Document:

Exhibit
      10.9

     

    GUARANTY

    

    
      	
              New
                York, New York

            	
              August
                22, 2006

            

    

     

    FOR
      VALUE RECEIVED, and in consideration of note purchases, loans made or to be
      made
      or credit otherwise extended or to be extended by the purchasers, as listed
      on
      Schedule A hereto, (the “Purchasers”) to or for the account of Flagship
      Patient
      Advocates,
      Inc., a Delaware corporation (“Debtor”), from time to time and at any time and
      for other good and valuable consideration and to induce the Purchasers, in
      their
      discretion, to purchase such notes, make such loans or other extensions of
      credit and to make or grant such renewals, extensions, releases of collateral
      or
      relinquishments of legal rights as the Purchasers may deem advisable, each
      of
      the undersigned (and each of them if more than one, the liability under this
      guaranty (“Guaranty”) being joint and several) (jointly and severally referred
      to as “Guarantors”
      or “the undersigned”) unconditionally guaranties to the Purchasers, its
      successors, endorsees and assigns the prompt payment when due (whether by
      acceleration or otherwise) of all present and future obligations and liabilities
      of any and all kinds of Debtor to the Purchasers and of all instruments of
      any
      nature evidencing or relating to any such obligations and liabilities upon
      which
      Debtor or one or more parties and Debtor is or may become liable to the
      Purchasers, whether incurred by Debtor as maker, endorser, drawer, acceptor,
      guarantor, accommodation party or otherwise, and whether due or to become due,
      secured or unsecured, absolute or contingent, joint or several, and however
      or
      whenever acquired by the Purchasers, whether arising under, out of, or in
      connection with (i) that certain Securities Purchase Agreement dated as of
      January
      30, 2006
      by and between the Debtor and the Purchasers (the “Securities Purchase
      Agreement”) and (ii) each Related Agreement referred to in the Securities
      Purchase Agreement (the Securities Purchase Agreement and each Related
      Agreement, as each may be amended, modified, restated or supplemented from
      time
      to time, are collectively referred to herein as the “Documents”), or any
      documents, instruments or agreements relating to or executed in connection
      with
      the Documents or any documents, instruments or agreements referred to therein
      or
      otherwise, or any other indebtedness, obligations or liabilities of the Debtor
      to the Purchasers, whether now existing or hereafter arising, direct or
      indirect, liquidated or unliquidated, absolute or contingent, due or not due
      and
      whether under, pursuant to or evidenced by a note, agreement, guaranty,
      instrument or otherwise (all of which are herein collectively referred to as
      the
“Obligations”), and irrespective of the genuineness, validity, regularity or
      enforceability of such Obligations, or of any instrument evidencing any of
      the
      Obligations or of any collateral therefor or of the existence or extent of
      such
      collateral, and irrespective of the allowability, allowance or disallowance
      of
      any or all of the Obligations in any case commenced by or against Debtor under
      Title 11, United States Code, including, without limitation, obligations or
      indebtedness of Debtor for post-petition interest, fees, costs and charges
      that
      would have accrued or been added to the Obligations but for the commencement
      of
      such case. Terms not otherwise defined herein shall have the meaning assigned
      such terms in the Securities Purchase Agreement. In furtherance of the
      foregoing, the undersigned hereby agrees as follows:

     

