Warrant Shares) within three (3) Trading Days after its obligation to do so under clause (ii) below and if on or after such Trading Day the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of shares of Common Stock issuable upon such exercise that the Holder anticipated receiving from the Company (a “Buy-In”), then the Company shall, within three Business Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver such certificate (and to issue such shares of Common Stock) or credit such Holder’s balance account with DTC shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such shares of Common Stock or credit such Holder’s balance account with DTC and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the Closing Bid Price on the date of exercise.

(d) Cashless Exercise. Notwithstanding anything contained herein to the contrary, the Holder may, in its sole discretion, exercise this Warrant in whole or in part and, in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise in payment of the Aggregate Exercise Price, elect instead to receive upon such exercise

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the “Net Number” of shares of Common Stock determined according to the following formula (a “Cashless Exercise”):

Net Number =	(A x B) - (A x C)
	B

For purposes of the foregoing formula:

A=	the total number of shares with respect to which this Warrant is then being exercised.
B=	the average of the Closing Sale Prices of the shares of Common Stock (as reported by Bloomberg) for the five (5) consecutive Trading Days ending on the date immediately preceding the date of the Exercise Notice.
C=	the Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.

(e) Disputes. In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall promptly issue to the Holder the number of Warrant Shares that are not disputed and resolve such dispute in accordance with Section 12.

(f) Limitations on Exercises.

(1) Beneficial Ownership. The Company shall not effect the exercise of this Warrant, and the Holder shall not have the right to exercise this Warrant, to the extent that after giving effect to such exercise, such Person (together with such Person’s affiliates) would beneficially own in excess of 2.49% of the shares of Common Stock outstanding immediately after giving effect to such exercise. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by such Person and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude shares of Common Stock which would be issuable upon (i) exercise of the remaining, unexercised portion of this Warrant beneficially owned by such Person and its affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company beneficially owned by such Person and its affiliates (including, without limitation, any convertible notes or convertible preferred stock or warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein. Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended. For purposes of this Warrant, in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Company’s most recent Form 10-K, Form 10-Q, Current Report on Form 8-K or other public filing with the Securities and Exchange Commission, as the case may be, (2) a more recent public announcement by the Company or (3) any other

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notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. For any reason at any time, upon the written or oral request of the Holder, the Company shall within one Business Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including the SPA Securities and the SPA Warrants, by the Holder and its affiliates since the date as of which such number of outstanding shares of Common Stock was reported. By written notice to the Company, the Holder may from time to time increase or decrease the Maximum Percentage to any other percentage not in excess of 2.49%, or after receipt of a notice of a Fundamental Transaction, to any other percentage, specified in such notice; provided that (i) any such increase will not be effective until the sixty-first (61^st) day after such notice is delivered to the Company, and (ii) any such increase or decrease will apply only to the Holder and not to any other holder of SPA Warrants.

(2) Principal Market Regulation. The Company shall not be obligated to issue any shares of Common Stock upon exercise of this Warrant, if the issuance of such shares of Common Stock would exceed that number of shares of Common Stock which the Company may issue upon exercise, redemption or conversion, as applicable, of the SPA Warrants and SPA Securities or otherwise without breaching the Company’s obligations under the rules or regulations of the Principal Market and any Eligible Market (the number of shares which may be issued without violating such rules and regulations, the “Exchange Cap”), except that such limitation shall not apply in the event that the Company (A) obtains the approval of its stockholders as required by the applicable rules of the applicable Principal Market and any Eligible Market for issuances of shares of Common Stock in excess of such amount or (B) obtains a written opinion from outside counsel to the Company that such approval is not required, which opinion shall be reasonably satisfactory to the Required Holders. Unless and until such approval or written opinion is obtained, no Buyer shall be issued in the aggregate, upon exercise or conversion, as applicable, of any SPA Warrants or SPA Securities, shares of Common Stock in an amount greater than the product of the Exchange Cap multiplied by a fraction, the numerator of which is the total number of shares of Common Stock underlying the SPA Warrants issued to such Buyer pursuant to the applicable Second Forbearance Agreement and Amendment on the Issuance Date and the denominator of which is the aggregate number of shares of Common Stock underlying the SPA Warrants issued to the Buyers pursuant to the Second Forbearance Agreement and Amendments on the Issuance Date (with respect to each Buyer, the “Exchange Cap Allocation”). In the event that any Buyer shall sell or otherwise transfer any of such Buyer’s SPA Warrants, the transferee shall be allocated a pro rata portion of such Buyer’s Exchange Cap Allocation, and the restrictions of the prior sentence shall apply to such transferee with respect to the portion of the Exchange Cap Allocation allocated to such transferee. In the event that any holder of SPA Warrants shall exercise all of such holder’s SPA Warrants into a number of shares of Common Stock which, in the aggregate, is less than such holder’s Exchange Cap Allocation, then the difference between such holder’s Exchange Cap Allocation and the number of shares of Common Stock actually issued to such holder shall be allocated to the respective Exchange Cap Allocations of the remaining

