PLACEMENT AGENT AGREEMENT

 

                              ATC HEALTHCARE, INC.

                            PLACEMENT AGENT AGREEMENT

 

 

                                                     Dated as of: April 19, 2000

 

Arthur's, Lestrange & Company Inc.

Two Gateway Center

Pittsburgh, PA 15222-1498

 

Gentlemen:

 

      The   undersigned,   ATC   Healthcare,   Inc.,   a   Delaware   corporation   (the

"Company"),    hereby   agrees   with   Arthur's,   Lestrange   &   Company   Inc.   (the

"Placement   Agent")   and   Cornell   Capital   Partners,   LP,   a   Delaware   Limited

Partnership (the "Investor"), as follows:

 

      1. Offering.   The Company hereby engages the Placement Agent to act as its

exclusive   placement   agent in connection   with the Standby Equity   Distribution

Agreement dated the date hereof (the "Standby Equity   Distribution   Agreement"),

pursuant to which the Company shall issue and sell to the Investor, from time to

time, and the Investor   shall   purchase from the Company (the   "Offering") up to

Five Million   Dollars   ($5,000,000)   of the Company's   Class A common stock (the

"Commitment   Amount"),   $.01 par value per share (the "Common Stock"),   at price

per share equal to the   Purchase   Price,   as that term is defined in the Standby

Equity Distribution   Agreement.   The Placement Agent's services shall consist of

reviewing the terms of the Standby   Equity   Distribution   Agreement and advising

the Company with respect to those terms.

 

      All capitalized   terms used herein and not otherwise   defined herein shall

have the same   meaning   ascribed to them as in the Standby   Equity   Distribution

Agreement. The Investor will be granted certain registration rights with respect

to the Common Stock as more fully set forth in the Registration Rights Agreement

between the Company and the   Investor   dated the date hereof (the   "Registration

Rights   Agreement").   The   documents to be executed and   delivered in connection

with the Offering,   including,   but not limited to, this Agreement,   the Standby

Equity Distribution Agreement, the Registration Rights Agreement, and the Escrow

Agreement   dated the date   hereof   (the   "Escrow   Agreement"),   are   referred to

sometimes   hereinafter   collectively as the "Offering   Materials." The Company's

Common Stock   purchased by the Investor or to be issued in   connection   with the

conversion of the debenture to be issued to the Investor are sometimes   referred

to hereinafter as the   "Securities."   The Placement Agent shall not be obligated

to sell any Securities.

 

      2. Compensation.

 

            Upon the execution of this Agreement, the Company shall issue to the

Placement   Agent or its   designee   shares of the   Company's   Common   Stock in an

amount equal to Ten Thousand Dollars   ($10,000) divided by the Closing Bid Price

of the   Company's   Common   Stock   on the date   hereof   (the   "Placement   Agent's

Shares").   The   Placement   Agent's   Shares   shall be   registered   along with the

 

 

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Investor's shares being registered pursuant to the Registration Rights Agreement

dated the date hereof.

 

      3. Representations, Warranties and Covenants of the Placement Agent.

 

            The Placement Agent represents, warrants and covenants as follows:

 

                  (i) The Placement   Agent has the necessary power to enter into

this Agreement and to consummate the transactions contemplated hereby.

 

                  (ii) The execution and delivery by the Placement Agent of this

Agreement and the consummation of the transactions   contemplated herein will not

result in any   violation   of, or be in conflict   with,   or   constitute a default

under, any agreement or instrument to which the Placement Agent is a party or by

which the Placement Agent or its properties are bound, or any judgment,   decree,

order or, to the Placement Agent's   knowledge,   any statute,   rule or regulation

applicable to the Placement Agent. This Agreement when executed and delivered by

the Placement Agent, will constitute the legal, valid and binding obligations of

the Placement   Agent,   enforceable in accordance   with their   respective   terms,

except   to the   extent   that (a) the   enforceability   hereof or   thereof   may be

limited by bankruptcy,   insolvency,   reorganization,   moratorium or similar laws

from time to time in effect and affecting the rights of creditors generally, (b)

the enforceability hereof or thereof is subject to general principles of equity,

or (c) the   indemnification   provisions   hereof or thereof   may be held to be in

violation of public policy.