    1.           No
      Impairment.
      The Purchasers may at any time and from time to time, either before or after
      the
      maturity thereof, without notice to or further consent of the undersigned,
      extend the time of payment of, exchange or surrender any collateral for, renew
      or extend any of the Obligations or increase or decrease the interest rate
      thereon, and may also make any agreement with Debtor or with any other party
      to
      or person liable on any of the Obligations, or interested therein, for the
      extension, renewal, payment, compromise, discharge or release thereof, in whole
      or in part, or for any modification of the terms thereof or of any agreement
      between the Purchasers and Debtor or any such other party or person, or make
      any
      election of rights the Purchasers may deem desirable under the United States
      Bankruptcy Code, as amended, or any other federal or state bankruptcy,
      reorganization, moratorium or insolvency law relating to or affecting the
      enforcement of creditors’ rights generally (any of the foregoing, an “Insolvency
      Law”) without in any way impairing or affecting this Guaranty. This Guaranty
      shall be effective regardless of the subsequent incorporation, merger or
      consolidation of Debtor, or any change in the composition, nature, personnel
      or
      location of Debtor and shall extend to any successor entity to Debtor, including
      a debtor in possession or the like under any Insolvency Law.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.           Guaranty
      Absolute.
      Subject to Section 5(c) hereof, each of the undersigned jointly and severally
      guarantees that the Obligations will be paid strictly in accordance with the
      terms of the Documents and/or any other document, instrument or agreement
      creating or evidencing the Obligations, regardless of any law, regulation or
      order now or hereafter in effect in any jurisdiction affecting any of such
      terms
      or the rights of Debtor with respect thereto. Guarantors hereby knowingly accept
      the full range of risk encompassed within a contract of “continuing guaranty”
which risk includes the possibility that Debtor will contract additional
      indebtedness for which Guarantors may be liable hereunder after Debtor’s
      financial condition or ability to pay its lawful debts when they fall due has
      deteriorated, whether or not Debtor has properly authorized incurring such
      additional indebtedness. The undersigned acknowledge that (i) no oral
      representations, including any representations to extend credit or provide
      other
      financial accommodations to Debtor, have been made by the Purchasers to induce
      the undersigned to enter into this Guaranty and (ii) any extension of credit
      to
      the Debtor shall be governed solely by the provisions of the Documents. The
      liability of each of the undersigned under this Guaranty shall be absolute
      and
      unconditional, in accordance with its terms, and shall remain in full force
      and
      effect without regard to, and shall not be released, suspended, discharged,
      terminated or otherwise affected by, any circumstance or occurrence whatsoever,
      including, without limitation: (a) any waiver, indulgence, renewal, extension,
      amendment or modification of or addition, consent or supplement to or deletion
      from or any other action or inaction under or in respect of the Documents or
      any
      other instruments or agreements relating to the Obligations or any assignment
      or
      transfer of any thereof, (b) any lack of validity or enforceability of any
      Document or other documents, instruments or agreements relating to the
      Obligations or any assignment or transfer of any thereof, (c) any furnishing
      of
      any additional security to the Purchasers or their assignees or any acceptance
      thereof or any release of any security by the Purchasers or their assignees,
      (d)
      any limitation on any party’s liability or obligation under the Documents or any
      other documents, instruments or agreements relating to the Obligations or any
      assignment or transfer of any thereof or any invalidity or unenforceability,
      in
      whole or in part, of any such document, instrument or agreement or any term
      thereof, (e) any bankruptcy, insolvency, reorganization, composition,
      adjustment, dissolution, liquidation or other like proceeding relating to
      Debtor, or any action taken with respect to this Guaranty by any trustee or
      receiver, or by any court, in any such proceeding, whether or not the
      undersigned shall have notice or knowledge of any of the foregoing, (f) any
      exchange, release or nonperfection of any collateral, or any release, or
      amendment or waiver of or consent to departure from any guaranty or security,
      for all or any of the Obligations or (g) any other circumstance which might
      otherwise constitute a defense available to, or a discharge of, the undersigned.
      Any amounts due from the undersigned to the Purchasers shall bear interest
      until
      such amounts are paid in full at the highest rate then applicable to the
      Obligations. Obligations include post-petition interest whether or not allowed
      or allowable.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    3.           Waivers.

     

    (a)           This
      Guaranty is a guaranty of payment and not of collection. The Purchasers shall
      be
      under no obligation to institute suit, exercise rights or remedies or take
      any
      other action against Debtor or any other person or entity liable with respect
      to
      any of the Obligations or resort to any collateral security held by it to secure
      any of the Obligations as a condition precedent to the undersigned being
      obligated to perform as agreed herein and each of the Guarantors hereby waives
      any and all rights which it may have by statute or otherwise which would require
      the Purchasers to do any of the foregoing. Each of the Guarantors further
      consents and agrees that the Purchasers shall be under no obligation to marshal
      any assets in favor of Guarantors, or against or in payment of any or all of
      the
      Obligations. The undersigned hereby waives all suretyship defenses and any
      rights to interpose any defense, counterclaim or offset of any nature and
      description which the undersigned may have or which may exist between and among
      the Purchasers, Debtor and/or the undersigned with respect to the undersigned’s
      obligations under this Guaranty, or which Debtor may assert on the underlying
      debt, including but not limited to failure of consideration, breach of warranty,
      fraud, payment (other than cash payment in full of the Obligations), statute
      of
      frauds, bankruptcy, infancy, statute of limitations, accord and satisfaction,
      and usury. 

     

    (b)           Each
      of the undersigned further waives (i) notice of the acceptance of this Guaranty,
      of the making of any such loans or extensions of credit, and of all notices
      and
      demands of any kind to which the undersigned may be entitled, including, without
      limitation, notice of adverse change in Debtor’s financial condition or of any
      other fact which might materially increase the risk of the undersigned and
      (ii)
      presentment to or demand of payment from anyone whomsoever liable upon any
      of
      the Obligations, protest, notices of presentment, non-payment or protest and
      notice of any sale of collateral security or any default of any
      sort.