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holders of SPA Warrants on a pro rata basis in proportion to the shares of Common Stock underlying the SPA Warrants then held by each such holder.

(g) Insufficient Authorized Shares. If at any time while any of the Warrants remain outstanding the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon exercise of the Warrants at least a number of shares of Common Stock equal to 120% of the number of shares of Common Stock as shall from time to time be necessary to effect the exercise of all of the Warrants then outstanding (the “Required Reserve Amount”) (an “Authorized Share Failure”), then the Company shall immediately take all action necessary to increase the Company’s authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for the Warrants then outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than ninety (90) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders for the approval of an increase in the number of authorized shares of Common Stock. In connection with such meeting, the Company shall provide each stockholder with a proxy statement and shall use its best efforts to solicit its stockholders’ approval of such increase in authorized shares of Common Stock and to cause its board of directors to recommend to the stockholders that they approve such proposal.

2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The Exercise Price and the number of Warrant Shares shall be adjusted from time to time as follows:

(a) Adjustment upon Issuance of Shares of Common Stock. If and whenever on or after the Issuance Date the Company issues or sells, or in accordance with this Section 2 is deemed to have issued or sold, any shares of Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the account of the Company, but excluding shares of Common Stock deemed to have been issued by the Company in connection with any Excluded Securities (as defined in the SPA Securities) for a consideration per share (the “New Issuance Price”) less than a price equal to the Market Price (as defined in the SPA Securities) in effect immediately prior to such issue or sale or deemed issuance or sale (the “Applicable Price” and the foregoing a “Dilutive Issuance”), then immediately after such Dilutive Issuance the Exercise Price then in effect shall be reduced to an amount equal to the New Issuance Price. Upon each such adjustment of the Exercise Price hereunder, the number of Warrant Shares shall be adjusted to the number of shares of Common Stock determined by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares acquirable upon exercise of this Warrant immediately prior to such adjustment and dividing the product thereof by the Exercise Price resulting from such adjustment. For purposes of determining the adjusted Exercise Price under this Section 2(a), the following shall be applicable:

(i) Issuance of Options. If the Company in any manner grants any Options and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option is less than the

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Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes of this Section 2(a)(i), the “lowest price per share for which one share of Common Stock is issuable upon exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of such Option” shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the granting or sale of the Option, upon exercise of the Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option. No further adjustment of the Exercise Price or number of Warrant Shares shall be made upon the actual issuance of such shares of Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities.

(ii) Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this Section 2(a)(ii), the “lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof” shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale of the Convertible Security and upon conversion, exercise or exchange of such Convertible Security. No further adjustment of the Exercise Price or number of Warrant Shares shall be made upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of this Warrant has been or is to be made pursuant to other provisions of this Section 2(a), no further adjustment of the Exercise Price or number of Warrant Shares shall be made by reason of such issue or sale.

(iii) Change in Option Price or Rate of Conversion. If the purchase price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time, the Exercise Price and the number of Warrant Shares in effect at the time of such increase or decrease shall be adjusted to the Exercise Price and the number of Warrant Shares which would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration or increased or decreased conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section 2(a)(iii), if the terms of any Option or Convertible Security that was outstanding as of the date of issuance of this Warrant are increased or decreased in the manner

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described in the immediately preceding sentence, then such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 2(a) shall be made if such adjustment would result in an increase of the Exercise Price then in effect or a decrease in the number of Warrant Shares.

(iv) Calculation of Consideration Received. In case any Option is issued in connection with the issue or sale of other securities of the Company, together comprising one integrated transaction in which no specific consideration is allocated to such Options by the parties thereto, the Options will be deemed to have been issued for a consideration of $.01. If any Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount received by the Company therefor. If any Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Company will be the fair value of such consideration, except where such consideration consists of securities, in which case the amount of consideration received by the Company will be the Closing Sale Price of such securities on the date of receipt. If any Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such Common Stock, Options or Convertible Securities, as the case may be. The fair value of any consideration other than cash or securities will be determined jointly by the Company and the Required Holders. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within five (5) Business Days after the tenth (10^th) day following the Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Required Holders. The determination of such appraiser shall be deemed binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.

