Document:

WWW.EXFILE.COM, INC. -- 888-775-4789 -- PERFORMANCE HEALTH TECHNOLOGIES, INC. -- EXHIBIT 10.118 TO FORM 10-KSB

    EXHIBIT
10.118

    

    SUBSCRIPTION AGREEMENT AND
INVESTOR QUESTIONNAIRE

    

    This
Subscription Agreement and Investor Questionnaire (the “Agreement”) is made and
entered into as of the date set forth below 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 and sale of PHT's units up to an aggregate amount of $300,000 (the
"Units"), in a private offering (the “Offering”) with each Unit, having a
purchase price of $1,000, consisting of (i) an unsecured non-convertible
promissory note in the amount of $1,000 (collectively referred to herein as the
“Notes”) and (ii) 3,000 warrants to purchase PHT common stock with an exercise
price of $0.30 per share (the “Warrants”); and

    

    WHEREAS, the Investor desires
to purchase 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.    Purchase
and Sale of Notes

     

    1.1           At
the Closing (as defined below) the Investor shall purchase from PHT and PHT
shall sell to the Investor, subject to all of the terms and conditions hereof,
Units for the purchase price set forth on the signature page.

    

    2.    Closing

    

    2.1           Date of
Closing.  The closing (the "Closing") of the purchase and sale
of the Units shall take place on any date subsequent to the date of this
Agreement up to and including April 30, 2008 as determined by PHT unless
extended by PHT and Dawson James Securities for up to two additional 30-day
periods (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

    

    

    
      (b)    the
purchase price for the Units by wire transfer to the following
account:

    

    

    Performance
Health Technologies, Inc.

    Atlantic
Central Bankers Bank:  Camp Hill, PA

    ABA#
031301752

    Account#
220146

    Further Credit
To:

    Hopewell
Valley Community Bank

    ABA#
031207827

    Final Credit
To:

    Performance
Health Technologies, Inc.

    Account#  2000024756

    

    
      
         

      

      
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    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 form 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 exercise of the Warrants (the “Warrant 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.

    
      
         

      

      
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    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.  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.

     

               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”):

            

    

    

    
      	
              1.  

            	
              Letter
      dated March 25 2008, describing terms of the Offering and certain risk
      factors;

            

    

    

    
      	
              2.  

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

            

    

    

    
      	
              3.  

            	
              PHT’s
      Form 10-SB (Amendment No. 5), Form 10-QSB for the quarter ended September
      30, 2007 and all documents filed by PHT with the SEC since January 1,
      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 Warrant 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.

            

    

    

    
      
         

      

      
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              (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 Warrant
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 Units (and Warrant Shares) for investment
      purposes only without intent to distribute the same, and acknowledges that
      the Units (and Warrant 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 Units (and
      Warrant Shares) except upon compliance with the registration requirements
      of the Securities Act and applicable state securities laws or exemptions
      therefrom.

              

      

       

    

    
      	
               
      

            	
              (i)

            	
              RELEASE
      OF DAWSON JAMES SECURITIES LIABILITY.  In order to induce Dawson
      James Securities to make the introduction of the Investor to PHT and in
      view of the investment by the Investor, the Investor does hereby
      IRREVOCABLY AND UNCONDITIONALLY RELEASE, REMISE AND FOREVER DISCHARGE
      Dawson James Securities and its affiliates and each and any of their
      respective shareholders, officers, directors, “controlling persons”,
      employees, registered representatives, independent contractors, heirs,
      executors, administrators, successors in interest and assigns from and
      against any and all agreements, promises, liabilities, claims and demands
      of any kind whatsoever, in law or equity, whether known or unknown,
      suspected or unsuspected, fixed or contingent, apparent or concealed
      (collectively a “Claim”), which the Investor, the Investor’s heirs,
      executors, administrators, successors or assigns ever had, now have or
      hereafter can, shall, or may have, for, upon, or by reason of any matter,
      cause or thing whatsoever existing, arising or occurring, directly or
      indirectly, out of the Investor’s
investment.

            

    

    

    
      	
               
      

            	
              (j)

            	
              The
      certificates and/or instruments evidencing the Notes and Warrants included
      in the Units (and Warrant 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.”

    
      
         

      

      
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              (k)

            	
              All
      of the written information pertaining to the Investor which the Investor
      has heretofore furnished to PHT, and all information pertaining to the
      Investor which is set forth in this Subscription Agreement and the
      Subscription Questionnaire attached hereto, is correct and complete as of
      the date hereof and, if there should be any material change in such
      information prior to PHT's acceptance of this Subscription Agreement, the
      Investor shall promptly furnish such revised or corrected information to
      PHT. Investor otherwise meets any special suitability standards applicable
      to the Investor's state of
residence.

            

    

    

    
      	
               
      

            	
              (l)

            	
              The
      Investor acknowledges that it has received a subscription package, a copy
      of which is attached hereto, containing information describing the
      offering, setting forth the Risk Factors the Investor must consider prior
      to making an investment decision, use of proceeds and other matters
      relevant to the offering.

            

    

    

    5.           Registration
Rights

    

    5.1           Participation in Registered
Offerings.  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 Warrant 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 offering
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 Warrant
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 Warrant Shares pursuant to this Section 5 that the
Investor shall furnish to PHT such information regarding the Warrant 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.

