8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 25, 2006

PATIENT INFOSYSTEMS, INC.
(Exact name of the Registrant as specified in its charter)
Delaware	0-22319	16-1476509
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)
46 Prince Street Rochester, New York 14607
(Address of principal executive offices and Zip Code)
the Registrant’s telephone number, including area code: (585) 242-7200
Not applicable
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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Item 1.01. Entry into a Material Definitive Agreement.

Pursuant to an Agreement and Plan of Merger dated September 19, 2005, as amended on November 22, 2005 and December 23, 2005 (as so amended, the “Merger Agreement”) by and among Patient Infosystems, Inc. (the “Registrant”), PATY Acquisition Corp., a wholly-owned subsidiary of the Registrant (“Merger Sub”) and CCS Consolidated, Inc. (“CCS Consolidated”), Merger Sub merged with and into CCS (the “Merger”) and CCS Consolidated became a wholly-owned subsidiary of the Registrant. The Merger closed and became effective on January 25, 2006.

As conditions to the closing of the Merger, the Registrant entered into employment agreements with Chris Paterson, CCS Consolidated’s president and chief executive officer, Glen Spence, CCS Consolidated’s executive vice president and chief financial officer, Roger Chaufournier, the Registrant’s former chairman and chief executive officer, and Christine St. Andre, the Registrant’s former president and chief operating officer, regarding their continued service to the Registrant following the completion of the Merger. The Registrant also entered into an employment agreement with Kent Tapper regarding his continued service to the Registrant following the completion of the Merger. Each of these agreements became effective upon the closing of the Merger. The material terms of these agreements are described below.

Chris Paterson

Under the terms of Dr. Paterson’s employment agreement, he is to be employed in the capacity of president and chief executive officer of the Registrant following the completion of the Merger. His employment agreement has an initial one year term, which automatically renews for additional one-year periods unless earlier terminated by the Registrant or Dr. Paterson. Dr. Paterson’s base salary under the employment agreement is $250,000 per year, and Dr. Paterson is eligible for a discretionary calendar year bonus in an amount up to 50% of his base salary, subject to his achievement of mutually agreed upon performance goals. In addition, Dr. Paterson is eligible for any other bonus payments as may be awarded by the Registrant’s board of directors. Dr. Paterson’s options to purchase shares of CCS Consolidated common stock were assumed by the Registrant at the closing of the Merger, and the vesting of such options was partially accelerated so that one quarter of the shares underlying the options were vested as of the closing of the Merger, with the remainder vesting in 36 equal monthly installments over the next three years. Dr. Paterson is also eligible to receive options to purchase shares of the Registrant’s common stock under the Registrant’s stock option plans on the same basis as similarly situated employees. The decision to grant any such options and the terms of such options will be within the discretion of the Registrant’s board of directors.

In the event that Dr. Paterson’s employment is terminated by the Registrant “without cause” or by Dr. Paterson for “good reason” (each as defined in his employment agreement), subject to Dr. Paterson’s entering into and not revoking a separation agreement and release in a form acceptable to the Registrant, Dr. Paterson will be entitled to receive: (i) severance payments equal to his then applicable base salary for a period of twelve months; (ii) a pro rated portion of any annual bonus that he would have received had he remained employed through the calendar year for which the bonus is calculated; and (iii) if he timely elects and remains eligible for continued coverage under COBRA, that portion of the COBRA premiums that the Registrant was paying prior to the date of termination for as long as he is receiving severance payments under the employment agreement (or until he is eligible for health care coverage under another employer’s plan, whichever period is shorter).

Glen Spence

Under the terms of Mr. Spence’s employment agreement, he is to be employed in the capacity of chief financial officer of the Registrant following the completion of the Merger. His employment agreement has an initial one year term, which automatically renews for additional one-year periods unless earlier terminated by the Registrant or Mr. Spence. Mr. Spence’s base salary under the employment agreement is $215,000 per year, and Mr. Spence is eligible for a discretionary calendar year bonus in an amount up to 20% of his base salary, subject to his achievement of mutually agreed upon performance goals. In addition, Mr. Spence is eligible for any other bonus payments as may be awarded by the Registrant’s board of directors. Certain of Mr. Spence’s options to purchase shares of CCS Consolidated common stock were assumed by the Registrant at the closing of the Merger, and the vesting of such options was partially accelerated so that one quarter of the shares underlying the options were vested as of the closing of the Merger, with the remainder vesting in 36 equal monthly installments over the next three years. Mr. Spence is also eligible to receive options to purchase shares of the Registrant’s common stock under the Registrant’s stock option plans on the same basis as similarly situated employees. The decision to grant any such options and the terms of such options will be within the discretion of the Registrant’s board of directors.

In the event that Mr. Spence’s employment is terminated by the Registrant “without cause” or by Mr. Spence for “good reason” (each as defined in his employment agreement), subject to Mr. Spence’s entering into and not revoking a separation

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agreement and release in a form acceptable to the Registrant, Mr. Spence will be entitled to receive: (i) severance payments equal to his then applicable base salary for a period of six months; (ii) a pro rated portion of any annual bonus that he would have received had he remained employed through the calendar year for which the bonus is calculated; and (iii) if he timely elects and remains eligible for continued coverage under COBRA, that portion of the COBRA premiums that the Registrant was paying prior to the date of termination for as long as he is receiving severance payments under the employment agreement (or until he is eligible for health care coverage under another employer’s plan, whichever period is shorter).

Roger Chaufournier

Under the terms of Mr. Chaufournier’s employment agreement, he is to be employed in the capacity of President of the Registrant’s provider improvement subsidiary, reporting to the chief executive officer of the Registrant, following the completion of the Merger. His employment agreement has an initial one year term, which automatically renews for additional one-year periods unless earlier terminated by the Registrant or Mr. Chaufournier. Mr. Chaufournier’s base salary under the employment agreement is $262,500 per year, and Mr. Chaufournier is eligible for a calendar year bonus if the Registrant’s board of directors determines in its sole reasonable discretion that the earnings before charges for interest, taxes, depreciation and amortization (“EBITDA”) for the Registrant’s provider improvement subsidiary for the year has exceeded $1,000,000, and Mr. Chaufournier remains employed by the Registrant through the end of the calendar year. If both these conditions are met, Mr. Chaufournier’s bonus shall be equal to a percentage of such EBITDA as follows:

• 12% of the EBITDA of the provider improvement subsidiary over $1,000,000 but less than $2,000,000;

• 18% of the EBITDA of the provider improvement subsidiary over $2,000,000 but less than $3,000,000;

• 24% of the EBITDA of the provider improvement subsidiary over $3,000,000 but less than $4,000,000; and

• 30% of the EBITDA of the provider improvement subsidiary over $4,000,000.

In addition, Mr. Chaufournier is eligible to receive options to purchase shares of the Registrant’s common stock under the Registrant’s stock option plans on the same basis as similarly situated employees. The decision to grant any such options and the terms of such options will be within the discretion of the Registrant’s board of directors.

In the event that Mr. Chaufournier’s employment is terminated by the Registrant “without cause” or by Mr. Chaufournier for “good reason” (each as defined in his employment agreement), subject to Mr. Chaufournier’s entering into and not revoking a separation agreement and release in a form acceptable to the Registrant, Mr. Chaufournier will be entitled to receive: (i) severance payments equal to his then applicable base salary for a period of twelve months; (ii) a pro rated portion of any annual bonus that he would have received had he remained employed through the calendar year for which the bonus is calculated; and (iii) if he timely elects and remains eligible for continued coverage under COBRA, that portion of the COBRA premiums that the Registrant was paying prior to the date of termination for as long as he is receiving severance payments under the employment agreement (or until he is eligible for health care coverage under another employer’s plan, whichever period is shorter).

Christine St. Andre

Under the terms of Ms. St. Andre’s employment agreement, she is to be employed in the capacity of Chief Operating Officer of the Registrant’s provider improvement subsidiary following the completion of the Merger. Her employment agreement has an initial one year term, which automatically renews for additional one-year periods unless earlier terminated by the Registrant or Ms. St. Andre. Ms. St. Andre’s base salary under the employment agreement is $210,000 per year, and Ms. St. Andre will be eligible for a calendar year bonus if the Registrant’s board of directors determines in its sole reasonable discretion that the EBITDA for the provider improvement subsidiary for the year has exceeded $1,000,000, and Ms. St. Andre remains employed by the Registrant through the end of the calendar year. If both these conditions are met, Ms. St. Andre’s bonus shall be equal to a percentage of such EBITDA as follows:

• 8% of the EBITDA of the provider improvement subsidiary over $1,000,000 but less than $2,000,000;

• 12% of the EBITDA of the provider improvement subsidiary over $2,000,000 but less than $3,000,000;

• 16% of the EBITDA of the provider improvement subsidiary over $3,000,000 but less than $4,000,000; and

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• 20% of the EBITDA of the provider improvement subsidiary over $4,000,000.

In addition, Ms. St. Andre is eligible to receive options to purchase shares of the Registrant’s common stock under the Registrant’s stock option plans on the same basis as similarly situated employees. The decision to grant any such options and the terms of such options will be within the discretion of the Registrant’s board of directors.

In the event that Ms. St. Andre’s employment is terminated by the Registrant “without cause” or by Ms. St. Andre for “good reason” (each as defined in her employment agreement), subject to Ms. St. Andre’s entering into and not revoking a separation agreement and release in a form acceptable to the Registrant, Ms. St. Andre will be entitled to receive: (i) severance payments equal to her then applicable base salary for a period of twelve months; (ii) a pro rated portion of any annual bonus that she would have received had she remained employed through the calendar year for which the bonus is calculated; and (iii) if she timely elects and remains eligible for continued coverage under COBRA, that portion of the COBRA premiums that the Registrant was paying prior to the date of termination for as long as she is receiving severance payments under the employment agreement (or until she is eligible for health care coverage under another employer’s plan, whichever period is shorter).

Kent Tapper

Under the terms of Mr. Tapper’s employment agreement, he is to be employed in the capacity of Vice President of Finance, Sarbanes-Oxley and SEC Compliance, reporting to the chief financial officer of the Registrant, following the completion of the Merger. His employment agreement has an initial one year term, which automatically renews for additional one-year periods unless earlier terminated by the Registrant or Mr. Tapper. Mr. Tapper’s base salary under the employment agreement is $175,000 per year, and Mr. Tapper is eligible for any other bonus payments as may be awarded by the Registrant’s board of directors. In addition, Mr. Tapper is eligible to receive options to purchase shares of the Registrant’s common stock under the Registrant’s stock option plans on the same basis as similarly situated employees. The decision to grant any such options and the terms of such options will be within the discretion of the Registrant’s board of directors. Mr. Tapper will relocate to the Coral Springs, Florida area by the end of July 2006, and the Registrant has agreed to pay travel and commuting expenses until such relocation is complete and up to $30,000 in relocation costs plus amounts associated with income taxes thereon. In the event that Mr. Tapper terminates his employment with the Registrant within one year after his relocation to Florida, Mr. Tapper will be required to repay a prorated portion of such relocation costs.

In the event that Mr. Tapper’s employment is terminated by the Registrant “without cause” or by Mr. Tapper for “good reason” (each as defined in his employment agreement), subject to Mr. Tapper’s entering into and not revoking a separation agreement and release in a form acceptable to the Registrant, Mr. Tapper will be entitled to receive: (i) severance payments equal to his then applicable base salary for a period of six months; (ii) a pro rated portion of any annual bonus that he would have received had he remained employed through the calendar year for which the bonus is calculated; and (iii) if he timely elects and remains eligible for continued coverage under COBRA, that portion of the COBRA premiums that the Registrant was paying prior to the date of termination for as long as he is receiving severance payments under the employment agreement (or until he is eligible for health care coverage under another employer’s plan, whichever period is shorter).

Stockholders Agreement

As described in Item 5.01 of this Form 8-K, at the closing of the Merger, the Registrant and certain of its stockholders entered into a Stockholders Agreement, which is attached as Exhibit 10.89 hereto and incorporated by reference herein.

Lock-Up Agreements

As a condition to the closing of the Merger, the Registrant was required to enter into “lockup” agreements with the largest stockholders of the Registrant and the largest stockholders of CCS Consolidated who received shares of the Registrant’s common stock at the closing of the Merger. Lockup agreements were signed and delivered by stockholders of the Registrant holding approximately 75% of the issued and outstanding shares of the Registrant’s common stock as of the closing of the Merger. Each stockholder signing a lockup agreement agreed not to sell, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale with respect to any securities of the Registrant held by such stockholder for a period of eighteen (18) months following the closing of the Merger, or until July 25, 2007, subject to certain limited exceptions. After the expiration of this 18-month period ending on July 25, 2007, and during each 3-month period thereafter until June 30, 2008, each stockholder may sell a number of securities of the Registrant equal to the greater of

• 1% of the number of shares of the Registrant’s common stock outstanding as of the date of determination; or

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• the average weekly reported volume of trading of the Registrant’s common stock on all national securities exchanges and/or reported through the automated quotation system of a registered securities association during the four calendar weeks preceding the date of determination.

                After June 30, 2008, all securities of the Registrant held by such stockholders shall no longer be subject to the lockup agreements.

In addition, in the event that after July 25, 2007, there is either a change of control transaction involving the Registrant, or a primary offering of shares of the Registrant’s common stock (or securities convertible into shares of the Registrant’s common stock for no additional consideration) constituting at least 25% of the shares of the Registrant’s common stock then outstanding, then in each such case all securities of the Registrant held by such stockholders will no longer be subject to the restrictions contained in the lockup agreement.

With respect to the lockup agreements signed by Roger Chaufournier, Christine St. Andre and Kent Tapper, each of whom were executive officers of the Registrant immediately prior to the closing of the Merger, in the event that any of such individuals ceases to be an employee of the Registrant or any of its affiliates, for any reason or no reason, then the securities of the Registrant held by such individuals will be released from the restrictions contained in their lockup agreements thirty (30) days after the date the employment relationship ends, unless earlier released as described above.

The form of lockup agreement is attached as Exhibit 10.99 hereto and incorporated by reference herein, and the form of lockup agreement signed by Mr. Chaufournier, Ms. St. Andre and Mr. Tapper is attached as Exhibit 10.100 hereto and incorporated by reference herein.

