Document:

Exhibit
      10.1

     

     

    AMENDED
      AND RESTATED SECURITIES PURCHASE AGREEMENT

     

    LAURUS
      MASTER
      FUND, LTD.,

     

    FLAGSHIP
      PATIENT ADVOCATES, INC. 

    

     

    and

    

     

    PATIENTS
      & PHYSICIANS, INC. 

     

    Dated:
      August 22, 2006

     

    

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Table
      of
      Contents

    

      
        	 	 	
                Page

                 

              
	
                1.

              	
                Agreement
                  to Issue

              	
                2

              
	 	 	 
	
                2.

              	
                Fees,
                  Warrant and Closing Shares

              	
                2

              
	 	 	 
	
                3.

              	
                Closing,
                  Delivery and Payment

              	
                3

              
	 	
                3.1

              	
                Closing

              	
                3

              
	 	
                3.2

              	
                Delivery

              	
                3

              
	 	 	 
	
                4.

              	
                Representations
                  and Warranties of Patients and the Company

              	
                3

              
	 	
                4.1

              	
                Organization,
                  Good Standing and Qualification

              	
                3

              
	 	
                4.2

              	
                Subsidiaries

              	
                4

              
	 	
                4.3

              	
                Capitalization;
                  Voting Rights

              	
                4

              
	 	
                4.4

              	
                Authorization;
                  Binding Obligations

              	
                5

              
	 	
                4.5

              	
                Liabilities

              	
                6

              
	 	
                4.6

              	
                Agreements;
                  Action

              	
                6

              
	 	
                4.7

              	
                Obligations
                  to Related Parties

              	
                7

              
	 	
                4.8

              	
                Changes

              	
                8

              
	 	
                4.9

              	
                Title
                  to Properties and Assets; Liens, Etc.

              	
                9

              
	 	
                4.10

              	
                Intellectual
                  Property

              	
                10

              
	 	
                4.11

              	
                Compliance
                  with Other Instruments

              	
                10

              
	 	
                4.12

              	
                Litigation

              	
                11

              
	 	
                4.13

              	
                Tax
                  Returns and Payments

              	
                11

              
	 	
                4.14

              	
                Employees

              	
                11

              
	 	
                4.15

              	
                Registration
                  Rights and Voting Rights

              	
                12

              
	 	
                4.16

              	
                Compliance
                  with Laws; Permits

              	
                12

              
	
                 

              	
                4.17

              	
                Environmental
                  and Safety Laws

              	
                13

              
	
                 

              	
                4.18

              	
                Valid
                  Offering

              	
                13

              
	 	
                4.19

              	
                Full
                  Disclosure

              	
                13

              
	 	
                4.20

              	
                Insurance

              	
                13

              
	 	
                4.21

              	
                INTENTIONALLY
                  OMITTED

              	
                14

              
	 	
                4.22

              	
                INTENTIONALLY
                  OMITTED

              	
                14

              
	 	
                4.23

              	
                No
                  Integrated Offering

              	
                14

              
	 	
                4.24

              	
                Stop
                  Transfer

              	
                14

              
	 	
                4.25

              	
                Dilution

              	
                14

              
	 	
                4.26

              	
                Patriot
                  Act

              	
                14

              
	 	
                4.27

              	
                ERISA

              	
                15

              
	 	 	 
	
                5.

              	
                Representations
                  and Warranties of the Purchaser

              	
                15

              
	 	
                5.1

              	
                No
                  Shorting

              	
                15

              
	 	
                5.2

              	
                Requisite
                  Power and Authority

              	
                15

              
	 	
                5.3

              	
                Investment
                  Representations

              	
                16

              
	 	
                5.4

              	
                The
                  Purchaser Bears Economic Risk

              	
                16

              
	 	
                5.5

              	
                Acquisition
                  for Own Account

              	
                16

              
	 	
                5.6

              	
                The
                  Purchaser Can Protect Its Interest

              	
                16

              
	 	
                5.7

              	
                Accredited
                  Investor

              	
                16

              
	 	
                5.8

              	
                Legends

              	
                16

              

      

       

      
        
          
          

        

        
          i

          
            

          

        

        
          
          

        

      

       Table
        of Contents

       

      
        	 	 	
                Page

                 

              
	
                6.

              	
                Covenants
                  of the Company

              	
                17

              
	 	
                6.1

              	
                Stop-Orders

              	
                17

              
	 	
                6.2

              	
                Listing

              	
                18

              
	 	
                6.3

              	
                Market
                  Regulations

              	
                18

              
	 	
                6.4

              	
                Reporting
                  Requirements

              	
                18

              
	 	
                6.5

              	
                Use
                  of Funds

              	
                19

              
	 	
                6.6

              	
                Access
                  to Facilities

              	
                20

              
	 	
                6.7

              	
                Taxes

              	
                20

              
	 	
                6.8

              	
                Insurance

              	
                20

              
	 	
                6.9

              	
                Intellectual
                  Property

              	
                22

              
	 	
                6.10

              	
                Properties

              	
                22

              
	 	
                6.11

              	
                Confidentiality

              	
                22

              
	 	
                6.12

              	
                Required
                  Approvals

              	
                22

              
	 	
                6.13

              	
                Reissuance
                  of Securities

              	
                23

              
	 	
                6.14

              	
                Opinion

              	
                23

              
	 	
                6.15

              	
                Margin
                  Stock

              	
                24

              
	
                 

              	
                6.16

              	
                Financing
                  Right of First Refusal

              	
                24

              
	
                 

              	
                6.17

              	
                Authorization
                  and Reservation of Shares

              	
                24

              
	 	
                6.18

              	
                INTENTIONALLY
                  OMITTED

              	
                24

              
	 	
                6.19

              	
                Obligations
                  to Nazem, Inc.

              	
                24

              
	 	
                6.20

              	
                INTENTIONALLY
                  OMMITTED

              	
                25

              
	 	 	 
	
                7.

              	
                Covenants
                  of the Purchaser

              	
                25

              
	 	
                7.1

              	
                Confidentiality

              	
                25

              
	 	
                7.2

              	
                Non-Public
                  Information

              	
                25

              
	 	
                7.3

              	
                Limitation
                  on Acquisition of Common Stock of Patients

              	
                25

              
	 	 	 
	
                8.

              	
                Covenants
                  of Patients, the Company and the Purchaser Regarding
                  Indemnification

              	
                25

              
	 	
                8.1

              	
                Patients
                  and Company Indemnification

              	
                25

              
	 	
                8.2

              	
                Purchaser’s
                  Indemnification

              	
                26

              
	 	 	 
	
                9.

              	
                Conversion
                  of Convertible Note.

              	
                26

              
	 	
                9.1

              	
                Mechanics
                  of Conversion

              	
                26

              
	 	 	 
	
                10.

              	
                Registration
                  Rights

              	
                28

              
	 	
                10.1

              	
                Registration
                  Rights Granted

              	
                28

              
	 	
                10.2

              	
                Offering
                  Restrictions

              	
                28

              
	 	 	 
	
                11.

              	
                Miscellaneous.

              	
                28

              
	 	
                11.1

              	
                Governing
                  Law, Jurisdiction and Waiver of Jury Trial

              	
                28

              
	 	
                11.2

              	
                Severability

              	
                29

              
	 	
                11.3

              	
                Survival

              	
                29

              
	 	
                11.4

              	
                Successors

              	
                29

              
	 	
                11.5

              	
                Entire
                  Agreement; Maximum Interest

              	
                30

              
	 	
                11.6

              	
                Amendment
                  and Waiver

              	
                30

              
	 	
                11.7

              	
                Delays
                  or Omissions

              	
                30

              

      

       

       

      
        
          
          

        

        
          ii

          
            

          

        

        
          
          

        

      

       Table
        of Contents

      
        	 	 	 	
                Page

                 

              
	 	
                11.8

              	
                Notices

              	
                30

              
	 	
                11.9

              	
                Attorneys’
                  Fees

              	
                31

              
	 	
                11.10

              	
                Titles
                  and Subtitles

              	
                32

              
	 	
                11.11

              	
                Facsimile
                  Signatures; Counterparts

              	
                32

              
	 	
                11.12

              	
                Broker’s
                  Fees

              	
                32

              
	 	
                11.13

              	
                Construction

              	
                32

              

      

    

    

     

    
      	 	LIST
              OF
              EXHIBITS
	 	 
	
              Form
                of Convertible Term Note

            	
              Exhibit
                A

            
	 	 
	
              Form
                of Warrant

            	
              Exhibit
                B

            
	 	 
	
              Form
                of Opinion

            	
              Exhibit
                C

            

    

     

    

     

    

    
      
        
           

        

        
        

      

      
        iii

        
          

        

      

       

    

     

    AMENDED
      AND RESTATED SECURITIES PURCHASE AGREEMENT

     

    THIS
      AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT (this “Agreement”) is made
      and entered into as of August 22, 2006, by and among FLAGSHIP PATIENT ADVOCATES,
      INC. (f/k/a Flagship Healthcare Management, Inc.), a Delaware corporation (the
      “Company”), PATIENTS & PHYSICIANS, INC. (f/k/a Finity Holdings, Inc.), a
      Delaware corporation (“Patients”), and LAURUS MASTER FUND, LTD., a Cayman
      Islands company (the “Purchaser”).

     

    RECITALS

     

    WHEREAS,
      the Company and the Purchaser are parties to a Securities Purchase Agreement,
      dated as of January 30, 2006 (the “Original Purchase Agreement”);

     

    WHEREAS,
      on January 30, 2006, the Company sold to the Purchaser a Secured
      Convertible Term Note
      in the
      aggregate principal amount of Four Million One Hundred Thousand Dollars
      ($4,100,000) (the “Original Note”), which Original Note is convertible into
      shares of the Company’s common stock, $0.001 par value per share, at an initial
      fixed conversion price of $.90 per share of such common stock;

     

    WHEREAS,
      the Company issued to the Purchaser a warrant (the “Original Warrant”) to
      purchase up to 621,118 shares of the Company’s common stock (subject to
      adjustment as set forth therein) in connection with the Purchaser’s purchase of
      the Original Note;

     

    WHEREAS,
      the Purchaser, the Company and Patients desire to amend and restate the Original
      Note and Patients desires to issue a replacement of the Original Warrant on
      the
      terms and conditions set forth herein; and

     

    WHEREAS,
      the Company and Patients shall make, to replace the Original Note, for the
      benefit of the Purchaser that certain Amended and Restated Convertible Term
      Note
      in the aggregate principal amount of Four Million One Hundred Thousand Dollars
      ($4,100,000) in the form of Exhibit
      A
      hereto
      (as amended, modified, restated and/or supplemented from time to time, the
      “Note”), which Note in convertible into shares of Patients’ common stock, $0.001
      par value per share (the “Common Stock”) at an initial fixed conversion price of
      $0.90 per share of Common Stock.

     

    WHEREAS,
      Patients has made that certain Guaranty dated as of January 30, 2006, in favor
      of the Purchaser pursuant to which Patients has guaranteed all obligations
      and
      liabilities of the Company due and owing to the Purchaser.

     

    WHEREAS,
      in order to replace the Original Warrant, Patients has agreed to issue to the
      Purchaser a warrant in the form of Exhibit
      B
      hereto
      (as amended, modified, restated and/or supplemented from time to time, the
      “Warrant”) to purchase up to 621,118 shares of Patients’ Common Stock (subject
      to adjustment as set forth therein).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    AMENDMENT
      AND RESTATEMENT

     

    As
      of the
      date of this Agreement, the terms, conditions, covenants, obligations,
      representations and warranties contained in the Original Purchase Agreement
      shall be deemed amended and restated in their entirety as follows and the
      Original Purchase Agreement shall be consolidated with and into and superseded
      by this Agreement provided, however, that nothing contained in this Agreement
      shall impair, limit or affect the liens or security interest heretofore granted,
      pledged and/or assigned as security for the obligations of the Company and
      its
      Subsidiaries under the Original Purchase Agreement.

     

    AGREEMENT

     

    NOW,
      THEREFORE, in consideration of the foregoing recitals and the mutual promises,
      representations, warranties and covenants hereinafter set forth and for other
      good and valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, the parties hereto agree as follows:

     

    1.  Agreement
      to Issue.
      Pursuant to the terms and conditions set forth in this Agreement, on the
      Amendment and Restatement Date (as defined in Section 3), the Company and
      Patients shall issue to the Purchaser, and the Purchaser shall receive from
      the
      Company and Patients, the Note. The exchange of the Note on the Amendment and
      Restatement Date (as defined herein) shall be known as the “Offering.” The Note
      will mature on the Maturity Date (as defined in the Note). Collectively, the
      Closing Shares (as defined in Section 2(e)), Note, Warrant and Common Stock
      issuable upon conversion of the Note and upon exercise of the Warrant are
      referred to as the “Securities”.

     

    2.  Fees,
      Warrant and Closing Shares.
      On the
      Amendment and Restatement Date:

     

    (a)  Patients
      shall issue and deliver to the Purchaser the Warrant to purchase up to 621,118
      shares of Common Stock (subject to adjustment as set forth in the Warrant)
      in
      connection with the Offering, pursuant to Section 1 hereof. All the
      representations, covenants, warranties, undertakings, and indemnification,
      and
      other rights made or granted to or for the benefit of the Purchaser by Patients
      are hereby also made and granted for the benefit of the holder of the Warrant
      and shares of Patients’ Common Stock issuable upon exercise of the Warrant (the
“Warrant Shares”).

     

    (b)  Intentionally
      Omitted.

     

    (c)  The
      Company and Patients shall jointly and severally reimburse the Purchaser for
      its
      reasonable expenses (including legal fees and expenses) incurred in connection
      with the preparation and negotiation of this Agreement and the Related
      Agreements (as hereinafter defined), and expenses incurred in connection with
      the Purchaser’s due diligence review of the Patients and its Subsidiaries (as
      defined in Section 4.2) and all related matters. Amounts required to be paid
      under this Section 2(c) will be paid on the Amendment and Restatement
      Date.

     

    (d)  Intentionally
      Omitted.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    (e)  Subject
      to the terms and conditions set forth herein, prior to the Amendment and
      Restatement Date, the Company and Patients shall have consummated the
      transaction contemplated by the Share Exchange Documentation, and the Purchaser
      shall thereafter own 2,601,862 shares of Common Stock of Patients (the “Closing
      Shares”). On the Amendment and Restatement Date, Patients will deliver to the
      Purchaser the stock certificates evidencing the Closing Shares registered in
      the
      Purchaser’s name.

     

    3.  Closing,
      Delivery and Payment. 

     

    3.1  Closing.
      Subject
      to the terms and conditions herein, the closing of the transactions contemplated
      hereby (the “Closing”), shall take place on the date hereof, at such time or
      place as Patients and the Purchaser may mutually agree (such date is hereinafter
      referred to as the “Amendment and Restatement Date”).

     

    3.2  Delivery.
      At the
      Closing on the Amendment and Restatement Date, Patients and the Company will
      deliver to the Purchaser, among other things, the Closing Shares, the Note
      and
      the Warrant.

     

    4.  Representations
      and Warranties of Patients and the Company.
      Patients and the Company hereby represent and warrant to the Purchaser as
      follows:

     

    4.1  Organization,
      Good Standing and Qualification.
      Each of
      Patients and each of its Subsidiaries is a corporation, partnership or limited
      liability company, as the case may be, duly organized, validly existing and
      in
      good standing under the laws of its jurisdiction of organization. Each of
      Patients and each of its Subsidiaries has the corporate, limited liability
      company or partnership, as the case may be, power and authority to own and
      operate its properties and assets and, insofar as it is or shall be a party
      thereto, to (a) execute and deliver (i) this Agreement, (ii) the Note and
      the Warrant to be issued in connection with this Agreement, (iii) the Master
      Security Agreement dated as of January 30, 2006 between the Company, certain
      Subsidiaries of the Company and the Purchaser (as amended, modified and/or
      supplemented from time to time, the “Master Security Agreement”), (iv) the
      Registration Rights Agreement relating to the Securities dated as of the date
      hereof between Patients and the Purchaser (as amended, modified and/or
      supplemented from time to time, the “Registration Rights Agreement”), (v) the
      Subsidiary Guaranty dated as of January 30, 2006 made by Patients and certain
      Subsidiaries of the Company (as amended, modified and/or supplemented from
      time
      to time, the “Subsidiary Guaranty”), (vi) the Stock Pledge Agreement dated as of
      the date hereof by and between Patients and the Purchaser (as amended, modified
      and/or supplemented from time to time, the “Stock Pledge Agreement”), (vii) the
      Intellectual Property Security Agreement dated as of January 30, 2006 made
      by
      Patients in favor of the Purchaser (as amended, modified and/or supplemented
      from time to time, the “Patients Intellectual Property Security Agreement”),
      (viii) the Intellectual Property Security Agreement dated as of January 30,
      2006
      made by the Company and certain Subsidiaries of the Company in favor of the
      Purchaser (as amended, modified and/or supplemented from time to time, the
      “Flagship Intellectual Property Security Agreement”), (ix) the Reaffirmation of
      the Master Security Agreement, Subsidiary Guaranty, Patients Intellectual
      Property Security Agreement and Flagship Intellectual Property Security
      Agreement, dated as of the date hereof, made by the Company and Patients and
      (x)
      all other documents, instruments and agreements entered into in connection
      with
      the transactions contemplated hereby and thereby (the preceding clauses (ii)
      through (x) together with the Reaffirmation of the Limited Guaranty Agreements
      dated as of January 30, 2006 made by Fred Nazem, John H. Flood, III, Jack
      Diamond, Christopher Moody and Neil Moody in favor of the Purchaser,
      collectively, the “Related Agreements”); (b) issue and sell the Closing Shares,
      (c) issue and sell the Note and the shares of Common Stock issuable upon
      conversion of the Note (the “Note Shares”); (d) issue and sell the Warrant
      and the Warrant Shares; and (e) carry out the provisions of this Agreement
      and
      the Related Agreements and to carry on its business as presently conducted.
      Each
      of Patients and each of its Subsidiaries is duly qualified and is authorized
      to
      do business and is in good standing as a foreign corporation, partnership or
      limited liability company, as the case may be, in all jurisdictions in which
      the
      nature or location of its activities and of its properties (both owned and
      leased) makes such qualification necessary, except for those jurisdictions
      in
      which failure to do so has not, or could not reasonably be expected to have,
      individually or in the aggregate, a material adverse effect on the business,
      assets, liabilities, condition (financial or otherwise), properties, operations
      or prospects of Patients and its Subsidiaries, taken individually and as a
      whole
      (a “Material Adverse Effect”).

