WWW.EXFILE.COM, INC. -- 888-775-4789 -- PERFORMANCE HEALTH TECHNOLOGIES, INC. -- EXHIBIT 10.135 TO FORM 10-Q


     

    EXHIBIT
10.135



    DEBT EXCHANGE AGREEMENT AND
INVESTOR QUESTIONNAIRE

    


    This Debt
Exchange Agreement and Investor Questionnaire (the “Agreement”) is made and
entered into as of October 22, 2008 by and between the person or entity set
forth on the signature page below (the “Investor”) and Performance Health
Technologies, Inc. (“PHT”).

     

    Recitals

     

    


    WHEREAS, PHT has authorized
the issuance of PHT’s equity units in
an aggregate amount of $58,000 (the “Units”), in
exchange for $50,000 principal amount of an outstanding non-convertible
promissory note together with accrued interest (the “Old Note”);

    


    WHEREAS, for each $1,000 of
principal and interest of Old Note tendered, the tendering Investor will receive
$1,000 of Units (the “Exchange Offer”);

    WHEREAS, each Unit consists of
(i) an unsecured convertible note in the amount of $1,000 (collectively referred
to herein as the “Notes”) convertible at the rate of $0.25 per share and (ii)
2,000 warrants to purchase PHT common stock, 1,000 of which have an exercise
price of $0.75 per share and 1,000 of which have an exercise price of $1.00 per
share (collectively referred to herein as the “Warrants”); and

    


    WHEREAS, the Investor desires
to exchange the Old Note held by the Investor for Units on the terms set forth
herein;

     

    NOW, THEREFORE, in
consideration of the covenants, promises and representations set forth herein
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereby agree as follows:

     

    1.           Exchange

     

    1.1           At
the Closing (as defined below) the Investor shall acquire from PHT and PHT shall
issue to the Investor, subject to all of the terms and conditions hereof, Units
in the amount of $58,000.00 in exchange for the Old Note.  The Old
Note will be exchanged into Units in increments of $1,000 and for each $1,000 of
principal and interest of the Old Note tendered the Investor will receive $1,000
of Units.  The amount of $614.73 outstanding on the Old Note will be
paid in cash at the closing.

    


    2.           Closing

    


    2.1           Date of
Closing.  The closing (the “Closing”) of the exchange of the Units
for the Old Note shall take place on  as soon as practicable with an
effective date of October 22, 2008 as determined by PHT (the “Closing
Date”).

    


    2.2           Items to be Delivered by the
Investor to PHT.  The following shall be delivered by the Investor
to PHT on the Closing Date:

    


    
      	
              
              

            	
              (a) 

            	
              this
      Agreement executed by the Investor;
and

            


    

    


    
      
        
        

      

      
        - 1
-

        
          

        

      

      
        
        

      

    

    
      	
               
      

            	
              (b)

            	
              the
      Old Note.

            


    

    


    2.3           Items to be Delivered to the
Investor by PHT.  The following shall be delivered by PHT to the
Investor on the Closing Date:  the Notes and Warrants included in the
Units purchased by the Investor in the forms attached hereto as Exhibits A and
B.

    


    3.           Representations
and Warranties of PHT

     

    PHT hereby represents and warrants
to the Investor as follows:

     

    3.1           Corporate Existence and
Power.  PHT is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
Delaware.  PHT has all corporate power and all material governmental
permits required to carry on its business as now conducted.

    


    3.2           Corporate Authorization;
Enforceability.  The execution, delivery and performance by PHT
of this Agreement, the Notes and the Warrants are within PHT’s corporate powers
and have been duly authorized by the Board of Directors of PHT and no other
corporate action on the part of PHT is necessary to authorize this Agreement or
issuance of the Notes or the Warrants.  This Agreement has been, and
the Notes and Warrants will be, duly executed and delivered by
PHT.  This Agreement constitutes the valid and binding agreement of
PHT, enforceable against PHT in accordance with its terms, except to the extent
that its enforceability may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the enforcement of
creditors’ rights generally and by general principles of equity.

    


    3.3           No
Conflict.  The execution, delivery and performance by PHT of
this Agreement, and the consummation of the transactions contemplated hereby,
including issuance of the Units, do not and will not at the Closing, (a) violate
any provision of law, statute, rule or regulation, or any ruling, writ,
injunction, order, judgment or decree of any court, administrative agency or
other governmental body applicable to PHT, or any of its properties or assets,
(b) conflict with or result in any breach of any of the terms, conditions or
provisions of, or constitute (with due notice or lapse of time, or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, or result in the creation of any encumbrance upon any of the properties
or assets of PHT under any material contract to which PHT is a party or (c)
violate any organizational document of PHT.

     

    3.4           Notes and
Warrants.  The Notes and Warrants included in the Units and
common stock issuable upon conversion of the Notes (the “Conversion Shares”) and
upon exercise of the Warrants (the “Warrant Shares” and together with the
Conversion Shares, the “Common Shares”), when issued and delivered in accordance
with the terms of this Agreement (and the terms of the Notes or Warrants, as the
case may be) will be duly authorized, validly issued, fully paid, non-assessable
and free and clear of any lien or other limitation or restriction.

    


     

    3.5          
Securities
Matters.    Subject to the accuracy of the
representations of the Investor set forth in Section 4.4 hereof the offer, sale
and issuance of the Units as contemplated by this Agreement are exempt from the
registration requirements of the Securities Act.  PHT has complied and
will comply with all applicable state “blue sky” or securities laws in
connection with the offer, sale and issuance of the Units as contemplated by
this Agreement.

    


    
      
        
        

      

      
        - 2
-

        
          

        

      

      
        
        

      

    

    4.           Representations
and Warranties of the Investor

     

    The Investor hereby represents and
warrants to PHT as follows:

     

    4.1           Organization and Good
Standing; Power and Authority. Any Investor that is not a natural person
(a) is an organization that is duly organized, validly existing and in good
standing under the laws of its organization, and (b) has all requisite power and
authority and all authorizations, licenses and material permits necessary to
own, lease and operate its properties, to carry on its business as presently
conducted and as proposed to be conducted and to enter into and carry out the
transactions contemplated by this Agreement.

     

    4.2           Authorization of the
Agreement; Title to Old Note.

     

    (a)           This
Agreement constitutes a valid and legally binding obligation of the Investor
except to the extent that enforceability may be limited by bankruptcy,
insolvency or similar laws affecting creditors’ rights generally or by general
principles of equity.

     

    (b)           Investor
is the beneficial owner and owner of record of the Old Note and owns the Old
Note free and clear of any and all liens or other encumbrances of any
nature.  Investor has not permitted any set-off to be made under, or
made any transfer or assignment of, the  Old Note or made any
agreement for the foregoing.  Investor has no knowledge of any
defenses against performance under the Old Note that any party may
have.  The Investor has and will convey to PHT good title to the Old
Note, free of liens, claims and encumbrances.

     

    4.3           No Conflict. The
execution, delivery and performance by the Investor of this Agreement and the
consummation by the Investor of the transactions contemplated hereby do not and
will not at the Closing (a) violate any provision of law, statute, rule or
regulation, or any ruling, writ, injunction, order, judgment or decree of any
court, administrative agency or other governmental body applicable to the
Investor, or any of its properties or assets, (b) conflict with or result in any
breach of any of the terms, conditions or provisions of, or constitute (with due
notice or lapse of time, or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, or result in the creation of
any encumbrance upon any of the properties or assets of the Investor under any
material contract to which the Investor is a party or (c) violate any
organizational document of any Investor that is not a natural
person.

     

    4.4           Investment
Representation.

     

    
      	
               
      

            	
              (a)

            	
              The
      Investor has received and reviewed the following (the “PHT
      Documents”):

            


    

    


    
      	
              i.  

            	
              This
      Agreement and the form of Notes and Warrants attached
    hereto;

            


    

    


    
      	
              ii.  

            	
              PHT’s
      Form 10-KSB for the year ended December 31,
  2007;

            


    

    


    
      	
              iii.  

            	
              PHT’s
      Form 10-Q for the quarter ended June 30, 2008;
  and

            


    

    


    
      
        
        

      

      
        - 3
-

        
          

        

      

      
        
        

      

    

    
      	
              iv.  

            	
              PHT’s
      Form 8-Ks filed July 7, 2008, August 12, 2008, September 4, 2008 and
      October 20, 2008.

            


    

    


    
      	
               
      

            	
              (b)

            	
              The
      Investor or Investor’s designated representatives have concluded a
      satisfactory due diligence investigation of PHT and have had an
      opportunity to review the PHT Documents and to have all of their questions
      related thereto satisfactorily
answered.

            


    

    


    
      	
               
      

            	
              (c)

            	
              The
      Investor acknowledges that the Notes and Warrants included in the Units
      (and Common Shares) are speculative and involve a high degree of risk and
      the Investor represents that it is able to sustain the loss of the entire
      amount of its investment.

            


    

    


    
      	
               
      

            	
              (d)

            	
              The
      Investor (or its members and/or officers) has previously invested in
      unregistered securities and has sufficient financial and investing
      expertise to evaluate and understand the risks of the Notes and Warrants
      included in the Units (and Common
Shares).

            


    

    


    
      	
               
      

            	
              (e)

            	
              The
      Investor has received from PHT, and is relying on, no representations or
      projections with respect to PHT’s business and prospects except as set
      forth in this Agreement and the PHT
Documents.

            


    

    


    
      	
               
      

            	
              (f)

            	
              The
      Investor is an “accredited investor” within the meaning of Regulation D
      under the Securities Act.

            


    

    


    
      	
               
      

            	
              (g)

            	
              The
      Investor is acquiring the Notes and Warrants included in the Units (and
      Common Shares) for investment purposes only without intent to distribute
      the same, and acknowledges that the Notes and Warrants included in the
      Units (and Common Shares) have not been registered under the Securities
      Act and applicable state securities laws, and accordingly, constitute
      “restricted securities” for purposes of the Securities Act and such state
      securities laws.

            


    

    


    
      
        	
                
                

              	
                (h) 

              	
                The
      Investor acknowledges that it will not be able to transfer the Notes and
      Warrants included in the Units (and Common Shares) except upon compliance
      with the registration requirements of the Securities Act and applicable
      state securities laws or exemptions
therefrom.

              


      

    

    


    
      
        	
                
                

              	
                (i) 

              	
                 The
      certificates and/or instruments evidencing the Notes and Warrants included
      in the Units (and Common Shares) will contain the following
      legend:

              


      

    

    


    “THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).  THE SECURITIES MAY
NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER SAID ACT, OR AN OPINION OF COUNSEL IN FORM,
SUBSTANCE AND SCOPE CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR UNLESS SOLD PURSUANT TO RULE
144 UNDER SAID ACT.”

    
 

    
      
        
        

      

      
        - 4
-

        
          

        

      

      
        
        

      

    

    5.           Registration
Rights

    


    5.1           Participation in Registered
Offers.  If  PHT proposes or is required to register
any of its shares or other equity securities for public sale for cash under the
Securities Act (other than on Forms S-4 or S-8 or similar registration forms),
it will at each such time or times give written notice to the Investor of its
intention to do so.  Upon the written request of the Investor given
within twenty (20) days after receipt of any such notice, PHT shall use its best
efforts to cause to be included in such registration any Common Shares held by
the Investor requested to be registered (the “Registrable Securities”);
provided, that if the managing underwriter advises that less than all of the
shares requested to be registered should be offered for sale so as not
materially and adversely to affect the price or salability of such offer being
registered by PHT, the Investor (but not PHT to the extent it desires to include
shares for its own account) shall reduce the number of its Common Shares to be
included in the registration statement as required by the underwriter to the
extent requisite of all prospective sellers of the securities proposed to be
registered (other than PHT) on a pro rata basis according to the amounts of
securities proposed to be registered by all prospective sellers to permit the
sale or other disposition (in accordance with the intended method of disposition
thereof as aforesaid) by the prospective seller or sellers of the securities so
registered.  The registration requested pursuant to this Section 5.1
is referred to herein as the “Piggyback Registration”.