Line of Credit with Comerica Bank

The information in Item 2.03 relating to the agreement between the Registrant’s wholly-owned subsidiary CCS Consolidated and Comerica Bank is incorporated herein by reference.

Item 2.01. Completion of Acquisition or Disposition of Assets.

Merger with CCS Consolidated

On January 25, 2006, pursuant to the Merger Agreement, CCS Consolidated became a wholly-owned subsidiary of the Registrant. The Merger Agreement and the Merger were approved by the stockholders of CCS Consolidated at a meeting held on December 13, 2005. In the Merger, each share of CCS Consolidated Series AA Preferred Stock outstanding at the effective time of the Merger was converted into the right to receive approximately 3.15 shares of the Registrant’s common stock plus additional shares for accrued dividends on each such share of CCS Consolidated Series AA Preferred Stock, each share of CCS Consolidated Series C Preferred Stock outstanding at the effective time of the Merger was converted into the right to receive approximately 5.23 shares of the Registrant’s common stock, and each share of CCS Consolidated common stock outstanding at the effective time of the Merger was converted into the right to receive approximately 1.26 shares of the Registrant’s common stock. In addition, the Registrant assumed all outstanding options to purchase CCS Consolidated common stock issued under CCS Consolidated’s 2005 Equity Incentive Plan at the effective time of the Merger, and each such option is now exercisable for a number of shares of the Registrant’s common stock, and at an exercise price, adjusted to reflect the exchange ratio applicable to the CCS Consolidated common stock. As a result, the CCS Consolidated stockholders collectively received 43,224,352 shares of the Registrant’s common stock. Of the 43,224,352 shares of the Registrant’s common stock issued to former CCS Consolidated stockholders at the closing of the Merger, 3,668,937 shares were issued into escrow, to be released to the former CCS Consolidated stockholders upon the occurrence of certain events. If all of the assumed stock options are exercised in the future, the Registrant will issue an additional 1,399,290 shares of its common stock. The shares of the Registrant’s common stock and stock options to purchase shares of the Registrant’s common stock in the aggregate equaled approximately 63% of the fully diluted shares of the combined company immediately following consummation of the Merger. The valuation of the Registrant’s common stock issued in the Merger was determined using the average closing price of the Registrant’s common stock on the OTC Bulletin Board for the ten business days preceding the third business day prior to the closing of the Merger.

The foregoing description of the Merger and the Merger Agreement is not complete and is qualified in its entirety by reference to the Merger Agreement, as amended, which was filed as an exhibit to the Forms 8-K filed on September 23, 2005, November 29, 2005 and December 23, 2005 and is incorporated herein by reference.

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Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

As a result of the effectiveness of the Merger, the Registrant, through its wholly-owned subsidiary CCS Consolidated, assumed a revolving line of credit with Comerica Bank (“Comerica”). CCS Consolidated is a party to a Loan and Security Agreement dated October 9, 2002 as amended on October 28, 2003, November 17, 2004 and January 25, 2006 (as so amended, the “Loan and Security Agreement”). The January 25, 2006 amendment became effective as of the closing of the Merger. The terms of the Loan and Security Agreement provide for a revolving line of credit of up to $8.0 million secured by a security interest in CCS Consolidated’s assets, other than intellectual property. The full amount of the line of credit is currently outstanding. The outstanding balances under the line of credit bear interest on a monthly basis at an interest rate equal to Comerica’s prime rate plus one percent (1.00%). As a result of the January 25, 2006 amendment to the Loan and Security Agreement, the maturity date of the line of credit was extended until June 30, 2007.

In connection with the Merger, each of the Registrant and its wholly-owned subsidiary CBCA Care Management, Inc. was required to deliver to Comerica an unconditional guaranty of CCS Consolidated’s obligations under the Loan and Security Agreement. The satisfaction of the obligations of CCS Consolidated under the Loan and Security Agreement are also guaranteed by subsidiaries of CCS Consolidated which became indirect subsidiaries of the Registrant as a result of the Merger. The satisfaction of the obligations of CCS Consolidated under the Loan and Security Agreement are also guaranteed by certain of the former stockholders of CCS Consolidated who became stockholders of the Registrant upon the closing of the Merger. In exchange for deliveries guaranties to Comerica to satisfy the obligations of CCS Consolidated, these former stockholders of CCS Consolidated were issued warrants to purchase shares of capital stock of CCS Consolidated, which vested over time based on the outstanding balances under the Loan and Security Agreement. As part of the Merger, the unvested portion of these warrants were terminated and replaced by the Registrant with warrants to purchase shares of the Registrant’s common stock (the “Replacement Warrants”). Each of the Replacement Warrants has an exercise price of $0.003172 per share of the Registrant’s common stock. These Replacement Warrants vest through November 17, 2006 based on the outstanding balances under the Loan and Security Agreement. If the Replacement Warrants fully vest and are exercised in full for a cash payment of the aggregate exercise price, the Registrant will issue 3,152,141 shares of its common stock to the holders of the Replacement Warrants. These 3,152,141 shares are part of the 3,668,937 shares of the Registrant’s common stock issued into escrow at the closing of the Merger. To the extent that the Replacement Warrants do not vest or are not exercised in full, the shares of the Registrant’s common stock underlying the Replacement Warrants will be released from escrow to all stockholders of CCS Consolidated at the effective time of the Merger in accordance with the Merger Agreement.

The Loan and Security Agreement contains representations and warranties and affirmative and negative covenants that are customary for credit facilities of this type. The Loan and Security Agreement could restrict CCS Consolidated’s ability to, among other things, sell certain assets, change its business, engage in a merger or change in control transaction, incur debt, pay cash dividends, make investments and encumber its assets. The Loan and Security Agreement also contains events of default that are customary for credit facilities of this type, including payment defaults, covenant defaults, insolvency type defaults and events of default relating to liens, judgments, material misrepresentations and the occurrence of certain material adverse events.

All disclosures set forth in this Form 8-K are qualified by and subject to the terms of the Loan and Security Agreement, which will be filed as an exhibit to the Registrant’s annual report on Form 10-KSB.

Item 3.02 Unregistered Sales of Equity Securities.

Conversion of Preferred Stock

In connection with the Merger, on January 25, 2006, the holders of the Registrant’s Series C Preferred Stock and Series D Preferred Stock elected to convert all shares of such preferred stock into shares of the Registrant’s common stock on a one-for-one basis. As a result, the Registrant issued 9,327,720 shares of its common stock to such holders. These shares were issued without registration under the Securities Act of 1933, as amended, in reliance upon Section 3(a)(9) of the Securities Act.

Exchange of Options for Warrants

On January 25, 2006, prior to the closing of the Merger, the Registrant issued warrants to each of its directors and certain of its executive officers (each, a “Registrant Option Holder”) to purchase shares of the Registrant’s common stock in exchange for each such Registrant Option Holder’s agreement to terminate all outstanding options to purchase common stock of the Registrant then held by such Registrant Option Holder. The number of warrants issued to each Registrant Option Holder was equal to 75% of the number

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of shares underlying all stock options then held by such Registrant Option Holder, and the exercise price of each warrant is $0.95 per share, which is based on a formula tied to the weighted average closing price of the Registrant’s common stock for the 20 trading days prior to the exchange. Each of these warrants is immediately vested. If the warrants are exercised in full, the Registrant will issue 737,500 shares of its common stock. The Registrant has agreed to register the resale of the shares of common stock issuable upon exercise of the warrants issued to the Registrant Option Holders. These warrants were issued without registration under the Securities Act of 1933, as amended, in reliance upon Section 3(a)(9) of the Securities Act.

Merger with CCS Consolidated

The shares of the Registrant’s common stock described in Item 2.01 of this Form 8-K and the Replacement Warrants to purchase shares of the Registrant’s common stock described in Item 2.03 of this Form 8-K were issued without registration under the Securities Act of 1933, as amended, in reliance upon Section 4(2) of the Securities Act and Rule 506 of Regulation D thereunder. The options to purchase shares of the Registrant’s common stock granted to certain employees of CCS Consolidated who became executive officers of the Registrant upon the closing of the Merger as replacements for their options to purchase capital stock of CCS Consolidated were issued without registration under the Securities Act of 1933, as amended, in reliance upon Section 4(2) of the Securities Act and Rule 506 of Regulation D thereunder.

Item 4.01 Change in Registrant’s Certifying Accountant

Change in Auditor by Virtue of Reverse Acquisition

Because the Merger with CCS Consolidated is treated as a “reverse merger” for accounting purposes, and as such the financial statements of the accounting acquirer, CCS Consolidated, will become the financial statements of the Registrant as the legal acquirer, and because the independent registered public accounting firm that audited CCS Consolidated’s financial statements, Ernst & Young LLP (“Ernst & Young”), is different from the independent registered public accounting firm that has been auditing the Registrant’s financial statements, McGladrey & Pullen, LLP (“McGladrey”), the rules and regulations of the Securities and Exchange Commission (the “Commission”) provide that there has been a change in the Registrant’s independent registered public accounting firm.

The report issued by McGladrey in connection with the audit of the Registrant for the year ended December 31, 2004 did not contain an adverse opinion or a disclaimer of opinion, nor was such report qualified or modified as to uncertainty, audit scope, or accounting principles. There have been no disagreements with McGladrey on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement, if not resolved to the satisfaction of McGladrey would have caused McGladrey to make a reference to the subject matter of such disagreement in connection with its audited report or interim financial statements for the periods ended September 30, 2005.

Pursuant to Item 304(a)(3) of Regulation S-B, the Registrant has requested that McGladrey furnish it with a letter addressed to the Commission stating whether or not McGladrey agrees with the above statements. A copy of such letter, dated January 31, 2006, is filed as Exhibit 16.2 to this Form 8-K.

Subsequent Change in Auditors

On January 31, 2006, the board of directors of CCS Consolidated approved the dismissal of Ernst & Young as the auditor of CCS Consolidated.

The Registrant is currently finalizing the terms of the engagement of the firm it intends to engage as its new independent registered public accounting firm and will file a subsequent report on Form 8-K upon its engagement of such firm.          

The reports issued by Ernst & Young in connection with the audits of the financial statements of CCS Consolidated for the years ended March 31, 2005 and 2004 did not contain an adverse opinion or a disclaimer of opinion, nor was either such report qualified or modified as to uncertainty, audit scope, or accounting principles. In connection with the audits of the financial statements of CCS Consolidated for each of the two fiscal years ended March 31, 2005, and in the subsequent interim period ended January 31, 2006, there have been no disagreements with Ernst & Young on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreement, if not resolved to the satisfaction of Ernst & Young would have caused Ernst & Young to make a reference to the subject matter of such disagreement in connection with its audit report.

Pursuant to Item 304(a)(3) of Regulation S-B, the Registrant has requested that Ernst & Young furnish it with a letter

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addressed to the Commission stating whether or not Ernst & Young agrees with the above statements. A copy of such letter, dated January 31, 2006, is filed as Exhibit 16.1 to this Form 8-K.     

Item 5.01 Change in Control of Registrant.

As described in Item 2.01 of this Form 8-K, at the closing of the Merger, the Registrant issued 43,224,352 shares of its common stock to the former stockholders of CCS Consolidated. This represents approximately 64% of the issued and outstanding voting shares of the Registrant upon the closing of the Merger, and a result there has been a change of control of the Registrant. The Merger was approved by CCS Consolidated’s stockholders owning a majority of the outstanding voting capital stock of CCS Consolidated. Under Delaware law, no approval of the Merger by the Registrant’s stockholders was required and such approval was not sought by the Registrant.

In addition, under a Stockholders Agreement entered into at the closing of the Merger, stockholders holding approximately 65% of the outstanding voting shares of the Registrant’s common stock after the consummation of the Merger have agreed to vote their shares in favor of the election of John Pappajohn, a current director of the Registrant, Derace Schaffer, a current director of the Registrant, and three individuals designated by holders of at least a majority of the Registrant’s common stock held by the former stockholders of CCS Consolidated who are parties to the Stockholders Agreement. Upon the appointment of the three designees of the former CCS Consolidated stockholders to the Registrant’s board of directors, such individuals will comprise a majority of the Registrant’s board of directors. As provided by the Stockholders Agreement, two additional directors may be added to the Registrant’s board of directors, which individuals must be unanimously approved by the other five members of the Registrant’s board of directors.

Item 5.02. Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

In connection with the completion of the Merger, Roger L. Chaufournier, Donald R. Ryan, Edward B. Berger and Robert M. Kaufman resigned as directors of the Company effective January 25, 2006, and Mr. Chaufournier resigned as chief executive officer of the registrant effective January 25, 2006, but as described in Item 1.01 of this Form 8-K, Mr. Chaufournier will serve as president and chief executive officer of the Registrant’s provider improvement subsidiary to be formed. Christine St. Andre is no longer serving as president and chief operating officer of the Registrant as of the effective time of the Merger, but as described in Item 1.01 of this Form 8-K, Ms. St. Andre will serve as chief operating officer of the Registrant’s provider improvement subsidiary to be formed. Kent Tapper is no longer serving as the chief financial officer of the Registrant as of the effective time of the Merger, but as described in Item 1.01 of this Form 8-K, Mr. Tapper will serve as Vice President of Finance, Sarbanes-Oxley and SEC Compliance of the Registrant.

In connection with the completion of the Merger, three individuals who are directors of CCS Consolidated have been appointed by the Registrant’s board of directors to fill three of the vacancies left by the resignations of Messrs. Chaufournier, Ryan, Berger and Kaufman. These individuals will become directors of the Registrant effective as of the date that is 10 days following the filing with the Commission and delivery to the Registrant’s stockholders of the information required pursuant to Rule 14f-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As described in Item 5.01 of this Form 8-K, certain stockholders of the Registrant have entered into a Stockholders Agreement pursuant to which they have agreed to vote for three directors designated by the former stockholders of CCS Consolidated who are parties to the stockholders agreement.

The names of the directors of CCS Consolidated who will become directors of the Registrant following the Merger, their ages and other information about them are shown below.