    

    
      
         

      

      
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    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
      underwriters may reasonably request in order to facilitate the public
      offering 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,

    
      
         

      

      
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    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.

    

    5.5           Indemnification of the
Investor.  Subject to the conditions set forth below, in
connection with any registration of the Warrant Shares pursuant to this Section
5, PHT agrees to indemnify and hold harmless the Investor, any underwriter for
the offering 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 offering; 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 

            

    

     

    
      
         

      

      
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                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 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 offering, 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 offering.  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.

    

    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 

    
      
         

      

      
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    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.

    

    “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
      

            

    

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    
      
        	
                 
      

              	
                 

              	
                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 offering, 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.

    

    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:

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    Performance
Health Technologies, Inc.

    427 River
View Plaza

    Trenton,
NJ  08611

    Attn.:  Robert
Prunetti, President and 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.

    

               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 

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    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 Units to be Purchased Under this Agreement

     

    

     

    Date:______________________,
2008

     

    

     

    If
Investor is an entity:

     

    

    ______________________________

     Print
Name of Entity

    

    

    ______________________________                              ______________________________

     Signature
of
Officer,                                                               Print
Name of Officer,

     Trustee
or Partner, as
applicable                                         Trustee
or Partner, as applicable

     

    
 

    $________________
of Units to be Purchased Under this Agreement

     

    

    Date:______________________,
2008

    

    Accepted:

     

     

    
      
        	 	      
                PERFORMANCE HEALTH
      TECHNOLOGIES, INC.

              	 
	 	 	 	 
	
                      
                  Date:
      _____________________, 2008

                

              	
                By:
      

              	/s/ 	 
	 	 	Name 	 
	 	 	Title 	 
	 	 	 	 

      

    

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    ACCREDITED
INVESTOR QUESTIONNAIRE

    

    The
Investor understands that:

    

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

     

     •  The
Offering 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 a purchase 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 Offering

    

    This is an illiquid investment and
there is no current trading market for our securities.  There
is no established trading market for the Notes or our common stock or any or our
securities and no assumption should be made that one will ever
exist.  The Company has been a public reporting company under the
Securities Exchange Act of 1934 since July 13, 2007.  The Company’s
common stock is presently not traded on any market or securities exchange. The
Company is in the process of filing, through a market maker, an information
statement pursuant to Section 15c-211 with the National Association of
Securities Dealers, Inc.  Once a trading market is established, there
can be no assurance that it will be active. An 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 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.  There is no assurance that the National
Association of Securities Dealers, Inc. will approve our application. Since our
common stock has not traded on any public market before, we cannot predict the
extent to which an active public market for our common stock will develop. For this and other
reasons, there is
substantial risk of non-payment of the Notes. The Units, Notes,
Warrants, and the common stock (including the common stock which may be issued
in payment of interest due under the Notes and into which the Notes may be
converted or issuable upon exercise of 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 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.

    

    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.  The Units
are being sold on a “best efforts” basis and no assurance can be given that all
of the Units being offered will be sold.  We are continuing to seek
other financing initiatives to meet our working capital needs.  Our

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    operating
plan seeks to minimize our capital requirements, but further commercialization
of our products will require additional capital. We expect that product
development and operating and production expenses will increase significantly as
we continue to develop, produce and sell products.

    

    No
assurance can be given that we will be successful in completing this Offering or
any other financings at the minimum level necessary to fund our capital
requirements, current operations or at all. If we are unsuccessful in completing
these financings at such minimum level, we will not be able to fund our capital
requirements or current expenses. If we are unsuccessful in completing these
financings at or near the maximum level or an additional financing, we will not
be able to pursue our business strategy.  Additional financing may not
be available on terms favorable to us or at all.

    

    We
estimate that we will need approximately $3.4 million to continue to operate
over the next 12 months in order to implement our business plan in addition to
the remaining proceeds provided from privately placed bridge loans of $2.2
million that closed from April 2006 to June 27, 2007. These remaining bridge
loan proceeds may not be sufficient to meet our needs until the standby equity
distribution agreement described below is available for us to draw
on.

    

    Our
long-term financing needs are expected to be provided from the standby equity
distribution agreement we entered into in January 2006 with Cornell Capital
Partners, L.P. Pursuant to the standby equity distribution agreement we may, at
our discretion, periodically sell to Cornell Capital shares of our common stock
for a total purchase price of up to $10 million. We will need to register under
the Securities Act the shares to be issued under the standby equity distribution
agreement before such shares can be issued to Cornell Capital in the future. We
have not yet registered such shares with the SEC and there can be no assurance
that we will register such shares or draw down funds under the standby equity
distribution agreement.

    

    In
addition, we will not be in a position to access the capital under the standby
equity distribution agreement until our securities are quoted on the
Over-the-Counter Bulletin Board. Our common stock is presently not traded on any
public market or securities exchange. There can be no assurance that we will
successfully list our securities for quotation on the Over-the-Counter Bulletin
Board. For this and other reasons, there is
substantial risk of non-payment of the Notes.