(v) Record Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.

(b) Adjustment upon Subdivision or Combination of Common Stock. If the Company at any time on or after the Issuance Date subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision will be proportionately reduced and the number of Warrant Shares will be

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proportionately increased. If the Company at any time on or after the Issuance Date combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Exercise Price in effect immediately prior to such combination will be proportionately increased and the number of Warrant Shares will be proportionately decreased. Any adjustment under this Section 2(b) shall become effective at the close of business on the date the subdivision or combination becomes effective.

(c) Other Events. If any event occurs of the type contemplated by the provisions of this Section 2 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company’s Board of Directors will make an appropriate adjustment in the Exercise Price and the number of Warrant Shares so as to protect the rights of the Holder; provided that no such adjustment pursuant to this Section 2(c) will increase the Exercise Price or decrease the number of Warrant Shares as otherwise determined pursuant to this Section 2.

3. RIGHTS UPON DISTRIBUTION OF ASSETS. If the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case:

(a) any Exercise Price in effect immediately prior to the close of business on the record date fixed for the determination of holders of shares of Common Stock entitled to receive the Distribution shall be reduced, effective as of the close of business on such record date, to a price determined by multiplying such Exercise Price by a fraction of which (i) the numerator shall be the Closing Bid Price of the shares of Common Stock on the Trading Day immediately preceding such record date minus the value of the Distribution (as determined in good faith by the Company’s Board of Directors) applicable to one share of shares of Common Stock, and (ii) the denominator shall be the Closing Bid Price of the shares of Common Stock on the trading day immediately preceding such record date; and

(b) the number of Warrant Shares shall be increased to a number of shares equal to the number of shares of Common Stock obtainable immediately prior to the close of business on the record date fixed for the determination of holders of shares of Common Stock entitled to receive the Distribution multiplied by the reciprocal of the fraction set forth in the immediately preceding paragraph (a); provided that in the event that the Distribution is of shares of Common Stock (or common stock) (“Other Shares of Common Stock”) of a company whose common shares are traded on a national securities exchange or a national automated quotation system, then the Holder may elect to receive a warrant to purchase Other Shares of Common Stock in lieu of an increase in the number of Warrant Shares, the terms of which shall be identical to those of this Warrant, except that such warrant shall be exercisable into the number of shares of Other Shares of Common Stock that would have been payable to the Holder pursuant to the Distribution had the Holder exercised this Warrant immediately prior to such record date and with an aggregate exercise price equal to the product of the amount by which the exercise price of this Warrant was decreased with respect to the Distribution pursuant to the

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terms of the immediately preceding paragraph (a) and the number of Warrant Shares calculated in accordance with the first part of this paragraph (b) and provided further that such Warrant may provide for such legends and restrictions on transfer as may then be required under applicable provisions of U.S. federal securities laws.

4. PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.

(a) Purchase Rights. In addition to any adjustments pursuant to Section 2 above, if at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

(b) Fundamental Transactions.

(1) The Company shall not enter into or be party to a Fundamental Transaction unless (i) the Successor Entity assumes in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section (4)(b) pursuant to written agreements in form and substance reasonably satisfactory to the Required Holders and approved by the Required Holders prior to such Fundamental Transaction, including agreements to deliver to each holder of Warrants in exchange for such Warrants a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant, including, without limitation, an adjusted exercise price equal to the value for the shares of Common Stock reflected by the terms of such Fundamental Transaction, and exercisable for a corresponding number of shares of capital stock equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and reasonably satisfactory to the Required Holders and (ii) the Successor Entity (including its Parent Entity) is a publicly traded corporation whose common stock is quoted on or listed for trading on an Eligible Market. Upon the occurrence of any Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant with the same effect as if such Successor Entity had been named as the Company herein. Upon consummation of the Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation that there shall be issued upon exercise of this Warrant at any time after the consummation of the Fundamental Transaction, in lieu of the shares of the Common Stock (or other securities, cash, assets or other property) purchasable upon the exercise of the Warrant prior to such Fundamental Transaction, such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights)

