REGISTRATION RIGHTS AGREEMENT

         This  Registration  Rights  Agreement  (the  "Agreement")  is made  and
entered  into as of this  ___ day of  __________,  2004,  by and  among  Applied
NeuroSolutions,  Inc., a Delaware corporation (the "Company"), and the investors
set forth on the signature pages hereto (the "Investors").

         The parties hereby agree as follows:

         1. CERTAIN DEFINITIONS.

         As used in this Agreement, the following terms shall have the following
meanings:

         "AFFILIATE"  means, with respect to any person,  any other person which
directly or indirectly  controls,  is controlled  by, or is under common control
with, such person.

         "BUSINESS DAY" means a day,  other than a Saturday or Sunday,  on which
banks in New York City are open for the general transaction of business.

         "COMMON STOCK" shall mean the Company's common stock, par value $0.0025
per  share,  and any  securities  into  which such  shares  may  hereinafter  be
reclassified.

         "INVESTORS"  shall mean the  Investors  and any  Affiliate or permitted
transferee  of any  Investor  who is a  subsequent  holder  of any  Warrants  or
Registrable Securities.

         "PROSPECTUS"  shall mean the  prospectus  included in any  Registration
Statement, as amended or supplemented by any prospectus supplement, with respect
to the  terms of the  offering  of any  portion  of the  Registrable  Securities
covered  by  such  Registration  Statement  and  by  all  other  amendments  and
supplements  to the  prospectus,  including  post-effective  amendments  and all
material incorporated by reference in such prospectus.

         "PURCHASE   AGREEMENTS"   shall  mean  the  purchase  and  subscription
agreements entered into among the Company and the Investors.

         "REGISTER,"  "REGISTERED"  and  "REGISTRATION"  refer to a registration
made by preparing  and filing a  Registration  Statement or similar  document in
compliance with the 1933 Act (as defined below), and the declaration or ordering
of effectiveness of such Registration Statement or document.

         "REGISTRABLE SECURITIES" shall mean the Shares and the shares of Common
Stock issuable (i) upon the exercise of the Warrants, if any, and (ii) any other
securities  issued or issuable  with respect to or in exchange  for  Registrable
Securities;  provided, that, a security shall cease to be a Registrable Security
upon (A) sale  pursuant to a  Registration  Statement or Rule 144 under the 1933
Act, or (B) such security becoming  eligible for sale by the Investors  pursuant
to Rule 144(k).

         "REGISTRATION  STATEMENT" shall mean any registration  statement of the
Company  filed  under  the  1933  Act  that  covers  the  resale  of  any of the
Registrable Securities pursuant to the provisions of this Agreement,  amendments
and  supplements  to  such  Registration  Statement,   including  post-effective
amendments,  all  exhibits and all  material  incorporated  by reference in such
Registration Statement.

<PAGE>


         "REQUIRED  INVESTORS"  means the  Investors  holding a majority  of the
Registrable Securities.

         "SEC" means the U.S. Securities and Exchange Commission.

         "SHARES"  means the  shares  of Common  Stock  issued  pursuant  to the
Purchase Agreements.

         "1933 ACT" means the Securities Act of 1933, as amended,  and the rules
and regulations promulgated thereunder.

         "1934 ACT" means the Securities  Exchange Act of 1934, as amended,  and
the rules and regulations promulgated thereunder.

         "WARRANTS"  means,  the  warrants  to purchase  shares of Common  Stock
issued to the Investors pursuant to the Purchase Agreements.

         "WARRANT  SHARES"  means the shares of Common Stock  issuable  upon the
exercise of the Warrants.

         2. REGISTRATION.

                           (a) REGISTRATION  STATEMENTS.  Promptly following the
closing of the purchase and sale of the securities  contemplated by the Purchase
Agreements (the "Closing  Date"),  but no later than the earlier of (i) ten days
after the  completion of the Company's  audit for the fiscal year ended December
31,  2003 or (ii) March 22, 2004 (the  "Filing  Deadline"),  the  Company  shall
prepare and file with the SEC one Registration  Statement on Form SB-2, covering
the  resale of the  Registrable  Securities  in an amount at least  equal to the
number of Shares plus the number of shares of Common  Stock  necessary to permit
the exercise in full of the Warrants.  Such Registration Statement shall include
the plan of  distribution  attached  hereto  as  EXHIBIT  A.  Such  Registration
Statement also shall cover,  to the extent  allowable under the 1933 Act and the
rules promulgated  thereunder (including Rule 416), such indeterminate number of
additional  shares of Common Stock resulting from stock splits,  stock dividends
or similar transactions with respect to the Registrable Securities.  The Company
shall include in the Registration  Statement only the Registrable Securities and
those  securities set forth in SCHEDULE 2(a) annexed  hereto.  The  Registration
Statement  (and each  amendment  or  supplement  thereto,  and each  request for
acceleration  of  effectiveness  thereof)  shall be provided in accordance  with
Section 3(c) to the  Investors  and their  counsel  prior to its filing or other
submission.  If a Registration  Statement covering the Registrable Securities is
not filed with the SEC on or prior to the Filing Deadline, the Company will make
pro rata payments to each Investor,  as liquidated damages and not as a penalty,
in an amount equal to 1.5% of the aggregate amount invested by such Investor for
each 30-day  period or pro rata for any portion  thereof  following  the date by
which  such  Registration   Statement  should  have  been  filed  for  which  no
Registration Statement is filed with respect to the Registrable Securities. Such
payments  shall  constitute  the  Investors'  exclusive  remedy for such events;
provided,  however,  that the  Investors  shall  retain  the right to pursue any
equitable remedies available to them with respect to such events.  Such payments
shall be made to each Investor in cash.