    


    5.2           Obligations of
Investor.  It shall be a condition precedent to the obligation
of PHT to register any Common Shares pursuant to this Section 5 that the
Investor shall furnish to PHT such information regarding the Common Shares held
and the intended method of disposition thereof and other information concerning
the Investor as PHT shall reasonably request and as shall be required in
connection with the registration statement to be filed by PHT.  If
after a registration statement becomes effective PHT advises the Investor that
PHT considers it appropriate to amend or supplement the applicable registration
statement, the Investor shall suspend further sales of the Registrable
Securities until PHT advises the Investor that such registration statement has
been amended or supplemented.

    


    5.3           Registration
Proceedings.  Whenever PHT is required by the provisions of
this Section 5 to effect the registration of the Registrable Securities under
the Securities Act, PHT shall:

    


    
      	
               
      

            	
              (i)

            	
              Prepare
      and promptly file with the SEC a registration statement with respect to
      such securities and use its best efforts to cause such registration
      statement to become effective within 60 days of filing and remain
      effective;

            


    

    


    
      	
               
      

            	
              (ii)

            	
              Prepare
      and file with the SEC such amendments to such registration statement and
      supplements to the prospectus contained therein as may be necessary to
      keep such registration statement
effective;

            


    

    


    
      	
               
      

            	
              (iii)

            	
              Furnish
      to the Investor and to the underwriters of the securities being registered
      such reasonable number of copies of the registration statement,
      preliminary prospectus, final prospectus and such other documents as
      such 

            


    

    
      


      
        
          
          

        

        
          - 5
-

          
            

          

        

        
          
          

        

      

      
        	
                 
      

              	
                 

              	
                underwriters
      may reasonably request in order to facilitate the public Exchange Offer of
      such securities;

              


      

       

    

    
      	
               
      

            	
               (iv)

            	
              Use
      its best efforts to register or qualify the securities covered by such
      registration statement under such state securities or Blue Sky Laws of
      such jurisdictions as the Investor may reasonably request within twenty
      (20) days following the original filing of such registration statement,
      except that PHT shall not for any purpose be required to execute a general
      consent to service of process or to qualify to do business as a foreign
      corporation in any jurisdiction wherein it is not so
      qualified;

            


    

    


    
      	
               
      

            	
              (v)

            	
              Notify
      the Investor, promptly after it shall receive notice thereof, of the time
      when such registration statement has become effective or a supplement to
      any prospectus forming a part of such registration statement has been
      filed;

            


    

    


    
      	
               
      

            	
              (vi)

            	
              Notify
      the Investor promptly of any request by the SEC for the amending or
      supplementing of such registration statement or prospectus or for
      additional information; and

            


    

    


    
      	
               
      

            	
              (vii)

            	
              Prepare
      and promptly file with the SEC and promptly notify the Investor of the
      filing of such amendment or supplement to such registration statement or
      prospectus as may be necessary to correct any statements or omissions if,
      at the time when a prospectus relating to such securities is required to
      be delivered under the Securities Act, any event shall have occurred as
      the result of which any such prospectus or any other prospectus as then in
      effect would include an untrue statement of a material fact or omit to
      state any material fact necessary to make the statements therein, in light
      of the circumstances in which they were made, not
      misleading.  Notwithstanding any provision herein to the
      contrary, PHT shall not be required to amend, supplement, or update a
      prospectus contained in any registration statement if to do so would
      result in an unduly burdensome expense to
PHT.

            


    

    


    5.4           Expenses.  With
respect to the inclusion of the Registrable Securities in a registration
statement pursuant to this Section 5, all registration expenses, fees, costs and
expenses of and incidental to such registration, shall be borne by PHT;
provided, however, that Investor shall bear its own professional fees and pro
rata share of the underwriting discounts and commissions.  The fees,
costs and expenses of registration to be borne by PHT shall include, without
limitation, all registration, filing,  and printing expenses, fees and
disbursements of counsel and accountants for PHT, fees and disbursements of
counsel for the underwriter or underwriters of such securities (if PHT and/or
selling security holders are required to bear such fees and disbursements), and
all legal fees and disbursements and other expenses of complying with state
securities or Blue Sky laws of any jurisdiction in which the securities to be
offered are to be registered or qualified.

    


    
      
        
        

      

      
        - 6
-

        
          

        

      

      
        
        

      

    

    5.5           Indemnification of the
Investor.  Subject to the conditions set forth below, in
connection with any registration of the Common Shares pursuant to this Section
5, PHT agrees to indemnify and hold harmless the Investor, any underwriter for
the Exchange Offer and each of their officers and directors and agents and each
other person, if any, who controls Investor or their underwriter (each, an
“Investor Indemnified Party”), within the meaning of Section 15 of the
Securities Act, as follows:

    


    
      	
               
      

            	
               (i)

            	
              Against
      any and all loss, claim, damage and expense whatsoever arising out of or
      based upon (including, but not limited to, any and all expense whatsoever
      reasonably incurred in investigating, preparing or defending any
      litigation, commenced or threatened, or any claim whatsoever based upon)
      any untrue or alleged untrue statement of a material fact contained in any
      preliminary prospectus (if used prior to the effective date of the
      registration statement), the registration statement or the prospectus (as
      from time to time amended and supplemented), or in any application or
      other document executed by PHT or based upon written information furnished
      by PHT filed in any jurisdiction in order to qualify PHT’s securities
      under the securities laws thereof, or the omission or alleged omission
      therefrom of a material fact required to be stated therein or necessary to
      make the statements therein not misleading, or any other violation of
      applicable federal or state statutory or regulatory requirements or
      limitations relating to action or inaction by PHT in the course of
      preparing, filing, or implementing such registered Exchange Offer;
      provided, however, that the indemnity agreement contained in this section
      shall not apply to any loss, claim, damage, liability or action arising
      out of or based upon any untrue or alleged untrue statement or omission
      made in reliance upon and in conformity with any information furnished in
      writing to PHT by or on behalf of the Investor expressly for use in
      connection therewith or arising out of any action or inaction of the
      Investor;

            


    

    


    
      	
               
      

            	
              (ii)

            	
              Subject
      to the proviso contained in Subsection (i) above, against any and all
      loss, liability, claim, damage and expense whatsoever to the extent of the
      aggregate amount paid in settlement of any litigation, commenced or
      threatened, or of any claim whatsoever based upon any untrue statement or
      omission (including, but not limited to, any and all expense whatsoever
      reasonably incurred in investigating, preparing or defending against any
      such litigation or claim) if such settlement is effected with the written
      consent of PHT; and

            


    

    


    
      	
               
      

            	
               (iii)

            	
              In
      no case shall PHT be liable under this indemnity agreement with respect to
      any claim made against any Investor Indemnified Party unless PHT shall be
      notified, by letter or by facsimile confirmed by letter, of any action
      commenced against such Investor Indemnified Party, promptly after such
      person shall have been served with the summons or other legal process
      giving information as to the nature and basis of the claim.  The
      failure to so notify PHT, if prejudicial in any material respect to PHT’s
      

            


    

    
      


      
        
          
          

        

        
          - 7
-

          
            

          

        

        
          
          

        

      

      
        	
                 
      

              	
                 

              	
                ability
      to defend such claim, shall relieve PHT from its liability to the
      indemnified person under this Section 5.5, but only to the extent that PHT
      was prejudiced.  The failure to so notify PHT shall not relieve
      PHT from any liability which it may have otherwise than on account of this
      indemnity agreement.  PHT shall be entitled to participate at
      its own expense in the defense of any suit brought to enforce any such
      claim, but if PHT elects to assume the defense, such defense shall be
      conducted by counsel chosen by it, provided such counsel is reasonably
      satisfactory to the Investor Indemnified Party in any suit so
      brought.  In the event PHT elects to assume the defense of any
      such suit and retain such counsel, the Investor Indemnified Party in the
      suit shall, after the date they are notified of such election, bear the
      fees and expenses of any counsel thereafter retained by them, as well as
      any other expenses thereafter incurred by them in connection with the
      defense thereof; provided, however, that if the Investor Indemnified Party
      reasonably believes that there may be available to it any defense or
      counterclaim different than those available to PHT or that representation
      of the Investor Indemnified Party by counsel for PHT presents a conflict
      of interest for such counsel, then the Investor Indemnified Party shall be
      entitled to defend such suit with counsel of its own choosing and PHT
      shall bear the fees, expenses and other costs of such separate
      counsel.

              


      



    5.6           Indemnification of
PHT.  The Investor agrees to indemnify and hold harmless PHT,
each underwriter for the Exchange Offer, and each of their officers and
directors and agents and each other person, if any, who controls PHT and the
underwriter within the meaning of Section 15 of the Securities Act and any other
stockholder selling securities against any and all such losses, liabilities,
claims, damages and expenses as are indemnified against by PHT under Section 5.5
(i), (ii) and (iii) above; provided, however, that such indemnification by
Investor hereunder shall be limited to any losses, liabilities, claims, damages,
or expenses to the extent caused by any untrue statement of a material fact or
omission of a material fact (required to be stated therein or necessary to make
statements therein not misleading), if any made (or in settlement of any
litigation effected with the written consent of such Investors, alleged to have
been made) in any preliminary prospectus, the registration statement or
prospectus or any amendment or supplement thereof or in any application or other
document in reliance upon, and in conformity with, written information furnished
in respect of such Investor by or on behalf of such Investor expressly for use
in any preliminary prospectus, the registration statement or prospectus or any
amendment or supplement thereof or in any such application or other document or
arising out of any action or inaction of such Investor in implementing such
registered Exchange Offer.  Notwithstanding the foregoing, the
indemnification obligation of Investor shall not exceed the purchase price of
the Units paid by Investor.  In case any action shall be brought
against PHT, or any other person so indemnified, in respect of which indemnity
may be sought against any Investor, such Investor shall have the rights and
duties given to PHT, and each other person so indemnified shall have the rights
and duties given to Investor, by the provisions of Section 5.5.  The
person indemnified agrees to notify the Investor promptly after the assertion of
any claim against the person indemnified in connection with the sale of
securities.

    


    
      
        
        

      

      
        - 8
-

        
          

        

      

      
        
        

      

    

    5.7           Contribution.  If
the indemnification provided for in Sections 5.5 and 5.6 above are unavailable
or insufficient to hold harmless an indemnified party in respect of any losses,
claims, damages or liabilities (or actions in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the indemnified party, on one hand, and such
indemnifying party, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, or liabilities (or
actions in respect thereof).  The relative fault shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the indemnified party, on one
hand, or such indemnifying party, on the other hand, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.  No person who has committed fraudulent
misrepresentation (within the meaning of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation.  The amount paid or payable by an indemnified party
as a result of the losses, claims, damages or liabilities (or actions in respect
thereof) referred to above in this Section shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim.

