Document:

Unassociated Document

    THIS
WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.  THEY MAY NOT
BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OF 1933, AS AMENDED OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED.

     

    
      
        	
                No.
      ___________

              	
                Void
      after: [five years from date of
issuance]

              

      

    

    
       

      
        

      

    

     

    THIS
WARRANT SHALL BE VOID AFTER  5:00 P.M. EASTERN TIME

    ON
__________ (THE “EXPIRATION DATE”)

     

    WARRANT TO PURCHASE
SHARES

     

    This
Warrant is issued to _____________ (“Investor”) by CNS
Response, Inc., a Delaware corporation (the “Company”), pursuant
to the terms of that certain Subscription Agreement (the “Agreement”), dated
__________.  All capitalized terms not defined in this Warrant shall
have the meaning ascribed to them in the Agreement.

     

    1.           Purchase of
Shares.  Subject to the terms and conditions hereinafter set
forth and set forth in the Agreement, the holder of this Warrant is entitled,
upon surrender of this Warrant at the principal office of the Company (or at
such other place as the Company shall notify the holder hereof in writing), to
purchase from the Company _____________ fully paid and nonassessable Shares
(as defined below) at the Exercise Price (as defined below).

     

    2.           Definitions.

     

    (a)           Exercise
Price.  The exercise price for the Shares initially shall be
$0.30 per share (such price, as adjusted from time to time, is herein referred
to as the “Exercise
Price”).

     

    (b)           Exercise
Period.  This Warrant shall be exercisable, in whole or in
part, during the term commencing on the date hereof and ending on the Expiration
Date.

     

    (c)           The
Shares.  The term “Shares” shall mean
shares of the Company’s common stock, par value $0.001 per share.

     

    3.           Method of
Exercise.  While this Warrant remains outstanding and
exercisable in accordance with Section 2 above, the holder may exercise, in
whole or in part, the purchase rights evidenced hereby.  Such exercise
shall be effected by:

     

    (i)                 the
surrender of the Warrant, together with a notice of exercise to the Secretary of
the Company at its principal offices; and

     

    (ii)                 the
payment to the Company of an amount equal to the aggregate Exercise Price for
the number of Shares being purchased.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    4.           Certificates for
Shares.  Upon the exercise of the purchase rights evidenced by
this Warrant, one or more certificates for the number of Shares so purchased
shall be issued as soon as practicable thereafter, and in any event within
thirty (30) days of the delivery of the subscription notice.

     

    5.           Issuance of
Shares.  The Company covenants that the Shares, when issued
pursuant to the exercise of this Warrant, will be duly and validly issued, fully
paid and nonassessable and free from all taxes, liens, and charges with respect
to the issuance thereof.

     

    6.           Adjustment of Exercise Price
and Number of Shares.  The number of and kind of securities
purchasable upon exercise of this Warrant and the Exercise Price shall be
subject to adjustment from time to time as follows:

     

    (a)           Subdivisions, Combinations
and Other Issuances.  If the Company shall at any time prior to
the expiration of this Warrant subdivide the Shares, by split-up or otherwise,
or combine its Shares, or issue additional shares of its Shares as a dividend,
the number of Shares issuable on the exercise of this Warrant shall forthwith be
proportionately increased in the case of a subdivision or stock dividend, or
proportionately decreased in the case of a combination.  Appropriate
adjustments shall also be made to the purchase price payable per share, but the
aggregate purchase price payable for the total number of Shares purchasable
under this Warrant (as adjusted) shall remain the same.  Any
adjustment under this Section 6(a) shall become effective at the close of
business on the date the subdivision or combination becomes effective, or as of
the record date of such dividend, or in the event that no record date is fixed,
upon the making of such dividend.

     

    (b)           Reclassification,
Reorganization and Consolidation.  In case of any
reclassification, capital reorganization, or change in the capital stock of the
Company (other than as a result of a subdivision, combination, or stock dividend
provided for in Section 6(a) above), then the Company shall make
appropriate provision so that the holder of this Warrant shall have the right at
any time prior to the expiration of this Warrant to purchase, at a total price
equal to that payable upon the exercise of this Warrant, the kind and amount of
shares of stock and other securities and property receivable in connection with
such reclassification, reorganization, or change by a holder of the same number
of Shares as were purchasable by the holder of this Warrant immediately prior to
such reclassification, reorganization, or change.  In any such case
appropriate provisions shall be made with respect to the rights and interest of
the holder of this Warrant so that the provisions hereof, including Sections
6(a), shall thereafter be applicable with respect to any shares of stock or
other securities and property deliverable upon exercise hereof, and appropriate
adjustments shall be made to the purchase price per share payable hereunder,
provided the aggregate purchase price shall remain the same.

     

    (c)           Notice of
Adjustment.  When any adjustment is required to be made in the
number or kind of shares purchasable upon exercise of the Warrant, or in the
Exercise Price, the Company shall promptly notify the holder of such event and
of the number of Shares or other securities or property thereafter purchasable
upon exercise of this Warrant.

     

    7.           No Fractional
Shares.  No fractional shares shall be issued upon the exercise
of this Warrant, but in lieu of such fractional shares the Company shall make a
cash payment therefor on the basis of the Exercise Price then in
effect.

     

    8.           Representations of the
Company.  The Company represents and warrants to Holder that
the representations and warranties made by the Company in Section 3 of the
Agreement are true, correct and complete as of the date hereof. In addition, the
Company represents that the Shares necessary for a cash exercise of this Warrant
are duly reserved.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    9.           Representations and
Warranties by the Holder.  The Holder represents and warrants
to the Company that the representations and warranties made by the Holder in
Section 2 of the Agreement are true, correct and complete as of the date
hereof.

     

    10.         Restrictive
Legend.

     

    The Shares (unless registered under the
Securities Act of 1933, as amended (the “Act”)) shall be
stamped or imprinted with a legend in substantially the following
form:

     

    THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT
WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF, AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.  SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.  COPIES OF THE AGREEMENT COVERING THE PURCHASE
OF THESE SHARES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF THE COMPANY AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
COMPANY.

     

    THE SALE
OF SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED
WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE
ISSUANCE OF THE SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE
CONSIDERATION THEREFOR PRIOR TO THE QUALIFICATION IS UNLAWFUL, UNLESS THE SALE
OF SECURITIES IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100, 25102 OR 25105
OF THE CALIFORNIA CORPORATIONS CODE.  THE RIGHTS OF ALL PARTIES TO
THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON THE QUALIFICATION BEING OBTAINED
UNLESS THE SALE IS SO EXEMPT.

