SEC Filing | Cross Country Healthcare, Inc.

View:

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 27, 2002
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------------

FORM S-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
--------------------------

CROSS COUNTRY, INC.
(Exact name of registrant as specified in its charter)

DELAWARE 7363 13-4066229
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)

6551 PARK OF COMMERCE BLVD, N.W.
SUITE 200
BOCA RATON, FL 33487
(561) 998-2232
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------------

JOSEPH A. BOSHART
PRESIDENT AND CHIEF EXECUTIVE OFFICER
CROSS COUNTRY, INC.
6551 PARK OF COMMERCE BLVD, N.W.
SUITE 200
BOCA RATON, FL 33487
(561) 998-2232
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------

COPIES OF COMMUNICATIONS TO:

STEPHEN W. RUBIN, ESQ. MICHAEL W. BLAIR, ESQ.
PROSKAUER ROSE LLP STEVEN J. SLUTZKY, ESQ.
1585 BROADWAY DEBEVOISE & PLIMPTON
NEW YORK, NEW YORK 10036-8299 919 THIRD AVENUE
(212) 969-3000 NEW YORK, NEW YORK 10022
(212) 909-6000

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
As soon as practicable after the effective date of this registration statement.
------------------------------

If any securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act, check
the following box. / /

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /

CALCULATION OF REGISTRATION FEE

PROPOSED
MAXIMUM PROPOSED
PER MAXIMUM
TITLE OF EACH CLASS OF NUMBER OF SHARES OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED TO BE REGISTERED(1) SHARE(2) OFFERING PRICE REGISTRATION FEE

Common Stock, par value $0.0001 per
share............................... 10,350,000 $29.63 $306,670,500 $28,213.69

(1) Includes 1,350,000 shares that the underwriters will have the option to
purchase from the selling stockholders identified in this Registration
Statement to cover overallotments, if any.

(2) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(c) under the Securities Act of 1933, as amended.
Based on the average of the high and low selling prices of the Registrant's
Common Stock reported on the Nasdaq National Market on February 26, 2002.
------------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

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

The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS DATED FEBRUARY 27, 2002
PROSPECTUS

9,000,000 SHARES

[LOGO]
COMMON STOCK
-------------

The selling stockholders named in this prospectus are selling all of the
shares. We will not receive any of the proceeds from the sale of shares by the
selling stockholders.

The shares are quoted on the Nasdaq National Market under the symbol "CCRN."
On February 26, 2002, the last sale price of the shares as reported on the
Nasdaq National Market was $28.45 per share.

INVESTING IN THE COMMON STOCK INVOLVES RISKS THAT ARE DESCRIBED IN THE "RISK
FACTORS" SECTION BEGINNING ON PAGE 12 OF THIS PROSPECTUS.

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

PER SHARE TOTAL
--------- -----

Public offering price....................................... $ $
Underwriting discount....................................... $ $
Proceeds, before expenses, to the selling stockholders...... $ $

The underwriters may also purchase up to an additional 1,350,000 shares from
the selling stockholders at the public offering price, less the underwriting
discount, within 30 days from the date of this prospectus to cover
overallotments.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

The shares will be ready for delivery on or about , 2002.

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

MERRILL LYNCH & CO. SALOMON SMITH BARNEY

BANC OF AMERICA SECURITIES LLC

CIBC WORLD MARKETS

SUNTRUST ROBINSON HUMPHREY

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

The date of this prospectus is , 2002.

[DESCRIPTION OF ARTWORK: DEPICTION OF PATIENT AND HEALTHCARE PERSONNEL]

[DESCRIPTION OF ARTWORK: MAP OF THE UNITED STATES DEPICTING CLIENT LOCATIONS]

TABLE OF CONTENTS

PAGE
--------

Prospectus Summary.......................................... 1
Risk Factors................................................ 12
Special Note Regarding Forward-Looking Statements........... 17
Use of Proceeds............................................. 17
Dividend Policy............................................. 17
Price Range of Common Stock................................. 18
Capitalization.............................................. 19
Selected Consolidated Financial and Other Data.............. 20
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 27
Business of Cross Country, Inc.............................. 39
Management.................................................. 48
Related Party Transactions.................................. 54
Principal and Selling Stockholders.......................... 55
Description of Capital Stock................................ 57
Shares Eligible for Future Sale............................. 60
Underwriting................................................ 61
Legal Matters............................................... 64
Experts..................................................... 64
Where You Can Find More Information......................... 65
Index to Financial Statements............................... F-1

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

You should rely on only the information contained in this prospectus. We
have not, and the selling stockholders and the underwriters have not, authorized
any other person to provide you with different information. If anyone provides
you with different or inconsistent information, you should not rely on it. We
are not, and the underwriters are not, making an offer to sell these securities
in any jurisdiction where the offer or sale is not permitted. You should assume
that the information appearing in this prospectus is accurate only as of the
date of the front cover of this prospectus or other date stated in this
prospectus. Our business, financial condition, results of operations and
prospects may have changed since that date.

PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE IN THIS
PROSPECTUS. IT IS NOT COMPLETE AND DOES NOT CONTAIN ALL OF THE INFORMATION THAT
YOU SHOULD CONSIDER BEFORE INVESTING IN OUR COMMON STOCK. YOU SHOULD READ THE
ENTIRE PROSPECTUS CAREFULLY, ESPECIALLY THE RISKS OF INVESTING IN OUR COMMON
STOCK DISCUSSED UNDER RISK FACTORS AND OUR CONSOLIDATED FINANCIAL STATEMENTS AND
ACCOMPANYING NOTES.

CROSS COUNTRY, INC.

We are one of the largest providers of healthcare staffing services in the
United States. Approximately 80% of our revenue is derived from travel nurse
staffing services. We also provide staffing of clinical research professionals
and allied healthcare professionals such as radiology technicians,
rehabilitation therapists and respiratory therapists. Our staffing operations
are complemented by other human capital management services, including search
and recruitment, consulting, education and training and resource management
services. Our active client base includes over 3,000 hospitals, pharmaceutical
companies and other healthcare providers across all 50 states. Our fees are paid
directly by our clients rather than by government or other third-party payors.
We are well positioned to take advantage of current industry dynamics, including
the growing shortage of nurses in the United States, the growing demand for
healthcare services and the trend among healthcare providers toward outsourcing
staffing services. On February 14, 2002, we reported revenue and EBITDA for the
year ended December 31, 2001 of $500.5 million and $56.2 million, respectively.

INDUSTRY DYNAMICS

The STAFFING INDUSTRY REPORT, an independent staffing industry publication,
estimated that the healthcare segment of the temporary staffing market generated
$7.2 billion in revenue in 2000 and that this segment would grow 18% to
$8.5 billion in 2001.

Several trends are driving demand for our healthcare staffing services,
including:

- A growing shortage of registered nurses throughout the country. A recent
study published in the Journal of the American Medical Association
projects that by 2020, the nationwide registered nurse workforce will be
nearly 20% below projected requirements.

- Increasing demand for healthcare services as a result of the aging of the
baby boomers and technological advances in healthcare treatment methods
which attract a greater number of patients with complex medical conditions
requiring a higher intensity of care.

- Greater use of temporary staffing by healthcare providers to manage
seasonal fluctuations in demand for their services. The use of temporary
personnel enables providers to vary their staffing levels to match these
changes in demand while avoiding the more costly alternative of hiring
permanent staff.

OUR COMPETITIVE STRENGTHS

Our competitive strengths include:

- A LEADER IN THE RAPIDLY GROWING NURSE STAFFING INDUSTRY. We have operated
in the travel nurse staffing industry since the 1970s and have the leading
brand name based on revenue. Our Cross Country TravCorps brand is well
recognized among leading healthcare providers and professionals. We
believe that through our relationships with existing travel nurse staffing
clients, we are positioned to effectively market complementary services,
including staffing of clinical trials and allied health professionals,
search and recruitment, consulting, and education and training to our
existing client base.

- STRONG AND DIVERSE CLIENT RELATIONSHIPS. We provide staffing solutions to
an active client base of over 3,000 hospitals, pharmaceutical companies
and other healthcare providers across all 50 states. We do not rely on any
geographic region or client for a significant portion of our revenue. No
single client accounted for more than 3% of our revenue in 2001. In 2001,
we worked with over 75% of the nation's top hospitals, as identified by
U.S. NEWS AND WORLD REPORT. We provide temporary staffing to our clients
through assignments that typically have terms of 13 weeks or longer. Our
fees are paid directly by our clients rather than by government or other
third-party payors.

- LEADER IN RECRUITING AND EMPLOYEE RETENTION. We are a leader in the
recruitment and the retention of highly qualified healthcare
professionals. We recruit healthcare professionals from all 50 states and
Canada. In 2001, we received approximately 24,400 requests for
applications from potential field employees and approximately 13,100
completed applications were added to our database. Employee referrals
generate a majority of our new candidates. We believe we offer appealing
assignments, competitive compensation packages, attractive housing options
and other valuable benefits. In 2001, more than 70% of our nurses accepted
new assignments with us within 35 days of completion of previous
assignments.

- SCALABLE AND EFFICIENT OPERATING STRUCTURE. We have an efficient
centralized operating structure that includes a database of more than
159,000 nurses and other healthcare professionals who have completed job
applications with us. Our size and centralized structure provide us with
operating efficiencies in key areas such as recruiting, advertising,
marketing, training, housing and insurance benefits. Our fully integrated
proprietary information system enables us to manage virtually all aspects
of our travel staffing operations. This system is designed to accommodate
significant future growth of our business.

- STRONG MANAGEMENT TEAM WITH EXTENSIVE HEALTHCARE STAFFING AND ACQUISITION
EXPERIENCE. Our management team has played a key role in the development
of the travel nurse staffing industry. Our management team, which averages
more than 10 years of experience in the healthcare industry, has
consistently demonstrated the ability to successfully identify and
integrate strategic acquisitions.

GROWTH STRATEGY

We intend to continue to grow our business by:

- ENHANCING OUR ABILITY TO FILL UNMET DEMAND FOR OUR TRAVEL STAFFING
SERVICES. There is substantial unmet demand for our travel staffing
services. We are striving to meet a greater portion of this demand by
recruiting additional healthcare personnel. Our recruitment strategy for
nurses and other healthcare professionals is focused on:

- increasing referrals from existing field employees by providing them with
superior service;

- expanding our advertising presence to reach more nursing professionals;

- using the internet to accelerate the recruitment-to-placement cycle;

- increasing the number of staff dedicated to the recruitment of new
nurses; and

- developing Assignment America, our recruitment program for
foreign-trained nurses residing abroad.

we have not historically had a significant presence in per diem staffing
services, we believe that this market presents a substantial growth
opportunity.

- EXPANDING THE RANGE OF SERVICES WE OFFER OUR CLIENTS. We plan to utilize
our relationships with existing travel staffing clients to more
effectively market complementary services, including staffing of clinical
trials and allied health professionals, search and recruitment,
consulting, and education and training.

- ACQUIRING COMPLEMENTARY BUSINESSES. We continually evaluate opportunities
to acquire complementary businesses to strengthen and broaden our market
presence.

- INCREASING OPERATING EFFICIENCIES. We seek to increase our operating
margins by increasing the productivity of our administrative personnel,
using our purchasing power to achieve greater savings in key areas such as
housing and benefits and continuing to invest in our information systems.

RECENT DEVELOPMENTS

RECENT ACQUISITION

On January 3, 2002, we announced the purchase of the assets of the NovaPro
healthcare staffing division (Tampa, FL) of HRLogic Holdings, Inc. (NovaPro), a
professional employer organization, for a purchase price of $7.1 million.
NovaPro targets nurses seeking more customized benefits packages.

UNAUDITED YEAR-END FINANCIAL RESULTS

On February 14, 2002, we reported financial results for the three months
ended December 31, 2001 and the year ended December 31, 2001. For the three
months ended December 31, 2001, we reported revenue of $144.3 million, an
increase of 48.4% over revenue of $97.2 million for the same period in the prior
year. Income from continuing operations for the three months ended December 31,
2001 was $6.5 million, or $0.21 per diluted share, compared to $1.9 million or
$0.08 per diluted share for the three month period ended December 31, 2000.
Including the effects of discontinued operations and the extraordinary loss from
the early retirement of debt with proceeds received in our initial public
offering in October 2001, net income for the fourth quarter of 2001 was
$2.1 million or $0.07 per diluted share. EBITDA for the three months ended
December 31, 2001 was $17.1 million compared to $12.3 million for the same
period in the prior year, an increase of 39.0%. The quarter was favorably
impacted primarily by the strong results of our healthcare staffing segment
coupled with reduced interest expense as a result of the paydown of
approximately $134.5 million in debt, and a reduction in our effective corporate
income tax.

For the year ended December 31, 2001, we reported revenue of
$500.5 million, an increase of 36.1% over revenue of $367.7 million for the year
ended December 31, 2000. Income from continuing operations for the year ended
December 31, 2001 was $13.7 million, or $0.54 per diluted share, as compared to
$6.7 million, or $0.29 per diluted share, for the year ended December 31, 2000.
EBITDA for the year ended December 31, 2001 was $56.2 million compared to
$45.1 million for the year ended December 31, 2000, an increase of 24.5%.

CROSS COUNTRY, INC.
CONSOLIDATED STATEMENT OF OPERATIONS DATA
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
------------------- ----------------------
2000 2001 2000 2001
-------- -------- -------- -----------
(UNAUDITED) (UNAUDITED)

Revenue from services.............................. $ 97,230 $144,310 $367,690 $500,503
Operating expenses
Direct operating expenses........................ 72,690 108,165 273,095 374,651
Selling, general and administrative expenses..... 12,480 19,080 49,027 68,393
Bad debt expense................................. (248) (44) 433 1,274
Depreciation..................................... 382 789 1,324 2,579
Amortization..................................... 3,483 3,776 13,701 15,157
Non-recurring indirect transaction costs......... 733 -- 1,289 --
-------- -------- -------- --------
Total operating expenses........................... 89,520 131,766 338,869 462,054
-------- -------- -------- --------
Income from operations............................. 7,710 12,544 28,821 38,449
Other expenses
Interest expense, net............................ 3,804 1,515 15,435 14,422
-------- -------- -------- --------
Income from continuing operations before income
taxes............................................ 3,906 11,029 13,386 24,027
Income tax expense............................... 1,961 4,506 6,730 10,364
-------- -------- -------- --------
Income from continuing operations.................. 1,945 6,523 6,656 13,663
Income (loss) from discontinued operations....... (662) 337 (2,058) (207)
-------- -------- -------- --------
Net income before extraordinary items.............. 1,283 6,860 4,598 13,456
Extraordinary loss from early extinguishment of
debt........................................... -- (4,784) -- (4,784)
-------- -------- -------- --------
Net income......................................... $ 1,283 $ 2,076 $ 4,598 $ 8,672
======== ======== ======== ========
Net income (loss) per common share--basic:
Income from continuing operations................ $ 0.08 $ 0.22 $ 0.29 $ 0.55
Income (loss) from discontinued operations....... (0.03) 0.01 (0.09) (0.01)
-------- -------- -------- --------
Net income before extraordinary items.............. 0.05 0.23 0.20 0.54
Extraordinary loss from early extinguishment of
debt........................................... -- (0.16) -- (0.19)
-------- -------- -------- --------
Net income......................................... $ 0.05 $ 0.07 $ 0.20 $ 0.35
======== ======== ======== ========
Net income (loss) per common share--diluted:
Income from continuing operations................ $ 0.08 $ 0.21 $ 0.29 $ 0.54
Income (loss) from discontinued operations....... (0.03) 0.01 (0.09) (0.01)
-------- -------- -------- --------
Net income before extraordinary items.............. 0.05 0.22 0.20 0.53
Extraordinary loss from early extinguishment of
debt........................................... -- (0.15) -- (0.19)
-------- -------- -------- --------
Net income......................................... $ 0.05 $ 0.07 $ 0.20 $ 0.34
======== ======== ======== ========
Weighted average common shares
outstanding--basic............................... 23,205 29,852 23,205 24,881
Weighted average common shares
outstanding--diluted............................. 23,205 31,219 23,205 25,223

OTHER OPERATING DATA
(UNAUDITED)

THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
------------------- -------------------
2000 2001 2000 2001
-------- -------- -------- --------

EBITDA--($000's)(a)................................. $ 12,308 $ 17,109 $ 45,135 $ 56,185
EBITDA as % of revenue.............................. 12.7% 11.9% 12.3% 11.2%
FTE's(b)............................................ 4,222 5,337 4,167 4,816
Weeks worked(c)..................................... 54,886 69,381 216,684 250,432
Average contract revenue per week(d)................ $ 1,686 $ 1,934 $ 1,616 $ 1,851

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

(a) We define EBITDA as income before interest, income taxes, depreciation,
amortization and non-recurring indirect transaction costs. EBITDA should not
be considered a measure of financial performance under generally accepted
accounting principles. Items excluded from EBITDA are significant components
in understanding and assessing financial performance. EBITDA is a key
measure used by management to evaluate our operations and provide useful
information to investors. EBITDA should not be considered in isolation or as
an alternative to net income, cash flows generated by operations, investing
or financing activities, or other financial statement data presented in the
consolidated financial statements as indicators of financial performance or
liquidity. Because EBITDA is not a measurement determined in accordance with
generally accepted accounting principles and is thus susceptible to varying
calculations, EBITDA as presented may not be comparable to other similarly
titled measures of other companies.

(b) FTE's represent the average number of contract staffing personnel on a
full-time equivalent basis.

(d) Average contract revenue per week is calculated by dividing the revenue
received under our staffing contracts by the number of weeks worked during
the respective period.

CONSOLIDATED BALANCE SHEET DATA
(AMOUNTS IN THOUSANDS)
(UNAUDITED)

AS OF
DECEMBER 31, 2001
------------------

Working capital............................................. $ 69,166
Cash and cash equivalents................................... 2,644
Total assets................................................ 361,980
Total debt.................................................. 48,866
Stockholders' equity........................................ 269,927

RISK FACTORS

For a discussion of the risks we face, see "Risk Factors," including those
under the captions "Currently we are unable to recruit enough nurses to meet our
clients' demands for our nurse staffing services, limiting the potential growth
of our staffing business," "The costs of attracting and retaining qualified
nurses and other healthcare personnel may rise more than we anticipate" and "Our
costs of providing housing for nurses and other healthcare personnel may be
higher than we anticipate and, as a

result, our margins could decline." In addition, we operate in a highly
competitive industry, with limited barriers to entry.

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

In July 1999, an affiliate of Charterhouse Group International, Inc., or
Charterhouse, and certain members of management acquired the assets of Cross
Country Staffing, a Delaware partnership that is our predecessor, from W. R.
Grace & Co. In December 1999, we acquired TravCorps Corporation, or TravCorps,
which was owned by investment funds managed by Morgan Stanley Private Equity and
certain members of TravCorps' management.

We were incorporated in Delaware in 1999. Our principal executive offices
are located at 6551 Park of Commerce Blvd, N.W., Suite 200, Boca Raton, FL
33487. Our telephone number at that address is (561) 998-2232. Our World Wide
Web site address is www.crosscountry.com. Our website address is included in
this prospectus as an inactive textual reference only. The information in our
website is not intended to be incorporated into this prospectus by reference and
should not be considered a part of this prospectus.

THE OFFERING

Common stock offered by the selling stockholders........ 9,000,000 shares

Common stock outstanding after the offering............. 32,211,745 shares

Use of proceeds......................................... We will not receive any proceeds from the
sale of shares by the selling stockholders.

Risk factors............................................ See "Risk Factors" and other information
included in this prospectus for a discussion
of factors you should carefully consider
before deciding to invest in shares of the
common stock.

Nasdaq National Market symbol........................... CCRN

The number of shares outstanding after the offering is based on the number
of common shares outstanding as of December 31, 2001 and excludes 4,375,929
shares reserved for future issuance under our stock option plans, of which
options to purchase 3,520,068 shares at a weighted average exercise price of
$13.00 have been granted.

SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA

The summary consolidated financial data for the five-month period July 30,
1999 to December 31, 1999 and for the year ended December 31, 2000 are derived
from the audited consolidated financial statements of Cross Country, Inc., or
Cross Country, included elsewhere in this prospectus. The summary financial data
for the year ended December 31, 1998 and for the seven-month period January 1,
1999 to July 29, 1999 were derived from the audited financial statements of
Cross Country Staffing, our predecessor company, included elsewhere in this
prospectus.

The data for the nine months ended September 30, 2000 and 2001 are derived
from our unaudited consolidated financial statements included elsewhere in this
prospectus. The unaudited consolidated financial statements include all
adjustments, consisting of normal recurring accruals, which we consider
necessary for a fair presentation of our financial position and results of
operations for these periods. Operating results for the nine months ended
September 30, 2001 are not necessarily indicative of the results that may be
expected for the entire year ending December 31, 2001.

The pro forma as adjusted consolidated statement of operations for the year
ended December 31, 2000 and the nine months ended September 30, 2001 are pro
forma for the Heritage Professional Education, LLC, or Heritage, and ClinForce
acquisitions and as adjusted for our initial public offering of 8,984,375 shares
of our common stock on October 24, 2001 and the estimated expenses related to
this offering, as if these events had occurred on January 1, 2000. The as
adjusted consolidated balance sheet data as of September 30, 2001 are as
adjusted for our initial public offering of 8,984,375 shares of our common stock
on October 24, 2001 and the estimated expenses related to this offering, as if
these events had occurred on September 30, 2001.

The summary data below should be read in conjunction with the consolidated
financial statements and related notes of Cross Country, Inc., Cross Country
Staffing, TravCorps Corporation and Subsidiary, ClinForce and Heritage, the "Pro
Forma Condensed Consolidated Statement of Operations" and related notes,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", and other financial information included elsewhere in this
prospectus.

YEAR ENDED
PREDECESSOR(A) DECEMBER 31,
------------------------- -------------------------
PERIOD
FROM PERIOD FROM
JANUARY 1 JULY 30 PRO
YEAR ENDED THROUGH THROUGH FORMA
DECEMBER 31, JULY 29, DECEMBER 31, AS ADJUSTED
1998 1999 1999(B) 2000 2000(C)
------------ ---------- ------------ ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

CONSOLIDATED STATEMENT
OF OPERATIONS DATA

Revenue from
services............ $ 158,592 $ 106,047 $ 87,727 $ 367,690 $ 407,733

Operating expenses:
Direct operating
expenses.......... 121,951 80,187 68,036 273,095 298,159
Selling, general and
administrative
expenses(e)....... 19,070 12,688 9,257 49,027 58,356
Bad debt expense.... 722 157 511 433 543
Depreciation........ 264 212 155 1,324 1,459
Amortization........ 859 496 4,422 13,701 15,270
Non-recurring
indirect
transaction
costs(f).......... -- -- -- 1,289 2,289
---------- ---------- ----------- ----------- ----------
Total operating
expenses........ 142,866 93,740 82,381 338,869 376,076
---------- ---------- ----------- ----------- ----------
Income from
operations.......... 15,726 12,307 5,346 28,821 31,657

Other expenses:
Interest expense,
net............... 850 230 4,821 15,435 2,022

Other expenses...... 183 190 -- -- --
---------- ---------- ----------- ----------- ----------
Income before income
taxes and
discontinued
operations........ 14,693 11,887 525 13,386 29,635
Income tax
expense(g)........ -- -- 672 6,730 13,021
---------- ---------- ----------- ----------- ----------
Income (loss) before
discontinued
operations........ 14,693 11,887 (147) 6,656 16,614
Discontinued
operations:
Loss from
discontinued
operations, net of
income taxes(h)... -- -- (195) (1,604) --
Loss on
disposal(h)....... -- -- -- (454) --
---------- ---------- ----------- ----------- ----------
Net income (loss)... $ 14,693 $ 11,887 $ (342) $ 4,598 $ 16,614
========== ========== =========== =========== ==========
Basic and diluted
income (loss) per
common share(i):
Income (loss) before
discontinued
operations........ $ (0.01) $ 0.29
Discontinued
operations........ (0.01) (0.09)
----------- -----------
Net income (loss)... $ (0.02) $ 0.20
=========== ===========

Weighted-average
number of shares
outstanding:
Basic and
diluted......... 15,291,749 23,205,388

NINE MONTHS
ENDED SEPTEMBER 30,
---------------------------------------

PRO
FORMA
AS ADJUSTED
2000 2001 2001(D)
----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

CONSOLIDATED STATEMENT
OF OPERATIONS DATA
Revenue from
services............ $ 270,460 $ 356,193 $ 363,886
Operating expenses:
Direct operating
expenses.......... 200,405 266,486 271,836
Selling, general and
administrative
expenses(e)....... 36,547 49,313 50,919
Bad debt expense.... 681 1,318 1,318
Depreciation........ 942 1,790 1,825
Amortization........ 10,218 11,381 11,654
Non-recurring
indirect
transaction
costs(f).......... 556 -- 1,000
----------- ----------- ----------
Total operating
expenses........ 249,349 330,288 338,552
----------- ----------- ----------
Income from
operations.......... 21,111 25,905 25,334
Other expenses:
Interest expense,
net............... 11,631 12,907 3,592
Other expenses...... -- -- --
----------- ----------- ----------
Income before income
taxes and
discontinued
operations........ 9,480 12,998 21,742
Income tax
expense(g)........ 4,769 5,858 9,225
----------- ----------- ----------
Income (loss) before
discontinued
operations........ 4,711 7,140 12,517
Discontinued
operations:
Loss from
discontinued
operations, net of
income taxes(h)... (1,396) -- --
Loss on
disposal(h)....... -- (544) --
----------- ----------- ----------
Net income (loss)... $ 3,315 $ 6,596 $ 12,517
=========== =========== ==========
Basic and diluted
income (loss) per
common share(i):
Income (loss) before
discontinued
operations........ $ 0.20 $ 0.30
Discontinued
operations........ (0.06) (0.02)
----------- -----------
Net income (loss)... $ 0.14 $ 0.28
=========== ===========
Weighted-average
number of shares
outstanding:
Basic and
diluted......... 23,205,298 23,205,929

YEAR ENDED NINE MONTHS
PREDECESSOR(A) DECEMBER 31, ENDED SEPTEMBER 30,
------------------------- ------------------------ -------------------------------------
PERIOD
FROM PERIOD FROM
JANUARY 1 JULY 30 PRO PRO
YEAR ENDED THROUGH THROUGH FORMA FORMA
DECEMBER 31, JULY 29, DECEMBER 31, AS ADJUSTED AS ADJUSTED
1998 1999 1999(B) 2000 2000(C) 2000 2001 2001(D)
------------ ---------- ------------ ---------- ----------- ---------- ---------- -----------
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

OTHER OPERATING DATA

EBITDA(j)............. $ 16,849 $ 13,015 $ 9,923 $ 45,135 $ 50,675 $ 32,827 $ 39,076 $ 39,813
EBITDA as a % of
revenue............. 10.6% 12.3% 11.3% 12.3% 12.4% 12.1% 11.0% 10.9%

FTE's(k).............. 2,264 2,466 2,789 4,167 4,452 4,150 4,657 4,756
Weeks worked(l)....... 117,728 73,980 61,358 216,684 231,504 161,850 181,623 185,484
Average contract
revenue per
week(m)............. $ 1,347 $ 1,429 $ 1,417 $ 1,616 $ 1,638 $ 1,593 $ 1,813 $ 1,817

Net cash flow provided
by operating
activities.......... $ 14,434 $ 12,178 $ 6,301 $ 10,397 $ 8,703 $ 17,172
Net cash flow provided
by (used in)
investing
activities.......... $ (977) $ (202) $ 1,380 $ (9,584) $ (1,043) $ (39,790)
Net cash flow provided
by (used in)
financing
activities.......... $ (13,458) $ (11,977) $ (3,111) $ (5,641) $ (12,488) $ 22,618

AS OF SEPTEMBER 30, 2001
----------------------------
ACTUAL AS ADJUSTED(N)
---------- ---------------
(DOLLARS IN THOUSANDS)

CONSOLIDATED BALANCE SHEET DATA
Working capital............................................. $ 34,227 $ 59,332
Cash and cash equivalents................................... -- --
Total assets................................................ 360,774 352,243
Total debt.................................................. 184,064 50,734
Stockholders' equity........................................ $ 128,761 $ 261,873

- ------------------------------
(a) On July 29, 1999, we acquired the assets of Cross Country Staffing which,
for accounting and reporting purposes, is our predecessor. Financial data
for periods prior to July 30, 1999 is that of Cross Country Staffing.

(b) Includes TravCorps results from December 16, 1999, the date of its
acquisition, through December 31, 1999.

(c) Reflects the following adjustments as if our initial public offering, this
offering (from which we will receive no proceeds) and the Heritage and
ClinForce acquisitions had occurred on January 1, 2000:

- additional amortization expense of $0.9 million related to $35.4 million
of goodwill and other intangibles acquired in the Heritage and ClinForce
acquisitions;

- a reduction in interest expense of $13.4 million as a result of the
repayment, in connection with our initial public offering, of
$35.5 million including accrued interest of senior subordinated debt
(12.00% interest rate) plus an approximate $1.4 million redemption premium
and $101.9 million of borrowings outstanding under our credit facility
using the weighted average rate in effect during the year ended
December 31, 2000 (9.74%);

- additional expense related to this offering of $1.0 million; and

- additional income tax expense of $5.1 million as a result of the above
adjustments.

(d) Reflects the following adjustments as if our initial public offering, this
offering (from which we will receive no proceeds) and the Heritage and
ClinForce acquisitions had occurred on January 1, 2000:

- additional amortization expense for the nine months ended September 30,
2001 of $0.2 million related to $35.4 million of goodwill and other
intangibles acquired in the Heritage and ClinForce acquisitions;

- a reduction in interest expense for the nine months ended September 30,
2001 of $9.5 million as a result of the repayment, in connection with our
initial public offering, of $38.8 million including accrued interest of
senior subordinated debt (12.00% interest rate) plus an approximate
$1.6 million redemption premium and $95.7 million of borrowings
outstanding under our credit facility using the weighted average interest
rate in effect during the nine months ended September 30, 2001 (8.64%);

- additional expense related to this offering of $1.0 million; and

- additional income tax expense of $3.2 million as a result of the above
adjustments.

(e) Includes expenses related to a discontinued management incentive
compensation plan of $2.1 million and $2.7 million for the seven-month
period January 1-July 29, 1999 and the year ended December 31, 1998,
respectively. The management incentive compensation plan was discontinued on
July 30, 1999.

(f) Non-recurring indirect transaction costs consist of non-capitalizable
transition bonuses and integration costs related to the TravCorps
acquisition and expenses related to this transaction.

(g) Prior to July 30, 1999, our predecessor, Cross Country Staffing, operated as
a partnership under the applicable provisions of the Internal Revenue Code,
and, accordingly, income related to the operations of Cross Country Staffing
was taxed directly to its partners.

(h) Reflects the operating results of HospitalHub, Inc., which began operations
in 1999. We completed the divestiture of HospitalHub, Inc. during the second
quarter of 2001.

(i) The financial data contained herein for periods prior to July 30, 1999, is
that of our predecessor, Cross Country Staffing, a partnership, for which
share and per share amounts were not applicable.

(j) We define EBITDA as income before interest, income taxes, depreciation,
amortization and non-recurring indirect transaction costs. EBITDA should not
be considered a measure of financial performance under generally accepted
accounting principles. Items excluded from EBITDA are significant components
in understanding and assessing financial performance. EBITDA is a key
measure used by management to evaluate our operations and provide useful
information to investors. EBITDA should not be considered in isolation or as
an alternative to net income, cash flows generated by operations, investing
or financing activities, or other financial statement data presented in the
consolidated financial statements as indicators of financial performance or
liquidity. Because EBITDA is not a measurement determined in accordance with
generally accepted accounting principles and is thus susceptible to varying
calculations, EBITDA as presented may not be comparable to other similarly
titled measures of other companies.

(k) FTE's represent the average number of contract staffing personnel on a
full-time equivalent basis.

(l) Weeks worked is calculated by multiplying the FTE's by the number of weeks
during the respective period.

(m) Average contract revenue per week is calculated by dividing the revenue
received under our staffing contracts by the number of weeks worked during
the respective period.

(n) Reflects the following adjustments as if our initial public offering and
this offering (from which we will receive no proceeds) had occurred on
September 30, 2001:

- increase in stockholders' equity of $138.8 million from our initial public
offering;

- repayment of $38.8 million of senior subordinated debt, plus an
approximate $1.6 million redemption premium, repayment of $95.7 million of
borrowings outstanding under our credit facility. The repayment of debt
results in the write off of $6.6 million of debt issuance costs which,
along with the redemption premium was accounted for as an extraordinary
item, net of taxes, in October 2001.

- decrease in stockholders' equity of $0.6 million from expenses related to
this offering; and

- approximately $2.8 million of the proceeds from our initial public
offering were used for general corporate purposes.

RISK FACTORS

RISKS RELATED TO OUR BUSINESS

CURRENTLY WE ARE UNABLE TO RECRUIT ENOUGH NURSES TO MEET OUR CLIENTS' DEMANDS
FOR OUR NURSE STAFFING SERVICES, LIMITING THE POTENTIAL GROWTH OF OUR STAFFING
BUSINESS.

We rely significantly on our ability to attract, develop and retain nurses
and other healthcare personnel who possess the skills, experience and, as
required, licensure necessary to meet the specified requirements of our
healthcare staffing clients. We compete for healthcare staffing personnel with
other temporary healthcare staffing companies, as well as actual and potential
clients, some of which seek to fill positions with either regular or temporary
employees. Currently, there is a shortage of qualified nurses in most areas of
the United States and competition for nursing personnel is increasing. At this
time we do not have enough nurses to meet our clients' demands for our nurse
staffing services. This shortage of nurses limits our ability to grow our
staffing business. Furthermore, we believe that the aging of the existing nurse
population and declining enrollments in nursing schools will further exacerbate
the existing nurse shortage. In addition, in the aftermath of the terrorist
attacks on New York and Washington, we experienced a temporary interruption of
normal business activity. Similar events in the future could result in
additional temporary or longer-term interruptions of our normal business
activity.

THE COSTS OF ATTRACTING AND RETAINING QUALIFIED NURSES AND OTHER HEALTHCARE
PERSONNEL MAY RISE MORE THAN WE ANTICIPATE.

We compete with other healthcare staffing companies for qualified nurses and
other healthcare personnel. Because there is currently a shortage of qualified
healthcare personnel, competition for these employees is intense. To induce
healthcare personnel to sign on with them, our competitors may increase hourly
wages or other benefits. If we do not raise wages in response to such increases
by our competitors, we could face difficulties attracting and retaining
qualified healthcare personnel. In addition, if we raise wages in response to
our competitors' wage increases and are unable to pass such cost increases on to
our clients, our margins could decline.

OUR COSTS OF PROVIDING HOUSING FOR NURSES AND OTHER HEALTHCARE PERSONNEL MAY BE
HIGHER THAN WE ANTICIPATE AND, AS A RESULT, OUR MARGINS COULD DECLINE.

We currently have approximately 3,100 apartments on lease throughout the
U.S. If the costs of renting apartments and furniture for our nurses and other
healthcare personnel increase more than we anticipate and we are unable to pass
such increases on to our clients, our margins may decline. To the extent the
length of a nurse's housing lease exceeds the term of the nurse's staffing
contract, we bear the risk that we will be obligated to pay rent for housing we
do not use. To limit the costs of unutilized housing, we try to secure leases
with term lengths that match the term lengths of our staffing contracts,
typically 13 weeks. In some housing markets we have had, and believe we will
continue to have, difficulty identifying short-term leases. If we cannot
identify a sufficient number of appropriate short-term leases in regional
markets, or, if for any reason, we are unable to efficiently utilize the
apartments we do lease, we may be required to pay rent for unutilized housing
or, to avoid such risk, we may forego otherwise profitable opportunities.

DECREASES IN PATIENT OCCUPANCY AT OUR CLIENTS' FACILITIES MAY ADVERSELY AFFECT
THE PROFITABILITY OF OUR BUSINESS.

Demand for our temporary healthcare staffing services is significantly
affected by the general level of patient occupancy at our clients' facilities.
When a hospital's occupancy increases, temporary employees are often added
before full-time employees are hired. As occupancy decreases, clients may reduce
their use of temporary employees before undertaking layoffs of their regular
employees. We also

may experience more competitive pricing pressure during periods of occupancy
downturn. In addition, if a trend emerges toward providing healthcare in
alternative settings, as opposed to acute care hospitals, occupancy at our
clients' facilities could decline. This reduction in occupancy could adversely
affect the demand for our services and our profitability.

WE ARE DEPENDENT ON THE PROPER FUNCTIONING OF OUR INFORMATION SYSTEMS.

Our company is dependent on the proper functioning of our information
systems in operating our business. Critical information systems used in daily
operations identify and match staffing resources and client assignments and
perform billing and accounts receivable functions. Our information systems are
protected through physical and software safeguards and we have backup remote
processing capabilities. However, they are still vulnerable to fire, storm,
flood, power loss, telecommunications failures, physical or software break-ins
and similar events. In the event that critical information systems fail or are
otherwise unavailable, these functions would have to be accomplished manually,
which could temporarily impact our ability to identify business opportunities
quickly, to maintain billing and clinical records reliably and to bill for
services efficiently.

WE MAY EXPERIENCE DIFFICULTIES WITH OUR RECENTLY IMPLEMENTED FINANCIAL PLANNING
AND REPORTING SYSTEM.

In March 2001, we implemented a new financial planning and reporting system.
We may face difficulties or incur additional costs integrating data, including
data from companies acquired by us, to make it compatible with the new system.
If we experience difficulties with our system, our ability to generate timely
and accurate financial reports could be adversely affected.

IF REGULATIONS THAT APPLY TO US CHANGE, WE MAY FACE INCREASED COSTS THAT REDUCE
OUR REVENUE AND PROFITABILITY.

The temporary healthcare staffing industry is regulated in many states. In
some states, firms such as our company must be registered to establish and
advertise as a nurse staffing agency or must qualify for an exemption from
registration in those states. If we were to lose any required state licenses, we
could be required to cease operating in those states. The introduction of new
regulatory provisions could substantially raise the costs associated with hiring
temporary employees. For example, some states could impose sales taxes or
increase sales tax rates on temporary healthcare staffing services. These
increased costs may not be able to be passed on to clients without a decrease in
demand for temporary employees. In addition, if government regulations were
implemented that limited the amounts we could charge for our services, our
profitability could be adversely affected.

FUTURE CHANGES IN REIMBURSEMENT TRENDS COULD HAMPER OUR CLIENTS' ABILITY TO PAY
US.

Many of our clients are reimbursed under the federal Medicare program and
state Medicaid programs for the services they provide. In recent years, federal
and state governments have made significant changes in these programs that have
reduced reimbursement rates. In addition, insurance companies and managed care
organizations seek to control costs by requiring that healthcare providers, such
as hospitals, discount their services in exchange for exclusive or preferred
participation in their benefit plans. Future federal and state legislation or
evolving commercial reimbursement trends may further reduce, or change
conditions for, our clients' reimbursement. Limitations on reimbursement could
reduce our clients' cash flows, hampering their ability to pay us.

COMPETITION FOR ACQUISITION OPPORTUNITIES MAY RESTRICT OUR FUTURE GROWTH BY
LIMITING OUR ABILITY TO MAKE ACQUISITIONS AT REASONABLE VALUATIONS.

Our business strategy includes increasing our market share and presence in
the temporary healthcare staffing industry through strategic acquisitions of
companies that complement or enhance

our business. We have historically faced competition for acquisitions. In the
future, this could limit our ability to grow by acquisitions or could raise the
prices of acquisitions and make them less accretive to us. In addition,
restrictive covenants in our credit facility, including a covenant that requires
us to obtain bank approval for any acquisition over $25.0 million, may limit our
ability to complete desirable acquisitions. If we are unable to secure necessary
financing under our credit facility or otherwise, we may be unable to complete
desirable acquisitions.

WE MAY FACE DIFFICULTIES INTEGRATING OUR ACQUISITIONS INTO OUR OPERATIONS AND
OUR ACQUISITIONS MAY BE UNSUCCESSFUL, INVOLVE SIGNIFICANT CASH EXPENDITURES OR
EXPOSE US TO UNFORESEEN LIABILITIES.

We continually evaluate opportunities to acquire healthcare staffing
companies and other human capital management services companies that complement
or enhance our business and frequently have preliminary acquisition discussions
with some of these companies.

These acquisitions involve numerous risks, including:

- potential loss of key employees or clients of acquired companies;

- difficulties integrating acquired personnel and distinct cultures into our
business;

- difficulties integrating acquired companies into our operating, financial
planning and financial reporting systems;

- diversion of management attention from existing operations; and

- assumption of liabilities and exposure to unforeseen liabilities of
acquired companies, including liabilities for their failure to comply with
healthcare regulations.

These acquisitions may also involve significant cash expenditures, debt
incurrence and integration expenses that could have a material adverse effect on
our financial condition and results of operations. Any acquisition may
ultimately have a negative impact on our business and financial condition.

SIGNIFICANT LEGAL ACTIONS COULD SUBJECT US TO SUBSTANTIAL UNINSURED LIABILITIES.

In recent years, healthcare providers have become subject to an increasing
number of legal actions alleging malpractice, product liability or related legal
theories. Many of these actions involve large claims and significant defense
costs. In addition, we may be subject to claims related to torts or crimes
committed by our employees or temporary staffing personnel. In some instances,
we are required to indemnify clients against some or all of these risks. A
failure of any of our employees or personnel to observe our policies and
guidelines intended to reduce these risks, relevant client policies and
guidelines or applicable federal, state or local laws, rules and regulations
could result in negative publicity, payment of fines or other damages. To
protect ourselves from the cost of these claims, we maintain professional
malpractice liability insurance and general liability insurance coverage in
amounts and with deductibles that we believe are appropriate for our operations.
However, our insurance coverage may not cover all claims against us or continue
to be available to us at a reasonable cost. If we are unable to maintain
adequate insurance coverage, we may be exposed to substantial liabilities.

IF OUR INSURANCE COSTS INCREASE SIGNIFICANTLY, THESE INCREMENTAL COSTS COULD
NEGATIVELY AFFECT OUR FINANCIAL RESULTS.

The costs related to obtaining and maintaining professional and general
liability insurance and health insurance for healthcare providers has been
increasing. The cost of our professional and general liability insurance per FTE
increased by approximately 124% in 2001. The cost of our healthcare insurance
per FTE increased by approximately 50% in 2001. If the cost of carrying this
insurance continues to increase significantly, we will recognize an associated
increase in costs which may

negatively affect our margins. This could have an adverse impact on our
financial condition and the price of our common stock.

IF WE BECOME SUBJECT TO MATERIAL LIABILITIES UNDER OUR SELF-INSURED PROGRAMS,
OUR FINANCIAL RESULTS MAY BE ADVERSELY AFFECTED.

We provide workers compensation coverage through a program that is partially
self-insured. In addition, we provide medical coverage to our employees through
a partially self-insured preferred provider organization. If we become subject
to substantial uninsured workers compensation or medical coverage liabilities,
our financial results may be adversely affected.

OUR CLIENTS MAY TERMINATE OR NOT RENEW THEIR STAFFING CONTRACTS WITH US.

Our travel staffing arrangements with clients are generally terminable upon
30 or 90 days' notice. We may have fixed costs, including housing costs,
associated with terminated arrangements that we will be obligated to pay
post-termination.

Our clinical trials staffing business is conducted under long-term contracts
with individual clients that may conduct numerous clinical trials. Some of these
long-term contracts are terminable by the clients without cause upon 30 to
60 days notice.

OUR INDEMNITY FROM W. R. GRACE, IN CONNECTION WITH OUR ACQUISITION OF THE ASSETS
OF CROSS COUNTRY STAFFING, MAY BE MATERIALLY IMPAIRED BY GRACE'S FINANCIAL
CONDITION.

In connection with our acquisition from W. R. Grace & Co. of the assets of
Cross Country Staffing, our predecessor, Grace agreed to indemnify us against
damages arising out of the breach of certain representations or warranties of
Grace, as well as against any liabilities retained by Grace. In March 2001,
Grace filed a voluntary petition under Chapter 11 of the United States
Bankruptcy Code. This bankruptcy filing could materially impair Grace's
obligations to indemnify us.

RISKS RELATED TO THIS OFFERING

BECAUSE OUR PRINCIPAL STOCKHOLDERS CONTROL US, THEY WILL BE ABLE TO DETERMINE
THE OUTCOME OF ALL MATTERS SUBMITTED TO OUR STOCKHOLDERS FOR APPROVAL,
REGARDLESS OF THE PREFERENCES OF OTHER STOCKHOLDERS.

Following this offering, assuming there is no exercise by the underwriters
of the right to purchase an additional 1,350,000 shares, Charterhouse Equity
Partners III, or CEP III, and investment funds managed by Morgan Stanley Private
Equity together will own approximately 37% of our outstanding common stock.
Accordingly, acting together, they will be able to substantially influence:

- the election of directors;

- management and policies; and

- the outcome of any corporate transaction or other matter submitted to our
stockholders for approval, including mergers, consolidations and the sale
of all or substantially all of our assets.

Currently, our board of directors is comprised of ten members, two of whom are
designees of CEP III and two of whom are designees of investment funds managed
by Morgan Stanley Private Equity. Under our stockholders' agreement, CEP III and
the funds managed by Morgan Stanley Private Equity will each have the right to
designate two directors for nomination to our board of directors. This number
decreases if either CEP III or the funds managed by Morgan Stanley Private
Equity reduce their respective ownership by more than 50% of their holdings
prior to our initial public offering. Their interests may conflict with the
interests of the other holders of common stock.

AFTER GIVING EFFECT TO THIS OFFERING, WE WILL HAVE AN AGGREGATE OF 12,366,937
RESTRICTED SHARES OF COMMON STOCK, ALL OF WHICH ARE ELIGIBLE FOR SALE UNDER
RULE 144 OF THE SECURITIES ACT. FUTURE SALES OF THESE SHARES MAY CAUSE OUR STOCK
PRICE TO DECLINE.

Sales of substantial amounts of the restricted shares in the public market,
or the perception that these sales could occur, could adversely affect the
market price of our common stock and could materially impair our future ability
to raise capital through offerings of our common stock. Based on the number of
common shares outstanding as of December 31, 2001, an aggregate of 32,211,745
shares of common stock will be outstanding after this offering. Of these,
19,844,808 shares will be freely tradeable without restriction or further
registration.

In connection with this offering, we and our executive officers and
directors and the selling stockholders, have agreed not to sell or transfer any
shares of our common stock for a specified period of time after completion of
this offering without the underwriters' consent. While the underwriters may
release these shares from the restrictions at any time, this will be done, if at
all, only on a case-by-case basis. The underwriters do not currently have any
intention of consenting to a waiver of these restrictions. See "Shares Eligible
for Future Sale" and "Underwriting" included elsewhere in this prospectus.

Furthermore, CEP III and investment funds managed by Morgan Stanley Private
Equity each have demand rights to cause us to file, at our expense, a
registration statement under the Securities Act covering resales of their
shares. After giving effect to this offering, these shares represent
approximately 37% of our outstanding common stock. These shares may also be sold
under Rule 144 of the Securities Act, depending on their holding period and
subject to significant restrictions in the case of shares held by persons deemed
to be our affiliates.

In addition, we registered 4,398,001 shares of common stock for issuance
under our stock option plans. Options to purchase 3,520,068 shares of common
stock were issued and outstanding as of December 31, 2001, of which, as of
December 31, 2001, options to purchase 1,535,827 shares were vested. Common
stock issued upon exercise of stock options, except by our executive officers
and directors, under our benefit plans are eligible for resale in the public
market without restriction.

We cannot predict what effect, if any, market sales of shares held by any
stockholder or the availability of these shares for future sale will have on the
market price of our common stock. See "Shares Eligible for Future Sales" for a
more detailed description of the restrictions on selling shares of our common
stock after this offering.

IF OUR STOCK PRICE FLUCTUATES AFTER THIS OFFERING, YOU COULD LOSE A SIGNIFICANT
PART OF YOUR INVESTMENT.

Since our initial public offering in October 2001, the closing price of our
common stock has ranged from a low of $19.50 to a high of $30.97 per share. In
addition, the stock market in general and healthcare companies in particular
have experienced extreme volatility that often has been unrelated to the
operating performance or prospects of particular companies. You may not be able
to resell your shares at or above the offering price due to fluctuations in the
market price of our common stock due to changes in our operating performance or
prospects or market conditions.

IF PROVISIONS IN OUR CORPORATE DOCUMENTS AND DELAWARE LAW DELAY OR PREVENT A
CHANGE IN CONTROL OF OUR COMPANY, WE MAY BE UNABLE TO CONSUMMATE A TRANSACTION
THAT OUR STOCKHOLDERS CONSIDER FAVORABLE.

Our certificate of incorporation and by-laws may discourage, delay or
prevent a merger or acquisition involving us that our stockholders may consider
favorable. For example, our certificate of incorporation authorizes our board of
directors to issue up to 10,000,000 shares of "blank check" preferred stock.
Without stockholder approval, the board of directors has the authority to attach
special rights, including voting and dividend rights, to this preferred stock.
With these rights, preferred stockholders could make it more difficult for a
third party to acquire us. Delaware law may also discourage, delay or prevent
someone from acquiring or merging with us.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the matters discussed in this prospectus include forward-looking
statements. Statements that are predictive in nature, that depend upon or refer
to future events or conditions or that include words such as "expects,"
"anticipates," "intends," "plans," "believes," "estimates" and similar
expressions are forward-looking statements. These statements involve known and
unknown risks, uncertainties and other factors that may cause our actual results
and performance to be materially different from any future results or
performance expressed or implied by these forward-looking statements. These
factors include the following:

- our ability to attract and retain qualified nurses and other healthcare
personnel;

- costs and availability of short-term leases for our travel nurses;

- demand for the healthcare services we provide, both nationally and in the
regions in which we operate;

- the functioning of our information systems;

- the effect of existing or future government regulation and federal and
state legislative and enforcement initiatives on our business;

- our clients' ability to pay us for our services;

- our ability to successfully implement our acquisition and development
strategies;

- the effect of liabilities and other claims asserted against us; and

- the effect of competition in the markets we serve.

Although we believe that these statements are based upon reasonable
assumptions, we can not guarantee future results. Given these uncertainties, the
forward-looking statements discussed in this prospectus might not occur. These
forward-looking statements are made as of the date of this prospectus. Except as
may be required under applicable statutes, regulations or court decisions, we
undertake no obligation to update or revise them.

USE OF PROCEEDS

The selling stockholders will receive all of the net proceeds from selling
the common stock offered hereby. We will not receive any proceeds from this
offering.

DIVIDEND POLICY

We have never paid or declared cash dividends on our common stock. We
currently intend to retain all future earnings for use in the operation and
expansion of our business and do not anticipate declaring or paying cash
dividends in the foreseeable future. In addition, covenants in our credit
facility limit our ability to declare and pay cash dividends on our common
stock.

PRICE RANGE OF COMMON STOCK

Our common stock commenced trading on the Nasdaq National Market under the
symbol "CCRN" on October 25, 2001. The following table sets forth, for the
periods indicated, the high and low closing sale prices per share of our common
stock on the Nasdaq National Market. (Such prices reflect inter-dealer prices,
without retail mark-up, mark-down or commission and may not represent actual
transactions.)

HIGH LOW
-------- --------

Fiscal Year Ended December 31, 2001
Fourth Quarter (from October 25, 2001).................... $29.25 $19.50

Fiscal Year Ended December 31, 2002
First Quarter (through February 26, 2002)................. $30.97 $21.13

On February 26, 2002, the last reported sale price for our common stock on
the Nasdaq National Market was $28.45 per share. As of 2002, there
were approximately stockholders of record of our common stock. Because
many of such shares are held by brokers or other institutions on behalf of
stockholders, we are unable to estimate the total number of stockholders
represented by these record holders.

CAPITALIZATION

The following table shows our capitalization as of September 30, 2001:

- on an actual basis; and

- on a pro forma adjusted basis to give effect to our initial public
offering of 8,984,375 shares of our common stock on October 24, 2001 and
the estimated expenses related to this offering; we will not receive any
of the proceeds from this offering.

In addition, you should read the following table in conjunction with our
consolidated financial statements and the accompanying notes which are contained
elsewhere in this prospectus.