    

    There is no minimum amount of Units;
consummation of the Offering is in multiple closings.  There is
no minimum amount of Units that must be subscribed for in order for us to close
on any Units.  We intend to use the proceeds we receive from any Unit
subscriptions we accept when and if received, irrespective of the amount of Unit
subscriptions we receive.  This offering of Units will be subject to
multiple closings, if and when we receive any subscriptions.  All
subscriptions we receive and accept will be treated exactly the same,
irrespective of whether we receive certain subscriptions earlier and a closing
was effectuated with respect thereto in advance of our receipt of other
subscriptions in this Offering.  Accordingly, Investors who purchase
Units prior to other Investors may be more at risk, depending in part, on the
aggregate amount of Units ultimately subscribed for.  Once we accept a
subscription, irrespective of the ultimate amount of proceeds raised in this
Offering, the Investor may not ask for a return of such
investment.  For this and other reasons, there is
substantial risk of non-payment of the Units.

    

    The Notes are
unsecured.  We will not pledge any assets to secure the payment
of the Notes.  The Notes will be general unsecured obligations of
PHT.  The terms of the Notes allow us to incur indebtedness and
obligations that may be secured by its assets.  Any such secured
indebtedness and obligations will have a claim to our assets prior to the claims
of any holder of a Note.  All general unsecured claims against us will
be equal to the claims of any holder of a Note.

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    Payment of interest in common stock
may be worth less than cash payments.  We may elect to pay
interest under the Notes in cash, common stock, or a combination of cash and
common stock.  Any payment of interest in common stock will be at the
Conversion Rate.  The value of the common stock may be worth
substantially less than cash payments.

    

    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, the payment
of interest in common stock, the conversion of a Note into common stock, or the
exercise of the Warrants.  The characterization of the Notes as debt
or equity, the treatment of the payment of interest either in cash or in common
stock, the treatment of gain or loss on the sale or maturity of the Notes, the
conversion of the Notes to common stock, and the exercise of the Warrants may
all have tax implications to an Offeree.  Offerees should obtain their
own tax advice prior to making a decision to purchase a Unit.

    

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

    Telecopy
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)_______________________________________________________

     

     

    
      
        	
                1.  

              	
                Date(s)
      of Birth  
      _____________________________________________________________

              

      

       

    

    
      	
              2.  

            	
              Employment
      Position(s) 
      _______________________________________________________

            

    

    

    
      	
              3.  

            	
              State(s)
      from which driver’s license is issued
      ________________________________________

            

    

    

    
      	
              4.  

            	
              State(s)
      in which registered to vote 
      _______________________________________________

            

    

    

    
      	
              5.  

            	
              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 $300,000 in each of those years, and has a reasonable expectation of
      reaching the same income level in the current
  year.

            

    

    

      

    

    
       

        
          	
                  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.

                

        

      

       

        
          	
                  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.

                

        

      

    

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    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 ____

    

    

    
      6.        
Indicate
the individual(s) authorized to execute documents on behalf of the Entity
Investor in connection with this investment:

    

     

    
      Name:
__________________________ 

    

    
      Title:
___________________________ 

    

    

    
      Taxpayer
Identification Number: ____________________________________

    

    

    
      7.       
Each
Investor must initial at least one of the following
statements:

    

    

    
      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, 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.

            

    

    

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    
      	
               
      

            	
               ____
      (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 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.

            

    

    

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    
      	
               
      

            	
               (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.

            

    

    

    

    
      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
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.

               

            
	
              _______

            	
              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.

               

            

    

     

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    
      	
              _______

            	
              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 PHT
      Documents 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 Offering, the Investor must rely on its
      own examination of PHT and the terms of the Offering, including the merits
      and risks involved.

               

            
	
              _______

            	
              m)

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

               

            
	
              _______

            	
              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 no public market for PHT’s Common
      Stock and no assumption should be made that one will ever exist; the
      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.

               

            

    

     

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    
      	
              _______

            	
              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
      Offering.  If such an event were to occur, investors purchasing
      Units in this Offering would have the right to participate in such future
      offering on the terms and conditions of such future
      offering.  The ownership interest percentages of Investors who
      do not wish to participate in such future offering will be diluted to the
      extent of the Common Stock sold by us in the future offering.

               

            
	
              _______

            	
              q)

            	
              The
      Investor acknowledges that:  If the Investor purchases in this
      Offering, 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 offering 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)

            	
              WAIVER
      OF DAWSON JAMES SECURITIES LIABILITY.  In order to induce Dawson
      James Securities to make the introduction of the Investor to PHT and in
      view of the investment by the Investor, the Investor does hereby
      IRREVOCABLY AND UNCONDITIONALLY RELEASE, REMISE AND FOREVER DISCHARGE
      Dawson James Securities and its affiliates and each and any of their
      respective shareholders, officers, directors, “controlling persons”,
      employees, registered representatives, independent contractors, heirs,
      executors, administrators, successors in interest and assigns from and
      against any and all agreements, promises, liabilities, claims and demands
      of any kind whatsoever, in law or equity, whether known or unknown,
      suspected or unsuspected, fixed or contingent, apparent or concealed
      (collectively a “Claim”), which the Investor, the Investor’s heirs,
      executors, administrators, successors or assigns ever had, now have or
      hereafter can, shall, or may have, for, upon, or by reason of any matter,
      cause or thing whatsoever existing, arising or occurring, directly or
      indirectly, out of the Investor’s investment.

