Document:

Exhibit 4.1

 

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS.  THE SECURITIES MAY
NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE
OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A
GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

Uranium
Resources, Inc.

 

WARRANT TO PURCHASE COMMON STOCK

 

Warrant No.:

Number of Shares of Common Stock:

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

 

Uranium Resources, Inc., a Delaware corporation
(the “Company”), hereby certifies
that, for good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, [               ],
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 Issuance Date,
but not after 11:59 p.m., New York Time, on the Expiration Date (as
defined below) fully paid nonassessable shares of Common Stock (as defined
below) (the “Warrant Shares”) free from all liens and
charges with respect to the issuance thereof. 
Any portion of this Warrant remaining unexercised upon the Expiration
Date shall terminate and be of no further force or effect.  Except as otherwise defined herein,
capitalized terms in this Warrant shall have the meanings set forth in Section 15.  This Warrant is one of the Warrants (as
defined in the Securities Purchase Agreement) to purchase Common Stock (the “SPA Warrants” issued pursuant to those
certain Securities Purchase Agreements, each dated as of May 13, 2008 (the
“Subscription Date”), by and among
the Company and the purchasers (the “Purchasers”)
referred to therein (the “Securities Purchase
Agreements”).

 

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 Issuance
Date, in whole or in part by delivery of a written notice, in compliance with
and in the form attached hereto as Exhibit A (the 

 

 

“Exercise Notice”), of the Holder’s election
to exercise this Warrant 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 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 but shall be required to deliver the original Warrant
within ten (10) calendar days of such notice and shall not be entitled to
receive a replacement Warrant until such original Warrant has been so
delivered.  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 (1st) 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 (3rd)
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 shares
of Common Stock 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.  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
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 $[    ],
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 

 

2

 

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 Trading Day that the issuance of such shares of Common Stock is
not timely effected an amount equal to 0.5% 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 an 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 Trading 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, if a Registration Statement (as
defined in the Securities Purchase Agreement) covering the Warrant Shares that
are the subject of the Exercise Notice (the “Unavailable
Warrant Shares”) is not available for the resale of such Unavailable
Warrant Shares, 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 the “Net
Number” of shares of Common Stock determined according to the following formula
(a “Cashless Exercise”):

 

	
   

  	
  Net Number =
  

  	
  [A×B] - [A×C]

  
	
   

  	
   

  	
  B

  

 

For purposes of the foregoing
formula:

 

A= the total number of shares
with respect to which this Warrant is then being exercised.

 

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B= the Weighted Average Price 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.

 

(i)            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 4.99% (the “Maximum Percentage”) 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 (the “Exchange Act”).  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-KSB, Form 10-Q, Form 10-QSB,
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 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
Trading 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 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 increase or decrease the Maximum Percentage to any other percentage not in
excess of 9.99% specified in such notice; provided that (i) any such
increase will not be effective until the sixty-first (61st) day
after such notice is delivered to the Company, 

 

4

 

and (ii) any such
increase or decrease will apply only to the Holder and not to any other holder
of SPA Warrants.

 

(ii)           Principal Market Regulation.  The Company shall not be obligated to issue
any shares of Common Stock upon exercise of this Warrant and no Purchaser shall
be entitled to receive any shares of Common Stock 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 of the SPA Warrants, taking into account
the exercise of the Ratchet Warrants issued under the Securities Purchase
Agreement and the issuance of the total number of shares issued under the
Securities Purchase Agreement, or otherwise without breaching the Company’s
obligations under any
applicable rules or regulations of any applicable Eligible Market
(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 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. 
Until such approval or written opinion is obtained, no Purchaser shall
be issued in the aggregate, upon exercise of any SPA Warrants, 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 Purchaser pursuant to the Securities
Purchase Agreement 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 Purchasers pursuant to the Securities Purchase Agreement on the Issuance
Date (with respect to each Purchaser, the “Exchange
Cap Allocation”).  In the
event that any Purchaser shall sell or otherwise transfer any of such Purchaser’s
SPA Warrants, the transferee shall be allocated a pro rata portion of such
Purchaser’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 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. 
In the event that the Company is prohibited from issuing any Warrant
Shares for which an Exercise Notice has been received as a result of the
operation of this Section 1(f)(ii), and promptly following any shareholder
vote whereby the Company fails to obtain approval for an increase in authorized
shares of Common Stock as contemplated by Section 2(g) below, the
Company shall pay cash in exchange for cancellation of such Warrant Shares, at
a price per Warrant Share equal to the difference between the Weighted Average
Price and the Exercise Price as of the date of the attempted exercise.