     

    11.           Warrants
Transferable.  Subject to compliance with the terms and
conditions of this Section 11, this Warrant and all rights hereunder are
transferable, in whole or in part, without charge to the holder hereof (except
for transfer taxes), upon surrender of this Warrant properly endorsed or
accompanied by written instructions of transfer.  With respect to any
offer, sale or other disposition of this Warrant or any Shares acquired pursuant
to the exercise of this Warrant prior to registration of such Warrant or Shares,
the holder hereof agrees to give written notice to the Company prior thereto,
describing briefly the manner thereof, together with a written opinion of such
holder's counsel, or other evidence, if requested by the Company, to the effect
that such offer, sale or other disposition may be effected without registration
or qualification (under the Act as then in effect or any federal or state
securities law then in effect) of this Warrant or the Shares and indicating
whether or not under the Act certificates for this Warrant or the Shares to be
sold or otherwise disposed of require any restrictive legend as to applicable
restrictions on transferability in order to ensure compliance with such
law.  Upon receiving such written notice and reasonably satisfactory
opinion or other evidence, if so requested, the Company, as promptly as
practicable, shall notify such holder that such holder may sell or otherwise
dispose of this Warrant or such Shares, all in accordance with the terms of the
notice delivered to the Company.  If a determination has been made
pursuant to this Section 12 that the opinion of counsel for the holder or other
evidence is not reasonably satisfactory to the Company, the Company shall so
notify the holder promptly with details thereof after such determination has
been made.  Each certificate representing this Warrant or the Shares
transferred in accordance with this Section 12 shall bear a legend as to the
applicable restrictions on transferability in order to ensure compliance with
such laws, unless in the aforesaid opinion of counsel for the holder, such
legend is not required in order to ensure compliance with such
laws.  The Company may issue stop transfer instructions to its
transfer agent in connection with such
restrictions.   Notwithstanding the foregoing, Holder may assign
this Warrant or the Shares into which such Warrant may be converted to an
affiliated entity without the prior written consent of the Company so long as
such assignment complies with applicable law.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    12.           Rights of
Stockholders.  No holder of this Warrant shall be entitled, as
a Warrant holder, to vote or receive dividends or be deemed the holder of the
Shares or any other securities of the Company which may at any time be issuable
on the exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the holder of this Warrant, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of stock, change of par
value, consolidation, merger, conveyance, or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until the
Warrant shall have been exercised and the Shares purchasable upon the exercise
hereof shall have become deliverable, as provided herein.

     

    13.           Notices.  All
notices and other communications given or made hereunder shall be in writing and
shall be deemed effectively given: (a) upon personal delivery to the party to be
notified, (b) when sent by confirmed electronic mail or facsimile if sent during
normal business hours of the recipient, and if not so confirmed, then on the
next business day, with a copy to be sent by United States first class mail,
postage prepaid, (c) five (5) days after being sent by registered or certified
mail, return receipt required, postage prepaid, or (d) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt.  All communications shall be
sent to the respective parties at their address or fax number as set forth on
the signature page to the Agreement or to such electronic mail address,
facsimile number or address as subsequently modified by written notice given in
according with this Section 14.

     

    14.           Governing
Law.  This Warrant and all actions arising out of or in
connection with this Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without regard to the conflicts of law
provisions of the State of New York or of any other state.

     

    15.           Rights and Obligations
Survive Exercise of Warrant.  Unless otherwise provided herein,
the rights and obligations of the Company, of the holder of this Warrant and of
the holder of the Shares issued upon exercise of this Warrant, shall survive the
exercise of this Warrant.

     

    
      [Signature
Page Follows]

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      
        Issued
this __ day of _______, 2009.

      

       

      
        
          
            	
                    CNS
      RESPONSE, INC.

                  
	 
      
	
                    By:

                  	 
      
	
                    Name:       
      George Carpenter

                  
	
                    Its:       
      Chief Executive Officer

                  
	 
      	 
      	 
      
	
                    Address:

                  	 
      	
                    2755
      Bristol Street, Suite 285

                  
	 
      	 
      	
                    Costa
      Mesa, CA 92626

                  

          

        

      

       

      Accepted
and agreed:

       

      ______________________________________________

       

      Address:

      

      
        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

       

      EXHIBIT A

    

     

    NOTICE OF
EXERCISE

    

    
      
        
          
            
              
                
                  	
                          TO:

                        	
                          CNS
      Response, Inc.

                        
	 
      	 
      
	 
      	 
      
	 
      	
                          Attention:
      Chief Executive
Officer

                        

                

              

            

          

        

      

    

     

    1.           The
undersigned hereby elects to purchase __________ Shares of _____________
pursuant to the terms of the attached Warrant.

     

    2.           The
undersigned elects to exercise the attached Warrant by means of a cash payment,
and tenders herewith payment in full for the purchase price of the shares being
purchased, together with all applicable transfer taxes, if any.

     

    3.           Please
issue a certificate or certificates representing said Shares in the name of the
undersigned or in such other name as is specified below:

     

    _________________________________

    (Name)

     

    _________________________________

     

    _________________________________

    (Address)

     

    4.           The
undersigned hereby represents and warrants that the aforesaid Shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale, in connection with the distribution thereof, and that the
undersigned has no present intention of distributing or reselling such shares
and all representations and warranties of the undersigned set forth in the
attached Warrant are true and correct as of the date hereof.

     

    ______________________________

    (Signature)

     

    ______________________________

      
(Name)

     

    
      ___________________________                                ______________________________ 

    

    
                        
(Date)                                                                                    (Title)

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    FORM
OF TRANSFER

    (To be
signed only upon transfer of Warrant)

     

    FOR VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto
_______________________________________________ the right represented by the
attached Warrant to purchase ____________ shares
of  ________________________ of CNS Response, Inc. to which the
attached Warrant relates, and appoints ______________ Attorney to transfer such
right on the books of __________, with full power of substitution in the
premises.

     

    
      Dated:
____________________

    

     

    
      
        
          
            
              
                
                  
                    	 
      
	 
	
                            (Signature
      must conform in all respects to name of Holder as specified on the face of
      the Warrant)

                          
	 
      	 
      
	
                            Address:    

                          	 
      
	 
      	 
      
	 
      	 
      

                  

                

              

            

          

        

      

    

     

    
      Signed in
the presence of:

    ________________________________________REGISTRATION
RIGHTS AGREEMENT

       

      This
Registration Rights Agreement (this “Agreement”) is made
and entered into as of August 24, 2009 among CNS Response, Inc., a Delaware
corporation (the “Company”), and the
several purchasers signatory hereto (each such purchaser is a “Purchaser” and
collectively, the “Purchasers”).

