Document:

WWW.EXFILE.COM, INC. -- 888-775-4789 -- PERFORMANCE HEALTH TECHNOLOGIES, INC. -- EXHIBIT 10.112 TO FORM 10-KSB

    
      EXHIBIT
10.112

       

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

       

       

      FORM
OF CONVERTIBLE NOTE

       

      Trenton,
New Jersey

       

      ______________,
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 after the
date of issuance] (such date, the “Maturity Date”), and to pay interest on the
unpaid principal balance hereof at the rate of ten percent (10%) per annum from
the date of this Note (the “Issue Date”) until the same becomes due and payable,
whether at maturity or upon acceleration or by prepayment or
otherwise.  Interest shall commence accruing on the Issue Date, shall
be computed on the basis of a 365-day year and the actual number of days elapsed
and shall be payable in shares of Common Stock at the Conversion Price (as
defined below) on the Maturity Date or at the time of conversion of the
principal to which such interest relates in accordance with Article I
below.  The Borrower shall pay prepaid interest on the Issue Date
representing 60 days worth of interest on the Note.

       

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

       

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

      
        
           

        

        
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      The
following terms shall apply to this Note:

       

      1.           CONVERSION
RIGHTS

      

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

      

      A.           Holder Right to
Convert.  The Holder is entitled, at its option, to convert,
and sell on the same day, at any time and from time to time commencing on the
date hereof until the Maturity Date, all or any part of the principal amount of
the Note into shares (the “Conversion Shares”) of the Borrower’s Common Stock,
at the price per share equal to 80% of the average of the closing bid price for
the Borrower’s Common Stock for the 20 days preceding the Conversion Notice, as
reported by the exchange on which the Company’s Common Stock is then traded, but
in no event less than $0.40 per share (the “Conversion Price”).  No
fraction of shares or scrip representing fractions of shares will be issued on
conversion, but the number of shares issuable shall be rounded to the nearest
whole share.  To convert this Note, the Holder hereof shall deliver
written notice thereof, substantially in the form of Exhibit “A” to this
Note, with appropriate insertions (the “Conversion Notice”), to the Borrower at
its address as set forth herein.  The date upon which the conversion
shall be effective (the “Conversion Date”) shall be deemed to be the date set
forth in the Conversion Notice.

       

      B.           Mandatory
Conversion.

       

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

      

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

      

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

      

      C.           Reservation of Common
Stock.  The Borrower shall reserve and keep available out of
its authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of this Note, such number of shares of Common Stock as
shall from time to time be sufficient to effect such conversion, based upon the
Conversion Price.  If at any time the Borrower does not have a
sufficient number of Conversion Shares authorized and available,
then

      
        
           

        

        
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      the
Borrower shall call and hold a special meeting of its stockholders within thirty
(30) days of that time for the sole purpose of increasing the number of
authorized shares of Common Stock.

       

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

       

      2.           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
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 

      
        
           

        

        
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      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.

      

      3.           EVENTS
OF DEFAULT

      

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

       

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

       

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

       

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

       

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

      
        
           

        

        
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      then,
upon the occurrence and during the continuation of any Event of Default
specified in Section 3.A or B, upon 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 3.C or D, the Notes shall become
immediately due and payable (the “Mandatory Prepayment Date”).  On the
Mandatory Prepayment Date the Borrower shall deliver to the Holder, in full
satisfaction of its obligations hereunder, shares of Common Stock of the
Borrower in an amount equal to the then outstanding principal amount of this
Note for purposes of determining the lowest applicable Conversion Price, multiplied by (b) the
highest Closing Price for the Common Stock during the period beginning on the
date of first occurrence of the Event of Default and ending one day prior to the
Mandatory Prepayment Date (the “Default Amount”) and all other amounts payable
hereunder shall immediately become due and payable, all without demand,
presentment or notice, all of which hereby are expressly waived, together with
all costs, 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.  If the Borrower fails to pay
the Default Amount within five (5) business days of written notice that such
amount is due and payable, then the Holder shall have the right at any time, so
long as the Borrower remains in default (and so long and to the extent that
there are sufficient authorized shares), to require the Borrower, upon written
notice, to immediately issue, in lieu of the Default Amount, the number of
shares of Common Stock of the Borrower equal to the Default Amount divided by
the Conversion Price then in effect.

