Document:

Exhibit 4.1

THIS  WARRANT  AND THE  SHARES  ISSUABLE  UPON  EXERCISE  HEREOF  HAVE  NOT BEEN
REGISTERED  OR QUALIFIED FOR SALE UNDER THE  SECURITIES  ACT OF 1933, AS AMENDED
(THE "ACT"),  OR ANY STATE  SECURITIES LAW AND MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF SUCH  REGISTRATION,  UNLESS THE COMPANY IS  REASONABLY  SATISFIED
THAT  THE   PROPOSED   SALE  OR  TRANSFER  IS  EXEMPT  FROM  SUCH   REGISTRATION
REQUIREMENTS.

                           WARRANT TO PURCHASE SHARES
                                      OF
                              CLASS A COMMON STOCK
                              --------------------

                           Void after January 12, 2012

         THIS IS TO CERTIFY  that,  as of this 12th day of  January,  2007,  for
value received and subject to the provisions hereinafter set forth, Roaring Fork
Capital  SBIC,  L. P.  (the  "Purchaser"),  is  entitled  to  purchase  from ATC
Healthcare,  Inc., a Delaware corporation (the "Company"),  at any time from the
date hereof to and  including  January 12, 2012 (the  "Expiration  Date"),  at a
price  initially  equal to  Forty-five  Cents  ($0.45)  per share (the  "Warrant
Calculation  Price"),  One Million  (1,000,000) (the "Warrant Number") shares of
the Class A Common Stock of the Company (the "Stock").

         The aggregate price for the shares of Stock purchasable hereunder shall
be equal to the initial Warrant  Calculation  Price  multiplied by the number of
shares initially purchasable hereunder. Such aggregate price is herein sometimes
referred to as the "Aggregate Warrant Price". The Warrant  Calculation Price per
share is, however, subject to adjustment as hereinafter provided (such price, or
such price as last adjusted, as the case may be, being herein referred to as the
"Per Share Warrant Price"). The Warrant Number is likewise subject to adjustment
as hereinafter provided.

1. EXERCISE OF WARRANT.  Subject to the conditions  hereinafter set forth,  this
Warrant may be exercised in whole at any time,  or in part from time to time, by
the holder hereof, by delivery of a written notice in the form at the end hereof
(the "Exercise  Notice") duly executed at the principal office of the Company in
Lake  Success,  New York or at such other office as the Company may designate by
written  notice to the holder hereof within the  above-mentioned  period and, at
the  election  of the  holder,  either by paying to the  Company  the  Aggregate
Warrant Price (or the  proportionate  part thereof if exercised in part) for the
shares so purchased  in current  funds,  in which case payment  shall be made in
cash, by wire transfer,  or by certified or official bank check,  or by cashless
exercise as hereinafter  set forth.  The holder shall not be required to deliver
the  original  Warrant in order to effect an  exercise  of the  Warrant.  At its
option, the holder may request, pursuant to Section 1, that the Company exchange
this  Warrant for a  particular  number of shares  subject to the  Warrant  (the
"Converted Warrant Shares") by delivering to the holder,  without payment by the
holder of the Warrant Price or any cash or other  consideration,  that number of
shares of Stock as is equal to the  quotient  obtained by dividing the Net Value
(as  hereinafter  defined) of the  Converted  Warrant  Shares by the Fair Market
Value (as determined (i) by reference to the current market price based upon the
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average last sale price for the three  business  days prior to exercise,  if the
Stock is publicly traded or (ii) by the Board of Directors  acting in good faith
if the Stock is not publicly  traded) of a single share of Stock,  determined in
each case as of the close of business  on the date of exercise of this  Warrant.
The  "Net  Value"  of the  Converted  Warrant  Shares  shall  be  determined  by
subtracting the Aggregate Warrant Price of the Converted Warrant Shares from the
aggregate  Fair  Market  Value  of  the  Converted  Warrant  Shares.  All  other
provisions  of the  Warrants  shall apply to any such  exchange of the  Warrants
pursuant to the terms of this Section 1.

Company's Failure to Timely Deliver Securities.  If within ten (10) Trading Days
after the  Company's  receipt of the  facsimile  copy of an Exercise  Notice the
Company shall fail to issue and deliver a certificate to the holder and register
such  shares of Common  Stock on the  Company's  share  register  or credit  the
holder's  balance  account  with DTC for the number of shares of Common Stock to
which the holder is entitled  upon the  holder's  exercise  hereunder,  and such
failure to issue and deliver such  certificate(s)  continues  for more than five
(5) Business Days after the Company receives written notice of non-delivery from
the holder  (with the total  period of time of the 10  Trading  Day period and 5
Business Day period  referenced  herein being  referred to as the "Cure Period")
and if on or after the expiration of the Cure Period without the delivery of the
applicable  certificate(s),  the holder purchases (in an open market transaction
or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
holder of shares of Common Stock  issuable  upon such  exercise  that the holder
anticipated  receiving  from the Company (a "Buy-In"),  then the Company  shall,
within  three (3) Business  Days after the holder's  request and in the holder's
discretion, either (i) pay cash to the holder in an amount equal to the holder's
total purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased  (the "Buy-In  Price"),  at which point the  Company's
obligation  to deliver  such  certificate  (and to issue  such  shares of Common
Stock) shall terminate,  or (ii) promptly honor its obligation to deliver to the
Holder a certificate or  certificates  representing  such shares of Common Stock
and pay cash to the  Holder in an  amount  equal to the  excess  (if any) of the
Buy-In  Price  over the  product of (A) such  number of shares of Common  Stock,
times (B) the dollar volume Weighted Average Price on the date of exercise.

If this Warrant is exercised in respect of fewer than all of the shares of Stock
at the time  purchasable  hereunder,  the holder  hereof  shall be  entitled  to
receive a new  Warrant  covering  the  number of shares in respect of which this
Warrant shall not have been  exercised  and setting forth the Aggregate  Warrant
Price  applicable to such shares.  Notwithstanding  anything to the contrary set
forth herein,  this Warrant or any new Warrant issued as the result of a partial
exercise hereof and all rights and options  hereunder or thereunder shall expire
and shall be wholly null and void to the extent this Warrant or such new warrant
is not  exercised  before it expires at the close of business on the  Expiration
Date.

2. RESERVATION OF STOCK. The Company covenants and agrees that during the period
within  which the rights  represented  by this  Warrant  may be  exercised,  the
Company will at all times have authorized,  and in reserve,  a sufficient number
of shares of its Stock to provide for the exercise of the rights  represented by
this  Warrant;  provided,  however,  that in the  event  there is at any time an
insufficient  number of shares of Stock reserved and available the Company shall
as soon as practicable take such action as is required to increase the Company's
authorized  shares  of Stock in order to  provide  a  sufficient  number of such
shares.

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3.       PROTECTION AGAINST DILUTION.

         3.1 Sales of Stock Below Per Share Warrant  Price.  In case the Company
         shall  issue or grant to any  person  (a)  rights,  warrants,  options,
         exchangeable  securities or  convertible  securities  (each referred to
         herein as "Rights")  entitling such person to subscribe for or purchase
         shares of Stock at a price per  share  less than the Per Share  Warrant
         Price or (b)  shares of Stock at a price  per  share  less than the Per
         Share Warrant Price, on the date fixed for the determination of persons
         entitled to receive such Rights or such shares,  the Per Share  Warrant
         Price in effect  immediately  before the close of  business on the date
         fixed for such  determination  shall be reduced by multiplying such Per
         Share  Warrant  Price by a fraction,  of which (i) the numerator is the
         number of shares of Stock  outstanding  (including  all shares of Stock
         issued or issuable upon conversion of any convertible  security or upon
         the exercise of any rights,  warrants or options) on such date plus the
         number of shares of Stock which the aggregate of the offering  price of
         the total  number of shares of Stock so  offered  for  subscription  or
         purchase pursuant to such Rights,  or so issued,  would purchase at the
         Per Share Warrant Price on such date and (ii) the denominator  shall be
         the  number of shares of Stock  outstanding  (including  all  shares of
         Stock issued or issuable upon conversion of any convertible security or
         upon the  exercise of any rights,  warrants or options) at the close of
         business on such date plus the number of shares of Stock so offered for
         subscription  or purchase  pursuant to such Rights,  or so issued.  If,
         after any such date,  any such Rights or shares are not in fact issued,
         or are not exercised  prior to the  expiration  thereof,  the Per Share
         Warrant Price shall be immediately readjusted, effective as of the date
         such  Rights  or  shares  expire,  or the date the  Board of  Directors
         determines not to issue such Rights or shares, to the Per Share Warrant
         Price  that  would  have been in effect if the  unexercised  Rights had
         never been granted or such record date had not been fixed,  as the case
         may be. Such adjustment  shall be made  successively  whenever any such
         event shall occur. For the purposes of this paragraph, the aggregate of
         the  offering  price  received or to be  received by the Company  shall
         include the minimum  aggregate amount (if any) payable upon exercise or
         conversion of such Rights.  The value of any consideration  received or
         to be received by the Company,  if other than cash, is to be determined
         by the Board of Directors in good faith.

         3.2 Stock Splits and Dividends.  If outstanding shares of the Company's
         Stock shall be subdivided into a greater number of shares or a dividend
         in Stock shall be paid in respect of Stock, the Per Share Warrant Price
         in effect  immediately  prior to such subdivision or at the record date
         of such dividend shall  simultaneously  with the  effectiveness of such
         subdivision  or  immediately  after the record date of such dividend be
         proportionately  reduced.  If  outstanding  shares  of  Stock  shall be
         combined into a smaller  number of shares,  the Per Share Warrant Price
         in effect immediately prior to such combination  shall,  simultaneously
         with  the  effectiveness  of  such  combination,   be   proportionately
         increased.  When any adjustment is required to be made in the Per Share
         Warrant  Price,  the  number of shares  of Stock  purchasable  upon the
         exercise of this Warrant  shall be changed to the number  determined by
         dividing (i) an amount equal to the number of shares  issuable upon the
         exercise  of  this  Warrant   immediately  prior  to  such  adjustment,

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         multiplied by the Per Share Warrant Price in effect  immediately  prior
         to such  adjustment,  by (ii) the Per  Share  Warrant  Price in  effect
         immediately after such adjustment.

         3.3 Reclassification, Etc. In case of any reclassification or change of
         the outstanding  securities of the Company or of any  reorganization of
         the Company (or any other  corporation the stock or securities of which
         are at the time  receivable  upon the exercise of this  Warrant) or any
         similar  corporate  reorganization  on or after the date hereof that is
         not a Change of Control (as defined herein), then and in each such case
         the holder of this Warrant,  upon the exercise hereof at any time after
         the  consummation  of such  reclassification,  change,  reorganization,
         merger or  conveyance,  shall be entitled  to  receive,  in lieu of the
         stock or other  securities  and property  receivable  upon the exercise
         hereof prior to such  consummation,  the stock or other  securities  or
         property  to which  such  holder  would  have been  entitled  upon such
         consummation  if such holder had  exercised  this  Warrant  immediately
         prior thereto, all subject to further adjustment as provided in Section
         3.2;  and in each  such  case,  the  terms of this  Section  3 shall be
         applicable  to  the  shares  of  stock  or  other  securities  properly
         receivable upon the exercise of this Warrant after such consummation.

         3.4 Exempted Issuances. Notwithstanding any other provision herein, the
         foregoing  provisions  of this  Section 3 shall  not  apply to,  and no
         adjustment shall be made to the Per Share Warrant Price for:

                  (a) shares of Stock  issuable  upon the exercise of options or
                  other convertible securities previously issued pursuant to the
                  Company's  stock  option,  employee  stock  purchase  or other
                  employee benefit plan;

                  (b)  shares of Stock to be issued  pursuant  to the  Company's
                  outstanding  stock option,  employee  stock  purchase or other
                  employee  benefit plan that total not more than 200,000 shares
                  of Stock per  employee  per year and an  aggregate  maximum of
                  2,000,000  shares  of Stock  per year and that do not  contain
                  exercise prices that are below $0.30 per share;

                  (c)  shares of Stock  issuable  upon  conversion  of shares of
                  Series C  Preferred  Stock or  warrants  issued in  connection
                  therewith;

                  (d) shares of Stock  issuable upon  conversion of shares of 7%
                  Convertible  Series A Preferred Stock or 5% Convertible Series
                  B Preferred  Stock of the Company or any warrants  outstanding
                  on the date of the filing of this Designation;

                  (e) shares of Stock issuable upon conversion of Class B Common
                  Stock;

                  (f)  securities  that have been approved for issuance or grant
                  by the  holders  of at  least a  majority  of the  outstanding
                  shares of Series C Preferred Stock;

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                  (g)  securities  that  are  issued  in  conjunction   with  an
                  acquisition or a non-financing  strategic transaction approved
                  by the Board of Directors;  provided, however, that the number
                  of shares of Stock or securities convertible into Stock issued
                  by the Company in  conjunction  with  non-financing  strategic
                  transactions that are exempt from the foregoing  provisions of
                  this  Section 3 shall be limited to 10% of the shares of Stock
                  outstanding  (including all shares of Stock issued or issuable
                  upon  conversion  of any  convertible  security  or  upon  the
                  exercise of any rights, warrants or options) immediately prior
                  to the date of such transaction; or

                  (h) Shares of Stock that are issued  pursuant to that  certain
                  Common  Stock and Warrant  Purchase  Agreement  dated as of an
                  even date herewith between the Company and Purchaser, pursuant
                  to which the  Purchaser is purchasing  this  Warrant,  and the
                  related  Registration  Rights  Agreement  referenced  therein,
                  including,  without  limitation,  any  shares  of  Stock to be
                  issued  in  connection  with  any  penalty  or   anti-dilution
                  provision  contained in such  documents,  any shares of Common
                  Stock  issued  under  the  Warrants  issued  as  part  of that
                  offering  or under the terms of the Common  Stock and  Warrant
                  Purchase  Agreement  relating  thereto,  and  shares of Common
                  Stock issued in private  offerings  completed prior to May 31,
                  2007 as  provided  in  Section  7.10 of the  Common  Stock and
                  Warrant Purchase  Agreement,  or under Warrants issued as part
                  of those other  offerings,  or under the terms of the purchase
                  agreements relating to those other offerings.