    


    5.8           Assignment of Registration
Rights.  The right to have PHT register Registrable Securities
pursuant to this Agreement shall be automatically assignable to any transferee
of all or any portion of the Registrable Securities if:  (a) the
Investor agrees in writing with the transferee or assignee to assign such
rights, and a copy of such agreement is furnished to PHT within a reasonable
time after such assignment, (b) PHT is, within a reasonable time after such
transfer or assignment, furnished with written notice of (i) the name and
address of such transferee or assignee, and (ii) the securities with respect to
which such registration rights are being transferred or assigned, (c) following
such transfer or assignment, the further disposition of such securities by the
transferee or assignee is restricted under the 1933 Act and applicable state
securities laws and, (d) at or before the time PHT receives the written notice
contemplated by clause (b) of this sentence, the transferee or assignee agrees
in writing with PHT to be bound by all of the provisions contained herein (the
foregoing a “Permitted Transferee”).

    


    6.           Miscellaneous

     

    6.1           Definitions.

    


    “Business Day” means a
day that is not a Saturday, Sunday or a day on which commercial banking
institutions located in New York City, New York are authorized or required to
close.

    


    “Exchange Act” means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.

    


    “SEC” means the
Securities and Exchange Commission.

    


    
      
        
        

      

      
        - 9
-

        
          

        

      

      
        
        

      

    

    “Securities Act” means
the Securities Act of 1933, as amended.

    


    6.2           Confidentiality.

    


    
      	
               
      

            	
              (a)

            	
              The
      Investor agrees to keep confidential any and all non-public information
      delivered or made available to the Investor by PHT except for disclosures,
      as necessary, made by the Investor to the Investor’s officers, directors,
      employees, agents, counsel and accountants each of whom shall be notified
      by the Investor of this confidentiality covenant and for whom the Investor
      shall be liable in the event of any breach of this covenant by any such
      individual or individuals; provided, however, that nothing herein shall
      prevent the Investor from disclosing such information (i) upon the order
      of any court or administrative agency, (ii) upon the request or demand of
      any regulatory agency or authority having jurisdiction over the Investor,
      (iii) which has been publicly disclosed or (iv) to any of its members
      provided that any such members agree in writing (with a copy provided to
      PHT) to be bound by confidentiality provisions in form and substance
      substantially as are contained herein.  In the event of a
      mandatory disclosure as described in clause (i) and/or (ii) of the
      preceding sentence, the Investor shall promptly notify PHT in writing of
      any applicable order, request or demand for such information, cooperate
      with PHT if and to the extent that PHT elects to seek an appropriate
      protective order or other relief from such order, request, or demand, and
      disclose only the minimal amount of information ultimately required to be
      disclosed.  No Investor shall use for its own benefit, nor
      permit any other person to use for such person’s benefit, any of PHT’s
      non-public information including, without limitation, in connection with
      the purchase and/or sale of PHT’s
securities.

            


    

     

    
      	
               
      

            	
              (b)

            	
              PHT
      shall in no event disclose non-public information to the Investor,
      advisors to or representatives of the Investor unless prior to disclosure
      of such information PHT marks such information as “Non-Public Information
      - Confidential” and provides the Investor, such advisors and
      representatives with the opportunity to accept or refuse to accept such
      non-public information for review.  PHT may, as a condition to
      disclosing any non-public information hereunder, require the Investor’s
      advisors and representatives to enter into a confidentiality agreement in
      form reasonably satisfactory to PHT and the
  Investor.

            


    

    


    
      	
               
      

            	
              (c)

            	
              Nothing
      herein shall require PHT to disclose non-public information to the
      Investor or its advisors or representatives, and PHT represents that it
      does not disseminate non-public information to any Investors who purchase
      stock in PHT in a public Exchange Offer, to money managers or to
      securities analysts.

            


    

     

    


    6.3           Costs and
Expenses.  PHT and the Investor shall bear their own costs and
expenses in connection with this transaction.

    


    
      
        
        

      

      
        - 10
-

        
          

        

      

      
        
        

      

    

    6.4           Survival.  All
agreements, covenants, representations and warranties made by PHT or by the
Investor herein shall survive the execution and delivery of this
Agreement.

    


    6.5           Notices.  Except
as otherwise provided herein, all notices, requests, demands, consents,
instructions or other communications to or upon PHT, or the Investor under this
Agreement shall be in writing and facsimiled, mailed or delivered to each party
at the facsimile number or its address as provided below (or to such other
facsimile number or address as the recipient of any notice shall have notified
the other in writing).  All such notices and communications shall be
effective (a) when sent by Federal Express or other overnight service of
recognized standing, on the Business Day following the deposit with such
service; (b) when mailed, by registered or certified mail, first class postage
prepaid and addressed as aforesaid through the United States Postal Service,
upon receipt; (c) when delivered by hand, upon delivery; and (d) when
facsimiled, upon confirmation of receipt to the following:

    


    Performance
Health Technologies, Inc.

    427 River
View Plaza

    Trenton,
NJ  08611

    Attn.:  Robert
Prunetti, CEO

    Fax:  (609)
656-0869

    


    To the
Investor at the Address Set Forth on the Investor Questionnaire.

     

    


    6.6           Nonwaiver.  No
failure or delay on any party in exercising any right hereunder shall operate as
a waiver thereof or of any other right nor shall any single or partial exercise
of any such right preclude any other further exercise thereof or of any other
right.

    


    6.7           Amendments and
Waivers.  This Agreement may not be amended or modified, nor
may any of its terms be waived, except by written instruments signed by all of
the parties.  Such waiver or consent under any provision hereof shall
be effective only in the specific instances for the purpose for which
given.

    


    6.8           Assignments.  This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.

    


    6.9           Partial
Invalidity.  If at any time any provision of this Agreement is
or becomes illegal, invalid or unenforceable in any respect under the law of any
jurisdiction, neither the legality, validity or enforceability of the remaining
provisions of this Agreement nor the legality, validity or enforceability of
such provision under the law of any other jurisdiction shall in any way be
affected or impaired thereby.

    


    6.10         Headings.  Headings
in this Agreement are for convenience of reference only and are not part of the
substance hereof or thereof.

    


    6.11         Entire
Agreement.  This Agreement constitutes and contains the entire
agreement of the parties hereto and supersedes any and all prior agreements,
negotiations, correspondence, understandings and communications among the
parties, whether written or oral, respecting the subject matter
hereof.

    


    
      
        
        

      

      
        - 11
-

        
          

        

      

      
        
        

      

    

    6.12         Governing
Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without reference to conflicts
of law rules.

    


    6.13         Jurisdiction.  Any
suit, action or proceeding seeking to enforce any provision of, or based on any
matter arising out of or in connection with, this Agreement or the transactions
contemplated hereby may be brought in the courts of the State of New York
located in the County of New York and the federal courts of the United States of
America located in such State and County.  Each of the parties (a)
consents to the exclusive jurisdiction of such courts (and of the appropriate
appellate courts therefrom) in any such suit, action or proceeding, (b)
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such suit, action
or proceeding in any such court or that any such suit, action or proceeding
which is brought in any such court has been brought in an inconvenient forum,
(c) will not attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court, and (d) will not bring any
action relating to this Agreement or any of the transactions contemplated by
this Agreement in any other court.  Process in any such suit, action
or proceeding may be served on any party anywhere in the world, whether within
or without the jurisdiction of any such court.  Without limiting the
foregoing, each party agrees that service of process on such party as provided
in Section 6.6 will be deemed effective service of process on such
party.

    


    6.14         JURY
TRIAL.  EACH
PARTY HERETO, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY AS TO ANY
ISSUE.

    


    6.15         Counterparts.  This
Agreement may be executed in several counterparts, each of which shall be deemed
an original, but such counterparts shall together constitute but one and the
same agreement.

    


    
 

    
 

    
      
        
        

      

      
        - 12
-

        
          

        

      

      
        
        

      

    

    IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date set
forth below.

    


    If
Investor is an individual:

     

    


    
    

     

    
      	
              
                
      

              Signature of
      Investor

            	
              
                
      

              Print Name of
      Investor 

            


    

     

    


     

    $________________
of Principal of Notes dated __________ Plus Accrued and Unpaid Interest
thereunder to be Exchanged for Units Under this Agreement

     

    


     

    Date:______________________,
2008

     

    


     

    If
Investor is an entity:

     

    


    ___________________________________

                  Print
Name of Entity

    


    


     

    
      	
              
                
      

              Signature of
      Officer,

              Trustee or Partner, as
      applicable

            	
              
                
      

              Print Name of
      Officer,

              Trustee or Partner, as
      applicable 

            


    

     

                                                                               

    $________________
of Principal of Notes dated __________ Plus Accrued and Unpaid Interest
thereunder to be Exchanged for Units Under this Agreement

     

    


    Date:______________________,
2008

    


    Accepted:

    


    
      	
               
      

            	
              Date:
      _____________, 2008

            	
              PERFORMANCE HEALTH
      TECHNOLOGIES, INC.

            


    

    


    


     

    
      	 	
              By:
      ________________________________

              Name:

              Title: 

            


    

     

    


    
      
        
        

      

      
        - 13
-

        
          

        

      

      
        
        

      

    

    ACCREDITED
INVESTOR QUESTIONNAIRE

    


    The
Investor understands that:

    


     •           In
making a decision to participate in the Exchange Offer, the Investor must rely
on its own examination of PHT and the terms of the Exchange Offer, including the
merits and risks involved.

     

     •           The
Exchange Offer has not been recommended or approved by any federal or state
securities commission or regulatory authority.

     

     •           The
Investor should consult his or her own competent counsel, including, without
limitation, legal counsel, accountant, or business advisor as to legal, tax,
financial, and related matters concerning an acquisition of the
Units.

    


    An
investment in the Units involves a high degree of risk.  Among other
factors, Investors should consider the following risk factors, which are
included in the PHT Documents.  Investors should carefully review the
entire PHT Documents, however, for a more complete description of PHT and the
risks involved in an investment in our Units.

    


    Risks Concerning the Units
and the Exchange Offer

    


    AN
INVESTMENT IN PHT INVOLVES AN EXTREMELY HIGH DEGREE OF RISK AND SHOULD ONLY BE
MADE IF THE INVESTOR CAN AFFORD A COMPLETE LOSS OF INVESTMENT.  EACH
INVESTOR UNDERSTANDS THAT:

    


    There is currently a low volume
public trading market for our common stock. The Company has been a public
reporting company under the 1934 Act since July 13, 2007. The Company’s common
stock is presently quoted on the Over The Counter Bulletin Board. There can be
no assurance that an active public trading market for our common stock may
develop. Absence of an active trading market could adversely affect our
stockholders’ ability to sell our common stock in short time periods, or
possibly at all. Our common stock has experienced, and is likely to experience
in the future, significant price and volume fluctuations that could adversely
affect the market price of our common stock without regard to our operating
performance. In addition, we believe that factors such as fluctuations in our
financial results and changes in the overall economy or the condition of the
financial markets could cause the price of our common stock to
fluctuate substantially.  For these and other reasons, there is
substantial risk of non-payment of the Notes. The common stock
issuable upon conversion of the notes and exercise of the Warrants will be
“restricted securities.”  As restricted securities they may be sold
only upon registration under the Securities Act and applicable state or other
jurisdictions’ securities laws, or upon reliance on an exemption from the
registration requirements.  Offerees should consider purchasing the
Units only as a long-term investment.  Offerees may not be able to
promptly liquidate their investment at a reasonable price, or for any price, in
the event of a personal financial emergency or otherwise.

    


    
      
        
        

      

      
        - 14
-

        
          

        

      

      
        
        

      

    

    We may not be able to obtain the
significant financing that we need to continue to operate and any additional
financing may be on terms adverse to your interests.  We have
recently entered into a number of financing transactions. We are continuing to
seek other financing initiatives. We need to raise additional capital to meet
our working capital needs, for the repayment of debt and for capital
expenditures. Such capital is expected to come from the sale of our debt and/or
equity securities through private placement offerings and/or the sale of common
stock.