     

    4.           Security.
      All sums at any time to the credit of the undersigned and any property of the
      undersigned in Purchasers possession or in the possession of any bank, financial
      institution or other entity that directly or indirectly, through one or more
      intermediaries, controls or is controlled by, or is under common control with,
      the Purchasers (each such entity, an “Affiliate”) shall be deemed held by the
      Purchasers or such Affiliate, as the case may be, as security for any and all
      of
      the undersigned’s obligations to the Purchasers and to any Affiliate of the
      Purchasers, no matter how or when arising and whether under this or any other
      instrument, agreement or otherwise. The
      Purchasers agree that any
      and all present and future debts and obligations of Debtor to any of the
      Purchasers are subordinated to the full payment and performance of, all present
      and future debts and obligations of Debtor to Laurus Master Fund, Ltd.
      (“Laurus”), and that no rights of subrogation may be enforced or exercised by
      the Purchasers until the Debtor’s obligations have been indefeasibly paid in
      full to Laurus.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    5.           Representations
      and Warranties.
      Each of the undersigned hereby jointly and severally represents and warrants
      (all of which representations and warranties shall survive until all Obligations
      are indefeasibly satisfied in full and the Documents have been irrevocably
      terminated), that:

     

    (a)           Corporate
      Status.
      It is a corporation, partnership or limited liability company, as the case
      may
      be, duly formed, validly existing and in good standing under the laws of its
      jurisdiction of formation indicated on the signature page hereof and has full
      power, authority and legal right to own its property and assets and to transact
      the business in which it is engaged.

     

    (b)           Authority
      and Execution.
      It has full power, authority and legal right to execute and deliver, and to
      perform its obligations under, this Guaranty and has taken all necessary
      corporate, partnership or limited liability company, as the case may be, action
      to authorize the execution, delivery and performance of this
      Guaranty.

     

    (c)           Legal,
      Valid and Binding Character.
      This Guaranty constitutes its legal, valid and binding obligation enforceable
      in
      accordance with its terms, except as enforceability may be limited by applicable
      bankruptcy, insolvency, reorganization, moratorium or other laws of general
      application affecting the enforcement of creditor’s rights and general
      principles of equity that restrict the availability of equitable or legal
      remedies. 

     

    (d)           Violations.
      The execution, delivery and performance of this Guaranty will not violate any
      requirement of law applicable to it or any contract, agreement or instrument
      to
      which it is a party or by which it or any of its property is bound or result
      in
      the creation or imposition of any mortgage, lien or other encumbrance other
      than
      in favor of the Purchasers on any of their property or assets pursuant to the
      provisions of any of the foregoing, which, in any of the foregoing cases, could
      reasonably be expected to have, either individually or in the aggregate, a
      Material Adverse Effect.

     

    (e)           Consents
      or Approvals.
      No consent of any other person or entity (including, without limitation, any
      creditor of the undersigned) and no consent, license, permit, approval or
      authorization of, exemption by, notice or report to, or registration, filing
      or
      declaration with, any governmental authority is required in connection with
      the
      execution, delivery, performance, validity or enforceability of this Guaranty
      by
      it, except to the extent that the failure to obtain any of the foregoing could
      not reasonably be expected to have, either individually or in the aggregate,
      a
      Material Adverse Effect.

     

    (f)           Litigation.
      No litigation, arbitration, investigation or administrative proceeding of or
      before any court, arbitrator or governmental authority, bureau or agency is
      currently pending or, to the best of its knowledge, threatened (i) with respect
      to this Guaranty or any of the transactions contemplated by this Guaranty or
      (ii) against or affecting it, or any of its property or assets, which, in each
      of the foregoing cases, if adversely determined, could reasonably be expected
      to
      have a Material Adverse Effect.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (g)           Financial
      Benefit.
      It has derived or expects to derive a financial or other advantage from each
      and
      every loan, advance or extension of credit made under the Documents or other
      Obligation incurred by the Debtor to the Purchasers.

     

    (h)           Solvency.
      As of the date of this Guaranty, (a) the fair saleable value of its assets
      exceeds its liabilities and (b) it is meeting its current liabilities as they
      mature.

     

    6.           Acceleration.

     

    (a)           If
      any breach of any covenant or condition or other event of default shall occur
      and be continuing under any agreement made by Debtor or any of the undersigned
      to the Purchasers, or either Debtor or any of the undersigned should at any
      time
      become insolvent, or make a general assignment, or if a proceeding in or under
      any Insolvency Law shall be filed or commenced by, or in respect of, any of
      the
      undersigned, or if a notice of any lien, levy, or assessment is filed of record
      with respect to any assets of any of the undersigned by the United States of
      America or any department, agency, or instrumentality thereof, or if any taxes
      or debts owing at any time or times hereafter to any one of them becomes a
      lien
      or encumbrance upon any assets of the undersigned in the Purchasers possession,
      or otherwise, any and all Obligations shall for purposes hereof, at the
      Purchasers option, be deemed due and payable without notice notwithstanding
      that
      any such Obligation is not then due and payable by Debtor.

     

    (b)           Each
      of the undersigned will promptly notify the Purchasers of any default by such
      undersigned in its respective performance or observance of any term or condition
      of any agreement to which the undersigned is a party if the effect of such
      default is to cause, or permit the holder of any obligation under such agreement
      to cause, such obligation to become due prior to its stated maturity and, if
      such an event occurs, the Purchasers shall have the right to accelerate such
      undersigned’s obligations hereunder.