      

      This
Agreement is made pursuant to the Subscription Agreement, dated as of the date
hereof between the Company and each Purchaser (the “Subscription
Agreement”).

      

      The
Company and each Purchaser hereby agrees as follows:

      

      1.           
    Definitions.    
Capitalized terms used and not otherwise defined herein that are defined in the
Subscription Agreement shall have the meanings given such terms in the
Subscription Agreement. As used in this Agreement, the following terms shall
have the following meanings:

      

      “Advice” shall have
the meaning set forth in Section 6(d).

      

      “Effectiveness Date”
means no later than the 180th
calendar day following the final closing of the Offering; provided, however, that in the
event the Company is notified by the Commission that the Registration Statement
will not be reviewed or is no longer subject to further review and comments, the
Effectiveness Date shall be the fifth Trading Day following the date on which
the Company is so notified if such date precedes the date required
above.

      

      “Effectiveness Period”
shall have the meaning set forth in Section 2(a).

      

      “Event” shall have the
meaning set forth in Section 2(b).

      

      “Event Date” shall
have the meaning set forth in Section 2(b).

      

      “Filing Date” means no
later than the later of (i) the 60th
calendar day following the closing at which the Minimum Amount has been raised;
or (ii) the 20th
calendar day after the termination of the Offering.

      

      “Holder” or “Holders” means the
holder or holders, as the case may be, from time to time of Registrable
Securities.

      

      “Indemnified Party”
shall have the meaning set forth in Section 5(c).

      

       “Indemnifying Party”
shall have the meaning set forth in Section 5(c).

      

      “Losses” shall have
the meaning set forth in Section 5(a).

      

      “Plan of Distribution”
shall have the meaning set forth in Section 2(a).

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

       “Prospectus” means the
prospectus included in the Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 424(b) promulgated under the Securities Act), 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 the Registration Statement, and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.

      

       “Registrable
Securities” means, the Shares, the Shares issuable upon the exercise of
the Investor Warrants and the Shares issuable upon the exercise of the warrants
to be issued to Maxim Group LLC, as placement agent for the Company in
connection with the Offering.

      

       “Registration
Statement” means the registration statement required to be filed
hereunder, including the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference in such registration
statement.

      

      “Rule 415” means Rule
415 promulgated by the Commission pursuant to the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same purpose and effect as
such Rule.

      

      “Rule 424” means Rule
424 promulgated by the Commission pursuant to the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same purpose and effect as
such Rule.

      

      “Selling Shareholder
Questionnaire” shall have the meaning set forth in Section
3(a).

      

      2.           Registration.   On
or prior to the Filing Date, the Company shall prepare and file with the
Commission a Registration Statement covering the resale of the Registrable
Securities on such Filing Date for an offering to be made on a continuous basis
pursuant to Rule 415.  The Registration Statement shall be on Form S-3
(except if the Company is not then eligible to register for resale the
Registrable Securities on Form S-3, in which case such registration shall be on
another appropriate form in accordance herewith) and shall contain (unless
otherwise directed by at least an 85% majority in interest of the Holders)
substantially the “Plan of Distribution”
attached hereto as Annex
A.  Subject to the terms of this Agreement, the Company shall
use its best efforts to cause the Registration Statement to be declared
effective under the Securities Act as promptly as possible after the filing
thereof, but in any event prior to the applicable Effectiveness Date, and shall
use its best efforts to keep the Registration Statement continuously effective
under the Securities Act until the sooner of the second anniversary of the date
of such effectiveness or the date that all Registrable Securities covered by the
Registration Statement have been sold, or may be sold without volume
restrictions pursuant to Rule 415, as determined by the counsel to the Company
pursuant to a written opinion letter to such effect, addressed and acceptable to
the Company’s transfer agent and the affected Holders (the “Effectiveness
Period”).  Notwithstanding anything to the contrary contained
herein, the amount of Registrable Securities required to be included in the
Registration Statement as described in this Section 2 shall not exceed the
maximum amount of Registrable Securities which may be included in a Registration
Statement without exceeding registration limitations imposed by the SEC pursuant
to Rule 415 under the Securities Act (the “Rule 415 Amount”). In
the event that less than all of the Registrable Securities are included in the
Registration Statement as a result of such limitations, then the Company will
file additional Registration Statements each registering the Rule 415 Amount,
seriatim, until all of the Registrable Securities have been
registered.  The Company shall telephonically request effectiveness of
the Registration Statement as of 5:00 pm Eastern time on a Trading
Day.   The Company shall immediately notify the Holders via
facsimile of the effectiveness of the Registration Statement on the same Trading
Day that the Company telephonically confirms effectiveness with the Commission,
which shall be the date requested for effectiveness of the Registration
Statement.  The Company shall, by 9:30 am Eastern time on the second
Trading Day after the Effective Date (as defined in the Subscription Agreement),
file a final Prospectus with the Commission as required by Rule
424.  All selling shareholders included on the applicable Registration
Statement shall be given notice of the effectiveness of such Registration
Statement substantially at the same time.

      
        
           

        

        
          - 2
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      3.           Registration
Procedures.

       

      In
connection with the Company’s registration obligations hereunder, the Company
shall:

       

      (a)           Not
less than five (5) Trading Days prior to the filing of the Registration
Statement and not less than one Trading Day prior to the filing of the related
Prospectus or any amendment or supplement thereto (including any document that
would be incorporated or deemed to be incorporated therein by reference), the
Company shall, (i) furnish to each Holder copies of all such documents proposed
to be filed, which documents (other than those incorporated or deemed to be
incorporated by reference) will be subject to the review of such Holders, and
(ii) cause its officers and directors, counsel and independent certified public
accountants to respond to such inquiries as shall be necessary, in the
reasonable opinion of respective counsel to each Holder to conduct a reasonable
investigation within the meaning of the Securities Act. The Company shall not
file the Registration Statement or any such Prospectus or any amendments or
supplements thereto to which the Holders of a majority of the Registrable
Securities shall reasonably object in good faith, provided that, the Company is
notified of such objection in writing no later than five (5) Trading Days after
the Holders have been so furnished copies of the Registration Statement or one
(1) Trading Day after the Holders have been so furnished copies of the related
Prospectus or amendment or supplement thereto. Each Holder agrees to furnish to
the Company a completed Questionnaire in the form attached to this Agreement as
Annex B (a “Selling
Shareholder Questionnaire”) not less than two (2) Trading Days prior to
the Filing Date or by the end of the fourth (4th) Trading Day following the date
on which such Holder receives draft materials in accordance with this
Section.