Mark Pacala. Mr. Pacala, age 50, has been a director of CCS Consolidated since 2002. He has over 20 years of operational and general management experience in services, technology and healthcare companies. He has been a Managing Director of Essex Woodlands Health Ventures since January 2004 and was a Venture Partner of Essex Woodlands Health Ventures from April 2002 to December 2003. From October 2001 to January 2003, Mr. Pacala was self-employed as a venture capital consultant. He served as Chief Executive Officer of American WholeHealth, Inc., an integrative health network company that combines conventional medicine, alternative medicine, nutrition and wellness, from September 1996 to September 2001. Prior to American WholeHealth, he served as Chief Executive Officer of Forum Group, a public senior housing and healthcare company with revenues in excess of $200 million, which was later sold to Marriott Corporation. From 1989 to 1994, Mr. Pacala was a Senior Vice President and General Manager at The Walt Disney Company, and he served as Director of Corporate Planning and Vice President of Operations at Marriott Corporation from 1984 to 1989. He began his career as a banker in 1977 at Manufacturers Hanover Trust Co. and transitioned to strategic planning in healthcare at Booz, Allen and Hamilton. Mr. Pacala currently serves on the board of directors of Health Grades, Inc., a provider of proprietary healthcare provider ratings and advisory services. He received a B.A. degree from Hamilton College

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where he graduated magna cum laude and Phi Beta Kappa, and later received an MBA degree from Harvard Business School, where he graduated with distinction.

Albert S. Waxman, Ph.D. Dr. Waxman, age 65, has been director of CCS Consolidated since 1998. He is a co-founder and senior managing member of Psilos Group Managers, LLC, a venture capital firm specializing in e-health and healthcare services investments since 1998. Prior to co-founding Psilos Group Managers, LLC, Dr. Waxman was, from 1993 to 1998, chairman and chief executive officer of Merit Behavioral Care Corporation, a healthcare company, and its predecessor companies, American Biodyne and Medco Behavioral Care, a subsidiary of Merck & Co., until its acquisition by Magellan Health Services in February 1998. Prior to American Biodyne, Dr. Waxman founded and served as President, Chairman and Chief Executive Officer of Diasonics, Inc. He holds several U.S. and foreign patents for display, imaging and diagnostic technologies and products. Dr. Waxman serves on the board of directors of Orthometrix, Inc. and has been a director of several Psilos portfolio companies, including Comprehensive NeuroScience, HealthEdge, Health Hero Network and Active Health Management. He also serves on the Board of Directors of the New York City Investment Fund, a $100 million venture capital fund formed in 1996 by leading corporations and financial executives. Dr. Waxman received a B.S.E.E. degree from City College of New York and M.A. and Ph.D. degrees from Princeton University. He serves on the Advisor Council of Princeton University’s School of Engineering and Applied Sciences.

Daniel C. Lubin. Mr. Lubin, age 46, has been a director of CCS Consolidated since January 2005. Mr. Lubin also served as a member of the board of directors of CCS Consolidated from 1998 to 2001. Mr. Lubin has been a managing member of Radius Ventures, LLC, a New York City venture capital firm, since 1997. From 1994 to 1997, Mr. Lubin was a director in the Investment Banking Division of Schroder Wertheim & Co., where he shared responsibility for managing the firm’s Health Care Group. In 1991, Mr. Lubin co-founded and was a managing director of KBL Healthcare Inc., a health and life sciences venture capital and investment banking organization, and served as president and chief operating officer of KBL Healthcare Acquisition Corp., a publicly-traded strategic acquisition fund. His prior affiliations include Manufacturers Hanover Trust, and the Center for Strategic and International Studies, where he served as Special Assistant to the Chairman. He was a founder of Cambridge Heart, Inc., a healthcare company engaged in the research, development and commercialization of products for the non-invasive diagnosis of cardiac disease. Mr. Lubin currently serves on the board of directors of BioLok International Inc., and EyeTel Imaging, Inc., each portfolio companies of Radius Ventures, LLC. He also serves on the Board of Trustees for The Haverford School. He earned a BS cum laude in Foreign Service from the Georgetown University School of Foreign Service and an MBA with honors from Harvard Business School.

Dr. Waxman will be the chairman of the board of directors of the Registrant, and John Pappajohn, a continuing director of the Registrant, will be the vice chairman of the board of directors.      The board of directors has not yet made any determinations regarding the board committee assignments of the new directors. Once these committee assignments have been determined, the Registrant will file an amendment to this Form 8-K to provide such information.

The Registrant also named new executive officers in connection with the completion of the Merger. The names of these new executive officers, their ages and their positions are shown below.

Chris E. Paterson, Ph.D. Dr. Paterson, age 45, is President and Chief Executive Officer of the Registrant. Prior to the Merger, he had been President and Chief Executive Officer of CCS Consolidated and a member of its board of directors since January 2005. He joined CCS Consolidated as Executive Vice President in July 2004. From 2002 to 2004, Dr. Paterson served as the President of the Central Region of UnitedHealth Group’s AmeriChoice Corporation, having served as CEO of AmeriChoice health plans in Pennsylvania from 1998 to 2002. From 1990 to 1998, he worked with Merit Behavioral Care Corporation, serving in such positions as Executive Vice President of the Eastern Division and President of Tennessee Behavioral Health. Dr. Paterson has served on the boards of such entities as the City of Philadelphia Department of Health and the American Heart Association Southeastern Pennsylvania Region. Dr. Paterson received his Ph.D. in psychology from Ohio State University, interned at the University of Florida and served on the faculty of the University of Miami early in his career.

Glen A. Spence. Mr. Spence, age 51, is Executive Vice President and Chief Financial Officer of the Registrant. Prior to the Merger, he had served as the Executive Vice President and Chief Financial Officer of CCS Consolidated since March 2003. From 2000 to 2003, Mr. Spence was a partner in the firm of Tatum Partners, which specializes in providing Chief Financial Officers to clients in a variety of industries. Mr. Spence was employed by John Alden Financial Corporation, a publicly-held life and health insurer, from 1981 to 1999 in a variety of finance positions, including serving as the Senior Vice President of Finance and Accounting. Mr. Spence has also functioned as a financial consultant, interim chief financial officer and an educator at CPA continuing education seminars. Mr. Spence started his career in public accounting working for Haskins & Sells, a predecessor of Deloitte and Touche, and later at KPMG. As a seasoned finance executive, Mr. Spence is versed in strategic and operational planning, rapid growth, initial public offerings, leveraged buyouts, mergers and acquisitions, regulatory affairs, underwriting, turnarounds, and SEC reporting. He holds a B.S. degree from Emporia State University, is a member of the American Institute of Certified Public Accountants and the

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Florida Institute of Certified Public Accountants, and holds a CPA license in the state of Florida.

Ileana Welte. Ms. Welte, age 49, is Senior Vice President and Chief Marketing Officer of the Registrant. Prior to the Merger, she had been serving as CCS Consolidated’s Senior Vice President and Chief Clinical Officer. Ms. Welte joined CCS Consolidated as the executive director of CareGuide@Home in June 2001 after the acquisition of CareGuide, Inc. by CCS Consolidated. She has extensive experience in the design of programs providing care management services to the elderly and chronically ill. With a background in building sales, business development and technology operations, Ms. Welte has built a clinical organization focused on providing quality health care to the elderly and chronically ill through application of evidence based medicine and innovative technologies. Prior to joining CareGuide@Home full-time, Ms. Welte served as a senior operations and clinical consultant for business development and sales strategies for CareGuide@Home from 2000 to 2001. Before joining CCS Consolidated and CareGuide@Home, Ms. Welte served as vice president of business development for Interval Research, Electric Planet, a Paul Allen company from 1997 to 1999 and Vice President of Sales for Maxis, Inc. from 1992 to 1997. Ms. Welte holds a B.S.N. degree and has post graduate education in Geriatric Care Management.

Ann M. Boughtin. Ms. Boughtin, age 53, is the Registrant’s Executive Vice President and Chief Operating Officer. Prior to the Merger, she had served as CCS Consolidated’s Senior Vice President and Chief Marketing Officer since August 2005. From September 2003 to August, 2005, Ms. Boughtin served as general manager for the TennCare Partners Program, a $450 million service operated by Magellan Health Services for the Tennessee Medicaid program. Previously, she was vice president of business development for Comprehensive Neuroscience, Inc. where she worked from June 2001 to September, 2003, She was vice president of marketing and business development from June 2000 through April 2001 for Centromine, a privately held technology company, providing an ASP enterprise solution for the behavioral health industry. She was vice president of managed care for Psychiatric Solutions, Inc., a company providing behavioral healthcare management services, from July 1998 until June 2000. Ms. Boughtin began her career as assistant executive director of a large, non-profit agency, and went on to spend 15 years in the New York State Office of Mental Health, where she worked as one of the 50 top executives. Ms. Boughtin holds a Master’s in Public Administration (MPA), and an MS and PS in Political Science, all from the State University of New York at Brockport.

Rex Dendinger. Rex Dendinger II, age 53, is the Registrant’s Senior Vice President and Chief Information Officer. Prior to the Merger, he had served as CCS Consolidated’s Senior Vice President and Chief Information Officer since he joined CCS Consolidated in November 2005. Prior to joining CCS Consolidated, from September 2003 to November 2005, Mr. Dendinger served as interim chief executive officer and chief information officer at a number of firms, providing vital expertise to start-up organizations, executive leadership to a regional claims administration firm, and supported merger and acquisition transactions. From July 1998 to September 2003, Mr. Dendinger served as chief information officer of Magellan Health Services, where he was responsible for technology strategy and operations for a $100 million leader in the managed care industry. At Saint Vincent Health System in Pennsylvania from 1996 to 1998, Mr. Dendinger directed a corporate information technology initiative to re-engineer the entire corporate network, accommodating a newly designed infrastructure and software platform. Mr. Dendinger holds a B.S. degree in Computer Science from Lockyear College.

As described in Item 1.01 of this Form 8-K, the Registrant has entered into employment agreements with each of Dr. Paterson and Mr. Spence. In connection with the Merger, options to purchase common stock of CCS Consolidated held by Dr. Paterson, Mr. Spence and Ms. Welte were assumed by the Registrant and have become options to purchase common stock of the Registrant as described in Item 2.01 of this Form 8-K.

Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

Because the Merger with CCS Consolidated is treated as a “reverse merger” for accounting purposes, and as such the financial statements of the accounting acquirer, CCS Consolidated, will become the financial statements of the Registrant as the legal acquirer, the Registrant adopted March 31 as its fiscal year end, which was CCS Consolidated’s fiscal year end.

Item 8.01 Other Events.

Press Release

A copy of the press release dated January 25, 2006, announcing the completion of the Merger is attached as Exhibit 99.1 hereto and incorporated by reference herein.

Potential Impairment

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In accordance with generally accepted accounting principles in the United States, the Registrant will account for the Merger using the purchase method of accounting. For accounting purposes, CCS Consolidated is considered to be the acquiring company, and as a result, the Registrant is required to allocate the total purchase price to the Registrant’s net tangible assets and amortizable and unamortizable intangible assets based on their fair values as of the measurement date (the “Measurement Date”), which was October 31, 2005 (as reduced by the estimated fair value of American CareSource Holdings, Inc., the Registrant’s former subsidiary (“ACS”), which was spun off by the Registrant prior to the closing of the Merger), and to record the excess of the purchase price over those fair values as goodwill. Based on preliminary estimates of the purchase price and the allocation to the various tangible and intangible assets and liabilities, the Registrant believes that it will be required to record a significant and material amount of goodwill as of the closing date of the Merger. However, in accordance with Financial Accounting Standards Board Statement No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”), the management of the Registrant is required to periodically evaluate the carrying value of goodwill and other intangible assets that it has acquired through acquisitions. On the Measurement Date, the market value of the Registrant was significantly higher than the market value of the Registrant on the date of the closing of the Merger (at least in part due to the spin-off of ACS), and as a result the Registrant believes that a material impairment charge against this goodwill may be required. Any such impairment would be a non-cash charge and would not result in future cash expenditures by the Registrant. In the event that the Registrant’s board of directors or management conclude that such an impairment charge is required by SFAS 142, the Registrant will file a Form 8-K disclosing the estimate of the amount, or range of amounts, of such impairment.

Item 9.01 Financial Statements and Exhibits.

(a)Financial Statements of Businesses Acquired

The financial statements required by Item 9.01(a) of Form 8-K will be filed by amendment on or before April 12, 2006.

(b)Pro Forma Financial Information

The pro forma financial statements required by Item 9.01(b) of Form 8-K will be filed by amendment on or before April 12, 2006.