         3.5  Deferral of Small  Adjustments.  Any  adjustment  in the Per Share
         Warrant  Price  otherwise  required by this  Section 3 may be postponed
         until  the  date of the  next  adjustment  otherwise  required  by this
         Section  3 to be made if  such  adjustment  (together  with  any  other
         adjustments   postponed   pursuant  to  this  paragraph  (ix)  and  not
         theretofore  made)  would not  require an  increase or decrease of more
         than 1 % in such Per Share Warrant Price. All  calculations  under this
         Section 3 shall be made to the nearest  cent or to the nearest  I/100th
         of a share, as the case may be.

         3.6 Authority of Board of Directors.  The Board of Directors shall have
         the power to resolve any ambiguity or correct any error in this Section
         3,  and its  action  in good  faith in so  doing  shall  be  final  and
         conclusive.

         3.7 Notice of Adjustment.  Whenever the Warrant Number or the Per Share
         Warrant  Price is  adjusted  under this  Section 3, the  Company  shall
         provide  notice  thereof to the holder  within thirty (30) days of such
         adjustment.

4. MERGERS,  CONSOLIDATIONS,  SALES;  NON-IMPAIRMENT OF RIGHTS. The Company will
not,  by  amendment  of  its  Certificate  of   Incorporation   or  through  any
reorganization,  recapitalization,  transfer of assets,  consolidation,  merger,
dissolution, issuance or sale of securities or any other voluntary action, avoid
or seek to avoid the  performance of any of the terms of this Warrant,  but will
at all times in good faith take all necessary  action to carry out the intent of
all such terms.  Without  limiting the generality of the foregoing,  the Company
(a) will not cause the par value of any  securities  receivable  on  exercise of
this Warrant to be in excess of the amount  payable  therefor on such  exercise,
and (b) will take all  action as may be  necessary  or  appropriate  so that the

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Company may validly and legally  issue fully paid and  nonassessable  shares (or
other  securities or property  deliverable  hereunder) upon the exercise of this
Warrant.  In  the  event  the  Company  sells  or  otherwise  transfers  all  or
substantially  all of its assets to another  corporation  or other  entity  and,
following the sale or transfer,  a majority of the combined  voting power of the
then-outstanding securities of the other corporation or entity immediately after
the sale or transfer is held in the aggregate by the holders of Voting Stock (as
defined below)  immediately prior to the sale or transfer,  then, as a condition
of such sale or transfer,  lawful and adequate  provision  shall be made whereby
the holder of this Warrant shall  thereafter  have the right to receive upon the
basis and upon the  terms and  conditions  specified  herein  and in lieu of the
shares of Stock immediately  theretofore  purchasable hereunder,  such shares of
stock,  securities  or assets as may (by virtue of such  consolidation,  merger,
sale,  reorganization or  reclassification) be issued or payable with respect to
or in exchange for a number of  outstanding  shares of Stock equal to the number
of shares of Stock  immediately  theretofore so  purchasable  hereunder had such
sale or transfer not taken  place,  and in any such case  appropriate  provision
shall be made with  respect to the rights  and  interests  of the holder of this
Warrant to the end that the provisions hereof  (including,  without  limitation,
provisions for adjustment of the Warrant Number and the Per Share Warrant Price)
shall thereafter be applicable as nearly as may be, in relation to any shares of
stock,  securities  or  assets  thereafter  deliverable  upon  exercise  of this
Warrant.  The Company shall not effect any such sale or transfer unless prior to
or  simultaneously  with the consummation  thereof,  the entity  purchasing such
assets shall assume by written instrument, reasonably satisfactory to the holder
of this Warrant, executed and mailed or delivered to the holder of this Warrant,
the  obligation  to deliver to such holder such shares of stock,  securities  or
assets as, in  accordance  with the  foregoing  provisions,  such  holder may be
entitled to receive.

5. DISSOLUTION OR LIQUIDATION.  In the event of any proposed distribution of the
assets of the Company in dissolution or liquidation  (except under circumstances
when the foregoing  Section 4 shall be applicable) the Company shall mail notice
thereof  to the  holder  of this  Warrant  and  shall  make no  distribution  to
shareholders  until the  expiration  of 30 days from the date of  mailing of the
aforesaid  notice and, in any such case, the holder of this Warrant may exercise
this Warrant within 30 days from the date of the mailing of such notice, and all
rights  herein  granted  not  so  exercised  within  such  30 day  period  shall
thereafter become null and void.

6. CHANGE OF CONTROL; FUNDAMENTAL TRANSACTIONS.

         (a) Change of Control.  In the event of a Change of Control, as defined
below, the Company shall provide notice thereof to the holder of this Warrant at
least ten (10) days prior to the contemplated closing date or occurrence of such
Change of  Control  (the  "Contemplated  Closing  Date").  Upon the  Purchaser's
receipt of the Company's  notice of a Change of Control,  the Purchaser  may, at
its option, elect to exercise this Warrant pursuant to Section 1 hereof.  Should
the  Purchaser  decline or fail to exercise  this  Warrant  before 5:00 p.m. New
York, New York time on the  Contemplated  Closing Date,  then this Warrant shall
immediately prior to the closing of the Change of Control be deemed to have been
exercised by cashless exercise, as provided for in Section 1 hereof, without any
further  action  on the  part of the  Purchaser,  and  all  rights  and  options
hereunder  shall  expire  and  shall be wholly  null and void.  In the case of a
cashless  exercise  pursuant to this  Section,  from and after the  Contemplated

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Closing  Date,  the  Purchaser  shall be  deemed  the  holder  of  record of the
securities  issuable  upon  exercise of this  Warrant,  and this  Warrant  shall
represent  only the right to receive,  upon return of the Warrant to the Company
for  cancellation,  a certificate  representing  the securities  issuable to the
Purchaser upon exercise of this Warrant.

For purposes of this Warrant,  a "Change of Control" shall be deemed to occur if
(A) any of the following occur:

         (i) The Company is merged,  consolidated  or  reorganized  into or with
         another  corporation  or other  entity,  and as a result of the merger,
         consolidation  or  reorganization  less than a majority of the combined
         voting power of the  then-outstanding  securities of the corporation or
         entity  immediately  after the  transaction is held in the aggregate by
         the holders of Voting Stock immediately prior to the transaction;

         (ii) The Company sells or otherwise  transfers all or substantially all
         of its assets to another  corporation  or other entity and, as a result
         of the sale or transfer,  less than a majority of the  combined  voting
         power of the  then-outstanding  securities of the other  corporation or
         entity  immediately after the sale or transfer is held in the aggregate
         by the  holders  of  Voting  Stock  immediately  prior  to the  sale or
         transfer; or

         (iii) Any person or group of  persons  (within  the  meaning of Section
         13(d)(3) of the  Securities  Exchange Act of 1934) that holds less than
         5% of the Voting  Stock of the Company  outstanding  on the date of the
         first issuance of any of the Warrants becomes the beneficial owner of a
         majority of the Voting Stock.;

         and (B) the per share price for any such  transaction  mentioned in (A)
         above is at least $1.35 per share of Stock.

For purposes of this Warrant, the term "Voting Stock" means the capital stock of
the Company of any class or series entitled to vote generally in the election of
directors.

         (b)  Fundamental  Transactions.  The Company shall not enter into or be
party to a Fundamental  Transaction  that is not a Change of Control  unless (i)
the Successor  Entity  assumes in writing all of the  obligations of the Company
under this Warrant and the other  Transaction  Documents in accordance  with the
provisions  of this  Section  6  pursuant  to  written  agreements  in form  and
substance  satisfactory  to the  Required  Holders and  approved by the Required
Holders prior to such Fundamental  Transaction,  including agreements to deliver
to each  holder of  Warrants  in  exchange  for such  Warrants a security of the
Successor Entity evidenced by a written instrument substantially similar in form
and  substance  to this  Warrant,  including,  without  limitation,  an adjusted
exercise  price equal to the value for the shares of Common  Stock  reflected by
the terms of such Fundamental  Transaction,  and exercisable for a corresponding
number of shares of  capital  stock  equivalent  to the  shares of Common  Stock
acquirable and receivable  upon exercise of this Warrant  (without regard to any
limitations  on  the  exercise  of  this  Warrant)  prior  to  such  Fundamental
Transaction,  and satisfactory to the Required  Holders.  Upon the occurrence of
any  Fundamental  Transaction,  the  Successor  Entity shall  succeed to, and be
substituted  for  (so  that  from  and  after  the  date  of  such   Fundamental
Transaction,  the  provisions of this Warrant  referring to the "Company"  shall

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refer instead to the Successor  Entity),  and may exercise every right and power
of the Company and shall assume all of the obligations of the Company under this
Warrant with the same effect as if such  Successor  Entity had been named as the
Company herein. Upon consummation of the Fundamental Transaction,  the Successor
Entity shall deliver to the Holder  confirmation that there shall be issued upon
exercise of this Warrant at any time after the  consummation  of the Fundamental
Transaction,  in lieu of the  shares of the Common  Stock (or other  securities,
cash, assets or other property)  issuable upon the exercise of the Warrant prior
to such Fundamental Transaction,  such shares of stock, securities, cash, assets
or any other  property  whatsoever  (including  warrants  or other  purchase  or
subscription  rights)  which the Holder would have been entitled to receive upon
the happening of such  Fundamental  Transaction  had this Warrant been converted
immediately  prior to such  Fundamental  Transaction,  as adjusted in accordance
with the provisions of this Warrant.  In addition to and not in substitution for
any  other  rights  hereunder,  prior  to the  consummation  of any  Fundamental
Transaction  pursuant to which holders of shares of Common Stock are entitled to
receive  securities or other assets with respect to or in exchange for shares of
Common Stock (a "Corporate Event"), the Company shall make appropriate provision
to insure  that the Holder  will  thereafter  have the right to receive  upon an
exercise of this Warrant at any time after the  consummation  of the Fundamental
Transaction  but  prior to the  Expiration  Date,  in lieu of the  shares of the
Common Stock (or other securities, cash, assets or other property) issuable upon
the exercise of this Warrant prior to such Fundamental Transaction,  such shares
of stock,  securities,  cash, assets or any other property whatsoever (including
warrants or other purchase or  subscription  rights) which the Holder would have
been entitled to receive upon the happening of such Fundamental  Transaction had
this Warrant been exercised  immediately prior to such Fundamental  Transaction.
Provision  made  pursuant  to the  preceding  sentence  shall  be in a form  and
substance  reasonably  satisfactory to the Required  Holders.  The provisions of
this  Section  shall  apply  similarly  and  equally to  successive  Fundamental
Transactions  and Corporate  Events and shall be applied  without  regard to any
limitations on the exercise of this Warrant.

7. FRACTIONAL SHARES. Fractional shares shall not be issued upon the exercise of
this  Warrant  but in any case where the  holder  hereof  would,  except for the
provisions of this  paragraph,  be entitled  under the terms hereof to receive a
fractional share upon the complete exercise of this Warrant,  the Company shall,
upon the  exercise of this  Warrant for the largest  number of whole shares then
called for,  pay a sum in cash equal to the excess of the Fair  Market  Value of
such fractional share over the proportional  part of the Per Share Warrant Price
represented by such fractional share.

8. FULLY PAID STOCK;  TAXES. The Company covenants and agrees that the shares of
stock represented by each and every certificate for its Stock to be delivered on
any  exercise  of this  Warrant  shall,  at the time of such  delivery,  be duly
authorized,  validly issued and outstanding and be fully paid and nonassessable.
The Company  further  covenants and agrees that it will pay when due and payable
any and all federal and state  taxes,  other than taxes on income,  which may be
payable in respect of this Warrant or any Stock or  certificates  therefor  upon
the  exercise of the rights  herein  provided  for  pursuant  to the  provisions
hereof. The Company shall not, however,  be required to pay any tax which may be
payable in respect of any  transfer  involved in the  transfer  and  delivery of

                                       10
<PAGE>

stock  certificates  in the name other  than that of the  holder of the  Warrant
converted,  and any  such  tax  shall  be paid by  such  holder  at the  time of
presentation.

9. CLOSING OF TRANSFER BOOKS.  The holder of this Warrant shall continue to have
the right to exercise this Warrant even during a period when the stock  transfer
books of the  Company  for its  Stock  are  closed.  The  Company  shall  not be
required, however, to deliver certificates of its Stock upon such exercise while
such books are duly closed for any  purpose,  but the Company may  postpone  the
delivery of the certificates for such Stock until the opening of such books, and
they shall, in such case, be delivered forthwith upon the opening thereof, or as
soon as practicable thereafter.