      
        
           

        

        
          - 3
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      (b)           (i)
Prepare and file with the Commission such amendments, including post-effective
amendments, to the Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep the Registration Statement continuously
effective as to the applicable Registrable Securities for the Effectiveness
Period; (ii) cause the related Prospectus to be amended or supplemented by any
required Prospectus supplement (subject to the terms of this Agreement), and as
so supplemented or amended to be filed pursuant to Rule 424; (iii) respond as
promptly as reasonably possible to any comments received from the Commission
with respect to the Registration Statement or any amendment thereto and as
promptly as reasonably possible provide the Holders true and complete copies of
all correspondence from and to the Commission relating to the Registration
Statement (provided that the Company may excise any information contained
therein which would constitute material non-public information as to any Holder
which has not executed a confidentiality agreement with the Company); and (iv)
comply in all material respects with the provisions of the Securities Act and
the Exchange Act with respect to the disposition of all Registrable Securities
covered by the Registration Statement during the Effectiveness Period in
accordance (subject to the terms of this Agreement) with the intended methods of
disposition by the Holders thereof set forth in the Registration Statement as so
amended or in such Prospectus as so supplemented.

      

      (c)           Notify
the Holders of Registrable Securities to be sold (which notice shall, pursuant
to clauses (iii) through (vi) hereof, shall also be accompanied by an
instruction to suspend the use of the Prospectus until the requisite changes
have been made) as promptly as reasonably possible (and, in the case of (i)(A)
below, not less than one (1) Trading Day prior to such filing) and (if requested
by any such Person) confirm such notice in writing no later than one (1) Trading
Day following the day (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to the Registration Statement is proposed to be filed;
(B) when the Commission notifies the Company whether there will be a “review” of
such Registration Statement and whenever the Commission comments in writing on
such Registration Statement; and (C) with respect to the Registration Statement
or any post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other Federal or state governmental authority
for amendments or supplements to the Registration Statement or Prospectus or for
additional information; (iii) of the issuance by the Commission or any other
federal or state governmental authority of any stop order suspending the
effectiveness of the Registration Statement covering the Registrable Securities
or the initiation of any Proceedings for that purpose; (iv) of the receipt by
the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of any
Proceeding for such purpose; (v) of the occurrence of any event or passage of
time that makes the financial statements included in the Registration Statement
ineligible for inclusion therein or any statement made in the Registration
Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires any revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading; and (vi) the occurrence or existence of any pending
corporate development with respect to the Company that the Company believes may
be material and that, in the determination of the Company, makes it not in the
best interest of the Company to allow continued availability of the Registration
Statement or Prospectus; provided that any and
all of such information shall remain confidential to each Holder until such
information otherwise becomes public, unless disclosure by a Holder is required
by law; provided, further, that
notwithstanding each Holder’s agreement to keep such information confidential,
the Holders make no acknowledgement that any such information is material,
non-public information.

      
        
           

        

        
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      (d)           Use
its best efforts to avoid the issuance of, or, if issued, obtain the withdrawal
of (i) any order suspending the effectiveness of the Registration Statement, or
(ii) any suspension of the qualification (or exemption from qualification) of
any of the Registrable Securities for sale in any jurisdiction, at the earliest
practicable moment.

      

      (e)           Furnish
to each Holder, without charge, at least one (1) conformed copy of the
Registration Statement and each amendment thereto, including financial
statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference to the extent requested by such Person, and
all exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission.

      

      (f)           Subject
to the terms of this Agreement, the Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Holders in connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto, except after
the giving of any notice pursuant to Section 3(d).

      

      (g)           (i)  In
the time and manner required by the NYSE Amex and any other market on which the
Registrable Securities are traded (each, a “Principal Market”),
prepare and file with each Principal Market an additional shares listing
application covering all of the Registrable Securities and a notification form
regarding the change in the number of the Company’s outstanding Shares; (ii)
take all steps necessary to cause such Registrable Securities to be approved for
listing on each Principal Market as soon as possible thereafter; (iii) provide
to each Holder notice of such listing; and (iv) maintain the listing of such
Registrable Securities on each Principal Market.

      

      (h)           Prior
to any resale of Registrable Securities by a Holder, use its commercially
reasonable efforts to register or qualify or cooperate with the selling Holders
in connection with the registration or qualification (or exemption from the
Registration or qualification) of such Registrable Securities for the resale by
the Holder under the securities or Blue Sky laws of such jurisdictions within
the United States as any Holder reasonably requests in writing, to keep each
registration or qualification (or exemption therefrom) effective during the
Effectiveness Period and to do any and all other acts or things reasonably
necessary to enable the disposition in such jurisdictions of the Registrable
Securities covered by each Registration Statement; provided, that the
Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified, subject the Company to any
material tax in any such jurisdiction where it is not then so subject or file a
general consent to service of process in any such jurisdiction.

      
        
           

        

        
          - 5
-

          
            

          

        

        
           

        

      

      

      (i)           If
requested by the Holders, cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be delivered to a transferee pursuant to the Registration Statement, which
certificates shall be free, to the extent permitted by the Subscription
Agreement, of all restrictive legends, and to enable such Registrable Securities
to be in such denominations and registered in such names as any such Holders may
request.

      

      (j)           Upon
the occurrence of any event contemplated by this Section 3, as promptly as
reasonably possible under the circumstances taking into account the Company’s
good faith assessment of any adverse consequences to the Company and its
stockholders of the premature disclosure of such event, prepare a supplement or
amendment, including a post-effective amendment, to the Registration Statement
or a supplement to the related Prospectus or any document incorporated or deemed
to be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither the Registration Statement nor such
Prospectus will contain 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, in light of the circumstances under which they were made,
not misleading. If the Company notifies the
Holders in accordance with clauses (iii) through (vi) of Section 3(d) above to
suspend the use of any Prospectus until the requisite changes to such Prospectus
have been made, then the Holders shall suspend use of such
Prospectus.  The Company will use its best efforts to ensure that the
use of the Prospectus may be resumed as promptly as is
practicable.  The Company shall be entitled to exercise its right
under this Section 3(k) to suspend the availability of the Registration
Statement and Prospectus, subject to the payment of partial liquidated damages
pursuant to Section 2(b), for a period not to exceed sixty (60) calendar days
(which need not be consecutive days) in any twelve (12) month
period.

      

      (k)           Comply
with all applicable rules and regulations of the Commission and each Principal
Market.