                           (b)  EXPENSES.  The  Company  will  pay all  expenses
associated  with each  registration,  including  filing and printing  fees,  the
Company's counsel and accounting fees


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<PAGE>


and expenses, costs associated with clearing the Registrable Securities for sale
under  applicable  state  securities  laws,  listing  fees  and  the  Investors'
reasonable expenses in connection with the registration,  but excluding fees and
expenses  of  counsel  to  the  Investors,   discounts,   commissions,  fees  of
underwriters,  selling brokers,  dealer managers or similar securities  industry
professionals with respect to the Registrable Securities being sold.

                           (c)      EFFECTIVENESS.

                           (i) The  Company  shall use  commercially  reasonable
efforts  to  have  the  Registration  Statement  declared  effective  as soon as
practicable.  The Company  shall notify the  Investors by facsimile or e-mail as
promptly as practicable,  and in any event, within twenty-four (24) hours, after
any  Registration  Statement  is  declared  effective  and shall  simultaneously
provide  the  Investors  with  copies of any  related  Prospectus  to be used in
connection with the sale or other disposition of the securities covered thereby.
If (A) a  Registration  Statement  covering the  Registrable  Securities  is not
declared  effective  by the SEC within 150 days after the Closing  Date,  or (B)
after a  Registration  Statement has been declared  effective by the SEC,  sales
cannot be made pursuant to such Registration Statement for any reason (including
without limitation by reason of a stop order, or the Company's failure to update
the Registration Statement), but excluding the inability of any Investor to sell
the Registrable  Securities  covered thereby due to market conditions and except
as excused pursuant to subparagraph  (ii) below,  then the Company will make pro
rata payments to each Investor,  as liquidated damages and not as a penalty,  in
an amount equal to 1.5% of the  aggregate  amount  invested by such Investor for
each 30- day period or pro rata for any portion  thereof  following  the date by
which such  Registration  Statement  should have been  effective  (the "Blackout
Period").  Such payments shall  constitute the Investors'  exclusive  remedy for
such events;  provided,  however,  that the Investors  shall retain the right to
pursue any equitable remedies available to them with respect to such events. The
amounts payable as liquidated  damages  pursuant to this paragraph shall be paid
monthly  within three (3) Business Days of the last day of each month  following
the  commencement  of the Blackout  Period until the termination of the Blackout
Period. Such payments shall be made to each Investor in cash.

                           (ii) For not more than twenty (20)  consecutive  days
or for a total of not more than  forty-five  (45) days in any twelve  (12) month
period, the Company may delay the disclosure of material non-public  information
concerning the Company,  by suspending the use of any Prospectus included in any
registration  contemplated  by this Section  containing  such  information,  the
disclosure  of which  at the  time is not,  in the  good  faith  opinion  of the
Company,  in the best interests of the Company (an "Allowed  Delay");  provided,
that the  Company  shall  promptly  (a) notify the  Investors  in writing of the
existence of (but in no event, without the prior written consent of an Investor,
shall the Company  disclose to such  Investor any of the facts or  circumstances
regarding) material non-public  information giving rise to an Allowed Delay, (b)
advise  the  Investors  in  writing  to cease all sales  under the  Registration
Statement until the end of the Allowed Delay and (c) use commercially reasonable
efforts to terminate an Allowed Delay as promptly as practicable.

                           (d) UNDERWRITTEN  OFFERING.  If any offering pursuant
to a  Registration  Statement  pursuant  to  Section  2(a)  hereof  involves  an
underwritten offering, the Company shall


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<PAGE>


have the right to select an  investment  banker and  manager to  administer  the
offering, which investment banker or manager shall be reasonably satisfactory to
the Required Investors.

         3. COMPANY  OBLIGATIONS.  The Company will use commercially  reasonable
efforts to effect the  registration of the Registrable  Securities in accordance
with the terms hereof,  and pursuant  thereto the Company will, as expeditiously
as possible:

                           (a) use commercially reasonable efforts to cause such
Registration  Statement to become effective and to remain continuously effective
for a period that will  terminate  upon the  earliest of (i) five years from the
initial effectiveness date of the Registration Statement, (ii) the date on which
all Registrable  Securities  covered by such  Registration  Statement as amended
from time to time,  have been sold, and (iii) the date on which all  Registrable
Securities  covered by such Registration  Statement may be sold pursuant to Rule
144(k) (the "Effectiveness Period") and advise the Investors in writing when the
Effectiveness Period has expired;

                           (b) prepare and file with the SEC such amendments and
post-effective  amendments to the  Registration  Statement and the Prospectus as
may be necessary to keep the  Registration  Statement  effective  for the period
specified in Section 3(a) and to comply with the  provisions of the 1933 Act and
the  1934  Act  with  respect  to the  distribution  of  all of the  Registrable
Securities covered thereby;

                           (c) provide copies to and permit  counsel  designated
by the Investors to review each  Registration  Statement and all  amendments and
supplements  thereto no fewer than seven (7) days prior to their filing with the
SEC and not file any document to which such counsel reasonably objects;