AS OF SEPTEMBER 30, 2001
----------------------------
PRO FORMA
ACTUAL AS ADJUSTED(A)
----------- --------------
(IN THOUSANDS)

Long term debt:
Revolving loan facility................................... $ 11,700 $ 5,600
Term loan................................................. 134,580 45,000
12.00% senior subordinated pay-in-kind notes due
2006(b)................................................. 38,779 --
Capitalized lease obligation.............................. 134 134
-------- --------
Total debt.................................................. 185,193 50,734
Less current maturities................................... 22,354 134
-------- --------
Total long-term debt.................................... 162,839 50,600

Stockholders' equity:
Undesignated preferred stock, $0.01 par value, 10,000,000
shares authorized--actual and as adjusted, none issued
and outstanding--actual and as adjusted................. -- --
Common stock, $0.0001 par value, 100,000,000 shares
authorized--actual and as adjusted, 23,207,546 shares
issued and outstanding--actual, 32,211,745 shares issued
and outstanding--as adjusted(c)......................... 2 3
Additional paid-in capital................................ 119,099 257,864
Retained earnings(d)...................................... 10,853 5,199
Accumulated other comprehensive earnings.................. (1,193) (1,193)
-------- --------
Total stockholders' equity.............................. 128,761 261,873
-------- --------
Total capitalization.................................. $291,600 $312,473
======== ========

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

(a) As adjusted amounts do not include the use of $2.4 million of proceeds for
general corporate purposes, $0.4 million of proceeds to repay pay-in-kind
notes issued between September 30, 2001 and the repayment of the debt in
connection with our initial public offering, and a related redemption
premium.

(b) Actual amount includes approximately $1.1 million of interest accrued
between July 1, 2001 and September 30, 2001.

(d) As adjusted amount includes the effects of an approximate $1.6 million
redemption premium associated with the prepayment of our pay-in-kind notes,
the write-off of $6.6 million of related debt issuance costs as of
September 30, 2001, and estimated expenses of $1.0 million related to this
offering, net of taxes.

SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

The selected consolidated financial data as of December 31, 1999 and 2000
and for the five-month period July 30, 1999 to December 31, 1999 and for the
year ended December 31, 2000 are derived from the audited consolidated financial
statements of Cross Country, Inc. included elsewhere in this prospectus. The
selected financial data as of December 31, 1998 and July 29, 1999 and for the
year ended December 31, 1998 and for the seven-month period January 1, 1999 to
July 29, 1999 have been derived from the audited financial statements of Cross
Country Staffing, included elsewhere in this prospectus. The selected financial
data as of December 31, 1996 and 1997 and for the period from July 1, 1996 to
December 31, 1996 and for the year ended December 31, 1997 were derived from the
financial statements of Cross Country Staffing that have been audited but not
included in this prospectus. The selected financial data as of June 30, 1996 and
for the period from January 1, 1996 to June 30, 1996 are derived from the
unaudited consolidated financial statements of Cross Country Staffing.

The data as of September 30, 2001 and for the nine months ended
September 30, 2000 and 2001 are derived from our unaudited consolidated
financial statements included elsewhere in this prospectus. The unaudited
consolidated financial statements include all adjustments, consisting of normal
recurring accruals, which we consider necessary for a fair presentation of our
financial position and results of operations for these periods. Operating
results for the nine months ended September 30, 2001 are not necessarily
indicative of the results that may be expected for the entire year ending
December 31, 2001.

The pro forma as adjusted consolidated statements of operations for the year
ended December 31, 2000 and the nine months ended September 30, 2001 are pro
forma for the Heritage and ClinForce acquisitions and as adjusted for our
initial public offering of 8,984,375 shares of our common stock on October 24,
2001 and the estimated expenses related to this offering as if these events had
occurred on January 1, 2000. The as adjusted consolidated balance sheet data as
of September 30, 2001 are as adjusted for the offering of 8,984,375 shares of
our common stock on October 24, 2001 and the estimated expenses related to this
offering as if these events had occurred on September 30, 2001.

The following selected consolidated financial data should be read in
conjunction with the consolidated financial statements and related notes of
Cross Country, Inc., Cross Country Staffing, TravCorps Corporation and
Subsidiary, ClinForce and Heritage, the "Pro Forma Condensed Consolidated
Statement of Operations" and related notes, "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and other financial
information included elsewhere in this prospectus.

PREDECESSOR(A)
------------------------------------------------------------
PERIOD FROM PERIOD FROM YEAR ENDED DECEMBER
JANUARY 1 THROUGH JULY 1 THROUGH 31,
JUNE 30, DECEMBER 31, -----------------------
1996 1996 1997 1998
----------------- -------------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

CONSOLIDATED STATEMENT OF
OPERATIONS DATA
Revenue from services............ $ 65,045 $ 59,209 $ 138,560 $ 158,592
Operating expenses:
Direct operating expenses...... 52,061 46,617 108,726 121,951
Selling, general and
administrative expenses(d)... 7,595 7,378 16,051 19,070
Bad debt expense............... 144 437 624 722
Depreciation................... 126 83 150 264
Amortization................... 536 446 875 859
Non-recurring indirect
transaction costs(e)......... -- -- -- --
---------- ---------- ---------- ----------
Total operating expenses....... 60,462 54,961 126,426 142,866
---------- ---------- ---------- ----------
Income from operations........... 4,583 4,248 12,134 15,726
Other (income) expense:
Interest expense, net.......... 2,602 1,169 1,647 850
Other (income) expense......... (1,328) 299 37 183
---------- ---------- ---------- ----------
Income before income taxes and
discontinued operations........ 3,309 2,780 10,450 14,693
Income tax expense(f)............ -- -- -- --
---------- ---------- ---------- ----------
Income (loss) before discontinued
operations..................... 3,309 2,780 10,450 14,693
Discontinued operations:
Loss from discontinued
operations, net of income
taxes(g)..................... -- -- -- --
Loss on disposal(g)............ -- -- -- --
---------- ---------- ---------- ----------
Net income (loss)................ $ 3,309 $ 2,780 $ 10,450 $ 14,693
========== ========== ========== ==========
Basic and diluted income (loss)
per common share(h):
Income (loss) before
discontinued operations......
Discontinued operations........
Net income (loss)............
Weighted-average number of shares
outstanding:
Basic and diluted............
OTHER OPERATING DATA
EBITDA(i)........................ $ 5,245 $ 4,777 $ 13,159 $ 16,849
EBITDA as % of revenue........... 8.1% 8.1% 9.5% 10.6%

FTE's(j)......................... 2,100 1,846 2,102 2,264
Weeks worked(k).................. 54,596 47,996 109,313 117,728
Average contract revenue per
week(l)........................ $ 1,191 $ 1,234 $ 1,268 $ 1,347

Net cash flow provided by
operating activities........... $ 309 $ 3,875 $ 12,374 $ 14,434
Net cash flow provided by (used
in) investing activities....... $ (75) $ (89) $ (309) $ (977)
Net cash flow used in financing
activities..................... $ (977) $ (3,854) $ (12,064) $ (13,458)

PREDECESSOR(A)
----------------- PERIOD FROM YEAR ENDED DECEMBER 31,
PERIOD FROM JULY 30 ------------------------
JANUARY 1 THROUGH THROUGH PRO FORMA
JULY 29, DECEMBER 31, AS ADJUSTED
1999 1999(B) 2000 2000(C)
----------------- ------------ ---------- -----------
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

CONSOLIDATED STATEMENT OF
OPERATIONS DATA
Revenue from services............ $ 106,047 $ 87,727 $ 367,690 $ 407,733
Operating expenses:
Direct operating expenses...... 80,187 68,036 273,095 298,159
Selling, general and
administrative expenses(d)... 12,688 9,257 49,027 58,356
Bad debt expense............... 157 511 433 543
Depreciation................... 212 155 1,324 1,459
Amortization................... 496 4,422 13,701 15,270
Non-recurring indirect
transaction costs(e)......... -- -- 1,289 2,289
---------- ---------- ---------- ----------
Total operating expenses....... 93,740 82,381 338,869 376,076
---------- ---------- ---------- ----------
Income from operations........... 12,307 5,346 28,821 31,657
Other (income) expense:
Interest expense, net.......... 230 4,821 15,435 2,022
Other (income) expense......... 190 -- -- --
---------- ---------- ---------- ----------
Income before income taxes and
discontinued operations........ 11,887 525 13,386 29,635
Income tax expense(f)............ -- 672 6,730 13,021
---------- ---------- ---------- ----------
Income (loss) before discontinued
operations..................... 11,887 (147) 6,656 16,614
Discontinued operations:
Loss from discontinued
operations, net of income
taxes(g)..................... -- (195) (1,604) --
Loss on disposal(g)............ -- -- (454) --
---------- ---------- ---------- ----------
Net income (loss)................ $ 11,887 $ (342) $ 4,598 $ 16,614
========== ========== ========== ==========
Basic and diluted income (loss)
per common share(h):
Income (loss) before
discontinued operations...... $ (0.01) $ 0.29
Discontinued operations........ (0.01) (0.09)
---------- ----------
Net income (loss)............ $ (0.02) $ 0.20
========== ==========
Weighted-average number of shares
outstanding:
Basic and diluted............ 15,291,749 23,205,388
========== ==========
OTHER OPERATING DATA
EBITDA(i)........................ $ 13,015 $ 9,923 $ 45,135 $ 50,675
EBITDA as % of revenue........... 12.3% 11.3% 12.3% 12.4%
FTE's(j)......................... 2,466 2,789 4,167 4,452
Weeks worked(k).................. 73,980 61,358 216,684 231,504
Average contract revenue per
week(l)........................ $ 1,429 $ 1,417 $ 1,616 $ 1,638
Net cash flow provided by
operating activities........... $ 12,178 $ 6,301 $ 10,397
Net cash flow provided by (used
in) investing activities....... $ (202) $ 1,380 $ (9,584)
Net cash flow used in financing
activities..................... $ (11,977) $ (3,111) $ (5,641)

AS OF DECEMBER 31,
AS OF ------------------------------------ AS OF
JUNE 30, 1996 1996 1997 1998 JULY 29, 1999
------------- ---------- ---------- ---------- -------------

CONSOLIDATED BALANCE SHEET DATA
Working capital.......................... $ 2,061 $ 12,710 $ 12,372 $ 12,871 $ 9,752
Cash and cash equivalents................ (1,476) -- 1 -- --
Total assets............................. 27,305 34,933 36,080 41,901 44,464
Total debt............................... 45,045 30,280 18,700 13,173 7,874
Stockholders' equity(m).................. (24,738) (2,471) 7,122 13,451 19,466

AS OF DECEMBER 31,
-------------------------------
1999 2000
---------- ----------

CONSOLIDATED BALANCE SHEET DATA
Working capital.......................... $ 33,998 $ 34,375
Cash and cash equivalents................ 4,828 --
Total assets............................. 309,695 317,626
Total debt............................... 159,074 157,272
Stockholders' equity(m).................. 118,742 123,340

NINE MONTHS
ENDED SEPTEMBER 30,
-------------------------------------
PRO FORMA
AS ADJUSTED
2000 2001 2001(N)
---------- ---------- -----------
(DOLLARS IN THOUSANDS, EXCEPT SHARE
AND PER SHARE DATA)

CONSOLIDATED STATEMENT OF OPERATIONS DATA
Revenue from services....................................... $ 270,460 $ 356,193 $ 363,886
Operating expenses:
Direct operating expenses................................. 200,405 266,486 271,836
Selling, general and administrative expenses.............. 36,547 49,313 50,919
Bad debt expense.......................................... 681 1,318 1,318
Depreciation.............................................. 942 1,790 1,825
Amortization.............................................. 10,218 11,381 11,654
Non-recurring indirect transaction costs(e)............... 556 -- 1,000
---------- ---------- ----------
Total operating expenses................................ 249,349 330,288 338,552
---------- ---------- ----------
Income from operations...................................... 21,111 25,905 25,334
Other expenses:
Interest expense, net..................................... 11,631 12,907 3,592
---------- ---------- ----------
Income before income taxes and discontinued operations...... 9,480 12,998 21,742
Income tax expense(f)....................................... 4,769 5,858 9,225
---------- ---------- ----------
Income before discontinued operations....................... 4,711 7,140 12,517
Discontinued operations:
Loss from discontinued operations, net of income taxes.... 1,396 -- --
Loss on disposal.......................................... -- 544 --
---------- ---------- ----------
Net income.................................................. $ 3,315 $ 6,596 $ 12,517
========== ========== ==========
Basic and diluted income (loss) per common share(h):
Income before discontinued operations..................... $ 0.20 $ 0.30
Discontinued operations................................... (0.06) (0.02)
---------- ----------
Net income.............................................. $ 0.14 $ 0.28
========== ==========
Weighted-average number of shares outstanding:
Basic and diluted......................................... 23,205,298 23,205,929

OTHER OPERATING DATA
EBITDA(i)................................................... $ 32,827 $ 39,076 $ 39,813
EBITDA as a % of revenue.................................... 12.1% 11.0% 10.9%

FTE's(j).................................................... 4,150 4,657 4,756
Weeks worked(k)............................................. 161,850 181,623 185,484
Average contract revenue per week(l)........................ $ 1,593 $ 1,813 $ 1,817

Net cash flow provided by operating activities.............. 8,703 17,172
Net cash flow used in investing activities.................. (1,043) (39,790)
Net cash flow (used in) provided by financing activities.... $ (12,488) $ 22,618

AS OF SEPTEMBER 30, 2001
---------------------------
ACTUAL AS ADJUSTED(O)
---------- --------------

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

(a) On July 29, 1999, we acquired the assets of Cross Country Staffing which,
for accounting and reporting purposes, is our predecessor. Financial data
for periods prior to July 30, 1999 is that of Cross Country Staffing.

(b) Includes TravCorps results from December 16, 1999, the date of its
acquisition, through December 31, 1999.

- additional amortization expense of $0.9 million related to $35.4 million
of goodwill and other intangibles acquired in the Heritage and ClinForce
acquisitions;

- a reduction in interest expense of $13.4 million as a result of the
repayment, in connection with our initial public offering, of
$35.5 million including accrued interest of senior subordinated debt
(12.00% interest rate) plus an approximate $1.4 million redemption premium
and $101.9 million of borrowings outstanding under our credit facility
using the weighted average interest rate in effect during the year ended
December 31, 2000 (9.74%);

- additional expense related to this offering of $1.0 million; and

- additional income tax expense of $5.1 million as a result of the above
adjustments.

(d) Includes expenses related to a discontinued management incentive
compensation plan of $2.1 million and $2.7 million for the seven-month
period January 1-July 29, 1999 and the year ended December 31, 1998. The
management incentive compensation plan was discontinued on July 30, 1999.

(e) Non-recurring indirect transaction costs consist of non capitalizable
transition bonuses and integration costs related to the TravCorps
acquisition.

(f) Prior to July 30, 1999, our predecessor, Cross Country Staffing, operated as
a partnership under the applicable provisions of the Internal Revenue Code,
and, accordingly, income related to the operations of Cross Country Staffing
was taxed directly to its partners.

(g) Reflects the operating results of HospitalHub, Inc., which began operations
in 1999. We completed the divestiture of HospitalHub, Inc. during the second
quarter of 2001.

(h) The financial data contained herein for periods prior to July 30, 1999, is
that of our predecessor, Cross Country Staffing, a partnership, for which
share and per share amounts were not applicable.

(i) We define EBITDA as income before interest, income taxes, depreciation,
amortization and non-recurring indirect transaction costs. EBITDA should not
be considered a measure of financial performance under generally accepted
accounting principles. Items excluded from EBITDA are significant components
in understanding and assessing financial performance. EBITDA is a key
measure used by management to evaluate our operations and provide useful
information to investors. EBITDA should not be considered in isolation or as
an alternative to net income, cash flows generated by operations, investing
or financing activities, or other financial statement data presented in the
consolidated financial statements as indicators of financial performance or
liquidity. Because EBITDA is not a measurement determined in accordance with
generally accepted accounting principles and is thus susceptible to varying
calculations, EBITDA as presented may not be comparable to other similarly
titled measures of other companies.

(j) FTE's represent the average number of contract staffing personnel on a
full-time equivalent basis.

(k) Weeks worked is calculated by multiplying the FTE's by the number of weeks
during the respective period.

(l) Average contract revenue per week is calculated by dividing the revenue
received under our staffing contracts by the number of weeks worked during
the respective period.

(m) Consists of partners' capital for periods prior to July 30, 1999, since our
predecessor, Cross Country Staffing, was a partnership.

(n) Reflects the following adjustments as if our initial public offering, this
offering (from which we will receive no proceeds) and the Heritage and
ClinForce acquisitions had occurred on January 1, 2000:

- a reduction in interest expense for the nine months ended September 30,
2001 of $9.5 million as a result of the repayment, in connection with our
initial public offering, of $38.8 million including accrued interest of
senior subordinated debt (12.00% interest rate) plus an approximate $1.6
million redemption premium and $95.7 million of borrowings outstanding
under our credit facility using the weighted average interest rate in
effect during the nine months ended September 30, 2001 (8.64%);

- additional expenses related to this offering of $1.0 million; and

- additional income tax expense of $3.2 million as a result of the above
adjustments.

(o) Reflects the following adjustments as if our initial public offering and
this offering (from which we will receive no proceeds) had occurred on
September 30, 2001:

- increase in stockholders' equity of $138.8 million of net proceeds from
our initial public offering;

- repayment of $38.8 million of senior subordinated debt including accrued
interest, plus an approximate $1.6 million redemption premium, and
repayment of $95.7 million of borrowings outstanding under our credit
facility. The repayment of debt results in the write off of $6.6 million
of debt issuance costs which, along with the redemption premium, was
accounted for as an extraordinary item, net of taxes, in October 2001;

- decrease in stockholders' equity of $0.6 million from estimated expenses
related to this offering; and

- approximately $2.8 million of the proceeds from our initial public
offering were used for general corporate purposes.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

We acquired ClinForce on March 16, 2001 and Heritage on December 26, 2000.

The pro forma condensed consolidated statement of operations for the year
ended December 31, 2000 and the nine months ended September 30, 2001 give effect
to the acquisitions of Heritage and ClinForce as if the transactions had
occurred on January 1, 2000.

The Company acquired E-Staff, Inc. on July 31, 2000, Gill/Balsano
Consulting, LLC on April 1, 2001 and NovaPro on January 3, 2002. Gill/Balsano,
E-Staff and NovaPro's results of operations are immaterial to us; therefore such
results have been excluded from these unaudited pro forma condensed consolidated
statement of operations.

The pro forma information is based on the historical statements of the
acquired businesses giving effect to the transactions under the purchase method
of accounting and the assumptions and adjustments described in the accompanying
notes to the Pro Forma Condensed Consolidated Statement of Operations.

The pro forma information as adjusted for this offering, and our initial
public offering of 8,984,375 shares of our common stock on October 24, 2001 for
the year ended December 31, 2000 and the nine months ended September 30, 2001,
assumes the repayment of certain of our indebtedness using a portion of the net
proceeds received from our initial public offering as if such offering and the
repayment had occurred on January 1, 2000.

This pro forma information does not purport to be indicative of the combined
results of operations that actually would have taken place if the transactions
had occurred at such dates. The pro forma Condensed Consolidated Statement of
Operations should be read in conjunction with the Consolidated Financial
Statements and related notes thereto included elsewhere in this prospectus.

YEAR ENDED DECEMBER 31, 2000
-----------------------------------------------------------------------------------------------------
PRO FORMA ADJUSTMENTS
ACQUISITION PRO FORMA FOR PRO FORMA
CROSS COUNTRY CLINFORCE(A) HERITAGE(B) ADJUSTMENTS COMBINED OFFERINGS AS ADJUSTED
------------- ------------ ----------- ----------- ---------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

Revenue from services..... $ 367,690 $ 28,895 $ 11,148 $ 407,733 $ 407,733
Operating expenses:
Direct operating
expenses.............. 273,095 20,128 4,936 298,159 298,159
Selling, general and
administrative
expenses.............. 49,027 4,766 4,563 58,356 58,356
Bad debt expense........ 433 110 -- 543 543
Depreciation............ 1,324 135 -- 1,459 1,459
Amortization............ 13,701 660 -- 909 (c) 15,270 15,270
Non-recurring indirect
transaction costs..... 1,289 -- -- 1,289 1,000 (d) 2,289
---------- ---------- ---------- ---------- ----------
Total operating
expenses................ 338,869 25,799 9,499 375,076 376,076
Income from operations.... 28,821 3,096 1,649 32,657 31,657
Interest expense, net..... 15,435 -- -- 3,758 (e) 19,193 (17,171)(f) 2,022
---------- ---------- ---------- ---------- ----------
Income before income
taxes................... 13,386 3,096 1,649 13,464 29,635
Income tax expense........ 6,730 1,227 -- (1,162)(g) 6,795 6,226 (g) 13,021
---------- ---------- ---------- ---------- ----------
Income from continuing
operations.............. $ 6,656 $ 1,869 $ 1,649 $ 6,669 $ 16,614
========== ========== ========== ========== ==========
Basic and diluted income
from continuing
operations per common
share................... $ 0.29 -- -- $ 0.29
========== ========== ========== ==========
Weighted average common
shares outstanding:
Basic and diluted..... 23,205,388 -- -- 23,205,388
========== ========== ========== ==========

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

(a) Represents the historical consolidated revenue and direct operating expenses
of ClinForce for the twelve months ended December 31, 2000. ClinForce was a
subsidiary of Edgewater Technology, Inc. ("Edgewater") prior to being
acquired by us in March 2001. Edgewater provided substantial services to
ClinForce during 2000. Edgewater has traditionally charged ClinForce a
management fee for tax planning services and information system services
through corporate allocations which were generally based on a percent of
sales. The amount of corporate allocations was dependent upon the total
amount of anticipated allocable costs incurred by Edgewater, less amounts
charged as a specific cost or expense rather than by allocation. The amounts
allocated for these services are not included in these pro forma statements
because they are not necessarily indicative of amounts that would have been
incurred by ClinForce had it operated on a stand-alone basis. Expenses
relating to corporate advertising, accounting and legal services, officer
salaries and other selling, general and administrative expenses were not
allocated by Edgewater to ClinForce for internal financial statement
purposes, and therefore, no amounts have been allocated for these services
in these pro forma financial statements. As a result of our corporate
infrastructure, which we believe is sufficient to support our combined
operations, including ClinForce, without any additional incremental
expenses, we believe the total expenses presented in the Pro Forma Combined
column fairly present the operating expenses expected to be incurred on a
going-forward basis.

(b) Represents the historical results of Heritage for the period from January 1,
2000 through December 25, 2000.

(c) Pro forma adjustment to record the amortization of intangible assets
acquired as a result of the ClinForce and Heritage acquisitions. Our
intangible assets are amortized on a straight-line basis over periods
ranging from 4.5--25 years.

An additional $6.5 million is contingently payable to Heritage based upon
future EBITDA results.
Such amount is payable through 2003.

(d) Pro forma adjustment to include estimated expenses of $1.0 million related
to this offering.

(e) Pro forma adjustment to record interest costs associated with the financing
of the ClinForce and Heritage acquisitions using the weighted average
interest rate in effect for the year ended December 31, 2000 (9.74%).

(f) Adjustment to record pro forma interest expense reduction as if
$138.8 million of proceeds from our initial public offering were used to
reduce outstanding debt through the repayment of $35.5 million of senior
subordinated debt including accrued interest, plus an approximate
$1.4 million redemption premium, and repayment of $101.9 million of
borrowings outstanding under our credit facility as of January 1, 2000.

(g) Pro forma adjustment for estimated income taxes at combined federal and
state statutory rates for the effect of the other adjustments and to record
pro forma income tax expense for Heritage which, prior to being acquired by
Cross Country, was an LLC for which income tax expense was determined at the
individual member level.

NINE MONTHS ENDED SEPTEMBER 30, 2001
---------------------------------------------------------------------------------------
ADJUSTMENTS
PRO FORMA FOR INITIAL
ACQUISITION PRO FORMA PUBLIC PRO FORMA
CROSS COUNTRY CLINFORCE(A) ADJUSTMENTS COMBINED OFFERING AS ADJUSTED
------------- ------------ ----------- ---------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

Revenue from services............. $ 356,193 $ 7,693 $ 363,886 $ 363,886
Operating expenses:
Direct operating expenses....... 266,486 5,350 271,836 271,836
Selling, general and
administrative expenses....... 49,313 1,606 50,919 50,919
Bad debt expense................ 1,318 1,318 1,318
Depreciation.................... 1,790 35 1,825 1,825
Amortization.................... 11,381 92 181(b) 11,654 11,654
Non-recurring indirect
transaction costs............. -- -- -- 1,000(c) 1,000
---------- ---------- ---------- ----------
Total operating expenses.......... 330,288 7,083 337,552 338,552

Income from operations............ 25,905 610 26,334 25,334

Interest expense, net............. 12,907 179 404(d) 13,490 (9,898)(e) 3,592
---------- ---------- ---------- ----------

Income before income taxes........ 12,998 431 12,844 21,742
Income tax expense................ 5,858 166 (225)(f) 5,799 3,426(f) 9,225
---------- ---------- ---------- ----------
Income from continuing
operations...................... $ 7,140 $ 265 $ 7,045 $ 12,517
========== ========== ========== ==========

Basic and diluted income from
continuing operations per common
share........................... $ 0.31 $ 0.30
========== ==========
Weighted average common shares
outstanding:
Basic and diluted............. 23,205,929 23,205,929
========== ==========

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

(a) Represents the historical consolidated revenues and direct operating
expenses of ClinForce for the period from January 1, 2001 through March 16,
2001. ClinForce was a subsidiary of Edgewater prior to being acquired by us
in March 2001. Edgewater provided substantial services to ClinForce during
2000. Edgewater traditionally charged ClinForce a management fee for tax
planning services and information system services through corporate
allocations which were generally based on a percent of sales. The amount of
corporate allocations was dependent upon the total amount of anticipated
allocable costs incurred by Edgewater, less amounts charged as a specific
cost or expense rather than by allocation. The amounts allocated for these
services are not included in these pro forma statements because they are not
necessarily indicative of amounts that would have been incurred by ClinForce
had it operated on a stand-alone basis. Expenses relating to corporate
advertising, accounting and legal services, officer salaries and other
selling, general and administrative expenses were not allocated by Edgewater
to ClinForce for internal financial statement purposes, and therefore, no
amounts have been allocated for their services in the pro forma financial
statements. As a result of our corporate infrastructure, which we believe is
sufficient to support our combined operations, including ClinForce, without
any additional incremental expenses, we believe the total expenses presented
in the Pro Forma Combined column fairly present the operating expenses
expected to be incurred on a going-forward basis.

(b) Pro forma adjustment to record the amortization of intangible assets
acquired as a result of the ClinForce acquisition. Our intangible assets are
amortized on a straight-line basis over periods ranging from 4.5--25 years.

(d) Pro forma adjustment to record interest costs associated with the financing
of the ClinForce acquisition using the weighted average interest rate in
effect for the nine months ended September 30, 2001 (8.64%).

(e) Adjustment to record pro forma interest expense reduction as if
$138.8 million proceeds from our initial public offering were used to reduce
outstanding debt through the repayment of $38.8 million including accrued
interest of senior subordinated debt, plus an approximate $1.6 million
redemption premium and repayment of $95.7 million of borrowings outstanding
under our credit facility as of January 1, 2001. Approximately $2.8 million
of the proceeds were used for general corporate purposes.

(f) Pro forma adjustment for estimated income taxes at combined federal and
state statutory rates for the effect of the other adjustments.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

THE FOLLOWING DISCUSSION AND ANALYSIS OF OUR FINANCIAL CONDITION AND RESULTS
OF OPERATIONS SHOULD BE READ IN CONJUNCTION WITH SELECTED CONSOLIDATED FINANCIAL
AND OTHER DATA AND OUR CONSOLIDATED FINANCIAL STATEMENTS AND THE ACCOMPANYING
NOTES THAT APPEAR ELSEWHERE IN THIS PROSPECTUS.

OVERVIEW

HISTORY

In July 1999, an affiliate of Charterhouse Group International, Inc. and
certain members of management acquired the assets of Cross Country Staffing, our
predecessor, from W. R. Grace & Co. Upon the closing of this transaction, we
changed from a partnership to a C corporation form of ownership. In
December 1999, we acquired TravCorps Corporation, which was owned by investment
funds managed by Morgan Stanley Private Equity and certain members of TravCorps'
management and subsequently changed our name to Cross Country TravCorps, Inc. In
May 2001, we changed our name to Cross Country, Inc.

REVENUE

Travel nurse staffing revenue is received primarily from acute care
hospitals. Our clinical trials staffing revenue is received primarily from
pharmaceutical and biotechnology companies, as well as medical device
manufacturers. Revenue from allied health staffing services is received from
numerous sources, including providers of radiation, rehabilitation and
respiratory services at additional venues including nursing homes, sports
medicine clinics and schools. Our staffing placements are through contracts with
assignments typically lasting 13 weeks or longer. Revenue from our search and
recruitment, consulting and education and training services is received from
numerous sources, including hospitals, physician group practices, insurance
companies and individual healthcare professionals. Our fees are paid directly by
our clients rather than by government or other third-party payors.

Revenue is recognized when services are rendered. Accordingly, accounts
receivable includes an accrual for employees' time worked but not yet invoiced.
Each of our field employees works for us under a contract. These contracts
typically last 13 weeks. Payroll contract employees are hourly employees whose
contract specifies the hourly rate they will be paid, including applicable
overtime, and any other benefits they are entitled to receive during the
contract period. For payroll contract employees, we bill clients at an hourly
rate and assume all employee costs, including payroll, withholding taxes,
benefits and professional liability insurance and Occupational Safety and Health
Administration, or OSHA, requirements, as well as any travel and housing
arrangements. Mobile contract employees are hourly employees of the hospital
client and receive an agreement that specifies the hourly rates they will be
paid by the hospital employer, as well as any benefits they are entitled to
receive from us. For mobile contract employees, we provide recruitment, housing
in apartments leased

by the Company and travel services. The Company's contract with the healthcare
professional obligates it to provide these services to the healthcare
professional. The Company is compensated for the services it provides at a
predetermined rate negotiated between the Company and its hospital client,
without regard to the Company's cost of providing these services. Currently,
more than 98% of our employees work under payroll contracts.

Our healthcare staffing revenue and earnings are impacted by the relative
supply of and demand for nurses at healthcare facilities. We rely significantly
on our ability to recruit and retain nurses and other healthcare personnel who
possess the skills, experience and, as required, licensure necessary to meet the
specified requirements of our clients. Shortages of qualified nurses and other
healthcare personnel could limit our ability to fill open assignments and grow
our revenue and EBITDA.

Fluctuations in patient occupancy at our clients' facilities may also affect
the profitability of our business. As occupancy increases, temporary employees
are often added before full-time employees are hired. As occupancy decreases,
clients tend to reduce their use of temporary employees before undertaking
layoffs of their regular employees. In addition, we may experience more
competitive pricing pressure during periods of occupancy downturn.

ACQUISITIONS

In January 2002, we acquired the assets of the NovaPro healthcare staffing
division of HR Logic Holdings, Inc. for $7.1 million in cash. NovaPro targets
nurses seeking more customized benefits packages.

In May 2001, we acquired Gill/Balsano, a healthcare management consulting
firm, for $1.8 million in cash and potential earnout payments of $2.0 million.

In March 2001, we acquired ClinForce for $31.0 million in cash. In
July 2001 a post-closing purchase price adjustment increased the purchase price
and goodwill by $1.4 million each. ClinForce supplies supplemental staffing
services for clinical trials.

In December 2000, we completed the acquisition of Heritage, a provider of
continuing education programs to the healthcare community, for a purchase price
of approximately $6.5 million in cash and potential earnout payments of
approximately $6.5 million.

In July 2000, we acquired E-Staff, an application service provider that has
developed an internet subscription-based communication, scheduling,
credentialing and training service business for healthcare providers, for
$1.5 million in cash and potential earnout payments of $3.2 million.

In December 1999, we acquired all outstanding shares of TravCorps' common
stock in exchange for shares of our common stock then valued at approximately
$32.1 million and we assumed TravCorps' debt of $45.0 million.

DISCONTINUED OPERATIONS

In December 2000, we committed to a formal plan to divest
HospitalHub, Inc., or HospitalHub, our electronic job board business, which
began operations in 1999. The operating results of HospitalHub have been
accounted for as discontinued operations in our consolidated financial
statements and notes thereto and in the other financial information included
herein. We completed the divestiture of HospitalHub in the second quarter of
2001.

GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and other intangible assets from the acquisition of the assets of
Cross Country Staffing, our predecessor, and from subsequent acquisitions were
$149.2 million and $98.4 million, respectively, at September 30, 2001. Goodwill
and other intangible assets are being amortized using the straight-line

method over their estimated useful lives ranging from 4.5 to 25 years. Goodwill
and other intangible assets represented 199% of our stockholders' equity as of
September 30, 2001. The amount of goodwill and other intangible assets amortized
equaled 43.9% of our income from operations for the nine months ended
September 30, 2001.

In July 2001, the Financial Accounting Standards Board issued FAS No. 141,
BUSINESS COMBINATIONS and FAS No. 142, INTANGIBLE ASSETS. FAS 141 eliminates the
pooling-of-interests method of accounting for business combinations except for
qualifying business combinations that were initiated before July 1, 2001.
FAS 142 further clarifies the criteria to recognize intangible assets separately
from goodwill and promulgates that goodwill and certain intangible assets not be
amortized. Instead, these assets will be reviewed for impairment annually with
any related losses recognized in earnings when incurred. These standards began
to apply to us beginning January 1, 2002 for existing intangible assets and
July 1, 2001 for business combinations completed after June 30, 2001. We adopted
these standards prospectively.

RESULTS OF OPERATIONS

The following table summarizes, for the periods indicated, selected
statement of operations data expressed as a percentage of revenue:

PREDECESSOR
--------------------------- NINE MONTHS
PERIOD FROM PERIOD FROM ENDED
YEAR ENDED JANUARY 1- JULY 30- YEAR ENDED SEPTEMBER 30,
DECEMBER 31, JULY 29, DECEMBER 31, DECEMBER 31, -------------------
AS A % OF REVENUE 1998 1999 1999 2000 2000 2001
- ----------------- ------------- ----------- ------------ ------------- -------- --------

Revenue.............................. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Direct operating expenses............ 76.9 75.6 77.6 74.3 74.1 74.8
Selling, general and administrative
expenses........................... 12.0 12.0 10.5 13.3 13.5 13.8
Bad debt expense..................... 0.5 0.1 0.6 0.1 0.3 0.4
----- ----- ----- ----- ----- -----
EBITDA(a)............................ 10.6 12.3 11.3 12.3 12.1 11.0
Depreciation and amortization........ 0.7 0.7 5.2 4.1 4.1 3.7
Non-recurring indirect transaction
costs.............................. -- -- -- 0.4 0.2 --
----- ----- ----- ----- ----- -----
Income from operations............... 9.9 11.6 6.1 7.8 7.8 7.3
Interest expense, net................ 0.5 0.2 5.5 4.2 4.3 3.6
Other expenses....................... 0.1 0.2 -- -- -- --
----- ----- ----- ----- ----- -----
Income before income taxes and
discontinued operations............ 9.3 11.2 0.6 3.6 3.5 3.7
Income tax expense(b)................ -- -- 0.8 1.8 1.8 1.6
----- ----- ----- ----- ----- -----
Income (loss) before discontinued
operations......................... 9.3 11.2 (0.2) 1.8 1.7 2.1
Loss from discontinued operations,
net of income taxes................ -- -- (0.2) (0.4) (0.5) --
Estimated loss on disposal of
discontinued operations............ -- -- -- (0.1) -- (0.2)
----- ----- ----- ----- ----- -----
Net income (loss).................... 9.3% 11.2% (0.4)% 1.3% 1.2% 1.9%
===== ===== ===== ===== ===== =====

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

liquidity. Because EBITDA is not a measurement determined in accordance with
generally accepted accounting principles and is thus susceptible to varying
calculations, EBITDA as presented may not be comparable to other similarly
titled measures of other companies.

(b) Prior to July 30, 1999, we were a partnership for which income tax expense
was determined at the partner level.

SEGMENT INFORMATION

PREDECESSOR
----------------------------------- NINE MONTHS
PERIOD FROM PERIOD FROM ENDED
YEAR ENDED JANUARY 1- JULY 30- YEAR ENDED SEPTEMBER 30,
DECEMBER 31, JULY 29, DECEMBER 31, DECEMBER 31, -------------------
1998 1999 1999 2000 2000 2001
------------- ------------------- ----------------- ------------- -------- --------
(DOLLARS IN THOUSANDS)

Revenue:
Healthcare staffing........ $156,951 $101,398 $ 85,595 $350,856 $258,225 $329,849
Other human capital
management services...... 1,641 4,649 2,132 16,834 12,235 26,344
-------- -------- -------- -------- -------- --------
$158,592 $106,047 $ 87,727 $367,690 $270,460 $356,193
======== ======== ======== ======== ======== ========
Contribution
income/(loss)(a):
Healthcare staffing........ $ 28,344 $ 19,409 $ 15,518 $ 61,894 $46,223 $ 51,434
Other human capital
management services...... (397) 693 (95) 4,290 1,241 3,502
Unallocated corporate
overhead................... 11,098 7,087 5,500 21,049 14,637 15,860
-------- -------- -------- -------- -------- --------
EBITDA $ 16,849 $ 13,015 $ 9,923 $ 45,135 $32,827 $ 39,076
======== ======== ======== ======== ======== ========

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

(a) We define contribution income as earnings before interest, taxes,
depreciation, amortization and corporate expenses not specifically
identified to a reporting segment.

NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 2000

Revenue increased 31.7% to $356.2 million for the nine months ended
September 30, 2001 as compared to $270.5 million for the nine months ended
September 30, 2000. Revenue included from Heritage and ClinForce, which were
acquired on December 26, 2000 and March 16, 2001, respectively, totaled
$29.8 million for the nine months ended September 30, 2001. Excluding the
effects of these acquisitions, revenue increased $55.9 million, or 20.7%, as
compared with the nine months ended September 30, 2000. This increase is
primarily from organic growth in our healthcare staffing business segment.

Revenue from our healthcare staffing segment increased $71.6 million, or
27.7%, for the nine months ended September 30, 2001 compared to the nine months
ended September 30, 2000. Excluding revenue from the Clinforce acquisition,
healthcare staffing segment revenue increased $52.2 million, or 20.2%. This
increase is primarily due to an increase in the average hourly bill rate along
with an increase in the average number of field employees, offset in part by a
modest reduction in the hours billed per FTE per week. The average number of
hours worked per week per FTE decreased primarily as a result of an increase in
the number of nurses working three 12-hour shifts rather than five 8-hour
shifts. For the nine months ended September 30, 2001, 86.7% of healthcare
staffing revenue was generated by nurse staffing operations and 13.3% was
generated by other healthcare staffing operations. In the nine month period
ending September 30, 2000, 92.5% was generated by nurse staffing operations and
7.5% was generated by other healthcare staffing operations. This shift is
primarily a result of the Company's expansion of healthcare staffing services
into the clinical trials sector through its acquisition of ClinForce.

Direct operating expenses totaled $266.5 million for the nine months ended
September 30, 2001 as compared to $200.4 million for the nine months ended
September 30, 2000. As a percentage of

revenue, direct operating expenses represented 74.8% of revenue for the nine
months ended September 30, 2001 as compared to 74.1% of revenue for the nine
months ended September 30, 2000. The increase in direct operating expenses as a
percent of revenue was mostly attributable to an increase in field salaries,
housing costs and health insurance coupled with an increase in the percentage of
nurses working under staffing rather than mobile contracts. These increases were
offset by the relatively lower direct operating expenses as a percent of revenue
for each of Heritage and ClinForce.

Selling, general, and administriative expenses totaled $49.3 million for the
nine months ended September 30, 2001 as compared to $36.5 million for the nine
mouths ended September 30, 2000. As a percentage of revenue, selling, general
and administrative expenses increased to 13.8% of revenue for the nine months
ended September 30, 2001 as compared with 13.5% for the nine months ended
September 30, 2000. The increase is a result of the acquisitions of Heritage and
ClinForce and Gill/ Balsano, which have historically higher selling, general,
and administrative expense than the nurse staffing operations.

Bad debt expense totaled $1.3 million for the nine months ended
September 30, 2001 as compared to $0.7 million for the nine months ended
September 30, 2000. As a percentage of revenue, bad debt expense represented
0.4% of revenue for the nine months ended September 30, 2001 as compared with
0.3% for the nine months ended September 30, 2000.

EBITDA, as a result of the above, totaled $39.1 million for the nine months
ended September 30, 2001 as compared to $32.8 million for the nine months ended
September 30, 2000. As a percentage of revenue, EBITDA represented 11.0% of
revenue for the nine months ended September 30, 2001 as compared with 12.1% for
the nine months ended September 30, 2000.

Depreciation and amortization totaled $13.2 million for the nine months
ended September 30, 2001 as compared to $11.2 million for the nine months ended
September 30, 2000. The increase was primarily due to the increased amortization
of goodwill and other intangibles resulting from the Heritage and ClinForce
acquisitions. As a percentage of revenue, depreciation and amortization expense
declined to 3.7% of revenue for the nine months ended September 30, 2001 as
compared to 4.1% for the nine months ended September 30, 2000.

Non-recurring indirect transaction costs for the nine months ended
September 30, 2000 were $0.6 million and consisted of non-capitalizable
transition bonuses and integration costs related to the TravCorps acquistion.

Net interest expense totaled $12.9 million for the nine months ended
September 30, 2001 as compared to $11.6 million for the nine months ended
September 30, 2000. This increase was primarily due to increased borrowings
related to the Heritage and ClinForce acquisitions.

Income tax expense totaled $5.9 million for the nine months ended
September 30, 2001 as compared to $4.8 million for the nine months ended
September 30, 2000. The effective tax rate for the nine months ended
September 30, 2001 was 45.1% compared to 50.3% in the nine months ended
September 30, 2000. The decline in the effective tax rate is primarily a result
of the non-deductible portion of intangibles becoming a lower percentage of
pretax income. For the nine months ended September 30, 2001 and September 30,
2000 the amount of non-deductible intangibles resulting from the TravCorps
acquisition was approximately $2.4 million.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO FIVE-MONTH PERIOD
JULY 30-DECEMBER 31, 1999 AND THE
SEVEN-MONTH PERIOD JANUARY 1-JULY 29, 1999

Revenue for the year ended December 31, 2000 totaled $367.7 million as
compared to $193.8 million for the two periods that comprise 1999. Revenue for
the two periods that comprise 1999 includes the results of TravCorps from its
date of acquisition on December 16, 1999. Had the results of TravCorps'
operations for the full year of 1999 been included with the combined revenue for
the two

periods in 1999, revenue would have increased by 19.9% to $367.7 million in 2000
from $306.6 million in 1999.

Revenue from our healthcare staffing segment for the year ended
December 31, 2000 totaled $350.9 million as compared to $187.0 million for the
two periods that comprise 1999. Revenue for the two periods that comprise 1999
includes the results of TravCorps from its date of acquisition on December 16,
1999. Had the results of TravCorps' operations for the full year of 1999 been
included with the combined revenue for the two periods in 1999, revenue from our
healthcare staffing segment would have increased by 22.7% to $350.9 million in
2000 from $285.9 million in 1999. The increase was attributable to an increase
in the average number of traveling nurses, a higher average hourly bill rate and
increased allied health staffing revenue. For the year ended December 31, 2000,
92.8% of healthcare staffing revenue was generated by nurse staffing operations
and 7.2% was generated by other operations. For the two periods that comprise
1999, 91.9% of healthcare staffing revenue was generated by nurse staffing
operations and 8.1% was generated by other operations.

Revenue from our other human capital management services segment for the
year ended December 31, 2000 totaled $16.8 million as compared to $6.8 million
for the two periods that comprise 1999. Revenue for the two periods that
comprise 1999 includes the results of TravCorps from its date of acquisition on
December 16, 1999. Had the results of TravCorps' operations for the full year of
1999 been included with the combined revenue for the two periods in 1999,
revenue from our other human capital management services segment would have
decreased by 18.4% to $16.8 million in 2000 from $20.6 million in 1999. This
decrease was due to a decrease in year 2000-related consulting services offset,
in part, by an increase in our search and consulting business.

Direct operating expenses for the year ended December 31, 2000 totaled
$273.1 million as compared to $68.0 million for the five-month period
July 30-December 31, 1999 and $80.2 million for the seven-month period
January 1-July 29, 1999. As a percentage of revenue, direct operating expenses
represented 74.3% of revenue for the year ended December 31, 2000 compared with
77.6% for the five-month period July 30-December 31, 1999 and 75.6% for the
seven-month period January 1-July 29, 1999. The relative improvement was largely
a result of the inclusion of revenue from our search, recruitment and consulting
subsidiaries, for which all salaries and related expenses are classified as
selling, general and administrative expenses. We acquired these subsidiaries in
December 1999 in connection with our acquisition of the assets of TravCorps. In
addition, for 1999, a change was made in the manner by which we compensated
travel nurses and allied health professionals which resulted in greater direct
operating expenses, as a percentage of revenue for the five-month period
July 30-December 31, 1999.

Selling, general and administrative expenses for the year ended
December 31, 2000 totaled $49.0 million as compared to $9.3 million for the
five-month period July 30-December 31, 1999 and $12.7 million for the
seven-month period January 1-July 29, 1999. As a percentage of revenue, selling,
general and administrative expenses represented 13.3% of revenue for the year
ended December 31, 2000 compared with 10.5% for the five-month period
July 30-December 31, 1999 and 12.0% for the seven-month period
January 1-July 29, 1999. The relative increase in 2000 resulted from inclusion
of the TravCorps operations, which historically have had greater selling,
general and administrative expenses on a percentage of revenue basis. The
decrease in selling, general and administrative expenses during the period
July 30-December 31, 1999 as compared with the period January 1-July 30, 1999
was due to the modification of a management incentive program in July 1999.

Bad debt expense for the year ended December 31, 2000 totaled $0.4 million
as compared to $0.5 million for the five-month period July 30-December 31, 1999
and $0.2 million for the seven-month period January 1-July 29, 1999. As a
percentage of revenue, bad debt expense represented 0.1% of revenue for 2000
compared with 0.6% for the five-month period July 30-December 31, 1999 and 0.1%
for the seven-month period January 1-July 29, 1999. The increase in bad debt
expense during the

five-month period July 30-December 31, 1999 was due to the increase in the aging
of accounts relating to one provider.

EBITDA, as a result of the above, totaled $45.1 million for the year ended
December 31, 2000 as compared to $9.9 million for the five-month period
July 30-December 31, 1999 and $13.0 million for the seven-month period
January 1-July 29, 1999. As a percentage of revenue, EBITDA represented 12.3% of
revenue for the year ended December 31, 2000 compared with 11.3% for the
five-month period July 30-December 31, 1999 and 12.3% for the seven-month period
January 1-July 29, 1999.

Depreciation and amortization expense for the year ended December 31, 2000
totaled $15.0 million as compared to $4.6 million for the five-month period
July 30-December 31, 1999 and $0.7 million for the seven-month period
January 1-July 29, 1999. The increase in depreciation and amortization expense
in 2000 was due to amortization of goodwill resulting from the acquisition of
the assets of Cross Country Staffing and the TravCorps acquisition. As a
percentage of revenue, depreciation and amortization expense represented 4.1% of
revenue for 2000 compared with 5.2% for the five-month period
July 30-December 31, 1999 and 0.7% for the seven-month period
January 1-July 29, 1999.

Non-recurring indirect transaction costs totaled $1.3 million for the year
ended December 31, 2000, which consisted primarily of transition bonuses related
to the TravCorps acquisition.

Income from operations for the year ended December 31, 2000 totaled
$28.8 million as compared to $5.3 million for the five-month period
July 30-December 31, 1999 and $12.3 million for the seven-month period
January 1-July 29, 1999. As a percentage of revenue, income from operations
represented 7.8% of revenue for the year ended December 31, 2000 compared with
6.1% for the five-month period July 30-December 31, 1999 and 11.6% for the
seven-month period January 1-July 29, 1999.

Net interest expense for the year ended December 31, 2000 totaled
$15.4 million as compared to $4.8 million for the five-month period
July 30-December 31, 1999 and $0.2 million for the seven-month period
January 1-July 29, 1999. The increase in 2000, and for the five-month period
July 30-December 31, 1999, was due to debt incurred in connection with our
acquisition of the assets of Cross Country Staffing in July 1999 and a higher
weighted average effective borrowing rate.

Income before income taxes and discontinued operations for the year ended
December 31, 2000 totaled $13.4 million as compared to $0.5 million for the
five-month period July 30-December 31, 1999 and $11.9 million for the
seven-month period January 1-July 29, 1999.

Income tax expense for the year ended December 31, 2000 was $6.7 million as
compared to $0.7 million for the five-month period July 30-December 31, 1999.
Our effective tax rate was 50.3% for the year ended December 31, 2000 and 128.0%
for the period July 30-December 31, 1999 largely as a result of non-deductible
expenses. Excluding the effects of non-deductible items and the tax benefit of
our discontinued operations, our effective tax rates for the year ended
December 31, 2000 and for the period July 30-December 31, 1999 were 41.5% and
34.7%, respectively. Prior to July 30, 1999, we were a partnership for which
income tax expense was determined at the partner level. Pro forma adjustments
have been made in the Cross Country Staffing financial statements included
elsewhere in this prospectus as if we were subject to federal income taxes for
the seven-month period January 1-July 29, 1999 using a 49.0% effective tax rate.
On a pro forma basis, income tax expense was $5.8 million for the seven-month
period January 1-July 29, 1999.

Income before discontinued operations totaled $6.7 million for the year
ended December 31, 2000 as compared to a loss of $0.1 million for the five-month
period July 30-December 31, 1999.

Losses from discontinued operations, net of income tax benefits, for the
year ended December 31, 2000, and the five-month period July 30-December 31,
1999, were $1.6 million and $0.2 million, respectively, in connection with
HospitalHub, which began operations in 1999. Also for the year ended

December 31, 2000, a $0.5 million loss was recognized on the planned disposal of
HospitalHub. The divestiture of HospitalHub was completed in the second quarter
of 2001.

Net income for the year ended December 31, 2000 totaled $4.6 million as
compared to a net loss of $0.3 million for the five-month period
July 30-December 31, 1999. Net income for the seven-month period
January 1-July 29, 1999 was $6.0 million, including a pro forma adjustment for
income tax expense as discussed above.

THE SEVEN-MONTH PERIOD JANUARY 1, 1999-JULY 29, 1999 AND THE FIVE-MONTH PERIOD
JULY 30, 1999-DECEMBER 31, 1999 COMPARED TO THE YEAR ENDED DECEMBER 31, 1998

Revenue for the five-month period July 30-December 31, 1999 totaled
$87.7 million and for the seven-month period January 1-July 29, 1999 totaled
$106.0 million as compared to $158.6 million for 1998. Combined revenue for the
two periods that comprise 1999 totaled $193.8 million, representing a 22.2%
increase over the year ended December 31, 1998.

Revenue from our healthcare staffing segment for the five-month period
July 30-December 31, 1999 totaled $85.6 million and for the seven-month period
January 1-July 29, 1999 totaled $101.4 million as compared to $157.0 million for
1998. Combined revenue from our healthcare staffing segment for the two periods
that comprise 1999 totaled $187.0 million, representing a 19.1% increase over
the year ended December 31, 1998. The increase was primarily due to increases in
the number of hours worked by our travel nurses and in the average hourly bill
rate, as well as by a greater mix of staffing business in payroll versus mobile
contracts. For the two periods that comprise 1999, 91.9% of healthcare staffing
revenue was generated by nurse staffing operations and 8.1% was generated by
other operations. For the year ended December 31, 1998, 87.5% of healthcare
staffing revenue was generated by nurse staffing operations and 12.5% was
generated by other operations.

Revenue from our other human capital management services segment for the
five-month period July 30-December 31, 1999 totaled $2.1 million and for the
seven-month period January 1-July 29, 1999 totaled $4.6 million as compared to
$1.6 million for 1998. Combined revenue from our other human capital management
services segment for the two periods that comprise 1999 totaled $6.8 million,
representing a 313.2% increase over the year ended December 31, 1998. This
increase was primarily due to an increase in year 2000-related consulting
revenues.

