Document:

EXHIBIT 4.1

                               ERF WIRELESS, INC.
                             2007 STOCK OPTION PLAN

                                ARTICLE I - PLAN

         1.1    Purpose. This Plan is a plan for key employees, officers,
directors, and consultants of the Company and its Affiliates and is intended to
advance the best interests of the Company, its Affiliates, and its stockholders
by providing those persons who have substantial responsibility for the
management and growth of the Company and its Affiliates with additional
incentives and an opportunity to obtain or increase their proprietary interest
in the Company, thereby encouraging them to continue in the employ of the
Company or any of its Affiliates.

         1.2    Rule 16b-3 Plan. The Company is subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "1934
Act"), and therefore the Plan is intended to comply with all applicable
conditions of Rule 16b-3 (and all subsequent revisions thereof) promulgated
under the 1934 Act. To the extent any provision of the Plan or action by the
Board of Directors or Committee fails to so comply, it shall be deemed null and
void, to the extent permitted by law and deemed advisable by the Committee. In
addition, the Board of Directors may amend the Plan from time to time, as it
deems necessary in order to meet the requirements of any amendments to Rule
16b-3 without the consent of the shareholders of the Company.

         1.3    Effective Date of Plan. The Plan shall be effective April 27,
2007 (the "Effective Date"). No Incentive Option, Nonqualified Option, Stock
Appreciation Right, Restricted Stock Award or Performance Stock Award shall be
granted pursuant to the Plan ten years after the Effective Date.

                            ARTICLE II - DEFINITIONS

         The words and phrases defined in this Article shall have the meaning
set out in these definitions throughout this Plan, unless the context in which
any such word or phrase appears reasonably requires a broader, narrower, or
different meaning.

         2.1    "Affiliate" means any subsidiary corporation. The term
"subsidiary corporation" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time of the
action or transaction, each of the corporations other than the last corporation
in the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in the
chain.

         2.2    "Award" means each of the following granted under this Plan:
Incentive Option, Nonqualified Option, Stock Appreciation Right, Restricted
Stock Award or Performance Stock Award.

         2.3    "Board of Directors" means the board of directors of the
Company.

         2.4    "Code" means the Internal Revenue Code of 1986, as amended.

         2.5    "Committee" means the Compensation Committee of the Board of
Directors, or if no Compensation Committee has been formed, then it shall mean
the entire Board of Directors. It is intended that the Committee shall be
comprised solely of at least two members who are both Non-Employee Directors and
Outside Directors; provided, however, that until such time as two such directors
are available to serve in such roles, the failure to meet this requirement shall
not affect the validity of any grants under this Plan.

         2.6    "Company" means ERF Wireless, Inc., a Nevada corporation.

         2.7    "Consultant" means any person, including an advisor, engaged by
the Company or Affiliate to render services and who is compensated for such
services.

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         2.8    "Eligible Persons" shall mean, with respect to the Plan, those
persons who, at the time that an Award is granted, are (i) Employees and all
other key personnel, including officers and directors, of the Company or
Affiliate, or (ii) Consultants or independent contractors who provide valuable
services to the Company or Affiliate as determined by the Committee.

         2.9    "Employee" means a person employed by the Company or any
Affiliate to whom an Award is granted.

         2.10   "Fair Market Value" of the Stock as of any date means (a) the
average of the high and low sale prices of the Stock on that date on the
principal securities exchange on which the Stock is listed; or (b) if the Stock
is not listed on a securities exchange, the average of the high and low sale
prices of the Stock on that date as reported on the Nasdaq; or (c) if the Stock
is not listed on the Nasdaq, the average of the high and low bid quotations for
the Stock on that date as reported by the National Quotation Bureau
Incorporated; or (d) if none of the foregoing is applicable, an amount at the
election of the Committee equal to (x), the average between the closing bid and
ask prices per share of Stock on the last preceding date on which those prices
were reported or (y) that amount as determined by the Committee in good faith.

         2.11   "Incentive Option" means an option to purchase Stock granted
under this Plan which is designated as an "Incentive Option" and satisfies the
requirements of Section 422 of the Code.

         2.12   "Non-Employee Directors" means that term as defined in Rule
16b-3 under the 1934 Act.

         2.13   "Nonqualified Option" means an option to purchase Stock granted
under this Plan other than an Incentive Option.

         2.14   "Option" means both an Incentive Option and a Nonqualified
Option granted under this Plan to purchase shares of Stock.

         2.15   "Option Agreement" means the written agreement by and between
the Company and an Eligible Person, which sets out the terms of an Option.

         2.16   "Outside Director" shall mean a member of the Board of Directors
serving on the Committee who satisfies Section 162(m) of the Code.

         2.17   "Plan" means the ERF Wireless, Inc. 2007 Stock Option Plan, as
set out in this document and as it may be amended from time to time.

         2.18   "Plan Year" means the Company's fiscal year.

         2.19    "Performance Stock Award" means an award of shares of Stock to
be issued to an Eligible Person if specified predetermined performance goals are
satisfied as described in Article VI.

         2.20   "Restricted Stock" means Stock awarded or purchased under a
Restricted Stock Agreement entered into pursuant to this Plan, together with (i)
all rights, warranties or similar items attached or accruing thereto or
represented by the certificate representing the stock and (ii) any stock or
securities into which or for which the stock is thereafter converted or
exchanged. The terms and conditions of the Restricted Stock Agreement shall be
determined by the Committee consistent with the terms of the Plan.

