Document:

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                                                                   EXHIBIT 10.1

                         SECURITIES PURCHASE AGREEMENT

     SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of August 15,
2001, by and among STORAGE COMPUTER CORPORATION, a Delaware corporation, with
headquarters located at 11 Riverside Street, Nashua, New Hampshire 03062
("Company"), and each of the purchasers set forth on the signature pages hereto
(the "Buyers").

     WHEREAS:

     A.  The Company and the Buyers are executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by Rule 506
under Regulation D ("Regulation D") as promulgated by the United States
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 Act");

     B.  The Company has authorized a new series of preferred stock, designated
as Series E Convertible Preferred Stock (the "Series E Preferred Stock"), having
the rights, preferences and privileges set forth in the Certificate of
Designations, Preferences and Rights attached hereto as Exhibit "A" (the
"Certificate of Designation");

     C.  The Preferred Shares (as defined below) are convertible into shares of
common stock, $.001 par value per share, of  the Company (the "Common Stock"),
upon the terms and subject to the limitations and conditions set forth in the
Certificate of Designation;

     D.  The Company has authorized the issuance to the Buyers of warrants, in
the form attached hereto as Exhibit "B", to purchase Seven Hundred Seventy-One
Thousand Six Hundred Five (771,605)  shares of Common Stock (the "Warrants").
The shares of Common Stock issuable upon exercise of or otherwise pursuant to
the Warrants are referred to herein collectively as the "Warrant Shares;"

     E.  The Buyers desire to purchase and the Company desires to issue and
sell, upon the terms and conditions set forth in this Agreement, (i) an
aggregate of Five Thousand (5,000) shares of Series E Preferred Stock (such
shares, together with any Series E Preferred Stock issued in replacement thereof
or as a dividend thereon or otherwise with respect thereto in accordance with
the terms thereof, being hereinafter collectively referred to as the "Preferred
Shares") and (ii) Warrants to purchase Seven Hundred Seventy-One Thousand Six
Hundred Five (771,605) shares of Common Stock, for an aggregate purchase price
of Five Million Dollars ($5,000,000);

     F.  Each Buyer wishes to purchase, upon the terms and conditions stated in
this Agreement, the number of Preferred Shares and number of Warrants as is set
forth immediately below its name on the signature pages hereto;
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     G.  Contemporaneous with the execution and delivery of this Agreement, the
parties hereto are executing and delivering a Registration Rights Agreement, in
the form attached hereto as Exhibit "C" (the "Registration Rights Agreement"),
pursuant to which the Company has agreed to provide certain registration rights
under the 1933 Act and the rules and regulations promulgated thereunder, and
applicable state securities laws; and

     NOW THEREFORE, the Company and each of the Buyers severally (and not
jointly) hereby agree as follows:

     1.  PURCHASE AND SALE OF PREFERRED SHARES AND WARRANTS.
         --------------------------------------------------

         (a)  Purchase of Preferred Shares and Warrants. Subject to the
              -----------------------------------------
satisfaction (or waiver) of the conditions thereto set forth in Section 6 and
Section 7 below, on the Closing Date (as defined below), the Company shall issue
and sell to each Buyer and each Buyer severally agrees to purchase from the
Company such number of Preferred Shares and number of Warrants for the aggregate
purchase price as is set forth immediately below such Buyer's name on the
signature pages hereto. The issuance, sale and purchase of the Preferred Shares,
and the Warrants shall take place at the closing (the "Closing"). The Company
shall issue an aggregate of (i) Five Thousand (5,000) Preferred Shares and (ii)
Warrants to purchase Seven Hundred Seventy-One Thousand Six Hundred Five
(771,605) shares of Common Stock, for an aggregate purchase price of Five
Million Dollars ($5,000,000) (the "Purchase Price").

         (b)  Form of Payment. On the Closing Date (as defined below), (i) each
              ---------------
Buyer shall pay the purchase price for the Preferred Shares and the Warrants to
be issued and sold to it at the Closing by wire transfer of immediately
available funds to the Company in accordance with the Company's written wiring
instructions, against delivery of duly executed certificates representing such
number of Preferred Shares and Warrants which such Buyer is purchasing and (ii)
the Company shall deliver such certificates duly executed on behalf of the
Company, to the Buyer, against delivery of such Purchase Price.

         (c)  Closing Date. Subject to the satisfaction (or waiver) of the
              ------------
conditions thereto set forth in Section 6 and Section 7 below, the date and time
of the issuance and sale of the Preferred Shares and the Warrants pursuant to
this Agreement (the "Closing Date") shall be 12:00 noon Eastern Daylight Time on
August 15, 2001, or such other mutually agreed upon time. The Closing shall
occur on the Closing Date at the offices of Akerman, Senterfitt & Eidson, P.A.,
One Southeast Third Avenue, Miami, Florida 33131, or at such other location as
may be agreed to by the parties.

     2.  BUYERS' REPRESENTATIONS AND WARRANTIES. Each Buyer severally (and not
         --------------------------------------
jointly) represents and warrants to the Company solely as to such Buyer that:

         (a)  Investment Purpose. As of the date hereof, the Buyer is purchasing
              ------------------
the Preferred Shares and the shares of Common Stock issuable upon conversion of
or otherwise pursuant to the Preferred Shares (including, without limitation,
(i) such additional shares of Common Stock as are issuable as a result of the
events described in Articles V, VI.D(ii) or VI.E of the Certificate of
Designation and Section 2(c) of the Registration Rights Agreement (such shares
of Common Stock

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being collectively referred to herein as the "Conversion Shares") and the
Warrants and the shares of Common Stock issuable upon exercise of or otherwise
pursuant to the Warrants (the "Warrant Shares" and, collectively with the
Preferred Shares, Warrants and Conversion Shares, the "Securities") for its own
account and not with a present view towards the public sale or distribution
thereof, except pursuant to sales registered or exempted from registration under
the 1933 Act; provided, however, that by making the representations herein, the
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Buyer does not agree to hold any of the Securities for any minimum or other
specific term and reserves the right to dispose of the Securities at any time in
accordance with or pursuant to a registration statement or an exemption under
the 1933 Act.

         (b)  Accredited Investor Status. The Buyer is an "accredited investor"
              --------------------------
as that term is defined in Rule 501(a) of Regulation D (an "Accredited
Investor").

         (c)  Reliance on Exemptions. The Buyer understands that the Securities
              ----------------------
are being offered and sold to it in reliance upon specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying upon the truth and accuracy of, and the Buyer's
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of the Buyer to acquire the
Securities.

         (d)  Information. The Buyer and its advisors, if any, have been
              -----------
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Securities
which have been requested by the Buyer or its advisors. The Buyer and its
advisors, if any, have been afforded the opportunity to ask questions of the
Company. Neither such inquiries nor any other due diligence investigation
conducted by Buyer or any of its advisors or representatives shall modify, amend
or affect Buyer's right to rely on the Company's representations and warranties
contained in Section 3 below. The Buyer understands that its investment in the
Securities involves a significant degree of risk.

         (e)  Governmental Review. The Buyer understands that no United States
              -------------------
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Securities.

         (f)  Transfer or Re-sale. The Buyer understands that (i) except as
              -------------------
provided in the Registration Rights Agreement, the sale or re-sale of the
Securities has not been and is not being registered under the 1933 Act or any
applicable state securities laws, and the Securities may not be transferred
unless (a) the Securities are sold pursuant to an effective registration
statement under the 1933 Act, (b) the Buyer shall have delivered to the Company
an opinion of counsel (which opinion shall be in form, substance and scope
customary for opinions of counsel in comparable transactions) to the effect that
the Securities to be sold or transferred may be sold or transferred pursuant to
an exemption from such registration, (c) the Securities are sold or transferred
to an "affiliate" (as defined in Rule 144 promulgated under the 1933 Act (or a
successor rule) ("Rule 144")) of the Buyer who agrees to sell or otherwise
transfer the Securities only in accordance with this Section 2(f) and who is an
Accredited Investor or (d) the Securities are sold pursuant to Rule 144; (ii)
any sale of such Securities made in reliance on Rule 144 may be made only in
accordance with the terms of said Rule

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and further, if said Rule is not applicable, any re-sale of such Securities
under circumstances in which the seller (or the person through whom the sale is
made) may be deemed to be an underwriter (as that term is defined in the 1933
Act) may require compliance with some other exemption under the 1933 Act or the
rules and regulations of the SEC thereunder; and (iii) neither the Company nor
any other person is under any obligation to register such Securities under the
1933 Act or any state securities laws or to comply with the terms and conditions
of any exemption thereunder (in each case, other than pursuant to the
Registration Rights Agreement). Notwithstanding the foregoing or anything else
contained herein to the contrary, the Securities may be pledged as collateral in
connection with a bona fide margin account or other lending arrangement.
                  ---- ----

         (g)  Legends. The Buyer understands that the Preferred Shares and the
              -------
Warrants and, until such time as the Conversion Shares and Warrant Shares have
been registered under the 1933 Act as contemplated by the Registration Rights
Agreement or otherwise may be sold pursuant to Rule 144 without any restriction
as to the number of securities as of a particular date that can then be
immediately sold, the Conversion Shares and Warrant Shares, may bear a
restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of the certificates for such Securities):

         "The securities represented by this certificate have not been
         registered under the Securities Act of 1933, as amended.  The
         securities may not be sold, transferred or assigned in the
         absence of an effective registration statement for the
         securities under said Act, or an opinion of counsel, in form,
         substance and scope customary for opinions of counsel in
         comparable transactions, that registration is not required
         under said Act or unless sold pursuant to Rule 144 under said
         Act."

         The legend set forth above shall be removed and the Company shall
issue a certificate without such legend to the holder of any Security upon which
it is stamped, if, unless otherwise required by applicable state securities
laws, (a) such Security is registered for sale under an effective registration
statement filed under the 1933 Act or otherwise may be sold pursuant to Rule 144
without any restriction as to the number of securities as of a particular date
that can then be immediately sold, or (b) such holder provides the Company with
an opinion of counsel, in form, substance and scope customary for opinions of
counsel in comparable transactions, to the effect that a public sale or transfer
of such Security may be made without registration under the 1933 Act and such
sale or transfer is effected or (c) such holder provides the Company with
reasonable assurances that such Security can be sold pursuant to Rule 144.  The
Buyer agrees to sell all Securities, including those represented by a
certificate(s) from which the legend has been removed, in compliance with
applicable prospectus delivery requirements, if any.

         (h)  Authorization; Enforcement. This Agreement and the Registration
              --------------------------
Rights Agreement have been duly and validly authorized. This Agreement has been
duly executed and delivered on behalf of the Buyer, and this Agreement
constitutes, and upon execution and delivery by the Buyer of the Registration
Rights Agreement, such agreement will constitute, valid and binding agreements
of the Buyer enforceable in accordance with their terms.

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         (i)  Residency.  The Buyer is a resident of the jurisdiction set forth
              ---------
immediately below such Buyer's name on the signature pages hereto.

     3.  REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
         ---------------------------------------------
and warrants to each Buyer, subject to such exceptions as are specifically
disclosed in the disclosure statement (referencing the appropriate schedule or
section number) supplied by Company to the Buyers and dated the date hereof (the
"Disclosure Statement"), as follows:

         (a)  Organization and Qualification. The Company and each of its
              ------------------------------
Subsidiaries (as defined below), if any, is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated, with full power and authority (corporate and other) to
own, lease, use and operate its properties and to carry on its business as and
where now owned, leased, used, operated and conducted. Schedule 3(a) of the
Disclosure Statement sets forth a list of all of the Subsidiaries of the Company
and the jurisdiction in which each is incorporated. The Company and each of its
Subsidiaries is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which its ownership or use of property or
the nature of the business conducted by it makes such qualification necessary
except where the failure to be so qualified or in good standing would not have a
Material Adverse Effect. "Material Adverse Effect" means any material adverse
effect on (i) the Securities, (ii) the business, operations, assets, financial
condition or prospects of the Company and its Subsidiaries, if any, taken as a
whole, (iii) the transactions contemplated hereby or by the agreements or
instruments to be entered into in connection herewith or (iv) the authority or
the ability of the Company to perform its obligation under this Agreement, the
Registration Rights Agreement, the Certificate of Designation or the Warrants.
"Subsidiaries" means any corporation or other organization, whether incorporated
or unincorporated, in which the Company owns, directly or indirectly, any equity
or other ownership interest.

         (b)  Authorization; Enforcement. (i) The Company has all requisite
              --------------------------
corporate power and authority to file and perform its obligations under the
Certificate of Designation and to enter into and perform this Agreement, the
Registration Rights Agreement and the Warrants and to consummate the
transactions contemplated hereby and thereby and to issue the Securities, in
accordance with the terms hereof and thereof, (ii) the execution and delivery of
this Agreement, the Registration Rights Agreement and the Warrants by the
Company, the filing of the Certificate of Designation and the consummation by it
of the transactions contemplated hereby and thereby (including without
limitation, the issuance of the Preferred Shares and the Warrants and the
issuance and reservation for issuance of the Conversion Shares issuable upon
conversion of or otherwise pursuant to the Preferred Shares and the Warrant
Shares issuable upon exercise of or otherwise pursuant to the Warrants) have
been duly authorized by the Company's Board of Directors and no further consent
or authorization of the Company, its Board of Directors, or its stockholders is
required, (iii) this Agreement has been duly executed and delivered by the
Company, and (iv) this Agreement constitutes, and upon execution and delivery by
the Company of the Registration Rights Agreement and the Warrants and upon
execution and filing of the Certificate of Designation, each of

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such agreements and instruments will constitute, a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms.

         (c)  Capitalization. As of the date hereof, the authorized capital
              --------------
stock of the Company consists of (i) 50,000,000 shares of Common Stock of which
15,784,479 shares are issued and outstanding, 3,196,421 shares are reserved for
issuance pursuant to the Company's stock option plans, 4,143,774 shares are
reserved for issuance pursuant to securities (other than the Preferred Shares
and the Warrants) exercisable for, or convertible into or exchangeable for
shares of Common Stock and 1,929,013 shares are reserved for issuance upon
conversion of the Preferred Shares and exercise of the Warrants (subject to
adjustment pursuant to the Company's covenant set forth in Section 4(h) below);
and (ii) 1,000,000 shares of preferred stock, 90,000 of which are designated as
Series A Convertible Preferred Stock of which 20,000 are issued and outstanding,
20,000 of which are designated as Series B 8% Convertible Preferred Stock of
which none are issued and outstanding, and 12,000 of which are designated as
Series C 8% Convertible Preferred Stock of which 12,000 are issued and
outstanding. All of such outstanding shares of capital stock are, or upon
issuance will be, duly authorized, validly issued, fully paid and nonassessable.
No shares of capital stock of the Company are subject to preemptive rights or
any other similar rights of the stockholders of the Company or any liens or
encumbrances imposed through the actions or failure to act of the Company.
Except as disclosed in Schedule 3(c) of the Disclosure Statement, as of the
effective date of this Agreement, (i) there are no outstanding options,
warrants, scrip, rights to subscribe for, puts, calls, rights of first refusal,
agreements, understandings, claims or other commitments or rights of any
character whatsoever relating to, or securities or rights convertible into or
exchangeable for any shares of capital stock of the Company or any of its
Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is
or may become bound to issue additional shares of capital stock of the Company
or any of its Subsidiaries, (ii) there are no agreements or arrangements under
which the Company or any of its Subsidiaries is obligated to register the sale
of any of its or their securities under the 1933 Act (except the Registration
Rights Agreement) and (iii) there are no anti-dilution or price adjustment
provisions contained in any security issued by the Company (or in any agreement
providing rights to security holders) that will be triggered by the issuance of
the Preferred Shares, the Warrants, the Conversion Shares or Warrant Shares. The
Company has furnished to the Buyer true and correct copies of the Company's
Certificate of Incorporation as in effect on the date hereof ("Certificate of
Incorporation"), the Company's By-laws, as in effect on the date hereof (the
"By-laws"), and the terms of all securities convertible into or exercisable for
Common Stock of the Company and the material rights of the holders thereof in
respect thereto. The Company shall provide the Buyer with a written update of
this representation signed by the Company's Chief Executive or Chief Financial
Officer on behalf of the Company as of the Closing Date.