 

                  (iii) Upon receipt and execution of this   Agreement by it, the

Placement Agent will promptly forward copies of this Agreement to the Company or

its counsel and the Investor or its counsel.

 

                  (iv)   The   Placement   Agent   will not   intentionally   take any

action   that it   reasonably   believes   would   cause the   Offering to violate the

provisions   of the   Securities   Act of 1933,   as amended (the "1933   Act"),   the

Securities   Exchange   Act of 1934 (the "1934   Act"),   the   respective   rules and

regulations   promulgated   thereunder (the "Rules and Regulations") or applicable

"Blue Sky" laws of any state or jurisdiction.

 

                  (v)   The    Placement    Agent   is   a   member   of   the   National

Association of Securities   Dealers,   Inc., and is a broker-dealer   registered as

such under the 1934 Act and under the securities laws of the states in which the

Securities   will be offered or sold by the   Placement   Agent unless an exemption

for such state   registration is available to the Placement   Agent. The Placement

Agent is in material compliance with the rules and regulations applicable to the

Placement Agent generally and applicable to the Placement Agent's   participation

in the Offering.

 

      4. Representations and Warranties of the Company.

 

            The   Company   represents   and   warrants   to the   Placement   Agent as

follows:

 

                  (i) The   execution,   delivery and   performance of each of this

Agreement, the Standby Equity Distribution Agreement and the Registration Rights

Agreement   have been or will be duly and validly   authorized   by the Company and

are,   or with   respect   to   this   Agreement,   the   Standby   Equity   Distribution

 

 

                                       2

<PAGE>

 

Agreement and the   Registration   Rights   Agreement   will be, a valid and binding

agreement of the Company,   enforceable in accordance with its respective   terms,

except   to the   extent   that (a) the   enforceability   hereof or   thereof   may be

limited by bankruptcy,   insolvency,   reorganization,   moratorium or similar laws

from time to time in effect and affecting the rights of creditors generally, (b)

the enforceability   hereof or thereof is subject to general principles of equity

or (c) the   indemnification   provisions   hereof or thereof   may be held to be in

violation of public policy.

 

                  (ii) The Company has a duly authorized, issued and outstanding

capitalization as set forth in the Standby Equity Distribution Agreement.

 

                  (iii) The   shares of Common   Stock to be issued in   accordance

with   this   Agreement,    the   Standby   Equity   Distribution   Agreement   and   the

Compensation   Debenture have been duly   authorized and, when issued and paid for

in accordance with this Agreement, the Standby Equity Distribution Agreement and

the Compensation Debenture,   those shares will be validly issued, fully-paid and

non-assessable;   the holders   thereof will not be subject to personal   liability

solely by reason of being such holders.

 

      5. Representations, Warranties and Covenants of the Investor.

 

            The Investor represents, warrants and covenants as follows:

 

            A. The Investor has the necessary power to enter into this Agreement

and to consummate the transactions contemplated hereby.

 

            B. The execution and delivery by the Investor of this   Agreement and

the consummation of the transactions   contemplated herein will not result in any

violation   of, or be in   conflict   with,   or   constitute   a default   under,   any

agreement   or   instrument   to which   the   Investor   is a party   or by which   the

Investor or its properties are bound, or any judgment,   decree, order or, to the

Investor's   knowledge,   any   statute,   rule   or   regulation   applicable   to   the

Investor.   This   Agreement   when executed and   delivered by the   Investor,   will

constitute the legal, valid and binding obligations of the Investor, enforceable

in accordance   with their   respective   terms,   except to the extent that (a) the

enforceability   hereof or   thereof   may be limited   by   bankruptcy,   insolvency,

reorganization,   moratorium   or   similar   laws from   time to time in effect   and

affecting the rights of creditors   generally,   (b) the enforceability   hereof or

thereof is subject to general   principles of equity, or (c) the   indemnification

provisions hereof or thereof may be held to be in violation of public policy.

 

      6. Indemnification and Limitation of Liability.

 

            A. The Company   hereby   agrees that it will   indemnify   and hold the

Placement    Agent   and   each   officer,    director,    shareholder,    employee   or

representative of the Placement Agent, and each person   controll