      

      (l)           The
Company may require each selling Holder to furnish to the Company a certified
statement as to the number of shares of Common Stock beneficially owned by such
Holder and, if required by the Commission, the natural persons thereof that have
voting and dispositive control over the Shares. During any periods that the
Company is unable to meet its obligations hereunder with respect to the
registration of the Registrable Securities solely because any Holder fails to
furnish such information within three (3) Trading Days of the Company’s request,
any liquidated damages that are accruing at such time as to such Holder only
shall be tolled and any Event that may otherwise occur solely because of such
delay shall be suspended as to such Holder only, until such information is
delivered to the Company.

      
        
           

        

        
          - 6
-

          
            

          

        

        
           

        

      

      4.          
Registration
Expenses. All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company
whether or not any Registrable Securities are sold pursuant to the Registration
Statement. The fees and expenses referred to in the foregoing sentence shall
include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (A) with respect to filings required to be
made with any Principal Market on which the Common Stock is then listed for
trading, and (B) in compliance with applicable state securities or Blue Sky laws
reasonably agreed to by the Company in writing (including, without limitation,
fees and disbursements of counsel for the Company in connection with Blue Sky
qualifications or exemptions of the Registrable Securities), (ii) printing
expenses of the Company (including, without limitation, expenses of printing
certificates for Registrable Securities, (iii) messenger, telephone and delivery
expenses of the Company, (iv) fees and disbursements of counsel for the Company,
(v) Securities Act liability insurance, if the Company so desires such
insurance, and (vi) fees and expenses of all other Persons retained by the
Company in connection with the consummation of the transactions contemplated by
this Agreement.  In addition, the Company shall be responsible for all
of its internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder.  In no event shall the
Company be responsible for any broker or similar commissions of any Holder or,
except to the extent provided for in the Transaction Documents, any legal fees
or other costs of the Holders.

      

      5.           Indemnification

      

      (a)           Indemnification by the
Company. The Company shall, notwithstanding any termination of this
Agreement, indemnify and hold harmless each Holder, the officers, directors,
members, partners, agents, brokers (including brokers who offer and sell
Registrable Securities as principal as a result of a pledge or any failure to
perform under a margin call of Common Stock), investment advisors and employees
(and any other Persons with a functionally equivalent role of a Person holding
such titles, notwithstanding a lack of such title or any other title) of each of
them, each Person who controls any such Holder (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, members, stockholders, partners, agents and employees (and any other
Persons with a functionally equivalent role of a Person holding such titles,
notwithstanding a lack of such title or any other title) of each such
controlling Person, to the fullest extent permitted by applicable law, from and
against any and all losses, claims, damages, liabilities, costs (including,
without limitation, reasonable attorneys’ fees) and expenses (collectively,
“Losses”), as
incurred, arising out of or relating to (1) any untrue or alleged untrue
statement of a material fact contained in the Registration Statement, any
Prospectus or any form of prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or form
of prospectus or supplement thereto, in light of the circumstances under which
they were made) not misleading, or (2) any violation or alleged violation by the
Company of the Securities Act, Exchange Act or any state securities law, or any
rule or regulation thereunder, in connection with the performance of its
obligations under this Agreement, except to the extent, but only to the extent,
that (i) such untrue statements or omissions are based solely upon information
regarding such Holder furnished in writing to the Company by such Holder
expressly for use therein, or to the extent that such information relates to
such Holder or such Holder’s proposed method of distribution of the Registrable
Securities and was reviewed and expressly approved in writing by such Holder
expressly for use in the Registration Statement, such Prospectus or such form of
Prospectus or in any amendment or supplement thereto (it being understood that
the Holder has approved Annex A hereto for this purpose) or (ii) in the case of
an occurrence of an event of the type specified in Section 3(d)(iii)-(vi), the
use by such Holder of an outdated or defective Prospectus after the Company has
notified such Holder in writing that the Prospectus is outdated or defective and
prior to the receipt by such Holder of the Advice contemplated in Section
6(d).  The Company shall notify the Holders promptly of the
institution, threat or assertion of any Proceeding arising from or in connection
with the transactions contemplated by this Agreement of which the Company is
aware.

      
        
           

        

        
          - 7
-

          
            

          

        

        
           

        

      

      

      (b)           Indemnification by
Holders. Each Holder shall, severally and not jointly, indemnify and hold
harmless the Company, its directors, officers, agents and employees, each Person
who controls the Company (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, agents or
employees of such controlling Persons (and any other Persons with a functionally
equivalent role of a Person holding such titles, notwithstanding a lack of such
title or any other title, to the fullest extent permitted by applicable law,
from and against all Losses, as incurred, to the extent arising out of or based
solely upon: (x) such Holder’s failure to comply with the prospectus delivery
requirements of the Securities Act or (y) any untrue or alleged untrue statement
of a material fact contained in any Registration Statement, any Prospectus, or
any form of prospectus, or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein not misleading (i) to the extent, but only to the extent,
that such untrue statement or omission is contained in any information so
furnished in writing by such Holder to the Company specifically for inclusion in
such Registration Statement or such Prospectus or (ii) to the extent that such
information relates to such Holder’s proposed method of distribution of the
Registrable Securities and was reviewed and expressly approved in writing by
such Holder expressly for use in the Registration Statement (it being understood
that the Holder has approved Annex A hereto for this purpose), such Prospectus
or such form of Prospectus or in any amendment or supplement thereto or (iii) in
the case of an occurrence of an event of the type specified in Section
3(d)(iii)-(vi), the use by such Holder of an outdated or defective Prospectus
after the Company has notified such Holder in writing that the Prospectus is
outdated or defective and prior to the receipt by such Holder of the Advice
contemplated in Section 6(d). In no event shall the liability of any selling
Holder hereunder be greater in amount than the dollar amount of the net proceeds
received by such Holder upon the sale of the Registrable Securities giving rise
to such indemnification obligation.

      

      (c)           Conduct of Indemnification
Proceedings. If any Proceeding shall be brought or asserted against any
Person entitled to indemnity hereunder (an “Indemnified Party”),
such Indemnified Party shall promptly notify the Person from whom indemnity is
sought (the “Indemnifying Party”)
in writing, and the Indemnifying Party shall have the right to assume the
defense thereof, including the employment of counsel reasonably satisfactory to
the Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that the failure of any Indemnified
Party to give such notice shall not relieve the Indemnifying Party of its
obligations or liabilities pursuant to this Agreement, except (and only) to the
extent that it shall be finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) that such
failure shall have prejudiced the Indemnifying Party.