                           (d) furnish to the  Investors and their legal counsel
(i) promptly after the same is prepared and publicly distributed, filed with the
SEC, or received by the Company (but not later than two (2) Business  Days after
the filing date,  receipt date or sending date, as the case may be) one (1) copy
of any  Registration  Statement  and any  amendment  thereto,  each  preliminary
prospectus and Prospectus  and each  amendment or supplement  thereto,  and each
letter  written  by or on behalf of the  Company  to the SEC or the staff of the
SEC,  and each item of  correspondence  from the SEC or the staff of the SEC, in
each case relating to such Registration Statement (other than any portion of any
thereof which contains information for which the Company has sought confidential
treatment),  and (ii)  such  number  of  copies  of a  Prospectus,  including  a
preliminary  prospectus,  and all  amendments and  supplements  thereto and such
other  documents as each Investor may reasonably  request in order to facilitate
the  disposition of the Registrable  Securities  owned by such Investor that are
covered by the related Registration Statement;

                           (e) in the event the Company  selects an  underwriter
for the  offering,  the Company  shall  enter into and  perform  its  reasonable
obligations  under an  underwriting  agreement,  in usual  and  customary  form,
including,  without  limitation,   customary  indemnification  and  contribution
obligations, with the underwriter of such offering;


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<PAGE>


                           (f)  if  required  by  the  underwriter,  or  if  any
Investor is  described in the  Registration  Statement  as an  underwriter,  the
Company shall  furnish,  on the  effective  date of the  Registration  Statement
(except  with  respect to clause  (i)  below)  and on the date that  Registrable
Securities are delivered to an underwriter,  if any, for sale in connection with
the Registration Statement (including any Investor deemed to be an underwriter),
(i) (A) in the case of an  underwritten  offering,  an opinion,  dated as of the
closing date of the sale of  Registrable  Securities to the  underwriters,  from
independent  legal  counsel  representing  the  Company  for  purposes  of  such
Registration  Statement, in form, scope and substance as is customarily given in
an underwritten public offering, addressed to the underwriters and the Investors
participating  in such  underwritten  offering  or (B) in the case of an "at the
market" offering,  an opinion,  dated as of or promptly after the effective date
of the Registration  Statement to the Investors,  from independent legal counsel
representing the Company for purposes of such Registration  Statement,  in form,
scope and substance as is customarily  given in a public offering,  addressed to
the  Investors,  and  (ii) a  letter,  dated  as of the  effective  date of such
Registration Statement and confirmed as of the applicable dates described above,
from  the  Company's  independent  certified  public  accountants  in  form  and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten  public offering,  addressed to the underwriters
(including any Investor deemed to be an underwriter);

                           (g)  use  commercially   reasonable  efforts  to  (i)
prevent the issuance of any stop order or other suspension of effectiveness and,
(ii) if such order is issued,  obtain  the  withdrawal  of any such order at the
earliest possible moment;

                           (h)  prior  to any  public  offering  of  Registrable
Securities,  use  commercially  reasonable  efforts  to  register  or qualify or
cooperate  with  the  Investors  and  their  counsel  in  connection   with  the
registration or qualification of such Registrable  Securities for offer and sale
under the  securities  or blue sky laws of such  jurisdictions  requested by the
Investors  and do any and  all  other  commercially  reasonable  acts or  things
necessary or advisable to enable the  distribution in such  jurisdictions of the
Registrable Securities covered by the Registration Statement; provided, however,
that the Company shall not be required in connection therewith or as a condition
thereto to (i)  qualify to do business  in any  jurisdiction  where it would not
otherwise be required to qualify but for this Section 3(h),  (ii) subject itself
to general  taxation  in any  jurisdiction  where it would not  otherwise  be so
subject but for this Section 3(h), or (iii) file a general consent to service of
process in any such jurisdiction;

                           (i) use commercially  reasonable efforts to cause all
Registrable  Securities covered by a Registration Statement to be listed on each
securities  exchange,  interdealer  quotation  system  or other  market on which
similar securities issued by the Company are then listed;

                           (j)  immediately  notify the  Investors,  at any time
when a Prospectus relating to Registrable Securities is required to be delivered
under the 1933 Act, upon discovery that, or upon the happening of any event as a
result of which, the Prospectus included in a Registration Statement, as then in
effect,  includes an untrue  statement of a material  fact or omits to state any
material fact required to be stated  therein or necessary to make the statements
therein not misleading in light of the circumstances  then existing,  and at the
request of any such  holder,  promptly  prepare  and  furnish  to such  holder a
reasonable number of copies of a supplement to or


                                      -5-
<PAGE>


an amendment of such  Prospectus  as may be  necessary  so that,  as  thereafter
delivered to the  purchasers of such  Registrable  Securities,  such  Prospectus
shall not  include an untrue  statement  of a  material  fact or omit to state a
material fact required to be stated  therein or necessary to make the statements
therein not misleading in light of the circumstances then existing; and

                           (k) otherwise use commercially  reasonable efforts to
comply with all applicable  rules and  regulations of the SEC under the 1933 Act
and the 1934 Act,  take such other  actions as may be  reasonably  necessary  to
facilitate the registration of the Registrable  Securities  hereunder;  and make
available to its security holders,  as soon as reasonably  practicable,  but not
later than the  Availability  Date (as defined  below),  an  earnings  statement
covering a period of at least twelve (12) months,  beginning after the effective
date of each Registration Statement,  which earnings statement shall satisfy the
provisions  of Section  11(a) of the 1933 Act,  including  Rule 158  promulgated
thereunder (for the purpose of this subsection 3(k),  "Availability  Date" means
the 45th day following  the end of the fourth  fiscal  quarter that includes the
effective  date of such  Registration  Statement,  except  that,  if such fourth
fiscal quarter is the last quarter of the Company's  fiscal year,  "Availability
Date" means the 90th day after the end of such fourth fiscal quarter).