10.  RESTRICTIONS  ON  TRANSFERABILITY  OF WARRANTS AND SHARES;  COMPLIANCE WITH
SECURITIES ACT;  EXCHANGE,  ASSIGNMENT OR LOSS OF WARRANT.  This Warrant and the
Stock issued upon the exercise  hereof,  and any security  into which such Stock
may be convertible  ("Underlying  Stock") shall not be transferable  except upon
the conditions  hereinafter  specified,  which conditions are intended to insure
compliance with the provisions of the Securities Act of 1933, as amended, or any
similar Federal statute at the time in effect (the "Securities  Act") in respect
of the transfer of any Warrant or any such Stock or any security into which such
Stock may be convertible.

         10.1  Assignments  Generally.  Except  as may  otherwise  be  expressly
         provided herein, this Warrant is exchangeable,  without expense, at the
         option of the holder, upon presentation and surrender of the Warrant to
         the Company,  for other Warrants of different  denominations  entitling
         the holder  thereof to  purchase  in the  aggregate  the same number of
         shares of Stock purchasable hereunder.  Any assignment shall be made by
         surrender of this  Warrant to the Company  with the Form of  Assignment
         annexed  hereto duly executed and funds  sufficient to pay any transfer
         tax,  provided  the Company has  received an opinion or other  evidence
         satisfactory  to the Company  that the transfer  will be in  compliance
         with the provisions of the  Securities Act of 1933, as amended,  or any
         similar Federal statute at the time in effect (the "Securities Act") in
         respect of the  transfer  of this  Warrant.  Upon  compliance  with the
         express  provisions  of this  Section  10, the Company  shall,  without
         charge, cause to be executed and delivered a new Warrant in the name of
         the assignee  named in such  instrument of assignment  and this Warrant
         shall  promptly be  canceled.  This  Warrant may be divided or combined
         with other warrants that carry the same rights upon presentation hereof
         to the Company together with a written notice  specifying the names and
         denominations  in which new Warrants are to be issued and signed by the
         holder hereof.

         10.2  Certain  Assignments  Following   Registration.   Notwithstanding
         anything  to  the  contrary   contained  herein,  if  the  Company  has
         registered  the Underlying  Stock pursuant to a Registration  Statement
         which  has been  declared  effective  by the  Securities  and  Exchange
         Commission (SEC) and, thereafter, the holder purports to assigns all or
         a portion of the  Underlying  Stock to any other  person,  the assignee
         shall have the right to cause the Registration  Statement to be amended
         or the prospectus related thereto to be supplemented (at the expense of
         the  Company),  in  either  case to name  such  assignee  as a  selling

                                       11
<PAGE>

         stockholder,  provided that the use of a post-effective  amendment or a
         supplement to the  prospectus  is permitted by applicable  law for such
         purpose.

         10.3 Restrictive Legends. Each Warrant shall bear on the face thereof a
         legend  substantially  in the form of the notice  endorsed on the first
         page of this Warrant.

         Each  certificate for shares of Underlying  Stock initially issued upon
         the  exercise  of any  Warrant  and  each  certificate  for  shares  of
         Underlying Stock issued to a subsequent  transferee of such certificate
         shall, if not registered for resale,  bear on the face thereof a legend
         reading substantially as follows:

         THE SHARES OF CLASS A COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE
         NOT BEEN  REGISTERED OR QUALIFIED FOR SALE UNDER THE  SECURITIES ACT OF
         1933, AS AMENDED (THE "ACT"),  OR ANY STATE  SECURITIES LAW AND MAY NOT
         BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION,  UNLESS THE
         COMPANY IS REASONABLY  SATISFIED  THAT THE PROPOSED SALE OR TRANSFER IS
         EXEMPT FROM SUCH REGISTRATION REQUIREMENTS.

         10.4 Removal of Legend.  In the event that the Company shall receive an
         opinion  of its  counsel or counsel  of the  holder,  which  opinion is
         reasonably acceptable to it, that, in the opinion of such counsel, such
         legend is not,  or is no  longer,  necessary  or  required  (including,
         without  limitation,  because  of the  availability  of  the  exemption
         afforded  by Rule  144 of the  General  Rules  and  Regulations  of the
         Securities  and  Exchange  Commission),  the  Company  shall,  or shall
         instruct its transfer agents and registrars to, remove such legend from
         the   certificates   evidencing  the  Restricted  Stock  or  issue  new
         certificates  without such legend in lieu  thereof.  The Company  shall
         also remove the legend if the Underlying  Stock has been registered for
         resale with the SEC.

11.  PARTIAL  EXERCISE AND PARTIAL  ASSIGNMENT.  If this Warrant be exercised in
part only, the holder hereof shall be entitled to receive a new Warrant covering
the  number of shares  in  respect  of which  this  Warrant  shall not have been
exercised  as  provided  in  paragraph 1 hereof.  If this  Warrant is  partially
assigned,  this Warrant  shall be  surrendered  at the  principal  office of the
Company (with the partial assignment form at the end hereof duly executed),  and
thereupon a new Warrant shall be issued to the holder hereof covering the number
of shares not assigned and setting  forth the  proportionate  Aggregate  Warrant
Price  applicable  to such shares not  assigned.  The  assignee of such  partial
assignment  of this  Warrant  shall also be  entitled  to receive a new  Warrant
covering  the number of shares so assigned and setting  forth the  proportionate
Aggregate Warrant Price applicable to such assigned shares.

12.  REGISTRATION  RIGHTS.  A holder of a  Warrant  is  entitled  to any and all
applicable  registration rights as set forth in that certain Registration Rights
Agreement,  dated January 12, 2007,  relating to the Common Stock of the Company
and this and other Warrants.

                                       12
<PAGE>

13. LOST, STOLEN WARRANTS,  ETC. In case any Warrant shall be mutilated,  stolen
or  destroyed,  the  Company  may issue a new  Warrant of like  date,  tenor and
denomination  and  deliver the same in exchange  and  substitution  for and upon
surrender and cancellation of any mutilated  Warrant,  or in lieu of any Warrant
lost, stolen or destroyed,  upon receipt of evidence satisfactory to the Company
of the loss, theft or destruction of such Warrant, and upon receipt of indemnity
satisfactory to the Company.

14. WARRANT HOLDER NOT SHAREHOLDER. This Warrant does not confer upon the holder
hereof any right to vote or to consent or to receive  notice as a shareholder of
the Company, as such, in respect of any matters whatsoever,  or any other rights
or liabilities as a shareholder,  prior to the exercise  hereof as  hereinbefore
provided.

15.  SEVERABILITY.  Should any part of this  Warrant  for any reason be declared
invalid,  such decision shall not affect the validity of any remaining  portion,
which remaining  portion shall remain in force and effect as if this Warrant had
been  executed with the invalid  portion  thereof  eliminated,  and it is hereby
declared the  intention of the parties  hereto that they would have executed and
accepted the remaining  portion of this Warrant  without  including  therein any
such part,  parts or portion  which may, for any reason,  be hereafter  declared
invalid.

16.  NOTICE.  All notices and other  communications  required or permitted to be
given under any  Agreement  shall be deemed given when  personally  delivered or
sent by certified mail,  return receipt  requested,  postage prepaid,  overnight
delivery or confirmed  facsimile  transmission  to the parties at the  following
address or fax number:

                  To the Company at:

                           ATC Healthcare, Inc.
                           1983 Marcus Avenue
                           Lake Success, NY  11042

                           Attention:  Chief Financial Officer
                           Facsimile:  (516) 750-1754

                  With a copy to:

                           David J. Hirsch, Esquire
                           Keevican Weiss Bauerle & Hirsch LLC
                           11th Floor, Federated Investors Tower
                           1001 Liberty Avenue
                           Pittsburgh, PA  15222
                           Facsimile:  (412) 355-2609

                                       13
<PAGE>

                  To the Purchaser at:

                           The address set forth in the Purchase Agreement under
                           which the  Purchaser  acquired,  among other  things,
                           this Warrant.

or, as to either party or any subsequent  holder of this Warrant,  to such other
address and/or  facsimile  number as such party  designates by written notice to
the other party or parties.

17. CERTAIN DEFINITIONS.

     (a) "Business Day" means any day other than  Saturday,  Sunday or other day
on which  commercial banks in The City of New York are authorized or required by
law to remain closed.

     (b)  "DTC"  means  The  Depository  Trust  Company  and its Fast  Automated
Securities Transfer Program.

     (c)  "Fundamental  Transaction"  means that the Company shall,  directly or
indirectly,  in one or more related transactions,  (i) consolidate or merge with
or into  (whether  or not the  Company  is the  surviving  corporation)  another
Person, or (ii) sell,  assign,  transfer,  convey or otherwise dispose of all or
substantially  all of the properties or assets of the Company to another Person,
or (iii) allow another Person to make a purchase,  tender or exchange offer that
is  accepted by the  holders of more than the 50% of the  outstanding  shares of
Common  Stock (not  including  any shares of Common  Stock held by the Person or
Persons making or party to, or associated or affiliated  with the Persons making
or party to, such  purchase,  tender or exchange  offer),  or (iv)  consummate a
stock  purchase  agreement or other  business  combination  (including,  without
limitation,   a   reorganization,   recapitalization,   spin-off  or  scheme  of
arrangement)  with another Person  whereby such other Person  acquires more than
the 50% of the  outstanding  shares of Common Stock (not including any shares of
Common  Stock held by the other Person or other  Persons  making or party to, or
associated or affiliated  with the other Persons  making or party to, such stock
purchase agreement or other business combination), (v) reorganize,  recapitalize
or reclassify its Common Stock,  or (vi) any "person" or "group" (as these terms
are used for  purposes of Sections  13(d) and 14(d) of the  Exchange  Act) is or
shall become the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act),  directly or  indirectly,  of 50% of the aggregate  ordinary  voting power
represented by issued and outstanding Common Stock.

     (d)  "Person"  means  an  individual,   a  limited  liability   company,  a
partnership,  a  joint  venture,  a  corporation,  a  trust,  an  unincorporated
association,  any other  entity and a  government  or any  department  or agency
thereof.

     (e) "Required  Holders" means the holders of the Warrants  representing  at
least a majority of shares of the Underlying Stock.

     (f) "Successor  Entity" means the Person (or, if so elected by the Required
Holders,  the  Parent  Entity)  formed  by,  resulting  from  or  surviving  any

                                       14
<PAGE>

Fundamental  Transaction  or the  Person  (or,  if so  elected  by the  Required
Holders,  the Parent Entity) with which such Fundamental  Transaction shall have
been entered into.

     (g) "Trading Day" means any day on which the Common Stock are traded on the
Principal  Market,  or, if the  Principal  Market is not the  principal  trading
market  for the Common  Stock,  then on the  principal  securities  exchange  or
securities  market on which the  Common  Stock are then  traded;  provided  that
"Trading  Day" shall not include any day on which the Common Stock are scheduled
to trade on such  exchange or market for less than 4.5 hours or any day that the
Common Stock are suspended from trading during the final hour of trading on such
exchange or market (or if such  exchange or market does not designate in advance
the closing  time of trading on such  exchange  or market,  then during the hour
ending at 4:00:00 p.m., New York time).

     (h) "Weighted  Average  Price" means,  for any security as of any date, the
dollar volume-weighted  average closing price for such security on the Principal
Market during the  immediately  preceeding  ten (10) business  days,  or, if the
foregoing does not apply,  the dollar  volume-weighted  average closing price of
such security in the  over-the-counter  market on the electronic  bulletin board
for such security during the  immediately  preceeding ten (10) business days, as
reported by Bloomberg, or, if no dollar volume-weighted average closing price is
reported  for such  security  by  Bloomberg  for such ten (10) day  period,  the
average of the highest closing bid price and the lowest closing ask price of any
of the market  makers for such security as reported in the "pink sheets" by Pink
Sheets LLC (formerly the National Quotation Bureau,  Inc.) for such ten (10) day
period.  If the Weighted Average Price cannot be calculated for such security on
such date on any of the  foregoing  bases,  the Weighted  Average  Price of such
security on such date shall be the fair market value as mutually  determined  by
the  Company  and  the  Required  Holders.  All  such  determinations  shall  be
appropriately  adjusted  for any share  dividend,  share split or other  similar
transaction during such period.

18. CALL OPTION.

         18.1 Option to Call  Warrants.  The  Company  shall be entitled to call
this Warrant if the  Company's  Stock trades at or above One and 35/100  Dollars
($1.35)  (as   adjusted   for  any  stock   dividends,   splits,   combinations,
recapitalizations and the like with respect to the Stock) for twenty (20) out of
thirty (30)  consecutive  Trading Days with an average daily  trading  volume of
over 150,000 shares and there is an effective registration statement registering
the shares underlying both the Series C Preferred Stock and Warrants.

         18.2  Call  Price.  The call  price for the  Warrant  shall be One Cent
($0.01) multiplied by the Warrant Number then in effect.

         18.3  Notice.  Notice of a call of this  Warrant  under this Section 18
shall be mailed by overnight  courier and by fax,  addressed to the holder.  The
notice shall state,  as  appropriate,  the  following and may contain such other
information as the Company deems advisable: (a) the call date, which shall be at
least  thirty  (30) days  after the  "notice  date" as  defined  herein  (b) the
aggregate call price for the Warrant,  and (c) the place where the Warrant is to

                                       15
<PAGE>

be surrendered.  The "notice date" shall be the date such notice is mailed.  Any
notice mailed as provided in this Section 18.3 shall be conclusively presumed to
have been duly given, whether or not the holder receives such notice.