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which the Holder would have been entitled to receive upon the happening of such Fundamental Transaction had this Warrant been converted immediately prior to such Fundamental Transaction, as adjusted in accordance with the provisions of this Warrant. In addition to and not in substitution for any other rights hereunder, prior to the consummation of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon an exercise of this Warrant at any time after the consummation of the Fundamental Transaction but prior to the Expiration Date, in lieu of the shares of the Common Stock (or other securities, cash, assets or other property) purchasable upon the exercise of the Warrant prior to such Fundamental Transaction, such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights) which the Holder would have been entitled to receive upon the happening of such Fundamental Transaction had the Warrant been exercised immediately prior to such Fundamental Transaction. Provision made pursuant to the preceding sentence shall be in a form and substance reasonably satisfactory to the Required Holders. The provisions of this Section shall apply similarly and equally to successive Fundamental Transactions and Corporate Events and shall be applied without regard to any limitations on the exercise of this Warrant.

(2) Notwithstanding the provisions of Section 4(b)(1), the Company shall have the right to require that the Holder waive the requirements of Section 4(b)(1) (the “Waiver”) in exchange for a payment of cash in an amount equal to the Black Scholes Value of the remaining unexercised portion of this Warrant on the date of such Fundamental Transaction, with the Waiver becoming effective, and this Warrant cancelled, concurrently with such payment of such cash amount (the “Fundamental Transaction Amount”) to the Holder on the Fundamental Transaction Closing Date. Notwithstanding anything to the contrary in this Section 4(b), but subject to Section 1(f), until such time that the Holder receives the Fundamental Transaction Amount (at which point this Warrant shall be cancelled), this Warrant may be exercised, in whole or in part, by the Holder (x) prior to the Fundamental Transaction Closing Date, into Common Stock pursuant to Section 1, or (y) upon (which may be expressly conditioned upon the closing of the Fundamental Transaction) or after the Fundamental Transaction Closing Date, into any such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights, if applicable) which the Holder would have been entitled to receive upon the happening of such Fundamental Transaction had the Warrant been exercised immediately prior to such Fundamental Transaction Closing Date.

5. NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation, Bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, and will at all times in good faith carry out all the provisions of this Warrant and take all action as may be required to protect the rights of the Holder. Without limiting the generality of the foregoing, the Company (i) shall not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, (ii) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of

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Common Stock upon the exercise of this Warrant, and (iii) shall, so long as any of the SPA Warrants are outstanding, take all action necessary to reserve and keep available out of its authorized and unissued shares of Common Stock, solely for the purpose of effecting the exercise of the SPA Warrants, 120% of the number of shares of Common Stock as shall from time to time be necessary to effect the exercise of the SPA Warrants then outstanding (without regard to any limitations on exercise).

6. WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically provided herein, the Holder, solely in such Person’s capacity as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in such Person’s capacity as the Holder of this Warrant, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares which such Person is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company. Notwithstanding this Section 6, the Company shall provide the Holder with copies of the same notices and other information given to the stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders.

7. REISSUANCE OF WARRANTS.

(a) Transfer of Warrant. If this Warrant is to be transferred, the Holder shall surrender this Warrant to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Warrant (in accordance with Section 7(d)), registered as the Holder may request, representing the right to purchase the number of Warrant Shares being transferred by the Holder and, if less then the total number of Warrant Shares then underlying this Warrant is being transferred, a new Warrant (in accordance with Section 7(d)) to the Holder representing the right to purchase the number of Warrant Shares not being transferred.

(b) Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Warrant, the Company shall execute and deliver to the Holder a new Warrant (in accordance with Section 7(d)) representing the right to purchase the Warrant Shares then underlying this Warrant.

(c) Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Warrant or Warrants (in accordance with Section 7(d)) representing in the aggregate the right to purchase the number of Warrant Shares then underlying this Warrant, and each such new

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Warrant will represent the right to purchase such portion of such Warrant Shares as is designated by the Holder at the time of such surrender; provided, however, that no Warrants for fractional shares of Common Stock shall be given.

(d) Issuance of New Warrants. Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to purchase the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to Section 7(a) or Section 7(c), the Warrant Shares designated by the Holder which, when added to the number of shares of Common Stock underlying the other new Warrants issued in connection with such issuance, does not exceed the number of Warrant Shares then underlying this Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance Date, and (iv) shall have the same rights and conditions as this Warrant.