     

    7.           Payments
      from Guarantors.
      The Purchasers, in their sole and absolute discretion, with or without notice
      to
      the undersigned, may apply on account of the Obligations any payment from the
      undersigned or any other guarantors, or amounts realized from any security
      for
      the Obligations, or may deposit any and all such amounts realized in a
      non-interest bearing cash collateral deposit account to be maintained as
      security for the Obligations.

     

    8.           Costs.
      The undersigned shall pay on demand, all costs, fees and expenses (including
      expenses for legal services of every kind) relating or incidental to the
      enforcement or protection of the rights of the Purchasers hereunder or under
      any
      of the Obligations.

     

    9.           No
      Termination.
      This is a continuing irrevocable guaranty and shall remain in full force and
      effect and be binding upon the undersigned, and each of the undersigned’s
      successors and assigns, until all of the Obligations have been indefeasibly
      paid
      in full and the Purchasers obligation to extend credit pursuant to the Documents
      has been irrevocably terminated. If any of the present or future Obligations
      are
      guarantied by persons, partnerships or entities in addition to the undersigned,
      the death, release or discharge in whole or in part or the bankruptcy, merger,
      consolidation, incorporation, liquidation or dissolution of one or more of
      them
      shall not discharge or affect the liabilities of any undersigned under this
      Guaranty.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    10.           Recapture.
      Anything in this Guaranty to the contrary notwithstanding, if the Purchasers
      receive any payment or payments on account of the liabilities guaranteed hereby,
      which payment or payments or any part thereof are subsequently invalidated,
      declared to be fraudulent or preferential, set aside and/or required to be
      repaid to a trustee, receiver, or any other party under any Insolvency Law,
      common law or equitable doctrine, then to the extent of any sum not finally
      retained by the Purchasers, the undersigned’s obligations to the Purchasers
      shall be reinstated and this Guaranty shall remain in full force and effect
      (or
      be reinstated) until payment shall have been made to the Purchasers, which
      payment shall be due on demand.

     

    11.           Books
      and Records.
      The books and records of the Purchasers showing the account between the
      Purchasers and Debtor shall be admissible in evidence in any action or
      proceeding, shall be binding upon the undersigned for the purpose of
      establishing the items therein set forth and shall constitute prima facie proof
      thereof.

     

    12.           No
      Waiver.
      No failure on the part of the Purchasers to exercise, and no delay in
      exercising, any right, remedy or power hereunder shall operate as a waiver
      thereof, nor shall any single or partial exercise by the Purchasers of any
      right, remedy or power hereunder preclude any other or future exercise of any
      other legal right, remedy or power. Each and every right, remedy and power
      hereby granted to the Purchasers or allowed it by law or other agreement shall
      be cumulative and not exclusive of any other, and may be exercised by the
      Purchasers at any time and from time to time.

     

    13.           Governing
      Law; Jurisdiction; Waiver of Jury Trial.

     

    (a)           THIS
      GUARANTY 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)           THE
      UNDERSIGNED 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 UNDERSIGNED, ON THE
      ONE
      HAND, AND THE PURCHASERS, ON THE OTHER HAND, PERTAINING TO THIS GUARANTY OR
      TO
      ANY MATTER ARISING OUT OF OR RELATED TO THIS GUARANTY; PROVIDED,
      THAT THE UNDERSIGNED ACKNOWLEDGES 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 GUARANTY SHALL BE DEEMED OR OPERATE TO PRECLUDE THE
      PURCHASERS FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER
      JURISDICTION TO COLLECT THE OBLIGATIONS OR TO ENFORCE A JUDGMENT OR OTHER COURT
      ORDER IN FAVOR OF THE PURCHASERS. THE UNDERSIGNED EXPRESSLY SUBMITS AND CONSENTS
      IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH
      COURT, AND THE UNDERSIGNED HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED
      UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM
      NON CONVENIENS.
      THE UNDERSIGNED 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 THE UNDERSIGNED AT THE ADDRESS SET FORTH BELOW ITS SIGNATURE HERETO
      AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF THE
      UNDERSIGNED’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S.
      MAILS, PROPER POSTAGE PREPAID.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c)           THE
      UNDERSIGNED DESIRES THAT ITS 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 UNDERSIGNED HERETO WAIVES 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 UNDERSIGNED
      AND/OR THE PURCHASERS ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL
      TO
      THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS GUARANTY
      OR
      THE TRANSACTIONS RELATED HERETO OR THERETO.