         2.21   "Restricted Stock Agreement" means an agreement between the
Company or any Affiliate and the Eligible Person pursuant to which the Eligible
Person receives a Restricted Stock Award subject to Article VI.

         2.22   "Restricted Stock Award" means an Award of Restricted Stock.

         2.23   "Restricted Stock Purchase Price" means the purchase price, if
any, per share of Restricted Stock subject to an Award. The Committee shall
determine the Restricted Stock Purchase Price. It may be greater than or less
than the Fair Market Value of the Stock on the date of the Stock Award.

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          2.24  "Stock" means the common stock of the Company, $.001 par value,
or, in the event that the outstanding shares of common stock are later changed
into or exchanged for a different class of stock or securities of the Company or
another corporation, that other stock or security.

         2.25   "Stock Appreciation Right" and "SAR" means the right to receive
the difference between the Fair Market Value of a share of Stock on the grant
date and the Fair Market Value of the share of Stock on the exercise date.

         2.26   "10% Stockholder" means an individual who, at the time the
Option is granted, owns Stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or of any Affiliate. An
individual shall be considered as owning the Stock owned, directly or
indirectly, by or for his brothers and sisters (whether by the whole or half
blood), spouse, ancestors, and lineal descendants; and Stock owned, directly or
indirectly, by or for a corporation, partnership, estate, or trust, shall be
considered as being owned proportionately by or for its stockholders, partners,
or beneficiaries.

                            ARTICLE III - ELIGIBILITY

         The individuals who shall be eligible to receive Awards shall be those
Eligible Persons of the Company or any of its Affiliates as the Committee shall
determine from time to time. However, no member of the Committee shall be
eligible to receive any Award or to receive Stock, Options, Stock Appreciation
Rights, or any Performance Stock Award under any other plan of the Company or
any of its Affiliates, if to do so would cause the individual not to be a
Non-Employee Director or Outside Director. The Board of Directors may designate
one or more individuals who shall not be eligible to receive any Award under
this Plan or under other similar plans of the Company.

               ARTICLE IV - GENERAL PROVISIONS RELATING TO AWARDS

         4.1    Authority to Grant Awards. The Committee may grant to those
Eligible Persons of the Company or any of its Affiliates, as it shall from time
to time determine, Awards under the terms and conditions of this Plan. The
Committee shall determine subject only to any applicable limitations set out in
this Plan, the number of shares of Stock to be covered by any Award to be
granted to an Eligible Person.

         4.2    Dedicated Shares. The total number of shares of Stock with
respect to which Awards may be granted under the Plan shall be 5,000,000 shares.
The shares may be treasury shares or authorized but unissued shares. The number
of shares stated in this Section 4.2 shall be subject to adjustment in
accordance with the provisions of Section 4.5. In the event that any outstanding
Award shall expire or terminate for any reason or any Award is surrendered, the
shares of Stock allocable to the unexercised portion of that Award may again be
subject to an Award under the Plan.

         4.3    Non-transferability. Awards shall not be transferable by the
Eligible Person otherwise than by will or under the laws of descent and
distribution, or pursuant to a qualified domestic relations order (as defined by
the Code or the rules thereunder), and shall be exercisable, during the Eligible
Person's lifetime, only by him or a transferee permitted by this Section 4. Any
attempt to transfer an Award other than under the terms of the Plan and the
Agreement shall terminate the Award and all rights of the Eligible Person to
that Award.

         4.4    Requirements of Law. The Company shall not be required to sell
or issue any Stock under any Award if issuing that Stock would constitute or
result in a violation by the Eligible Person or the Company of any provision of
any law, statute, or regulation of any governmental authority. Specifically, in
connection with any applicable statute or regulation relating to the
registration of securities, upon exercise of any Option or pursuant to any
Award, the Company shall not be required to issue any Stock unless the Committee
has received evidence satisfactory to it to the effect that the holder of that
Option or Award will not transfer the Stock except in accordance with applicable
law, including receipt of an opinion of counsel satisfactory to the Company to
the effect that any proposed transfer complies with applicable law. The
determination by the Committee on this matter shall be final, binding, and
conclusive. The Company may, but shall in no event be obligated to, register any
Stock covered by this Plan pursuant to applicable securities laws of any country
or any political subdivision. In the event the Stock issuable on exercise of an
Option or pursuant to an Award is not registered, the Company may imprint on the
certificate evidencing the Stock any legend that counsel for the Company
considers necessary or advisable to comply with applicable law. The Company
shall not be obligated to take any other affirmative action in order to cause
the exercise of an Option or vesting under an Award, or the issuance of shares
pursuant thereto, to comply with any law or regulation of any governmental
authority.

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         4.5    Changes in the Company's Capital Structure.