               

            
	
              _______

            	
              s)

            	
              The
      Investor acknowledges that the Units are being sold on a “best efforts”
      basis by the Agent and no assurance can be given that all of the Units
      being offered will be sold.  PHT is continuing to seek other
      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 Offering or any other
      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.

            

    

     

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    If
Investor is an individual:

    

    

    ________________________________                            ____________________________________

    Signature
of
Investor                                                                 Print
Name of Investor

    

    

    ________________________________                            ____________________________________

    Signature
of Spouse, if
applicable                                           Print
Name of Spouse, if applicable

     

     

    Date:
_________________, 2008

    

    

    If
Investor is an entity:

    

    

    ________________________________                            ____________________________________

    Signature
of
Officer,                                                                   Print
Name of Officer,

    Trustee
or Partner, as
applicable                                             Trustee,
or Partner, as applicable

     

    
 

    Date:
_________________, 2008

    

    

     

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

    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 NOTE

     

    Trenton,
New Jersey

     

    
      	______________,
      2008  	
               $________

            

    

      

    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 _________, on ________________, 2008 [180 days] (such date,
the “Maturity Date”), and to pay interest on the unpaid principal balance hereof
at the rate of twelve percent (12%) 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 cash on the
Maturity Date.

     

    All
payments due hereunder shall be made in cash 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 Subscription Agreement 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 “Subscription
Agreement”).

     

    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.           RIGHT
OF REDEMPTION

    

    A.           Optional
Redemption.  At any time prior to the Maturity Date the
Borrower at its option shall have the right, with ten (10)  business
days advance written notice (the “Optional Redemption Notice”), to redeem a
portion or all amounts outstanding under this Note in an amount 

     

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

    equal to
the principal amount outstanding and accrued interest being redeemed (the
“Optional Redemption Amount”).  The Borrower shall deliver to the
Holder the Optional Redemption Amount on the tenth (10th)
business day after the Optional Redemption Notice (the “Optional Repayment
Date”).

    

    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 delivered an Optional
Redemption Notice to the Holder the Holder shall still be entitled to effectuate
conversions as contemplated under Section 1 until the business day immediately
prior to the Optional Payment Date.

    

    B.           Mandatory
Redemption.  At any time prior to the Maturity Date the
Borrower shall upon a Mandatory Redemption Event (as herein defined) have the
obligation, with ten (10)  business days advance written notice (the
“Mandatory Redemption Notice”), to redeem all amounts outstanding under this
Note in an amount equal to the principal amount outstanding and accrued interest
being redeemed (the “Mandatory Redemption Amount”).  The Borrower
shall deliver to the Holder the Mandatory Redemption Amount on the tenth
(10th)
business day after the Mandatory Redemption Notice.  The “Mandatory
Redemption Event” shall be the date on which the Company has closed on aggregate
gross equity financings of $1 million prior to the Maturity Date.

    

    In the
event that 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 delivered a Mandatory
Redemption Notice to the Holder the Holder shall still be entitled to effectuate
conversions as contemplated under Section 1 until the business day immediately
prior to the Mandatory Payment Date.

    

    2.           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.           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;

     

    C.           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;

    
      
         

      

      
        25

        
          

        

      

      
         

      

    

    then,
upon the occurrence and during the continuation of any Event of Default
specified in Section 2.A, at the option of the Holders of a majority of the
aggregate principal amount of the outstanding Notes exercisable through the
delivery of written notice to the Borrower by such Holders (the “Default
Notice”), and upon the occurrence of an Event of Default specified in Section
2.B or C, the Notes shall become immediately due and payable (the “Mandatory
Prepayment Date”) and all 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, 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.

     

    3.           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 SUIT OR PROCEEDING.  BOTH PARTIES FURTHER AGREE
THAT SERVICE OF PROCESS UPON A PARTY MAILED 

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

    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.

     

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

     

    

      
        	 	      
                PERFORMANCE
      HEALTH TECHNOLOGIES, INC.

              	 
	 	 	 	 
	
                 

              	
                By:
      

              	 	 
	 	 	Name: 	 
	 	 	Title: 	 
	 	 	 	 

      

       

    

    

      
        
           

        

        
          27

          
            

          

        

        
           

        

      

    

    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:
_____________, 2007

    

    

    FORM OF WARRANT

    

    To
Purchase _____ shares of

    Common
Stock, $.01 par value

    

    of

    

    Performance
Health Technologies, Inc.

    

    Expiring
________________, 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, ______ 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 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 

    
      
         

      

      
        28

        
          

        

      

      
         

      

    

    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-QSB or Form 10-KSB, 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, but in no event later than one (1) Business Day
following the receipt of such notice, 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 (unless the Holder chooses the "cashless exercise" option
provided in the third paragraph of this Section 1.01).

    

    The
Company shall, as promptly as practicable and in any event within seventy-two
hours thereafter, 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, at the time of delivery of the certificate or certificates,
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 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.

    

    In lieu
of a monetary payment of the aggregate Exercise Price, the Holder may elect to
receive, without the payment of any additional consideration, Shares equal to
the value of this 

    
      
         

      

      
        29

        
          

        

      

      
         

      

    

    Warrant
or portion thereof by the surrender of such Warrant to the Company with the
"cashless exercise" election marked in the form of Subscription
Notice.  Thereupon, the Company shall issue to the Holder, such number
of fully paid and non-assessable Shares as is computed using the following
formula:

     

    
    

     

    
      	
              X  = Y(A-B)

            	 
	
              A 

            	 

    

     

    
      
        	
                      
                  Where 
      

                

              	
                X=

              	
                      
                  the
      number of Shares to be issued to the Holder pursuant to this Section
      1.01  upon such cashless exercise
      election.