     

    14.           Understanding
      With Respect to Waivers and Consents.
      Each Guarantor warrants and agrees that each of the waivers and consents set
      forth in this Guaranty is made voluntarily and unconditionally after
      consultation with outside legal counsel and with full knowledge of its
      significance and consequences, with the understanding that events giving rise
      to
      any defense or right waived may diminish, destroy or otherwise adversely affect
      rights which such Guarantor otherwise may have against the Debtor, the
      Purchasers or any other person or entity or against any collateral. If,
      notwithstanding the intent of the parties that the terms of this Guaranty shall
      control in any and all circumstances, any such waivers or consents are
      determined to be unenforceable under applicable law, such waivers and consents
      shall be effective to the maximum extent permitted by law.

     

    15.           Severability.
      To the extent permitted by applicable law, any provision of this Guaranty which
      is prohibited or unenforceable in any jurisdiction shall, as to such
      jurisdiction, be ineffective to the extent of such prohibition or
      unenforceability without invalidating the remaining provisions hereof, and
      any
      such prohibition or unenforceability in any jurisdiction shall not invalidate
      or
      render unenforceable such provision in any other jurisdiction.

     

    16.           Amendments,
      Waivers.
      No amendment or waiver of any provision of this Guaranty nor consent to any
      departure by the undersigned therefrom shall in any event be effective unless
      the same shall be in writing executed by each of the undersigned directly
      affected by such amendment and/or waiver and the Purchasers.

     

    17.           Notice.
      All notices, requests and demands to or upon the undersigned shall be in writing
      and shall be deemed to have been duly given or made (a) when delivered, if
      by
      hand, (b) three (3) days after being sent, postage prepaid, if by registered
      or
      certified mail, (c) when confirmed electronically, if by facsimile, or (d)
      when
      delivered, if by a recognized overnight delivery service in each event, to
      the
      numbers and/or address set forth beneath the signature of the
      undersigned.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    18.           Successors.
      The Purchasers may, from time to time, without notice to the undersigned, sell,
      assign, transfer or otherwise dispose of all or any part of the Obligations
      and/or rights under this Guaranty. Without limiting the generality of the
      foregoing, the Purchasers may assign, or grant participations to, one or more
      banks, financial institutions or other entities all or any part of any of the
      Obligations. In each such event, the Purchasers, their Affiliates and each
      and
      every immediate and successive purchaser, assignee, transferee or holder of
      all
      or any part of the Obligations shall have the right to enforce this Guaranty,
      by
      legal action or otherwise, for its own benefit as fully as if such purchaser,
      assignee, transferee or holder were herein by name specifically given such
      right. The Purchasers shall have an unimpaired right to enforce this Guaranty
      for its benefit with respect to that portion of the Obligations which the
      Purchasers have not disposed of, sold, assigned, or otherwise
      transferred.

     

    19.           Joinder.
      It is understood and agreed that any person or entity that desires to become
      a
      Guarantor hereunder, or is required to execute a counterpart of this Guaranty
      after the date hereof pursuant to the requirements of any Document, shall become
      a Guarantor hereunder by (x) executing a Joinder Agreement in form and substance
      satisfactory to the Purchasers, (y) delivering supplements to such exhibits
      and
      annexes to such Documents as the Purchasers shall reasonably request and (z)
      taking all actions as specified in this Guaranty as would have been taken by
      such Guarantor had it been an original party to this Guaranty, in each case
      with
      all documents required above to be delivered to the Purchasers and with all
      documents and actions required above to be taken to the reasonable satisfaction
      of the Purchasers.

     

    20.           Release.
      Nothing except indefeasible payment in full of the Obligations shall release
      any
      of the undersigned from liability under this Guaranty.

     

    21.           Remedies
      Not Exclusive.
      The remedies conferred upon the Purchasers in this Guaranty are intended to
      be
      in addition to, and not in limitation of any other remedy or remedies available
      to the Purchasers.

     

    22.           Limitation
      of Obligations under this Guaranty.
      Each Guarantor and the Purchasers (by their acceptance of the benefits of this
      Guaranty) hereby confirm that it is its intention that this Guaranty not
      constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy
      Code, the Uniform Fraudulent Conveyance Act of any similar federal or state
      law.
      To effectuate the foregoing intention, each Guarantor and the Purchasers (by
      their acceptance of the benefits of this Guaranty) hereby irrevocably agree
      that
      the Obligations guaranteed by such Guarantor shall be limited to such amount
      as
      will, after giving effect to such maximum amount and all other (contingent
      or
      otherwise) liabilities of such Guarantor that are relevant under such laws
      and
      after giving effect to any rights to contribution pursuant to any agreement
      providing for an equitable contribution among such Guarantor and the other
      Guarantors (including this Guaranty), result in the Obligations of such
      Guarantor under this Guaranty in respect of such maximum amount not constituting
      a fraudulent transfer or conveyance. 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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      PAGE IMMEDIATELY FOLLOWS] 

     

     

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, this Guaranty has been executed by the undersigned as of the
      date and year here above written.

     

    

     

    PATIENTS
      & PHYSICIANS, INC.