                           (l) With a view to making  available to the Investors
the  benefits  of Rule  144 (or  its  successor  rule)  and  any  other  rule or
regulation  of the SEC that may at any time permit the  Investors to sell shares
of Common Stock to the public without  registration,  the Company  covenants and
agrees to: (i) make and keep public  information  available,  as those terms are
understood  and defined in Rule 144,  until the earlier of (A) six months  after
such date as all of the  Registrable  Securities may be resold  pursuant to Rule
144(k)  or any  other  rule of  similar  effect  or (B) such  date as all of the
Registrable  Securities  shall  have  been  resold;  (ii) file with the SEC in a
timely manner all reports and other documents  required of the Company under the
1934 Act;  and (iii)  furnish to each  Investor  upon  request,  as long as such
Investor owns any Registrable Securities, (A) a written statement by the Company
that it has complied with the reporting requirements of the 1934 Act, (B) a copy
of the Company's most recent Annual Report on Form 10-KSB or Quarterly Report on
Form 10-QSB,  and (C) such other  information as may be reasonably  requested in
order to avail such  Investor of any rule or  regulation of the SEC that permits
the selling of any such Registrable Securities without registration.

              4. DUE  DILIGENCE  REVIEW;  INFORMATION.  The  Company  shall make
available,  during  normal  business  hours,  for  inspection  and review by the
Investors,  advisors to and representatives of the Investors (who may or may not
be  affiliated  with the  Investors  and who are  reasonably  acceptable  to the
Company),  any underwriter  participating in any disposition of shares of Common
Stock on  behalf  of the  Investors  pursuant  to a  Registration  Statement  or
amendments or  supplements  thereto or any blue sky,  NASD or other filing,  all
financial  and other  records,  all SEC  Filings  (as  defined  in the  Purchase
Agreement) and other filings with the SEC, and all other corporate documents and
properties of the Company as may be reasonably necessary for the purpose of such
review,  and cause the Company's  officers,  directors and  employees,  within a
reasonable time period, to supply all such information  reasonably  requested by
the Investors or any such  representative,  advisor or underwriter in connection
with such Registration Statement (including,  without limitation, in response to
all questions and other inquiries  reasonably made or submitted by any of them),
prior to and  from  time to time  after  the  filing  and  effectiveness  of the
Registration Statement for the sole purpose of enabling the


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<PAGE>


Investors  and  such  representatives,   advisors  and  underwriters  and  their
respective  accountants  and  attorneys  to  conduct  initial  and  ongoing  due
diligence  with  respect to the  Company and the  accuracy of such  Registration
Statement.

The Company shall not disclose material nonpublic  information to the Investors,
or to  advisors  to  or  representatives  of  the  Investors,  unless  prior  to
disclosure of such information the Company  identifies such information as being
material  nonpublic  information  and provides the Investors,  such advisors and
representatives with the opportunity to accept or refuse to accept such material
nonpublic  information  for  review  and any  Investor  wishing  to obtain  such
information  enters  into an  appropriate  confidentiality  agreement  with  the
Company with respect thereto.

         5. OBLIGATIONS OF THE INVESTORS.

                           (a) Each  Investor  shall  furnish  in writing to the
Company such information regarding itself, the Registrable Securities held by it
and the intended method of disposition of the Registrable Securities held by it,
as shall be reasonably  required to effect the  registration of such Registrable
Securities and shall execute such documents in connection with such registration
as the Company may reasonably  request. At least five (5) Business Days prior to
the first  anticipated  filing date of any Registration  Statement,  the Company
shall notify each  Investor of the  information  the Company  requires from such
Investor  if such  Investor  elects  to have any of the  Registrable  Securities
included  in  the  Registration   Statement.  An  Investor  shall  provide  such
information  to the  Company at least two (2)  Business  Days prior to the first
anticipated  filing date of such Registration  Statement if such Investor elects
to  have  any  of  the  Registrable  Securities  included  in  the  Registration
Statement.

                           (b)  Each   Investor,   by  its   acceptance  of  the
Registrable  Securities  agrees to  cooperate  with the  Company  as  reasonably
requested  by the Company in  connection  with the  preparation  and filing of a
Registration Statement hereunder,  unless such Investor has notified the Company
in writing of its  election to exclude all of its  Registrable  Securities  from
such Registration Statement.

                           (c) In the event the  Company,  at the request of the
Investors,  determines to engage the services of an  underwriter,  such Investor
agrees  to  enter  into  and  perform  its  obligations  under  an  underwriting
agreement, in usual and customary form, including, without limitation, customary
indemnification and contribution  obligations,  with the managing underwriter of
such offering and take such other actions as are reasonably required in order to
expedite or facilitate the dispositions of the Registrable Securities.

                           (d) Each  Investor  agrees that,  upon receipt of any
notice  from the  Company of either  (i) the  commencement  of an Allowed  Delay
pursuant  to Section  2(c)(ii)  or (ii) the  happening  of an event  pursuant to
Section 3(j) hereof, such Investor will immediately  discontinue  disposition of
Registrable  Securities  pursuant to the  Registration  Statement  covering such
Registrable  Securities,  until  the  Investor's  receipt  of the  copies of the
supplemented  or amended  prospectus  filed  with the SEC and until any  related
post-effective  amendment  is  declared  effective  and,  if so  directed by the
Company,  the  Investor  shall  deliver to the  Company  (at the  expense of the
Company) or destroy (and deliver to the Company a  certificate  of  destruction)
all  copies  in  the  Investor's  possession  of  the  Prospectus  covering  the
Registrable Securities current at the time of receipt of such notice.


