Document:

Exhibit
      10.14

    

    SECURITIES
      PURCHASE AGREEMENT

     

    This
      Securities Purchase Agreement (this “Agreement”)
      is
      made as of this 28th
      day of
      January, 2005, by and among Flagship Healthcare Management, Inc., a
      Delaware corporation
      (together with any predecessors or successors thereto as the context requires,
      the “Company”)
      and
      the investors named in Exhibit A
      attached
      hereto, as amended from time to time in accordance with Section 1.4 below (the
      “Investors”).
      Except as otherwise indicated herein, capitalized terms used herein are defined
      in Section 5 hereof.

     

    SECTION
      1

     

    PURCHASE
      AND SALE

     

    1.1           Description
      of Series B Preferred Stock.
      The
      Company has authorized the issuance and sale to the Investors of shares of
      its
      Series B Convertible Preferred Stock, $0.001 par value per share (the
“Series
      B Preferred Stock”),
      with
      the rights, preferences and other terms set forth in the Certificate of
      Designation for Series B Preferred Stock of the Amended and Restated Certificate
      of Incorporation, as amended attached hereto as Exhibit
      B,
      which
      are convertible into shares of the Company’s common stock, $0.001 par value per
      share (the “Common
      Stock”).
      For
      purposes of this Agreement, the shares of Common Stock issuable upon conversion
      of the Series B Preferred Stock are referred to as the “Conversion
      Shares.”

     

    1.2           Sale
      and Purchase.
      Upon
      the terms and subject to the conditions contained herein, and in reliance on
      the
      representations and warranties set forth in Sections 2 and 3, at each Closing
      (as defined in Sections 1.3 and 1.4 hereof), each of the Investors shall
      purchase from the Company, and the Company shall issue and sell to each of
      the
      Investors the number of shares of Series B Preferred Stock set forth opposite
      the name of such Investor on Exhibit
      A
      for the
      purchase price of $0.65 per share.

     

    1.3           Initial
      Closing.
      The
      initial closing of the purchase and sale of the securities under Section 1.2
      hereof (the “Initial Closing”)
      shall
      take place at the offices of Blank Rome LLP, located at One Logan Square,
      Philadelphia, Pennsylvania, at 10:00 a.m. prevailing Eastern Time, on the date
      hereof or such other time and place as shall be agreed upon by the Company
      and
      the Investors (the “Closing
      Date”).
      At
      the Initial Closing, the Company shall issue and deliver stock certificates
      representing the applicable number of shares of Series B Preferred Stock to
      be
      sold by the Company under Section 1.2 hereof to each of the Investors on
Exhibit
      A,
      free
      and clear of any and all Liens against payment of the full purchase price
      therefor by or on behalf of such Investor to the Company by check or wire
      transfer of immediately available funds.

     

    1.4           Additional
      Closings.
      On or
      prior to the date which is forty-five (45) days following the Initial Closing,
      subject to the terms of this Section 1.4, the Company may effect additional
      closings (the “Additional
      Closings”
and
      together with the Initial Closing, the “Closings”)
      for
      the aggregate sale and purchase of up to but not in excess of 7,692,308 shares
      of Series B Preferred Stock (including the number of shares of Series B
      Preferred Stock sold and purchased at the Initial Closing) at the price per
      share of $0.65 pursuant to and in accordance with this Agreement. The
      purchasers of the shares of Series B Preferred Stock at the Additional Closings
      shall be referred to as the “Additional
      Investors”,
      and
      each individually as an “Additional
      Investor”.
      Each
      Additional Investor must be an “accredited investor” (as such term is defined
      under the Securities Act of 1933, as amended). At each Additional Closing,
      the
      Company will issue and deliver certificates evidencing the shares of Series
      B
      Preferred Stock sold at such Additional Closing registered in the name of the
      applicable Additional Investor (with appropriate legends affixed thereto
      required by this Agreement and, to the extent applicable, the Related Agreements
      (as defined in Section 2.1 below)) against delivery by such Additional Investor
      of (i) such Additional Investor’s aggregate purchase price therefor by check or
      wire transfer of immediately available funds, and (ii) a counterpart signature
      page to this Agreement and each Related Agreement (to the extent applicable)
      in
      such form as shall be reasonably determined by the Company. Upon consummation
      of
      the Additional Closings in accordance with this Section 1.4, each Additional
      Investor shall be deemed an Investor for all purposes of this Agreement and
      Exhibit
      A
      shall be
      amended to reflect the purchase and sale of such shares of Series B Preferred
      Stock.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.5           Use
      of Proceeds by the Company from the Closings.
      The
      Company shall use the proceeds from the sale of Series B Preferred Stock
      hereunder to pay all transaction fees incurred by the Company in connection
      with
      the transactions contemplated under this Agreement and to fund the Company’s
      working capital needs.

     

    SECTION
      2

     

    REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY

     

    In
      order
      to induce the Investors to enter into this Agreement and consummate the
      transactions contemplated hereby, the Company hereby makes to the Investors
      the
      representations and warranties contained in this Section 2. Such
      representations and warranties are subject to the qualifications and exceptions
      set forth in the disclosure schedule delivered to the Investors pursuant to
      this
      Agreement (the “Disclosure
      Schedule”).