     

    By:
      /s/
      Fred F.
      Nazem                                     

    Name:Fred
      F.
      Nazem                                       

    Title:Chairman
      and Chief Executive Officer

     

    Address:

     

    432
      Park Avenue S., 13th
      Floor

    New
      York, New York 10016

    Telephone:
      (212)
      340-9100

    Facsimile:
      (212)
      340-9101

    State
      of Formation: Delaware

     

     

     

     

     

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      A

     

    

    
      	
              PURCHASERS

            
	
              Fred.
                F. Nazem

            
	
              OldIron
                Sports & Entertainment Company, Inc.

            
	
              Benjamin
                Safirstein, M.D.

            
	
              Daniel
                Keller

            
	
              Brandon
                Fradd

            
	
              Joseph
                Gatti

            
	
              John
                Keating

            
	
              Valhalla
                Investment Partners, LP

            
	
              Roger
                London, M.D.

            
	
              Mark
                Gardy, M.D.

            
	
              Edward
                Giles

            
	
              Pike
                SullivanExhibit
      10.13

     

    SECURITIES
      PURCHASE AGREEMENT

     

    This
      Securities Purchase Agreement (this “Agreement”)
      is
      made as of this 20th day
      of
      February, 2004, by and among Flagship Healthcare Management, Inc., a
      Delaware corporation
      (together with any predecessors or successors thereto as the context requires,
      the “Company”)
      and
      the investors named in Exhibit A
      attached
      hereto, as amended from time to time in accordance with Section 1.4 below.
      Except as otherwise indicated herein, capitalized terms used herein are defined
      in Section 5 hereof.

     

    SECTION
      1

     

    PURCHASE
      AND SALE

     

    1.1           Description
      of Securities.

     

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

     

    (b)           Warrants.
      The
      Company has authorized the issuance and sale to each Investor of a warrant
      (each
      a “Warrant,”
and
      collectively the “Warrants”)
      to
      purchase one share of Series A Preferred Stock for every five shares purchased
      pursuant to Section 1.3 or Section 1.4 below at a per share purchase price
      equal
      to $0.274. Such Warrants shall be in substantially the form of Exhibit
      C
      attached
      hereto.

     

    1.2           Sale
      and Purchase.
      Upon
      the terms and subject to the conditions contained herein, and in reliance on
      the
      representations and warranties set forth in Section 2, at each Closing (as
      defined in Sections 1.3 and 1.4 hereof), each of the Investors shall purchase
      from the Company, and the Company shall issue and sell to each of the Investors:
      (i) the number of shares of Series A Preferred Stock set forth opposite the
      name
      of such Investor on Exhibit
      A
      for the
      purchase price of $0.274 per share and (ii) Warrants to purchase a number of
      shares of Series A Preferred Stock set forth opposite the name of such Investor
      on Exhibit
      A.

     

    1.3           Initial
      Closing.
      The
      initial closing of the purchase and sale of the securities under Section 1.2
      hereof (the “Initial Closing”)
      shall
      take place at the offices of McDermott, Will & Emery, located at 50
      Rockefeller Plaza, New York, New York 10020, 10:00 a.m. New York time, on the
      date hereof or such other time and place as shall be agreed upon by the Company
      and the Investors (the “Closing
      Date”).
      At
      the Initial Closing, the Company shall issue and deliver (i) stock certificates
      representing the applicable number of shares of Series A Preferred Stock and
      (ii) Warrants to purchase a number of shares of Series A Preferred Stock (as
      determined pursuant to Section 1.2(b)) to be sold by the Company under Section
      1.2 hereof to each of the Investors on Exhibit
      A,
      free
      and clear of any and all Liens against payment of the full purchase price
      therefor by or on behalf of such Investor to the Company by wire transfer of
      immediately available funds or, in the case of Nazem, Inc., by cancellation
      of
      an aggregate of $85,000 outstanding indebtedness of the Company to Nazem,
      Inc.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.4           Additional
      Closings.
      On or
      prior to the date which is forty-five (45) days following the Initial Closing,
      subject to the terms of this Section 1.4, the Company may effect additional
      closings (the “Additional
      Closings”
and
      together with the Initial Closing, the “Closings”)
      for
      the aggregate sale and purchase of (i) up to but not in excess of 10,948,906
      shares of Series A Preferred Stock (including the number of shares of Series
      A
      Preferred Stock sold and purchased at the Initial Closing) at the price per
      share of $0.274 pursuant to and in accordance with this Agreement and (ii)
      Warrants to purchase up to but not in excess of 1,824,818 shares of Series
      A
      Preferred Stock (including the number of shares of Series A Preferred Stock
      subject to Warrants issued at the Initial Closing). The
      purchasers of the shares of Series A Preferred Stock and Warrants at the
      Additional Closings shall be referred to as the “Additional
      Investors”,
      and
      each individually as an “Additional
      Investor”.
      Each
      Additional Investor must be an “accredited investor” (as such term is defined
      under the Securities Act of 1933, as amended). At each Additional Closing,
      the
      Company will issue and deliver certificates evidencing the shares of Series
      A
      Preferred Stock and Warrants sold at such Additional Closing registered in
      the
      name of the applicable Additional Investor (with appropriate legends affixed
      thereto required by this Agreement and the Related Agreements (to the extent
      applicable)) against delivery by such Additional Investor of (i) such Additional
      Investor’s aggregate purchase price therefor by check or wire transfer of
      immediately available funds, and (ii) a counterpart signature page to this
      Agreement and each Related Agreement (to the extent applicable) in such form
      as
      shall be reasonably determined by the Company. Upon consummation of the
      Additional Closings in accordance with this Section 1.4, each Additional
      Investor shall be deemed an Investor for all purposes of this Agreement and
      Exhibit
      A
      shall be
      amended to reflect the purchase and sale of such shares of Series A Preferred
      Stock and Warrants.