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<PAGE>


                           (e) No Investor  may  participate  in any third party
underwritten registration hereunder unless it (i) agrees to sell the Registrable
Securities on the basis provided in any  underwriting  arrangements in usual and
customary  form  entered into by the Company,  (ii)  completes  and executes all
questionnaires,  powers of attorney,  indemnities,  underwriting  agreements and
other  documents  reasonably  required  under  the  terms  of such  underwriting
arrangements,  and (iii)  agrees to pay its pro rata  share of all  underwriting
discounts and commissions.  Notwithstanding the foregoing,  no Investor shall be
required to make any representations to such underwriter,  other than those with
respect to itself and the  Registrable  Securities  owned by it,  including  its
right to sell the Registrable  Securities,  and any  indemnification in favor of
the  underwriter by the Investors  shall be several and not joint and limited in
the case of any  Investor,  to the proceeds  received by such  Investor from the
sale of its Registrable  Securities.  The scope of any such  indemnification  in
favor of an  underwriter  shall be limited to the same  extent as the  indemnity
provided in Section 6(b) hereof.

         6. INDEMNIFICATION.

                           (a) INDEMNIFICATION BY THE COMPANY.  The Company will
indemnify and hold harmless each Investor and its officers,  directors, members,
employees and agents, successors and assigns, and each other person, if any, who
controls such Investor  within the meaning of the 1933 Act,  against any losses,
claims,  damages  or  liabilities,  joint or  several,  to which they may become
subject under the 1933 Act or otherwise, insofar as such losses, claims, damages
or liabilities  (or actions in respect  thereof) arise out of or are based upon:
(i) any untrue  statement  or alleged  untrue  statement  of any  material  fact
contained in any  Registration  Statement,  any preliminary  prospectus or final
prospectus  contained therein, or any amendment or supplement thereof;  (ii) any
blue sky application or other document executed by the Company  specifically for
that purpose or based upon written information furnished by the Company filed in
any  state  or  other  jurisdiction  in  order  to  qualify  any  or  all of the
Registrable  Securities under the securities laws thereof (any such application,
document  or  information  herein  called a "Blue Sky  Application");  (iii) the
omission or alleged  omission to state  therein a material  fact  required to be
stated therein or necessary to make the statements therein not misleading;  (iv)
any violation by the Company or its agents of any rule or regulation promulgated
under the 1933 Act  applicable  to the  Company or its agents  and  relating  to
action or inaction required of the Company in connection with such registration;
or (v) any failure to register or qualify the Registrable Securities included in
any  such  Registration  in any  state  where  the  Company  or its  agents  has
affirmatively  undertaken  or agreed in writing that the Company will  undertake
such  registration or qualification on an Investor's  behalf (the undertaking of
any underwriter  chosen by the Company being attributed to the Company) and will
reimburse such Investor, and each such officer, director or member and each such
controlling person for any legal or other expenses  reasonably  incurred by them
in connection  with  investigating  or defending any such loss,  claim,  damage,
liability or action;  provided,  however, that the Company will not be liable in
any such  case if and to the  extent  that  any  such  loss,  claim,  damage  or
liability  arises out of or is based upon an untrue  statement or alleged untrue
statement or omission or alleged omission so made in conformity with information
furnished  by  such  Investor  or  any  such   controlling   person  in  writing
specifically for use in such Registration Statement or Prospectus.

                           (b)  INDEMNIFICATION BY THE INVESTORS.  In connection
with any  registration  pursuant to the terms of this  Agreement,  each Investor
will furnish to the Company


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<PAGE>


in writing such information as the Company  reasonably  requests  concerning the
holders of Registrable Securities or the proposed manner of distribution for use
in  connection  with  any  Registration  Statement  or  Prospectus  and  agrees,
severally but not jointly, to indemnify and hold harmless, to the fullest extent
permitted by law, the Company, its directors, officers, employees,  stockholders
and each person who  controls  the Company  (within the meaning of the 1933 Act)
against  any  losses,  claims,  damages,   liabilities  and  expense  (including
reasonable attorney fees) resulting from any untrue statement of a material fact
or any  omission of a material  fact  required to be stated in the  Registration
Statement or  Prospectus  or  preliminary  prospectus or amendment or supplement
thereto or  necessary  to make the  statements  therein not  misleading,  to the
extent,  but only to the  extent  that such  untrue  statement  or  omission  is
contained  in any  information  furnished  in  writing by such  Investor  to the
Company specifically for inclusion in such Registration  Statement or Prospectus
or  amendment  or  supplement  thereto.  In no event shall the  liability  of an
Investor be greater in amount than the dollar amount of the proceeds (net of all
expense  paid by such  Investor in  connection  with any claim  relating to this
Section  6 and the  amount of any  damages  such  Investor  has  otherwise  been
required to pay by reason of such untrue statement or omission) received by such
Investor  upon  the  sale  of  the  Registrable   Securities   included  in  the
Registration Statement giving rise to such indemnification obligation.