         18.4  Effectiveness  of Call.  If notice of the call of the Warrant has
been duly given then,  notwithstanding that the Warrant has not been surrendered
for  cancellation,  on and after the call date this  Warrant  shall  cease to be
outstanding  and all rights with respect to this Warrant shall forthwith on such
notice date cease and  terminate,  except only the right of the holder hereof to
receive the amount payable on such call without interest.

19.      MISCELLANEOUS.

         (a) This  Warrant  shall be  governed  by,  construed  and  enforced in
accordance with the law of the State of Delaware, without regard to its conflict
of laws principles.

         (b) The  agreements  which  are  contained  herein  shall  survive  the
exercise of this Warrant to the extent applicable thereafter.

         (c) This Warrant was  originally  issued to Roaring Fork Capital  SBIC,
L.P. on January 12, 2007.

         IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer as of the day and year first set forth above.

                                       ATC HEALTHCARE, INC.

                                       By:  /s/ David Savitsky
                                           --------------------------
                                              David Savitsky
                                              Chief Executive Officer

                                       16
<PAGE>

                                   ASSIGNMENT
                                   ----------

FOR  VALUE  RECEIVED   ___________________________  hereby  sells,  assigns  and
transfers  unto  _______________________  the  within  Warrant  and  all  rights
evidenced    thereby    and   does    irrevocably    constitute    and   appoint
__________________________,  attorney, to transfer the said Warrant on the books
of the within named Company.

____________________________________

By__________________________________

Its_________________________________

Dated:  ____________________________

<PAGE>

                               PARTIAL ASSIGNMENT
                               ------------------

FOR VALUE  RECEIVED  ______________________________  hereby  sells,  assigns and
transfers  unto  _______________________________  that  portion  of  the  within
Warrant and the rights  evidenced  thereby which will an the date hereof entitle
the  holder  to  purchase  __________  shares  of  Class A  Common  Stock of ATC
Healthcare,   Inc.,   and  does  hereby   irrevocably   constitute  and  appoint
__________________________,  attorney, to transfer that part of the said Warrant
on the books of the within named Company.

____________________________________

By__________________________________

Its_________________________________

Dated:  ____________________________

<PAGE>

                                 EXERCISE NOTICE
                                 ---------------

        (To be completed and signed only upon an exercise of the Warrant
                              in whole or in part)

TO:      ATC Healthcare, Inc.:

The undersigned,  the holder of the attached Warrant,  hereby irrevocably elects
to exercise the purchase  right  represented by the Warrant for, and to purchase
thereunder,  ______  shares  of Class A Common  Stock (or  other  securities  or
property), and herewith makes payment as follows:

_____ By payment of  $____________  therefor in cash,  by  certified or official
bank check or such other form of payment as may be permitted under the Warrant.

____  By cashless exercise.

The undersigned  hereby requests that the  Certificate(s) for such securities be
issued in the name(s) and delivered to the address(es) as follows:

Name:                      _____________________________________________
Address:                   _____________________________________________
Social Security Number:    _____________________________________________
Deliver to:                _____________________________________________
Address:                   _____________________________________________

If the  foregoing  Exercise  Notice  evidences  an  exercise  of the  Warrant to
purchase fewer than all of the Shares (or other securities or property) to which
the undersigned is entitled under such Warrant,  please issue a new Warrant,  of
like  date and  tenor,  for the  remaining  portion  of the  Warrant  (or  other
securities or property) in the name(s),  and deliver the same to the  address(e'
s), as follows:

Name:                      ______________________________________________
Address:                   ______________________________________________

DATED:   ____________________, 200__

--------------------------------------------------------------------------------

Social Security or Taxpayer Identification           (Name of Holder)
         Number of Holder)

------------------------------------------
                                                  (Signature of Holder or
                                                   Authorized Signatory)

Signature Guaranteed:

------------------------------------------Exhibit 10.1

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                            COMMON STOCK AND WARRANT
                               PURCHASE AGREEMENT

                              ATC Healthcare, Inc.

                                January 12, 2007

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

<PAGE>

                            COMMON STOCK AND WARRANT
                            ------------------------
                               PURCHASE AGREEMENT
                               ------------------

         THIS COMMON STOCK AND WARRANT  PURCHASE  AGREEMENT (this  "Agreement"),
dated as of January 12, 2007, is by and among ATC  Healthcare,  Inc., a Delaware
corporation  (the  "Company"),  and Roaring Fork Capital SBIC,  L.P., a Delaware
limited partnership ("Roaring Fork" or the "Purchaser").

                                    Recitals
                                    --------

         A. The Company and  Roaring  Fork are  executing  and  delivering  this
Agreement in reliance upon the exemption from securities  registration  afforded
by  Section  4(2)  of  the  Securities  Act  and  Rule  506 of  Regulation  D as
promulgated by the SEC under the Securities Act.

         B.  Roaring Fork wishes to  purchase,  and the Company  wishes to sell,
upon the terms and conditions stated in this Agreement,  (i) 2,000,000 shares of
Common  Stock  (the  "Shares")  and (ii)  warrants,  in  substantially  the form
attached hereto as Exhibit A (the  "Warrants") to acquire up to 1,000,000 shares
of Common Stock (the "Warrant Shares").

         C. The Shares,  the Warrants and the Warrant  Shares  collectively  are
referred to herein as the "Securities".

         The parties hereto,  in  consideration of the premises and their mutual
covenants  and  agreements  herein set forth and  intending to be legally  bound
hereby, covenant and agree as follows:

                                   DEFINITIONS

Certain  Definitions.  In addition to other words and terms defined elsewhere in
this Agreement,  the following words and terms have the meanings set forth below
(and such meanings  shall be equally  applicable to both the singular and plural
form of the terms defined, as the context may require):

         "Affiliate"  shall mean with  respect to any Person,  any other  Person
that is  directly  or  indirectly  controlling,  controlled  by or under  common
control  with such  Person or  entity or any of its  Subsidiaries,  and the term
"control"  (including the terms "controlled by" and "under common control with")
shall mean  having,  directly  or  indirectly,  the power to direct or cause the
direction of the management and policies of a Person,  whether through ownership
of  voting  securities  or  by  contract  or  otherwise.  Without  limiting  the
foregoing,  (i) the  ownership  of ten  percent  (10%)  or  more  of the  voting
securities of a Person shall be deemed to constitute control and notwithstanding
anything to the contrary  herein,  and (ii) neither  Roaring Fork nor any of its
Affiliates  shall be deemed to be  Affiliates  of the  Company  by virtue of the
transactions contemplated in this Agreement.

                                       1
<PAGE>

         "Agreement"   shall  mean  this  Common  Stock  and  Warrant   Purchase
Agreement,  as the same may be  amended,  restated,  supplemented  or  otherwise
modified from time to time.

         "Board" shall mean the Board of Directors of ATC Healthcare, Inc.

         "Business"  shall mean the  principal  business  of the  Company as set
forth in  Section  4.1(b)  hereof  and as such shall  continue  to be  conducted
following the purchase and sale of the Common Stock and the Warrants hereby.

         "Business  Day"  shall mean any day other  than a  Saturday,  Sunday or
other day on which banking  institutions  in Denver,  Colorado are authorized or
required by law to close.

         "Bylaws"  shall  mean the  Bylaws  or  analogous  instrument  governing
operations, including all amendments and supplements thereto.

         "Charter  Documents" shall mean the certificate of incorporation  filed
with the  appropriate  Governmental  Authorities,  including all  amendments and
supplements thereto.

         "Closing" shall mean the closing of the purchase and sale of the Common
Stock and the Warrants pursuant to this Agreement.

         "Closing Date" shall mean January 12, 2007.

         "Code" shall mean the Internal Revenue Code of 1986, as amended.

         "Common Stock" shall mean the Class A Common Stock of the Company.

         "Company"  shall  have  the  meaning  assigned  to  such  term  in  the
introductory paragraph hereto, except as provided otherwise in this Agreement.

         "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as the same may from time to time be amended,  and the rules and  regulations of
any  governmental  agency  or  authority,  as  from  time  to  time  in  effect,
promulgated thereunder.

         "Exchange  Act"  shall mean the  Securities  Exchange  Act of 1934,  as
amended.

         "Fiscal Year" or "fiscal  year" shall mean each 12-month  period ending
on December 31 of each year.

         "Governmental  Authorities" shall mean any federal,  state or municipal
court or other governmental  department,  commission,  board, bureau,  agency or
instrumentality, governmental or quasi-governmental, domestic or foreign.

         "IRS" shall mean the Internal Revenue Service and any governmental body
or agency succeeding to the functions thereof.

         "Laws"  shall  mean  all  U.S.  and  foreign  federal,  state  or local
statutes, laws, rules, regulations, ordinances, codes, policies, rules of common
law,  and the like,  now or  hereafter  in effect,  including  any  judicial  or

                                       2
<PAGE>

administrative  interpretations  thereof,  and any  judicial  or  administrative
orders, consents, decrees or judgments.

         "Lien" shall mean any security interest,  pledge,  bailment,  mortgage,
hypothecation,  deed of trust,  conditional sales and title retention  agreement
(including  any  lease in the  nature  thereof),  charge,  encumbrance  or other
similar  arrangement  or  interest in real or personal  property,  whether  such
interest is based on common law, statute or contract.

         "Material  Adverse Effect" shall mean a material  adverse effect on the
business,  properties, assets, liabilities or condition (financial or otherwise)
of the Company, individually and/or taken as a whole.

          "Person" shall mean any individual,  partnership, limited partnership,
corporation, limited liability Company, association, joint stock company, trust,
joint venture, unincorporated organization or governmental entity or department,
agency or political subdivision thereof.

         "Plan"  shall mean any  employee  benefit  plan  (within the meaning of
Section 3(3) of ERISA),  established  or maintained by the Company or any member
of the Controlled Group.

         "Principal Market" shall mean the American Stock Exchange.
          ----------------

         "Properties  and  Facilities"  shall have the meaning  assigned to such
term in Section 4.1(r) hereof.

         "Property" shall mean, as to any Person,  all types of real,  personal,
tangible,  intangible  or mixed  property  owned by such  Person  whether or not
included in the most recent  balance  sheet of such Person and its  subsidiaries
under GAAP.

         "Proprietary Rights" shall mean all patents,  trademarks,  trade names,
service marks, copyrights,  inventions,  production methods, licenses, formulas,
know-how,  trade  secrets  and  good  will  related  to any  of  the  foregoing,
regardless of whether such are  registered  with any  Governmental  Authorities,
including applications therefor.

         "Purchase Documents" shall mean this Agreement (including all schedules
attached to the Agreement),  the Registration Rights Agreement, the Common Stock
and the Warrants as any or all of the foregoing may be  supplemented  or amended
from time to time.

         "Purchaser"  shall  have  the  meaning  assigned  to  such  term in the
introductory paragraph hereto.

         "Registrable  Securities" shall mean the Shares, the Warrant Shares and
any  shares  issued  or  issuable  upon  any  stock  split,  dividend  or  other
distribution,  recapitalization or similar event, or any exercise or other price
adjustment with respect to the Common Stock.

         "Roaring  Fork"  shall  mean  Roaring  Fork  Capital  SBIC,  L.P.,  the
Purchaser, which is managed by Roaring Fork Capital Management, LLC.

                                       3
<PAGE>

         "SBA Compliance  Agreement" means the SBA Compliance  Agreement between
the Company and Roaring Fork dated as of January 12, 2007.

         "SEC" means the U.S. Securities and Exchange Commission.
          ---

         "Securities" means the Shares, Warrants and the Warrant Shares.
          ----------

         "Securities Act" shall mean the Securities Act of 1933, as amended.

         "Subsidiary"  of any  corporation  shall mean any other  corporation or
limited  liability  company of which the outstanding  capital stock possessing a
majority of voting  power in the election of  directors  (otherwise  than as the
result of a default)  is owned or  controlled  by such  corporation  directly or
indirectly through Subsidiaries.

         "Trading  Day" means (i) a day on which the Common Stock is traded on a
Trading Market (other than the OTC Bulletin Board),  or (ii) if the Common Stock
is not listed on a Trading Market (other than the OTC Bulletin  Board), a day on
which the Common Stock is traded in the over-the-counter  market, as reported by
the OTC  Bulletin  Board,  or (iii) if the  Common  Stock is not  quoted  on any
Trading   Market,   a  day  on  which  the   Common   Stock  is  quoted  in  the
over-the-counter   market  as  reported  by  the   National   Quotation   Bureau
Incorporated (or any similar  organization or agency succeeding to its functions
of reporting prices);  provided,  that in the event that the Common Stock is not
listed or quoted as set forth in (i),  (ii) and (iii)  hereof,  then Trading Day
shall mean a Business Day.

         "Trading  Market" means whichever of the New York Stock  Exchange,  the
American  Stock  Exchange,  the NASDAQ Global  Market,  the NASDAQ Global Select
Market,  the NASDAQ  Capital  Market or OTC  Bulletin  Board on which the Common
Stock is listed or quoted for trading on the date in question.

         "Transaction Documents" shall have the meaning assigned to such term in
Section 4.1(f) hereof.

         "Transactions"  shall mean the  purchase of the Shares and the Warrants
as contemplated by this Agreement,  and all other agreements contemplated hereby
and thereby.