Direct operating expenses for the five-month period July 30-December 31,
1999 totaled $68.0 million and for the seven-month period January 1-July 29,
1999 totaled $80.2 million as compared to $122.0 million for the year ended
December 31, 1998. As a percentage of revenue, direct operating expenses
represented 77.6% of revenue for the five-month period July 30-December 31, 1999
and 75.6% for the seven-month period January 1-July 29, 1999 as compared to
76.9% for the year ended December 31, 1998. In 1999, a change was made in the
manner by which we compensated travel nurses and allied health professionals
which resulted in greater direct operating expenses as a percentage of revenue
for the five-month period July 30-December 31, 1999. The relative improvement,
as a percent of revenue, during the seven-month period January 1-July 29, 1999
as compared to the year ended December 31, 1998 was due to a greater percentage
increase in billing rates than field employee compensation expense.

Selling, general and administrative expenses for the five-month period
July 30-December 31, 1999 totaled $9.3 million and for the seven-month period
January 1-July 29, 1999 totaled $12.7 million as compared to $19.1 million for
the year ended December 31, 1998. As a percentage of revenue, selling, general
and administrative expenses were 10.5% of revenue for the five-month period
July 30-December 31, 1999 and 12.0% for the seven-month period
January 1-July 29, 1999 compared with 12.0% for the year ended December 31,
1998. The decrease in selling, general and administrative expenses as a
percentage of revenue during the July 30-December 31, 1999 period was due to the
modification of a management incentive program in July 1999.

Bad debt expense for the five-month period July 30-December 31, 1999 totaled
$0.5 million and for the seven-month period January 1-July 29, 1999 totaled
$0.2 million as compared to $0.7 million for the year ended December 31, 1998.
As a percentage of revenue, bad debt expense was 0.6% of revenue for the
five-month period July 30-December 31, 1999, 0.1% for the seven-month period
January 1-July 29, 1999 and 0.5% for 1998. The relative improvement from 1998 to
the seven-month period January 1-July 29, 1999 was attributable to better
collections of aged receivables. The increase in bad debt expense during the
five-month period July 30-December 31, 1999 was due to the increase in the aging
of accounts relating to one provider.

EBITDA, as a result of the above, for the five-month period
July 30-December 31, 1999 totaled $9.9 million and for the seven-month period
January 1-July 29, 1999 totaled $13.0 million as compared to $16.8 million for
the year ended December 31, 1998. As a percentage of revenue, EBITDA represented
11.3% of revenue for the five-month period July 30-December 31, 1999 and 12.3%
for the seven-month period January 1-July 29, 1999 as compared to 10.6% for the
year ended December 31, 1998.

Depreciation and amortization expense for the five-month period
July 30-December 31, 1999 totaled $4.6 million and for the seven-month period
January 1-July 29, 1999 totaled $0.7 million as compared to $1.1 million for the
year ended December 31, 1998. As a percentage of revenue, depreciation and
amortization expense represented 5.2% of revenue for the five-month period
July 30-December 31, 1999 and 0.7% for the seven-month period
January 1-July 29, 1999 as compared to 0.7% for the year ended December 31,
1998. The relative increase for the five-month period July 30-December 31, 1999
was due principally to amortization of goodwill and other intangible assets
which resulted from the acquisition of the assets of Cross Country Staffing.

Income from operations for the five-month period July 30-December 31, 1999
totaled $5.3 million and for the seven-month period January 1-July 29, 1999
totaled $12.3 million as compared to $15.7 million for the year ended
December 31, 1998. As a percentage of revenue, income from operations
represented 6.1% of revenue for the five-month period July 30-December 31, 1999
and 11.6% for the seven-month period January 1-July 29, 1999 as compared to 9.9%
for the year ended December 31, 1998.

Net interest expense for the five-month period July 30-December 31, 1999
totaled $4.8 million and for the seven-month period January 1-July 29, 1999
totaled $0.2 million as compared to $0.8 million for the year ended
December 31, 1998. The relative increase in net interest expense for the
five-month period July 30-December 31, 1999 was due to debt incurred in
connection with our acquisition of the assets of Cross Country Staffing, in
July 1999, and a higher weighted average effective borrowing rate.

Income before income taxes and discontinued operations for the five-month
period July 30-December 31, 1999 totaled $0.5 million and for the seven-month
period January 1-July 29, 1999 totaled $11.9 million as compared to
$14.7 million for the year ended December 31, 1998. As a percentage of revenue,
income before income taxes and discontinued operations represented 0.6% of
revenue for the five-month period July 30-December 31, 1999 and 11.2% for the
seven-month period January 1-July 29, 1999 as compared to 9.3% for the year
ended December 31, 1998.

Income tax expense for the five-month period July 30-December 31, 1999
totaled $0.7 million. Our effective tax rate was 128% for the five-month period
July 30-December 31, 1999 largely as a result of non-deductible expenses.
Excluding the effects of non-deductible items and the tax benefit of
discontinued operations, our effective tax rate for the five-month period
July 30-December 31, 1999 was 34.7%. For the seven-month period
January 1-July 29, 1999 and for the year ended December 31, 1998, our
predecessor was a partnership for which income tax expense was determined at the
partner level. Pro forma adjustments have been made in the Cross Country
Staffing financial statements included elsewhere in this prospectus as if we
were subject to federal income taxes for the seven-month

period January 1-July 29, 1999 using a 49.0% effective tax rate. On a pro forma
basis, income tax expense was $5.8 million for the seven-month period
January 1-July 29, 1999.

Loss before discontinued operations for the five-month period
July 30-December 31, 1999 totaled $0.1 million.

Loss from discontinued operations, net of taxes, for the five-month period
July 30-December 31, 1999 was $0.2 million, in connection with HospitalHub,
which began operations in 1999. The divestiture of HospitalHub was completed in
the second quarter of 2001.

Net loss for the five-month period July 30-December 31, 1999 was
$0.3 million. Net income for the seven-month period January 1-July 29, 1999 was
$6.1 million, including a pro forma adjustment for income tax expense as
discussed above.

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2001, we had a current ratio, the amount of current
assets divided by current liabilities, of 1.6 to 1.0. Working capital decreased
by $0.2 million to $34.2 million as of September 30, 2001, compared to
$34.4 million as of December 31, 2000. Although accounts receivable increased,
days sales outstanding decreased to 63 days at September 30, 2001 compared with
64 days at December 31, 2000.

Our operating cash flows constitute our primary source of liquidity and
historically have been sufficient to fund our working capital, capital
expenditures, internal business expansion and debt service. We believe that our
capital resources are sufficient to meet our working capital needs for the next
twelve months. We expect to meet our future working capital, capital
expenditures, internal business expansion, debt service and acquisition
requirements from a combination of operating cash flow and funds available under
our credit facility.

CREDIT FACILITY

The credit facility is provided by a lending syndicate comprised of Citicorp
USA, GE Capital, Wachovia Bank, Deutsche Bank, Suntrust Bank, Fleet Bank, IBJ
Whitehall, ING US Capital, Sovereign Bank, Merrill Lynch, Bank of America and
Provident Bank of Maryland. We amended our credit facility in in February, 2002.
The amended credit facility is comprised of (i) a revolving credit facility of
up to $30.0 million, including a swing-line sub-facility of $7.0 million and a
letter of credit sub-facility of $6.0 million, and (ii) a $45.0 million term
loan facility. The revolving facility matures on July 29, 2005 and the term loan
facility has staggered maturities in 2002, 2003, 2004 and 2005.

Borrowings under the amended credit facility bear interest at variable rates
based, at our option, on LIBOR or the prime rate plus various applicable margins
which are determined by the amended credit facility. As of September 30, 2001,
the weighted average effective interest rate under the amended credit facility
was 7.19%. We are required to pay a quarterly commitment fee at a rate of 0.50%
per annum on unused commitments under the revolving loan facility. As of
September 30, 2001, we had availability under our revolving credit facility of
$14.3 million and under our letter of credit sub-facility of $1.8 million.

The terms of the credit facility include customary covenants and events of
default. Our investments covenant requires us to obtain the consent of our
lenders to complete any acquisition, the costs of which exceeds $25.0 million.
Borrowings under the amended credit facility are collateralized by substantially
all our assets and the assets of our subsidiaries.

NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 2000

Cash provided by operating activities for the nine months ended
September 30, 2001 increased $8.5 million to $17.2 million compared to
$8.7 million for the nine months ended September 30, 2000. This increase is
primarily due to an increase in net income before non-cash charges.

Investing activities totaled $39.8 million for the nine months ended
September 30, 2001, primarily attributable to the current year acquisitions. The
acquisition of ClinForce accounted for approximately $32.4 million and the
remainder was for the acquisition of Gill/Balsano.

Net cash provided by financing activities for the nine months ending
September 30, 2001 totaled $22.6 million, primarily as a result of new debt
associated with the acquisitions discussed above. For the nine months ended
September 30, 2000 financing activities was a net use of $12.5 million as the
Company repaid prior borrowings with cash provided by operating activities.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO THE FIVE-MONTH PERIOD
JULY 30-DECEMBER 31, 1999 AND THE SEVEN-MONTH PERIOD JANUARY 1-JULY 29, 1999

Net cash provided by operating activities for 2000 increased $4.1 million to
a provision of $10.4 million as compared to a provision of $6.3 million for the
five-month period July 30-December 31, 1999 and a provision of $12.2 million for
the seven-month period January 1-July 29, 1999. Excluding income tax expense,
our cash flow from operations was $17.1 million in 2000 compared with
$7.0 million for the period July 30-December 31, 1999 and $12.2 million for the
period January 1-July 29, 1999. The use of cash from investing activities for
2000 increased $11.0 million to a use of $9.6 million as compared to a provision
of $1.4 million for the five-month period from July 30-December 31, 1999 and a
use of $0.2 million for the seven-month period January 1-July 29, 1999.
Investing activities during 2000 included $6.2 million for the acquisition of
Heritage and $1.5 million for the acquisition of E-Staff as compared to net cash
provided by acquisitions for the five-month period July 30-December 31, 1999 of
$1.8 million from the acquisition of TravCorps. No acquisitions were completed
during the period from January 1-July 30, 1999. Net cash used by financing
activities for 2000 increased $2.5 million to a use of $5.6 million as compared
to a use of $3.1 million for the five-month period July 30-December 31, 1999 and
a use of $12.0 million for the seven-month period January 1-July 29, 1999.
Financing activities for 2000 consisted of borrowings and repayments under debt
agreements, including primarily $5.1 million of net repayments under our term
loan agreement, borrowing of $3.9 million of subordinated debt and net
repayments under our revolver and swing line agreements of $1.0 million.

FIVE-MONTH PERIOD JULY 30-DECEMBER 31, 1999 AND THE SEVEN-MONTH PERIOD
JANUARY 1-JULY 29, 1999 COMPARED TO THE YEAR ENDED DECEMBER 31, 1998

Net cash provided by operating activities for the five-month period
July 30-December 31, 1999 decreased $5.9 million to a provision of $6.3 million
as compared to a provision of $12.2 million for the seven-month period
January 1-July 29, 1999 and a provision of $14.4 million for 1998. The use of
cash from investing activities for the five-month period July 30-December 31,
1999 decreased $1.6 million to a provision of $1.4 million as compared to a use
of $0.2 million for the seven-month period from January 1-July 29, 1999 and a
use of $1.0 million for 1998. The net cash provided by acquisitions for the
five-month period July 30-December 31, 1999 included $1.8 million from the
acquisition of TravCorps. Net cash used by financing activities the five-month
period July 30-December 31, 1999 decreased $8.9 million to a use of
$3.1 million as compared to a use of $12.0 million for the seven-month period
January 1-July 29, 1999 and a use of $13.5 million for 1998.

INFLATION

During the last several years, the rate of inflation in healthcare related
services has exceeded that of the economy as a whole. This inflation has
increased our direct operating costs. We are also

impacted by fluctuations in housing costs and recently by increases in costs of
professional and general and healthcare insurance. Historically, we have been
able to recoup the negative impact of such fluctuations by increasing our
billing rates. We may not be able to continue increasing our billing rates and
increases in our direct operating costs may adversely affect us in the future.
In addition, our clients are impacted by payments of healthcare benefits by
federal and state governments as well as private insurers.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to interest rate changes, primarily as a result of our credit
facility which bears interest based on floating rates. We are party to an
interest rate swap agreement which fixes the interest rate paid on
$45.0 million of borrowings under our credit facility at 6.705% effective
January 1, 2001, plus the applicable margin. The swap matures in February 2003.
Prior to January 2001, we accounted for the swap agreement as a hedge, which
means changes in the fair value of the swap were not required to be recognized
in earnings. Effective January 1, 2001, we adopted Statement of Financial
Accounting Standard No. 133 ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES. Upon adopting SFAS No. 133, we recorded a liability for the fair
value of the swap, which reduced consolidated stockholders' equity by
$0.9 million. We will recognize changes in the fair value of the swap in
earnings to the extent such changes are greater or less than the corresponding
change in the fair value of the future variable interest payments on the portion
of the debt underlying the swap. We do not contemplate that such changes will be
material to our results of operations for the remainder of 2001. However,
changes in interest rates which result in a yield curve that is different from
those projected may cause changes in the fair value of the swap to have a
significant impact on our results of operations.

A 1% change in interest rates on variable rate debt would have resulted in
interest expense fluctuating approximately $0.4 million for 1999, $1.2 million
for 2000, and $1.0 million for the nine months ended September 30, 2001.

SUBSEQUENT EVENT

In October 2001, we completed our initial public offering of 7,812,500
shares of common stock at $17.00 share. Additionally, the underwriters exercised
the over-allotment option of 1,171,875, bringing the total number of shares
issued to 8,984,375. Total proceeds received by us, net of expenses related to
our initial public offering were $138.8 million. The proceeds were used to repay
$95.7 million of our outstanding balance under the term loan portion of our
senior secured credit facility, and $40.3 million to redeem our outstanding
senior subordinated pay-in-kind notes, including the associated redemption
premium. The remainder of the proceeds were used for general corporate purposes.

BUSINESS OF CROSS COUNTRY, INC.

OVERVIEW OF OUR COMPANY

We are one of the largest providers of healthcare staffing services in the
United States. Approximately 80% of our revenue is derived from travel nurse
staffing services. Other staffing services include the placement of clinical
research professionals and allied healthcare professionals such as radiology
technicians, rehabilitation therapists and respiratory therapists. We also
provide other human capital management services, including search and
recruitment, consulting, education and training and resource management
services. Our active client base includes over 3,000 hospitals, pharmaceutical
companies and other healthcare providers across all 50 states. Our fees are paid
directly by our clients rather than by government or other third-party payors.
We are well positioned to take advantage of current industry dynamics, including
the growing shortage of nurses in the United States, the growing demand for
healthcare services and the trend among healthcare providers toward outsourcing
staffing services. For the nine months ended September 30, 2001, our revenue and
EBITDA were $356.2 million and $39.1 million, respectively. On February 14,
2002, we reported revenue and EBITDA for the year ended December 31, 2001 of
$500.5 million an $56.2 million, respectively.

OVERVIEW OF OUR INDUSTRY

The most common temporary nurse staffing alternatives available to hospital
administrators are travel nurses and per diem nurses.

- Travel nurse staffing involves placement of registered nurses on a
contracted, fixed-term basis. Travel nurses provide a long-term solution
to a nurse shortage, present hospitals and other healthcare facilities
with a pool of potential full-time job candidates and enable healthcare
facilities to provide their patients with continuity of care. Assignments
may run several weeks to one year, but are typically 13 weeks long. The
healthcare professional temporarily relocates to the geographic area of
the assignment. The staffing company generally is responsible for
providing travel nurses with customary employment benefits and for
coordinating travel and housing arrangements.

- Per diem staffing comprises the majority of all temporary healthcare
staffing and involves placement of locally based healthcare professionals
on very short-term assignments, often for daily shift work. Per diem
staffing often involves little advance notice of assignments by the
client.

INDUSTRY DYNAMICS

SHORTAGE OF NURSES. There is a pronounced shortage of registered nurses,
especially experienced, specialty nurses who staff operating rooms, emergency
rooms, intensive care units and pediatric wards. A recent study published in the
JOURNAL OF THE AMERICAN MEDICAL ASSOCIATION,estimates that by 2020, the
nationwide registered nurse workforce will be nearly 20% below projected
requirements.

Several factors have contributed to the decline in the supply of nurses:

- The nurse pool is getting older and retiring. The study in the JOURNAL OF
THE AMERICAN MEDICAL ASSOCIATION projects that within the next ten years,
the average age of registered nurses will increase 3.5 years to over 45.

- Many registered nurses are choosing to pursue careers outside of acute
care hospitals or in professions other than nursing. Similarly, the
numbers of candidates taking the NCLEX-RN-Registered Trademark-

examination for the first time, as reported by the National Council of
State Boards of Nursing, Inc., has declined at an average of 5.5% for each
of the past six years.

The shortage of nurses drives demand for our services because hospitals turn
to temporary nurses to make up for shortfalls in their permanent staff.

INCREASING UTILIZATION OF HEALTHCARE SERVICES. There are a number of
factors driving an increase in the utilization of healthcare services,
including:

- Increasing demand for healthcare services as a result of the aging of the
baby boomers; and

- Technological advances in healthcare treatment methods which attract a
greater number of patients with complex medical conditions requiring a
higher intensity of care.

The Centers for Medicare and Medicaid Services projected that total
healthcare expenditures would grow by 8.6% in 2001 and by 7.1% annually from
2001 through 2010. According to these projections, healthcare expenditures will
account for approximately $2.6 trillion or 15.9% of U.S. gross domestic product
by 2010.

INCREASED OUTSOURCING OF STAFFING SERVICES. Healthcare providers are
increasingly using temporary staffing to manage seasonal fluctuations in demand
for their services.

The following factors have created seasonal fluctuations in demand for
healthcare personnel:

- Seasonal population swings, in areas such as the sunbelt states of
Florida, Arizona and California in the winter months and the northeast in
the summer months.

- Seasonal changes in occupancy rates that tend to increase during the
winter months and decrease during the summer months.

The use of temporary personnel enables these providers to vary their staffing
levels to match these changes in demand and avoid the more costly alternative of
hiring permanent medical staff.

The healthcare staffing industry also includes the temporary staffing of
doctors and dentists, allied health personnel and professionals, and advanced
practice professionals, but excludes home healthcare services. Healthcare
staffing is also expanding, providing new specialties such as medical billing
and receptionists.

OUR COMPETITIVE STRENGTHS

Our competitive strengths include:

- LEADER IN THE RAPIDLY GROWING NURSE STAFFING INDUSTRY. We have operated in
the travel nurse staffing industry since the 1970s and have the leading
brand name based on revenue. Our Cross Country TravCorps brand is well
recognized among leading healthcare providers and professionals. We
believe that through our relationships with existing travel nurse staffing
clients, we are positioned to effectively market complementary services,
including staffing of clinical trials and allied health professionals,
search and recruitment, consulting, and education and training to our
existing client base.

OUR BUSINESS

HEALTHCARE STAFFING SERVICES

TRAVEL STAFFING

OVERVIEW

We are a leading provider of travel nurse staffing services, in terms of
revenue generated. Under the Cross Country TravCorps brand, we provide nurses on
a fixed-term contract basis throughout the U.S. In addition, we have recently
acquired the NovaPro brand, which targets nurses seeking more customized
benefits packages. We fill the majority of our assignments in acute care
hospitals, including teaching institutions, trauma centers and community
hospitals. We also fill assignments in non-acute care settings, including
nursing homes, skilled nursing facilities and sports medicine clinics, and, to a
lesser degree, in non-clinical settings, such as schools. We staff both public
and private, for-profit and not-for-profit facilities. In addition to our core
nurse staffing business, we provide operating room technicians, therapists and
other allied health and advanced practice professionals, such as radiology
technicians, rehabilitation therapists and respiratory therapists, in a wide
range of specialties.

We recruit credentialed nurses and other healthcare professionals and place
them on assignments away from their homes. We believe that these professionals
are attracted to us because we offer them high levels of customer service, as
well as a wide range of diverse assignments throughout the United States,
Canada, Bermuda and the United States Virgin Islands.

CONTRACTS WITH FIELD EMPLOYEES AND CLIENTS

Each of our field employees works for us under a contract. These contracts
typically last 13 weeks. Payroll contract employees are hourly employees whose
contract specifies the hourly rate they will be paid, including applicable
overtime, and any other benefits they are entitled to receive during the
contract period. For payroll contract employees, we bill clients at an hourly
rate and assume all

employee costs, including payroll, withholding taxes, benefits and professional
liability insurance and OSHA requirements, as well as any travel and housing
arrangements. Mobile contract employees are hourly employees of the hospital
client and receive an agreement that specifies the hourly rates they will be
paid by the hospital employer, as well as any benefits they are entitled to
receive from us. For mobile contract employees, we provide recruitment, housing
in apartments leased by the Company and travel services. The Company's contract
with the healthcare professional obligates it to provide these services to the
healthcare professional. The Company is compensated for the services it provides
at a predetermined rate negotiated between the Company and its hospital client,
without regard to the Company's cost of providing these services. Currently more
than 98% of our employees work for us under payroll contracts. Our fees are paid
directly by our clients rather than by government or other third-party payors.
In 2001, we completed approximately 16,950 individual assignments, typically
lasting 13 weeks.

RECRUITING AND RETENTION

In 2001, we received approximately 24,400 requests for applications from
potential field employees and approximately 13,100 completed applications were
added to our database. More than half of our field employees have been referred
by current or former employees, with the remainder attracted by advertisements
in trade publications and our internet website. Our internet site allows
potential applicants to review our business profile, apply on-line, view our
company-provided housing and participate in on-line forums. We offer appealing
assignments, attractive compensation packages, housing and other benefits, as
well as substantial training opportunities through Cross Country University.

Our recruiters are responsible for recruiting applicants, handling
placements, maintaining a regular dialogue with nurses on assignment, making
themselves available to address nurses' concerns regarding current assignments
and future opportunities, and other significant job support and guidance.
Recognizing that a nurse's relationship with the recruiter is the key to
retaining qualified applicants, our recruiters establish lasting partnerships
with the nurses. As part of the screening process, we conduct in-depth telephone
interviews with our applicants and verify references to determine
qualifications. Along with our hospital clients, we typically review our travel
nurses' performance after each assignment and use this information to maintain
the high quality of our staffing.

Our recruiters utilize our sophisticated database of positions, which is
kept up-to-date by our account managers, to match assignment opportunities with
the experience, skills and geographic preferences of their candidates. Once an
assignment is selected, the account manager reviews the candidate's resume
package before submitting it to the client for review.

Our educational and training services give us a competitive advantage by
enhancing both the quality of our nurses and the effectiveness of our
recruitment efforts. We typically monitor the quality of our workforce in the
field through performance reviews after each assignment and further develop the
capabilities of our recruits through Cross Country University and our Cross
Country Seminars brand. These services offer substantial benefits, such as:

- improving the quality of our nurses by offering them substantial training
opportunities;

- enabling our nurses to easily complete state licensing requirements;

- providing professional development opportunities to our nurses; and

- enhancing our image within the industry.

We recently initiated Assignment America, a recruitment program for
foreign-trained nurses. Assignment America is designed to address the current
shortage of nurses in the United States. Through Assignment America, we plan to
recruit registered nurses from foreign English-speaking

countries, assist them in obtaining U.S. nursing licenses, sponsor them for U.S.
permanent residency visas and then place them in domestic acute care hospitals.
We believe Assignment America will help us meet a greater portion of the demand
for our services. Because the recruitment process for foreign nurses is more
onerous than for domestic nurses, Assignment America nurses commit to long-term
contracts which typically range from 18 to 24 months. We plan to initially
recruit nurses from the United Kingdom, South Africa, New Zealand and Australia.

OPERATIONS

We service all of the assignment needs of our field employees and client
facilities through two operations centers located in Boca Raton, FL and Malden,
MA. These centers perform key support activities such as coordinating assignment
accommodations, payroll processing, benefits administration, billing and
collections, contract processing, client care, and risk management.

Hours worked by field employees are recorded by our operations system which
then transmits the data directly to Automated Data Processing for payroll
processing. As a result, client billings can be generated automatically once the
payroll information is complete, enabling real time management reporting
capabilities as to hours worked, billings and payroll costs. Our payroll
department also provides customer support services for field employees who have
questions.

We have approximately 3,100 apartments on lease throughout the U.S. Our
client accommodations department secures leases, and arranges for furniture
rental and utilities for field employees at their assignment locations.
Typically, we provide for shared accommodations with lease terms which
correspond to the length of the assignment. We believe that our economies of
scale help us secure preferred pricing and favorable lease terms.

We have also developed expertise in insurance, benefits administration and
risk management. For workers compensation coverage, we provide an attractive
program that is partially self-insured. For medical coverage, we use a partially
self-insured preferred provider organization plan.

SALES AND MARKETING

Our sales and marketing activities are comprised of the following:

NEW ACCOUNT DEVELOPMENT. Our new account development efforts are driven
principally through inbound telemarketing activities managed by a two-person
team of new business executives. In addition to negotiating new contracts with
prospective clients, these account executives also actively seek out specific
job opportunities for candidates who are not able to match our existing database
of opportunities. These activities generate approximately 350 new clients each
year.

MANAGEMENT OF EXISTING ACCOUNTS. We have a sales force composed of account
executives and managers of business development assigned to geographic markets
who manage approximately 75 to 90 client accounts each. This sales force
determines the appropriate billing rate and nurse pay rate for a given facility
utilizing a proprietary pricing model.

Day-to-day management of client accounts is handled by a team of
approximately 20 professionals. The account managers, who often have a nursing
background, are responsible for contacting active client facilities to obtain
open orders for staff. Once a candidate is submitted to the account manager for
submission to the facility, the account manager reviews the candidate's
credentials and confirms the appropriateness of the match. The account manager
then electronically submits appropriate materials to the facility.

BRAND MARKETING. Our brand marketing initiatives help develop Cross
Country's image in the markets we serve. Our brand is reinforced by our
professionally designed website, brochures and pamphlets, direct mail and
advertising materials. We believe that our branding initiatives coupled with

our high-quality client service differentiate us from our competitors and
establish us as a leader, in terms of brand recognition, in temporary nurse
staffing.

TRADE AND ASSOCIATION RELATIONSHIP MANAGEMENT. We actively manage trade and
association relationships through attendance at numerous national, regional and
local conferences and meetings, including National Association of Health Care
Recruiters, Association of Critical Care Nurses, American Organization of Nurse
Executives, American Society for Healthcare Human Resource Administration,
American College of Healthcare Executives and Medical Group Management
Association.

CLINICAL RESEARCH AND TRIALS STAFFING

Through our ClinForce brand, we provide clinical research professionals for
both contract assignments and permanent placement to many of the world's leading
companies in the pharmaceutical, biotechnology, medical device and related
industries. We provide an array of professionals in such areas as clinical
research and clinical data sciences, medical review and writing, and
pharmaeconomics and regulatory affairs. Our understanding of the clinical
research process enables us to provide responsive service to our clients and to
offer greater opportunities to our research professionals.

PER DIEM STAFFING

We provide per diem nurse staffing services to healthcare facilities in
Atlanta, Georgia, Las Vegas, Nevada, Phoenix, Arizona, Chicago, Illinois and
Seattle, Washington. Per diem staffing typically involves the placement of local
nurses to fill the immediate needs of healthcare facilities on a shift-by-shift
or short-term basis. While per diem services accounted for less than 1% of our
revenue in 2001, we believe this market presents a significant growth
opportunity.

OTHER HUMAN CAPITAL MANAGEMENT SERVICES

We provide an array of healthcare-oriented human capital management
services, which complement our core travel nurse staffing business. These
services include:

- SEARCH AND RECRUITMENT. We provide both retained and contingency search
and recruitment services to healthcare organizations throughout the United
States, including hospitals, pharmaceutical companies, insurance companies
and physician groups. Our search services include the placement of
physicians, healthcare executives and nurses.

- HEALTHCARE CONSULTING SERVICES. We provide healthcare-oriented consulting
services, including consulting related to physician compensation,
strategy, operations, facilities planning, workforce management and merger
integration.

- EDUCATION AND TRAINING SERVICES. Cross Country University is a national
leader in providing continuing education programs to the healthcare
industry. Cross Country University holds national conferences, as well as
one-day seminars, on topics relevant to nurses and healthcare
professionals and provides conference management services. To enhance
Cross Country University, in December 2000 we acquired Heritage, which
produced over 3,300 seminars and conferences that were attended by over
92,000 registrants in more than 200 cities across the U.S. in 2001. In
addition, we extend these educational services to our field employees on
favorable terms as a recruitment and retention tool.

- RESOURCE MANAGEMENT SERVICES. We provide software tools and services
designed to enhance clients' capabilities to manage their nursing staff
and their relationships with external staffing vendors. Our E-Staff tool
is an online communication, scheduling and training service for the
nursing industry.

SYSTEMS

Our placement and support operations are supported by sophisticated
information systems that facilitate smooth interaction between our recruitment
and support functions. Our fully integrated proprietary information system
enables us to manage virtually all aspects of our travel staffing operations.
The system is designed to accommodate significant future growth of our business.
In addition, its parallel process design allows for the addition of further
capacity to its existing hardware platform. We have proprietary software that
handles most facets of our business, including contract pricing and
profitability, contract processing, job posting, housing management,
billing/payroll and insurance. Our systems provide reliable support to our
facility clients and field employees and enable us to efficiently fulfill and
renew job assignments. Our systems also provide detailed information on the
status and skill set of each registered field employee.

Our financial and management reporting is managed on the PeopleSoft
Financial Suite. PeopleSoft is a leading enterprise resource planning software
suite that provides modules used to manage our accounts receivable, accounts
payable, general ledger and billing. This system is designed to accommodate
significant future growth of our business..

GROWTH STRATEGY

We intend to continue to grow our businesses by:

- increasing referrals from existing field employees by providing them with
superior service;

- expanding our advertising presence to reach more nursing professionals;

- using the internet to accelerate the recruitment-to-placement cycle;

- increasing the number of staff dedicated to the recruitment of new
nurses; and

- developing Assignment America, our recruitment program for
foreign-trained acute care nurses residing abroad.

- INCREASING OUR MARKET PRESENCE IN THE PER DIEM STAFFING MARKET. We intend
to use our existing brand recognition, client relationships and database
of nurses who have expressed an interest in temporary assignments to
expand our per diem services to the acute care hospital market. While we
have not historically had a significant presence in per diem staffing
services, we believe that this market presents a substantial growth
opportunity.

- ACQUIRING COMPLEMENTARY BUSINESSES. We continually evaluate opportunities
to acquire complementary businesses to strengthen and broaden our market
presence.

COMPETITIVE ENVIRONMENT

The travel nurse staffing industry is highly competitive, with limited
barriers to entry. Our principal competitor in the travel nurse staffing
industry is AMN Healthcare Services Inc. We also compete with a number of
nationally and regionally focused temporary nurse staffing companies that have
the capabilities to relocate nurses geographically and, to a lesser extent, with
local temporary nurse agencies.

In addition, the markets for our clinical staffing, allied staffing and per
diem nurse staffing and for our healthcare-oriented human capital management
services are highly competitive and highly fragmented, with limited barriers to
entry.

The principal competitive factors in attracting qualified candidates for
temporary employment are salaries and benefits, quality of accommodations,
quality and breadth of assignments, speed of placements, quality of recruitment
teams and reputation. We believe that persons seeking temporary employment
through us are also pursuing employment through other means, including other
temporary staffing firms, and that multiple staffing companies have the
opportunity to place employees with many of our clients. Therefore, the ability
to respond to candidate inquiries and submit candidates to clients more quickly
than our competitors is an important factor in our ability to fill assignments.
In addition, because of the large overlap of assignments, we focus on retaining
field employees by providing long-term benefits such as 401(k) plans and cash
bonuses. Although we believe that the relative size of our database and
economies of scale derived from the size of our operations make us an attractive
employer for nurses seeking travel opportunities, we expect competition for
candidates to continue to increase.

The principal competitive factors in attracting and retaining temporary
healthcare staffing clients include the ability to fill client needs, size of
available pool of qualified candidates, quality assurance and screening
capabilities, compliance with regulatory requirements, an understanding of the
client's work environment, risk management policies and coverages, general
industry reputation, and, to a lesser extent, price.

FACILITIES

We do not own any real property. Our principal leases are listed below.

LOCATION FUNCTION SQUARE FEET LEASE EXPIRATION
- -------- ------------------------------ ----------- -----------------

Boca Raton, Florida........... Headquarters 43,000 April 30, 2008
Malden, Massachusetts......... Staffing administration, 27,812 June 30, 2005
general office use and storage
space
Clayton, Missouri............. Search and recruitment 26,411 November 30, 2003
headquarters
Durham, North Carolina........ Clinical research and trials 12,744 December 31, 2004
staffing headquarters

REGULATORY ISSUES

In order to service our client facilities and to comply with OSHA and Joint
Commission or Accreditation of Healthcare Organizations standards, we have
developed a risk management program. The program is designed to protect against
the risk of negligent hiring by requiring a detailed skills assessment from each
healthcare professional. We conduct extensive reference checks and credential
verifications for each of the nurses and other healthcare professionals that we
might staff. In addition, we have a claims-based professional liability
insurance policy with a limit of $1.0 million per claim and an aggregate limit
of $3.0 million. We also have a fully insured umbrella liability insurance
policy with a limit of $10.0 million.

PROFESSIONAL LICENSURE AND CORPORATE PRACTICE. Nurses and other healthcare
professionals employed by us are required to be individually licensed or
certified under applicable state law. In addition, the healthcare professionals
that we staff frequently are required to have been certified to provide certain
medical care, such as CPR and anesthesiology, depending on the positions in
which they are placed. Our comprehensive compliance program is designed to
ensure that our employees possess all necessary licenses and certifications, and
we believe that our employees, including nurses and therapists, comply with all
applicable state laws.

BUSINESS LICENSES. A number of states require state licensure for
businesses that, for a fee, employ and assign personnel, including healthcare
personnel, to provide services on-site at hospitals and other healthcare
facilities to support or supplement the hospitals' or healthcare facilities'
work force. A number of states also require state licensure for businesses that
operate placement services for individuals attempting to secure employment.
Failure to obtain the necessary licenses can result in injunctions against
operating, cease and desist orders, and/or fines. We endeavor to maintain in
effect all required state licenses.

REGULATIONS AFFECTING OUR CLIENTS. Many of our clients are reimbursed under
the federal Medicare program and state Medicaid programs for the services they
provide. In recent years, federal and state governments have made significant
changes in these programs that have reduced reimbursement rates. In addition,
insurance companies and managed care organizations seek to control costs by
requiring that healthcare providers, such as hospitals, discount their services
in exchange for exclusive or preferred participation in their benefit plans.
Future federal and state legislation or evolving commercial reimbursement trends
may further reduce, or change conditions for, our clients' reimbursement. Such
limitations on reimbursement could reduce our clients' cash flows, hampering
their ability to pay us.

EMPLOYEES

As of February 20, 2002, we had approximately 779 corporate employees and
approximately 5,800 field employees, 98% of whom were working for us on a full
time basis. None of our employees is subject to a collective bargaining
agreement. We consider our relationship with our employees to be good.

LEGAL PROCEEDINGS

We are not presently a party to any material legal proceedings.

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The table below provides information regarding our directors and executive
officers.

NAME AGE POSITION
- ---- -------- --------

Joseph A. Boshart.................... 45 President and Chief Executive Officer and Director
Emil Hensel.......................... 51 Chief Financial Officer and Director
Vickie Anenberg...................... 37 President, Travel Staffing Division
Kevin Conlin......................... 43 President, Consulting Division
Dr. Franklin A. Shaffer, RN.......... 59 President, Education and Training Division
Tony Sims............................ 42 President, Clinical Trials Staffing Division
Carol D. Westfall.................... 52 President, Search and Recruitment Division
Annette Gardner...................... 48 President, Cross Country Local
Jonathan W. Ward..................... 36 Chief Strategy and Marketing Officer
Victor Kalafa........................ 47 Vice President, Corporate Development
Karen H. Bechtel..................... 52 Director
W. Larry Cash........................ 53 Director
Bruce A. Cerullo..................... 43 Director
Thomas C. Dircks..................... 43 Director
A. Lawrence Fagan.................... 72 Director
M. Fazle Husain...................... 37 Director
Joseph Swedish....................... 50 Director
Joseph Trunfio....................... 55 Director

JOSEPH A. BOSHART has served as President and Chief Executive Officer since
July 1999, and formerly served in such capacity at our predecessor since 1993.
He has served as a director since July 1999. Mr. Boshart holds a B.S. degree in
economics from the University of Michigan.

EMIL HENSEL has served as Chief Financial Officer since July 1999 and
formerly served in such capacity at our predecessor since 1991. He has served as
a director since July 1999. Mr. Hensel holds a B.S. degree in electrical
engineering from Columbia University, a Masters degree in Engineering from the
Johns Hopkins University and a Masters degree in Business Administration from
New York University.

VICKIE ANENBERG has served as President of the Travel Staffing Division
since February 2000, and formerly served as Vice President of the Nursing
Division for our predecessor, since 1995. Prior to joining Cross Country
Staffing in 1990, she worked for Proctor & Gamble since 1986.

KEVIN CONLIN has served as President of the Consulting Division since
April 2001. Before joining Cross Country, he served from 1996 to March 2001 as
the President and Chief Executive Officer of Partners First, a consulting firm
focused on physician-hospital partnering and managed care. He also served as a
senior executive at Ascension Health, one of the largest not-for-profit hospital
systems in the U.S. He holds a B.A. in Biological Sciences from Rutgers
University and a Masters of Health Administration from Duke University.

DR. FRANKLIN A. SHAFFER, RN has served as President, Education and Training
Division since March 2001. He also served as Vice President in our Education
Division since February 1996. Dr. Shaffer has also served as adjunct faculty in
graduate nursing programs at Teachers College, Columbia University, Adelphi
University and Hunter College. Dr. Shaffer holds a Doctorate of Education in
Nursing Administration and a Masters of Education and a Masters of Arts from
Teachers College, Columbia University.

TONY SIMS has served as President, Clinical Trials Staffing Division since
January 2001, as Executive Vice President of Operations for ClinForce from
March 1998 to December 2000 and as Managing Director of ClinForce from
August 1997 to March 1998. Before joining ClinForce, Mr. Sims served in various
roles, including National Account Executive and Business Development Manager,
with the

healthcare staffing and support groups at Kelly Scientific Resources from
August 1996 to August 1997. Mr. Sims holds a B.S. in Chemistry from Piedmont
College.

CAROL D. WESTFALL has served as President, Search and Recruitment Division
since October 2000. Ms. Westfall served as Senior Vice President of Cejka &
Company's Physician Search and Outsourced Executive Search Divisions from
August 1999 to October 2000 and Vice President of the Outsourced Executive and
Physician Search Division from 1994 to July 1999. Ms. Westfall holds a B.S.
degree in Education from Michigan State University and has completed graduate
work in Secondary Administration with Purdue University.

ANNETTE GARDNER has served as President of Cross Country Local, Inc. since
October 2001, the President of E-Staff, Inc. since August 2000 and an executive
officer since February 2002. Ms. Gardner founded Nurse Works, Inc. in 1986 and
served as its Chief Executive Officer until July 1999. She is also the founder
of Bates & Associates, a small healthcare consulting firm. She received her
nursing degree in 1974 and continued her education in management and business
studies at Temple University.

JONATHAN W. WARD has served as Chief Marketing and Strategy Officer since
1999 and an executive officer since February 2002. He served as Vice President
of Marketing at our predecessor since 1995 and Director of Marketing and
Business Development since 1993. Mr. Ward holds a B.A. in Political Science from
Drew University and an M.B.A. from Rutgers University, Graduate School of
Management.

VICTOR KALAFA has served as Vice President of Corporate Development since
April 2001 and an executive officer since February 2002. From March 1999 to
April 1, 2001, Mr. Kalafa was President of KSR Group, Inc., a management
consulting company. Mr. Kalafa served as Chief Operating Officer for Scott
Medical Group, Inc., a healthcare management company from January 1998 to March
1999 and as Vice President of Development from 1991 to 1998.

KAREN H. BECHTEL has been a director since December 1999. Ms. Bechtel has
been a Managing Director of Morgan Stanley Private Equity since 1998 and of
Morgan Stanley & Co. Incorporated since 1986. She received a B.A. in mathematics
from the University of Texas and an M.B.A. from the Harvard Graduate School of
Business Administration. She is also a director of several privately held
companies.

W. LARRY CASH has been a director since October 2001. He has been the
Executive Vice President and Chief Financial Officer of Community Health Systems
since September 1997 and a Director of Community Health Systems since May 2001.
Prior to joining Community Health Systems, Mr. Cash served as Vice President and
Group Chief Financial Officer of Columbia/HCA Healthcare Corporation from
September 1996 to August 1997. Prior to Columbia/HCA, Mr. Cash spent 23 years at
Humana Inc., most recently as Senior Vice President of Finance and Operations
from 1993 to 1996. He received his Bachelor of Science in Accounting from the
University of Kentucky at Lexington in 1970.

BRUCE A. CERULLO has been a director since December 1999 and served as
Chairman of the Board from December 1999 until December 2000. Mr. Cerullo served
as President of TravCorps from 1994 to December 1999 and Chief Executive Officer
of TravCorps from 1995 to December 1999. Mr. Cerullo holds a B.S. degree from
the University of New Hampshire and a master's degree from Pennsylvania State
University.

THOMAS C. DIRCKS has been a director since December 1999, and has been
President of Charterhouse Group International, a private equity firm, since
June 2001. Mr. Dircks served as Executive Vice President of Charterhouse from
July 2000 until June 2001 and has been employed as an executive officer of
Charterhouse since 1983. He was previously employed as a Certified Public
Accountant at a predecessor of PricewaterhouseCoopers, LLP. He holds a B.S. in
Accounting and an M.B.A. from Fordham University. Mr. Dircks also is a director
of Interliant, Inc., an application service provider, and a number of privately
held companies.

A. LAWRENCE FAGAN has been a director since December 1999. Mr. Fagan has
been Vice Chairman of Charterhouse since June 2001 and served as President and
Chief Operating Officer of Charterhouse from December 1996 until June 2001 and
formerly served as Executive Vice President of Charterhouse since 1984.
Mr. Fagan received a B.A. from Yale University and an M.B.A. from Columbia
University. He also is a director of Top Image Systems, Ltd. and a number of
privately held companies.

M. FAZLE HUSAIN has been a director since December 1999. He has been an
Executive Director of Morgan Stanley Private Equity and Morgan Stanley & Co.
Incorporated since February 1997. Mr. Husain received a B.S. in Chemical
Engineering from Brown University and an M.B.A. from the Harvard Graduate School
of Business Administration. He also is a director of Allscripts Healthcare
Solutions, Inc., Healthstream Inc., The Medicines Company and several privately
held companies.

JOSEPH SWEDISH has been a director since October 2001, and has been
President and Chief Executive Officer and a Director of Centura Health since
January 1999. Prior to joining Centura Health, Mr. Swedish served as President
and Chief Executive Officer of the East Florida Division of Columbia/HCA
Healthcare Corporation from March 1994 to January of 1999. He received his
Bachelor's degree from the University of North Carolina at Charlotte in 1973 and
a Master's Degree in Health Administration from Duke University in 1979.

JOSEPH TRUNFIO has been a director since October 2001 and has served as
President and Chief Executive Officer of Atlantic Health System, a
not-for-profit hospital group, since March 1999. From July 1997 to February
1999, Mr. Trunfio served as President and Chief Executive Officer of Via Caritas
Health System, a not-for-profit hospital group. Prior to his position with Via
Caritas Health System, he served as President and Chief Executive Officer of SSM
Healthcare Ministry Corp., a not-for-profit hospital group. Mr. Trunfio holds a
Ph.D. in Clinical Psychology from the University of Miami.

THE BOARD OF DIRECTORS

Currently, we have ten members on our board of directors. Each of our
directors holds office until his or her successor is duly elected and qualified
or until his or her resignation or removal, if earlier, as provided in our
by-laws. No family relationship exists among any of the directors or executive
officers.

DIRECTOR COMPENSATION AND OTHER ARRANGEMENTS

We do not pay cash compensation to our employee directors or directors
affiliated with our principal stockholders, however they are reimbursed for the
expenses they incur in attending meetings of the board or board committees. Our
three independent directors receive cash compensation in the amount of $3,000
per "in-person" board meeting attended and $1,500 per telephonic board meeting
or committee meeting attended. All independent directors are also reimbursed for
the expenses they incur in attending meetings of the board or board committees.
In accordance with a policy approved by our board of directors, each of our
independent directors was granted an option to purchase 12,500 shares of common
stock under our Amended and Restated 1999 Stock Option Plan in October 2001. 25%
of each option grant becomes exercisable on each of the four anniversaries
following the date of grant.

COMMITTEES OF THE BOARD OF DIRECTORS

We have established an audit committee and a compensation committee. The
audit committee reviews our internal accounting procedures and considers and
reports to the board of directors with respect to other auditing and accounting
matters, including the selection of our independent auditors, the scope of
annual audits, fees to be paid to our independent auditors and the performance
of our independent auditors. Our audit committee consists of W. Larry Cash,
Joseph Swedish and Joseph Trunfio. The compensation committee reviews and
recommends to the board of directors the salaries, benefits and stock option
grants for all employees, consultants, directors and other individuals
compensated by us. The compensation committee also administers our stock option
and other employee benefit plans. The compensation committee consists of Thomas
Dircks and Karen Bechtel.

EXECUTIVE COMPENSATION

The following table sets forth certain summary information with respect to
compensation we paid in 2000 and 2001 to our Chief Executive Officer and our
four other most highly compensated executive officers as of December 31, 2001
whose salary and bonus earned in 2001 exceeded $100,000.

ALL OTHER
SALARY BONUS COMPENSATION
NAME AND POSITION YEAR ($) ($) ($)(A)
- ----------------- -------- -------- -------- ------------

Joseph A. Boshart.............................. 2001 273,000 184,412 5,250
President and Chief Executive Officer 2000 263,465 193,883 5,250

Emil Hensel.................................... 2001 225,000 151,988 5,250
Chief Financial Officer 2000 218,976 159,794 5,250

Vickie Anenberg................................ 2001 154,842 144,051 5,250
President, Travel Staffing Division 2000 112,769 70,318 3,938

Kevin Conlin................................... 2001 159,375 199,125 --
President, Consulting Division 2000 -- -- --

Carol D. Westfall.............................. 2001 180,000 272,997 5,250
President, Search and Recruitment Division 2000 140,000 280,740 8,603

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

(a) Amounts consist of employer matching contributions to our 401(k) plan,
except that Ms. Westfall's amount in the year 2000 also includes a $3,503
matching contribution to a non-qualified savings program.

AGGREGATED OPTION VALUES AS OF DECEMBER 31, 2001

The executive officers named in the summary compensation table did not
exercise any stock options during the year ended December 31, 2001. The
following table sets forth information concerning the year-end number and value
of unexercised options with respect to our named executive officers.

NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END (#) AT FISCAL YEAR-END ($)
------------------------------- -------------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------

Joseph A. Boshart...................... 256,347 256,347 $3,290,873 $3,290,873
Emil Hensel............................ 205,078 205,077 $2,632,699 $2,632,686
Vickie Anenberg........................ 102,539 102,539 $1,316,352 $1,316,352
Kevin Conlin........................... -- 92,822 $ -- $ 536,875
Carol D. Westfall...................... 16,824 16,823 $ 258,864 $ 258,845

OPTION GRANTS

No stock options were granted for the year ended 2001 to any of
Mr. Boshart, Mr. Hensel, Ms. Anenberg or Ms. Westfall.

EMPLOYMENT AGREEMENTS

We are party to employment agreements with each of Joseph Boshart and Emil
Hensel, pursuant to which Mr. Boshart serves as our president and chief
executive officer and Mr. Hensel serves as our chief financial officer. The
initial term of each agreement expires on July 29, 2002. Upon expiration of such
initial term, each agreement will be automatically renewed for successive
one-year terms unless prior to the end of such renewal term either party has
given at least 90 days' prior written notice of its intention not to renew the
agreement. Messrs. Boshart and Hensel currently receive annual base salaries of
$273,000 and $225,000, respectively. These salaries are subject to increase upon
annual review by the board of directors, and each of Messrs. Boshart and Hensel
is eligible to receive an

annual bonus under our bonus plan. Under our bonus plan, 70% of the bonus is
tied to the achievement of annual operating profit targets, and the remaining
30% is tied to the achievement of strategic and operating objectives established
annually by our Board of Directors. Messrs. Boshart and Hensel are eligible to
participate in all benefit plans and fringe benefit arrangements available to
our senior executives. If either executive's employment is terminated without
cause, the executive will be entitled to the greater of (x) base salary, for the
balance of the initial or renewal term, certain other benefits provided in the
agreement and bonus for the fiscal year in which termination occurs and (y) one
year's worth of his base salary in effect as of the date of termination. Each of
Messrs. Boshart and Hensel is subject to a two-year post-termination
noncompetition covenant. However, if either executive's employment is terminated
without cause, then the non-competition agreement will be effective only if we
continue to pay the executive's base salary, bonus and other benefits provided
in the agreement for the term of the noncompetition covenant. We are permitted
to terminate the noncompetition covenant, and related payments, upon 30 days'
prior written notice.

OUR STOCK PLANS

AMENDED AND RESTATED 1999 STOCK OPTION PLAN. We have reserved for issuance
2,145,515 shares of common stock under our Amended and Restated 1999 Stock
Option Plan, subject to adjustment for stock splits or similar corporate events.
Our Amended and Restated 1999 Stock Option Plan provides for the granting of
options to purchase shares of our common stock to any of our employees or
consultants and our non-employee directors. Each stock option granted under our
Amended and Restated 1999 Stock Option Plan is either intended to qualify as an
incentive stock option or is a non-qualified stock option. The plan is currently
administered by the compensation committee of our board of directors. The
exercise price of options granted under our Amended and Restated 1999 Stock
Option Plan is determined by the committee, except that in the case of
substitute options, the exercise price cannot be less than 100% of the fair
market value of the common stock on the date of the grant. In the case of
incentive stock options granted to ten percent stockholders, the exercise price
cannot be less than 110% of the fair market value of the common stock. In the
event of a change of control of our company, stock options granted and not
previously exercisable, will become exercisable unless the committee determines
in good faith that an alternative option will be substituted. Under our Amended
and Restated 1999 Stock Option Plan, options to purchase 1,267,588 shares of
common stock were outstanding as of December 31, 2001.

AMENDED AND RESTATED EQUITY PARTICIPATION PLAN. We have reserved for
issuance 2,252,486 shares of common stock under our Amended and Restated Equity
Participation Plan, subject to adjustment for stock splits or similar corporate
events. Our Amended and Restated Equity Participation Plan provides for the
granting of options to purchase shares of our common stock to key management
employees of our company and our affiliates. Each stock option granted under our
Amended and Restated Equity Participation Plan is either intended to qualify as
an incentive stock option or is a non-qualified stock option. The exercise price
of options granted under our Amended and Restated Equity Participation Plan is
divided into five tranches ranging from 100 percent to 300 percent of the fair
market value of the common stock on the date of grant. However, for incentive
stock options granted to ten percent stockholders, the exercise price in the
first tranche cannot be less than 110 percent of the fair market value of the
common stock on the date of grant. The plan is currently administered by the
compensation committee of our board of directors. In the event of a change in
control of our company, stock options granted and not previously exercisable,
will become exercisable unless the committee determines in good faith that an
alternative option will be substituted. Under our Amended and Restated Equity
Participation Plan, options to purchase 2,252,479 shares of common stock were
outstanding as of December 31, 2001.

401(K) PLAN. We maintain a 401(k) Plan. The plan permits eligible employees
to make voluntary, pre-tax contributions to the plan up to a specified
percentage of compensation, subject to applicable tax limitations. We may make a
discretionary matching contribution to the plan equal to a pre-determined
percentage of an employee's voluntary, pre-tax contributions and may make an
additional discretionary profit sharing contribution to the plan, subject to
applicable tax limitations. Eligible employees who elect to participate in the
plan are generally vested in any matching contribution after three years of
service with the company. The plan is intended to be tax-qualified under
Section 401(a) of the Internal Revenue Code so that contributions to the plan,
and income earned on plan contributions, are not taxable to employees until
withdrawn from the plan, and so that our contributions, if any, will be
deductible by us when made.