      
        
           

        

        
          - 8
-

          
            

          

        

        
           

        

      

      

                     An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless:  (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses; (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and counsel to the
Indemnified Party shall reasonably believe that a material conflict of interest
is likely to exist if the same counsel were to represent such Indemnified Party
and the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and the reasonable fees and expenses of no
more than one separate counsel shall be at the expense of the Indemnifying
Party).  The Indemnifying Party shall not be liable for any settlement
of any such Proceeding effected without its written consent, which consent shall
not be unreasonably withheld or delayed.  No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any pending Proceeding in respect of which any Indemnified Party
is a party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such Proceeding.

      

      Subject
to the terms of this Agreement, all reasonable fees and expenses of the
Indemnified Party (including reasonable fees and expenses to the extent incurred
in connection with investigating or preparing to defend such Proceeding in a
manner not inconsistent with this Section) shall be paid to the Indemnified
Party, as incurred, within ten Trading Days of written notice thereof to the
Indemnifying Party; provided, that the Indemnified Party shall promptly
reimburse the Indemnifying Party for that portion of such fees and expenses
applicable to such actions for which such Indemnified Party is judicially
determined to be not entitled to indemnification hereunder.

      

      (d)           Contribution. If the
indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified
Party or insufficient to hold an Indemnified Party harmless for any Losses, then
each Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Party, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material fact,
has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission.  The amount paid or payable by a party
as a result of any Losses shall be deemed to include, subject to the limitations
set forth in this Agreement, any reasonable attorneys’ or other fees or expenses
incurred by such party in connection with any Proceeding to the extent such
party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms.

      
        
           

        

        
          - 9
-

          
            

          

        

        
           

        

      

      

        The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding
paragraph.  Notwithstanding the provisions of this Section 5(d), no
Holder shall be required to contribute, in the aggregate, any amount in excess
of the amount by which the net proceeds actually received by such Holder from
the sale of the Registrable Securities subject to the Proceeding exceeds the
amount of any damages that such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission, except in the case of fraud by such Holder.

      

      The
indemnity and contribution agreements contained in this Section are in addition
to any liability that the Indemnifying Parties may have to the Indemnified
Parties.

      

      6.           Miscellaneous

      

      (a)           Remedies.  In
the event of a breach by the Company or by a Holder, of any of their respective
obligations under this Agreement, each Holder or the Company, as the case may
be, in addition to being entitled to exercise all rights granted by law and
under this Agreement, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement.  The Company
and each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall not assert
or shall waive the defense that a remedy at law would be adequate.

      

      (b)           Compliance. Each
Holder covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to the Registration Statement.

      

      (c)           Discontinued
Disposition. Each Holder agrees by its acquisition of Registrable
Securities that, upon receipt of a notice from the Company of the occurrence of
any event of the kind described in Section 3(d)(iii) through (vi), such Holder
will forthwith discontinue disposition of such Registrable Securities under the
Registration Statement until it is advised in writing (the “Advice”) by the
Company that the use of the applicable Prospectus (as it may have been
supplemented or amended) may be resumed.  The Company will use its
best efforts to ensure that the use of the Prospectus may be resumed as promptly
as it practicable.  The Company agrees and acknowledges that any
periods during which the Holder is required to discontinue the disposition of
the Registrable Securities hereunder shall be subject to the provisions of
Section 2(b).

      
        
           

        

        
          - 10
-

          
            

          

        

        
           

        

      

      

      (d)           Piggy-Back
Registrations. If at any time during the Effectiveness Period there is
not an effective Registration Statement covering all of the Registrable
Securities and the Company shall determine to prepare and file with the
Commission a Registration Statement relating to an offering for its own account
or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with the stock option or other employee
benefit plans, then the Company shall send to each Holder a written notice of
such determination and, if within fifteen (15) days after the date of such
notice, any such Holder shall so request in writing, the Company shall include
in such registration statement all or any part of such Registrable Securities
such Holder requests to be registered; provided, however, that, the
Company shall not be required to register any Registrable Securities pursuant to
this Section 6(d) that are not eligible for resale pursuant to Rule 415
promulgated under the Securities Act or that are the subject of a then effective
Registration Statement.  Notwithstanding anything to the contrary
contained herein, the amount of Registrable Securities required to be included
in the Registration Statement as described in this Section 6(d) shall equal the
lesser of (i) the amount of Registrable Securities that Holders request to have
so registered pursuant to this Section 6(d) and (ii) the maximum amount of
Registrable Securities which may be included in a Registration Statement without
exceeding the Rule 415 Amount.

      

      (e)           Amendments and
Waivers. The provisions of this Agreement, including the provisions of
this sentence, may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
same shall be in writing and signed by the Company and Holders holding at least
67% of the then outstanding Registrable Securities.  Notwithstanding
the foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of Holders and that
does not directly or indirectly affect the rights of other Holders may be given
by Holders of all of the Registrable Securities to which such waiver or consent
relates; provided, however, that the
provisions of this sentence may not be amended, modified, or supplemented except
in accordance with the provisions of the immediately preceding
sentence.

      

      (f)           Notices. Any and all
notices or other communications or deliveries required or permitted to be
provided hereunder shall be delivered as set forth in the Subscription
Agreement.

      

      (g)           Successors and
Assigns. This Agreement shall inure to the benefit of and be binding upon
the successors and permitted assigns of each of the parties and shall inure to
the benefit of each Holder. The Company may not assign (except by merger) its
rights or obligations hereunder without the prior written consent of all of the
Holders of the then-outstanding Registrable Securities. Each Holder may assign
their respective rights hereunder in the manner and to the Persons as permitted
under the Subscription Agreement.

      
        
           

        

        
          - 11
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      (h)           No Inconsistent
Agreements. Neither the Company nor any of its Subsidiaries has entered,
as of the date hereof, nor shall the Company or any of its Subsidiaries, on or
after the date of this Agreement, enter into any agreement with respect to its
securities, that would have the effect of impairing the rights granted to the
Holders in this Agreement or otherwise conflicts with the provisions
hereof.  Except as set forth on Schedule 6(h),
neither the Company nor any of its subsidiaries has previously entered into any
agreement granting any registration rights with respect to any of its securities
to any Person that have not been satisfied in full.

      

      (i)           Execution and
Counterparts. This Agreement may be executed in two or more counterparts,
all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart.  In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a “.pdf” format
data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or “.pdf” signature page were an original
thereof.

      

      (j)           Governing
Law.  All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be determined in
accordance with the provisions of the Subscription Agreement.

      

      (k)           Cumulative Remedies.
The remedies provided herein are cumulative and not exclusive of any other
remedies provided by law.