Accounting Principles. The character or amount of any asset, liability,  capital
account or reserve  and of any item of income or expense to be  determined,  and
any  consolidation  or  other  accounting   computation  to  be  made,  and  the
construction  of any definition  containing a financial  term,  pursuant to this
Agreement  shall be  determined or made in accordance  with  generally  accepted
accounting  principles  in the  United  States of America  consistently  applied
("GAAP").

Other Definitional Provisions;  Construction.  Whenever the context so requires,
neuter gender includes the masculine and feminine,  the singular number includes
the plural and vice versa. The words "hereof" "herein" and "hereunder" and words
of similar import when used in this Agreement shall refer to this Agreement as a
whole and not in any particular  provision of this agreement,  and references to
section, article, annex, schedule, exhibit and like references are references to
this Agreement unless otherwise  specified.  References in this Agreement to any
Persons shall include such Persons' successors and permitted assigns.

                                       4
<PAGE>

                   ISSUE AND SALE OF COMMON STOCK AND WARRANTS

Authorization  and  Issuance  of the Shares and  Warrants.  The Company has duly
authorized the offering of the Shares and Warrants to Roaring Fork.

Purchase  Price.  Subject to the terms and  conditions  and in reliance upon the
representations,  warranties and agreements set forth herein,  the Company shall
sell to  Roaring  Fork for  $600,000  invested  in the  Company  (the  "Purchase
Price"),  and Roaring Fork shall  purchase from the Company,  the Shares and the
Warrants.  Roaring  Fork and the Company  agree that the Shares and the Warrants
constitute an "investment unit" for purposes of Section  1273(c)(2) of the Code.
On or before the  Closing  Date,  Roaring  Fork shall  notify the Company of its
determination  of the  allocation  of the issue  price of such  investment  unit
between the Shares and the Warrants in accordance with Section 1273(c)(2) of the
Code and Treasury Regulation Section  1.1273-2(h),  and neither Roaring Fork nor
the Company shall take any position inconsistent with such allocation in any tax
return or in any judicial or administrative proceeding in respect of taxes.

The Closing.  Delivery of and payment for the Shares and the Warrants to be sold
to Roaring  Fork will be made on the Closing  Date at such place and date as may
be mutually  agreeable to the Company and Roaring  Fork.  Delivery of the Shares
and Warrants shall be made to Roaring Fork against  payment of the $600,000,  by
check or by wire transfer of immediately available funds in the manner agreed to
by the Company and Roaring Fork.  The Shares and the Warrants shall be issued in
the name of Roaring Fork.

                                   CONDITIONS

Conditions to Purchase of Securities. The obligation of Roaring Fork to purchase
and pay for the Shares and Warrants is subject to the satisfaction,  prior to or
at the Closing, of the following conditions at the time of its purchase:

          (i)  Representations  and  Warranties  True. The  representations  and
          warranties  contained in Article 4 hereof shall be true and correct in
          all  material  respects at and as of the  Closing  Date as though then
          made,  except to the  extent  of  changes  caused by the  transactions
          expressly contemplated herein.

          (j) Material  Adverse Change.  Except as described in the SEC Reports,
          there will have been no material adverse change in the business of the
          Company since September 30, 2006.

          (k) Closing Documents.  The Company shall have delivered or ordered to
          be delivered to the Purchaser  all of the following  documents in form
          and substance satisfactory to the Purchaser:

the certificate for the Shares, duly completed and executed by the Company;

                                       5
<PAGE>

the Warrants, duly completed and executed by the Company;

the Registration Rights Agreement, duly completed and executed by the Company;

the Amendments to the Certificate of Designation of the Series C Preferred Stock
and the warrants issued to Roaring Fork in connection with the purchase and sale
of the Series C Preferred  Stock changing the  conversion  price of the Series C
Preferred  Stock  to $.40  and the  exercise  price  of the  warrants  to  $.45,
respectively.

a copy of the  Charter  Documents  and Bylaws of the  Company  certified  by the
Secretary or Assistant Secretary of the Company as of the Closing Date;

copies of the resolutions  duly adopted by the Board  authorizing the execution,
delivery and  performance by the Company of this Agreement and each of the other
agreements,  instruments and documents  contemplated hereby to which the Company
is a party, and the consummation of all of the other Transactions,  certified as
of each Closing Date by the president or secretary of the Company;

a certificate dated as of the Closing Date from the President and Secretary,  as
officers of the Company,  stating that the conditions  specified in this Section
3.1 have been  fully  satisfied  or waived by Roaring  Fork with  respect to its
purchase;

the SBA Compliance Agreement, duly completed and executed by the Company; and

such other documents relating to the Transactions contemplated by this Agreement
that Roaring Fork may reasonably request.

          (l)  Proceedings.  All  proceedings  taken or  required to be taken in
          connection with the transactions contemplated hereby to be consummated
          at or prior to the Closing and all documents  incident thereto will be
          satisfactory in form and substance to Roaring Fork.

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Representations  and  Warranties  of the  Company.  Unless the context  requires
otherwise,  all references to the "Company"  shall include each of the Company's
Subsidiaries, unless the context requires otherwise. As a material inducement to
Roaring  Fork to enter  into this  Agreement  and  purchase  the  Shares and the
Warrants, the Company hereby represents and warrants to Roaring Fork as follows:

          (m)  Organization  and Power.  The Company is duly organized,  validly
          existing  and  in  good  standing  under  the  laws  of its  state  of
          organization.  The  Company  has  all  requisite  corporate  or  other
          organizational power and authority and all material licenses, permits,
          approvals  and  authorizations   necessary  to  own  and  operate  its
          properties,  to carry on its businesses as now conducted and presently
          proposed to be  conducted  and to carry out the  Transactions,  and is

                                       6
<PAGE>

          qualified to do business in every jurisdiction where the failure to so
          qualify  might  reasonably  be  expected  to have a  Material  Adverse
          Effect.  The  Company  has its  principal  place of  business  in Lake
          Success,  New York. The copies of the Charter  Documents and Bylaws of
          the  Company  that have been  furnished  to Roaring  Fork  reflect all
          amendments  made  thereto  at any  time  prior  to the  date  of  this
          Agreement and are correct and complete.

          (n) Principal Business.  The Company is primarily engaged in providing
          medical supplemental staffing services (the "Business").

          (o) SEC Reports; Financial Statements. Except as set forth on Schedule
          4.1(c),  the Company has filed all reports  required to be filed by it
          under the Securities Act and the Exchange Act,  including  pursuant to
          Section 13(a) or 15(d) thereof  reports filed on Form 10-K, Form 10-Q,
          and Form 8-K,  for the two years  preceding  the date  hereof (or such
          shorter  period  as the  Company  was  required  by law to  file  such
          reports)  (the  foregoing  materials  being  collectively  referred to
          herein as the "SEC Reports"  and,  together with the Schedules to this
          Agreement (if any), the  "Disclosure  Materials") on a timely basis or
          has  timely  filed a valid  extension  of such time of filing  and has
          filed  any  such  SEC  Reports  prior  to the  expiration  of any such
          extension.  Attached as  Schedule  4.1(c) is a list of any SEC Reports
          not available on the EDGAR system.  As of their respective  dates, the
          SEC Reports complied in all material respects with the requirements of
          the Securities Act and the Exchange Act and the rules and  regulations
          of the SEC promulgated  thereunder,  and none of the SEC Reports, when
          filed, contained any untrue statement of a material fact or omitted to
          state a material  fact  required to be stated  therein or necessary in
          order to make the statements  therein,  in light of the  circumstances
          under which they were made, not misleading.  The financial  statements
          of the  Company  included in the SEC  Reports  comply in all  material
          respects with  applicable  accounting  requirements  and the rules and
          regulations  of the SEC with respect  thereto as in effect at the time
          of filing. Such financial  statements have been prepared in accordance
          with GAAP applied on a consistent  basis during the periods  involved,
          except as may be otherwise  specified in such financial  statements or
          the notes  thereto,  and fairly  present in all material  respects the
          financial position of the Company and its consolidated Subsidiaries as
          of and for the dates  thereof and the results of  operations  and cash
          flows for the periods  then ended,  subject,  in the case of unaudited
          statements,  to normal,  immaterial,  year-end audit adjustments.  The
          Company's Common Stock is registered  pursuant to Section 12(g) of the
          Exchange  Act,  and the  Company has taken no action  designed  to, or
          which to its  knowledge  is likely to have the effect of,  terminating
          the  registration  of the Common  Stock under the Exchange Act nor has
          the Company  received any  notification  that the SEC is contemplating
          terminating such registration.  No other information provided by or on
          behalf of the Company to Roaring Fork which is not included in the SEC
          Reports,  including in any disclosure  schedules,  contains any untrue
          statement  of a  material  fact or omits to state  any  material  fact
          necessary in order to make the statements therein, in the light of the
          circumstance under which they are or were made not misleading.

          (p)  Capitalization  and Related  Matters.  As of the Closing Date and
          immediately  thereafter,  the authorized  capital stock of the Company
          and the shares of stock that are issued,  outstanding and reserved for
          issuance upon  conversion  of notes,  exercise of warrants and Options
          and  exercise  of the  Warrants  hereunder  (after  giving  effect  to

                                       7
<PAGE>

               anti-dilution  adjustments)  are as set forth on Schedule  4.1(d)
               hereto.  As of the  Closing  Date,  the  Company  will  not  have
               outstanding  any  capital  stock  or  securities  convertible  or
               exchangeable  for any shares of its capital  stock  except as set
               forth in  Schedule  4.1(d),  and will  not have  outstanding  any
               rights or options to  subscribe  for or to  purchase  its capital
               stock or any stock or securities convertible into or exchangeable
               for its capital stock, except as set forth in Schedule 4.1(d). As
               of the  Closing  Date,  the  Company  will not be  subject to any
               obligation  (contingent  or otherwise) to repurchase or otherwise
               acquire or retire any shares of its capital stock,  except as set
               forth  herein  and the  Charter  Documents,  respectively,  as in
               effect  on  the  date  hereof.  As of  the  Closing,  all  of the
               outstanding shares of the Company's capital stock will be validly
               issued, fully paid and nonassessable.  Except as set forth on the
               Schedule   4.1(d),   there  are  no  statutory   or   contractual
               stockholders'  preemptive  rights or notices  with respect to the
               issuance  of the Shares and  Warrants  hereunder.  Subject to and
               based on the accuracy of all representations made by Roaring Fork
               in this  Offering,  the Company has not violated  any  applicable
               federal or state  securities  laws in connection  with the offer,
               sale or issuance of any of its capital stock, and the offer, sale
               and issuance of the Shares and Warrants  hereunder do not require
               registration  under the Securities  Act or any  applicable  state
               securities laws.

               (q)  Subsidiaries.  Except as set forth on Schedule  4.1(e),  the
               Company  does not own, or hold any rights to acquire,  any shares
               of stock or any other  security or interest in any other  Person.
               The Company has no  Subsidiaries  except as set forth on Schedule
               4.1(e).

               (r)  Authorization;   No  Breach.  The  execution,  delivery  and
               performance  of the Purchase  Documents,  and the SBA  Compliance
               Agreement (collectively,  the "Transaction  Documents"),  and the
               consummation of the Transactions have been duly authorized by the
               Company.  The  Company  has the  requisite  corporate  power  and
               authority  to enter into and  perform its  obligations  under the
               Transaction  Documents  and to issue  the  Shares,  Warrants  and
               Warrant  Shares in accordance  with the terms hereof and thereof.
               Except  as set  forth  in  Section  4.1(f),  no  further  filing,
               consent,  or authorization is required by the Company,  its Board
               of  Directors,  or  its  stockholders.  Except  as set  forth  on
               Schedule 4.1(f),  the execution,  delivery and performance of the
               Transaction  Documents by the Company and the consummation by the
               Company  of the  transactions  contemplated  hereby  and  thereby
               (including,  without  limitation,  the issuance of the Shares and
               Warrants and reservation for issuance and issuance of the Warrant
               Shares) will not (i) result in a violation of any certificates or
               articles of incorporation, articles of formation, certificates or
               articles of  designations or other  constituent  documents of the
               Company  or any of its  Subsidiaries,  any  capital  stock of the
               Company or any of its  Subsidiaries  or bylaws of the  Company or
               any of its  Subsidiaries  or (ii) conflict  with, or constitute a
               default  (or an event which would with notice or lapse of time or
               both would  become a default)  in any respect  under,  or give to
               others  any rights of  termination,  amendment,  acceleration  or
               cancellation of, any agreement,  indenture or instrument to which
               the  Company  or any of its  Subsidiaries  is a  party,  or (iii)
               result  in a  violation  of any  law,  rule,  regulation,  order,
               judgment  or  decree,   including  foreign,   federal  and  state
               securities  laws and regulations and the rules and regulations of
               the  Principal  Market,  applicable  to the Company or any of its
               Subsidiaries  or by which any property or asset of the Company or
               any of its Subsidiaries is bound or effective.

                                       8
<PAGE>

               (s) Enforceability.  This Agreement constitutes,  and each of the
               other  Transaction  Documents when duly executed and delivered by
               the Company will constitute, legal, valid and binding obligations
               of the Company  enforceable in accordance  with their  respective
               terms.