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    4.2  Subsidiaries.
      Each
      direct and indirect Subsidiary of Patients, the direct owner of such Subsidiary
      and its percentage ownership thereof, is set forth on Schedule 4.2. For the
      purpose of this Agreement, a “Subsidiary” of any person or entity means (i) a
      corporation or other entity whose shares of stock or other ownership interests
      having ordinary voting power (other than stock or other ownership interests
      having such power only by reason of the happening of a contingency) to elect
      a
      majority of the directors of such corporation, or other persons or entities
      performing similar functions for such person or entity, are owned, directly
      or
      indirectly, by such person or entity or (ii) a corporation or other entity
      in
      which such person or entity owns, directly or indirectly, more than 50% of
      the
      equity interests at such time. 

     

    4.3  Capitalization;
      Voting Rights. 

     

    (a)  The
      authorized capital stock of the Company, as of the date hereof consists of
      (i)
      70,000,000 shares of common stock, par value $0.001 per share (“Company Common
      Stock”), 100 shares of which are issued and outstanding, and (ii) 30,000,000
      shares of preferred stock, par value $0.001 per share (“Company Preferred
      Stock”), of which 10,948,906 shares are designated as Series A Preferred Stock,
      of which no shares are issued and outstanding and 7,692,308 are designated
      as
      Series B Preferred Stock of which no shares are issues and outstanding. The
      Company has no warrants to purchase any of its capital stock issued and
      outstanding. The authorized, issued and outstanding capital stock of Patients
      consists of (i) 125,000,000 shares of Common Stock, 55,884,347 shares of which
      are issued and outstanding, and (ii) 5,000,000 shares of preferred stock, par
      value $0.001 per share (“Preferred Stock”), no shares of which are issued and
      outstanding. In addition, Patients has warrants outstanding to purchase
      1,902,174 shares of Common Stock. The authorized, issued and outstanding capital
      stock of each Subsidiary of Patients (other than the Company, which is set
      forth
      in this clause (a)) is set forth on Schedule 4.3. 

     

    (b)  Except
      as
      disclosed on Schedule 4.3, other than: (i) the shares reserved for issuance
      under Patients’ or the Company’s stock option plans; and (ii) shares which may
      be granted pursuant to this Agreement and the Related Agreements, there are
      no
      outstanding options, warrants, rights (including conversion or preemptive rights
      and rights of first refusal), proxy or stockholder agreements, or arrangements
      or agreements of any kind for the purchase or acquisition from either Patients
      or the Company of any of its securities. Except as disclosed on Schedule 4.3,
      neither the offer, issuance or sale of any of the Note or the Warrant, or the
      issuance of any of the Closing Shares, Note Shares or Warrant Shares, nor the
      consummation of any transaction contemplated hereby will result in a change
      in
      the price or number of any securities of Patients outstanding, under
      anti-dilution or other similar provisions contained in or affecting any such
      securities.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    (c)  All
      issued and outstanding shares of (i) Company Common Stock and (ii) Patients’
Common Stock: (A) have been duly authorized and validly issued and are
      fully paid and nonassessable; and (B) were issued in compliance with all
      applicable state and federal laws concerning the issuance of
      securities.

     

    (d)  The
      rights, preferences, privileges and restrictions of the shares of Company Common
      Stock and Company Preferred Stock are as stated in the Company’s Amended and
      Restated Certificate of Incorporation .

     

    (e)  The
      rights, preferences, privileges and restrictions of the shares of the Common
      Stock and Preferred Stock are as stated in Patients’ Amended and Restated
      Certificate of Incorporation (the “Charter”). The Closing Shares, Note Shares
      and Warrant Shares have been duly and validly reserved for issuance. When issued
      in compliance with the provisions of this Agreement and Patients’ Charter, the
      Securities will be validly issued, fully paid and nonassessable, and will be
      free of any liens or encumbrances; provided, however, that the Securities may
      be
      subject to restrictions on transfer under state and/or federal securities laws
      as set forth herein or as otherwise required by such laws at the time a transfer
      is proposed.

     

    4.4  Authorization;
      Binding Obligations.
      All
      corporate, partnership or limited liability company, as the case may be, action
      on the part of Patients and each of its Subsidiaries (including their respective
      officers and directors) necessary for the authorization of this Agreement and
      the Related Agreements, the performance of all obligations of Patients and
      its
      Subsidiaries hereunder and under the other Related Agreements at the Closing,
      and the authorization, sale, issuance and delivery of the Closing Shares, Note
      and Warrant has been taken or will be taken prior to the Closing. This Agreement
      and the Related Agreements, when executed and delivered and to the extent it
      is
      a party thereto, will be valid and binding obligations of each of Patients
      and
      each of its Subsidiaries, enforceable against each such entity in accordance
      with their terms, except:

     

    (a)  as
      limited by applicable bankruptcy, insolvency, reorganization, moratorium or
      other laws of general application affecting enforcement of creditors’ rights;
      and

     

    (b)  general
      principles of equity that restrict the availability of equitable or legal
      remedies.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    The
      issuance of the Closing Shares is not and will not be subject to any preemptive
      rights or rights of first refusal that have not been properly waived or complied
      with. The issuance of the Note and the subsequent conversion of the Note into
      Note Shares are not and will not be subject to any preemptive rights or rights
      of first refusal that have not been properly waived or complied with. The
      issuance of the Warrant and the subsequent exercise of the Warrant for Warrant
      Shares are not and will not be subject to any preemptive rights or rights of
      first refusal that have not been properly waived or complied with. 

     

    4.5  Liabilities.
      Except
      as contemplated by this Agreement, or as set forth on Schedule 4.5 and the
      Junior Secured Notes, neither Patients nor any of its Subsidiaries has any
      liabilities, except current liabilities incurred in the ordinary course of
      business and liabilities reflected in the balance sheet of the Company as at
      June 30, 2006 (the “Balance Sheet Date”), which has been provided to the
      Purchaser. 

     

    4.6  Agreements;
      Action.
      Except
      as contemplated by this Agreement, as set forth on Schedule 4.6, or pursuant
      to
      the Share Exchange Documentation (for purposes hereof, the term “Share Exchange
      Documentation” means the Share Exchange Agreement dated as of January 30, 2006
      by and between the Company and Patients, and all documents, instruments and
      agreements entered into in connection therewith) or as disclosed in any Exchange
      Act Filings:

     

    (a)  There
      are
      no agreements, understandings, instruments, contracts, proposed transactions,
      judgments, orders, writs or decrees to which Patients or any of its Subsidiaries
      is a party or by which it is bound which may involve: (i) obligations
      (contingent or otherwise) of, or payments to, Patients or any of its
      Subsidiaries in excess of $50,000 (other than obligations of, or payments to,
      Patients or any of its Subsidiaries arising from purchase or sale agreements
      entered into in the ordinary course of business); or (ii) the transfer or
      license of any patent, copyright, trade secret or other proprietary right to
      or
      from Patients or any of its Subsidiaries (other than licenses arising from
      the
      purchase of “off the shelf” or other standard products); or (iii) provisions
      restricting the development, manufacture or distribution of Patients’ or any of
      its Subsidiaries’ products or services; or (iv) indemnification by Patients or
      any of its Subsidiaries with respect to infringements of proprietary
      rights.

     

    (b)  Since
      the
      Balance Sheet Date, neither Patients nor any of its Subsidiaries has: (i)
      declared or paid any dividends, or authorized or made any distribution upon
      or
      with respect to any class or series of its capital stock; (ii) incurred any
      indebtedness for money borrowed or any other liabilities (other than ordinary
      course obligations) individually in excess of $50,000 or, in the case of
      indebtedness and/or liabilities individually less than $50,000, in excess of
      $100,000 in the aggregate, other than the notes set forth on Schedule 1 attached
      hereto (collectively, the “Junior Secured Notes”); (iii) made any loans or
      advances to any person or entity in excess, individually or in the aggregate,
      of
      $100,000, other than ordinary course advances for travel expenses; or (iv)
      sold,
      exchanged or otherwise disposed of any of its assets or rights, other than
      the
      sale of its inventory in the ordinary course of business.

     

    (c)  For
      the
      purposes of subsections (a) and (b) above, all indebtedness, liabilities,
      agreements, understandings, instruments, contracts and proposed transactions
      involving the same person or entity (including persons or entities Patients
      or
      any Subsidiary of Patients has reason to believe are affiliated therewith)
      shall
      be aggregated for the purpose of meeting the individual minimum dollar amounts
      of such subsections.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    (d)  Each
      of
      Patients and the Company makes and keeps books, records, and accounts, that,
      in
      reasonable detail, accurately and fairly reflect the transactions and
      dispositions of their respective assets. Each of Patients and the Company
      maintains internal control over financial reporting (“Financial Reporting
      Controls”) designed by, or under the supervision of, their respective principal
      executive and principal financial officers, and effected by their respective
      board of directors, management, and other personnel, to provide reasonable
      assurance regarding the reliability of financial reporting and the preparation
      of financial statements for external purposes in accordance with generally
      accepted accounting principles (“GAAP”), including that: 

     

    (i)  transactions
      are executed in accordance with such company’s management’s general or specific
      authorization;

     

    (ii)  in
      the
      case of Patients, unauthorized acquisition, use, or disposition of Patients’
assets that could have a material effect on the financial statements are
      prevented or timely detected;

     

    (iii)  in
      the
      case of the Company, unauthorized acquisition, use, or disposition of the
      Company’s assets that could have a material effect on the financial statements
      are prevented or timely detected;

     

    (iv)  in
      the
      case of Patients, transactions are recorded as necessary to permit preparation
      of financial statements in accordance with GAAP, and that Patients’ receipts and
      expenditures are being made only in accordance with authorizations of Patients’
management and board of directors; 

     

    (v)  in
      the
      case of the Company, transactions are recorded as necessary to permit
      preparation of financial statements in accordance with GAAP, and that the
      Company’s receipts and expenditures are being made only in accordance with
      authorizations of the Company’s management and board of directors; 

     

    (vi)  such
      company’s transactions are recorded as necessary to maintain accountability for
      assets; and

     

    (vii)  the
      recorded accountability for such company’s assets is compared with the existing
      assets at reasonable intervals, and appropriate action is taken with respect
      to
      any differences.

     

    4.7  Obligations
      to Related Parties.
      Except
      as set forth on Schedule 4.7, there are no obligations of Patients or any of
      its
      Subsidiaries to officers, directors, stockholders or employees of Patients
      or
      any of its Subsidiaries other than:

     

    (a)  for
      payment of salary for services rendered and for bonus payments;

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    (b)  reimbursement
      for reasonable expenses incurred on behalf of Patients and its
      Subsidiaries;

     

    (c)  for
      other
      standard employee benefits made generally available to all employees (including
      stock option agreements outstanding under any stock option plan approved by
      the
      Board of Directors of Patients and each Subsidiary of Patients, as applicable);
      

     

    (d)  obligations
      listed in Patients’ and each of its Subsidiary’s financial statements;
      and

     

    (e)  the
      Junior Secured Notes.

     

    Except
      as
      described above, set forth on Schedule 4.7, or contemplated by the Share
      Exchange Documentation, none of the officers, directors or, to the best of
      either Patients’ or the Company’s knowledge, key employees or stockholders of
      Patients or any of its Subsidiaries or any members of their immediate families,
      are indebted to Patients or any of its Subsidiaries, individually or in the
      aggregate, in excess of $50,000 or have any direct or indirect ownership
      interest in any firm or corporation with which Patients or any of its
      Subsidiaries is affiliated or with which Patients or any of its Subsidiaries
      has
      a business relationship, or any firm or corporation which competes with Patients
      or any of its Subsidiaries, other than passive investments in publicly traded
      companies (representing less than one percent (1%) of such company) which may
      compete with Patients or any of its Subsidiaries. Except as described above,
      no
      officer, director or stockholder of Patients or any of its Subsidiaries, or
      any
      member of their immediate families, is, directly or indirectly, interested
      in
      any material contract with Patients or any of its Subsidiaries and no
      agreements, understandings or proposed transactions are contemplated between
      Patients or any of its Subsidiaries and any such person. Except as set forth
      on
      Schedule 4.7, neither Patients nor any of its Subsidiaries is a guarantor or
      indemnitor of any indebtedness of any other person or entity.

     

    4.8  Changes.
      Since
      the Balance Sheet Date, except as disclosed in any Schedule to this Agreement
      or
      to any of the Related Agreements, and after consummation of the transaction
      contemplated by the Share Exchange Documentation as disclosed in any Exchange
      Act Filings, there has not been:

     

    (a)  any
      change in the business, assets, liabilities, condition (financial or otherwise),
      properties, operations or prospects of Patients or any of its Subsidiaries,
      which individually or in the aggregate has had, or could reasonably be expected
      to have, individually or in the aggregate, a Material Adverse
      Effect;

     

    (b)  any
      resignation or termination of any officer, key employee or group of employees
      of
      Patients or any of its Subsidiaries; 

     

    (c)  any
      material change, except in the ordinary course of business, in the contingent
      obligations of Patients or any of its Subsidiaries by way of guaranty,
      endorsement, indemnity, warranty or otherwise;

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (d)  any
      damage, destruction or loss, whether or not covered by insurance, which has
      had,
      or could reasonably be expected to have, individually or in the aggregate,
      a
      Material Adverse Effect;

     

    (e)  any
      waiver by Patients or any of its Subsidiaries of a valuable right or of a
      material debt owed to it;

     

    (f)  any
      direct or indirect loans made by Patients or any of its Subsidiaries to any
      stockholder, employee, officer or director of Patients or any of its
      Subsidiaries, other than advances made in the ordinary course of
      business;

     

    (g)  any
      material change in any compensation arrangement or agreement with any employee,
      officer, director or stockholder of Patients or any of its Subsidiaries;

     

    (h)  any
      declaration or payment of any dividend or other distribution of the assets
      of
      Patients or any of its Subsidiaries;

     

    (i)  any
      labor
      organization activity related to Patients or any of its
      Subsidiaries;

     

    (j)  any
      debt,
      obligation or liability incurred, assumed or guaranteed by Patients or any
      of
      its Subsidiaries, except those for immaterial amounts and for current
      liabilities incurred in the ordinary course of business;

     

    (k)  any
      sale,
      assignment or transfer of any patents, trademarks, copyrights, trade secrets
      or
      other intangible assets owned by Patients or any of its
      Subsidiaries;

     

    (l)  any
      change in any material agreement to which Patients or any of its Subsidiaries
      is
      a party or by which either Patients or any of its Subsidiaries is bound which
      either individually or in the aggregate has had, or could reasonably be expected
      to have, individually or in the aggregate, a Material Adverse
      Effect;

     

    (m)  any
      other
      event or condition of any character that, either individually or in the
      aggregate, has had, or could reasonably be expected to have, individually or
      in
      the aggregate, a Material Adverse Effect; or

     

    (n)  any
      arrangement or commitment by Patients or any of its Subsidiaries to do any
      of
      the acts described in subsection (a) through (m) above.

     

    4.9  Title
      to Properties and Assets; Liens, Etc.
      Except
      as set forth on Schedule 4.9, each of Patients and each of its Subsidiaries
      has good and marketable title to its properties and assets, and good title
      to
      its leasehold interests, in each case subject to no mortgage, pledge, lien,
      lease, encumbrance or charge, other than:

     

    (a)  those
      resulting from taxes which have not yet become delinquent;

     

    (b)  minor
      liens and encumbrances which do not materially detract from the value of the
      property subject thereto or materially impair the operations of Patients or
      any
      of its Subsidiaries, so long as in each such case, such liens and encumbrances
      have no effect on the lien priority of the Purchaser in such property;
      and

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (c)  those
      that have otherwise arisen in the ordinary course of business, so long as they
      have no effect on the lien priority of the Purchaser therein.

     

    All
      facilities, machinery, equipment, fixtures, vehicles and other properties owned,
      leased or used by Patients and its Subsidiaries are in good operating condition
      and repair and are reasonably fit and usable for the purposes for which they
      are
      being used. Except as set forth on Schedule 4.9, Patients and its Subsidiaries
      are in compliance with all material terms of each lease to which it is a party
      or is otherwise bound.