                           (c)  CONDUCT  OF  INDEMNIFICATION   PROCEEDINGS.  Any
person entitled to indemnification hereunder shall (i) give prompt notice to the
indemnifying  party of any claim with respect to which it seeks  indemnification
and (ii) permit such indemnifying party to assume the defense of such claim with
counsel  reasonably  satisfactory  to the indemnified  party;  PROVIDED that any
person  entitled  to  indemnification  hereunder  shall have the right to employ
separate  counsel and to participate in the defense of such claim,  but the fees
and expenses of such counsel  shall be at the expense of such person  unless (a)
the  indemnifying  party has  agreed to pay such  fees or  expenses,  or (b) the
indemnifying  party  shall have  failed to assume the  defense of such claim and
employ counsel  reasonably  satisfactory to such person or (c) in the reasonable
judgment  of any such  person,  based  upon  written  advice of its  counsel,  a
conflict of interest exists between such person and the indemnifying  party with
respect to such claims (in which case, if the person  notifies the  indemnifying
party in  writing  that such  person  elects to employ  separate  counsel at the
expense of the indemnifying  party,  the  indemnifying  party shall not have the
right to  assume  the  defense  of such  claim on behalf  of such  person);  and
PROVIDED,  FURTHER,  that the failure of any indemnified party to give notice as
provided  herein  shall not relieve the  indemnifying  party of its  obligations
hereunder,  except  to the  extent  that  such  failure  to  give  notice  shall
materially  adversely affect the  indemnifying  party in the defense of any such
claim or litigation.  It is understood that the indemnifying party shall not, in
connection with any proceeding in the same  jurisdiction,  be liable for fees or
expenses of more than one  separate  firm of  attorneys at any time for all such
indemnified  parties. No indemnifying party will, except with the consent of the
indemnified party, consent to entry of any judgment or enter into any settlement
that  does not  include  as an  unconditional  term  thereof  the  giving by the
claimant or plaintiff to such indemnified  party of a release from all liability
in respect of such claim or litigation.

                           (d)    CONTRIBUTION.    If   for   any   reason   the
indemnification  provided  for  in  the  preceding  paragraphs  (a)  and  (b) is
unavailable to an indemnified  party or insufficient to hold it harmless,  other
than  as  expressly  specified  therein,   then  the  indemnifying  party  shall
contribute to the amount paid or payable by the indemnified party as a result of
such loss, claim,


                                      -9-
<PAGE>


damage or liability in such proportion as is appropriate to reflect the relative
fault of the indemnified party and the indemnifying  party, as well as any other
relevant   equitable   considerations.    No   person   guilty   of   fraudulent
misrepresentation  within the meaning of Section  11(f) of the 1933 Act shall be
entitled  to  contribution  from  any  person  not  guilty  of  such  fraudulent
misrepresentation.  In no event shall the contribution obligation of a holder of
Registrable  Securities  be  greater  in amount  than the  dollar  amount of the
proceeds (net of all expenses  paid by such holder in connection  with any claim
relating  to this  Section  6 and the  amount of any  damages  such  holder  has
otherwise  been  required  to pay by reason of such  untrue  or  alleged  untrue
statement or omission or alleged  omission)  received by it upon the sale of the
Registrable Securities giving rise to such contribution obligation.

         7. MISCELLANEOUS.
                           (a)  AMENDMENTS  AND WAIVERS.  This  Agreement may be
amended only by a writing signed by the Company and the  Investors.  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  shall have  obtained  the
written consent to such amendment, action or omission to act, of the Investors.

                           (b)  NOTICES.  All notices  and other  communications
provided for or permitted hereunder shall be made as set forth in Section 9.4 of
the Purchase Agreement.

                           (c)  ASSIGNMENTS  AND  TRANSFERS  BY  INVESTORS.  The
provisions of this  Agreement  shall be binding upon and inure to the benefit of
the  Investors  and their  respective  successors  and assigns.  An Investor may
transfer  or  assign,  in  whole or from  time to time in  part,  to one or more
persons its rights  hereunder in  connection  with the  transfer of  Registrable
Securities by such Investor to such person, provided that such Investor complies
with all laws  applicable  thereto and provides  written notice of assignment to
the Company promptly after such assignment is effected.

                           (d)  ASSIGNMENTS  AND TRANSFERS BY THE COMPANY.  This
Agreement  may not be assigned by the Company  (whether by  operation  of law or
otherwise)  without  the  prior  written  consent  of the  Investors,  provided,
however,  that the  Company  may  assign  its  rights  and  delegate  its duties
hereunder to any surviving or successor  corporation in connection with a merger
or consolidation of the Company with another corporation, or a sale, transfer or
other disposition of all or substantially all of the Company's assets to another
corporation,  without the prior written  consent of the Investors,  after notice
duly given by the Company to each Investor.

                           (e)  BENEFITS  OF  THE   AGREEMENT.   The  terms  and
conditions of this  Agreement  shall inure to the benefit of and be binding upon
the respective permitted successors and assigns of the parties.  Nothing in this
Agreement,  express or implied,  is intended to confer upon any party other than
the  parties  hereto or their  respective  successors  and  assigns  any rights,
remedies,  obligations,  or  liabilities  under or by reason of this  Agreement,
except as expressly provided in this Agreement.

                           (f)  COUNTERPARTS;   FAXES.  This  Agreement  may  be
executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall


                                      -10-
<PAGE>


constitute one and the same instrument.  This Agreement may also be executed via
facsimile, which shall be deemed an original.

                           (g) TITLES AND  SUBTITLES.  The titles and  subtitles
used  in  this  Agreement  are  used  for  convenience  only  and  are not to be
considered in construing or interpreting this Agreement.