    


    We
believe that if we raise approximately $10.2 million in debt and equity
financings we would have sufficient funds to meet our needs for working capital
($1.1 million), repayment of debt (approximately $7.6 million expected to mature
from July 1, 2008 to June 30, 2009), accounts payable and accrued expenses
(approximately $1.2 million) and balance to be utilized for marketing and
development over the next 12 months.  As of June 30, 2008, we had cash
balances of approximately $197,000.

    


    No assurance can be given that we will
be successful in completing any financings at the minimum level necessary to
fund our working capital, debt repayment or other expenses, or at all. If we are
unsuccessful in completing financings, we will not be able to meet our working
capital, debt repayment or other capital needs or execute our business plan. In
such case we will assess all available alternatives including a sale of our
assets or merger, the suspension of operations and possibly liquidation,
auction, bankruptcy, or other measures.  For these and other reasons,
there
is substantial risk of non-payment of the Notes.

    


    We have had limited product sales, a
history of operating losses and have been unprofitable since
inception.  We have had limited sales of our products to date.
We incurred net losses of approximately $1.2 million during the quarter ended
June 30, 2008. We expect to incur substantial additional operating losses in the
future. During the quarter ended June 30, 2008, we generated revenues from
product sales in the amount of $0. We cannot assure you that we will continue to
generate revenues from operations or achieve profitability in the near future or
at all.  For these and other reasons, there is
substantial risk of non-payment of the Notes.

    


    We have a working capital loss, which
means that our current assts were not sufficient to satisfy our current
liabilities on June 30, 2008.  We had a working capital deficit
of $11,164,933 at June 30, 2008, which means that our current liabilities
exceeded our current assets on June 30, 2008 by $11,164,933.  Current
assets are assets that are expected to be converted to cash or otherwise
utilized within one year and, therefore, may be used to pay current liabilities
as they become due.  Our working capital deficit means that our
current assets on December 31, 2007 were not sufficient to satisfy all of our
current liabilities on that date.  For these and other reasons, there is
substantial risk of non-payment of the Notes.

     

    No advice is given as to the tax
aspects of the Units.  Offerees are advised that we are giving
no advice as to the tax implications of an investment in the
Units.  Offerees should obtain their own tax advice prior to making a
decision to purchase a Unit.

    


    
      
        
        

      

      
        - 15
-

        
          

        

      

      
        
        

      

    

    The interest rate and conversion
price of the Notes and the exercise price of the Warrants has been arbitrarily
set by the Board of Directors.  The interest rate and
conversion of the Notes and the exercise price of the Warrants have been
determined by our Board of Directors, based, in part, on  our
prospects in the industry, an assessment of our financial condition and other
factors deemed relevant by the Board.  The interest rate and
conversion price of the Notes and the exercise price of the Warrants, however,
are not based on our historical earnings, the book value of our common stock, or
any other objective criteria and should not be deemed to be an indication of the
value of our common stock.

    


    THE
INVESTOR HAS BEEN ADVISED BY PHT THAT AN INVESTMENT IN PHT WILL INVOLVE AN
EXTREMELY HIGH DEGREE OF RISK AND SHOULD ONLY BE MADE IF INVESTOR CAN AFFORD A
COMPLETE LOSS OF ITS INVESTMENT.

    


    


    
 

    
 

     

     

     

     

     

     

    
      
        
        

      

      
        - 16
-

        
          

        

      

      
        
        

      

    

    A.           INDIVIDUALS
(If Investor is an individual, complete this Part A)

    


    1.           
 Name of Investor(s)1                                                                                                                                

    


    Address (including Zip Code)                                                                                                                


     

    
      ----------------------------------------------------------------------------------------------------------------------------



    Telephone
No.        (           )                                                      

    Facsimile
No.           (           )                                                      

    


    2.           Indicate
type of ownership subscribed for:

    Individual

    Joint Tenants with Rights of
Survivorship

    Tenant in Common

    Tenants by the Entirety

    


    3.           Social
Security Number(s)                                                                                                                   

    


    4.           Date(s)
of Birth_________________________________________________________

    


    5.           Employment
Position(s)___________________________________________________

    


    6.           State(s)
from which driver’s license is
issued___________________________________

    


    7.           State(s)
in which registered to vote
__________________________________________

    


     

      
        

      

    

      
      
        	
                1

              	
                If
      there is more than one Investor other than husband and wife, a separate
      Investor Questionnaire must be completed for each such Investor and
      attached to this Investor Questionnaire.  If Investors are
      husband and wife, please include both names, be certain to complete item 2
      and include both social security numbers (indicating to which individual
      each social security number belongs) in item
3.

              


      

    

    
 

    
      
        
        

      

      
        - 17
-

        
          

        

      

      
        
        

      

    

    8.           Each
Investor must initial at least one of the following statements:

    


    
      	
               
      

            	
              ____

            	
              (a)

            	
              Investor
      certifies that he/she is a director or executive officer of
      PHT.

            


    

    


    
      	
               
      

            	
              ____

            	
              (b)

            	
              Investor
      certifies that he/she is a natural person whose individual net worth, or
      joint net worth with his/her spouse, at the time of his/her Loan to PHT
      exceed $1,000,000 (inclusive of the value of his/her home, home
      furnishings and automobiles).

            


    

    


    
      	
               
      

            	
              ____

            	
              (c)

            	
              Investor
      certifies that he/she is a natural person who has an individual
      income2 in excess of $200,000 in each of the two
      most recent years or joint income with his/her spouse in excess of
      $600,000 in each of those years, and has a reasonable expectation of
      reaching the same income level in the current
  year.

            


    

    


    B.          ENTITIES
(If Investor is an entity, complete this Part B)

    


    1.           Name
of Investor                                                                                                                                

                                                                                                                                              

                         


    


    Address (including Zip Code)                                                                                          
            

    


    Telephone No.   (           )                                                      

    Telecopy
No.     (           )                                                      

    


    2.           Indicate
type of entity:

    


    ____     Corporation                                ____       Trust 
       ____    Limited
Partnership

    


    ____      General
Partnership                  ____       IRA           ____   
Pension Plan or Trust

    


    Other:                                         
      

    


    3.           Date
of formation or incorporation:                                                                           

    


    4.           State
of formation or incorporation:                                                                           

    


    
      	
              5.

            	
              Indicate
      whether Investor was organized for the specific purpose of acquiring
      Common Stock of PHT.

            


    

    


    Yes ____    No
____

     

    
      
        
          

        
 

        
          	
                  2

                	
                  In
      determining income, a Investor should add to his or her adjusted gross
      income any amounts attributable to tax-exempt income received, losses
      claimed as a limited partner in any limited partnership, deductions
      claimed for depletion, contributions to IRA or Keogh retirement plans,
      alimony payments and any amount by which income from long-term capital
      gains has been reduced in arriving at adjusted gross
    income.

                


        

      



    
      
        
        

      

      
        - 18
-

        
          

        

      

      
        
        

      

    

    
      	
              6.

            	
              Indicate
      the individual(s) authorized to execute documents on behalf of the Entity
      Investor in connection with this
investment:

            


    

    


    
      Name:                                                
 

    

    
      Title:                                                   


    

    


    
      	
              7.

            	
              Taxpayer
      Identification Number:                                                       
      

            	 


    

    


    
      	
              8.

            	
              Each
      Investor must initial at least one of the following
      statements:

            


    

    


    
      	
               
      

            	
              ____

            	
              (a)

            	
              Investor
      certifies that it is a bank as defined in Section 3(a)(2) of the
      Securities Act of 1933, as amended (the “Act”), or any savings and loan
      association or other institution as defined in Section 3(a)(5)(A) of the
      Act, whether acting in its individual or fiduciary
    capacity.

            


    

    


    
      	
               
      

            	
              ____

            	
              (b)

            	
              Investor
      certifies that it is an insurance company as defined in Section 2(13) of
      the Act.

            


    

    


    
      	
               
      

            	
              ____

            	
              (c)

            	
              Investor
      certifies that it is a broker/dealer registered pursuant to the Securities
      Exchange Act of 1934, as amended.

            


    

    


    
      	
               
      

            	
              ____

            	
              (d)

            	
              Investor
      certifies that it is an investment company registered under the Investment
      Company Act of 1940, as amended, or business development company as
      defined in Section 2(a)(48) of such
Act.

            


    

    


    
      	
               
      

            	
              ____

            	
              (e)

            	
              Investor
      certifies that it is a Small Business Investment Company licensed by the
      U.S. Small Business Administration under Section 301(c) or (d) of the
      Small Business Investment Act of
1958.

            


    

    


    
      	
               
      

            	
              ____

            	
              (f)

            	
              Investor
      certifies that it is an employee benefit plan within the meaning of Title
      I of the Employee Retirement Income Security Act of 1974, as amended
      (“ERISA”), and either (i) the investment decision is made by a plan
      fiduciary, as defined in Section 3(21) of ERISA, which is either a bank,
      savings and loan association, insurance company or registered investment
      adviser, (ii) the employee benefit plan has total assets in excess of
      $5,000,000, or (iii) if a self-directed plan, investment decisions are
      made solely by persons that are “accredited investors” as defined in Rule
      501(a) of Regulation D promulgated under the
  Act.

            


    

    


    
      	
               
      

            	
              ____

            	
              (g)

            	
              Investor
      certifies that it is a private business development company as defined in
      Section 202(a)(22) of the Investment Advisers Act of 1940, as
      amended.

            


    

    


    
      	
               
      

            	
              ____

            	
              (h)

            	
              Investor
      certifies that it is a corporation, partnership, a Massachusetts or
      similar business trust or other trust (if the trust’s purchase of
      securities is directed by a sophisticated person as described in Rule
      506(b)(2)(ii) of

            


    

    
      


      
        
          
          

        

        
          - 19
-

          
            

          

        

        
          
          

        

      

      
        	
                 
      

              	
                ____

              	
                (h)

              	
                Regulation
      D under the Act) or other organization described in Section 501(c)(3) of
      the Internal Revenue Code of 1986, as amended, not formed for the specific
      purpose of acquiring the Common Stock, with total assets in excess of
      $5,000,000.

              


      

       

    

    
      	
               
      

            	
              ____

            	
              (i)

            	
              Investor
      certifies that it is an entity in which all of the equity owners are
      “accredited investors” as defined in Rule 501(a) of Regulation D
      promulgated under the Act.

            


    

    


    
      	
               
      

            	
              ____

            	
              (j)

            	
              None
      of the statements in clauses (a) through (i) are applicable to the Entity
      Investor and the Entity Investor is otherwise not an “accredited investor”
      as defined in Rule 501(a) of Regulation D promulgated under the
      Act.

            


    

    


    
      	
              9.

            	
              Investor
      agrees to provide, upon request by PHT, the following
      information:

            


    

    


    
      	
               
      

            	
              (A)

            	
              Corporations
      will provide the articles of incorporation, by-laws and corporate
      resolution authorizing the Loan and authorizing the person(s) signing this
      Investor Questionnaire.  All the documents must be certified by
      the Secretary or Assistant Secretary of the corporation as being true and
      correct copies thereof and in full force and
  effect.

            


    

    


    
      	
               
      

            	
              (B)

            	
              Partnerships
      and limited liability companies will provide a copy of the partnership
      agreement, articles of organization, and/or operating agreement showing
      the date of formation and giving evidence of the authority of the
      person(s) signing this Investor
Questionnaire.

            


    

    


    
      	
               
      

            	
              (C)

            	
              Trusts
      will provide a copy of the trust agreement showing the date of formation
      and giving evidence of the authority of the person(s) signing this
      Investor Questionnaire.