               (t) No Material  Adverse Change.  Except as disclosed in Schedule
               4.1(h), since the date of the latest audited financial statements
               included within the SEC Reports, except as specifically disclosed
               in the SEC Reports,  (i) there has been no event,  occurrence  or
               development  that has had or that could reasonably be expected to
               result in a Material  Adverse  Effect,  (ii) the  Company has not
               incurred any liabilities (contingent or otherwise) other than (A)
               trade payables,  accrued expenses and other liabilities  incurred
               in the ordinary course of business  consistent with past practice
               and (B) liabilities not required to be reflected in the Company's
               financial statements pursuant to GAAP or required to be disclosed
               in filings  made with the  Commission,  (iii) the Company has not
               altered its method of accounting or the identity of its auditors,
               (iv)  the  Company  has not  declared  or made  any  dividend  or
               distribution  of cash or other  property to its  stockholders  or
               purchased,  redeemed or made any agreements to purchase or redeem
               any shares of its capital  stock,  and (v) except as set forth on
               Schedule 4.1(t), the Company has not issued any equity securities
               to any officer,  director or Affiliate. The Company does not have
               pending before the SEC any request for confidential  treatment of
               information.

               (u)  Litigation.  Except as  described  in the SEC  Reports,  the
               Company  has not  received  notice of the filing of any  material
               actions, suits or proceedings at law or in equity or by or before
               any  arbitrator  or  any  Governmental  Authority  (collectively,
               "Lawsuits")  now  pending  nor,  to  the  best  knowledge  of the
               Company's  management  after  due  inquiry,   have  any  material
               Lawsuits  been  threatened  against  or  filed  by or  materially
               affecting the Company or against any of its directors or officers
               or Affiliates  relating to the assets or rights of the Company or
               the Business.

               (v) Compliance  with Laws. The Company is not in violation of any
               applicable  Law in any  material  respect.  The Company is not in
               default with respect to any judgment,  order,  writ,  injunction,
               decree, rule or regulation of any Governmental  Authority.  There
               is no  investigation,  enforcement  action or  regulatory  action
               pending or  threatened  against or  affecting  the Company by any
               Governmental Authority.  There is no remedial or other corrective
               action  that  the  Company  is  required  to  take to  remain  in
               compliance with any judgment,  order, writ,  injunction or decree
               of  any  Governmental  Authority  or  to  maintain  any  material
               permits,  approvals  or  licenses  granted  by  any  Governmental
               Authority  in full  force and  effect.  During  the past five (5)
               years,  none of the  officers,  directors  or  management  of the
               Company have been arrested or convicted of any material crime nor
               have any of them been  bankrupt  or an officer or  director  of a
               bankrupt company.

               (w)  Transactions  With  Affiliates and Employees.  Except as set
               forth in the SEC Reports  referenced in Schedule 4.1(k),  none of
               the  officers  or  directors  of the  Company  or  the  Principal
               Shareholders  and, to the  knowledge of the Company,  none of the
               employees of the Company is presently a party to any  transaction
               with the Company (other than for services as employees,  officers
               and  directors),  including  any  contract,  agreement  or  other

                                       9
<PAGE>

               arrangement  providing  for the  furnishing of services to or by,
               providing for rental of real or personal  property to or from, or
               otherwise requiring payments to or from any officer,  director or
               such employee or, to the knowledge of the Company,  any entity in
               which  any  officer,   director,  or  any  such  employee  has  a
               substantial  interest  or is an  officer,  director,  trustee  or
               partner.

               (x)  Sarbanes-Oxley  Act.  The Company is in material  compliance
               with  any  and  all  applicable  material   requirements  of  the
               Sarbanes-Oxley  Act of 2002  that  are  effective  as of the date
               hereof, and any and all applicable material rules and regulations
               promulgated  by the SEC  thereunder  that are effective as of the
               date hereof.

               (y)  Certain   Fees.   Neither  the  Company,   nor  any  of  its
               Subsidiaries or Affiliates, nor any person acting on its or their
               behalf,  has  engaged  in any  form of  general  solicitation  or
               general  advertising  (within  the  meaning of  Regulation  D) in
               connection  with the offer or sale of the  Shares  and  Warrants.
               Except  for any  payments  that  may be due to  Bathgate  Capital
               Partners LLC, no brokerage or finder's fees or commissions are or
               will be payable by the Company to any broker,  financial  advisor
               or consultant,  finder,  placement agent, investment banker, bank
               or other Person with respect to the transactions  contemplated by
               this  Agreement.  Roaring  Fork  shall  have no  obligation  with
               respect to any fees or with  respect to any claims  made by or on
               behalf of other Persons for fees of a type  contemplated  in this
               Section  that  may be due in  connection  with  the  transactions
               contemplated by this Agreement.

               (z)  Application of Takeover  Protections.  The Company has taken
               all necessary action, if any, in order to render inapplicable any
               control  share  acquisition,  business  combination,  poison pill
               (including any  distribution  under a rights  agreement) or other
               similar  anti-takeover  provision  under  the  Company's  Charter
               Documents,  or the laws of its state of incorporation  that is or
               could  become  applicable  to the  Purchaser  as a result  of the
               Purchaser  and  the  Company   fulfilling  their  obligations  or
               exercising   their  rights  under  the   Transaction   Documents,
               including  without  limitation  the  Company's  issuance  of  the
               Shares,  the Warrants and the Warrant  Shares and Roaring  Fork's
               ownership of the Shares, the Warrants, and the Warrant Shares.

               (aa) Taxes.  Except as set forth on Schedule 4.1(o),  the Company
               has filed or caused to be filed all Federal,  state and local tax
               returns  that are  required  to be  filed by it,  and has paid or
               caused to be paid all taxes  shown to be due and  payable on such
               returns or on any assessments  received by it, including  payroll
               taxes.

               (bb) Labor and  Employment.  The Company is and each of its Plans
               are in compliance in all material  respects with those provisions
               of ERISA, the Code, the Age Discrimination in Employment Act, and
               the regulations and published  interpretations  thereunder  which
               are applicable to the Company or any such Plan. The Company is in
               compliance in all material respects with all labor and employment
               laws,  rules,  regulations  and  requirements  of all  applicable
               domestic  and  foreign  jurisdictions.  There are no  pending  or
               threatened labor disputes, work stoppages or strikes.

               (cc)  Properties;  Security  Interests.  Except  as set  forth in
               Schedule 4.1(q), the Company has good and marketable title to, or
               valid  leasehold  interests  in, all of the  material  assets and

                                       10
<PAGE>

               properties  used  or  useful  by  the  Company  in  the  Business
               (collectively,  the  "Properties  and  Facilities").  All  of the
               Properties and  Facilities are in good repair,  working order and
               condition and all such assets and properties  are,  except as set
               forth  in  the  SEC  Reports.   The   Properties  and  Facilities
               constitute all of the material  assets,  properties and rights of
               any type used in or necessary for the conduct of the Business.

               (dd)  Intellectual  Property.  The  Company  has good  title  and
               ownership  of,  or has  sufficient  rights  to,  all  trademarks,
               service marks, trade names, copyrights,  trade secrets, licenses,
               information,   proprietary  rights  and  processes  and  patents,
               including    without    limitation   the    Proprietary    Rights
               (collectively,  the "Intellectual Property") used in or necessary
               for its business as now conducted or as proposed to be conducted.
               None of the  Intellectual  Property  used in or necessary for the
               Company's business as now conducted  conflicts with or infringes,
               nor has the Company  received any written or oral  communications
               alleging  that the Company has  violated  or, by  conducting  its
               business,  would violate, any Intellectual  Property of any other
               Person.  The transactions  contemplated under this Agreement will
               not alter,  impair or otherwise  affect any rights of the Company
               in the Intellectual  Property. The Company has taken commercially
               reasonable  measures  to protect  the  proprietary  nature of the
               Intellectual  Property  and to maintain in  confidence  all trade
               secrets  and  confidential  information  owned  or  used  by  the
               Company.

There  are  no  legal  or  governmental  proceedings,   including  interference,
re-examination,   reissue,  opposition,  nullity,  or  cancellation  proceedings
pending that relate to any of the  Intellectual  Property,  other than review of
pending  patent  applications,  and the Company is not aware of any  information
indicating  that  such   proceedings  are  threatened  or  contemplated  by  any
governmental entity or any other Person.

               (ee) Employment Agreements; Intellectual Property Agreements. The
               Company is not aware  that any of its  employees  or  independent
               contractors is obligated under any contract (including  licenses,
               covenants or  commitments of any nature) or other  agreement,  or
               subject  to  any  judgment,  decree  or  order  of any  court  or
               administrative  agency, that would interfere with the use of such
               employee's or  independent  contractor's  best efforts to promote
               the  interest  of the  Company  or that would  conflict  with the
               Company's  business  as  now  conducted  or  as  proposed  to  be
               conducted.  Neither the execution or delivery of this  Agreement,
               nor the carrying on of the  Company's  business by the  employees
               and  independent  contractors of the Company,  nor the conduct of
               the Company's business as now conducted, or as currently proposed
               to be conducted, will, to the Company's knowledge,  conflict with
               or result in a breach of the terms, conditions, or provisions of,
               or  constitute  a  default  under,  any  contract,   covenant  or
               instrument   under  which  any  such   employee  or   independent
               contractor is now obligated.  It is not and will not be necessary
               to use  any  inventions  of any of the  Company's  employees  (or
               persons  the  Company  currently  intends  to hire) made prior to
               their employment by the Company. Schedule 4.1(s) and the specific
               SEC  Reports  referenced  therein  list all  material  employment
               agreements, including non-competition agreements, confidentiality
               and intellectual property agreements, between the Company and its
               directors,  officers,  key employees and agents. To the knowledge

                                       11
<PAGE>

               of the Company, no key employee of the Company is in violation of
               any term of any employment contract, patent disclosure agreement,
               proprietary information agreement,  noncompetition  agreement, or
               any other  contract  or  agreement  or any  restrictive  covenant
               relating to the right of any such key  employee to be employed by
               the Company because of the nature of the business conducted or to
               be  conducted  by the  Company  or  relating  to the use of trade
               secrets or proprietary  information of others,  and the continued
               employment of the key  employees  does not subject the Company or
               Roaring Fork to any material liability to third parties.

To the  knowledge  of  the  Company,  no  key  employee  of  the  Company  whose
termination,  either  individually  or in the  aggregate,  would have a Material
Adverse  Effect,   has  expressed  any  present  intention  of  terminating  his
employment with the Company

               (ff) Complete Disclosure. All factual information furnished by or
               on behalf of the  Company to Roaring  Fork for  purposes of or in
               connection  with this Agreement or the  Transactions  is, and all
               other  such  factual  information  hereafter  furnished  by or on
               behalf of the Company  will be, true and accurate in all material
               respects on the date as of which such  information  is  furnished
               and not  incomplete  by omitting to state any fact  necessary  to
               make such information not misleading at such time in light of the
               circumstances under which such information was provided.

               (gg) Side  Agreements.  Neither the Company nor any  Affiliate of
               the Company nor any director,  officer or employee of the Company
               or any of its Affiliates has entered into, as of the date hereof,
               any side agreement,  either oral or written,  with any individual
               or business,  pursuant to which the director,  officer, employee,
               Company  or   Affiliate   agreed  to  do   anything   beyond  the
               requirements  of the formal,  written  contracts  executed by the
               Company and disclosed in the SEC reports.

               (hh) Product  Liabilities.  There are no product  recalls,  trade
               disputes,  product  liabilities or product  tampering  claims now
               pending,  threatened  against or made by or affecting the Company
               or any of its directors, officers or employees or the businesses,
               assets or rights of the Company.

               (ii) Business Plan. The business plan which the Company delivered
               to Roaring Fork on or about  December 14, 2006, has been prepared
               honestly and in good faith,  with reasonable basis, by management
               of the Company.  All potential  material changes that have become
               known to Management  since December 14, 2006, with respect to the
               Company's business plan are listed on Schedule 4.1(h).

               (jj) Environmental  Laws. Except as set forth in Schedule 4.1(x),
               the Company and its Subsidiaries,  to their knowledge, (i) are in
               material  compliance  with  any and all  Environmental  Laws  (as
               hereinafter defined), (ii) have received all permits, licenses or
               other approvals  required of them under applicable  Environmental
               Laws to  conduct  their  respective  businesses  and (iii) are in
               compliance  with all terms  and  conditions  of any such  permit,
               license or approval where, in each of the foregoing  clauses (i),
               (ii) and  (iii),  the  failure to so comply  could be  reasonably
               expected to have,  individually  or in the aggregate,  a Material
               Adverse Effect. The term "Environmental  Laws" means all federal,
               state,  local or foreign laws relating to pollution or protection

                                       12
<PAGE>

               of  human   health  or  the   environment   (including,   without
               limitation, ambient air, surface water, groundwater, land surface
               or  subsurface  strata),  including,   without  limitation,  laws
               relating  to  emissions,   discharges,   releases  or  threatened
               releases  of  chemicals,  pollutants,  contaminants,  or toxic or
               hazardous   substances   or  wastes   (collectively,   "Hazardous
               Materials")  into the environment,  or otherwise  relating to the
               manufacture,  processing,  distribution, use, treatment, storage,
               disposal,  transport or handling of Hazardous Materials,  as well
               as all authorizations, codes, decrees, demands or demand letters,
               injunctions,  judgments,  licenses,  notices  or notice  letters,
               orders,   permits,   plans  or   regulations   issued,   entered,
               promulgated or approved thereunder.