     

    4.10  Intellectual
      Property. 

     

    (a)  Each
      of
      Patients and each of its Subsidiaries owns or possesses sufficient legal rights
      to all patents, trademarks, service marks, trade names, copyrights, trade
      secrets, licenses, information and other proprietary rights and processes
      necessary for its business as now conducted and, to Patients’ or the Company’s
      knowledge, as presently proposed to be conducted (the “Intellectual Property”),
      without any known infringement of the rights of others. Except as set forth
      in
      Schedule 4.10, there are no outstanding options, licenses or agreements of
      any
      kind relating to the foregoing proprietary rights, nor is Patients or any of
      its
      Subsidiaries bound by or a party to any options, licenses or agreements of
      any
      kind with respect to the patents, trademarks, service marks, trade names,
      copyrights, trade secrets, licenses, information and other proprietary rights
      and processes of any other person or entity other than such licenses or
      agreements arising from the purchase of “off the shelf” or standard
      products.

     

    (b)  Neither
      Patients nor any of its Subsidiaries has received any communications alleging
      that Patients or any of its Subsidiaries has violated any of the patents,
      trademarks, service marks, trade names, copyrights or trade secrets or other
      proprietary rights of any other person or entity, nor is Patients or any of
      its
      Subsidiaries aware of any basis therefor.

     

    (c)  Patients
      does not believe it is or will be necessary to utilize any inventions, trade
      secrets or proprietary information of any of its employees made prior to their
      employment by Patients or any of its Subsidiaries, except for inventions, trade
      secrets or proprietary information that have been rightfully assigned to
      Patients or any of its Subsidiaries.

     

    4.11  Compliance
      with Other Instruments.
      Neither
      Patients nor any of its Subsidiaries is in violation or default of (x) any
      term
      of its Charter or Bylaws, or (y) any provision of any indebtedness, mortgage,
      indenture, contract, agreement or instrument to which it is party or by which
      it
      is bound or of any judgment, decree, order or writ, which violation or default,
      in the case of this clause (y), has had, or could reasonably be expected to
      have, either individually or in the aggregate, a Material Adverse Effect. The
      execution, delivery and performance of and compliance with this Agreement and
      the Related Agreements to which it is a party, and the issuance and sale of
      the
      Note by Patients and the Company and the other Securities by Patients each
      pursuant hereto and thereto, will not, with or without the passage of time
      or
      giving of notice, result in any such material violation, or be in conflict
      with
      or constitute a default under any such term or provision, or result in the
      creation of any mortgage, pledge, lien, encumbrance or charge upon any of the
      properties or assets of Patients or any of its Subsidiaries or the suspension,
      revocation, impairment, forfeiture or nonrenewal of any permit, license,
      authorization or approval applicable to Patients or any of its Subsidiaries,
      their respective businesses or operations or any of their respective assets
      or
      properties. 

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    4.12  Litigation.
      Except
      as set forth on Schedule 4.12, and after the consummation of the transaction
      contemplated by the Share Exchange Documentation as disclosed in Exchange Act
      Filings, there is no action, suit, proceeding or investigation pending or,
      to
      Patients’ or the Company’s knowledge, currently threatened against Patients or
      any of its Subsidiaries that prevents Patients or any of its Subsidiaries from
      entering into this Agreement or the other Related Agreements, or from
      consummating the transactions contemplated hereby or thereby, or which has
      had,
      or could reasonably be expected to have, either individually or in the
      aggregate, an adverse effect on Patients or any of its Subsidiaries or any
      change in the current equity ownership of Patients or any of its Subsidiaries,
      nor is Patients or the Company aware that there is any basis to assert any
      of
      the foregoing. Neither Patients nor any of its Subsidiaries is a party to or
      subject to the provisions of any order, writ, injunction, judgment or decree
      of
      any court or government agency or instrumentality. There is no action, suit,
      proceeding or investigation by Patients or any of its Subsidiaries currently
      pending or which Patients or any of its Subsidiaries intends to
      initiate.

     

    4.13  Tax
      Returns and Payments.
      Each of
      Patients and each of its Subsidiaries has timely filed all tax returns (federal,
      state and local) required to be filed by it. All taxes shown to be due and
      payable on such returns, any assessments imposed, and all other taxes due and
      payable by Patients or any of its Subsidiaries on or before the Closing, have
      been paid or will be paid prior to the time they become delinquent. Except
      as
      set forth on Schedule 4.13, neither Patients nor any of its Subsidiaries
      has been advised:

     

    (a)  that
      any
      of its returns, federal, state or other, have been or are being audited as
      of
      the date hereof; or

     

    (b)  of
      any
      adjustment, deficiency, assessment or court decision in respect of its federal,
      state or other taxes.

     

    Neither
      Patients nor the Company has any knowledge of any liability for any tax to
      be
      imposed upon its properties or assets as of the date of this Agreement that
      is
      not adequately provided for. 

     

    4.14  Employees.
      Except
      as set forth on Schedule 4.14, neither Patients nor any of its Subsidiaries
      has
      any collective bargaining agreements with any of its employees. There is no
      labor union organizing activity pending or, to Patients’ or the Company’s
      knowledge, threatened with respect to Patients or any of its Subsidiaries.
      Except as disclosed on Schedule 4.14, neither Patients nor any of its
      Subsidiaries is a party to or bound by any currently effective employment
      contract, deferred compensation arrangement, bonus plan, incentive plan, profit
      sharing plan, retirement agreement or other employee compensation plan or
      agreement. To neither Patients’ nor the Company’s knowledge, no employee of
      Patients or any of its Subsidiaries, nor any consultant with whom Patients
      or
      any of its Subsidiaries has contracted, is in violation of any term of any
      employment contract, proprietary information agreement or any other agreement
      relating to the right of any such individual to be employed by, or to contract
      with, Patients or any of its Subsidiaries because of the nature of the business
      to be conducted by Patients or any of its Subsidiaries; and to each of Patients’
and the Company’s knowledge the continued employment by Patients and its
      Subsidiaries of their present employees, and the performance of Patients’ and
      its Subsidiaries’ contracts with its independent contractors, will not result in
      any such violation. Neither Patients nor any of its Subsidiaries is 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 their duties to Patients or any of its Subsidiaries. Neither
      Patients nor any of its Subsidiaries has received any notice alleging that
      any
      such violation has occurred. Except for employees who have a current effective
      employment agreement with Patients or any of its Subsidiaries, no employee
      of
      Patients or any of its Subsidiaries has been granted the right to continued
      employment by Patients or any of its Subsidiaries or to any material
      compensation following termination of employment with Patients or any of its
      Subsidiaries. Except as set forth on Schedule 4.14, neither Patients nor the
      Company is aware that any officer, key employee or group of employees intends
      to
      terminate his, her or their employment with Patients or any of its Subsidiaries,
      nor does Patients or any of its Subsidiaries have a present intention to
      terminate the employment of any officer, key employee or group of
      employees.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    4.15  Registration
      Rights and Voting Rights.
      Except
      as contemplated by this Agreement, or as set forth on Schedule 4.15,
      neither Patients nor any of its Subsidiaries is presently under any obligation,
      and neither Patients nor any of its Subsidiaries has granted any rights, to
      register any of Patients’ or its Subsidiaries’ presently outstanding securities
      or any of its securities that may hereafter be issued. Except as set forth
      on
      Schedule 4.15, to Patients’ and the Company’s knowledge, no stockholder of
      Patients or any of its Subsidiaries has entered into any agreement with respect
      to the voting of equity securities of Patients or any of its
      Subsidiaries.

     

    4.16  Compliance
      with Laws; Permits.
      To the
      extent applicable, neither Patients nor any of its Subsidiaries is in violation
      of any provision of the Sarbanes-Oxley Act of 2002, or any applicable provision
      of the Securities Act of 1933, as amended, or Securities Exchange Act of 1934,
      as amended, or rule of the Pink Sheet or the Principal Market (as hereinafter
      defined) or any other applicable statute, rule, regulation, order or restriction
      of any domestic or foreign government or any instrumentality or agency thereof
      in respect of the conduct of its business or the ownership of its properties
      which has had, or could reasonably be expected to have, either individually
      or
      in the aggregate, a Material Adverse Effect. For purposes hereof, the term
      “Principal Market” means the NASD OTC Bulletin Board, NASDAQ SmallCap Market,
      NASDAQ National Market System, American Stock Exchange, or New York Stock
      Exchange (whichever of the foregoing is at the time the principal trading
      exchange or market for the Common Stock.) No governmental orders, permissions,
      consents, approvals or authorizations are required to be obtained and no
      registrations or declarations are required to be filed in connection with the
      execution and delivery of this Agreement or any other Related Agreement and
      the
      issuance of any of the Securities, except such as have been duly and validly
      obtained or filed, or with respect to any filings that must be made after the
      Closing, as will be filed in a timely manner. Each of Patients and its
      Subsidiaries has all material franchises, permits, licenses and any similar
      authority necessary for the conduct of its business as now being conducted
      by
      it, the lack of which could, either individually or in the aggregate, reasonably
      be expected to have a Material Adverse Effect.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    4.17  Environmental
      and Safety Laws.
      To the
      best of its knowledge, neither Patients nor any of its Subsidiaries is in
      violation of any applicable statute, law or regulation relating to the
      environment or occupational health and safety, and to its knowledge, no material
      expenditures are or will be required in order to comply with any such existing
      statute, law or regulation. Except as set forth on Schedule 4.17, no Hazardous
      Materials (as defined below) are used or have been used, stored, or disposed
      of
      by Patients or any of its Subsidiaries or, to Patients’ or the Company’s
      knowledge, by any other person or entity on any property owned, leased or used
      by Patients or any of its Subsidiaries. For the purposes of the preceding
      sentence, “Hazardous Materials” shall mean:

     

    (a)  materials
      which are listed or otherwise defined as “hazardous” or “toxic” under any
      applicable local, state, federal and/or foreign laws and regulations that govern
      the existence and/or remedy of contamination on property, the protection of
      the
      environment from contamination, the control of hazardous wastes, or other
      activities involving hazardous substances, including building materials;
      or

     

    (b)  any
      petroleum products or nuclear materials.

     

    4.18  Valid
      Offering.
      Assuming the accuracy of the representations and warranties of the Purchaser
      contained in this Agreement, the offer, sale and issuance of the Securities
      will
      be exempt from the registration requirements of the Securities Act of 1933,
      as
      amended (the “Securities Act”), and will have been registered or qualified (or
      are exempt from registration and qualification) under the registration, permit
      or qualification requirements of all applicable state securities
      laws. 

     

    4.19  Full
      Disclosure.
      Each of
      Patients and each of its Subsidiaries has provided the Purchaser with all
      information requested by the Purchaser in connection with its decision to
      purchase the Note and Warrant, including all information Patients and its
      Subsidiaries believe is reasonably necessary to make such investment decision.
      Neither this Agreement, the Related Agreements, the exhibits and schedules
      hereto and thereto nor any other document delivered by Patients or any of its
      Subsidiaries to Purchaser or its attorneys or agents in connection herewith
      or
      therewith or with the transactions contemplated hereby or thereby, contain
      any
      untrue statement of a material fact nor omit to state a material fact necessary
      in order to make the statements contained herein or therein, in light of the
      circumstances in which they are made, not misleading. Any financial projections
      and other estimates provided to the Purchaser by Patients or any of its
      Subsidiaries were based on Patient’s and its Subsidiaries’ experience in the
      industry and on assumptions of fact and opinion as to future events which
      Patients or any of its Subsidiaries, at the date of the issuance of such
      projections or estimates, believed to be reasonable. 

     

    4.20  Insurance.
      Each of
      Patients and each of its Subsidiaries has general commercial, product liability,
      fire and casualty insurance policies, in each case with coverages which Patients
      believes are customary for companies similarly situated to the Company and
      its
      Subsidiaries in the same or similar business.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    4.21  INTENTIONALLY
      OMITTED

     

    4.22  INTENTIONALLY
      OMITTED

     

    4.23  No
      Integrated Offering.
      Neither
      Patients, nor any of its Subsidiaries or affiliates, nor any person acting
      on
      its or their behalf, has directly or indirectly made any offers or sales of
      any
      security or solicited any offers to buy any security under circumstances that
      would cause the offering of the Securities pursuant to this Agreement or any
      of
      the Related Agreements to be integrated with prior offerings by Patients for
      purposes of the Securities Act which would prevent Patients from selling the
      Securities pursuant to Rule 506 under the Securities Act, nor will Patients
      or
      any of its affiliates or Subsidiaries take any action or steps that would cause
      the offering of the Securities to be integrated with other offerings except
      the
      Junior Secured Notes.

     

    4.24  Stop
      Transfer.
      The
      Securities are restricted securities as of the date of this Agreement. Neither
      Patients nor any of its Subsidiaries will issue any stop transfer order or
      other
      order impeding the sale and delivery of any of the Securities at such time
      as
      the Securities are registered for public sale or an exemption from registration
      is available, except as required by state and federal securities laws, except
      the Junior Secured Notes.

     

    4.25  Dilution.
      Patients specifically acknowledges that its obligation to issue the Closing
      Shares, the shares of Common Stock upon conversion of the Note and exercise
      of
      the Warrant is binding upon Patients and enforceable regardless of the dilution
      such issuance may have on the ownership interests of other shareholders of
      Patients. 

     

    4.26  Patriot
      Act.Patients
      and the Company each certify that, to the best of each of Patients’ and the
      Company’s knowledge, neither Patients nor any of its Subsidiaries has been
      designated, nor is or shall be owned or controlled by, a “suspected terrorist”
as defined in Executive Order 13224. Patients hereby acknowledges that the
      Purchaser seeks to comply with all applicable laws concerning money laundering
      and related activities. In furtherance of those efforts, each of Patients and
      the Company hereby represents, warrants and covenants that: (i) none of the
      cash
      or property that Patients or any of its Subsidiaries will pay or will contribute
      to the Purchaser has been or shall be derived from, or related to, any activity
      that is deemed criminal under United States law; and (ii) no contribution or
      payment by Patients or any of its Subsidiaries to the Purchaser, to the extent
      that they are within Patients’ and/or its Subsidiaries’ control shall cause the
      Purchaser to be in violation of the United States Bank Secrecy Act, the United
      States International Money Laundering Control Act of 1986 or the United States
      International Money Laundering Abatement and Anti-Terrorist Financing Act of
      2001. Patients and/or the Company shall promptly notify the Purchaser if any
      of
      these representations, warranties or covenants ceases to be true and accurate
      regarding Patients or any of its Subsidiaries. Patients and the Company shall
      provide the Purchaser any and all additional information regarding Patients
      or
      any of its Subsidiaries that the Purchaser deems necessary or convenient to
      ensure compliance with all applicable laws concerning money laundering and
      similar activities. Patients and the Company understand and agree that if at
      any
      time it is discovered that any of the foregoing representations, warranties
      or
      covenants are incorrect, or if otherwise required by applicable law or
      regulation related to money laundering or similar activities, the Purchaser
      may
      undertake appropriate actions to ensure compliance with applicable law or
      regulation, including but not limited to segregation and/or redemption of the
      Purchaser’s investment in Patients and/or the Company. Patients and the Company
      further understand that the Purchaser may release confidential information
      about
      Patients and its Subsidiaries and, if applicable, any underlying beneficial
      owners, to proper authorities if the Purchaser, in its sole discretion,
      determines that it is in the best interests of the Purchaser in light of
      relevant rules and regulations under the laws set forth in subsection (ii)
      above.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    4.27  ERISA.
      Based
      upon the Employee Retirement Income Security Act of 1974 (“ERISA”),
      and
      the regulations and published interpretations thereunder: (i) neither Patients
      nor any of its Subsidiaries has engaged in any Prohibited Transactions (as
      defined in Section 406 of ERISA and Section 4975 of the Internal Revenue Code
      of
      1986, as amended (the “Code”));
      (ii)
      each of Patients and each of its Subsidiaries has met all applicable minimum
      funding requirements under Section 302 of ERISA in respect of its plans; (iii)
      neither Patients nor any of its Subsidiaries has any knowledge of any event
      or
      occurrence which would cause the Pension Benefit Guaranty Corporation to
      institute proceedings under Title IV of ERISA to terminate any employee benefit
      plan(s); (iv) neither Patients nor any of its Subsidiaries has any fiduciary
      responsibility for investments with respect to any plan existing for the benefit
      of persons other than Patients’ or such Subsidiary’s employees; and (v) neither
      Patients nor any of its Subsidiaries has withdrawn, completely or partially,
      from any multi-employer pension plan so as to incur liability under the
      Multiemployer Pension Plan Amendments Act of 1980.

     

    5.  Representations
      and Warranties of the Purchaser.
      The
      Purchaser hereby represents and warrants to Patients and the Company as follows
      (such representations and warranties do not lessen or obviate the
      representations and warranties of each of Patients and the Company set forth
      in
      this Agreement):

     

    5.1  No
      Shorting.
      The
      Purchaser or any of its affiliates and investment partners has not, will not
      and
      will not cause any person or entity, to directly or indirectly engage in “short
      sales” of Patients’ Common Stock as long as the Note shall be
      outstanding.