            


    

    


    


    
 

    
 

    
 

    
      
        
        

      

      
        - 20
-

        
          

        

      

      
        
        

      

    

    
      	
              C.

            	
              ACKNOWLEDGEMENTS
      AND REPRESENTATIONS TO BE MADE BY ALL INVESTORS (Every Investor must
      complete this Part C)

            


    

    


    Investor understands that PHT will be
relying on the accuracy and completeness of the representations made above as
well as Investor’s responses to the questions contained in this Investor
Questionnaire.  Investor understands that a false representation may
constitute a violation of law, and that any person who suffers damage as a
result of a false representation may have a claim for damages as a result of
such false representation.

    


    ALL INFORMATION CONTAINED IN THIS
QUESTIONNAIRE WILL BE TREATED CONFIDENTIALLY.  However, Investor
agrees that PHT may present this Investor Questionnaire to such parties as PHT
deems appropriate if called upon to establish that the Loan is exempt from
registration under the Securities Act of 1933, as amended, or meets the
requirements of applicable state securities law.

    


    Investor represents and warrants to PHT
as follows (each Investor must initial all of the following):

    


    
      	
              _______

            	
              a)

            	
              The
      representations and the answers to the questions in this Investor
      Questionnaire are complete and correct and may be relied upon by PHT and
      its counsel.

               

            
	
              _______

            	
              b)

            	
              Investor
      has full power and authority to subscribe for and purchase the
      Units.

               

            
	
              _______

            	
              c)

            	
              The
      Investor Questionnaire has been duly and validly authorized, executed, and
      delivered by Investor and constitutes the valid, binding, and enforceable
      agreement of Investor.

               

            
	
              _______

            	
              d)

            	
              Investor
      has reviewed the PHT Documents and has received all information Investor
      has deemed relevant and has had all of Investor’s questions answered with
      respect to the purchase of the Units and PHT and has made such independent
      investigation into PHT as Investor has deemed necessary.

               

            
	
              _______

            	
              e)

            	
              The
      purchase of the Units is made solely for the account of Investor with a
      view to and for investment and not with a view to or for distribution,
      assignment, participation, or resale.  Investor has no contract,
      undertaking, agreement, or arrangement with any person to sell, transfer,
      or pledge the Units, or any interest therein.  There are
      substantial restrictions on the transferability of the
      Units.  Investor is prepared to bear the economic risk involved
      in the purchase of the Units for an indefinite term.

               

            


    

     

    
      
        
        

      

      
        - 21
-

        
          

        

      

      
        
        

      

    

    
      	
              _______

            	
              f)

            	
              Investor
      acknowledges there is a substantial economic risk with respect to
      Investor’s investment in the Units and that Investor has such knowledge
      and experience in financial and business matters that Investor is able to
      evaluate the risks and merits of the investment in the Units and is making
      an informed decision to purchase the Units.

               

            
	
              _______

            	
              g)

            	
              Investor
      did not learn about the offer to purchase the Units through any
      advertisement, article, notice, or other communication published in any
      newspaper, magazine, or similar media or broadcast over television, radio,
      or the internet or at any seminar or meeting to which Investor was invited
      by a general solicitation or advertising.

               

            
	
              _______

            	
              h)

            	
              Investor
      hereby agrees to indemnify PHT and its affiliates and each and any of
      their respective officers, directors, shareholders, “controlling persons”,
      agents, and employees and to hold each of such entities and persons
      harmless from and against any and all liabilities, loss, damages, costs,
      or expenses (including reasonable attorneys’ fees) to which they, or any
      of them, may be put or which they, or any of them, may incur by reason of
      any breach of the representations and warranties made by Investor in the
      Subscription Agreement or this Investor Questionnaire.

               

            
	
              _______

            	
              i)

            	
              Investor
      will notify PHT immediately of any material change in any representation
      made above or any statement made herein that occurs prior to the closing
      of the sale of the Units.

               

            
	
              _______

            	
              j)

            	
              Investor
      will provide such further information as may be requested by PHT or its
      counsel to verify the information contained herein.

               

            
	
              _______

            	
              k)

            	
              In
      evaluating the suitability of Investor’s decision to purchase the Units,
      Investor has relied solely upon the information provided in the Memorandum
      and the exhibits and schedules attached hereto and Investor’s own
      independent investigation of PHT, and acknowledges that no representations
      (oral or written) have been made to the Investor with respect
      thereto.

               

            
	
              _______

            	
              l)

            	
              In
      making a decision to invest in the Exchange Offer, the Investor must rely
      on its own examination of PHT and the terms of the Exchange Offer,
      including the merits and risks involved.

               

            
	
              _______

            	
              m)

            	
              The
      Exchange Offer has not been recommended or approved by any federal or
      state securities commission or regulatory authority.

               

            


    

     

    
      
        
        

      

      
        - 22
-

        
          

        

      

      
        
        

      

    

    
      	
              _______

            	
              n)

            	
              The
      Investor should consult his or her own competent counsel, including,
      without limitation, legal counsel, accountant, or business advisor as to
      legal, tax, financial, and related matters concerning a purchase of the
      Units.

               

            
	
              _______

            	
              o)

            	
              The
      Investor acknowledges that there is not an active public market for PHT’s
      Common Stock and no assumption should be made that one will ever exist;
      the Common Stock, Warrants and Common Stock underlying the warrants are
      and will be “restricted securities”; as restricted securities, they may be
      sold only upon registration under the Securities Act and applicable state
      securities laws, or upon reliance on an exemption from such registration
      requirements.  Investors should consider purchasing the Units
      only as a long-term investment.  Investors may not be able to
      promptly liquidate at a reasonable price, or for any price, in the event
      of a personal financial emergency or otherwise.

               

            
	
              _______

            	
              p)

            	
              The
      Investor acknowledges that:  In the future, PHT’s financial
      needs may be such that it is forced to offer for sale its Common Stock on
      terms more favorable than the terms offered to investors in this Exchange
      Offer.  If such an event were to occur, investors purchasing
      Units in this Exchange Offer would have the right to participate in such
      future Exchange Offer on the terms and conditions of such future Exchange
      Offer.  The ownership interest percentages of Investors who do
      not wish to participate in such future Exchange Offer will be diluted to
      the extent of the Common Stock sold by us in the future Exchange
      Offer.

               

            
	
              _______

            	
              q)

            	
              The
      Investor acknowledges that:  If the Investor purchases in this
      Exchange Offer, the Investor will pay a price that was not established in
      a competitive market but was been determined by PHT’s management, based,
      in part, on the price paid by our prior investors, the prospects in our
      industry, an assessment of our financial condition and other factors
      deemed relevant.  The price, however, is not based on historical
      earnings, the book value of PHT, or any other objective
      criteria.  The Exchange Offer price should not be deemed an
      indication of our value.  An Investor should consider in making
      an investment in our Common Stock that we have insufficient assets to meet
      our obligations and we have a working capital deficit.

               

            
	
              ­_______

            	
              r)

            	
              The
      Investor acknowledges that PHT is continuing to seek financing initiatives
      to meet its working capital needs.  PHT’s operating plan seeks
      to minimize its capital requirements, but further commercialization of its
      products will require additional capital. PHT expects that product
      development and operating and production expenses will increase
      significantly as it continues to develop, produce and sell products. The
      Investor further acknowledges that no assurance can be given that PHT will
      be successful in completing this Exchange Offer or any
    other

            


    

     

    
      
        
        

      

      
        - 23
-

        
          

        

      

      
        
        

      

    

    
      	
               

            	
               

            	
              financings
      at the minimum level necessary to fund its capital requirements, current
      operations or at all. If PHT is unsuccessful in completing these
      financings at such minimum level, PHT will not be able to fund its capital
      requirements or current expenses. If PHT is unsuccessful in completing
      these financings at or near the maximum level or an additional financing,
      PHT will not be able to pursue its business
      strategy.  Additional financing may not be available on terms
      favorable to PHT or at all.

               

            


      




    If
Investor is an individual:

    


    


    


     

    
      	
              
                
      

              Signature
      of Investor 

               

              
                
      

              Signature of Spouse, if applicable

            	
              
                
      

              Print
      Name of Investor 

               

              
                
       Print Name of Spouse, if
  applicable

            


    

    


    Date:                      

    


    


    If
Investor is an entity:

    


    


    


     

    
      	
              
                
      

              Signature
      of Officer,

              Trustee or Partner, as
      applicable  

            	
              
                
      

              Print
      Name of Officer,

              Trustee, or Partner, as
  applicable 

            


    

     

                                                                                                                                  

60;                                                     

    


    Date:                      

    


    


    


    


    


    
 

    
 

    
      
        
        

      

      
        - 24
-

        
          

        

      

      
        
        

      

    

    EXHIBIT
A

     

    


     

    THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).  THE SECURITIES MAY
NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER SAID ACT, OR AN OPINION OF COUNSEL IN FORM,
SUBSTANCE AND SCOPE CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR UNLESS SOLD PURSUANT TO RULE
144 UNDER SAID ACT.

     

    


     

    FORM
OF CONVERTIBLE NOTE

     

    Trenton,
New Jersey

    
    

     

    
      	October 22,
      2008 	
              $58,000.00 

            


    

     

     

    FOR VALUE RECEIVED, PERFORMANCE HEALTH TECHNOLOGIES,
INC., a Delaware corporation (hereinafter called the “Borrower”), hereby
promises to pay to the order of ----------------------- or registered
assigns (the “Holder”) the sum of  $58, 000.00, on September 30,
2009(such date, the “Maturity Date”), and to pay interest on the unpaid
principal balance hereof at the rate of thirteen percent (13%) per annum from
the date of this Note (the “Issue Date”) until the same becomes due and payable,
whether at maturity or upon acceleration or by prepayment or
otherwise.  Interest shall commence accruing on the Issue Date, shall
be computed on the basis of a 365-day year and the actual number of days elapsed
and shall be payable in shares of Common Stock at the Conversion Price (as
defined below) on the Maturity Date or at the time of conversion of the
principal to which such interest relates in accordance with Article I
below.

     

    All
amounts due hereunder (to the extent not converted into Common Stock by the
Holder or redeemed by the Borrower in accordance with the terms hereof) shall be
made in shares of Common Stock of the Borrower valued at the then applicable
Conversion Price. All payments due hereunder shall be made at such address as
the Holder shall hereafter give to the Borrower by written notice made in
accordance with the provisions of this Note.

     

    Whenever
any amount expressed to be due by the terms of this Note is due on any day which
is not a business day, the same shall instead be due on the next succeeding day
which is a business day and, in the case of any interest payment date which is
not the date on which this Note is paid in full, the extension of the due date
thereof shall not be taken into account for purposes of determining the amount
of interest due on such date.  As used in this Note, the term
“business day” shall mean any day other than a Saturday, Sunday or a day on
which commercial banks in the city of New York, New York are authorized or
required by law or executive order to remain closed.  Each capitalized
term used herein, and not otherwise defined, shall have the meaning ascribed
thereto in that certain Debt Exchange Agreement and Investor Questionnaire


     

    
      
        
        

      

      
        - 25
-

        
          

        

      

      
        
        

      

    

    between
the Holder and the Borrower to which this Note relates, as amended from time to
time, pursuant to which the Holder subscribed to purchase this Note (the “Debt
Exchange”).

     

    This Note
is free from all taxes, liens, claims and encumbrances with respect to the issue
thereof and shall not be subject to preemptive rights or other similar rights of
shareholders of the Borrower and will not impose personal liability upon the
Holder thereof.