               (kk) Subsidiary  Rights.  The Company or one of its  Subsidiaries
               has the  unrestricted  right to vote, and (subject to limitations
               imposed by applicable law) to receive dividends and distributions
               on, all capital  securities of its  Subsidiaries  as owned by the
               Company or such Subsidiary.

               (ll) Internal Accounting and Disclosure Controls. The Company and
               each of its Subsidiaries maintain a system of internal accounting
               controls  sufficient  to provide  reasonable  assurance  that (i)
               transactions are executed in accordance with management's general
               or specific  authorizations,  (ii)  transactions  are recorded as
               necessary  to  permit  preparation  of  financial  statements  in
               conformity with generally accepted  accounting  principles and to
               maintain  asset and  liability  accountability,  (iii)  access to
               assets  or  incurrence  of   liabilities  is  permitted  only  in
               accordance with  management's  general or specific  authorization
               and (iv) the recorded  accountability  for assets and liabilities
               is  compared  with  the  existing   assets  and   liabilities  at
               reasonable intervals and appropriate action is taken with respect
               to any difference.  The Company maintains disclosure controls and
               procedures  (as such term is  defined  in Rule  13a-14  under the
               Exchange  Act) that are  effective in ensuring  that  information
               required to be  disclosed  by the Company in the reports  that it
               files or submits  under the Exchange Act is recorded,  processed,
               summarized and reported, within the time periods specified in the
               rules  and  forms  of the  SEC,  including,  without  limitation,
               controls  and  procedures  designed  to ensure  that  information
               required to be  disclosed  by the Company in the reports  that it
               files or  submits  under  the  Exchange  Act is  accumulated  and
               communicated to the Company's management, including its principal
               executive officer or officers and its principal financial officer
               or officers, as appropriate,  to allow timely decisions regarding
               required  disclosure.  During the twelve months prior to the date
               hereof  neither  the  Company  nor any of its  Subsidiaries  have
               received  any  notice  or  correspondence   from  any  accountant
               relating to any  potential  material  weakness in any part of the
               system of internal  accounting  controls of the Company or any of
               its Subsidiaries.

               (mm)  Indebtedness  and Other  Contracts.  Except as disclosed in
               Schedule  4.1(aa) or in the SEC Reports,  neither the Company nor
               any of its Subsidiaries (i) has any outstanding  Indebtedness (as
               defined  below),  (ii) is a party to any  contract,  agreement or
               instrument,  the violation of which,  or default under which,  by
               the other  party(ies) to such  contract,  agreement or instrument
               could  reasonably  be  expected  to result in a Material  Adverse
               Effect,  (iii) is in violation of any term of or in default under
               any   contract,   agreement   or   instrument   relating  to  any
               Indebtedness, except where such violations and defaults would not
               result,  individually or in the aggregate,  in a Material Adverse

                                       13
<PAGE>

               Effect,  or  (iv)  is a  party  to  any  contract,  agreement  or
               instrument  relating  to any  Indebtedness,  the  performance  of
               which,  in the  judgment  of the  Company's  officers,  has or is
               expected  to have a Material  Adverse  Effect.  Schedule  4.1(aa)
               provides a detailed description of the material terms of any such
               outstanding  Indebtedness.  For purposes of this  Agreement:  (x)
               "Indebtedness" of any Person means,  without  duplication (A) all
               indebtedness   for   borrowed   money  in  excess   of   $100,000
               individually  (the  "Debt  Threshold"),  (B) all  obligations  in
               excess of the Debt Threshold issued, undertaken or assumed as the
               deferred purchase price of property or services (other than trade
               payables  entered into in the ordinary  course of business),  (C)
               all reimbursement or payment  obligations with respect to letters
               of credit,  surety bonds and other similar  instruments in excess
               of the Debt Threshold,  (D) all obligations in excess of the Debt
               Threshold  evidenced  by  notes,  bonds,  debentures  or  similar
               instruments,  including  obligations  so  evidenced  incurred  in
               connection   with  the   acquisition   of  property,   assets  or
               businesses,  (E) all indebtedness in excess of the Debt Threshold
               created  or arising  under any  conditional  sale or other  title
               retention  agreement,  or incurred as  financing,  in either case
               with respect to any property or assets acquired with the proceeds
               of such indebtedness  (even though the rights and remedies of the
               seller or bank under such  agreement  in the event of default are
               limited  to  repossession  or  sale of  such  property),  (F) all
               monetary  obligations in excess of the Debt  Threshold  under any
               leasing  or  similar   arrangement   which,  in  connection  with
               generally accepted accounting  principles,  consistently  applied
               for the  periods  covered  thereby,  is  classified  as a capital
               lease,  (G) all  indebtedness  referred to in clauses (A) through
               (F)  above   secured   by  (or  for  which  the  holder  of  such
               Indebtedness has an existing right,  contingent or otherwise,  to
               be secured  by) any  mortgage,  lien,  pledge,  charge,  security
               interest or other  encumbrance  upon or in any property or assets
               (including  accounts  and contract  rights)  owned by any Person,
               even though the Person which owns such assets or property has not
               assumed or become  liable for the  payment of such  indebtedness,
               and  (H)  all  Contingent  Obligations  in  excess  of  the  Debt
               Threshold in respect of  indebtedness or obligations of others of
               the kinds  referred  to in clauses  (A)  through  (G) above;  (y)
               "Contingent  Obligation"  means, as to any Person,  any direct or
               indirect liability,  contingent or otherwise, of that Person with
               respect  to any  Indebtedness  of another  Person if the  primary
               purpose or intent of the Person incurring such liability,  or the
               primary effect thereof, is to provide assurance to the obligee of
               such liability that such liability will be paid or discharged, or
               that any  agreements  relating  thereto will be complied with, or
               that the holders of such liability will be protected (in whole or
               in part)  against  loss with  respect  thereto;  and (z) "Person"
               means an individual,  a limited liability company, a partnership,
               a joint  venture,  a  corporation,  a  trust,  an  unincorporated
               organization  and  a  government  or  any  department  or  agency
               thereof.

               (nn) Off Balance  Sheet  Arrangements.  There is no  transaction,
               arrangement,  or other  relationship  between  the Company and an
               unconsolidated or other off balance sheet entity that is required
               to be disclosed by the Company in its Exchange Act filings and is
               not so disclosed or that otherwise would be reasonably  likely to
               have a Material Adverse Effect.

               (oo)  Investment  Company  Status.  The Company is not,  and upon
               consummation  of the  sale of the  Securities  will  not  be,  an
               "investment  company,"  a company  controlled  by an  "investment
               company"  or  an   "affiliated   person"  of,  or  "promoter"  or

                                       14
<PAGE>

               "principal  underwriter"  for,  an  "investment  company" as such
               terms are  defined  in the  Investment  Company  Act of 1940,  as
               amended.

               (pp) Transfer  Taxes.  On the Closing Date, all stock transfer or
               other  taxes  (other  than  income or  similar  taxes)  which are
               required to be paid in  connection  with the sale and transfer of
               the  Securities to be sold to Roaring Fork  hereunder will be, or
               will have been,  fully paid or provided for by the  Company,  and
               all laws  imposing  such taxes will be or will have been complied
               with.

               (qq) Foreign  Corrupt  Practices.  Neither the Company nor any of
               its Subsidiaries nor any director,  officer,  agent,  employee or
               other  Person  acting  on  behalf  of the  Company  or any of its
               Subsidiaries  has, in the course of its actions for, or on behalf
               of, the Company or any of its Subsidiaries (i) used any corporate
               funds for any unlawful contribution, gift, entertainment or other
               unlawful expenses relating to political  activity;  (ii) made any
               direct or  indirect  unlawful  payment to any foreign or domestic
               government  official  or employee  from  corporate  funds;  (iii)
               violated or is in violation of any provision of the U.S.  Foreign
               Corrupt  Practices  Act of 1977,  as  amended;  or (iv)  made any
               unlawful bribe, rebate,  payoff,  influence payment,  kickback or
               other  unlawful  payment to any  foreign or  domestic  government
               official or employee.

               (rr)  No  Undisclosed   Events,   Liabilities,   Developments  or
               Circumstances.  No event, liability,  development or circumstance
               has occurred or exists,  or is contemplated to occur with respect
               to the Company,  its Subsidiaries or their  respective  business,
               properties,  prospects,  operations or financial condition,  that
               would be required to be disclosed by the Company under applicable
               securities  laws on a  registration  statement  on Form S-1 filed
               with the SEC  relating to an issuance  and sale by the Company of
               its Common Stock and which has not been publicly announced.

               (ss)  No   Integrated   Offering.   None  of  the  Company,   its
               Subsidiaries,  any of their affiliates,  and any Person acting on
               their  behalf  has,  directly or  indirectly,  made any offers or
               sales  of any  security  or  solicited  any  offers  to  buy  any
               security,  under circumstances that would require registration of
               any of the  Securities  under the  Securities  Act or cause  this
               offering of the Securities to be integrated  with prior offerings
               by  the  Company  for  purposes  of  the  Securities  Act  or any
               applicable  stockholder approval provisions,  including,  without
               limitation,  under the rules and  regulations  of any exchange or
               automated  quotation system on which any of the securities of the
               Company  are  listed  or  designated.  None of the  Company,  its
               Subsidiaries,  their  affiliates  and any Person  acting on their
               behalf will take any action or steps referred to in the preceding
               sentence that would require registration of any of the Securities
               under the  Securities Act or cause the offering of the Securities
               to be integrated with other offerings.

               (tt) Dilutive  Effect.  The Company  understands and acknowledges
               that the number of Warrant  Shares  issuable upon exercise of the
               Warrants  will  increase  in certain  circumstances.  The Company
               further  acknowledges  that its  obligation  to issue the Warrant
               Shares upon  exercise of the  Warrants  in  accordance  with this
               Agreement  and the  Warrants  is,  in  each  case,  absolute  and
               unconditional,  regardless  of  the  dilutive  effect  that  such
               issuance   may  have  on  the   ownership   interests   of  other
               stockholders of the Company.

                                       15
<PAGE>

               (uu) No Changes to Bylaws or Charter  Documents.  There have been
               no changes in the Bylaws or the charter documents for the Company
               and its Subsidiaries  since the closing of the Series C Preferred
               Stock.

Survival of Company  Representations  and Warranties.  All  representations  and
warranties   contained  in  this   Agreement  and  any   financial   statements,
instruments,  certificates, schedules or other documents delivered in connection
herewith,  shall survive the execution and delivery of this Agreement only for a
period of eighteen (18) months from the date of this Agreement.

                 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

         Roaring Fork hereby represents and warrants to the Company as follows:

Purchase Entirely for Its Own Account.  This Agreement is made with Roaring Fork
in  reliance  upon its  representation  to the  Company  that the Shares and the
Warrants will be acquired for investment for the Purchaser's own account, not as
a nominee or agent, and not with any agreement for the resale or distribution of
any part thereof. Subject to the immediate preceding sentence, nothing contained
herein shall be deemed a representation  or warranty by Roaring Fork to hold any
of the Securities for any period of time.

Disclosure of Information. Roaring Fork has had the opportunity to ask questions
of, and receive  answers from officers and  directors of the Company,  to review
the SEC Reports, and to obtain additional  information regarding the Company and
this Offering.  Neither such inquiries nor any other investigation  conducted by
or on behalf of Roaring Fork or its  representatives  or counsel  shall  modify,
amend  or  affect  Roaring  Fork's  right  to rely on the  truth,  accuracy  and
completeness of the Disclosure  Materials and the Company's  representations and
warranties contained in the Purchase Documents.

Accredited  and  Sophisticated  Investor;  Investment  Experience.  Roaring Fork
represents that it is a sophisticated  investor and an "accredited  investor" as
defined in Rule 501 under the Securities Act.  Roaring Fork also represents that
it is an investor in restricted  securities and acknowledges  that it is able to
fend for itself,  can bear the  economic  risk of its  investment,  and has such
knowledge and experience in financial or business  matters that it is capable of
evaluating the merits and risks of the investment in the Shares and Warrants and
can bear the economic  risk of loss of the  investment in the  Securities  being
purchased.

Restricted  Securities.  Roaring Fork acknowledges that the Shares, the Warrants
and the Warrant Shares have not been registered under the Securities Act and may
be resold only if registered pursuant to the provisions of the Securities Act or
if an exemption from registration is available.

Legends.  Unless the  Shares and the  Warrants  have been  registered  under the
Securities  Act, the Company  shall  instruct  its transfer  agent to enter stop
transfer  orders with respect to such Shares and Warrants  (including any Common
Stock issued  pursuant to exercise of the  Warrants),  and all  certificates  or
instruments representing such Shares and Warrants shall bear on the face thereof
substantially the following legend:

                                       16
<PAGE>

THE  SECURITIES  EVIDENCED  BY THIS  CERTIFICATE  HAVE  NOT BEEN  REGISTERED  OR
QUALIFIED FOR SALE UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),  OR
ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED,  IN THE ABSENCE OF
SUCH REGISTRATION,  UNLESS THE COMPANY IS REASONABLY SATISFIED THAT THE PROPOSED
SALE OR TRANSFER IS EXEMPT FROM SUCH REGISTRATION REQUIREMENTS.

Assignment.  Upon the  assignment  or  transfer  by  Roaring  Fork or any of its
successors or assignees of all or any part of the Warrants, the term "Purchaser"
as used herein shall thereafter mean, to the extent thereof,  the then holder or
holders of such Warrants, or portion thereof.