         (a)     The existence of outstanding Options or Awards shall not affect
in any way the right or power of the Company or its stockholders to make or
authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the Company's capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Stock or its rights, or the
dissolution or liquidation of the Company, or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise. If the Company shall effect a
subdivision or consolidation of shares or other capital readjustment, the
payment of a Stock dividend, or other increase or reduction of the number of
shares of the Stock outstanding, without receiving compensation for it in money,
services or property, then (a) the number, class, and per share price of shares
of Stock subject to outstanding Options under this Plan shall be appropriately
adjusted in such a manner as to entitle an Eligible Person to receive upon
exercise of an Option, for the same aggregate cash consideration, the equivalent
total number and class of shares he would have received had he exercised his
Option in full immediately prior to the event requiring the adjustment; and (b)
the number and class of shares of Stock then reserved to be issued under the
Plan shall be adjusted by substituting for the total number and class of shares
of Stock then reserved, that number and class of shares of Stock that would have
been received by the owner of an equal number of outstanding shares of each
class of Stock as the result of the event requiring the adjustment.

         (b)     If the Company is merged or consolidated with another
corporation and the Company is not the surviving corporation, or if the Company
is liquidated or sells or otherwise disposes of substantially all its assets
while unexercised Options remain outstanding under this Plan (each of the
foregoing referred to as a "Corporate Transaction"):

                  (i) Subject to the provisions of clause (ii) below, in the
         event of such a Corporate Transaction, any unexercised Options shall
         automatically accelerate so that they shall, immediately prior to the
         specified effective date for the Corporate Transaction become 100%
         vested and exercisable; provided, however, that any unexercised Options
         shall not accelerate if and to the extent such Option is, in connection
         with the Corporate Transaction, either to be assumed by the successor
         corporation or parent thereof (the "Successor Corporation") or to be
         replaced with a comparable award for the purchase of shares of the
         capital stock of the Successor Corporation. Whether or not any
         unexercised Option is assumed or replaced shall be determined by the
         Company and the Successor Corporation in connection with the Corporate
         Transaction. The Board of Directors shall make the determination of
         what constitutes a comparable award to the unexercised Option, and its
         determination shall be conclusive and binding. The unexercised Option
         shall terminate and cease to remain outstanding immediately following
         the consummation of the Corporate Transaction, except to the extent
         assumed by the Successor Corporation.

                  (ii) All outstanding Options may be canceled by the Board of
         Directors as of the effective date of any Corporate Transaction, if (i)
         notice of cancellation shall be given to each holder of an Option and
         (ii) each holder of an Option shall have the right to exercise that
         Option in full (without regard to any limitations set out in or imposed
         under this Plan or the Option Agreement granting that Option) during a
         period set by the Board of Directors preceding the effective date of
         the merger, consolidation, liquidation, sale, or other disposition and,
         if in the event all outstanding Options may not be exercised in full
         under applicable securities laws without registration of the shares of
         Stock issuable on exercise of the Options, the Board of Directors may
         limit the exercise of the Options to the number of shares of Stock, if
         any, as may be issued without registration. The method of choosing
         which Options may be exercised, and the number of shares of Stock for
         which Options may be exercised, shall be solely within the discretion
         of the Board of Directors.

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         (c)     After a merger of one or more corporations into the Company or
after a consolidation of the Company and one or more corporations in which the
Company shall be the surviving corporation, each Eligible  Person shall be
entitled to have his Restricted Stock and shares earned under a Performance
Stock Award appropriately adjusted based on the manner the Stock was adjusted
under the terms of the agreement of merger or consolidation.

         (d)     In each situation described in this Section 4.5, the Committee
will make similar adjustments, as appropriate, in outstanding Stock Appreciation
Rights.

         (e)     The issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property,
or for labor or services either upon direct sale or upon the exercise of rights
or warrants to subscribe for them, or upon conversion of shares or obligations
of the Company convertible into shares or other securities, shall not affect,
and no adjustment by reason of such issuance shall be made with respect to, the
number, class, or price of shares of Stock then subject to outstanding Awards.

         4.6    Election under Section 83(b) of the Code. No Employee shall
exercise the election permitted under Section 83(b) of the Code without written
approval of the Committee. Any Employee doing so shall forfeit all Awards issued
to him under this Plan.

                ARTICLE V - OPTIONS AND STOCK APPRECIATION RIGHTS

         5.1    Type of Option. The Committee shall specify at the time of grant
whether a given Option shall constitute an Incentive Option or a Nonqualified
Option. Incentive Stock Options may only be granted to Employees.

         5.2    Option Exercise Price. The price at which Stock may be purchased
under an Incentive Option shall not be less than the greater of: (a) 100% of the
Fair Market Value of the shares of Stock on the date the Option is granted or
(b) the aggregate par value of the shares of Stock on the date the Option is
granted. The Committee in its discretion may provide that the price at which
shares of Stock may be purchased under an Incentive Option shall be more than
100% of Fair Market Value. In the case of any 10% Stockholder, the price at
which shares of Stock may be purchased under an Incentive Option shall not be
less than 110% of the Fair Market Value of the Stock on the date the Incentive
Option is granted. The price at which shares of Stock may be purchased under a
Nonqualified Option shall be such price as shall be determined by the Committee
in its sole discretion but in no event lower than the par value of the shares of
Stock on the date the Option is granted.

         5.3    Duration of Options and SARS. No Option or SAR shall be
exercisable after the expiration of ten (10) years from the date the Option or
SAR is granted. In the case of a 10% Stockholder, no Incentive Option shall be
exercisable after the expiration of five years from the date the Incentive
Option is granted.

