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


<PAGE>

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


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<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  controlling,  controlled
by or under  common  control  with the  Placement  Agent  within the  meaning of
Section  15 of the 1933 Act or  Section  20 of the  1934  Act or the  Rules  and
Regulations,  harmless  from  and  against  any and  all  loss,  claim,  damage,
liability,  cost or expense whatsoever  (including,  but not limited to, any and
all  reasonable  legal fees and other  expenses  and  disbursements  incurred in
connection with investigating, preparing to defend or defending any action, suit
or proceeding, including any inquiry or investigation, commenced or threatened,


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<PAGE>

or any claim whatsoever or in appearing or preparing for appearance as a witness
in any action,  suit or  proceeding,  including  any inquiry,  investigation  or
pretrial  proceeding  such as a deposition) to which the Placement Agent or such
indemnified person of the Placement Agent may become subject under the 1933 Act,
the 1934 Act, the Rules and  Regulations,  or any other  federal or state law or
regulation, common law or otherwise, arising out of or based upon (i) the breach
of any  representation,  warranty,  covenant or agreement made by the Company in
this Agreement,  or (ii) any false or misleading  information or allegedly false
or misleading information,  which is included in any document filed with the SEC
or  any  state  agency,   other  than  information  included  therein  which  is
specifically provided for that purpose by the Placement Agent or the Investor.

            B. The Placement Agent hereby agrees that it will indemnify and hold
the Company and each officer, director, shareholder,  employee or representative
of the  Company,  and each person  controlling,  controlled  by or under  common
control  with the  Company  within the  meaning of Section 15 of the 1933 Act or
Section  20 of the 1934 Act or the  Rules  and  Regulations,  harmless  from and
against any and all loss, claim, damage,  liability,  cost or expense whatsoever
(including,  but not  limited  to, any and all  reasonable  legal fees and other
expenses and disbursements incurred in connection with investigating,  preparing
to defend or defending any action, suit or proceeding,  including any inquiry or
investigation,  commenced or threatened, or any claim whatsoever or in appearing
or preparing  for  appearance  as a witness in any action,  suit or  proceeding,
including  any  inquiry,   investigation  or  pretrial   proceeding  such  as  a
deposition) to which the Company or such  indemnified  person of the Company may
become subject under the 1933 Act, the 1934 Act, the Rules and  Regulations,  or
any other federal or state law or regulation,  common law or otherwise,  arising
out of or based upon (i) the breach of any representation, warranty, covenant or
agreement made by the Placement  Agent in this  Agreement,  or (ii) any false or
misleading  information or allegedly false or misleading information provided to
the  Company  by  the  Placement  Agent  or by  one  of  the  Placement  Agent's
indemnified  persons  specifically  for inclusion in any document filed with the
SEC or any state agency

            C. The Investor  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  controlling,  controlled
by or under  common  control  with the  Placement  Agent  within the  meaning of
Section  15 of the 1933 Act or  Section  20 of the  1934  Act or the  Rules  and
Regulations,  harmless  from  and  against  any and  all  loss,  claim,  damage,
liability,  cost or expense whatsoever  (including,  but not limited to, any and
all  reasonable  legal fees and other  expenses  and  disbursements  incurred in
connection with investigating, preparing to defend or defending any action, suit
or proceeding, including any inquiry or investigation,  commenced or threatened,
or any claim whatsoever or in appearing or preparing for appearance as a witness
in any action,  suit or  proceeding,  including  any inquiry,  investigation  or
pretrial  proceeding  such as a deposition) to which the Placement Agent or such
indemnified person of the Placement Agent may become subject under the 1933 Act,
the 1934 Act, the Rules and  Regulations,  or any other  federal or state law or
regulation,  common  law or  otherwise,  arising  out of or  based  upon (i) the
conduct of the Investor or its  officers,  employees or  representatives  in its
acting  as the  Investor  for the  Offering,  (ii) the  material  breach  of any
representation,  warranty,  covenant or  agreement  made by the  Investor in the
Offering Materials, or (iii) any false or misleading information provided to the
Placement Agent by one of the Investor's indemnified persons.