     

    The
following terms shall apply to this Note:

     

    1.            
CONVERSION RIGHTS

    


    The Holder shall have the following
conversion rights with respect to this Note (the “Conversion
Rights”):

    


    A.          Holder Right to
Convert.  The Holder is entitled, at its option, to convert,
and sell on the same day, at any time and from time to time commencing on the
date hereof until the Maturity Date, all or any part of the principal amount of
the Note into shares (the “Conversion Shares”) of the Borrower’s Common Stock,
at the price per share of $0.25 (the “Conversion Price”).  No fraction
of shares or scrip representing fractions of shares will be issued on
conversion, but the number of shares issuable shall be rounded to the nearest
whole share.  To convert this Note, the Holder hereof shall deliver
written notice thereof, substantially in the form of Exhibit “A” to this
Note, with appropriate insertions (the “Conversion Notice”), to the Borrower at
its address as set forth herein.  The date upon which the conversion
shall be effective (the “Conversion Date”) shall be deemed to be the date set
forth in the Conversion Notice.

     

    B.           Mandatory
Conversion.

     

    1.    If this
Note is outstanding in whole or in part on the Mandatory Conversion Date it
shall automatically and without any action on the part of the Holder, convert
into a number of fully paid and nonassessable shares of Common Stock equal to
the quotient of (i) $1,000 divided by (ii) the Conversion Price in effect on the
Mandatory Conversion Date.

    


    2.    As used
herein, “Mandatory Conversion Date” shall be the Maturity Date of this
Note.  The Mandatory Conversion Date and the Voluntary Conversion Date
collectively are referred to herein as the “Conversion Date.”

    


    3.    On the
Mandatory Conversion Date, any amounts outstanding under this Note shall be
converted automatically without any further action by the Holder and whether or
not this Note surrendered to the Borrower; provided, however, that the
Borrower shall not be obligated to issue the shares of Common Stock issuable
upon conversion of this Note unless this Note is either delivered to the
Borrower or the Holder notifies the Borrower that such Note has been lost,
stolen, or destroyed, and executes an agreement satisfactory to the Borrower to
indemnify the Borrower from any loss incurred by it in connection
therewith.  Upon the occurrence of the automatic conversion of this
Note pursuant to this Section, the Holder shall surrender this Note to the
Borrower and the Borrower shall deliver the shares of Common Stock issuable upon
such conversion to the Holder within three (3) business days of the Holder’s
delivery of this Note.

    


    
      
        
        

      

      
        - 26
-

        
          

        

      

      
        
        

      

    

    C.           Reservation of Common
Stock.  The Borrower shall reserve and keep available out of
its authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of this Note, such number of shares of Common Stock as
shall from time to time be sufficient to effect such conversion, based upon the
Conversion Price.  If at any time the Borrower does not have a
sufficient number of Conversion Shares authorized and available, then the
Borrower shall call and hold a special meeting of its stockholders within thirty
(30) days of that time for the sole purpose of increasing the number of
authorized shares of Common Stock.

     

    D.           Conversion
Restrictions.  The Holder may not convert this Note or receive
shares of Common Stock hereunder to the extent such conversion would result in
the Holder, together with any affiliate thereof, beneficially owning as
determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended, and the rules promulgated thereunder (the “Exchange Act”) in
excess of 9.99% of the then issued and outstanding shares of Common Stock,
including shares issuable upon conversion of, and payment of interest on, this
Note held by such Holder after application of this Section.  Since the
Holder will not be obligated to report to the Borrower the number of shares of
Common Stock it may hold at the time of a conversion hereunder, unless the
conversion at issue would result in the issuance of shares of Common Stock in
excess of 9.99% of the then outstanding shares of Common Stock without regard to
any other shares which may be beneficially owned by the Holder or an affiliate
thereof, the Holder shall have the authority and obligation to determine whether
the restriction contained in this Section will limit any particular conversion
hereunder and to the extent that the Holder determines that the limitation
contained in this Section applies, the determination of which portion of the
principal amount of this Note is convertible shall be the responsibility and
obligation of the Holder.  If the Holder has delivered a Conversion
Notice for a principal amount of this Note that, without regard to any other
shares that the Holder or its affiliates may beneficially own, would result in
the issuance in excess of the permitted amount hereunder, the Borrower shall
notify the Holder of this fact and shall honor the conversion for the maximum
principal amount permitted to be converted on such Conversion Date and, at the
option of the Holder, either retain any principal amount tendered for conversion
in excess of the permitted amount hereunder for future conversions or return
such excess principal amount to the Holder. The provisions of this Section may
be waived by a Holder (but only as to itself and not to any other Holder) upon
not less than 65 days prior notice to the Borrower.  Other Holders
shall be unaffected by any such waiver.  No interest shall be paid by
the Borrower for any portion of this Note which is not permitted to be converted
on any Conversion Date or the Maturity Date because of the conversion
restrictions set forth herein.

     

    2.            
RIGHT OF REDEMPTION

    


    At any time after the Borrower is a
reporting company under the Exchange Act and prior to the Maturity Date the
Borrower at its option shall have the right, with ten (10)  business
days advance written notice (the “Early Redemption Notice”), to redeem a portion
or all amounts outstanding under this Note in an amount equal to the principal
amount outstanding and accrued interest being redeemed (the “Early Redemption
Amount”).  The Borrower shall deliver to the Holder the Early
Redemption Amount on the tenth (10th)
business day after the Early Redemption Notice.

    


    
      
        
        

      

      
        - 27
-

        
          

        

      

      
        
        

      

    

    In the
event that the Borrower redeems a portion of the amount outstanding under this
Note, or the Holder converts a portion of the principal amount outstanding and
accrued interest under this Note as contemplated herein, the Borrower shall be
entitled to an off-set of the amount of principal and accrued interest due equal
to the amount of principal and accrued interest redeemed or
converted.

    


    Notwithstanding
the foregoing in the event that the Borrower has elected to redeem a portion of
the outstanding principal amount and accrued interest under this Note the Holder
shall still be entitled to effectuate conversions as contemplated under Section
1.

    


    3.           EVENTS
OF DEFAULT

    


    If any of
the following events of default (each, an “Event of Default”) shall
occur:

     

    A.          Failure to Pay Principal or
Interest.  The Borrower fails to pay the principal hereof or
interest thereon when due on this Note, whether at maturity, upon acceleration
or otherwise;

     

    B.           Conversion and the
Shares.  The Borrower fails to issue shares of Common Stock to
the Holder (or announces or threatens that it will not honor its obligation to
do so) upon exercise by the Holder of the conversion rights of the Holder in
accordance with the terms of this Note, or fails to transfer or cause its
transfer agent to transfer (electronically or in certificated form) any
certificate for shares of Common Stock issued to the Holder upon conversion of
or otherwise pursuant to this Note as and when required by this Note, and any
such failure shall continue uncured (or any announcement, statement or threat
not to honor its obligations shall not be rescinded in writing) for ten (10)
days after the Borrower shall have been notified thereof in writing by the
Holder;

     

    C.           Receiver or
Trustee.  The Borrower or any subsidiary of the Borrower shall
make an assignment for the benefit of creditors, or apply for or consent to the
appointment of a receiver or trustee for it or for a substantial part of its
property or business, or such a receiver or trustee shall otherwise be
appointed;

     

    D.           Bankruptcy.  Bankruptcy,
insolvency, reorganization or liquidation proceedings or other proceedings for
relief under any bankruptcy law or any law for the relief of debtors shall be
instituted by or against the Borrower or any subsidiary of the Borrower which
remains unvacated, unbonded or unstayed for a period of thirty (30)
days;

     

    then,
upon the occurrence and during the continuation of any Event of Default
specified in Section 3.A or B, at the option of the Holder exercisable through
the delivery of written notice to the Borrower by such Holder (the “Default
Notice”), and upon the occurrence of an Event of Default specified in Section
3.C or D, the Note shall become immediately due and payable (the “Mandatory
Prepayment Date”) and the Borrower shall deliver to the Holder, in full
satisfaction of its obligations hereunder, shares of Common Stock of the
Borrower in an amount equal to the then outstanding principal amount of this
Note divided by the Conversion Price then in effect. and all other amounts
payable hereunder shall immediately become due and payable, all without demand,
presentment or notice, all of which hereby are expressly waived, together with
all costs, 

     

    
      
        
        

      

      
        - 28
-

        
          

        

      

      
        
        

      

    

    including,
without limitation, legal fees and expenses, of collection, and the Holder shall
be entitled to exercise all other rights and remedies available at law or in
equity.

     

    Upon an
Event of Default, notwithstanding any other provision of this Note, the Holder
shall have no obligation to comply with or adhere to any limitations, if any, on
the conversion of this Note or the sale of the underlying shares of Common
Stock.

     

    4.           MISCELLANEOUS

    


    A.           Failure or Indulgence Not
Waiver.  No failure or delay on the part of the Holder in the
exercise of any power, right or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right,
power or privileges.  All rights and remedies existing hereunder are
cumulative to, and not exclusive of, any rights or remedies otherwise
available.

     

     

    B.           Notices.  Any
notice herein required or permitted to be given shall be in writing and may be
personally served or delivered by courier or sent by United States mail and
shall be deemed to have been given upon receipt if personally served (which
shall include telephone line facsimile transmission) or sent by courier or three
(3) days after being deposited in the United States mail, certified, with
postage pre-paid and properly addressed, if sent by mail.  For the
purposes hereof, the address of the Holder shall be as shown on the records of
the Borrower; and the address of the Borrower shall be 427 River View Plaza,
Trenton, NJ  08611 facsimile number: (609) 656-0869.  Both
the Holder and the Borrower may change the address for service by service of
written notice to the other as herein provided.

     

    C.           Amendments.  This
Note and any provision hereof may only be amended by an instrument in writing
signed by the Borrower and the Holder.  The term “Note” and all
reference thereto, as used throughout this instrument, shall mean this
instrument as originally executed, or if later amended or supplemented, then as
so amended or supplemented.

     

    D.           Assignability.  This
Note shall be binding upon the Borrower and its successors and assigns, and
shall inure to be the benefit of the Holder and its successors and
assigns.  Each transferee of this Note must be an “accredited
investor” (as defined in Rule 501(a) of the Securities
Act).  Notwithstanding anything in this Note to the contrary, this
Note may be pledged as collateral in connection with a bona fide margin account
or other lending arrangement, subject to all applicable federal and state
securities laws.

     

    E.           Governing
Law.  THIS NOTE SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES
OF CONFLICT OF LAWS.  THE BORROWER HEREBY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK
WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS NOTE, THE AGREEMENTS ENTERED INTO
IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. BOTH
PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH 

     

    
      
        
        

      

      
        - 29
-

        
          

        

      

      
        
        

      

    

    SUIT OR
PROCEEDING.  BOTH PARTIES FURTHER AGREE THAT SERVICE OF PROCESS UPON A
PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE
SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR
PROCEEDING.  NOTHING HEREIN SHALL AFFECT EITHER PARTY’S RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.  BOTH PARTIES AGREE THAT
A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT
OR IN ANY OTHER LAWFUL MANNER.  THE PARTY WHICH DOES NOT PREVAIL IN
ANY DISPUTE ARISING UNDER THIS NOTE SHALL BE RESPONSIBLE FOR ALL FEES AND
EXPENSES, INCLUDING ATTORNEYS’ FEES, INCURRED BY THE PREVAILING PARTY IN
CONNECTION WITH SUCH DISPUTE.

     

    F.           Denominations.  At
the request of the Holder, upon surrender of this Note, the Borrower shall
promptly issue new Notes in the aggregate outstanding principal amount hereof,
in the form hereof, in such denominations of at least $1,000 as the Holder shall
request.