     

    5.2  Requisite
      Power and Authority.
      The
      Purchaser has all necessary power and authority under all applicable provisions
      of law to execute and deliver this Agreement and the Related Agreements and
      to
      carry out their provisions. All corporate action on the Purchaser’s part
      required for the lawful execution and delivery of this Agreement and the Related
      Agreements have been or will be effectively taken prior to the Closing. Upon
      their execution and delivery, this Agreement and the Related Agreements will
      be
      valid and binding obligations of the Purchaser, enforceable in accordance with
      their terms, except:

     

    (a)  as
      limited by applicable bankruptcy, insolvency, reorganization, moratorium or
      other laws of general application affecting enforcement of creditors’ rights;
      and

     

    (b)  as
      limited by general principles of equity that restrict the availability of
      equitable and legal remedies.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    5.3  Investment
      Representations.
      The
      Purchaser understands that the Securities are being offered and sold pursuant
      to
      an exemption from registration contained in the Securities Act based in part
      upon the Purchaser’s representations contained in this Agreement, including,
      without limitation, that the Purchaser is an “accredited investor” within the
      meaning of Regulation D under the Securities Act. The Purchaser confirms that
      it
      has received or has had full access to all the information it considers
      necessary or appropriate to make an informed investment decision with respect
      to
      the Closing Shares, the Note and the Warrant issued to it under this Agreement
      and the Note Shares and the Warrant Shares acquired by it upon the conversion
      of
      the Note and the exercise of the Warrant, respectively. The Purchaser further
      confirms that it has had an opportunity to ask questions and receive answers
      from Patients regarding Patients’ and its Subsidiaries’ business, management and
      financial affairs and the terms and conditions of the Offering, the Closing
      Shares, the Note, the Warrant and the Securities and to obtain additional
      information (to the extent Patients or the Company possessed such information
      or
      could acquire it without unreasonable effort or expense) necessary to verify
      any
      information furnished to the Purchaser or to which the Purchaser had
      access.

     

    5.4  The
      Purchaser Bears Economic Risk.
      The
      Purchaser has substantial experience in evaluating and investing in private
      placement transactions of securities in companies similar to Patients so that
      it
      is capable of evaluating the merits and risks of its investment in Patients
      and
      has the capacity to protect its own interests. The Purchaser must bear the
      economic risk of this investment until the Securities are sold pursuant to:
      (i)
      an effective registration statement under the Securities Act; or (ii) an
      exemption from registration is available with respect to such sale.

     

    5.5  Acquisition
      for Own Account.
      The
      Purchaser is acquiring the Closing Shares, the Note and Warrant and the Note
      Shares and the Warrant Shares for the Purchaser’s own account for investment
      only, and not as a nominee or agent and not with a view towards or for resale
      in
      connection with their distribution.

     

    5.6  The
      Purchaser Can Protect Its Interest.
      The
      Purchaser represents that by reason of its, or of its management’s, business and
      financial experience, the Purchaser has the capacity to evaluate the merits
      and
      risks of its investment in the Note, the Warrant and the Securities and to
      protect its own interests in connection with the transactions contemplated
      in
      this Agreement and the Related Agreements. Further, the Purchaser is aware
      of no
      publication of any advertisement in connection with the transactions
      contemplated in the Agreement or the Related Agreements.

     

    5.7  Accredited
      Investor.
      The
      Purchaser represents that it is an accredited investor within the meaning of
      Regulation D under the Securities Act.

     

    5.8  Legends. 

     

    (a)  The
      Note
      shall bear substantially the following legend: 

     

    “THIS
      NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
      STATE
      SECURITIES LAWS. THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF
      THIS
      NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
      OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE OR SUCH SHARES UNDER
      SAID
      ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
      SATISFACTORY TO PATIENTS & PHYSICIANS, INC. THAT SUCH REGISTRATION IS NOT
      REQUIRED.”

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    (b)  The
      Closing Shares, Note Shares and the Warrant Shares, if not issued by DWAC system
      (as hereinafter defined), shall bear a legend which shall be in substantially
      the following form until such shares are covered by an effective registration
      statement filed with the SEC:

     

    “THE
      SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS.
      THESE SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
      THE
      ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND
      APPLICABLE STATE LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
      PATIENTS & PHYSICIANS, INC. THAT SUCH REGISTRATION IS NOT
      REQUIRED.”

     

    (c)  The
      Warrant shall bear substantially the following legend:

     

    “THIS
      WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
      BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
      STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE
      OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
      IN
      THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT OR THE
      UNDERLYING SHARES OF COMMON STOCK UNDER SAID ACT AND APPLICABLE STATE SECURITIES
      LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO PATIENTS &
PHYSICIANS, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.”

     

    6.  Covenants
      of Patients and the Company.
      Each of
      Patients and the Company covenants and agrees with the Purchaser as
      follows:

     

    6.1  Stop-Orders.
      Patients will advise the Purchaser, promptly after it receives notice of
      issuance by any state securities commission or any other regulatory authority
      of
      any stop order or of any order preventing or suspending any offering of any
      securities of Patients, or of the suspension of the qualification of the Common
      Stock of Patients for offering or sale in any jurisdiction, or the initiation
      of
      any proceeding for any such purpose.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    6.2  Listing.
      To the
      extent the Common Stock of Patients is publicly traded, Patients shall promptly
      secure the listing or quotation, as applicable, of the Closing Shares, the
      shares of Common Stock issuable upon conversion of the Note and upon the
      exercise of the Warrant on the Principal Market upon which shares of Patients’
Common Stock are listed or quoted for trading, as applicable (subject to
      official notice of issuance) and shall maintain such listing or quotation,
      as
      applicable, so long as any other shares of Common Stock shall be so listed
      or
      quoted, as applicable. Patients will maintain the listing or quotation, as
      applicable, of its Common Stock on the Principal Market, and will comply in
      all
      material respects with Patients’ reporting, filing and other obligations under
      the bylaws or rules of the National Association of Securities Dealers (“NASD”)
      and such exchanges, as applicable. 

     

    6.3  Market
      Regulations.
      To the
      extent applicable, Patients shall notify the SEC, NASD and applicable state
      authorities, in accordance with their requirements, of the transactions
      contemplated by this Agreement, and shall take all other necessary action and
      proceedings as may be required and permitted by applicable law, rule and
      regulation, for the legal and valid issuance of the Securities to the Purchaser
      and promptly provide copies thereof to the Purchaser.

     

    6.4  Reporting
      Requirements. 

     

    (a)  Patients
      will deliver, or cause to be delivered, to the Purchaser each of the following,
      which shall be in form and detail reasonably acceptable to the
      Purchaser:

     

    (i)  As
      soon
      as available, and in any event within ninety (90) days after the end of each
      fiscal year of Patients, each of Patients’ and each of its Subsidiaries’ audited
      financial statements with a report of independent certified public accountants
      of recognized standing selected by Patients and acceptable to the Purchaser
      (the
“Accountants”), which annual financial statements shall be without qualification
      and shall include each of Patients’ and each of its Subsidiaries’ balance sheet
      as at the end of such fiscal year and the related statements of each of
      Patients’ and each of its Subsidiaries’ income, retained earnings and cash flows
      for the fiscal year then ended, prepared on a consolidating and consolidated
      basis to include Patients, each Subsidiary of Patients and each of their
      respective affiliates, all in reasonable detail and prepared in accordance
      with
      GAAP, together with (i) if and when available, copies of any management letters
      prepared by the Accountants; and (ii) a certificate of Patients’ President,
      Chief Executive Officer or Chief Financial Officer stating that such financial
      statements have been prepared in accordance with GAAP and whether or not such
      officer has knowledge of the occurrence of any Event of Default (as defined
      in
      the Note) and, if so, stating in reasonable detail the facts with respect
      thereto;

     

    (ii)  Other
      than with respect to any fiscal quarter ending on the last day of the fiscal
      year of Patients, as soon as available and in any event within forty five (45)
      days after the end of each fiscal quarter (commencing with the fiscal quarter
      ending September 30, 2006) of Patients, an unaudited/internal balance sheet
      and
      statements of income, retained earnings and cash flows of Patients and each
      of
      its Subsidiaries as at the end of and for such quarter and for the year to
      date
      period then ended, prepared on a consolidating and consolidated basis to include
      Patients, each Subsidiary of Patients and each of their respective affiliates,
      in reasonable detail and stating in comparative form the figures for the
      corresponding date and periods in the previous year, all prepared in accordance
      with GAAP, subject to year-end adjustments and accompanied by a certificate
      of
      Patients’ President, Chief Executive Officer or Chief Financial Officer, stating
      (i) that such financial statements have been prepared in accordance with GAAP,
      subject to year-end audit adjustments, and (ii) whether or not such officer
      has
      knowledge of the occurrence of any Event of Default (as defined in the Note)
      not
      theretofore reported and remedied and, if so, stating in reasonable detail
      the
      facts with respect thereto; and

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    (iii)  As
      soon
      as available and in any event within fifteen (15) business days after the end
      of
      each calendar month (commencing with the calendar month ending July 31, 2006),
      an unaudited/internal balance sheet and statements of income, retained earnings
      and cash flows of each of Patients and its Subsidiaries as at the end of and
      for
      such month and for the year to date period then ended, prepared on a
      consolidating and consolidated basis to include Patients, each Subsidiary of
      Patients and each of their respective affiliates, in reasonable detail and
      stating in comparative form the figures for the corresponding date and periods
      in the previous year, all prepared in accordance with GAAP, subject to year-end
      adjustments and accompanied by a certificate of Patients’ President, Chief
      Executive Officer or Chief Financial Officer, stating (i) that such financial
      statements have been prepared in accordance with GAAP, subject to year-end
      audit
      adjustments, and (ii) whether or not such officer has knowledge of the
      occurrence of any Event of Default (as defined in the Note) not theretofore
      reported and remedied and, if so, stating in reasonable detail the facts with
      respect thereto.

     

    (b)  To
      the
      extent applicable, Patients shall timely file with the SEC all reports required
      to be filed pursuant to the Exchange Act and refrain from terminating its status
      as an issuer required by the Exchange Act to file reports thereunder even if
      the
      Exchange Act or the rules or regulations thereunder would permit such
      termination. Promptly after (i) the filing thereof, Patients will notify the
      Purchaser, in writing (but in any event within one (1) business day of the
      filing thereof), of Patients’ most recent registration statements and annual,
      quarterly, monthly or other regular reports which Patients files with the SEC,
      and (ii) the issuance thereof, Patients will deliver, or cause to be delivered,
      to the Purchaser copies of such financial statements, reports and proxy
      statements as Patients shall send to its stockholders.

     

    (c)  Patients
      shall deliver, or cause the applicable Subsidiary of Patients to deliver, such
      other information as the Purchaser shall reasonably request.

     

    6.5  Use
      of
      Funds.
      Patients shall use the proceeds of the sale of the Closing Shares, the Note
      and
      the Warrant solely to fund the transaction contemplated by the Share Exchange
      Documentation and for general working capital purposes. 

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    6.6  Access
      to Facilities.
      Each of
      Patients and each of its Subsidiaries will permit any representatives designated
      by the Purchaser (or any successor of the Purchaser), upon reasonable notice
      and
      during normal business hours, at Patients’ and the Company’s joint and several
      expense and accompanied by a representative of Patients or any Subsidiary
      (provided (a) that no such prior notice shall be required to be given and no
      such representative of Patients or any Subsidiary shall be required to accompany
      the Purchaser in the event the Purchaser believes such access is necessary
      to
      preserve or protect the Collateral (as defined in the Master Security Agreement)
      or following the occurrence and during the continuance of an Event of Default
      (as defined in the Note) and (b) so long as no Event of Default shall have
      occurred and is then continuing (i) Purchaser shall not visit and inspect the
      properties of Patients and its Subsidiary more than four (4) times in any
      calendar year and (ii) Patients and the Company shall not be obligated to pay
      to
      Purchaser more than $8,000 during any calendar year in connection with the
      activities described in clauses (a), (b) and (c) below), to:

     

    (a)  visit
      and
      inspect any of the properties of Patients or any of its
      Subsidiaries;

     

    (b)  examine
      the corporate and financial records of Patients or any of its Subsidiaries
      (unless such examination is not permitted by federal, state or local law or
      by
      contract) and make copies thereof or extracts therefrom; and

     

    (c)  discuss
      the affairs, finances and accounts of Patients or any of its Subsidiaries with
      the directors, officers and independent accountants of Patients or any of its
      Subsidiaries.

     

    Notwithstanding
      the foregoing, neither Patients nor any of its Subsidiaries will provide any
      material, non-public information to the Purchaser unless the Purchaser signs
      a
      confidentiality agreement and otherwise complies with Regulation FD under the
      federal securities laws.

     

    6.7  Taxes.
      Each of
      Patients and each of its Subsidiaries will promptly pay and discharge, or cause
      to be paid and discharged, when due and payable, all taxes, assessments and
      governmental charges or levies imposed upon the income, profits, property or
      business of Patients and its Subsidiaries; provided, however, that any such
      tax,
      assessment, charge or levy need not be paid currently if (i) the validity
      thereof shall currently and diligently be contested in good faith by appropriate
      proceedings, (ii) such tax, assessment, charge or levy shall have no effect
      on
      the lien priority of the Purchaser in any property of Patients or any of its
      Subsidiaries and (iii) if Patients and/or such Subsidiary shall have set aside
      on its books adequate reserves with respect thereto in accordance with GAAP;
      and
      provided, further, that Patients and its Subsidiaries will pay all such taxes,
      assessments, charges or levies forthwith upon the commencement of proceedings
      to
      foreclose any lien which may have attached as security therefor.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    6.8  Insurance.
      Each of
      Patients and its Subsidiaries will keep its assets which are of an insurable
      character insured by financially sound and reputable insurers against loss
      or
      damage by fire, explosion and other risks customarily insured against by
      companies in similar business similarly situated as Patients and its
      Subsidiaries; and Patients and its Subsidiaries will maintain, with financially
      sound and reputable insurers, insurance against other hazards and risks and
      liability to persons and property to the extent and in the manner which Patients
      reasonably believes is customary for companies in similar business similarly
      situated as Patients
      and its Subsidiaries and to the extent available on commercially reasonable
      terms. Patients, and each of its Subsidiaries, will jointly and severally bear
      the full risk of loss from any loss of any nature whatsoever with respect to
      the
      assets pledged to the Purchaser as security for their respective obligations
      hereunder and under the Related Agreements. At Patients’ and each of its
      Subsidiaries’ joint and several cost and expense in amounts and with carriers
      reasonably acceptable to the Purchaser, each of Patients and each of its
      Subsidiaries shall (i) keep all its insurable properties and properties in
      which
      it has an interest insured against the hazards of fire, flood, sprinkler
      leakage, those hazards covered by extended coverage insurance and such other
      hazards, and for such amounts, as is customary in the case of companies engaged
      in businesses similar to Patients’ or the respective Subsidiary’s including
      business interruption insurance; (ii) maintain a bond in such amounts as is
      customary in the case of companies engaged in businesses similar to Patients’ or
      the respective Subsidiary’s insuring against larceny, embezzlement or other
      criminal misappropriation of insured’s officers and employees who may either
      singly or jointly with others at any time have access to the assets or funds
      of
      Patients or any of its Subsidiaries either directly or through governmental
      authority to draw upon such funds or to direct generally the disposition of
      such
      assets; (iii) maintain public
      and product liability insurance against claims for personal injury, death or
      property damage suffered by others; (iv) maintain all such worker’s compensation
      or similar insurance as may be required under the laws of any state or
      jurisdiction in which Patients or the respective Subsidiary is engaged in
      business; and (v) furnish the Purchaser with (x) a copy of all policies and
      evidence of the maintenance of such policies at least thirty (30) days before
      any expiration date, (y) excepting the Company’s workers’ compensation policy,
      endorsements to such policies naming the Purchaser as “co-insured” or
“additional insured” and appropriate loss payable endorsements in form and
      substance satisfactory to the Purchaser, naming the Purchaser as loss payee,
      and
      (z) evidence that as to the Purchaser the insurance coverage shall not be
      impaired or invalidated by any act or neglect of Patients or any Subsidiary
      and
      the insurer will provide the Purchaser with at least thirty (30) days notice
      prior to cancellation. Patients and each Subsidiary shall instruct the insurance
      carriers that in the event of any loss thereunder, the carriers shall make
      payment for such loss to Patients and/or the Subsidiary and the Purchaser
      jointly. In the event that as of the date of receipt of each loss recovery
      upon
      any such insurance, the Purchaser has not declared an event of default with
      respect to this Agreement or any of the Related Agreements, then Patients and/or
      such Subsidiary shall be permitted to direct the application of such loss
      recovery proceeds toward investment in property, plant and equipment that would
      comprise “Collateral” secured by the Purchaser’s security interest pursuant to
      the Master Security Agreement, any Related Agreement and/or such other security
      agreement as shall be required by the Purchaser, with any surplus funds to
      be
      applied toward payment of the obligations of Patients and/or the Company to
      the
      Purchaser. In the event that the Purchaser has properly declared an event of
      default with respect to this Agreement or any of the Related Agreements, then
      all loss recoveries received by the Purchaser upon any such insurance thereafter
      may be applied to the obligations of Patients and/or the Company hereunder
      and
      under the Related Agreements, in such order as the Purchaser may determine.
      Any
      surplus (following satisfaction of all of the respective obligations of Patients
      and the Company to the Purchaser) shall be paid by the Purchaser to Patients
      or
      applied as may be otherwise required by law. Any deficiency thereon shall be
      paid by Patients or the Subsidiary, as applicable, to the Purchaser, on
      demand. 

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    6.9  Intellectual
      Property.
      Each of
      Patients and each of its Subsidiaries shall maintain in full force and effect
      its existence, rights and franchises and all licenses and other rights to use
      Intellectual Property owned or possessed by it and reasonably deemed to be
      necessary to the conduct of its business.