Survival  of  Purchaser  Representations.  All  representations  and  warranties
contained  in  this  Agreement  by  Purchaser  and  any  financial   statements,
instruments,  certificates, schedules or other documents delivered in connection
herewith, shall survive the execution and delivery of this Agreement, regardless
of any investigation made by the Company or on the Company's behalf.

                                    COVENANTS

Affirmative Covenants.  The Company covenants that, so long as Roaring Fork owns
any Shares, Warrants or Warrant Shares the Company shall:

               (vv)  Existence.  Do or cause to be done all things  necessary to
               preserve,  renew  and keep in full  force  and  effect  its legal
               existence.

               (ww) Furnishing of Information. Timely file (or obtain extensions
               in respect  thereof and file within the applicable  grace period)
               all reports  required to be filed by the Company  pursuant to the
               Exchange  Act, and if the Company is not required to file reports
               pursuant  to  such  laws,  it will  prepare  and  furnish  to the
               Purchaser  and make publicly  available in  accordance  with Rule
               144(c) such  information as is required for the Purchaser to sell
               the  Conversion  Shares and Warrant  Shares  under Rule 144.  The
               Company  further  covenants that it will take such further action
               as any holder of Shares,  Warrants and or the Warrant  Shares may
               reasonably request,  all to the extent required from time to time
               to enable  such  Person  to sell the  Shares  or  Warrant  Shares
               without   registration   under  the  Securities  Act  within  the
               limitation of the exemptions provided by Rule 144.

               (xx)  Indemnification of Investors.  In addition to the indemnity
               provided in Article 7,  indemnify and hold each Purchaser and its
               respective  directors,   officers,   partners,   representatives,
               employees and agents (each,  an "Investor  Party")  harmless from
               any   and   all   losses,   liabilities,   obligations,   claims,
               contingencies,   damages,  costs  and  expenses,   including  all
               judgments,   amounts  paid  in   settlements,   court  costs  and
               reasonable   attorneys'   fees   and   costs   of   investigation
               (collectively,  "Losses") that any such Investor Party may suffer
               or incur as a result  of or  relating  to any  misrepresentation,
               breach or inaccuracy of any representation, warranty, covenant or
               agreement  made by the Company in any  Transaction  Document.  In
               addition to the  indemnity  contained  herein,  the Company  will

                                       17
<PAGE>

               reimburse each Investor Party for its reasonable  legal and other
               expenses  (including the cost of any  investigation,  preparation
               and  travel  in  connection  therewith)  incurred  in  connection
               therewith, as such expenses are incurred.

               (yy) Common Stock Reserve. Maintain in reserve, at all times that
               the  Warrants  are  unexercised,  authorized,  but  unissued  and
               unreserved,  shares of Common Stock for issuance upon exercise of
               the Warrants.

               (zz) Use of Proceeds. Use the funds received from Roaring Fork in
               connection with the Transactions substantially in accordance with
               the  "Use of  Proceeds  Schedule"  attached  hereto  as  Schedule
               6.1(e).

               (aaa) Further Assurances. With reasonable promptness, execute and
               deliver to the Purchaser,  from time to time, upon the reasonable
               request  of  the   Purchaser,   such   supplemental   agreements,
               statements,   assignments  and  transfers,   or  instructions  on
               documents  as the  Purchaser  may  request in order that the full
               intent of this Agreement and the other Purchase  Documents may be
               carried into effect.

         6.2.  Amendment  of Note.  The Company  will  deliver to the  Purchaser
within ten (10) days of the  Closing,  an  amendment to that certain 15% Secured
Convertible Subordinated Note Dated December 15, 2004 from the Company to Regina
Savitsky  (the  "Note")  that will (i) extend the  maturity  date of the Note to
January 15, 2009,  (ii) have the payee forebear on the Company's  obligations to
make principal  payments on the Note until the maturity date, (iii)  acknowledge
that the conversion  price is fixed at $0.38 per share,  the current price under
the formula in the Note,  and (iv) provide for the Company's  issuance to Regina
Savitsky in  connection  with such  amendment  of a Warrant to Purchase  350,000
shares of Class A Common  Stock at an  exercise  price of $0.50 per  share,  and
which will not include any provision for anti-dilution price adjustment.

                                  MISCELLANEOUS

Successors and Assigns.  This  Agreement  shall be binding upon and inure to the
benefit of the  parties  hereto and their  respective  successors  and  assigns,
except that (a) the Company may not assign or transfer  its rights  hereunder or
any interest herein or delegate its duties hereunder.

Modifications and Amendments.  The provisions of this Agreement may be modified,
waived or amended,  but only by a written  instrument  signed by the Company and
the Purchaser.

No Implied Waivers;  Cumulative Remedies;  Writing Required. No delay or failure
in exercising any right,  power or remedy hereunder shall affect or operate as a
waiver  thereof;  nor  shall any  single  or  partial  exercise  thereof  or any
abandonment or discontinuance of steps to enforce such a right,  power or remedy
preclude any further  exercise  thereof or of any other right,  power or remedy.
The rights and remedies hereunder are cumulative and not exclusive of any rights
or remedies that the Purchaser or any holder of Warrants or Warrant Shares would
otherwise have. Any waiver, permit, consent or approval of any kind or character

                                       18
<PAGE>

of any  breach  or  default  under  this  Agreement  or any such  waiver  of any
provision  or  condition  of this  Agreement  must be in  writing,  and shall be
effective only to the extent in such writing specifically set forth.

Fees and Expenses. The Company agrees to pay Roaring Fork $15,000] at Closing as
reimbursement of Roaring Fork's legal fees in connection with the preparation of
the Purchase  Documents and other  expenses.  It is understood  that counsel for
Roaring  Fork has only  rendered  legal advice to Roaring  Fork,  and not to the
Company or any other Person in  connection  with the  transactions  contemplated
hereby,  and that each of the  Company  and  Roaring  Fork has  relied  for such
matters on the advice of its own respective counsel.  Except as specified in the
immediately  preceding  sentence,  each party shall pay the fees and expenses of
its advisers,  counsel,  accountants  and other  experts,  if any, and all other
expenses  incurred  by such  party  incident  to the  negotiation,  preparation,
execution, delivery and performance of the Purchase Documents.

Reimbursement of  Expenses-Enforcement  and Collection.  The Company upon demand
shall pay or  reimburse  the  Purchaser  for all fees and  expenses  incurred or
payable by the Purchaser  (including,  without  limitation,  reasonable fees and
expenses of counsel for the Purchaser),  from time to time arising in connection
with the enforcement of this Agreement.

Notices.  All notices and other  communications  given to or made upon any party
hereto in connection with this Agreement  shall,  except as otherwise  expressly
herein  provided,  be in  writing  (including  telecopy,  but in  such  case,  a
confirming  copy  will  be sent by  another  permitted  means)  and  mailed  via
certified mail,  telecopied or delivered by guaranteed  overnight parcel express
service or courier to the respective parties, as follows:

                  to the Company:
                  ---------------

                  ATC Healthcare, Inc.
                  1983 Marcus Avenue
                  Lake Success, NY  11042
                  Attn:  Chief Financial Officer
                  Fax:  (516) 750-1754

                  with a copy to:

                  David J. Hirsch, Esq.
                  Keevican Weiss Bauerle & Hirsch LLC
                  11th Floor, Federated Investors Tower
                  1001 Liberty Avenue
                  Pittsburg, PA  15222
                  Fax:  (412) 355-2609

                           and

                  To Roaring Fork and its counsel at the addresses set forth
                  ----------------------------------------------------------
                  below the signature of Roaring Fork;
                  ------------------------------------

                                       19
<PAGE>

or in accordance with any subsequent  written direction from the recipient party
to the sending party. All such notices and other communications shall, except as
otherwise expressly herein provided,  be effective upon delivery if delivered by
courier or overnight  parcel  express  service;  in the case of certified  mail,
three (3) Business  Days after the date sent;  or in the case of telecopy,  when
received.

Survival.  All  representations,  warranties,  covenants  and  agreements of the
Company contained herein or made in writing in connection herewith shall survive
the execution and delivery of this  Agreement,  the Closing and the purchase and
delivery of the Common Stock and Warrants.

Governing Law; Consent to Jurisdiction. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Colorado,  without regard
to conflict of laws principles.  Each of the parties hereto irrevocably  submits
to the exclusive jurisdiction of the courts of the State of Colorado,  County of
Arapahoe,  and the United States District Court for the District of Colorado for
the purpose of any suit, action,  proceeding or judgment relating or arising out
of this Agreement and the transactions  contemplated hereby.  Service of process
in connection  with any such suit,  action or  proceeding  may be served on each
party  hereto by the same  methods  as are  specified  for the giving of notices
under this  Agreement.  Each of the parties hereto  irrevocably  consents to the
jurisdiction  of any such court in any such suit,  action or proceeding  and the
laying  of venue  in such  court.  Each  party  hereto  irrevocably  waives  any
objection to the laying of venue of any such suit, action or proceeding  brought
in such courts and  irrevocably  waives any claim that any such suit,  action or
proceeding brought in any such court has been brought in an inconvenient forum.

Remedies.  In addition to being entitled to exercise all rights  provided herein
or granted by law, including recovery of damages, the Purchaser will be entitled
to specific  performance  under the Purchase  Documents.  The parties agree that
monetary  damages  may not be  adequate  compensation  for any loss  incurred by
reason of any breach of  obligations  described  in the  foregoing  sentence and
hereby  agrees  to waive in any  action  for  specific  performance  of any such
obligation the defense that a remedy at law would be adequate.

Adjustment Provisions. The Company has represented to Roaring Fork that it plans
to raise  between  $900,000  and  $1,900,000  in  additional  funds in a private
offering to be completed  no later than May 31, 2007 on terms no more  favorable
than those made to Roaring  Fork  pursuant  to the  Purchase  Documents.  If the
Company does not raise at least  $900,000 by May 31, 2007 either  through such a
private offering or through a mezzanine debt arrangement involving a note with a
minimum  term of two years or more that  includes  a warrant,  then the  Company
shall, for no additional consideration,  issue an additional 1,000,000 shares of
Common  Stock to Roaring Fork and the  exercise  price of the Warrants  shall be
reduced to $.30 and the Warrant Shares shall be increased by 500,000 shares.  If
the Company enters into a subsequent placement involving an equity issuance from
and after the date hereof until  September 30, 2007 and any of the terms of such
subsequent placement are more beneficial to the investors than those provided in
this  Agreement  or in any of the  other  Transaction  Documents,  the  relevant
Transaction  Document(s) shall be, without any further action by Roaring Fork or
the  Company,  deemed  amended  and  modified  in an  economically  and  legally
equivalent  manner such that Roaring Fork shall  receive the benefit of the more
favorable terms of such subsequent placement.  The Company hereby agrees, at its
expense,  to take such other actions  (such as entering into  amendments to this

                                       20
<PAGE>

Agreement or any other  Transaction  Document)  as Roaring  Fork may  reasonably
request to further effectuate the foregoing.

Severability.  Whenever  possible,  each  provision of this  Agreement  shall be
interpreted  in such manner as to be effective and valid under  applicable  law,
but if any  provision of this  Agreement is held to be  prohibited by or invalid
under  applicable law in any  jurisdiction,  such provision shall be ineffective
only to the extent of such prohibition or invalidity,  without  invalidating any
other provision of this Agreement.

Headings.  Article,  section  and  subsection  headings  in this  Agreement  are
included for  convenience  of reference  only and shall not constitute a part of
this Agreement for any other purpose.

Counterparts.  This Agreement may be executed in any number of counterparts  and
by any party hereto on separate  counterparts,  each of which,  when so executed
and delivered,  shall be an original,  but all such counterparts  shall together
constitute one and the same instrument.

Integration.  This  Agreement  and the other  Purchase  Documents  set forth the
entire  understanding  of  the  parties  hereto  with  respect  to  all  matters
contemplated  hereby and supersede all previous  agreements  and  understandings
among them  concerning  such  matters.  No  statements  or  agreements,  oral or
written, made prior to or at the signing hereof, shall vary, waive or modify the
written terms hereof.

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

                                       21
<PAGE>

                                SIGNATURE PAGE TO
                   COMMON STOCK AND WARRANT PURCHASE AGREEMENT

         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as
of the day and year first above written.

                                  COMPANY:

                                  ATC Healthcare, Inc., a Delaware corporation

                                  By: /s/ David Savitsky
                                     -----------------------------------------

                                  Name: David Savitsky

                                  Title: Chief Executive Officer

                                  PURCHASER:

                                  ROARING FORK CAPITAL SBIC, L.P.,
                                  a Delaware limited partnership

                                  By:      Roaring Fork Capital Management, LLC,
                                           its general partner

                                           By: /s/ G. Michael Machens
                                               -------------------------------
                                           Name:    G. Michael Machens

                                           Title:   Manager

                                  Purchase Price:  $600,000
                                  -------------------------

                                  Address for Notices to:
                                  Roaring Fork Capital SBIC, L.P.
                                  5350 S. Roslyn St., Ste. 380
                                  Greenwood Village, CO 80111
                                  Fax: (303) 694-1181

                                  With a copy to its counsel:
                                  Patton Boggs, LLP
                                  1660 Lincoln Street, Suite 1900
                                  Denver, Colorado  80264
                                  Attn:  Robert M. Bearman, Esq.
                                  Fax:  (303) 894-9239

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