                

              

      

       

    

    
      	
               
      

            	
              Y=

            	
              the
      number of Shares covered by this Warrant in respect of which the cashless
      exercise election is made.

            

    

    

    
      	
               
      

            	
              A=

            	
              the
      Fair Market Value (as defined in Article IV hereof) of one Share, as at
      the time the cashless exercise election is
made.

            

    

    

    
      	
               
      

            	
              B=

            	
              the
      Exercise Price in effect under this Warrant at the time the cashless
      exercise election is made.

            

    

    

    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 Company shall pay to the
Holder or Holders, as the case may be, in cash, an amount equal to the same
fraction of the Fair Market Value per share of outstanding Shares on the
Business Day immediately prior to the date of such exercise.

    

    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.

    

    
      
         

      

      
        30

        
          

        

      

      
         

      

    

    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.

     

    
 

    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 

    
      
         

      

      
        31

        
          

        

      

      
         

      

    

    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.

    

    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:

    

    "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 $0.30 per share, subject to adjustment pursuant to Article
V.

    

    
      
         

      

      
        32

        
          

        

      

      
         

      

    

     “Fair
Market Value” means the value of a share of Common Stock on a particular date,
determined as follows: (i) if the Common Stock is not listed on such date on any
national securities exchange but is traded in the over-the-counter market, the
closing "bid" quotations of a share of Common Stock on such date (or if none, on
the most recent date on which there were bid quotations of a share of Common
Stock), as reported on the National Association of Securities Dealers, Inc.
Automated Quotation System, or, if not so reported, as reported by the National
Quotation Bureau, Incorporated, or any other similar service selected by the
Board; or (ii) if the Common Stock is listed on such date on one or more
national securities exchanges, the last reported sale price of a share of Common
Stock on such date as recorded on the composite tape system, or, if such system
does not cover the Common Stock, the last reported sale price of a share of
Common Stock on such date on the principal national securities exchange on which
the Common Stock is listed, or if no sale of Common Stock took place on such
date, the last reported sale price of a share of Common Stock on the most recent
day on which a sale of a share of Common Stock took place as recorded by such
system or on such exchange, as the case may be; or (iii) if the Common Stock is
neither listed on such date on a national securities exchange nor traded in the
over-the-counter market, as determined by the Company.

     

    
 

    ARTICLE
V

    ANTIDILUTION
PROVISIONS

    

    Section
5.01                                Adjustments
Generally.  The Exercise Price and the number of Shares (or
other securities or property) issuable upon exercise of this Warrant shall be
subject to adjustment from time to time upon the occurrence of certain events,
as provided in this Article V.

    

    Section
5.02                                Share
Reorganization.  If the Company shall subdivide its outstanding
Shares into a greater number of Shares or consolidate its outstanding Shares
into a smaller number of Shares (any such event being called a "Share
Reorganization"), then (a) the Exercise Price shall be adjusted,
effective immediately after the record date at which the holders of Shares are
determined for purposes of such Share Reorganization, to a price determined by
multiplying the Exercise Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of Shares outstanding
on such record date before giving effect to such Share Reorganization and the
denominator of which shall be the number of Shares outstanding immediately after
giving effect to such Share Reorganization, and (b) the number of Shares subject
to purchase upon exercise of this Warrant shall be adjusted, effective at such
time, to a number determined by multiplying the number of Shares subject to
purchase immediately before such Share Reorganization by a fraction, the
numerator of which shall be the number of Shares outstanding immediately after
giving effect to such Share Reorganization and the denominator of which shall be
the number of Shares outstanding immediately before such Share
Reorganization.

    

    Section
5.03                                Below Market
Distribution.

    

    (a)  If the Company shall
issue or otherwise sell or distribute any Shares, other than pursuant to a Share
Reorganization (any such event, including any event described in paragraphs (c)
and (d) below, being herein called a "Below-Market
Distribution") for a consideration per share less than the Exercise Price
per Share on the date of such issue, sale or distribution (before giving effect
to such issue, sale or distribution), then, effective upon such issue, sale or
distribution, the Exercise Price shall be reduced to the price determined by
multiplying the Exercise Price in effect immediately prior to such Below-Market
Distribution by a fraction, the numerator of which shall be the sum of (i) the
number of Shares outstanding immediately prior to such Below-Market

    
      
         

      

      
        33

        
          

        

      

      
         

      

    

    Distribution
multiplied by the Exercise Price per share on the date of such Below-Market
Distribution plus (ii) the consideration received by the Company upon such
Below-Market Distribution, and the denominator of which shall be the product of
(A) the total number of Shares outstanding immediately after such Below-Market
Distribution, multiplied by (B) the Exercise Price per share on the date of such
Below-Market Distribution.  If any Below-Market Distribution shall
require an adjustment to the Exercise Price pursuant to the foregoing provisions
of this paragraph (a), then effective at the time such adjustment is made, the
number of Shares subject to purchase upon exercise of this Warrant shall be
increased to a number determined by multiplying the number of Shares subject to
purchase immediately before such Below-Market Distribution by a fraction, the
numerator of which the numerator of which shall be the Exercise Price in effect
immediately before such Below-Market Distribution and the denominator of which
shall be the Exercise Price in effect immediately after such Below-Market
Distribution.