     

    6.10  Properties.
      Each of
      Patients and each of its Subsidiaries will keep its properties in good repair,
      working order and condition, reasonable wear and tear excepted, and from time
      to
      time make all needful and proper repairs, renewals, replacements, additions
      and
      improvements thereto; and each of Patients and each of its Subsidiaries will
      at
      all times comply with each provision of all leases to which it is a party or
      under which it occupies property if the breach of such provision could, either
      individually or in the aggregate, reasonably be expected to have a Material
      Adverse Effect.

     

    6.11  Confidentiality.
      Patients will not, and will not permit any of its Subsidiaries to, disclose,
      and
      will not include in any public announcement, the name of the Purchaser, unless
      expressly agreed to by the Purchaser or unless and until such disclosure is
      required by law or applicable regulation, and then only to the extent of such
      requirement. Notwithstanding the foregoing, Patients may disclose the
      Purchaser’s identity and the terms of this Agreement to its current and
      prospective debt and equity financing sources.

     

    6.12  Required
      Approvals.
      For so
      long as twenty-five percent (25%) of the principal amount of the Note is
      outstanding, Patients, without the prior written consent of the Purchaser,
      shall
      not, and shall not permit any of its Subsidiaries to:

     

    (a)  (i)
      directly or indirectly declare or pay any dividends, other than dividends paid
      to Patients or any of its wholly-owned Subsidiaries, (ii) issue any
      preferred stock that is mandatorily redeemable prior to the one year anniversary
      of Maturity Date (as defined in the Note) or (iii) redeem any of its preferred
      stock or other equity interests;

     

    (b)  liquidate,
      dissolve or effect a material reorganization (it being understood that in no
      event shall Patients or any of its Subsidiaries dissolve, liquidate or merge
      with any other person or entity (unless, in the case of such a merger, Patients
      or, in the case of merger not involving Patients, such Subsidiary, as
      applicable, is the surviving entity);

     

    (c)  become
      subject to (including, without limitation, by way of amendment to or
      modification of) any agreement or instrument which by its terms would (under
      any
      circumstances) restrict Patients’ or any of its Subsidiaries’ right to perform
      the provisions of this Agreement, any Related Agreement or any of the agreements
      contemplated hereby or thereby; 

     

    (d)  materially
      alter or change the scope of the business of Patients and its Subsidiaries
      taken
      as a whole; 

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    (e)  (i)
      create, incur, assume or suffer to exist any indebtedness (exclusive of trade
      debt and debt incurred to finance the purchase of equipment (not in excess
      of
      five percent (5%) of the fair market value of the Company’s and its
      Subsidiaries’ assets)) whether secured or unsecured other than (v) each of
      Patients’ and the Company’s obligations owed to the Purchaser, (w) indebtedness
      set forth on Schedule 6.12(e) attached hereto and made a part hereof and any
      refinancings or replacements thereof on terms no less favorable to the Purchaser
      than the indebtedness being refinanced or replaced, (x) the obligations under
      the Junior Secured Notes, in the aggregate amount of $3,000,000, and related
      documents, including a Securities Purchase Agreement, Secured Convertible Term
      Note, Registration Rights Agreement and Warrant, which obligations shall be
      subject to a subordination and intercreditor agreement (the “Subordination
      Agreement”) with the Purchaser, which shall be in form and substance
      satisfactory to Purchaser in its sole discretion, and (y) any indebtedness
      incurred in connection with the purchase of assets (other than equipment) in
      the
      ordinary course of business, or any refinancings or replacements thereof on
      terms no less favorable to the Purchaser than the indebtedness being refinanced
      or replaced, so long as any lien relating thereto shall only encumber the fixed
      assets so purchased and no other assets of Patients or any of its Subsidiaries;
      (ii) cancel any indebtedness owing to it in excess of $50,000 in the aggregate
      during any 12 month period; (iii) assume, guarantee, endorse or otherwise become
      directly or contingently liable in connection with any obligations of any other
      person or entity, except the endorsement of negotiable instruments by Patients
      or any Subsidiary thereof for deposit or collection or similar transactions
      in
      the ordinary course of business or guarantees of indebtedness otherwise
      permitted to be outstanding pursuant to this clause (e); and

     

    (f)  create
      or
      acquire any Subsidiary after the date hereof unless (i) such Subsidiary is
      a
      wholly-owned Subsidiary of Patients and (ii) such Subsidiary becomes a party
      to
      the Master Security Agreement, the Stock Pledge Agreement, the Intellectual
      Property Security Agreement and the Subsidiary Guaranty (either by executing
      a
      counterpart thereof or an assumption or joinder agreement in respect thereof)
      and, to the extent required by the Purchaser, satisfies each condition of this
      Agreement and the Related Agreements as if such Subsidiary were a Subsidiary
      on
      the Amendment and Restatement Date.

     

    6.13  Reissuance
      of Securities.
      Patients agrees to reissue certificates representing the Securities without
      the
      legends set forth in Section 5.8 above at such time as:

     

    (a)  the
      holder thereof is permitted to dispose of such Securities pursuant to Rule
      144(k) under the Securities Act; or

     

    (b)  upon
      resale subject to an effective registration statement after such Securities
      are
      registered under the Securities Act.

     

    Patients
      agrees to cooperate with the Purchaser in connection with all resales pursuant
      to Rule 144(d) and Rule 144(k) and provide legal opinions necessary to allow
      such resales provided Patients and its counsel receive reasonably requested
      representations from the Purchaser and broker, if any.

     

    6.14  Opinion.
      On the
      Amendment and Restatement Date, Patients will deliver to the Purchaser an
      opinion acceptable to the Purchaser from Patients’ external legal counsel in the
      form of Exhibit
      C
      hereto.
      Patients will provide, at Patients’ expense, such other legal opinions in the
      future as are deemed reasonably necessary by the Purchaser (and acceptable
      to
      the Purchaser) in connection with the Closing Shares, the conversion of the
      Note
      and exercise of the Warrant.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    6.15  Margin
      Stock.Patients
      will not permit any of the proceeds of the Closing Shares, the Note or the
      Warrant to be used directly or indirectly to “purchase” or “carry” “margin
      stock” or to repay indebtedness incurred to “purchase” or “carry” “margin stock”
within the respective meanings of each of the quoted terms under Regulation
      U of
      the Board of Governors of the Federal Reserve System as now and from time to
      time hereafter in effect.

     

    6.16  Financing
      Right of First Refusal. 

     

    (a)  Patients
      hereby grants to the Purchaser a right of first refusal to provide any
      Additional Financing (as defined below) to be issued by Patients and/or any
      of
      its Subsidiaries, subject to the following terms and conditions. From and after
      the date hereof, prior to the incurrence of any additional indebtedness and/or
      the sale or issuance of any equity interests of Patients or any of its
      Subsidiaries (an “Additional Financing”), Patients and/or any Subsidiary of
      Patients, as the case may be, shall notify the Purchaser of its intention to
      enter into such Additional Financing. In connection therewith, Patients and/or
      the applicable Subsidiary thereof shall submit a fully executed term sheet
      (a
“Proposed Term Sheet”) to the Purchaser setting forth the terms, conditions and
      pricing of any such Additional Financing (such financing to be negotiated on
      “arm’s length” terms and the terms thereof to be negotiated in good faith)
      proposed to be entered into by Patients and/or such Subsidiary. The Purchaser
      shall have the right, but not the obligation, to deliver its own proposed term
      sheet (the “Purchaser Term Sheet”) setting forth the terms and conditions upon
      which the Purchaser would be willing to provide such Additional Financing to
      Patients and/or such Subsidiary. The Purchaser Term Sheet shall contain terms
      no
      less favorable to Patients and/or such Subsidiary than those outlined in
      Proposed Term Sheet. The Purchaser shall deliver such Purchaser Term Sheet
      within ten business days of receipt of each such Proposed Term Sheet. If the
      provisions of the Purchaser Term Sheet are at least as favorable to Patients
      and/or such Subsidiary, as the case may be, as the provisions of the Proposed
      Term Sheet, Patients and/or such Subsidiary shall enter into and consummate
      the
      Additional Financing transaction outlined in the Purchaser Term
      Sheet.

     

    (b)  Patients
      will not, and will not permit its Subsidiaries to, agree, directly or
      indirectly, to any restriction with any person or entity which limits the
      ability of the Purchaser to consummate an Additional Financing with Patients
      or
      any of its Subsidiaries.

     

    6.17  Authorization
      and Reservation of Shares.
      Patients shall at all times have authorized and reserved a sufficient number
      of
      shares of Common Stock to provide for the conversion of the Note and exercise
      of
      the Warrants.

     

    6.18  INTENTIONALLY
      OMITTED.

     

    6.19  Obligations
      to Nazem, Inc.
      The
      maximum obligation of the Company to Nazem Inc. shall at no time be greater
      than
      $50,000. 

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    6.20  INTENTIONALLY
      OMMITTED.

     

    7.  Covenants
      of the Purchaser.
      The
      Purchaser covenants and agrees with Patients as follows:

     

    7.1  Confidentiality.
      The
      Purchaser will not disclose, and will not include in any public announcement,
      the name of Patients or the Company, unless expressly agreed to by Patients
      or
      unless and until such disclosure is required by law or applicable regulation,
      and then only to the extent of such requirement.

     

    7.2  Non-Public
      Information.
      The
      Purchaser will not effect any sales in the shares of Patients’ Common Stock
      while in possession of material, non-public information regarding Patients
      if
      such sales would violate applicable securities law.

     

    7.3  Limitation
      on Acquisition of Common Stock of Patients.
      Notwithstanding anything to the contrary contained in this Agreement, any
      Related Agreement or any document, instrument or agreement entered into in
      connection with any other transactions between the Purchaser and Patients,
      the
      Purchaser may not acquire stock in Patients (including, without limitation,
      pursuant to a contract to purchase, by exercising an option or warrant, by
      converting any other security or instrument, by acquiring or exercising any
      other right to acquire, shares of stock or other security convertible into
      shares of stock in Patients, or otherwise, and such contracts, options,
      warrants, conversion or other rights shall not be enforceable or exercisable)
      to
      the extent such stock acquisition would cause any interest (including any
      original issue discount) payable by Patients to the Purchaser not to qualify
      as
“portfolio interest” within the meaning of Section 881(c)(2) of the Code, by
      reason of Section 881(c)(3) of the Code, taking into account the
      constructive ownership rules under Section 871(h)(3)(C) of the Code (the “Stock
      Acquisition Limitation”). The Stock Acquisition Limitation shall automatically
      become null and void without any notice to Patients upon the earlier to occur
      of
      either (a) Patients’ delivery to the Purchaser of a Notice of Redemption (as
      defined in the Note) or (b) the existence of an Event of Default (as defined
      in
      the Note) at a time when the average closing price of Patients’ common stock as
      reported by Bloomberg, L.P. on the Pink Sheets or the Principal Market, as
      applicable, for the immediately preceding five trading days is greater than
      or
      equal to 150% of the Fixed Conversion Price (as defined in the
      Note).

     

    8.  Covenants
      of Patients, the Company and the Purchaser Regarding
      Indemnification. 

     

    8.1  Patients
      and Company Indemnification.
      Patients and the Company agree to jointly and severally indemnify, hold
      harmless, reimburse and defend the Purchaser, each of the Purchaser’s officers,
      directors, agents, affiliates, control persons, and principal shareholders,
      against any and all claims, costs, expenses, liabilities, obligations, losses
      or
      damages (including reasonable legal fees) of any nature, incurred by or imposed
      upon the Purchaser which result, arise out of or are based upon: (a) any
      misrepresentation by Patients or any of its Subsidiaries or breach of any
      warranty by Patients or any of its Subsidiaries in this Agreement, any Related
      Agreement or in any exhibits or schedules attached hereto or thereto; (b) any
      breach or default in performance by Patients or any of its Subsidiaries of
      any
      covenant or undertaking to be performed by Patients or any of its Subsidiaries
      hereunder, under any Related Agreement or any other agreement entered into
      by
      Patients and/or any of its Subsidiaries and the Purchaser relating hereto or
      thereto; or (c) (i) the violation of any local, state or federal law, rule
      or
      regulation pertaining to environmental regulation, contamination or cleanup
      (collectively, "Environmental Laws"), including without limitation, the
      Comprehensive Environmental Response, Compensation and Liability Act of 1980
      (42
      U.S.C. §9601 et seq. and 40 CFR §302.1 et seq.), the Resource Conservation and
      Recovery Act of 1976 (42 U.S.C. §6901 et seq.), the Federal Water Pollution
      Control Act (33 U.S.C. §1251 et seq., and 40 CFR §116.1 et seq.), the Hazardous
      Materials Transportation Act (49 U.S.C. §1801 et seq.) and the regulations
      promulgated pursuant to said laws, all as amended and relating to or affecting
      Patients and/or any Subsidiary and Patients’ and/or any Subsidiary's properties,
      whether or not caused by or within the control of the Purchaser and/or (ii)
      the
      presence, release or threat of release of any hazardous, toxic or harmful
      substances, wastes, materials, pollutants or contaminants (including, without
      limitation, asbestos, polychlorinated biphenyls, petroleum products, flammable
      explosives, radioactive materials, infectious substances or raw materials which
      include hazardous constituents) or any other substances or raw materials which
      are included under or regulated by Environmental Laws on, in, under or affecting
      all or any portion of any property of Patients and/or any Subsidiary or any
      surrounding areas, regardless of whether or not caused by or within the control
      of the Purchaser.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    8.2  Purchaser’s
      Indemnification.
      The
      Purchaser agrees to indemnify, hold harmless, reimburse and defend Patients
      and
      the Company and each of Patients’ and the Company’s officers, directors, agents,
      affiliates, control persons and principal shareholders, at all times against
      any
      claims, costs, expenses, liabilities, obligations, losses or damages (including
      reasonable legal fees) of any nature, incurred by or imposed upon Patients
      or
      the Company which result, arise out of or are based upon: (a) any
      misrepresentation by the Purchaser or breach of any warranty by the Purchaser
      in
      this Agreement or in any exhibits or schedules attached hereto or any Related
      Agreement; or (b) any breach or default in performance by the Purchaser of
      any covenant or undertaking to be performed by the Purchaser hereunder, or
      any
      other agreement entered into by the Purchaser and Patients and/or the Company
      relating hereto.

     

    9.  Conversion
      of Convertible Note. 

     

    9.1  Mechanics
      of Conversion. 

     

    (a)  Provided
      the Purchaser has notified Patients of the Purchaser’s intention to sell the
      Note Shares and the Note Shares are included in an effective registration
      statement or are otherwise exempt from registration when sold: (i) upon the
      conversion of the Note or part thereof, Patients shall, at its own cost and
      expense, take all necessary action (including the issuance of an opinion of
      counsel reasonably acceptable to the Purchaser following a request by the
      Purchaser) to assure that Patients’ transfer agent shall issue shares of
      Patients’ Common Stock in the name of the Purchaser (or its nominee) or such
      other persons as designated by the Purchaser in accordance with Section 9.1(b)
      hereof and in such denominations to be specified representing the number of
      Note
      Shares issuable upon such conversion; and (ii) Patients warrants that no
      instructions other than these instructions have been or will be given to the
      transfer agent of Patients’ Common Stock and that after the Effectiveness Date
      (as defined in the Registration Rights Agreement) the Note Shares issued will
      be
      freely transferable subject to the prospectus delivery requirements of the
      Securities Act and the provisions of this Agreement, and will not contain a
      legend restricting the resale or transferability of the Note
      Shares.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    (b)  The
      Purchaser will give notice of its decision to exercise its right to convert
      the
      Note or part thereof by telecopying or otherwise delivering an executed and
      completed notice of the number of shares to be converted to Patients (the
“Notice of Conversion”). The Purchaser will not be required to surrender the
      Note until the Purchaser receives a credit to the account of the Purchaser’s
      prime broker through the DWAC system (as defined below), representing the Note
      Shares or until the Note has been fully satisfied. Each date on which a Notice
      of Conversion is telecopied or delivered to Patients in accordance with the
      provisions hereof shall be deemed a “Conversion Date.” Pursuant to the terms of
      the Notice of Conversion, Patients will issue instructions to the transfer
      agent
      accompanied by an opinion of counsel within one (1) business day of the date
      of
      the delivery to Patients of the Notice of Conversion and shall cause the
      transfer agent to transmit the certificates representing the Conversion Shares
      to the Holder by crediting the account of the Purchaser’s prime broker with the
      Depository Trust Company (“DTC”) through its Deposit Withdrawal Agent Commission
      (“DWAC”) system within three (3) business days after receipt by Patients of the
      Notice of Conversion (the “Delivery Date”).