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<PAGE>

            D. The Placement Agent hereby agrees that it will indemnify and hold
the Investor and each officer, director, shareholder, employee or representative
of the  Investor,  and each person  controlling,  controlled  by or under common
control  with the  Investor  within the meaning of Section 15 of the 1933 Act or
Section  20 of the 1934 Act or the  Rules  and  Regulations,  harmless  from and
against any and all loss, claim, damage,  liability,  cost or expense whatsoever
(including,  but not  limited  to, any and all  reasonable  legal fees and other
expenses and disbursements incurred in connection with investigating,  preparing
to defend or defending any action, suit or proceeding,  including any inquiry or
investigation,  commenced or threatened, or any claim whatsoever or in appearing
or preparing  for  appearance  as a witness in any action,  suit or  proceeding,
including  any  inquiry,   investigation  or  pretrial   proceeding  such  as  a
deposition) to which the Investor or such indemnified person of the Investor may
become subject under the 1933 Act, the 1934 Act, the Rules and  Regulations,  or
any other federal or state law or regulation,  common law or otherwise,  arising
out of or based  upon  the  material  breach  of any  representation,  warranty,
covenant or agreement made by the Placement Agent in this Agreement.

            E. Promptly after receipt by an  indemnified  party of notice of the
existence of any condition  which is covered by Section  6(A),  (B), (C) or (D),
the party to be indemnified  shall,  within five (5) business  days,  notify the
indemnifying  party of the  occurrence  thereof;  the omission by an indemnified
party to so notify the  indemnifying  party shall not  relieve the  indemnifying
party of its obligation to indemnify any other  indemnified party that has given
such  notice  and shall not  relieve  the  indemnifying  party of any  liability
outside of this  indemnification if not materially  prejudiced  thereby.  In the
event that any action is brought against an indemnified  party, the indemnifying
party shall be entitled to participate therein and, to the extent it may desire,
to assume and control the  defense  thereof  with  counsel  chosen by it.  After
notice from the indemnifying  party to such indemnified party of its election to
so assume the defense thereof, the indemnifying party will not be liable to such
indemnified  party under such  Section  6(A),  (B),  (C) or (D) for any legal or
other expenses  subsequently  incurred by such  indemnified  party in connection
with the defense  thereof,  but the  indemnified  party may, at its own expense,
participate in such defense by counsel chosen by it, without, however, impairing
the indemnifying party's control of the defense.  Subject to the proviso of this
sentence and  notwithstanding  any other  statement  to the  contrary  contained
herein,  the indemnified  party or parties shall have the right to choose its or
their own counsel  and control the defense of any action,  all at the expense of
the  indemnifying  party if (i) the  employment  of such counsel shall have been
authorized in writing by the  indemnifying  party in connection with the defense
of  such  action  at  the  expense  of  the  indemnifying  party,  or  (ii)  the
indemnifying party shall not have employed counsel to have charge of the defense
of such action  within a  reasonable  time after notice of  commencement  of the
action,  or (iii)  such  indemnified  party or  parties  shall  have  reasonably
concluded that there may be defenses available to it or them which are different
from or additional to those available to one or all of the indemnifying parties,
which cannot be properly raised by the counsel hired by the  indemnifying  party
(in which case the  indemnifying  parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any of
which events such fees and expenses of one additional  counsel shall be borne by
the indemnifying  party;  provided,  however,  that the indemnifying party shall
not, in connection with any one action or separate but substantially  similar or
related  actions  in the  same  jurisdiction  arising  out of the  same  general
allegations or  circumstance,  be liable for the reasonable fees and expenses of
more than one separate firm of attorneys at any time for all such indemnified


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<PAGE>

parties.  No settlement of any action or proceeding against an indemnified party
shall be made without the consent of the indemnifying party.

            F. The indemnity agreements contained in this Section 6 shall remain
operative and in full force and effect regardless of any  investigation  made by
or on behalf of any indemnified person or any termination of this Agreement.