       

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

       

      4.           MISCELLANEOUS

      

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

       

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

       

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

       

      D.           Assignability.  This
Note shall be binding upon the Borrower and its successors and assigns, and
shall inure to be the benefit of the Holder and its successors and
assigns.  Each

      
        
           

        

        
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      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 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: 	 
	 	 	 	 

        

      

      

        
          
             

          

          
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      EXHIBIT
A

       

      NOTICE
OF CONVERSION

       

      (To be
Executed by the Registered Holder

       

      in order
to Convert the Notes)

       

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

       

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

       

      Date of
Conversion: ___________________________

      Applicable
Conversion Price: ____________________

      Number of
Shares of Common Stock to be Issued Pursuant to

      Conversion
of the Notes: _______________________

      Signature:___________________________________

      Name:______________________________________

      Address:
___________________________________

       

      The
Borrower shall issue and deliver shares of Common Stock to an overnight courier
not later than three (3) business days following receipt of the original Note(s)
to be converted, and shall make any applicable payments pursuant to the Notes
for the number of business days such issuance and delivery is late.

       

      

      

       

      

      

      
        
           

        

        
          7WWW.EXFILE.COM, INC. -- 888-775-4789 -- PERFORMANCE HEALTH TECHNOLOGIES, INC. -- EXHIBIT 10.113 TO FORM 10-KSB

    EXHIBIT
10.113

     

    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:
_____________, 2008

    

    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

    
      
        
        

      

      
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    other
securities of the Company beneficially owned by the holder and its affiliates
(including, without limitation, any convertible notes or preferred stock)
subject to a limitation on conversion or exercise analogous to the limitation
contained herein.  Except as set forth in the preceding sentence, for
purposes of this paragraph, beneficial ownership shall be calculated in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended.  For purposes of this Warrant, in determining the number of
outstanding shares of Common Stock a Holder may rely on the number of
outstanding shares of Common Stock as reflected in (1) the Company’s most recent
Form 10-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

    
      
        
        

      

      
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    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 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:

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

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

    

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

     

     

    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

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    canceled.  Notwithstanding
the foregoing, a Warrant may be exercised by a new Holder which has become the
registered Holder of such Warrant without having a new Warrant
issued.

    

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

    

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

    

    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

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    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.

     

     

    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
$1.00 per share, subject to adjustment pursuant to Article V.

    

    “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

    ADJUSTMENTS

     

    Section
5.01                                Adjustment of Warrant
Exercise Price upon Subdivision or Combination of Common
Stock.  If the Company at any time after the date of issuance
of this Warrant subdivides (by any stock split, stock dividend, recapitalization
or otherwise) one or more classes of its outstanding shares of Common Stock into
a greater number of shares, any Warrant Exercise Price in effect immediately
prior to such subdivision will be proportionately reduced and the number of
shares of Common Stock obtainable upon exercise of this Warrant will be
proportionately increased.

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

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

     

     

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

     

    

    ARTICLE
VI

    MISCELLANEOUS

    

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

    

    Section
6.02                                Waivers;
Amendments.  No failure or delay of the Holder in exercising
any power or right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or
power.  The rights and remedies of the Holder are cumulative and not
exclusive of any rights or remedies which it would otherwise
have.  The provisions of this Warrant may be amended, modified or
waived with (and only with) the written consent of the Company and 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.

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

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

    

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

    

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

    

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

    

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

    

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

    

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

     

     

    
      
        	 	PERFORMANCE HEALTH
      TECHNOLOGIES, INC.	 
	 	 	 	 
	
                 

              	
                By:
      

              	 	 
	 	 	Name: 	 
	 	 	Title: 	 
	 	 	 	 

      

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

    

    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.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    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:
      

              	/s/ 	 
	 	Name: 	 
	 	Its: 	 
	 	 	 

      

     

    
      
         

      

      
        10

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