    

    (b)           The
provisions of paragraph (a) above, including by operation of paragraph (c) or
(d) below, shall not operate to increase the Exercise Price or reduce the number
of shares of Shares subject to purchase upon exercise of this
Warrant.  The provisions of paragraph (a) above, including operation
of paragraph (c) or (d) below, shall not apply to the issuance of any Shares,
the issuance of or exercise of any options, warrants, or other rights, the
conversion of any debt or any other convertible security (collectively,
“Securities”) to the extent (i) now or hereafter issued or granted pursuant to
the Company’s Incentive Stock Plan as in effect on March 1, 2008, (ii) issued in
connection with any of the Company’s Securities outstanding on the date hereof,
or (iii) arising under transactions or agreements of the Company prior to March
1, 2008.

    

    (c)           If
the Company shall issue, sell, distribute or otherwise grant in any manner
(whether directly or by assumption in a merger or otherwise) any rights to
subscribe for or to purchase, or any warrants or options for the purchase of,
Shares or any stock or securities convertible into or exchangeable for Shares
(such rights, warrants or options being herein called "Options" and such
convertible or exchangeable stock or securities being herein called "Convertible
Securities"), whether or not such Options or the rights to convert or
exchange any such Convertible Securities are immediately exercisable, and the
price per share for which securities are issuable upon exercise of such Options
upon conversion or exchange of such Convertible Securities (determined by
dividing (i) the aggregate amount, if any, received or receivable by the Company
as consideration for the granting of such Options, plus the minimum aggregate
amount of additional consideration payable to the Company upon the exercise of
all such Options, plus, in the case of Options to acquire Convertible
Securities, the minimum aggregate amount of additional consideration, if any,
payable upon the issue or sale of such Convertible Securities and upon the
conversion or exchange thereof, by (ii) the total maximum number of Shares
issuable upon the exercise of such Options or upon the conversion or exchange of
all such Convertible Securities issuable upon the exercise of such Options)
shall be less than the Exercise Price per share of outstanding Shares on the
date of granting such Options (before giving effect to such grant), then, for
purposes of paragraph (a) above, the total maximum number of Shares issuable
upon the exercise of such Options or upon conversion or exchange of the
Convertible Securities issuable upon the exercise of such Options shall be
deemed to have been issued as of the date of granting of such Options and
thereafter shall be deemed to be outstanding and the Company shall be deemed to
have received as consideration such price per share, determined as
provided  above, therefor.  Except as otherwise provided in
paragraph (e) below, no additional adjustment of the Exercise Price shall be
made upon the actual exercise of such Options or upon conversion or exchange of
such Convertible Securities.  The adjustment provided for in this
paragraph (c) shall give effect to the change in the Exercise Price and the
number of Shares issuable upon the exercise hereof only with respect to such
Options as remain outstanding.

    
      
         

      

      
        34

        
          

        

      

      
         

      

    

    (d)           If
the Company shall issue, sell or otherwise distribute (whether directly or
otherwise) any Convertible Securities, whether or not the rights to exchange or
convert thereunder are immediately exercisable, and the price per share for
which Shares are issuable upon such conversion or exchange (determined by
dividing (i) the aggregate amount received or receivable by the Company as
consideration for the issue, sale or distribution of such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Company upon the conversion or exchange thereof, by (ii) the
total maximum number of Shares issuable upon the conversion or exchange of all
such Convertible Securities) shall be less than the Exercise Price per share of
outstanding Shares on the date of such issue, sale or distribution (before
giving effect to such issue, sale or distribution), then, for purposes of
paragraph (a) above, the total maximum number of Shares issuable upon conversion
or exchange of all such Convertible Securities shall be deemed to have been
issued as of the date of the issue, sale or distribution of such Convertible
Securities and thereafter shall be deemed to have received as consideration such
price per share, determined as provided above, therefor.  Except as
otherwise provided in paragraph (e) below, no additional adjustment of the
Exercise Price shall be made upon the actual conversion or exchange of such
Convertible Securities.

    

    (e)           If
the purchase price provided for in any Option referred to in paragraph (c)
above, the additional consideration, if any, payable upon the conversion or
exchange of any Convertible Securities referred to in paragraph (c) or (d)
above, or the rate at which any Convertible Securities referred to in paragraph
(c) or (d) above are convertible into or exchangeable for Shares shall change at
any time (other than under or by reason of provisions designed to protect
against dilution upon an event which results in a related adjustment pursuant to
this Article V), including the cancellation and/or expiration or termination of
the Options and/or Convertible Securities, the Exercise Price then in effect
shall forthwith be readjusted (effective only with respect to any exercise of
this Warrant after such readjustment) to the Exercise Price which would then be
in effect had the adjustment made upon the issue, sale, distribution or grant of
such Options or Convertible Securities been made based upon such changed
purchase price, additional consideration or conversion rate, or in the event of
the cancellation, termination or expiration of the same, such adjustment shall
be made to reflect as if such issuance had never occurred, as the case may be;
provided, however, that such
readjustment (other than in the event of a cancellation, termination or
expiration) shall give effect to such change only with respect to such Options
and Convertible Securities as then remain outstanding.