RELATED PARTY TRANSACTIONS

In connection with our acquisition of the assets of Cross Country Staffing
in July 1999 from W. R. Grace, CEP III purchased 11,830,275 shares of our common
stock for an aggregate of $71.8 million, and we paid a transaction fee to
Charterhouse in the amount of $2.8 million. In addition, in July 1999, in
connection with the acquisition, Messrs. Boshart and Hensel and Ms. Anenberg
purchased 173,050, 82,400 and 16,485 shares of our common stock for an aggregate
of $1.7 million.

In December 1999, Messrs. Boshart, Hensel and Shaffer and Ms. Anenberg
received stock bonuses of 20,000, 19,672, 4,918 and 9,508 shares, respectively,
of our common stock for a purchase price equal to the par value per share.

In connection with our acquisition of TravCorps in December 1999, investment
funds managed by Morgan Stanley Private Equity acquired 7,155,062 shares of our
common stock then valued in the aggregate at $26.0 million in exchange for their
shares of TravCorps common stock valued at $26.0 million. In addition, in
connection with our acquisition of TravCorps, we paid a transaction fee to
Charterhouse in the amount of $0.3 million.

We are party to an agreement with Bruce Cerullo dated as of December 21,
2000, pursuant to which Mr. Cerullo has agreed to continue as a Director and
provide certain consulting services to us at such times as we may request and
that are reasonably convenient to Mr. Cerullo. He is subject to a four-year
noncompetition covenant which expires four years from the date he ceases to
serve as a director. Under the agreement, we pay him $250 per hour for such
consulting services. To date, no amounts have been paid to Mr. Cerullo under
this agreement. We anticipate that we will compensate Mr. Cerullo for less than
10 hours of consulting services per month for the remainder of 2002.
Additionally, he retained all options that were vested and exercisable as of
December 31, 2001 in consideration of his continued service as a director.

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of our common stock as of December 31, 2001 and as adjusted to reflect
this offering. The table includes:

- each person who is known by us to be the beneficial owner of more than 5%
of our common stock;

- each executive officer named in the summary compensation table;

- each of our directors;

- all directors and listed executive officers as a group; and

- each selling stockholder offering shares of stock in this offering

CEP III and investment funds managed by Morgan Stanley Private Equity are
selling all of the shares in this offering. CEP III and investment funds managed
by Morgan Stanley Private Equity are the principal stockholders of the Company
and have appointed four of the ten members of our Board of Directors.

Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes voting or investment power with
respect to the securities. Except as otherwise indicated, the persons or
entities listed below have sole voting and investment power with respect to all
shares of common stock beneficially owned by them, except to the extent such
power may be shared with a spouse.

SHARES SHARES PERCENT BENEFICIALLY OWNED(A)
BENEFICIALLY BENEFICIALLY -----------------------------
OWNED PRIOR TO OWNED AFTER THE BEFORE AFTER
NAME AND ADDRESS OFFERING SHARES OFFERED OFFERING OFFERING OFFERING
- ---------------- -------------- -------------- --------------- ------------- -------------

5% STOCKHOLDERS:
Charterhouse Equity Partners III, 12,575,475 5,165,151 7,410,324 39.0% 23.0%
L.P.(b) ...............................
c/o Charterhouse Group International,
Inc.
535 Madison Avenue
New York, NY 10022
Morgan Stanley Private Equity and related
entities(c)............................ 7,877,802 3,235,666 4,642,136 24.5 14.4
1221 Avenue of the Americas, 33rd Floor
New York, NY 10020
DIRECTORS:
Karen H. Bechtel(d)...................... -- -- -- -- --
Joseph A. Boshart(e)..................... 462,059 -- 462,059 1.4 1.4
W. Larry Cash............................ -- -- -- -- --
Bruce A. Cerullo(f)...................... 438,683 127,536 311,147 1.4 1.0
Thomas C. Dircks(g)...................... -- -- -- -- --
A. Lawrence Fagan(g)..................... -- -- -- -- --
Emil Hensel(h)........................... 313,843 -- 313,843 1.0 1.0
M. Fazle Husain(d)....................... -- -- -- -- --
Joseph Swedish........................... -- -- -- -- --
Joseph Trunfio........................... -- -- -- -- --
OTHER NAMED EXECUTIVE OFFICERS:
Vickie Anenberg(i)....................... 131,532 -- 131,532 * *
Kevin Conlin(j).......................... 23,706 -- 23,706 * *
Carol D. Westfall(k)..................... 25,308 -- 25,308 * *
All directors and executive officers as a
group (18 persons)(l).................. 1,603,453 127,536 1,475,917 4.8 4.5
OTHER SELLING STOCKHOLDERS:
CHEF Nominees Ltd........................ 7,882 3,237 4,645 * *
DB Capital Investors, L.P................ 760,282 312,272 448,010 2.4 1.4
The Northwestern Mutual Life Insurance
Company................................ 380,147 156,138 224,009 1.2 0.7

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

* Less than 1%.

(a) For purposes of this table, information as to the shares of common stock
assumes, in the case of the column "After Offering," that the underwriters'
over-allotment option is not exercised. In addition, a person or group of
persons is deemed to have "beneficial ownership" of any shares of common
stock when such person or persons has the right to acquire them within
60 days after the date of this prospectus. For purposes of computing the
percentage of outstanding shares of common stock held by each person or
group of persons named above, any shares which such person or persons have
the right to acquire within 60 days after the date of this prospectus is
deemed to be outstanding but is not deemed to be outstanding for the
purpose of computing the percentage ownership of any other person.

(b) The general partner of CEP III is CHUSA Equity Investors III, L.P., whose
general partner is CEP III, Inc., a wholly owned subsidiary of
Charterhouse. As a result of the foregoing, all of the shares held by CEP
III would, for purposes of the Securities Exchange Act of 1934, be
considered to be beneficially owned by Charterhouse.

(c) Consists of 7,096,909 shares owned by Morgan Stanley Dean Witter Capital
Partners IV, L.P. and its related investment funds (collectively, "MSDWCP")
and 780,893 shares owned by Morgan Stanley Venture Partners III, L.P. and
its related investment funds (collectively, "MSVP"). The general partner of
MSDWCP is MSDW Capital Partners IV, LLC, the institutional managing member
of which is MSDW Capital Partners IV, Inc. ("MSDWCP Inc."), a wholly owned
subsidiary of Morgan Stanley Dean Witter & Co. ("MSDW"). The general
partner of MSVP is Morgan Stanley Venture Partners III, L.L.C. ("MSVP
L.L.C."), the institutional managing member of which is Morgan Stanley
Venture Capital III, Inc. ("MSVC Inc."), a wholly owned subsidiary of MSDW.

(d) Karen H. Bechtel is a Managing Director of MSDWCP Inc. and Morgan
Stanley & Co. Incorporated, ("MS & Co."), a wholly owned subsidiary of
MSDW. M. Fazle Husain is an Executive Director of MSVC Inc. and MS & Co.,
and a managing member of MSVP L.L.C. Ms. Bechtel and Mr. Husain each
disclaim beneficial ownership of the shares of common stock beneficially
owned by the investment funds managed by Morgan Stanley Private Equity and
its affiliates, except to the extent of any direct pecuniary interest
therein.

(e) Includes 256,347 shares subject to options that are currently exercisable
or exercisable within 60 days of the date of this prospectus.

(f) Includes 128,175 shares subject to options that are currently exercisable
or exercisable within 60 days of the date of this prospectus.

(g) Thomas C. Dircks and A. Lawrence Fagan are executive officers of
Charterhouse. Mr. Fagan is also a director and stockholder of Charterhouse.
Messrs. Dircks and Fagan each disclaim beneficial ownership of the shares
of common stock beneficially owned by Charterhouse.

(h) Includes 205,078 shares subject to options that are currently exercisable
or exercisable within 60 days of the date of this prospectus.

(i) Includes 102,539 shares subject to options that are currently exercisable
or exercisable within 60 days of the date of this prospectus.

(j) Includes 23,206 shares subject to options that are currently exercisable or
exercisable within 60 days of the date of this prospectus.

(k) Includes 16,824 shares subject to options that are currently exercisable or
exercisable within 60 days of the date of this prospectus.

(l) Includes an aggregate of 891,490 shares subject to options that are
currently exercisable or exercisable within 60 days of the date of this
prospectus.

DESCRIPTION OF CAPITAL STOCK

Our amended and restated certificate of incorporation authorizes the
issuance of up to 100,000,000 shares of common stock and 10,000,000 shares of
preferred stock, the rights and preferences of which may be established from
time to time by our board of directors. As of December 31, 2001, we had
32,211,745 shares of common stock outstanding and no shares of preferred stock
outstanding.

The following description of our capital stock and provisions of our amended
and restated certificate of incorporation and amended and restated by-laws are
summaries and are qualified by reference to the certificate of incorporation and
the by-laws. Copies of these documents have been filed with the Securities and
Exchange Commission as exhibits to our registration statement, of which this
prospectus forms a part.

COMMON STOCK

Holders of common stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders and do not have cumulative voting
rights. Accordingly, a plurality of the votes cast in any election of directors
may elect all of the directors standing for election. Pursuant to a stockholders
agreement, investment funds managed by Morgan Stanley Private Equity and
Charterhouse have certain rights with respect to the board of directors and
other related matters. Specifically, this stockholders agreement provides that
we shall nominate for election to the board of directors, and recommend that the
stockholders elect to the board of directors, two designees of each of CEP III
and investment funds managed by Morgan Stanley Private Equity. A 50% reduction
in the number of shares of common stock owned by either CEP III or investment
funds managed by Morgan Stanley Private Equity reduces the number of designees
we are required to nominate, on behalf of such stockholder, to one and a 90%
reduction results in the elimination of the right to have us nominate a
designee, on behalf of such stockholder. Under our stockholders agreement, in
the event that either CEP III or investment funds managed by Morgan Stanley
Private Equity propose to sell more than ten percent of the total number of
shares of common stock owned by them, the other party is entitled to include in
such sale a pro rata portion of its common stock, on the same terms and for the
same consideration. Our stockholders agreement also provides that if both
Charterhouse and investment funds managed by Morgan Stanley desire to sell
shares into the public market, they shall endeavor, subject to applicable
securities laws, to effect such sales in a manner that will not adversely
disrupt the market for our common stock. In addition, Charterhouse and
investment funds managed by Morgan Stanley have agreed, to the extent
practicable, to sell their shares of common stock through a single broker, and
that all sales will be made proportionally based on the number of shares desired
to be sold by such stockholders. Pursuant to an additional shareholders
agreement, each of Joseph Boshart, our President and Chief Executive Officer,
and Emil Hensel, our Chief Financial Officer (collectively, the "Management
Investors"), agree not to transfer any shares of our common stock, except to
certain permitted transferees. The limitation on the ability of Management
Investors to transfer common stock terminates on the date of the consummation of
this offering. Holders of common stock are entitled to receive ratably such
dividends, if any, as may be declared by the board of directors out of legally
available funds. Upon our liquidation, dissolution or winding-up, holders of
common stock are entitled to receive ratably our net assets available for
distribution after the payment of all of our liabilities. The outstanding shares
of common stock are, and the shares sold in the offering will be, when issued
and paid for, validly issued, fully paid and nonassessable.

PREFERRED STOCK

The board of directors has the authority, without action by the
stockholders, to designate and issue preferred stock and to designate the
rights, preferences and privileges of each series of preferred stock, which may
be greater than the rights attached to the common stock. It will not be possible
to state the actual effect of the issuance of any shares of preferred stock on
the rights of holders of common stock

until the board of directors determines the specific rights attached to that
preferred stock. The effects of issuing preferred stock could include one or
more of the following:

- restricting dividends on the common stock;

- diluting the voting power of the common stock;

- impairing the liquidation rights of the common stock; or

- delaying or preventing a change of control of our Company.

LIMITATION ON LIABILITY AND INDEMNIFICATION MATTERS

Our amended and restated certificate of incorporation limits the liability
of our directors to us and our stockholders to the fullest extent permitted by
Delaware law. Specifically, our directors will not be personally liable for
money damages for breach of fiduciary duty as a director, except for liability.

- for any breach of the director's duty of loyalty to us or our
stockholders;

- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;

- under Section 174 of the Delaware General Corporation Law, which concerns
unlawful payments of dividends, stock purchases or redemptions; and

- for any transaction from which the director derived an improper personal
benefit.

Our amended and restated certificate of incorporation and amended and
restated by-laws also contain provisions indemnifying our directors and officers
to the fullest extent permitted by Delaware law. The indemnification permitted
under Delaware law is not exclusive of any other rights to which these persons
may be entitled.

In addition, we maintain directors' and officers' liability insurance to
provide our directors and officers with insurance coverage for losses arising
from claims based on breaches of duty, negligence, errors and other wrongful
acts.

ANTI-TAKEOVER EFFECTS OF PROVISIONS OF DELAWARE LAW AND OUR CERTIFICATE OF
INCORPORATION AND BY-LAWS

A number of provisions under Delaware law and in our amended and restated
certificate of incorporation and amended and restated by-laws may make it more
difficult to acquire control of us. These provisions could deprive the
stockholders of opportunities to realize a premium on the shares of common stock
owned by them. In addition, these provisions may adversely affect the prevailing
market price of the common stock. These provisions are intended to:

- enhance the likelihood of continuity and stability in the composition of
the board and in the policies formulated by the board;

- discourage certain types of transactions which may involve an actual or
threatened change in control of our company;

- discourage certain tactics that may be used in proxy fights; and

- encourage persons seeking to acquire control of our company to consult
first with the board of directors to negotiate the terms of any proposed
business combination or offer.

SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW. We are subject to the
provisions of Section 203 of the Delaware General Corporation Law. Subject to
certain exceptions, Section 203 of Delaware law prohibits a publicly held
Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the

transaction in which the person became an interested stockholder, unless the
interested stockholder attained such status with the approval of the board of
directors or unless the "business combination" is approved in a prescribed
manner. A "business combination" is defined as a merger, asset sale or other
transaction resulting in a financial benefit to the interested stockholder.
Subject to various exceptions, an "interested stockholder" is a person who,
together with affiliates and associates, owns, or within the past three years
did own 15% or more of a corporation's voting stock. This statute could prohibit
or delay the accomplishment of mergers or other takeover or change in control
attempts with respect to us and, accordingly, may discourage attempts to acquire
us.

STOCKHOLDER ACTION BY WRITTEN CONSENT. Our amended and restated by-laws
provide that stockholders may take action by written consent.

AUTHORIZED BUT UNISSUED SHARES OF COMMON STOCK. The authorized but unissued
shares of common stock and preferred stock are available for future issuance
without stockholder approval. These additional shares may be utilized for a
variety of corporate purposes, including future public offerings to raise
additional capital, corporate acquisitions and employee benefit plans. The
existence of authorized but unissued shares of common stock and preferred stock
could render more difficult or discourage an attempt to obtain control of us by
means of a proxy contest, tender offer, merger or otherwise.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our common stock is SunTrust Bank.

SHARES ELIGIBLE FOR FUTURE SALE

RULE 144 SECURITIES

Upon the consummation of this offering, we will have 32,211,745 shares of
common stock outstanding assuming no exercise of outstanding options and
warrants after December 31, 2001. All of the 9,000,000 shares of common stock
sold in this offering will be freely tradable without restriction or further
registration under the Securities Act, except for any of the shares that are
acquired by "affiliates" as that term is defined in Rule 144 under the
Securities Act. 12,366,937 shares of common stock held by our affiliates after
the offering will be "restricted" securities under the meaning of Rule 144 under
the Securities Act and may not be sold in the absence of registration under the
Securities Act, unless an exemption from registration is available, including
exemptions pursuant to Rule 144 or Rule 144A under the Securities Act.

In general, under Rule 144 as currently in effect, a person who has
beneficially owned shares of our common stock for at least one year would be
entitled to sell within any three-month period a number of shares that does not
exceed the greater of either of the following:

- 1% of the number of shares of common stock then outstanding, which will
equal approximately 322,117 shares outstanding immediately after this
offering, or

- the average weekly trading volume of the common stock on the Nasdaq
National Market during the four calendar weeks preceding the filing of a
notice on Form 144 with respect to such sale.

Sales under Rule 144 are also subject to certain manner of sale provisions and
notice requirements and to the availability of current public information about
us.

Under Rule 144(k), a person who is not deemed to have been one of our
"affiliates" at any time during the 90 days preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years,
including the holding period of any prior owner other than an "affiliate," is
entitled to sell its shares without complying with the manner of sale, public
information, volume limitation or notice provisions of Rule 144. Therefore,
unless otherwise restricted, "144(k) shares" may be sold immediately upon the
completion of this offering. The sale of these shares, or the perception that
sales will be made, could adversely affect the price of our common stock after
the offering because a greater supply of shares would be, or would be perceived
to be, available for sale in the public market.

We and our executive officers and directors and selling stockholders, other
than DB Capital Investors, LP and The Northwestern Mutual Life Insurance
Company, have agreed that, without the prior written consent of Merrill Lynch &
Co. on behalf of the underwriters, we will not, during the period ended 90 days
after the date of this prospectus, sell shares of common stock or take certain
related actions, subject to limited exceptions, all as described under
"Underwriting." DB Capital Investors, LP and The Northwestern Mutual Life
Insurance Company have agreed not to take such action for 60 days after the date
of this prospectus.

STOCK OPTIONS

On December 10, 2001, we filed a registration statement on Form S-8 under
the Securities Act covering shares of common stock issued or reserved for
issuance under our various stock option plans. Options to purchase 3,520,068
shares of common stock were issued and outstanding as of December 31, 2001, of
which, as of December 31, 2001, options to purchase 1,535,827 shares were
vested. All shares acquired upon exercises of employee stock options will be
freely tradeable unless held by affiliates.

REGISTRATION RIGHTS

CEP III and investment funds managed by Morgan Stanley Private Equity may
require us on up to an aggregate of three occasions to use our best efforts to
file registration statements on Form S-1 or Form S-2 covering public sale of
shares of common stock held by them. We have the right, under specified
circumstances, to delay any registration required by up to 90 days. In addition,
the holders are entitled to require us to register their shares on registrations
that we initiate and we have granted the holders unlimited demand rights to
cause us to file a registration statement on Form S-3.

UNDERWRITING

The selling stockholders intend to offer the shares through the underwriters
named below. Subject to the terms and conditions described in a purchase
agreement between us, the selling stockholders and the underwriters, the selling
stockholders have agreed to sell to the underwriters, and the underwriters
severally have agreed to purchase from the selling stockholders, the number of
shares listed opposite their names below.

NUMBER OF
UNDERWRITER SHARES
- ----------- ---------

Merrill Lynch, Pierce, Fenner & Smith
Incorporated......................................
Salomon Smith Barney Inc....................................
Banc of America Securities LLC..............................
CIBC World Markets Corp. ...................................
SunTrust Capital Markets, Inc. .............................
--------
Total............................................. 9,000,000
========

The underwriters have agreed to purchase all of the shares sold under the
purchase agreement if any of these shares are purchased. If an underwriter
defaults, the purchase agreement provides that the purchase commitments of the
nondefaulting underwriters may be increased or the purchase agreement may be
terminated.

We and the selling stockholders have agreed to indemnify the underwriters
against certain liabilities, including liabilities under the Securities Act, or
to contribute to payments the underwriters may be required to make in respect of
those liabilities.

The underwriters are offering the shares, subject to prior sale, when, as
and if issued to and accepted by them, subject to approval of legal matters by
their counsel, including the validity of the shares, and other conditions
contained in the purchase agreement, such as the receipt by the underwriters of
officer's certificates and legal opinions. The underwriters reserve the right to
withdraw, cancel or modify offers to the public and to reject orders in whole or
in part.

COMMISSIONS AND DISCOUNTS

The representatives have advised us that the underwriters propose initially
to offer the shares to the public at the initial public offering price on the
cover page of this prospectus and to dealers at that price less a concession not
in excess of $ per share. The underwriters may allow, and the dealers may
reallow, a discount not in excess of $ per share to other dealers. After
the public offering, the public offering price, concession and discount may be
changed.

The following table shows the public offering price, underwriting discount
and proceeds before expenses to the selling stockholders. The information
assumes either no exercise or full exercise by the underwriters of their
overallotment option.

WITHOUT WITH
PER SHARE OPTION OPTION
--------- -------- --------

Public offering price...................................... $ $ $
Underwriting discount...................................... $ $ $
Proceeds, before expenses, to selling stockholders......... $ $ $

The expenses of the offering, not including the underwriting discount, are
estimated at $1.0 million and are payable by us.

OVERALLOTMENT OPTION

The selling stockholders have granted an option to the underwriters to
purchase up to 1,350,000 additional shares at the public offering price less the
underwriting discount. The underwriters may exercise this option for 30 days
from the date of this prospectus solely to cover any overallotments. If the
underwriters exercise this option, each will be obligated, subject to conditions
contained in the purchase agreement, to purchase a number of additional shares
proportionate to that underwriter's initial amount reflected in the above table.

NO SALES OF SIMILAR SECURITIES

We and our executive officers and directors and selling stockholders, other
than DB Capital Investors, LP and The Northwestern Mutual Life Insurance
Company, have agreed not to sell or transfer any common stock for 90 days after
the date of this prospectus without first obtaining the written consent of
Merrill Lynch. DB Capital Investors, LP and The Northwestern Mutual Life
Insurance Company have agreed not to take such action for 60 days after the date
of this prospectus. Specifically, we and these other persons have agreed not to
directly or indirectly:

- offer, pledge, sell or contract to sell any common stock;

- sell any option or contract to purchase any common stock;

- purchase any option or contract to sell any common stock;

- grant any option, right or warrant for the sale of any common stock;

- lend or otherwise dispose of or transfer any common stock;

- request or demand that we file a registration statement related to the
common stock; or

- enter into any swap or other agreement that transfers, in whole or in
part, the economic consequence of ownership of any common stock whether
any such swap or transaction is to be settled by delivery of shares or
other securities, in cash or otherwise.

This lockup provision applies to common stock and to securities convertible
into or exchangeable or exercisable for or repayable with common stock. It also
applies to common stock owned now or acquired later by the person executing the
agreement or for which the person executing the agreement later acquires the
power of disposition.

QUOTATION ON THE NASDAQ NATIONAL MARKET

The shares of common stock are quoted on the Nasdaq National Market under
the symbol "CCRN."

PRICE STABILIZATION AND SHORT POSITIONS

Until the distribution of the shares is completed, SEC rules may limit
underwriters and selling stockholders from bidding for or purchasing our common
stock. However, the representatives may engage in transactions that stabilize
the price of the common stock, such as bids or purchases to peg, fix or maintain
that price.

The underwriters may purchase and sell our common stock in the open market.
These transactions may include short sales, stabilizing transactions and
purchases to cover positions created by short sales. Short sales involve the
sale by the underwriters of a greater number of shares than they are required to
purchase in the offering. "Covered" short sales are sales made in an amount not
greater than the underwriters' option to purchase additional shares from the
issuer in the offering. The underwriters may close out any covered short
position by either exercising their option to purchase additional shares

or purchasing shares in the open market. In determining the source of shares to
close out the covered short position, the underwriters will consider, among
other things, the price of shares available for purchase in the open market as
compared to the price at which they may purchase shares through the
over-allotment option. "Naked" short sales are any sales in excess of such
option. The underwriters must close out any naked short position by purchasing
shares in the open market. A naked short position is more likely to be created
if the underwriters are concerned that there may be downward pressure on the
price of the common shares in the open market after pricing that could adversely
affect investors who purchase in the offering. Stabilizing transactions consist
of various bids for or purchases of common shares made by the underwriters in
the open market prior to the completion of the offering.

The underwriters may also impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the underwriting
discount received by it because the representatives have repurchased shares sold
by or for the account of such underwriter in stabilizing or short covering
transactions.

Similar to other purchase transactions, the underwriters' purchases to cover
the syndicate short sales may have the effect of raising or maintaining the
market price of our common stock or preventing or retarding a decline in the
market price of the common shares. As a result, the price of our common stock
may be higher than the price that might otherwise exist in the open market.

Neither we nor any of the underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the common stock. In addition, neither
we nor any of the underwriters makes any representation that the U.S.
representatives or the lead managers will engage in these transactions or that
these transactions, once commenced, will not be discontinued without notice.

PASSIVE MARKET MAKING

In connection with this offering, underwriters and selling group members may
engage in passive market making transactions in the common stock on the Nasdaq
National Market in accordance with Rule 103 of the Regulation M under the
Exchange Act during a period before the commencement of offers or sales of
common stock and extending through the completion of distribution. A passive
market maker must display its bid at a price not in excess of the highest
independent bid of that security. However, if all independent bids are lowered
below the passive market maker's bid, that bid must then be lowered when
specified purchase limits are exceeded.

OTHER RELATIONSHIPS

Some of the underwriters and their affiliates have engaged in, and may in
the future engage in, investment banking and other commercial dealings in the
ordinary course of business with us. They have received customary fees and
commissions for these transactions. Each of the underwriters acted as an
underwriter for our initial public offering in October 2001. Salomon Smith
Barney Inc. acted as the lead arranger, and affiliates of Salomon Smith
Barney Inc. acted as administrative agent, collateral agent, issuing bank and
swingline lender under our credit facility. In addition, affiliates of Merrill
Lynch, Salomon Smith Barney Inc., Banc of America Securities LLC and SunTrust
Capital Markets, Inc. are lenders under our credit facility. During the past two
years we paid $3.8 million in fees to Salomon Smith Barney Inc. and its
affiliates, $0.3 million to Banc of America Securities LLC and its affiliates
and $0.1 million to Merrill Lynch, SunTrust Capital Markets, Inc. and their
respective affiliates, primarily in connection with lending activities.

INTERNET DISTRIBUTION

Merrill Lynch will be facilitating internet distribution for the offering to
some of its internet subscription customers. Merrill Lynch intends to allocate a
limited number of shares for sale to its online brokerage customers. An
electronic prospectus is available on the website maintained by Merrill Lynch.
Other than the prospectus in electronic format, the information on the Merrill
Lynch website relating to the offering is not a part of this prospectus.

LEGAL MATTERS

The validity of the shares of common stock offered by this prospectus will
be passed upon for us by Proskauer Rose LLP, New York, New York. Certain legal
matters related to the offering will be passed upon for the underwriters by
Debevoise & Plimpton, New York, New York.

Members of Proskauer Rose LLP own 500 shares of our common stock, in the
aggregate.

EXPERTS

The consolidated financial statements of Cross Country, Inc. at
December 31, 2000 and 1999, and for the year ended December 31, 2000 and for the
period from July, 30, 1999 to December 31, 1999, appearing in this prospectus
and registration statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon appearing elsewhere herein, and
are included in reliance upon such report given on the authority of such firm as
experts in accounting and auditing.

The financial statements of Cross Country Staffing (a Partnership) as of
July 29, 1999 and December 31, 1998, and for the period from January 1, 1999
through July 29, 1999 and for the year ended December 31, 1998, included in this
prospectus have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.

The consolidated financial statements of TravCorps Corporation and
Subsidiary at December 15, 1999, and for the period from December 27, 1998 to
December 15, 1999, appearing in this prospectus and registration statement have
been audited by Ernst & Young LLP, independent auditors, and at December 26,
1998, and for the year ended December 26, 1998, by Deloitte & Touche LLP,
independent auditors, as set forth in their respective reports thereon appearing
elsewhere herein, and are included in reliance upon such reports given on the
authority of such firms as experts in accounting and auditing.

The consolidated financial statements of ClinForce, Inc. at December 31,
2000 and 1999, and for each of the two years in the period ended December 31,
2000, appearing in this prospectus and registration statement have been audited
by Ernst & Young LLP, independent auditors, as set forth in their report thereon
appearing elsewhere herein, and are included in reliance upon such report given
on the authority of such firm as experts in accounting and auditing.

The financial statements of Heritage Professional Education, LLC as of
December 25, 2000 and for the period from January 1, 2000 through December 25,
2000, appearing in this prospectus and registration statement have been audited
by Ernst & Young LLP, independent auditors, as set forth in their report thereon
appearing elsewhere herein, and are included in reliance upon such report given
on the authority of such firm as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Commission a registration statement on Form S-1,
which includes amendments, exhibits, schedules and supplements, under the
Securities Act and the rules and regulations under the Securities Act, for the
registration of the common stock offered by this prospectus. Although this
prospectus, which forms a part of the registration statement, contains all
material information included in the registration statement, parts of the
registration statement have been omitted from this prospectus as permitted by
the rules and regulations of the Commission. For further information with
respect to us and the common stock offered by this prospectus, please refer to
the registration statement. Statements contained in this prospectus as to the
contents of any contracts or other document referred to in this prospectus are
not necessarily complete and, where such contract or other document is an
exhibit to the registration statement, each such statement is qualified in all
respects by the provisions of such exhibit, to which reference is now made. The
registration statement can be inspected and copied at prescribed rates at the
public reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. The public may obtain information regarding the Washington, D.C.
Public Reference Room by calling the Commission at 1-800-SEC-0330. In addition,
the registration statement is publicly available through the Commission's site
on the Internet's World Wide Web, located at: http://www.sec.gov.

INDEX TO FINANCIAL STATEMENTS

PAGE
--------

HISTORICAL FINANCIAL STATEMENTS
CROSS COUNTRY, INC.
Supplementary Quarterly Financial Information............. F-2
Condensed Consolidated Balance Sheet as of September 30,
2001 (unaudited)........................................ F-3
Condensed Consolidated Statements of Operations for the
three and nine-month periods
ended September 30, 2001 and 2000 (unaudited)........... F-4
Condensed Consolidated Statements of Cash Flows for the
nine-month
periods ended September 30, 2001 and 2000 (unaudited)... F-5
Notes to Condensed Consolidated Financial Statements...... F-6
Report of Independent Certified Public Accountants........ F-10
Consolidated Balance Sheets as of December 31, 1999 and
2000.................................................... F-11
Consolidated Statements of Operations for the Period from
July 30, 1999 to December 31, 1999 and for the Year
Ended December 31, 2000................................. F-12
Consolidated Statements of Stockholders' Equity for the
Period from July 30, 1999 to December 31, 1999 and for
the Year Ended December 31, 2000........................ F-13
Consolidated Statements of Cash Flows for the Period from
July 30, 1999 to December 31, 1999, for the Year Ended
December 31, 2000....................................... F-14
Notes to the Consolidated Financial Statements............ F-15

CROSS COUNTRY STAFFING ("PREDECESSOR COMPANY")
Report of Independent Certified Public Accountants........ F-32
Balance Sheets as of July 29, 1999 and December 31,
1998.................................................... F-33
Statements of Income and Partners' Capital for the Period
from January 1, 1999 to July 29, 1999 and for the Year
Ended December 31, 1998................................. F-34
Statements of Cash Flows for the Period from January 1,
1999 to July 29, 1999 and for the Year Ended December
31, 1998................................................ F-35
Notes to Financial Statements............................. F-36

TRAVCORPS CORPORATION AND SUBSIDIARY
Independent Auditors' Report.............................. F-42
Consolidated Balance Sheets as of December 15, 1999 and
December 26, 1998....................................... F-44
Consolidated Statements of Income for the Year Ended
December 26, 1998 and for the Period from December 27,
1998 to December 15, 1999............................... F-46
Consolidated Statements of Stockholders' (Deficit) Equity
for the Period from December 27, 1998 to December 15,
1999 and the Year Ended December 26, 1998............... F-47
Consolidated Statements of Cash Flows for the Period from
December 27, 1998 to December 15, 1999 and the Year
Ended December 26, 1998................................. F-48
Notes to the Consolidated Financial Statements............ F-49

CLINFORCE, INC.
Report of Independent Auditors............................ F-57
Consolidated Statements of Assets Acquired and Liabilities
Assumed as of December 31, 2000 and 1999................ F-58
Consolidated Statements of Operating Revenues and Expenses
for the Years Ended December 31, 2000 and 1999.......... F-59
Notes to the Consolidated Statements...................... F-60

HERITAGE PROFESSIONAL EDUCATION, LLC
Report of Independent Auditors............................ F-66
Balance Sheet as of December 25, 2000..................... F-67
Statement of Income for the Period from January 1, 2000
through December 25, 2000............................... F-68
Statement of Members' Deficit for the Period from January
1, 2000 through December 25, 2000....................... F-69
Statement of Cash Flows for the Period from January 1,
2000 through December 25, 2000.......................... F-70
Notes to Financial Statements............................. F-71

F-1

CROSS COUNTRY, INC.

SUPPLEMENTARY QUARTERLY FINANCIAL INFORMATION

(UNAUDITED, AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- --------

1999(A)
Revenue from services................................ $ 35,091 $52,636
Gross profit......................................... $ 7,876 11,815
Income from continuing operations.................... $ (59) $ (88)
Loss from discontinued operations.................... (78) (117)
-------- -------
Net loss............................................. $ (137) $ (205)
======== =======
Basic and diluted earnings per share................. $ (0.01) $ (0.01)
======== =======

2000
Revenue from services................................ $ 89,584 $ 88,066 $ 92,810 $97,230
Gross profit......................................... $ 22,522 $ 23,258 $ 24,275 $24,540
Income from continuing operations.................... $ 1,187 $ 1,293 $ 2,231 $ 1,945
Loss from discontinued operations.................... (286) (402) (708) (662)
-------- -------- -------- -------
Net income........................................... $ 901 $ 891 $ 1,523 $ 1,283
======== ======== ======== =======
Basic and diluted earnings per share................. $ 0.04 $ 0.04 $ 0.07 $ 0.05
======== ======== ======== =======

2001
Revenue from services................................ $103,872 $118,835 $133,486
Gross profit......................................... $ 24,870 $ 30,738 $ 34,099
Income from continuing operations.................... $ 1,072 $ 2,146 $ 3,922
(Loss) income from discontinued operations........... (1,063) 519 --
-------- -------- --------
Net income........................................... $ 9 $ 2,665 $ 3,922
======== ======== ========
Basic and diluted earnings per share................. $ -- $ 0.11 $ 0.17
======== ======== ========

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

(a) On July 29, 1999, we acquired the assets of Cross Country Staffing. Third
quarter 1999 reflects results of operations from July 30 through
September 30, 1999. Fourth quarter 1999 results include the Travcorps
acquisition from December 16, 1999, the date of its acquisition, through
December 31, 1999.

F-2

CROSS COUNTRY, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(DOLLAR AMOUNTS IN THOUSANDS)

SEPTEMBER 30,
2001
-------------
(UNAUDITED)

Current assets:
Cash...................................................... $ --
Accounts receivable, net.................................. 82,848
Other current assets...................................... 12,525
--------
Total current assets........................................ 95,373
Property and equipment, net................................. 9,622
Goodwill, net............................................... 220,138
Other identifiable intangible assets, net................... 35,447
Other assets................................................ 194
--------
Total assets................................................ $360,774
========
Current liabilities:
Accounts payable and accrued expenses..................... $ 8,933
Accrued employee compensation and benefits................ 25,661
Current portion of long-term debt......................... 22,220
Note payable.............................................. 134
Net liabilities from discontinued operations.............. 311
Other current liabilities................................. 3,887
--------
Total current liabilities................................... 61,146
Interest rate swap.......................................... 2,603
Deferred income taxes....................................... 6,554
Long-term debt.............................................. 161,710
--------
Total liabilities........................................... 232,013
Commitments and contingencies
Stockholders' equity:
Common stock.............................................. 2
Additional paid-in capital................................ 119,099
Other stockholders' equity................................ 9,660
--------
Total stockholders' equity.................................. 128,761
--------
Total liabilities and stockholders' equity.................. $360,774
========

See accompanying notes to the condensed consolidated financial statements

F-3

CROSS COUNTRY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED, AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -------------------
2000 2001 2000 2001
-------- -------- -------- --------

Revenue from services................................ $92,810 $133,486 $270,460 $356,193
Operating expenses:
Direct operating expenses.......................... 68,535 99,387 200,405 266,486
Selling, general and administrative expenses....... 12,318 17,802 36,547 49,313
Bad debt expense................................... 217 456 681 1,318
Depreciation....................................... 332 627 942 1,790
Amortization....................................... 2,901 3,886 10,218 11,381
Non-recurring indirect transaction costs........... 123 -- 556 --
------- -------- -------- --------
Total operating expenses............................. 84,426 122,158 249,349 330,288
------- -------- -------- --------
Income from operations............................... 8,384 11,328 21,111 25,905
Other expenses:
Interest expense, net.............................. 3,893 4,375 11,631 12,907
------- -------- -------- --------
Income before income taxes and discontinued
operations......................................... 4,491 6,953 9,480 12,998
Income tax expense................................... (2,260) (3,031) (4,769) (5,858)
------- -------- -------- --------
Income before discontinued operations................ 2,231 3,922 4,711 7,140
Discontinued operations............................ (708) -- (1,396) (544)
------- -------- -------- --------
Net income........................................... $ 1,523 $ 3,922 $ 3,315 $ 6,596
======= ======== ======== ========
Net income/(loss) per common share- basic and
diluted:
Income before discontinued operations.............. $ 0.10 $ 0.17 $ 0.20 $ 0.30
Discontinued operations............................ (0.03) 0.00 (0.06) (0.02)
------- -------- -------- --------
Net income........................................... $ 0.07 $ 0.17 $ 0.14 $ 0.28
======= ======== ======== ========
Weighted average common shares outstanding........... 23,205 23,206 23,205 23,206

See accompanying notes to the condensed consolidated financial statements

F-4

CROSS COUNTRY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, AMOUNTS IN THOUSANDS)

NINE MONTHS ENDED
SEPTEMBER 30,
-------------------
2000 2001
-------- --------

NET CASH PROVIDED BY OPERATING ACTIVITIES................... $ 8,703 $ 17,172

INVESTING ACTIVITIES
Acquistions................................................. -- (35,030)
Purchase of property and equipment.......................... (1,043) (3,553)
Increase in software development costs...................... (1,235)
Other investing activities.................................. -- 28
------- --------
Net cash used in investing activities....................... (1,043) (39,790)

FINANCING ACTIVITIES
Debt issuance costs......................................... -- (982)
Repayment of debt........................................... (53,883) (142,200)
Proceeds from issuance of debt.............................. 41,395 165,800
------- --------
Net cash provided by (used in) financing activities......... (12,488) 22,618
Change in cash.............................................. (4,828) --
Cash at beginning of period................................. 4,828 --
------- --------
Cash at end of period....................................... $ -- $ --
======= ========

See accompanying notes to the condensed consolidated financial statements

F-5

CROSS COUNTRY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2001 (UNAUDITED)

1. BASIS OF PRESENTATION

The condensed consolidated financial statements include the accounts of
Cross Country, Inc. and its wholly-owned direct and indirect subsidiaries (the
"Company"). All material intercompany transactions and balances have been
eliminated in consolidation. The accompanying condensed consolidated financial
statements have been prepared in accordance with accounting principles generally
accepted in the United States for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and notes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. These operating results
are not necessarily indicative of the results that may be expected for the
fiscal year ending December 31, 2001. The unaudited interim condensed
consolidated financial statements should be read in conjunction with the audited
consolidated financial statements and notes thereto for the fiscal year ended
December 31, 2000 included in the Company's Form S-1 Registration Statement.

2. RECLASSIFICATION

Certain prior year amounts have been reclassified to conform to the current
period's presentation.

3. EARNINGS PER SHARE

Options to purchase shares of common stock were not included in computing
diluted earnings per share because their effects were antidilutive for the
respective periods.

4. ACQUISITIONS

In May 2001, the Company acquired Gill/Balsano Consulting, L.L.C.
(Gill/Balsano), a healthcare management consulting firm for $1.8 million in cash
and potential earnout payments of $2.0 million. The excess of purchase price
over the fair market value of the assets acquired of approximately $1.7 million
was allocated to goodwill. In March 2001, the company acquired all of the
outstanding stock of two subsidiaries that comprise ClinForce, Inc., a Delaware
corporation that provides temporary staffing and permanent placement of clinical
trials support services personnel, for approximately $32.4 million. The purchase
price exceeded the fair value of the assets acquired less liabilities assumed by
approximately $29.2 million of which $3.4 million was allocated to certain
identifiable intangible assets ($2.1 million--trademarks,
$0.9 million--workforce $0.4 million--hospital relocations.) The remaining
$25.8 million was allocated to goodwill. The transaction was primarily funded
through the issuance of additional debt. Both acquisitions were accounted for by
the purchase method of accounting and, accordingly, their results of operations
have been included in the consolidated condensed statement of operations from
their respective dates of acquisition.

The following unaudited pro forma summary presents the consolidated results
of operations as if the ClinForce (March 2001) and Heritage (December 2000)
acquisitions had occurred as of the beginning of each period presented, after
giving effect to certain adjustments, including amortization of goodwill and
specifically identifiable intangibles, interest expense incurred on additional
borrowings and related income tax effects. The pro forma financial information
does not purport to be indicative of the

F-6

CROSS COUNTRY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 30, 2001 (UNAUDITED)

4. ACQUISITIONS (CONTINUED)
results of operations that would have occurred had the transactions taken place
at the beginning of periods presented or of future results of operations.

NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------
2000 2001
---------- ----------
(UNAUDITED, AMOUNTS IN
THOUSANDS)

Revenue from services....................................... $293,353 $363,886
======== ========
Net income.................................................. $ 3,070 $ 6,479
======== ========
Net income per common share--basic and diluted.............. $ 0.13 $ 0.28
======== ========

5. DISPOSAL OF BUSINESS

In May 2001, the company completed the sale of HospitalHub Inc., which was
previously reflected as a discontinued operation. The actual loss on the
disposal, including shutdown costs from the measurement date, was approximately
$1.0 million. An additional charge of $0.5 million was recognized during the
nine months ended September 30, 2001 to adjust the original estimate of
$0.5 million recognized at December 31, 2000. As of September 30, 2001,
estimated future cash expenditures related to the disposition of approximately
$0.3 million are included in net liabilities from discontinued operations on the
condensed consolidated balance sheet.

6. COMPREHENSIVE INCOME

The company has adopted Financial Accounting Statement (FAS) No. 130,
Comprehensive Income, which requires that an enterprise: 1) classify items of
other comprehensive income by their nature in the financial statements; and
b) display the accumulated balance of other comprehensive income separately from
retained earnings and additional paid-in capital in the equity section of the
balance sheet. The items of other comprehensive income that are typically
required to be displayed are foreign currency items, minimum pension liability
adjustments and unrealized gains and losses on certain investments in debt and
equity securities. There were no components of other comprehensive income or
loss besides the Company's consolidated net income for the three and nine month
periods ending September 30, 2000. During the three and nine month periods
ending September 30, 2001, the Company recorded the fair value of the interest
rate swap transaction which resulted in a reduction in consolidated
stockholder's equity of approximately $0.3 million and $1.2 million,
respectively.

7. INTEREST RATE SWAP

The Company is party to an interest rate swap agreement which effectively
fixes the interest rate paid on $45.0 million of borrowings under our credit
facility at 6.71%, effective January 1, 2001, plus the applicable margin. The
swap matures in February 2003. In accordance with Statement of Financial
Accounting Standard No. 133, the Company has recorded the fair value of this
instrument, as a liability of $2.6 million separately stated, on the condensed
balance sheets. Additionally, consolidated shareholders' equity has been
reduced, in the nine months ended September 30, 2001 by $1.2 million as a result
of this interest rate swap.

F-7

CROSS COUNTRY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 30, 2001 (UNAUDITED)

8. DEBT

In March 2001, the Company amended its credit facility. The amended credit
facility is comprised of (i) a revolving credit facility of up to
$30.0 million, including a swing-line sub-facility of $7.0 million and a letter
of credit sub-facility of $6.0 million, and (ii) a $144.9 million term loan
facility. The revolving credit facility matures on July 29, 2005 and the
term-loan facility has staggered maturities in 2001 through 2005. The unused
credit facility balance as of September 30, 2001 was $14.3 million.

9. SEGMENT DATA

Information on operating segments and a reconciliation to income before
income taxes and discontinued operations for the periods indicated are as
follows:

THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -------------------
2000 2001 2000 2001
-------- -------- -------- --------

Revenue from unaffiliated customers:
Healthcare Staffing................................ $88,555 $124,096 $258,225 $329,849
Other human capital management services............ 4,255 9,390 12,235 26,344
------- -------- -------- --------
$92,810 $133,486 $270,460 $356,193
======= ======== ======== ========

Contribution income:
Healthcare Staffing................................ $16,429 $ 20,215 $ 46,223 $ 51,434
Other human capital management services............ 316 1,150 1,241 3,502
Unallocated corporate overhead..................... (5,005) (5,524) (14,637) (15,860)
------- -------- -------- --------
EBITDA............................................... $11,740 $ 15,841 $ 32,827 $ 39,076
======= ======== ======== ========

Interest expense..................................... 3,893 4,375 11,631 12,907
Depreciation and Amortization........................ 3,233 4,513 11,160 13,171
Nonrecurring indirect transaction cost............... 123 -- 556 --
------- -------- -------- --------
Income before income taxes and discontinued
operations........................................... $ 4,491 $ 6,953 $ 9,480 $ 12,998
======= ======== ======== ========

Contribution income is defined as earnings before interest, taxes,
depreciation, amortization and expenses not specifically identified to a
reporting segment. EBITDA is defined as income before interest, income taxes,
depreciation, amortization and non-recurring indirect transaction costs. EBITDA
and contribution income are not measures of financial performance under
generally accepted accounting principles and are only used by management when
assessing segment performance.

10. CONTINGENCIES

The Company is contingently liable for total potential earnout payments of
approximately $11.7 million relating to its acquisitions of Heritage,
Gill/Balsano, and E-staff. Each of these earnouts is based on profitability
measures as defined by their respective purchase agreements. Upon payment, the
earnouts will be allocated to goodwill as additional purchase price.

F-8

CROSS COUNTRY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEPTEMBER 30, 2001 (UNAUDITED)

10. CONTINGENCIES (CONTINUED)
The Company is subject to legal proceedings and claims that arise in the
ordinary course of its business. In the opinion of management, the outcome of
these matters will not have a significant effect on the Company's consolidated
financial position or results of operations.

11. SIGNIFICANT ACCOUNTING PRONOUNCEMENTS

In July 2001, the Financial Accounting Standards Board issued FAS No. 141,
Business Combinations and FAS No. 142, Intangible Assets. FAS 141 eliminates the
pooling-of-interests method of accounting for business combinations except for
qualifying business combinations that were initiated before July 1, 2001.
FAS 142 further clarifies the criteria to recognize intangible assets separately
from goodwill and promulgates that goodwill and certain intangible assets not be
amortized. Instead, these assets will be reviewed for impairment annually with
any related losses recognized in earnings when incurred. These standards will
apply to us beginning January 1, 2002 for existing intangible assets and
July 1, 2001 for business combinations completed after June 30, 2001. The
Company is in the process of assessing the impact of these standards and will
adopt these standards prospectively.

12. SUBSEQUENT EVENT

On October 30, 2001, the Company completed its initial public offering of
7,812,500 shares of common stock at $17.00 per share. Additionally, the
underwriters exercised the over-allotment option of 1,171,875 shares, bringing
the total number of shares issued to 8,984,375. Total proceeds received by the
company, net of estimated expenses related to the initial public offering were
$138.8 million. The proceeds were used to repay $95.7 million of its outstanding
balance under the term loan portion of its senior secured credit facility, and
$40.3 million to redeem the Company's outstanding senior subordinated
pay-in-kind notes, including the associated redemption premium. The remainder of
the proceeds will be used for general corporate purposes or other acquisitions.

F-9

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Board of Directors and Stockholders
Cross Country, Inc.

We have audited the accompanying consolidated balance sheets of Cross
Country, Inc. as of December 31, 1999 and 2000 and the related consolidated
statements of operations, stockholders' equity and cash flows for the period
from July 30, 1999 to December 31, 1999 and the year ended December 31, 2000.
Our audit also included the financial statement schedule listed in the Index at
Item 14(a). These financial statements and schedule are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Cross Country, Inc. at December 31, 1999 and 2000, and the results of their
operations and their cash flows for the period from July 30, 1999 to
December 31, 1999 and the year ended December 31, 2000, in conformity with
accounting principles generally accepted in the United States. Also, in our
opinion, the related financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, present fairly, in all
material respects, the information set forth therein.

/s/ ERNST & YOUNG LLP

West Palm Beach, Florida
May 7, 2001, except for the third paragraph of
Note 11, as to which the date is August 23, 2001

F-10

CROSS COUNTRY, INC.

CONSOLIDATED BALANCE SHEETS

DECEMBER 31
---------------------------
1999 2000
------------ ------------

ASSETS
Current assets:
Cash...................................................... $ 4,827,877 $ --
Accounts receivable, less allowance for doubtful accounts
of $2,144,110 in 1999 and $2,087,747 in 2000............ 50,243,772 65,087,380
Deferred income taxes..................................... 1,779,592 3,140,522
Income taxes receivable................................... 2,936,436 2,076,471
Prepaid rent on employees' apartments..................... 2,922,723 3,309,673
Deposits on employees' apartments, net of allowance of
$300,445 in 1999 and $418,775 in 2000................... 1,518,071 1,055,106
Other current assets...................................... 449,595 2,032,437
------------ ------------
Total current assets........................................ 64,678,066 76,701,589
Property and equipment, net of accumulated depreciation and
amortization of $3,470,984 in 1999 and $5,024,756 in
2000...................................................... 3,975,129 6,168,505
Trademark, net of accumulated amortization of $158,644 in
1999 and $746,669 in 2000................................. 14,541,356 13,953,331
Goodwill, net of accumulated amortization of $2,417,217 in
1999 and $10,767,664 in 2000.............................. 200,315,122 199,373,353
Other identifiable intangible assets, net of accumulated
amortization of $949,236 in 1999 and $3,746,200 in 2000... 15,480,764 12,683,800
Debt issuance costs, net of accumulated amortization of
$746,341 in 1999 and $2,616,598 in 2000................... 10,475,198 8,604,941
Other assets................................................ 229,634 140,148
------------ ------------
Total assets................................................ $309,695,269 $317,625,667
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 4,677,411 $ 6,445,501
Accrued employee compensation and benefits................ 13,818,840 17,430,804
Accrued expenses.......................................... 5,963,985 3,801,172
Current portion of long-term debt......................... 5,120,000 12,400,000
Note payable and capital lease obligation................. 54,972 484,108
Net liabilities from discontinued operations.............. 309,670 534,999
Other current liabilities................................. 735,219 1,229,840
------------ ------------
Total current liabilities................................... 30,680,097 42,326,424
Interest rate swap.......................................... -- --
Deferred income taxes....................................... 6,374,436 7,571,311
Long-term debt.............................................. 153,899,000 144,388,000
------------ ------------
Total liabilities........................................... 190,953,533 194,285,735
Commitments and contingencies
Stockholders' equity:
Common stock, Class A--$.0001 par value; 100,000,000
shares authorized; 22,445,104 shares issued and
outstanding at December 31, 1999 and 2000............... 2,245 2,245
Common stock, Class B--$.0001 par value; 870,203 shares
authorized; 760,284 shares issued and outstanding at
December 31, 1999 and 2000.............................. 76 76
Additional paid-in capital................................ 119,080,880 119,080,880
Accumulated other comprehensive income.................... -- --
(Accumulated deficit) retained earnings................... (341,465) 4,256,731
------------ ------------
Total stockholders' equity.................................. 118,741,736 123,339,932
------------ ------------
Total liabilities and stockholders' equity.................. $309,695,269 $317,625,667
============ ============

See accompanying notes.

F-11

CROSS COUNTRY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

PERIOD FROM
JULY 30, 1999 TO YEAR ENDED
DECEMBER 31, DECEMBER 31,
1999 2000
----------------- ------------

Revenue from services....................................... $87,727,219 $367,689,902
Operating expenses:
Direct operating expenses................................. 68,036,524 273,094,434
Selling, general and administrative expenses.............. 9,256,719 49,027,376
Bad debt expense.......................................... 511,341 432,973
Depreciation.............................................. 154,590 1,323,397
Amortization.............................................. 4,421,577 13,701,384
Non-recurring indirect transaction costs.................. -- 1,289,217
----------- ------------
Total operating expenses.................................... 82,380,751 338,868,781
Income from operations...................................... 5,346,468 28,821,121
Other expenses:
Interest expense, net..................................... 4,821,302 15,435,236
Income before income taxes and discontinued operations...... 525,166 13,385,885
Income tax expense.......................................... (671,917) (6,730,024)
(Loss) income before discontinued operations................ (146,751) 6,655,861
Discontinued operations:
Loss from discontinued operations of HospitalHub, less
income tax benefit of $140,710 in 1999 and $1,159,013 in
2000.................................................... (194,714) (1,603,833)
Loss on disposal of HospitalHub, less income tax benefit
of $0 in 1999 and $327,963 in 2000...................... -- (453,832)
----------- ------------
Net (loss) income........................................... $ (341,465) $ 4,598,196
=========== ============
Net (loss) income per common share--basic and diluted:
(Loss) income before discontinued operations.............. $ (.01) $ .29
Discontinued operations................................... (.01) (.09)
----------- ------------
Net (loss) income........................................... $ (.02) $ .20
=========== ============
Weighted average common shares outstanding.................. 15,291,749 23,205,388
=========== ============

See accompanying notes.