                           (h)  SEVERABILITY.  Any  provision of this  Agreement
that is  prohibited  or  unenforceable  in any  jurisdiction  shall,  as to such
jurisdiction,   be   ineffective   to  the   extent  of  such   prohibition   or
unenforceability  without invalidating the remaining provisions hereof but shall
be  interpreted  as if it were  written so as to be  enforceable  to the maximum
extent permitted by applicable law, and any such prohibition or unenforceability
in any jurisdiction shall not invalidate or render  unenforceable such provision
in any other  jurisdiction.  To the extent  permitted  by  applicable  law,  the
parties  hereby waive any provision of law which renders any  provisions  hereof
prohibited or unenforceable in any respect.

                           (i) FURTHER ASSURANCES. The parties shall execute and
deliver  all such  further  instruments  and  documents  and take all such other
actions as may reasonably be required to carry out the transactions contemplated
hereby and to evidence the fulfillment of the agreements herein contained.

                           (j) ENTIRE  AGREEMENT.  This Agreement is intended by
the  parties as a final  expression  of their  agreement  and  intended  to be a
complete and  exclusive  statement of the  agreement  and  understanding  of the
parties hereto in respect of the subject matter contained herein. This Agreement
supersedes  all prior  agreements  and  understandings  between the parties with
respect to such subject matter.

                           (k) GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF
JURY TRIAL.  This  Agreement  shall be governed by, and  construed in accordance
with, the internal laws of the State of New York without regard to the choice of
law principles  thereof.  Each of the parties hereto irrevocably  submits to the
exclusive  jurisdiction  of the  courts of the State of New York  located in New
York County and the United States  District  Court for the Southern  District of
New York for the purpose of any suit, action, proceeding or judgment relating to
or arising  out of this  Agreement  and the  transactions  contemplated  hereby.
Service of process in connection with any such suit, action or proceeding may be
served on each party  hereto  anywhere  in the world by the same  methods as are
specified  for the giving of notices under this  Agreement.  Each of the parties
hereto  irrevocably  consents to the  jurisdiction of any such court in any such
suit,  action or proceeding and to the laying of venue in such court. Each party
hereto irrevocably waives any objection to the laying of venue of any such suit,
action or  proceeding  brought in such courts and  irrevocably  waives any claim
that any such  suit,  action or  proceeding  brought  in any such court has been
brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO
REQUEST A TRIAL BY JURY IN ANY  LITIGATION  WITH RESPECT TO THIS  AGREEMENT  AND
REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.


                                      -11-
<PAGE>


                  IN WITNESS  WHEREOF,  the parties have executed this Agreement
or caused their duly  authorized  officers to execute  this  Agreement as of the
date first above written.

                                 APPLIED NEUROSOLUTIONS, INC.



                                 By:
                                     ------------------------
                                 Name:
                                 Title:


                     [INVESTORS' SIGNATURE PAGES TO FOLLOW]








                                      -12-
<PAGE>


                                 ----------------------------

                                 By:
                                     ------------------------
                                 Name:
                                 Title:






                                      -13-
<PAGE>


                                    SPECIAL SITUATIONS FUND III, L.P.



                                    By:
                                        -------------------------------
                                    Name: Austin W. Marxe
                                    Title: General Partner

                                    SPECIAL SITUATIONS CAYMAN FUND, L.P.



                                    By:
                                        -------------------------------
                                    Name: Austin W. Marxe
                                    Title: General Partner

                                    SPECIAL SITUATIONS PRIVATE EQUITY FUND, L.P.



                                    By:
                                        -------------------------------
                                    Name: Austin W. Marxe
                                    Title: General Partner

                                    SPECIAL SITUATIONS TECHNOLOGY FUND, L.P.



                                    By:
                                        -------------------------------
                                    Name: Austin W. Marxe
                                    Title: General Partner

                                    SPECIAL SITUATIONS TECHNOLOGY FUND II, L.P.



                                    By:
                                        -------------------------------
                                    Name: Austin W. Marxe
                                    Title: General Partner




                                      -14-
<PAGE>


                                                                       EXHIBIT A


                              PLAN OF DISTRIBUTION

         The  selling  stockholders,  which  as  used  herein  includes  donees,
pledgees,  transferees or other successors-in-interest  selling shares of common
stock or  interests in shares of common  stock  received  after the date of this
prospectus  from  a  selling   stockholder  as  a  gift,   pledge,   partnership
distribution  or other  transfer,  may,  from time to time,  sell,  transfer  or
otherwise  dispose of any or all of their shares of common stock or interests in
shares of common  stock on any stock  exchange,  market or trading  facility  on
which the shares are traded or in private  transactions.  These dispositions may
be at fixed prices,  at prevailing  market prices at the time of sale, at prices
related to the prevailing market price, at varying prices determined at the time
of sale, or at negotiated prices.

         The  selling  stockholders  may use  any  one or more of the  following
methods when disposing of shares or interests therein:

         -  ordinary  brokerage  transactions  and  transactions  in  which  the
broker-dealer solicits purchasers;

         - block  trades in which the  broker-dealer  will  attempt  to sell the
shares as agent, but may position and resell a portion of the block as principal
to facilitate the transaction;

         -  purchases  by  a  broker-dealer  as  principal  and  resale  by  the
broker-dealer for its account;

         - an  exchange  distribution  in  accordance  with  the  rules  of  the
applicable exchange;

         - privately negotiated transactions;

         - short sales;

         - through  the  writing  or  settlement  of  options  or other  hedging
transactions, whether through an options exchange or otherwise;

         -  broker-dealers  may agree with the  selling  stockholders  to sell a
specified number of such shares at a stipulated price per share;

         - a combination of any such methods of sale; and

         - any other method permitted pursuant to applicable law.