8. NOTICES. Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall be given in accordance with Section 8(i) of the Amendment and Exchange Agreements. The Company shall provide the Holder with prompt written notice of all actions taken pursuant to this Warrant, including in reasonable detail a description of such action and the reason therefore. Without limiting the generality of the foregoing, the Company will give written notice to the Holder (i) immediately upon any adjustment of the Exercise Price, setting forth in reasonable detail, and certifying, the calculation of such adjustment and (ii) at least fifteen (15) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the shares of Common Stock, (B) with respect to any grants, issuances or sales of any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property to holders of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction with such notice being provided to the Holder.

9. AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions of this Warrant may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Required Holders; provided that no such action may increase the exercise price of any SPA Warrant or decrease the number of shares or class of stock obtainable upon exercise of any SPA Warrant without the written consent of the Holder. No such amendment shall be effective to the extent that it applies to less than all of the holders of the SPA Warrants then outstanding and no amendment to the SPA Warrants which has a disproportionate negative impact on any Holder as compared to the other Holders may be made without the approval of such negatively affected Holder.

10. GOVERNING LAW. This Warrant shall be governed by and construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Warrant shall be governed by, the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York.

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11. CONSTRUCTION; HEADINGS. This Warrant shall be deemed to be jointly drafted by the Company and all the Buyers and shall not be construed against any person as the drafter hereof. The headings of this Warrant are for convenience of reference and shall not form part of, or affect the interpretation of, this Warrant.

12. DISPUTE RESOLUTION. In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall submit the disputed determinations or arithmetic calculations via facsimile within two (2) Business Days of receipt of the Exercise Notice giving rise to such dispute, as the case may be, to the Holder. If the Holder and the Company are unable to agree upon such determination or calculation of the Exercise Price or the Warrant Shares within three (3) Business Days of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall, within two (2) Business Days submit via facsimile (a) the disputed determination of the Exercise Price to an independent, reputable investment bank selected by the Company and approved by the Holder or (b) the disputed arithmetic calculation of the Warrant Shares to the Company’s independent, outside accountant. The Company shall cause at its expense the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than ten Business Days from the time it receives the disputed determinations or calculations. Such investment bank’s or accountant’s determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error.

13. REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Warrant shall be cumulative and in addition to all other remedies available under this Warrant and the other Transaction Documents, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of the Holder right to pursue actual damages for any failure by the Company to comply with the terms of this Warrant. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the holder of this Warrant shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required.

14. TRANSFER. This Warrant may be offered for sale, sold, transferred or assigned without the consent of the Company.

15. CERTAIN DEFINITIONS. For purposes of this Warrant, the following terms shall have the following meanings:

(a) “Amendment and Exchange Agreements” means those certain Amendment and Exchange Agreements dated as of June 13, 2008 by and among the Company, the Guarantors (as defined therein) and each of the Buyers.

(b) “Black Scholes Value” means the value of this Warrant obtained from the “OV” function on Bloomberg using (i) a price per share of Common Stock equal to the greater of (A) the arithmetic average of the VWAP (as defined below) of the Common Stock for

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the five Trading Days immediately preceding the date of consummation of the applicable Fundamental Transaction and (B) the VWAP of the Common Stock for the Trading Day immediately preceding the date of consummation of the applicable Fundamental Transaction, (ii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of this Warrant as of the date of consummation of the Fundamental Transaction and (iii) an expected volatility equal to the greater of 60% and the 100 day volatility obtained from the HVT function on Bloomberg determined as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction

(c) “Bloomberg” means Bloomberg Financial Markets.

(d) “Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed.

(e) “Closing Bid Price” and “Closing Sale Price” means, for any security as of any date, the last closing bid price and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price, as the case may be, then the last bid price or last trade price, respectively, of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing bid price or last trade price, respectively, of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.). If the Closing Bid Price or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing Sale Price, as the case may be, of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved pursuant to Section 12. All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.

(f) “Common Stock” means (i) the Company’s shares of Class A Common Stock, par value $0.01 per share, and (ii) any share capital into which such Common Stock shall have been changed or any share capital resulting from a reclassification of such Common Stock.

(g) “Common Stock Deemed Outstanding” means, at any given time, the number of shares of Common Stock outstanding immediately prior to such issue calculated on a fully diluted basis, as if all Convertible Securities had been fully converted into shares of Common Stock immediately prior to such issuance and any outstanding warrants, options or

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other rights for the purchase of either shares of Common Stock or Convertible Securities had been fully exercised immediately prior to such issuance (and the resulting securities fully converted into shares of Common Stock, if so convertible) as of such date, but excluding any Common Stock owned or held by or for the account of the Company or issuable upon conversion or exercise, as applicable of the SPA Securities and the Warrants.