(d)Exhibits

	Exhibit
	Number	ExhibitDescription
2.1 (1)		Agreement and Plan of Merger, dated September 19, 2005, by and among Patient Infosystems, Inc., PATY Acquisition Corp. and CCS Consolidated, Inc.
2.2 (2)		Amendment No. 1 to the Agreement and Plan of Merger, dated November 22, 2005, by and among Patient Infosystems, Inc., PATY Acquisition Corp. and CCS Consolidated, Inc.
2.3 (3)		Amendment No. 2 to the Agreement and Plan of Merger, dated December 23, 2005, by and among Patient Infosystems, Inc., PATY Acquisition Corp. and CCS Consolidated, Inc.
10.89 (*)		Stockholders Agreement, dated as of January 25, 2006, by and among Patient Infosystems, Inc. and certain of its stockholders
10.90 (4)		Employment Agreement, dated September 19, 2005 and effective as of January 25, 2006, by and between Patient Infosystems, Inc. and Chris Paterson
10.91 (5)		Employment Agreement, dated September 19, 2005 and effective as of January 25, 2006, by and between Patient Infosystems, Inc. and Glen Spence
10.92 (6)		Employment Agreement, dated September 19, 2005 and effective as of January 25, 2006, by and between Patient Infosystems, Inc. and Roger Chaufournier
10.93 (7)		Employment Agreement, dated September 19, 2005 and effective as of January 25, 2006, by and between Patient Infosystems, Inc. and Christine St. Andre
10.98		Employment Agreement, dated December 5, 2005 and effective as of January 25, 2006, by and between Patient Infosystems, Inc. and Kent A. Tapper
10.99		Form of Lockup Agreement

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10.100	Form of Lockup Agreement signed by Roger Chaufournier, Christine St. Andre and Kent Tapper
16.1	Letter to the Securities and Exchange Commission from Ernst & Young LLP
16.2	Letter to the Securities and Exchange Commission from McGladrey & Pullen, LLP
99.1	Press Release dated January 25, 2006

(1)	Previously filed as Exhibit 10.88 to the Registrant’s Report on Form 8-K filed with the Commission on September 23, 2005, and incorporated by reference herein.
(2)	Previously filed as Exhibit 10.96 to the Registrant’s Report on Form 8-K filed with the Commission on November 29, 2005, and incorporated by reference herein.
(3)	Previously filed as Exhibit 10.97 to the Registrant’s Report on Form 8-K filed with the Commission on December 23, 2005, and incorporated by reference herein.
(4)	Previously filed as Exhibit 10.90 to the Registrant’s Report on Form 8-K filed with the Commission on September 23, 2005, and incorporated by reference herein.
(5)	Previously filed as Exhibit 10.91 to the Registrant’s Report on Form 8-K filed with the Commission on September 23, 2005, and incorporated by reference herein.
(6)	Previously filed as Exhibit 10.92 to the Registrant’s Report on Form 8-K filed with the Commission on September 23, 2005, and incorporated by reference herein.
(7)	Previously filed as Exhibit 10.93 to the Registrant’s Report on Form 8-K filed with the Commission on September 23, 2005, and incorporated by reference herein.
(*)	Form of this agreement was previously filed as Exhibit 10.89 to the Registrant’s Report on Form 8-K filed with the Commission on September 23, 2005.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: January 31, 2006 PATIENT INFOSYSTEMS, INC. By:  /s/ Chris E. Paterson Chris E. Paterson President and Chief Executive Officer

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EXHIBIT INDEX

	Exhibit
	Number	ExhibitDescription
2.1 (1)		Agreement and Plan of Merger, dated September 19, 2005, by and among Patient Infosystems, Inc., PATY Acquisition Corp. and CCS Consolidated, Inc.
2.2 (2)		Amendment No. 1 to the Agreement and Plan of Merger, dated November 22, 2005, by and among Patient Infosystems, Inc., PATY Acquisition Corp. and CCS Consolidated, Inc.
2.3 (3)		Amendment No. 2 to the Agreement and Plan of Merger, dated December 23, 2005, by and among Patient Infosystems, Inc., PATY Acquisition Corp. and CCS Consolidated, Inc.
10.89 (*)		Stockholders Agreement, dated as of January 25, 2006, by and among Patient Infosystems, Inc. and certain of its stockholders
10.90 (4)		Employment Agreement, dated September 19, 2005 and effective as of January 25, 2006, by and between Patient Infosystems, Inc. and Chris Paterson
10.91 (5)		Employment Agreement, dated September 19, 2005 and effective as of January 25, 2006, by and between Patient Infosystems, Inc. and Glen Spence
10.92 (6)		Employment Agreement, dated September 19, 2005 and effective as of January 25, 2006, by and between Patient Infosystems, Inc. and Roger Chaufournier
10.93 (7)		Employment Agreement, dated September 19, 2005 and effective as of January 25, 2006, by and between Patient Infosystems, Inc. and Christine St. Andre
10.98		Employment Agreement, dated December 5, 2005 and effective as of January 25, 2006, by and between Patient Infosystems, Inc. and Kent A. Tapper
10.99		Form of Lockup Agreement
10.100		Form of Lockup Agreement signed by Roger Chaufournier, Christine St. Andre and Kent Tapper
16.1		Letter to the Securities and Exchange Commission from Ernst & Young LLP
16.2			Letter to the Securities and Exchange Commission from McGladrey & Pullen, LLP
99.1		Press Release dated January 25, 2006

(1)	Previously filed as Exhibit 10.88 to the Registrant’s Report on Form 8-K filed with the Commission on September 23, 2005, and incorporated by reference herein.
(2)	Previously filed as Exhibit 10.96 to the Registrant’s Report on Form 8-K filed with the Commission on November 29, 2005, and incorporated by reference herein.
(3)	Previously filed as Exhibit 10.97 to the Registrant’s Report on Form 8-K filed with the Commission on December 23, 2005, and incorporated by reference herein.
(4)	Previously filed as Exhibit 10.90 to the Registrant’s Report on Form 8-K filed with the Commission on September 23, 2005, and incorporated by reference herein.
(5)	Previously filed as Exhibit 10.91 to the Registrant’s Report on Form 8-K filed with the Commission on September 23, 2005, and incorporated by reference herein.
(6)	Previously filed as Exhibit 10.92 to the Registrant’s Report on Form 8-K filed with the Commission on September 23, 2005, and incorporated by reference herein.

(7) Previously filed as Exhibit 10.93 to the Registrant’s Report on Form 8-K filed with the Commission on September

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23, 2005, and incorporated by reference herein.

(*) Form of this agreement was previously filed as Exhibit 10.89 to the Registrant’s Report on Form 8-K filed with the Commission on September 23, 2005.

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EX-16

January 31, 2006

Securities and Exchange Commission

450 Fifth Street, N.W.

Washington, DC 20549

Gentlemen:

We have read Item 4.01 of Form 8-K dated January 31, 2006 of Patient Infosystems, Inc. and are in agreement with the statements therein regarding our firm. We have no basis to agree or disagree with other statements of the registrant contained therein.

McGladrey & Pullen, LLP

EX-10

STOCKHOLDERS AGREEMENT

THIS STOCKHOLDERS’ AGREEMENT (this “Agreement”), dated this 25th day of January 2006 is entered into by and among Patient Infosystems, Inc., a Delaware corporation (“PATY”), John Pappajohn, an individual residing in the state of Iowa (“Pappajohn”), Derace Schaffer, an individual residing in the state of Texas (“Schaffer” and together with Pappajohn the “PATY Guarantors”), Essex Woodlands Health Ventures Fund IV, L.P., (“Essex IV”), Essex Woodlands Health Ventures Fund V, L.P. (“Essex V” and together with Essex IV, “Essex”), Hickory Venture Capital Corporation, (“Hickory”), Radius Venture Partners I, L.P. (“Radius”), Psilos Group Partners, L.P., (“Psilos I”) and Psilos Group Partners II, L.P., (“Psilos II” and together with Psilos I, “Psilos” Psilos, Essex, Hickory and Radius are collectively referred to herein as the “CCS Guarantors”), and Albert Waxman, an individual residing in the state of New York (“Waxman”). The PATY Guarantors and the CCS Guarantors are sometimes collectively referred to herein as the “Investors.” Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Merger Agreement (as defined below).

W I T N E S S E T H:

WHEREAS, each of PATY, PATY Acquisition Corp. and CCS Consolidated, Inc. (“CCS”) are party to an Agreement and Plan of Merger dated as of September 19, 2005 (the “Merger Agreement”) pursuant to which PATY Acquisition Corp., a wholly-owned subsidiary of PATY, is to be merged with and into CCS; and

WHEREAS, the execution of this Agreement is a condition precedent to the consummation of the transactions contemplated by the Merger Agreement; and

WHEREAS, prior to the execution of the Merger Agreement, the PATY Guarantors, as stockholders of PATY, guaranteed the payment (the “Guarantee”) of a revolving loan in the principal amount of up to six million dollars ($6,000,000) made by Wells Fargo Bank Iowa, National Association to PATY pursuant to a Second Amended and Restated Credit Agreement, dated March 28, 2002, as amended (the “Loan”); and

WHEREAS, the obligations under the Guarantee and Loan shall remain in effect, in accordance with their terms, following the consummation of the transactions contemplated by the Merger Agreement; and

WHEREAS, in connection with the execution and consummation of the Merger Agreement, CCS retained Sonenshine Pastor Advisors LLC (“Sonenshine Partners”) to serve as its financial advisor; and

WHEREAS, Sonenshine Partners’ fee for the financial advisory services provided to CCS is $550,000 (the “Sonenshine Partners Fee”); and

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WHEREAS, in accordance with Section 13.5 of the Merger Agreement, PATY agreed to pay the Expenses associated with the transaction, subject to the terms of this Agreement; and

WHEREAS, the Sonenshine Partners Fee is an Expense; and

WHEREAS, stockholders holding 0 shares of CCS Common Stock and 0 shares of CCS Preferred Stock (the “Dissenting Stockholders”) who are otherwise entitled to receive 0 shares of PATY Common Stock (the “Dissenter Shares”) in accordance with the terms and conditions set forth in Section 2.2(f) of the Merger Agreement, have made a written demand to CCS for appraisal rights in accordance with Section 262(d) of the GCL; and

WHEREAS, upon the consummation of the transactions contemplated by the Merger Agreement, the Investors shall possess a majority of the shares of the PATY Common Stock.

NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and undertakings of the Corporation, the Investors and Waxman hereunder the parties hereto do hereby agree as follows:

SECTION 1 The Loan.

1.1        Satisfaction of Loan. PATY shall use its best efforts to satisfy its obligations under the Loan and repay all amounts owed thereunder by December 31, 2005, in one or more of the following ways:

(a)        PATY may sell the shares of common stock of American Caresource Holdings, Inc. (“ACS”) that it owns, and if any such sales occur, PATY shall immediately use the proceeds of such sale to repay part or all of the Loan; or

(b)        PATY may enter into one or more transactions pursuant to which it will sell equity securities of PATY, and if any such sales occur, PATY shall immediately use the proceeds from such sale or sales to repay part or all of the Loan (each a “Loan Satisfaction Transaction”);

provided, however, that in all cases such actions shall be subject to the prior approval of the PATY Board of Directors pursuant to the terms of Section 4 hereof.

1.2        PATY Standby Commitment. If, despite its best efforts, PATY is unable to satisfy its obligation to repay the Loan in full, in accordance with Section 1.1 above, by the 30^th day from the date hereof (the “Standby Commitment Date”), then each of the PATY Guarantors shall be obligated, and hereby agrees, to purchase, at a price that is five percent less than the Share Value (as defined below) (a “Five Percent Discount”), on the Standby Commitment Date, a number of shares of PATY Common Stock from PATY, which is equal in value (as determined using the average closing price for the ten trading days immediately preceding the Standby Commitment Date (the “Share Value”)), after taking into account the Five Percent Discount, to seventy-five percent, in the case of Pappajohn and twenty-five percent, in the case of Schaffer of the remaining principal balance of the Loan (plus accrued but unpaid interest thereon) as of the Standby Commitment Date (the “PATY Standby Commitment”). Immediately upon the consummation of such sales (the “PATY Standby Sales”), PATY shall use the proceeds of the PATY Standby Sales to satisfy its obligations to repay the Loan thus extinguishing the obligations under the Loan and the Guarantee.

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1.3 True-Up Shares.

(a)        Within ten (10) business days after the consummation of a Loan Satisfaction Transaction, Pappajohn, Schaffer and Waxman (as the CCS Stockholder Representative) shall execute and deliver to the PATY Debt Escrow Agent a Disbursement Notice (as defined in the PATY Debt Escrow Agreement) that provides for the distribution from escrow to the holders of CCS Capital Stock, in accordance with Section 2.2(f) of the Merger Agreement, an amount of Escrow Shares (as defined in the PATY Debt Escrow Agreement) equal to the lesser of (i) the product of (A) the number of shares of PATY Common Stock issued or issuable as a result of each Loan Satisfaction Transaction and (B) the Applicable Multiplier (as defined below) and (ii) the balance of the Escrow Shares (as defined in the PATY Debt Escrow Agreement) on the date of the Loan Satisfaction Transaction (the shares received by holders of CCS Capital Stock pursuant to this Section 1.3(a) are hereinafter referred to as the “Loan Satisfaction True-Up Shares”).

(b)        Within ten (10) business days after the consummation of a PATY Standby Sale, Pappajohn and Waxman shall execute and deliver to the PATY Debt Escrow Agent a Disbursement Notice (as defined in the PATY Debt Escrow Agreement) that provides for the distribution from escrow to the holders of CCS Capital Stock, in accordance with Section 2.2(f) of the Merger Agreement, an amount of Escrow Shares (as defined in the PATY Debt Escrow Agreement) equal to the lesser of (i) the product of (A) the number of shares of PATY Common Stock issued in connection with the PATY Standby Sale and (B) the Applicable Multiplier, and (ii) the balance of the Escrow Shares (as defined in the PATY Debt Escrow Agreement) on the Standby Commitment Date (the shares received by holders of CCS Capital Stock pursuant to this Section 1.3(b) are hereinafter referred to as the “Standby True-Up Shares” and together with the Loan Satisfaction True-Up Shares, the “True-Up Shares”)

(c)        Any Escrow Shares (as defined in the PATY Debt Escrow Agreement) remaining in escrow after the satisfaction of the Loan and application of paragraphs (a) and (b) of this Section 1.3 shall be disbursed to PATY.

1.4        Applicable Multiplier.        For purposes of this Agreement, the (“Applicable Multiplier”) shall mean quotient obtained by dividing (i) the product of (A) the difference between (I) the sum of (a) the number of shares of PATY Common Stock outstanding immediately prior to Closing, (b) the number of shares of PATY Common Stock issuable upon exercise of PATY Options outstanding immediately prior to Closing, and (c) the number of shares of PATY Common Stock issuable upon the exercise of PATY Warrants outstanding immediately prior to Closing and (II) the sum of (a) the number of Initial Pipe Securities and (b) the number of Supplemental Pipe Securities the proceeds of which were not used to pay the debt associated with the Loan, and (B) 1.857142 and (ii) the difference between (A) the total number of shares of PATY Common Stock outstanding (for the avoidance of doubt the shares held in escrow pursuant the PATY Debt Escrow Agreement are outstanding for the purposes of this Section) immediately following the Effective Time minus (B) the sum of (I) the result of the calculations set forth above in (i) and (II) the number of shares held in escrow pursuant to the PATY Debt Escrow Agreement.

SECTION 2     

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Sonenshine Partners Fee.

2.1 Payment of the Sonenshine Partners Fee.

(a)        On the Closing Date PATY shall make a payment to Sonenshine Partners of $550,000 as partial or full payment for the Sonenshine Partners Fee.

(b)        PATY shall use its best efforts to pay the balance of the Sonenshine Partners Fee, by entering into one or more transactions pursuant to which it will sell equity securities of PATY and use the proceeds from such sale or sales to pay the balance of the Sonenshine Partners Fee (each, a “Sonenshine Partners Fee Satisfaction Transaction”); provided, however, that any proceeds derived from the sale of such securities shall first be used to pay any remaining balance of the Loan, and next to satisfy the balance of the Sonenshine Partners Fee and fund the Dissenter Reserve Account (as defined below) on a pari passu basis; and provided, further, that in all cases such sales of securities shall be subject to the prior approval of the PATY Board of Directors pursuant to the terms of Section 4 hereof.