F-12

CROSS COUNTRY, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

CLASS A CLASS B ACCUMULATED (ACCUMULATED
COMMON STOCK COMMON STOCK ADDITIONAL OTHER DEFICIT)
--------------------- ------------------- PAID-IN COMPREHENSIVE RETAINED
SHARES DOLLARS SHARES DOLLARS CAPITAL INCOME EARNINGS
---------- -------- -------- -------- ------------ -------------- ------------

Balance at July 29, 1999 (date
of incorporation)............ 13,114,880 $1,312 -- $ -- $ 79,588,811 $ -- $ --
Issuance of common stock in
conjunction with issuance
of long-term debt.......... 380,163 38 760,284 76 6,919,924 -- --
Issuance of common stock in
exchange for employee
services................... 132,010 13 -- -- 470,627 -- --
Issuance of common stock in
conjunction with
acquisition of TravCorps
Corporation................ 8,817,961 882 -- -- 32,101,518 -- --
---------- ------ -------- ---- ------------ --------- ----------
Net loss..................... -- -- -- -- -- -- (341,465)
---------- ------ -------- ---- ------------ --------- ----------
Balance at December 31, 1999... 22,445,014 2,245 760,284 76 119,080,880 -- (341,465)
Net income................... -- -- -- -- -- -- 4,598,196
---------- ------ -------- ---- ------------ --------- ----------
Balance at December 31, 2000... 22,445,014 2,245 760,284 76 119,080,880 -- 4,256,731
========== ====== ======== ==== ============ ========= ==========

TOTAL
STOCKHOLDERS'
EQUITY
-------------

Balance at July 29, 1999 (date
of incorporation)............ $ 79,590,123
Issuance of common stock in
conjunction with issuance
of long-term debt.......... 6,920,038
Issuance of common stock in
exchange for employee
services................... 470,640
Issuance of common stock in
conjunction with
acquisition of TravCorps
Corporation................ 32,102,400
------------
Net loss..................... (341,465)
------------
Balance at December 31, 1999... 118,741,736
Net income................... 4,598,196
------------
Balance at December 31, 2000... 123,339,932
============

See accompanying notes.

F-13

CROSS COUNTRY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

PERIOD FROM
JULY 30, 1999 TO YEAR ENDED
DECEMBER 31, DECEMBER 31,
1999 2000
---------------- ------------

OPERATING ACTIVITIES
Net (loss) income........................................... $ (341,465) $ 4,598,196
Adjustments to reconcile net (loss) income to net cash
provided by operating activities:
Amortization.............................................. 4,421,577 13,701,384
Depreciation.............................................. 154,590 1,323,397
Bad debt expense.......................................... 511,341 432,973
Cumulative interest due at maturity......................... 1,537,000 3,839,000
Estimated loss on disposal of discontinued operations....... -- 453,832
Changes in operating assets and liabilities:
Accounts receivable....................................... (1,874,246) (15,096,581)
Prepaid rent, deposits, and other current assets.......... (3,381,084) (1,385,374)
Accounts payable and accrued expenses..................... 1,793,712 2,679,076
Net liabilities from discontinued operations.............. 309,670 (228,503)
Other current liabilities................................. 3,170,112 79,621
------------- ------------
Net cash provided by operating activities................... 6,301,207 10,397,021
------------- ------------
INVESTING ACTIVITIES
Acquisition of TravCorps, net cash acquired................. 1,787,434 --
Acquisition of covenant not to compete...................... (250,000) --
Issuance of common stock.................................... 10,000 --
Acquisition of E-Staff, Inc................................. -- (1,500,000)
Acquisition of Heritage Professional Education, LLC......... -- (6,200,000)
(Increase) decrease in other assets......................... -- (6,205)
Increase in other liabilities............................... -- 1,196,875
Purchase of property and equipment.......................... (167,170) (1,992,109)
Increase in software development costs...................... -- (1,082,595)
------------- ------------
Net cash provided by (used in) investing activities......... 1,380,264 (9,584,034))
------------- ------------
FINANCING ACTIVITIES
Debt issuance costs......................................... 494,535 --
Repayment of debt........................................... (148,305,305) (65,258,097)
Proceeds from issuance of debt.............................. 144,700,000 59,617,233
------------- ------------
Net cash (used in) provided by financing activities......... (3,110,770) (5,640,864)
------------- ------------
Change in cash.............................................. 4,570,701 (4,827,877)
Cash at beginning of period................................. 257,176 4,827,877
------------- ------------
Cash at end of period....................................... $ 4,827,877 $ --
============= ============
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING
ACTIVITIES
Issuance of common stock in connection with issuance of
debt...................................................... $ 6,920,038 $ --
Issuance of common stock with TravCorps acquisition......... $ 32,102,400 $ --
Issuance of common stock in exchange for employee
services.................................................. $ 470,640 $ --
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid............................................... $ 3,005,467 $ 10,711,873
Income taxes paid........................................... $ 437,873 $ 221,467

See accompanying notes.

F-14

CROSS COUNTRY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1999 AND 2000

1. ORGANIZATION AND BASIS OF PRESENTATION

On July 29, 1999, Cross Country Staffing, Inc. (CCS), a Delaware
corporation, was established through an acquisition of certain assets and
liabilities of Cross Country Staffing (the Partnership), a Delaware general
partnership. The acquisition included certain identifiable intangible assets
primarily related to proprietary databases and contracts. The Partnership was
engaged in the business of providing nurses and other allied health personnel to
health care providers primarily on a contract basis. CCS recorded the assets and
certain assumed liabilities, as defined in the asset purchase agreement, at fair
market value. The purchase price of approximately $189,000,000 exceeded the fair
market value of the assets less the assumed liabilities by approximately
$167,537,000, of which $20,890,000 was allocated to certain identifiable
intangible assets ($8,900,000--trademark, $8,440,000--databases,
$1,040,000--workforce, and $2,510,000--hospital relations), and $250,000
relating to a covenant not to compete. The remaining $146,397,000 was allocated
to goodwill.

On December 16, 1999, CCS entered into a Plan of Merger with TravCorps
Corporation (TravCorps). TravCorps and its wholly-owned subsidiary, Cejka &
Company (Cejka) provide flexible staffing, search, consulting and related
outsourced services to health care providers throughout the United States.
Pursuant to the Plan of Merger on December 16, 1999, all outstanding shares of
TravCorps' common stock were exchanged for common stock in CCS and TravCorps
became a wholly-owned subsidiary of CCS. The fair value of the shares of common
stock issued to the stockholders of TravCorps, as determined by a valuation of
the common stock as of December 16, 1999, was $32,102,000. The purchase price
exceeded the fair value of the net tangible assets acquired by approximately
$66,575,000, of which $10,240,000 was allocated to certain identifiable
intangible assets ($5,800,000--trademark, $2,910,000--databases,
$630,000--workforce, and $900,000--hospital relations). The remaining
$56,335,000 was allocated to goodwill. The acquisition was accounted for as a
purchase and, accordingly, the accompanying consolidated financial statements
include the results of TravCorps from the acquisition date.

Effective October 1, 2000, TravCorps changed its name to TVCM, Inc. (TVCM).

Effective October 10, 2000, CCS changed its name to Cross Country
TravCorps, Inc. (CCT). Subsequent to December 31, 2000, CCT changed its name to
Cross Country, Inc. (the Company). The Company is primarily engaged in the
business of providing temporary health care staffing services to acute and
subacute care facilities nationwide.

The consolidated financial statements include the accounts of the Company
and its wholly-owned direct and indirect subsidiaries, TVCM (f/k/a TravCorps),
Cejka, CC Staffing, Inc., E-Staff, Inc. (E-Staff), HospitalHub, Inc. (f/k/a
Ashley One, Inc.) (HospitalHub), and Cross Country Seminars, Inc. (f/k/a
CCS/Heritage Acquisition Corp.) (Cross Country Seminars). All material
intercompany transactions and balances have been eliminated in consolidation.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

The preparation of the consolidated financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts in
the consolidated financial statements and accompanying notes. Actual results
could differ from those estimates.

F-15

CROSS COUNTRY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999 AND 2000

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to concentrations
of credit risk as defined by Financial Accounting Standards Board (FASB)
Statement No. 105, DISCLOSURE OF INFORMATION ABOUT FINANCIAL INSTRUMENTS WITH
OFF-BALANCE-SHEET RISK AND FINANCIAL INSTRUMENTS WITH CONCENTRATIONS OF CREDIT
RISK, consist principally of accounts receivable. The Company's customers are
health care providers and accounts receivable represent amounts due from these
providers. The Company performs ongoing credit evaluations of its customers'
financial conditions and, generally, does not require collateral. Overall, based
on the large number of customers in differing geographic areas throughout the
United States and its territories, the Company believes the concentration of
credit risk is limited. As of December 31, 1999, approximately 8% of the
outstanding accounts receivable were due from one customer and as of
December 31, 2000, approximately 9% of the outstanding accounts receivable were
due from four customers.

PREPAID RENT AND DEPOSITS

The Company leases a number of apartments for its employees under short-term
agreements (typically three to six months), which generally coincide with each
employee's staffing contract. As a condition of these agreements, the Company
places security deposits on the leased apartments. Prepaid rent and deposits
relate to these short-term agreements.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost, less accumulated depreciation.
Depreciation is determined on a straight-line basis over the estimated useful
lives of the assets, which generally range from three to seven years. Leasehold
improvements are depreciated over the lives of the related leases or the useful
life of an individual lease, whichever is shorter.

Certain software development costs are capitalized in accordance with the
provisions of Statement of Position 98-1, ACCOUNTING FOR THE COSTS OF COMPUTER
SOFTWARE DEVELOPED OR OBTAINED FOR INTERNAL USE and FASB Statement No. 86,
ACCOUNTING FOR COSTS OF COMPUTER SOFTWARE TO BE SOLD, LEASED, OR OTHERWISE
MARKETED. Such costs include charges for consulting services and costs for
personnel associated with programming, coding, and testing such software.
Amortization of capitalized software costs begins when the software is placed
into service and is included in depreciation expense in the accompanying
consolidated statements of operations. Software development costs are being
amortized using the straight-line method over five years or revenue to projected
revenue, if greater. Through December 31, 2001, the Company has not recognized
any revenue from the sale of software.

RESERVES FOR CLAIMS

Workers' compensation and health care benefits are provided under partially
self-insured plans. The Company records its estimate of the ultimate cost of,
and reserves for, workers' compensation and health care benefits based on
actuarial computations using the loss history as well as industry statistics.
Furthermore, in determining its reserves, the Company includes reserves for
estimated claims incurred but not reported.

F-16

CROSS COUNTRY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999 AND 2000

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The ultimate cost of workers' compensation and health care benefits will
depend on actual costs incurred to settle the claims and may differ from the
amounts reserved by the Company for those claims. Accruals for workers'
compensation claims and health care benefits are included in accrued employee
compensation and benefits in the consolidated balance sheets.

GOODWILL AND INTANGIBLE ASSETS

Goodwill represents the excess of purchase price over the fair value of net
assets acquired. Goodwill is being amortized using the straight-line method over
its estimated useful life ranging from 5 to 25 years. Other identifiable
intangible assets, net, consist of database (approximately $10,550,000 and
$8,259,000), workforce (approximately $1,593,000 and $1,315,000) and hospital
relations (approximately $3,338,000 and $3,110,000) at December 31, 1999 and
December 31, 2000, respectively. Identifiable intangible assets are being
amortized using the straight-line method over their estimated useful lives
ranging from 4.5 to 25 years. In accordance with FASB Statement No. 121,
ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO
BE DISPOSED OF, long-lived assets are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be
recoverable. The Company periodically reviews goodwill to determine if any
impairment exists based upon projected, undiscounted net cash flows of the
Company. Recoverability of intangible assets is measured by comparison of the
carrying amount of the asset to net future cash flows expected to be generated
from the asset. Identifiable intangible assets not covered by FASB Statement
No. 121 and goodwill not identified with assets that are subject to an
impairment loss are evaluated in accordance with Accounting Principles Board
(APB) Opinion No. 17, INTANGIBLE ASSETS. At December 31, 1999 and December 31,
2000 the Company believes that no impairment of goodwill or identifiable
intangible assets exists.

DEBT ISSUANCE COSTS

Deferred costs related to the issuance of debt are being amortized on a
straight-line basis, which approximates the effective interest method, over the
six-year term of the debt. Debt issuance costs of approximately $11,222,000,
less accumulated amortization of approximately $746,000 and $2,617,000 at
December 31, 1999 and December 31, 2000, respectively, are recorded in the
consolidated balance sheets.

REVENUE RECOGNITION

Revenue from services consists primarily of temporary staffing revenues.
Revenue is recognized when services are rendered. Accordingly, accounts
receivable includes an accrual for employees' time worked but not yet invoiced.
At December 31, 1999 and December 31, 2000, the amounts accrued are
approximately $5,526,000 and $14,970,000, respectively.

Revenues on permanent and temporary placements are recognized when services
provided are substantially completed. The Company does not, in the ordinary
course of business, give refunds. If a candidate leaves a permanent placement
within a short period of time I.E., one month, it is customary for us to seek a
replacement at no additional cost. Allowances are established as considered
necessary to estimate significant losses due to placed candidates not remaining
employed for the Company's

F-17

CROSS COUNTRY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999 AND 2000

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
guarantee period. During 2000, 1999 and 1998, such replacements and refunds were
not material and, accordingly, related allowances were not recorded.

STOCK-BASED COMPENSATION

The Company, from time to time, grants stock options for a fixed number of
common shares to employees. The Company accounts for employee stock option
grants in accordance with Accounting Principles Board Opinion No. 25, ACCOUNTING
FOR STOCK ISSUED TO EMPLOYEES, and accordingly, recognizes no compensation
expense for the stock option grants when the exercise price of the options
equals, or is greater than, the market value of the underlying stock on the date
of grant. Accordingly, the Company did not recognize any compensation cost
during the period from July 30, 1999 to December 31, 1999 or the year ended
December 31, 2000 for stock based employee compensation awards.

ADVERTISING

The Company's advertising expense consists primarily of print media, online
advertising and promotional material. Advertising costs are expensed as incurred
and were approximately $404,000 for the period from July 30, 1999 to
December 31, 1999 and $2,450,000 for the year ended December 31, 2000.

DERIVATIVE FINANCIAL INSTRUMENTS

The Company is exposed to market risks arising from changes in interest
rates. To protect against such risks, the Company has one derivative financial
instrument, an interest rate swap agreement, which is more fully disclosed in
Note 13, INTEREST RATE SWAP.

COMPREHENSIVE INCOME

The Company has adopted FASB Statement No. 130, COMPREHENSIVE INCOME, which
requires that an enterprise: (a) classify items of other comprehensive income by
their nature in the financial statements; and (b) display the accumulated
balance of other comprehensive income separately from retained earnings and
additional paid-in capital in the equity section of the balance sheet. The items
of other comprehensive income that are typically required to be displayed are
foreign currency items, minimum pension liability adjustments and unrealized
gains and losses on certain investments in debt and equity securities. There are
no other components of comprehensive income or loss other than the Company's
consolidated net (loss) income for the period from July 30, 1999 to
December 31, 1999 and the year ended December 31, 2000.

During 1998, the FASB issued Statement No. 133, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES, which was effective beginning January 1,
2001. FASB Statement No. 133 requires companies to recognize all of its
derivative instruments as either assets or liabilities in the statement of
financial position at fair value. The accounting for changes in the fair value
(i.e., gains or losses) of a derivative instrument depends on whether it has
been designated and qualifies as part of a hedging relationship and further, on
the type of hedging relationship. For those derivative instruments that are
designated and qualify as hedging instruments, a company must designate the
hedging instrument,

F-18

CROSS COUNTRY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999 AND 2000

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
based upon the exposure being hedged, as either a fair value hedge, cash flow
hedge or a hedge of a net investment in a foreign operation. As the Company's
derivative instrument is designated and qualifies as a cash flow hedge (i.e.,
hedging the exposure to variability in expected future cash flows that is
attributable to a particular risk), the effective portion of the gain or loss on
the derivative instrument is reported as a component of other comprehensive
income and reclassified into earnings in the same period or periods during which
the hedged transaction affects earnings. The remaining gain or loss on the
derivative instrument in excess of the cumulative change in the present value of
future cash flows of the hedged item, if any, is recognized in current earnings
during the period of change.

The Company implemented the provisions of FASB Statement No. 133 on
January 1, 2001. The implementation of FASB Statement No. 133 resulted in a
reduction in consolidated stockholders' equity of approximately $910,000 as of
January 1, 2001.

INCOME TAXES

RECENT ACCOUNTING PRONOUNCEMENTS

In December 1999, the Securities and Exchange Commission staff released
Staff Accounting Bulletin (SAB) No. 101, REVENUE RECOGNITION. SAB No. 101
provides interpretive guidance on the recognition, presentation, and disclosure
of revenue in financial statements. The Company believes that its current
revenue recognition policies comply with SAB No. 101.

In July 2001, the FASB issued Statement No. 141, BUSINESS COMBINATIONS and
Statement No. 142, INTANGIBLE ASSETS. FASB Statement No. 141 eliminates the
pooling-of-interests method of accounting for business combinations except for
qualifying business combinations that were initiated before July 1, 2001. FASB
Statement No. 142 further clarifies the criteria to recognize intangible assets
separately from goodwill and promulgates that goodwill and certain intangible
assets not be amortized. Instead, these assets will be reviewed for impairment
annually with any related losses recognized in earnings when incurred. These
standards will apply to the Company beginning January 1, 2002 for existing
intangible assets and July 1, 2001 for business combinations completed after
June 30, 2001.

RECLASSIFICATIONS

Certain amounts in the 1999 consolidated financial statements have been
reclassified to conform to the 2000 presentation.

3. ACQUISITIONS

Effective July 31, 2000, the Company acquired substantially all of the
assets of E-Staff, a Pennsylvania corporation, for $1,500,000. E-Staff is a
development-stage company creating an Internet, subscription-based
communication, scheduling, credentialing and training service business. The
acquisition met the accounting criteria of a purchase and, accordingly, the
accompanying consolidated

F-19

CROSS COUNTRY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999 AND 2000

3. ACQUISITIONS (CONTINUED)
financial statements include the results of E-Staff from the acquisition date.
The consideration for this acquisition included $1,500,000 in cash. In addition,
the asset purchase agreement provides for potential earnout payments of up to
$3,250,000 to the seller based on the profits of E-Staff over a three-year
period ending July 31, 2003. This contingent consideration is not related to the
seller's employment. Upon payment, the earnouts will be allocated to goodwill as
additional purchase price and amortized over the remaining life of the asset.
The excess of the aggregate purchase price over the fair market value of the
assets acquired of approximately $927,000 was allocated to goodwill and is being
amortized over five years.

Effective December 26, 2000, Cross Country Seminars acquired substantially
all of the assets of Heritage Professional Education, LLC (Heritage), a
Tennessee limited liability company. Heritage provides continuing professional
education courses to medical and healthcare personnel through seminars and study
programs servicing the healthcare industry. The acquisition met the accounting
criteria of a purchase and, accordingly, the accompanying consolidated financial
statements include the results of Heritage from the acquisition date. The
consideration for this acquisition included $6,200,000 in cash and a
post-closing adjustment of approximately $300,000, to be paid 90 days from the
closing date. In addition, the asset purchase agreement provides for potential
earnout payments of approximately $6,500,000 based on adjusted earnings before
interest, taxes, depreciation, and amortization (EBITDA) (as defined in the
asset purchase agreement) of Heritage over a three-year period ending
December 31, 2003. This contingent consideration is not related to the seller's
employment. Upon payment, the earnouts will be allocated to goodwill as
additional purchase price and amortized over the remaining life of the asset.
The excess of the aggregate purchase price over the fair market value of the
assets acquired of approximately $6,482,000 was allocated to goodwill and is
being amortized over 25 years.

On December 15, 2000, the Company entered into a stock purchase agreement to
acquire substantially all of the outstanding stock of two subsidiaries that
comprise ClinForce Inc., a Delaware corporation that provides temporary staffing
and permanent placement of clinical trials support services personnel. The
acquisition was consummated on March 16, 2001 and met the accounting criteria of
a purchase. The transaction was primarily funded through the issuance of
additional debt. The purchase price of approximately $31,000,000 exceeded the
fair value of assets acquired less liabilities assumed by approximately
$27,788,000 of which $3,400,000 was allocated to certain identifiable intangible
assets ($2,100,000--trademark, $890,000--workforce, $410,000--hospital
relations). The remaining $24,388,000 was allocated to goodwill and is being
amortized over 25 years. The purchase price was subject to a post-closing
adjustment based on changes in the net working capital of the acquired companies
between October 31, 2000 and March 16, 2001. During the quarter ended
September 30, 2001, the post closing adjustment of approximately $1.4 million
was calculated and allocated to goodwill as additional purchase price.

In May 2001, Cejka acquired substantially all of the assets of Gill/Balsano
Consulting, L.L.C. (Gill/ Balsano), a Delaware limited liability company.
Gill/Balsano provides management consulting services to the healthcare industry.
The acquisition met the accounting criteria of a purchase, and, accordingly, the
accompanying consolidated financial statements include the results of
Gill/Balsano from the acquisition date. The consideration for this acquisition
was $1,831,000 in cash. In addition, the asset purchase agreement provides for
potential earnout payments of approximately $1,995,000 based on

F-20

CROSS COUNTRY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999 AND 2000

3. ACQUISITIONS (CONTINUED)
adjusted EBITDA (as defined in the asset purchase agreement) of Gill/Balsano
over a three-year period ending March 31, 2004. This contingent consideration is
not related to the seller's employment. Upon payment, the earnouts will be
allocated to goodwill as additional purchase price and amortized over the
remaining life of the asset. The excess of the aggregate purchase price over the
fair market value of the assets acquired of approximately $1,674,000 was
allocated to goodwill and is being amortized over 25 years.

The following unaudited pro forma summary presents the consolidated results
of operations as if the Company's acquisitions had occurred as of the beginning
of each period presented, after giving effect to certain adjustments, including
amortization of goodwill and other specifically identifiable intangibles,
interest expense incurred on additional borrowings and related income tax
effects. E-staff's results of operations have been excluded from the pro forma
financial information as amounts are considered immaterial to the Company. The
pro forma financial information does not purport to be indicative of the results
of operations that would have occurred had the transactions taken place at the
beginning of the periods presented or of future results of operations.

PERIOD FROM
JULY 30, 1999 YEAR ENDED
TO DECEMBER 31, DECEMBER 31,
1999 2000
--------------- ------------

Revenue from services.................................... $151,847,118 $407,732,700
Net (loss) income........................................ $ (3,133,254) $ 4,611,097
Net (loss) income per common share--basic and diluted.... $ (0.20) $ 0.20

4. PROPERTY AND EQUIPMENT

At December 31, 1999 and December 31, 2000, property and equipment consist
of the following:

DECEMBER 31,
-------------------------
1999 2000
----------- -----------

Computer equipment......................................... $ 4,601,677 $ 4,830,242
Computer software.......................................... 875,672 3,900,076
Office equipment........................................... 548,190 760,527
Furniture and fixtures..................................... 736,551 833,786
Leasehold improvements..................................... 684,023 868,630
----------- -----------
7,446,113 11,193,261
Less accumulated depreciation and amortization............. (3,470,984) (5,024,756)
----------- -----------
$ 3,975,129 $ 6,168,505
=========== ===========

At December 31, 2000, computer software includes approximately $1,481,000 of
software development costs capitalized in accordance with the provisions of FASB
Statement No. 86.

F-21

CROSS COUNTRY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999 AND 2000

5. ACCRUED COMPENSATION AND BENEFITS

At December 31, 1999 and December 31, 2000 accrued employee compensation and
benefits consist of the following:

DECEMBER 31,
-------------------------
1999 2000
----------- -----------

Salaries................................................... $ 5,660,772 $ 6,903,347
Bonuses.................................................... 5,686,305 6,858,620
Accrual for workers' compensation claims................... 1,896,543 2,095,720
Accrual for health care benefits........................... 372,000 1,295,632
Accrual for vacation....................................... 203,220 277,485
----------- -----------
$13,818,840 $17,430,804
=========== ===========

6. LONG-TERM DEBT AND NOTE PAYABLE

At December 31, 1999 and December 31, 2000, long-term debt consists of the
following:

DECEMBER 31,
---------------------------
1999 2000
------------ ------------

Term Loan, interest at 9.46% at December 31, 1999 and 9.52%,
9.50%, and 9.41% for $65,000,000, $45,000,000 and
$4,880,000, respectively at December 31, 2000............. $120,000,000 $114,880,000
Revolving Loan Facility, interest at 9.46% and 10.50% for
$5,400,000 and $3,000,000, respectively, at December 31,
1999 and 11.25% and 9.40% for $1,250,000 and $6,200,000,
respectively at December 31, 2000......................... 8,400,000 7,450,000
Subordinated Pay-In-Kind Notes, interest at 12%............. 30,619,000 34,458,000
------------ ------------
159,019,000 156,788,000
Less current portion........................................ (5,120,000) (12,400,000)
------------ ------------
$153,899,000 $144,388,000
============ ============

On July 29, 1999, the Company entered into a $105 million senior secured
credit facility consisting of a $75,000,000 term loan and a $30,000,000
revolving loan facility. The term loan and the revolving loan facility bear
interest based on either an alternate base rate plus a margin of 2.00% and 1.75%
at December 31, 1999 and December 31, 2000 respectively, or LIBOR plus a margin
of 3.00% and 2.75% at December 31, 1999 and December 31, 2000 respectively,
(each as defined in the senior secured credit facility). During fiscal year
2000, the Company met certain covenants which provided for the above reduction
in interest rates. On December 16, 1999, the senior credit facility was
increased to $120 million. The Company has pledged all of the assets of the
Company as collateral for the senior credit facility.

In March 2001, the senior credit facility was amended to increase the term
loan facility to $144,900,000. The Company is required to pay a quarterly
commitment fee at a rate of 0.50% per year on unused commitments under the
revolving loan facility.

F-22

CROSS COUNTRY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999 AND 2000

6. LONG-TERM DEBT AND NOTE PAYABLE (CONTINUED)
The senior credit facility allows for the issuance of letters of credit in
an aggregate face amount at any time outstanding not in excess of $4,000,000 and
$5,000,000 at December 31, 1999 and December 31, 2000, respectively.
Additionally, swingline loans, as defined in the senior credit facility, not to
exceed an aggregate principal amount at any time outstanding of $7,000,000 are
available under the senior credit facility.

The senior credit facility requires that the Company meet certain covenants,
including the maintenance of certain debt and interest expense ratios, capital
expenditure limits, and the maintenance of a minimum level of EBITDA (as defined
in the senior credit facility). The senior credit facility also limits the
Company's ability to declare and pay cash dividends on its common stock.

On July 29, 1999, the Company issued $30,000,000 in senior subordinated
pay-in-kind notes to two financial institutions. The proceeds of the loan were
used by the Company solely to finance the CCS acquisition and to pay fees and
expenses incurred in connection therewith. The interest rate on the subordinated
notes is 12% per annum, compounded quarterly. The pay-in-kind notes represent
additional debt issued by the Company in lieu of cash payments for accrued
interest. The maturity date is the earlier of six months after the final
maturity of the term and revolving debt issuances (January 29, 2006) or change
in control of the Company.

In connection with the issuance of the subordinated debt, the Company issued
504,468 shares of its common stock to the financial institutions. Debt issuance
costs of $6,920,000 relating to this transaction were recorded, which
represented the fair market value of the shares at the time of issuance.

The revolving loan facility matures on July 29, 2005. The aggregate
scheduled maturities of the term notes, the subordinated notes and the revolving
loan facility are as follows:

YEAR ENDED DECEMBER 31:
- -----------------------

2001........................................................ $ 12,400,000
2002........................................................ 20,160,000
2003........................................................ 29,600,000
2004........................................................ 34,720,000
2005........................................................ 25,450,000
Thereafter.................................................. 34,458,000
------------
$156,788,000
============

On July 16, 2000, the Company entered into a note payable with a third
party. The proceeds from the note payable were used to pay the Company's
insurance premiums. Principal and interest are payable over an 11-month period
at an interest rate of 7.10%. At December 31, 2000, the outstanding balance was
$484,108.

7. EMPLOYEE BENEFIT PLANS

The Company maintains a voluntary defined contribution 401(k) profit-sharing
plan covering all eligible employees as defined in the plan documents. The plan
provides for a discretionary matching contribution, which is equal to a
percentage of each contributing participant's elective deferral, which the
Company, at its sole discretion, determines from year to year. Contributions by
the Company, net

F-23

CROSS COUNTRY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999 AND 2000

7. EMPLOYEE BENEFIT PLANS (CONTINUED)
of forfeitures, under this plan amounted to approximately $487,000 for the
period from July 30, 1999 to December 31, 1999, and $885,000 for the year ended
December 31, 2000.

TVCM employees were covered under a separate benefit plan for both 2000 and
1999. TVCM had a 401(k) defined contribution plan for eligible employees.
Eligible employees made pretax savings contributions to the 401(k) Plan of up to
20% of their earnings to a certain statutory limit. TVCM matched employee
contributions from 1% to 3% of compensation based on years of service.
Contributions to the 401(k) Plan were approximately $630,000 for the year ended
December 31, 2000. Effective fiscal 2001, TVCM employees participated in the
Company's defined contribution 401(k) profit-sharing plan.

8. COMMITMENTS AND CONTINGENCIES

The Company has entered into noncancelable operating lease agreements for
the rental of space. Future minimum lease payments associated with these
agreements are as follows:

YEAR ENDING DECEMBER 31:
- ------------------------

2001........................................................ $ 894,000
2002........................................................ 944,000
2003........................................................ 965,000
2004........................................................ 905,000
2005........................................................ 919,000
Thereafter.................................................. 1,557,000
----------
$6,184,000
==========

Rent expense related to office facilities was approximately $308,000 for the
period July 30, 1999 to December 31, 1999 and $1,527,000 for the year ended
December 31, 2000.

The Company is subject to legal proceedings and claims that arise in the
ordinary course of its business. In the opinion of management, the outcome of
these matters will not have a significant effect on the Company's consolidated
financial position or results of operations.

9. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts reported in the consolidated balance sheets for cash,
accounts receivable, accounts payable and accrued expenses approximate fair
value because of their short maturity. The carrying amount of the revolving
credit note and term loan approximates fair value because the interest rate is
tied to a quoted variable index.

F-24

CROSS COUNTRY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999 AND 2000

10. INCOME TAXES

The components of the income tax expense are as follows:

PERIOD FROM YEAR ENDED
JULY 30, 1999 TO DECEMBER 31,
DECEMBER 31, 1999 2000
------------------ -------------

Current............................................... $ 15,000 $5,407,103
Deferred.............................................. 516,207 (164,055)
-------- ----------
$531,207 $5,243,048
======== ==========

Significant components of the Company's deferred tax assets and liabilities
are as follows:

DECEMBER 31,
-------------------------
1999 2000
----------- -----------

Deferred tax assets:
Accrued and prepaid expenses............................. $ 1,038,863 $ 2,376,762
Allowance for doubtful accounts.......................... 347,492 841,844
Net operating loss carryforward.......................... 85,324 --
Other.................................................... 307,913 (78,084)
----------- -----------
1,779,592 3,140,522
Deferred tax liabilities:
Depreciation and amortization............................ (2,190,845) (3,720,933)
Identifiable intangibles................................. (4,183,591) (3,850,378)
----------- -----------
(6,374,436) (7,571,311)
----------- -----------
Net deferred taxes......................................... $(4,594,844) $(4,430,789)
=========== ===========

FASB Statement No. 109 requires a valuation allowance to reduce the deferred
tax assets reported if, based on the weight of the evidence, it is more likely
than not that some of or all of the deferred tax assets will not be realized.
After consideration of all the evidence, both positive and negative, management
has determined that a valuation allowance at December 31, 1999 and 2000 is not

F-25

CROSS COUNTRY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999 AND 2000

10. INCOME TAXES (CONTINUED)
necessary. The reconciliation of income tax computed at the U. S. federal
statutory rate to income tax expense is as follows:

DECEMBER 31,
-----------------------
1999 2000
--------- -----------

Tax at U. S. statutory rate................................. $ 183,808 $ 4,685,061
State taxes, net of federal benefit......................... 18,706 468,908
Non-deductible goodwill..................................... 50,686 1,136,323
Non-deductible meals and entertainment...................... 438,895 38,862
Benefit from discontinued operations........................ (140,710) (1,486,976)
Other....................................................... (20,178) 400,870
--------- -----------
$ 531,207 $ 5,243,048
========= ===========

At December 31, 1999, the Company had available net operating loss
carryforwards of approximately $207,000. There were no available net operating
loss carryforwards at December 31, 2000.

11. STOCKHOLDERS' EQUITY

Effective on December 10, 1999, the Company approved a 2.26066 for 1 stock
split of its common stock. All common stock data in these consolidated financial
statements have been adjusted to give retroactive effect to the stock split.

Effective April 27, 2001, the 760,284 issued and outstanding shares of the
Company's Class B common stock were converted to an equal number of shares of
Class A common stock of the Company.

Effective August 23, 2001, the Company approved a 5.80135 for 1 stock split
of its common stock. All common stock data in these consolidated financial
statements have been adjusted to give retroactive effect to the stock split.

STOCK OPTIONS

On December 16, 1999, the Company's Board of Directors approved the 1999
Stock Option Plan and Equity Participation Plan (collectively, the Plans), which
provide for the issuance of incentive stock options (ISOs) and non-qualified
stock options to eligible employees for the purchase of up to 4,398,001 shares
of Class A common stock. Non-qualified stock options may also be issued to
consultants. Under the Plans, the exercise price of options granted must equal
or exceed the fair market value of the Company's common stock on the date of
grant, and the exercise price of ISOs granted may not be less than 110% of such
fair market value with respect to any options granted to a participant who owns
10% or more of the Company's outstanding common stock. Options granted during
1999 and 2000 under the 1999 Stock Option Plan generally vest ratably over
4 years. Options granted during 1999 and 2000 under the Equity Participation
Plan vest 25% on the first anniversary of the date of grant and then vest 12.5%
every 6 months thereafter. All options expire on the tenth (or, in the case of a
10% shareholder, the fifth) anniversary of the date of grant.

F-26

CROSS COUNTRY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999 AND 2000

11. STOCKHOLDERS' EQUITY (CONTINUED)
Information regarding the Company's stock option activity is summarized
below:

WEIGHTED AVERAGE
STOCK OPTION EXERCISE PRICE
ACTIVITY OPTION PRICE PER SHARE
------------ ------------ ----------------

Options outstanding at July 29, 1999......... -- $ -- $ --
Granted.................................... 3,465,817 7.75-23.25 11.87
Options outstanding at December 31, 1999..... 3,465,817 7.75-23.25 11.87
Granted.................................... 173,450 10.13-32.35 15.64
Canceled................................... (518,015) 7.75-23.25 12.80
Options outstanding at December 31, 2000..... 3,121,252 7.75-32.35 11.93

There were no exercisable options at December 31, 1999. The number of
options exercisable at December 31, 2000 was 832,936. The weighted-average
grant-date fair value of options granted during 1999 and 2000 was $4.05 per
share, and $5.56 per share, respectively.

OPTIONS REMAINING OPTIONS
EXERCISE PRICE OUTSTANDING CONTRACTUAL LIFE EXERCISABLE
- -------------- ----------- ---------------- -----------

$ 7.75.......................................... 1,327,033 9.00 348,817
10.13.......................................... 43,352 9.50 --
10.78.......................................... 39,596 9.75 --
11.62.......................................... 664,932 9.00 198,613
15.19.......................................... 11,724 9.50 --
15.50.......................................... 664,932 9.00 198,613
16.17.......................................... 25,404 9.75 --
19.37.......................................... 145,453 9.00 43,447
20.26.......................................... 11,724 9.50 --
21.56.......................................... 25,404 9.75 --
23.25.......................................... 145,452 9.00 43,446
25.32.......................................... 2,565 9.50 --
26.96.......................................... 5,557 9.75 --
30.39.......................................... 2,567 9.50 --
32.35.......................................... 5,557 9.75 --

Had compensation cost for stock options granted during 1999 and 2000, been
measured under the fair value based method prescribed by FASB Statement
No. 123, ACCOUNTING FOR STOCK-BASED

F-27

CROSS COUNTRY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999 AND 2000

11. STOCKHOLDERS' EQUITY (CONTINUED)
COMPENSATION, the Company's consolidated net income (loss) would have changed to
the pro forma amounts set forth below.

PERIOD FROM YEAR ENDED
JULY 30, 1999 TO DECEMBER 31,
DECEMBER 31, 1999 2000
------------------ -------------

Pro forma net (loss) income............................ $(444,569) $2,818,729
========= ==========
Pro forma (loss) income per common share--basic and
diluted:
(Loss) income from continuing operations............. $ (0.02) $ 0.21
Discontinued operations.............................. (0.01) (0.09)
--------- ----------
Net (loss) income.................................... $ (0.03) $ 0.12
========= ==========

The fair value of options granted used to compute pro forma net income
(loss) disclosures were estimated on the date of grant using the Black-Scholes
option-pricing model based on the following assumptions:

DECEMBER 31,
-------------------
1999 2000
-------- --------

Dividend yield.............................................. 0.00% 0.00%
Expected volatility......................................... 60.00 60.00
Risk-free interest rate..................................... 5.19 5.19
Expected life............................................... 6 years 6 years

The effect of applying FASB Statement No. 123 for providing pro forma
disclosures is not likely to be representative of the effect on reported net
income in future years.

12. EARNINGS PER SHARE

In accordance with the requirements of FASB Statement No. 128, EARNINGS PER
SHARE, basic earnings per share is computed by dividing net income or loss by
the weighted average number of shares outstanding and diluted earnings per share
reflects the dilutive effects of stock options (as calculated utilizing the
treasury stock method). Shares of common stock that are issuable upon the
exercise of options have been excluded from the 1999 and 2000 per share
calculations because their effect would have been anti-dilutive.

13. INTEREST RATE SWAP

The Company's senior credit facility requires that the Company maintain an
interest rate protection agreement to manage the impact of interest rate changes
on the Company's variable rate obligations. Effective February 7, 2000, the
Company entered into an interest rate swap agreement (the Agreement) with a
financial institution. Interest rate swap agreements involve the exchange of
floating interest rate payments for fixed interest rate payments over the life
of the agreement without an exchange of the underlying notional amount. The
Company entered into the Agreement to reduce the

F-28

CROSS COUNTRY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999 AND 2000

13. INTEREST RATE SWAP (CONTINUED)
exposure to adverse fluctuations in floating interest rates on the underlying
debt obligation as required by the senior credit facility and not for trading
purposes.

The interest rate swap matures on February 7, 2003 and has an underlying
notional amount of $45,000,000. The floating interest rate to be paid to the
Company is based on the three-month U.S. dollar London Interbank Offered Rate
(LIBOR), which is reset quarterly, while the fixed interest rate, through
December 31, 2000, to be paid by the Company is 6.625% if the three-month US
dollar LIBOR is less than 7.25%, the three-month U.S. dollar LIBOR if LIBOR is
greater than or equal to 7.25% but less than 8.5%, and 8.5% if the three-month
U.S. dollar LIBOR is greater than or equal to 8.5% over the term of the
Agreement. Effective January 1, 2001, the Agreement was amended to change the
fixed rate to be paid by the Company to 6.705%. In addition, the maturity date
of the Agreement was extended to February 28, 2003. Any differences paid or
received under the terms of the Agreement are recognized as adjustments to
interest expense over the life of the swap, thereby adjusting the effective
interest rate on the underlying debt obligation.

For the period from February 7, 2000 through December 31, 2000, the Company
paid a fixed interest rate of 6.625% based on an underlying notional amount of
$45,000,000. The floating interest rate paid by the financial institution to the
Company approximated 6.7503%. The carrying value of the interest rate swap at
December 31, 2000 was immaterial as to the net amount due from the financial
institution. The fair value of the interest rate swap approximated a $910,000
net payable based on quoted market prices for similar instruments at
December 31, 2000. The estimated fair value of the swap will fluctuate over time
based on changes in floating interest rates; however, these fair value amounts
should not be viewed in isolation but rather in relation to the overall
reduction in the Company's exposure to adverse fluctuations in floating interest
rates. The fair value of the interest rate swap transaction is not reflected in
the consolidated financial statements at December 31, 2000 as it properly
qualified for hedge accounting treatment under applicable accounting guidance.
The Company recorded the fair value of the interest rate swap transaction at
January 1, 2001 which resulted in a reduction in consolidated stockholders'
equity of approximately $910,000.

The Company has no plans to terminate the Agreement earlier than the
maturity date. The Company is exposed to credit loss in the event of
nonperformance by the counterparty to the Agreement. The amount of such exposure
is limited to the unpaid portion of amounts due to the Company, if any, pursuant
to the Agreement. However, management believes that this exposure is mitigated
by provisions in the Agreement that allow for the legal right of offset of any
amounts due to the Company from the counter party with any amounts payable to
the counterparty by the Company. As a result, management considers the risk of
counter party default to be minimal. At December 31, 2000, the Company expects
to reclassify approximately $423,000 of net losses on the derivative instrument
from accumulated other comprehensive income to earnings during the next twelve
months.

14. RELATED PARTY TRANSACTIONS

In connection with the July 29, 1999 CCS acquisition, Charterhouse Equity
Partners III, L.P. (Charterhouse), a majority shareholder of the Company,
received approximately $2,835,000 in transaction fees. In connection with the
TravCorps merger on December 16, 1999, Charterhouse received approximately
$288,000 in transaction fees. These transaction fees were capitalized in
accordance with the purchase method of accounting.

F-29

CROSS COUNTRY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999 AND 2000

15. DISCONTINUED OPERATIONS

On December 20, 2000, the Company committed itself to a formal plan to
dispose of its wholly-owned subsidiary, HospitalHub, through a sale or
liquidation of the business segment. Pursuant to APB Opinion No. 30, REPORTING
THE RESULTS OF OPERATIONS-REPORTING THE EFFECTS OF DISPOSAL OF A SEGMENT OF A
BUSINESS, AND EXTRAORDINARY, UNUSUAL AND INFREQUENTLY OCCURRING EVENTS AND
TRANSACTIONS, the consolidated financial statements of the Company have been
reclassified to reflect the discontinuance of HospitalHub. Accordingly, the
revenue, costs and expenses, assets and liabilities of HospitalHub have been
segregated and reported as discontinued operations in the accompanying
consolidated balance sheets and statements of operations. The divestiture was
completed in the second quarter of 2001.

16. SEGMENT INFORMATION

The Company has two reportable operating segments: healthcare staffing and
other human capital management services. The healthcare staffing operating
segment includes travel staffing, clinical research and trials staffing and per
diem staffing and it reflects management's approach to operating the business.
This segment provides temporary staffing services of healthcare professionals
primarily to hospitals, laboratories, and pharmaceutical and biotechnology
companies. The other human capital management services segment includes the
combined results of our education and training, healthcare consulting services,
physician search and resource management services.

The Company's management evaluates performance of each segment primarily
based on revenues and contribution income (which is defined as earnings before
interest, taxes, depreciation, amortization and corporate expenses not
specifically identified to a reported segment (EBITDA)). The Company's
management does not evaluate, manage or measure performance of segments using
asset information, accordingly, asset information by segment is not prepared or
disclosed. The accounting policies of the segments are the same as those
described in the summary of significant accounting policies (see note 1). The
information in the following table is derived directly from the segments'
internal financial reporting used for corporate management purposes. Certain
corporate expenses are not allocated to and/or among the operating segments.

F-30

CROSS COUNTRY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999 AND 2000

16. SEGMENT INFORMATION (CONTINUED)
Information on operating segments and a reconciliation to income before
income taxes, discontinued operation for the periods indicated are as follows:

PERIOD FROM
JULY 30, 1999 TO YEAR ENDED
DECEMBER 31, 1999 DECEMBER 31, 2000
------------------ ------------------

Revenue from unaffiliated customers:
Healthcare staffing....................................... $85,594,847 $350,856,054
Other human capital management services................... 2,132,372 16,833,848
----------- ------------
$87,727,219 $367,689,902
=========== ============
Contribution (expense) income:
Healthcare staffing....................................... $15,517,594 $ 61,894,291
Other human capital management services................... (94,852) 4,290,020
Unallocated corporate overhead.............................. 5,500,107 21,049,192
----------- ------------
EBITDA...................................................... $ 9,922,635 $ 45,135,119
=========== ============
Interest expense, net....................................... $ 4,821,302 $ 15,435,236
Depreciation and amortization............................... 4,576,167 15,024,781
Nonrecurring indirect transaction costs..................... 1,289,217
Other expenses..............................................
----------- ------------
Income before income taxes and discontinued operations...... $ 525,166 $ 13,385,885
=========== ============

Contribution income is computed by the Company as operating income, less
unallocated corporate overhead. Contribution income is not a measure of
financial performance under generally accepted accounting principles and is only
used by management when assessing segment performance.

F-31

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Partners of
Cross Country Staffing (a Partnership):

In our opinion, the accompanying balance sheets and the related statements
of income and partners' capital and of cash flows present fairly, in all
material respects, the financial position of Cross Country Staffing (a
Partnership) at July 29, 1999 and December 31, 1998, and the results of its
operations and its cash flows for the periods then ended in conformity with
accounting principles generally accepted in the United States. These financial
statements are the responsibility of the Partnership's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.

As discussed in Note 1 to the financial statments, Cross Country Staffing's
assets were sold on July 29, 1999. The amounts included in the financial
statements pursuant to the Management Incentive Compensation Plan give no effect
to the additional amount payable as determined by the change in control
transaction as further discussed in Note 5 to the financial statements.

/s/ PricewaterhouseCoopers LLP
Fort Lauderdale, Florida
November 5, 1999, except for Note 8 as to which the date is December 16, 1999

F-32

CROSS COUNTRY STAFFING

BALANCE SHEETS

JULY 29, DECEMBER 31,
1999 1998
----------- --------------

ASSETS
Current assets:
Cash.................................................... $ -- $ 110
Accounts receivable, less allowance for doubtful
accounts (1999-$1,158,039; 1998-$1,327,983)........... 31,494,858 28,794,335
Other current assets.................................... 3,255,994 2,886,333
----------- -----------
Total current assets.................................. 34,750,852 31,680,778
Fixed assets, net of accumulated depreciation
(1999-$842,971; 1998-$630,848)............................ 1,208,713 1,219,319
Goodwill, net of accumulated amortization (1999-$7,261,467;
1998-$6,809,880).......................................... 8,365,716 8,817,303
Other assets................................................ 138,852 183,817
----------- -----------
Total assets................................................ $44,464,133 $41,901,217
=========== ===========

LIABILITIES AND PARTNERS' CAPITAL

Current liabilities:
Short-term debt......................................... $ 7,874,004 $ 3,533,039
Accounts payable........................................ 2,329,396 3,446,433
Accrued employee compensation and benefits.............. 7,256,162 5,515,526
Accrued distribution payable............................ -- 5,645,354
Accrued interest payable................................ 19,443 23,926
Accrued management incentive compensation............... 6,940,000 --
Other current liabilities............................... 579,473 645,612
----------- -----------
Total current liabilities............................. 24,998,478 18,809,890

Debt........................................................ -- 4,800,000
Accrued management incentive compensation plan.............. -- 4,840,000
----------- -----------
Total liabilities........................................... 24,998,478 28,449,890

Commitments and contingencies (Note 7)

Partners' capital........................................... 19,465,655 13,451,327
----------- -----------
Total liabilities and partners' capital..................... $44,464,133 $41,901,217
=========== ===========

The accompaying notes are an integral part of these financial statements.

F-33

CROSS COUNTRY STAFFING

STATEMENTS OF INCOME AND PARTNERS' CAPITAL

PERIOD ENDED PERIOD ENDED
JULY 29, DECEMBER 31,
1999 1998
---------------- -----------------

Revenue................................................ $106,046,826 $158,591,804
------------ ------------
Operating expenses:
Compensation and benefits............................ 80,186,753 121,950,872
Selling, general and administrative expenses......... 10,587,604 16,377,419
Management incentive compensation plan............... 2,100,000 2,693,001
Bad debt expense..................................... 156,772 721,510
Depreciation......................................... 212,123 264,026
Amortization......................................... 496,551 859,159
------------ ------------
Total operating expenses......................... 93,739,803 142,865,987
------------ ------------

Operating income....................................... 12,307,023 15,725,817

Other income (expense):
Interest income...................................... 62,026 48,423
Interest expense..................................... (292,642) (897,606)
Other................................................ (189,858) (183,435)
------------ ------------
Net income............................................. 11,886,549 14,693,199

Partners' capital at beginning of year................. 13,451,327 7,122,155
Distributions to partners.............................. (5,872,221) (8,364,027)
------------ ------------
Partners' capital at end of period..................... $ 19,465,655 $ 13,451,327
============ ============
Pro Forma net income data
Net income as reported............................... $ 11,886,549 $ 14,693,199
Pro Forma adjustment for income taxes................ (5,824,409) (7,199,668)
------------ ------------
Pro Forma net income................................. $ 6,062,140 $ 7,493,531
============ ============

The accompanying notes are an integral part of these financial statements.

F-34

CROSS COUNTRY STAFFING

STATEMENTS OF CASH FLOWS

JULY 29, 1999 DECEMBER 31, 1998
------------- -----------------

Cash flows from operating activities:
Net income................................................ $ 11,886,549 $ 14,693,199
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization........................... 708,674 1,123,185
Provision for management incentive compensation plan.... 2,100,000 2,693,001
Changes in operating assets and liabilities:
Increase in net accounts receivable..................... (2,700,523) (5,690,790)
Increase in other current assets........................ (369,661) (507,668)
Decrease in other assets................................ -- 230,000
(Decrease) increase in accounts payable................. (1,117,037) 1,202,369
Increase in accrued employee compensation and
benefits.............................................. 1,740,636 792,962
Decrease in accrued interest payable.................... (4,483) (57,534)
Decrease in other current liabilities................... (66,139) (44,409)
------------ ------------

Net cash provided by operating activities............. 12,178,016 14,434,315
------------ ------------
Cash flows from investing activities:
Net purchases of equipment............................ (201,516) (976,672)
------------ ------------

Net cash used in investing activities................. (201,516) (976,672)
------------ ------------
Cash flows from financing activities:
Net repayment of debt................................. (459,035) (10,366,961)

Distributions to partners............................. (11,517,575) (3,091,365)
------------ ------------

Net cash used in financing activities................. (11,976,610) (13,458,326)
------------ ------------

Net decrease in cash.................................. (110) (683)
Cash at beginning of year................................... 110 793
------------ ------------

Cash at end of year......................................... $ -- $ 110
============ ============

Supplemental disclosure of cash flow information:
Amounts paid during the period for interest............... $ 293,857 $ 955,140
============ ============

The accompanying notes are an integral part of these financial statements.

F-35

CROSS COUNTRY STAFFING (A PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS

FOR THE PERIODS ENDED JULY 29, 1999 AND DECEMBER 31, 1998

1. ORGANIZATION AND BASIS OF PRESENTATION

On July 1, 1996, Cross Country Staffing (CCS or the Partnership), a Delaware
general partnership, was established through a Joint Venture Agreement
(Agreement) between CCHP, Inc. (CCHP) and MRA Staffing Systems, Inc. (MRA), with
ownership percentages of 64% and 36%, respectively. CCHP is a 94% owned
subsidiary of W. R. Grace & Co.-Conn., a Connecticut corporation (Grace). Prior
to the transaction on July 28, 1999 described below, MRA was a wholly owned
subsidiary of Nestor Healthcare Group plc (Nestor), a public company registered
in the U.K.