    

    (f)           If
the Company shall pay a dividend or make any other distribution upon any capital
stock of the Company payable in Shares, Options or Convertible Securities, then,
for purposes of paragraph (a) above, such Shares, Options or Convertible
Securities, as the case may be, shall be deemed to have been issued or sold
without consideration.

    

    (g)           If
any Shares, Options or Convertible Securities shall be issued, sold or
distributed for cash, the consideration received therefor shall be deemed to be
the amount received by the Company therefor, after deduction therefrom of any
expenses incurred and any underwriting commission or concessions paid or allowed
by the Company in connection therewith.  If any Shares, Options or
Convertible Securities shall be issued, sold or distributed for a consideration
other than cash, the amount of the consideration other than cash received by the
Company for purposes of this Section 5.03 shall be deemed to be the Fair Market
Value of such consideration, after deduction of any expenses incurred and any
underwriting commissions or concessions paid or allowed by the Company in
connection therewith.  If any Shares, Options or Convertible
Securities shall be issued in connection with any merger in which the Company is
the surviving corporation, the amount of consideration therefor shall be deemed
to be the Fair Market Value of such portion of the assets and business of the
nonsurviving corporation as shall be attributable to such Shares, Option or

    
      
         

      

      
        35

        
          

        

      

      
         

      

    

    Convertible
Securities, as the case may be.  If any Options shall be issued in
connection with the issue and sale of other securities of the Company, together
comprising one integral transaction in which no specific consideration is
allocated to such Options by the parties thereto, such Options shall be deemed
to have been issued without consideration.

    

    Section
5.04                                Special
Dividends.  If the Company shall issue or distribute to any
holders of Shares, evidences of indebtedness, any other securities of the
Company or any cash, property or other assets, and if such issuance or
distribution does not constitute (a) a cash dividend or distribution out of
surplus or net profits legally available therefor; (b) a Share Reorganization;
or (c) a Below Market Distribution  (any such nonexcluded event being
herein called a "Special Dividend"),
then (i) the Exercise Price shall be decreased, effective immediately after the
record date at which the holders of Shares are determined for purposes of such
Special Dividend, to a price determined by multiplying the Exercise Price then
in effect by a fraction, the numerator of which shall be the Exercise Price per
share of outstanding Shares on such record date less the then Fair Market Value
of the evidences of indebtedness, securities or property or other assets issued
or distributed in such Special Dividend with respect to one Share, and the
denominator of which shall be the Exercise Price per share on such record date,
and (ii) the number of Shares subject to purchase upon exercise of this Warrant
shall be increased to a number determined by multiplying the number of Shares
subject to purchase immediately before such Special Dividend by a fraction, the
numerator of which shall be the Exercise Price in effect immediately before such
Special Dividend and the denominator of which shall be the Exercise Price in
effect immediately after such Special Dividend.

    

    Section
5.05                                Merger, Consolidation, Asset
Sale, Capital Reorganization.  If there shall be any
consolidation or merger to which the Company is a party, other than a
consolidation or a merger in which the Company is a continuing corporation and
which does not result in any reclassification of, or change (other than a Share
Reorganization or a change in nominal value) in, outstanding Shares, or any sale
or conveyance of the property of the Company as an entirety or substantially as
an entirety (any such event being called a "Capital
Reorganization"), then, effective upon the effective date of such Capital
Reorganization, the Holder shall have the right to purchase, upon exercise of
this Warrant, the kind and amount of shares of stock and other securities and
property (including cash) which the Holder would have owned or have been
entitled to receive after such Capital Reorganization if this Warrant had been
exercised immediately prior to such Capital Reorganization and this Warrant
shall expire.

    

    Section
5.06                                Certain Other
Events.  If any event occurs as to which the foregoing
provisions of this Article V are not strictly applicable or, if strictly
applicable, would not, in the good faith judgment of the Board of Directors of
the Company, fairly protect the purchase rights of the Warrants in accordance
with the essential intent and principles of such provisions or would violate
applicable law, then such Board shall make such adjustments in the application
of such provisions (or if necessary make alternative provisions including taking
all reasonable efforts to amend the Company's organizational documents), in
accordance with such essential intent and principles, as shall be reasonably
necessary, in the good faith opinion of such Board, to protect such purchase
rights as aforesaid, but in no event shall any such adjustment have the effect
of increasing the Exercise Price or decreasing the number of  Shares
subject to purchase upon exercise of this Warrant.

    

    Section
5.07                                Adjustment
Rules.

    

    (a)           Any
adjustments pursuant to this Article V shall be made successively whenever an
event referred to herein shall occur.

    
      
         

      

      
        36

        
          

        

      

      
         

      

    

    (b)           If
the Company shall set a record date to determine the holders of Shares for
purposes of a Share Reorganization, Below Market Distribution, Special Dividend
or Capital Reorganization and shall legally abandon such action prior to
effecting such action, then no adjustment shall be made pursuant to this Article
V in respect of such action.