 

(g)           Insufficient
Authorized Shares.  If at any time
while this Warrant remains 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 this Warrant at least a
number of shares of Common Stock equal to 100% (the “Required
Reserve Amount”) of the number of shares of Common Stock as shall
from time to 

 

5

 

time be necessary to
effect the exercise of all of this Warrant then outstanding (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 this Warrant 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 one hundred and twenty
(120) 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 reasonable 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.  If the Company at any time on or after the
Subscription 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 proportionately increased, provided however, that in no event shall the Exercise Price
be reduced below the par value of the Common Stock.  If the Company at any time on or after the
Subscription 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 shall become effective at the close of
business on the date the subdivision or combination becomes effective.

 

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 Weighted Average 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 Weighted Average 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 

 

6

 

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 terms of the immediately
preceding paragraph (a) and the number of Warrant Shares calculated in
accordance with the first part of this paragraph (b).

 

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.

 

(i)            The Company
shall not enter into or be party to a Fundamental Transaction unless the
Successor Entity assumes in writing all of the obligations of the Company under
this Warrant and the Securities Purchase Agreement in accordance with the
provisions of this Section (4)(b) pursuant to written agreements in
form and substance satisfactory to the Required Holders and approved by the
Required Holders prior to such Fundamental Transaction, including
agreements to deliver to each holder of the SPA 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 satisfactory to the Required Holders.

 

(ii)           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 

 

7

 

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.

 

(iii)          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) issuable upon the exercise of the Warrant
prior to such Fundamental Transaction, such shares of the Common Stock (or its equivalent)
of the Successor Entity (including its Parent Entity) 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.

 

(iv)          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)
issuable upon the exercise of this 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 this 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
Holder.

 

(v)           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.

 

(vi)          The Company shall immediately
following the public disclosure of the record date for any shareholder vote
relating to a Fundamental Transaction, provide notice of such record date to
the Holder.

 

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 and, (ii) shall
take all such actions as may be necessary or 

 

8

 

appropriate in order that
the Company may validly and legally issue fully paid and nonassessable shares
of Common Stock upon the exercise of this Warrant.

 

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 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.

 

9

 

(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 10 of the
Securities Purchase Agreement.  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 ten (10) 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 or (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.

 

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.

 

10.           GOVERNING LAW AND FORUM.  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.  The parties hereto
agree to submit to the exclusive jurisdiction of the federal and state courts
of the State of New York with respect to the interpretation of this Warrant or
for the purposes of any action arising out of or related to this Warrant.

 

11.           CONSTRUCTION; HEADINGS.  This Warrant
shall be deemed to be jointly drafted by the Company and all the Purchasers 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 

 

10

 

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 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
the disputed determination of the Exercise Price to an independent, reputable
investment bank selected by the Company and approved by the Holder.  The Company shall cause at its expense the
investment bank to perform the determinations or calculations and notify the
Company and the Holder of the results no later than ten (10) 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 Securities Purchase Agreement, 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 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, except as may otherwise be required by Sections 5.9 and 7.2 of the
Securities Purchase Agreement.  This
Warrant is a “restricted security” as such term is defined in Rule 144
promulgated under the Securities Act and must be held indefinitely unless
transferred pursuant to an exemption from registration or qualification under
applicable state and federal securities laws.

 

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

 

(a)           “Bloomberg” means Bloomberg Financial Markets.

 

(b)           “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.

 

(c)           “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 the last trade
price, respectively, 

 

11

 

of such security prior to
4:00 p.m., New York City 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.

 

(d)           “Common Stock”
means (i) the Company’s shares of Common Stock, $0.001 par value, 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.

 

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

 

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

 

(g)           “Expiration Date”
means the date sixty (60) months after the Issuance Date or, if such date falls
on a day other than a Trading Day, the next Trading Day.

