Document:

August 3,
2009

    

    Mr.
George Carpenter

    Chief
Executive Officer

    CNS
Response, Inc.

    2755
Bristol Street, Suite 285

    Costa
Mesa, CA 92626

    

    Re:
Private Placement of Securities

    

    Dear Mr.
Carpenter:

    

    This
Placement Agency Agreement (the “Agreement”)
confirms the retention of Maxim Group LLC (“Maxim” or “Placement Agent”)
by CNS Response, Inc., a Delaware corporation (“CNS” or the “Company”), to
provide, on an exclusive basis, certain investment banking services in
connection with a “best efforts” private placement of Units (as defined below)
consisting of securities of the Company (the “Private
Placement”). Each Unit (“Unit”) shall
consist of: (i) 180,000 shares of the Company’s common stock at $0.30 per share
(“Common
Stock”) and (ii) warrants to purchase 90,000 shares of common stock for
$0.30 per share (the “Warrants”) for
$54,000 per Unit. The Units are sometimes referred to herein as the “Private Placement
Securities” or the “Securities.” The
investors introduced by Maxim to the Company in connection with the financing
contemplated hereunder are referred to herein each as an “Investor” and
collectively as the “Investors.”

    

    1.           PLACEMENT

    

    (a)           The
Private Placement shall be a “best efforts” placement consisting of a minimum of
seventy-five (75) Units, or four million fifty thousand dollars ($4,050,000)
(the “Private Placement Minimum Amount”) and up to a maximum of one hundred
fifty (150) Units, or eight million dollars ($8,100,000), at an offering price
of $54,000 per Unit (the “Private Placement Maximum Amount”). The Company has
granted the Placement Agent the option to exercise an over-allotment option to
sell up to an additional twenty-two and five tenths (22.5) Units (the
“Over-Allotment Option”). The Shares and Warrants, or the other agreements or
instruments entered into in connection with the Private Placement shall have
such other features as are agreed to by the Company and Maxim and memorialized
in the Offering Documents (as defined below) including, without limitation, the
registration rights described in Section 1(e) below as well as those described
in the subscription documents included in the Offering Documents, as defined
below, for the shares of Common Stock receivable upon the exercise of the
Warrants, or issuable as part of the Units.

    

    
      
        

      

    

    
      Members
FINRA & SIPC

    

    405
Lexington Ave. * New York, NY 10174 *  tel (212) 895-3500 * (800)
724-0761 * fax (212) 895-3783 * www.maximgrp.com

    New York,
NY * Long Island, NY * Red Bank,
NJ

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    
      
        	
                

              	
                CNS
      Response, Inc.

                August
      3, 2009

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    (b)           Maxim
will, on an exclusive basis, conduct the Placement on a “best efforts” basis to
accredited investors, only, as meant in Regulation D. If at least the Private
Placement Minimum Amount has been subscribed for and accepted by the Company at
any time during the Private Placement Offering Period, as defined below, the
Company will promptly conduct an initial closing (the “Initial Closing”) and may
conduct subsequent closings (each, a “Subsequent Closing” and together with the
Initial Closing, each, a “Closing” and collectively, the “Closings”), until the
date on which the Maximum Amount is subscribed for by Investors and accepted by
the Company (the “Final Closing Date”). Unless terminated earlier in the
Company’s or Maxim’s sole discretion, the offering period for the Private
Placement (“Private Placement Offering Period”) will expire on the earlier to
occur of: (i) September 30, 2009, unless extended in the mutual discretion of
the Company and Maxim (the “Termination Date”), (ii) the date on which the
Private Placement Maximum Amount is subscribed for and accepted by the Company,
or (iii) the termination of the Private Placement or this Agreement, but in any
event no later than December 31, 2009. Any Closing shall be undertaken in a
manner agreed to by the Company and Maxim. Unless the Private Placement Minimum
Amount is subscribed for and accepted by the Company by the Termination Date,
the Private Placement will be terminated and all subscription proceeds will be
returned to Investors without interest or deduction The minimum subscription
amount per investor shall be Fifty Four Thousand Dollars ($54,000.00) which
amount may be reduced and partial Units may be issued and sold at the discretion
of the Company and the Placement Agent.

    

    (c)           The
Private Placement will be made pursuant to the Offering Documents, as defined
below. The Securities will not be registered under the Securities Act of 1933,
as amended, or any applicable successor statute (the “Act”), but will be issued
in reliance on the private offering exemption available under Section 4(2) of
the Act and the Rules and Regulations, as defined below, promulgated thereunder,
including Regulation D (“Regulation D”). Maxim understands that all
subscriptions for Units are subject to acceptance by the Company. The Company
and Maxim reserve the right in their reasonable discretion to accept or reject
any or all subscriptions for Units, in whole or in part, regardless whether any
funds have been deposited into an escrow account. Any subscription monies
received by Maxim from Investors will be handled in accordance with Rule 15c2-4
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
whether or not Maxim is subject to the Exchange Act, and as otherwise may be
prescribed by the terms of the Offering Documents (as defined in Section 2
below). As used herein, the term “Rules and Regulations” means the applicable
rules and regulations promulgated under the Securities Act and the Exchange
Act.

    

    (d)           Until
the Closing (as defined below) is held, all subscription funds received shall be
held by American Stock Transfer & Trust Company (the “Escrow Agent”). Maxim
shall not have any independent obligation to verify the accuracy or completeness
of any information contained in any Subscription Documents (as defined in
Section 2 below) or the authenticity, sufficiency or validity of any check
delivered by any prospective Investor in payment for the Units, nor shall Maxim
incur any liability with respect to any such verification or failure to verify,
unless it had actual knowledge that any information in the Subscription
Documents was untrue. All subscription checks and funds shall be promptly and
directly delivered without offset or deduction to the Escrow Agent.

    

    
      
        
          

        
Members FINRA
& SIPC

    

    405
Lexington Ave. * New York, NY 10174 *  tel (212) 895-3500 * (800)
724-0761 * fax (212) 895-3783 * www.maximgrp.com

    New York,
NY * Long Island, NY * Red Bank, NJ

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      
        	
                

              	
                CNS
      Response, Inc.

                August
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    (e)           In
the event that the Private Placement Minimum Amount is raised, the Company
agrees to file a registration statement, on a form to be agreed upon by the
Company and Maxim (the “Registration Statement”), with the Securities and
Exchange Commission (the “SEC”) no later than sixty (60) days following the
Closing, covering the resale of the shares of Common Stock: (i) included in the
Units, (ii) issuable upon the exercise of the Warrants, and (iii) underlying any
Placement Agent Warrant (as defined below) issued to Maxim in connection with
the Private Placement. In addition, the Company shall use reasonable efforts to
have such Registration Statement declared effective by the SEC by no later than
one hundred-eighty (180) days following the Final Closing of the Private
Placement with the SEC (the “Target Effective Date”), and to maintain the
effectiveness of such Registration Statement until sooner of the second (2nd)
anniversary of the date of such effectiveness on the date that all of such
shares may be sold by the Investor without restrictions. The terms of such
registration rights are more fully described in the Offering
Documents.

    

    2.           OFFERING
DOCUMENTS AND RELATED MATTERS

    

    (a)           The
Company has prepared an Offering Document which includes: (i) the Form 10-KSB
for the year ended September 30, 2008 as filed with the Securities and Exchange
Commission on January 13, 2009 and amended on January 28, 2009, (ii) the
subscription booklet, (iii) the form of Warrants, and (iv) the Offering term
sheet, relating to the Private Placement (such Offering Documents and any
amendments or supplements thereto prepared and furnished by the Company, being
referred to herein as the “Offering Documents”), which Offering Documents, among
other things, describes the Private Placement and certain investment risks
relating thereto.

    

    (b)           The
Company has been and will continue to be responsible for preparing and filing
required documentation, if any, with the authorities in the United States or any
state located therein (and subsequent to, if required by the laws of any such
jurisdiction) in connection with the distribution of the Offering Documents to
prospective Investors (the parties acknowledging, however, that the Private
Placement is intended and expected to be wholly or partially exempt from filing
requirements in the United States by reason of an “accredited investor”
exemption).

    

    (c)           Maxim
and its counsel and the Company and its counsel have or will jointly prepare a
form of subscription agreement (the “Subscription Agreement”) and a form of
purchaser questionnaire (collectively, with the Subscription Agreement, the
Note, the Warrant or other documents required in connection with the Private
Placement, the “Subscription Documents”), which Subscription Documents shall
contain such representations, warranties, conditions and covenants as are
customary in private placements of corporate debt and equity securities with
United States accredited investors. Maxim and its counsel have had or will have
an opportunity to review the final form of the Offering Documents and
Subscription Documents prior to the distribution thereof to prospective
Investors, and the Offering Documents and the Subscription Documents will be the
only offering documents (other than cover letters which may be used by Maxim,
and any documents made available to Investors in accordance with the terms of
the Offering Documents) shown to prospective Investors. The Company and its
counsel will advise Maxim and its counsel , in writing of those jurisdictions in
which the Securities may lawfully be offered and sold, and the manner in which
the Securities may lawfully be offered and sold in each such jurisdiction in
connection with the Private Placement, and Maxim agrees that the Securities will
be offered or sold only in such jurisdictions and in the manner specified by the
Company; provided, however, that Maxim shall not be responsible for
independently verifying such written advice with respect to the jurisdictions in
which the Securities may be offered and sold and with respect to the manner in
which the Securities may be offered and sold in such jurisdictions.
Notwithstanding the foregoing, Maxim shall determine whether it is licensed to
offer and sell the Securities in each jurisdiction in which it intends to do
so.

    

    
      
        
          

        
Members FINRA
& SIPC

    

    405
Lexington Ave. * New York, NY 10174 *  tel (212) 895-3500 * (800)
724-0761 * fax (212) 895-3783 * www.maximgrp.com

    New York,
NY * Long Island, NY * Red Bank, NJ

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    
      
        	
                

              	
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      Response, Inc.

                August
      3, 2009

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    (d)           The
Private Placement will be made in accordance with the requirements of Section
4(2) under the Act and/or Regulation D only to investors that qualify as
accredited investors, as defined in Rule 501(a) under the Act (“Accredited
Investors”), purchasing for their own account for investment purposes only and
not for distribution in violation of securities laws. Furthermore, prospective
Investors will have been provided with the Offering Documents and access to the
management of the Company and afforded the opportunity to ask
questions.

    

    (e)           The
Company recognizes, agrees and confirms that Maxim (or any selling agent
permitted to be utilized by Maxim under Section 3(a) hereof): (i) will use and
rely primarily on the information contained in the Offering Documents and the
Subsciption Documents and on information available from generally recognized
public sources in performing the services contemplated by this Agreement without
having independently verified the same; (ii) is authorized, as the Company’s
exclusive financial advisor and placement agent in connection with the Private
Placement, to transmit to any prospective Investor a copy or copies of the
Offering Documents, the Subsciption Documents and any other documentation
supplied to Maxim for transmission to any prospective Investor by or on behalf
of the Company or by any of the Company’s officers, representatives or agents,
in connection with the performance of Maxim’s services hereunder or any
transaction contemplated hereby; (iii) does not assume responsibility for the
accuracy or completeness of any information contained in the Offering Documents
and the Subsciption Documents or any such other information; (iv) will not make
an appraisal of the Company or any assets of the Company or the securities being
offered by the Company in the Private Placement; and (v) retains the right to
continue to perform due diligence of the Company during the course of the
Company’s engagement of Maxim.

    

    3.           PLACEMENT
AGENT MATTERS

    

    (a)           Subject
to the provisions of this Agreement and to the performance by the Company of all
of its obligations to be performed hereunder, Maxim agrees to use its best
efforts to assist in arranging for sales of Private Placement Securities. The
Company recognizes that “best efforts” does not assure that the Private
Placement will be consummated. It is understood and agreed that this Agreement
does not create any partnership, joint venture or other similar relationship
between or among Maxim and the Company, and that Maxim is acting only as a sales
agent. The Company hereby agrees that Maxim shall have the right to utilize
other selling broker-dealers in connection with the Private Placement on terms
approved by Maxim.