2.2        CCS Sonenshine Partners Standby Commitment. If, despite its best efforts, PATY is unable, following the satisfaction of the obligations of the Loan, to pay the entire unpaid balance of the Sonenshine Partners Fee using the proceeds from the Sonenshine Partners Fee Satisfaction Transactions, then each of the CCS Guarantors shall be obligated, and hereby agrees, to purchase, at a Five Percent Discount, on the Standby Commitment Date, a number of shares of PATY Common Stock which is equal in value (as determined using the average closing price for the ten trading days immediately preceding the Standby Commitment Date), after taking into account the Five Percent Discount, to the percentage of the remaining balance of the Sonenshine Partners Fee set forth opposite each such CCS Guarantor below as of the Standby Commitment Date:

Essex IV – 40.5%

Essex V - 1%

Hickory – 23.8%

Radius -		20%
Psilos I –	13.7%
Psilos II -			1%

(the commitment of each CCS Guarantor to purchase the PATY Common Stock as set forth in this Section 2.2 being referred to herein as the “CCS Sonenshine Partners Standby Commitment”). Immediately upon the consummation of such sales (the “CCS Sonenshine Partners Standby Sales”), PATY shall use the proceeds of the CCS Sonenshine Partners Standby Sales to satisfy its obligation to pay the unpaid balance of the Sonenshine Partners Fee.

2.3        

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Residual Shares.

(a)        Within ten (10) business days of the consummation of a Sonenshine Partners Fee Satisfaction Transaction, Pappajohn, Schaffer and Waxman shall execute and deliver to the Sonenshine Partners Escrow Agent a Disbursement Notice (as defined in the Sonenshine Partners Escrow Agreement) that provides for the distribution from escrow to PATY an amount of Escrow Shares (as defined in the Sonenshine Partners Debt Escrow Agreement) equal to the lesser of (i) the number of shares of PATY Common Stock issued or issuable as a result of such Sonenshine Partners Fee Satisfaction Transaction and (ii) the balance of the Escrow Shares (as defined in the Sonenshine Partners Debt Escrow Agreement).

(b)        Within ten business days of the consummation of a CCS Sonenshine Partners Standby Sale, Pappajohn, Schaffer and Waxman shall execute and deliver to the Sonenshine Partners Escrow Agent a Disbursement Notice (as defined in the Sonenshine Partners Escrow Agreement) that provides for the distribution from escrow to PATY an amount of Escrow Shares (as defined in the Sonenshine Partners Debt Escrow Agreement) equal to the lesser of (i) the number of shares of PATY Common Stock issued in connection with the CCS Sonenshine Partners Standby Sale and (ii) the balance of the Escrow Shares (as defined in the Sonenshine Partners Debt Escrow Agreement).

(c)        Any Escrow Shares (as defined in the Sonenshine Partners Debt Escrow Agreement) remaining in escrow after the satisfaction of the Sonenshine Partners Fee and the application of paragraphs (a) and (b) of this Section 2.3 (the “Residual Shares”) shall be disbursed to the holders of CCS Capital Stock in accordance with Section 2.2(f) of the Merger Agreement.

SECTION 3 Dissenter Liability.

3.1        Payment of Dissenter Liability. PATY shall reserve funds in an account (the “Dissenter Reserve Account”) for the exclusive purpose of satisfying any liability to Dissenting Stockholders deriving from the exercise of appraisal rights under Section 262 of the GCL (the “Dissenter Liability”). The Dissenter Reserve Account shall initially be funded by PATY, within ten business days after the Closing Date, with the lesser of the Dissenter Reserve (as defined below) and $1,000,000. Such amount may be increased as set forth below in Section 3.2 or may be decreased as set forth below in this Section 3.1. Unless otherwise required by law, PATY shall not make any payments related to the Dissenter Liability until the obligations of the Loan are completely satisfied. Once the obligations of the Loan are satisfied, PATY may use the funds in the Dissenter Reserve Account to satisfy the Dissenter Liability as it comes due (each instance, a “Dissenter Payment”). PATY may release the funds from the Dissenter Reserve Account once all claims of the Dissenting Stockholders have been settled or adjudicated to a final decision and all opportunities for appeal have been exhausted.

3.2        CCS Dissenter Standby Commitment. Following the satisfaction of the Loan, if the number of Dissenter Shares multiplied by the closing price of PATY Common Stock on the first trading day immediately after the Closing Date (the “Dissenter Reserve”) exceeds $1,000,000, PATY shall, contemporaneously with its efforts to satisfy its obligations set forth in Section 2.1(b), until the Standby Commitment Date, use its best efforts to raise funds up to an

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amount equal to (i) the Dissenter Reserve minus (ii) $1,000,000 (the “Net Dissenter Liability”) through one or more transactions pursuant to which it shall sell PATY’s equity securities; provided, however, that the proceeds from such sale shall be used to satisfy the balance of the Sonenshine Partners Fee and fund the Dissenter Reserve Account on a pari pasu basis; and provided further that in all cases such sales of securities shall be subject to the prior approval of the PATY Board of Directors pursuant to the terms of Section 4 hereof. Such funds raised in accordance with this Section 3.2 shall be added to the Dissenter Reserve Account. If, despite its best efforts, PATY is unable to raise funds equal in value to the Net Dissenter Liability by the Standby Commitment Date, then each of the CCS Guarantors shall be obligated, and hereby agrees, to purchase, at a Five Percent Discount, on the date that is ten business days following the date when all claims by Dissenting Stockholders have been settled or adjudicated to a final decision and all opportunities for appeal have been exhausted (the “Dissenter Standby Commitment Date”), a number of shares of PATY Common Stock from PATY which is equal in value (as determined using the average closing price for the ten trading days immediately preceding the Dissenter Standby Commitment Date), after taking into account the Five Percent Discount, to a percentage of the positive amount, if any, equal to the difference between the aggregate Dissenter Liability and the greater of (A) the balance of the Dissenter Reserve Account plus the aggregate Dissenter Payments made as of such date, and (B) $1,000,000 as of the Dissenter Standby Commitment Date, equal to the percentages set forth in Section 2.2 above for each CCS Guarantor (the “CCS Dissenter Standby Commitment”). Immediately upon the consummation of such sales (the “CCS Dissenter Standby Commitment Sales”), PATY shall use the proceeds of such sales, along with the balance of the Dissenter Reserve Account, to satisfy the remaining Dissenter Liability. Notwithstanding anything herein to the contrary, the obligations of the CCS Dissenter Standby Commitment shall be extinguished if all claims of the Dissenting Stockholders have been settled or adjudicated to a final decision and all opportunities for appeal have been exhausted and the balance of the Dissenter Reserve Account equals or exceeds the actual amounts due to the Dissenting Stockholders as a result of the exercise of their appraisal rights, on or before the Standby Commitment Date.

3.3        No Appraisal Right Exercise. In the event that no holder of CCS Capital Stock has exercised his, her or its appraisal rights pursuant to the terms of Section 262(d) of the GCL, this Section 3 shall have no force or effect and no party to this Agreement shall have any obligation in connection herewith.

SECTION 4The Committee. PATY shall use its best efforts to effectuate the purposes of Sections 1, 2 and 3, including the creation and maintenance of a Debt Elimination Committee (the “Committee”) of the Board of Directors, in accordance with Section 141 of the Delaware General Corporation Law and Section 2.13 of the Corporation’s By-laws. The Committee shall be comprised exclusively of the PATY Guarantors and Waxman and shall be delegated the exclusive authority to pursue equity financing opportunities for the specific purpose of raising funds to be used to satisfy the obligations of the Loan. Unless otherwise provided herein, all decisions of the Committee shall require the consent of a majority of the Committees members. Once the obligations of the Loan have been satisfied, the Committee shall be expanded to include such other PATY board member designated by the holders of a majority of PATY Common Stock held by the CCS Guarantors and shall be delegated the exclusive authority to pursue equity

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financing opportunities for the specific purposes of raising funds to be used to pay the balance of the Sonenshine Partners Fee and to satisfy the Dissenter Liability. Furthermore, the Committee shall have the exclusive authority to negotiate the terms and conditions of such financings, consistent with its fiduciary duties, for PATY, subject to the final approval by the PATY Board of Directors of any such transaction. The PATY Board of Directors shall approve any financing transaction presented by the Committee involving the sale of the PATY Common Stock and/or warrants to purchase PATY Common Stock, provided that the sale price of such common stock and/or the exercise price for such warrants must be in any event greater than or equal to 90 percent of the average closing price for the twenty trading days immediately preceding the date of such sale. The PATY Board of Directors shall approve any financing transaction presented by the Committee relating to the sale of either (i) securities other than PATY Common Stock or warrants to purchase PATY Common Stock (as contemplated in the previous sentence, including the proviso) provided the Committee unanimously recommends such sale or (ii) ACS common stock unless such approval would, upon the advice of counsel, reasonably be expected to cause the Board of Directors to breach its fiduciary duties to PATY’s stockholders. The Committee shall remain in effect until the later of (a) such time that (1) the Loan is repaid and all obligations under the Loan and the Guarantee have been satisfied and extinguished, (2) the balance of the Sonenshine Partners Fee has been paid, and (3) the Dissenter Reserve Account plus all Dissenter Payments made exceeds the value of the Net Dissenter Liability or (b) the consummation of (1) the PATY Standby Sales, (2) the CCS Sonenshine Partners Fee Standby Sales, and (3) the CCS Dissenter Standby Commitment Sales.

SECTION 5 Election of Directors.

5.1        Voting for Directors. At each annual meeting of the stockholders of PATY and at each special meeting of the stockholders of PATY called for the purposes of electing directors of PATY, and at any time at which stockholders of PATY shall have the right to, or shall, vote for or consent to the election of directors, then, in each such event, each Investor shall vote all shares of PATY Common Stock, and any other shares of voting stock of PATY then owned (or controlled as to voting rights) by it or him, whether by purchase, exercise of rights, warrants or options, stock dividends or otherwise:

(a)        to fix and maintain the number of directors on the Board of Directors at seven (7);

(b)        to elect to the Board of Directors three designees nominated by the holders of at least a majority of PATY Common Stock held by the CCS Guarantors, John Pappajohn or his designee and Derace Schaffer or his designee.

(c)        to elect to the Board of Directors two (2) directors who meet all requirements of independence under the Securities Exchange Act of 1934, as amended, applicable to PATY and who are approved by the unanimous consent of members of the board selected in accordance with Section 5.1(b) of this Agreement.

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5.2        Cooperation. PATY shall use its best efforts to effectuate the purposes of this Section 5, including promoting the adoption of any necessary amendment of the By-laws of PATY and its Certificate of Incorporation. In addition, PATY, Waxman, and the Investors shall take such action as is necessary to convene annual and/or special meetings of the Board of Directors and annual and/or special meetings of stockholders for the election of the directors (or to act by written consent) in order to elect and re-elect the directors in accordance with this Section 5. Such action shall include, but not be limited to, the holding of a meeting of the Board of Directors immediately following the Effective Time for the purpose of electing the directors in accordance with this Section 5.

SECTION 6Wells Fargo Credit Line. Under no circumstances shall PATY draw down funds on the Wells Fargo Credit Line without the written consent of Pappajohn and Schaffer. Without limitation, any breach of this Section shall relieve Pappajohn and Schaffer of all obligations it may have under Section 1 of this Agreement.

SECTION 7Charter Amendment. If the number of shares of PATY Common Stock needed to be issued by PATY in order to consummate a transaction or transactions contemplated by Sections 1.1(b), 2.1(b) or 3.2 of this Agreement exceeds the number of shares of PATY Common Stock available to be issued by PATY in accordance with its Certificate of Incorporation, each Investor hereto agrees to vote all of their shares of PATY Common Stock in favor of any proposal presented to the holders of PATY Common Stock which would provide for an amendment to PATY’s Certificate of Incorporation to increase the number of authorized shares of PATY Common Stock to a level that would allow PATY to consummate such transactions.

SECTION 8Remedies. In case any one or more of the covenants and/or agreements set forth in this Agreement shall have been breached by any party hereto, the party or parties entitled to the benefit of such covenants or agreements may proceed to protect and enforce its or their rights, either by suit in equity and/or action at law, including, but not limited to, an action for damages as a result of any such breach and/or an action for specific performance of any such covenant or agreement contained in this Agreement. The rights, powers and remedies of the parties under this Agreement are cumulative and not exclusive of any other right, power or remedy which such parties may have under any other agreement or law. No single or partial assertion or exercise of any right, power or remedy of a party hereunder shall preclude any other or further assertion or exercise thereof.

SECTION 9Successors and Assigns. Except as otherwise expressly provided herein, this Agreement shall bind and inure to the benefit of PATY, each of the Investors and Waxman and the respective successors and permitted assigns of PATY, each of the Investors and Waxman. Prior to the transfer of any shares of PATY Common Stock by any Investor, such transferee must (unless such transferee is already an Investor), as a condition to such transfer, deliver to PATY and the other Investors, a written instrument by which such transferee identifies itself, identifies the securities of PATY to be acquired by it and agrees to be bound by the

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obligations imposed hereunder to the same extent as if such transferee were an Investor hereunder. Upon receipt of such notice by PATY and the other Investors, the transfer of the PATY Common Stock may be consummated and the transferee shall be deemed to be an Investor hereunder.

SECTION 10Duration of Agreement. Except as specifically set forth herein, the rights and obligations of PATY, each Investor and Waxman set forth herein shall survive indefinitely, unless and until, by their respective terms, they are no longer applicable.

SECTION 11Entire Agreement. This Agreement, together with the other writings referred to herein or delivered pursuant hereto which form a part hereof, contains the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous arrangements or understandings with respect thereto.

SECTION 12Notices. All notices, requests, consents and other communications hereunder to any party shall be deemed to be sufficient if contained in a written instrument delivered in person or duly sent by first class registered, certified or overnight mail, postage prepaid, or telecopied with a confirmation copy by regular mail, addressed or telecopied, as the case may be, to such party at the address or telecopier number, as the case may be, set forth below or such other address or telecopier number, as the case may be, as may hereafter be designated in writing by the addressee to the addressor listing all parties:

(i) if to PATY, to:

46 Prince Street

Rochester, NY 14601

Attention: Chief Executive Officer

Telecopier: (585) 244-1367

with a copy to:

McCarter & English, LLP

Four Gateway Center

100 Mulberry Street

Newark, NJ 07102

Attention: Jeffrey A. Baumel, Esq.