         5.4    Amount Exercisable -- Incentive Options. Each Option may be
exercised from time to time, in whole or in part, in the manner and subject to
the conditions the Committee, in its sole discretion, may provide in the Option
Agreement, as long as the Option is valid and outstanding. To the extent that
the aggregate Fair Market Value (determined as of the time an Incentive Option
is granted) of the Stock with respect to which Incentive Options first become
exercisable by the optionee during any calendar year (under this Plan and any
other incentive stock option plan(s) of the Company or any Affiliate) exceeds
$100,000, the portion in excess of $100,000 of the Incentive Option shall be
treated as a Nonqualified Option. In making this determination, Incentive
Options shall be taken into account in the order in which they were granted.

         5.5    Exercise of Options. Each Option shall be exercised by the
delivery of written notice to the Committee setting forth the number of shares
of Stock with respect to which the Option is to be exercised, together with:

         (a)     cash, certified check, bank draft, or postal or express money
order payable to the order of the Company for an amount equal to the option
price of the shares;

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         (b)     stock at its Fair Market Value on the date of exercise (if
approved in advance in writing by the Committee);

         (c)     an election to make a cashless exercise through a registered
broker-dealer (if approved in advance in writing by the Committee);

         (d)     an election to have shares of Stock, which otherwise would be
issued on exercise, withheld in payment of the exercise price (if approved in
advance in writing by the Committee); and/or

         (e)     any other form of payment which is acceptable to the Committee,
including without limitation, payment in the form of a promissory note, and
specifying the address to which the certificates for the shares are to be
mailed.

         As promptly as practicable after receipt of written notification and
payment, the Company shall deliver to the Eligible Person certificates for the
number of shares with respect to which the Option has been exercised, issued in
the Eligible Person's name. If shares of Stock are used in payment, the
aggregate Fair Market Value of the shares of Stock tendered must be equal to or
less than the aggregate exercise price of the shares being purchased upon
exercise of the Option, and any difference must be paid by cash, certified
check, bank draft, or postal or express money order payable to the order of the
Company. Delivery of the shares shall be deemed effected for all purposes when a
stock transfer agent of the Company shall have deposited the certificates in the
United States mail, addressed to the Eligible Person, at the address specified
by the Eligible Person.

         Whenever an Option is exercised by exchanging shares of Stock owned by
the Eligible Person, the Eligible Person shall deliver to the Company
certificates registered in the name of the Eligible Person representing a number
of shares of Stock legally and beneficially owned by the Eligible Person, free
of all liens, claims, and encumbrances of every kind, accompanied by stock
powers duly endorsed in blank by the record holder of the shares represented by
the certificates (with signature guaranteed by a commercial bank or trust
company or by a brokerage firm having a membership on a registered national
stock exchange). The delivery of certificates upon the exercise of Options is
subject to the condition that the person exercising the Option provides the
Company with the information the Company might reasonably request pertaining to
exercise, sale or other disposition.

         5.6    Stock Appreciation Rights. All Eligible Persons shall be
eligible to receive Stock Appreciation Rights. The Committee shall determine the
SAR to be awarded from time to time to any Eligible Person. The grant of a SAR
to be awarded from time to time shall neither entitle such person to, nor
disqualify such person from, participation in any other grant of awards by the
Company, whether under this Plan or any other plan of the Company. If granted as
a stand-alone SAR Award, the terms of the Award shall be provided in a Stock
Appreciation Rights Agreement.

         5.7    Stock Appreciation Rights in Tandem with Options. Stock
Appreciation Rights may, at the discretion of the Committee, be included in each
Option granted under the Plan to permit the holder of an Option to surrender
that Option, or a portion of the part which is then exercisable, and receive in
exchange, upon the conditions and limitations set by the Committee, an amount
equal to the excess of the Fair Market Value of the Stock covered by the Option,
or the portion of it that was surrendered, determined as of the date of
surrender, over the aggregate exercise price of the Stock. In the event of the
surrender of an Option, or a portion of it, to exercise the Stock Appreciation
Rights, the shares represented by the Option or that part of it which is
surrendered, shall not be available for reissuance under the Plan. Each Stock
Appreciation Right issued in tandem with an Option (a) will expire not later
than the expiration of the underlying Option, (b) may be for no more than 100%
of the difference between the exercise price of the underlying Option and the
Fair Market Value of a share of Stock at the time the Stock Appreciation Right
is exercised, (c) is transferable only when the underlying Option is
transferable, and under the same conditions, and (d) may be exercised only when
the underlying Option is eligible to be exercised.

         5.8    Conditions of Stock Appreciation Rights. All Stock Appreciation
Rights shall be subject to such terms, conditions, restrictions or limitations
as the Committee deems appropriate, including by way of illustration but not by
way of limitation, restrictions on transferability, requirement of continued
employment, individual performance, financial performance of the Company, or
payment of any applicable employment or withholding taxes.

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         5.9    Payment of Stock Appreciation Rights. The amount of payment to
which the Eligible Person who reserves an SAR shall be entitled upon the
exercise of each SAR shall be equal to the amount, if any by which the Fair
Market Value of the specified shares of Stock on the exercise date exceeds the
Fair Market Value of the specified shares of Stock on the date of grant of the
SAR. The SAR shall be paid in either cash or Stock, as determined in the
discretion of the Committee as set forth in the SAR agreement. If the payment is
in Stock, the number of shares to be paid shall be determined by dividing the
amount of such payment by the Fair Market Value of Stock on the exercise date of
such SAR.