      

      (l)           Severability. If any
term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their commercially reasonable
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

      

      (m)           Headings. The
headings in this Agreement are for convenience only, do not constitute a part of
this Agreement and shall not be deemed to limit or affect any of the provisions
hereof.

      

      (n)           Independent Nature of
Holders’ Obligations and Rights. The obligations of each Holder hereunder
are several and not joint with the obligations of any other Holder hereunder,
and no Holder shall be responsible in any way for the performance of the
obligations of any other Holder hereunder. Nothing contained herein or in any
other agreement or document delivered at any closing, and no action taken by any
Holder pursuant hereto or thereto, shall be deemed to constitute the Holders as
a partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Holders are in any way acting in concert with
respect to such obligations or the transactions contemplated by this Agreement.
Each Holder shall be entitled to protect and enforce its rights, including
without limitation the rights arising out of this Agreement, and it shall not be
necessary for any other Holder to be joined as an additional party in any
proceeding for such purpose.

      
        
           

        

        
          - 12
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                     IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as
of the date first written above.

      

      
        
          	 
      	
                  CNS
      RESPONSE, INC.

                
	 
      	 
      
	 
      	
                  By:

                	 
      
	 
      	 
      	
                  Name:
      George Carpenter

                
	 
      	 
      	
                  Title:
      Chief Executive Officer

                

        

      

      

      [SIGNATURE
PAGE OF HOLDERS FOLLOWS]

      
        
           

        

        
          - 13
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      [SIGNATURE
PAGE OF HOLDERS TO CNS RRA]

      

      Name of
Holder: __________________________

      

      Signature of Authorized Signatory of
Holder: __________________________

      

      Name of
Authorized Signatory: _________________________

      

      Title of
Authorized Signatory: __________________________

      

      [SIGNATURE
PAGES CONTINUE]

      
        
           

        

        
          - 14
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      ANNEX
A

       

      Plan of
Distribution

       

      The
shares covered by this prospectus may be offered and sold from time to time by
the selling stockholders. The term “selling stockholder” includes pledgees,
donees, transferees or other successors in interest selling shares received
after the date of this prospectus from each selling stockholder as a pledge,
gift, partnership distribution or other non-sale related transfer. The number of
shares beneficially owned by a selling stockholder will decrease as and when it
effects any such transfers. The plan of distribution for the selling
stockholders’ shares sold hereunder will otherwise remain unchanged, except that
the transferees, pledgees, donees or other successors will be selling
stockholders hereunder. To the extent required, we may amend and supplement this
prospectus from time to time to describe a specific plan of
distribution.

       

      The
selling stockholders will act independently of us in making decisions with
respect to the timing, manner and size of each sale. The selling stockholders
may make these sales at prices and under terms then prevailing or at prices
related to the then current market price. The selling stockholders may also make
sales in negotiated transactions. The selling stockholders may offer their
shares from time to time pursuant to one or more of the following
methods:

       

      
        	
                 
      

              	
                      
                  ·

                

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

              

      

       

      
        	
                 
      

              	
                      
                  ·

                

              	
                one
      or more 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;

              

      

       

      
        	
                 
      

              	
                      
                  ·

                

              	
                publicly
      or privately negotiated
transactions;

              

      

       

      
        	
                 
      

              	
                      
                  ·

                

              	
                through
      underwriters, brokers or dealers (who may act as agents or principals) or
      directly to one or more purchasers;

              

      

       

      
        	
                 
      

              	
                      
                  ·

                

              	
                a
      combination of any such methods of sale;
and

              

      

       

      
        	
                 
      

              	
                      
                  ·

                

              	
                any
      other method permitted pursuant to applicable
  law.

              

      

       

      In
connection with distributions of the shares or otherwise, 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 shares in the
      course of hedging the positions they
assume;

              

      

       

      
        
           

        

        
          - 15
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                  ·

                

              	
                sell
      the shares short and redeliver the shares to close out such short
      positions;

              

      

       

      
        	
                 
      

              	
                      
                  ·

                

              	
                enter
      into option or other transactions with broker-dealers or other financial
      institutions which require the delivery to them of shares offered by this
      prospectus, which they may in turn resell;
and

              

      

       

      
        	
                 
      

              	
                      
                  ·

                

              	
                pledge
      shares to a broker-dealer or other financial institution, which, upon a
      default, they may in turn resell.

              

      

       

      In
addition to the foregoing methods, the selling stockholders may offer their
shares from time to time in transactions involving principals or brokers not
otherwise contemplated above, in a combination of such methods or described
above or any other lawful methods. The selling stockholders may also transfer,
donate or assign their shares to lenders, family members and others and each of
such persons will be deemed to be a selling stockholder for purposes of this
prospectus. The selling stockholders or their successors in interest may from
time to time pledge or grant a security interest in some or all of the shares of
common stock, and if the selling stockholders default in the performance of
their secured obligations, the pledgees or secured parties may offer and sell
the shares of common stock from to time under this prospectus; provided however
in the event of a pledge or then default on a secured obligation by the selling
stockholder, in order for the shares to be sold under this registration
statement, unless permitted by law, we must distribute a prospectus supplement
and/or amendment to this registration statement amending the list of selling
stockholders to include the pledgee, secured party or other successors in
interest of the selling stockholder under this prospectus.

       

      The
selling stockholders may also sell their shares pursuant to Rule 144 under the
Securities Act, which permits limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions.

       

      Sales
through brokers may be made by any method of trading authorized by any stock
exchange or market on which the shares may be listed or quoted, including block
trading in negotiated transactions. Without limiting the foregoing, such brokers
may act as dealers by purchasing any or all of the shares covered by this
prospectus, either as agents for others or as principals for their own accounts,
and reselling such shares pursuant to this prospectus. The selling stockholders
may effect such transactions directly, or indirectly through underwriters,
broker-dealers or agents acting on their behalf. In effecting sales,
broker-dealers or agents engaged by the selling stockholders may arrange for
other broker-dealers to participate. Broker-dealers or agents may receive
commissions, discounts or concessions from the selling stockholders, in amounts
to be negotiated immediately prior to the sale (which compensation as to a
particular broker-dealer might be in excess of customary commissions for routine
market transactions).

       

      In
offering the shares covered by this prospectus, the selling stockholders, and
any broker-dealers and any other participating broker-dealers who execute sales
for the selling stockholders, may be deemed to be “underwriters” within the
meaning of the Securities Act in connection with these sales. Any profits
realized by the selling stockholders and the compensation of such broker-dealers
may be deemed to be underwriting discounts and commissions.