     

    (c)  Patients
      understands that a delay in the delivery of the Note Shares in the form required
      pursuant to Section 9 hereof beyond the Delivery Date could result in economic
      loss to the Purchaser. In the event that Patients fails to direct its transfer
      agent to deliver the Note Shares to the Purchaser via the DWAC system within
      the
      time frame set forth in Section 9.1(b) above and the Note Shares are not
      delivered to the Purchaser by the Delivery Date, as compensation to the
      Purchaser for such loss, Patients and the Company jointly and severally agree
      to
      pay late payments to the Purchaser for late issuance of the Note Shares in
      the
      form required pursuant to Section 9 hereof upon conversion of the Note in the
      amount equal to the greater of: (i) $500 per business day after the Delivery
      Date or (ii) the Purchaser’s actual damages from such delayed delivery. Patients
      and the Company shall jointly and severally pay any payments incurred under
      this
      Section in immediately available funds upon demand and, in the case of actual
      damages, accompanied by reasonable documentation of the amount of such damages.
      Such documentation shall show the number of shares of Common Stock the Purchaser
      is forced to purchase (in an open market transaction) which the Purchaser
      anticipated receiving upon such conversion, and shall be calculated as the
      amount by which (A) the Purchaser’s total purchase price (including customary
      brokerage commissions, if any) for the shares of Common Stock so purchased
      exceeds (B) the aggregate principal and/or interest amount of the Note, for
      which such Conversion Notice was not timely honored.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    10.  Registration
      Rights. 

     

    10.1  Registration
      Rights Granted.
      Patients hereby grants registration rights to the Purchaser pursuant to the
      Registration Rights Agreement. 

     

    10.2  Offering
      Restrictions.
      Except
      for stock or stock options granted to employees or directors of Patients and
      the
      Company (these exceptions hereinafter referred to as the “Excepted Issuances”),
      neither Patients nor any of its Subsidiaries will, prior to the full repayment
      or conversion of the Note (together with all accrued and unpaid interest and
      fees related thereto), (a) enter into any equity line of credit agreement or
      similar agreement or (b) issue, or enter into any agreement to issue, any
      securities with a variable/floating conversion and/or pricing feature which
      are
      or could be (by conversion or registration) free-trading securities (i.e. common
      stock subject to a registration statement).

     

    11.  Miscellaneous. 

     

    11.1  Governing
      Law, Jurisdiction and Waiver of Jury Trial. 

     

    (a)  THIS
      AGREEMENT AND THE OTHER RELATED AGREEMENTS SHALL BE GOVERNED BY AND CONSTRUED
      AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE
      TO
      CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO PRINCIPLES OF
      CONFLICTS OF LAWS.

     

    (b)  EACH
      OF
      PATIENTS AND THE COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL
      COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE
      JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE COMPANY
      AND/OR PATIENTS, ON THE ONE HAND, AND THE PURCHASER, ON THE OTHER HAND,
      PERTAINING TO THIS AGREEMENT OR ANY OF THE RELATED AGREEMENTS OR TO ANY MATTER
      ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OF THE OTHER RELATED
      AGREEMENTS; PROVIDED,
      THAT
      THE PURCHASER, PATIENTS AND THE COMPANY ACKNOWLEDGE THAT ANY APPEALS FROM THOSE
      COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE COUNTY OF NEW
      YORK, STATE OF NEW YORK; AND FURTHER PROVIDED,
      THAT
      NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE PURCHASER
      FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO
      COLLECT THE OBLIGATIONS, TO REALIZE ON THE COLLATERAL (AS DEFINED IN THE MASTER
      SECURITY AGREEMENT) OR ANY OTHER SECURITY FOR THE OBLIGATIONS (AS DEFINED IN
      THE
      MASTER SECURITY AGREEMENT), OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN
      FAVOR OF THE PURCHASER. EACH OF PATIENTS AND THE COMPANY EXPRESSLY SUBMITS
      AND
      CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN
      ANY
      SUCH COURT, AND PATIENTS AND THE COMPANY HEREBY WAIVE ANY OBJECTION WHICH IT
      MAY
      HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM
      NON CONVENIENS.
      EACH OF
      PATIENTS AND THE COMPANY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS,
      COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT
      SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED
      OR CERTIFIED MAIL ADDRESSED TO PATIENTS AT THE ADDRESS SET FORTH IN SECTION
      11.8
      AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF PATIENTS’
ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
      POSTAGE PREPAID.

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

    (c)  THE
      PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH
      APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS
      OF
      THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHTS
      TO
      TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,
      WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE PURCHASER AND/OR
      THE
      COMPANY ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE
      RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT, ANY
      OTHER RELATED AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR
      THERETO.

     

    11.2  Severability.
      Wherever possible each provision of this Agreement and the Related Agreements
      shall be interpreted in such manner as to be effective and valid under
      applicable law, but if any provision of this Agreement or any Related Agreement
      shall be prohibited by or invalid or illegal under applicable law such provision
      shall be ineffective to the extent of such prohibition or invalidity or
      illegality, without invalidating the remainder of such provision or the
      remaining provisions thereof which shall not in any way be affected or impaired
      thereby.

     

    11.3  Survival.
      The
      representations, warranties, covenants and agreements made herein shall survive
      any investigation made by the Purchaser and the closing of the transactions
      contemplated hereby to the extent provided therein. All statements as to factual
      matters contained in any certificate or other instrument delivered by or on
      behalf of Patients and/or the Company pursuant hereto in connection with the
      transactions contemplated hereby shall be deemed to be representations and
      warranties by Patients and/or the Company, as the case may be, hereunder solely
      as of the date of such certificate or instrument. All indemnities set forth
      herein shall survive the execution, delivery and termination of this Agreement
      and the Note and the making and repayment of the obligations arising hereunder,
      under the Note and under the other Related Agreements.

     

    11.4  Successors.
      Except
      as otherwise expressly provided herein, the provisions hereof shall inure to
      the
      benefit of, and be binding upon, the successors, heirs, executors and
      administrators of the parties hereto and shall inure to the benefit of and
      be
      enforceable by each person or entity which shall be a holder of the Securities
      from time to time, other than the holders of Common Stock which has been sold
      by
      the Purchaser pursuant to Rule 144 or an effective registration statement.
      The
      Purchaser shall not assign its rights hereunder or under any Related Agreement
      to a competitor of the Company unless an Event of Default (as defined in the
      Note) has occurred and is continuing.

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

    11.5  Entire
      Agreement; Maximum Interest.
      This
      Agreement, the Related Agreements, the exhibits and schedules hereto and thereto
      and the other documents delivered pursuant hereto constitute the full and entire
      understanding and agreement between the parties with regard to the subjects
      hereof and no party shall be liable or bound to any other in any manner by
      any
      representations, warranties, covenants and agreements except as specifically
      set
      forth herein and therein. Nothing contained in this Agreement, any Related
      Agreement or in any document referred to herein or delivered in connection
      herewith shall be deemed to establish or require the payment of a rate of
      interest or other charges in excess of the maximum rate permitted by applicable
      law. In the event that the rate of interest or dividends required to be paid
      or
      other charges hereunder exceed the maximum rate permitted by such law, any
      payments in excess of such maximum shall be credited against amounts owed by
      Patients and/or the Company to the Purchaser and thus refunded to Patients
      and/or the Company, as the case may be.

     

    11.6  Amendment
      and Waiver. 

     

    (a)  This
      Agreement may be amended or modified only upon the written consent of Patients,
      the Company and the Purchaser.

     

    (b)  The
      obligations of Patients and the Company and the rights of the Purchaser under
      this Agreement may be waived only with the written consent of the Purchaser.
      

     

    (c)  The
      obligations of the Purchaser and the rights of Patients under this Agreement
      may
      be waived only with the written consent of Patients.

     

    (d)  The
      rights of the Company under this Agreement may be waived only with the written
      consent of the Company.

     

    11.7  Delays
      or Omissions.
      It is
      agreed that no delay or omission to exercise any right, power or remedy accruing
      to any party, upon any breach, default or noncompliance by another party under
      this Agreement or the Related Agreements, shall impair any such right, power
      or
      remedy, nor shall it be construed to be a waiver of any such breach, default
      or
      noncompliance, or any acquiescence therein, or of or in any similar breach,
      default or noncompliance thereafter occurring. All remedies, either under this
      Agreement or the Related Agreements, by law or otherwise afforded to any party,
      shall be cumulative and not alternative.

     

    11.8  Notices.
      All
      notices required or permitted hereunder shall be in writing and shall be deemed
      effectively given:

     

    (a)  upon
      personal delivery to the party to be notified;

     

    (b)  when
      sent
      by confirmed facsimile if sent during normal business hours of the recipient,
      if
      not, then on the next business day;

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

    (c)  three
      (3)
      business days after having been sent by registered or certified mail, return
      receipt requested, postage prepaid; or

     

    (d)  one
      (1)
      day after deposit with a nationally recognized overnight courier, specifying
      next day delivery, with written verification of receipt.

     

    All
      communications shall be sent as follows:

     

    
      	 	
              If
                to Patients or any Subsidiary 

              thereof,
                to:

            	 	
              Patients
                & Physicians, Inc.

              c/o
                Flagship Patient Advocates, Inc. 

              432
                Park Avenue South

              13th
                Floor

              New
                York, NY 10016

              Attention: Chief
                Financial Officer

              Facsimile: 212-340-9101

            
	 	 	 	 
	 	
              with
                a copy to:

            	 	
              Robert
                S. Matlin, Esq

              Kirkpatrick
                & Lockhart Nicholson Graham LLP

              599
                Lexington Avenue

              New
                York, NY 10022

              Facsimile: 212-536-3901

            
	 	 	 	 
	 	
              If
                to the Purchaser, to:

            	 	
              Laurus
                Master Fund, Ltd.

              c/o
                M&C Corporate Services Limited

              P.O.
                Box 309 GT

              Ugland
                House 

              George
                Town

              South
                Church Street

              Grand
                Cayman, Cayman Islands

              Facsimile: 345-949-8080

            
	 	 	 	 
	 	
              with
                a copy to:

            	 	
              John
                E. Tucker, Esq.

              825
                Third Avenue 14th Floor

              New
                York, NY 10022

              Facsimile: 212-541-4434

            
	 	 	 	 
	 	
              with
                a copy to:

            	 	
              Loeb
                & Loeb LLP

              345
                Park Avenue

              New
                York, NY 10154

              Attention:
                Scott J. Giordano, Esq.

              Facsimile:
                212-407-4990

            

    

     

    or
      at
      such other address as Patients or the Purchaser may designate by written notice
      to the other parties hereto given in accordance herewith.

     

    11.9  Attorneys’
      Fees.
      In the
      event that any suit or action is instituted to enforce any provision in this
      Agreement or any Related Agreement, the prevailing party in such dispute shall
      be entitled to recover from the losing party all fees, costs and expenses of
      enforcing any right of such prevailing party under or with respect to this
      Agreement and/or such Related Agreement, including, without limitation, such
      reasonable fees and expenses of attorneys and accountants, which shall include,
      without limitation, all fees, costs and expenses of appeals.

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

    11.10  Titles
      and Subtitles.
      The
      titles of the sections and subsections of this Agreement are for convenience
      of
      reference only and are not to be considered in construing this
      Agreement.

     

    11.11  Facsimile
      Signatures; Counterparts.
      This
      Agreement may be executed by facsimile signatures and in any number of
      counterparts, each of which shall be an original, but all of which together
      shall constitute one agreement.

     

    11.12  Broker’s
      Fees.
      Except
      as set forth on Schedule 11.12 hereof, each party hereto represents and warrants
      that no agent, broker, investment banker, person or firm acting on behalf of
      or
      under the authority of such party hereto is or will be entitled to any broker’s
      or finder’s fee or any other commission directly or indirectly in connection
      with the transactions contemplated herein. Each party hereto further agrees
      to
      indemnify each other party for any claims, losses or expenses incurred by such
      other party as a result of the representation in this Section 11.12 being
      untrue.

     

    11.13  Construction.
      Each
      party acknowledges that its legal counsel participated in the preparation of
      this Agreement and the Related Agreements and, therefore, stipulates that the
      rule of construction that ambiguities are to be resolved against the drafting
      party shall not be applied in the interpretation of this Agreement or any
      Related Agreement to favor any party against the other.

     

    [THE
      REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

     

    

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the parties hereto have executed this Amended and Restated
      Securities Purchase Agreement of the date set forth in the first paragraph
      hereof.

     

    
      	
              COMPANY:

            	
              PURCHASER:

            
	 	 
	
              FLAGSHIP
                PATIENT ADVOCATES, INC. 

            	
              LAURUS
                MASTER FUND, LTD.

            
	 	 
	 	 
	
              By:
                /S/
                Fred F.
                Nazem                                                                  
                

            	
              By:
                /S/
                David
                Grin                                                    
                

            
	 	 
	
              Name:
                Fred
                F.
                Nazem                                                                  
                

            	
              Name:
                David
                Grin               
                                                     
                

            
	 	 
	
              Title:
                CEO                                                                                    
                

            	
              Title:
                Director                                                           
                

            
	 	 
	
              PATIENTS
                & PHYSICIANS, INC. 

            	 
	 	 
	 	 
	
              By:
                /S/
                Fred F.
                Nazem                                                               
                

            	 
	 	 
	
              Name:
                Fred
                F.
                Nazem                                                                
                

            	 
	 	 
	
              Title:
                CEO                                                                                  
                

            	 

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

     

    FORM
      OF CONVERTIBLE NOTE

     

    

     

    

    
      
        
          A-1

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B

     

    FORM
      OF WARRANT

     

    

     

    

    
      
        
          B-1

        

        
        

      

      
        
        

        
          

        

      

       

    

     

    EXHIBIT
      C

     

    FORM
      OF OPINION

     

    1.  Patients
      and each of its Subsidiaries is a corporation duly incorporated, validly
      existing and in good standing under the laws of the jurisdiction of its
      formation and has all requisite corporate power and authority to own, operate
      and lease its properties and to carry on its business as it is now being
      conducted. 

     

    2.  Each
      of
      Patients and each of its Subsidiaries has the requisite corporate power and
      authority to execute, deliver and perform its obligations under the Agreement
      and the Related Agreements. All corporate action on the part of Patients and
      each of its Subsidiaries and its officers, directors and stockholders necessary
      has been taken for: (i) the authorization of the Agreement and the Related
      Agreements and the performance of all obligations of Patients and each of its
      Subsidiaries thereunder; and (ii) the authorization, sale, issuance and delivery
      of the Securities pursuant to the Agreement and the Related Agreements. The
      Closing Shares, the Note Shares and the Warrant Shares, when issued pursuant
      to
      and in accordance with the terms of the Agreement and the Related Agreements
      and
      upon delivery shall be validly issued and outstanding, fully paid and non
      assessable. 

     

    3.  The
      execution, delivery and performance by each of Patients and each of its
      Subsidiaries of the Agreement and the Related Agreements to which it is a party
      and the consummation of the transactions on its part contemplated by any
      thereof, will not, with or without the giving of notice or the passage of time
      or both:

     

    (a)  Violate
      the provisions of their respective Charter or bylaws; or

     

    (b)  To
      our
      knowledge, violate any judgment, decree, order or award of any court binding
      upon Patients or any of its Subsidiaries; or

     

    (c)  Violate
      any Delaware, New York or federal law

     

    4.  The
      Agreement and the Related Agreements will constitute, valid and legally binding
      obligations of each of Patients and each of its Subsidiaries (to the extent
      such
      entity is a party thereto), and are enforceable against each of Patients and
      each of its Subsidiaries party thereto in accordance with their respective
      terms, except:

     

    (a)  as
      limited by applicable bankruptcy, insolvency, reorganization, moratorium or
      other laws of general application affecting enforcement of creditors’ rights;
      and

     

    (b)  general
      principles of equity that restrict the availability of equitable or legal
      remedies.

     

    5.  To
      such
      counsel’s knowledge, the sale of the Closing Shares is not subject to any
      preemptive rights or rights of first refusal that have not been properly waived
      or complied with. To such counsel’s knowledge, the issuance of the Note and the
      subsequent conversion of the Note into Note Shares are not subject to any
      preemptive rights or rights of first refusal that have not been properly waived
      or complied with. To such counsel’s knowledge, the issuance of the Warrant and
      the subsequent exercise of the Warrant for Warrant Shares are not subject to
      any
      preemptive rights or, to such counsel’s knowledge, rights of first refusal that
      have not been properly waived or complied with.

     

    
      
        
        

      

      
        C-1

        
          

        

      

      
        
        

      

    

    6.  Assuming
      the accuracy of the representations and warranties of the Purchaser contained
      in
      the Agreement, the offer, sale and issuance of the Securities on the Amendment
      and Restatement Date will be exempt from the registration requirements of the
      Securities Act. To such counsel’s knowledge, neither Patients, nor any of its
      affiliates, nor any person acting on its or their behalf, has directly or
      indirectly made any offers or sales of any security or solicited any offers
      to
      buy any security under circumstances that would cause the offering of the
      Securities pursuant to the Agreement or any Related Agreement to be integrated
      with prior offerings by Patients for purposes of the Securities Act which would
      prevent Patients from selling the Securities pursuant to Rule 506 under the
      Securities Act, or any applicable exchange-related stockholder approval
      provisions.

     

    7.  To
      our
      knowledge, there is no action, suit, proceeding or investigation pending or,
      to
      such counsel’s knowledge, currently threatened against Patients or any of its
      Subsidiaries that prevents the right of Patients or any of its Subsidiaries
      to
      enter into this Agreement or any Related Agreement, or to consummate the
      transactions contemplated thereby. To such counsel’s knowledge, Patients is not
      a party or subject to the provisions of any order, writ, injunction, judgment
      or
      decree of any court or government agency or instrumentality; nor is there any
      action, suit, proceeding or investigation by Patients currently pending or
      which
      Patients intends to initiate.