         5.10   Exercise on Termination of Employment. Unless it is expressly
provided otherwise in the Option or SAR agreement, Options and SAR's granted to
Employees shall terminate three months after severance of employment of the
Employee from the Company and all Affiliates for any reason, with or without
Cause (defined below), other than death, retirement under the then established
rules of the Company, or severance for disability. The Committee shall determine
whether authorized leave of absence or absence on military or government service
shall constitute severance of the employment of the Employee at that time.
Notwithstanding anything contained herein, no Option or SAR may be exercised
after termination of employment for any reason (whether by death, disability,
retirement or otherwise) if it has not vested as at the date of termination of
employment. Cause shall mean any of the following: (A) conviction of a crime
(including conviction on a nolo contendere plea) involving a felony or
dishonesty, or moral turpitude; (B) deliberate and continual refusal to perform
employment duties reasonably requested by the Company or an affiliate after
thirty (30) days' written notice by certified mail of such failure to perform,
specifying that the failure constitutes cause (other than as a result of
vacation, sickness, illness or injury); (C) fraud or embezzlement as determined
by an independent certified public accountant firm; or (D) gross misconduct or
gross negligence in connection with the business of the Company or an affiliate
which has substantial effect on the Company or the affiliate.

         5.11   Death. If, before the expiration of an Option or SAR, the
Eligible Person, whether in the employ of the Company or after he has retired or
was severed for disability, or otherwise dies, the Option or SAR may be
exercised until the earlier of the Option's or SAR's expiration date or six
months following the date of his death, unless it is expressly provided
otherwise in the Option or SAR agreement. After the death of the Eligible
Person, his executors, administrators, or any persons to whom his Option or SAR
may be transferred by will or by the laws of descent and distribution shall have
the right, at any time prior to the Option's or SAR's expiration or termination,
whichever is earlier, to exercise it, to the extent to which he was entitled to
exercise it immediately prior to his death, unless it is expressly provided
otherwise in the Option or SAR's agreement.

         5.12   Retirement. Unless it is expressly provided otherwise in the
Option Agreement, before the expiration of an Option or SAR, the Employee shall
be retired in good standing from the employ of the Company under the then
established rules of the Company, the Option or SAR may be exercised until the
earlier of the Option's or SAR's expiration date or three months following the
date of his retirement, unless it is expressly provided otherwise in the Option
or SAR agreement.

         5.13   Disability. If, before the expiration of an Option or SAR, the
Employee shall be severed from the employ of the Company for disability, the
Option or SAR shall terminate on the earlier of the Option's or SAR's expiration
date or six months after the date he was severed because of disability, unless
it is expressly provided otherwise in the Option or SAR agreement.

         5.14   Substitution Options. Options may be granted under this Plan
from time to time in substitution for stock options held by employees of other
corporations who are about to become employees of or affiliated with the Company
or any Affiliate as the result of a merger or consolidation of the employing
corporation with the Company or any Affiliate, or the acquisition by the Company
or any Affiliate of the assets of the employing corporation, or the acquisition
by the Company or any Affiliate of stock of the employing corporation as the
result of which it becomes an Affiliate of the Company. The terms and conditions
of the substitute Options granted may vary from the terms and conditions set out
in this Plan to the extent the Committee, at the time of grant, may deem
appropriate to conform, in whole or in part, to the provisions of the stock
options in substitution for which they are granted.

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         5.15   Reload Options. Without in any way limiting the authority of the
Board of Directors or Committee to make or not to make grants of Options
hereunder, the Board of Directors or Committee shall have the authority (but not
an obligation) to include as part of any Option Agreement a provision entitling
the Eligible Person to a further Option (a "Reload Option") in the event the
Eligible Person exercises the Option evidenced by the Option Agreement, in whole
or in part, by surrendering other shares of Stock in accordance with this Plan
and the terms and conditions of the Option Agreement. Any such Reload Option (a)
shall be for a number of shares equal to the number of shares surrendered as
part or all of the exercise price of such Option; (b) shall have an expiration
date which is the greater of (i) the same expiration date of the Option the
exercise of which gave rise to such Reload Option or (ii) one year from the date
of grant of the Reload Option; and (c) shall have an exercise price which is
equal to one hundred percent (100%) of the Fair Market Value of the Stock
subject to the Reload Option on the date of exercise of the original Option.
Notwithstanding the foregoing, a Reload Option which is an Incentive Option and
which is granted to a 10% Stockholder, shall have an exercise price which is
equal to one hundred ten percent (110%) of the Fair Market Value of the Stock
subject to the Reload Option on the date of exercise of the original Option and
shall have a term which is no longer than five (5) years.

         Any such Reload Option may be an Incentive Option or a Nonqualified
Option, as the Board of Directors or Committee may designate at the time of the
grant of the original Option; provided, however, that the designation of any
Reload Option as an Incentive Option shall be subject to the provisions of the
Code. There shall be no Reload Options on a Reload Option. Any such Reload
Option shall be subject to the availability of sufficient shares under Section
4.2 herein and shall be subject to such other terms and conditions as the Board
of Directors or Committee may determine which are not inconsistent with the
express provisions of the Plan regarding the terms of Options.

         5.16   No Rights as Stockholder. No Eligible Person shall have any
rights as a stockholder with respect to Stock covered by his Option until the
date a stock certificate is issued for the Stock.

