EXHIBIT 4.1
FORM OF WARRANT
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF
HAVE NOT BEEN
REGISTERED UNDER THE
SECURITIES
ACT OF 1933,
AS AMENDED (THE
"ACT"), OR ANY
STATE SECURITIES
LAWS, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED UNLESS (i) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
ACT COVERING SUCH SECURITIES OR (ii) THE COMPANY RECEIVES AN OPINION OF COUNSEL
FOR THE HOLDER
OF THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY
STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS
EXEMPT FROM THE
REGISTRATION
REQUIREMENTS OF THE ACT AND IS IN ACCORDANCE WITH APPLICABLE
STATE
SECURITIES LAWS.
THIS WARRANT
IS ISSUED PURSUANT AND SUBJECT TO THAT CERTAIN SUBSCRIPTION
AGREEMENT BETWEEN THE
INITIAL HOLDER OF THIS WARRANT (THE "INVESTOR") AND CNS
RESPONSE, INC., A DELAWARE CORPORATION (THE "COMPANY") DATED
________, 2007.
Dated: _____, 2007
CNS RESPONSE, INC.
WARRANT ("WARRANT") TO PURCHASE SHARES
OF
COMMON STOCK, $0.001 PAR VALUE PER SHARE
___________ SHARES
WARRANT NO. W-_____
1.
NUMBER OF SHARES SUBJECT TO WARRANT. This is to certify that,
FOR VALUE RECEIVED,
_______________ (the
"Investor"), is
entitled to purchase
from the Company, at any time before the termination of this
Warrant pursuant to
Section 3 hereof, at
an exercise price
equal to $1.80 per share (the exercise
price in effect from time to time hereafter being called the "Warrant
Price"),
___________________
(_________,000) shares
("Warrant Shares") of the Company's
common stock, $0.001 par value per share ("Common Stock"),
upon such
Investor's
exercise of this
Warrant pursuant
to Section 7 hereof.
The number of
Warrant
Shares purchaseable upon exercise of this Warrant and the Warrant
Price shall be
subject to adjustment from time to time as described herein.
2.
DEFINITIONS. As used
in this Warrant,
the following terms
shall have definitions ascribed to them below:
(a) "BUSINESS
DAY" shall
mean any day except
Saturday,
Sunday and any day
which shall be a legal
holiday or a day on which
banking institutions in the state
<PAGE>
of New York are
authorized
or required by law or other government
actions to close
between the hours of 9:30 a.m. and 5:00 p.m. Eastern
Standard Time.
(b) "FAIR
MARKET VALUE" or "FMV" of a share of
Common
Stock as of a particular date shall mean:
(i) If traded on a
securities exchange,
the Nasdaq
National Market
or the Nasdaq Small Cap Market, the Fair
Market
Value shall be deemed
to be the average of the closing
prices of the Common Stock of the Company on such exchange or
market over the five
(5) business
days ending immediately
prior to the applicable date of valuation;
(ii) If actively
traded
over-the-counter, the
Fair
Market Value shall be
deemed to be the average of the closing
bid prices over the 30-day period ending immediately prior to
the applicable date of valuation; and
(iii) If there is no active public market, the Fair
Market Value shall be the value as determined in good faith by
the Company's Board of Directors upon a review of relevant
factors,
including due
consideration
of the Registered
Holders' determination of the value of the Company.
(c) "HOLDER"
shall mean the
Investor and any
permitted
transferees.
3.
TERMINATION. Unless
terminated sooner under the terms of this
Warrant, this Warrant shall terminate and no longer be exercisable
at 5:00 p.m.,
Eastern Standard Time, on ________, 2012.
4.
FRACTIONAL SHARES. No fractional shares shall be issuable upon
exercise of this
Warrant and the number of shares to be issued shall be rounded
up to the nearest whole share.
5. NO
SHAREHOLDER
RIGHTS.
This
Warrant, by itself, as
distinguished from any shares purchased hereunder, shall not entitle the Holder
to any of the rights of a shareholder of the Company.
6.
RESERVATION OF
STOCK. The Company will reserve from its
authorized and
unissued Common Stock
a sufficient number of
shares to provide
for the issuance of
Warrant Shares upon
the exercise
or conversion of this
Warrant. Issuance
of this Warrant shall constitute full authority to the
Company's officers who are charged with the duty of executing stock
certificates
to execute, issue and
deliver the necessary
certificates for shares of Warrant
Shares issuable upon the exercise or conversion of this
Warrant.
7.
EXERCISE OF WARRANT. This Warrant may be exercised at any time
prior to its
termination by the
surrender of this
Warrant, together with
the
Notice of Exercise and
the Investment
Representation
Statement in the forms
attached hereto
as Attachments 1 and 2, respectively, duly completed and
executed, at the principal office of the Company, specifying the
portion of this
Warrant to be exercised, and either:
2
<PAGE>
(a)
accompanied by payment
in full of the Warrant
Price
in cash or by check with respect to the shares of Warrant
Shares being
purchased; or
(b) by
electing, by written
notice to the Company on the
Notice of Exercise duly executed by the Holder, to receive a number of
Warrant Shares,
determined in
accordance
with the formula set
forth
below (the
"Election"), in which
event the Company shall issue to the
Holder a number of Warrant Shares computed using the following
formula:
X= Y(A-B)
-----
A
Where X = The number of Warrant Shares to be issued to the Holder
upon
an Election.
Y = The number
of Warrant Shares in respect of which this
Warrant is being exercised as adjusted to the date of
the Election.
A = The FMV of
one Warrant
Share on the
date that the
relevant Notice
of Exercise is received by the
Company.
B = The
Warrant Price (as adjusted to the date of the
Election in accordance with Section 8 hereof).
This Warrant shall be deemed to have been exercised immediately prior
to the close of business on the date of its surrender for exercise as provided
above, and the person
entitled to receive the shares of Warrant Shares issuable
upon exercise shall be
treated for all purposes as the holder of such shares of
record as of the close of business on such date.
As promptly as practicable
after such date, the
Company shall issue and deliver to the
person or persons
entitled to receive the same a certificate or certificates for the number of
full shares of Warrant Shares issuable upon such exercise.
If the Warrant
shall
be exercised
for less than the
total number of shares
of Warrant Shares
then
issuable upon
exercise, promptly after surrender of the Warrant upon such
exercise, the Company
will execute and
deliver a new Warrant,
dated the date
hereof, evidencing the
right of the Holder to the balance of the Warrant Shares
purchasable hereunder upon the same terms and conditions set forth
herein.
8.
ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. The number
of shares issuable
upon exercise of this Warrant (or any shares of stock
or
other securities or property at the time receivable or issuable
upon exercise of
this Warrant) a