     

    G. ­No Preemptive
Rights.  Except as provided herein no Holder of this Note shall
be entitled to rights to subscribe for, purchase or receive any part of any new
or additional shares of any class, whether now or hereinafter authorized, or of
bonds or Notes, or other evidences of indebtedness convertible into or
exchangeable for shares of any class, but all such new or additional shares of
any class, or any bond, Notes or other evidences of indebtedness convertible
into or exchangeable for shares, may be issued and disposed of by the Board of
Directors on such terms and for such consideration (to the extent permitted by
law), and to such person or persons as the Board of Directors in their absolute
discretion may deem advisable.

     

    
 

    
 

    
      
        
        

      

      
        - 30
-

        
          

        

      

      
        
        

      

    

    IN WITNESS WHEREOF, Borrower
has caused this Note to be signed in its name by its duly authorized
officer.

     

    
      
        	 	
                PERFORMANCE
      HEALTH TECHNOLOGIES, INC.

              	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ 	 
	 	 	Name 	 
	 	 	Title 	 
	 	 	 	 


      



    


    


     

    
 

    
      
        
        

      

      
        - 31
-

        
          

        

      

      
        
        

      

    

    EXHIBIT
A

     

    NOTICE
OF CONVERSION

     

    (To be
Executed by the Registered Holder

     

    in order
to Convert the Notes)

     

    The
undersigned hereby irrevocably elects to convert $__________ principal amount of
the Note (defined below) into shares of common stock, par value $.01 per share
(“Common Stock”), of Performance Health Technologies, Inc., a Delaware
corporation (the “Borrower”), according to the conditions of the convertible
Notes of the Borrower dated as of October 22, 2008 (the “Notes”), as of the date
written below.  If securities are to be issued in the name of a person
other than the undersigned, the undersigned will pay all transfer taxes payable
with respect thereto and is delivering herewith such certificates.  No
fee will be charged to the Holder for any conversion, except for transfer taxes,
if any.  A copy of each Note is attached hereto (or evidence of loss,
theft or destruction thereof).

     

    The
undersigned represents and warrants that all offers and sales by the undersigned
of the securities issuable to the undersigned upon conversion of the Notes shall
be made pursuant to registration of the securities under the Securities Act of
1933, as amended (the “Act”), or pursuant to an exemption from registration
under the Act.

     

    Date of
Conversion:___________________________

    Applicable
Conversion Price:____________________

    Number of
Shares of Common Stock to be Issued Pursuant to

    Conversion
of the Notes:______________

    Signature:___________________________________

    Name:______________________________________

    Address:____________________________________

     

    The
Borrower shall issue and deliver shares of Common Stock as soon as practicable
following receipt of the original Note(s) to be converted.

     

    
 

    
 

    
      
        
        

      

      
        - 32
-

        
          

        

      

      
        
        

      

    

    EXHIBIT
B

     

    THIS
WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED OR DISPOSED OF
EXCEPT PURSUANT TO (1) A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR (2) UPON
DELIVERY OF A LEGAL OPINION TO THE COMPANY, IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE COMPANY, THAT ANY SUCH TRANSACTION IS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.

    


     Dated:  October
22, 2008

    


    


    FORM OF WARRANT

    


    To
Purchase up to 58,000 shares of

    Common
Stock, $.01 par value

    


    of

    


    Performance
Health Technologies, Inc.

    


    ExpiringOctober
22, 2013

    


    THIS IS
TO CERTIFY THAT, for value received, ------------------------------------, or his registered
assigns (hereinafter referred to as the (“Holder”), is entitled
to subscribe and purchase from PERFORMANCE HEALTH TECHNOLOGIES,
INC., a Delaware corporation (the “Company”), commencing
on the date hereof, up to 58,000 shares of Common Stock, $.01 par value, of the
Company (the “Shares”), at the
place where the Warrant Agency (as hereinafter defined) is located, at the
Exercise Price (as hereinafter defined), all subject to adjustment and upon the
terms and conditions as hereinafter provided, and is entitled also to exercise
the other appurtenant rights, powers and privileges hereinafter described;
provided, however, that in no event shall the Holder be entitled to exercise
this Warrant for a number of Shares in excess of that number of Shares which,
upon giving effect to such exercise, would cause the aggregate number of shares
of Company Common Stock beneficially owned by the Holder and its affiliates to
exceed 9.99% of the outstanding shares of the Company Common Stock following
such exercise, except within sixty (60) days of the Expiration
Date.  For purposes of the foregoing proviso, the aggregate number of
shares of Common Stock beneficially owned by the Holder and its affiliates shall
include the number of shares of Common Stock issuable upon exercise of this
Warrant with respect to which the determination of such proviso is being made,
but shall exclude shares of Common Stock which would be issuable upon
(i) exercise of the remaining, unexercised Warrants beneficially owned by
the holder and its affiliates and (ii) exercise or 

     

    
      
        
        

      

      
        - 33
-

        
          

        

      

      
        
        

      

    

    conversion
of the unexercised or unconverted portion of any other securities of the Company
beneficially owned by the holder and its affiliates (including, without
limitation, any convertible notes or preferred stock) subject to a limitation on
conversion or exercise analogous to the limitation contained
herein.  Except as set forth in the preceding sentence, for purposes
of this paragraph, beneficial ownership shall be calculated in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended.  For
purposes of this Warrant, in determining the number of outstanding shares of
Common Stock a Holder may rely on the number of outstanding shares of Common
Stock as reflected in (1) the Company’s most recent Form 10-Q or Form 10-K, as
the case may be, (2) a more recent public announcement by the Company or (3) any
other notice by the Company or its transfer agent setting forth the number of
shares of Common Stock outstanding.  Upon the written request of any
holder, the Company shall promptly, confirm in writing to any such holder the
number of shares of Common Stock then outstanding.  In any case, the
number of outstanding shares of Common Stock shall be determined after giving
effect to the exercise of Warrants (as defined below) by such holder and its
affiliates since the date as of which such number of outstanding shares of
Common Stock was reported.

     

    Capitalized
terms used in this Warrant and not otherwise defined shall have the meanings set
forth in Article IV hereof.

    


    ARTICLE
I

    EXERCISE
OF WARRANTS

    


    Section
1.01   Method of
Exercise.  To exercise this Warrant in whole or in part, the
Holder shall deliver to the Company at the Warrant Agency, (a) this Warrant, (b)
a written notice, in substantially the form of the Subscription Notice attached
hereto, of such Holder’s election to exercise this Warrant, which notice shall
specify the number of Shares to be purchased, the denominations of the share
certificate or certificates desired and the name or names in which such
certificates are to be registered and (c) the aggregate Exercise Price for
the Shares purchased.

    


    The
Company shall, as promptly as practicable execute and deliver or cause to be
executed and delivered, in accordance with such notice, a certificate or
certificates representing the aggregate number of Shares specified in said
notice.  The Share certificate or certificates so delivered shall be
in such denominations as determined by the Company, or as may be specified in
such notice, and shall be issued in the name of the Holder or such other name or
names as shall be designated in such notice.  Such certificate or
certificates shall be deemed to have been issued, and such Holder or any other
person so designated to be named therein shall be deemed for all purposes to
have become holders of record of such Shares, as of the date the aforementioned
notice is received by the Company.  If this Warrant shall have been
exercised only in part, the Company shall, deliver to the Holder a new Warrant
evidencing the rights to purchase the remaining Shares called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant, or, at the request of the Holder, appropriate notation may be made on
this Warrant which shall then be returned to the Holder.  The Company
shall pay all expenses, payable in connection with the preparation, issuance and
delivery of Share certificates and new Warrants as contemplated by Section 2.07
below (other than transfer, income or similar taxes in connection with the
transfer of securities), except that, if Share certificates or new Warrants
shall be registered in a name or names other than the name of the Holder, funds


     

    
      
        
        

      

      
        - 34
-

        
          

        

      

      
        
        

      

    

    sufficient
to pay all transfer taxes payable as a result of such transfer shall be paid by
the Holder at the time of delivering the aforementioned notice of exercise or
promptly upon receipt of a written request of the Company for
payment.


    


    Section 1.02   Shares To Be Fully Paid and
Non-assessable.  All Shares issued upon the exercise of this
Warrant (the “Warrant
Shares”) pursuant to Section 1.01 above shall be validly issued, fully
paid and nonassessable and the Company shall at all times reserve and keep
available out of its authorized shares of Common Stock a sufficient number of
Shares for the purpose of issuance of the Warrant Shares upon the exercise of
this Warrant.

    


    Section 1.03   No Fractional Shares To Be
Issued.  The Company shall not be required to issue fractions
of Shares upon exercise of this Warrant.  If any fraction of a Share
would, but for this Section, be issuable upon any exercise of this Warrant, in
lieu of such fractional Share the number of shares issuable shall be rounded to
the nearest whole share.

    


    Section 1.04   Share
Legend.  Each certificate for Shares issued upon exercise of
this Warrant shall bear the legend set forth below, unless Holder’s Counsel (as
defined below) shall render an opinion in form and substance reasonably
satisfactory to the Company that such legend is not required or at the time of
exercise such Shares are registered under the Securities Act:

    


    THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT PURSUANT
TO (1) A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR (2) UPON DELIVERY OF A LEGAL OPINION TO THE
COMPANY, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, THAT ANY
SUCH TRANSACTION IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

    


    Any
certificate issued at any time in exchange or substitution for any certificate
bearing such legend (except a new certificate issued upon completion of a public
distribution pursuant to a registration statement under the Securities Act)
shall also bear such legend unless, in the opinion (in form and substance
reasonably satisfactory to the Company) of counsel selected by the Holder of
such certificate and who is reasonably acceptable to the Company (“Holder’s Counsel”),
the securities represented thereby need no longer be subject to restrictions on
resale under the Securities Act.

    


    
      
        
        

      

      
        - 35
-

        
          

        

      

      
        
        

      

    

    ARTICLE
II

    WARRANT
AGENCY; TRANSFER,

    EXCHANGE
AND REPLACEMENT OF WARRANTS

    


    Section 2.01   Warrant
Agency.  Until such time, if any, as an independent agency
shall be appointed by the Company to perform services with respect to the
Warrants described herein (the “Warrant Agency”), the
Company shall perform the obligations of the Warrant Agency provided herein at
its principal office address or such other address as the Company shall specify
by prior written notice to all Holders.

    


    Section 2.02   Ownership of
Warrant.  The Company may deem and treat the person in whose
name this Warrant is registered as the holder and owner hereof (notwithstanding
any notations of ownership or writing hereon made by any person other than the
Company) for all purposes and shall not be affected by any notice to the
contrary, until presentation of this Warrant for registration of transfer as
provided in this Article II.

    


    Section 2.03   Transfer of
Warrant.  The Company agrees to maintain at the Warrant Agency
books for the registration of transfers of this Warrant and all rights hereunder
shall be registered, in whole or in part, on such books, upon surrender of this
Warrant at the Warrant Agency, together with a written assignment of this
Warrant duly executed by the Holder or its duly authorized agent or
attorney.  Subject to applicable law and regulation and
Section 2.04 hereof, upon surrender of this Warrant as provided for herein,
the Company shall execute and deliver a new Warrant or Warrants in the name of
the assignee or assignees and in the denominations specified in the instrument
of assignment, and this Warrant shall promptly be
canceled.  Notwithstanding the foregoing, a Warrant may be exercised
by a new Holder which has become the registered Holder of such Warrant without
having a new Warrant issued.