    
      

      
        
          
            

          
Members FINRA
& SIPC

      

      405
Lexington Ave. * New York, NY 10174 *  tel (212) 895-3500 * (800)
724-0761 * fax (212) 895-3783 * www.maximgrp.com

      New York,
NY * Long Island, NY * Red Bank, NJ

        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

    

    

    
      	  	
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      Response, Inc.

              August
      3, 2009

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    (b)           For
the services of Maxim hereunder, the Company will pay or caused to be paid to
Maxim the following fees at each Closing in connection with the sale of Private
Placement Securities to persons introduced to the Company by the Placement Agent
Private Placement, subject to the limitations set forth in Section (c)
below:

    

    (i)           a
cash payment equal to 10.0% of the gross proceeds received by the Company from
the sale of the Private Placement Securities, payable at each applicable
Closing, in lawful money of the United States by check or wire transfer of
immediately available funds;

     

    (ii)           a
non-accountable expense allowance equal to 2.0% of the gross proceeds received
by the Company from the sale of the Private Placement Securities, payable at
each applicable Closing, in lawful money of the United States by check or wire
transfer of immediately available funds;

     

    (iii)           a
warrant (the “Placement Agent Warrant”) to purchase such number of shares of
Common Stock, equal to 10.0% of the aggregate number of securities sold in the
Offering, at 110% of the offering price of the Units (“Exercise Price”), as
defined in the Offering Documents, exercisable for a period of five (5) years
from the date of issuance, subject to customary anti-dilution protection rights
contained in warrants of this type.

     

    The
Placement Agent Warrant will be issued at the applicable Closing pursuant to
Warrant Certificates to be signed by the Company, as applicable. The Placement
Agent Warrant shall provide, among other things:

     

    (A)           that
the Placement Agent Warrant shall:

     

    
      	
               
      

            	
               
      (1)

            	
              be
      exercisable at the Exercise Price, as applicable;
  and

            

    

     

    
      	
               
      

            	
               
      (2)

            	
              expire
      five (5) years from the date of issuance, unless otherwise agreed
      to.

            

    

     

    (B)           for
registration rights on the same terms granted to the Investors,

     

    (C)           for
such other terms as are normal and customary for Placement Agent Warrants issued
to placement agents.

    

    (c)           For
the services of Maxim hereunder, the Company will pay or caused to be paid to
Maxim the following fees at each Closing in connection with the Private
Placement for the sale of the Private Placement Securities to persons not
introduced to the Company by the Placement Agent:

    

    (i)           a
cash payment equal to 3.0% of the gross proceeds received by the Company from
the sale of the Private Placement Securities, payable at each applicable
Closing, in lawful money of the United States by check or wire transfer of
immediately available funds;

    

    
      
        
          

        
Members FINRA
& SIPC

    

    405
Lexington Ave. * New York, NY 10174 *  tel (212) 895-3500 * (800)
724-0761 * fax (212) 895-3783 * www.maximgrp.com

    New York,
NY * Long Island, NY * Red Bank, NJ

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      
        	  	
                CNS
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                August
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    (ii)           a
non-accountable expense allowance equal to 2.0% of the gross proceeds received
by the Company from the sale of the Private Placement Securities, payable at
each applicable Closing, in lawful money of the United States by check or wire
transfer of immediately available funds;

     

    (iii)           the
Placement Agent to purchase such number of shares of Common Stock, equal to 3.0%
of the aggregate number of securities sold in the Offering, at 110% of the
offering price of the Units, as defined in the Offering Documents, exercisable
for a period of five (5) years from the date of issuance, subject to customary
anti-dilution protection rights contained in warrants of this type.

     

    (d)           Upon
receipt by the Company from a proposed Investor of completed Subscription
Documents, and such other documents as the Company requests, the Company and
Maxim will determine in their reasonable discretion whether they wish to accept
or reject the subscription.

    

    
      	
              4.

            	
              PAYMENT
      BY COMPANY OF EXPENSES

            

    

    

    The
Company will pay for and whether or not any Securities are sold in connection
with the Private Placement , all expenses of the Company relating to the Private
Placement, including, without limitation: (i) the preparation, printing,
reproduction and filing of the Offering Documents and all other documents
relating to the Private Placement, and any supplements or amendments thereto,
including the fees and expenses of counsel to the Company, and the cost of all
copies thereof; (ii) the issuance, sale, transfer and delivery of the Private
Placement Securities, including any transfer or other taxes payable thereon and
the fees of any transfer agent or registrar; (iii) the public registration and
listing of, or registration and qualification of the Securities pursuant to the
resale registration statement required to be filed in connection with the sale
of the Securities or otherwise and for the securing of an exemption therefrom
under state or foreign “blue sky” or securities laws, including, without
limitation, filing fees payable in the jurisdictions in which such registration
or qualification or exemption therefrom is sought, the costs of preparing
preliminary, supplemental and final “blue sky surveys” relating to the offer and
sale of the Securities; (iv) the filing fees, if any, payable to the applicable
securities regulatory authorities, including, but not limited to, the FINRA in
connection with filings made via the FINRA’s CobraDesk filing system; (v) all
Escrow Agent fees; and (vi) all road show expenses of the Company, travel for
Company employees and other related expenses of the Company. The Company will
pay or promptly reimburse Maxim, as the case may be for all reasonable
out-of-pocket expenses of Maxim relating to activities under this Agreement
(including legal fees incurred by Maxim) in an amount not to exceed $25,000 in
the aggregate, which amount will be offset against the non-accountable expense
allowance referred to in Section 3(b) and 3(c) hereof.

    

    
      	
              5.

            	
              TERMINATION
      OF PRIVATE PLACEMENT

            

    

    

    The
Private Placement may be terminated: (i) by Maxim or the Company at any time
upon ten (10) days prior written notice; (ii) by the Company on September 30,
2009 or any day thereafter, on prior written notice to Maxim; or (iii)
immediately by Maxim upon giving written notice to the Company, but, with
respect to clause (iii), only in the event that:

    

    
      
        
          

        
Members FINRA
& SIPC

    

    405
Lexington Ave. * New York, NY 10174 *  tel (212) 895-3500 * (800)
724-0761 * fax (212) 895-3783 * www.maximgrp.com

    New York,
NY * Long Island, NY * Red Bank, NJ

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      
        	  	
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      Response, Inc.

                August
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    (a)           in
the opinion of Maxim, the Offering Documents contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements appearing therein not misleading in
the light of the circumstances in which they were made, and the Company shall
not have corrected such untrue statement or omission to the reasonable
satisfaction of Maxim and its counsel within ten (10) days after the Company
receives notice of such untrue statement or omission, provided that
notwithstanding such ten (10) day period, no Closing shall occur hereunder until
Maxim shall notify the Company that it is satisfied, in its reasonable
determination, that the Company has taken such steps (including circulating
amended offering materials and afforded prospective Investors a reasonable
opportunity to review such amendments) to allow the applicable Closing to occur;
or

    

    (b)           the
Company shall be in material breach of any representation, warranty or covenant
made by it in this Agreement, any Subscription Document or any other document
relating to the Private Placement (“Cause”); or

    

    (c)           (i)
any calamitous domestic or international event or act or occurrence has taken
place and, in Maxim’s opinion, has or will materially disrupt general securities
markets in the United States in the immediate future; or (ii) if trading on the
New York Stock Exchange, the American Stock Exchange, or in the over-the-counter
market shall have been suspended or minimum or maximum prices for trading shall
have been fixed, or maximum ranges for prices for securities shall have been
required on the over-the counter market by the Financial Industry Regulatory
Authority, (“FINRA”) or by order  of the SEC or any other government
authority having jurisdiction; or (iii) if the United States shall have become
subject to an act of terrorism or involved in a war, major hostilities or the
like; or (iv) if a banking moratorium has been declared by a New York State or
federal authority; or (v) if the Company shall have sustained a material loss,
whether or not insured, by reason of fire, flood, accident or other calamity; or
(vii) if there shall have been such material adverse change in the conditions or
prospects of the Company, involving a change not contemplated by the Offering
Documents; or (viii) if there shall have been such material adverse general
market conditions as in Maxim’s reasonable judgment would make it inadvisable to
proceed with the Private Placement or the sale or delivery of the
Securities.

    

    
      	
              6.

            	
              PRIVATE
      PLACEMENT OFFERING PERIOD; CLOSINGS

            

    

    

    Subject
to the terms and conditions set forth herein, the Units which are the subject of
the Private Placement will be offered as described in Section 1(b) hereof.
Unless the Private Placement Minimum Amount is subscribed for and accepted by
the Company by the Termination Date (as the same may be extended pursuant to the
terms hereof), the Private Placement will be terminated and all subscription
proceeds will be returned to Investors without interest or deduction. At any
Closing, the Company shall deliver to the Investors instruments or preferred
stock or warrant certificates representing the securities underlying the Units
and instruments representing the Placement Agent Warrants, duly executed by the
Company, together with such other closing documentation as may be required by
Maxim in its reasonable discretion in order to affect the applicable Closing.
Any date on which a Closing occurs is referred to herein as a “Closing
Date.”

    

    
      
        
          

        
Members FINRA
& SIPC

    

    405
Lexington Ave. * New York, NY 10174 *  tel (212) 895-3500 * (800)
724-0761 * fax (212) 895-3783 * www.maximgrp.com

    New York,
NY * Long Island, NY * Red Bank, NJ

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	  	
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      Response, Inc.

              August
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              7.

            	
              REPRESENTATIONS,
      WARRANTIES AND COVENANTS OF THE
COMPANY

            

    

    

    The
Company hereby represents, warrants, covenants and agrees with and to Maxim: (i)
as of the date hereof, (ii) as of each applicable Closing Date and (iii) as of
the date of the filing of the Registration Statement (or any amendment or
supplement thereto), as follows and except as disclosed in the Company’s
periodic reports as filed with the SEC.

    

    (a)           The
Company has been validly formed and legally exists as a corporation in good
standing under the laws of the State of Delaware. The Company has full corporate
power and authority to conduct its business as currently conducted, and is in
good standing in the jurisdiction in which the conduct of its businesses or the
nature of its properties requires such qualification or authorization, except
where the failure to be so qualified or authorized and in good standing would
not have a material adverse effect on the business and financial condition of
the Company or any other Subsidiary (as defined below) of the Company, each
taken as a whole (a “Material Adverse Effect”). As of the date hereof, the
Company does not have, directly or indirectly, any subsidiaries other than as
disclosed in the Company’s filings with the SEC (each, a “Subsidiary” and
collectively, the “Subsidiaries”). Each Subsidiary has been duly organized, is
validly existing and in good standing under the laws of the jurisdiction of its
organization, has the power and authority to own its properties and to conduct
its business and is duly qualified and authorized to transact business and is in
good standing in each jurisdiction in which the conduct of its business or the
nature of its properties requires such qualification or authorization, except
where the failure to be so qualified or authorized and in good standing would
not have a Material Adverse Effect.

    

    (b)           Except
for the Subsidiaries, the Company holds no ownership or other interest, nominal
or beneficial, direct or indirect, in any corporation, partnership, joint
venture or other business entity. Other than as described in the Company’s
filings with the SEC, all of the issued and outstanding capital stock of each
Subsidiary is owned by the Company, free and clear of any lien, charge,
mortgage, pledge, security interest, claim, equity, trust or other encumbrance,
preferential arrangement, defect or restriction of any kind whatsoever (each, a
“Lien”), and has been duly authorized and validly issued, and is
non-assessable.

    

    
      
        
          

        
Members FINRA
& SIPC

    

    405
Lexington Ave. * New York, NY 10174 *  tel (212) 895-3500 * (800)
724-0761 * fax (212) 895-3783 * www.maximgrp.com

    New York,
NY * Long Island, NY * Red Bank, NJ

    

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    
      
        	
                

              	
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                August
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    The
authorized capital stock of the Company consists of 750,000,000 shares of
capital stock, of which: (i) 750,000,000 are classified as Common Stock, par
value $0.001 per share, and (ii) none are classified as preferred stock, par
value $0.001 per share. As of the date hereof and as of each Closing Date,
28,872,476 shares of the Company’s Common Stock, 0 shares of Series A Preferred
Stock and 0 shares of Series B Preferred Stock and no other shares of capital
stock of the Company are or will be issued and outstanding, except as otherwise
contemplated by the Offering Documents and all such shares of capital stock are,
as the case may be, duly authorized, validly issued, fully paid and
non-assessable and not subject to preemptive rights. The shares of Common Stock
underlying the Warrants and the Placement Agent Warrants, will be duly reserved,
and when issued in accordance with the terms of the Private Placement, will be
validly issued, fully paid and non-assessable and not subject to preemptive or
any other similar rights and no personal liability will attach to the ownership
thereof. The outstanding options, warrants and other convertible securities of
the Company are as set forth in the Offering Documents and the Company’s filings
with the SEC. Except as disclosed in the Offering Documents, neither the Company
nor any Subsidiary is a party to an agreement, instrument or understanding which
calls for, and no securities of the Company or any Subsidiary contain provisions
relating to, the resetting or repricing of any debt or equity security
instrument of the Company or any Subsidiary. Neither the issuance of the
Securities nor the consummation of the Private Placement will trigger any
resetting or repricing of any debt or equity security instrument of the Company
or any Subsidiary.