CCHP and MRA (the Partners) were each engaged in the business of providing
nurses and other allied health personnel primarily on a contract basis. The
Partnership recorded the assets and assumed the liabilities, as defined in the
Agreement, of its Partners. Assets and liabilities contributed by the Partners
to the joint venture were recorded at predecessor basis. In addition to the
recorded assets and liabilities, the Partners contributed the value of their
businesses, which included certain unrecorded intangible assets primarily
related to proprietary databases and contracts.

On July 28, 1999, Grace purchased Nestor's ownership interest in MRA. On
July 29, 1999, the assets of CCS were sold (the "Sale") to Cross Country
Staffing, Inc. (the "Buyer"), an unrelated entity and affiliate of Charterhouse
Group International, Inc. The amounts included in these Financial Statements
give no effect to the Sale, including the repayment of outstanding bank debt and
liquidation of the Management Incentive Compensation Plan liability. See Notes 4
and 5 for further detail.

CCS is engaged in the business of providing staffing and placement of
healthcare and other professionals throughout the United States and its
territories.

2. ACCOUNTING POLICIES

USE OF ESTIMATES

The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.

FIXED ASSETS

Fixed assets include office furniture, business machines and leasehold
improvements which are stated at cost, less accumulated depreciation.
Depreciation is determined on a straight-line basis over the estimated useful
lives of the assets of five years.

RESERVES FOR CLAIMS

Workers' compensation and health care benefits are provided under partially
self-insured plans. CCS records its estimate of the ultimate cost of, and
reserves for, workers' compensation and health care benefits based on actuarial
computations using its loss history as well as industry statistics. Furthermore,
in determining its reserves, CCS includes reserves for estimated claims incurred
but not reported.

F-36

CROSS COUNTRY STAFFING (A PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

FOR THE PERIODS ENDED JULY 29, 1999 AND DECEMBER 31, 1998

2. ACCOUNTING POLICIES (CONTINUED)
The ultimate cost of workers' compensation and health care benefits will
depend on actual costs incurred in settling the claims and may differ from the
amounts reserved by CCS for those claims. Accruals for workers' compensation
claims and health care benefits are included in accrued employee compensation
and benefits in the Balance Sheet.

GOODWILL

Goodwill contributed by one of the Partners at inception is amortized using
the straight-line method over its estimated useful life of 14 years
(approximately 11 years remaining at July 29, 1999). CCS assesses the
recoverability of goodwill whenever adverse events or changes in circumstance or
business climate indicate that expected future undiscounted cash flows are not
sufficient to support the carrying value. At July 29, 1999 and December 31, 1998
the Partnership believes that no impairment of goodwill exists.

DEFERRED DEBT ISSUE COSTS

Deferred costs related to the issuance of debt are amortized on a
straight-line basis over the five year term of the debt. At July 29, 1999 and
December 31, 1998 costs of $389,000 less accumulated amortization of $250,148
and $205,183, respectively, are recorded as other assets in the Balance Sheet.

FAIR VALUE OF FINANCIAL INSTRUMENTS

At July 29, 1999 and December 31, 1998 the recorded value of cash, trade
receivables and debt approximated their fair value, based on the maturities of
these instruments and the terms of the individual debt agreements.

REVENUE RECOGNITION

Revenue is recognized when the service is performed. Accordingly, accounts
receivable includes an accrual for employees' time worked but not yet invoiced.
At July 29, 1999 and December 31, 1998 the amounts accrued are $7,176,798 and
$4,835,971.

CONCENTRATIONS OF CREDIT RISK

CCS's clients are principally health care providers and accounts receivable
represent amounts due from these providers. CCS performs ongoing credit
evaluations of its clients' financial condition and does not require collateral.
Overall, based on the large number of clients in differing geographic areas
throughout the United States and its territories, CCS believes the concentration
of credit risk is limited.

INCOME TAXES

CCS is not subject to federal taxation at the Partnership level as income is
taxed directly to the Partners. Accordingly, a provision for income taxes has
not been included in the financial statements.

The General Partnership Agreement (Partnership Agreement) provides for
quarterly distributions to the Partners based on the Partnership's estimated
taxable income for the year. Generally, it has been the practice of the
Partnership to make such distributions based on actual tax liabilities of the

F-37

CROSS COUNTRY STAFFING (A PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

FOR THE PERIODS ENDED JULY 29, 1999 AND DECEMBER 31, 1998

2. ACCOUNTING POLICIES (CONTINUED)
individual Partners. Currently, distributions are made at the request of the
Partners up to the quarterly distribution amount provided for in the Partnership
Agreement. A distribution payable was recorded to equalize the distributions
based on the respective Partners' ownership percentages.

RECLASSIFICATIONS

Certain amounts in prior year financial statements and related notes have
been reclassified to conform to current year's presentation.

3. OTHER BALANCE SHEET ITEMS

At July 29 and December 31, other current assets are composed of the
following:

JULY 29, DECEMBER 31,
1999 1998
---------- ------------

Prepaid rent on employees' apartments............... $1,907,276 $1,538,636
Deposits on employees' apartments, net of allowance
(1999-$299,246; 1998-$236,756).................... 1,025,308 866,354
Other............................................... 323,410 481,343
---------- ----------
$3,255,994 $2,886,333
========== ==========

CCS leases a number of apartments for its employees under short-term
agreements (typically three to six months) which generally coincide with each
employee's staffing contract. As a condition of those agreements, CCS places
security deposits on the leased apartments. Prepaid rent and deposits relate to
these short-term agreements.

At July 29 and December 31, accrued employee compensation and benefits is
composed of the following:

JULY 29, DECEMBER 31,
1999 1998
---------- ------------

Salaries............................................ $2,984,990 $1,947,117
Bonus............................................... 2,152,918 2,070,759
Accrual for workers' compensation claims............ 1,596,170 1,148,849
Accrual for health care benefits.................... 345,500 206,033
Accrual for vacation................................ 176,584 142,768
---------- ----------
$7,256,162 $5,515,526
========== ==========

F-38

CROSS COUNTRY STAFFING (A PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

FOR THE PERIODS ENDED JULY 29, 1999 AND DECEMBER 31, 1998

4. DEBT

On July 30, 1999, CCS repaid all of its long-term debt, which consists of
the Term Note and Revolving Loan Facility. Accordingly, they have been
classified as short-term at July 29, 1999. At July 29 and December 31,
short-term debt is composed of the following:

JULY 29, DECEMBER 31,
1999 1998
---------- ------------

Current maturities of long-term debt................ $7,850,000 $3,500,000
Note payable........................................ 24,004 33,039
---------- ----------
$7,874,004 $3,533,039
========== ==========

At July 29 and December 31, long-term debt is composed of the following:

JULY 29, DECEMBER 31,
1999 1998
----------- ------------

Term Loan, interest at the Eurodollar rate plus
0.325%, or the greater of the prime or Federal
Funds effective rate plus 0.5% (5.535% and
5.955%, at July 29, 1999 and December 31, 1998,
respectively).................................... $ 3,800,000 $ 3,500,000

Revolving Loan Facility, interest at the Eurodollar
rate plus 0.325%, or the greater of the prime or
Federal Funds effective rate plus 0.5% (8.0% and
5.955%, at July 29, 1999 and December 31,1998,
respectively).................................... 4,050,000 4,800,000
----------- -----------

7,850,000 8,300,000

(7,850,000) (3,500,000)
----------- -----------

$ -- $ 4,800,000
=========== ===========

Grace acts as guarantor of the Term Note and Revolving Loan Facility and, as
such, is paid a monthly fee based on the average outstanding balance. For the
periods ended July 29, 1999 and December 31, 1998 this fee was 0.025% per month.
For the periods ended July 29, 1999 and December 31, 1998 total fees in relation
to this guarantee were $13,398 and $47,663, respectively. Of these total fees,
which are recorded as interest expense, $9,229 and $18,243 were recorded as
accrued interest payable at July 29, 1999 and December 31, 1998, respectively.

5. MANAGEMENT INCENTIVE COMPENSATION PLAN

The CCS Management Incentive Compensation Plan (the Plan) is a
performance-based compensation plan for key personnel of the Partnership. The
Plan authorizes the award of percentage interests in an incentive pool based on
the achievement of certain performance objectives. The percentage interests vest
over a period of either three or five years or, in the case of a Liquidity Event
as defined in the Plan, vesting occurs immediately.

F-39

CROSS COUNTRY STAFFING (A PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

FOR THE PERIODS ENDED JULY 29, 1999 AND DECEMBER 31, 1998

5. MANAGEMENT INCENTIVE COMPENSATION PLAN (CONTINUED)
The Plan also authorized an immediate percentage award to certain key
executives based on Partnership equity value at inception, as defined by the
Plan. Incremental increases in the amount of this award may occur based on
increases in the value of the Partnership equity. The amount charged to income
for the award and the incremental increase in equity value was $319,000 and
$409,000 for the periods ended July 29, 1999 and December 31, 1998,
respectively.

In accordance with the terms of the Plan, cash payments are made at the
earlier of occurrence of a Liquidity Event or July 1, 2001. The occurrence of a
Liquidity Event also provides for a revised award computation. The Sale of CCS
assets on July 29, 1999 constituted a Liquidity Event and as such, a liquidation
cash payment was triggered. Grace used a portion of the Sale proceeds for such
liquidation payment totaling approximately $20,200,000.

6. PARTNERS' CAPITAL (DEFICIT)

Partners' capital accounts are as follows:

CCHP MRA TOTAL
------------ ------------ -----------

December 31, 1997.................................... $(12,234,662) $ 19,356,817 $ 7,122,155
1998 distributions paid and payable.................. (5,352,977) (3,011,050) (8,364,027)
1998 net income...................................... 9,403,647 5,289,552 14,693,199
------------ ------------ -----------
December 31, 1998.................................... (8,183,992) 21,635,319 13,451,327
1999 distributions................................... (3,757,272) (2,114,949) (5,872,221)
1999 net income...................................... 7,607,391 4,279,158 11,886,549
------------ ------------ -----------
July 29, 1999........................................ $ (4,333,873) $ 23,799,528 $19,465,655
============ ============ ===========

At December 31, 1998, accrued distributions payable of $5,645,354 relate to
CCHP.

7. COMMITMENTS AND CONTINGENCIES

CCS is involved in a dispute with the Internal Revenue Service (IRS) with
respect to the IRS Examination of the 1993-1995 treatment of per diem plan
allowances for meals and incidental expenses paid to CCHP health care personnel
who were performing temporary services while away from home. Under the terms of
the Sale, Grace has assumed ongoing responsibility for any settlement or related
litigation liability.

In connection with the Partnership's partially self-insured workers'
compensation plan, the Partnership has outstanding at July 29, 1999 a $943,594
standby letter of credit in order to guarantee the payment of workers'
compensation claims to the Partnership's insurance carrier.

CCS entered into an agreement to lease office space for the next 10 years
beginning in February 1998. In accordance with the Sale, CCS assigned the office
lease agreement to the Buyer.

Rent expense related to office facilities for the periods ended July 29,
1999 and December 31, 1998 was approximately $250,000 and $269,000,
respectively.

F-40

CROSS COUNTRY STAFFING (A PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

FOR THE PERIODS ENDED JULY 29, 1999 AND DECEMBER 31, 1998

7. COMMITMENTS AND CONTINGENCIES (CONTINUED)
CCS is subject to legal proceedings and claims which arise in the ordinary
course of its business. In the opinion of management, the outcome of these
matters will not have a significant effect on the Partnership's financial
position or results of operations.

8. SUBSEQUENT EVENTS

As referred to in Note 1, the assets of CCS were sold to Cross Country
Staffing, Inc. on July 29, 1999.

On November 12, 1999 Cross Country Staffing, Inc. and TravCorps announced
their intention to merge operations. The combined company will be owned by an
affiliate of Charterhouse Group International, Inc., certain investment funds
managed by Morgan Stanley Private Equity and management. The transaction was
consummated on December 16, 1999.

F-41

INDEPENDENT AUDITORS' REPORT

To the Stockholders and Board of Directors of
TravCorps Corporation and Subsidiary:

We have audited the accompanying consolidated balance sheet of TravCorps
Corporation and subsidiary (the "Company") as of December 15, 1999, and the
related consolidated statements of income, stockholders' equity, and cash flows
for the period from December 27, 1998 to December 15, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The consolidated financial statements for the year ended
December 26, 1998 were audited by other auditors whose report, dated March 12,
1999, expressed an unqualified opinion on those statements.

We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of TravCorps
Corporation and subsidiary as of December 15, 1999, and the results of their
operations and their cash flows for the period from December 27, 1998 to
December 15, 1999, in conformity with accounting principles generally accepted
in the United States.

/s/ ERNST & YOUNG LLP

Boston, Massachusetts
March 10, 2000

F-42

INDEPENDENT AUDITORS' REPORT

To the Stockholders and Board of Directors of
TravCorps Corporation and Subsidiary:

We have audited the accompanying consolidated balance sheet of TravCorps
Corporation and Subsidiary as of December 26, 1998, and the related consolidated
statement of operations, stockholders' equity, and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the companies as of December 26,
1998, and the results of its operations and its cash flows for the year then
ended in conformity with accounting principles generally accepted in the United
States of America.

/s/ DELOITTE & TOUCHE LLP

Boston, Massachusetts
March 12, 1999

F-43

TRAVCORPS CORPORATION AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

DECEMBER 15, 1999 AND DECEMBER 26, 1998

ASSETS

1999 1998
----------- -----------

CURRENT ASSETS:
Cash and cash equivalents................................. $ 3,594,666 $ 1,852,578
Accounts receivable, less allowance for doubtful accounts
of $657,000 and $397,000 in 1999 and 1998,
respectively............................................ 17,386,009 15,309,000
Prepaid rent.............................................. 488,008 862,968
Prepaid expenses and other................................ 215,396 784,979
Deferred income taxes..................................... 1,355,300 579,600
----------- -----------
Total current assets.................................. 23,039,379 19,389,125
----------- -----------

PROPERTY AND EQUIPMENT:
Computer and software equipment........................... 6,331,352 4,777,795
Office equipment.......................................... 239,719 225,244
Furniture and fixtures.................................... 373,762 371,457
Leasehold improvements.................................... 340,142 131,166
----------- -----------
Total property and equipment.......................... 7,284,975 5,505,662

Less accumulated depreciation and amortization............ (2,801,089) (1,628,152)
----------- -----------
Property and equipment--net........................... 4,483,886 3,877,510
----------- -----------

DEPOSITS.................................................... 470,665 627,043
----------- -----------

DEFERRED FINANCING COSTS--NET............................... 3,327,326 19,556
GOODWILL--NET............................................... 11,181,605 11,732,578

TOTAL....................................................... $42,502,861 $35,645,812
=========== ===========

See notes to consolidated financial statements.

F-44

TRAVCORPS CORPORATION AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

DECEMBER 15, 1999 AND DECEMBER 26, 1998

LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY

1999 1998
----------- -----------

CURRENT LIABILITIES:
Accounts payable.......................................... $ 2,826,601 $ 2,956,273
Accrued expenses.......................................... 2,127,221 2,660,644
Accrued payroll and withholdings.......................... 1,933,697 2,262,534
Accrued incentive compensation............................ 2,670,960 2,321,544
Current maturities of long-term obligations............... 36,273 163,742
----------- -----------
Total current liabilities............................. 9,594,752 10,364,737
----------- -----------

DEFERRED INCOME TAXES....................................... 1,235,538 929,800
----------- -----------

LONG-TERM OBLIGATIONS....................................... 45,000,000 12,675,649
----------- -----------

STOCKHOLDERS' (DEFICIT) EQUITY:
Convertible preferred stock, $.01 par value per
share--1,020,000 shares authorized, issued and
outstanding (liquidation preference $0 and $3,804,750 in
1999 and 1998, respectively)............................ -- 2,869,229
Common stock, $.01 par value per share--1,774,385 shares
authorized; 2,984,171 shares and 614,011 shares issued
in 1999 and 1998, respectively; 2,984,171 shares and
476,291 shares outstanding in 1999 and 1998,
respectively............................................ 29,842 6,139
Treasury stock............................................ (73,576,703) (1,377)
Additional paid-in capital................................ 54,110,662 667,183
Retained earnings......................................... 6,108,770 8,134,452
----------- -----------
Total stockholders' (deficit) equity.................. (13,327,429) 11,675,626
----------- -----------

TOTAL....................................................... $42,502,861 $35,645,812
=========== ===========

See notes to consolidated financial statements.

F-45

TRAVCORPS CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

PERIOD FROM DECEMBER 27, 1998 TO DECEMBER 15, 1999
AND THE YEAR ENDED DECEMBER 26, 1998

1999 1998
------------ -----------

REVENUES.................................................... $112,795,230 $99,604,430
------------ -----------
DIRECT COSTS AND EXPENSES:
Professional salaries and wages........................... 58,137,810 50,660,556
Other professional expenses............................... 15,972,698 17,475,730
------------ -----------
Total direct costs and expenses......................... 74,110,508 68,136,286
------------ -----------
GROSS PROFIT................................................ 38,684,722 31,468,144
------------ -----------
OPERATING EXPENSES:
Selling, general and administrative expenses (includes
nonrecurring transaction costs of $4,556,904 in 1999)... 35,431,054 21,282,325
Depreciation and amortization............................. 1,886,017 1,225,676
------------ -----------
Total operating expenses................................ 37,317,071 22,508,001
------------ -----------
INCOME FROM OPERATIONS...................................... 1,367,651 8,960,143
INTEREST EXPENSE............................................ 2,790,948 880,992
------------ -----------
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES............. (1,423,297) 8,079,151
PROVISION FOR INCOME TAXES.................................. 580,134 3,349,400
------------ -----------
NET (LOSS) INCOME........................................... $ (2,003,431) $ 4,729,751
============ ===========

See notes to consolidated financial statements.

F-46

TRAVCORPS CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
PERIOD FROM DECEMBER 27, 1998 TO DECEMBER 15, 1999
AND THE YEAR ENDED DECEMBER 26, 1998

CONVERTIBLE
PREFERRED STOCK COMMON STOCK ADDITIONAL
----------------------- ---------------------- TREASURY PAID-IN RETAINED
SHARES AMOUNT SHARES AMOUNT STOCK CAPITAL EARNINGS
---------- ---------- --------- ---------- ------------ ----------- ----------

BALANCE, DECEMBER 27, 1997............. 1,020,000 $2,779,979 527,674 $ 5,276 $ (1,377) $ 181 $3,493,951

Stock options exercised.............. -- -- 16,337 163 -- 2,702 --
Accretion of preferred stock
dividends.......................... -- 89,250 -- -- -- -- (89,250)
Purchase of treasury stock........... -- -- -- -- (190,000) -- --
Issuance of stock in connection with
acquisition........................ -- -- 70,000 700 190,000 664,300 --
Net income........................... -- -- -- -- -- -- 4,729,751
---------- ---------- --------- ---------- ------------ ----------- ----------

BALANCE, DECEMBER 26, 1998............. 1,020,000 2,869,229 614,011 6,139 (1,377) 667,183 8,134,452

Stock options exercised.............. -- -- 305,470 3,056 -- 2,023,590 --
Accretion of preferred stock
dividends.......................... -- 22,251 -- -- -- -- (22,251)
Conversion of preferred stock........ (1,020,000) (2,550,000) 1,020,000 10,200 -- 2,539,800 --
Distribution of preferred stock
dividends.......................... -- (341,480) -- -- -- (2,550,000) --
Purchase of treasury stock........... -- -- -- -- (73,575,326) -- --
Issuance of common stock............. -- -- 1,044,690 10,447 -- 51,430,089 --
Net income (loss).................... -- -- -- -- -- -- (2,003,431)
---------- ---------- --------- ---------- ------------ ----------- ----------
BALANCE, DECEMBER 15, 1999............. -- $ -- 2,984,171 $ 29,842 $(73,576,703) $54,110,662 $6,108,770
========== ========== ========= ========== ============ =========== ==========

TOTAL
------------

BALANCE, DECEMBER 27, 1997............. $ 6,278,010
Stock options exercised.............. 2,865
Accretion of preferred stock
dividends.......................... --
Purchase of treasury stock........... (190,000)
Issuance of stock in connection with
acquisition........................ 855,000
Net income........................... 4,729,751
------------
BALANCE, DECEMBER 26, 1998............. 11,675,626
Stock options exercised.............. 2,026,646
Accretion of preferred stock
dividends.......................... --
Conversion of preferred stock........ --
Distribution of preferred stock
dividends.......................... (2,891,480)
Purchase of treasury stock........... (73,575,326)
Issuance of common stock............. 51,440,536
Net income (loss).................... (2,003,431)
------------
BALANCE, DECEMBER 15, 1999............. $(13,327,429)
============

See notes to consolidated financial statements.

F-47

TRAVCORPS CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

PERIOD FROM DECEMBER 27, 1998 TO DECEMBER 15, 1999
AND THE YEAR ENDED DECEMBER 26, 1998

1999 1998
------------ ------------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income......................................... $ (2,003,431) $ 4,729,751
Adjustments to reconcile net (loss) income to cash (used
in) provided by operating activities:
Depreciation............................................ 1,108,346 781,569
Amortization............................................ 739,073 444,107
Increase (decrease) in cash from changes in:
Accounts receivable................................... (2,077,009) (1,814,191)
Income tax receivable................................. (1,817,733) --
Prepaid rent.......................................... 374,959 (48,326)
Prepaid expenses and other............................ 569,582 (77,956)
Other assets.......................................... -- (2,202)
Deferred income taxes................................. (469,962) 424,300
Accounts payable and accrued expenses................. (653,337) 1,534,809
Accrued payroll withholdings and incentive
compensation........................................ 20,578 1,051,983
------------ ------------
Cash provided by (used in) operating activities..... (4,208,934) 7,023,844
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Cejka, net of cash acquired................ -- (11,970,454)
Purchase of property and equipment........................ (1,779,340) (1,888,705)
Increase in deposits...................................... 156,378 (133,495)
------------ ------------
Cash used in investing activities................... (1,622,962) (13,992,654)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock.................... 53,136,887 2,865
Redemption of preferred stock............................. (2,569,927) --
Repurchase of common stock................................ (73,576,312) (190,000)
Net borrowings under revolving credit agreement........... 32,335,500 8,184,500
Deferred financing charges................................ (1,613,546) --
Principal payments on capital leases...................... -- (227,445)
Principal payments on other long-term obligations......... (138,618) (17,936)
------------ ------------
Cash provided by financing activities............... 7,573,984 7,751,984
------------ ------------
INCREASE IN CASH AND CASH EQUIVALENTS....................... 1,742,088 783,174
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR................ 1,852,578 1,069,404
------------ ------------
CASH AND CASH EQUIVALENTS, END OF YEAR...................... $ 3,594,666 $ 1,852,578
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION--
Cash paid during the year for:
Interest................................................ $ 2,857,017 $ 1,028,270
============ ============
Income taxes............................................ $ 3,011,490 $ 2,271,687
============ ============
SUPPLEMENTAL SCHEDULE OF NONCASH TRANSACTIONS -
Stock issued in connection with the Cejka acquisition..... $ -- $ 855,000
============ ============

See notes to consolidated financial statements.

F-48

TRAVCORPS CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PERIOD FROM DECEMBER 27, 1998 TO DECEMBER 15, 1999
AND THE YEAR ENDED DECEMBER 26, 1998

1. NATURE OF BUSINESS

TravCorps Corporation ("TravCorps") and its wholly-owned subsidiary,
Cejka & Company ("Cejka") (collectively, the "Company") provide flexible
staffing, search, consulting and related outsourced services to health care
providers throughout the United States. The Company's fiscal year typically ends
on the last Saturday in December.

On December 16, 1999, the Company merged with Cross Country Staffing, Inc.
("CCS") (see Note 9). These financial statements are presented on a going
concern basis and do not reflect any effects on the financial statements
resulting from the merger with CCS.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REVENUE RECOGNITION--The Company recognizes revenue from temporary staffing
services as services are rendered based on hours worked by the assigned health
care professionals. Retainer fees earned for search and related outsourced
services are recognized over the contract term. Placement revenues are
recognized upon successful completion of the search assignment. Consulting
revenues are recognized as services are rendered.

Revenues on permanent and temporary placements are recognized when services
provided are substantially completed. The Company does not, in the ordinary
course of business, make refunds. If a candidate leaves a permanent placement
within a short period of time (i.e., one month) it is customary for us to seek a
replacement at no additional cost. Allowances are established as considered
necessary to estimate significant losses due to placed candidates not remaining
employed for the Company's guarantee period. During 2000, 1999 and 1998, such
replacements and refunds were not material and, accordingly, related allowances
were not recorded.

PRINCIPLES OF CONSOLIDATION--The consolidated financial statements include
the accounts of TravCorps Corporation and subsidiary. Upon consolidation, all
material intercompany accounts and transactions are eliminated.

CASH AND CASH EQUIVALENTS--The Company considers all investments in highly
liquid debt instruments with maturities of less than three months at the date of
purchase to be cash and cash equivalents.

USE OF ESTIMATES--The preparation of consolidated financial statements in
conformity with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements. Estimates included in the
consolidated financial statements include allowances for uncollectible accounts
and certain accrued expenses. Actual results could differ from those estimates.

PROPERTY AND EQUIPMENT--Property and equipment are recorded at cost.
Depreciation and amortization are provided using the straight-line method over
the estimated useful lives (three to seven years) of the related assets. This
caption also includes capitalized costs associated with the development of
internal-use software (see below). Such costs include charges for consulting
services and costs for personnel associated with programming, coding and testing
such software. These costs are not depreciated until the related software is
placed into service.

F-49

TRAVCORPS CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

PERIOD FROM DECEMBER 27, 1998 TO DECEMBER 15, 1999
AND THE YEAR ENDED DECEMBER 26, 1998

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ACCOUNTING FOR COMPUTER SOFTWARE COSTS--In March 1998, the American
Institute of Certified Public Accountants issued Statement of Position (SOP)
No. 98-1, ACCOUNTING FOR THE COSTS OF COMPUTER SOFTWARE DEVELOPED OR OBTAINED
FOR INTERNAL USE. SOP No. 98-1 delineated the types of costs that may be
capitalized in connection with the development and installation of internal-use
software. The Company historically has had accounting policies that are
consistent with those specified in SOP No. 98-1. Accordingly, its implementation
did not have a material impact on the consolidated financial statements.

IMPAIRMENT OF LONG-LIVED ASSETS--Long-lived assets to be held and used are
reviewed for impairment whenever circumstances indicate that the carrying amount
of an asset may not be recoverable. Long-lived assets to be disposed of are
reported at the lower of the carrying amount or fair value, less cost to sell.

GOODWILL--The excess of the purchase price of acquired companies over the
fair value of net identifiable assets ("goodwill") at the date of acquisition
are amortized on a straight-line basis over their estimated lives of twenty or
twenty-five years. The Company periodically reviews goodwill to assess
recoverability, based upon expectations of nondiscounted cash flows and
operating income of the activities, that generated the goodwill balance.
Impairments would be recognized in operating results if such expected cash flows
were less than the carrying value of the related assets. No such impairments
have been recorded through December 15, 1999.

DEFERRED FINANCING COSTS--Deferred financing costs represent commitment fees
and other costs incurred relating to the refinancing of the Company's revolving
credit agreement and are being amortized over the life of the agreement.

INCOME TAXES--Deferred income taxes are provided for differences in bases of
the Company's assets and liabilities for book and tax purposes. Deferred income
taxes are estimated using currently enacted tax rates.

CONCENTRATION OF CREDIT RISK--The Company extends credit to its customers on
an unsecured basis and requires no collateral. However, credit control policies
are in place to control the Company's exposure to potential uncollectible
receivables.

STOCK-BASED COMPENSATION--The Company accounts for stock-based awards to
employees using the intrinsic-value method.

ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS--The carrying amounts reported
in the consolidated balance sheets for cash, accounts receivable, accounts
payable and accrued expenses approximate fair value because of their short
maturity. The carrying amount of the long-term obligations approximates fair
value because the interest rate is tied to a quoted variable index.

3. ACQUISITION

On April 29, 1998, the Company acquired certain assets and assumed certain
liabilities of Cejka, a company that provides permanent placement, consulting
and related outsourced services for physicians and health care executives. The
acquisition has been accounted for as a purchase and, accordingly, the results
of Cejka are included in these consolidated financial statements from the date
of acquisition.

F-50

TRAVCORPS CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

PERIOD FROM DECEMBER 27, 1998 TO DECEMBER 15, 1999
AND THE YEAR ENDED DECEMBER 26, 1998

3. ACQUISITION (CONTINUED)
The purchase and related acquisition costs aggregated $12,826,000 and were
funded with the borrowing of $11,821,000 under the Company's revolving credit
agreement and the issuance of 90,000 shares of Class A common stock valued at
$855,000.

The consideration involved in the acquisition, after giving effect to
liabilities assumed, has been allocated to the assets acquired based on their
respective fair values as follows:

Assets:
Cash and cash equivalents................................. $ 300
Accounts receivable....................................... 1,785,969
Prepaid rent.............................................. 28,229
Deposits.................................................. 11,396
Property and equipment.................................... 379,047
Goodwill.................................................. 11,560,000
-----------
Assets acquired............................................. 13,764,941
Less assumed liabilities.................................... 939,187
-----------
Total consideration......................................... $12,825,754
===========

4. LONG-TERM OBLIGATIONS

Long-term obligations at December 15, 1999 and December 26, 1998 consist of
the following:

1999 1998
----------- -----------

Revolving Credit Agreement......................... $45,000,000 $12,664,500
Capital lease obligations.......................... 36,273 174,891
----------- -----------
Total.............................................. 45,036,273 12,839,391
Less current portion............................... 36,273 163,742
----------- -----------
Total long-term obligations........................ $45,000,000 $12,675,649
=========== ===========

CREDIT AGREEMENT--At December 15, 1999, the Company has a revolving credit
agreement with Chase Bank (the "Revolving Credit Agreement"), which provides for
a term loan of $45 million, revolving loans of up to $10,000,000 and swingline
loans up to $1,000,000, including letters of credit of up to $2,500,000,
maturing May 14, 2005. Revolving loans under the Revolving Credit Agreement can
be ABR loans or Eurodollar loans. Swingline loans must be ABR loans. Eurodollar
rate loans must have a minimum principal balance of $1,000,000 and must be in
integral multiples of $250,000. ABR Revolving loans must have a minimum
principal balance of $250,000 and must be in integral multiples of $50,000.
Swingline loans must have a minimum principal balance of $250,000 and must be in
integral multiples of $50,000. Amounts outstanding under the term loan at
December 15, 1999 totaled $45 million and are scheduled to be repaid with
interest at 9.40% in quarterly installments of $250,000 from December 25, 1999
through March 2004 and $10,125,000 through May 2005. There were no Revolving or
Swingline loans outstanding at December 15, 1999.

F-51

TRAVCORPS CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

PERIOD FROM DECEMBER 27, 1998 TO DECEMBER 15, 1999
AND THE YEAR ENDED DECEMBER 26, 1998

4. LONG-TERM OBLIGATIONS (CONTINUED)
ABR loans carry interest at the greatest of a) the Prime Rate, b) the Base
CD Rate plus 1%, or c) the Federal Funds Effective Rate plus 1/2of 1%.
Eurodollar loans carry interest at the LIBOR Rate for the interest period
multiplied by b) the Statutory Reserve Rate. The interest on any ABR or
Eurodollar loan is payable quarterly. The interest on any Swingline loan is
payable on the principal due date.

Letters of credit amounting to $404,099 and $399,508 at December 15, 1999
and December 26, 1998, respectively, had been issued pursuant to the Company's
workers' compensation insurance program.

The Agreement contains, among other things, restrictions on further
indebtedness, asset sales, capital expenditures, payment of dividends, changes
in the capital structure and changes in the ownership of the Company. The
Agreement also has covenants which require the Company to maintain a minimum
level of tangible net worth, achieve minimum levels of earnings before interest,
taxes, depreciation and amortization, and achieve certain financial ratios, all
as defined in the Agreement.

At December 26, 1998, the Company had a revolving credit agreement with
Fleet Bank NA that carried terms similar to the Chase Bank agreement. The Fleet
agreement did not include a term loan. The Fleet Bank agreement was terminated
and replaced with the Chase Bank agreement in connection with the leveraged
recapitalization discussed in Note 7.

CAPITAL LEASE OBLIGATIONS--The Company leases equipment under capital
leases. The leases bear interest at rates ranging from 8.0% to 9.0% and expire
in 2000. The Company intends to exercise its options to purchase the equipment.

5. COMMITMENTS AND CONTINGENCIES

OPERATING ACTIVITIES--The Company has entered into various operating leases
for temporary housing of its professional medical personnel, with terms of up to
twelve months. The Company also leases office space for its corporate
activities. Future lease payments for office space pursuant to the leases total
$736,088, $440,050, $449,188, $441,166 and $0 for the years ending
December 2000, 2001, 2002, 2003 and 2004, respectively. Total lease expense was
approximately $12,132,185 and $10,024,495 for the period December 27, 1998 to
December 15, 1999 and the year ended December 26, 1998, respectively.

F-52

TRAVCORPS CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

PERIOD FROM DECEMBER 27, 1998 TO DECEMBER 15, 1999
AND THE YEAR ENDED DECEMBER 26, 1998

6. INCOME TAXES

The components of the provision for income taxes for the for the period
December 26, 1998 to December 15, 1999 and the year ended December 26, 1998 are
as follows:

1999 1998
---------- ----------

Current:
Federal............................................ $ 831,600 $2,141,800
State.............................................. 189,200 783,300
---------- ----------
1,020,800 2,925,100
---------- ----------

Deferred:
Federal............................................ (363,000) 310,700
State.............................................. (77,700) 113,600
---------- ----------
(440,700) 424,300
---------- ----------
Total................................................ $ 580,100 $3,349,400
========== ==========

The components of the deferred tax assets and liabilities at December 15,
1999 and December 26, 1998 are as follows:

1999 1998
---------- ----------

Deferred tax assets--current:
Accrued incentive compensation..................... $ 971,700 $ 704,550
Accrued liabilities................................ 223,900 337,650
Other.............................................. 310,000 149,400
---------- ----------
1,505,600 1,191,600

Deferred tax liabilities--current--prepaid
expenses........................................... (150,300) (612,000)
---------- ----------
Net deferred tax assets--current..................... $1,355,300 $ 579,600
========== ==========

Deferred tax liabilities--noncurrent--depreciation... $1,235,538 $ 929,800
========== ==========

Difference between the provision for income taxes and income taxes computed
using the U.S. federal income tax rate are primarily due to state taxes and
expenses not deductible for income tax purposes.

7. STOCKHOLDERS' EQUITY

LEVERAGED RECAPITALIZATION--On May 14, 1999, in connection with a leveraged
recapitalization transaction, the Company sold 1,044,690 of the Company's common
shares to Morgan Stanley Dean Witter ("MSDW") and the Company redeemed 1,583,983
of its common shares. Immediately preceding the leveraged recapitalization, the
Company's preferred shareholders converted 1,020,000 preferred shares into
1,020,000 common shares. The price for the redeemed shares was $76,869,925,
which was paid in cash. After the transaction, MSDW owned 87.29% of the
Company's outstanding common stock.

F-53

TRAVCORPS CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

PERIOD FROM DECEMBER 27, 1998 TO DECEMBER 15, 1999
AND THE YEAR ENDED DECEMBER 26, 1998

7. STOCKHOLDERS' EQUITY (CONTINUED)
The redemption was funded with $45,200,000 of new bank borrowings (see
Note 4) and the proceeds from the sale of the common shares. These new
borrowings and common share proceeds were also used to repay $11,081,000 of
existing bank borrowings and to pay $4,036,000 of transaction expenses.

For financial accounting purposes, the transaction is treated as a leveraged
recapitalization, whereby the assets are not revalued and the excess purchase
price of the redeemed shares over the net book value of the shares reduces the
Company's equity.

The characteristics of preferred and common stock of the Company prior to
the recapitalization are described as follows:

PREFERRED STOCK--During 1995, the Company issued 1,020,000 shares of
convertible preferred stock at $2.50 per share. All (but not less than all) of
the shares of convertible preferred stock were convertible at any time, at the
option of the holders of the convertible preferred stock, into conversion units
which consisted of one share of Class B common stock and one share of redeemable
preferred stock for each share of convertible preferred stock tendered for
conversion. In connection with the leveraged recapitalization described above,
the holders of the convertible preferred stock elected to convert their
preferred shares into Class B common shares only.

The holders of convertible preferred stock were entitled to elect three
representatives to the Board. On all other matters, the holders of convertible
preferred stock were entitled to vote, as a single class with the common
stockholders, as if their convertible preferred stock had been converted into an
equivalent number of shares of common stock.

The convertible preferred stock was entitled to cumulative dividends at the
rate of 3.5% per year on the convertible base liquidation amount, as defined, of
$2.50 per share. At December 15, 1999 and December 26, 1998, the cumulative
preferred dividends in arrears totaled $0 and $319,229, respectively, as all
cumulative preferred dividends were paid in connection with the leveraged
recapitalization. No dividends could be paid to holders of common stock or
Class B common stock until all cumulative preferred stock dividends were paid.
Convertible preferred stock dividends became immediately payable upon the
leveraged recapitalization.

COMMON STOCK--Common stock and Class B common stock are identical, except
that the holders of common stock and Class B common stock, each voting as
separate classes, are entitled to each elect two representatives to the Board.
The Class B common stock is convertible into an equivalent number of shares of
common stock immediately prior to the closing of an Extraordinary Transaction as
defined. The leveraged recapitalization qualified as an Extraordinary
Transaction and, accordingly, the Class B common shares were converted into
common shares.

STOCK OPTIONS--The Company's 1995 Stock Option Plan (the "Plan") provides
for the issuance of incentive stock options ("ISOs") and nonstatutory stock
options ("NSOs") to officers, employees, directors, consultants and advisors for
the purchase of up to 430,000 shares of common stock. The exercise price of ISOs
may not be less than the fair market value of the Company's common stock on the
date of grant and may not be less than 110% of such fair market value with
respect to any ISOs granted to a participant who owns 10% or more of the
Company's outstanding common stock. Options

F-54

TRAVCORPS CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

PERIOD FROM DECEMBER 27, 1998 TO DECEMBER 15, 1999
AND THE YEAR ENDED DECEMBER 26, 1998

7. STOCKHOLDERS' EQUITY (CONTINUED)
vest in installments over periods of up to seven years. Options granted must be
exercised within ten years.

The Company applies the intrinsic value method to determine compensation
cost associated with its plan. The Board has determined that the fair value of
common stock approximates the exercise price at the time of the grant.
Accordingly, no compensation costs have been recognized for its stock option
plan. The difference between net (loss) income on a pro forma basis had
compensation cost for the Company's plan been determined consistent with the
fair value method described in SFAS No. 123, and reported net (loss) income is
immaterial:

The following is a summary of stock option activity under the Plan:

WEIGHTED-
AVERAGE
EXERCISE
PRICE PER
SHARES SHARE
-------- ---------

Outstanding at December 27, 1997 (25,935 exercisable at a
weighted-average price of $0.20)....................... 216,673 $2.93
Granted (weighted-average fair value of $3.27)......... 149,509 11.81
Forfeited.............................................. (12,310) 5.33
Exercised.............................................. (16,337) 0.18
--------
Outstanding at December 26, 1998 (51,307 exercisable at a
weighted-average price of $2.83)....................... 337,535 6.91

Granted (weighted-average fair value of $25.00).......... 14,725 25.00
Forfeited.............................................. (46,790) 13.98
Exercised.............................................. (305,470) 6.26
--------
Outstanding at December 15, 1999......................... 0
========

The fair value of each option grant was estimated on the date of grant using
an option pricing model with the following assumptions:

1999 1998
-------- --------

Risk-free interest rate.................................... 4.75% 4.75%
Dividend yield............................................. 0.00% 0.00%
Expected life (years)...................................... 10.00 10.00

In connection with the merger with CCS (see Note 9), the options outstanding
as of December 15, 1999 immediately vested and were exchanged for an equivalent
number of shares in CCS.

RESTRICTION ON DIVIDENDS--Pursuant to the terms of the Company's Revolving
Credit Agreement in effect at December 26, 1998 (see Note 4), the Company was
precluded from declaring or paying any dividends on any of its preferred or
common stock and was prohibited from repurchasing any of its outstanding
preferred and common stock, except that up to $190,000 of common stock could
have been repurchased annually from employees whose employment had ceased.

F-55

TRAVCORPS CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

PERIOD FROM DECEMBER 27, 1998 TO DECEMBER 15, 1999
AND THE YEAR ENDED DECEMBER 26, 1998

8. PROFIT-SHARING PLAN

TravCorps has a 401(k) defined contribution benefit plan (the "401(k) Plan")
for eligible employees. Eligible employees may make pretax savings contributions
to the 401(k) Plan of up to 15% of their earnings to a certain statutory limit.
TravCorps matches employee contributions up to 1% of compensation. TravCorps
contributed $97,000 and $93,000 to the 401(k) Plan during the period from
December 27, 1998 to December 15, 1999 and the year ended December 26, 1998,
respectively, and made a discretionary profit sharing contribution of
approximately $86,000 during the year ended December 26, 1998. Cejka has a
separate 401(k) defined contribution benefit plan (the "Cejka plan") for
eligible employees. Eligible employees may make pretax savings contributions to
the Cejka plan of up to 10% of their earnings to a statutory limit. Cejka
matches 50% of the employee contributions up to 6% of compensation. Cejka
contributed approximately $145,000 and $250,000 to the Cejka plan and a
discretionary profit-sharing plan during the period December 27, 1998 to
December 15, 1999 and year ended December 26, 1998, respectively.

9. SUBSEQUENT EVENT--MERGER WITH CROSS COUNTRY STAFFING, INC.

On December 16, 1999, the Company entered into a Plan of Merger with CCS, a
company engaged in the business of providing temporary health care staffing
services to acute and subacute care facilities nationwide. Pursuant to the Plan
of Merger, all outstanding shares of the Company's common stock were exchanged
for common stock in CCS. The fair value of the shares of CCS common stock issued
to the stockholders of the Company, as determined by an independent valuation of
the common stock in January 2000, was $32,102,000. In connection with the merger
transaction, CCS assumed the Company's long-term obligation of $45,000,000. The
merger was accounted for in the CCS consolidated financial statements as a
purchase.

Upon consummation of the merger, certain computer information systems used
by the Company were replaced with CCS systems resulting in a write down of
computer and software equipment approximately $1.2 million. In addition,
unamortized deferred financing costs approximately $1.6 million were written off
in connection with CCS's assumption of the Company's long-term obligation. These
asset write downs were accounted for in the purchase accounting as part of the
merger. Accordingly, the effects of these write downs are not reflected in the
accompanying financial statements.

F-56

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders
Cross Country, Inc.

We have audited the accompanying consolidated statements of assets acquired
and liabilities assumed of ClinForce, Inc. ("ClinForce") as of December 31, 2000
and 1999 and the related consolidated statement of operating revenues and
expenses for each of the two years in the period ended December 31, 2000. These
statements are the responsibility of ClinForce's management. Our responsibility
is to express an opinion on the statements based on our audits.

The accompanying consolidated statements of assets acquired and liabilities
assumed and the related consolidated statements of operating revenues and
expenses were prepared for inclusion in the Registration Statement on Form S-1
of Cross Country, Inc. for purposes of complying with the rules and regulations
of the Securities and Exchange Commission in lieu of the full financial
statements required by Rule 3-05 for the transaction between Cross Country, Inc.
and ClinForce. The statements are not intended to be a complete presentation of
the financial position of ClinForce.

In our opinion, the statements referred to above present fairly, in all
material respects, the consolidated assets acquired and liabilities assumed of
ClinForce at December 31, 2000 and 1999, and the operating revenues and expenses
for each of the two years in the period ended December 31, 2000 in conformity
with accounting principles generally accepted in the United States.

/s/ ERNST &YOUNG LLP

Raleigh, North Carolina

April 26, 2001

F-57

CLINFORCE, INC.

CONSOLIDATED STATEMENTS OF ASSETS ACQUIRED AND LIABILITIES ASSUMED

DECEMBER 31
-------------------------
2000 1999
----------- -----------

ASSETS ACQUIRED
Current assets:
Cash...................................................... $ -- $ 737,556
Accounts receivable, less allowance for doubtful accounts
of $103,645 in 2000 and $0 in 1999...................... 4,943,894 3,367,818
Prepaid expenses.......................................... 25,201 4,290
Current deferred tax asset................................ 108,877 --
Other current assets...................................... 1,999 68,961
----------- -----------
Total current assets........................................ 5,079,971 4,178,625

Property and equipment, net of accumulated depreciation of
$842,498 in 2000 and $707,356 in 1999..................... 404,402 435,979
Goodwill, net of accumulated amortization of $2,119,322 in
2000 and $1,458,113 in 1999............................... 11,073,812 11,735,021
Other assets................................................ 30,036 14,983
----------- -----------
Total assets acquired....................................... $16,588,221 $16,364,608
=========== ===========

LIABILITIES ASSUMED
Current liabilities:
Cash overdraft............................................ $ 248,801 $ --
Accounts payable.......................................... 62,277 2,036
Income taxes payable...................................... 2,060,900 884,515
Accrued employee compensation and benefits................ 1,146,856 626,484
Other current liabilities................................. 4,837 21,909
----------- -----------
Total current liabilities................................... 3,523,671 1,534,944
----------- -----------

Long-term deferred tax liability............................ 354,998 195,435
----------- -----------

Total liabilities assumed................................... $ 3,878,669 $ 1,730,379
=========== ===========

See accompanying notes.

F-58

CLINFORCE, INC.

CONSOLIDATED STATEMENTS OF OPERATING REVENUES AND EXPENSES

YEAR ENDED DECEMBER 31
-------------------------
2000 1999
----------- -----------

Revenue from services....................................... $28,895,276 $26,385,411
Operating expenses:
Compensation and benefits................................. 20,128,675 19,066,580
Selling, general and administrative expenses.............. 4,765,833 3,906,762
Bad debt expense.......................................... 110,000 --
Depreciation.............................................. 135,141 94,199
Amortization.............................................. 659,657 659,657
----------- -----------
Total operating expenses.................................... 25,799,306 23,727,198
----------- -----------
Income from operations...................................... 3,095,970 2,658,213
Income tax expense.......................................... 1,227,071 1,079,950
----------- -----------
Income from operations after tax............................ $ 1,868,899 $ 1,578,263
=========== ===========

See accompanying notes.

F-59

CLINFORCE, INC.

NOTES TO CONSOLIDATED STATEMENTS

DECEMBER 31, 2000

1. ORGANIZATION AND BASIS OF PRESENTATION

ClinForce, Inc. ("ClinForce" or the "Company") is in the business of
recruiting and placing temporary and permanent clinical research professionals.
The Company was a subsidiary of Edgewater Technology, Inc. (f/k/a
Staffmark, Inc.), a publicly held company.

ClinForce, Inc. was founded in 1991 as Clinical Trial Support Services. In
1997, the Company acquired ClinForce in Morristown, New Jersey. In August 1996,
the Company merged with four other regional companies to form Staffmark, Inc.
(n/k/a Edgewater Technology, Inc.). In October 1996, Staffmark became a publicly
traded company. In March 1998, ClinForce acquired Temporary Tech in North
Carolina. On April 1, 1999, the Company changed its name to ClinForce, Inc.
During 2000, the Company opened facilities in Ft. Myers, Boston, Philadelphia,
and Cincinnati.

CFRC, Inc., a wholly-owned subsidiary of ClinForce, was established in
fiscal year 1997. CFRC, Inc. was established primarily as an intellectual
property company. The consolidated financial statements of ClinForce include the
results of operations for CFRC, Inc.

On December 15, 2000, the ClinForce entered into a stock purchase agreement
to be acquired by Cross Country, Inc. for approximately $31,000,000. The
transaction was consummated on March 16, 2001 and met the accounting criteria of
a purchase. The purchase price is subject to a post-closing adjustment based on
changes in the net working capital of the acquired companies between
October 31, 2000 and March 16, 2001.

The consolidated statements of assets acquired and liabilities assumed and
related consolidated statements of operating revenues and expenses (the
"statements") have been prepared solely to comply with the requirements of the
Securities and Exchange Commission. These statements are not intended to be a
complete presentation of the assets, liabilities, revenues and expenses of the
Company because they do not include corporate allocated expenses that would have
been incurred by the Company had it operated as a stand-alone business (see
Note 2).

USE OF ESTIMATES

The preparation of the statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts in the statements and
accompanying notes. Actual results could differ from those estimates.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These statements are not indicative of the financial condition or results of
operations of this business going forward because of the change in the business
and the omission of various administrative expenses.

REVENUE RECOGNITION

Revenues consist primarily of billing for associates' time and permanent
placement fees. Revenue is recognized upon completion of services.

F-60

CLINFORCE, INC.

NOTES TO CONSOLIDATED STATEMENTS (CONTINUED)

DECEMBER 31, 2000

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
for us to seek a replacement at no additional cost. Allowances are established
as considered necessary to estimate significant losses due to placed candidates
not remaining employed for the Company's guarantee period. During 2000 and 1999,
such replacements and refunds were not material and, accordingly, related
allowances were not recorded.

CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to concentrations
of credit risk as defined by Financial Accounting Standards Board (FASB)
Statement No. 105, DISCLOSURE OF INFORMATION ABOUT FINANCIAL INSTRUMENTS WITH
OFF-BALANCE-SHEET RISK AND FINANCIAL INSTRUMENTS WITH CONCENTRATIONS OF CREDIT
RISK, consist principally of accounts receivable. The Company's customers are
clinical research organizations ("CROs") and accounts receivable represent
amounts due from these CROs. The Company performs ongoing credit evaluations of
its customers' financial conditions and, generally, does not require collateral.
Overall, based on the large number of customers in differing geographic areas
throughout the United States and its territories, the Company believes the
concentration of credit risk is limited. As of December 31, 2000, approximately
48% of the outstanding accounts receivable were due from four customers. As of
December 31, 1999, approximately 70% of the outstanding accounts receivable were
due from four customers.

PROPERTY AND EQUIPMENT

CORPORATE ALLOCATIONS

Edgewater provided substantial services to the Company during 2000,
Edgewater has traditionally charged the Company a management fee for tax
planning services and information system services through corporate allocations
which were generally based on a percent of sales. The amount of corporate
allocations was dependent upon the total amount of anticipated allocable costs
incurred by Edgewater less amounts charged as a specific cost or expense rather
than by allocation. The amounts allocated for these services are not included in
these statements because they are not necessarily indicative of amounts that
would have been incurred by the Company had it operated on a stand-alone basis.
Expenses relating to corporate advertising, accounting and legal services,
officer salaries and other selling, general and administrative expenses were not
allocated by Edgewater to ClinForce for internal financial statement purposes,
and therefore, no amounts have been allocated for their services in the pro
forma financial statements.

GOODWILL

Goodwill represents the excess of purchase price over the fair value of net
assets acquired. Goodwill associated with acquisitions in 1998 and 1997 is being
amortized using the straight-line method over its estimated useful life of
twenty years. In accordance with FASB Statement No. 121, ACCOUNTING FOR THE
IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF,

F-61

CLINFORCE, INC.

NOTES TO CONSOLIDATED STATEMENTS (CONTINUED)

DECEMBER 31, 2000

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable.
Recoverability of assets is measured by comparison of the carrying amount of the
asset to net future cash flows expected to be generated from the asset. At
December 31, 2000 and 1999, the Company believes that no impairment of goodwill
exists.

ADVERTISING

The Company's advertising expense consists primarily of print media, online
advertising and promotional material. Advertising costs are expensed as incurred
and were approximately $16,539 and $16,759 for the years ended December 31, 2000
and 1999, respectively.

INCOME TAXES

The Company accounts for income taxes under FASB Statement No. 109,
ACCOUNTING FOR INCOME TAXES. Deferred income tax assets and liabilities are
determined based upon differences between financial reporting and tax bases of
assets and liabilities and are measured using the enacted tax rates and laws
that will be in effect when the differences are expected to reverse. ClinForce
has always been included in a consolidated return for United States federal tax
reporting purposes. The income tax provision included in the statement of
operating revenues and expenses was prepared as if the Company was a stand-alone
entity.

ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts reported in the consolidated balance sheets for cash,
accounts receivable, accounts payable and accrued expenses approximate fair
value because of their short maturity.