     

    2.1           Organization
      and Corporate Power.
      The
      Company is a corporation duly organized, validly existing and in good standing
      under the laws of Delaware, and is duly qualified or registered to do business
      as a foreign corporation in each jurisdiction in which the failure to be so
      qualified would have a Material Adverse Effect. The Company has all required
      corporate power and authority to carry on its business as presently conducted,
      to enter into and perform this Agreement, the Amendment to Registration Rights
      Agreement and the Amendment to Stockholders Agreement (collectively, the
“Related
      Agreements”)
      to
      which it is a party and to carry out the transactions contemplated hereby and
      thereby. The copies of the Amended and Restated Certificate of Incorporation,
      as
      amended and Bylaws of the Company, as amended to date (the “Certificate
      of Incorporation”
and
      “Bylaws,”
      respectively), which are attached hereto as Exhibit
      C,
      are
      correct and complete at the date hereof, and the Company is not in violation
      of
      any term of its Certificate of Incorporation or Bylaws. Except as set forth
      in
Section
      2.1 of the Disclosure Schedule,
      the
      Company is not in violation of any term or provision of any agreement,
      instrument, judgment, decree, order, statute, rule or government regulation
      applicable to it and which is actively enforced or to which it is a party that
      would have a Material Adverse Effect.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.2           Authorization
      and Non-Contravention.
      This
      Agreement and all documents executed pursuant hereto are valid and binding
      obligations of the Company, enforceable in accordance with their terms, except
      (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium
      and other laws of general application affecting enforcement of creditors’ rights
      generally or by equitable principles, (b) as limited by laws relating to the
      availability of specific performance, injunctive relief or other equitable
      remedies, and (c) to the extent that the enforceability of the indemnification
      provisions herein and in the Registration Rights Agreement may be limited by
      applicable law. The execution, delivery and performance of this Agreement,
      the
      Related Agreements and all agreements, documents and instruments contemplated
      hereby, the sale and delivery of the Series B Preferred Stock and, upon
      conversion of the Series B Preferred Stock, the issuance of the Conversion
      Shares, have been duly authorized by all necessary corporate or other action
      of
      the Company. The execution of this Agreement, the sale and delivery of the
      Series B Preferred Stock and, upon conversion of the Series B Preferred Stock,
      the issuance of the Conversion Shares, and the performance of any transaction
      contemplated hereby or by the Related Agreements will not (i) violate, conflict
      with or result in a default under any contract or obligation to which the
      Company is a party or by which it or its assets are bound, or any provision
      of
      the Certificate of Incorporation or Bylaws of the Company, or cause the creation
      of any encumbrance upon any of the material assets of the Company; (ii) violate
      or result in a violation of, or constitute a default (whether after the giving
      of notice, lapse of time or both) under, any provision of any law, regulation
      or
      rule, or any order of, or any restriction imposed by any court or other
      governmental agency applicable to the Company; (iii) require from the Company
      any notice to, declaration or filing with, or consent or approval of, any
      governmental authority or other third party other than pursuant to state
      securities or blue sky laws; or (iv) accelerate any obligation under, or give
      rise to a right of termination of, any agreement, permit, license or
      authorization to which the Company is a party or by which the Company is bound,
      except for such violations, conflicts, defaults and rights of acceleration
      that
      would not have a Material Adverse Effect.

     

    2.3           Corporate
      Records.
      The
      corporate record books of the Company accurately record all corporate action
      taken by its stockholders, board of directors and committees thereof. The copies
      of the corporate records of the Company, as made available to the Investors
      for
      review, are true and complete copies of the originals of such
      documents.

     

    2.4           Capitalization.
      As of
      the Initial Closing and after giving effect to the transactions contemplated
      hereby, the authorized capital stock of the Company will consist
      of:

    

      
        	 	
                ·

              	
                70,000,000
                  shares of Common Stock, par value $0.001, of which (a) 31,536,060
                  shares are issued and outstanding, (b) 10,948,906 shares are reserved
                  for
                  issuance upon conversion of the Series A Preferred Stock, (c) 5,000,000
                  shares are currently reserved for issuance under the Company’s 2004 Stock
                  Option and Grant Plan (of which, options for 4,091,000 shares are
                  outstanding), and (d) 7,692,308 shares will be reserved for issuance
                  upon
                  conversion of the Series B Preferred
                  Stock.

              

      

       

      
        	 	
                ·

              	
                30,000,000
                  shares of preferred stock, par value $0.001 per share, of which
                  (i)
                  10,948,906 shares are designated as Series A Preferred Stock, of
                  which (a)
                  7,798,059 shares are issued and outstanding and (b) 1,328,468 shares
                  are
                  reserved for issuance upon exercise of Warrants for Series A Preferred
                  Stock and (ii) 7,692,308 shares are designated as Series B Preferred
                  Stock, of which, the number of shares indicated on Exhibit
                  A
                  hereto will be issued and outstanding.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    Immediately
      prior to the Initial Closing and without giving effect to the transactions
      contemplated hereby, the outstanding shares of Common Stock and Series A
      Preferred Stock will be held beneficially and of record by the Persons
      identified in Section 2.4
      of the Disclosure Schedule
      in the
      amounts indicated thereon. Except as set forth in Section
      2.4 of the Disclosure Schedule,
      the
      Company has never adopted or maintained any formal stock incentive plan or
      other
      plan providing for equity compensation of any Person. Except as set forth in
      Section
      2.4 of the Disclosure Schedule,
      there
      are no outstanding subscriptions, options, warrants, commitments, preemptive
      rights, agreements, arrangements or commitments of any kind for or relating
      to
      the issuance or sale of, or outstanding securities convertible into or
      exchangeable for, any shares of capital stock of any class or other equity
      interests of the Company. Other than as set forth in Section
      2.4 of the Disclosure Schedule
      or the
      Certificate of Incorporation, the Company has no obligation to purchase, redeem
      or otherwise acquire any of its capital stock or any interests therein. As
      of
      the Initial Closing, and after giving effect to the transactions contemplated
      hereby, all of the outstanding shares of capital stock of the Company will
      have
      been duly and validly authorized and issued and will be fully paid and
      non-assessable and will have been offered, issued, sold and delivered in
      compliance with applicable federal and state securities laws and not subject
      to
      any preemptive rights. The Company has duly and validly authorized and reserved
      7,692,308 shares of Common Stock for issuance upon conversion of the Series
      B
      Preferred Stock and the shares of Common Stock so issued will, upon such
      conversion, be validly issued, fully paid and non-assessable. The relative
      rights, preferences and other provisions relating to the Series B Preferred
      Stock are as set forth in Exhibit B
      attached
      hereto. As of the Initial Closing and after giving effect to the transactions
      contemplated hereby, except as set forth in (i) Section
      2.4 of the Disclosure Schedule,
      (ii)
      the Certificate of Incorporation, (iii) the Stockholders Agreement or (iv)
      the
      Registration Rights Agreement, there are (x) no preemptive rights, rights of
      first refusal, put or call rights or obligations or anti-dilution rights with
      respect to the issuance, sale or redemption of the Company’s capital stock, (y)
      no rights to have the Company’s capital stock registered for sale to the public
      in connection with the laws of any jurisdiction and (z) no documents,
      instruments or agreements relating to the voting of the Company’s voting
      securities or restrictions on the transfer of the Company’s capital
      stock.

