Document:

Exhibit
4.2

    

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

    

    Void
after

    September
30, 2017

    

    FORM OF WARRANT TO PURCHASE
SHARES

    

    This
Warrant is issued to [__________] (“Holder”) by CNS Response,
Inc., a Delaware corporation (the “Company”), in connection with
the contemporaneous issuance to the Holder of a Note in the aggregate principal
amount of $[__________] (the “Note”).  All
capitalized terms not defined in this Warrant shall have the meaning ascribed to
them in the Note.

    

    1.           Purchase of
Shares.  Subject to the terms and conditions hereinafter set
forth, 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 up to
[__________] fully paid and nonassessable Shares (as defined below) at the
Exercise Price (as defined below).

    

    2.           Definitions.

    

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

    

    (b)           Exercise
Period.  This Warrant shall be exercisable, in whole or in
part, during the term commencing on the date hereof and ending on the expiration
of this Warrant pursuant to Section 14 hereof.

    

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

    

    3.           Method of
Exercise.  While this Warrant remains outstanding and
exercisable in accordance with the terms hereof, 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 in substantially
the form attached hereto as Exhibit A to the
Secretary of the Company at its principal offices; and

    

    (ii)        the
payment to the Company of an amount equal to the aggregate Exercise Price for
the number of Shares being purchased, either in cash (through a check payable to
the Company or by wire transfer to an account designated by the Company) or as
provided in Section 4 below.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    4.           Net
Exercise.   In lieu of making a cash payment upon the
exercise of this Warrant, the holder of this Warrant may, at such holder’s
option. elect to receive shares equal to the value of this Warrant (or the
portion thereof being exercised) by surrender of this Warrant at the principal
office of the Company together with notice of such election, in which event the
Company shall issue to the holder hereof a number of Shares computed using the
following formula:

    

    Y (A -
B)

    X
=               A

    

    Where

    

    
      	
               
      

            	
              X
      —

            	
              The
      number of Shares to be issued to the holder of this
    Warrant.

            

    

    

    
      	
               
      

            	
              Y
      —

            	
              The
      number of Shares purchasable under this
Warrant.

            

    

    

    
      	
               
      

            	
              A
      —

            	
              The
      fair market value of one Share.

            

    

    

    
      	
               
      

            	
              B
      —

            	
              The
      Exercise Price (as adjusted to the date of such
    calculations).

            

    

    

    For
purposes of this Section 4, the fair market value of a Share shall mean the
closing price of the Shares quoted in the over-the-counter market or any
exchange on which the Shares are listed, whichever is applicable, as published
in The Wall Street
Journal on the date of determination of fair market value.  If
the Shares are not traded on the over-the-counter market or on an exchange, the
fair market value shall be the price per Share that the Company could obtain
from a willing buyer for Shares sold by the Company from authorized but unissued
Shares, as such prices shall be determined in good faith by the Company’s board
of directors.

    

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

    

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

    

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

    

    (a)           Subdivisions, Combinations
and Other Issuances.  If the Company shall at any time prior to
the expiration of this Warrant subdivide the Shares, by split-up or otherwise,
or combine its Shares, or issue additional shares of its Shares as a dividend,
the number of Shares issuable on the exercise of this Warrant shall forthwith be
proportionately increased in the case of a subdivision or stock dividend, or
proportionately decreased in the case of a combination.  Appropriate
adjustments shall also be made to the purchase price payable per share, but the
aggregate purchase price payable for the total number of Shares purchasable
under this Warrant (as adjusted) shall remain the same.  Any
adjustment under this Section 7(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 7(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
7(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)           Ratchet. In the event
the Company shall issue Shares, or securities convertible, exchangeable or
exercisable into Shares (excluding in each case shares issued (i) in any of the
transactions described in Subsections (a) and (b) above, (ii) upon exercise of
options granted to the Company’s employees, directors, consultants or officers
under a plan or plans or individual compensation arrangements adopted by the
Company’s board of directors, if such shares would otherwise be included in this
Subsection (c), (iii) upon conversion of shares or exercise of options and
warrants outstanding as of the date hereof, or (iv) to shareholders of any
Company which merges into the Company in proportion to their stock holdings of
such Company immediately prior to such merger, upon such merger), for
consideration per share, exercise price per share, conversion price per share or
exchange price per share (as the case may be)(“Offering Price”) less than the
then applicable Exercise Price, the Exercise Price shall be adjusted immediately
thereafter so that it shall equal such Offering Price and the number of shares
issuable upon exercise of this Warrant shall be proportionately increased
immediately thereafter.  Such adjustments shall be made successively
whenever any such issuance is made.

    

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

    

    8.           No Fractional Shares or
Scrip.  No fractional shares or scrip representing 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.

    

    9.           Representations of the
Company.  The Company represents and warrants to Holder that
the representations and warranties made by the Company in Section 2 of the
Agreement are true, correct and complete as of the date hereof. In addition, the
Company represents that the Shares necessary for a cash exercise of this Warrant
are duly reserved.

    

    10.         Representations and
Warranties by the Holder.  The Holder represents and warrants
to the Company that the representations and warranties made by the Holder in
Section 3 of the Agreement are true, correct and complete as of the date
hereof.

    

    11.         Restrictive
Legend.

    

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

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

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

    

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

    

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

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

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

    

    14.         Amendments and
Waivers.  Any provision of this Warrant may be amended, waived
or modified upon the written consent of the Company and the Majority
Holders.  Any such amendment, waiver or modification effected in
accordance with this paragraph shall be binding upon the Company and
Holder, it being understood and agreed that such written consent will affect all
Warrants and be binding on all holders thereof regardless of whether any
particular holder executed such consent.

    

    15.         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 Note or to such electronic mail address, facsimile
number or address as subsequently modified by written notice given in according
with this Section 14.

    

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

    

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

    

    
      [Signature
Page Follows]

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Issued
this ___ day of October ___, 2010.

    

    
      
        
          	 
      	
                  CNS
      RESPONSE, INC.

                
	 
      	 
      
	 
      	
                  By:

                	 
      
	 
      	 
      	
                  Name:  George
      Carpenter

                
	 
      	 
      	
                  Title:  Chief
      Executive Officer

                
	 
      	 
      	 
      
	 
      	
                  Address:  85
      Enterprise, Suite 410

                
	 
      	
                                  
      Aliso Viejo, CA 92626

                

        

      

    

    

    
      
        
          
            
              
                	
                        Accepted
      and agreed:

                      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	
                        Name
      and Position

                      	 
      

              

            

          

        

      

    

    

    
      
        
          
            
              
                	
                        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.           Method
of Exercise (Please initial the applicable blank):

    

    
      	
               
      

            	
              ___

            	
              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.

            

    

    

    
      	
               
      

            	
              ___

            	
              The
      undersigned elects to exercise the attached Warrant by means of the net
      exercise provisions of Section 4 of the
  Warrant.

            

    

    

    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
Section 10 of 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:Exhibit
10.1

    EXECUTION
COPY

    

    NOTE
AND WARRANT PURCHASE AGREEMENT

     

    THIS NOTE AND WARRANT PURCHASE
AGREEMENT (this “Agreement”) is made as of
October 1, 2010 by and between CNS Response, Inc., a Delaware corporation (the
“Company”), and the
investors listed on Schedule A hereto
(each, an “Investor” and
together, the “Investors”).

     

    AGREEMENT

     

    In consideration for the mutual
promises and covenants herein, the parties agree as follows:

     

    SECTION
1 – PURCHASE AND SALE OF NOTES AND WARRANTS

    

    1.1  
           Purchase and Sale of Notes
and Warrants.  The Company has authorized the issuance and
sale, in accordance with the terms hereof, of Secured Convertible Promissory
Notes in the original aggregate principal amount of up to $3,000,000 plus an
amount corresponding to accrued and unpaid interest payable on any Existing
Notes (as defined below) exchanged in this financing (the sum of $3,000,000 plus
such amount, the “Note Cap
Amount”), substantially in the form attached as Exhibit A hereto
(individually, a “Note”
and, collectively, the “Notes”), and warrants to
purchase shares of the common stock of the Company, par value $0.001 per share
(the “Common Stock”),
substantially in the form attached as Exhibit B hereto
(individually, a “Warrant” and collectively, the
“Warrants”).  On the
terms and subject to the conditions set forth in this Agreement, at the Closings
(as defined below) the Company agrees to issue to each Investor, and each
Investor agrees to purchase from the Company, or exchange pursuant to Section
4.3 hereof (“Exchange”)
Existing Notes and Existing Warrants (as defined below) for, (i) Notes in the
principal amounts set forth on Schedule A hereto and
(ii) Warrants, for the aggregate consideration set forth opposite such
Investor’s name on Schedule A
hereto.  The Notes and the Warrants to be purchased or received upon
Exchange hereunder are sometimes referred to herein, collectively, as the “Securities”.  The
financing pursuant to which the Company is issuing the Securities is hereinafter
referred to as the “Financing”.

     

    
      	 	
              1.2

            	
              Closings.

            

    

     

    (a)           Initial
Closing.  The initial purchase and sale of the Securities and
Exchange of Existing Notes and Warrants shall take place at a closing (the
“Initial Closing”) which
shall take place remotely via exchange of documents and signatures at 10:00 a.m.
Eastern Time on the day immediately following execution and delivery of this
Agreement, or at such other place and time as may be agreed to among the Company
and the Investors.  At the Initial Closing, the Company shall deliver
to each of the Investors purchasing Securities for cash at such closing a Note
in the face amount set forth opposite such Investor’s name on Schedule A under the
column entitled “Purchase Price / Principal Amount of Note (Initial Closing)”,
and a Warrant to purchase a number of shares of Common Stock corresponding to
fifty percent (50%) of the number of shares of Common Stock issuable upon
conversion of such Note, against receipt of a check subject to collection or a
wire transfer in immediately available funds of the purchase price, to an
account designated by the Company.   At the Initial Closing, the
Company shall deliver to each Investor exchanging Securities for Existing Notes
and Existing Warrants at such closing a Note in the face amount corresponding to
the principal amount plus accrued and unpaid interest with respect to such
Existing Notes, and a Warrant to purchase a number of shares of Common Stock
corresponding to fifty percent (50%) of the number of shares of Common Stock
issuable upon conversion of such new Note, against receipt of the certificate(s)
representing the Existing Notes and Existing Warrants subject to such
Exchange.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    (b)           Additional
Closings.  The Company shall have the right, on one or more
occasions, to hold additional closings (each, an “Additional Closing”, and
collectively with the Initial Closing, the “Closings”, and individually, a
“Closing”), pursuant to
which it shall have the right to issue and sell additional Notes and Warrants to
additional Investors or existing Investors and to exchange Existing Notes and
Warrants (provided that no Additional Closings shall take place later than
January 31, 2011).  At each Additional Closing, the Company shall
deliver to each Investor purchasing Notes for cash at such closing a Note in the
face amount of the purchase price paid by such Investor for such Note, and a
Warrant to purchase a number of shares of Common Stock corresponding to fifty
percent (50%) of the number of shares of Common Stock issuable upon conversion
of such Note, against receipt of a check subject to collection or a wire
transfer in immediately available funds of the purchase price, to an account
designated by the Company. At each Additional Closing, the Company shall deliver
to each Investor exchanging Securities for Existing Notes and Existing Warrants
at such closing a Note in the face amount corresponding to the principal amount
plus accrued and unpaid interest with respect to such Existing Notes, and a
Warrant to purchase a number of shares of Common Stock corresponding to fifty
percent (50%) of the number of shares of Common Stock issuable upon conversion
of such new Note, against receipt of the certificate(s) representing the
Existing Notes and Existing Warrants subject to such Exchange.  By
receiving Securities at an Additional Closing, each Investor so receiving
Securities thereby represents that its representations and warranties contained
in Section 3 are true and correct as of the date of such Additional
Closing.  The aggregate amount of Notes that may be issued at Closings
hereunder shall in no event exceed the Note Cap Amount.  The Company
shall have the right to update Schedule A in order
to add information regarding Additional Closings, which shall not be deemed to
be an amendment to this Agreement.

     

    The
obligation of each Investor to purchase and pay for the Notes and Warrants to be
delivered at a Closing is, unless waived by such Investor, subject to the
condition that the Company’s representations and warranties contained in Section
2 are true, complete and correct on and as of such Closing date.  The
obligation of the Company to sell and issue Notes and Warrants to be delivered
at a Closing is, unless waived by the Company, subject to the condition that the
relevant Investor’s representations and warranties contained in Section 3 are
true, complete and correct on and as of the Closing Date.

     

    SECTION
2 - REPRESENTATIONS AND WARRANTIES

    OF
THE COMPANY

     

    The
Company represents and warrants to each Investor as follows:

     

    2.1          Existence of
Company.  The Company is a duly organized Delaware
corporation.  The Company is validly existing in all jurisdictions
where it conducts its business.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    2.2          Authority to
Execute.  The execution, delivery and performance by the
Company of (i) this Agreement, (ii) the  Notes and the Warrants to be
issued pursuant to the terms of this Agreement, (iii) the Security Agreement,
dated as of October 1, 2010, by and between the Company and John Pappajohn, as
administrative agent on behalf of the Secured Parties (as defined therein)(the
“Security Agreement”)
and (iv) any financing statements thereunder (collectively, the “Loan Documents”) are within
the Company’s corporate powers, have been duly authorized by all necessary
corporate action, do not and will not conflict with any provision of law or
organizational document of the Company (including its Certificate of
Incorporation or Bylaws) or of any agreement or contractual restrictions binding
upon or affecting the Company or any of its property and need no further
stockholder or creditor consent.

     

    2.3          No Stockholder Approval
Required.  No approval of the Company’s stockholders is
required for (i) the entry by the Company into this Agreement or the Security
Agreement, (ii) the issuance of the Notes and Warrants contemplated by this
Agreement, (iii) the granting of the security interest under the terms of the
Notes or (iv) the issuance of any shares of stock upon conversion of the Notes
or exercise of the Warrants.

     

    2.4          Valid
Issuance.  The shares of stock to be issued upon conversion of
the Notes and exercise of the Warrants contemplated by this Agreement will be,
upon conversion and exercise in accordance with the terms of the Notes or the
Warrants, as applicable, and in the case of the Warrants upon payment of the
exercise price therefor in accordance with the terms of such Warrants, validly
issued, fully paid and nonassessable and free of restrictions on transfer other
than restrictions on transfer under the Loan Documents, the documents entered
into by the investors and other parties in the financing giving rise to
repayment of the Notes, applicable state and federal securities laws and liens
or encumbrances created by or imposed by the Investor.  Assuming the
accuracy of the representations of the Investor in Section 3 of this Agreement,
such Notes and Warrants and the shares of stock to be issued upon conversion of
such Notes and exercise of such Warrants will be issued in compliance with all
applicable federal and state securities laws.  The issuance of such
Notes, Warrants and shares will not trigger any anti-dilution protections,
except as may be the case with respect to the Existing Notes (as defined below)
and the related warrants.

     

    2.5          Binding
Obligation.  This Agreement is, and the other Loan Documents
when delivered hereunder will be, legal, valid and binding obligations of the
Company enforceable against the Company in accordance with their respective
terms, subject, as to enforcement of remedies, to applicable bankruptcy,
insolvency, moratorium, reorganization and similar laws affecting creditors’
rights generally and to general equitable principles.

     

    2.6          Litigation.  Other
than the litigation disclosed in the Company’s most recent SEC Reports (as
defined below), no litigation or governmental proceeding is pending or
threatened against the Company which may have a materially adverse effect on the
financial condition,  operations or prospects of the Company, and to
the knowledge of the Company, no basis therefore exists.

    
      
         

      

      
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    2.7          Intellectual
Property.  To the best of the Company’s knowledge, the Company owns
or possesses sufficient legal rights to all patents, trademarks, service marks,
trade names, copyrights, trade secrets, licenses, information and other
proprietary rights and processes necessary for its business as now conducted and
as presently proposed to be conducted, without any known infringement of the
rights of others.  There are no outstanding options, licenses or
agreements of any kind relating to the foregoing proprietary rights, nor is the
Company bound by or a party to any options, licenses or agreements of any kind
with respect to the patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information and other proprietary rights and processes
of any other person or entity other than such licenses or agreements arising
from the purchase of “off the shelf” or standard products.

     

    2.8          SEC Reports. 
The Company has timely filed all forms, reports, schedules, proxy statements,
registration statements and other documents (including all exhibits thereto)
required to be filed by it with the Securities and Exchange Commission (the
“SEC”) pursuant to the
federal securities laws and the SEC rules and regulations thereunder, together
with all certifications required pursuant to the Sarbanes-Oxley Act of 2002 (the
“Sarbanes-Oxley Act”)
(as they have been amended since the time of their filing, including all
exhibits thereto, the “SEC
Reports”).  Each of the SEC Reports complied in all material
respects with the applicable requirements of the Securities Act of 1933, as
amended (the “Securities
Act”) and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the
Sarbanes-Oxley Act and the rules and regulations of the SEC under all of the
foregoing. None of the SEC Reports contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.

     

    SECTION
3 - REPRESENTATIONS AND WARRANTIES

    OF
THE INVESTORS

     

    Each Investor represents and warrants
to the Company as follows:

     

    3.1          Authorization; Binding
Obligations.  The Investor has full power and authority to
enter into this Agreement and each of the other Loan Documents to which he, she
or it is a party, and this Agreement and each other Loan Document constitutes a
valid and legally binding obligation of each Investor, enforceable against each
Investor in accordance with its terms, subject, as to enforcement of remedies,
to applicable bankruptcy, insolvency, moratorium, reorganization and similar
laws affecting creditors’ rights generally and to general equitable
principles.

     

    3.2          Accredited
Investor.  The Investor is an “accredited investor” within the
meaning of SEC Rule 501 of Regulation D promulgated under the Securities
Act.

     

    3.3          Investment for Own
Account.  The Notes and Warrants issued pursuant to this
Agreement and the shares of stock to be issued upon conversion of such Notes and
exercise of such Warrants are being, and will be, acquired for his, her or its
own account, for investment and not with a view to, or for resale in connection
with, any distribution or public offering thereof within the meaning of the
Securities Act.

     

    3.4          Knowledge and
Experience.  The Investor has such
knowledge and experience in financial and business matters that (s)he is capable
of evaluating the merits and risks of an investment in the Securities and of
making an informed investment decision with respect thereto, has the ability and
capacity to protect his/her interests and can bear the economic risk of the
acceptance of the Securities, including a total loss of his/her
investment.

    
      
         

      

      
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    3.5          Opportunity to Ask
Questions.  The Investor has had the opportunity to ask
questions and receive answers from the Company or any authorized person acting
on its behalf concerning the Company and its business and to obtain any
additional information, to the extent possessed by the Company (or to the extent
it could have been acquired by the Company without unreasonable effort or
expense) necessary to verify the accuracy of the information received by the
Investor.  In connection therewith, the Investor acknowledges that
(s)he has had the opportunity to discuss the Company’s business, management and
financial affairs with the Company’s management or any authorized person acting
on its behalf.

     

    3.6.         Receipt of
Information.  The Investor has received and reviewed all the
information concerning the Company, the Securities and the shares of common
stock underlying such Securities, both written and oral, that the Investor
desires.  Without limiting the generality of the foregoing, the
Investor has been furnished with or has had the opportunity to acquire, and to
review: all information, both written and oral, that the Investor desires with
respect to the Company’s business, management, financial affairs and
prospects.  In determining whether to make this investment, the
Investor has relied solely on his/her own knowledge and understanding of the
Company and its business based upon the Investor’s own due diligence
investigations and the Company’s filings with the SEC.

     

    SECTION
4 - COVENANTS OF THE COMPANY

     

    4.1          Registration Rights
Agreement.  Notwithstanding any provision in the Loan Documents
to the contrary, the Company agrees that all securities issued upon conversion
of the Notes and exercise of the Warrants contemplated by this Agreement will be
subject to a Registration Rights Agreement between the Company and each
Investor.  In the event that the terms of such Notes and Warrants do
not provide for such a Registration Rights Agreement, the Company agrees to work
with each Investor in good faith to prepare and execute such a Registration
Rights Agreement on terms reasonably satisfactory to each Investor at or prior
to the time of conversion or exercise.

     

    4.2          Restrictive
Covenants.  Without the consent of the holders of Notes
representing at least a majority of the aggregate principal amount outstanding
under all of the Notes issued pursuant to this Agreement (the “Majority Holders”), the
Company shall not:

     

     (a)           effect
a merger, reorganization, or sell, exclusively license or lease, or otherwise
dispose of any assets of the Company with a value in excess of $20,000, other
than in the ordinary course of business;

     

     (b)           borrow,
guaranty or otherwise incur indebtedness in excess of $100,000;

     

     (c)           acquire
all or substantially all of the properties, assets or stock of any other
corporation or entity or assets with a value greater than $50,000;
or

    
      
         

      

      
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    (d)           form,
contribute capital or assets to, or make a loan or advance in excess of $50,000
to (i) any partially-owned or wholly-owned subsidiary formed or acquired after
the date of this Agreement, (ii) a joint venture or (iii) a similar business
entity;

     

    (e)           use
the proceeds from the Financing for any purpose other than for the current
operations of the Company, it being understood that the Majority Holders will
review for payment certain obligations of the Company after the Initial Closing
and will approve payment thereof;

     

    provided, however, that the rights of
the Investor under this Section 4.2 shall not apply (1) after the repayment in
full of the Notes or (2) in connection with a transaction that provides for the
repayment in full of the Notes upon the closing of such
transaction.

     

    4.3           Outstanding
Debt.  In the event an Investor, who has previously purchased
notes from the Company and received related warrants (i) pursuant to that
certain Bridge Note and Warrant Purchase Agreement, dated as of June 3, 2010, by
and between the Company and John Pappajohn, and as amended or (ii) as part of
the issuance of notes to Deerwood Partners LLC and Deerwood Holdings LLC on July
5, 2010 and August 20, 2010 (such notes purchased pursuant to (i) and (ii)
above, the “Existing Notes” and such warrants received pursuant to (i) and (ii)
above, the “Existing Warrants”), purchases Notes pursuant to this Agreement in
the aggregate principal amount of 50% of the aggregate principal amount of such
Investor’s Existing Notes, the Company shall cause such Investor’s Existing
Notes and Existing Warrants to be amended to reflect the terms of the Notes
issued pursuant to this Agreement, or, at the Company’s option, exchange such
Investor’s Existing Notes and Existing Warrants for Notes and Warrants issued
pursuant to this Agreement.

     

    SECTION
5 - MISCELLANEOUS

     

    5.1           No Waiver; Cumulative
Remedies.  No failure or delay on the part of any party to any
Loan Document in exercising any right or remedy under, or pursuant to, any Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, remedy or power preclude other or further exercise
thereof, or the exercise of any other right, remedy or power.  The
remedies in the Loan Documents are cumulative and are not exclusive of any
remedies provided by law.

     

    5.2           Amendments and
Waivers.  Except as otherwise expressly set forth in this
Agreement, any term of this Agreement may be amended (either retroactively or
prospectively) with the written consent of the Company and the Majority
Holders.  Any amendment effected in accordance with this Section 5.2
shall be binding upon each Investor, each future holder of Securities and the
Company.

    
      
         

      

      
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    5.3           Notices,
Etc.   All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person, sent by facsimile
transmission to the number set forth on the signature page hereof only if a hard
copy is sent by U.S. mail to the recipient within 24 hours of facsimile
transmission, or such other number as may hereinafter be designated in writing
by the recipient to the sender, or duly sent by first class registered or
certified mail, return receipt requested, postage prepaid, or overnight delivery
service (e.g., Federal Express)
addressed to such party (i) if to the Company, at the address set forth on the
signature page hereof or (ii) if to an Investor, at the address set forth on
Schedule A
hereof or such other address as may hereafter be designated in writing by the
addressee to the sender.  All such notices, advises and communications
shall be deemed to have been received: (a) in the case of personal delivery, on
the date of such delivery; (b) in the case of facsimile transmission, on the
date of transmission; and (c) in the case of mailing or delivery by service, on
the date of delivery as shown on the return receipt or delivery service
statement.

     

    5.4           Costs and
Expenses.  The Company agrees to be responsible for its costs
and expenses incurred in connection with the preparation of the Loan Documents
and to reimburse each Investor for all of its costs and expenses incurred in
connection with the preparation of the Loan Documents, including legal fees of
each Investor’s outside counsel.  If any litigation, contest, dispute,
suit, proceeding or action is instituted between or among any of the parties
hereto regarding the enforcement or interpretation of this Agreement or any of
the Exhibits hereto, the prevailing party shall be entitled to reimbursement
from the other party or parties for all reasonable expenses, costs, charges and
other fees (including legal fees) incurred in connection with or related to such
dispute.

     

    5.5           Governing
Law.  The Loan Documents shall be governed by and construed in
accordance with the laws of the State of California, without regard to the
conflicts of law provisions of the State of California or of any other state;
provided, however, that the perfection of the security interests in the
Collateral shall be governed and controlled by the laws of the relevant
jurisdiction or jurisdictions under the UCC.  The Company and each
Investor consent to personal jurisdiction in Orange County,
California.

     

    5.6           Severability.  If
any term in this Agreement is held to be illegal or unenforceable, the remaining
portions of this Agreement shall not be affected, and this Agreement shall be
construed and enforced as if this Agreement did not contain the term held to be
illegal or unenforceable.

     

    5.7           Binding Effect;
Assignment.  The Loan Documents shall be binding upon and inure
to the benefit of the Company and each Investor and their respective successors
and assigns.  The Company may not assign its rights or interest under
the Loan Documents without the prior written consent of the Majority
Holders.

     

    5.8           Transfer of
Securities.  Notwithstanding the legend required to be placed
on the Securities by applicable law, no registration statement or opinion of
counsel shall be necessary: (a) for a transfer of Securities to the respective
estate of each Investor or for a transfer of Securities by gift, will or
intestate succession of each Investor to his or her spouse or to the siblings,
lineal descendants or ancestors each Investor or his or her spouse, if the
transferee agrees in writing to be subject to the terms hereof to the same
extent as if he or she were the original Investor hereunder; or (b) for a
transfer of Securities pursuant to SEC Rule 144 or any successor rule, or for a
transfer of Securities pursuant to a registration statement declared effective
by the SEC under the Securities Act relating to the Securities.

    
      
         

      

      
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    5.9           Survival of Representations,
Warranties and Covenants.  The representations and warranties
of the parties contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement indefinitely, and shall in no way be
affected by any investigation of the subject matter thereof made by or on behalf
of the other parties. The covenants of the parties contained in or made pursuant
to this Agreement shall survive the execution and delivery of this Agreement
until such time as the Notes have been paid in full.

     

    5.10         California Commissioner of
Corporations.  THE SALE OF THE 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 PAYMENT OR
RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES PRIOR TO THE
QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM
QUALIFICATIONS BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS
CODE.  THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO
EXEMPT.

    

    [Remainder
of Page Intentionally Left Blank]

    
      
         

      

      
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    IN WITNESS WHEREOF, the parties hereto
have caused this Agreement to be duly executed and delivered by their proper and
duly authorized officers as of the date first written above.

    

    
      
        	 
      	
                CNS RESPONSE, INC.

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ Paul Buck

              
	 
      	 
      	
                Name:  Paul
      Buck

              
	 
      	 
      	
                Title:  Chief
      Financial Officer

              

      

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    
 

    
      
        
          	 
      	
                  INVESTOR:

                
	 
      	 
      	 
      
	 
      	
                  By:

                	 
      
	 
      	 
      	
                  Name:

                
	 
      	 
      	
                  Title:

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