COMPREHENSIVE INCOME

The Company has adopted FASB Statement No.130, COMPREHENSIVE INCOME, which
requires that an enterprise: (a) classify items of other comprehensive income by
their nature in the financial statements; and (b) display the accumulated
balance of other comprehensive income separately from retained earnings and
additional paid-in capital in the equity section of the balance sheet. The items
of other comprehensive income that are typically required to be displayed are
foreign currency items, minimum pension liability adjustments and unrealized
gains and losses on certain investments in debt and equity securities. There are
no other components of comprehensive income or loss other than the Company's
consolidated net income and net loss for the years ended December 31, 2000 and
1999, respectively.

IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board issued SFAS No.133,
"Accounting for Derivative Instruments and Hedging Activities". SFAS No.133, as
amended, is required to be adopted in years beginning after June 15, 2000. The
Company plans to adopt the new statement effective January 1, 2001. Because of
the Company's minimal use of derivatives, management does not anticipate the
adoption of the new Statement will have a significant affect on earnings or the
consolidated financial position of the Company.

F-62

CLINFORCE, INC.

NOTES TO CONSOLIDATED STATEMENTS (CONTINUED)

DECEMBER 31, 2000

3. PROPERTY AND EQUIPMENT

At December 31, property and equipment consist of the following:

2000 1999
---------- ----------

Computer equipment................................... $ 268,657 $ 251,398
Computer software.................................... 161,853 131,014
Office equipment..................................... 118,721 118,722
Furniture and fixtures............................... 558,968 556,770
Leasehold improvements............................... 138,701 85,431
---------- ----------
1,246,900 1,143,335
Less accumulated depreciation........................ (842,498) (707,356)
---------- ----------
$ 404,402 $ 435,979
========== ==========

4. ACCRUED COMPENSATION AND BENEFITS

At December 31, accrued employee compensation and benefits consist of the
following:

2000 1999
---------- ----------

Salaries............................................. $ 305,446 $ 222,820
Bonuses.............................................. 512,225 238,169
Accrual for payroll taxes............................ 226,855 82,063
Accrual for vacation................................. 102,330 83,432
---------- ----------
$1,146,856 $ 626,484
========== ==========

5. COMMITMENTS AND CONTINGENCIES

The Company has entered into non-cancelable operating lease agreements for
the rental of space. Future minimum lease payments associated with these
agreements are as follows:

YEAR ENDING DECEMBER 31:
------------------------

2001................................................. $ 412,214
2002................................................. 363,176
2003................................................. 365,844
2004................................................. 294,378
2005................................................. 35,352
Thereafter........................................... 23,712
----------
$1,494,676
==========

Rent expense related to office facilities was approximately $355,161 and
$244,536 for the years ended December 31, 2000 and 1999, respectively.

F-63

CLINFORCE, INC.

NOTES TO CONSOLIDATED STATEMENTS (CONTINUED)

DECEMBER 31, 2000

6. INCOME TAXES

The Company has always been included in a consolidated return for United
States federal tax reporting purposes. The income tax expense and deferred
income taxes were calculated based on income from operations, and therefore are
not necessarily indicative of amounts that would have been incurred by the
Company had it operated as a stand-alone entity. These calculations were
prepared as if the Company filed on a separate return basis. Deferred income
taxes from years prior to 1999 have not been calculated.

The components of the income tax expense (benefit) are as follows:

2000 1999
---------- ----------

Current.............................................. $1,176,385 $ 884,515
Deferred............................................. 50,686 195,435
---------- ----------
$1,227,071 $1,079,950
========== ==========

Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets and liabilities are as follows:

DECEMBER 31
-----------------------
2000 1999
---------- ----------

Deferred tax assets:
Accrued expenses..................................... $ 67,953 $ --
Allowance for doubtful accounts...................... 40,924 --
---------- ----------
108,877 --
Deferred tax liabilities:
Goodwill amortization................................ (235,764) (149,686)
Depreciation......................................... (119,234) (45,749)
---------- ----------
Net deferred taxes................................... $ (246,121) $ (195,435)
========== ==========

F-64

CLINFORCE, INC.

NOTES TO CONSOLIDATED STATEMENTS (CONTINUED)

DECEMBER 31, 2000

6. INCOME TAXES (CONTINUED)
The reconciliation of income tax computed at the U. S. federal statutory
rate to income tax expense is as follows:

DECEMBER 31
-----------------------
2000 1999
---------- ----------

Tax at U.S. statutory rate........................... $1,083,590 $ 930,375
State taxes, net of federal benefit.................. 140,039 119,221
Non-deductible items................................. 9,243 9,363
Other................................................ (5,801) 20,791
---------- ----------
$1,227,071 $1,079,950
========== ==========

7. CASH FLOW INFORMATION (UNAUDITED)

Based on available information and management's best estimates, cash flows
for the Company are as follows for the year ended December 31, 2000:

Provided by operating activities............................ 2,092,075
Used in investing activities................................ (103,564)
Provided by financing activities............................ 0

F-65

REPORT OF INDEPENDENT AUDITORS

To the Members of

Heritage Professional Education, LLC

We have audited the accompanying balance sheet of Heritage Professional
Education, LLC as of December 25, 2000, and the related statements of income,
members' deficit and cash flows for the period from January 1, 2000 through
December 25, 2000. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Heritage Professional
Education, LLC at December 25, 2000, and the results of its operations and its
cash flows for the period from January 1, 2000 through December 25, 2000, in
conformity with accounting principles generally accepted in the United States.

Ernst & Young LLP

Nashville, TN

August 10, 2001

F-66

HERITAGE PROFESSIONAL EDUCATION, LLC

BALANCE SHEET

DECEMBER 25, 2000

ASSETS
Current assets:
Cash and cash equivalents................................. $ 376,965
Accounts receivable, net of allowance for doubtful
accounts of $131,081.................................... 118,155
Prepaid expenses and other current assets................. 55,896
---------
Total current assets........................................ 551,016

Property and equipment:
Furniture and fixtures.................................... 10,541
Computer equipment........................................ 50,035
---------
60,576
Less accumulated depreciation and amortization............ (23,672)
---------
36,904
Other assets................................................ 3,226
---------
Total assets................................................ $ 591,146
=========

LIABILITIES AND MEMBERS' DEFICIT
Current liabilities:
Accounts payable and accrued liabilities.................. $ 609,459
Accrued compensation...................................... 138,106
Deferred revenue.......................................... 282,567
---------
Total current liabilities................................... 1,030,132
Members' deficit............................................ (438,986)
---------
Total liabilities and members' deficit...................... $ 591,146
=========

See accompanying notes.

F-67

HERITAGE PROFESSIONAL EDUCATION, LLC

STATEMENT OF INCOME

FOR THE PERIOD FROM JANUARY 1, 2000

THROUGH DECEMBER 25, 2000

Revenue..................................................... $11,147,522
Operating costs and expenses:
Cost of revenues.......................................... 4,935,771
Selling, general and administrative expenses.............. 4,562,912
-----------
Total operating costs and expenses.......................... 9,498,683
-----------
Net income.................................................. $ 1,648,839
===========

See accompanying notes.

F-68

HERITAGE PROFESSIONAL EDUCATION, LLC

STATEMENT OF MEMBERS' DEFICIT

MEMBERS' DEFICIT
----------------

Balance at January 1, 2000.................................. $ (551,003)
Net income.................................................. 1,648,839
Capital distribution........................................ (1,536,822)
----------
Balance at December 25, 2000................................ $ (438,986)
==========

See accompanying notes.

F-69

HERITAGE PROFESSIONAL EDUCATION, LLC

STATEMENT OF CASH FLOWS

FOR THE PERIOD FROM JANUARY 1, 2000

THROUGH DECEMBER 25, 2000

OPERATING ACTIVITIES:
Net income.................................................. $1,648,839
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization............................. 11,259
Allowance for doubtful accounts........................... 88,096
Changes in operating assets and liabilities:
Accounts receivable..................................... (186,358)
Prepaid expenses and other current assets............... (55,792)
Accounts payable and accrued liabilities................ 285,668
Accrued compensation.................................... 115,142
Deferred revenue........................................ 21,258
----------
Net cash provided operating activities...................... 1,928,112

INVESTING ACTIVITIES:
Purchase of property and equipment.......................... (14,325)
----------
Net cash used in investing activities....................... (14,325)

FINANCING ACTIVITIES:
Distribution to members..................................... (1,536,822)
----------
Net cash used in financing activities....................... (1,536,822)
Net increase in cash and cash equivalents................... 376,965
Cash and cash equivalents at beginning of period............ --
----------
Cash and cash equivalents at end of period.................. $ 376,965
==========

See accompanying notes.

F-70

HERITAGE PROFESSIONAL EDUCATION, LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 25, 2000

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REPORTING ENTITY

Heritage Professional Education, LLC (the "Company") was organized on
January 1, 1998 and is based in Nashville, Tennessee. The Company provides one
day instructor-led seminars throughout the United States to meet the ongoing
training and continuing education needs of the healthcare community. The Company
has an infinite life unless terminated earlier in accordance with its Operating
Agreement dated January 1, 1998.

RECOGNITION OF REVENUE

Revenue is recognized as the instructor-led seminars are performed and the
related learning materials are delivered. The Company does not require
collateral on trade receivables.

USE OF ESTIMATES

The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates and such differences could be material to the financial statements.

CASH AND CASH EQUIVALENTS

The Company considers unrestricted, highly liquid investments with initial
maturities of less than three months to be cash equivalents.

PROPERTY AND EQUIPMENT

Property and equipment are stated on the basis of cost. Depreciation and
amortization are provided on the straight-line method over the following
estimated useful lives:

YEARS
--------

Furniture and fixtures...................................... 7
Computer equipment.......................................... 3-5

LONG-LIVED ASSETS

The Company accounts for long-lived assets in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," which
requires that companies consider whether events or changes in facts and
circumstances, both internally and externally, may indicate that an impairment
of long-lived assets held for use are present. Management periodically evaluates
the carrying value of long-live assets, including property and equipment and
intangible assets and has determined that there were no indications of
impairment as of December 25, 2000. Should there be an impairment in the future,
the Company would recognize the amount of the impairment based on expected
future cash flows from the impaired assets. The cash flow estimates that would
be used would be based on management's best estimates, using appropriate and
customary assumptions and projections at the time.

F-71

HERITAGE PROFESSIONAL EDUCATION, LLC

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 25, 2000

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DEFERRED REVENUE

Deferred revenue represents amounts which have been billed and collected,
but not yet recognized in revenue.

INCOME TAXES

The Company has elected to be treated as a partnership for federal income
tax purposes. Accordingly, for federal income tax purposes, the members report
their proportionate share of the Company's taxable income or loss on their
respective tax returns; therefore, no provision for federal income taxes is
included in the financial statements. Furthermore, because the Company's income
is subject to individual self-employment taxes, the income is not subject to
Tennessee income tax. As a result, no provision for state income taxes is
included in the financial statements.

SHIPPING AND HANDLING COSTS

Shipping and handling costs are included in cost of revenues.

ADVERTISING

The Company expenses the costs of advertising as incurred. Advertising
expense for the period from January 1, 2000 through December 25, 2000 was
$3,246,358 and is included in selling, general and administrative expenses.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial instruments:

CASH AND CASH EQUIVALENTS: The carrying amounts approximate the fair value
because of the short-term maturity or short-term nature of such instruments.

ACCOUNTS RECEIVABLE, ACCOUNTS PAYABLE, ACCRUED LIABILITIES AND DEFERRED
REVENUE: The carrying amounts approximate the fair value because of the
short-term nature of such instruments.

2. MEMBERS' DEFICIT

The Operating Agreement requires that a separate capital account be
maintained for each member. The respective capital account of each Member
consists of the opening capital account, increased by additional capital
contributions and share of profits transferred to capital by agreement between
the members, and decreased by the share of the Company losses and distributions
of capital. No member shall withdraw any part of his or her capital account
without the consent of the majority in interest of all the members of the
Company. If the capital account of a member becomes impaired, his or her share
of the subsequent Company profits shall be first credited to his or her capital
account until that account has been restored, before such profits are credited
to his or her income accounts. Income tax depreciation shall be taken by each
member based on the ratio that each member's capital account bears to the total
sum of all capital accounts.

F-72

HERITAGE PROFESSIONAL EDUCATION, LLC

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 25, 2000

2. MEMBERS' DEFICIT (CONTINUED)
The net profits and losses of the Company are divided between the members in
the same proportions as subsequent contributions to capital described above. A
separate income account shall be maintained for each member. Company profits and
losses shall be charged or credited to the separate income account for each
member. If a member has no credit balance in his or her income account, losses
shall be charged to his or her capital account.

Without the consent of a majority in interest of the members of the Company,
no member shall receive any salary for services or other remuneration rendered
to the Company. Withdrawals of income during each year shall be in amounts
agreed upon from time to time by the members. If a member has a debit balance in
his or her income account, it shall be deemed a debit due to the Company payable
quarterly upon the demand of any member.

3. PROFIT SHARING PLAN

The Company has a profit sharing plan (the "Plan"). Employees of the Company
must have attained the age of 21 and have completed one year of service to be
eligible to participate in the Plan. Under the provisions of the Plan, the
Company may make discretionary contributions to the Plan. The Company
contributed $9,725 during 2000.

4. LEASE COMMITMENTS

The Company leases its office facility in Nashville, Tennessee under an
agreement that expires on December 31, 2002. The lease agreement contains a
provision for escalating rent payments over the term of the lease. The Company
accounts for this lease by recognizing the straight-line rent expense and
adjusting the deferred rent expense liability for the difference between the
straight-line rent expense and the amount of rent paid. Total rent expense under
all operating leases was $39,710 in 2000. Future rental payment commitments at
December 25, 2000 under the non-cancelable facility-operating lease with an
initial term of one year or more, are as follows:

OPERATING LEASES
----------------

2001........................................................ $40,916
2002........................................................ 40,927
Thereafter.................................................. --
-------
Total minimum lease payments................................ $81,843
=======

5. SUBSEQUENT EVENTS

Effective December 26, 2000, Cross Country Seminars, a wholly-owned
subsidiary of Cross Country, Inc., acquired substantially all of the assets and
business of the Company. The Company received approximately $6,500,000 in cash.
In addition, the asset purchase agreement provides for potential earnout
payments of approximately $6,500,000 based on adjusted earnings before interest,
taxes, depreciation, and amortization (EBITDA) (as defined in the asset purchase
agreement) of the business over a three-year period ending December 31, 2003.

Subsequent to December 25, 2000, the Company changed its name to Caney Fork
Investments, LLP.

F-73

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

9,000,000 SHARES

[LOGO]

COMMON STOCK

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

PROSPECTUS

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

MERRILL LYNCH & CO.
SALOMON SMITH BARNEY
BANC OF AMERICA SECURITIES LLC
CIBC WORLD MARKETS
SUNTRUST ROBINSON HUMPHREY

, 2002

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

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the expenses expected to be incurred by the
Company in connection with the issuance and distribution of common stock
registered hereby. Except for the Securities and Exchange Commission registrant
fee and the National Association of Securities Dealers, Inc. filing fee, the
fees set forth below are estimates.

Securities and Exchange Commission registration fee......... $ 28,213
National Association of Securities Dealers, Inc. filing
fee......................................................... 30,500
Printing and engraving fees and expenses.................... *
Legal fees and expenses..................................... *
Accounting fees and expenses................................ *
Transfer Agent and Registrar fees and expenses.............. *
Miscellaneous expenses...................................... *
--------
Total..................................................... $ *
========

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

* To be completed by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 102 of the General Corporation Law of Delaware allows a corporation
to limit a director's personal liability to the corporation or its stockholders
from monetary damages for breach of fiduciary duty as a director, with certain
exceptions. The Company's Certificate of Incorporation, as amended, provides
such limitation to the fullest extent permitted by the General Corporation Law
of Delaware.

Section 145 of the General Corporation Law of Delaware permits a
corporation, subject to the standards set forth therein, to indemnify any person
in connection with any action, suit or proceeding brought or threatened by
reason of the fact that such person is or was a director, officer, employee or
agent of the corporation or is or was serving as such with respect to another
entity at the request of the corporation. The Company's Certificate of
Incorporation, as amended, and the Company's By-Laws, as amended, provide for
full indemnification of its directors and officers to the extent permitted by
Section 145.

- for any breach of the director's duty of loyalty to us or our
stockholders;

- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;

- under Section 174 of the Delaware General Corporation Law, which concerns
unlawful payments of dividends, stock purchases, or redemptions; and

- for any transaction from which the director derived an improper personal
benefit.

Our amended and restated certificate of incorporation and amended and
restated by-laws will also contain provisions indemnifying our directors and
officers to the fullest extent permitted by Delaware law. The indemnification
permitted under Delaware law is not exclusive of any other rights to which such
persons may be entitled.

II-1

In addition, we maintain insurance on behalf of our directors and officers
insuring them against liabilities asserted against them in their capacities as
directors or officers or arising out of such status, except when we have
directly indemnified the directors and officers.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Since its inception, Cross Country has issued and sold unregistered
securities in the transactions described below:

On July 29, 1999, we issued and sold 11,837,672 shares of Common Stock to
Charterhouse Equity Partners III, L.P. and CHEF Nominees, Ltd. for gross
proceeds of $71.8 million.

On July 29, 1999, in connection with our acquisition of substantially all
the assets of Cross Country Staffing, we issued 988,811 shares of Common Stock
to Cross Country Staffing.

On July 29, 1999, pursuant to an Amended and Restated Subscription and
Stockholders Agreement, we issued to Joseph Boshart, Emil Hensel, Jonathan Ward
and Vickie Anenberg an aggregate of 288,420 shares of Common Stock for gross
proceeds of $1.8 million.

On July 29, 1999, we issued 380,147 shares of Common Stock to The
Northwestern Mutual Life Insurance Company in connection with its purchase of
$10.0 million of our 12% Senior Subordinated Pay-in-Kind Notes, due on
January 1, 2006.

On July 29, 1999, we issued 760,282 shares of Common Stock to DB Capital
Investors in connection with the purchase by BT Investment Partners of
$20.0 million of our 12% Senior Subordinated Pay-in-Kind Notes, due on
January 1, 2006.

On December 9, 1999, we granted to certain of our and our subsidiaries'
employees an aggregate of 132,004 shares of Common Stock in consideration for
the receipt of $0.0001 per share. The following individuals purchased these
shares: Joseph Boshart, Emil Hensel, Vickie Anenberg, Jonathan Ward, Lee Ann
O'Connor, Frank Shaffer, Barbara Astler, Jerry Chua, Daniel Lewis, Richard Ives,
Wendi Dusseault, Katherine Miyares, Dijanan Lesh, Debbie Simpson, Jean Ann
Johnson, Denise Brodwyn, Kristin Dunn, Francine Denello, Lisa Vrana, Lisa
Lapina, Mia Wender, Hope Mello, Tom Homish, Christine Portner, Darren Portner,
Marc Leon, Tom Stevens, Brian Hekman, Sharon Boggs, Lynn Gianatasio, Ted Burg,
Jeanette McClary, Chris West, Karen McConnell, Darren Bounds, Michael MacNeill,
Stephanie Russo, Michael Britt, Melissa Rutherford, Mary Walker, Luz Torres,
Kimberly Hewlitt, Kathleen Salerno, Jill Wengerter, Jennifer Goldstein, Jackie
Finz, Gregg Proietti, Dawn Anderson, Beth Butler, Audrey Mariovich, Arlene
Belue, Anthony Pederson and Heather Stover.

On December 16, 1999, in connection with our acquisition of TravCorps, we
issued 1,520,000 shares of Common Stock to certain holders of stock of
TravCorps.

In addition, as of December 31, 2001, the Company has granted options to
purchase a total of 3,725,084 shares of Common Stock to employees, including
certain senior managers, at a weighted average exercise price of approximately
$13.00 per share.

The issuances described above in this Item 15 were deemed exempt from
registration under the Securities Act in reliance on either: (1) Rule 701
promulgated under the Securities Act as offers and sales of securities pursuant
to certain compensatory benefit plans and contracts relating to compensation in
compliance with Rule 701; or (2) Section 4(2) of the Securities Act, including
Regulation D thereunder, as transactions by an issuer not involving any public
offering.

II-2

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

The following exhibits are filed herewith unless otherwise indicated

NO. DESCRIPTION
- --------------------- ------------------------------------------------------------

1.1* Form of Underwriting Agreement

2.1 Cross Country Staffing Asset Purchase Agreement, dated
June 24, 1999, by and among W. R. Grace & Co.--Conn., a
Connecticut corporation, Cross Country Staffing, a Delaware
general partnership, and the Registrant, a Delaware
corporation (incorporated by reference to Exhibit 2.1 of the
Company's registration statement on Form S-1, dated
July 11, 2001)

2.2 Agreement and Plan of Merger, dated as of October 29, 1999,
by and among the Registrant, CCTC Acquisition, Inc. and
Certain Stockholders of Cross Country Staffing, Inc and
TravCorps Corporation and the Stockholders of TravCorps
Corporation (incorporated by reference to Exhibit 2.2 of the
Company's registration statement on Form S-1, dated
July 11, 2001)

2.3 Stock Purchase Agreement, dated as of December 15, 2000, by
and between Edgewater Technology, Inc. and the Registrant
(incorporated by reference to Exhibit 2.3 of the Company's
registration statement on Form S-1, dated July 11, 2001)

3.1 Amended and Restated Certificate of Incorporation of the
Registrant (incorporated by reference to Exhibit 3.1 of the
Company's registration statement on Form S-1, dated
July 11, 2001)

3.2 Amended and Restated By-laws of the Registrant (incorporated
by reference to Exhibit 3.2 of the Company's registration
statement on Form S-1, dated July 11, 2001)

4.1 Form of specimen common stock certificate (incorporated by
reference to Exhibit 4.1 of the Company's registration
statement on Form S-1, dated October 22, 2001)

4.2 Amended and Restated Stockholders Agreement, dated
August 23, 2001, among the Registrant, a Delaware
corporation, the CEP Investors and the Investors
(incorporated by reference to Exhibit 4.2 of the Company's
registration statement on Form S-1, dated July 11, 2001)

4.3 Registration Rights Agreement, dated as of October 29, 1999,
among the Registrant, a Delaware corporation, and the CEP
Investors and the MSDWCP Investors (incorporated by
reference to Exhibit 4.3 of the Company's registration
statement on Form S-1, dated July 11, 2001)

4.4 Amendment to the Registration Rights Agreement, dated as of
August 23, 2001, among the Registrant, a Delaware
corporation, and the CEP Investors and the MSDWCP Investors
(incorporated by reference to Exhibit 4.4 of the Company's
registration statement on Form S-1, dated July 11, 2001)

4.5 Stockholders Agreement, dated as of August 23, 2001, among
the Registrant, Joseph Boshart and Emil Hensel and the
Financial Investors (incorporated by reference to Exhibit
4.5 of the Company's registration statement on Form S-1,
dated July 11, 2001)

II-3

NO. DESCRIPTION
- --------------------- ------------------------------------------------------------

5.1* Opinion of Proskauer Rose LLP as to the legality of the
common stock being registered

10.1 Employment Agreement, dated as of June 24, 1999, between
Joseph Boshart and the Registrant (incorporated by reference
to Exhibit 10.1 of the Company's registration statement on
Form S-1, dated July 11, 2001)

10.2 Employment Agreement, dated as of June 24, 1999, between
Emil Hensel and the Registrant (incorporated by reference to
Exhibit 10.2 of the Company's registration statement on
Form S-1, dated July 11, 2001)

10.3 Employment Agreement termination, dated as of December 21,
2000, between Bruce Cerullo and the Registrant (incorporated
by reference to Exhibit 10.3 of the Company's registration
statement on Form S-1, dated July 11, 2001)

10.4 Lease Agreement, dated April 28, 1997, between Meridian
Properties and the Registrant (incorporated by reference to
Exhibit 10.4 of the Company's registration statement on
Form S-1, dated July 11, 2001)

10.5 Lease Agreement, dated October 31, 2000, by and between
Trustees of the Goldberg Brothers Trust, a Massachusetts
Nominee Trust and TVCM, Inc. (incorporated by reference to
Exhibit 10.5 of the Company's registration statement on
Form S-1, dated July 11, 2001)

10.6 222 Building Standard Office Lease between Clayton Investors
Associates, LLC and Cejka & Company (incorporated by
reference to Exhibit 10.6 of the Company's registration
statement on Form S-1, dated July 11, 2001)

10.7 Amended and Restated 1999 Stock Option Plan of the
Registrant

10.8 Amended and Restated Equity Participation Plan of the
Registrant

10.9* Third Amended and Restated Credit Agreement, dated as of
February 11, 2002, among the Registrant, the Lenders Party
thereto, Salomon Smith Barney, Inc., as Arranger, Citicorp
USA, Inc. as Administrative Agent, Collateral Agent, Issuing
Bank and Swingline Lender, Bankers Trust Company, as
Syndication Agent, and Wachovia Bank, N.A., as Documentation
Agent

10.10 Waiver and Amendment No. 1 dated as of May 3, 2001, to the
Credit Agreement dated as of July 29, 1999, as amended and
restated as of December 16, 1999 and March 16, 2001 by and
among the Registrant, the Lenders Party thereto, Salomon
Smith Barney, Inc., as Arranger, Citicorp USA, Inc. as
Administrative Agent, Collateral Agent, Issuing Bank and
Swingline Lender, Bankers Trust Company, as Syndication
Agent, and Wachovia Bank, N.A., as Documentation Agent
(incorporated by reference to Exhibit 10.10 of the Company's
registration statement on Form S-1, dated July 11, 2001)

10.11 Form of Subsidiary Guarantee Agreement, dated as of
December 16, 1999, among the Registrant's subsidiary
guarantors and Citicorp USA, Inc., as collateral agent for
the Obligees (incorporated by reference to Exhibit 10.11 of
the Company's registration statement on Form S-1, dated
July 11, 2001)

10.12 Form of Security Agreement, dated as of July 29, 1999, as
amended and restated as of December 16, 1999 among the
Registrant and Citicorp USA, Inc. as collateral agent for
the Obligees (incorporated by reference to Exhibit 10.12 of
the Company's registration statement on Form S-1, dated
July 11, 2001)

II-4

NO. DESCRIPTION
- --------------------- ------------------------------------------------------------

10.13 Form of Pledge Agreement, dated as of July 29, 1999, as
amended and restated as of December 16, 1999, among the
Registrant and Citicorp USA, Inc., as collateral agent for
the Obligees (incorporated by reference to Exhibit 10.13 of
the Company's registration statement on Form S-1, dated
July 11, 2001)

10.14 Form of Indemnity, Subrogation and Contribution Agreement,
dated as of December 16, 1999, among the Registrant, the
subsidiaries of the Registrant and Citicorp USA, Inc., as
collateral agent for the Obligees (incorporated by reference
to Exhibit 10.14 of the Company's registration statement on
Form S-1, dated July 11, 2001)

21.1 List of subsidiaries of the Registrant

23.1 Consents of Ernst & Young LLP

23.2 Consent of PricewaterhouseCoopers LLP

23.3 Consent of Deloitte & Touche LLP

23.4* Consent of Proskauer Rose LLP (contained in Exhibit 5.1)

24.1 Power of Attorney (included on signature page of the
Registration Statement)

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

* To be filed by amendment.

(b) Financial Statement Schedules

SCHEDULE II

BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END
DESCRIPTION OF PERIOD EXPENSES WRITEOFF'S RECOVERIES CHANGES OF PERIOD
- ----------- ---------- ---------- ----------- ---------- ---------- ----------
VALUATION AND QUALIFYING ACCOUNTS (FOR CONTINUING OPERATIONS)

ALLOWANCE FOR DOUBTFUL ACCOUNTS
Period July 30--December 31,
1999.......................... $1,158,039 $511,341 $ (272,142) $ -- $746,872(a) $2,144,110
Year ended December 31, 2000.... 2,144,110 432,973 (565,012) 75,676 -- 2,087,747
Nine months ended September 30,
2001.......................... 2,087,747 1,712,640 (1,241,274) -- 52,499(b) 2,611,612

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

(a) --Allowance for doubtful accounts for receivables acquired in TravCorps
acquisition

(b) --Allowance for doubtful accounts for receivables acquired in ClinForce
acquisition

All schedules not identified above have been omitted because they are not
required, are not applicable or the information is included in the selected
consolidated financial data or notes contained in this Registration Statement.

ITEM 17. UNDERTAKINGS

(a) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by the director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the registrant

II-5

will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.

(b) The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the time it
was declared effective.

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial BONA FIDE offering
thereof.

II-6

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Boca Raton, Florida, on the 27th
day of February, 2002.

CROSS COUNTRY, INC.

By: /s/ JOSEPH BOSHART
-----------------------------------------
Joseph Boshart
PRESIDENT AND CHIEF EXECUTIVE OFFICER

Each person whose signature appears below hereby constitutes and appoints
Joseph A. Boshart and Emil Hensel, his true and lawful attorneys-in-fact and
agents with full power of substitution and resubstitution, for him and in his
name, place, and stead, in any and all capacities, to sign any and all
(1) amendments (including post-effective amendments) and additions to this
Registration Statement and (2) Registration Statements, and any and all
amendments thereto (including post-effective amendments), relating to the
offering contemplated pursuant to Rule 462(b) under the Securities Act of 1933,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, and hereby
grants to such attorneys-in-fact and agents full power and authority to do and
perform each and every act and thing requisite and necessary to be done, as
fully to all intents and purposes as he or she might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents or
his substitute or substitutes may lawfully do or cause to be done by virtue
hereof.

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons, as of the
27th day of February, 2002, in the capacities indicated.

SIGNATURE TITLE
--------- -----

/s/ JOSEPH A. BOSHART President, Chief Executive Officer and
------------------------------------------- Director
Joseph A. Boshart (Principal Executive Officer)

/s/ EMIL HENSEL Chief Financial Officer and Director
------------------------------------------- (Principal Financial Officer and Principal
Emil Hensel Accounting Officer)

/s/ KAREN H. BECHTEL
------------------------------------------- Director
Karen H. Bechtel

/s/ W. LARRY CASH
------------------------------------------- Director
W. Larry Cash

/s/ BRUCE A. CERULLO
------------------------------------------- Director
Bruce A. Cerullo

/s/ THOMAS C. DIRCKS
------------------------------------------- Director
Thomas C. Dircks

II-7

SIGNATURE TITLE
--------- -----

/s/ A. LAWRENCE FAGAN
------------------------------------------- Director
A. Lawrence Fagan

/s/ M. FAZLE HUSAIN
------------------------------------------- Director
M. Fazle Husain

/s/ JOSEPH SWEDISH
------------------------------------------- Director
Joseph Swedish

/s/ JOSEPH TRUNFIO
------------------------------------------- Director
Joseph Trunfio

II-8



                                                                    Exhibit 10.7














                               CROSS COUNTRY, INC.

                              AMENDED AND RESTATED

                             1999 STOCK OPTION PLAN
                       (EFFECTIVE AS OF OCTOBER 25, 2001)





















                               CROSS COUNTRY, INC.

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

                              AMENDED AND RESTATED

                             1999 STOCK OPTION PLAN

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


                                   ARTICLE I

                                     PURPOSE

         The purpose of this Cross Country, Inc. Amended and Restated 1999 Stock
Option Plan is to enhance the profitability and value of the Company for the
benefit of its stockholders by enabling the Company to offer employees of and
Consultants to the Company and its Affiliates stock-based incentives in the
Company, thereby creating a means to raise the level of stock ownership by
employees and Consultants in order to attract, retain and reward such
individuals and strengthen the mutuality of interests between such individuals
and the Company's stockholders. The purpose of the Plan is also to enhance the
profitability of the Company and value of the Company for the benefit of its
stockholders by enabling the Company to offer non-employee directors of the
Company stock-based incentives in the Company.

                                   ARTICLE II

                                   DEFINITIONS

         For purposes of this Plan, the following terms shall have the following
meanings:

         2.1 "Affiliate" means each of the following: (i) any Subsidiary; (ii)
any Parent; (iii) any corporation, trade or business (including, without
limitation, a partnership or limited liability company) which is directly or
indirectly controlled 50% or more (whether by ownership of stock, assets or an
equivalent ownership interest or voting interest) by the Company or one of its
Affiliates; and (iv) any other entity in which the Company or any of its
Affiliates has a material equity interest and which is designated as an
"Affiliate" by resolution of the Committee.

         2.2 "Award" means any award under this Plan of a Stock Option.

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

         2.4 "Cause" means, with respect to a Participant's Termination: (i) in
the case where there is no employment agreement, consulting agreement, change in
control



agreement or similar agreement in effect between the Company or an Affiliate and
the Participant at the time of the grant of the Award (or where there is such an
agreement but it does not define "cause" (or words of like import)), termination
due to a Participant's insubordination, dishonesty, fraud, incompetence, moral
turpitude, misconduct, refusal to perform his or her duties or responsibilities
for any reason other than illness or incapacity or materially unsatisfactory
performance of his or her duties for the Company or an Affiliate as determined
by the Committee in its sole discretion; or (ii) in the case where there is an
employment agreement, consulting agreement, change in control agreement or
similar agreement in effect between the Company or an Affiliate and the
Participant at the time of the grant of the Award that defines "cause" (or words
of like import), "cause" as defined under such agreement; provided, however,
that with regard to any agreement that conditions "cause" on occurrence of a
change in control, such definition of "cause" shall not apply until a change in
control actually takes place and then only with regard to a termination
thereafter. Notwithstanding the foregoing, a Participant shall be deemed to be
terminated for "cause" if the Participant: (i) breaches the terms of any
agreement between the Company and the Participant including, without limitation,
an employment agreement or non-competition agreement or (ii) discloses to anyone
outside the Company or its Affiliates, or uses in other than the Company's or
its Affiliate's business, without written authorization from the Company, any
confidential information or proprietary information, relating to the business of
the Company or its Affiliates, acquired by the Participant prior to the
Participant's Termination. Notwithstanding the foregoing, with respect to a
non-employee director's Termination of Directorship, "cause" means an act or
failure to act that constitutes cause for removal of a director under applicable
Delaware law.

         2.5 "CEP" means Charterhouse Equity Partners III, L.P., and its
successors.

         2.6 "Change in Control" has the meaning set forth in Article VIII.

         2.7 "Code" means the Internal Revenue Code of 1986, as amended. Any
reference to any section of the Code shall also be a reference to any successor
provision.

         2.8 "Committee" means (i) with respect to Eligible Employees and
Consultants, a committee or subcommittee of the Board appointed from time to
time by the Board, which committee or subcommittee shall consist of 2 or more
non-employee directors each of whom shall be a non-employee director as defined
in Rule 16b-3 under the Exchange Act and an outside director as defined under
Section 162(m) of the Code; provided, however, that if and to the extent that no
Committee exists which has the authority to administer this Plan, the functions
of the Committee shall be exercised by the Board and all references herein to
the Committee shall be deemed to be references to the Board; and (ii) with
respect to the application of this Plan to non-employee directors, the Board. If
for any reason the appointed Committee does not meet the requirements of Rule
16b-3 or Section 162(m) of the Code, such noncompliance with the requirements of
Rule 16b-3 or Section 162(m) of the Code shall not affect the validity of the
awards, grants, interpretations or other actions of the Committee.



                                       2


         2.9 "Common Stock" means the Common Stock, $.0001 par value per share,
of the Company.

         2.10 "Company" means Cross Country, Inc., a Delaware corporation, and
its successors.

         2.11 "Consultant" means any advisor or consultant to the Company or its
Affiliates.

         2.12 "Disability" means a disability which would qualify as such under
the Company's long-term disability plan. A Disability shall only be deemed to
occur at the time of the determination by the Committee of the Disability.

         2.13 "Effective Date" means the effective date of this Plan as defined
in Article XIII.

         2.14 "Eligible Employee" means each employee of the Company or an
Affiliate.

         2.15 "Exchange Act" means the Securities Exchange Act of 1934, as
amended. Any references to any section of the Exchange Act shall also be a
reference to any successor provision.

         2.16 "Fair Market Value" means, for purposes of this Plan, unless
otherwise required by any applicable provision of the Code or any regulations
issued thereunder, as of any date, the last sales price reported for the Common
Stock on the applicable date: (a) as reported on the principal national
securities exchange in the United States on which it is then traded or The
Nasdaq Stock Market, Inc.; or (b) if not traded on any such national securities
exchange or The Nasdaq Stock Market, Inc., as quoted on an automated quotation
system sponsored by the National Association of Securities Dealers, Inc. or if
the Common Stock shall not have been reported or quoted on such date, on the
first day prior thereto on which the Common Stock was reported or quoted;
provided, that the Committee may modify the definition of Fair Market Value to
reflect any changes in the trading practices of any exchange on which the Common
Stock is listed or traded. If the Common Stock is not readily tradable on a
national securities exchange, The Nasdaq Stock Market, Inc. or any automated
quotation system sponsored by the National Association of Securities Dealers,
Inc., its Fair Market Value shall be set in good faith by the Committee.
Notwithstanding anything herein to the contrary, "Fair Market Value" means the
price for Common Stock set by the Committee in good faith. For purposes of the
grant of any Stock Option, the applicable date shall be the date for which the
last sales price is available at the time of grant.

         2.17 "Incentive Stock Option" means any Stock Option awarded to an
Eligible Employee under this Plan intended to be and designated as an "Incentive
Stock Option" within the meaning of Section 422 of the Code.



                                       3


         2.18 "MSDWCP" means a representative of Morgan Stanley Dean Witter
Capital Partners IV, L.P. and its affiliated funds, and their respective
successors.

         2.19 "Non-Qualified Stock Option" means any Stock Option awarded under
this Plan that is not an Incentive Stock Option.

         2.20 "Parent" means any parent corporation of the Company within the
meaning of Section 424(e) of the Code.

         2.21 "Participant" means any Eligible Employee or Consultant to whom a
Stock Option has been awarded under this Plan. Effective as of October 25, 2001,
non-employee directors shall be Participants for purposes of the Plan solely
with respect to awards of Stock Options pursuant to Article X.

         2.22 "Plan" means this Cross Country, Inc. Amended and Restated 1999
Stock Option Plan, as amended from time to time.

         2.23 "Retirement" means a Termination of Employment or Termination of
Consultancy without Cause by a Participant on or after age 65 or such earlier
date after age 50 as may be approved by the Committee with regard to such
Participant. With respect to a Participant's Termination of Directorship,
Retirement means the failure to stand for reelection or the failure to be
reelected on or after a Participant has attained age 65 or, with the consent of
the Board, before age 65 but after age 50.

         2.24 "Securities Act" means the Securities Act of 1933, as amended. Any
reference to any section of the Securities Act shall also be a reference to any
successor provision.

         2.25 "Stock Option" or "Option" means any option to purchase shares of
Common Stock granted to Eligible Employees or Consultants pursuant to Article VI
or non-employee directors pursuant to Article X.

         2.26 "Subsidiary" means any subsidiary corporation of the Company
within the meaning of Section 424(f) of the Code.

         2.27 "Substitute Options" means Stock Options issued in assumption of
or substitution for stock options issued by a company acquired by the Company or
with which the Company combines.

         2.28 "Ten Percent Stockholder" means a person owning stock possessing
more than 10% of the total combined voting power of all classes of stock of the
Company, its Subsidiaries or its Parent.

         2.29 "Termination" means a Termination of Consultancy or Termination of
Employment, as the case may be.



                                       4


         2.30 "Termination of Consultancy" means (i) that the Consultant is no
longer acting as a consultant to the Company or an Affiliate; or (ii) when an
entity which is retaining a Participant as a Consultant ceases to be an
Affiliate, unless the Participant otherwise is, or thereupon becomes, a
Consultant to the Company or another Affiliate. In the event that a Consultant
becomes an Eligible Employee upon the termination of his consultancy, the
Committee, in its sole and absolute discretion, may determine that no
Termination of Consultancy shall be deemed to occur until such time as such
Consultant is no longer a Consultant or an Eligible Employee. The Committee may
otherwise define Termination of Consultancy in the Award agreement or, if no
rights of a Participant are reduced, may otherwise define Termination of
Consultancy thereafter.

         2.31 "Termination of Directorship" means, with respect to a
non-employee director, that the non-employee director has ceased to be a
director of the Company. In the event that a non-employee director becomes an
Eligible Employee or Consultant upon his termination of directorship, the Board,
in its sole and absolute discretion, may determine that no Termination of
Directorship shall be deemed to occur until such time as such non-employee
director is no longer an Eligible Employee or Consultant. The Committee may
otherwise define Termination of Directorship in the Award agreement or, if no
rights of a non-employee director are reduced, may otherwise define Termination
of Directorship thereafter.

         2.32 "Termination of Employment" means: (i) a termination of employment
(for reasons other than a military or personal leave of absence granted by the
Company) of a Participant from the Company and its Affiliates; or (ii) when an
entity which is employing a Participant ceases to be an Affiliate, unless the
Participant otherwise is, or thereupon becomes, employed by the Company or
another Affiliate. In the event that an Eligible Employee becomes a Consultant
upon the termination of his employment, the Committee, in its sole and absolute
discretion, may determine that no Termination of Employment shall be deemed to
occur until such time as such Eligible Employee is no longer an Eligible
Employee or a Consultant. The Committee may otherwise define Termination of
Employment in the Award agreement or, if no rights of a Participant are reduced,
may otherwise define Termination of Employment thereafter.

         2.33 "Transfer" means anticipate, alienate, attach, sell, assign,
pledge, encumber, charge, hypothecate or otherwise transfer and "Transferred"
has a correlative meaning.

                                  ARTICLE III

                                 ADMINISTRATION

         3.1 THE COMMITTEE. The Plan shall be administered and interpreted by
the Committee.

         3.2 GRANTS OF AWARDS. The Committee shall have full authority to grant
Stock Options to Eligible Employees and Consultants pursuant to the terms of
this Plan. All



                                       5


Stock Options shall be granted by, confirmed by, and subject to the terms of, a
written agreement executed by the Company and the Participant. All authorities
granted to the Committee under this Section 3.2 with respect to awards to
Eligible Employees and Consultants shall be exercised by the Board with respect
to awards to non-employee directors. In particular, the Committee shall have the
authority:

                  (a) to select from among those persons recommended by the
         President of the Company the Eligible Employees and Consultants to whom
         Stock Options may from time to time be granted hereunder;

                  (b) to determine whether and to what extent Stock Options are
         to be granted hereunder to one or more Eligible Employees or
         Consultants after receipt of a recommendation by the President of the
         Company;

                  (c) to determine, in accordance with the terms of this Plan,
         the number of shares of Common Stock to be covered by each Stock Option
         granted hereunder;

                  (d) to determine the terms and conditions, not inconsistent
         with the terms of this Plan, of any Stock Option granted hereunder
         (including, but not limited to, the exercise or purchase price (if
         any), any restriction or limitation, any vesting schedule or
         acceleration thereof and any forfeiture restrictions or waiver thereof,
         regarding any Stock Option and the shares of Common Stock relating
         thereto, based on such factors, if any, as the Committee shall
         determine, in its sole discretion);

                  (e) to determine whether and under what circumstances a Stock
         Option may be settled in cash, Common Stock and/or restricted stock
         under Section 6.3(d);

                  (f) to determine whether, to what extent and under what
         circumstances to provide loans to Eligible Employees and Consultants in
         order to exercise Stock Options under this Plan;

                  (g) to determine whether a Stock Option is an Incentive Stock
         Option or Non-Qualified Stock Option;

                  (h) to determine whether to require an Eligible Employee or
         Consultant, as a condition of the granting of any Stock Option, not to
         sell or otherwise dispose of shares of Common Stock acquired pursuant
         to the exercise of an Option for a period of time as determined by the
         Committee, in its sole discretion, following the date of the
         acquisition of such Option or Award; and

                  (i) to modify, extend or renew an Award, subject to Article IX
         herein, provided, however, that if an Award is modified, extended or
         renewed and thereby deemed to be the issuance of a new Award under the
         Code or the


                                       6


         applicable accounting rules, the exercise price of a Stock Option may
         continue to be the original exercise price even if less than the Fair
         Market Value of the Common Stock at the time of such modification,
         extension or renewal.

         3.3 GUIDELINES. Subject to Article IX hereof, the Committee shall have
the authority to adopt, alter and repeal such administrative rules, guidelines
and practices governing this Plan and perform all acts, including the delegation
of its administrative responsibilities, as it shall, from time to time, deem
advisable; to construe and interpret the terms and provisions of this Plan and
any Stock Option issued under this Plan (and any agreements relating thereto);
and to otherwise supervise the administration of this Plan. The Committee may
correct any defect, supply any omission or reconcile any inconsistency in this
Plan or in any agreement relating thereto in the manner and to the extent it
shall deem necessary to effectuate the purpose and intent of this Plan. The
Committee may adopt special guidelines and provisions for persons who are
residing in or employed in, or subject to, the taxes of, foreign jurisdictions
to comply with applicable tax and securities laws and may impose any limitations
and restrictions that it deems necessary to comply with the applicable tax and
securities laws of such foreign jurisdictions. No action may be taken pursuant
to this Section 3.3 unless any such action would be permitted under the
applicable provisions of Rule 16b-3 under the Exchange Act (if any) and the
applicable provisions of Section 162(m) of the Code (if any). If and to the
extent applicable, this Plan is intended to comply with Section 162(m) of the
Code and the applicable requirements of Rule 16b-3 under the Exchange Act and
shall be limited, construed and interpreted in a manner so as to comply
therewith.

         3.4 DECISIONS FINAL. Any decision, interpretation or other action made
or taken in good faith by or at the direction of the Company, the Board or the
Committee (or any of its members) arising out of or in connection with this Plan
shall be within the absolute discretion of all and each of them, as the case may
be, and shall be final, binding and conclusive on the Company and all employees
and Participants and their respective heirs, executors, administrators,
successors and assigns.

         3.5 PROCEDURES. If the Committee is appointed, the Board shall
designate one of the members of the Committee as chairman and the Committee
shall hold meetings, subject to the By-Laws of the Company, at such times and
places as it shall deem advisable, including, without limitation, by telephone
conference or by written consent to the extent permitted by applicable law. A
majority of the Committee members shall constitute a quorum. All determinations
of the Committee shall be made by a majority of its members. Any decision or
determination reduced to writing and signed by all the Committee members in
accordance with the By-Laws of the Company, shall be fully as effective as if it
had been made by a vote at a meeting duly called and held. The Committee shall
keep minutes of its meetings and shall make such rules and regulations for the
conduct of its business as it shall deem advisable.

         3.6 DESIGNATION OF CONSULTANTS/LIABILITY.



                                       7


                  (a) The Committee may designate employees of the Company and
         professional advisors to assist the Committee in the administration of
         this Plan and may grant authority to officers to execute agreements or
         other documents on behalf of the Committee.

                  (b) The Committee may employ such legal counsel, consultants
         and agents as it may deem desirable for the administration of this Plan
         and may rely upon any opinion received from any such counsel or
         consultant and any computation received from any such consultant or
         agent. Expenses incurred by the Committee or Board in the engagement of
         any such counsel, consultant or agent shall be paid by the Company. The
         Committee, its members and any person designated pursuant to paragraph
         (a) above shall not be liable for any action or determination made in
         good faith with respect to this Plan. To the maximum extent permitted
         by applicable law, no officer of the Company or member or former member
         of the Committee or of the Board shall be liable for any action or
         determination made in good faith with respect to this Plan or any Stock
         Option granted under it. To the maximum extent permitted by applicable
         law or the Certificate of Incorporation or By-Laws of the Company and
         to the extent not covered by insurance directly insuring such person,
         each officer and member or former member of the Committee or the Board
         shall be indemnified and held harmless by the Company against any cost
         or expense (including reasonable fees of counsel reasonably acceptable
         to the Company) or liability (including any sum paid in settlement of a
         claim with the approval of the Company), and advanced amounts necessary
         to pay the foregoing at the earliest time and to the fullest extent
         permitted, arising out of any act or omission to act in connection with
         the administration of this Plan, except to the extent arising out of
         such officer's, member's or former member's own fraud or bad faith.
         Such indemnification shall be in addition to any rights of
         indemnification the employees, officers, directors or members or former
         officers, directors or members may have under applicable law or under
         the Certificate of Incorporation or By-Laws of the Company or any
         Affiliate. Notwithstanding anything else herein, this indemnification
         will not apply to the actions or determinations made by an individual
         with regard to Stock Option granted to him or her under this Plan.

                                   ARTICLE IV

                           SHARE AND OTHER LIMITATIONS

         4.1 SHARES.

         The aggregate number of shares of Common Stock which may be issued or
used for reference purposes under this Plan or with respect to which Stock
Options may be granted shall not exceed 2,145,515(1) shares of Common Stock
(subject to any increase or

- --------
(1) Note, this number reflects the stock split that occurred on August 23, 2001.


                                       8


decrease pursuant to Section 4.2) which may be either authorized and unissued
Common Stock or Common Stock held in or acquired for the treasury of the Company
or both. If any Stock Option granted under this Plan other than a Substitute
Option expires, terminates or is forfeited for any reason other than by reason
of its exercise, the number of shares of Common Stock underlying such
unexercised or forfeited Stock Option shall again be available for the purposes
of Awards under this Plan.

         In the event Substitute Options are granted pursuant to Section 5.4,
the Committee may increase the aggregate number of shares of Common Stock
available under the Plan for Non-Qualified Stock Options by the number of shares
of Common Stock subject to such Substitute Options. The maximum number of shares
of Common Stock which may be issued under this Plan with respect to Incentive
Stock Options shall not be increased (subject to any increase or decrease
pursuant to Section 4.2).

         In determining the number of shares of Common Stock available for
Non-Qualified Stock Options, if Common Stock has been delivered or exchanged by
a Participant as full or partial payment to the Company for payment of the
exercise price, or for payment of withholding taxes, or if the number shares of
Common Stock otherwise deliverable has been reduced for payment of the exercise
price or for payment of withholding taxes, the number of shares of Common Stock
exchanged as payment in connection with the exercise or for withholding or
reduced shall again be available for purposes of Non-Qualified Stock Options
under this Plan. The maximum number of shares of Common Stock subject to any
Stock Option which may be granted under this Plan during any calendar year to
each Participant shall not exceed 1,000,000 shares (subject to any increase or
decrease pursuant to Section 4.2).

         4.2 CHANGES.

                  (a) The existence of this Plan and the Stock Options granted
         hereunder shall not affect in any way the right or power of the Board
         or the stockholders of the Company to make or authorize (i) any
         adjustment, recapitalization, reorganization or other change in the
         Company's capital structure or its business, (ii) any merger or
         consolidation of the Company or any Affiliate, (iii) any issuance of
         bonds, debentures, preferred or prior preference stock ahead of or
         affecting the Common Stock, (iv) the dissolution or liquidation of the
         Company or any Affiliate, (v) any sale or transfer of all or part of
         the assets or business of the Company or any Affiliate, or (vi) any
         other corporate act or proceeding.

                  (b) In the event of any change in the capital structure or
         business of the Company by reason of any stock split, reverse stock
         split, stock dividend, combination or reclassification of shares,
         recapitalization, or other change in the capital structure of the
         Company, merger, consolidation, spin-off, reorganization, partial or
         complete liquidation, issuance of rights or warrants to purchase any
         Common Stock or securities convertible into Common Stock, or any other
         corporate transaction or event having an effect similar to any of the
         foregoing, then the Committee may take such action, if any, with
         respect to the Plan and


                                       9


         outstanding Stock Options, as it may deem equitable to prevent
         substantial dilution or enlargement of the rights granted to, or
         available for, Participants under this Plan, including, without
         limitation, adjustment of the aggregate number and kind of shares which
         thereafter may be issued under this Plan, the number and kind of shares
         or other property (including cash) to be issued upon exercise of an
         outstanding Stock Option granted under this Plan and the purchase price
         thereof. Any such action or adjustment determined by the Committee in
         good faith shall be final, binding and conclusive on the Company and
         all Participants and employees and their respective heirs, executors,
         administrators, successors and assigns. Except as provided in this
         Section 4.2, a Participant shall have no rights by reason of any
         issuance by the Company of any class or securities convertible into
         stock of any class of the Company, any subdivision or consolidation of
         shares of stock of any class of the Company, the payment of any stock
         dividend, any other increase or decrease in the number of shares of
         stock of any class of the Company, any sale or transfer of all or part
         of the Company's assets or business or any other change affecting the
         Company's capital structure or business.