     

    8.  The
      terms
      and provisions of the Master Security Agreement, the Intellectual Property
      Security Agreement and the Stock Pledge Agreement create a valid security
      interest in favor of the Purchaser in the respective rights, title and interests
      of Patients and its Subsidiaries in and to the Collateral (as defined in each
      of
      the Master Security Agreement and the Stock Pledge Agreement). Each UCC-1
      Financing Statement naming Patients or any Subsidiary thereof as debtor and
      the
      Purchaser as secured party are in proper form for filing and assuming that
      such
      UCC-1 Financing Statements have been filed with the Secretary of State of
      Delaware, the security interest created under the Master Security Agreement
      and
      the Intellectual Property Security Agreement will constitute a perfected
      security interest under the Uniform Commercial Code in favor of the Purchaser
      in
      respect of the Collateral that can be perfected by filing a financing statement.
      After giving effect to the delivery to the Purchaser of the stock certificates
      representing the ownership interests of each Subsidiary of Patients (together
      with effective endorsements) and assuming the continued possession by the
      Purchaser of such stock certificates in the State of New York, the security
      interest created in favor of the Purchaser under the Stock Pledge Agreement
      constitutes a valid and enforceable first perfected security interest in such
      ownership interests (and the proceeds thereof) in favor of the Purchaser,
      subject to no other security interest. No filings, registrations or recordings
      are required in order to perfect (or maintain the perfection or priority of)
      the
      security interest created under the Stock Pledge Agreement in respect of such
      ownership interests.

     

    

    
      
        
        

      

      
        C-2

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      1

     

    JUNIOR
      SECURED NOTES

     

     

     

     

     

    
      
        
        

      

      
        S1-1Exhibit
      10.2

    

    THIS
      NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
      LAWS. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE
      MAY
      NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
      EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT AND ANY
      APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
      SATISFACTORY TO PATIENTS & PHYSICIANS, INC. THAT SUCH REGISTRATION IS NOT
      REQUIRED.

    

    AMENDED
      AND RESTATED SECURED CONVERTIBLE TERM NOTE

    

    FOR
      VALUE
      RECEIVED, FLAGSHIP PATIENT ADVOCATES, INC. (F/K/A FLAGSHIP HEALTHCARE
      MANAGEMENT, INC.), a Delaware corporation (the “Company”),
      promises to pay to LAURUS MASTER FUND, LTD., c/o M&C Corporate Services
      Limited, P.O. Box 309 GT, Ugland House, South Church Street, George Town, Grand
      Cayman, Cayman Islands, Fax: 345-949-8080 (the “Holder”)
      or its
      registered assigns or successors in interest, the sum of Four Million One
      Hundred Thousand Dollars ($4,100,000), together with any accrued and unpaid
      interest hereon, on January 30, 2009 (the “Maturity
      Date”)
      if not
      sooner indefeasibly paid in full.

    

    Capitalized
      terms used herein without definition shall have the meanings ascribed to such
      terms in that certain Securities Purchase Agreement dated as of the date hereof
      by and between the Company, the Holder and Patients & Physicians, Inc., a
      Delaware corporation (“Patients”) (as amended, modified and/or supplemented from
      time to time, the “Purchase
      Agreement”).

    

    The
      following terms shall apply to this Secured Convertible Term Note (this
“Note”):

    

    ARTICLE
      I

    CONTRACT
      RATE AND AMORTIZATION

    

    1.1 Contract
      Rate.
      Subject
      to Sections 4.2 and 5.10, interest payable on the outstanding principal amount
      of this Note (the “Principal
      Amount”)
      shall
      accrue at a rate per annum equal to the “prime rate” published in The
      Wall Street Journal
      from
      time to time (the “Prime
      Rate”),
      plus
      one percent (1%) (the “Contract
      Rate”).
      The
      Contract Rate shall be increased or decreased as the case may be for each
      increase or decrease in the Prime Rate in an amount equal to such increase
      or
      decrease in the Prime Rate; each change to be effective as of the day of the
      change in the Prime Rate. The Contract Rate shall not at any time be less than
      seven percent (7%). Interest shall be (i) calculated on the basis of a 360
      day
      year, and (ii) payable monthly, in arrears, commencing on September 1, 2006,
      on
      the first business day of each consecutive calendar month thereafter through
      and
      including the Maturity Date, and on the Maturity Date, whether by acceleration
      or otherwise.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    1.2 Contract
      Rate Adjustments and Payments.
      The
      Contract Rate shall be calculated on the last business day of each calendar
      month hereafter (other than for increases or decreases in the Prime Rate which
      shall be calculated and become effective in accordance with the terms of Section
      1.1) until the Maturity Date. 

    

    1.3 Principal
      Payments.
      Amortizing payments of the aggregate principal amount outstanding under this
      Note at any time (the “Principal
      Amount”)
      shall
      be made by the Company on February 1, 2007 and on the first business day of
      each
      succeeding month thereafter through and including the Maturity Date (each,
      an
“Amortization
      Date”).
      Subject to Article III below, commencing on the first Amortization Date, the
      Company shall make monthly payments to the Holder on each Amortization Date,
      each such payment in the amount of $170,833.33 together with any accrued and
      unpaid interest on such portion of the Principal Amount plus any and all other
      unpaid amounts which are then owing under this Note, the Purchase Agreement
      and/or any other Related Agreement (collectively, the “Monthly
      Amount”).
      Any
      outstanding Principal Amount together with any accrued and unpaid interest
      and
      any and all other unpaid amounts which are then owing by the Company to the
      Holder under this Note, the Purchase Agreement and/or any other Related
      Agreement shall be due and payable on the Maturity Date.

    

    ARTICLE
      II

    CONVERSION
      AND REDEMPTION

    

    2.1 Payment
      of Monthly Amount.

    

    (a) Payment
      in Cash or Common Stock.
      If the
      Monthly Amount (or a portion of such Monthly Amount if not all of the Monthly
      Amount may be converted into shares of Common Stock pursuant to Section 3.2)
      is
      required to be paid in cash pursuant to Section 2.1(b), then the Company
      shall pay the Holder an amount in cash equal to 100% of the Monthly Amount
      (or
      such portion of such Monthly Amount to be paid in cash) due and owing to the
      Holder on the Amortization Date. If the Monthly Amount (or a portion of such
      Monthly Amount if not all of the Monthly Amount may be converted into shares
      of
      Common Stock pursuant to Section 3.2) is required to be paid in shares of Common
      Stock pursuant to Section 2.1(b), the number of such shares to be issued by
      Patients to the Holder on such Amortization Date (in respect of such portion
      of
      the Monthly Amount converted into shares of Common Stock pursuant to Section
      2.1(b)), shall be the number determined by dividing (i) the portion of the
      Monthly Amount converted into shares of Common Stock, by (ii) the then
      applicable Fixed Conversion Price. For purposes hereof, subject to Section
      3.6
      hereof, the initial “Fixed
      Conversion Price”
means
      $0.90.

    

    (b) Monthly
      Amount Conversion Conditions.
      Subject
      to Sections 2.1(a), 2.2, and 3.2 hereof, the Holder shall convert into
      shares of Common Stock all (subject to the limitations of this clause (b))
      of
      the Monthly Amount due on each Amortization Date if the following conditions
      (the “Conversion
      Criteria”)
      are
      satisfied: (i) if at such time, the Common Stock is publicly traded, the average
      closing price of the Common Stock as reported by Bloomberg, L.P. on the
      Principal Market for the five (5) trading days immediately preceding such
      Amortization Date shall be greater than or equal to 120% of the Fixed Conversion
      Price and (ii) the amount of such conversion does not exceed twenty five percent
      (25%) of the aggregate dollar trading volume of the Common Stock for the period
      of twenty-two (22) trading days immediately preceding such Amortization Date.
      If
      subsection (i) of the Conversion Criteria is met but subsection (ii) of the
      Conversion Criteria is not met as to the entire Monthly Amount, the Holder
      shall
      convert only such part of the Monthly Amount that meets subsection (ii) of
      the
      Conversion Criteria. Any portion of the Monthly Amount due on an Amortization
      Date that the Holder has not been able to convert into shares of Common Stock
      due to the failure to meet the Conversion Criteria, shall be paid in cash by
      the
      Company at the rate of 100% of the Monthly Amount otherwise due on such
      Amortization Date, within three (3) business days of such Amortization Date.
      

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    2.2 No
      Effective Registration.
      Notwithstanding anything to the contrary herein, none of the Company’s
      obligations to the Holder may be converted into Common Stock unless (a) either
      (i) an effective current Registration Statement (as defined in the Registration
      Rights Agreement) covering the shares of Common Stock to be issued in connection
      with satisfaction of such obligations exists or (ii) an exemption from
      registration for resale of all of the Common Stock issued and issuable is
      available pursuant to Rule 144 of the Securities Act and (b) no Event of Default
      (as hereinafter defined) exists and is continuing, unless such Event of Default
      is cured within any applicable cure period or otherwise waived in writing by
      the
      Holder.

    

    2.3 Optional
      Redemption in Cash.
      The
      Company may prepay this Note (“Optional
      Redemption”)
      by
      paying to the Holder a sum of money equal to one hundred thirty percent (130%)
      of the Principal Amount outstanding at such time together with accrued but
      unpaid interest thereon and any and all other sums due, accrued or payable
      to
      the Holder arising under this Note, the Purchase Agreement or any other Related
      Agreement (the “Redemption
      Amount”)
      outstanding on the Redemption Payment Date (as defined below). The Company
      shall
      deliver to the Holder a written notice of redemption (the “Notice
      of Redemption”)
      specifying the date for such Optional Redemption (the “Redemption
      Payment Date”),
      which
      date shall be seven (7) business days after the date of the Notice of Redemption
      (the “Redemption
      Period”).
      A
      Notice of Redemption shall not be effective with respect to any portion of
      this
      Note for which the Holder has previously delivered a Notice of Conversion (as
      hereinafter defined) or for conversions elected to be made by the Holder
      pursuant to Article III during the Redemption Period. The Redemption Amount
      shall be determined as if the Holder’s conversion elections had been completed
      immediately prior to the date of the Notice of Redemption. On the Redemption
      Payment Date, the Redemption Amount must be paid in good funds to the Holder.
      In
      the event the Company fails to pay the Redemption Amount on the Redemption
      Payment Date as set forth herein, then such Redemption Notice will be null
      and
      void.

    

    ARTICLE
      III

    HOLDER’S
      CONVERSION RIGHTS

    

    3.1 Optional
      Conversion.
      Subject
      to the terms set forth in this Article III, the Holder shall have the right,
      but
      not the obligation, to convert all or any portion of the issued and outstanding
      Principal Amount and/or accrued interest and fees due and payable, in accordance
      with the terms and conditions of the Purchase Agreement and the Related
      Agreements, into fully paid and nonassessable shares of Common Stock at the
      Fixed Conversion Price. The shares of Common Stock to be issued upon such
      conversion are herein referred to as, the “Conversion
      Shares.”

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    3.2 Conversion
      Limitation.
      Notwithstanding anything contained herein to the contrary, the Holder shall
      not
      be entitled to convert pursuant to the terms of this Note an amount that would
      be convertible into that number of Conversion Shares which would exceed the
      difference between (i) 4.99% of the outstanding shares of Common Stock and
      (ii)
      the number of shares of Common Stock beneficially owned by the Holder. For
      purposes of the immediately preceding sentence, beneficial ownership shall
      be
      determined in accordance with Section 13(d) of the Exchange Act and Regulation
      13d-3 thereunder. The Conversion Shares limitation described in this Section
      3.2
      shall automatically become null and void following notice to the Company or
      Patients upon the occurrence and during the continuance of an Event of Default,
      upon 75 days prior notice to the Company or Patients, or upon receipt by the
      Holder of a Notice of Redemption. Notwithstanding anything contained herein
      to
      the contrary, the provisions of this Section 3.2 are irrevocable and may not
      be
      waived by the Holder, Patients or any Company.

    

    3.3 Mechanics
      of Holder’s Conversion.
      In the
      event that the Holder elects to convert this Note into Common Stock, the Holder
      shall give notice of such election by delivering an executed and completed
      notice of conversion in substantially the form of Exhibit A hereto
      (appropriately completed) (“Notice
      of Conversion”)
      to
      Patients and such Notice of Conversion shall provide a breakdown in reasonable
      detail of the Principal Amount, accrued interest and fees that are being
      converted. On each Conversion Date (as hereinafter defined) and in accordance
      with its Notice of Conversion, the Holder shall make the appropriate reduction
      to the Principal Amount, accrued interest and fees, payable to Holder in
      accordance with the terms and conditions of the Purchase Agreement and the
      Related Agreements, as entered in its records and shall provide written notice
      thereof to the Company within two (2) business days after the Conversion Date.
      Each date on which a Notice of Conversion is delivered or telecopied to Patients
      in accordance with the provisions hereof shall be deemed a Conversion Date
      (the
“Conversion
      Date”).
      Pursuant to the terms of the Notice of Conversion, Patients will issue
      instructions to the transfer agent accompanied by an opinion of counsel within
      three (3) business days of the date of the delivery to Patients of the Notice
      of
      Conversion and shall cause the transfer agent to transmit the certificates
      representing the Conversion Shares to the Holder by crediting the account of
      the
      Holder’s designated broker with the Depository Trust Corporation (“DTC”)
      through its Deposit Withdrawal Agent Commission (“DWAC”)
      system
      within three (3) business days after receipt by Patients of the Notice of
      Conversion (the “Delivery
      Date”).
      In
      the case of the exercise of the conversion rights set forth herein the
      conversion privilege shall be deemed to have been exercised and the Conversion
      Shares issuable upon such conversion shall be deemed to have been issued upon
      the date of receipt by Patients of the Notice of Conversion. The Holder shall
      be
      treated for all purposes as the record holder of the Conversion Shares, unless
      the Holder provides Patients written instructions to the contrary. 

    

    3.4 Late
      Payments.
      The
      Company understands that a delay in the delivery of the Conversion Shares in
      the
      form required pursuant to this Article beyond the Delivery Date could result
      in
      economic loss to the Holder. As compensation to the Holder for such loss, in
      addition to all other rights and remedies which the Holder may have under this
      Note, applicable law or otherwise, the Company shall pay late payments to the
      Holder for any late issuance of Conversion Shares in the form required pursuant
      to this Article III upon conversion of this Note, in the amount equal to $500
      per business day after the Delivery Date. The Company shall make any payments
      incurred under this Section in immediately available funds upon
      demand.

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    3.5 Conversion
      Mechanics.
      The
      number of shares of Common Stock to be issued upon each conversion of this
      Note
      shall be determined by dividing that portion of the principal and interest
      and
      fees to be converted, if any, by the then applicable Fixed Conversion Price.
      In
      the event of any conversions of a portion of the outstanding Principal Amount
      pursuant to this Article III, such conversions shall be deemed to constitute
      conversions of the outstanding Principal Amount applying to Monthly Amounts
      for
      the remaining Amortization Dates in chronological order.

    

    3.6 Adjustment
      Provisions.
      The
      Fixed Conversion Price and number and kind of shares or other securities to
      be
      issued upon conversion determined pursuant to this Note shall be subject to
      adjustment from time to time upon the occurrence of certain events during the
      period that this conversion right remains outstanding, as follows:

    

    (a) Reclassification.
      If
      Patients at any time shall, by reclassification or otherwise, change the Common
      Stock into the same or a different number of securities of any class or classes,
      this Note, as to the unpaid Principal Amount and accrued interest thereon,
      shall
      thereafter be deemed to evidence the right to purchase an adjusted number of
      such securities and kind of securities as would have been issuable as the result
      of such change with respect to the Common Stock (i) immediately prior to or
      (ii)
      immediately after, such reclassification or other change at the sole election
      of
      the Holder.

    

    (b) Stock
      Splits, Combinations and Dividends.
      If the
      shares of Common Stock are subdivided or combined into a greater or smaller
      number of shares of Common Stock, or if a dividend is paid on the Common Stock
      or any preferred stock issued by Patients in shares of Common Stock, the Fixed
      Conversion Price shall be proportionately reduced in case of subdivision of
      shares or stock dividend or proportionately increased in the case of combination
      of shares, in each such case by the ratio which the total number of shares
      of
      Common Stock outstanding immediately after such event bears to the total number
      of shares of Common Stock outstanding immediately prior to such
      event.

    

    3.7 Reservation
      of Shares.
      During
      the period the conversion right exists, Patients will reserve from its
      authorized and unissued Common Stock a sufficient number of shares to provide
      for the issuance of Conversion Shares upon the full conversion of this Note
      and
      the Warrant. Patients represents that upon issuance, the Conversion Shares
      will
      be duly and validly issued, fully paid and non-assessable. Patients agrees
      that
      its issuance of this Note shall constitute full authority to its officers,
      agents, and transfer agents who are charged with the duty of executing and
      issuing stock certificates to execute and issue the necessary certificates
      for
      the Conversion Shares upon the conversion of this Note.

    

    3.8 Registration
      Rights.
      The
      Holder has been granted registration rights with respect to the Conversion
      Shares as set forth in the Registration Rights Agreement.

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

       

    

    ARTICLE
      IV

    EVENTS
      OF DEFAULT

    

    4.1 Events
      of Default.
      The
      occurrence of any of the following events set forth in this Section 4.1 shall
      constitute an event of default (“Event
      of Default”)
      hereunder:

    

    (a) Failure
      to Pay.
      The
      Company fails to pay when due any installment of principal, interest or other
      fees hereon in accordance herewith, or the Company or Patients fails to pay
      any
      of the other Obligations (under and as defined in the Master Security Agreement)
      when due, and, in any such case, such failure shall continue for a period of
      three (3) days following the date upon which any such payment was
      due.