    


    Section 2.04   Restrictions on
Transfer.  The Holder, by its acceptance hereof, represents
that this Warrant is being acquired for its own account, as an investment and
not with a view towards the further resale or the distribution thereof in
violation of the Securities Act, and agrees that this Warrant may not be
transferred, sold, assigned, hypothecated or otherwise disposed of, in whole or
in part, except as provided in the legend on the first page hereof and provided
that the Holder shall have furnished to the Company an opinion of Holder’s
Counsel, in form and substance reasonably satisfactory to the Company, to the
effect that such transfer is exempt from the registration requirements of the
Securities Act and any applicable state securities laws.

    


    Section 2.05   Division or Combination of
Warrants.  This Warrant may be divided or combined with other
Warrants upon surrender hereof and of any Warrant or Warrants with which this
Warrant is to be combined at the Warrant Agency, together with a written notice
specifying the names and denominations in which the new Warrant or Warrants are
to be issued, signed by the holders hereof and thereof or their respective duly
authorized agents or attorneys.  Subject to compliance with Section
2.04 as to any transfer which may be involved in the division or combination,
the Company shall execute and deliver a new Warrant or Warrants in exchange for
the Warrant or Warrants to be divided or combined in accordance with such
notice.

    


    
      
        
        

      

      
        - 36
-

        
          

        

      

      
        
        

      

    

    Section 2.06   Loss, Theft, Destruction of
Warrant Certificates.  Upon receipt by the Company of a written
notice (or other evidence reasonably satisfactory to the Company) of the loss,
theft, destruction or mutilation of any Warrant and, in the case of any such
loss, theft or destruction, upon receipt of indemnity or security reasonably
satisfactory to the Company or, in the case of any such mutilation, upon
surrender and cancellation of such Warrant, the Company will make and deliver,
in lieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant of
like tenor and representing the right to purchase the same aggregate number of
Shares.

    


    Section 2.07   Expenses of Delivery of
Warrants.  The Company shall pay all expenses (other than
transfer taxes) and other charges payable in connection with the preparation,
issuance and delivery of Warrants and Warrant Shares hereunder.

    


    ARTICLE
III

    COMPANY
COVENANTS AND REPRESENTATIONS

    


    Section 3.01   Company
Covenants.  In case at any time the Company shall
(a) declare any dividend or distribution on its Shares, whether payable in
cash, stock or other property, (b) offer to all holders of Shares any
additional shares of Common Stock, or any option, right or warrant to subscribe
therefore, or (c) declare a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation or merger) or propose a
sale of substantially all of its property, assets and business as an entirety,
then the Company shall give written notice to the Holder of the date on which
the books of the Company shall close or a record shall be taken for such
action.  Such notice shall also specify the date as of which the
holders of Shares of record shall participate in such dividend or
distribution.  Such written notice shall be given at least 30 days and
not more than 90 days prior to the action in question, and not less than 15 days
prior to the relevant record date or the date fixed for determining stockholders
entitled to participate therein, as the case may be.

    


    Section 3.02   Authority, Execution and
Delivery.  The Company hereby represents and warrants that the
Company has full corporate power and authority to enter into this Warrant and to
issue Shares in accordance with the terms hereof.  The execution,
delivery and performance of this Warrant by the Company have been duly and
effectively authorized by the Company.  This Warrant has been duly
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.

    


    Section 3.03   Information
Requirements.  To the extent applicable, the Company shall
promptly furnish the Holder with copies of all reports, proxy statements and
similar materials that it mails to holders of its Common Stock.

    


    ARTICLE
IV

    CERTAIN
DEFINITIONS

    


    The
following terms, as used in this Warrant, have the following respective
meanings:

    


    
      
        
        

      

      
        - 37
-

        
          

        

      

      
        
        

      

    

    “Business Days” means
each day in which banking institutions in New York are not required or
authorized by law or executive order to close.

     

    “Exercise Price” means
$[0.75] [1.00] per share, subject to adjustment pursuant to Article
V.

     

    “

    ARTICLE
V

    ADJUSTMENTS

     

    Section
5.01   Adjustment of Warrant
Exercise Price upon Subdivision or Combination of Common
Stock.  If the Company at any time after the date of issuance
of this Warrant subdivides (by any stock split, stock dividend, recapitalization
or otherwise) one or more classes of its outstanding shares of Common Stock into
a greater number of shares, any Warrant Exercise Price in effect immediately
prior to such subdivision will be proportionately reduced and the number of
shares of Common Stock obtainable upon exercise of this Warrant will be
proportionately increased.  If the Company at any time after the date
of issuance of this Warrant combines (by combination, reverse stock split or
otherwise) one or more classes of its outstanding shares of Common Stock into a
smaller number of shares, any Warrant Exercise Price in effect immediately prior
to such combination will be proportionately increased and the number of Warrant
Shares issuable upon exercise of this Warrant will be proportionately
decreased.  Any adjustment under this Section 5.01 shall become
effective at the close of business on the date the subdivision or combination
becomes effective.

     

     

    Section
5.02   Notices.  Immediately
upon any adjustment of the Warrant Exercise Price, the Company will give written
notice thereof to the holder of this Warrant, setting forth in reasonable
detail, and certifying, the calculation of such adjustment.

     

    


    ARTICLE
VI

    MISCELLANEOUS

    


    Section 6.01   Notices.  Any
notice or other communication to be given hereunder shall be in writing and
shall be delivered by recognized courier, telecopy or certified mail, return
receipt requested, and shall be conclusively deemed to have been received by a
party hereto and to be effective on the day on which delivered or telecopied to
such party at its address set forth below (or at such other address as such
party shall specify to the other parties hereto in writing), or, if sent by
certified mail, on the third business day after the day on which mailed,
addressed to such party at such address.  In the case of the Holder,
such notices and communications shall be addressed to its address as shown on
the books maintained by the Warrant Agency, unless the Holder shall notify the
Company and the Warrant Agency that notices and communications should be sent to
a different address, in which case such notices and communications shall be sent
to the address specified by the Holder, and in either case a copy of such
notices and communications shall be sent to Thomas P. Gallagher, Gallagher,
Briody & Butler, 155 Village Boulevard, Princeton, New Jersey 08540 Fax:
(609) 454-0090.  In the case of the Company, such notices and
communications shall be addressed as follows (until notice of a change is given
as provided herein): Performance Health Technologies, Inc., 427 River View
Plaza, Trenton, New Jersey 08611, Attention:  Robert Prunetti,
Fax:  (609) 656-0869.

    


    
      
        
        

      

      
        - 38
-

        
          

        

      

      
        
        

      

    

    Section 6.02   Waivers;
Amendments.  No failure or delay of the Holder in exercising
any power or right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or
power.  The rights and remedies of the Holder are cumulative and not
exclusive of any rights or remedies which it would otherwise
have.  The provisions of this Warrant may be amended, modified or
waived with (and only with) the written consent of the Company and Holder(or any
permitted transferee of all of the Warrant).  In the event of any such
amendment, modification or waiver the Company shall give prompt notice thereof
to the Holder and, if appropriate, notation thereof shall be made on all
Warrants thereafter surrendered for registration of transfer or
exchange.  No notice or demand on the Company in any case shall
entitle the Company to any other or further notice or demand in similar or other
circumstances.

    


    Section 6.03   Governing
Law.  This Warrant shall be construed in accordance with and
governed by the laws of the State of Delaware without regard to choice of law
doctrine.

    


    Section 6.04   Covenants To Bind Successor
and Assigns.  All covenants, stipulations, promises and
agreements in this Warrant contained by or on behalf of the Company shall bind
its successors and assigns, whether so expressed or not.

    


    Section 6.05   Severability.  In
case any one or more of the provisions contained in this Warrant shall be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby.  The parties shall
endeavor in good faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

    


    Section 6.06   Section
Headings.  The section headings used herein are for convenience
of reference only, are not part of this Warrant and are not to affect the
construction of or be taken into consideration in interpreting this
Warrant.

    


    Section 6.07   No Rights as
Stockholder.  This Warrant shall not entitle the Holder to any
rights as a stockholder of the Company.

    


    Section 6.08   No Requirement to
Exercise.  Nothing contained in this Warrant shall be construed
as requiring the Holder to exercise this Warrant.

    


    


    IN WITNESS WHEREOF, the Company has
caused this Warrant to be executed in its corporate name by one of its officers
thereunto duly authorized, and attested by its Secretary or an Assistant
Secretary, all as of the day and year first above written.

     

    
      	 	
              PERFORMANCE
      HEALTH TECHNOLOGIES, INC.

              


              By:__________________________________________

              Name:

              Title: 

            


    

     

     

     

    
 

    
      
        
        

      

      
        - 39
-

        
          

        

      

      
        
        

      

    

    SUBSCRIPTION
NOTICE

    (To be
executed upon exercise of Warrant)

    


    To:  Performance
Health Technologies, Inc. (the “Company”)

    


    The
undersigned hereby irrevocably elects to exercise the right of purchase
represented by the attached Warrant for, and to purchase thereunder, __________
Shares, as provided for therein, and tenders herewith payment of the Exercise
Price in full in the form of certified or bank cashier’s check or wire
transfer.

    


    


    Please
issue a certificate or certificates for such Shares in the following name or
names and denominations:

    


    
      
        

      

      
        

      

    

    


    In
connection with the exercise of the Warrant, the undersigned hereby represents
and warrants that:

    


    (i)           it
recognizes that the Shares issuable pursuant to the attached Warrant have not
been registered under the Securities Act and may not be sold, pledged or
otherwise transferred except pursuant to the exceptions set forth on the legend
on such Shares which is also set forth in Section 1.04 of the attached
Warrant;

    


    (ii)          it
has received all material information with respect to the Company which it deems
necessary with its decision to exercise the attached Warrant and it has been
given an opportunity to ask questions and receive answers from representatives
of the Company;

    


    (iii)         it
is purchasing the Shares for its own account, for the purpose of investment
only, and not with a view towards the further resale or distribution thereof;
and

    


    (iv)         it
is an “Accredited Investor” within the meaning of Rule 501 of Regulation D under
the Securities Act of 1933, as amended.

    


    If said
number of Shares shall not be all the Shares issuable upon exercise of the
attached Warrant, a new Warrant is to be issued in the name of the undersigned
for the balance remaining of such Shares less any fraction of a Share paid in
cash.

     

     By:
_____________________________

     Name:
__________________________

     Its:
_____________________________

     Dated:
____________________

    


     NOTE:                            The
above signatory should correspond exactly with the name on the face of the
attached Warrant or with the name of the assignee appearing in the assignment
form below.

    
 

    
 

    
      
        
        

      

      
        - 40
-

        
          

        

      

      
        
        

      

    

    ASSIGNMENT

    


    (To be executed upon assignment of
Warrant)

    


    For value
received and in accordance with Section 2.03 of the attached Warrant,
____________________ hereby sells, assigns and transfers unto
___________________________ the attached Warrant, together with all right, title
and interest therein, and does hereby irrevocably constitute and appoint
__________________ attorney to transfer said Warrant on the books of Performance
Health Technologies, Inc. with full power of substitution in the
premises.

     

    
      
        	 	
                By:
      ___________________________

                Name:
      __________________________

                Its:
      _____________________________ 

              


      

       

    

    Dated:____________________

    


    
      	
               
      

            	
              NOTE:

            	
              The
      above signatory should correspond exactly with the name on the face of the
      attached Warrant.

            


    

    


    Consented
to and approved in accordance with

    Section
2.03 of the attached Warrant

    


    PERFORMANCE
HEALTH TECHNOLOGIES, INC.

    


    


    By:     _________________________________

    Name: ___________________________

    Its:
______________________________

    


    


    


    
 

    
      
        
        

      

      
        - 41
-