     

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

     

    SECTION
      2

     

    REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY 

     

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

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    2.4           Capitalization.
      As of
      the Initial Closing and after giving effect to the transactions contemplated
      hereby, the authorized capital stock of the Company will consist of (i)
      100,000,000 shares of Common Stock, of which (a) 30,536,060 shares will be
      issued and outstanding, (b) 10,948,906 shares will be reserved for issuance
      upon
      conversion of the Series A Preferred Stock and (c) 6,000,000 shares will be
      reserved for issuance under the Company’s 2004 Stock Option and Grant Plan, and
      (ii) 30,000,000 shares of preferred stock, par value $0.001 per share, of which
      10,948,906 shares are designated as Series A Preferred Stock, of which (a)
      3,777,374 shares will be issued and outstanding and (b) 755,475 shares will
      be
      reserved for issuance upon exercise of the Warrants. As of the Initial Closing
      and after giving effect to the transactions contemplated hereby, the outstanding
      shares of Common Stock are held and Series A Preferred Stock will be held
      beneficially and of record by the Persons identified in Section 2.4
      of the Disclosure Schedule
      in the
      amounts indicated thereon. Except as set forth in Section
      2.4 of the Disclosure Schedule,
      the
      Company has never adopted or maintained any formal stock incentive plan or
      other
      plan providing for equity compensation of any Person. Except as set forth in
      Section
      2.4 of the Disclosure Schedule,
      there
      are no outstanding subscriptions, options, warrants, commitments, preemptive
      rights, agreements, arrangements or commitments of any kind for or relating
      to
      the issuance or sale of, or outstanding securities convertible into or
      exchangeable for, any shares of capital stock of any class or other equity
      interests of the Company. Other than as set forth in Section
      2.4 of the Disclosure Schedule
      or the
      Certificate of Incorporation, the Company has no obligation to purchase, redeem
      or otherwise acquire any of its capital stock or any interests therein. As
      of
      the Initial Closing, and after giving effect to the transactions contemplated
      hereby, all of the outstanding shares of capital stock of the Company will
      have
      been duly and validly authorized and issued and will be fully paid and
      non-assessable and will have been offered, issued, sold and delivered in
      compliance with applicable federal and state securities laws and not subject
      to
      any preemptive rights. The Company has duly and validly authorized and reserved
      1,824,818 shares of Series A Preferred Stock for issuance upon exercise of
      the
      Warrants and the shares of Series A Preferred Stock so issued will, upon such
      exercise and payment in full of the exercise price, be validly issued, fully
      paid and non-assessable. The Company has duly and validly authorized and
      reserved 10,948,906 shares of Common Stock for issuance upon conversion of
      the
      Series A Preferred Stock and the shares of Common Stock so issued will, upon
      such conversion, be validly issued, fully paid and non-assessable. The relative
      rights, preferences and other provisions relating to the Series A Preferred
      Stock are as set forth in Exhibit B
      attached
      hereto. As of the Initial Closing and after giving effect to the transactions
      contemplated hereby, except as set forth in (i) Section
      2.4 of the Disclosure Schedule,
      (ii)
      the Certificate of Incorporation, (iii) the Stockholders Agreement or (iv)
      the
      Registration Rights Agreement, there are (x) no preemptive rights, rights of
      first refusal, put or call rights or obligations or anti-dilution rights with
      respect to the issuance, sale or redemption of the Company’s capital stock, (y)
      no rights to have the Company’s capital stock registered for sale to the public
      in connection with the laws of any jurisdiction and (z) no documents,
      instruments or agreements relating to the voting of the Company’s voting
      securities or restrictions on the transfer of the Company’s capital
      stock.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    2.6           Financial
      Statements.
      Section
      2.6 of the Disclosure Schedule
      sets
      forth (a) a detailed itemization of the Company’s expenses since the Company’s
      inception to December 31, 2003 (the “Financial
      Statements”),
      and
      (b) projections for fiscal years ending December 31, 2003 and 2004, which
      represent management’s good faith estimates of the Company’s future financial
      performance based upon assumptions which are set forth therein and which
      management in good faith believes were reasonable when made and continue to
      believe to be reasonable as of the date hereof.