    

    (b) Breach
      of Covenant.
      Patients, the Company or any of their respective Subsidiaries breaches any
      covenant or any other term or condition of this Note in any material respect
      and
      such breach, if subject to cure, continues for a period of fifteen (15) days
      after the occurrence thereof.

    

    (c) Breach
      of Representations and Warranties.
      Any
      representation, warranty or statement made or furnished by Patients, the Company
      or any of their respective Subsidiaries in this Note, the Purchase Agreement
      or
      any other Related Agreement shall at any time be false or misleading in any
      material respect on the date as of which made or deemed made.

    

    (d) Default
      Under Other Agreements.
      The
      occurrence of any default (or similar term) in the observance or performance
      of
      any other agreement or condition relating to any indebtedness or contingent
      obligation of Patients, the Company or any of their respective Subsidiaries
      beyond the period of grace (if any), the effect of which default is to cause,
      or
      permit the holder or holders of such indebtedness or beneficiary or
      beneficiaries of such contingent obligation to cause, such indebtedness to
      become due prior to its stated maturity or such contingent obligation to become
      payable; 

    

    (e) Material
      Adverse Effect.
      Any
      change or the occurrence of any event which could reasonably be expected to
      have
      a Material Adverse Effect;

    

    (f) Bankruptcy.
      Patients, the Company or any of their respective Subsidiaries shall
      (i) apply for, consent to or suffer to exist the appointment of, or the
      taking of possession by, a receiver, custodian, trustee or liquidator of itself
      or of all or a substantial part of its property, (ii) make a general
      assignment for the benefit of creditors, (iii) commence a voluntary case under
      the federal bankruptcy laws (as now or hereafter in effect), (iv) be adjudicated
      a bankrupt or insolvent, (v) file a petition seeking to take advantage of any
      other law providing for the relief of debtors, (vi) acquiesce to, without
      challenge within ten (10) days of the filing thereof, or failure to have
      dismissed, within thirty (30) days, any petition filed against it in any
      involuntary case under such bankruptcy laws, or (vii) take any action for the
      purpose of effecting any of the foregoing;

    

    (g) Judgments.
      Attachments or levies in excess of $50,000 in the aggregate are made upon
      Patients, the Company or any of their respective Subsidiary’s assets or a
      judgment is rendered against the Company’s property involving a liability of
      more than $50,000 which shall not have been vacated, discharged, stayed or
      bonded within thirty (30) days from the entry thereof;

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    (h) Insolvency.
      Patients, the Company or any of their respective Subsidiaries shall admit in
      writing its inability, or be generally unable, to pay its debts as they become
      due or cease operations of its present business;

    

    (i) Change
      of Control.
      A
      Change of Control (as defined below) shall occur with respect to Patients or
      the
      Company, unless Holder shall have expressly consented to such Change of Control
      in writing. A “Change in Control” with respect to Patients shall mean any event
      or circumstance as a result of which (i) any “Person” or “group” (as such terms
      are defined in Sections 13(d) and 14(d) of the Exchange Act, as in effect on
      the
      date hereof), other than the Holder, is or becomes the “beneficial owner” (as
      defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or
      indirectly, of 35% or more on a fully diluted basis of the then outstanding
      voting equity interest of Patients (other than a “Person” or “group” that
      beneficially owns 35% or more of such outstanding voting equity interests of
      Patients on the date hereof), (ii) the Board of Directors of Patients shall
      cease to consist of a majority of Patients’ board of directors on the date
      hereof (or directors appointed by a majority of the board of directors in effect
      immediately prior to such appointment) or (iii) Patients or any of its
      Subsidiaries merges or consolidates with, or sells all or substantially all
      of
      its assets to, any other person or entity; and a “Change of Control” with
      respect to the Company shall mean any event or circumstance as a result of
      which
      any “Person” or “group”, other than Patients, is or becomes the “beneficial
      owner”, directly or indirectly, of any of the then outstanding equity interests
      of the Company.

    

    (j) Indictment;
      Proceedings.
      The
      indictment or threatened indictment of Patients, the Company or any of their
      respective Subsidiaries or any executive officer of Patients, the Company or
      any
      of their respective Subsidiaries under any criminal statute, or commencement
      or
      threatened commencement of criminal or civil proceeding against Patients, the
      Company or any of their respective Subsidiaries or any executive officer of
      Patients, the Company or any of their respective Subsidiaries pursuant to which
      statute or proceeding penalties or remedies sought or available include
      forfeiture of any of the property of Patients, the Company or any of their
      respective Subsidiaries;

    

    (k) The
      Purchase Agreement and Related Agreements.
      (i) An
      Event of Default shall occur under and as defined in the Purchase Agreement
      or
      any other Related Agreement, (ii) Patients, the Company or any of their
      respective Subsidiaries shall breach any term or provision of the Purchase
      Agreement or any other Related Agreement in any material respect and such
      breach, if capable of cure, continues unremedied for a period of fifteen (15)
      days after the occurrence thereof, (iii) Patients, the Company or any of their
      respective Subsidiaries attempts to terminate, challenges the validity of,
      or
      its liability under, the Purchase Agreement or any Related Agreement, (iv)
      any
      proceeding shall be brought to challenge the validity, binding effect of the
      Purchase Agreement or any Related Agreement or (v) the Purchase Agreement or
      any
      Related Agreement ceases to be a valid, binding and enforceable obligation
      of
      Patients, the Company or any of their respective Subsidiaries (to the extent
      such persons or entities are a party thereto);

    

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    (l) Stop
      Trade.
      A
      Securities and Exchange Commission stop trade order or Principal Market trading
      suspension of the Common Stock shall be in effect for five (5) consecutive
      days
      or five (5) days during a period of ten (10) consecutive days, excluding in
      all
      cases a suspension of all trading on a Principal Market, provided that Patients
      shall not have been able to cure such trading suspension within thirty (30)
      days
      of the notice thereof or list the Common Stock on another Principal Market
      within sixty (60) days of such notice; or

    

    (m) Failure
      to Deliver Common Stock or Replacement Note.
      Patients’ failure to deliver Common Stock to the Holder pursuant to and in the
      form required by this Note and the Purchase Agreement and, if such failure
      to
      deliver Common Stock shall not be cured within two (2) business days or Patients
      and the Company are required to issue a replacement Note to the Holder and
      Patients and the Company shall fail to deliver such replacement Note within
      seven (7) business days.

    

    4.2 Default
      Interest.
      Following the occurrence and during the continuance of an Event of Default,
      the
      Company shall pay additional interest on this Note in an amount equal to two
      percent (2%) per month, and all outstanding obligations under this Note, the
      Purchase Agreement and each other Related Agreements, including unpaid interest,
      shall continue to accrue interest at such additional interest rate from the
      date
      of such Event of Default until the date such Event of Default is cured or
      waived.

    

    4.3 Default
      Payment.
      Following the occurrence and during the continuance of an Event of Default,
      the
      Holder, at its option, may demand repayment in full of all obligations and
      liabilities owing by Company or Patients to the Holder under this Note, the
      Purchase Agreement and/or any other Related Agreement and/or may elect, in
      addition to all rights and remedies of the Holder under the Purchase Agreement
      and the other Related Agreements and all obligations and liabilities of Patients
      and the Company under the Purchase Agreement and the other Related Agreements,
      to require the Company to make a Default Payment (“Default
      Payment”).
      The
      Default Payment shall be 130% of the outstanding principal amount of the Note,
      plus accrued but unpaid interest, all other fees then remaining unpaid, and
      all
      other amounts payable hereunder. The Default Payment shall be applied first
      to
      any fees due and payable to the Holder pursuant to this Note, the Purchase
      Agreement, and/or the other Related Agreements, then to accrued and unpaid
      interest due on this Note and then to the outstanding principal balance of
      this
      Note. The Default Payment shall be due and payable immediately on the date
      that
      the Holder has exercised its rights pursuant to this Section 4.3.

    

    ARTICLE
      V

    MISCELLANEOUS

    

    5.1 Conversion
      Privileges.
      The
      conversion privileges set forth in Article III shall remain in full force and
      effect immediately from the date hereof until the date this Note is indefeasibly
      paid in full and irrevocably terminated.

    

    5.2 Cumulative
      Remedies.
      The
      remedies under this Note shall be cumulative.

    

    5.3 Failure
      or Indulgence Not Waiver.
      No
      failure or delay on the part of the Holder hereof 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 privilege. All
      rights and remedies existing hereunder are cumulative to, and not exclusive
      of,
      any rights or remedies otherwise available.

    

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    5.4 Notices.
      Any
      notice herein required or permitted to be given shall be in writing and shall
      be
      deemed effectively given: (a) upon personal delivery to the party notified,
      (b)
      when sent by confirmed telex or facsimile if sent during normal business hours
      of the recipient, if not, then on the next business day, (c) five days after
      having been sent by registered or certified mail, return receipt requested,
      postage prepaid, or (d) one day after deposit with a nationally recognized
      overnight courier, specifying next day delivery, with written verification
      of
      receipt. All communications shall be sent to Patients and the Company at the
      address provided in the Purchase Agreement executed in connection herewith,
      and
      to the Holder at the address provided in the Purchase Agreement for the Holder,
      with a copy to John E. Tucker, Esq., 825 Third Avenue, 14th
      Floor,
      New York, New York 10022, facsimile number (212) 541-4434, or at such other
      address as Patients, the Company or the Holder may designate by ten days advance
      written notice to the other parties hereto. A Notice of Conversion shall be
      deemed given when made to Patients pursuant to the Purchase
      Agreement.

    

    5.5 Amendment
      Provision.
      The
      term “Note” and all references 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, and any successor instrument
      as such successor instrument may be amended or supplemented.

    

    5.6 Assignability.
      This
      Note shall be binding upon Patients, the Company and their respective successors
      and shall inure to the benefit of the Holder and its successors and assigns,
      and
      may be assigned by the Holder in accordance with the requirements of the
      Purchase Agreement. Neither Patients nor the Company may assign any of its
      obligations under this Note without the prior written consent of the Holder,
      any
      such purported assignment without such consent being null and void.

    

    5.7 Cost
      of Collection.
      In case
      of any Event of Default under this Note, Patients and the Company shall jointly
      and severally pay the Holder reasonable costs of collection, including
      reasonable attorneys’ fees.

    

    5.8 Governing
      Law, Jurisdiction and Waiver of Jury Trial.

    

    (a) THIS
      NOTE
      SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS
      OF
      THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
      LAW.

    

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    (b) PATIENTS
      AND THE COMPANY HEREBY CONSENT AND AGREE THAT THE STATE OR FEDERAL COURTS
      LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE
      JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN PATIENTS
      AND/OR THE COMPANY, ON THE ONE HAND, AND THE HOLDER, ON THE OTHER HAND,
      PERTAINING TO THIS NOTE OR ANY OF THE OTHER RELATED AGREEMENTS OR TO ANY MATTER
      ARISING OUT OF OR RELATED TO THIS NOTE OR ANY OF THE RELATED AGREEMENTS;
PROVIDED,
      THAT
      PATIENTS AND THE COMPANY ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY
      HAVE
      TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF
      NEW
      YORK; AND FURTHER PROVIDED,
      THAT
      NOTHING IN THIS NOTE SHALL BE DEEMED OR OPERATE TO PRECLUDE THE HOLDER FROM
      BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT
      THE OBLIGATIONS, TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
      OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE
      HOLDER. PATIENTS AND THE COMPANY EXPRESSLY SUBMIT AND CONSENT IN ADVANCE TO
      SUCH
      JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND PATIENTS
      AND
      THE COMPANY HEREBY WAIVE ANY OBJECTION WHICH EACH MAY HAVE BASED UPON LACK
      OF
      PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM
      NON CONVENIENS.
      PATIENTS AND THE COMPANY HEREBY WAIVE PERSONAL SERVICE OF THE SUMMONS, COMPLAINT
      AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE
      OF
      SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED
      MAIL ADDRESSED TO PATIENTS AND THE COMPANY AT THE ADDRESS SET FORTH IN THE
      PURCHASE AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON
      THE
      EARLIER OF PATIENTS’ OR THE COMPANY’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS
      AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.

    

    (c) PATIENTS
      AND THE COMPANY DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING
      SUCH
      APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS
      OF
      THE JUDICIAL SYSTEM AND OF ARBITRATION, PATIENTS AND THE COMPANY HERETO WAIVE
      ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO
      RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN
      THE
      HOLDER AND PATIENTS OR THE COMPANY ARISING OUT OF, CONNECTED WITH, RELATED
      OR
      INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH
      THIS
      NOTE, ANY OTHER RELATED AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR
      THERETO.

    

    5.9 Severability.
      In the
      event that any provision of this Note is invalid or unenforceable under any
      applicable statute or rule of law, then such provision shall be deemed
      inoperative to the extent that it may conflict therewith and shall be deemed
      modified to conform with such statute or rule of law. Any such provision which
      may prove invalid or unenforceable under any law shall not affect the validity
      or enforceability of any other provision of this Note.

    

    5.10 Maximum
      Payments.
      Nothing
      contained herein shall be deemed to establish or require the payment of a rate
      of interest or other charges in excess of the maximum permitted by applicable
      law. In the event that the rate of interest required to be paid or other charges
      hereunder exceed the maximum rate permitted by such law, any payments in excess
      of such maximum rate shall be credited against amounts owed by the Company
      to
      the Holder and thus refunded to the Company.

    

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    5.11 Security
      Interest and Guarantee.
      The
      Holder has been granted a security interest (i) in certain assets of Patients
      and the Company and their respective Subsidiaries as more fully described in
      the
      Master Security Agreement and (ii) in the equity interests of Patients’
Subsidiaries pursuant to the Stock Pledge Agreement. The obligations of the
      Company under this Note are guaranteed by Patients pursuant to a Guaranty dated
      as of the date hereof.

    

    5.12 Construction.
      Each
      party acknowledges that its legal counsel participated in the preparation of
      this Note and, therefore, stipulates that the rule of construction that
      ambiguities are to be resolved against the drafting party shall not be applied
      in the interpretation of this Note to favor any party against the
      other.

    

    5.13 Registered
      Obligation.
      This
      Note is intended to be a registered obligation within the meaning of Treasury
      Regulation Section 1.871-14(c)(1)(i) and the Company (or its agent) shall
      register the Note (and thereafter shall maintain such registration) as to both
      principal and any stated interest. Notwithstanding any document, instrument
      or
      agreement relating to this Note to the contrary, transfer of this Note (or
      the
      right to any payments of principal or stated interest thereunder) may only
      be
      effected by (i) surrender of this Note and either the reissuance by the Company
      of this Note to the new holder or the issuance by the Company of a new
      instrument to the new holder, or (ii) transfer through a book entry system
      maintained by the Company (or its agent), within the meaning of Treasury
      Regulation Section 1.871-14(c)(1)(i)(B).

    

    5.14 Amendment
      and Restatement.
      This
      Note amends and restates in its entirety and is given in substitution for (but
      not satisfaction of) that certain Secured Convertible Term Note dated as of
      January 30, 2006 made by Company in favor of Holder in the original principal
      amount of $4,100,000.

    

    [Balance
      of page intentionally left blank; signature page follows]

    

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    

    IN
      WITNESS WHEREOF,
      Patients and the Company have caused this Secured Convertible Term Note to
      be
      signed in its name effective as of this 22nd
      day of
      August, 2006.

     

     

    
      	 	
              
                FLAGSHIP
                  PATIENT ADVOCATES, INC.

              

               

              
                By: 
                  /S/
                  Fred F.
                  Nazem                                 
                  

                Name:
                  Fred F. Nazem

                
                  Title:
                    CEO

                

              

            
	 	 
	
              WITNESS:

              

              /S/
                Philip
                Barak                                  

            	 
	 	 
	 	
              
                PATIENTS
                  & PHYSICIANS, INC.

              

               

              
                By: 
                  /S/
                  Fred F. Nazem

                Name:
                  Fred F. Nazem

                
                  Title:
                    CEO

                

              

            
	 	 
	
              WITNESS:

              

              /S/
                Philip
                Barak                                   

            	 

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    EXHIBIT
      A

    

    NOTICE
      OF CONVERSION

    

    (To
      be
      executed by the Holder in order to convert all or part of

    the
      Secured Convertible Term Note into Common Stock)

    

    Patients
      & Physicians, Inc.

    432
      Park
      Avenue South, 13th
      Floor

    New
      York,
      New York 10016

    

    The
      undersigned hereby converts $_________ of the principal due on [specify
      applicable Repayment Date] under the Secured Convertible Term Note dated as
      of
      August ___, 2006 (the “Note”)
      issued
      by Flagship Patient Advocates, Inc. and Patients & Physicians, Inc. (the
“Company”)
      by
      delivery of shares of Common Stock of the Company (“Shares”)
      on and
      subject to the conditions set forth in the Note.

    

    
      	1.	
              Date
                of
                Conversion                  
                _______________________

            

    

    

    
      	2.	
              Shares
                To Be
                Delivered:          
                _______________________

            

    

    

    

    
      	 	
              [HOLDER]

              

              

              By:
                ____________________________

              Name:
                __________________________

              Title:
                ___________________________

            

    

    
      

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    EXHIBIT
      B

    

    PROJECTIONS

    

    [See
      Attached]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00109-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00109-of-00352.parquet"}]]