     

    2.5           Subsidiaries.
      The
      Company does not have and has not had any direct or indirect
      Subsidiaries.

     

    2.6           Financial
      Statements.
      Section
      2.6 of the Disclosure Schedule
      sets
      forth (i) unaudited balance sheets as of December 31, 2003 and as of November
      30, 2004, and (ii) unaudited statements of operations for the period from the
      Company’s inception through December 31, 2003 and for the eleven (11) months
      ended November 30, 2004 (the “Financial
      Statements”).

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.7           Absence
      of Undisclosed Liabilities.
      The
      Company does not have any material liabilities or obligations of any nature
      (including, without limitation, liabilities as guarantor or otherwise with
      respect to obligations of others, or liabilities for Taxes due or then accrued
      or to become due, regardless of whether claims in respect thereof had been
      asserted as of such date), except liabilities or obligations incurred in the
      ordinary course of business or otherwise disclosed in Section
      2.7 of the Disclosure Schedule
      or the
      Financial Statements. For purposes of this Section 2.7, “material”
      liability or obligation shall mean a transaction involving potential commitment
      or payment by the Company in excess of $25,000.

     

    2.8           Accounts
      Payable.
      Except
      as set forth in Section 2.8
      of the Disclosure Schedule,
      all
      accounts payable of the Company arose in bona fide arms’ length transactions in
      the ordinary course of business and no account payable is delinquent by more
      than sixty (60) days in its payment. Since inception, the Company has paid
      its
      accounts payable in the ordinary course and in a manner which is consistent
      with
      its past practices.

     

    2.9           Transactions
      with Affiliates.
      Except
      for their ongoing, regular employment relationships with the Company and as
      set
      forth in Section 2.9
      of the Disclosure Schedule,
      there
      are no loans, leases or other transactions or continuing transactions between
      the Company and any present or former stockholder, director, officer or employee
      of the Company, or any member of such officer’s, director’s, employee’s or
      stockholder’s immediate family, or any Person controlled by such officer,
      director, employee or stockholder or his or her immediate family.

     

    2.10           Title
      to Properties.
      Section
      2.10 of the Disclosure Schedule
      sets
      forth the addresses and uses of all real property that the Company owns, leases
      or subleases. To the Company’s knowledge, the Company has good, valid and (if
      applicable) marketable title to all of its assets, free and clear of all Liens,
      restrictions or encumbrances, and none of such assets is subject to any
      mortgage, pledge, Lien or conditional sale agreement. Such assets constitute
      all
      property which is necessary to the business of the Company as presently
      conducted and all equipment included therein is in good condition and repair
      (ordinary wear and tear excepted).

     

    2.11           Tax
      Matters.
      The
      Company has timely and properly filed all material federal, state, local and
      foreign tax returns required to be filed by it through the date hereof and
      has
      paid or caused to be paid all material Taxes required to be paid by it through
      the date hereof, except Taxes which are the subject of a good faith dispute
      or
      have not yet accrued or otherwise become due. All material Taxes and other
      assessments and levies which the Company was or is required to withhold or
      collect have been withheld and collected and have been paid over to the proper
      governmental authorities. Except as set forth in Section 2.11
      of the Disclosure Schedule,
      (i) the Company has never received written notice of any audit or of any
      proposed deficiencies from the Internal Revenue Service (the “IRS”)
      or any
      other taxing authority (other than routine audits undertaken in the ordinary
      course and which have been resolved on or prior to the date hereof);
      (ii) there are in effect no waivers of applicable statutes of limitations
      with respect to any Taxes owed by the Company for any year; and
      (iii) neither the IRS nor any other taxing authority is now asserting or
      threatening to assert against the Company any deficiency or claim for additional
      Taxes or interest thereon or penalties in connection therewith in respect of
      the
      income or sales of the Company.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.12           Certain
      Contracts and Arrangements.
      Except
      as set forth in Section 2.12
      of the Disclosure Schedule
      (with
      true and correct copies made available to the Investors and/or their counsel),
      the Company is not a party or subject to or bound by:

     

    (a)           any
      contract or agreement involving potential commitment or payment by the Company
      in excess of $25,000 or which is otherwise material and not entered into in
      the
      ordinary course of business;

     

    (b)           any
      contract, lease or agreement involving payments in excess of $25,000 which
      is
      not cancelable by the Company without penalty on not less than 60 days
      notice;