    

    (c)           This
Agreement, the Subscription Documents, the Warrants, the Placement Agent
Warrants, and all other documents to be entered into by the Company in
connection with the transactions described in the Offering Documents have been
duly authorized, executed and delivered by the Company and constitutes the
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except insofar as enforcement of the
indemnification or contribution provisions hereof may be limited by applicable
laws or principles of public policy and except further as to enforcement, to the
availability of equitable remedies and limitations imposed by bankruptcy,
insolvency, reorganization and other similar laws and related court decisions
relating to or affecting creditors’ rights generally.

    

    (d)           Neither
the Offering Documents, the Registration Statement, the Subscription Documents
nor any of the Company’s filings with the SEC (collectively,
the  “Company Documents”) contain or will contain any untrue statement
of a material fact, and the Company Documents will not omit to state any
material fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading, except that the
Company shall have no liability for any information provided to the Company in
writing by, and relating to, Maxim, for use in and used in the Offering
Documents. It is understood that any summary in the Offering Documents of a
document which appears therein in full (either as signed or substantially in the
form to be signed) does not constitute an untrue or misleading statement merely
because it is a summary; provided, however, that any such summary does not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements made, in light of the circumstances under
which they were made, not misleading. If, at any time before the Private
Placement is completed or terminated or before all subscriptions are accepted by
the Company, there should be any change which would cause the Company Documents
not to comply with this Section 7(d), the Company will promptly advise Maxim
thereof and make any necessary corrective filings with the SEC and prepare and
furnish Maxim with, for distribution to Investors, after prior review and
approval by Maxim and its counsel (such approval not to be unreasonably
withheld), such copies of such supplements or amendments to the Offering
Documents and the Subscription Documents as will cause the Offering Documents
and the Subscription Documents, as so supplemented or amended, to comply with
this Section 7(d), and will authorize Maxim to make to Investors, if: (i) deemed
necessary by counsel to Maxim and approved by Maxim, or (ii) if deemed necessary
by counsel to the Company, an offer of rescission.

    
      

      
        
          
            

          
Members FINRA
& SIPC

      

      405
Lexington Ave. * New York, NY 10174 *  tel (212) 895-3500 * (800)
724-0761 * fax (212) 895-3783 * www.maximgrp.com

      New York,
NY * Long Island, NY * Red Bank, NJ

        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

    

    

    
      
        	
                

              	
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    (e)           Except
as disclosed in the Company Documents, since March 31, 2009, there has been no
material adverse change (or any development involving a prospective material
adverse change), whether or not arising from transactions in the ordinary course
of business, in or affecting: (i) the business, condition (financial or
otherwise), results of operations, shareholders’ equity, properties or prospects
of the Company and each Subsidiary, taken as a whole; (ii) the long-term debt or
capital stock of the Company or any of its Subsidiaries; or (iii) the Private
Placement or consummation of any of the other transactions contemplated by this
Agreement. Since the date of the latest Company balance sheet presented in or
attached to the Offering Documents, and other than as described in the Offering
Document, neither the Company nor any Subsidiary has incurred or undertaken any
liabilities or obligations, whether direct or indirect, liquidated or
contingent, matured or unmatured, or entered into any transactions, including
any acquisition or disposition of any business or asset, which are material to
the Company and the Subsidiaries taken as a whole, except for liabilities,
obligations and transactions which are disclosed in the Offering Documents and
the exhibits thereto.

    

    (f)           Neither
the Company nor any Subsidiary is in: (i) violation of its certificate or
articles of incorporation, by-laws or other organizational documents, (ii)
default under, and no event has occurred which, with notice or lapse of time or
both, would constitute a default under or result in the creation or imposition
of any Lien upon any of its property or assets pursuant to, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which it is a party or by which it is bound or to which any of its property or
assets is subject or (iii) violation in any respect of any law, rule,
regulation, ordinance, directive, judgment, decree or order of any judicial,
regulatory or other legal or governmental agency or body, foreign or domestic,
except (in the case of clause (ii) above) for any Lien disclosed in the Offering
Documents and the exhibits thereto and except, in the cases of (ii) and (iii),
where such defaults or violations do not, individually or in the aggregate, have
a Material Adverse Effect.

    

    (g)           The
execution, delivery and performance of this Agreement, all Company Documents and
all other documents to be entered into by the Company in connection with any
transaction described in the Offering Documents or in connection with the
Private Placement, and the consummation of the transactions contemplated hereby,
have been or will be prior to such execution, delivery, performance or
consummation, as the case may be, duly and validly authorized by the Company and
do not and will not: (i) constitute, or result in, a breach or violation of any
of the terms, provisions or conditions of the Certificate or Articles of
Incorporation, Bylaws or other governing documents of the Company or any of the
Subsidiaries, (ii) constitute, or result in, a material violation of any
applicable statute, law, ordinance or regulation of any state, territory or
other jurisdiction, or (iii) violate, constitute, or result in, a default under
(or an event which with the passing of time or the giving of notice or both
would constitute a default under) or breach of the terms, provisions or
conditions of any material indenture, note, contract, commitment, instrument or
document to which the Company or any of the Subsidiaries is or will be a party
or by which the Company, any of the Subsidiaries or any of its properties are
bound, or any award, judgment, decree, rule or regulation of any court or
governmental or regulatory agency or body having jurisdiction over the Company
or any of the Subsidiaries or its activities or properties, the result of which
would have a Material Adverse Effect. No consent, approval, authorization or
order of any court or governmental or regulatory agency or body or any
individual or entity is required on the part of the Company for the lawful
consummation of the transactions contemplated hereby and thereby, except for
such consents and approvals with respect to the offer and sale of the Securities
in certain jurisdictions which are identified to Maxim by counsel for the
Company.

    
      

      
        
          
            

          
Members FINRA
& SIPC

      

      405
Lexington Ave. * New York, NY 10174 *  tel (212) 895-3500 * (800)
724-0761 * fax (212) 895-3783 * www.maximgrp.com

      New York,
NY * Long Island, NY * Red Bank, NJ

        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

    

    

    
      
        	
                

              	
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    (h)           Each
of the Company and the Subsidiaries has all necessary consents, approvals,
authorizations, orders, registrations, qualifications, licenses, filings and
permits of, with and from all applicable judicial, regulatory and other legal or
governmental agencies and bodies and all third parties, foreign and domestic
(collectively, the “Consents”), to own, lease and operate their respective
properties and conduct their respective businesses as are now being conducted
and as disclosed in the Offering Documents, except where the failure to have any
such Consent would not have a Material Adverse Effect. Each such Consent is
valid and in full force and effect, and neither the Company nor any Subsidiary
has received written notice of any investigation or proceedings which results in
or, if decided adversely to the Company or any Subsidiary, could reasonably be
expected to result in, the revocation of, or imposition of a materially
burdensome restriction on, any Consent.

    

    (i)           Each
of the Company and its Subsidiaries is in compliance with all applicable laws,
rules, regulations, ordinances, directives, judgments, decrees and orders,
foreign and domestic, except where the failure to so comply does or would not
have a Material Adverse Effect.

    

    (j)           Except
as disclosed in the Offering Documents, there is no judicial, regulatory,
arbitral or other legal or governmental proceeding or other litigation or
arbitration, domestic or foreign, pending to which the Company or any Subsidiary
is a party or of which any property, operations or assets of the Company or any
Subsidiary is the subject which, would have a Material Adverse Effect. No such
proceeding, litigation or arbitration is threatened or contemplated, and the
defense of all such proceedings, litigation and arbitration against or involving
the Company or any Subsidiary would not have a Material Adverse
Effect.

    

    (k)           [_______]
whose report is included or attached to the Form 10-K included in the Offering
Documents, are independent public accountants as required by the Securities Act,
the Exchange Act and the Rules and Regulations.

    

    (l)           Except
as disclosed in the Offering Documents, and except for such matters that, would
not have a Material Adverse Effect there are no claims, actions, suits,
investigations or proceedings before or by any arbitrator, court, governmental
authority or instrumentality pending or threatened against or affecting the
Company or any of its subsidiaries or involving the properties of the Company
which would affect the transactions or other acts contemplated by this Agreement
or the validity or enforceability of this Agreement.

    

    
      
        
          

        
Members FINRA
& SIPC

    

    405
Lexington Ave. * New York, NY 10174 *  tel (212) 895-3500 * (800)
724-0761 * fax (212) 895-3783 * www.maximgrp.com

    New York,
NY * Long Island, NY * Red Bank, NJ

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      
        	
                

              	
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    (m)           Neither
the Company nor any of its Subsidiaries has violated or is currently in
violation of any provisions of: (a) any federal or state environmental law, (b)
Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder (“ERISA”), (c) the Bank
Secrecy Act, as amended, (d) the Money Laundering Control Act of 1986, as
amended, (e) the Foreign Corrupt Practices Act, or (f) the Uniting and
Strengthening of America by Providing Appropriate Tools Required to Intercept
and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, and the rules and
regulations promulgated under any such law, or any successor law, except for
such violations which, singly or in the aggregate, would not have a Material
Adverse Effect.

    

    (n)           Except
as disclosed in the Offering Documents, there are no contracts, agreements or
understandings between the Company and any person that would give rise to a
valid claim against the Company or Maxim for a brokerage commission, finder’s
fee or other like payment in connection with the transactions contemplated by
this Agreement or, to the Company’s knowledge, any arrangements, agreements,
understandings, payments or issuance with respect to the Company or any of its
officers, directors, shareholders, partners, employees, Subsidiaries or
affiliates that may affect Maxim’s compensation.

    

    (o)           The
financial statements, including the notes thereto, and the supporting schedules
included, attached to or incorporated by reference in the Form 10-K, as amended,
included in the Offering Documents and the Offering Documents present fairly, in
all material respects the financial position as of the dates indicated and the
cash flows and results of operations for the periods specified of the Company
and its consolidated Subsidiaries and the other entities for which financial
statements are included, attached to or incorporated by reference in the
Offering Documents. Except as otherwise stated in the Offering Documents and the
Company Documents, said financial statements have been prepared in conformity
with United States generally accepted accounting principles  applied
on a consistent basis throughout the periods involved. The supporting schedules
included, attached to or incorporated by reference in the Offering Documents and
the Company Documents present fairly the information required to be stated
therein. The other financial and statistical information included in the
Offering Documents and the Company Documents present fairly the information
included therein in all material respects.

    

    (p)           The
Company and its Subsidiaries maintain a system of internal accounting and other
controls sufficient to provide reasonable assurances that: (i) transactions are
executed in accordance with management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with United States generally accepted accounting
principles and to maintain accountability for assets, (iii) access to assets is
permitted only in accordance with management’s general or specific
authorization, and (iv) the recorded accounting for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.

    

    
      
        
          

        
Members FINRA
& SIPC

    

    405
Lexington Ave. * New York, NY 10174 *  tel (212) 895-3500 * (800)
724-0761 * fax (212) 895-3783 * www.maximgrp.com

    New York,
NY * Long Island, NY * Red Bank, NJ

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      
        	
                

              	
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    (q)           Other
than as described in the Offering Documents, neither the Company nor any of its
affiliates (within the meaning of Rule 144 under the Securities Act)
(collectively, “Affiliates”) has, prior to the date hereof, made any offer or
sale of any securities which could be “integrated” for purposes of the Act with
the offer and sale of the Securities pursuant to the Offering Documents or the
Registration Statement.