      7. Termination.

      This Agreement  shall be co-terminus  with, and terminate at the same time
as, the Standby Equity Distribution Agreement.

      8. Miscellaneous.

            A. This  Agreement  may be executed  in any number of  counterparts,
each of which shall be deemed to be an  original,  but all which shall be deemed
to be one and the same instrument.

            B. Any notice  required or permitted to be given  hereunder shall be
given in writing  and shall be deemed  effective  when  deposited  in the United
States mail, postage prepaid, or when received if personally  delivered or faxed
(upon  confirmation  of receipt  received by the sending  party),  addressed  as
follows to such other address of which written notice is given to the others):

If to Placement Agent, to:             Arthur's Lestrange & Company Inc.
                                       Two Gateway Center
                                       Pittsburgh, PA 15222-1498
                                       Attention:        Ronald Weiss
                                       Telephone:        (412) 341-1144
                                       Facsimile:        (412) 341-5563

If to the Company, to:                 ATC Healthcare, Inc.
                                       1983 Marcus Avenue
                                       Lake Success, New York 11042
                                       Attention:         Andrew Reiben
                                       Telephone:        516-750-1600
                                       Facsimile:        516-750-1754

With a copy to:                        DKW Law Group, LLC
                                       58th Floor, US Steel Tower
                                       600 Grant Street
                                       Pittsburgh, PA 15219
                                       Attention:        David Hirsch, Esq.
                                       Telephone:        412-355-2960
                                       Facsimile:        412-355-2609


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<PAGE>

If to the Investor:                    Cornell Capital Partners, LP
                                       101 Hudson Street - Suite 3606
                                       Jersey City, New Jersey 07302
                                       Attention:        Mark A. Angelo
                                                         Portfolio Manager
                                       Telephone:        (201) 985-8300
                                       Facsimile:        (201) 985-8266

With Copies to:                        Butler Gonzalez LLP
                                       1416 Morris Avenue - Suite 207
                                       Union, New Jersey 07083
                                       Attention:        David Gonzalez, Esq.
                                       Facsimile:        (908) 810-0973
                                       Butler Gonzalez LLP

            C. This Agreement shall be governed by and construed in all respects
under the laws of the State of New York,  without  reference  to its conflict of
laws rules or principles. Any suit, action, proceeding or litigation arising out
of or relating to this Agreement shall be brought and prosecuted in such federal
or state court or courts  located  within the State of New Jersey as provided by
law.  The  parties  hereby  irrevocably  and  unconditionally   consent  to  the
jurisdiction of each such court or courts located within the State of New Jersey
and to service of  process by  registered  or  certified  mail,  return  receipt
requested,  or by any other  manner  provided  by  applicable  law,  and  hereby
irrevocably and unconditionally  waive any right to claim that any suit, action,
proceeding  or litigation  so commenced  has been  commenced in an  inconvenient
forum.

            D. This Agreement and the other agreements referenced herein contain
the entire  understanding  between the parties hereto and may not be modified or
amended except by a writing duly signed by the party against whom enforcement of
the modification or amendment is sought.

            E. If any provision of this Agreement shall be held to be invalid or
unenforceable,  such invalidity or  unenforceability  shall not affect any other
provision of this Agreement.



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

                                              COMPANY:
                                              ATC HEALTHCARE, INC.

                                              By: /s/ Andrew Rebien
                                                  ------------------------------
                                              Name:   Andrew Reiben
                                              Title:  Chief Financial Officer


                                              PLACEMENT AGENT:
                                              ARTHUR'S, LESTRANGE & COMPANY INC.

                                              By:  /s/ Ron Weiss
                                                  ------------------------------
                                              Name:    Ron Weiss
                                              Title:   President

                                              INVESTOR:
                                              CORNELL CAPITAL PARTNERS, LP

                                              By:     Yorkville Advisors, LLC
                                              Its:    General Partner


                                              By: /s/ Mark A. Angelo
                                                  -----------------------------
                                              Name:   Mark A. Angelo
                                              Title:  Portfolio Manager


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