     

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

     

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

     

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

     

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

     

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

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    (i)           any
      acquisition, merger or similar agreement.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    SECTION
      3

     

    REPRESENTATIONS
      AND WARRANTIES OF THE INVESTORS

     

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

     

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

     

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

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    SECTION
      4

     

    CONDITIONS
      OF PURCHASE BY THE INVESTORS AT CLOSING

     

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

     

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

     

    4.2           Opinion
      of Counsel.
      The
      Investors shall have received from McDermott, Will & Emery an opinion dated
      as of the Closing Date substantially in the form attached hereto as Exhibit D.

     

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

     

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

     

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

     

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

     

    (b)           Warrants
      to purchase shares of Series A Preferred Stock;

     

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

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    4.6           Registration
      Rights Agreement.
      The
      Company and the Investors shall have entered into the Registration Rights
      Agreement in substantially the form attached hereto as Exhibit E.

     

    4.7           Stockholders
      Agreement.
      The
      Company, the Investors and the Founder shall have entered into the Stockholders
      Agreement in substantially the form attached hereto as Exhibit F.

     

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

     

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

     

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

     

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

     

    4.12           Stock
      Option Plan; Agreements.
      The
      Company and its existing stockholders shall have taken proper action to adopt
      the 2004 Stock Option and Grant Plan, including all related form agreements,
      in
      substantially the forms attached hereto at Exhibits
      H
      and
I.

     

    4.13           Director
      Indemnification Agreements.
      The
      Company shall have entered into Director Indemnification Agreements with each
      of
      its directors in substantially the form attached hereto as Exhibit
      J.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SECTION
      5

     

    DEFINITIONS

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Registration
      Rights Agreement”
means
      the Registration Rights Agreement in substantially the form attached hereto
      as
Exhibit
      E
      hereto,
      dated as of the Closing Date, to be executed by and among the Company and the
      Investors.

     

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

     

    “Stockholders
      Agreement”
means
      the Stockholders Agreement in substantially the form attached hereto as
Exhibit
      F
      hereto,
      dated as of the Closing Date, to be executed by and among the Company, the
      Founders and the Investors.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    SECTION
      6

     

    GENERAL

     

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

     

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

     

    6.3           Legend
      on Securities.
      The
      Company and the Investors acknowledge and agree that the following legend (or
      one substantially similar thereto) shall be typed on each Warrant and each
      certificate evidencing any of the Series A Preferred Stock issued hereunder
      held
      at any time by an Investor:

    

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

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

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

     

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

     

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

     

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

     

    (a)           if
      to the
      Company, 645 Madison Avenue, 12th
      Floor,
      New York, New York 10022, Fax: (212) 371-2150 or at such other address or
      facsimile number designated by the Company to the Investors in writing with
      a
      copy to McDermott, Will & Emery, 50 Rockefeller Plaza, New York, New York
      10020, Fax: (212) 547-5444, Attn: Amy S. Leder.

     

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

     

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

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    [Signature
      Pages Follow]

     

     

     

     

     

     

    
 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

    COMPANY:

    

    FLAGSHIP
      HEALTHCARE MANAGEMENT, INC.

     

    By:/s/
      Fred F. Nazem 

    Name:
      Fred F. Nazem

    Title:
      Chief Executive Officer

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    INVESTORS:

    

    

    __________________________________

    Fred
      F.
      Nazem 

    Address:               
      645
      Madison Ave

    New
      York,
      NY 10022

    

    

    __________________________________

    Ralph
      Larsen 

    Address:              
      100
      Albany Street 

    Suite
      200

    New
      Brunswick, NJ 08901

     

    __________________________________

    Richard
      Steadman

    Address:               
      1299
      Spraddle Creek Road

    Vail,
      CO
      81657

     

    REXFORD
      INVESTMENTS, LLC

     

    By:___________________________________

    Name:
      Joseph Pryor

    Title:

    Address:               
      2407
      Third Avenue

    Bronx,
      NY
      10451

     

    NAZEM,
      INC.

     

    By:___________________________________

    Name:
      Fred F. Nazem

    Title:

    Address:               
      645
      Madison Avenue

    New
      York,
      NY 10022

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    __________________________________

    Fridolin
      Fackelmayer

    Address:               
      12
      East
      49th Street 

    22nd
      Floor

    New
      York,
      NY 10017-1004

     

    

    

    __________________________________

    Roy
      Geronemus

    Address:               
      317
      East
      34th Street

    11th
      Floor

    New
      York,
      NY 10016

    

    

    __________________________________

    Mark
      Urken

    Address:               
      Department
      of Otolaryngology 

    1
      Gustave
      Levy Place

    Box
      1189

    New
      York,
      NY 10029

    

    

    __________________________________

    Norman
      Krischer

    Address:               
      151
      Highland Avenue

    Montclair,
      NJ 07042

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