    

    (c)           No
adjustment of the Exercise Price or number of Warrant Shares issuable upon
exercise hereof shall be made in an amount less than 1% of such Exercise Price
or number of Warrant Shares so issuable upon exercise hereof, respectively, but
any such lesser adjustment shall be carried forward and shall be made at the
time and together with the next subsequent adjustment which together with any
adjustments so carried forward shall amount to 1% or more of such Exercise Price
or number of Warrant Shares so issuable upon exercise,
respectively.

    

    Section
5.08                                Proceeding Prior to Any
Action Requiring Adjustment.  As a condition precedent to the
taking of any action which would require an adjustment pursuant to this Article
V, the Company shall take any action which may be reasonably necessary,
including obtaining regulatory approvals or exemptions, in order that the
Company may thereafter validly and legally issue as fully paid and nonassessable
all Shares which the holders of Warrants are entitled to receive upon exercise
thereof.

    

    Section
5.09                                Notice of
Adjustment.  Not less than 30 nor more than 90 days prior to
the effective date or 15 days prior to the record date, as the case may be, of
any action which requires or might require an adjustment or readjustment
pursuant to this Article V, the Company shall give notice to the Holder of such
event, describing such event in reasonable detail and specifying the record date
or effective date, as the case may be, and, if determinable, the required
adjustment and the computation thereof.  If the required adjustment is
not determinable at the time of such notice, the Company shall give notice to
the Holder of such adjustment and computation promptly after such adjustment
becomes determinable.

     

    

    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.

    

    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 

    
      
         

      

      
        37

        
          

        

      

      
         

      

    

    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
Holders holding a majority of Warrants at the time outstanding (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 all Holders of Warrants 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.

    
      
         

      

      
        38

        
          

        

      

      
         

      

    

    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:

    

    (i) 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; or

    

    (ii) the
"cashless exercise" of its rights under the Section 1.01 of the attached Warrant
with respect to ___________ Shares otherwise available for purchase to it under
the Warrant and receive such number of Shares as provided in the formula set
forth in such Section 1.01.

    

    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: 
__________________________

    

    
 

    
      
         

      

      
        41WWW.EXFILE.COM, INC. -- 888-775-4789 -- PERFORMANCE HEALTH TECHNOLOGIES, INC. -- EXHIBIT 10.119 TO FORM 10-KSB

    EXHIBIT
10.119

     

    

    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 NOTE

     

    Trenton,
New Jersey

     

    ______________,
2008

    $________

    

    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 _________, on ________________, 2008 [180 days] (such date,
the “Maturity Date”), and to pay interest on the unpaid principal balance hereof
at the rate of twelve percent (12%) 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 cash on the
Maturity Date.

     

    All
payments due hereunder shall be made in cash 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 Subscription Agreement 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 “Subscription
Agreement”).

     

    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.           RIGHT
OF REDEMPTION

    

    A.          Optional
Redemption.  At any time prior to the Maturity Date the
Borrower at its option shall have the right, with ten (10)  business
days advance written notice (the “Optional 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 “Optional

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    Redemption
Amount”).  The Borrower shall deliver to the Holder the Optional
Redemption Amount on the tenth (10th)
business day after the Optional Redemption Notice (the “Optional Repayment
Date”).

    

    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 delivered an Optional
Redemption Notice to the Holder the Holder shall still be entitled to effectuate
conversions as contemplated under Section 1 until the business day immediately
prior to the Optional Payment Date.

    

    B.           Mandatory
Redemption.  At any time prior to the Maturity Date the
Borrower shall upon a Mandatory Redemption Event (as herein defined) have the
obligation, with ten (10)  business days advance written notice (the
“Mandatory Redemption Notice”), to redeem all amounts outstanding under this
Note in an amount equal to the principal amount outstanding and accrued interest
being redeemed (the “Mandatory Redemption Amount”).  The Borrower
shall deliver to the Holder the Mandatory Redemption Amount on the tenth
(10th)
business day after the Mandatory Redemption Notice.  The “Mandatory
Redemption Event” shall be the date on which the Company has closed on aggregate
gross equity financings of $1 million prior to the Maturity Date.

    

    In the
event that 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 delivered a Mandatory
Redemption Notice to the Holder the Holder shall still be entitled to effectuate
conversions as contemplated under Section 1 until the business day immediately
prior to the Mandatory Payment Date.

    

    2.           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.           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;

     

    C.           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;

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    then,
upon the occurrence and during the continuation of any Event of Default
specified in Section 2.A, at the option of the Holders of a majority of the
aggregate principal amount of the outstanding Notes exercisable through the
delivery of written notice to the Borrower by such Holders (the “Default
Notice”), and upon the occurrence of an Event of Default specified in Section
2.B or C, the Notes shall become immediately due and payable (the “Mandatory
Prepayment Date”) and all 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, 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.

     

    3.           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 SUIT OR PROCEEDING.  BOTH PARTIES FURTHER AGREE
THAT SERVICE OF PROCESS UPON A PARTY MAILED

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    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.

     

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

     

     

     

     

    
      
        	 	PERFORMANCE
      HEALTH TECHNOLOGIES, INC.	 
	 	 	 	 
	
                 

              	
                By:
      

              	 	 
	 	 	Name: 	 
	 	 	Title:	 
	 	 	 	 

      

    

     

     

     

     

    
      
         

      

      
        4

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