                               ARTICLE VI - AWARDS

         6.1    Restricted Stock Awards. The Committee may issue shares of Stock
to an Eligible Person subject to the terms of a Restricted Stock Agreement. The
Restricted Stock may be issued for no payment by the Eligible Person or for a
payment below the Fair Market Value on the date of grant. Restricted Stock shall
be subject to restrictions as to sale, transfer, alienation, pledge or other
encumbrance and generally will be subject to vesting over a period of time
specified in the Restricted Stock Agreement. The Committee shall determine the
period of vesting, the number of shares, the price, if any, of Stock included in
a Restricted Stock Award, and the other terms and provisions which are included
in a Restricted Stock Agreement.

         6.2    Restrictions. Restricted Stock shall be subject to the terms and
conditions as determined by the Committee, including without limitation, any or
all of the following:

         (a)     a prohibition against the sale, transfer, alienation, pledge,
or other encumbrance of the shares of Restricted Stock, such prohibition to
lapse (i) at such time or times as the Committee shall determine (whether in
annual or more frequent installments, at the time of the death, disability, or
retirement of the holder of such shares, or otherwise);

         (b)     a requirement that the holder of shares of Restricted Stock
forfeit, or in the case of shares sold to an Eligible Person, resell back to the
Company at his cost, all or a part of such shares in the event of termination of
the Eligible Person's employment during any period in which the shares remain
subject to restrictions;

         (c)     a prohibition against employment of the holder of Restricted
Stock by any competitor of the Company or its Affiliates, or against such
holder's dissemination of any secret or confidential information belonging to
the Company or an Affiliate;

         (d)     unless stated otherwise in the Restricted Stock Agreement, (i)
if restrictions remain at the time of severance of employment with the Company
and all Affiliates, other than for reason of disability or death, the Restricted
Stock shall be forfeited; and (ii) if severance of employment is by reason of
disability or death, the restrictions on the shares shall lapse and the Eligible
Person or his heirs or estate shall be 100% vested in the shares subject to the
Restricted Stock Agreement.

                                       8
<PAGE>

         6.3    Stock Certificate. Shares of Restricted Stock shall be
registered in the name of the Eligible Person receiving the Restricted Stock
Award and deposited, together with a stock power endorsed in blank, with the
Company. Each such certificate shall bear a legend in substantially the
following form:

         "The transferability of this certificate and the shares of Stock
         represented by it is restricted by and subject to the terms and
         conditions (including conditions of forfeiture) contained in the ERF
         Wireless, Inc. 2007 Stock Option Plan and an agreement entered into
         between the registered owner and the Company. A copy of the Plan and
         agreement is on file in the office of the Secretary of the Company."

         6.4    Rights as Stockholder. Subject to the terms and conditions of
the Plan, each Eligible Person receiving a certificate for Restricted Stock
shall have all the rights of a stockholder with respect to the shares of Stock
included in the Restricted Stock Award during any period in which such shares
are subject to forfeiture and restrictions on transfer, including without
limitation, the right to vote such shares. Dividends paid with respect to shares
of Restricted Stock in cash or property other than Stock in the Company or
rights to acquire stock in the Company shall be paid to the Eligible Person
currently. Dividends paid in Stock in the Company or rights to acquire Stock in
the Company shall be added to and become a part of the Restricted Stock.

         6.5    Lapse of Restrictions. At the end of the time period during
which any shares of Restricted Stock are subject to forfeiture and restrictions
on sale, transfer, alienation, pledge, or other encumbrance, such shares shall
vest and will be delivered in a certificate, free of all restrictions, to the
Eligible Person or to the Eligible Person's legal representative, beneficiary or
heir; provided the certificate shall bear such legend, if any, as the Committee
determines is reasonably required by applicable law. By accepting a Stock Award
and executing a Restricted Stock Agreement, the Eligible Person agrees to remit
when due any federal and state income and employment taxes required to be
withheld.

         6.6    Restriction Period. No Restricted Stock Award may provide for
restrictions continuing beyond ten (10) years from the date of grant.

                     ARTICLE VII - PERFORMANCE STOCK AWARDS

         7.1    Award of Performance Stock. The Committee may award shares of
Stock, without any payment for such shares, to designated Eligible Persons if
specified performance goals established by the Committee are satisfied. The
terms and provisions herein relating to these performance-based awards are
intended to satisfy Section 162(m) of the Code and regulations issued
thereunder. The designation of an employee eligible for a specific Performance
Stock Award shall be made by the Committee in writing prior to the beginning of
the period for which the performance is measured (or within such period as
permitted by IRS regulations). The Committee shall establish the maximum number
of shares of Stock to be issued to a designated Employee if the performance goal
or goals are met. The Committee reserves the right to make downward adjustments
in the maximum amount of an Award if in its discretion unforeseen events make
such adjustment appropriate.

         7.2    Performance Goals. Performance goals determined by the Committee
may be based on specified increases in cash flow; net profits; Stock price;
Company, segment, or Affiliate sales; market share; earnings per share; return
on assets; and/or return on stockholders' equity.

         7.3    Eligibility. The employees eligible for Performance Stock Awards
are the senior officers (i.e., chief executive officer, president, vice
presidents, secretary, treasurer, and similar positions) of the Company and its
Affiliates, and such other employees of the Company and its Affiliates as may be
designated by the Committee.