         The  selling  stockholders  may,  from time to time,  pledge or grant a
security  interest  in some or all of the shares of common  stock  owned by them
and,  if they  default in the  performance  of their  secured  obligations,  the
pledgees or secured parties may offer and sell the shares of common stock,  from
time to time,  under this  prospectus,  or under an amendment to this prospectus
under  Rule  424(b)(3)  or other  applicable  provision  of the  Securities  Act
amending the


                                      -15-
<PAGE>


list of  selling  stockholders  to  include  the  pledgee,  transferee  or other
successors  in  interest  as selling  stockholders  under this  prospectus.  The
selling  stockholders  also may  transfer  the  shares of common  stock in other
circumstances,  in which case the  transferees,  pledgees or other successors in
interest will be the selling beneficial owners for purposes of this prospectus.

         In connection  with the sale of our common stock or interests  therein,
the selling stockholders may enter into hedging transactions with broker-dealers
or other financial institutions,  which may in turn engage in short sales of the
common stock in the course of hedging the  positions  they  assume.  The selling
stockholders  may also sell shares of our common  stock short and deliver  these
securities  to close out their  short  positions,  or loan or pledge  the common
stock to  broker-dealers  that in turn may sell these  securities.  The  selling
stockholders   may  also  enter   into   option  or  other   transactions   with
broker-dealers  or other  financial  institutions or the creation of one or more
derivative  securities which require the delivery to such broker-dealer or other
financial  institution of shares offered by this  prospectus,  which shares such
broker-dealer  or  other  financial  institution  may  resell  pursuant  to this
prospectus (as supplemented or amended to reflect such transaction).

         The aggregate proceeds to the selling stockholders from the sale of the
common stock offered by them will be the purchase price of the common stock less
discounts or commissions,  if any. Each of the selling stockholders reserves the
right to accept and, together with their agents from time to time, to reject, in
whole or in part,  any proposed  purchase of common stock to be made directly or
through agents. We will not receive any of the proceeds from this offering. Upon
any  exercise of the warrants by payment of cash,  however,  we will receive the
exercise price of the warrants.

         The selling stockholders also may resell all or a portion of the shares
in open market  transactions  in reliance upon Rule 144 under the Securities Act
of 1933, provided that they meet the criteria and conform to the requirements of
that rule.

         The selling stockholders and any underwriters, broker-dealers or agents
that  participate  in the sale of the common stock or  interests  therein may be
"underwriters"  within the meaning of Section 2(11) of the  Securities  Act. Any
discounts,  commissions,  concessions  or profit  they earn on any resale of the
shares may be underwriting  discounts and commissions  under the Securities Act.
Selling stockholders who are "underwriters"  within the meaning of Section 2(11)
of the Securities Act will be subject to the prospectus delivery requirements of
the Securities Act.

         To the extent required,  the shares of our common stock to be sold, the
names of the selling  stockholders,  the respective  purchase  prices and public
offering prices, the names of any agents, dealer or underwriter,  any applicable
commissions or discounts with respect to a particular offer will be set forth in
an  accompanying  prospectus  supplement or, if  appropriate,  a  post-effective
amendment to the registration statement that includes this prospectus.

         In  order  to  comply  with  the  securities  laws of some  states,  if
applicable,  the common  stock may be sold in these  jurisdictions  only through
registered  or licensed  brokers or  dealers.  In  addition,  in some states the
common stock may not be sold unless it has been registered or


                                      -16-
<PAGE>


qualified  for  sale  or  an  exemption  from   registration  or   qualification
requirements is available and is complied with.

         We have  advised the selling  stockholders  that the  anti-manipulation
rules of Regulation M under the Exchange Act may apply to sales of shares in the
market and to the activities of the selling  stockholders and their  affiliates.
In addition,  we will make copies of this  prospectus (as it may be supplemented
or amended  from time to time)  available  to the selling  stockholders  for the
purpose of satisfying the  prospectus  delivery  requirements  of the Securities
Act. The selling  stockholders may indemnify any broker-dealer that participates
in transactions  involving the sale of the shares against  certain  liabilities,
including liabilities arising under the Securities Act.

         We  have  agreed  to  indemnify   the  selling   stockholders   against
liabilities, including liabilities under the Securities Act and state securities
laws, relating to the registration of the shares offered by this prospectus.

         We have agreed with the selling  stockholders to keep the  registration
statement  of which  this  prospectus  constitutes  a part  effective  until the
earlier of (1) such time as all of the shares  covered by this  prospectus  have
been disposed of pursuant to and in accordance with the  registration  statement
or (2) the date on which the shares may be sold  pursuant  to Rule 144(k) of the
Securities Act.




                                      -17-
<PAGE>


                   REGISTRATION RIGHTS AGREEMENT SCHEDULE 2(a)


The Registration Statement will include the following securities, in addition to
the Registerable securities:

      1.    Securities issued to Convertible Bridge Holders upon conversion

      2.    Equity   Communications,   LLC  -  securities  underlying  1,000,000
            warrants

      3.    Virtual Concepts Corp. - 100,000 shares

      4.    Sunrise Securities Corp. - 400,000 shares and securities  underlying
            400,000 warrants

      5.    Placement  Agent  Warrants - securities  underlying  up to 3,200,000
            warrants - these warrants will not be exercisable  for one year from
            the date of closing







                                      -18-