 

(h)           “Fundamental
Transaction” means (i) the
consolidation or merger of the Company with or into another Person in which the
Company is not the surviving corporation, or (ii) the sale, assignment,
transfer, conveyance or other disposition of all or substantially all of the
properties or assets of the Company to another Person, or (iii) a purchase, tender or exchange offer that
is commenced with the consent of the Company and that is accepted by the
holders of more than the 50% of either the outstanding shares of Common Stock (not
including any shares of Common 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) the consummation of a stock
purchase agreement or
other business combination (including, without limitation, a reorganization,
recapitalization or scheme of arrangement) with another Person
whereby such other Person acquires more than the 50% of the outstanding shares of Common
Stock (not including any shares of Common 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, 

 

12

 

such stock purchase agreement or other business combination), or
(v) the reorganization, recapitalization or reclassification of the
Company’s Common Stock.

 

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

 

(j)            “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.

 

(k)           “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.

 

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

 

(m)          “Required Holders”
means the holders of the SPA Warrants representing all of the shares of Common
Stock underlying the SPA Warrants then outstanding.

 

(n)           “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 with which such Fundamental Transaction shall have been entered
into.

 

(o)           “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 p.m., New York City Time).

 

(p)           “Weighted Average Price”
means, for any security as of any date, the dollar volume-weighted average
price for such security on the Principal Market during the period beginning at 9:30 a.m., New York
City time, and ending at 4:00 p.m., New York City time, 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 a.m., New York City time, and ending
at 4:00 p.m., New York City time, 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 Weighted Average Price cannot be
calculated for such security on such date on any of the foregoing bases, the
Weighted 

 

13

 

Average Price of such
security on such date shall be the fair market value as mutually determined by
the Company and the Required Holders.  If
the Company and the Required Holders are unable to agree upon the fair market
value of the such security, then such dispute shall be resolved pursuant to Section 12
with the term “Weighted Average Price” being substituted for the term “Exercise
Price.” All such determinations shall be appropriately adjusted for any share
dividend, share split or other similar transaction during such period.

 

[Signature
Page Follows]

 

14

 

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.

 

 

	
   

  	
  URANIUM RESOURCES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

EXHIBIT A

 

EXERCISE NOTICE

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

WARRANT TO PURCHASE
COMMON STOCK

 

URANIUM RESOURCES,
INC.

 

The undersigned holder
hereby exercises the right to purchase                          
of the shares of Common Stock (“Warrant
Shares”) of Uranium Resources, 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                                    
  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.

 

4. The Undersigned shall
deliver a copy of this Exercise Notice to the following:

 

	
  Uranium
  Resources, Inc.

  405 State highway 121 Bypass

  Building A, Suite 110

  Lewisville, TX 75067

  Attn: Chief Financial Officer

  	
   

  	
  Baker
  Hostetler LLP

  303 East 17th Avenue

  Suite, 1100

  Denver, CO 802036

  Attn: Mr. Alfred Chidester

  	
   

  	
  Corporate
  Stock Transfer, Inc.

  3200 Cherry Creek Drive South

  Suite 430

  Denver, CO 80209

  

 

	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
          Name
  of Registered Holder

  
	
  Title:

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  
							

 

 

ACKNOWLEDGMENT

 

The Company hereby acknowledges
this Exercise Notice and hereby directs Corporate Stock Transfer, Denver,
Colorado to issue the above indicated number of shares of Common Stock in
accordance with the Transfer Agent Instructions dated April [   ], 2008 from the Company and acknowledged
and agreed to by Corporate Stock Transfer, Denver, Colorado.

 

 

	
   

  	
  URANIUM RESOURCES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

2Exhibit 4.2

 

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS.  THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE
FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD
PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

Uranium
Resources, Inc.

 

WARRANT TO PURCHASE COMMON STOCK

 

Warrant No.:

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

 

Uranium Resources, Inc., a Delaware corporation
(the “Company”), hereby certifies
that, for good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, [              
], the registered holder hereof or its permitted assigns (the “Holder”), is entitled, upon the occurrence
of a Trigger Event and subject to the terms
set forth below, to purchase from the Company, at the Exercise Price, 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 Issuance Date, but not after 11:59 p.m., New York Time, on the
Expiration Date (as defined below) the number of fully paid nonassessable
shares of Common Stock (as defined below) (the “Warrant Shares”)
free from all liens and charges with respect to the issuance thereof,
determined by the Ratchet Formula (as defined below).  Any portion of this Warrant remaining
unexercised upon the Expiration Date shall terminate and be of no further force
or effect.  Except as otherwise defined
herein, capitalized terms in this Warrant shall have the meanings set forth in Section 15.  This Warrant is one of the Ratchet Warrants
(as defined in the Securities Purchase Agreement) to purchase Common Stock (the
“SPA Ratchet Warrants” issued pursuant
to those certain Securities Purchase Agreements, each dated as of May 13,
2008 (the “Subscription Date”), by
and among the Company and the purchasers (the “Purchasers”) referred to therein (the “Securities Purchase Agreements”).