         7.4    Certificate of Performance. The Committee must certify in
writing that a performance goal has been attained prior to issuance of any
certificate for a Performance Stock Award to any Employee. If the Committee
certifies the entitlement of an Employee to the Performance Stock Award, the
certificate will be issued to the Employee as soon as administratively
practicable, and subject to other applicable provisions of the Plan, including
but not limited to, all legal requirements and tax withholding. However, payment
may be made in shares of Stock, in cash, or partly in cash and partly in shares
of Stock, as the Committee shall decide in its sole discretion. If a cash
payment is made in lieu of shares of Stock, the number of shares represented by
such payment shall not be available for subsequent issuance under this Plan.

                                       9
<PAGE>

                          ARTICLE VIII - ADMINISTRATION

         The Committee shall administer the Plan. All questions of
interpretation and application of the Plan and Awards shall be subject to the
determination of the Committee. A majority of the members of the Committee shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members. Any decision or determination reduced to writing and
signed by a majority of the members shall be as effective as if it had been made
by a majority vote at a meeting properly called and held. This Plan shall be
administered in such a manner as to permit the Options, which are designated to
be Incentive Options, to qualify as Incentive Options. In carrying out its
authority under this Plan, the Committee shall have full and final authority and
discretion, including but not limited to the following rights, powers and
authorities, to:

          (a)    determine the Eligible Persons to whom and the time or times at
which Options or Awards will be made;

          (b)    determine the number of shares and the purchase price of Stock
covered in each Option or Award, subject to the terms of the Plan;

          (c)    determine the terms, provisions, and conditions of each Option
and Award, which need not be identical;

          (d)    accelerate the time at which any outstanding Option or SAR may
be exercised, or Restricted Stock Award will vest;

          (e)    define the effect, if any, on an Option or Award of the death,
disability, retirement, or termination of employment of the Employee;

          (f)    prescribe, amend and rescind rules and regulations relating to
administration of the Plan; and

          (g)    make all other determinations and take all other actions deemed
necessary, appropriate, or advisable for the proper administration of this Plan.

         The actions of the Committee in exercising all of the rights, powers,
and authorities set out in this Article and all other Articles of this Plan,
when performed in good faith and in its sole judgment, shall be final,
conclusive and binding on all parties.

                  ARTICLE IX - AMENDMENT OR TERMINATION OF PLAN

         The Board of Directors of the Company may amend, terminate or suspend
this Plan at any time, in its sole and absolute discretion; provided, however,
that to the extent required to qualify this Plan under Rule 16b-3 promulgated
under Section 16 of the Securities Exchange Act of 1934, as amended, no
amendment that would (a) materially increase the number of shares of Stock that
may be issued under this Plan, (b) materially modify the requirements as to
eligibility for participation in this Plan, or (c) otherwise materially increase
the benefits accruing to participants under this Plan, shall be made without the
approval of the Company's stockholders; provided further, however, that to the
extent required to maintain the status of any Incentive Option under the Code,
no amendment that would (a) change the aggregate number of shares of Stock which
may be issued under Incentive Options, (b) change the class of employees
eligible to receive Incentive Options, or (c) decrease the Option price for
Incentive Options below the Fair Market Value of the Stock at the time it is
granted, shall be made without the approval of the Company's stockholders.
Subject to the preceding sentence, the Board of Directors shall have the power
to make any changes in the Plan and in the regulations and administrative
provisions under it or in any outstanding Incentive Option as in the opinion of
counsel for the Company may be necessary or appropriate from time to time to
enable any Incentive Option granted under this Plan to continue to qualify as an
incentive stock option or such other stock option as may be defined under the
Code so as to receive preferential federal income tax treatment.

                                       10
<PAGE>

                            ARTICLE X - MISCELLANEOUS

         10.1   No Establishment of a Trust Fund. No property shall be set aside
nor shall a trust fund of any kind be established to secure the rights of any
Eligible Person under this Plan. All Eligible Persons shall at all times rely
solely upon the general credit of the Company for the payment of any benefit
which becomes payable under this Plan.

         10.2   No Employment Obligation. The granting of any Option or Award
shall not constitute an employment contract, express or implied, nor impose upon
the Company or any Affiliate any obligation to employ or continue to employ any
Eligible Person. The right of the Company or any Affiliate to terminate the
employment of any person shall not be diminished or affected by reason of the
fact that an Option or Award has been granted to him.

         10.3   Forfeiture. Notwithstanding any other provisions of this Plan,
if the Committee finds by a majority vote after full consideration of the facts
that an Eligible Person, before or after termination of his employment with the
Company or an Affiliate for any reason (a) committed or engaged in fraud,
embezzlement, theft, commission of a felony, or proven dishonesty in the course
of his employment by the Company or an Affiliate, which conduct damaged the
Company or Affiliate, or disclosed trade secrets of the Company or an Affiliate,
or (b) participated, engaged in or had a material, financial, or other interest,
whether as an employee, officer, director, consultant, contractor, stockholder,
owner, or otherwise, in any commercial endeavor in the United States which is
competitive with the business of the Company or an Affiliate without the written
consent of the Company or Affiliate, the Eligible Person shall forfeit all
outstanding Options and all outstanding Awards, and including all exercised
Options and other situations pursuant to which the Company has not yet delivered
a stock certificate. Clause (b) shall not be deemed to have been violated solely
by reason of the Eligible Person's ownership of stock or securities of any
publicly owned corporation, if that ownership does not result in effective
control of the corporation.