      
        
           

        

        
          - 16
-

          
            

          

        

        
           

        

      

      The
Company is required to pay all fees and expenses incident to the registration of
the shares.

       

      The
Company has agreed to indemnify the selling stockholders against certain losses,
claims, damages and liabilities, including liabilities under the Securities
Act.

      
        
           

        

        
          - 17
-

          
            

          

        

        
           

        

      

      Annex
B

       

      CNS
RESPONSE, INC.

       

      Selling
Securityholder Notice and Questionnaire

       

      The
undersigned beneficial owner of common stock (the “Registrable
Securities”) of CNS Response, Inc., a Delaware corporation (the “Company”),
understands that the Company has filed or intends to file with the Securities
and Exchange Commission (the “Commission”) the
Registration Statement (the “Registration
Statement”) for the registration and resale under Rule 415 of the
Securities Act of 1933, as amended (the “Securities Act”), of
the Registrable Securities, in accordance with the terms of the Registration
Rights Agreement (the “Registration Rights
Agreement”) to which this document is annexed.  A copy of the
Registration Rights Agreement is available from the Company upon request at the
address set forth below.  All capitalized terms not otherwise defined
herein shall have the meanings ascribed thereto in the Registration Rights
Agreement.

       

      Certain
legal consequences arise from being named as a selling securityholder in the
Registration Statement and the related prospectus.  Accordingly,
holders and beneficial owners of Registrable Securities are advised to consult
their own securities law counsel regarding the consequences of being named or
not being named as a selling securityholder in the Registration Statement and
the related prospectus.

       

      NOTICE

       

      The
undersigned beneficial owner (the “Selling
Securityholder”) of Registrable Securities hereby elects to include the
Registrable Securities owned by it in the Registration Statement.

       

      The
undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:

       

      QUESTIONNAIRE

       

      
        
          	
                  1.

                	
                  Name.

                

        

      

       

      
        
          
            
              
                
                  	
                        	
                          (a)

                        	
                          Full
      Legal Name of Selling Securityholder  
         
       

                        
	 	 	 
	 	 	 

                

              

            

          

        

      

       

      
        
          	
                   
      

                	
                  (b)

                	
                  Full
      Legal Name of Registered Holder (if not the same as (a) above) through
      which Registrable Securities are held:

                
	 	 	 
	 	 	 

        

      

       

      
        
          	
                   
      

                	
                  (c)

                	
                  Full
      Legal Name of Natural Control Person (which means a natural person who
      directly or indirectly alone or with others has power to vote or dispose
      of the securities covered by the questionnaire):

                
	 	 	 
	 	 	 

        

      

       

      
        
           

        

        
          - 18
-

          
            

          

        

        
           

        

      

       

      
        2.  Address
for Notices to Selling Securityholder:

      

       

      
        
          
            
              
                
                  
                    
                      	 
      
	 
      
	 
      
	
                                Telephone:

                            	 
      
	
                                Fax:

                            	 
      
	
                                Contact Person:

                            	 
      

                    

                  

                

              

            

          

        

      

       

      3.  Broker-Dealer
Status:

       

      
        	
                 
      

              	
                (a)

              	
                Are
      you a broker-dealer?

              

      

       

      Yes    ̈                      No    ̈

       

      
        	
                 
      

              	
                (b)

              	
                If
      “yes” to Section 3(a), did you receive your Registrable Securities as
      compensation for investment banking services to the
    Company.

              

      

       

      Yes    ̈                      No    ̈

       

      
        	
              	
                Note:

              	
                If
      no, the Commission’s staff has indicated that you should be identified as
      an underwriter in the Registration
Statement.

              

      

       

      
        	
                 
      

              	
                (c)

              	
                Are
      you an affiliate of a
broker-dealer?

              

      

       

      Yes    ̈                      No    ̈

       

      
        	
                 
      

              	
                (d)

              	
                If
      you are an affiliate of a broker-dealer, do you certify that you bought
      the Registrable Securities in the ordinary course of business, and at the
      time of the purchase of the Registrable Securities to be resold, you had
      no agreements or understandings, directly or indirectly, with any person
      to distribute the Registrable
Securities?

              

      

       

      Yes    ̈                      No    ̈

       

      
        	
              	
                Note:

              	
                If
      no, the Commission’s staff has indicated that you should be identified as
      an underwriter in the Registration
Statement.

              

      

       

      
        4.  Beneficial
Ownership of Other Securities of the Company Owned by the Selling
Securityholder.

      

       

      Except
as set forth below in this Item 4, the undersigned is not the beneficial or
registered owner of any securities of the Company other than the securities
issuable pursuant to the Subscription Agreement.

      
        
           

        

        
          - 19
-

          
            

          

        

        
           

        

      

      
        
          	
                   
      

                	
                  (a)

                	
                  Type
      and Amount of other securities beneficially owned by the Selling
      Securityholder:

                
	 	 	 
	 	 	 
	 	 	 

        

      

       

      
        5.  Relationships
with the Company:

      

       

      Except
as set forth below, neither the undersigned nor any of its affiliates, officers,
directors or principal equity holders (owners of 5% of more of the equity
securities of the undersigned) has held any position or office or has had any
other material relationship with the Company (or its predecessors or affiliates)
during the past three years.

       

      
        
          	
                   
      

                	
                  State
      any exceptions here:

                
	 	 
	 	 
	 	 

        

      

       

      The
undersigned agrees to promptly notify the Company of any inaccuracies or changes
in the information provided herein that may occur subsequent to the date hereof
at any time while the Registration Statement remains effective.

       

      By
signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 5 and the inclusion of such
information in the Registration Statement and the related prospectus and any amendments or supplements
thereto.  The undersigned understands that such information
will be relied upon by the Company in connection with the preparation or
amendment of the Registration Statement and the related prospectus.

       

      IN
WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice
and Questionnaire to be executed and delivered either in person or by its duly
authorized agent.

       

      
        
          
            
              
                
                  	
                          Dated:

                        	 
      	 
      	
                          Beneficial Owner:

                        	 
      

                

              

            

          

        

      

      

      
        
          
            	 
      	 
      	
                    By:

                  	 
      
	 
      	 
      	 
      	
                    Name:

                  
	 
      	 
      	 
      	
                    Title:

                  

          

        

      

      

      PLEASE
FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN
THE ORIGINAL BY OVERNIGHT MAIL, TO:

       

      CNS
Response, Inc.

      2755
Bristol St., Suite 285

      Costa
Mesa, CA 92626

      Attention:  George
Carpenter

      
        
           

        

        
          - 20
-

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