Telecopier: (973) 624-7070

(ii) if to John Pappajohn:

Equity Dynamics

2116 Financial Center

Des Moines, IA 50309

Telecopier: (515) 244-2346

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(iii) if to Derace Schaffer:

3489 Elmwood Ave

Rochester, NY 14610

(iv) if to Albert Waxman:

Psilos Group Investors, LLC

625 Avenue of the Americas

New York, NY 10011

(v) if to Essex:

c/o Essex Woodlands

11951 Freedom Drive, 16^th Floor

Reston, VA 20190

Attention: Mark Pacala

(vi) if to Hickory:

c/o Hickory Venture Group

301 Washington Street N.W., Suite 301

Huntsville, AL 35801

Attention: J. Thomas Noojin

(vii) if to Radius:

c/o Radius Ventures, LLC

400 Madison Avenue, 8^th floor

New York, NY 10017

Attention: Daniel Lubin

(viii) if to Psilos:

625 Avenue of the Americas

New York, NY 10011

Attention: Albert Waxman

All such notices, requests, consents and communications shall be deemed to have been received (a) in the case of personal delivery, on the date of such delivery, (b) in the case of mailing, on the third business day following the date of such mailing, (c) in the case of overnight mail, on the first business day following the date of such mailing, and (d) in the case of facsimile transmission, when confirmed by facsimile machine report.

SECTION 13Changes. The terms and provisions of this Agreement may be modified or amended, or any of the provisions hereof waived, temporarily or

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permanently, only pursuant to the written consent of PATY, each of the Investors and Waxman.

SECTION 14Counterparts. This Agreement may be executed in any number of counterparts, and each such counterpart shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement.

SECTION 15Headings. The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement.

SECTION 16Nouns and Pronouns. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of names and pronouns shall include the plural and vice-versa.

SECTION 17Severability. Any provision of this Agreement that 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.

SECTION 18Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, excluding choice of law rules thereof.

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IN WITNESS WHEREOF the parties hereto have executed this Agreement on the date first above written.

PATIENT INFOSYSTEMS, INC.

By:/s/ Roger Louis Chaufournier

Name: Roger Louis Chaufournier

Title: Chairman and CEO

/s/ John Pappajohn

John Pappajohn

/s/ Derace Schaffer

Derace Schaffer

ESSEX WOODLANDS HEALTH VENTURES FUND IV, L.P.

By: ESSEX WOODLANDS HEALTH VENTURES FUND IV, L.P., its general partner

By:/s/Mark L. Pacala

Name: Mark L. Pacala

Title: Managing Director

ESSEX WOODLANDS HEALTH VENTURES FUND V, L.P.

By: ESSEX WOODLANDS HEALTH VENTURES FUND V, L.P., its general partner

By:/s/Mark L. Pacala

Name: Mark L. Pacala

Title: Managing Director

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HICKORY VENTURE CAPITAL CORPORATION

By:/s/J. Thomas Noojin

Name: J. Thomas Noojin

Title: President

RADIUS VENTURE PARTNERS I, L.P.

By:/s/Daniel C. Lubin

Name: Daniel C. Lubin

Title: Managing Member

PSILOS GROUP PARTNERS I, L.P.

By: PSILOS GROUP PARTNERS I, L.P., its general partner

By:/s/ Albert S. Waxman

Name: Albert S. Waxman

Title: Managing Member

PSILOS GROUP PARTNERS II, L.P.

By: PSILOS GROUP PARTNERS II, L.P., its general partner

By:/s/ Albert S. Waxman

Name: Albert S. Waxman

Title: Managing Member

/s/ Albert S. Waxman

Albert Waxman

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EX-10

EMPLOYMENT AGREEMENT

This Employment Agreement (“Agreement”) is entered into effective as of the “Effective Time” as defined in that certain Agreement and Plan of Merger by and among Patient Infosystems, Inc., PATY Acquisition Corp. and CCS Consolidated, Inc. (the “Merger Agreement”), by and between Patient Infosystems, Inc., a Delaware corporation (the “Company”), and Kent A. Tapper (“Employee”).

Conditioned on the successful consummation of the Plan of Merger pursuant to the Merger Agreementand in consideration of the mutual covenants and conditions set forth herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:

1.       Employment. The Company hereby employs Employee in the capacity of Vice President of Finance, Sarbanes-Oxley and SEC Compliance, reporting to the Chief Financial Officer. Employee accepts such employment and agrees to diligently, conscientiously and exclusively perform such services as are customary to such office and as shall from time to time be assigned to him by an officer of the Company or by the Chief Financial Officer. Employee’s employment will be on a full-time business basis requiring the devotion of substantially all of his productive business time for the efficient and successful operation of the business of the Company.

2.       Conditional Agreement; Term. Should Plan of Merger not be consummated and the Effective Time not occur, this Agreement shall not become effective. Should this Agreement become effective, the employment hereunder shall be for a one year period commencing at the Effective Time, unless earlier terminated as provided in Section 4 (the “Initial Term”). This Agreement shall be automatically renewed for successive one-year periods upon the expiration of the Initial Term unless earlier terminated as provided in Section 4. The parties expressly agree that designation of a term and renewal provisions in this Agreement does not in any way limit the right of the parties to terminate this Agreement at any time as hereinafter provided. Reference herein to the term of this Agreement shall refer both to the Initial Term and any successive term as the context requires.

3. Compensation and Benefits

3.1        Salary. For the performance of Employee’s duties hereunder, the Company shall pay Employee a salary at the annualized rate of $175,000 (the “Base Compensation”), payable in accordance with the normal payroll practices of the Company. Prior to the end of the Initial Term and any renewal term, Employee’s Base Compensation shall be reviewed, taking into account the performance of Employee, the financial condition of the Company, and such other information as the Company shall determine is appropriate. Based upon such review, the Company may increase (but not decrease) Employee’s Base Compensation, effective upon the commencement of the immediately following renewal term.

3.2        Bonuses.                     The Employee will be eligible during the term of this Agreement for such additional bonus payments as may be awarded to the Employee from time to time by the Company.

3.3        Payment and Withholding. All payments required to be made by the Company to the Employee shall be made in accordance with the Company’s normal payroll practices and shall be subject to the withholding of such amounts, if any, relating to tax and other payroll deductions as the Company may reasonably determine should be withheld pursuant to any applicable law or regulation.

3.4        Personnel Policies and Benefits. Unless otherwise specified herein, the Employee’s employment is subject to the Company’s personnel policies and procedures as they may be interpreted, adopted, revised or deleted from time to time in the Company’s sole discretion. The Employee will be eligible to participate on the same basis as similarly situated employees in the Company’s benefit plans in effect from time to time during his employment. All matters of eligibility for coverage or benefits under any benefit plan shall be determined in accordance with the provisions of the plan. The Company reserves the right to change, alter, or terminate any benefit plan in its sole discretion. While this Agreement is in effect the Company agrees to maintain at its expense a group life insurance program in which the Employee is eligible to apply for coverage and name the beneficiary or beneficiaries and a group long term disability insurance program in which the Employee is eligible to apply for coverage.

3.5        Stock Options. From time to time the Company may grant to Employee options under the Company’s then current Stock Option Plan to purchase shares of the Company’s common stock at a stated exercise price per share. Any options granted will vest and be exercisable in accordance with a Stock Option Agreement to be executed pursuant to the Company’s Stock Option Plan. Employee will participate in any stock grant program established by the Company on the same basis as similarly situated employees.

3.6        Reimbursement of Expenses. Employee shall be eligible to be reimbursed for all reasonable business expenses, including but not limited to expenses for cellular telephone (to a maximum of $60.00 per month), BlackBerry, travel, meals and entertainment, incurred by Employee in connection with and reasonably related to the furtherance of the Company’s business in accordance with the Company’s policy. In addition, if the Company’s office in Rochester, New York is closed, Employee will be eligible to be reimbursed for reasonable home office expenses provided Employee receives prior approval before incurring such expenses. Employee shall submit expense reports and receipts documenting the expenses incurred in accordance with Company policy.

3.7        Relocation to Florida. Employee will use all reasonable efforts to relocate his primary residence to the Coral Springs, Florida area by the end of July 2006. The parties understand that Employee’s primary residence will remain in Rochester, New York until his relocation to the Coral Springs, Florida area. The parties agree that for the first three (3) months of the Initial Term, Employee will perform his services for the Company primarily at the Company’s Rochester, New York office. Thereafter, Employee will perform his services for the Company primarily at the Company’s Coral Springs, Florida headquarters. Between the end of the third month of the Initial Term and when Employee relocates his primary residence to the Coral Springs, Florida area (the “Transition Period”), Employee will commute between the Company’s Coral Springs headquarters and his primary residence in Rochester (it being agreed that Employee will spend most weekdays in Coral Springs and most week-ends in Rochester during the Transition Period). For the period between the end of the third month of the Initial term and the end of July 2006 or until Employee relocates his primary residence to the Coral Springs, Florida area, whichever first occurs, the Company will pay for or reimburse Employee for his reasonable temporary housing in the Coral Springs, Florida area at an amount not to exceed $4,000 per month without prior approval by the Company’s CEO or CFO, rental car costs in the Coral Springs, Florida area (until his personal automobile is located in the area), and the reasonable cost of airfare for his travel between Coral Springs and Rochester for up to 4 round trips between Coral Springs and Rochester per month.

3.8 Relocation Costs.

(a)        During the Initial Term, Employee shall be reimbursed for, or the Company shall pay the cost of, reasonable expenses related to the relocation of Employee’s primary residence from Rochester, New York to the Coral Springs, Florida area, including house hunting trips to Florida for

Employee and his family, moving and transportation costs (for Employee, his family and household goods), temporary living costs in Florida, storage costs, brokerage fees on the sale of his primary residence in Rochester, closing costs, mortgage loan points on a mortgage on his new primary residence in Florida, and other reasonable out-of-pocket expenses incurred by the Employee resulting from the relocation (collectively, “Moving Costs”); provided, however, that the Company’s payment of, or reimbursement for, Moving Costs will be limited to a maximum of $30,000.

In addition, to the extent that such Moving Costs are taxable income to Employee, the Company will pay Employee a “gross-up” amount to cover the (i) taxes due on such Moving Costs, plus (ii) and the taxes due on such gross-up amount; provided, however, that such net income provided from such gross up amount shall not exceed $10,000 (the gross-up and Moving Costs together shall be the “Relocation Costs”).

(b)       In order to avoid excessive out-of-pocket costs to Employee, the Company shall directly pay (rather than reimburse Employee for) Moving Costs to the extent reasonable and appropriate for: (i) a professional moving company of the Employee’s choice for packing, loading, transportation and unloading of the Employee’s personal effects; (ii) air fare for house hunting for Employee and Employee’s family, and (iii) other approved expenses for which direct billing is an option, or the Employee is able to submit a check request in advance with the required documentation.

(c)        Employee shall submit expense reports and receipts documenting the expenses for out-of-pocket expenses incurred in accordance with Section 3.8 of this Agreement.

(d)       If Employee remains a full-time Company employee for one year following the Transition Period, Employee shall have no obligation to repay any of the Relocation Costs. If Employee is terminated by the Company without Cause pursuant to Section 4.1(d) or resigns from the Company with Good Reason pursuant to Section 4.1(e), then Employee shall have no obligation to repay any of the Relocation Costs. However, if Employee is terminated by the Company for Cause pursuant to Section 4.1(c) or resigns from the Company without Good Reason within one year following the Transition Period, Employee agrees to repay to the Company a portion of the Relocation Costs, to be calculated as follows: For each full month of full-time employment after the Transition Period, the Company will forgive 1/12 of Employee’s Relocation Costs. The remaining unforgiven Relocation Costs are due and payable to the Company on demand.

(e)        Certain reimbursements and allowances paid to Employee or on his behalf as Relocation Costs, including gross up payments and amounts withheld as payroll deductions, in connection with his relocation must be included as a part of his gross income and therefore may be subject to tax. If Employee is required to repay Relocation Costs to the Company, Employee will repay the entire amount determined, including gross up payments and amounts withheld as payroll deductions. Employee also understands that his ability to deduct a portion of his Relocation Costs is subject to specific limits and other IRS requirements, including the requirement that Employee must be able to substantiate his expenses by keeping copies of his receipts. Employee understands that if he is audited by the IRS or any state tax agency, he alone and not the Company will be liable for any taxes, interest or penalties due if any claimed deductions are denied for any reason, including if employee fails to keep copies of receipts. Employee understands that he cannot rely on the Company or any officer or employee of the Company for advice regarding the proper tax treatment of his Relocation Costs, and that he is responsible for obtaining independent advice from his own personal tax advisor.

(f)        If Employee is obligated under this Agreement to repay the Company for Relocation Costs, Employee hereby authorize the Company to deduct the entire amount due from any

severance or other salary, bonus, compensation, or other amounts the Company may owe Employee or he may otherwise receive from the Company.

4. Termination

4.1        Termination Events. The employment of the Employee and the Term of this Agreement will terminate upon the occurrence of any of the following events (“the Termination Event”):

(a) The Employee’s Death;

(b)       The Employee’s “Disability”, defined, subject to applicable state and federal law, as termination by the Company because the Employee is unable to perform the essential functions of Employee’s position (with or without reasonable accommodation as such term is defined in the Americans with Disabilities Act) for six months in the aggregate during any twelve month period. This definition shall be interpreted and applied consistent with the Americans with Disabilities Act, the Family and Medical Leave Act and other applicable law.          

(c)        Employee is discharged by the Company for “Cause”. As used in this Agreement, the term “Cause” shall mean a determination by the Company that:

(i)        Employee has engaged in theft, dishonesty, or falsification of any Company documents or records or in conduct constituting afelony or a misdemeanor involving dishonesty or moral turpitude; or

(ii)       Employee has failed substantially to perform his duties with the Company (other than any such failure resulting from the Employee’s absence due to approved or legally protected leave) after written demand of no less than ten (10) days for substantial performance is requested by the Company, which demand specifically identifies the manner in which it is claimed Employee has not substantially performed his duties, or

(iii)      Employee is engaged, or has engaged, in conduct which has, or would reasonably be expected to have, a direct and material adverse effect on the Company; or

(iv)     Employee has materially breached this Agreement, any other agreement between the Employee and the Company, or Employee’s duty of loyalty to the Company which breach remains uncured by for a period of thirty (30) days following receipt of written notice thereof to the Employee from the Company.