 

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 Issuance
Date, in whole or in part by delivery of a written notice, in compliance with
and in the form attached hereto as Exhibit A (the 

 

 

“Exercise Notice”), of the Holder’s election
to exercise this Warrant 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 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 but shall be required to deliver the original Warrant
within ten (10) calendar days of such notice and shall not be entitled to
receive a replacement Warrant until such original Warrant has been so
delivered.  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 (1st)
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 (3rd)
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 shares
of Common Stock 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.  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
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 $0.01.

 

(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 

 

2

 

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 Trading Day that the issuance of such shares of Common Stock is
not timely effected an amount equal to 0.5% 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 an 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 Trading 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, if a Registration Statement (as
defined in the Securities Purchase Agreement) covering the Warrant Shares that
are the subject of the Exercise Notice (the “Unavailable
Warrant Shares”) is not available for the resale of such Unavailable
Warrant Shares, 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 the “Net
Number” of shares of Common Stock determined according to the following formula
(a “Cashless Exercise”):

 

	
   

  	
  Net Number = 

  	
  [A×B] - [A×C]

  	
   

  
	
   

  	
   

  	
  B

  	
   

  

 

For purposes of the foregoing formula:

 

A= the total number of shares with respect to which this Warrant is
then being exercised.

 

3

 

B= the Weighted Average Price 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.

 

(i)            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 4.99% (the “Maximum Percentage”) 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 (the “Exchange Act”).  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-KSB, Form 10-Q, Form 10-QSB,
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 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
Trading 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 Ratchet 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 increase or decrease the Maximum Percentage to any
other percentage not in excess of 9.99% specified in such notice; provided that
(i) any such increase will not be effective until the sixty-first (61st)
day after such notice is delivered to the Company, 

 

4

 

and (ii) any such
increase or decrease will apply only to the Holder and not to any other holder
of SPA Ratchet Warrants.

 

(ii)           Principal Market Regulation.  The Company shall not be obligated to issue
any shares of Common Stock upon exercise of this Warrant and no Purchaser shall
be entitled to receive any shares of Common Stock 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 of the SPA Ratchet Warrants, taking into
account the exercise of the Warrants issued under the Securities Purchase
Agreement and the issuance of the total number of shares issued under the
Securities Purchase Agreement, or otherwise without breaching the Company’s
obligations under any
applicable rules or regulations of any applicable Eligible Market
(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 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. 
Until such approval or written opinion is obtained, no Purchaser shall
be issued in the aggregate, upon exercise of any SPA Ratchet Warrants, 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 Ratchet Warrants issued to such Purchaser
pursuant to the Securities Purchase Agreement on the Issuance Date and the
denominator of which is the aggregate number of shares of Common Stock
underlying the SPA Ratchet Warrants issued to the Purchasers pursuant to the
Securities Purchase Agreement on the Issuance Date (with respect to each
Purchaser, the “Exchange Cap Allocation”).  In the event that any Purchaser shall sell or
otherwise transfer any of such Purchaser’s SPA Ratchet Warrants, the transferee
shall be allocated a pro rata portion of such Purchaser’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 Ratchet Warrants shall exercise all of such holder’s SPA
Ratchet 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 holders of SPA Ratchet
Warrants on a pro rata basis in proportion to the shares of Common Stock
underlying the SPA Ratchet Warrants then held by each such holder.  In the event that the Company is prohibited from
issuing any Warrant Shares for which an Exercise Notice has been received as a
result of the operation of this Section 1(f)(ii), and promptly following
any shareholder vote whereby the Company fails to obtain approval for an
increase in authorized shares of Common Stock as contemplated by Section 2(g) below,
the Company shall pay cash in exchange for cancellation of such Warrant Shares,
at a price per Warrant Share equal to the difference between the Weighted
Average Price and the Exercise Price as of the date of the attempted exercise.