         The decision of the Committee as to the cause of an Employee's
discharge, the damage done to the Company or an Affiliate, and the extent of an
Eligible Person's competitive activity shall be final. No decision of the
Committee, however, shall affect the finality of the discharge of the Employee
by the Company or an Affiliate in any manner.

         10.4   Tax Withholding. The Company or any Affiliate shall be entitled
to deduct from other compensation payable to each Eligible Person any sums
required by federal, state, or local tax law to be withheld with respect to the
grant or exercise of an Option or SAR, lapse of restrictions on Restricted
Stock, or award of Performance Stock. In the alternative, the Company may
require the Eligible Person (or other person exercising the Option, SAR or
receiving the Stock) to pay the sum directly to the employer corporation. If the
Eligible Person (or other person exercising the Option or SAR or receiving the
Stock) is required to pay the sum directly, payment in cash or by check of such
sums for taxes shall be delivered within 10 days after the date of exercise or
lapse of restrictions. The Company shall have no obligation upon exercise of any
Option or lapse of restrictions on Stock until payment has been received, unless
withholding (or offset against a cash payment) as of or prior to the date of
exercise or lapse of restrictions is sufficient to cover all sums due with
respect to that exercise. The Company and its Affiliates shall not be obligated
to advise an Eligible Person of the existence of the tax or the amount which the
employer corporation will be required to withhold.

         10.5   Written Agreement. Each Option and Award shall be embodied in a
written agreement which shall be subject to the terms and conditions of this
Plan and shall be signed by the Eligible Person and by a member of the Committee
on behalf of the Committee and the Company or an executive officer of the
Company, other than the Eligible Person, on behalf of the Company. The agreement
may contain any other provisions that the Committee in its discretion shall deem
advisable which are not inconsistent with the terms of this Plan.

         10.6   Indemnification of the Committee and the Board of Directors.
With respect to administration of this Plan, the Company shall indemnify each
present and future member of the Committee and the Board of Directors against,
and each member of the Committee and the Board of Directors shall be entitled
without further act on his part to indemnity from the Company for, all expenses
(including attorney's fees, the amount of judgments, and the amount of approved
settlements made with a view to the curtailment of costs of litigation, other
than amounts paid to the Company itself) reasonably incurred by him in
connection with or arising out of any action, suit, or proceeding in which he
may be involved by reason of his being or having been a member of the Committee
and/or the Board of Directors, whether or not he continues to be a member of the
Committee and/or the Board of Directors at the time of incurring the expenses,
including, without limitation, matters as to which he shall be finally adjudged
in any action, suit or proceeding to have been found to have been negligent in
the performance of his duty as a member of the Committee or the Board of
Directors.

                                       11
<PAGE>

However, this indemnity shall not include any expenses incurred by any member of
the Committee and/or the Board of Directors in respect of matters as to which he
shall be finally adjudged in any action, suit or proceeding to have been guilty
of gross negligence or willful misconduct in the performance of his duty as a
member of the Committee and the Board of Directors. In addition, no right of
indemnification under this Plan shall be available to or enforceable by any
member of the Committee and the Board of Directors unless, within 60 days after
institution of any action, suit or proceeding, he shall have offered the
Company, in writing, the opportunity to handle and defend same at its own
expense. This right of indemnification shall inure to the benefit of the heirs,
executors or administrators of each member of the Committee and the Board of
Directors and shall be in addition to all other rights to which a member of the
Committee and the Board of Directors may be entitled as a matter of law,
contract, or otherwise.

         10.7   Gender. If the context requires, words of one gender when used
in this Plan shall include the others and words used in the singular or plural
shall include the other.

         10.8   Headings. Headings of Articles and Sections are included for
convenience of reference only and do not constitute part of the Plan and shall
not be used in construing the terms of the Plan.

         10.9   Other Compensation Plans. The adoption of this Plan shall not
affect any other stock option, incentive or other compensation or benefit plans
in effect for the Company or any Affiliate, nor shall the Plan preclude the
Company from establishing any other forms of incentive or other compensation for
employees of the Company or any Affiliate.

         10.10  Other Options or Awards. The grant of an Option or Award shall
not confer upon the Eligible Person the right to receive any future or other
Options or Awards under this Plan, whether or not Options or Awards may be
granted to similarly situated Eligible Persons, or the right to receive future
Options or Awards upon the same terms or conditions as previously granted.

         10.11  Governing Law. The provisions of this Plan shall be construed,
administered, and governed under the laws of the State of Texas.

                                       12Exhibit 4.12

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
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.

<PAGE>

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.

                                       2
<PAGE>

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, 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
<PAGE>

     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;

                                       4
<PAGE>

          (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
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
<PAGE>

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
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.

                                       6
<PAGE>

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
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
<PAGE>

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
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.

                                       8
<PAGE>

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

                                       9
<PAGE>

     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.

                                       10
<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

                                       11
<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
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.

                                       12
<PAGE>

     (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
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.

                                       13
<PAGE>

     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: _______________________
                                                         David Savitsky
                                                         Chief Executive Officer

                                       14
<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:

_________________________________

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