    

    (r)           All
private offers and sales of securities prior to the date hereof by the Company
or any Subsidiary have been validly exempt from registration under the Act and
have been properly registered with all applicable state securities authorities
pursuant to appropriate “blue sky” filings or otherwise and if not properly
filed or registered, all such purchasers in such private offerings have received
an offer of recission, which has been prepared and offered to purchasers in
accordance with the laws and regulations of each state in which such recission
offer was required to be made. Additionally, recission has not been offered to
purchasers that would not be entitled to any such recission based on the
expiration of the applicable statute of limitations in the state in which such
purchaser resides.

    

    (s)           Except
as disclosed in the Offering Documents, no holder of any security of the Company
or any Subsidiary has any rights to require registration of any such security as
part or on account of, or otherwise in connection with, the offer and sale of
the Securities contemplated by the Registration Statement, and any such rights
so disclosed have either been fully complied with by the applicable entity or
effectively waived by the holders thereof, and any such waivers remain in full
force and effect.

    

    (t)           Neither
the Company nor any of its respective directors, officers, employees, agents or
representatives (“Company Representatives”) has taken or will take any action
which has caused or may cause the Private Placement not to qualify for exemption
from the registration requirements of the Act or of United States federal, state
or other securities or other laws. In connection with the Private Placement,
neither the Company nor the Company Representatives shall offer or cause to be
offered the Securities by any form of general solicitation or general
advertising as defined in Rule 502(c) of Regulation D. Other than as described
in the Offering Documents, the Company and the Company Representatives have not
taken and shall not take any action (except for actions contemplated by the
Offering Documents) that would cause the Private Placement to be integrated with
other transactions under Rule 502(a) of Regulation D.

    

    (u)           No
relationship, direct or indirect, exists between the Company or any of its
Affiliates, on the one hand, and any director, officer, shareholder, customer or
supplier of the Company or any Affiliate of them, on the other hand, which is
required by the Act or the Exchange Act to be described in the Form 10-K
included in the Offering Documents which is not so described and described as
required. There are no outstanding loans, advances (except normal advances for
business expenses in the ordinary course of business) or guarantees of
indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any of their respective family members, except as
disclosed in the Form 10-K included in the Offering Documents. The Company has
not, in violation of the Sarbanes-Oxley Act of 2002 (“Sarb-Ox”), directly or
indirectly, including through a Subsidiary (other than as permitted under the
Sarb-Ox for depositary institutions), extended or maintained credit, arranged
for the extension of credit, or renewed an extension of credit, in the form of a
personal loan to or for any director or executive officer of the
Company.

    

    
      
        
          

        
Members FINRA
& SIPC

    

    405
Lexington Ave. * New York, NY 10174 *  tel (212) 895-3500 * (800)
724-0761 * fax (212) 895-3783 * www.maximgrp.com

    New York,
NY * Long Island, NY * Red Bank, NJ

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      
        	
                

              	
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    (v)           The
Company is in material compliance with the provisions of Sarb-Ox and the rules
and regulations promulgated thereunder and related or similar rules and
regulations promulgated by NASDAQ or any other governmental or self regulatory
entity or agency, except for such violations which, singly or in the aggregate,
would not have a Material Adverse Effect.

    

    (w)           With
the exception of product liability insurance, the Company and/or the
Subsidiaries maintain insurance in such amounts and covering such risks as they
reasonably consider adequate for the conduct of their businesses and the value
of their properties and as is customary for companies engaged in similar
businesses in similar industries, all of which insurance is in full force and
effect. There are no claims by the Company or any Subsidiary under any such
policy or instrument as to which any insurance company is denying liability or
defending under a reservation of rights clause. The Company reasonably believes
that it will be able to renew its existing insurance, if any, as and when such
coverage expires or will be able to obtain replacement insurance adequate for
the conduct of its business.

    

    (x)           No
“prohibited transaction” (as defined in either Section 406 of the ERISA or
Section 4975 of the Internal Revenue Code of 1986, as amended from time to time
(the “Code”)), “accumulated funding deficiency” (as defined in Section 302 of
ERISA) or other event of the kind described in Section 4043(b) of ERISA (other
than events with respect to which the 30-day notice requirement under Section
4043 of ERISA has been waived) has occurred with respect to any employee benefit
plan for which the Company or any Subsidiary would have any liability; each
employee benefit plan of the Company or any Subsidiary is in compliance in all
material respects with applicable law, including (without limitation) ERISA and
the Code; the Company has not incurred and does not expect to incur liability
under Title IV of ERISA with respect to the termination of, or withdrawal from
any “pension plan”; and each employee benefit plan of the Company or any
Subsidiary that is intended to be qualified under Section 401(a) of the Code is
so qualified and nothing has occurred, whether by action or by failure to act,
which could cause the loss of such qualification.

    

    (y)           The
Company and each Subsidiary owns or leases all such properties as are necessary
to the conduct of their businesses as presently operated and as proposed to be
operated as described in the Offering Documents. The Company and each Subsidiary
have good and marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them, in each case free and
clear of all liens and encumbrances, except such as are described in the
Offering Documents or such as would not have a Material Adverse Effect. Any real
property and buildings held under lease or sublease by the Company and the
Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material to, and do not interfere with, the use
made and proposed to be made of such property and buildings by the Company and
the Subsidiaries. Neither the Company nor any Subsidiary has received any notice
of any claim adverse to its ownership of any real or personal property or of any
claim against the continued possession of any real property, whether owned or
held under lease or sublease by the Company or any Subsidiary.

    

    
      
        
          

        
Members FINRA
& SIPC

    

    405
Lexington Ave. * New York, NY 10174 *  tel (212) 895-3500 * (800)
724-0761 * fax (212) 895-3783 * www.maximgrp.com

    New York,
NY * Long Island, NY * Red Bank, NJ

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      
        	
                

              	
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    (z)           The
Company and each Subsidiary: (i) owns or possesses adequate right to use all
patents, patent applications, trademarks, service marks, trade names, trademark
registrations, service mark registrations, copyrights, licenses, formulae,
customer lists, and know-how and other intellectual property (including trade
secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures, “Intellectual Property”) necessary for the
conduct of their respective businesses as being conducted and as described in
the Offering Documents and (ii) does not believe that the conduct of their
respective businesses does or will conflict with, and have not received any
notice of any claim of conflict with, any such right of others. All material
technical information developed by and belonging to the Company or any
Subsidiary which has not been patented has been, to the Company’s knowledge,
kept confidential so as, among other things, all such information may be deemed
proprietary to the applicable entity. Neither the Company nor any Subsidiary has
granted or assigned to any other person or entity any right to manufacture, have
manufactured, assemble or sell the current products and services of the Company
or any Subsidiary or those products and services described in the Offering
Documents. After due investigation, there is no infringement by third parties of
any such Intellectual Property; there is no pending or threatened action, suit,
proceeding or claim by others challenging the Company’s or any Subsidiary’s
rights in or to any such Intellectual Property, and the Company is unaware of
any facts which would form a reasonable basis for any such claim. There is no
pending or threatened action, suit, proceeding or claim by others that the
Company or any Subsidiary infringes or otherwise violates any patent, trademark,
copyright, trade secret or other proprietary rights of others, and the Company
is unaware of any other fact which would form a reasonable basis for any such
claim.

    

    (aa)           Except
as disclosed in the Company Documents, and except for such matters that,
individually or in the aggregate, would not have a Material Adverse
Effect:

    

     
(i)           the
Company and each of its Subsidiaries are, and have been, in compliance with all
Environmental Laws (as defined below), and neither the Company nor any of its
Subsidiaries has received any: (A) communication that alleges that the Company
or any such Subsidiary is in violation of, or has liability under, any
Environmental Law, (B) written request for information pursuant to any
Environmental Law, or (C) notice regarding any requirement that is proposed for
adoption or implementation under any Environmental Law and that would be
applicable to the operations of the Company or any of its
Subsidiaries;

     

     
(ii)           (A) The Company and
each of its Subsidiaries have obtained and are in compliance with all permits,
licenses and governmental authorizations pursuant to all Environmental Laws
(collectively, “Environmental
Permits”) necessary for their operations as currently conducted, (B) all
such Environmental Permits are valid and in good standing, and (C) neither the
Company nor any of its Subsidiaries has been advised by any governmental entity
or authority of any actual or potential change in the status or terms and
conditions of any Environmental Permit;

    

    
      
        
          

        
Members FINRA
& SIPC

    

    405
Lexington Ave. * New York, NY 10174 *  tel (212) 895-3500 * (800)
724-0761 * fax (212) 895-3783 * www.maximgrp.com

    New York,
NY * Long Island, NY * Red Bank, NJ

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      
        	
                

              	
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    (iii)           there
are no Environmental Claims pending or threatened, against the Company or any of
its Subsidiaries;

    

    (iv)           there
have been no Releases of any Hazardous Material that could reasonably be
expected to form the basis of any Environmental Claim against the Company or any
of its Subsidiaries or against any person whose liabilities for such
Environmental Claims the Company or any of its Subsidiaries has, or may have,
retained or assumed, either contractually or by operation of law;
and

     

    (v)           there
have been no Releases of any Hazardous Material that could reasonably be
expected to form the basis of any Environmental Claim against the Company or any
of its Subsidiaries or against any person whose liabilities for such
Environmental Claims the Company or any of its Subsidiaries has, or may have,
retained or assumed, either contractually or by operation of law;
and

     

    (vi)           (A)
neither the Company nor any of its Subsidiaries has retained or assumed, either
contractually or by operation of law, any liabilities or obligations that could
reasonably be expected to form the basis of any Environmental Claim against the
Company or any Subsidiary, and (B) no Environmental Claims are pending against
any person or entity whose liabilities for such Environmental Claims the Company
or any Company Subsidiary has, or may have, retained or assumed, either
contractually or by operation of law.

     

    As used
in this Agreement, the terms: (A) “Environmental
Claim” means any and all administrative, regulatory or judicial actions,
suits, orders, demands, directives, claims, investigations, proceedings or
notices of violation by or from any person or entity alleging liability of
whatever kind or nature arising out of, based on or resulting from (y) the
presence or release of, or exposure to, any Hazardous Materials at any location;
or (z) the failure to comply with any Environmental Law; (B) “Environmental Laws”
means all applicable federal, state, local and foreign laws, rules, regulations,
orders, decrees, judgments, legally binding agreements or Environmental Permits
issued, promulgated or entered into by or with any governmental entity or
authority, relating to pollution, natural resources or protection of endangered
or threatened species, human health or the environment (including ambient air,
surface water, groundwater, land surface or subsurface strata); (C) “Hazardous
Materials” means (y) any petroleum or petroleum products, radioactive
materials or wastes, asbestos in any form, urea formaldehyde foam insulation and
polychlorinated biphenyls; and (z) any other chemical, material, substance or
waste that in relevant form or concentration is prohibited, limited or regulated
under any Environmental Law; and (D) “Release” means any
actual or threatened release, spill, emission, leaking, dumping, injection,
pouring, deposit, disposal, discharge, dispersal, leaching or migration into or
through the environment (including ambient air, surface water, groundwater, land
surface or subsurface strata) or within any building, structure, facility or
fixture.

    

    
      
        
          

        
Members FINRA
& SIPC

    

    405
Lexington Ave. * New York, NY 10174 *  tel (212) 895-3500 * (800)
724-0761 * fax (212) 895-3783 * www.maximgrp.com

    New York,
NY * Long Island, NY * Red Bank, NJ

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      
        	
                

              	
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    (bb)           Each
of the Company and the Subsidiaries has accurately prepared and filed all
federal, state, foreign and other tax returns that are required to be filed by
it and has paid or made provision for the payment of all taxes, assessments,
governmental or other similar charges, including without limitation, all sales
and use taxes and all taxes which the Company or any Subsidiary is obligated to
withhold from amounts owing to employees, creditors and third parties, with
respect to the periods covered by such tax returns (whether or not such amounts
are shown as due on any tax return). No deficiency assessment with respect to a
proposed adjustment of the Company or any Subsidiary’s federal, state, local or
foreign taxes is pending or threatened. The accruals and reserves on the books
and records of the Company and the Subsidiaries in respect of tax liabilities
for any taxable period not finally determined are adequate to meet any
assessments and related liabilities for any such period and, since the date of
the Company’s most recent audited financial statements, the Company and the
Subsidiaries have not incurred any liability for taxes other than in the
ordinary course of its business. There is no tax lien, whether imposed by any
federal, state, foreign or other taxing authority, outstanding against the
assets, properties or business of the Company or any Subsidiary.

    

    (cc)           Neither
the Company any Subsidiary nor any of their respective employees or agents has
at any time during the last five (5) years: (i) made any unlawful contribution
to any candidate for foreign office, or failed to disclose fully any
contribution in violation of law, or (ii) made any payment to any federal or
state governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments that are not prohibited by
the laws of the United States of any jurisdiction thereof.

    

    (dd)           No
labor disturbance by the employees of the Company or any Subsidiary currently
exists or, to the knowledge of the Company, is likely to occur.

    

    (ee)           The
Company has not offered, or caused Maxim to offer, the Securities to any person
or entity with the intention of unlawfully influencing: (i) a customer or
supplier of the Company or any Subsidiary to alter the customer’s or supplier’s
level or type of business with the Company or any Subsidiary or (ii) a
journalist or publication to write or publish favorable information about the
Company, any Subsidiary or its products or services.

    

    (ff)           The
Company will not offer the Securities for sale hereunder on the basis of any
communications or documents relating to Maxim or the Securities except the
Offering Documents and the exhibits thereto and documents described or referred
to therein, including the Subscription Documents.

    

    (gg)           So
long as any of the Securities are “restricted securities” within the meaning of
Rule 144(a)(3) under the Act, the Company, during any period in which it is not
subject to and in compliance with Section 13 or 15(d) of the Exchange Act, or is
not exempt from such reporting requirements pursuant to and in compliance with
Rule 12g3-2b under the Exchange Act, provide to each holder of Units, and the
underlying shares of Common Stock, and to each prospective purchaser (as
designated by such holder) of Units, and the underlying shares of Common Stock,
upon the request of such holder or prospective holder, any information required
to be provided by Rule 144A(d)(4) under the Act.

    

    
      
        
          

        
Members FINRA
& SIPC

    

    405
Lexington Ave. * New York, NY 10174 *  tel (212) 895-3500 * (800)
724-0761 * fax (212) 895-3783 * www.maximgrp.com

    New York,
NY * Long Island, NY * Red Bank, NJ

    

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    
      
        	
                

              	
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    (hh)           Neither
the Company nor any Subsidiary is and, at all times up to and including
consummation of the transactions contemplated by this Agreement, and after
giving effect to application of the net proceeds of the Private Placement, will
not be, subject to registration as an “investment company” under the Investment
Company Act of 1940, as amended, and is not and will not be an entity
“controlled” by an “investment company” within the meaning of such act. The
Company will: (i) utilize the proceeds of the Placement in accordance with the
“Use of Proceeds” section of the Offering Documents and (ii) initially utilize
the proceeds of the Placement and all other funds of the Company in such a
manner so as to cause the Company not to be subject to the 1940 Act, and will
thereafter use its best efforts to avoid the Company’s becoming subject to the
1940 Act.

    

    (ii)           In
addition to the foregoing, to the extent not set forth herein, Maxim may rely on
the representations and warranties made by the Company in the Subscription
Agreement provided by the Company and used in connection with the Private
Placement.

    

    
      	
              8.

            	
              REPRESENTATIONS,
      WARRANTIES AND COVENANTS OF MAXIM

            

    

    

    Maxim
hereby represents and warrants to, and covenants with, the Company
that:

    

    (a)           This
Agreement has been duly authorized, executed and delivered by Maxim and
constitutes the legal, valid and binding obligation of Maxim, enforceable
against it in accordance with its terms, except insofar as enforcement of the
indemnification or contribution provisions hereof may be limited by applicable
laws or principles of public policy and subject, as to enforcement, to the
availability of equitable remedies and limitations imposed by bankruptcy,
insolvency, reorganization and other similar laws and related court decisions
relating to or affecting creditors’ rights generally.

    

    (b)           Maxim
will cooperate with the Company to ensure that the offering and sale of the
Securities will comply with the requirements of the Act, including, without
limitation, the general conditions contained in Regulation D and the federal
securities laws, and will follow the reasonable advice of the Company with
respect to the manner in which to offer and sell the Securities so as to ensure
that the offering and sale thereof will comply with the securities laws of any
jurisdiction in which Securities are offered by Maxim, and Maxim will not make
an offer of Securities in any jurisdiction in which the Company advises it in
writing that such offer would be unlawful for Maxim to offer or sell
securities.

    

    (c)           Maxim
is: (i) a registered broker-dealer under the Exchange Act; (ii) a member in good
standing of the FINRA; and (iii) registered as a broker-dealer in each
jurisdiction in which it is required to be registered as such in order to offer
and sell the Securities in such jurisdiction.

    

    
      
        
          

        
Members FINRA
& SIPC

    

    405
Lexington Ave. * New York, NY 10174 *  tel (212) 895-3500 * (800)
724-0761 * fax (212) 895-3783 * www.maximgrp.com

    New York,
NY * Long Island, NY * Red Bank, NJ

    

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    
      
        	
                

              	
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    (d)           Maxim
has not and will not make an offer of Securities (or of any securities, the
offering of which may be integrated with the Private Placement) on the basis of
any communications or documents relating to the Company or the Securities except
the Offering Documents and the exhibits thereto and documents described,
referred to or incorporated by reference therein (including the Subscription
Documents). Maxim will deliver a copy of the Offering Documents to each
prospective Investor solicited by it prior to such offeree’s execution of the
Subscription Documents or, in the case of amendments or supplements to the
Offering Documents (other than those amendments and supplements approved in
writing by the Company but designated in writing as not subject to this
requirement), prior to such offeree’s execution of an acknowledgment of receipt
of such amendment or supplement and reconfirmation of intent to
subscribe.

    

    (e)           Maxim
will not transmit to the Company any written offer from an offeree to purchase
Securities unless, it has a pre-existing relationship with such offeree, and
immediately prior thereto, it reasonably believes that: (i) the offeree is an
Accredited Investor; and (ii) the offeree meets all other offeree and/or
purchaser suitability standards, if any, required under applicable securities
laws and regulations.

    

    (f)           Maxim
will periodically notify the Company of the jurisdiction in which the Securities
are being offered by it or will be offered by it pursuant to this Agreement, and
will periodically notify the Company of the status of the offering conducted
pursuant to this Agreement.

    

    
      	
              9.

            	
              COVENANTS

            

    

    

    The
Company covenants to Maxim that it shall:

    

    (a)           Notify
Maxim as soon as practicable, and confirm such notice promptly in writing: (i)
when any event shall have occurred during the period commencing on the date
hereof and ending on the later of the date of the Final Closing as a result of
which the Offering Documents would include 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 not misleading, and (ii) of the receipt
of any notification with respect to the modification, rescission, withdrawal or
suspension of the qualification or registration of the Securities or of an
exemption from such registration or qualification in any jurisdiction. The
Company will use its reasonable best efforts to prevent the issuance of any such
modification, rescission, withdrawal or suspension and, if any such
modification, rescission, withdrawal or suspension is issued, to obtain the
lifting thereof as promptly as possible.

    

    (b)           Not
supplement or amend the Offering Documents unless Maxim and its counsel shall
have approved of such supplement or amendment in writing, such approval not to
be unreasonably withheld, delayed or conditioned. If, at any time during the
period commencing on the date hereof and ending on the date of the Final
Closing, any event shall have occurred as a result of which the Offering
Documents contains any 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, or if, in the opinion of counsel to the Company or
counsel to Maxim, it is necessary at any time to supplement or amend the
Offering Documents to comply with the Act, Regulation D or any applicable
securities or “blue sky” laws, the Company will promptly prepare an appropriate
supplement or amendment (in form and substance reasonably satisfactory to Maxim
and its counsel) which will correct such statement or omission or which will
effect such compliance.

    
      

      
        
          
            

          
Members FINRA
& SIPC

      

      405
Lexington Ave. * New York, NY 10174 *  tel (212) 895-3500 * (800)
724-0761 * fax (212) 895-3783 * www.maximgrp.com

      New York,
NY * Long Island, NY * Red Bank, NJ

        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

    

    

    
      
        	
                

              	
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    (c)           Include
all the shares of Common Stock underlying the Notes, Warrants and the Placement
Warrants, and all shares of Common Stock included as part of the Units (“Registrable
Securities”), issued in this Placement in a registration statement of its
securities under the Act to be filed with the SEC within sixty (60) days
following the initial Closing of the Placement (the “Target Filing Date”) and
will use its best efforts to have the SEC declare such registration statement
effective by no later than one hundred-eighty (180) days following the initial
Closing of the Placement (the “Target Effective Date”), and to maintain the
effectiveness of such registration statement until the sooner of the second
(2nd) anniversary of the final Closing of the Placement and the date that all
such securities may be sold without repetition. In addition, Investors shall be
provided with certain “piggy back” registration rights as described in the
Offering Documents. The Company will prepare and file with the SEC such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective until the sale of the securities registered thereunder, and
shall comply with the provisions of the Act with respect to the disposition of
all securities owned by the Investors and Maxim that are covered by such
registration statement during such period in accordance with the intended
methods of disposition by the Investors and Maxim. The Company will furnish to
the Investors and Maxim such number of copies of such registration statement,
each amendment and supplement thereto, the prospectus included in such
registration statement (including each preliminary prospectus) and such other
documents as the Investors and Maxim may request in order to facilitate the
disposition of the shares of Common Stock which may be owned by the Investors
and Maxim. The Company shall bear all expenses of the Registration Statement,
(but not any fees and expenses, if any, of counsel or other advisors to the
Investors and Maxim), all of which shall be payable upon the initial filing of
the Registration Statement. The Company shall also pay all expenses of the
Investors and Maxim for any “144 opinions” or other opinions which are required
in connection with any transfers of Securities made by such parties under Rule
144 or any other applicable sale or transfer (including, without limitation,
sales made pursuant to prospectus delivery). In addition to the foregoing, as of
the Closing, the Company also grants to Maxim, with respect to the shares of
Common Stock underlying the Placement Agent Warrants, each of the registration
rights and anti-dilution protections granted to the Investors in the Placement
are provided for in the Placement Agent Warrants. In the event the SEC
determines any registration statement filed pursuant hereto constitutes a
primary offering of securities by the Company and/or requires any Investor to be
named as an underwriter, or otherwise restricts the number of Registrable
Securities that can be registered in a given registration statement citing the
percentage of Registrable Securities to be registered as compared to the
then-current public float or market capital of the Company (“SEC Caused Event”),
Maxim understands and agrees that the Company may reduce, on a pro-rata basis,
the total number of Registrable Securities to be registered on behalf of each
such Investor.

    

    (d)           Use
its best good faith efforts to, within sixty (60) days of the Closing, obtain a
“key man” life insurance policy with a nationally recognized carrier and with
the Company as the beneficiary on the life of George Carpenter in an amount no
less than $2,000,000 worth of coverage.

    
      

      
        
          
            

          
Members FINRA
& SIPC

      

      405
Lexington Ave. * New York, NY 10174 *  tel (212) 895-3500 * (800)
724-0761 * fax (212) 895-3783 * www.maximgrp.com

      New York,
NY * Long Island, NY * Red Bank, NJ

        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

    

    

    
      
        	
                

              	
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    (e)           Deliver
without charge to Maxim such number of copies of the Offering Documents and any
supplement or amendment thereto as may reasonably be requested by
Maxim.

    

    (f)      
     [Intentionally Omitted]

    

    (g)           Not
solicit any offer to buy or offer to sell Securities by any form of general
solicitation or advertising, including, without limitation, any advertisement,
article, notice or other communication published in any newspaper, magazine or
similar medium or broadcast over the Internet, television or radio or at any
seminar or meeting whose attendees have been invited by any general solicitation
or advertising.

    

    (h)           At
all times during the period commencing on the date hereof and ending on the date
of the Final Closing, provide to each prospective Investor or his purchaser
representative, if any, on reasonable request, such information (in addition to
that contained in the Offering Documents) concerning the Private Placement, the
Company, the Securities and any other relevant matters as it possesses or can
acquire without unreasonable effort or expense and extend to each prospective
investor or his purchaser representative, if any, the opportunity to ask
questions of, and receive answers from the Company concerning the terms and
conditions of the Private Placement and the business of the Company and to
obtain any other additional information, to the extent it possesses the same or
can acquire it without unreasonable effort or expense, as such prospective
Investor or purchaser representative may consider necessary in making an
informed investment decision or in order to verify the accuracy of the
information furnished to such prospective Investor or purchaser representative,
as the case may be.

    

    (i)       
    Notify Maxim promptly of the acceptance or rejection of
any subscription.

    

    (j)         
  File a Notice of Sales of Securities on Form D with the SEC no later
than 15 days after the first sale of the Securities, if required by law. The
Company shall, through Maxim’s counsel, file promptly such amendments to such
Notices on Form D as shall become necessary and shall also comply with any
filing requirement imposed by the laws of any province or jurisdiction in which
offers and sales are made. The Company shall furnish Maxim with copies of all
such filings. The Company acknowledges that it shall be liable for all filing
fees and expenses, as well as Maxim’s counsel’s legal fees, in all state and
federal filings made in connection with the sale or proposed sale of
Securities.

    

    (k)           Place
the following legend on all certificates representing the
Securities:

    

    “THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR
ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS
WHICH, IN THE OPINION OF COUNSEL FOR THIS CORPORATION, IS
AVAILABLE.”

    
      

      
        
          
            

          
Members FINRA
& SIPC

      

      405
Lexington Ave. * New York, NY 10174 *  tel (212) 895-3500 * (800)
724-0761 * fax (212) 895-3783 * www.maximgrp.com

      New York,
NY * Long Island, NY * Red Bank, NJ

        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

    

    

    
      
        	
                

              	
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    (l)           Not,
directly or indirectly, engage in any act or activity which may jeopardize the
status of the offering and sale of the Securities as exempt transactions under
the Act or under the securities or “blue sky” laws of any jurisdiction in which
the Private Placement may be made.

    

    (m)           Not
and shall use its best efforts to ensure that none of its Affiliates shall sell,
offer for sale or solicit offers to buy or otherwise negotiate in respect of any
security that would be integrated with the offer or sale of the Securities in a
manner that would require the registration under the Act of the issue, offer or
sale of the Securities to the Investors.

    

    (n)           Apply
the net proceeds from the sale of the Securities in accordance with the
description thereof in the Offering Documents.

    

    (o)           Not,
during the period commencing on the date hereof and ending on the date of the
Final Closing, issue any press release or other communication or hold any press
conference with respect to the Company, its financial condition, results of
operations, business properties, assets, liabilities or future prospects of the
Private Placement, without the prior written consent of Maxim, which consent
will not be unreasonably withheld.

    

    (p)           Not,
prior to the completion of the Private Placement, bid for, purchase, attempt to
induce others to purchase, or sell, directly or indirectly, any shares of Common
Stock or any other securities in violation of the provisions of Regulation M
under the Exchange Act.

    

    (q)           Use
its good faith best efforts after the date hereof to become compliant with all
aspects of the Sarbanes-Oxley Act of 2002 (“Sarb-Ox”)
and the rules and regulations promulgated thereunder that are applicable to the
Company at the date of this Agreement and the rules and regulations with respect
to Sarb-Ox that are now or will be applicable to the Company from time to time
including, without limitation, those provisions relating to loans to Company
officers and directors (it being covenanted and agreed to by the Company that it
shall not, after the date hereof, make any loans to any officer or director of
the Company).

    

    (r)           Not,
for a period of one (1) year from the Final Closing Date, increase the base
salary of any officer of the Company in excess of ten percent (10%) per
year.

    

    
      
        
          

        
Members FINRA
& SIPC

    

    405
Lexington Ave. * New York, NY 10174 *  tel (212) 895-3500 * (800)
724-0761 * fax (212) 895-3783 * www.maximgrp.com

    New York,
NY * Long Island, NY * Red Bank, NJ

    

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    
      
        	
                

              	
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    (s)           Within
one business day of the filing of the Registration Statement, the Company will
prepare and file, through Maxim’s counsel, the selling stockholder resale
offering described in the Registration Statement for review by the Financial
Industry Regulatory Authority (“FINRA”) via the
FINRA’s CobraDesk filing system (“CobraDesk Filing”)
for the purpose of having the prospectus contained within the Registration
Statement treated as a “base prospectus” in connection with such resale
offering. The Company will use its best efforts to have the CobraDesk Filing
approved by the FINRA within thirty (30) days of the Target Filing Date. The
Company shall be liable for Maxim’s counsel’s legal fees in connection
therewith. The Company shall bear all expenses of the CobraDesk Filing,
including fees and expenses, if any, of counsel or other advisors to the
Investors or Maxim. In all circumstances, the Company shall pay for all FINRA
filing fees associated with the CobraDesk Filing.

    

    The
Company agrees to cooperate with Maxim and/or its counsel and to promptly supply
all necessary information for completion of the CobraDesk Filing to Maxim and/or
its counsel. The Company agrees to indemnify each of Maxim and its counsel for
any and all statements and/ or representations made by the Company to Maxim
and/or its counsel included by Maxim and/or its counsel in the CobraDesk
Filing.

    

    (t)           (A) issue a press
release accurately describing and disclosing the transactions contemplated
hereby on the Closing Date, (B) file with the SEC a report on Form 8-K or Form
10-Q disclosing the transactions contemplated hereby within four (4) business
days after the Closing Date, and (C) timely file with the SEC a Form D
promulgated under the Act as required under Regulation D.

    

    (u)           So
long as any Investor owns any of the Securities, timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof pursuant to
Section 13(a) or 15(d) of the Exchange Act. If at any time for 12 months
following the Closing and while any Investor owns any of the Securities, the
Company is not required to file reports pursuant to Section 13(a) or 15(d) of
the Exchange Act, it will prepare and furnish to each Investor and make publicly
available in accordance with Rule 144(c) promulgated under the Act annual and
quarterly financial statements, together with a discussion and analysis of such
financial statements in form and substance substantially similar to those that
would otherwise be required to be included in reports required by Section 13(a)
or 15(d) of the Exchange Act, as well as any other information required thereby,
in the time period that such filings would have been required to have been made
under the Exchange Act. The Company further covenants that for 12 months
following the Closing and it will take such further action as any holder of the
Securities may reasonably request, all to the extent required from time to time
to enable such holder to sell the Common Stock underlying the Securities without
registration under the Exchange Act under Rule 144 promulgated under the Act.
Upon the request of any such holder, the Company shall deliver thereto a written
certification of a duly authorized officer as to whether it has complied with
such requirements.

    

    (v)           The
Company shall at all times have authorized, and reserved for the purpose of
issuance, a sufficient number of shares of Common Stock issuable upon exercise
of the Warrants and the Placement Agent Warrants to provide for the issuance of
all of such shares. Prior to complete exercise of the Warrants and the Placement
Agent Warrants, the Company shall not reduce the number of shares of Common
Stock reserved for issuance hereunder without the prior written consent of the
Holder except for a reduction proportionate to a reverse stock split, which
reverse stock split affects all shares of Common Stock equally.

    
      

      
        
          
            

          
Members FINRA
& SIPC

      

      405
Lexington Ave. * New York, NY 10174 *  tel (212) 895-3500 * (800)
724-0761 * fax (212) 895-3783 * www.maximgrp.com

      New York,
NY * Long Island, NY * Red Bank, NJ

        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

    

    

    
      
        	
                

              	
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    If the
Company would be, if exercise of the Warrants or Placement Agent Warrants, as
applicable, were to be delivered on such date, precluded from issuing the full
number of shares of Common Stock as would then be issuable if upon the exercise
of the Warrants and the Placement Agent Warrants, due to the unavailability of a
sufficient number of shares of authorized but unissued or re-acquired Common
Stock, then the Board of Directors of the Company shall promptly (and in any
case within 30 days from such date) prepare and mail to the stockholders of the
Company proxy materials requesting authorization to amend the Company's articles
of incorporation to increase the number of shares of Common Stock which the
Company is authorized to issue to at least a number of shares equal to the sum
of (1) all shares of Common Stock then outstanding, (2) the number of shares of
Common Stock issuable on account of all outstanding warrants, options and
convertible securities (other than the Warrants and Placement Agent Warrants)
and on account of all shares of Common Stock reserved under any stock option,
stock purchase, warrant or similar plan, and (3) the number of shares of Common
Stock to be issued upon exercise of all Warrants and Placement Agent
Warrants.

    

    (w)           Give
prompt written notice to Maxim of any breach by it of any representation,
warranty or other agreement contained in this Agreement, or any other document
to which the Company, the Placement Agent and Investor has relied or is relying
on in connection with the Offering (“Transaction Documents”), as well as any
events or occurrences arising after the date hereof, which would reasonably be
likely to cause any representation or warranty or other agreement of such party,
as the case may be, contained in the Transaction Documents to be incorrect or
breached as of and after the Closing Date. However, no disclosure by any party
pursuant to this Section shall be deemed to cure any breach of any
representation, warranty or other agreement contained in any Transaction
Documents.

    

    (x)           To
the extent necessary, promptly seek the listing of all shares of Common Stock
underlying the Securities offered in the Offering not previously listed as such
shares of Common Stock are issued on the securities exchange, market or other
quotation system on which the Common Stock is then listed or traded and shall
maintain, so long as any other shares of Common Stock shall be so listed, such
listing of all such securities from time to time issuable under the terms of the
Warrants or Placement Agent Warrants. Once listed, the Company shall maintain
the Common Stock's authorization for listing on a securities exchange, market or
other quotation system on which the Common Stock is then listed or traded. The
Company shall promptly provide to Maxim copies of any notices it receives from
the securities exchange, market or other quotation system on which the Common
Stock is then listed or traded regarding the continued eligibility of the Common
Stock for listing on such a securities exchange, market or other quotation
system. The Company shall pay all fees and expenses in connection with
satisfying its obligations hereunder.

    

    
      
        
          

        
Members FINRA
& SIPC

    

    405
Lexington Ave. * New York, NY 10174 *  tel (212) 895-3500 * (800)
724-0761 * fax (212) 895-3783 * www.maximgrp.com

    New York,
NY * Long Island, NY * Red Bank, NJ

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      
        	
                

              	
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    (y)           In
addition to the foregoing, to the extent not set forth herein, Maxim may rely on
the covenants made by the Company in the Subscription Documents used in
connection with the Private Placement.

    

    
      	
              10.

            	
              CONDITIONS
      OF MAXIM’S OBLIGATIONS

            

    

    

    The obligations of Maxim pursuant to
this Agreement shall be subject, in its discretion, to the continuing accuracy
of the representations and warranties of the Company contained herein and in
each certificate and document contemplated under this Agreement to be delivered
to Maxim or otherwise at any Closing (including, without limitation, all
Subscription Documents), as of the date hereof and as of the
Closing Date or the date of any Closing subsequent to the Closing Date, to the
performance by the Company of its obligations hereunder, and to the following
conditions:

    

    (a)           At
each Closing, Maxim shall have received the favorable legal opinion of
Sonnenschein, Nath & Rosenthal, LLP, outside legal counsel to the Company,
in the form and substance reasonably satisfactory to Maxim and substantially to
the effect that:

    

    (i)           
The Company has been duly organized and is validly existing and in good standing
under the laws of its state of incorporation, has all requisite corporate power
and authority necessary to own or hold its properties and conduct its business
and, to our knowledge, is duly qualified or licensed to do business as a foreign
corporation in each other jurisdiction in which the ownership or leasing of its
properties or the conduct of its business requires such qualification, except
where the failure to so qualify or be licensed would not have a Material Adverse
Effect;

    

    (ii)           
Each Subsidiary is validly existing and in good standing under the laws of the
jurisdiction of its organization, has the corporate power and authority to own
its properties and to conduct its business and, to our knowledge, is duly
qualified and authorized to transact business and is in good standing in each
jurisdiction in which the conduct of its business or the nature of its
properties requires such qualification or authorization, except where the
failure to be so qualified or authorized and in good standing could not
reasonably be expected to have a Material Adverse Effect. To our knowledge, all
of the issued and outstanding capital stock of each Subsidiary is owned by the
Company, free and clear of any liens except as disclosed in the Offering
Documents and the Company Documents;

    

    (iii)           
Each of the Agreement, the Escrow Agreement by and among Maxim, the Company and
the Escrow Agent, the Securities, Placement Agent Warrants and the Subscription
Documents has been duly and validly authorized, executed and delivered by the
Company and is the valid and binding obligation of the Company enforceable
against it in accordance with its terms, subject to any applicable bankruptcy,
insolvency or other laws affecting the rights and remedies of creditors
generally and to general equitable principles;

    

    
      
        
          

        
Members FINRA
& SIPC

    

    405
Lexington Ave. * New York, NY 10174 *  tel (212) 895-3500 * (800)
724-0761 * fax (212) 895-3783 * www.maximgrp.com

    New York,
NY * Long Island, NY * Red Bank, NJ

    

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    
      
        	
                

              	
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    (iv)           The
authorized capital stock of the Company as of the date hereof (before giving
effect to the transactions contemplated by this Agreement) is as set forth in
the Form 10-K as filed with the Securities and Exchange Commission on January
13, 2009 and as amended on January 28, 2009. The Securities and the Common Stock
underlying each of the Warrants and the Placement Agent Warrants, will be duly
reserved, and when issued in accordance with the terms of the Private Placement,
will be validly issued, fully paid and non-assessable and, to our knowledge,
will not have been issued in violation of or subject to any statutory preemptive
or any other similar rights that entitle or will entitle any Person to acquire
any shares of Common Stock from the Company upon issuance thereof and no
personal liability will attach to the ownership thereof ;

    

    (v)           
Assuming: (i) the accuracy of the information provided by the Investors in the
Subscription Documents, (ii) that Maxim has complied in all material respects
with the requirements of Section 4(2) of the Act (and the provisions of
Regulation D promulgated thereunder), and (iii) the filing of Form D relating to
the Private Placement, the issuance and sale of the Units, and the securities
included therein, is exempt from registration under the Act and Regulation D
promulgated thereunder;

    

    (vi)           Neither
the execution, delivery and performance of this Agreement and consummation of
the transactions contemplated by the Private Placement and the Offering
Documents do not and will not: violate or conflict with any provision of the
certificate or articles of incorporation, by-laws or other governing documents
of the Company or any of its Subsidiaries.

    

    (vii)           
To our knowledge, no consent approval authorization, order, registration,
filing, qualification, license or permit of or with any court or any judicial,
regulatory or other legal or governmental agency or body is required for the
execution, delivery and performance of this Agreement or consummation of the
transactions contemplated by this Agreement, the Private Placement and the
Offering Documents, except for (1) such as may be required under state
securities or blue sky laws in connection with the sale of the Securities by the
Company, and (2) such as have been made or obtained under the Act;

    

    (b)           At
the Initial Closing and each Subsequent Closing, Maxim shall have received
warrant certificates for Warrants sold to the Investors in the Placement, duly
executed and made out in the name of such Investors for the amount of Warrants
purchased.

    

    (c)           At
the Initial Closing and each Subsequent Closing, Maxim shall have received stock
certificates for Common Stock sold to the Investors in the Placement, duly
executed and made out in the name of such Investors for the number of shares of
Common Stock purchased.

    

    (d)           At
the Initial Closing and each Subsequent Closing, Maxim shall have received the
applicable fees payable and securities issuable to Maxim as described in Section
3 hereof.

    

    (e)           To
use its best good faith efforts to, within sixty (60) days of the Closing,
obtain a “key man” life insurance policy with a nationally recognized carrier
and with the Company as the beneficiary on the life of each of George Carpenter
in an amount no less than $2,000,000 worth of coverage each.

    
      

      
        
          
            

          
Members FINRA
& SIPC

      

      405
Lexington Ave. * New York, NY 10174 *  tel (212) 895-3500 * (800)
724-0761 * fax (212) 895-3783 * www.maximgrp.com

      New York,
NY * Long Island, NY * Red Bank, NJ

        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

    

    

    
      
        	
                

              	
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      Response, Inc.

                August
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    (f)           At
each Closing, Maxim shall have received a certificate of the chief executive
officer of both the Company, dated, as applicable, as of the Closing Date or the
date of such Closing, to the effect that, as of the date of this Agreement and
as of the applicable date, the representations and warranties of the Company
contained herein were and are accurate, and that, as of the applicable date, the
obligations to be performed by the Company hereunder on or prior thereto have
been fully performed.

    

    (g)           At
each Closing, Maxim shall have received a duly executed management confirmation
letter from the directors and officers the Company, relating to certain
information appearing in the Offering Documents.

    

    (h)           At
each Closing, Maxim shall have received a certificate of the Secretary of the
Company, dated, as applicable, as of the date of such Closing, certifying to the
charter, by-laws, good standing in its state of incorporation and board
resolutions relating to the Placement.

    

    (i)           On
or prior to the Initial Closing Date or the date of any Subsequent Closing, as
the case may be, Maxim shall have been furnished with: (i) such information,
documents and certificates as it may reasonably require for the purpose of
enabling it to review the matters referred to in this Section 10 and in order to
evidence the accuracy, completeness or satisfaction of any of the
representations, warranties, covenants, agreements or conditions herein
contained, and (ii) such other closing documentation as may be required in order
to affect the applicable Closing or as Maxim may otherwise reasonably
request.

    

    (j)           All
proceedings taken in connection with the issuance, sale and delivery of the
Securities and the Placement Agent Warrant shall be reasonably satisfactory in
form and substance to Maxim and its counsel, and Maxim shall have received
certified resolutions or minutes of the Board of Directors of the Company
authorizing each of the transactions contemplated by this
Agreement.

    

    (k)           Any
certificate or other document signed by any officer of the Company and delivered
to Maxim and its counsel as required hereunder shall be deemed a representation
and warranty by the Company hereunder as to the statements made therein. If any
condition to Maxim’s obligations hereunder have not been fulfilled as and when
required to be so fulfilled, Maxim may terminate this Agreement or, if Maxim so
elects, in writing waive any such conditions which have not been fulfilled or
extended the time for their fulfillment. In the event that Maxim elects to
terminate this Agreement, Maxim shall notify the Company of such election in
writing. Upon such termination, neither party shall have any further liability
nor obligation to the other except as provided in Section 11
hereof.

    

    (l)           On
or prior to or following the Closing Date, as the case may be, Maxim shall have
been furnished such information, documents and certificates as it may reasonably
require for the purpose of enabling it to review the matters referred to in this
Section 10 and in order to evidence the accuracy, completeness or satisfaction
of any of the representations, warranties, covenants, agreements or conditions
herein contained, or as it may otherwise reasonably request.

    

    
      
        
          

        
Members FINRA
& SIPC

    

    405
Lexington Ave. * New York, NY 10174 *  tel (212) 895-3500 * (800)
724-0761 * fax (212) 895-3783 * www.maximgrp.com

    New York,
NY * Long Island, NY * Red Bank, NJ

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      
        	
                

              	
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    (m)           If
there is more than one Closing, then at each such Closing there shall be
delivered to Maxim updated opinions, certificates or other information described
in this Section 10.

    

    
      	
              11.

            	
              INDEMNIFICATION

            

    

    

    (a)           The
Company agrees to indemnify and hold harmless Maxim, any person who controls
Maxim within the meaning of the Act, Section 20(a) of the Exchange Act or any
applicable statute, and each partner, director, officer, employee, agent, legal
counsel and representative of Maxim and its representatives from and against any
and all losses, damages, obligations, penalties, judgments, awards, costs,
expenses, liabilities, claims or disbursements, and any and all actions, suits,
proceedings and investigations in respect thereof and any and all legal and
other costs, expenses and disbursements in giving testimony or furnishing
documents in response to a subpoena or otherwise (including, without limitation,
the costs, expenses and disbursements, as and when incurred, of investigating,
preparing, pursuing or defending against any such action, suit, proceeding or
investigation (whether or not in connection with litigation in which any
Indemnified Party, as defined below, is a party)) which any such person may
incur or which may be made or brought against any such person directly or
indirectly, caused by, relating to, based upon, arising out of or in connection
with: (i) Maxim’s acting for the Company, including, without limitation, any act
or omission by Maxim in connection with its acceptance of or the performance or
non-performance of its obligations under the Agreement (ii) any breach of any of
the agreements, representations, warranties or covenants of the Company
contained in or contemplated by this Agreement or the Subscription Documents,
including, without limitation, those arising out of or based on any alleged
untrue statement of a material fact or omission to state a material fact
required to be stated in either the Offering Documents or the Subscription
Documents or necessary in order to make the statements appearing therein not
misleading in the light of the circumstances in which they were made, (iii) any
violation of any federal or state securities laws attributable to the Private
Placement, or (iv) any violation of law by the Company or any Affiliate thereof,
or any director, officer, employee, agent or representative of any of them,
related to or arising out of the Private Placement. This indemnity agreement by,
and the agreements, warranties and representations of the Company shall survive
the offer, sale and delivery of the Securities and the termination of this
Agreement and shall remain in full force and effect regardless of any
investigation made by or on behalf of any person indemnified hereunder, and
termination of this Agreement and acceptance of any payment for the Securities
hereunder.

    

    
      
        
          

        
Members FINRA
& SIPC

    

    405
Lexington Ave. * New York, NY 10174 *  tel (212) 895-3500 * (800)
724-0761 * fax (212) 895-3783 * www.maximgrp.com

    New York,
NY * Long Island, NY * Red Bank, NJ

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      
        	
                

              	
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    (b)           If
any action, suit, proceeding or investigation is commenced against Maxim, its
present and former affiliated entities, managers, members, officers, employees,
legal counsel, agents and controlling persons (within the meaning of the federal
securities laws), and the officers, directors, partners, stockholders, members,
managers, employees, legal counsel, agents and controlling persons of any of
them (the “Indemnified Party”
or “Indemnified
Parties”) in respect of which indemnity may be sought against one or more
of the Company or any affiliates thereof (the “Indemnifying Party”
or “Indemnifying
Parties”), the Indemnified Party shall notify the Indemnifying Party or
Parties with reasonable promptness in writing of the institution of such action;
provided,
however, the failure to give such notice shall not release the
Indemnifying Party or Parties from its or their obligation to indemnify the
Indemnified Party hereunder, except to the extent the Indemnifying Party shall
have been materially prejudiced by such delay and shall not release the
Indemnifying Party or Parties from any other obligations or liabilities to the
Indemnified Party in any event. The Indemnifying Party or Parties shall at its
or their own expense assume the defense of such action, including the employment
of counsel reasonably acceptable to the Indemnified Party. If, in the reasonable
judgment of counsel to Maxim, the assumptions by counsel chosen by the
Indemnifying Party would adversely affect the Indemnified Party, then the
Indemnified Party or Parties shall have the right to retain counsel of its own
choice to represent it, and the fees, expenses and disbursements of such counsel
shall be borne by the Indemnifying Party or Parties. Any such counsel shall, to
the extent consistent with its professional responsibilities, cooperate with the
Company in any defense, except such matters in respect of which the Indemnified
Parties counsel shall advise the Indemnified Parties that such cooperation would
impair a defense available to the Indemnified Parties that is unavailable to the
Company. Notwithstanding anything herein to the contrary, no Indemnifying or
Indemnified Party shall, without the prior written consent of Maxim and the
Indemnifying Party, settle or compromise any claim, or permit a default or
consent to the entry of any judgment in respect thereof, unless such settlement,
compromise or consent (i) includes, as an unconditional term thereof, the giving
by the claimant to all Indemnified Parties of an unconditional release from all
liability in respect of such claim, and (ii) does not contain any factual or
legal admission by or with respect to an Indemnified Party or an adverse
statement with respect to the character, professionalism, expertise or
reputation of any Indemnified Party or any action or inaction of any Indemnified
Party. In the event the Indemnifying Party or Parties assume a defense
hereunder, the Indemnified Party shall be entitled to retain its own counsel in
connection therewith and, except as provided below, shall bear the fees and
expenses of any such counsel, and counsel to the Indemnified Party or Parties
shall cooperate with such counsel to the Indemnifying Party in connection with
such proceeding. If the Indemnifying Party or Parties assume the defense
hereunder and an Indemnified Party reasonably determines that there are or may
be differing or additional defenses available to the Indemnified Party which are
not available to the Indemnifying Party, or that there is or may be a conflict
between the respective positions of the Indemnifying Party and of the
Indemnified Party in conducting the defense of any action, then the Indemnifying
Party shall bear the reasonable fees and expenses of any counsel retained by the
Indemnified Party in connection with such proceeding. All references to the
Indemnified Party contained in this Section 11(b) include, and extend to and
protect with equal effect, any persons who may control the Indemnified Party
within the meaning of the Act, Section 20(a) of the Exchange Act or any
applicable statute, any successor to the Indemnified Party and each of its
partners, officers, directors, employees, agents and representatives. The
indemnity agreements set forth in this Section 11 shall be in addition to any
other obligations or liabilities of the Indemnifying Party or Parties hereunder
or at common law or otherwise.

    

    
      
        
          

        
Members FINRA
& SIPC

    

    405
Lexington Ave. * New York, NY 10174 *  tel (212) 895-3500 * (800)
724-0761 * fax (212) 895-3783 * www.maximgrp.com

    New York,
NY * Long Island, NY * Red Bank, NJ

    

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    
      
        	
                

              	
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      Response, Inc.

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    (c)           If
recovery is not available under the foregoing indemnification provisions of this
Section 11, for any reason other than as specified therein, the party entitled
to indemnification by the terms thereof shall be entitled to contribution to
losses, damages, liabilities and expenses of the nature contemplated by such
indemnification provisions. In determining the amount of such contribution,
there shall be considered the relative benefits received by the Company on the
one hand, and Maxim on the other hand from the Private Placement (which shall be
deemed to be the portion of the proceeds of the Private Placement realized by
each party), the parties’ relative knowledge and access to information
concerning the matter with respect to which the claim was asserted, the
opportunity to correct and prevent any statement or omission, the relative
culpability of the parties, the relative benefits received by the parties and
any other equitable considerations appropriate under the circumstances. No party
shall be liable for contribution with respect to any action or claim settled
without its consent. Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against such
party in respect of which a claim for contribution may be made against another
party or parties under this Section 11, notify such party or parties from whom
contribution may be sought, but the omission to so notify such party or parties
shall not relieve the party or parties from whom contribution may be sought from
any obligation it or they may have under this Section 11 or otherwise. For
purposes of this Section 11, each person, if any, who controls a party to this
Agreement within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act shall have the same rights to contribution as that party to this
Placement Agreement.

    

    (d)           In
any claim for indemnification for United States Federal or state securities law
violations, the party seeking indemnification shall place before the court the
position of: (i) the SEC and (ii) if applicable, any state securities
commissioner or agency having jurisdiction with respect to the issue of
indemnification for securities law violations.

    

    
      	
              12.

            	
              MISCELLANEOUS

            

    

    

    (a)           The
agreements set forth in this Agreement have been made and are made solely for
the benefit of the Company, Maxim, the Investors with respect to Sections 7 and
9, and the respective Affiliates, heirs, personal representatives and permitted
successors and assigns thereof, and except as expressly provided herein nothing
expressed or mentioned herein is intended or shall be construed to give any
other person, firm or corporation any legal or equitable right, remedy or claim
under or in respect of this Agreement or any representation, warranty or
agreement herein contained. The term “successors and assigns” as used herein
shall not include any purchaser of any Securities merely because of such
purchase.

    

    (b)           Neither
party will be liable to the other by reason of any failure in performances of
this Agreement if the failure arises out of the unavailability of third party
communication facilities or energy sources or acts of God, acts of governmental
authority, acts of terrorism, fires, strikes, delays in transportation, riots or
war, or any cause beyond the reasonable control of such party.

    

    
      
        
          

        
Members FINRA
& SIPC

    

    405
Lexington Ave. * New York, NY 10174 *  tel (212) 895-3500 * (800)
724-0761 * fax (212) 895-3783 * www.maximgrp.com

    New York,
NY * Long Island, NY * Red Bank, NJ

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      
        	
                

              	
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      Response, Inc.

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    (c)           Any
notice or other communication required or appropriate under the provisions of
this Agreement shall be given in writing addressed (or sent by facsimile
transmission, with confirmation of receipt) as follows: (i) if to the Company,
at the address set forth above, Attention: President, Fax No.: (954) 598-7996;
and (ii) if to Maxim, Maxim Group LLC, 405 Lexington Avenue, New York, NY 10174,
Attention: Mr. Clifford Teller, Fax No.: (212) 895-3783; with a copy to James
Siegel, 405 Lexington Avenue, New York, NY 10174, Attention: James Siegel, Esq.,
Fax No.: (212) 895-3888, or at such other address as any party may designate to
the others in accordance with this Section 12(c).

    

    (d)           This
Agreement shall be governed and construed in accordance with the laws of the
State of New York, without giving effect to conflicts of law provisions thereof
(other than Section 5-1401 of the New York General Obligations
Law).

    

    (e)           Any
legal suit, action or proceeding arising out of or relating to this Agreement or
the transactions contemplated hereby shall be instituted exclusively in New York
Supreme Court, County of New York, or in the United States District Court for
the Southern District of New York. The parties hereto hereby: (i) waives any
objection which they may now have or hereafter have to the venue of any such
suit, action or proceeding, and (ii) irrevocably consents to the jurisdiction of
the New York Supreme Court, County of New York, and the United States District
Court for the Southern District of New York in any such suit, action or
proceeding. The parties further agree to accept and acknowledge service of any
and all process which may be served in any such suit, action or proceeding in
the New York Supreme Court, County of New York, or in the United States District
Court for the Southern District of New York and agree that service of process
upon a party mailed by certified mail to such party’s address shall be deemed in
every respect effective service of process upon such party in any such suit,
action or proceeding.

    

    (f)           This
Agreement constitutes the entire agreement between the parties hereto with
respect to the Private Placement and supercedes any and all prior agreements,
and may be amended or modified only by a duly authorized writing signed by such
parties. This Agreement may be executed in any number of counterparts and by
facsimile, each of which shall be deemed an original and all of which shall
constitute a single instrument.

    

    [SIGNATURE
PAGE FOLLOWS]

    
      

      
        
          
            

          
Members FINRA
& SIPC

      

      405
Lexington Ave. * New York, NY 10174 *  tel (212) 895-3500 * (800)
724-0761 * fax (212) 895-3783 * www.maximgrp.com

      New York,
NY * Long Island, NY * Red Bank, NJ

        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

    

    

    
      
        	
                

              	
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      Response, Inc.

                August
      3, 2009

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    This
Placement Agency Agreement is executed and shall be effective as of August 3,
2009.

     

    
      
        
          
            	
                    Very
      truly yours,

                  
	 
      
	
                    MAXIM
      GROUP LLC

                  
	 
      	 
      
	
                    By:

                  	
                     

                  
	 
      	
                    Name:

                  
	 
      	
                    Title:

                  

          

        

      

    

     

    ACCEPTED
AND AGREED TO:

    

    CNS
RESPONSE, INC.

     

    
      
        
          
            
              	
                      By:

                    	
                       

                    
	 
      	
                      Name:

                    
	 
      	
                      Title:

                    

            

          

        

      

    

     

    
      
        
          
            

          
Members FINRA
& SIPC

      

      405
Lexington Ave. * New York, NY 10174 *  tel (212) 895-3500 * (800)
724-0761 * fax (212) 895-3783 * www.maximgrp.com

      New York,
NY * Long Island, NY * Red Bank, NJTHIS
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.
      W-M809-PA

            	
              Void
      after: August 26, 2014

            

    

     

    
      
        

      

    

     

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

    ON AUGUST
26, 2014 (THE “EXPIRATION DATE”)

     

    WARRANT TO PURCHASE
SHARES

     

    This
Warrant is being issued to the Maxim Partners LLC (“Holder”) by CNS
Response, Inc., a Delaware corporation (the “Company”) in
connection with its services under the Placement Agency Agreement, dated August
3, 2009, by and between the Company and the Holder in connection with the
Company’s private offering to select, accredited investors of units, each unit
comprised of 180,000 shares of Common Stock and a five-year warrant to purchase
90,000 shares of the Company’s Common Stock at an exercise price of $0.30 per
share, in accordance with, and subject to, the terms and conditions described in
the Company’s private offering pursuant to that certain Private Placement
Memorandum dated August 26, 2009, as amended or supplemented from time to time
(the “Memorandum”).

     

    Simultaneously
with the issuance of this Warrant, the Holder and the Company shall enter into a
Registration Rights Agreement, dated as of the date hereof (the “Agreement”).  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 two hundred and seventy-four thousand, eight hundred
and sixty-seven (274,867) fully paid and nonassessable Shares (as defined below)
at the Exercise Price (as defined below) (subject to adjustment as set forth in
Section 6 below).

     

    2.           Definitions.

     

    (a)           Exercise
Price.  The exercise price for the Shares initially shall be
110% of the Investor Warrant exercise price issued in the Company’s private
offering pursuant to the Memorandum, or $0.33 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, and the term
“Warrant
Shares” shall mean the Shares purchasable upon exercise of this
Warrant.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    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 Warrant 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 Warrant 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 Warrant 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 Warrant Shares
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 Warrant Shares 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 Warrant Shares (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 Warrant Shares, or in the Exercise Price, the Company shall
promptly notify the holder of such event and of the number of Warrant 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 as
follows:

     

    (a)           This
Warrant has been duly executed and delivered by the Company and constitutes a
legal, valid and binding obligation of the Company enforceable in accordance
with its terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies.

     

    (b)           The
execution and delivery of, or performance by the Company under this Warrant
conflicts with or violates, or will result in the creation or imposition of any
lien, charge or other encumbrance upon any of the assets of the Company under,
any agreement or other instrument to which the Company is a party or by which
the Company or its assets may be bound, any term of the certificate of
incorporation or by-laws of the Company, or any license, permit, judgment,
decree, order, statute, rule or regulation applicable to the Company or any of
its assets, except where such conflict, violation or creation would not have a
material adverse effect on the Company.

     

    9.           Representations and
Warranties by the Holder.  The Holder represents and warrants
to the Company as follows:

     

    (a)           The
Holder is an “accredited investor” as defined by Rule 501 under the Securities
Act of 1933, as amended (the “Act”), and is capable
of evaluating the merits and risks of its investment in the Warrant and the
Warrant Shares, and has the ability and capacity to protect its
interests.

     

    (b)           The
Holder understands that the Warrant and the Warrant Shares are not presently
registered, but the Holder is entitled to certain rights as set forth in the
Agreement.

     

    (c)           The
Holder is acquiring the Warrant and the Warrant Shares for investment purposes
and not with a view to distribution or resale, nor with the intention of
selling, transferring or otherwise disposing of all or any part thereof for any
particular price, or at any particular time, or upon the happening of any
particular event or circumstance, except selling, transferring, or disposing the
Warrant Shares made in full compliance with all applicable provisions of the
Act, the rules and regulations promulgated by the SEC thereunder, and applicable
state securities laws; and that an investment in the Warrant and the Warrant
Shares is not a liquid investment.

     

    10.          Restrictive
Legend.

     

    The Warrant Shares (unless registered
under 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.

     

    In
addition, the Holder understands that the certificates representing the Warrant
Shares, and any and all securities issued in replacement thereof or in exchange
therefor, shall bear such legend as may be required by the securities laws of
the jurisdiction in which the Holder resides.  Because of the legal
restrictions imposed on resale, the Holder understands that the Company shall
have the right to note stop-transfer instructions in its stock transfer records,
and the Holder has been informed of the Company’s intention to do
so.  Any sales, transfers, or other dispositions of the Warrant or the
Warrant Shares by the Holder, if any, will be made in compliance with the Act
and all applicable rules and regulations promulgated thereunder.

     

    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 in the form attached
hereto.  With respect to any offer, sale or other disposition of this
Warrant or any Warrant Shares prior to registration of such Warrant or the
Warrant 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
Warrant Shares and indicating whether or not under the Act certificates for this
Warrant or the Warrant 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 Warrant Shares, all in
accordance with the terms of the notice delivered to the Company.  If
a determination has been made pursuant to this Section 11 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 Warrant Shares transferred in accordance with this Section
11 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 Warrant Shares 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 Warrant 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 Warrant Shares, 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:

     

    _______________________________________

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