 

(g)           Insufficient Authorized Shares.  If at any time while this Warrant remains
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 this Warrant at least a number of shares of Common
Stock equal to 100% (the “Required Reserve Amount”)
of the number of shares of Common Stock as shall from time to 

 

5

 

time be necessary to
effect the exercise of all of this Warrant then outstanding (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 this Warrant 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 one hundred and twenty
(120) 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 reasonable 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.  If the Company at any time on or after the
Subscription 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 proportionately increased, provided however, that in no event shall the Exercise Price
be reduced below the par value of the Common Stock.  If the Company at any time on or after the
Subscription 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 shall become effective at the close of
business on the date the subdivision or combination becomes effective.

 

3.             Reserved.

 

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.

 

(i)            The Company shall not enter into or
be party to a Fundamental Transaction unless the Successor Entity assumes in
writing all of the obligations of 

 

6

 

the Company under
this Warrant and the Securities Purchase Agreement in accordance with the
provisions of this Section (4)(b) pursuant to written agreements in
form and substance satisfactory to the Required Holders and approved by the
Required Holders prior to such Fundamental Transaction, including
agreements to deliver to each holder of the SPA 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 satisfactory to the Required Holders.

 

(ii)           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.

 

(iii)          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) issuable upon the exercise of the Warrant
prior to such Fundamental Transaction, such shares of the Common Stock (or its equivalent)
of the Successor Entity (including its Parent Entity) 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.

 

(iv)          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) issuable
upon the exercise of this 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 this 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 Holder.

 

(v)           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.

 

7

 

(vi)          The
Company shall immediately following the public disclosure of the record date
for any shareholder vote relating to a Fundamental Transaction, provide notice
of such record date to the Holder.

 

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 and, (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
Common Stock upon the exercise of this Warrant.

 

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)           Reserved.

 

(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, 

 

8

 

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 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(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 10 of the Securities Purchase Agreement.  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 ten (10) 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 or (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.

 

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 Ratchet Warrants then outstanding.

 

10.           GOVERNING
LAW AND FORUM.  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.  The
parties hereto agree to submit to the exclusive jurisdiction of the federal and
state courts of the State of New York with respect to the interpretation of
this Warrant or for the purposes of any action arising out of or related to
this Warrant.

 

9

 

11.           CONSTRUCTION;
HEADINGS.  This Warrant shall be
deemed to be jointly drafted by the Company and all the Purchasers 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 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 the
disputed determination of the Exercise Price to an independent, reputable
investment bank selected by the Company and approved by the Holder.  The Company shall cause at its expense the
investment bank to perform the determinations or calculations and notify the
Company and the Holder of the results no later than ten (10) 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 Securities Purchase Agreement, 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 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 not be offered for sale,
sold, transferred or assigned without the consent of the Company.  This Warrant is a “restricted security” as
such term is defined in Rule 144 promulgated under the Securities Act and
must be held indefinitely unless transferred pursuant to an exemption from
registration or qualification under applicable state and federal securities
laws, subject to the consent of the Company.

 

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

 

(a)           “Bloomberg” means
Bloomberg Financial Markets.

 

(b)           “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.

 

10

 

(c)           “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 the last
trade price, respectively, of such security prior to 4:00 p.m., New York
City 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.

 

(d)           “Common
Stock” means (i) the Company’s shares of Common Stock, $0.001
par value, 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.

 

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

 

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

 

(g)           “Expiration
Date” means the date that is the earlier of (i) twelve (12)
months after the Issuance Date or, if such date falls on a day other than a
Trading Day, the next Trading Day or (ii) the date that is ten (10) calendar
days after the date upon which the Company consummates the raising of at least
$80 million in gross proceeds by sale of shares of the Company’s Common Stock
in one or more transactions after the Issuance Date.

 

(h)           “Fundamental
Transaction” means (i) the
consolidation or merger of the Company with or into another Person in which the
Company is not the surviving corporation, or (ii) the sale, assignment,
transfer, conveyance or other disposition of all or substantially all of the
properties or assets of the Company to another Person, or (iii) a purchase, tender or exchange offer that
is commenced with the consent of the Company and that is accepted by the
holders of more than the 50% of either the outstanding shares of Common Stock 

 

11

 

(not including any shares of Common 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) the
consummation of a stock purchase agreement or other business combination (including, without
limitation, a reorganization, recapitalization or scheme of arrangement) with another
Person whereby such other Person acquires more than the 50% of the outstanding shares of Common
Stock (not including any shares of Common 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), or
(v) the reorganization, recapitalization or reclassification of the
Company’s Common Stock.

 

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

 

(j)            “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.

 

(k)           “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.

 

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

 

(m)          “PIPE Purchase Price”
means $[  •  ].

 

(n)           “PIPE Number of Shares
Purchased” mean $[  •  ].

 

(o)           “Ratchet Formula”
means: the product obtained through subtracting the Trigger Follow On Purchase
Price (“B”) from the PIPE Purchase Price (“A”), divided by the Trigger Follow
On Purchase Price (“B”); multiplied by the PIPE Number of Shares Purchased (“C”)
or, expressed as a formula: ((A-B)/B) x C,
rounded up to the next whole number.

 

(p)           “Required
Holders” means the holders of the SPA Ratchet Warrants representing
all of shares of Common Stock underlying the SPA Ratchet Warrants then
outstanding.

 

(q)           “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 with which such Fundamental
Transaction shall have been entered into.

 

(r)            “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 

 

12

 

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 p.m., New York City Time).

 

(s)           “Trigger Event” means
the sale of shares of Common Stock by the Company after the Issuance Date and
prior to the Expiration Date other than (i) by means of the exercise of
warrants or options outstanding prior to the Issuance Date, or (ii) pursuant
to the exercise of options issued under any of the Company’s employee stock
option plans, retirement plans, deferred compensation plans, restricted stock
plans, or other equity incentive programs. 
If an option or warrant outstanding on the Issuance Date is thereafter
amended to reduce the exercise price it shall not be considered outstanding as
of the Issuance Date.  Trigger Event
shall also include the issuance by the Company of securities convertible
into shares of Common Stock that entitle any Person to acquire shares of Common
Stock at a price per share less than the PIPE Purchase Price (“Convertible
Securities”).

 

(t)            “Trigger
Follow On Purchase Price” means (i) the price per share Common
Stock sold by the Company in a transaction that is a Trigger Event and (ii) the
price per share of Common Stock at which Convertible Securities may be
converted into Common Stock, in each case if the price per share is less than
the PIPE Purchase Price.

 

(u)           “Weighted Average Price”
means, for any security as of any date, the dollar volume-weighted average
price for such security on the Principal Market during the period beginning at 9:30 a.m., New York
City time, and ending at 4:00 p.m., New York City time, 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 a.m., New York City time, and ending
at 4:00 p.m., New York City time, 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 Weighted Average Price cannot be
calculated for such security on such date on any of the foregoing bases, the
Weighted Average Price of such security on such date shall be the fair market
value as mutually determined by the Company and the Required Holders.  If the Company and the Required Holders are
unable to agree upon the fair market value of the such security, then such
dispute shall be resolved pursuant to Section 12 with the term “Weighted
Average Price” being substituted for the term “Exercise Price.” All such
determinations shall be appropriately adjusted for any share dividend, share
split or other similar transaction during such period.

 

[Signature
Page Follows]

 

13

 

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.

 

	
   

  	
  URANIUM RESOURCES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

EXHIBIT A

 

EXERCISE NOTICE

 

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS 

WARRANT TO PURCHASE COMMON STOCK

 

URANIUM RESOURCES,
INC.

 

The undersigned holder
hereby exercises the right to purchase                                   
of the shares of Common Stock (“Warrant
Shares”) of Uranium Resources, 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
                                              
  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.

 

4. The Undersigned shall
deliver a copy of this Exercise Notice to the following:

 

	
  Uranium
  Resources, Inc. 

  405
  State highway 121 Bypass

  Building
  A, Suite 110 

  Lewisville,
  TX 75067 

  Attn:
  Chief Financial Officer

  	
   

  	
  Baker
  Hostetler LLP 

  303
  East 17th Avenue 

  Suite,
  1100 

  Denver,
  CO 802036 

  Attn:
  Mr. Alfred Chidester

  	
   

  	
  Corporate
  Stock Transfer, Inc. 

  3200
  Cherry Creek Drive South Suite 430 

  Denver,
  CO 80209

  

 

 

	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
     Name of
  Registered Holder

  
	
  Title:

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  
						

 

 

ACKNOWLEDGMENT

 

The Company hereby
acknowledges this Exercise Notice and hereby directs Corporate Stock Transfer,
Denver, Colorado to issue the above indicated number of shares of Common Stock
in accordance with the Transfer Agent Instructions dated May [   ], 2008 from the Company and acknowledged
and agreed to by Corporate Stock Transfer, Denver, Colorado.

 

 

	
   

  	
  URANIUM RESOURCES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00142-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00142-of-00352.parquet"}]]