(h) “Convertible Securities” means any stock or securities (other than Options) directly or indirectly convertible into or exercisable or exchangeable for shares of Common Stock.

(i) “Eligible Market” means the Principal Market, The New York Stock Exchange, Inc., the American Stock Exchange, The NASDAQ Capital Market or The NASDAQ Global Select Market.

(j) “Expiration Date” means the date sixty months after the Replacement Date or, if such date falls on a day other than a Business Day or on which trading does not take place on the Principal Market (a “Holiday”), the next date that is not a Holiday.

(k) “Fundamental Transaction” means that the (A) Company shall, directly or indirectly, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation) another Person or Persons, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company to another Person, or (iii) allow another Person to make a purchase, tender or exchange offer that is accepted by the holders of more than 50% of the outstanding shares of Voting Stock (not including any shares of Voting Stock held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such purchase, tender or exchange offer), or (iv) consummate a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than the 50% of the outstanding shares of Voting Stock (not including any shares of Voting Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock purchase agreement or other business combination), (v) reorganize, recapitalize or reclassify its Common Stock, or (vi) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act) (other than Noah A. Samara and any Samara Person, taken as a whole) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate Voting Stock of the Company.

(l) “Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.

(m) “Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.

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(n) “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or agency thereof.

(o) “Principal Market” means The NASDAQ Global Market.

(p) “Required Holders” means the holders of the SPA Warrants representing at least a majority of shares of Common Stock underlying the SPA Warrants then outstanding.

(q) “Samara Persons” means (i) the immediate family of Noah A. Samara and any (A) corporation, partnership, limited liability company, trust or other business organization or (B) “person” or “group” under Section 13(d)(3) of the Exchange Act that, in either (A) or (B) is controlled by Noah A. Samara or his immediate family, any beneficiary of the estate of Noah A. Samara or his immediate family and (ii) following the death of Noah A. Samara, any beneficiary of the estate of Noah A. Samara or his immediate family or any corporation, partnership, limited liability company, trust or other business organization controlled by any beneficiary of the estate of Noah A. Samara or his immediate family.

(r) “SPA Securities” means the Notes issued pursuant to the Amendment and Exchange Agreements.

(s) “Successor Entity” means the Person (or, if so elected by the Required Holders, the Parent Entity) formed by, resulting from or surviving any Fundamental Transaction or the Person (or, if so elected by the Required Holders, the Parent Entity) with which such Fundamental Transaction shall have been entered into.

(t) “Trading Day” means any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded; provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York Time).

(u) “VWAP” means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market on which such security is traded during the period beginning at 9:30:01 a.m., New York City time (or such other time as such Principal Market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York City time (or such other time as such Principal Market publicly announces is the official close of trading) as reported by Bloomberg through its “Volume at Price” function, or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York City time (or such other time as such market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York City time (or

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such other time as such market publicly announces is the official close of trading) as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.). If the VWAP cannot be calculated for a security on a particular date on any of the foregoing bases, the VWAP, of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved pursuant to Section 12. All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.

[Signature Page Follows]

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IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock to be duly executed as of the Issuance Date set out above.

WORLDSPACE, INC.

By:

Name:

Title:

EXHIBIT A

EXERCISE NOTICE

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

WARRANT TO PURCHASE COMMON STOCK

WORLDSPACE, INC.

The undersigned holder hereby exercises the right to purchase                      of the shares of Common Stock (“Warrant Shares”) of WorldSpace, Inc., a Delaware corporation (the “Company”), evidenced by the attached Warrant to Purchase Common Stock (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

1. Form of Exercise Price. The Holder intends that payment of the Exercise Price shall be made as:

                     a “Cash Exercise” with respect to                            Warrant Shares; and/or

                     a “Cashless Exercise” with respect to                      Warrant Shares.

2. Payment of Exercise Price. In the event that the holder has elected a Cash Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, the holder shall pay the Aggregate Exercise Price in the sum of $                     to the Company in accordance with the terms of the Warrant.

3. Delivery of Warrant Shares. The Company shall deliver to the holder                      Warrant Shares in accordance with the terms of the Warrant.

Date:                  ,         

Name of Registered Holder

By:

Name:

Title: