12% CONVERTIBLE PROMISSORY NOTE

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS.  THEY MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

December ___, 2008                                                                                                                                                                              Vernon Hills, Illinois

  No. CPN      _________                                                                                                                                                                      $   _________ 

APPLIED NEUROSOLUTIONS, INC., a Delaware corporation with an address at 50 Lakeview Parkway, Suite 111, Vernon Hills, Illinois 60061 (the "Maker"), for value received, hereby promises to pay to ___________________ or his/her/its registered assigns (the "Holder") on June  __, 2010 (the Maturity Date”) the principal sum of $___________ and interest on the outstanding principal sum hereof (computed on the basis of a 360 day year of twelve months) at the rate of 12% per annum from the date hereof until the earlier of (a) the Maturity Date or (b) the date on which this Promissory Note has been converted in full into shares of the Maker’s common stock (the “Common Stock”).   The outstanding principal and accrued but unpaid interest thereon shall be payable on the Maturity Date in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts to the Holder at the office of the Maker as hereinafter set forth.  At the option of the Maker, interest on this Promissory Note may be paid in shares of the Common Stock in accordance with Section 2 hereof.

This Promissory Note is one of a series of promissory notes of the Maker in the aggregate principal amount of up to $ 2,000,000 issued in connection with a private placement as described in the Convertible Note Purchase Agreement dated as of the date hereof to which the Maker is a party (the “Subscription Agreement”).  This Promissory Note shall rank pari passu with all of the other Promissory Notes issued pursuant to the Subscription Agreement.

1.            Transfers of Note to Comply with the Securities Act

The Holder agrees that this Promissory Note may not be sold, transferred, pledged, hypothecated or otherwise disposed of except as follows: (1) to a person to whom this Promissory Note may legally be transferred without registration and without delivery of a current prospectus under the Securities Act of 1933, as amended (the “Securities Act”) with respect thereto and then only against receipt of an agreement of such person to comply with the provisions of this Section 1 with respect to any resale or other disposition of this Promissory Note; or (2) to any person upon delivery of a prospectus then meeting the requirements of the Securities Act relating to such securities and the offering thereof for such sale or disposition and thereafter to all successive assignees.

2.            Payment of Interest and Prepayment

(a)           Subject to the terms hereof, the Maker has the sole option to determine whether to satisfy payment of the accrued but unpaid interest on this Promissory Note in full on the Maturity Date or the date on which this Promissory Note is converted in full into shares of Common Stock (each an “Interest Repayment Date”) either in cash or in shares of Common Stock, or a combination of both.  The Maker shall deliver to the Holder a written notice, in the form of Exhibit A attached hereto, electing to pay such interest in full on such Interest Repayment Date in either cash or Common Stock, or a combination of both ("Interest Repayment Election Notice").  The Interest Repayment Election Notice shall be delivered to the Holder at least two (2) business days, but not more than six (6) business days, prior to the Interest Repayment Date (the "Notice Date").  If the Interest Repayment Election Notice is not delivered within the prescribed period set forth in the preceding sentence, then the repayment of interest on the Repayment Interest Date shall be made in cash.  The Maker shall issue and deliver to the Holder no later than four (4) business days from the Notice Date that number of shares of Common Stock specified in the Interest Repayment Election Notice.  If the Maker elects to repay all or a portion of the accrued but unpaid interest on the Interest Repayment Date with shares of Common Stock, the number of such shares to be issued for such interest repayment shall be the number determined by dividing (x) the dollar amount of interest to be paid in shares of Common Stock, by (y) the Interest Conversion Price (as defined below) as of Notice Date.

            (b)               Conversion Price for Accrued but Unpaid Interest - The conversion price for the accrued but unpaid interest on this Promissory Note (the "Interest Conversion Price") shall be equal to the lesser of (i) 75% of the average closing price of the Common Stock on the OTC Bulletin Board for the 20 trading day period immediately preceding the date of the closing date under the Subscription Agreement (the “Closing”) or (ii) the closing market price on the Principal Market (as hereinafter defined) on which the Common Stock is then-quoted on the Notice Date  (in each case as such amount is equitably adjusted to reflect any stock split, reverse stock split or stock dividend carried out by the Maker).  “Principal Market” shall mean the Pink Sheets, the OTC Bulletin Board, the Nasdaq Global Market, the Nasdaq Global Select Market, the American Stock Exchange or the New York Stock Exchange on which the Maker’s Common Stock is quoted at the applicable time.

(c)           The shares of Common Stock issued by the Maker to repay accrued but unpaid interest on this Promissory Note, when issued, will not have been registered under the Securities Act or any state securities laws and such shares may not be sold or offered for sale in the absence of an effective registration statement as to such shares under the Securities Act and any applicable state securities law or an opinion of counsel satisfactory to the Maker that such registration is not required.  The Company has granted  to the Holder of this Promissory Note certain piggyback registration rights with respect to the shares of Common Stock issued by the Maker to repay accrued but unpaid interest on this Promissory Notes, which rights are set forth on Schedule III to the Purchase Agreement.

(d)           The Maker may not prepay all or any part of the principal sum from time to time without Holder’s consent.

(a)              Subject to the provisions set forth herein, including, but not limited to, the restrictions on conversion pursuant to Section 3(h) below, the Holder shall have the right, but not the obligation, from and after the date hereof, and then at any time until this Promissory Note is fully paid, to convert the principal portion of this Promissory Note into fully paid and nonassessable shares of Common Stock at the Note Conversion Price (as herein defined).  Upon delivery to the Maker of a fully completed and executed Notice of Conversion, in the form attached hereto as Exhibit B , in accordance with Section 3(b) below (the date of giving such notice of conversion being a "Note Conversion Date"), the Maker shall issue and deliver to the Holder no later than four (4) business days from the Conversion Date that number of shares of Common Stock for the portion of principal of this Promissory Note being converted in accordance with this Section 3.  The number of shares of Common Stock to be issued upon each conversion of principal of this Promissory Note shall be determined by dividing that portion of the principal of this Promissory Note to be converted by the Note Conversion Price as of the Note Conversion Date.  The Maker’s delivery of the Notice of Conversion shall be an irrevocable election to convert principal of this Promissory Note in accordance with such Notice of Conversion, subject to the limitations set forth in Section 3(h) below.

(b)              The Holder shall give notice of its decision to exercise its right to convert principal of this Promissory Note, in whole or in part, by telecopying or otherwise delivering an executed and completed Notice of Conversion to the Maker at its address set forth in the Subscription Agreement.  The Holders will be required to surrender this Promissory Note with the Notice of Conversion.  Unless the Maker delivers a notice to the Holder pursuant to Section 3(h) hereof, the Maker will cause the transfer agent to issue and transmit to the Holder within four (4) business days of the Note Conversion Date a certificate representing the shares of Common Stock being issued pursuant to the Notice of Conversion and the Maker shall promptly deliver to the Holder a new Promissory Note representing the balance of the principal not converted into Common Stock.

(c)               Conversion Price for Principal - The price at which principal of this Promissory Note will be converted into shares of Common Stock (the “Note Conversion Price”) shall be equal to the lesser of  (i) the average closing price of