In the event a failure or breach under (ii) or (iv) above is based on completed actions that cannot be undone, and therefore not, in the opinion of the Company, capable of cure, Employee may be terminated immediately provided it pays the Employee for the cure period. No termination shall be effected for Cause unless Employee has been provided with a written notice that states with reasonable specificity the acts or omissions which form the basis of the Company’s decision.

(d)       Employee is terminated by the Company “without Cause”, which the Company may do upon its election, regardless of whether it also has the option to terminate for Cause, upon written notice, which notice shall specify the date of such termination.

(e)        Employee terminates his employment due to “Good Reason”, which shall mean that any of the following has occurred (i) a material default by the Company in the performance of any of its obligations hereunder, which default remains uncured by the Company for a period of thirty (30) days

following receipt of written notice thereof to the Company from Employee; (ii) without the Employee’s consent, a requirement imposed by the Company that the employee relocate his office to a location more than fifty (50) miles from his current office location; provided, however, that any move from the Rochester, New York office to the Coral Springs, Florida office shall not be deemed Good Reason; (iii) without the Employee’s consent, a reduction in salary imposed by the Company; or (iv) without the Employee’s consent, a material diminution in the Employee’s title or duties; provided however, that any actions taken by the Company to accommodate a disability of the Employee or pursuant to the Family and Medical Leave Act shall not be a Good Reason for purposes of this Agreement. The Employee may elect to terminate for Good Reason within thirty (30) days of the Employee’s becoming aware of the existence of Good Reason, so long as the Company has not previously notified the Employee of its decision to terminate his employment.

(f)         Employee terminates his employment without Good Reason, which Employee may do at any time with at least 30 days advance notice.

(g)       If at any time during the course of this Agreement the parties by mutual consent decide to terminate this Agreement, they shall do so by separate agreement setting forth the terms and condition of such termination.

4.2 Effects of Termination

(a)        Upon termination of Employee’s employment hereunder for any reason, the Company will pay Employee all amounts owed to Employee through the date of Termination. Any amounts earned by Employee as of the date of Termination but due to be paid Employee at a future date shall be paid when otherwise due, in accordance with applicable law. Upon termination, the entitlement of the Employee or his Estate to benefits, or to continuation or conversion rights, under any Company sponsored benefit plan shall be determined in accordance with applicable law and the provisions of such plan.

(b)       Upon termination of Employee’s employment under Sections 4.1 (d) or (e), if the Employee executes, and does not revoke, a Separation Agreement and Release in a form acceptable to the Company, the Company shall pay Employee, on the Company’s regular payroll dates, commencing on the first such date that occurs at least eight days following the Employee’s execution of the Separation Agreement and Release, amounts equal to the then applicable Base Compensation, excluding bonus, for a period of six (6) months; pay Employee a portion of any bonus he would have earned had he remained employed, prorated based on the number of months he was employed during the calendar year for which the bonus is calculated, and paid on the date it would have been paid had he remained employed; and if the Employee timely elects and remains eligible for continued coverage under COBRA, the Company will pay that portion of the COBRA premiums it was paying prior to the date of Termination for the period the Employee is receiving severance under this Agreement or until the Employee is eligible for health care coverage under another Employer’s plan, whichever period is shorter.

(c)        Following a Termination Event, both the Employee and the Company agree not to make to any person, including but not limited to customers of the Company, any statement that disparages the other or which reflects negatively upon the other in any manner likely to be harmful to them or their business, business reputation or personal reputation, including but not limited to statements regarding the Company’s financial condition, its officers, directors, shareholders, employees and affiliates; provided that both the Employee and the Company may respond accurately and fully to any question, inquiry or request for information when required by legal process. The Company’s obligations under this section are limited to the Company’s officers and directors and Company representatives with knowledge of this provision.

(d)       Following a Termination Event, Employee shall fully cooperate with the Company in all matters relating to the winding up of Employee’s pending work including, but not limited to, any litigation in which the Company is involved, and the orderly transfer of any such pending work to such other Employees as may be designated by the Company.

5. General Provisions

5.1        Assignment. Neither party may assign or delegate any of his or its rights or obligations under this Agreement without the prior written consent of the other party. Provided however, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Company and its successors and permitted assigns and Employee and Employee’s legal representatives, heirs, legatees, distributees, assigns and transferees by operation of law, whether or not any such person shall have become a party to this Agreement and have agreed in writing to join and be bound by the terms and conditions hereof.

5.2        Entire Agreement. This Agreement contains the entire agreement between the parties with respect to the subject matter hereof and supersedes any and all prior agreements between the parties. The parties hereto have entered into a Proprietary Information, Inventions, Non-Competition and Non-Solicitation Agreement with the same Effective Date as this Agreementwhich may be amended by the parties from time to time without regard to this Agreement. The Proprietary Information, Inventions, Non-Competition and Non-Solicitation Agreement, contains provisions that are intended by the parties to survive and do survive termination or expiration of this Agreement. The Employee and the Company are also parties to Option Certificates with attached Schedule of Terms which were signed by Employee on August 30, 2000, January 30, 2001, and February 27, 2004,which were entered into subject to the terms of thePatient Infosystems, Inc. Stock Option Plan and which contain provisions that may, by their terms, survive termination or execution of this Agreement.

5.3        Modifications. This Agreement may be changed or modified only by an agreement in writing signed by both parties hereto.

5.4        Prior Agreements. This Agreement supercedes all prior written and verbal agreements with the Company and/or its Board of Directors and shall govern all future employment obligations.

5.5        Headings. The section headings contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

5.6        Governing Law. This Agreement shall be governed by, construed and enforced in accordance with, the laws of the State of Delaware, and venue and jurisdiction for any disputes hereunder shall be heard in any court of competent jurisdiction in Delaware for all purposes.

5.7        Severability. If any provision of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions shall nevertheless continue in full force and effect.

5.8        Further Assurances. The parties will execute such further instruments and take such further actions as may be reasonably necessary to carry out the intent of this Agreement.

5.9        Notices. Any notice expressly provided for under this Agreement shall be in writing, shall be given either by hand delivery, by courier, or by mail and shall be deemed sufficiently given when actually received by the party to be notified, or, if delivered by courier, when delivered to the party’s

address as set forth below, or when mailed, if mailed by certified or registered mail, postage prepaid, addressed to the party’s address as set forth below. Either party may, by notice to the other party, given in the manner provided for herein, change their address for receiving such notices.

• If to the Company, to the CEO in person or to its corporate headquarters at the time notice is given, “Attention: CEO”.

• If to the Employee, to his in person or to his home address as listed in Company records at the time notice is given.

5.10      No Waiver. The failure of either party to enforce any provision of this Agreement shall not be construed as a waiver of that provision, nor prevent that party thereafter from enforcing that provision of any other provision of this Agreement.

5.11      Legal Fees and Expenses. In the event of any disputes under this Agreement, each party shall be responsible for their own legal fees and expenses which it may incur in resolving such dispute, unless otherwise prohibited by applicable law or a court of competent jurisdiction.

5.12      Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the Company and Employee have executed this Agreement, effective as of the day and year first above written.

Patient Infosystems, Inc. EMPLOYEE:

By: /s/ Roger L. Chaufournier			/s/ Kent A. Tapper
	Name: Roger L. Chaufournier		Kent A. Tapper
	Title:	Chief Executive Officer

259487 v2/RE

EX-10

<Name of Stockholder>

<Address of Stockholder>

January 25, 2006

Patient Infosystems, Inc.

46 Prince Street

Rochester, NY 14601

RE: Lock-up Agreement

Ladies and Gentlemen:

The undersigned, a Stockholder (the “Stockholder”) of Patient Infosystems, Inc., a Delaware corporation (the “Company”), understands that CCS Consolidated, Inc., a Delaware corporation (“CCS”), Paty Acquisition Corp., a Delaware corporation (the “Merger Sub”), and the Company have entered into an Agreement and Plan of Merger, dated as of September 19, 2005 (the “Merger Agreement”) pursuant to which (i) Merger Sub shall be merged into and with CCS and CCS shall continue as the surviving corporation (the “Merger”), and (ii) each share of CCS common stock, $.01 par value, shall be converted into a number of shares of the Company’s common stock, $.01 par value (the “Common Stock”), determined pursuant to the formula set forth in Section 2.2 of the Merger Agreement. In recognition of the benefit that such Merger will confer upon the Stockholder, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned agrees that for a period of eighteen months from the Closing Date (as defined in the Merger Agreement) (the “Lock-up Period”), and, to the extent that the undersigned’s Securities (as defined below) are designated as Locked-up Securities (as defined below) during the Release Period (as defined below), the undersigned will not directly or indirectly, (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant for the sale of, make any short sale or otherwise dispose of or transfer any shares of the Company’s Common Stock, or any options or warrants to purchase any shares of the Company’s Common Stock, or any securities convertible into or exchangeable or exercisable for the Company’s Common Stock, whether now owned or hereafter acquired by the undersigned or with respect to which the undersigned has or hereafter acquires the power of disposition (collectively, the “Securities”) or (ii) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the Securities, whether any such swap or transaction is to be settled by delivery of Common Stock or other securities, in cash or otherwise. The foregoing restriction is expressly intended to preclude the undersigned from engaging in any hedging or other transaction which is designed to or which reasonably could be expected to lead to or result in a sale or disposition of the undersigned’s Securities even if such securities would be disposed of by someone other than the undersigned. Such prohibited hedging or other transaction would include without limitation any short sale or any purchase, sale or grant of any right (including without limitation any put or call option) with respect to any of the undersigned’s Securities or with respect to any security that includes, related to, or derives any significant part of its value from such Securities.

ME1\5372164.1

Notwithstanding the foregoing, the undersigned may (a) exercise Securities convertible into shares of Common Stock owned by the undersigned as of the date of the Merger Agreement, it being understood and acknowledged that any shares of Common Stock acquired by the undersigned in connection with any such exercise or conversion shall be subject to this letter agreement; or (b) transfer Securities (i) by bona fide gift, (ii) to a member of the undersigned’s immediate family or to a trust of which the undersigned or an immediate family member is the beneficiary, or (iii) to the undersigned’s limited and general partners, members, stockholders or other equity holders in connection with an in kind distribution thereof; provided that, prior to any transfer described in clause (b), each transferee shall execute an agreement, in form reasonably satisfactory to the Company, pursuant to which each transferee shall agree to be bound by the terms of this agreement for the remainder of the above-referenced 18-month period and the Release Period and pursuant to which the undersigned and its transferees agree to the allocation among themselves of the maximum number of Securities which are to be released in accordance with the release schedule set forth below (it being expressly understood that the purpose of this provision is to ensure that any dispositions of the undersigned’s Securities do not enable the undersigned and its direct and indirect transferees to engage in any transactions with respect to the undersigned’s Securities in an aggregate amount in excess of that which would be permitted under the terms of this agreement in the absence of such dispositions).

Prior to the expiration of the Lock-up Period or the Release Period (as the case may be), the undersigned shall not announce or disclose any intention to take any action after the expiration of such period which the undersigned is otherwise prohibited from taking during such period.

Following the expiration of the Lock-up Period (the “Release Period”), the undersigned’s Securities shall remain subject to the restrictions of this agreement as if the Lock-up Period had not expired (the “Locked-up Securities”) except to the extent that such Securities are released from such restrictions in accordance with the following release schedule, at which point they will cease to be “Locked-up Securities”:

Release Trigger	Number of Securities Released
18 months after Closing Date	Rule 144 Amount (as defined below)
21 months after Closing Date	Rule 144 amount (as defined below)
24 months after Closing Date	Rule 144 amount (as defined below)
27 months after Closing Date	Rule 144 amount (as defined below)
30 months after Closing date, or if the Closing Date occurs after January 1, 2006, June 30, 2008; provided that if the Closing Date occurs after March 1, 2006 the Release Trigger date shall be extended by that number of days between Closing Date and March 1, 2006, but shall not exceed 30 months after the Closing Date (e.g., if the Closing Date occurs on March 15, 2006, the Release Trigger date is July 15, 2008)	All Remaining Locked-Up Securities

ME1\5372164.1

For the purposes of this agreement, the term “Rule 144 Amount” shall mean the greater of: (a) 1% of the number of shares of Common Stock of the Company outstanding as of the date of determination; or (b) the average weekly reported volume of trading of the Common Stock of the Company on all national securities exchanges and/or reported through the automated quotation system of a registered securities association during the four calendar weeks preceding the date of determination.

Notwithstanding the foregoing, in the event that after the expiration of the Lock-up Period there occurs a Change of Control or there occurs or has occurred a Significant Equity Offering (each, as defined below), any and all Securities of the undersigned that remain Locked-up Securities at such time shall immediately cease to be Locked-up Securities. For the purposes of this agreement, the term “Change of Control” shall mean the first to occur of: (a) any consolidation or merger of the Company with or into any other corporation or other entity or person, or any other corporate reorganization, in which the capital stock of the Company immediately prior to such consolidation, merger or reorganization, represents less than 50% of the voting power of the surviving entity (or, if the surviving entity is a wholly owned subsidiary, its parent) immediately after such consolidation, merger or reorganization, provided that a “Change of Control” shall not include the Merger; (b) any transaction or series of related transactions to which the Company is a party in which in excess of fifty percent (50%) of the Company’s voting power is transferred, provided that a “Change of Control” shall not include any transaction or series of transactions principally for bona fide equity financing purposes in which cash is received by the Company or any successor or indebtedness of the Company is cancelled or converted or a combination thereof; or (c) a sale, lease, exclusive license or other disposition of all or substantially all of the assets of the Company. For the purposes of this agreement, the term “Significant Equity Offering” shall mean one or more primary offerings, after the Closing Date, of shares of Common Stock (and/or securities convertible into Common Stock for no additional consideration) of the Company in aggregate amount equal to or greater than 25% of the outstanding shares of the Company’s Common Stock immediately prior to the first such offering.

The Company may not amend or waive any term or condition of any lock-up agreement entered into in connection with the Merger, unless such amendment or waiver also is granted or effected with respect to this letter agreement.

Once all of the undersigned’s Securities cease to be Locked-up Securities, the Release Period shall terminate.