         (d)  Issuance of Shares. The Preferred Shares are duly authorized and,
              ------------------
upon issuance in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable, and free from all taxes, liens, claims
and encumbrances with respect to the issue thereof and shall not be subject to
preemptive rights or other similar rights of stockholders of the Company and
will not impose personal liability upon the holder thereof. The Conversion
Shares and Warrant Shares are duly authorized and reserved for issuance, and,
when issued upon conversion of or otherwise pursuant to the Preferred Shares and
upon exercise of or otherwise pursuant to the

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Warrants in accordance with the terms thereof, will be validly issued, fully
paid and non-assessable, and free from all taxes, liens, claims and encumbrances
and will not be subject to preemptive rights or other similar rights of
stockholders of the Company and will not impose personal liability upon the
holder thereof.

         (e)  Acknowledgment of Dilution. The Company understands and
              --------------------------
acknowledges the potentially dilutive effect to the Common Stock upon the
issuance of the Conversion Shares upon conversion of or otherwise pursuant to
the Preferred Shares and upon issuance of the Warrant Shares upon exercise of or
otherwise pursuant to the Warrants. The Company's directors and executive
officers have studied and fully understand the nature of the Securities being
sold hereunder. The Company further acknowledges that its obligation to issue
Conversion Shares and Warrant Shares upon conversion of the Preferred Shares or
exercise of the Warrants in accordance with this Agreement, the Certificate of
Designation and the Warrants is absolute and unconditional regardless of the
dilutive effect that such issuance may have on the ownership interests of other
stockholders of the Company. Taking the foregoing into account, the Company's
Board of Directors has determined, in its good faith business judgment, that the
issuance of the Securities hereunder and under the Certificate of Designation
and the Warrants and the consummation of the transactions contemplated hereby
and thereby are in the best interest of the Company and its stockholders.

         (f)  Series of Preferred Stock. The terms, designations, powers,
              -------------------------
preferences and relative, participating and optional or special rights, and the
qualifications, limitations and restrictions of each series of preferred stock
of the Company (other than the Preferred Shares) are as stated in the
Certificates of Incorporation, filed on or prior to the date hereof, and the
Bylaws. The terms, designations, powers, preferences and relative, participating
and optional or special rights, and the qualifications, limitations and
restrictions of the Preferred Shares are as stated in the Certificate of
Designation.

         (g)  No Conflicts. The execution, delivery and performance of this
              ------------
Agreement, the Registration Rights Agreement and the Warrants by the Company and
the consummation by the Company of the transactions contemplated hereby and
thereby (including, without limitation, the filing of the Certificate of
Designation and the issuance and reservation for issuance, as applicable, of the
Preferred Shares, Conversion Shares and Warrant Shares) will not (i) conflict
with or result in a violation of any provision of the Certificate of
Incorporation or By-laws or (ii) violate or conflict with, or result in a breach
of any provision of, or constitute a default (or an event which with notice or
lapse of time or both could become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture, patent, patent license or instrument to which the Company
or any of its Subsidiaries is a party, or (iii) result in a violation of any
law, rule, regulation, order, judgment or decree (including federal and state
securities laws and regulations and regulations of any self-regulatory
organizations to which the Company or its securities are subject) applicable to
the Company or any of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected (except for such
conflicts, defaults, terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, have a Material
Adverse Effect). Neither the Company nor any of its Subsidiaries is in violation
of its Certificate of Incorporation, By-laws or other organizational documents
and neither the Company nor any of its Subsidiaries is in default (and no event
has

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occurred which with notice or lapse of time or both could put the Company or any
of its Subsidiaries in default) under, and neither the Company nor any of its
Subsidiaries has taken any action or failed to take any action that would give
to others any rights of termination, amendment, acceleration or cancellation of,
any agreement, indenture or instrument to which the Company or any of its
Subsidiaries is a party or by which any property or assets of the Company or any
of its Subsidiaries is bound or affected, except for possible defaults as would
not, individually or in the aggregate, have a Material Adverse Effect. The
businesses of the Company and its Subsidiaries, if any, are not being conducted,
and shall not be conducted so long as a Buyer owns any of the Securities, in
violation of any law, ordinance or regulation of any governmental entity. Except
as specifically contemplated by this Agreement and as required under the 1933
Act and any applicable state securities laws, the Company is not required to
obtain any consent, authorization or order of, or make any filing or
registration with, any court, governmental agency, regulatory agency, self
regulatory organization or stock market or any third party in order for it to
execute, deliver or perform any of its obligations under this Agreement, the
Registration Rights Agreement or the Warrants in accordance with the terms
hereof or thereof or to issue and sell the Preferred Shares and Warrants in
accordance with the terms hereof and to issue the Conversion Shares upon
conversion of or otherwise pursuant to the Preferred Shares and the Warrant
Shares upon exercise of or otherwise pursuant to the Warrants. Except as
disclosed in Schedule 3(g) of the Disclosure Statement, all consents,
authorizations, orders, filings and registrations which the Company is required
to obtain pursuant to the preceding sentence have been obtained or effected on
or prior to the date hereof. The Company is not in violation of the listing
requirements of the American Stock Exchange (the "AMEX") and does not reasonably
anticipate that the Common Stock will be delisted by the AMEX in the foreseeable
future. The Company and its Subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing.

         (h)  SEC Documents; Financial Statements. Except as set forth in
              -----------------------------------
Schedule 3(h) of the Disclosure Statement, since December 31, 1998, the Company
has timely filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements
of the Securities Exchange Act of 1934, as amended (the "1934 Act") (all of the
foregoing filed prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents (other than exhibits to
such documents) incorporated by reference therein, being hereinafter referred to
as the "SEC Documents"). The Company has delivered to each Buyer true and
complete copies of the SEC Documents, except for such exhibits and incorporated
documents. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the 1934 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. None of the statements made in any such SEC Documents is, or has
been, required to be amended or updated under applicable law (except for such
statements as have been amended or updated in subsequent filings prior to the
date hereof). As of their respective dates, the financial statements of the
Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with United States generally

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accepted accounting principles, consistently applied, during the periods
involved (except (i) as may be otherwise indicated in such financial statements
or the notes thereto, or (ii) in the case of unaudited interim statements, to
the extent they may not include footnotes or may be condensed or summary
statements) and fairly present in all material respects the consolidated
financial position of the Company and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments). Except as set forth in the financial
statements of the Company included in the SEC Documents, the Company has no
liabilities, contingent or otherwise, other than (i) liabilities incurred in the
ordinary course of business subsequent to December 31, 2000 and (ii) obligations
under contracts and commitments incurred in the ordinary course of business and
not required under generally accepted accounting principles to be reflected in
such financial statements, which, individually or in the aggregate, are not
material to the financial condition or operating results of the Company.

         (i)  Absence of Certain Changes. Except as set forth in Schedule 3(i)
              --------------------------
of the Disclosure Statement, since December 31, 2000, there has been no material
adverse change and no material adverse development in the assets, liabilities,
business, properties, operations, financial condition, results of operations or
prospects of the Company or any of its Subsidiaries.

         (j)  Absence of Litigation. There is no action, suit, claim,
              ---------------------
proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the Company or any of its Subsidiaries, threatened against or
affecting the Company or any of its Subsidiaries, or their officers or directors
in their capacity as such, that could have a Material Adverse Effect. Schedule
3(j) of the Disclosure Statement contains a complete list and summary
description of any pending or threatened proceeding against or affecting the
Company or any of its Subsidiaries, without regard to whether it would have a
Material Adverse Effect. The Company and its Subsidiaries are unaware of any
facts or circumstances which might give rise to any of the foregoing.

         (k)  Patents, Copyrights, etc.
              ------------------------

               (i)  The Company and each of its Subsidiaries owns or possesses
     the requisite licenses or rights to use all patents, patent applications,
     patent rights, inventions, know-how, trade secrets, trademarks, trademark
     applications, service marks, service names, trade names and copyrights
     ("Intellectual Property") necessary to enable it to conduct its business as
     now operated (and, except as set forth in Schedule 3(k) of the Disclosure
     Statement, to the best of the Company's knowledge, as presently
     contemplated to be operated in the future); there is no claim or action by
     any person pertaining to, or proceeding pending, or to the Company's
     knowledge threatened, which challenges the right of the Company or of a
     Subsidiary with respect to any Intellectual Property necessary to enable it
     to conduct its business as now operated (and, except as set forth in
     Schedule 3(k) of the Disclosure Statement, to the best of the Company's
     knowledge, as presently contemplated to be operated in the future); to the
     best of the Company's knowledge, the Company's or its Subsidiaries' current
     and intended products, services and processes do not infringe on any
     Intellectual Property or other rights held by any person; and the Company
     is unaware of any facts or
                                       9
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     circumstances which might give rise to any of the foregoing. The Company
     and each of its Subsidiaries have taken reasonable security measures to
     protect the secrecy, confidentiality and value of their Intellectual
     Property.

              (ii)   All of the Company's computer software and computer
     hardware, and other similar or related items of automated, computerized or
     software systems that are used or relied on by the Company in the conduct
     of its business or that were, or currently are being, sold or licensed by
     the Company to customers (collectively, "Information Technology"), are Year
     2000 Compliant. For purposes of this Agreement, the term "Year 2000
     Compliant" means, with respect to the Company's Information Technology,
     that the Information Technology is designed to be used prior to, during and
     after the calendar Year 2000 A.D., and the Information Technology used
     during each such time period will accurately receive, provide and process
     date and time data (including, but not limited to, calculating, comparing
     and sequencing) from, into and between the 20th and 21st centuries,
     including the years 1999 and 2000, and leap-year calculations, and will not
     malfunction, cease to function, or provide invalid or incorrect results as
     a result of the date or time data, to the extent that other information
     technology, used in combination with the Information Technology, properly
     exchanges date and time data with it.

         (l)  No Materially Adverse Contracts, Etc. Neither the Company nor any
              ------------------------------------
of its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which in the
judgment of the Company's officers has or is expected in the future to have a
Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a
party to any contract or agreement which in the judgment of the Company's
officers has or is expected to have a Material Adverse Effect.

         (m)  Tax Status. Except as set forth on Schedule 3(m) of the Disclosure
              ----------
Statement, the Company and each of its Subsidiaries has made or filed all
federal, state and foreign income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject (unless and
only to the extent that the Company and each of its Subsidiaries has set aside
on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provisions reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim. Except as set forth on Schedule
3(m) of the Disclosure Statement, the Company has not executed a waiver with
respect to the statute of limitations relating to the assessment or collection
of any foreign, federal, state or local tax. Except as set forth on Schedule
3(m) of the Disclosure Statement, none of the Company's tax returns is presently
being audited by any taxing authority.

         (n)  Certain Transactions. Except as set forth on Schedule 3(n) of the
              --------------------
Disclosure Statement and except for arm's length transactions pursuant to which
the Company or any of its Subsidiaries makes payments in the ordinary course of
business upon terms no less favorable

                                       10
<PAGE>

than the Company or any of its Subsidiaries could obtain from third parties and
other than the grant of stock options disclosed on Schedule 3(c), none of the
officers, directors, or employees of the Company is presently a party to any
transaction with the Company or any of its Subsidiaries (other than for services
as employees, officers and directors), including any contract, agreement or
other arrangement providing for the furnishing of services to or by, providing
for rental of real or personal property to or from, or otherwise requiring
payments to or from any officer, director or such employee or, to the knowledge
of the Company, any corporation, partnership, trust or other entity in which any
officer, director, or any such employee has a substantial interest or is an
officer, director, trustee or partner.

         (o)  Disclosure. All information relating to or concerning the Company
              ----------
or any of its Subsidiaries set forth in this Agreement and provided to the
Buyers pursuant to Section 2(d) hereof and otherwise in connection with the
transactions contemplated hereby is true and correct in all material respects
and the Company has not omitted to state any material fact necessary in order to
make the statements made herein or therein, in light of the circumstances under
which they were made, not misleading. No event or circumstance has occurred or
exists, nor is the Company in possession of any information, with respect to the
Company or any of its Subsidiaries or its or their business, properties,
prospects, operations or financial conditions, which has not been publicly
announced or disclosed but under applicable law, rule or regulation, requires
public disclosure or announcement by the Company (assuming for this purpose that
the Company's reports filed under the 1934 Act are being incorporated into an
effective registration statement filed by the Company under the 1933 Act).

         (p)  Acknowledgment Regarding Buyers' Purchase of Securities. The
              -------------------------------------------------------
Company acknowledges and agrees that the Buyers are acting solely in the
capacity of arm's length purchasers with respect to this Agreement and the
transactions contemplated hereby. The Company further acknowledges that no Buyer
is acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions contemplated
hereby and that any statement made by any Buyer or any of their respective
representatives or agents in connection with this Agreement and the transactions
contemplated hereby is not advice or a recommendation and is merely incidental
to the Buyers' purchase of the Securities and has not been relied upon by the
Company, its officers or directors in any way. The Company further represents to
each Buyer that the Company's decision to enter into this Agreement has been
based solely on the independent evaluation of the Company and its
representatives.

         (q)  No Integrated Offering. Neither the Company, nor any of its
              ----------------------
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would require registration under the
1933 Act of the issuance of the Securities to the Buyers. The issuance of the
Securities to the Buyers will not be integrated with any other issuance of the
Company's securities (past, current or future) for purposes of any stockholder
approval provisions applicable to the Company or its securities.

         (r)  No Brokers. The Company has taken no action which would give rise
              ----------
to any claim by any person for brokerage commissions, finder's fees or similar
payments relating to this

                                       11
<PAGE>

Agreement or the transactions contemplated hereby, except for dealings with
Hartsfield Capital Group, whose commissions and fees will be paid for by the
Company.

         (s)  Permits; Compliance. The Company and each of its Subsidiaries is
              -------------------
in possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted (collectively, the "Company Permits"), and there is
no action pending or, to the knowledge of the Company, threatened regarding
suspension or cancellation of any of the Company Permits. Neither the Company
nor any of its Subsidiaries is in conflict with, or in default or violation of,
any of the Company Permits, except for any such conflicts, defaults or
violations which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. Since December 31, 2000, neither the
Company nor any of its Subsidiaries has received any notification with respect
to possible conflicts, defaults or violations of applicable laws, except for
notices relating to possible conflicts, defaults or violations, which conflicts,
defaults or violations would not have a Material Adverse Effect.

         (t)  Environmental Matters.
              ---------------------

              (i)    Except as set forth in Schedule 3(t) of the Disclosure
     Statement, there are, to the Company's knowledge, with respect to the
     Company or any of its Subsidiaries or any predecessor of the Company, no
     past or present violations of Environmental Laws (as defined below),
     releases of any material into the environment, actions, activities,
     circumstances, conditions, events, incidents, or contractual obligations
     which may give rise to any common law environmental liability or any
     liability under the Comprehensive Environmental Response, Compensation and
     Liability Act of 1980 or similar federal, state, local or foreign laws and
     neither the Company nor any of its Subsidiaries has received any notice
     with respect to any of the foregoing, nor is any action pending or, to the
     Company's knowledge, threatened in connection with any of the foregoing.
     The term "Environmental Laws" means all federal, state, local or foreign
     laws relating to pollution or protection of human health or the environment
     (including, without limitation, ambient air, surface water, groundwater,
     land surface or subsurface strata), including, without limitation, laws
     relating to emissions, discharges, releases or threatened releases of
     chemicals, pollutants contaminants, or toxic or hazardous substances or
     wastes (collectively, "Hazardous Materials") into the environment, or
     otherwise relating to the manufacture, processing, distribution, use,
     treatment, storage, disposal, transport or handling of Hazardous Materials,
     as well as all authorizations, codes, decrees, demands or demand letters,
     injunctions, judgments, licenses, notices or notice letters, orders,
     permits, plans or regulations issued, entered, promulgated or approved
     thereunder.

              (ii)   Other than those that are or were stored, used or disposed
     of in compliance with applicable law, no Hazardous Materials are contained
     on or about any real property currently owned, leased or used by the
     Company or any of its Subsidiaries, and no Hazardous Materials were
     released on or about any real property previously owned, leased or used by
     the Company or any of its Subsidiaries during the period the property was
     owned,

                                       12
<PAGE>

     leased or used by the Company or any of its Subsidiaries during the period
     the property was owned, leased or used by the Company or any of its
     Subsidiaries, except in the normal course of the Company's or any of its
     Subsidiaries' business.

               (iii)  Except as set forth in Schedule 3(t) of the Disclosure
     Statement, there are no underground storage tanks on or under any real
     property owned, leased or used by the Company or any of its Subsidiaries
     that are not in compliance with applicable law.

          (u) Title to Property.  The Company and its Subsidiaries have good and
              -----------------
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them which is material to the business
of the Company and its Subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in Schedule 3(u) of the
Disclosure Statement or such as would not have a Material Adverse Effect.  Any
real property and facilities held under lease by the Company and its
Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as would not have a Material Adverse Effect.

          (v) Insurance.  The Company and each of its Subsidiaries are insured
              ---------
by insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged.  Neither the Company nor any such Subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not have a Material
Adverse Effect.

          (w) Internal Accounting Controls.  The Company and each of its
              ----------------------------
Subsidiaries maintain a system of internal accounting controls sufficient, in
the judgment of the Company's board of directors, to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.

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

                                       13
<PAGE>

          (y) Solvency.  The Company (both before and after giving effect to the
              --------
transactions contemplated by this Agreement) is solvent (i.e., its assets have a
                                                         ----
fair market value in excess of the amount required to pay its probable
liabilities on its existing debts as they become absolute and matured) and
currently the Company has no information that would lead it to reasonably
conclude that the Company would not have the ability to, nor does it intend to
take any action that would impair its ability to, pay its debts from time to
time incurred in connection therewith as such debts mature. The Company did not
receive a qualified opinion from its auditors with respect to its most recent
fiscal year end and does not anticipate or know of any basis upon which its
auditors might issue a qualified opinion in respect of its current fiscal year.

          (z) No Investment Company.  The Company is not, and upon the issuance
              ---------------------
and sale of the Securities as contemplated by this Agreement and the Certificate
of Designation will not be an "investment company" required to be registered
under the Investment Company Act of 1940 (an "Investment Company").  The Company
is not controlled by an Investment Company.

     4.   COVENANTS.
          ---------

          (a) Best Efforts.  The parties shall use their best efforts to satisfy
              ------------
timely each of the conditions described in Section 6 and 7 of this Agreement.

          (b) Form D; Blue Sky Laws.  The Company agrees to file a Form D with
              ---------------------
respect to the Securities as required under Regulation D and to provide a copy
thereof to each Buyer promptly after such filing.  The Company shall, on or
before the Closing Date, take such action as the Company shall reasonably
determine is necessary to qualify the Securities for sale to the Buyers at the
Closing pursuant to this Agreement under applicable securities or "blue sky"
laws of the states of the United States (or to obtain an exemption from such
qualification), and shall provide evidence of any such action so taken to each
Buyer on or prior to the Closing Date.

          (c) Reporting Status; Eligibility to Use Form S-3; Press Release.  The
              ------------------------------------------------------------
Company's Common Stock is registered under Section 12(g) of the 1934 Act.  So
long as any Buyer beneficially owns any of the Securities, the Company shall
timely file all reports required to be filed with the SEC pursuant to the 1934
Act, and the Company shall not terminate its status as an issuer required to
file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would permit such termination.  The Company will take all
necessary action to meet the "registrant eligibility" requirements set forth in
the general instructions to Form S-3.  The Company shall issue a press release
describing the material terms of the transactions contemplated hereby as soon as
practicable following the Closing Date but in no event later than one (1)
Trading Day (as defined in the Certificate of Designation) following the Closing
Date, and shall file with the SEC a Current Report on Form 8-K describing the
material terms of the transactions contemplated hereby (and attaching as
exhibits thereto this Agreement, the Registration Rights Agreement, the
Certificate of Designation and the Warrants) within three (3) Trading Days of
the Closing Date, which press release and Form 8-K shall be subject to prior
review by the Buyers.

          (d) Use of Proceeds.  The Company shall use the proceeds from the sale
              ---------------
of the Preferred Shares and the Warrants in the manner set forth in Schedule
4(d) of the Disclosure

                                       14
<PAGE>

Statement attached hereto and made a part hereof and shall not, directly or
indirectly, use such proceeds for any loan to or investment in any other
corporation, partnership, enterprise or other person (except in connection with
its currently existing direct or indirect Subsidiaries).

          (e) Additional Equity Capital.  Subject to the exceptions described
              -------------------------
below, the Company will not, without the prior written consent of a majority-in-
interest of the Buyers, negotiate or contract with any party to obtain
additional equity financing (including debt financing with an equity component),
during the period beginning on the Closing Date and ending ninety (90) days from
the Closing Date (the limitations referred to in this sentence are the "Capital
Raising Limitations"). The Capital Raising Limitations shall not apply to any
transaction involving (i) issuances of securities in a firm commitment
underwritten public offering (excluding a continuous offering pursuant to Rule
415 under the 1933 Act) or (ii) issuances of securities as consideration for a
merger, consolidation or purchase of assets, or in connection with any strategic
partnership or joint venture (the primary purpose of which is not to raise
equity capital), or in connection with the disposition or acquisition of a
business, product or license by the Company. The Capital Raising Limitations
also shall not apply to the issuance of securities upon exercise of conversion
of the Company's options, warrants or other convertible securities outstanding
as of the date hereof or to the grant of additional options or warrants, or the
issuance of additional securities, under any Company stock option or restricted
stock plan approved by the stockholders of the Company.

          (f) Expenses.  The Company shall reimburse Rose Glen Capital
              --------
Management, L.P. ("Rose Glen") for all expenses incurred by it in connection
with the negotiation, preparation, execution, delivery and performance of this
Agreement and the other agreements to be executed in connection herewith,
including, without limitation, attorneys' and consultants' fees and expenses and
travel expenses.  The Company's obligation to reimburse Rose Glen's expenses
under this Section 4(f) shall be limited to Fifteen Thousand Dollars ($15,000)
of which Seven Thousand Five Hundred Dollars ($7,500) was advanced previously.

          (g) Financial Information.  The Company agrees to send the following
              ---------------------
reports to each Buyer until such Buyer transfers, assigns, or sells all of the
Securities: (i) within ten (10) days after the filing with the SEC, a copy of
its Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q and any
Current Reports on Form 8-K; (ii) within one (1) day after release, copies of
all press releases issued by the Company or any of its Subsidiaries; and (iii)
contemporaneously with the making available or giving to the stockholders of the
Company, copies of any notices or other information the Company makes available
or gives to such stockholders.

          (h) Reservation of Shares.  The Company shall at all times have
              ---------------------
authorized, and reserved for the purpose of issuance, a sufficient number of
shares of Common Stock to provide for the full conversion of the outstanding
Preferred Shares and issuance of the Conversion Shares in connection with the
conversion of Preferred Shares (based on the Conversion Price (as defined in the
Certificate of Designation) in effect from time to time) and as otherwise
required by the Certificate of Designation and the full exercise of the Warrants
and issuance of the Warrant Shares in connection therewith (based on the
Exercise Price (as defined in the Warrants) of the Warrants in effect from time
to time). The Company shall not reduce the number of shares of Common Stock
reserved for issuance upon conversion of or otherwise pursuant to the Preferred
Shares and upon

                                       15
<PAGE>

exercise of or otherwise pursuant to the Warrants without the consent of each
Buyer. The Company shall use its best efforts at all times to maintain the
number of shares of Common Stock so reserved for issuance at no less than one
and one-fourth (1 1/4) times the number that is then actually issuable upon full
conversion of the Preferred Shares (based on the Conversion Price (as defined in
the Certificate of Designation) in effect from time to time) and full exercise
of the Warrants (based on the Exercise Price (as defined in the Warrants) of the
Warrants in effect from time to time). If at any time the number of shares of
Common Stock authorized and reserved for issuance is below the number of
Conversion Shares issued and issuable upon conversion of or otherwise pursuant
to the Preferred Shares (based on the Conversion Price (as defined in the
Certificate of Designation) in effect from time to time) and the aggregate
number of Warrant Shares issued and issuable upon exercise of or otherwise
pursuant to the Warrants (based on the Exercise Price (as defined in the
Warrants) of the Warrants in effect from time to time), the Company will
promptly take all corporate action necessary to authorize and reserve a
sufficient number of shares, including, without limitation, calling a special
meeting of stockholders to authorize additional shares to meet the Company's
obligations under this Section 4(h), in the case of an insufficient number of
authorized shares, and using its best efforts to obtain stockholder approval of
an increase in such authorized number of shares.

          (i) Listing.  The Company shall promptly secure the listing of the
              -------
Conversion Shares and Warrant Shares upon each national securities exchange or
automated quotation system, if any, upon which shares of Common Stock are then
listed (subject to official notice of issuance) and, so long as any Buyer owns
any of the Securities, shall maintain, so long as any other shares of Common
Stock shall be so listed, such listing of all Conversion Shares and Warrant
Shares from time to time issuable upon conversion of or otherwise pursuant to
the Preferred Shares or exercise of or otherwise pursuant to the Warrants. The
Company will obtain and, so long as any Buyer owns any of the Securities,
maintain the listing and trading of its Common Stock on AMEX, the Nasdaq
National Market ("Nasdaq"), the Nasdaq SmallCap Market ("Nasdaq SmallCap") or
the New York Stock Exchange ("NYSE") and will comply in all respects with the
Company's reporting, filing and other obligations under the bylaws or rules of
the National Association of Securities Dealers ("NASD") and such exchanges, as
applicable. The Company shall promptly provide to each Buyer copies of any
notices it receives from AMEX and any other exchanges or quotation systems on
which the Common Stock is then listed regarding the continued eligibility of the
Common Stock for listing on such exchanges and quotation systems.

          (j) Corporate Existence. So long as a Buyer beneficially owns any
              -------------------
Preferred Shares or Warrants, the Company shall maintain its corporate existence
and shall not merge, consolidate or sell all or substantially all of the
Company's assets, except in the event of a merger or consolidation or sale of
all or substantially all of the Company's assets, where (i) the successor or
acquiring entity and, if an entity different from the successor or acquiring
entity, the entity whose securities into which the Preferred Shares shall become
convertible pursuant to Article VI.C(ii) of the Certificate of Designation), in
such transaction assumes the Company's obligations hereunder and under the
agreements and instruments entered into in connection herewith (including the
Certificate of Designation and the Warrants) and (ii) the entity whose
securities into which the Preferred Shares shall become convertible pursuant to
Article VI.C(ii) of the Certificate of Designation is a publicly

                                       16
<PAGE>

traded corporation whose Common Stock is listed for trading on Nasdaq, Nasdaq
SmallCap, NYSE or AMEX.

          (k) No Integration.  The Company shall not make any offers or sales of
              --------------
any security (other than the Securities) under circumstances that would require
registration of the Securities being offered or sold hereunder under the 1933
Act or cause the offering of Securities to be integrated with any other offering
of securities by the Company for the purpose of any stockholder approval
provision applicable to the Company or its securities.

          (l) No Optional Redemption of Series C 8% Convertible Preferred Stock.
              -----------------------------------------------------------------
The Company covenants and agrees that, prior to May 15, 2002, it shall not,
without the consent of the Buyer, voluntarily redeem any shares of the Series C
8% Convertible Preferred Stock (the "Series C Preferred Stock") pursuant to
Article V.C. of the Company's Certificate of Designation, Preferences and Rights
of Series C 8% Convertible Preferred Stock; provided, however, that the
foregoing covenant shall not prohibit or restrict the Company from effecting any
redemption required pursuant to Articles V.A and V.B of the Company's
Certificate of Designation, Preferences and Rights of Series C 8% Convertible
Preferred Stock.

     5.   TRANSFER AGENT INSTRUCTIONS.  The Company shall issue irrevocable
          ---------------------------
instructions to its transfer agent to issue certificates, registered in the name
of each Buyer or its nominee, for the Conversion Shares and Warrant Shares in
such amounts as specified from time to time by each Buyer to the Company upon
conversion of the Preferred Shares or exercise of the Warrants in accordance
with the terms thereof (the "Irrevocable Transfer Agent Instructions").  Prior
to registration of the Conversion Shares and Warrant Shares under the 1933 Act
or the date on which the Conversion Shares or Warrant Shares may be sold
pursuant to Rule 144 without any restriction as to the number of securities as
of a particular date that can then be immediately sold, all such certificates
shall bear the restrictive legend specified in Section 2(g) of this Agreement.
The Company warrants that no instruction other than the Irrevocable Transfer
Agent Instructions referred to in this Section 5, and stop transfer instructions
to give effect to Section 2(f) hereof (in the case of the Conversion Shares and
Warrant Shares, prior to registration of the Conversion Shares and Warrant
Shares under the 1933 Act or the date on which the Conversion Shares or Warrant
Shares may be sold pursuant to Rule 144 without any restriction as to the number
of securities as of a particular date that can then be immediately sold), will
be given by the Company to its transfer agent and that the Securities shall
otherwise be freely transferable on the books and records of the Company as and
to the extent provided in this Agreement and the Registration Rights Agreement.
Nothing in this Section shall affect in any way the Buyer's obligations and
agreement set forth in Section 2(g) hereof to comply with all applicable
prospectus delivery requirements, if any, upon re-sale of the Securities.  If a
Buyer provides the Company with (i) an opinion of counsel, in form, substance
and scope customary for opinions in comparable transactions, to the effect that
a public sale or transfer of  such  Securities may be made without registration
under the 1933 Act and such sale or transfer is effected or (ii) the Buyer
provides reasonable assurances that the Securities can be sold pursuant to Rule
144, the Company shall permit the transfer, and, in the case of the Conversion
Shares and Warrant Shares, promptly instruct its transfer agent to issue one or
more certificates, free from any restrictive legend, in such name and in such
denominations as specified by such Buyer.

                                       17
<PAGE>

     6.       CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.  The obligation of
              ----------------------------------------------
the Company hereunder to issue and sell the Preferred Shares and Warrants to a
Buyer at the Closing is subject to the satisfaction, at or before the Closing
Date of each of the following conditions thereto, provided that these conditions
are for the Company's sole benefit and may be waived by the Company at any time
in its sole discretion:

              (a) The applicable Buyer shall have executed this Agreement and
the Registration Rights Agreement, and delivered the same to the Company.

              (b) The applicable Buyer shall have delivered the Purchase Price
in accordance with Section 1(b) above.

              (c) The Series E Certificate of Designation shall have been
accepted for filing with the Secretary of State of the State of Delaware.

              (d) The representations and warranties of the applicable Buyer
shall be true and correct in all material respects as of the date when made and
as of the Closing Date as though made at that time (except for representations
and warranties that speak as of a specific date, which representations and
warranties shall be true and correct as of such date), and the applicable Buyer
shall have performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the applicable Buyer at or prior to the Closing
Date.

              (e) No litigation, statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by or in any court or governmental authority of competent jurisdiction
or any self-regulatory organization having authority over the matters
contemplated hereby which prohibits the consummation of any of the transactions
contemplated by this Agreement.

     7.       CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.  The obligation
              -------------------------------------------------
of each Buyer hereunder to purchase the Preferred Shares and Warrants at the
Closing is subject to the satisfaction, at or before the Closing Date, of each
of the following conditions, provided that these conditions are for such Buyer's
sole benefit and may be waived by such Buyer at any time in its sole discretion:

              (a) The Company shall have executed this Agreement and the
Registration Rights Agreement, and delivered the same to the Buyer.

              (b) The Company shall have delivered to such Buyer duly executed
certificates (in such denominations as the Buyer shall request) representing the
Preferred Shares and Warrants purchased at such Closing in accordance with
Section 1(b) above.

              (c) The Series E Certificate of Designation shall have been
accepted for filing with the Secretary of State of the State of Delaware, and a
copy thereof certified by such Secretary of State shall have been delivered to
such Buyer.

                                       18
<PAGE>

          (d) The Irrevocable Transfer Agent Instructions, in form and substance
satisfactory to a majority-in-interest of the Buyers, shall have been delivered
to and acknowledged in writing by the Company's Transfer Agent.

          (e) The representations and warranties of the Company shall be true
and correct in all material respects as of the date when made and as of the
Closing Date as though made at such time (except for representations and
warranties that speak as of a specific date, which representations and
warranties shall be true and correct as of such date) and the Company shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to the Closing Date. The Buyer shall
have received a certificate or certificates, executed by the chief executive
officer of the Company, dated as of the Closing Date, to the foregoing effect
and as to such other matters as may be reasonably requested by such Buyer
including, but not limited to certificates with respect to the Company's
Certificate of Incorporation, By-laws and Board of Directors' resolutions
relating to the transactions contemplated hereby.

          (f) No litigation, statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by or in any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.

          (g) An additional listing application to authorize the Conversion
Shares and the Warrant Shares for quotation on AMEX shall have been filed with
AMEX no later than five (5) Trading Days after Closing and trading in the Common
Stock on the AMEX shall not have been suspended by the SEC or AMEX.

          (h) The Buyer shall have received an opinion of the Company's counsel,
dated as of the Closing Date, in form, scope and substance reasonably
satisfactory to the Buyer and in substantially the same form as Exhibit "D"
attached hereto.

          (i) The Buyer shall have received an officer's certificate described
in Section 3(c) above, dated as of the Closing Date.

          (j) The Company shall have received waivers of rights of first
refusal, as well as all consents needed for the sale of the Securities, from The
Shaar Fund Ltd.

          (k) No material adverse change in the business, operations, assets,
financial condition, results of operations, properties or prospects of the
Company and its Subsidiaries, if any, taken as a whole shall have occurred from
the date of this Agreement to the Closing Date.

          (l) The Irrevocable Transfer Agent Instructions, in form and substance
satisfactory to a majority-in-interest of the Buyers, with respect to the Series
C Preferred Stock issued to the Buyer shall have been delivered to and
acknowledged in writing by the Company's Transfer Agent.

                                       19
<PAGE>

          (m) The Company shall have delivered to the Buyer an opinion of
Peabody & Arnold, LLP reasonably acceptable to the Buyer with respect to certain
disclosure regarding the Series C Preferred Stock in the Company's Definitive
Proxy Statement filed with the SEC on April 19, 2001.

     8.   GOVERNING LAW; MISCELLANEOUS.
          ----------------------------

          (a) Governing Law. This Agreement shall be governed by and construed
              -------------
in accordance with the laws of the State of Delaware applicable to agreements
made and to be performed in the State of Delaware (without regard to principles
of conflict of laws).  Both parties irrevocably consent to the exclusive
jurisdiction of the United States federal courts and the state courts located in
Delaware with respect to any suit or proceeding based on or arising under this
Agreement, the agreements entered into in connection herewith or the
transactions contemplated hereby or thereby and irrevocably agree that all
claims in respect of such suit or proceeding may be determined in such courts.
Both parties irrevocably waive the defense of an inconvenient forum to the
maintenance of such suit or proceeding.  Both parties further agree that service
of process upon a party mailed by first class mail shall be deemed in every
respect effective service of process upon the party in any such suit or
proceeding.  Nothing herein shall affect either party's right to serve process
in any other manner permitted by law.  Both parties agree that a final non-
appealable judgment in any such suit or proceeding shall be conclusive and may
be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.

          (b) Counterparts; Signatures by Facsimile.  This Agreement may be
              -------------------------------------
executed in one or more counterparts, all of which shall be considered one and
the same agreement and shall become effective when counterparts have been signed
by each party and delivered to the other party.  This Agreement, once executed
by a party, may be delivered to the other party hereto by facsimile transmission
of a copy of this Agreement bearing the signature of the party so delivering
this Agreement.

          (c) Headings.  The headings of this Agreement are for convenience of
              --------
reference and shall not form part of, or affect the interpretation of, this
Agreement.

          (d) Severability.  If any provision of this Agreement shall be invalid
              ------------
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement or
the validity or enforceability of this Agreement in any other jurisdiction.

          (e) Entire Agreement; Amendments.  This Agreement, the Disclosure
              ----------------------------
Statement  and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither the
Company nor the Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters.  No provision of this Agreement may be
waived or amended other than by an instrument in writing signed by the party to
be charged with enforcement.

          (f) Notices.  Any notices required or permitted to be given under the
              -------
terms of this Agreement shall be sent by certified or registered mail (return
receipt requested) or delivered

                                       20
<PAGE>

personally or by courier (including a recognized overnight delivery service) or
by facsimile and shall be effective five days after being placed in the mail, if
mailed by regular United States mail, or upon receipt, if delivered personally
or by courier (including a recognized overnight delivery service) or by
facsimile, in each case addressed to a party. The addresses for such
communications shall be:

          If to the Company:

               Storage Computer Corporation
               11 Riverside Street
               Nashua, New Hampshire 03062
               Attention:  Chief Financial Officer
               Facsimile:  (603) 889-7232

          With copy to:

               Peabody & Arnold, LLP
               50 Rowes Wharf
               Boston, Massachusetts  021010-3342
               Attention: William E. Kelly
               Facsimile: (617) 951-2125

     If to a Buyer: To the address set forth immediately below such Buyer's name
on the signature pages hereto.

          With copy to:

               Bradley D. Houser
               Akerman, Senterfitt & Eidson, P.A.
               SunTrust International Center
               One Southeast Third Avenue, 28th Floor
               Miami, Florida  33131-1714
               Facsimile:  (305) 374-5095

     Each party shall provide notice to the other party of any change in
address.

        (g)   Successors and Assigns; Company Right of First Refusal.
              ------------------------------------------------------

               (i) This Agreement shall be binding upon and inure to the benefit
     of the parties and their successors and assigns.  Neither the Company nor
     any Buyer shall assign this Agreement or any rights or obligations
     hereunder without the prior written consent of the other.  Notwithstanding
     the foregoing, subject to Section 2(f) and Section 8(g)(ii), any Buyer may
     assign its rights hereunder to any person that purchases Securities in a
     private transaction from a Buyer or to any of its "affiliates," as that
     term is defined under the 1934 Act, without the consent of the Company.

                                       21
<PAGE>

               (ii) No Buyer may at any time transfer its Securities to any
     person (other than in a transaction otherwise permitted hereunder or to
     "affiliates" as that term is defined in the 1934 Act, to any fund or
     investment vehicle managed or controlled by Rose Glen or its affiliates or
     to a holder of interests in the Buyer upon liquidation of the Buyer's
     assets in accordance with Buyer's governing documents) (a "Proposed
     Transferee") without first offering in writing to sell such Preferred
     Shares and/or Warrants to the Company first at the same price and upon the
     same terms and conditions that are proposed from the transferee (an
     "Offer").  The Offer shall remain open for a period of five (5) business
     days (the "Exercise Period").  If, prior to the end of the Exercise Period,
     the Company does not (i) give written notice of its intent to accept the
     Offer, and (ii) consummate the purchase of the Preferred Shares and/or
     Warrants pursuant to the Offer, such Offer will terminate and the Buyer
     shall be permitted to transfer the Securities to the Proposed Transferee
     identified in the Offer.

          (h) Third Party Beneficiaries.  This Agreement is intended for the
              -------------------------
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.

          (i) Survival.  The representations and warranties of the Company and
              --------
the agreements and covenants set forth in Sections 3, 4, 5 and 8 shall survive
the closing hereunder notwithstanding any due diligence investigation conducted
by or on behalf of the Buyers.  The Company agrees to indemnify and hold
harmless each of the Buyers and all their officers, directors, employees and
agents for loss or damage arising as a result of or related to any breach or
alleged breach by the Company of any of its representations, warranties and
covenants set forth in Sections 3 and 4 hereof or any of its covenants and
obligations under this Agreement or the Registration Rights Agreement, including
advancement of expenses as they are incurred.

          (j) Publicity.  The Company and each of the Buyers shall have the
              ---------
right to review a reasonable period of time before issuance of any press
releases, filings with the SEC, NASD or any stock exchange or interdealer
quotation system, or any other public statements with respect to the
transactions contemplated hereby; provided, however, that the Company shall be
                                  --------  -------
entitled, without the prior approval of each of the Buyers, to make any press
release or public filings with respect to such transactions as is required by
applicable law and regulations (although each of the Buyers shall be consulted
by the Company in connection with any such press release or public filing prior
to its release or public filing and shall be provided with a copy thereof and be
given an opportunity to comment thereon).  In addition, the Company agrees that
it will not disclose, and will not include in any public filing or other
announcement, the name of any Buyer, unless expressly agreed to in writing by
such Buyer or unless and until such disclosure is, in the reasonable opinion of
counsel to the Company, required by law or applicable regulation, and then only
to the extent of such requirement.

          (k) Further Assurances.  Each party shall do and perform, or cause to
              ------------------
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in

                                       22
<PAGE>

order to carry out the intent and accomplish the purposes of this Agreement and
the consummation of the transactions contemplated hereby.

          (l) No Strict Construction.  The language used in this Agreement will
              ----------------------
be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.

          (m) Remedies.  The Company acknowledges that a breach by it of its
              --------
obligations hereunder will cause irreparable harm to each Buyer by vitiating the
intent and purpose of the transactions contemplated hereby.  Accordingly, the
Company acknowledges that the remedy at law for a breach of its obligations
under this Agreement will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Agreement, that each
Buyer shall be entitled, in addition to all other available remedies in law or
in equity, to an injunction or injunctions to prevent or cure any breaches of
the provisions of this Agreement and to enforce specifically the terms and
provisions of this Agreement, without the necessity of showing economic loss and
without any bond or other security being required.

                 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       23
<PAGE>

          IN WITNESS WHEREOF, the undersigned Buyers and the Company have caused
this Agreement to be duly executed as of the date first above written.

STORAGE COMPUTER CORPORATION

By:     /s/ Peter N. Hood
     ------------------------------------------
     Peter N. Hood
     Treasurer and Chief Financial Officer

RGC INTERNATIONAL INVESTORS, LDC

By:  Rose Glen Capital Management, L.P., Investment Manager
     By:  RGC General Partner Corp., as General Partner

By:     /s/ Wayne D. Bloch
     ------------------------------------------
     Wayne D. Bloch
     Managing Director

RESIDENCE:   Cayman Islands

ADDRESS:

     c/o Rose Glen Capital Management, L.P.
     3 Bala Plaza East, Suite 501
     251 St. Asaphs Road
     Bala Cynwyd, PA  19004
     Facsimile:  (610) 617-0570
     Telephone:  (610) 617-5900

AGGREGATE SUBSCRIPTION AMOUNT:

     Number of Preferred Shares:                    5,000
                                                    ---------------
     Number of Warrants:                            771,605
                                                    ---------------
     Aggregate Purchase Price:                      $5,000,000
                                                    ---------------

                                       24<PAGE>   1
                                                                     EXHIBIT 4.2

                          REGISTRATION RIGHTS AGREEMENT

                                      among

                         AMN HEALTHCARE SERVICES, INC.,

                           HWH CAPITAL PARTNERS, L.P.,

                         HWH NIGHTINGALE PARTNERS, L.P.,

                       HWP NIGHTINGALE PARTNERS II, L.P.,

                         HWP CAPITAL PARTNERS II, L.P.,

                                 STEVEN FRANCIS,

                   THE FRANCIS FAMILY TRUST DATED MAY 24, 1996

                                       and

                   BANCAMERICA CAPITAL INVESTORS SBIC I, L.P.

                                Dated: [ ], 2001
<PAGE>   2
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                            Page
<S>                                                                                                                         <C>
1.         Definitions....................................................................................................    1

2.         General; Securities Subject to this Agreement..................................................................    5
           (a)       Grant of Rights......................................................................................    5
           (b)       Registrable Securities...............................................................................    5
           (c)       Holders of Registrable Securities....................................................................    5

3.         Demand Registration............................................................................................    5
           (a)       Request for Demand Registration......................................................................    5
           (b)       Incidental or "Piggy-Back" Rights with Respect to a Demand Registration..............................    6
           (c)       Effective Demand Registration........................................................................    7
           (d)       Expenses.............................................................................................    7
           (e)       Underwriting Procedures..............................................................................    7
           (f)       Selection of Underwriters............................................................................    8

4.         Incidental or "Piggy-Back" Registration........................................................................    8
           (a)       Request for Incidental Registration..................................................................    8
           (b)       Expenses.............................................................................................    9

5.         Form S-3 Registration..........................................................................................    9
           (a)       Request for a Form S-3 Registration..................................................................    9
           (b)       Form S-3 Underwriting Procedures.....................................................................    9
           (c)       Limitations on Form S-3 Registrations................................................................   10
           (d)       Expenses.............................................................................................   11
           (e)       No Demand Registration...............................................................................   11

6.         Holdback Agreements............................................................................................   11
           (a)       Restrictions on Public Sale by Designated Holders....................................................   11
           (b)       Restrictions on Public Sale by the Company...........................................................   11

7.         Registration Procedures........................................................................................   12
           (a)       Obligations of the Company...........................................................................   12
           (b)       Seller Information...................................................................................   15
           (c)       Notice to Discontinue................................................................................   15
           (d)       Registration Expenses................................................................................   16

8.         Indemnification; Contribution..................................................................................   16
           (a)       Indemnification by the Company.......................................................................   16
           (b)       Indemnification by Designated Holders................................................................   17
           (c)       Conduct of Indemnification Proceedings...............................................................   17
           (d)       Contribution.........................................................................................   18
</TABLE>

                                       i
<PAGE>   3
<TABLE>
<CAPTION>
                                                                                                                            Page
<S>                                                                                                                         <C>
9.         Rule 144.......................................................................................................   19

10.        Miscellaneous..................................................................................................   19
           (a)       Recapitalizations, Exchanges, etc....................................................................   19
           (b)       No Inconsistent Agreements...........................................................................   19
           (c)       Remedies.............................................................................................   20
           (d)       Amendments and Waivers...............................................................................   20
           (e)       Notices..............................................................................................   20
           (f)       Successors and Assigns; Third Party Beneficiaries....................................................   21
           (g)       Counterparts.........................................................................................   22
           (h)       Headings.............................................................................................   22
           (i)       Governing Law........................................................................................   22
           (j)       Severability.........................................................................................   22
           (k)       Rules of Construction................................................................................   23
           (l)       Entire Agreement.....................................................................................   23
           (m)       Further Assurances...................................................................................   23
           (n)       Other Agreements.....................................................................................   23
</TABLE>

                                       ii
<PAGE>   4
                          REGISTRATION RIGHTS AGREEMENT

                  REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated [ ],
2001, among AMN Healthcare Services, Inc., a Delaware corporation (formerly
known as AMN Holdings, Inc.) (the "Company"), HWH Capital Partners, L.P., a
Delaware limited partnership ("HWH Capital Partners"), HWH Nightingale Partners,
L.P., a Delaware limited partnership ("HWH Nightingale"), HWP Capital Partners
II, L.P., a Delaware limited partnership ("HWP Capital Partners II"), HWP
Nightingale Partners II, L.P., a Delaware limited partnership ("HWP Nightingale
II" and together with HWH Capital Partners, HWH Nightingale and HWP Capital
Partners II, the "HWP Stockholders"), Steven Francis and Gayle Francis, as
Trustees of the Francis Family Trust dated May 24, 1996 (the "Trust"), Steven
Francis ("Francis" and together with the Trust, the "Francis Stockholders") and
BancAmerica Capital Investors SBIC I, L.P. ("BancAmerica").

                  WHEREAS, the Company intends to consummate an Initial Public
Offering (as hereinafter defined);

                  WHEREAS, the parties hereto desire to provide for, among other
things, the grant of registration rights with respect to the Registrable
Securities (as hereinafter defined) in contemplation of such Initial Public
Offering (as hereinafter defined).

                  NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereto agree as
follows:

                  1. Definitions. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:

                  "Affiliate" shall mean any Person who is an "affiliate" as
defined in Rule 12b-2 of the General Rules and Regulations under the Exchange
Act.

                  "Agreement" means this Agreement as the same may be amended,
supplemented or modified in accordance with the terms hereof.

                  "Approved Underwriter" has the meaning set forth in Section
3(f) of this Agreement.

                  "BancAmerica" has the meaning set forth in the preamble to
this Agreement.

                  "Board of Directors" means the Board of Directors of the
Company.

                  "Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in the State of New York are authorized or
required by law or executive order to close.
<PAGE>   5
                                                                               2

                  "Closing Price" means, with respect to the Registrable
Securities, as of the date of determination, (a) if the Registrable Securities
are listed on a national securities exchange, the closing price per share of a
Registrable Security on such date published in The Wall Street Journal (National
Edition) or, if no such closing price on such date is published in The Wall
Street Journal (National Edition), the average of the closing bid and asked
prices on such date, as officially reported on the principal national securities
exchange on which the Registrable Securities are then listed or admitted to
trading; or (b) if the Registrable Securities are not then listed or admitted to
trading on any national securities exchange but are designated as national
market system securities by the NASD, the last trading price per share of a
Registrable Security on such date; or (c) if there shall have been no trading on
such date or if the Registrable Securities are not designated as national market
system securities by the NASD, the average of the reported closing bid and asked
prices of the Registrable Securities on such date as shown by The Nasdaq Stock
Market, Inc. (or its successor) and reported by any member firm of The New York
Stock Exchange, Inc. selected by the Company; or (d) if none of (a), (b) or (c)
is applicable, a market price per share determined in good faith by the Board of
Directors or, if such determination is not satisfactory to the Designated Holder
for whom such determination is being made, by a nationally recognized investment
banking firm selected by the Company and such Designated Holder, the expenses
for which shall be borne equally by the Company and such Designated Holder. If
trading is conducted on a continuous basis on any exchange, then the closing
price shall be at 4:00 P.M. New York City time.

                  "Commission" means the Securities and Exchange Commission or
any similar agency then having jurisdiction to enforce the Securities Act.

                  "Common Stock" means the Common Stock, par value $0.01 per
share, of the Company or any other capital stock of the Company into which such
stock is reclassified or reconstituted and any other common stock of the
Company.

                  "Company" has the meaning set forth in the preamble to this
Agreement.

                  "Company Underwriter" has the meaning set forth in Section
4(a) of this Agreement.

                  "Demand Registration" has the meaning set forth in Section
3(a) of this Agreement.

                  "Designated Holder" means each of the HWP Stockholders, the
Francis Stockholders and BancAmerica and any transferee of any of them to whom
Registrable Securities have been transferred in accordance with Section 10(f) of
this Agreement, other than a transferee to whom Registrable Securities have been
transferred pursuant to a Registration Statement under the Securities Act or
Rule 144 or Regulation S under the Securities Act (or any successor rule
thereto).

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
<PAGE>   6
                                                                               3

                  "Francis" has the meaning set forth in the preamble to this
Agreement.

                  "Francis Stockholders" has the meaning set forth in the
preamble to this Agreement.

                  "Holders' Counsel" has the meaning set forth in Section
7(a)(i) of this Agreement.

                  "HWH Capital Partners" has the meaning set forth in the
preamble to this Agreement.

                  "HWP Capital Partners II" has the meaning set forth in the
preamble to this Agreement.

                  "HWH Nightingale" has the meaning set forth in the preamble to
this Agreement.

                  "HWP Nightingale II" has the meaning set forth in the preamble
to this Agreement.

                  "HWP Stockholders" has the meaning set forth in the preamble
to this Agreement.

                  "Incidental Registration" has the meaning set forth in Section
4(a) of this Agreement.

                  "Indemnified Party" has the meaning set forth in Section 8(c)
of this Agreement.

                  "Indemnifying Party" has the meaning set forth in Section 8(c)
of this Agreement.

                  "Initial Public Offering" means the initial public offering of
the shares of Common Stock of the Company pursuant to an effective Registration
Statement filed under the Securities Act.

                  "Initiating Holders" has the meaning set forth in Section 3(a)
of this Agreement.

                  "Inspector" has the meaning set forth in Section 7(a)(vii) of
this Agreement.

                  "IPO Effectiveness Date" means the date upon which the Company
consummates the Initial Public Offering.

                  "Liability" has the meaning set forth in Section 8(a) of this
Agreement.
<PAGE>   7
                                                                               4

                  "Market Price" means, on any date of determination, the
average of the daily Closing Price of the Registrable Securities for the
immediately preceding thirty (30) days on which the national securities
exchanges are open for trading; provided, however, that if the Closing Price is
determined pursuant to clause (d) of the definition of Closing Price, the
"Market Price" means such Closing Price on the date of determination.

                  "NASD" means the National Association of Securities Dealers,
Inc.

                  "Person" means any individual, firm, corporation, partnership,
limited liability company, trust, incorporated or unincorporated association,
joint venture, joint stock company, limited liability company, government (or an
agency or political subdivision thereof) or other entity of any kind, and shall
include any successor (by merger or otherwise) of such entity.

                  "Records" has the meaning set forth in Section 7(a)(vii) of
this Agreement.

                  "Registrable Securities" means each of the following: (a) any
and all shares of Common Stock now or hereafter owned by the Designated Holders
or issued or issuable upon conversion of any convertible securities or exercise
of any warrants or options held by any of the Designated Holders and (b) any
shares of Common Stock issued or issuable to any of the Designated Holders with
respect to the Registrable Securities by way of stock dividend or stock split or
in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise and any shares of Common
Stock or voting common stock issuable upon conversion, exercise or exchange
thereof.

                  "Registration Expenses" has the meaning set forth in Section
7(d) of this Agreement.

                  "Registration Statement" means a Registration Statement filed
pursuant to the Securities Act.

                  "Rights Agreement" has the meaning set forth in Section 10(l)
of this Agreement.

                  "S-3 Initiating Holders" has the meaning set forth in Section
5(a) of this Agreement.

                  "S-3 Registration" has the meaning set forth in Section 5(a)
of this Agreement.

                  "Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission promulgated thereunder.

                  "Stockholders Agreement" has the meaning set forth in Section
10(l) of this Agreement.
<PAGE>   8
                                                                               5

         "Trust" has the meaning set forth in the preamble to this Agreement.

         "Valid Business Reason" has the meaning set forth in Section 3(a) of
this Agreement.

         2. General; Securities Subject to this Agreement.

                  (a) Grant of Rights. The Company hereby grants registration
rights to the Designated Holders upon the terms and conditions set forth in this
Agreement.

                  (b) Registrable Securities. For the purposes of this
Agreement, Registrable Securities held by any Designated Holder will cease to be
Registrable Securities, when (i) a Registration Statement covering such
Registrable Securities has been declared effective under the Securities Act by
the Commission and such Registrable Securities have been disposed of pursuant to
such effective Registration Statement, (ii) (x) the entire amount of the
Registrable Securities held by any Designated Holder may be sold in a single
sale, in the opinion of counsel satisfactory to the Company and such Designated
Holder, each in their reasonable judgment, without any limitation as to volume
pursuant to Rule 144 (or any successor provision then in effect) under the
Securities Act and (y) such Designated Holder owns less than one percent (1%) of
the outstanding shares of Common Stock on a fully diluted basis or (iii) the
Registrable Securities are proposed to be sold or distributed by a Person not
entitled to the registration rights granted by this Agreement.

                  (c) Holders of Registrable Securities. A Person is deemed to
be a holder of Registrable Securities whenever such Person owns of record
Registrable Securities, or holds an option to purchase, or a security
convertible into or exercisable or exchangeable for, Registrable Securities
whether or not such acquisition or conversion has actually been effected. If the
Company receives conflicting instructions, notices or elections from two or more
Persons with respect to the same Registrable Securities, the Company may act
upon the basis of the instructions, notice or election received from the
registered owner of such Registrable Securities. Registrable Securities issuable
upon exercise of an option or upon conversion of another security shall be
deemed outstanding for the purposes of this Agreement.

         3. Demand Registration.

                  (a) Request for Demand Registration. The HWP Stockholders as a
group, acting through HWH Capital Partners or its written designee, or
BancAmerica may make a written request to the Company to register (the party
making such request, the "Initiating Holders"), and the Company shall register,
under the Securities Act (other than pursuant to a Registration Statement on
Form S-4 or S-8 or any successor thereto) (a "Demand Registration"), the number
of Registrable Securities stated in such request; provided, however, that the
Company shall not be obligated to effect (x) more than five such Demand
Registrations requested by the HWP Stockholders and more than one such Demand
Registration requested by BancAmerica, (y) a Demand Registration if the
<PAGE>   9
                                                                               6

Initiating Holders, together with the Designated Holders (other than the
Initiating Holders) which have requested to register securities in such
registration pursuant to Section 3(b), propose to sell their Registrable
Securities at an aggregate price (calculated based upon the Market Price of the
Registrable Securities on the date of filing of the Registration Statement with
respect to such Registrable Securities) to the public of less than $5,000,000
and (z)(i) in the case of a Demand Registration requested by the HWP
Stockholders, any such Demand Registration commencing prior to 180 days after
the IPO Effectiveness Date or (ii) in the case of a Demand Registration
requested by BancAmerica, any such Demand Registration commencing prior to one
year after the IPO Effectiveness Date. For purposes of the preceding sentence,
two or more Registration Statements filed in response to one demand shall be
counted as one Demand Registration. If the Board of Directors, in its good faith
judgment, determines that any registration of Registrable Securities should not
be made or continued because it would materially interfere with any material
financing, acquisition, corporate reorganization or merger or other material
transaction involving the Company (a "Valid Business Reason"), the Company may
(x) postpone filing a Registration Statement relating to a Demand Registration
until such Valid Business Reason no longer exists, but in no event for more than
(i) forty-five (45) days in the case of a Demand Registration requested by the
HWP Stockholders and (ii) nine (9) months in the case of a Demand Registration
requested by BancAmerica, and (y) in case a Registration Statement has been
filed relating to a Demand Registration, the Company, upon the approval of a
majority of the Board of Directors, may cause such Registration Statement to be
withdrawn and its effectiveness terminated or may postpone amending or
supplementing such Registration Statement (in which case, if the Valid Business
Reason no longer exists or if more forty-five (45) days (in the case of a Demand
Registration requested by the HWP Stockholders) or nine (9) months (in the case
of a Demand Registration requested by BancAmerica) have passed since such
withdrawal or postponement, the Initiating Holders may request a new Demand
Registration). The Company shall give written notice of its determination to
postpone or withdraw a Registration Statement and of the fact that the Valid
Business Reason for such postponement or withdrawal no longer exists, in each
case, promptly after the occurrence thereof. Notwithstanding anything to the
contrary contained herein, the Company may not postpone or withdraw a filing
under this Section 3(a) more than once in any eighteen (18) month period. Each
request for a Demand Registration by the Initiating Holders shall state the
amount of the Registrable Securities proposed to be sold and the intended method
of disposition thereof.

                  (b) Incidental or "Piggy-Back" Rights with Respect to a Demand
Registration. Each of the Designated Holders (other than Initiating Holders
which have requested a registration under Section 3(a)) may offer its or his
Registrable Securities under any Demand Registration pursuant to this Section 3.
Within five (5) days after the receipt of a request for a Demand Registration
from an Initiating Holder, the Company shall (i) give written notice thereof to
all of the Designated Holders (other than Initiating Holders which have
requested a registration under Section 3(a)) and (ii) subject to Section 3(e),
include in such registration all of the Registrable Securities held by such
Designated Holders from whom the Company has received a written request for
inclusion therein within ten (10) days of the receipt by such Designated Holders
of such written notice referred to in clause (i) above. Each such request by
such Designated
<PAGE>   10
                                                                               7

Holder shall specify the number of Registrable Securities proposed to be
registered. The failure of any Designated Holder to respond within such 10-day
period referred to in clause (ii) above shall be deemed to be a waiver of such
Designated Holder's rights under this Section 3(b) with respect to such Demand
Registration. Any Designated Holder may waive its rights under this Section 3(b)
prior to the expiration of such 10-day period by giving written notice to the
Company, with a copy to the Initiating Holders. If a Designated Holder sends the
Company a written request for inclusion of part or all of such Designated
Holder's Registrable Securities in a registration, such Designated Holder shall
not be entitled to withdraw or revoke such request without the prior written
consent of the Company in its sole discretion unless, (i) as a result of facts
or circumstances arising after the date on which such request was made relating
to the Company or to market conditions, such Designated Holder reasonably
determines that participation in such registration would have a material adverse
effect on such Designated Holder or (ii) if the Closing Price declines by more
than forty percent (40%) from the date the Initiating Holders requested such
Demand Registration.

                  (c) Effective Demand Registration. The Company shall use its
commercially reasonable efforts to cause any such Demand Registration to become
and remain effective not later than sixty (60) days after it receives a request
under Section 3(a) hereof. A registration shall not constitute a Demand
Registration until it has become effective and remains continuously effective
for the lesser of (i) the period during which all Registrable Securities
registered in the Demand Registration are sold or (ii) 120 days; provided,
however, that a registration shall not constitute a Demand Registration if (x)
after such Demand Registration has become effective, such registration or the
related offer, sale or distribution of Registrable Securities thereunder is
interfered with by any stop order, injunction or other order or requirement of
the Commission or other governmental agency or court for any reason not
attributable to the Initiating Holders and such interference is not thereafter
eliminated or (y) the conditions specified in the underwriting agreement, if
any, entered into in connection with such Demand Registration are not satisfied
or waived, other than by reason of a failure by the Initiating Holder.

                  (d) Expenses. The Company shall pay all Registration Expenses
in connection with a Demand Registration, whether or not such Demand
Registration becomes effective.

                  (e) Underwriting Procedures. If the Company or the Initiating
Holders so elect, the Company shall use its commercially reasonable efforts to
cause such Demand Registration to be in the form of a firm commitment
underwritten offering and the managing underwriter or underwriters selected for
such offering shall be the Approved Underwriter selected in accordance with
Section 3(f). In connection with any Demand Registration under this Section 3
involving an underwritten offering, none of the Registrable Securities held by
any Designated Holder making a request for inclusion of such Registrable
Securities pursuant to Section 3(b) hereof shall be included in such
underwritten offering unless such Designated Holder accepts the terms of the
offering as agreed upon by the Company, the Initiating Holders and the Approved
Underwriter, and then only in such quantity as set forth below. If the Approved
Underwriter advises the
<PAGE>   11
                                                                               8

Company that the aggregate amount of such Registrable Securities requested to be
included in such offering is sufficiently large to have a material adverse
effect on the success of such offering, then the Company shall include in such
registration, to the extent of the amount that the Approved Underwriter believes
may be sold without causing such material adverse effect, first, such number of
Registrable Securities of the Initiating Holders and any Designated Holder
participating in the offering pursuant to the terms of Section 3(b), which
Registrable Securities shall be allocated pro rata among such Initiating Holders
and Designated Holders, based on the number of Registrable Securities held by
each such Initiating Holder or Designated Holder, as the case may be, second,
any other securities of the Company requested by holders thereof to be included
in such registration, which such securities shall be allocated pro rata among
such stockholders, based on the number of the Company's securities held by each
such stockholder, and third, securities offered by the Company for its own
account.

                  (f) Selection of Underwriters. If any Demand Registration or
S-3 Registration, as the case may be, of Registrable Securities is in the form
of an underwritten offering, the Company shall select and obtain an investment
banking firm of national reputation to act as the managing underwriter of the
offering (the "Approved Underwriter"); provided, however, that the Approved
Underwriter shall, in any case, also be approved by the Initiating Holders or
S-3 Initiating Holders, as the case may be, such approval not to be unreasonably
withheld.

         4. Incidental or "Piggy-Back" Registration.

                  (a) Request for Incidental Registration. At any time after the
IPO Effectiveness Date, if the Company proposes to file a Registration Statement
under the Securities Act with respect to an offering by the Company for its own
account (other than a Registration Statement on Form S-4 or S-8 or any successor
thereto) or for the account of any stockholder of the Company other than the
Designated Holders, then the Company shall give written notice of such proposed
filing to each of the Designated Holders at least twenty (20) days before the
anticipated filing date, and such notice shall describe the proposed
registration and distribution and offer such Designated Holders the opportunity
to register the number of Registrable Securities as each such Designated Holder
may request (an "Incidental Registration"). The Company shall use its
commercially reasonable efforts (within twenty (20) days of the notice provided
for in the preceding sentence) to cause the managing underwriter or underwriters
in the case of a proposed underwritten offering (the "Company Underwriter") to
permit each of the Designated Holders who have requested in writing to
participate in the Incidental Registration to include its or his Registrable
Securities in such offering on the same terms and conditions as the securities
of the Company or the account of such other stockholder, as the case may be,
included therein. In connection with any Incidental Registration under this
Section 4(a) involving an underwritten offering, the Company shall not be
required to include any Registrable Securities in such underwritten offering
unless the Designated Holders thereof accept the terms of the underwritten
offering as agreed upon between the Company, such other stockholders, if any,
and the Company Underwriter, and then only in such quantity as set forth below.
If the Company Underwriter determines that the registration of all or part of
the securities that have been requested to
<PAGE>   12
                                                                               9

be included would materially adversely affect the success of such offering, then
the Company shall be required to include in such Incidental Registration, to the
extent of the amount that the Company Underwriter believes may be sold without
causing such material adverse effect, first, all of the securities to be offered
for the account of the Company and second, any other securities of the Company
requested by stockholders to be included in such offering (including the
Designated Holders), which such securities shall be allocated pro rata among the
stockholders participating in the offering based on the number of the Company's
securities held by each such stockholder.

                  (b) Expenses. The Company shall bear all Registration Expenses
in connection with any Incidental Registration pursuant to this Section 4,
whether or not such Incidental Registration becomes effective.

         5. Form S-3 Registration.

                  (a) Request for a Form S-3 Registration. The Company will use
its commercially reasonable efforts to file all required reports under the
Exchange Act in order to qualify for the use of Form S-3 under the Securities
Act; provided, that this covenant shall not require the Company to remain a
reporting company under the Exchange Act if the Company shall have determined to
enter into a merger, acquisition, going private transaction or similar
transaction. Upon the Company becoming eligible for use of Form S-3 (or any
successor form thereto) under the Securities Act in connection with a public
offering of its securities, in the event that the Company shall receive from one
or more of the HWP Stockholders, acting through HWH Capital Partners or its
written designee (the "S-3 Initiating Holders"), a written request that the
Company register, under the Securities Act on Form S-3 (or any successor form
then in effect) (an "S-3 Registration"), all or a portion of the Registrable
Securities owned by such S-3 Initiating Holders, the Company shall give written
notice of such request to all of the Designated Holders (other than S-3
Initiating Holders which have requested an S-3 Registration under this Section
5(a)) at least ten (10) days before the anticipated filing date of such Form
S-3, and such notice shall describe the proposed registration and offer such
Designated Holders the opportunity to register the number of Registrable
Securities as each such Designated Holder may request in writing to the Company,
given within ten (10) days after their receipt from the Company of the written
notice of such registration. With respect to each S-3 Registration, the Company
shall, subject to Section 5(b), (i) include in such offering the Registrable
Securities of the S-3 Initiating Holders and the Designated Holders (who have
requested in writing to participate in such registration on the same terms and
conditions as the Registrable Securities of the S-3 Initiating Holders included
therein) and (ii) use its commercially reasonable efforts to cause such
registration pursuant to this Section 5(a) to become and remain effective as
soon as practicable.

                  (b) Form S-3 Underwriting Procedures. If the S-3 Initiating
Holders so elect, the Company shall use its commercially reasonable efforts to
cause such S-3 Registration pursuant to this Section 5 to be in the form of a
firm commitment underwritten offering and the managing underwriter or
underwriters selected for such offering shall be the Approved Underwriter
selected in accordance with Section 3(f).
<PAGE>   13
                                                                              10

In connection with any S-3 Registration under Section 5(a) involving an
underwritten offering, the Company shall not be required to include any
Registrable Securities in such underwritten offering unless the Designated
Holders thereof accept the terms of the underwritten offering as agreed upon
between the Company, the Approved Underwriter and the S-3 Initiating Holders,
and then only in such quantity as set forth below. If the Approved Underwriter
believes that the registration of all or part of the Registrable Securities
which the S-3 Initiating Holders and the other Designated Holders have requested
to be included would materially adversely affect the success of such public
offering, then the Company shall be required to include in the underwritten
offering, to the extent of the amount that the Approved Underwriter believes may
be sold without causing such material adverse effect, first, such number of
Registrable Securities of the S-3 Initiating Holders and any Designated Holder
participating in the offering pursuant to the terms of Section 5(a) hereof,
which such Registrable Securities shall be allocated pro rata among such S-3
Initiating Holders and Designated Holders, based on the number of Registrable
Securities held by each such S-3 Initiating Holder or Designated Holder, as the
case may be, second, any other securities of the Company requested by holders
thereof to be included in such registration, which such securities shall be
allocated pro rata among such stockholders, based on the number of the Company's
securities held by each such stockholder, and third, securities offered by the
Company for its own account.

                  (c) Limitations on Form S-3 Registrations. If the Board of
Directors has a Valid Business Reason, the Company may (x) postpone filing a
Registration Statement relating to a S-3 Registration until such Valid Business
Reason no longer exists, but in no event for more than forty-five (45) days
following the request and (y) in case a Registration Statement has been filed
relating to a S-3 Registration, the Company, upon the approval of a majority of
the Board of Directors, may cause such Registration Statement to be withdrawn
and its effectiveness terminated or may postpone amending or supplementing such
Registration Statement (in which case, if the Valid Business Reason no longer
exists or if more than forty-five (45) days have passed since such withdrawal or
postponement, the S-3 Initiating Holder may request the prompt amendment or
supplement of such Registration Statement or a new S-3 Registration). The
Company shall give written notice of its determination to postpone or withdraw a
Registration Statement and of the fact that the Valid Business Reason for such
postponement or withdrawal no longer exists, in each case, promptly after the
occurrence thereof. Notwithstanding anything to the contrary contained herein,
the Company may not postpone or withdraw a filing, under either this Section or
Section 3(a), due to a Valid Business Reason more than once in any twelve (12)
month period. In addition, the Company shall not be required to effect any
registration pursuant to Section 5(a), (i) within ninety (90) days after the
effective date of any other Registration Statement of the Company (other than a
Registration Statement on Form S-4 or S-8 or any successor thereto), (ii) if
Form S-3 is not available for such offering by the S-3 Initiating Holders or
(iii) if the S-3 Initiating Holders, together with the Designated Holders (other
than S-3 Initiating Holders which have requested an S-3 Registration under
Section 5(a)) registering Registrable Securities in such registration, propose
to sell their Registrable Securities at an aggregate price (calculated based
upon the Market Price of the Registrable Securities on the date of filing of the
Form S-3 with respect to such Registrable Securities) to the public of less than
$5,000,000.
<PAGE>   14
                                                                              11

                  (d) Expenses. The Company shall bear all Registration Expenses
in connection with any S-3 Registration pursuant to this Section 5, whether or
not such S-3 Registration become effective.

                  (e) No Demand Registration. No registration requested by any
Designated Holder pursuant to this Section 5 shall be deemed a Demand
Registration pursuant to Section 3.

         6. Holdback Agreements.

                  (a) Restrictions on Public Sale by Designated Holders. Any
Designated Holder selling Registrable Securities pursuant to a Registration
Statement under Sections 3, 4 or 5 of this Agreement, to the extent (i)
requested (A) by the Company, the Initiating Holders or the S-3 Initiating
Holders, as the case may be, in the case of a non-underwritten public offering
and (B) by the Approved Underwriter or the Company Underwriter, as the case may
be, in the case of an underwritten public offering and (ii) all of the Company's
executive officers, directors and holders in excess of one percent (1%) of its
outstanding capital stock execute agreements identical to those referred to in
this Section 6(a), agrees (x) not to effect any public sale or distribution of
any Registrable Securities or of any securities convertible into or exchangeable
or exercisable for such Registrable Securities, including a sale pursuant to
Rule 144 under the Securities Act, or offer to sell, contract to sell (including
without limitation any short sale), grant any option to purchase or enter into
any hedging or similar transaction with the same economic effect as a sale any
Registrable Securities and (y) not to make any request for a Demand Registration
or S-3 Registration under this Agreement, during the period beginning on the
fifteenth (15th) day prior to the expected effective date (as determined by the
Company, which shall notify the Designated Holders of such date in writing) of
such Registration Statement and ending on the ninetieth (90th) day following the
actual effective date of such Registration Statement, or such shorter period, if
any, mutually agreed upon by such Designated Holder and the requesting party
(except as part of such registration). No Designated Holder of Registrable
Securities subject to the foregoing restrictions shall be released from any
obligation under any agreement, arrangement or understanding entered into
pursuant to this Section 6(a) unless all other Designated Holders of Registrable
Securities subject to the same obligation are also released. Further, to the
extent that any Designated Holder is subject to any trading restriction policy,
or other similar policy, adopted by the Board of Directors, such Designated
Holder shall comply with the applicable restrictions of such policy.

                  (b) Restrictions on Public Sale by the Company. The Company
agrees not to effect any public sale or distribution of any of its securities,
or any securities convertible into or exchangeable or exercisable for such
securities (except pursuant to registrations on Form S-4 or S-8 or any successor
thereto), during the period beginning on the fifteenth (15th) day prior to the
expected effective date (as determined by the Company) of any Registration
Statement in which the Designated Holders of Registrable Securities are
participating and ending on the earlier of (i) the date on which all Registrable
Securities registered on such Registration Statement are sold and
<PAGE>   15
                                                                              12

(ii) 90 days after the actual effective date of such Registration Statement
(except as part of such registration).

         7. Registration Procedures.

                  (a) Obligations of the Company. Whenever registration of
Registrable Securities has been requested pursuant to Section 3, Section 4 or
Section 5 of this Agreement, the Company shall use its commercially reasonable
efforts to effect the registration and sale of such Registrable Securities in
accordance with the intended method of distribution thereof as quickly as
practicable, and in connection with any such request, the Company shall, as
expeditiously as possible:

                           (i) prepare and file with the Commission (as promptly
as practicable, but in any event not later than sixty (60) days after receipt of
a request to file a Registration Statement with respect to Registrable
Securities) a Registration Statement on any form for which the Company then
qualifies or which counsel for the Company shall deem appropriate and which form
shall be available for the sale of such Registrable Securities in accordance
with the intended method of distribution thereof, and cause such Registration
Statement to become effective; provided, however, that (x) before filing a
Registration Statement or prospectus or any amendments or supplements thereto,
the Company shall provide counsel selected by the Designated Holders holding a
majority of the Registrable Securities being registered in such registration
("Holders' Counsel") and any other Inspector (as hereinafter defined) with an
opportunity to review and comment on such Registration Statement and each
prospectus included therein (and each amendment or supplement thereto) to be
filed with the Commission, subject to such documents being under the Company's
control, and (y) the Company shall notify the Holders' Counsel and each seller
of Registrable Securities of any stop order issued or threatened by the
Commission and take all reasonable actions required to prevent the entry of such
stop order or to remove it if entered;

                           (ii) prepare and file with the Commission such
amendments and supplements to such Registration Statement and the prospectus
used in connection therewith as may be necessary to keep such Registration
Statement effective for the lesser of (x) 120 days (except in the case of a
registration filed pursuant to Rule 415 of the Securities Act or any successor
rule or regulation) and (y) such shorter period which will terminate when all
Registrable Securities covered by such Registration Statement have been sold,
and comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration Statement during such
period in accordance with the intended methods of disposition by the sellers
thereof set forth in such Registration Statement;

                           (iii) furnish to each seller of Registrable
Securities such number of copies of such Registration Statement, each amendment
and supplement thereto (in each case including all exhibits thereto), and the
prospectus included in such Registration Statement (including each preliminary
prospectus) and any prospectus filed under Rule 424 under the Securities Act as
each such seller may reasonably request in order to facilitate the disposition
of the Registrable Securities owned by such seller;
<PAGE>   16
                                                                              13

                           (iv) register or qualify such Registrable Securities
under such other securities or "blue sky" laws of such jurisdictions as any
seller of Registrable Securities may reasonably request, and to continue such
qualification in effect in such jurisdiction for as long as permissible pursuant
to the laws of such jurisdiction, or for as long as any such seller requests or
until all of such Registrable Securities are sold, whichever is shortest, and do
any and all other acts and things which may be reasonably necessary or advisable
to enable any such seller to consummate the disposition in such jurisdictions of
the Registrable Securities owned by such seller; provided, however, that the
Company shall not be required to (x) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 7(a)(iv), (y) subject itself to taxation in any such jurisdiction or (z)
consent to general service of process in any such jurisdiction;

                           (v) notify each seller of Registrable Securities at
any time when a prospectus relating thereto is required to be delivered under
the Securities Act, upon discovery that, or upon the happening of any event as a
result of which, the prospectus included in such Registration Statement contains
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading and the
Company shall promptly prepare a supplement or amendment to such prospectus and
furnish to each seller of Registrable Securities a reasonable number of copies
of such supplement to or an amendment of such prospectus as may be necessary so
that, after delivery to the purchasers of such Registrable Securities, such
prospectus shall not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading;

                           (vi) enter into and perform customary agreements
(including an underwriting agreement in customary form with the Approved
Underwriter or Company Underwriter, if any, selected as provided in Section 3,
Section 4 or Section 5, as the case may be) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of such
Registrable Securities, including causing its officers to participate in "road
shows" and other information meetings organized by the Approved Underwriter or
Company Underwriter;

                           (vii) make available at reasonable times for
inspection by any seller of Registrable Securities, any managing underwriter
participating in any disposition of such Registrable Securities pursuant to a
Registration Statement, Holders' Counsel and any attorney or accountant retained
by any such seller or any managing underwriter (each, an "Inspector" and
collectively, the "Inspectors"), all financial and other records, pertinent
corporate documents and properties of the Company and its subsidiaries
(collectively, the "Records") as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, and cause the Company's and its
subsidiaries' officers, directors and employees, and the independent public
accountants of the Company, to supply all information reasonably requested by
any such Inspector in connection with such Registration Statement. Records that
the Company determines, in good faith, to be confidential and which it notifies
the Inspectors are confidential shall
<PAGE>   17
                                                                              14

not be disclosed by the Inspectors (and the Inspectors shall confirm their
agreement in writing in advance to the Company if the Company shall so request)
unless (x) the disclosure of such Records is necessary, in the Company's
judgment, to avoid or correct a misstatement or omission in the Registration
Statement, (y) the release of such Records is ordered pursuant to a subpoena or
other order from a court of competent jurisdiction after exhaustion of all
appeals therefrom or (z) the information in such Records was known to the
Inspectors on a non-confidential basis prior to its disclosure by the Company or
has been made generally available to the public. Each seller of Registrable
Securities agrees that it shall, upon learning that disclosure of such Records
is sought in a court of competent jurisdiction, give notice to the Company and
allow the Company, at the Company's expense, to undertake appropriate action to
prevent disclosure of the Records deemed confidential;

                           (viii) if such sale is pursuant to an underwritten
offering, obtain a "cold comfort" letters dated the effective date of the
Registration Statement and the date of the closing under the underwriting
agreement from the Company's independent public accountants in customary form
and covering such matters of the type customarily covered by "cold comfort"
letters as the managing underwriter reasonably requests;

                           (ix) furnish, at the request of any seller of
Registrable Securities on the date such securities are delivered to the
underwriters for sale pursuant to such registration or, if such securities are
not being sold through underwriters, on the date the Registration Statement with
respect to such securities becomes effective, an opinion, dated such date, of
counsel representing the Company for the purposes of such registration,
addressed to the underwriters, if any, and to the seller making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the underwriters, if any, and such seller may
reasonably request and are customarily included in such opinions;

                           (x) comply with all applicable rules and regulations
of the Commission, and make available to its security holders, as soon as
reasonably practicable but no later than fifteen (15) months after the effective
date of the Registration Statement, an earnings statement covering a period of
twelve (12) months beginning after the effective date of the Registration
Statement, in a manner which satisfies the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder;

                           (xi) cause all such Registrable Securities to be
listed on each securities exchange on which similar securities issued by the
Company are then listed, provided that the applicable listing requirements are
satisfied;

                           (xii) cooperate with each seller of Registrable
Securities and each underwriter participating in the disposition of such
Registrable Securities and their respective counsel in connection with any
filings required to be made with the NASD;
<PAGE>   18
                                                                              15

                           (xiii) use its commercially reasonable efforts to
cause the Registrable Securities covered by such Registration Statement to be
registered with or approved by such other governmental agencies or authorities
as may be reasonably necessary by virtue of the business and operations of the
Company to enable the seller or sellers of Registrable Securities to consummate
the disposition of such Registrable Securities;

                           (xiv) keep each seller of Registrable Securities
advised as to all material developments of any registration under Sections 3, 4
or 5 hereunder;

                           (xv) provide officers' certificates and other
customary closing documents; and

                           (xvi) take all other steps reasonably necessary to
effect the registration of the Registrable Securities contemplated hereby and
reasonably cooperate with the holders of such Registrable Securities to
facilitate the disposition of such Registrable Securities pursuant thereto.

                  (b) Seller Information. The Company may require each seller of
Registrable Securities as to which any registration is being effected to
furnish, and such seller shall furnish, to the Company such information required
to be included in such Registration Statement by applicable securities laws or
otherwise necessary or desirable in connection with the disposition of such
Registrable Securities as the Company may from time to time reasonably request
in writing. If any seller of Registrable Securities fails to provide such
information required to be included in such Registration Statement by applicable
securities laws or otherwise necessary or desirable in connection with the
disposition of such Registrable Securities in a timely manner after written
request therefor, the Company may exclude such seller's Registrable Securities
from a registration under Sections 3, 4 or 5 hereof.

                  (c) Notice to Discontinue. Each Designated Holder agrees that,
upon receipt of any notice from the Company of the happening of any event of the
kind described in Section 7(a)(v), such Designated Holder shall forthwith
discontinue disposition of Registrable Securities pursuant to the Registration
Statement covering such Registrable Securities until such Designated Holder's
receipt of the copies of the supplemented or amended prospectus contemplated by
Section 7(a)(v) and, if so directed by the Company, such Designated Holder shall
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in such Designated Holder's possession, of the
prospectus covering such Registrable Securities which is current at the time of
receipt of such notice. If the Company shall give any such notice, the Company
shall extend the period during which such Registration Statement shall be
maintained effective pursuant to this Agreement (including, without limitation,
the period referred to in Section 7(a)(ii)) by the number of days during the
period from and including the date of the giving of such notice pursuant to
Section 7(a)(v) to and including the date when sellers of such Registrable
Securities under such Registration Statement shall have received the copies of
the supplemented or amended prospectus contemplated by and meeting the
requirements of Section 7(a)(v).
<PAGE>   19
                                                                              16

                  (d) Registration Expenses. The Company shall pay all expenses
arising from or incident to its performance of, or compliance with, this
Agreement, including, without limitation, (i) Commission, stock exchange and
NASD registration and filing fees, (ii) all fees and expenses incurred in
complying with securities or "blue sky" laws (including reasonable fees, charges
and disbursements of counsel to any underwriter incurred in connection with
"blue sky" qualifications of the Registrable Securities as may be set forth in
any underwriting agreement), (iii) all printing, messenger and delivery expenses
and (iv) the fees, charges and expenses of counsel to the Company and of its
independent public accountants and any other accounting fees, charges and
expenses incurred by the Company (including, without limitation, any expenses
arising from any "cold comfort" letters or any special audits incident to or
required by any registration or qualification), regardless of whether such
Registration Statement is declared effective. All of the expenses described in
the preceding sentence of this Section 7(d) are referred to herein as
"Registration Expenses." The Designated Holders of Registrable Securities sold
pursuant to a Registration Statement shall bear the expense of any broker's
commission or underwriter's discount or commission relating to registration and
sale of such Designated Holders' Registrable Securities and shall bear the fees
and expenses of their own counsel.

         8. Indemnification; Contribution.

                  (a) Indemnification by the Company. The Company agrees to
indemnify and hold harmless each Designated Holder, its partners, directors,
officers, affiliates, members, employees and each Person who controls (within
the meaning of Section 15 of the Securities Act) such Designated Holder from and
against any and all losses, claims, damages, liabilities and expenses
(including, but not limited to, reasonable costs and expenses of legal counsel
or otherwise arising from any investigation, action or proceeding, whether
commenced or threatened, in respect to any of the foregoing) (each, a
"Liability" and collectively, "Liabilities"), arising out of or based upon any
untrue, or allegedly untrue, statement of a material fact contained in any
Registration Statement, prospectus or preliminary prospectus or notification or
offering circular (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) or arising out of or based upon
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading under
the circumstances such statements were made, except insofar as such Liability
arises out of or is based upon any untrue statement or alleged untrue statement
or omission or alleged omission contained in such Registration Statement,
preliminary prospectus or final prospectus in reliance and in conformity with
information concerning such Designated Holder furnished in writing to the
Company by such Designated Holder expressly for use therein, including, without
limitation, the information furnished to the Company pursuant to Section 8(b).
The Company shall also provide customary indemnities to any underwriters of the
Registrable Securities, their officers, directors and employees and each Person
who controls such underwriters (within the meaning of Section 15 of the
Securities Act) to the same extent as provided above with respect to the
indemnification of the Designated Holders of Registrable Securities.
<PAGE>   20
                                                                              17

                  (b) Indemnification by Designated Holders. In connection with
any Registration Statement in which a Designated Holder is participating
pursuant to Section 3, Section 4 or Section 5 hereof, each such Designated
Holder shall promptly furnish to the Company in writing such information with
respect to such Designated Holder as the Company may reasonably request or as
may be required by law for use in connection with any such Registration
Statement or prospectus and all information required to be disclosed in order to
make the information previously furnished to the Company by such Designated
Holder not materially misleading or necessary to cause such Registration
Statement not to omit a material fact with respect to such Designated Holder
necessary in order to make the statements therein not misleading. Each
Designated Holder agrees severally to indemnify and hold harmless the Company,
the other Designated Holders who participate in the Registration Statement, any
underwriter retained by the Company and each Person who controls the Company,
the other Designated Holders who participate in the Registration Statement or
such underwriter (within the meaning of Section 15 of the Securities Act) to the
same extent as the foregoing indemnity from the Company to the Designated
Holders (including indemnification of their respective partners, directors,
officers, members and employees), but only to the extent that Liabilities arise
out of or are based upon a statement or alleged statement or an omission or
alleged omission that was made in reliance upon and in conformity with
information with respect to such Designated Holder furnished in writing to the
Company by such Designated Holder expressly for use in such Registration
Statement or prospectus, including, without limitation, the information
furnished to the Company pursuant to this Section 8(b); provided, however, that
the total amount to be indemnified by such Designated Holder pursuant to this
Section 8(b) shall be limited to the net proceeds received by such Designated
Holder in the offering to which the Registration Statement or prospectus
relates.

                  (c) Conduct of Indemnification Proceedings. Any Person
entitled to indemnification or contribution hereunder (the "Indemnified Party")
agrees to give prompt written notice to the indemnifying party (the
"Indemnifying Party") after the receipt by the Indemnified Party of any written
notice of the commencement of any action, suit, proceeding or investigation or
threat thereof made in writing for which the Indemnified Party intends to claim
indemnification or contribution pursuant to this Agreement; provided, however,
that the failure so to notify the Indemnifying Party shall not relieve the
Indemnifying Party of any Liability that it may have to the Indemnified Party
hereunder (except to the extent that the Indemnifying Party is materially
prejudiced or otherwise forfeits substantive rights or defenses by reason of
such failure). If notice of commencement of any such action is given to the
Indemnifying Party as above provided, the Indemnifying Party shall be entitled
to participate in and, to the extent it may wish, jointly with any other
Indemnifying Party similarly notified, to assume the defense of such action at
its own expense, with counsel chosen by it and reasonably satisfactory to such
Indemnified Party. Each Indemnified Party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be paid by the Indemnified Party
unless (i) the Indemnifying Party agrees to pay the same, (ii) the Indemnifying
Party fails to assume the defense of such action with counsel reasonably
satisfactory to the Indemnified Party or (iii) the named parties to any such
action (including any impleaded parties) include
<PAGE>   21
                                                                              18

both the Indemnifying Party and the Indemnified Party and such parties have been
advised by such counsel that either (x) representation of such Indemnified Party
and the Indemnifying Party by the same counsel would be inappropriate under
applicable standards of professional conduct or (y) there may be one or more
legal defenses available to the Indemnified Party which are different from or
additional to those available to the Indemnifying Party. In any of such cases,
the Indemnifying Party shall not have the right to assume the defense of such
action on behalf of such Indemnified Party, it being understood, however, that
the Indemnifying Party shall not be liable for the reasonable fees and expenses
of more than one separate firm of attorneys (in addition to any local counsel)
for all Indemnified Parties and all such expenses shall be reimbursed as
incurred. No Indemnifying Party shall be liable for any settlement entered into
without its written consent, which consent shall not be unreasonably withheld.
No Indemnifying Party shall, without the consent of such Indemnified Party,
effect any settlement of any pending or threatened proceeding in respect of
which such Indemnified Party is a party and indemnity has been sought hereunder
by such Indemnified Party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability for claims that are the
subject matter of such proceeding. Notwithstanding the foregoing, if at any time
an Indemnified Party shall have requested the Indemnifying Party to reimburse
the Indemnified Party for fees and expenses of counsel as contemplated by this
Section 8, the Indemnifying Party agrees that it shall be liable for any
settlement of any proceeding effected without the Indemnifying Party's written
consent if (i) such settlement is entered into more than thirty (30) business
days after receipt by the Indemnifying Party of the aforesaid request and (ii)
the Indemnifying Party shall not have reimbursed the Indemnified Party in
accordance with such request or contested the reasonableness of such fees and
expenses prior to the date of such settlement.

                  (d) Contribution. If the indemnification provided for in this
Section 8 from the Indemnifying Party is unavailable to an Indemnified Party
hereunder or insufficient to hold harmless an Indemnified Party in respect of
any Liabilities referred to herein, then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Liabilities in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party and Indemnified Party in connection with the actions which resulted in
such Liabilities, as well as any other relevant equitable considerations. The
relative faults of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action. The amount paid or payable by a party as a
result of the Liabilities referred to above shall be deemed to include, subject
to the limitations set forth in Sections 8(a), 8(b) and 8(c), any legal or other
fees, charges or expenses reasonably incurred by such party in connection with
any investigation or proceeding; provided that the total amount to be
contributed by any Designated Holder shall be limited to the net proceeds
received by such Designated Holder in the offering.
<PAGE>   22
                                                                              19

                  The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 8(d) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.

         9. Rule 144. The Company covenants that from and after the IPO
Effectiveness Date it shall (a) file any reports required to be filed by it
under the Exchange Act and (b) take such further action as each Designated
Holder may reasonably request (including providing any information necessary to
comply with Rule 144 under the Securities Act), all to the extent required from
time to time to enable such Designated Holder to sell Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by (i) Rule 144 under the Securities Act, as such rule may
be amended from time to time, or Regulation S under the Securities Act or (ii)
any similar rules or regulations hereafter adopted by the Commission. The
Company shall, upon the request of any Designated Holder, deliver to such
Designated Holder a written statement as to whether it has complied with such
requirements.

         10. Miscellaneous.

                  (a) Recapitalizations, Exchanges, etc. The provisions of this
Agreement shall apply to the full extent set forth herein with respect to (i)
the shares of Common Stock, (ii) any and all shares of voting common stock of
the Company into which the shares of Common Stock are converted, exchanged or
substituted in any recapitalization or other capital reorganization by the
Company and (iii) any and all equity securities of the Company or any successor
or assign of the Company (whether by merger, consolidation, sale of assets or
otherwise) which may be issued in respect of, in conversion of, in exchange for
or in substitution of, the shares of Common Stock and shall be appropriately
adjusted for any stock dividends, splits, reverse splits, combinations,
recapitalizations and the like occurring after the date hereof. The Company
shall cause any successor or assign (whether by merger, consolidation, sale of
assets or otherwise) to enter into a new registration rights agreement with the
Designated Holders on terms substantially the same as this Agreement as a
condition of any such transaction.

                  (b) No Inconsistent Agreements. The Company hereby represents
and warrants that it has not previously entered into any agreement granting
registration rights to any Person with respect to any securities of the Company
except as set forth in the Rights Agreement and the Stockholders Agreement. The
Company shall not enter into any agreement with respect to its securities that
is inconsistent with the rights granted to the Designated Holders in this
Agreement or grant any additional registration rights to any Person or with
respect to any securities that are not Registrable Securities that provides for
the priority in registration of such securities over the Registrable Securities
held by the Designated Holders or which rights are otherwise inconsistent with
the rights granted in this Agreement.
<PAGE>   23
                                                                              20

                  (c) Remedies. The Designated Holders, in addition to being
entitled to exercise all rights granted by law, including recovery of damages,
shall be entitled to specific performance of their rights under this Agreement.
The Company agrees that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by it of the provisions of this
Agreement and hereby agrees to waive in any action for specific performance the
defense that a remedy at law would be adequate.

                  (d) Amendments and Waivers. Except as otherwise provided
herein, the provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless consented to in writing by the Company and Designated
Holders holding more than 50% of the Registrable Securities; provided, however,
that (i) no amendment, modification, supplement, waiver or consent to depart
from the provisions hereof shall be effective if such amendment, modification,
supplement, waiver or consent to depart from the provisions hereof materially
and adversely affects the substantive rights or obligations of one Designated
Holder, or group of Designated Holders, without a similar and proportionate
effect on the substantive rights or obligations of all Designated Holders,
unless each such disproportionately affected Designated Holder consents in
writing thereto; (ii) any amendment with respect to Sections 6(a), 10(d) or
10(f) hereof shall require the written consent of each Designated Holder; (iii)
to the extent that it in any way affects the Demand Registration rights of
BancAmerica, any amendment to Section 3(a) shall require the written consent of
BancAmerica; and (iv) to the extent that it in any way affects the Incidental
Registration rights of the Francis Stockholders, any amendment to Section 3(b)
(but not including an amendment, waiver or consent to any other provision of
Section 3 that may affect the rights provided in Section 3(b)) and the first and
second sentence of Section 4(a) shall require the written consent of the Francis
Stockholders.

                  (e) Notices. All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be made
by registered or certified first-class mail, return receipt requested,
telecopier, courier service or personal delivery:

                                (i)        if to the Company:

                                AMN Healthcare Services, Inc.
                                12235 El Camino Real, Suite 200
                                San Diego, CA 92130
                                Telecopy:  (877) 282-0384
                                Attention:  Susan R. Nowakowski

                                with a copy to:

                                Paul, Weiss, Rifkind, Wharton & Garrison
                                1285 Avenue of the Americas
                                New York, NY 10019-6064
                                Telecopy:  (212) 757-3990
                                Attention:  John C. Kennedy, Esq.
<PAGE>   24
                                                                              21

                                (ii)       if to the HWP Stockholders:

                                c/o Haas Wheat & Partners, L.P.
                                300 Crescent Court
                                Suite 1700
                                Dallas, TX 75201
                                Telecopy:  (214) 871-8317
                                Attention: Douglas D. Wheat

                                (iii)      if to BancAmerica:

                                BancAmerica Capital Investors SBIC I, L.P.
                                Bank of America Corporate Center
                                100 North Tryon Street, 25th Floor
                                Charlotte, NC 28255
                                Telecopy:  (704) 386-6432
                                Attention:  Walker L. Poole

                                with a copy to:

                                Kennedy Covington Lobdell & Hickman, L.L.P.
                                100 North Tryon Street
                                Suite 4200
                                Charlotte, NC 28202
                                Telecopy:  (704) 331-7598
                                Attention:  Henry W. Flint, Esq.

                                (iv)       if to the Francis Stockholders:

                                [                   ]
                                Telecopy:  [               ]
                                Attention:  Steven C. Francis

                  All such notices, demands and other communications shall be
deemed to have been duly given when delivered by hand, if personally delivered;
one (1) Business Day after delivered by courier, if delivered by commercial
courier service; five (5) Business Days after being deposited in the mail,
postage prepaid, if mailed; and one (1) Business Day after receipt is
mechanically acknowledged, if telecopied. Any party may by notice given in
accordance with this Section 10(e) designate another address or Person for
receipt of notices hereunder.

                  (f) Successors and Assigns; Third Party Beneficiaries. This
Agreement shall inure to the benefit of and be binding upon the successors and
permitted assigns of the parties hereto as hereinafter provided. The Demand
Registration rights, incidental registration rights and the S-3 Registration
rights and the other rights of the HWP Stockholders hereunder may be (i) with
respect to any Registrable Security that is transferred to an Affiliate of the
HWP Stockholders (or if any of the HWP Stockholders is a partnership, limited
liability company or corporation, to any such partner, member or stockholder
thereof), transferred to such Affiliate (or such partner, member or
<PAGE>   25
                                                                              22

stockholder) and (ii) with respect to any Registrable Security that is
transferred in all cases to a non-Affiliate of the HWP Stockholders, transferred
only if the transferee receives in one transaction or series of related
transactions Registrable Securities representing at least five percent (5%) of
the Common Stock outstanding on the date of such transaction (or the first
transaction in a series of transactions). The Demand Registration rights and
incidental registration rights and the other rights of BancAmerica hereunder may
be (i) with respect to any Registrable Security that is transferred to an
Affiliate of BancAmerica (or if BancAmerica is a partnership, limited liability
company or corporation, to any such partner, member or stockholder thereof),
transferred to such Affiliate (or such partner, member or stockholder) and (ii)
with respect to any Registrable Security that is transferred in all cases to a
non-Affiliate of BancAmerica, transferred only if the transferee receives in one
transaction or series of related transactions Registrable Securities
representing at least five percent (5%) of the Common Stock outstanding on the
date of such transaction (or the first transaction in a series of transactions).
The incidental or "piggy-back" registration rights of the Francis Stockholders
contained in Sections 3, 4 and 5 hereof and the other rights of the Francis
Stockholders hereunder may be (i) with respect to any Registrable Security that
is transferred to the estate of Francis or an Affiliate of the Francis
Stockholders (or if any of the Francis Stockholders is a partnership, limited
liability company or corporation, to any such partner, member or stockholder
thereof), transferred to such estate or Affiliate (or such partner, member or
stockholder) and (ii) with respect to any Registrable Security that is
transferred in all cases to a non-Affiliate of the Francis Stockholder,
transferred only if the transferee receives in one transaction or series of
related transactions Registrable Securities representing at least five percent
(5%) of the Common Stock outstanding on the date of such transaction (or the
first transaction in a series of transactions). All of the obligations of the
Company hereunder shall survive any such transfer. Except as provided in Section
8, no Person other than the parties hereto and their successors and permitted
assigns is intended to be a beneficiary of this Agreement.

                  (g) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

                  (h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

                  (i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.

                  (j) Severability. If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of
<PAGE>   26
                                                                              23

any such provision in every other respect and of the remaining provisions hereof
shall not be in any way impaired.

                  (k) Rules of Construction. Unless the context otherwise
requires, references to sections or subsections refer to sections or subsections
of this Agreement.

                  (l) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, representations, warranties or undertakings, other than those set
forth or referred to herein. This Agreement supersedes all prior agreements and
understandings among the parties with respect to such subject matter. This
Agreement supersedes and replaces the Rights Agreement, dated as of November 19,
1999, among the Company, the HWP Stockholders and BancAmerica (the "Rights
Agreement") and Section 4 of the Stockholders Agreement, dated as of November
19, 1999, among the Company, the HWP Stockholders and the Francis Stockholders
(the "Stockholders Agreement"). The Rights Agreement and Section 4 of the
Stockholders Agreement are hereby terminated and have no further force and
effect.

                  (m) Further Assurances. Each of the parties shall execute such
documents and perform such further acts as may be reasonably required or
desirable to carry out or to perform the provisions of this Agreement.

                  (n) Other Agreements. Nothing contained in this Agreement
shall be deemed to be a waiver of, or release from, any obligations any party
hereto may have under, or any restrictions on the transfer of Registrable
Securities or other securities of the Company imposed by, any other agreement.

                  [Remainder of page intentionally left blank]
<PAGE>   27
                                                                              24

                     IN WITNESS WHEREOF, the undersigned have executed, or have
caused to be executed, this Registration Rights
Agreement on the date first written above.

                          AMN HEALTHCARE SERVICES, INC.

                          By:  __________________________________________
                               Name:
                               Title:

                          HWH CAPITAL PARTNERS, L.P.

                          By:  HWH, L.P., its General Partner

                          By:  HWH Incorporated, its General Partner

                               By:  _________________________________________
                                    Name:  Douglas D. Wheat
                                    Title: President

                          HWH NIGHTINGALE PARTNERS, L.P.

                          By:  HWH NIGHTINGALE, L.P.,
                          its General Partner

                          By:  HWH NIGHTINGALE, L.L.C., its General Partner

                               By: __________________________________________
                                   Name:  Douglas D. Wheat
                                   Title: Managing Member

                          HWP CAPITAL PARTNERS II, L.P.

                          By:  HWP II, L.P., its General Partner

                          By:  HWP II, LLC, its General Partner

                               By: __________________________________________
                                   Name:  Douglas D. Wheat
                                   Title: Managing Member
<PAGE>   28
                                                                              25

                          HWP NIGHTINGALE PARTNERS II, L.P.

                          By:  HWP Nightingale II, L.P., its General Partner

                          By:  HWP Nightingale II, LLC., its General Partner

                               By:  _________________________________________
                                    Name:  Douglas D. Wheat
                                    Title: Managing Member

                          BANCAMERICA CAPITAL INVESTORS
                                  SBIC I, L.P.

                          By: BANCAMERICA CAPITAL
                              MANAGEMENT SBIC I, LLC, its General Partner

                          By:  BancAmerica Capital Management I L.P., its
                               sole member

                          By:     BACM I GP, LLC, its General Partner

                          By:  ______________________________________________
                               Name:
                               Title:

                          ___________________________________________________
                          Steven Francis, as Trustee of the Francis
                          Family Trust dated May 24, 1996

                          ___________________________________________________
                          Gayle Francis, as Trustee of the Francis
                          Family Trust dated May 24, 1996

                          ___________________________________________________
                          Steven Francis

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