     

    (c)           any
      contract containing covenants directly or explicitly limiting the freedom of
      the
      Company to compete in any line of business or with any Person or to offer any
      of
      its products;

     

    (d)           any
      contract or agreement principally relating to the licensing, distribution,
      development, purchase, sale or servicing of its products requiring payments
      during the term in excess of $25,000;

     

    (e)           any
      indenture, mortgage, promissory note, loan agreement, guaranty or other
      agreement or commitment for borrowing or any pledge or security arrangement
      in
      excess of $25,000;

     

    (f)           any
      employment contracts, non-competition agreements, invention assignments,
      severance or other agreements with officers, directors, Key Employees,
      stockholders or consultants of the Company or their respective
      Affiliates;

     

    (g)           any
      material royalty, dividend or similar arrangement based on the revenues or
      profits of the Company or any material contract or agreement involving fixed
      price or fixed volume arrangements;

     

    (h)           any
      material joint venture, partnership, manufacturer, development, distribution,
      supply or similar agreement; or

     

    (i)           any
      acquisition, merger or similar agreement.

     

    To
      the
      Company’s knowledge, all such contracts, agreements, leases and instruments are
      valid and are in full force and effect and constitute legal, valid and binding
      obligations of the Company, and are enforceable in accordance with their
      respective terms, except (a) as limited by applicable bankruptcy, insolvency,
      reorganization, moratorium and other laws of general application affecting
      enforcement of creditors’ rights generally or by equitable principles, (b) as
      limited by laws relating to the availability of specific performance, injunctive
      relief or other equitable remedies, and (c) to the extent that the
      enforceability of any indemnification provisions therein may be limited by
      applicable law. The Company has not received any written notice, and has no
      knowledge of any threat, to terminate any such contracts, agreements, leases
      or
      instruments other than such terminations that would not have a Material Adverse
      Effect. The Company is not in default in complying with any provisions of any
      such contract, agreement, lease or instrument, and no condition or event or
      fact
      exists which, with written notice, lapse of time or both, would constitute
      a
      default thereunder on the part of the Company, except for any such default,
      condition, event or fact that would not have a Material Adverse
      Effect.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.13           Intellectual
      Property Rights.
      To the
      Company’s knowledge with respect to patents, trademarks, services marks and
      trade names only (but without having conducted any special investigation or
      patent or trademark search), the Company has sufficient title and ownership
      of
      all Intellectual Property Rights necessary for its business as now conducted
      and
      as proposed to be conducted without any violation or infringement of the rights
      of others. Section
      2.13 of the Disclosure Schedule
      contains
      a complete list of patents and pending patent applications and registrations
      and
      applications for trademarks, copyrights and domain names of, or exclusively
      licensed to, the Company. The Company has not received any communications
      alleging that the Company has violated or, by conducting its business as
      proposed, would violate any of the Intellectual Property Rights of any other
      person or entity and the Company is not aware of any basis for such an
      allegation or of any reason to believe that such an allegation may be
      forthcoming. The Company is not aware that any of its employees is obligated
      under any contract (including licenses, covenants or commitments of any nature)
      or other agreement, or subject to any judgment, decree or order of any court
      or
      administrative agency, that would interfere with the use of his or her best
      efforts to promote the interests of the Company or that would conflict with
      the
      Company’s business as presently conducted or as proposed to be conducted.
      Neither the execution nor delivery of this Agreement or the Related Agreements,
      nor the carrying on of the Company’s business by the employees of the Company,
      nor the conduct of the Company’s business as proposed will, to the Company’s
      knowledge, conflict with or result in a breach of the terms, conditions or
      provisions of, or constitute a default under, any contract, covenant or
      instrument under which any of such employees is now obligated. The Company
      does
      not believe it is or will be necessary to utilize any inventions of any of
      its
      employees (or people it currently intends to hire) made prior to or outside
      the
      scope of their employment by the Company.

     

    2.14           Litigation.
      There
      is no litigation or governmental or administrative proceeding or investigation
      pending or threatened against the Company or affecting the properties or assets
      of the Company. Section
      2.14 of the Disclosure Schedule
      includes
      a description of all litigation, claims, proceedings or investigations involving
      the Company occurring, arising or existing since the Company’s
      inception.

     

    2.15           Labor
      Matters.
      The
      Company is not delinquent in payments to any of its employees, consultants
      or
      independent contractors for any wages, salaries, commissions, bonuses or other
      direct compensation for any service performed for it to the date hereof or
      amounts required to be reimbursed to such employees, consultants or independent
      contractors. Except as set forth in Section
      2.15 of the Disclosure Schedule
      or as
      required by law, upon termination of the employment of any such employees,
      consultants or independent contractors, no severance or other payments will
      become due. Except as set forth in Section
      2.15 of the Disclosure Schedule,
      the
      Company has no policy, practice, plan or program of paying severance pay or
      any
      form of severance compensation in connection with the termination of employment
      services. The Company is and since its inception has been in compliance with
      all
      applicable laws and regulations respecting labor, employment, fair employment
      practices, terms and conditions of employment and wages and hours. There are
      no
      charges of employment discrimination, sexual harassment or unfair labor
      practices, pending or to the Company’s knowledge, threatened against or
      involving the Company. The Company is, and at all times has been, in compliance
      with the requirements of the Immigration Reform Control Act of 1986 except
      for
      such failures to comply that would not have a Material Adverse
      Effect.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.16           Employee
      Benefit Programs.
      Section
      2.16 of the Disclosure Schedule
      sets
      forth a list of every Employee Program that has been maintained by the Company
      or to which the Company has contributed at any time since its inception and
      (i)
      is subject to ERISA, (ii) involves the issuance of options or other securities,
      or (iii) is otherwise material. The terms and operation of each Employee Program
      comply with all applicable laws and regulations relating to such Employee
      Program except to the extent that any instances of non-compliance would not
      result in a Material Adverse Effect.

     

    2.17           Insurance.
      The
      physical properties, assets, business, operations, employees, officers and
      directors of the Company are insured by the Company, to the extent disclosed
      in
Section
      2.17 of the Disclosure Schedule.
      Except
      claims for health care benefits in the ordinary course, there is no claim by
      the
      Company pending under any such policies. Said insurance policies and
      arrangements are in full force and effect, all premiums with respect thereto
      are
      currently paid, and the Company is in compliance in all material respects with
      the terms thereof. Said insurance is sufficient for compliance by the Company
      with all requirements of applicable law and all agreements and leases to which
      it is a party. Each such insurance policy shall continue to be in full force
      and
      effect immediately following consummation of the transactions contemplated
      by
      this Agreement. To the Company’s knowledge, there is no threatened termination
      of any such policies or arrangements.

     

    2.18           Permits;
      Compliance with Laws.
      The
      Company has all Permits necessary to permit it to own its property and to
      conduct its business as it is presently conducted and all such Permits are
      valid
      and in full force and effect, except where the failure to obtain such a Permit
      or its invalidity, in whole or in part, would not have a Material Adverse
      Effect. No Permit is subject to termination as a result of the execution of
      this
      Agreement or consummation of the transactions contemplated hereby. The Company
      is in compliance with all applicable statutes, ordinances, orders, rules and
      regulations promulgated and enforced by any federal, state, municipal or other
      governmental authority, which apply to the conduct of its business, except
      where
      the failure to so comply would not have a Material Adverse Effect.

     

    2.19           Investment
      Banking; Brokerage.
      There
      are no claims for investment banking fees, brokerage commissions, finder’s fees
      or similar compensation (exclusive of professional fees to lawyers and
      accountants) in connection with the transactions contemplated by this Agreement
      payable by the Company or based on any arrangement or agreement made by or
      on
      behalf of the Company.

     

    2.20           Disclosure.
      Except
      as set forth in Section
      2.20 of the Disclosure Schedule,
      this
      Agreement, the Disclosure Schedule and the certificates and statements furnished
      pursuant to this Agreement by or on behalf of the Company do not contain any
      untrue statement of a material fact or omit to state a material fact necessary
      in order to make the statements contained therein not misleading in the light
      of
      the circumstances under which they were made.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SECTION
      3

     

    REPRESENTATIONS
      AND WARRANTIES OF THE INVESTORS

     

    As
      a
      material inducement to the Company to enter into this Agreement and consummate
      the transactions contemplated hereby, each Investor hereby makes to the Company
      the representation and warranties contained in this Section 3.

     

    3.1           Investment
      Status.
      Each
      Investor represents that it is an “accredited investor” as such term is defined
      in Rule 501 under the Securities Act. Each Investor represents to the Company
      that it is purchasing the Series B Preferred Stock for its own account, for
      investment only and not with a view to, or any present intention of, effecting
      a
      distribution of such securities or any part thereof except pursuant to a
      registration statement or an available exemption under applicable law. Each
      such
      Investor acknowledges that such securities have not been registered under the
      Securities Act or the securities laws of any state or other jurisdiction and
      cannot be disposed of unless they are subsequently registered under the
      Securities Act and any applicable state laws or unless an exemption from such
      registration is available. Each such Investor (a) has knowledge and experience
      in financial and business matters so as to be capable of evaluating and
      understanding the merits and risks of an investment in the Company, (b) has
      received certain information concerning the Company and has had the opportunity
      to obtain additional information as desired in order to evaluate the merits
      and
      the risks inherent of an investment in the Company and (c) is able to bear
      the
      economic risk of its investment in the Company and the Series B Preferred Stock
      and, if issued, the Conversion Shares in that, among other factors, such
      Investor can afford to hold the Series B Stock and the Conversion Shares for
      an
      indefinite period and can afford a complete loss of its investment in the
      Company.

     

    3.2           Authority.
      Each
      Investor represents that it has full right, authority and power under its
      charter, bylaws or governing partnership or operating agreement, as applicable,
      to enter into this Agreement and each agreement, document and instrument to
      be
      executed and delivered by or on behalf of such Investor pursuant to or as
      contemplated by this Agreement and to carry out the transactions contemplated
      hereby and thereby, and the execution, delivery and performance by such Investor
      of this Agreement and each such other agreement, document and instrument have
      been duly authorized by all necessary action under such Investor’s charter,
      bylaws or governing partnership or operating agreement, as applicable. This
      Agreement and each agreement, document and instrument executed and delivered
      by
      each Investor pursuant to or as contemplated by this Agreement constitute,
      or
      when executed and delivered will constitute, valid and binding obligations
      of
      each of the Investors enforceable in accordance with their respective terms,
      except (a) as limited by applicable bankruptcy, insolvency, reorganization,
      moratorium and other laws of general application affecting enforcement of
      creditors’ rights generally or by equitable principles, (b) as limited by laws
      relating to the availability of specific performance, injunctive relief or
      other
      equitable remedies, and (c) to the extent that the enforceability of the
      indemnification provisions herein and in the Registration Rights Agreement
      may
      be limited by applicable law.

     

    3.3           Investment
      Banking; Brokerage Fees.
      No
      Investor has incurred or become liable for any broker’s or finder’s fee, banking
      fees or similar compensation relating to or in connection with the transactions
      contemplated hereby.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SECTION
      4

     

    CONDITIONS
      OF PURCHASE BY THE INVESTORS AT CLOSING

     

    Each
      Investor’s obligation to purchase and pay for the Series B Preferred Stock to be
      purchased by it hereunder shall be subject to compliance by the Company with
      the
      agreements herein contained and to the fulfillment to the Investors’
satisfaction, or the waiver by the Investors, on or before and at the Closing
      Date of the following conditions:

     

    4.1           Satisfaction
      of Conditions.
      The
      representations and warranties of the Company contained in this Agreement shall
      be true and correct on and as of the Closing Date and each of the conditions
      specified in this Section 4 shall have been satisfied or waived in writing
      by
      the Investors.

     

    4.2           Opinion
      of Counsel.
      The
      Investors shall have received from Blank Rome LLP an opinion dated as of the
      Closing Date substantially in the form attached hereto as Exhibit D.

     

    4.3           Authorization.
      The
      Board of Directors and appropriate stockholders of the Company shall have duly
      adopted resolutions in the form reasonably satisfactory to the Investors and
      shall have taken all action necessary for the purpose of authorizing the Company
      to consummate all of the transactions contemplated hereby (including, without
      limitation, the issuance of the Series B Preferred Stock and the Conversion
      Shares as contemplated hereunder).

     

    4.4           Certificate
      of Incorporation.
      The
      Company shall have delivered to the Investors a copy of the Company’s
      Certificate of Incorporation certified as of a recent date by the Delaware
      Secretary of State.

     

    4.5           Delivery
      of Documents.
      The
      Company shall have executed and/or delivered to the Investors (or shall have
      caused to be executed and delivered to the Investors by the appropriate Persons)
      the following:

     

    (a)           Certificates
      for the Series B Preferred Stock to be purchased hereunder;

     

    (b)           Certificates
      issued by (i) the Secretary of State of the State of Delaware certifying that
      the Company has legal existence and is in good standing; and (ii) the Secretary
      of State (or similar authority) of each jurisdiction in which the Company has
      qualified to do business as a foreign corporation as to such foreign
      qualification; and

     

    (c)           A
      certificate of the Secretary of the Company which shall certify (i) the
      resolutions adopted by the Board of Directors and stockholders as contemplated
      in Section 4.3 hereof, (ii) the Company’s Bylaws and (iii) the names of the
      officers of the Company authorized to sign this Agreement and the Related
      Agreements, together with the true signatures of such officers.

     

    4.6           Registration
      Rights Agreement.
      The
      Company and a majority of the holders of the Series A Preferred Stock shall
      have
      entered into the Amendment to the Registration Rights Agreement in substantially
      the form attached hereto as Exhibit E
      and the
      Investors shall have executed joinders to the Registration Rights Agreement,
      as
      amended in substantially the form attached hereto as part of Exhibit
      E.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    4.7           Stockholders
      Agreement.
      The
      Company and a majority of the holders of the Series A Preferred Stock shall
      have
      entered into the Amendment to Stockholders Agreement in substantially the form
      attached hereto as Exhibit F
      and the
      Investors shall have executed joinders to the Stockholders Agreement, as amended
      in substantially the form attached hereto as part of Exhibit
      F.

     

    4.8           All
      Proceedings Satisfactory.
      All
      corporate and other proceedings taken prior to or at the Initial Closing in
      connection with the transactions contemplated by this Agreement, and all
      documents and instruments related thereto, shall be reasonably satisfactory
      in
      form and substance to the Investors and the issuance and sale of the Series
      B
      Preferred Stock hereunder shall be made in compliance with applicable federal
      and state laws.

     

    4.9           No
      Violation or Injunction.
      The
      consummation of the transactions contemplated by this Agreement shall not be
      in
      violation of any law or regulation, including applicable “Blue Sky” laws, and
      shall not be subject to any injunction, stay or restraining order.

     

    4.10           Consents
      and Waivers.
      The
      Company shall have made all filings with and notifications of governmental
      authorities, regulatory agencies and other entities required to be made by
      such
      parties in connection with the execution and delivery of this Agreement, the
      performance of the transactions contemplated hereby and the continued operation
      of the business of the Company subsequent to the Initial Closing.

     

    4.11           Confidentiality
      and Invention Assignment Agreements.
      All Key
      Employees shall have entered into agreements containing non-competition,
      confidentiality and inventions assignment provisions with the Company in the
      form attached hereto as Exhibit G
      (the
“Non-Competition,
      Confidentiality and Inventions Assignment Agreement”).

     

    SECTION
      5

     

    DEFINITIONS

     

    Unless
      the context specifically requires otherwise, capitalized terms used in this
      Agreement shall have the meaning specified below:

     

    “Code”
means
      the Internal Revenue Code of 1986, as amended.

     

    “ERISA”
means
      the Employee Retirement Income Security Act of 1974, as amended, and the
      regulations promulgated thereunder.

     

    “Employee
      Program”
means
      any employee benefit or welfare plan, stock option, bonus or incentive plan,
      severance pay policy or agreement, deferred compensation agreement or any
      similar plan or agreement.

     

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Intellectual
      Property Rights”
means
      all intellectual property rights, including all patents, patent applications,
      patent rights, trademarks, trademark applications, trade names, service marks,
      service mark applications, domain names, copyrights, copyright applications,
      computer programs and other computer software (including, without limitation,
      all source and object code, algorithms, architecture, structure, display
      screens, layouts and development tools) and trade secrets.

     

    “Key
      Employees”
means
      Mr. Fred F. Nazem, Dr. Stephen J. O’Brien, Dr. Benjamin Safirstein, Mr. Richard
      Howard and Mr. Phillip Barek. 

     

    “Lien”
means
      any liens, claims, options, charges, pledges, security interests, voting
      agreements, trusts, encumbrances, rights or restrictions of any
      nature.

     

    “Material
      Adverse Effect”
means
      any change or effect that is materially adverse to the properties, assets,
      business, financial condition or results of operations of the
      Company.

     

    “Permits”
means
      any franchises, authorizations, approvals, orders, consents, licenses,
      certificates, permits, registrations, qualifications or other rights and
      privileges.

     

    “Person”
means
      any individual, corporation, partnership, joint venture, trust or unincorporated
      organization or any government or any agency or political subdivision
      thereof.

     

    “Registration
      Rights Agreement”
means
      the Registration Rights Agreement, as amended, attached as Exhibit
      E
      hereto,
      dated as of February 20, 2004, by and among the Company and the Series A
      Preferred Stock investors.

     

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

     

    “Stockholders
      Agreement”
means
      the Stockholders Agreement, as amended, attached as Exhibit
      F
      hereto,
      dated as of February 20, 2004 executed by and among the Company, the
      Stockholders (as defined therein) and the Series A Preferred Stock
      investors.

     

    “Subsidiary”
means
      any corporation more than 50% of the outstanding voting securities of which,
      or
      any partnership, joint venture or other entity more than 50% of the total equity
      interest of which, is directly or indirectly owned by the Company or any other
      entity otherwise controlled by or under common control with the
      Company.

     

    “Taxes”
means
      any federal, state, local, foreign or other taxes, including without limitation
      income taxes, estimated taxes, excise taxes, sales taxes, use taxes, gross
      receipts taxes, franchise taxes, employment and payroll related taxes,
      withholding taxes, stamp taxes, transfer taxes and property taxes, whether
      or
      not measured in whole or in part by net income.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SECTION
      6

     

    GENERAL

     

    6.1           Amendments,
      Waivers and Consents.
      For the
      purposes of this Agreement and all agreements executed pursuant hereto, no
      course of dealing between or among any of the parties hereto and no delay on
      the
      part of any party hereto in exercising any rights hereunder or thereunder shall
      operate as a waiver of the rights hereof and thereof. No provision hereof may
      be
      waived otherwise than by a written instrument signed by the party or parties
      so
      waiving such covenant or other provision. No amendment to this Agreement may
      be
      made without the written consent of the Company and the Investors (in accordance
      with the immediately succeeding sentence). Any actions required to be taken
      or
      consents, approvals, votes or waivers required or contemplated to be given
      by
      the Investors herein shall require a vote of a majority of the Investors based
      on the relative holdings of Series B Preferred Stock or Conversion Shares of
      the
      Investors as a group at the relevant time and any such action by such percentage
      of Investors shall bind all of the Investors. The Company agrees to pay the
      reasonable fees and out-of-pocket expenses of the Investor's counsel in
      connection with the waiver or amendment of any provision of this Agreement
      and
      any agreement executed pursuant hereto.

     

    6.2           Survival
      of Representations Warranties and Covenants.
      All
      covenants, agreements, representations and warranties of the Company and the
      Investors made herein and in the certificates, lists, exhibits, schedules or
      other written information delivered or furnished to any Investor in connection
      herewith are material, shall be deemed to have been relied upon by the party
      or
      parties to whom they are made and shall survive the Initial Closing and any
      Additional Closings regardless of any investigation on the part of such party
      or
      its representatives for a period of twelve (12) months following the date
      hereof.

     

    6.3           Legend
      on Securities.
      The
      Company and the Investors acknowledge and agree that the following legend (or
      one substantially similar thereto) and, to the extent applicable, such other
      legends as required pursuant to any Related Agreement shall be typed on each
      certificate evidencing any of the Series B Preferred Stock issued hereunder
      held
      at any time by an Investor:

    

      THE
        SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
        ACT
        OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES OR BLUE SKY LAWS AND
        MAY NOT BE OFFERED, SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE ASSIGNED
        EXCEPT
        (1) PURSUANT TO A REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES
        WHICH
        IS EFFECTIVE UNDER THE ACT OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM
        REGISTRATION UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES AND
        IN
        ACCORDANCE WITH APPLICABLE STATE SECURITIES AND BLUE SKY LAWS.

       

    

    6.4           Governing
      Law.
      This
      Agreement shall be deemed to be a contract made under, and shall be construed
      in
      accordance with, the laws of the State of Delaware, without giving effect to
      conflict of laws principles thereof. Each party hereto hereby waives, to the
      fullest extent permitted by applicable law, any right it may have to a trial
      by
      jury in respect of any litigation directly or indirectly arising out of, under
      or in connection with this Agreement. Each party hereto (i) certifies that
      no
      representative, agent or attorney of the other party has represented, expressly
      or otherwise, that the other party would not, in the event of litigation, seek
      to enforce the foregoing waiver and (ii) acknowledges that it and the other
      parties hereto have been induced to enter into this Agreement by, among other
      things, the mutual waivers and certifications in this Section.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    6.5           Section
      Headings and Gender.
      The
      descriptive headings in this Agreement have been inserted for convenience only
      and shall not be deemed to limit or otherwise affect the construction of any
      provision thereof or hereof. The use in this Agreement of the masculine pronoun
      in reference to a party hereto shall be deemed to include the feminine or
      neuter, and vice versa, as the context may require.

     

    6.6           Counterparts.
      This
      Agreement may be executed in multiple counterparts, each of which shall
      constitute but one and the same instrument. One or more counterparts of this
      Agreement may be delivered via telecopier, with the intention that they shall
      have the same effect as an original counterpart hereof.

     

    6.7           Notices
      and Demands.
      Any
      notice or demand which is required or provided to be given under this Agreement
      shall be deemed to have been sufficiently given or served and received for
      all
      purposes when delivered by hand, facsimile, or five (5) days after being sent
      by
      certified or registered mail, postage and charges prepaid, return receipt
      requested, or two (2) days after being sent by overnight delivery providing
      receipt of delivery, to:

     

    (a)           if
      to the
      Company, 645 Madison Avenue, 12th
      Floor,
      New York, New York 10022, Fax: (212) 371-2150 or at such other address or
      facsimile number designated by the Company to the Investors in writing with
      a
      copy to Blank Rome LLP, One Logan Square, Philadelphia, Pennsylvania 19103,
      Fax:
      (215) 569-5555, Attn: Stephen E. Luongo.

     

    (b)           if
      to the
      Investors, at the mailing addresses or facsimile numbers as shown on the
      signature pages attached hereto, or at such other address or facsimile number
      designated by an Investor to the Company in writing.

     

    6.8           Remedies;
      Severability.
      It is
      specifically understood and agreed that any breach of the provisions of this
      Agreement by any Person subject hereto will result in irreparable injury to
      the
      other parties hereto, that the remedy at law alone will be an inadequate remedy
      for such breach, and that, in addition to any other remedies which they may
      have, such other parties may enforce their respective rights by actions for
      specific performance (to the extent permitted by law). The Company may refuse
      to
      recognize any unauthorized transferee as one of its stockholders for any
      purpose, including, without limitation, for purposes of dividend and voting
      rights, until the relevant party or parties have complied with all applicable
      provisions of this Agreement, the Stockholders Agreement and the Registration
      Rights Agreement. Whenever possible, each provision of this Agreement shall
      be
      interpreted in such a manner as to be effective and valid under applicable
      law,
      but if any provision of this Agreement shall be deemed prohibited or invalid
      under such applicable law, such provision shall be ineffective to the extent
      of
      such prohibition or invalidity, and such prohibition or invalidity shall not
      invalidate the remainder of such provision or the other provisions of this
      Agreement.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    6.9           Integration.
      This
      Agreement, including the exhibits, schedules, documents and instruments referred
      to herein, constitutes the entire agreement and supersedes all other prior
      agreements and understandings, both written and oral, among the parties with
      respect to the subject matter hereof.

     

    6.10           Expenses.
      Each
      party shall bear its own costs and expenses incurred in connection with this
      transaction.

     

    [Signature
      Pages Follow]

     

    

     

     

     

     

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
      Agreement to be duly executed and delivered by their proper and duly authorized
      representatives as of the day and year first above written.

     

    COMPANY:

    

    FLAGSHIP
      HEALTHCARE MANAGEMENT, INC.

     

    By:
      /s/
      Fred F. Nazem

    Name:
      Fred F. Nazem

    Title:
      Chief Executive Officer

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    INVESTOR:

     

    

    

    __________________________________

    Name:
      

    Address:Exhibit
      10.18

    PROMISSORY
      NOTE

    

    
      	
              $2,700,000.00

            	
              June
                7, 2006

            

    

    

    FOR
      VALUE
      RECEIVED, FLAGSHIP PATIENT ADVOCATES, INC. (the “Borrower”), hereby promises to
      pay to Apollo
      Medical Partners, LP (the
      “Lender”), as the holder of this promissory note (the “Note”), the principal
      remaining unpaid, together with all accrued interest one year from the date
      hereof. In the event the Borrower completes the closing of the next round of
      financing of at least an additional Four Million Dollars ($4,000,000.00), the
      Note, including all accrued interest, shall become convertible into the form
      of
      securities issued in such next round of financing at the price per share of
      the
      securities issued in such financing. Interest shall accrue at the prime rate
      reported in the Wall Street Journal for the business day immediately prior
      to
      the date of issuance of the Note and shall be calculated based on a 365-day
      year
      and shall be paid at maturity of the Note. Borrower may prepay any or all of
      the
      unpaid principal without penalty. 

    

    All
      payments shall be made in lawful money of the United States of America at the
      principal office of the Lender, or such other place as the holder hereof may
      from time to time designate in writing to the Borrower.

    

    This
      Note
      is non-negotiable and may not be transferred.

    

    Upon
      written evidence reasonably satisfactory to Borrower of the loss, theft,
      destruction or mutilation of the Note, Borrower will issue a new Note, of like
      tenor and amount, dated the date to which interest has been paid, in lieu o
      such
      lost, stolen, destroyed or mutilated Note, and in such event Lender agrees
      to
      indemnify and hold harmless Borrower in respect of an such lost, stolen,
      destroyed or mutilated Note.

    

    The
      Lender agrees that the Note is subordinated to the Secured Convertible Term
      Note
      issued to the Laurus Master Fund, Ltd., dated January 30, 2006, and the Junior
      Secured Convertible Term Notes, dated January 30, 2006.

     

    This
      Note
      shall be governed and construed in accordance with the internal laws of the
      State of New York (without reference to any principals of conflicts of
      law).

    

    In
      addition and not in limitation of the foregoing, Borrower further agrees,
      subject only to any limitation imposed by applicable law, to pay all expenses,
      including reasonable attorney’s fees, incurred by the holder of this Note in
      endeavoring to collect any amounts payable hereunder which are not paid when
      due.

    

    IN
      WITNESS WHEREOF, the undersigned has caused this instrument to be executed
      as of
      the date first above written.

    

    
      	 	 
	 	
              Borrower:
                Flagship Patient Advocates, Inc.

            
	 	 
	 	
              By:
                /s/
                Fred F. Nazem

            
	 	
              Fred
                F. Nazem, Chairman and CEO

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