This lock-up letter is dated January 25, 2006

Very truly yours,

______________________

ME1\5372164.1

EX-10

<Name of Stockholder>

<Address of Stockholder>

January 25, 2006

Patient Infosystems, Inc.

46 Prince Street

Rochester, NY 14601

RE: Lock-up Agreement

Ladies and Gentlemen:

The undersigned, the holder (the “Stockholder”) of a warrant to purchase shres of Common Stock (as defined below) of Patient Infosystems, Inc., a Delaware corporation (the “Company”), understands that CCS Consolidated, Inc., a Delaware corporation (“CCS”), Paty Acquisition Corp., a Delaware corporation (the “Merger Sub”), and the Company have entered into an Agreement and Plan of Merger, dated as of September 19, 2005 (the “Merger Agreement”) pursuant to which (i) Merger Sub shall be merged into and with CCS and CCS shall continue as the surviving corporation (the “Merger”), and (ii) each share of CCS common stock, $.01 par value, shall be converted into a number of shares of the Company’s common stock, $.01 par value (the “Common Stock”), determined pursuant to the formula set forth in Section 2.2 of the Merger Agreement. In recognition of the benefit that such Merger will confer upon the Stockholder, including the issuance of warrants to purchase additional shares of Common Stock, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned agrees that for a period of eighteen months from the Closing Date (as defined in the Merger Agreement) (the “Lock-up Period”), and, to the extent that the undersigned’s Securities (as defined below) are designated as Locked-up Securities (as defined below) during the Release Period (as defined below), the undersigned will not directly or indirectly, (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant for the sale of, make any short sale or otherwise dispose of or transfer any shares of the Company’s Common Stock, or any options or warrants to purchase any shares of the Company’s Common Stock, or any securities convertible into or exchangeable or exercisable for the Company’s Common Stock, whether now owned or hereafter acquired by the undersigned or with respect to which the undersigned has or hereafter acquires the power of disposition (collectively, the “Securities”) or (ii) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the Securities, whether any such swap or transaction is to be settled by delivery of Common Stock or other securities, in cash or otherwise. The foregoing restriction is expressly intended to preclude the undersigned from engaging in any hedging or other transaction which is designed to or which reasonably could be expected to lead to or result in a sale or disposition of the undersigned’s Securities even if such securities would be disposed of by someone other than the undersigned. Such prohibited hedging or other transaction would include without limitation any short sale or any purchase, sale or grant of any right (including without limitation any put or call option) with respect to any of the undersigned’s Securities or with respect to any security that includes, related to, or derives any significant part of its value from such Securities. Notwithstanding the foregoing, the undersigned may (a) exercise Securities convertible into shares of Common Stock

ME1\5459677.1

owned by the undersigned as of the date of the Merger Agreement, it being understood and acknowledged that any shares of Common Stock acquired by the undersigned in connection with any such exercise or conversion shall be subject to this letter agreement; or (b) transfer Securities (i) by bona fide gift, (ii) to a member of the undersigned’s immediate family or to a trust of which the undersigned or an immediate family member is the beneficiary, or (iii) to the undersigned’s limited and general partners, members, stockholders or other equity holders in connection with an in kind distribution thereof; provided that, prior to any transfer described in clause (b), each transferee shall execute an agreement, in form reasonably satisfactory to the Company, pursuant to which each transferee shall agree to be bound by the terms of this agreement for the remainder of the above-referenced 18-month period and the Release Period and pursuant to which the undersigned and its transferees agree to the allocation among themselves of the maximum number of Securities which are to be released in accordance with the release schedule set forth below (it being expressly understood that the purpose of this provision is to ensure that any dispositions of the undersigned’s Securities do not enable the undersigned and its direct and indirect transferees to engage in any transactions with respect to the undersigned’s Securities in an aggregate amount in excess of that which would be permitted under the terms of this agreement in the absence of such dispositions).

Prior to the expiration of the Lock-up Period or the Release Period (as the case may be), the undersigned shall not announce or disclose any intention to take any action after the expiration of such period which the undersigned is otherwise prohibited from taking during such period.

Following the expiration of the Lock-up Period (the “Release Period”), the undersigned’s Securities shall remain subject to the restrictions of this agreement as if the Lock-up Period had not expired (the “Locked-up Securities”) except to the extent that such Securities are released from such restrictions in accordance with the following release schedule, at which point they will cease to be “Locked-up Securities”:

Release Trigger	Number of Securities Released
18 months after Closing Date	Rule 144 Amount (as defined below)
21 months after Closing Date	Rule 144 amount (as defined below)
24 months after Closing Date	Rule 144 amount (as defined below)
27 months after Closing Date	Rule 144 amount (as defined below)
30 months after Closing date, or if the Closing Date occurs after January 1, 2006, June 30, 2008; provided that if the Closing Date occurs after March 1, 2006 the Release Trigger date shall be extended by that number of days between Closing Date and March 1, 2006, but shall not exceed 30 months after the Closing Date (e.g., if the Closing Date occurs on March 15, 2006, the Release Trigger date is July 15, 2008)	All Remaining Locked-Up Securities

             For the purposes of this agreement, the term “Rule 144 Amount” shall mean the greater of: (a) 1% of the number of shares of Common Stock of the Company outstanding as of the date

ME1\5459677.1

of determination; or (b) the average weekly reported volume of trading of the Common Stock of the Company on all national securities exchanges and/or reported through the automated quotation system of a registered securities association during the four calendar weeks preceding the date of determination.

Notwithstanding the foregoing, in the event that after the expiration of the Lock-up Period there occurs a Change of Control or there occurs or has occurred a Significant Equity Offering (each, as defined below), any and all Securities of the undersigned that remain Locked-up Securities at such time shall immediately cease to be Locked-up Securities. For the purposes of this agreement, the term “Change of Control” shall mean the first to occur of: (a) any consolidation or merger of the Company with or into any other corporation or other entity or person, or any other corporate reorganization, in which the capital stock of the Company immediately prior to such consolidation, merger or reorganization, represents less than 50% of the voting power of the surviving entity (or, if the surviving entity is a wholly owned subsidiary, its parent) immediately after such consolidation, merger or reorganization, provided that a “Change of Control” shall not include the Merger; (b) any transaction or series of related transactions to which the Company is a party in which in excess of fifty percent (50%) of the Company’s voting power is transferred, provided that a “Change of Control” shall not include any transaction or series of transactions principally for bona fide equity financing purposes in which cash is received by the Company or any successor or indebtedness of the Company is cancelled or converted or a combination thereof; or (c) a sale, lease, exclusive license or other disposition of all or substantially all of the assets of the Company. For the purposes of this agreement, the term “Significant Equity Offering” shall mean one or more primary offerings, after the Closing Date, of shares of Common Stock (and/or securities convertible into Common Stock for no additional consideration) of the Company in aggregate amount equal to or greater than 25% of the outstanding shares of the Company’s Common Stock immediately prior to the first such offering.

The Company may not amend or waive any term or condition of any lock-up agreement entered into in connection with the Merger, unless such amendment or waiver also is granted or effected with respect to this letter agreement.

Notwithstanding anything herein in to the contrary, if the Stockholder shall cease to be an employee of the Company or any affiliate thereof for any reason, all obligations of the Stockholder hereunder shall terminate 30 days following the date of such cessation.

Once all of the undersigned’s Securities cease to be Locked-up Securities, the Release Period shall terminate.

ME1\5459677.1

This lock-up letter is dated January 25, 2006

Very truly yours,	Accepted and Agreed:
	PATIENT INFOSYSTEMS, INC.

__________________________	By: __________________________
		<Name>
		<Title>

ME1\5459677.1

EX-99

FOR IMMEDIATE RELEASE

Contact:

Chris Paterson

President and CEO

800-276-2575

CAREGUIDE AND PATIENT INFOSYSTEMS COMPLETE MERGER

Merger Establishes Uniquely Positioned Single-Source Provider of Information-Based Disease and Care Management Services for the Public and Private Sectors; Conference Call Scheduled for Monday, January 30, 2006 at 11:00 a.m. EST.

Coral Springs, FL, January 25, 2006 – Patient Infosystems, Inc. (OTCBB: PATY - News) (“Patient Infosystems”) and CCS Consolidated, Inc. (d/b/a CareGuide) (“CareGuide”) today announced the completion of their previously announced merger, resulting in the creation of a uniquely positioned, single-source provider of a full range of information-based disease and care management services for both the public and private sectors.

Under the terms of the merger agreement, stockholders of CareGuide have

been issued shares of common stock of Patient Infosystems representing

approximately 63% of the common stock of the combined company and CareGuide has become a wholly-owned subsidiary of Patient Infosystems. Patient Infosystems and CareGuide now operate together as a single, publicly traded corporation. Shares of the company’s common stock are listed for trading on the NASD Over-The-Counter Bulletin Board under the trading symbol “PATY.”

The newly merged company is headquartered in Coral Springs, Florida, and has more than 250 employees. The merged company currently has over 50 customers in 28 states and the District of Columbia, including commercial, Taft-Hartley, Medicare and Medicaid healthcare benefit plans, state governments, third party administrators, PPOs, corporations, and EAP and work/life benefit companies.

Patient Infosystems’ and CareGuide’s decision to merge was the result of a natural fit between the companies’ respective missions, service offerings and target markets. Together, as an integrated entity, the company is able to offer a comprehensive portfolio of information-based care and disease management solutions designed to improve health outcomes, eliminate inappropriate and unnecessary care, and lower healthcare costs for patients.

Based on its existing level of operations, the newly merged care and disease management company expects annualized revenues in excess of $50 million from existing customers, consisting of a combination of administrative services and risk-based revenue. The merger is expected to result in operational and technological synergies, and the combined company expects to achieve operating profitability during 2006.

265657 v6/RE

Albert Waxman, Ph.D., former CareGuide Chairman, and Chris Paterson, former CareGuide CEO, now serve as Chairman and CEO, respectively, of the merged company. Roger Chaufournier, former CEO and Chairman of Patient Infosystems, now leads a new subsidiary focused on provider innovation and quality improvement services. John Pappajohn, a board member of Patient Infosystems, has been named Vice Chairman of the merged company. In addition to Waxman and Pappajohn, the merged company’s board of directors includes Mark Pacala and Daniel Lubin, both former CareGuide directors, and Derace Schaffer, M.D., a former Patient Infosystems director. The company expects to name two additional independent directors to the board in the near future.

Paterson stated, “The unique combination of CareGuide’s and Patient Infosystems’ resources and capabilities results in a more robust company that will offer one of the broadest continuums of services in the growing disease and care management market. We believe that the breadth of our services will allow us to serve public and private sector clients cost-effectively, while the depth of our capabilities will allow for a personalized, high-touch focus on patient needs throughout their interaction with the healthcare system. As a result, we expect to produce a meaningful impact on health and quality of life while providing our customers a significant return on investment.”

Waxman added, “The board of directors is confident that the merger of CareGuide and Patient Infosystems creates a compelling model that is uniquely positioned to meet the growing demands for care mangement services in today’s healthcare market. We have already begun pursuing attractive business opportunities that are available to our newly merged company as we introduce our full range of services to existing and new customers."

Chaufournier said, “We believe that this merger will be advantageous for our stockholders, as well as our clients. We are leveraging a broader product line and combining the two companies’ human resources and experience in order to meet the market’s demands for seamless management and better quality of care for patients with chronic and complex illnesses.”

In conjunction with the merger, Patient Infosystems raised an aggregate of $12.5 million over the last three months through the sale of common stock and the resale of certain shares of its former wholly-owned subsidiary American Caresource Holdings, Inc. (“ACS”) that it had retained following its recent spin-off of ACS. Patient Infosystems used a portion of these proceeds to retire $6 million in indebtedness and the remainder is intended to be retained for working capital.

In the near future, the company will file a Form 8-K with the SEC containing information regarding the completion of the merger. The company will also file an amendment to that Form 8-K on or before March 31, 2006 to include additional information regarding CareGuide and the combined company, including historical financial statements of CareGuide and pro forma financial statements of the combined company.

265657 v6/RE

NOTE: CONFERENCE CALL ON MONDAY, JANUARY 30, 2006

The company will host a live conference call on Monday, January 30, 2006 at 11:00 a.m. EST (U.S.).The dial-in numbers to listen to the conference are:

TOLL-FREE (U.S.): 1-800-766-6630

OUTSIDE THE U.S.: 416-695-9753

ABOUT CAREGUIDE AND PATIENT INFOSYSTEMS

CareGuide and Patient Infosystems have merged to create a uniquely positioned, single-source provider of a full range of information-based disease and care management services, serving a broad cross-section of the healthcare market. The combined company offers a full range of comprehensive, integrated care management services, including utilization management, disease management, and a 24-hour nurse help line. The company also offers specialized care management that focuses on individuals with the most complex medical needs. The company’s other services include CareGuide@Home, which encompasses a national network of field care managers who provide home-based assessments and other on-site services for the elderly and their families, and a provider quality improvement consulting program.

Visit www.careguide.com and www.ptisys.com for more information.

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Statements contained in this press release that are not historical facts, including information about management's view of the combined company's future expectations, plans and prospects, the benefits provided by the services offered by each of the two companies, the prospects for success of the merger and the combination of the two companies, such as expected synergies and expanded revenue opportunities, expected revenues and potential operating profitability, constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “intend” and “will” or similar expressions are intended to identify forward-looking statements. Actual results may differ materially from historical results or those indicated by these forward-looking statements as a result of a variety of factors including, but not limited to, risks and uncertainties associated with the combined company's financial condition, the continued use of the combined company’s services by its existing customers at current or increased levels, the combined company’s ability to increase its business and revenue base, the combined company’s ability to sell its products, the combined company’s ability to compete with competitors and the growth of the healthcare market as well as other factors that are discussed in Patient Infosystems’ Annual Report on Form 10-KSB for the year ended December 31,

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2004, as well as other documents filed by Patient Infosystems with the Securities and Exchange Commission.

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EX-16

January 31, 2006

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549-7561

Gentlemen:

We have read Item 4.01 of Form 8-K dated January 31, 2006 of Patient Infosystems, Inc. and are in agreement with the statements contained in the sixth and seventh paragraphs of Item 4.01 therein. We have no basis to agree or disagree with other statements of the registrant contained therein.

/s/Ernst & Young LLP