                  (c) Fractional shares of Common Stock resulting from any
         adjustment in Options pursuant to Section 4.2(a) or (b) shall be
         aggregated until, and eliminated at, the time of exercise by
         rounding-down for fractions less than one-half and rounding-up for
         fractions equal to or greater than one-half. No cash settlements shall
         be made with respect to fractional shares eliminated by rounding.
         Notice of any adjustment shall be given by the Committee to each
         Participant whose Option has been adjusted and such adjustment (whether
         or not such notice is given) shall be effective and binding for all
         purposes of this Plan.

         4.3 MINIMUM PURCHASE PRICE. Notwithstanding any provision of this Plan
to the contrary, if authorized but previously unissued shares of Common Stock
are issued under this Plan, such shares shall not be issued for a consideration
which is less than as permitted under applicable law.

                                   ARTICLE V

                                   ELIGIBILITY

         5.1 NON-QUALIFIED STOCK OPTIONS. All Eligible Employees and Consultants
and prospective employees of and Consultants to the Company and its Affiliates
are eligible to be granted Non-Qualified Stock Options. Eligibility for the
grant of a Non-Qualified Stock Option and actual participation in this Plan
shall be determined by the Committee in its sole discretion.

         5.2 INCENTIVE STOCK OPTIONS. All Eligible Employees of the Company, its
Subsidiaries and its Parent (if any) are eligible to be granted Incentive Stock
Options under this Plan. Eligibility for the grant of an Incentive Stock Option
and actual participation in this Plan shall be determined by the Committee in
its sole discretion.


                                       10


         5.3 GENERAL REQUIREMENT. The vesting and exercise of Options granted to
a prospective employee or Consultant are conditioned upon such individual
actually becoming an Eligible Employee or Consultant.

         5.4 SUBSTITUTE OPTIONS. Substitute Options may be granted by the
Committee in its sole discretion to holders of stock options issued by a company
acquired by the Company or with which the Company combines.

         5.5 NON-EMPLOYEE DIRECTORS. Non-employee directors of the Company are
only eligible to receive awards of Stock Options in accordance with Article X of
the Plan.

                                   ARTICLE VI

                                  STOCK OPTIONS

         6.1 STOCK OPTIONS. Each Stock Option granted hereunder shall be one of
two types: (i) an Incentive Stock Option intended to satisfy the requirements of
Section 422 of the Code; or (ii) a Non-Qualified Stock Option.

         6.2 GRANTS. Subject to the provisions of Article V, the Committee shall
have the authority to grant to any Eligible Employee one or more Incentive Stock
Options, Non- Qualified Stock Options or both types of Stock Options. To the
extent that any Stock Option does not qualify as an Incentive Stock Option
(whether because of its provisions or the time or manner of its exercise or
otherwise), such Stock Option or the portion thereof which does not qualify,
shall constitute a separate Non-Qualified Stock Option. The Committee shall have
the authority to grant any Consultant one or more Non-Qualified Stock Options.
Notwithstanding any other provision of this Plan to the contrary or any
provision in an agreement evidencing the grant of a Stock Option to the
contrary, any Stock Option granted to an Eligible Employee of an Affiliate
(other than an Affiliate which is a Parent or a Subsidiary) shall be a
Non-Qualified Stock Option.

         6.3 TERMS OF STOCK OPTIONS. Stock Options granted under this Plan shall
be subject to the following terms and conditions, and shall be in such form and
contain such additional terms and conditions, not inconsistent with the terms of
this Plan, as the Committee shall deem desirable:

                  (a) EXERCISE PRICE. The exercise price per share of Common
         Stock shall be determined by the Committee, but, except in the case of
         Substitute Options, shall not be less than 100% of the Fair Market
         Value of the Common Stock at the time of grant; provided, however, that
         if an Incentive Stock Option is granted to a Ten Percent Stockholder,
         the exercise price shall be no less than 110% of the Fair Market Value
         of the Common Stock.

                  (b) STOCK OPTION TERM. The term of each Stock Option shall be
         fixed by the Committee; provided, however, that no Stock Option shall
         be exercisable


                                       11


         more than 10 years after the date such Stock Option is granted; and
         further provided that the term of an Incentive Stock Option granted to
         a Ten Percent Stockholder shall not exceed 5 years.

                  (c) EXERCISABILITY. Stock Options shall be exercisable at such
         time or times and subject to such terms and conditions as shall be
         determined by the Committee at grant. If the Committee provides, in its
         discretion, that any Stock Option is exercisable subject to certain
         limitations (including, without limitation, that such Stock Option is
         exercisable only in installments or within certain time periods), the
         Committee may waive such limitations on the exercisability at any time
         at or after grant in whole or in part (including, without limitation,
         waiver of the installment exercise provisions or acceleration of the
         time at which such Stock Option may be exercised), based on such
         factors, if any, as the Committee shall determine, in its sole
         discretion.

                  (d) METHOD OF EXERCISE. Subject to whatever installment
         exercise and waiting period provisions apply under subsection (c)
         above, Stock Options may be exercised in whole or in part at any time
         and from time to time during the Stock Option term by giving written
         notice of exercise to the Committee specifying the number of shares to
         be purchased. Such notice shall be accompanied by payment in full of
         the purchase price as follows: (i) in cash or by check, bank draft or
         money order payable to the order of the Company; (ii) if the Common
         Stock is traded on a national securities exchange, The Nasdaq Stock
         Market, Inc. or quoted on a national quotation system sponsored by the
         National Association of Securities Dealers, through a "cashless
         exercise" procedure whereby the Participant delivers irrevocable
         instructions to a broker approved by the Committee to deliver promptly
         to the Company an amount equal to the purchase price; or (iii) on such
         other terms and conditions as may be acceptable to the Committee
         (including, without limitation, the relinquishment of Stock Options or
         by payment in full or in part in the form of Common Stock owned by the
         Participant for a period of at least 6 months (and for which the
         Participant has good title free and clear of any liens and
         encumbrances) based on the Fair Market Value of the Common Stock on the
         payment date). No shares of Common Stock shall be issued until payment
         therefor, as provided herein, has been made or provided for.

                  (e) INCENTIVE STOCK OPTION LIMITATIONS. To the extent that the
         aggregate Fair Market Value (determined as of the time of grant) of the
         Common Stock with respect to which Incentive Stock Options are
         exercisable for the first time by an Eligible Employee during any
         calendar year under this Plan and/or any other stock option plan of the
         Company, any Subsidiary or any Parent exceeds $100,000, such Options
         shall be treated as Non-Qualified Stock Options. In addition, if an
         Eligible Employee does not remain employed by the Company, any
         Subsidiary or any Parent at all times from the time an Incentive Stock
         Option is granted until 3 months prior to the date of exercise thereof
         (or such other period as required by applicable law), such Stock Option
         shall be treated as a Non-


                                       12


         Qualified Stock Option. Should any provision of this Plan not be
         necessary in order for the Stock Options to qualify as Incentive Stock
         Options, or should any additional provisions be required, the Committee
         may amend this Plan accordingly, without the necessity of obtaining the
         approval of the stockholders of the Company.

                  (f) FORM, MODIFICATION, EXTENSION AND RENEWAL OF STOCK
         OPTIONS. Subject to the terms and conditions and within the limitations
         of this Plan, Stock Options shall be evidenced by such form of
         agreement or grant as is approved by the Committee, and the Committee
         may (i) modify, extend or renew outstanding Stock Options granted under
         this Plan (provided that the rights of a Participant are not reduced
         without his consent), and (ii) accept the surrender of outstanding
         Stock Options (up to the extent not theretofore exercised) and
         authorize the granting of new Stock Options in substitution therefor
         (to the extent not theretofore exercised).

                  (g) DEFERRED DELIVERY OF COMMON SHARES. The Committee may in
         its discretion permit Participants to defer delivery of Common Stock
         acquired pursuant to a Participant's exercise of an Option in
         accordance with the terms and conditions established by the Committee.

                                  ARTICLE VII

                     NON-TRANSFERABILITY AND TERMINATION OF
                             EMPLOYMENT/CONSULTANCY

         7.1 NON-TRANSFERABILITY. No Stock Option shall be Transferable by the
Participant otherwise than by will or by the laws of descent and distribution.
All Stock Options shall be exercisable, during the Participant's lifetime, only
by the Participant. No Stock Option shall, except as otherwise specifically
provided by law or herein, be Transferable in any manner, and any attempt to
Transfer any such Stock Option shall be void, and no such Stock Option shall in
any manner be liable for or subject to the debts, contracts, liabilities,
engagements or torts of any person who shall be entitled to such Stock Option,
nor shall it be subject to attachment or legal process for or against such
person.

         Notwithstanding the foregoing, the Committee may determine at the time
of grant or thereafter that a Non-Qualified Stock Option that is otherwise not
Transferable pursuant to this Section 7.1 is Transferable to a Family Member in
whole or in part and in such circumstances, and under such conditions, as
specified by the Committee. A Stock Option that is Transferred to a Family
Member pursuant to the preceding sentence (i) may not be subsequently
Transferred otherwise than by will or by the laws of descent and distribution
and (ii) remains subject to the terms of this Plan and the Stock Option
agreement. Any shares of Common Stock acquired upon the exercise of a Stock
Option by a permissible transferee of a Stock Option shall be subject to the
terms of this Plan and the Stock Option agreement. For purposes of this Section
7.1, the term "Family


                                       13


Member" means any child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including
adoptive relationships, any person sharing the employee's household (other than
a tenant or employee), a trust in which these persons have more than 50% of the
beneficial interest, a foundation in which these persons (or the employee)
control the management of assets, and any other entity in which these persons
(or the employee) own more than 50% of the voting interests or as otherwise
defined under the Securities Act or Securities Act Form S-8.

         7.2 TERMINATION OF EMPLOYMENT AND TERMINATION OF CONSULTANCY. The
following rules apply with regard to the Termination of a Participant. Unless
otherwise determined by the Committee at grant or, if no rights of the
Participant are reduced, thereafter:

                  (a) TERMINATION BY REASON OF DEATH, DISABILITY OR RETIREMENT.
         If a Participant's Termination is by reason of death, Disability or
         Retirement, all Stock Options held by such Participant which are
         exercisable at the time of the Participant's Termination may be
         exercised by the Participant (or, in the case of death, by the legal
         representative of the Participant's estate) at any time within a period
         of one year from the date of such Termination, but in no event beyond
         the expiration of the stated terms of such Stock Options; provided,
         however, that, in the case of Retirement, if the Participant dies
         within such exercise period, all unexercised Stock Options held by such
         Participant shall thereafter be exercisable, to the extent to which
         they were exercisable at the time of death, for a period of one year
         from the date of such death, but in no event beyond the expiration of
         the stated term of such Stock Options.

                  (b) INVOLUNTARY TERMINATION WITHOUT CAUSE. If a Participant's
         Termination is by involuntary termination without Cause, all Stock
         Options held by such Participant which are exercisable at the time of
         such Termination, may be exercised by the Participant at any time
         within a period of 90 days from the date of such Termination, but in no
         event beyond the expiration of the stated term of such Stock Options.

                  (c) VOLUNTARY TERMINATION. If a Participant's Termination is
         voluntary (other than a voluntary termination described in Section
         7.2(d)(ii) below), all Stock Options held by such Participant which are
         exercisable at the time of such Termination, may be exercised by the
         Participant at any time within a period of 30 days from the date of
         such Termination, but in no event beyond the expiration of the stated
         terms of such Stock Options.

                  (d) TERMINATION FOR CAUSE. If a Participant's Termination (i)
         is for Cause or (ii) is a voluntary termination (as provided in
         subsection (c) above) at any time after an event which would be grounds
         for a Termination for Cause, all Stock Options held by such Participant
         shall thereupon terminate and expire as of the date of such
         Termination.



                                       14


                                  ARTICLE VIII

                          CHANGE IN CONTROL PROVISIONS

         8.1 BENEFITS. In the event of a Change in Control of the Company,
except as otherwise provided by the Committee upon the grant of a Stock Option,
the Participant shall be entitled to the following benefits:

                  (a) Except to the extent provided in the applicable Stock
         Option agreement, the Participant's employment agreement with the
         Company or an Affiliate, as approved by the Committee, or other written
         agreement approved by the Committee (as such agreement may be amended
         from time to time), Stock Options granted and not previously
         exercisable shall become exercisable upon a Change in Control, subject
         to subsection 8.1(b).

                  (b) Notwithstanding anything to the contrary herein, unless
         the Committee provides otherwise at the time a Stock Option is granted
         hereunder or thereafter, no acceleration of exercisability shall occur
         with respect to such Stock Options if the Committee reasonably
         determines in good faith, that the Stock Options shall be honored or
         assumed, or new rights substituted therefor (each such honored, assumed
         or substituted stock option hereinafter called an "Alternative
         Option"), by a Participant's employer (or the parent or a subsidiary of
         such employer) immediately following the Change in Control, provided
         that any such Alternative Option must meet the following criteria:

                           (i) the Alternative Option must provide such
                  Participant with rights and entitlements substantially
                  equivalent to or better than the rights, terms and conditions
                  applicable under such Stock Option, including, but not limited
                  to, an identical or better exercise schedule; and

                           (ii) the Alternative Option must substantially comply
                  and in the case of an Incentive Stock Option, must comply with
                  the requirements of Treasury Regulation ss. 1.425-1 (and any
                  amendments thereto), except that the Alternative Option need
                  not be an Incentive Stock Option.

                  (c) If the Company and the other party to a transaction
         constituting a Change in Control agree that such transaction shall be
         treated as a "pooling of interests" for financial reporting purposes,
         and if the transaction is in fact so treated, then the acceleration of
         exercisability, vesting or lapse of the applicable Restriction Period
         shall not occur to the extent that the Company's independent public
         accountants determine in good faith that such acceleration would
         preclude "pooling of interests" accounting.

         8.2 CHANGE IN CONTROL. A "Change in Control" shall be deemed to have
occurred:



                                       15


                  (a) upon any "person" as such term is used in Sections 13(d)
         and 14(d) of the Exchange Act (other than CEP, MSDWCP, the Company, any
         trustee or other fiduciary holding securities under any employee
         benefit plan of the Company, or any company owned, directly or
         indirectly, by the stockholders of the Company in substantially the
         same proportions as their ownership of Common Stock of the Company),
         becoming the beneficial owner (as defined in Rule 13d-3 under the
         Exchange Act), directly or indirectly, of securities of the Company
         representing 50% or more of the combined voting power of the Company's
         then outstanding securities;

                  (b) during any period of 2 consecutive years, individuals who
         at the beginning of such period constitute the Board, and any new
         director (other than a director designated by a person who has entered
         into an agreement with the Company to effect a transaction described in
         paragraph (a), (c), or (d) of this Section or a director whose initial
         assumption of office occurs as a result of either an actual or
         threatened election contest (as such term is used in Rule 14a-11 of
         Regulation 14A promulgated under the Exchange Act) or other actual or
         threatened solicitation of proxies or consents by or on behalf of a
         person other than the Board) whose election by the Board or nomination
         for election by the Company's stockholders was approved by a vote of at
         least two-thirds of the directors then still in office who either were
         directors at the beginning of the two-year period or whose election or
         nomination for election was previously so approved, cease for any
         reason to constitute at least a majority of the Board;

                  (c) a merger or consolidation of the Company or a Subsidiary
         with any other corporation, other than a merger or consolidation which
         would result in the voting securities of the Company outstanding
         immediately prior thereto continuing to represent (either by remaining
         outstanding or by being converted into voting securities of the
         surviving entity) more than 35% of the combined voting power of the
         voting securities of the Company or such surviving entity or such
         surviving entity's parent outstanding immediately after such merger or
         consolidation; or

                  (d) upon the approval by the stockholders of the Company of a
         plan of complete liquidation of the Company or an agreement for the
         sale or disposition by the Company of all or substantially all of the
         Company's assets other than the sale or disposition of all or
         substantially all of the assets of the Company to a person or persons
         who beneficially own, directly or indirectly, at least 50% or more of
         the combined voting power of the outstanding voting securities of the
         Company at the time of the sale.

         8.3 INITIAL PUBLIC OFFERING NOT A CHANGE IN CONTROL. For purposes of
the Plan, an initial public offering of the Common Stock of the Company shall
not be deemed to be a Change in Control.



                                       16


                                   ARTICLE IX

                        TERMINATION OR AMENDMENT OF PLAN

         Notwithstanding any other provision of this Plan, the Board or the
Committee may at any time, and from time to time, amend, in whole or in part,
any or all of the provisions of this Plan (including any amendment deemed
necessary to ensure that the Company may comply with any regulatory requirement
referred to in Article XII), or suspend or terminate it entirely, retroactively
or otherwise; provided, however, that, unless otherwise required by law or
specifically provided herein, the rights of a Participant with respect to Awards
granted prior to such amendment, suspension or termination, may not be impaired
without the consent of such Participant. In no event may this Plan be amended
without the approval of the stockholders of the Company, if and to the extent
required by the applicable provisions of Rule 16b-3 or, if and to the extent
required, by the applicable provisions of Section 162(m) of the Code, or with
regard to Incentive Stock Options, Section 422 of the Code, which would (i)
increase the aggregate number of shares of Common Stock that may be issued under
this Plan; (ii) decrease the minimum exercise price of any Stock Option; (iii)
increase the maximum individual Participant limitations for a calendar year
under Section 4.1; (iv) change the classification of employees, Consultants and
non-employee directors eligible to receive Stock Options under this Plan; or (v)
any other amendment that would require stockholder approval in order for the
Plan to continue to comply with the applicable provisions, if any, of Rule
16b-3, Section 162(m) of the Code or, with regard to Incentive Stock Options,
Section 422 of the Code or with the rules of any exchange or system on which the
Company's securities are listed or traded.

         The Committee may amend the terms of any Stock Option theretofore
granted, prospectively or retroactively, but, subject to Article IV above or as
otherwise specifically provided herein, no such amendment or other action by the
Committee shall impair the rights of any holder without the holder's consent.

                                   ARTICLE X

                              NON-EMPLOYEE DIRECTOR
                               STOCK OPTION GRANTS

         10.1 STOCK OPTIONS. The terms of this Article X shall apply only to
Stock Options granted to non-employee directors.

         10.2 GRANTS. The Board shall have the authority to grant Stock Options
to each Non-Employee Director in accordance with the following provisions:

                  (a) Stock Options to purchase up to a maximum of 100,000
         shares of Common Stock as of the date the Non-Employee Director begins
         service as a Non-Employee Director on the Board; and



                                       17


                  (b) In addition to Stock Options granted pursuant to (a)
         above, Stock Options to purchase up to a maximum of 100,000 shares of
         Common Stock as of the first day of the month following the annual
         meeting of the shareholders of the Company, provided he or she has not,
         as of such day, experienced a Termination of Directorship, other than
         in the year the Non-Employee Director receives a grant of Stock Options
         pursuant to (a) above.

         10.3 NON-QUALIFIED STOCK OPTIONS. Stock Options granted under this
Article X shall be Non-Qualified Stock Options.

         10.4 TERMS OF STOCK OPTIONS. Stock Options granted under this Article X
shall be subject to the following terms and conditions, and shall be in such
form and contain such additional terms and conditions, not inconsistent with the
terms of this Plan, as the Board shall deem desirable:

                  (a) STOCK OPTION PRICE. The exercise price per share of Common
         Stock shall be determined by the Board at the time of grant.

                  (b) STOCK OPTION TERM. The term of each Stock Option shall be
         10 years.

                  (c) EXERCISABILITY. Except as otherwise provided herein,
         twenty-five percent (25%) of any Option granted under this Article X
         shall be exercisable on or after each of the four anniversaries
         following the date of grant.

                  (d) METHOD OF EXERCISE. Subject to whatever installment
         exercise and waiting period provisions apply under subsection (c)
         above, Stock Options may be exercised in whole or in part at any time
         and from time to time during the Stock Option term, by giving written
         notice of exercise to the Board specifying the number of shares to be
         purchased. Such notice shall be accompanied by payment in full of the
         purchase price as follows: (i) in cash or by check, bank draft or money
         order payable to the Company; (ii) if the Common Stock is traded on a
         national securities exchange, The Nasdaq Stock Market, Inc. or quoted
         on a national quotation system sponsored by the National Association of
         Securities Dealers, through a "cashless exercise" procedure whereby the
         Participant delivers irrevocable instructions to a broker to deliver
         promptly to the Company an amount equal to the purchase price; or (iii)
         on such other terms and conditions that may be acceptable tot he Board
         (including, without limitation, the relinquishment of Stock Options or
         by payment in full or in part in the form of Common Stock owned by the
         Participant for at least 6 months (and for which the Participant has
         good title free and clear of any liens and encumbrances) based on the
         Fair Market Value of the Common Stock on the payment date). No shares
         of Common Stock shall be issued until payment, as provided herein,
         therefor has been made or provided for.



                                       18


                  (e) FORM, MODIFICATION, EXTENSION AND RENEWAL OF STOCK
         OPTIONS. Subject to the terms and conditions and within the limitations
         of the Plan, a Stock Option shall be evidenced by such form of
         agreement or grant as is approved by the Board, and the Board may
         modify, extend or renew outstanding Stock Options granted under the
         Plan (provided that the rights of a Participant are not reduced without
         his consent).

         10.5 TERMINATION OF DIRECTORSHIP. The following rules apply with regard
to Stock Options upon the Termination of Directorship:

                  (a) TERMINATION OF DIRECTORSHIP BY REASON OF DEATH,
         DISABILITY, RETIREMENT OR OTHERWISE. If a Participant's Termination of
         Directorship is by reason of death, Disability, Retirement or otherwise
         (other than for Cause), all Stock Options held by such Participant
         which are exercisable at the time of the Participant's Termination of
         Directorship may be exercised by the Participant (or, in the case of
         death, by the legal representative of the Participant's estate) at any
         time within a period of one year from the date of such Termination of
         Directorship, but in no event beyond the expiration of the stated term
         of such Stock Option.

                  (b) CANCELLATION OF OPTIONS. Except as provided in (a) above,
         no Stock Options that were not exercisable as of the date of
         Termination of Directorship shall thereafter become exercisable upon a
         Termination of Directorship for any reason or no reason whatsoever, and
         such Stock Options shall terminate and become null and void upon a
         Termination of Directorship. If a Non-Employee Director's Termination
         of Directorship is for Cause, all Stock Options held by the
         Non-Employee Director shall thereupon terminate and expire as of the
         date of termination.

         10.6 ACCELERATION OF EXERCISABILITY. All Stock Options granted to
non-employee directors and not previously exercisable shall become fully
exercisable immediately upon a Change in Control (as defined herein). For this
purpose, a "Change in Control" shall have the meaning set forth in Section 8.2.

         10.7 CHANGES. The Awards to a non-employee director shall be subject to
Sections 4.2 of the Plan.

                                   ARTICLE XI

                                  UNFUNDED PLAN

         11.1 UNFUNDED STATUS OF PLAN. This Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments as to which a Participant has a fixed and vested interest but which are
not yet made to a Participant by the Company, nothing contained herein shall
give any such Participant any rights that are greater than those of a general
unsecured creditor of the Company.



                                       19


                                  ARTICLE XII

                               GENERAL PROVISIONS

         12.1 LEGEND. The Committee may require each person receiving shares
pursuant to an Award under this Plan to represent to and agree with the Company
in writing that the Participant is acquiring the shares without a view to
distribution thereof. In addition to any legend required by this Plan, the
certificates for such shares may include any legend which the Committee deems
appropriate to reflect any restrictions on Transfer.

         All certificates for shares of Common Stock delivered under this Plan
shall be subject to such stock transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations and other requirements
of the Securities and Exchange Commission, any stock exchange upon which the
Common Stock is then listed or any national securities association system upon
whose system the Common Stock is then quoted, any applicable Federal or state
securities law, and any applicable corporate law, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.

         12.2 OTHER PLANS. Nothing contained in this Plan shall prevent the
Board from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases.

         12.3 NO RIGHT TO EMPLOYMENT/CONSULTANCY. Neither this Plan nor the
grant of any Award hereunder shall give any Participant or other employee or
Consultant any right with respect to continuance of employment or consultancy by
the Company or any Affiliate, nor shall they be a limitation in any way on the
right of the Company or any Affiliate by which an employee is employed or a
Consultant is retained to terminate his employment or consultancy at any time.

         12.4 WITHHOLDING OF TAXES. The Company shall have the right to deduct
from any payment to be made to a Participant, or to otherwise require, prior to
the issuance or delivery of any shares of Common Stock or the payment of any
cash hereunder, payment by the Participant of, any Federal, state or local taxes
required by law to be withheld.

         Any statutorily required withholding obligation with regard to any
Eligible Employee may be satisfied, subject to the consent of the Committee, by
reducing the number of shares of Common Stock otherwise deliverable or by
delivering shares of Common Stock already owned. Any fraction of a share of
Common Stock required to satisfy such tax obligations shall be disregarded and
the amount due shall be paid instead in cash by the Participant.



                                       20


         12.5 LISTING AND OTHER CONDITIONS.

                  (a) Unless otherwise determined by the Committee, as long as
         the Common Stock is listed on a national securities exchange or system
         sponsored by a national securities association, the issue of any shares
         of Common Stock pursuant to a Stock Option shall be conditioned upon
         such shares being listed on such exchange or system. The Company shall
         have no obligation to issue such shares unless and until such shares
         are so listed, and the right to exercise any Stock Option with respect
         to such shares shall be suspended until such listing has been effected.

                  (b) If at any time counsel to the Company shall be of the
         opinion that any sale or delivery of shares of Common Stock pursuant to
         a Stock Option is or may in the circumstances be unlawful or result in
         the imposition of excise taxes on the Company under the statutes, rules
         or regulations of any applicable jurisdiction, the Company shall have
         no obligation to make such sale or delivery, or to make any application
         or to effect or to maintain any qualification or registration under the
         Securities Act or otherwise with respect to shares of Common Stock or
         Stock Option, and the right to exercise any Stock Option shall be
         suspended until, in the opinion of said counsel, such sale or delivery
         shall be lawful or will not result in the imposition of excise taxes on
         the Company.

                  (c) Upon termination of any period of suspension under this
         Section 12.5, a Stock Option affected by such suspension which shall
         not then have expired or terminated shall be reinstated as to all
         shares available before such suspension and as to shares which would
         otherwise have become available during the period of such suspension,
         but no such suspension shall extend the term of any Stock Option.

                  (d) A Participant shall be required to supply the Company with
         any certificates, representations and information that the Company
         requests and otherwise cooperate with the Company in obtaining any
         listing, registration, qualification, exemption, consent or approval
         the Company deems necessary or appropriate.

         12.6 STOCKHOLDERS AGREEMENT. As a condition to the receipt of shares of
Common Stock pursuant to a Stock Option under this Plan, to the extent required
by the Committee, the Participant shall execute and deliver a stockholder's
agreement or such other documentation which shall set forth certain restrictions
on transferability of the shares of Common Stock acquired upon exercise or
purchase, a right of first refusal of the Company with respect to shares, the
right of the Company to purchase Common Stock in accordance with this Plan and
such other terms as the Board or Committee shall from time to time establish.
Such stockholder's agreement shall apply to all Common Stock acquired under the
Plan.



                                       21


         12.7 GOVERNING LAW. This Plan shall be governed and construed in
accordance with the laws of the State of Delaware (regardless of the law that
might otherwise govern under applicable Delaware principles of conflict of
laws).

         12.8 CONSTRUCTION. Wherever any words are used in this Plan in the
masculine gender they shall be construed as though they were also used in the
feminine gender in all cases where they would so apply, and wherever any words
are used herein in the singular form they shall be construed as though they were
also used in the plural form in all cases where they would so apply.

         12.9 OTHER BENEFITS. No Award payment under this Plan shall be deemed
compensation for purposes of computing benefits under any retirement plan of the
Company or its subsidiaries nor affect any benefits under any other benefit plan
now or subsequently in effect under which the availability or amount of benefits
is related to the level of compensation.

         12.10 COSTS. The Company shall bear all expenses included in
administering this Plan, including expenses of issuing Common Stock pursuant to
any Awards hereunder.

         12.11 NO RIGHT TO SAME BENEFITS. The provisions of Stock Options need
not be the same with respect to each Participant, and such Stock Options to
individual Participants need not be the same in subsequent years.

         12.12 DEATH/DISABILITY. The Committee may in its discretion require the
transferee of a Participant to supply it with written notice of the
Participant's death or Disability and to supply it with a copy of the will (in
the case of the Participant's death) or such other evidence as the Committee
deems necessary to establish the validity of the transfer of an Award. The
Committee may also require that the agreement of the transferee to be bound by
all of the terms and conditions of this Plan.

         12.13 SUCCESSORS AND ASSIGNS. The Plan shall be binding on all
successors and permitted assigns of a Participant, including, without
limitation, the estate of such Participant and the executor, administrator or
trustee of such estate.

         12.14 SEVERABILITY OF PROVISIONS. If any provision of this Plan shall
be held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions hereof, and this Plan shall be construed and
enforced as if such provisions had not been included.

         12.15 HEADINGS AND CAPTIONS. The headings and captions herein are
provided for reference and convenience only, shall not be considered part of
this Plan, and shall not be employed in the construction of this Plan.

         12.16 SECTION 16(B) OF THE EXCHANGE ACT. All elections and transactions
under this Plan by persons subject to Section 16 of the Exchange Act involving
shares of


                                       22


Common Stock are intended to comply with any applicable exemptive condition
under Rule 16b-3. The Committee may establish and adopt written administrative
guidelines, designed to facilitate compliance with Section 16(b) of the Exchange
Act, as it may deem necessary or proper for the administration and operation of
this Plan and the transaction of business thereunder.

                                  ARTICLE XIII

                             EFFECTIVE DATE OF PLAN

         13.1 The Plan shall become effective upon adoption by the Board,
subject to the approval of this Plan by the stockholders of the Company in
accordance with the requirements of the laws of the State of Delaware, or such
later date as provided in the adopting resolution.

                                  ARTICLE XIV

                                  TERM OF PLAN

         14.1 No Stock Option shall be granted pursuant to this Plan on or after
the tenth anniversary of the earlier of the date this Plan is adopted or the
date of stockholder approval, but Stock Options granted prior to such tenth
anniversary may, and the Committee's authority to administer the terms of such
Options shall, extend beyond that date.



                                       23



                                                                    Exhibit 10.8













                               CROSS COUNTRY, INC.

                              AMENDED AND RESTATED

                            EQUITY PARTICIPATION PLAN
                       (EFFECTIVE AS OF OCTOBER 25, 2001)




















                               CROSS COUNTRY, INC.

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

                              AMENDED AND RESTATED

                            EQUITY PARTICIPATION PLAN

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


                                   ARTICLE I

                                    PURPOSE

         The purpose of this Cross Country, Inc. Amended and Restated Equity
Participation Plan is to enhance the profitability and value of the Company for
the benefit of its stockholders by enabling the Company to offer key management
employees of the Company and its Affiliates stock-based incentives in the
Company, thereby creating a means to raise the level of stock ownership by key
management employees in order to attract, retain and reward such employees and
strengthen the mutuality of interests between such employees and the Company's
stockholders.

                                   ARTICLE II

                                   DEFINITIONS

         For purposes of this Plan, the following terms shall have the following
meanings:

         2.1 "Affiliate" means each of the following: (i) any Subsidiary; (ii)
any Parent; (iii) any corporation, trade or business (including, without
limitation, a partnership or limited liability company) which is directly or
indirectly controlled 50% or more (whether by ownership of stock, assets or an
equivalent ownership interest or voting interest) by the Company or one of its
Affiliates; and (iv) any other entity in which the Company or any of its
Affiliates has a material equity interest and which is designated as an
"Affiliate" by resolution of the Committee.

         2.2 "Award" means any award under this Plan of a Stock Option.

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

         2.4 "Cause" means, with respect to a Participant's Termination of
Employment: (i) in the case where there is no employment agreement, consulting
agreement, change in control agreement or similar agreement in effect between
the Company or an Affiliate and the Participant at the time of the grant of the
Award (or where there is such an agreement but it does not define "cause" (or
words of like import)), termination due to a Participant's insubordination,
dishonesty, fraud,




incompetence, moral turpitude, misconduct, refusal to perform his or her duties
or responsibilities for any reason other than illness or incapacity or
materially unsatisfactory performance of his or her duties for the Company or an
Affiliate as determined by the Committee in its sole discretion; or (ii) in the
case where there is an employment agreement, consulting agreement, change in
control agreement or similar agreement in effect between the Company or an
Affiliate and the Participant at the time of the grant of the Award that defines
"cause" (or words of like import), "cause" as defined under such agreement;
provided, however, that with regard to any agreement that conditions "cause" on
occurrence of a change in control, such definition of "cause" shall not apply
until a change in control actually takes place and then only with regard to a
termination thereafter.

         2.5 "CEP" means Charterhouse Equity Partners III, L.P., and its
successors.

         2.6 "Change in Control" has the meaning set forth in Article VIII.

         2.7 "Code" means the Internal Revenue Code of 1986, as amended. Any
reference to any section of the Code shall also be a reference to any successor
provision.

         2.8 "Committee" means a committee or subcommittee of the Board
appointed from time to time by the Board, which committee or subcommittee shall
consist of 2 or more non-employee directors each of whom shall be a non-employee
director as defined in Rule 16b-3 under the Exchange Act and an outside director
as defined under Section 162(m) of the Code; provided, however, that if and to
the extent that no Committee exists which has the authority to administer this
Plan, the functions of the Committee shall be exercised by the Board and all
references herein to the Committee shall be deemed to be references to the
Board. If for any reason the appointed Committee does not meet the requirements
of Rule 16b-3 or Section 162(m) of the Code, such noncompliance with the
requirements of Rule 16b-3 or Section 162(m) of the Code shall not affect the
validity of the awards, grants, interpretations or other actions of the
Committee.

         2.9 "Common Stock" means the Common Stock, $.0001 par value per share,
of the Company.

         2.10 "Company" means Cross Country, Inc., a Delaware corporation, and
its successors.

         2.11 "Consultant" means any advisor or consultant to the Company or its
Affiliates.

         2.12 "Detrimental Activity" means (i) the disclosure to anyone outside
the Company or its Affiliates, or the use in other than the Company's or its
Affiliate's business, without written authorization from the Company, of any
confidential information or proprietary information, relating to the business of
the Company or its Affiliates, acquired by a Participant prior to the
Participant's Termination of Employment; (ii) activity while employed that
results, or if known could result, in the


                                       2


Participant's Termination of Employment that is classified by the Company as a
termination for Cause; (iii) any attempt, directly or indirectly, to solicit,
induce or hire (or the identification for solicitation, inducement or hire) any
non-clerical employee of the Company or its Affiliates to be employed by, or to
perform services for, the Participant or any person or entity with which the
Participant is associated (including, but not limited to, due to the
Participant's employment by, consultancy for, equity interest in, or creditor
relationship with such person or entity) or any person or entity from which the
Participant receives direct or indirect compensation or fees as a result of such
solicitation, inducement or hire (or the identification for solicitation,
inducement or hire) without, in all cases, written authorization from the
Company; (iv) any attempt, directly or indirectly, to solicit in a competitive
manner any current customer of the Company or its Affiliates without, in all
cases, written authorization from the Company; (v) the Participant's
Disparagement, or inducement of others to do so, of the Company or its
Affiliates or their past and present officers, directors, employees or products;
(vi) without written authorization from the Company, the rendering of services
for any organization, or engaging, directly or indirectly, in any business,
which is competitive with the Company or its Affiliates, or which organization
or business, or the rendering of services to such organization or business, is
otherwise prejudicial to or in conflict with the interests of the Company or its
Affiliates, provided, however, that competitive activities shall only be those
competitive with any business unit or Affiliate of the Company with regard to
which the Participant performed services at any time within the 2 years prior to
the Participant's Termination of Employment; (vii) the Participant's breach of
the terms of any agreement between the Company and the Participant including,
without limitation, an employment agreement or non-competition agreement; or
(viii) except as otherwise provided in the applicable Stock Option agreement,
any other conduct or act determined by the Committee, in its sole discretion, to
be injurious, detrimental or prejudicial to any interest of the Company or its
Affiliates. For purposes of subparagraphs (i), (iii), (iv) and (vi) above, the
Chief Executive Officer and the General Counsel of the Company shall each have
authority, subject to the prior approval of the Board, to provide the
Participant with written authorization to engage in the activities contemplated
thereby and no other person shall have authority to provide the Participant with
such authorization.

         2.13 "Disability" means a disability which would qualify as such under
the Company's long-term disability plan. A Disability shall only be deemed to
occur at the time of the determination by the Committee of the Disability.

         2.14 "Disparagement" means (unless modified in the applicable Stock
Option agreement) making comments or statements to the press, the Company's or
its Affiliates' employees or any individual or entity with whom the Company or
its Affiliates has a business relationship which would adversely affect in any
manner: (i) the conduct of the business of the Company or its Affiliates
(including, without limitation, any products or business plans or business
prospects), or (ii) the business reputation of the Company or its Affiliates, or
any of their products, or their past or present officers, directors or
employees.



                                       3


         2.15 "Effective Date" means the effective date of this Plan as defined
in Article XIII.

         2.16 "Eligible Employee" means each key management employee of the
Company or an Affiliate.

         2.17 "Exchange Act" means the Securities Exchange Act of 1934, as
amended. Any references to any section of the Exchange Act shall also be a
reference to any successor provision.

         2.18 "Fair Market Value" means, for purposes of this Plan, unless
otherwise required by any applicable provision of the Code or any regulations
issued thereunder, as of any date, the last sales price reported for the Common
Stock on the applicable date: (a) as reported on the principal national
securities exchange in the United States on which it is then traded or The
Nasdaq Stock Market, Inc.; or (b) if not traded on any such national securities
exchange or The Nasdaq Stock Market, Inc., as quoted on an automated quotation
system sponsored by the National Association of Securities Dealers, Inc. or if
the Common Stock shall not have been reported or quoted on such date, on the
first day prior thereto on which the Common Stock was reported or quoted;
provided, that the Committee may modify the definition of Fair Market Value to
reflect any changes in the trading practices of any exchange on which the Common
Stock is listed or traded. If the Common Stock is not readily tradable on a
national securities exchange, The Nasdaq Stock Market, Inc. or any automated
quotation system sponsored by the National Association of Securities Dealers,
Inc., its Fair Market Value shall be set in good faith by the Committee.
Notwithstanding anything herein to the contrary, "Fair Market Value" means the
price for Common Stock set by the Committee in good faith. For purposes of the
grant of any Stock Option, the applicable date shall be the date for which the
last sales price is available at the time of grant.

         2.19 "Family Member" means any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, any person sharing the
employee's household (other than a tenant or employee), a trust in which these
persons have more than 50% of the beneficial interest, a foundation in which
these persons (or the employee) control the management of assets, and any other
entity in which these persons (or the employee) own more than 50% of the voting
interests.

         2.20 "Incentive Stock Option" means any Stock Option awarded to an
Eligible Employee under this Plan intended to be and designated as an "Incentive
Stock Option" within the meaning of Section 422 of the Code.

         2.21 "MSDWCP" means a representative of Morgan Stanley Dean Witter
Capital Partners IV, L.P. and its affiliated funds, and their respective
successors.



                                       4


         2.22 "Non-Qualified Stock Option" means any Stock Option awarded under
this Plan that is not an Incentive Stock Option.

         2.23 "Parent" means any parent corporation of the Company within the
meaning of Section 424(e) of the Code.

         2.24 "Participant" means any Eligible Employee to whom a Stock Option
has been awarded under this Plan.

         2.25 "Plan" means this Amended and Restated Cross Country, Inc. Equity
Participation Plan, as amended from time to time.

         2.26 "Retirement" means a Termination of Employment without Cause by a
Participant at or after age 65 or such earlier date after age 50 as may be
approved by the Committee with regard to such Participant.

         2.27 "Securities Act" means the Securities Act of 1933, as amended. Any
reference to any section of the Securities Act shall also be a reference to any
successor provision.

         2.28 "Stock Option" or "Option" means any option to purchase shares of
Common Stock granted to Eligible Employees under Article VI.

         2.29 "Subsidiary" means any subsidiary corporation of the Company
within the meaning of Section 424(f) of the Code.

         2.30 "Ten Percent Stockholder" means a person owning stock possessing
more than 10% of the total combined voting power of all classes of stock of the
Company, its Subsidiaries or its Parent.

         2.31 "Termination of Employment" means: (i) a termination of employment
(for reasons other than a military or personal leave of absence granted by the
Company) of a Participant from the Company and its Affiliates; or (ii) when an
entity which is employing a Participant ceases to be an Affiliate, unless the
Participant otherwise is, or thereupon becomes, employed by the Company or
another Affiliate. In the event that an Eligible Employee becomes a Consultant
upon the termination of his employment, the Committee, in its sole and absolute
discretion, may determine that no Termination of Employment shall be deemed to
occur until such time as such Eligible Employee is no longer an Eligible
Employee or a Consultant. The Committee may otherwise define Termination of
Employment in the Award agreement or, if no rights of a Participant are reduced,
may otherwise define Termination of Employment thereafter.

         2.32 "Transfer" means anticipate, alienate, attach, sell, assign,
pledge, encumber, charge, hypothecate or otherwise transfer and "Transferred"
has a correlative meaning.



                                       5


                                  ARTICLE III

                                 ADMINISTRATION

         3.1 THE COMMITTEE. The Plan shall be administered and interpreted by
the Committee.

         3.2 GRANTS OF AWARDS. The Committee shall have full authority to grant
Stock Options to Eligible Employees pursuant to the terms of this Plan. All
Stock Options shall be granted by, confirmed by, and subject to the terms of, a
written agreement executed by the Company and the Participant. In particular,
the Committee shall have the authority:

                  (a) to select from among those persons recommended by the
         President of the Company the Eligible Employees to whom Stock Options
         may from time to time be granted hereunder;

                  (b) to determine whether and to what extent Stock Options are
         to be granted hereunder to one or more Eligible Employees after receipt
         of a recommendation by the President of the Company;

                  (c) to determine, in accordance with the terms of this Plan,
         the number of shares of Common Stock to be covered by each Stock Option
         granted hereunder;

                  (d) to determine the terms and conditions, not inconsistent
         with the terms of this Plan, of any Stock Option granted hereunder
         (including, but not limited to, the exercise or purchase price (if
         any), any restriction or limitation, any vesting schedule or
         acceleration thereof and any forfeiture restrictions or waiver thereof,
         regarding any Stock Option and the shares of Common Stock relating
         thereto, based on such factors, if any, as the Committee shall
         determine, in its sole discretion);

                  (e) to determine whether and under what circumstances a Stock
         Option may be settled in cash, Common Stock and/or restricted stock
         under Section 6.3(d);

                  (f) to determine whether, to what extent and under what
         circumstances to provide loans to Eligible Employees in order to
         exercise Stock Options under this Plan;

                  (g) to determine whether a Stock Option is an Incentive Stock
         Option or Non-Qualified Stock Option; provided, however, that a Stock
         Option shall be, to the extent practicable, designated as an Incentive
         Stock Option;

                  (h) to determine whether to require an Eligible Employee, as a
         condition of the granting of any Stock Option, not to sell or otherwise
         dispose of


                                       6


         shares of Common Stock acquired pursuant to the exercise of an Option
         for a period of time as determined by the Committee, in its sole
         discretion, following the date of the acquisition of such Option or
         Award; and

                  (i) to modify, extend or renew an Award, subject to Article IX
         herein, provided, however, that if an Award is modified, extended or
         renewed and thereby deemed to be the issuance of a new Award under the
         Code or the applicable accounting rules, the exercise price of a Stock
         Option may continue to be the original exercise price even if less than
         the Fair Market Value of the Common Stock at the time of such
         modification, extension or renewal.

         3.3 GUIDELINES. Subject to Article IX hereof, the Committee shall have
the authority to adopt, alter and repeal such administrative rules, guidelines
and practices governing this Plan and perform all acts, including the delegation
of its administrative responsibilities, as it shall, from time to time, deem
advisable; to construe and interpret the terms and provisions of this Plan and
any Stock Option issued under this Plan (and any agreements relating thereto);
and to otherwise supervise the administration of this Plan. The Committee may
correct any defect, supply any omission or reconcile any inconsistency in this
Plan or in any agreement relating thereto in the manner and to the extent it
shall deem necessary to effectuate the purpose and intent of this Plan. The
Committee may adopt special guidelines and provisions for persons who are
residing in or employed in, or subject to, the taxes of, foreign jurisdictions
to comply with applicable tax and securities laws and may impose any limitations
and restrictions that it deems necessary to comply with the applicable tax and
securities laws of such foreign jurisdictions. No action may be taken pursuant
to this Section 3.3 unless any such action would be permitted under the
applicable provisions of Rule 16b-3 under the Exchange Act (if any) and the
applicable provisions of Section 162(m) of the Code (if any). If and to the
extent applicable, this Plan is intended to comply with Section 162(m) of the
Code and the applicable requirements of Rule 16b-3 under the Exchange Act and
shall be limited, construed and interpreted in a manner so as to comply
therewith.

         3.4 DECISIONS FINAL. Any decision, interpretation or other action made
or taken in good faith by or at the direction of the Company, the Board or the
Committee (or any of its members) arising out of or in connection with this Plan
shall be within the absolute discretion of all and each of them, as the case may
be, and shall be final, binding and conclusive on the Company and all employees
and Participants and their respective heirs, executors, administrators,
successors and assigns.

         3.5 PROCEDURES. If the Committee is appointed, the Board shall
designate one of the members of the Committee as chairman and the Committee
shall hold meetings, subject to the By-Laws of the Company, at such times and
places as it shall deem advisable, including, without limitation, by telephone
conference or by written consent to the extent permitted by applicable law. A
majority of the Committee members shall constitute a quorum. All determinations
of the Committee shall be made by a majority of its members. Any decision or
determination reduced to writing and signed by all the Committee members in
accordance with the By-Laws of the Company, shall be fully as


                                       7


effective as if it had been made by a vote at a meeting duly called and held.
The Committee shall keep minutes of its meetings and shall make such rules and
regulations for the conduct of its business as it shall deem advisable.

         3.6 DESIGNATION OF CONSULTANTS/LIABILITY.

                  (a) The Committee may designate employees of the Company and
         professional advisors to assist the Committee in the administration of
         this Plan and may grant authority to officers to execute agreements or
         other documents on behalf of the Committee.

                  (b) The Committee may employ such legal counsel, consultants
         and agents as it may deem desirable for the administration of this Plan
         and may rely upon any opinion received from any such counsel or
         consultant and any computation received from any such consultant or
         agent. Expenses incurred by the Committee or Board in the engagement of
         any such counsel, consultant or agent shall be paid by the Company. The
         Committee, its members and any person designated pursuant to paragraph
         (a) above shall not be liable for any action or determination made in
         good faith with respect to this Plan. To the maximum extent permitted
         by applicable law, no officer of the Company or member or former member
         of the Committee or of the Board shall be liable for any action or
         determination made in good faith with respect to this Plan or any Stock
         Option granted under it. To the maximum extent permitted by applicable
         law or the Certificate of Incorporation or By-Laws of the Company and
         to the extent not covered by insurance directly insuring such person,
         each officer and member or former member of the Committee or the Board
         shall be indemnified and held harmless by the Company against any cost
         or expense (including reasonable fees of counsel reasonably acceptable
         to the Company) or liability (including any sum paid in settlement of a
         claim with the approval of the Company), and advanced amounts necessary
         to pay the foregoing at the earliest time and to the fullest extent
         permitted, arising out of any act or omission to act in connection with
         the administration of this Plan, except to the extent arising out of
         such officer's, member's or former member's own fraud or bad faith.
         Such indemnification shall be in addition to any rights of
         indemnification the employees, officers, directors or members or former
         officers, directors or members may have under applicable law or under
         the Certificate of Incorporation or By-Laws of the Company or any
         Affiliate. Notwithstanding anything else herein, this indemnification
         will not apply to the actions or determinations made by an individual
         with regard to Stock Option granted to him or her under this Plan.

                                   ARTICLE IV

                           SHARE AND OTHER LIMITATIONS

         4.1 SHARES.



                                       8


                  (a) The aggregate number of shares of Common Stock which may
         be issued or used for reference purposes under this Plan or with
         respect to which Stock Options may be granted shall not exceed
         2,252,486(1) shares of Common Stock (subject to any increase or
         decrease pursuant to Section 4.2) which may be either authorized and
         unissued Common Stock or Common Stock held in or acquired for the
         treasury of the Company or both.

                  (b) Stock Options granted under the Plan shall be sub-divided
         into 5 tranches (as described more fully in Section 6.2). The number of
         shares of Common Stock available for each tranche shall be as follows:



              Tranche                         Number of Shares
              -------                        Subject to Tranche
                                             ------------------
                                                
                 1                                 403,076

                 2                                 758,732

                 3                                 758,732

                 4                                 165,973

                 5                                 165,973



                  (c) If any Stock Option granted under this Plan expires,
         terminates or is forfeited for any reason other than by reason of its
         exercise, the number of shares of Common Stock underlying such
         unexercised or forfeited Stock Option shall again be available for the
         purposes of Awards under this Plan. In determining the number of shares
         of Common Stock available for Non-Qualified Stock Options, if Common
         Stock has been delivered or exchanged by a Participant as full or
         partial payment to the Company for payment of the exercise price, or
         for payment of withholding taxes, or if the number shares of Common
         Stock otherwise deliverable has been reduced for payment of the
         exercise price or for payment of withholding taxes, the number of
         shares of Common Stock exchanged as payment in connection with the
         exercise or for withholding or reduced shall again be available for
         purposes of Non-Qualified Stock Options under this Plan. The maximum
         number of shares of Common Stock subject to any Stock Option which may
         be granted under this Plan during any calendar year to each Participant
         shall not exceed 1,000,000 shares (subject to any increase or decrease
         pursuant to Section 4.2).

         4.2 CHANGES.

                  (a) The existence of this Plan and the Stock Options granted
         hereunder shall not affect in any way the right or power of the Board
         or the stockholders of the Company to make or authorize (i) any
         adjustment, recapitalization,


- ---------
(1) Note, the number reflects the stock split that occurred on August 23, 2001.


                                       9


         reorganization or other change in the Company's capital structure or
         its business, (ii) any merger or consolidation of the Company or any
         Affiliate, (iii) any issuance of bonds, debentures, preferred or prior
         preference stock ahead of or affecting the Common Stock, (iv) the
         dissolution or liquidation of the Company or any Affiliate, (v) any
         sale or transfer of all or part of the assets or business of the
         Company or any Affiliate, or (vi) any other corporate act or
         proceeding.

                  (b) In the event of any change in the capital structure or
         business of the Company by reason of any stock split, reverse stock
         split, stock dividend, combination or reclassification of shares,
         recapitalization, or other change in the capital structure of the
         Company, merger, consolidation, spin-off, reorganization, partial or
         complete liquidation, issuance of rights or warrants to purchase any
         Common Stock or securities convertible into Common Stock, or any other
         corporate transaction or event having an effect similar to any of the
         foregoing, then the Committee may take such action, if any, with
         respect to the Plan and outstanding Stock Options, as it may deem
         equitable to prevent substantial dilution or enlargement of the rights
         granted to, or available for, Participants under this Plan, including,
         without limitation, adjustment of the aggregate number and kind of
         shares which thereafter may be issued under this Plan, the number and
         kind of shares or other property (including cash) to be issued upon
         exercise of an outstanding Stock Option granted under this Plan and the
         purchase price thereof. Any such action or adjustment determined by the
         Committee in good faith shall be final, binding and conclusive on the
         Company and all Participants and employees and their respective heirs,
         executors, administrators, successors and assigns. Except as provided
         in this Section 4.2, a Participant shall have no rights by reason of
         any issuance by the Company of any class or securities convertible into
         stock of any class of the Company, any subdivision or consolidation of
         shares of stock of any class of the Company, the payment of any stock
         dividend, any other increase or decrease in the number of shares of
         stock of any class of the Company, any sale or transfer of all or part
         of the Company's assets or business or any other change affecting the
         Company's capital structure or business.

                  (c) Fractional shares of Common Stock resulting from any
         adjustment in Options pursuant to Section 4.2(a) or (b) shall be
         aggregated until, and eliminated at, the time of exercise by
         rounding-down for fractions less than one-half and rounding-up for
         fractions equal to or greater than one-half. No cash settlements shall
         be made with respect to fractional shares eliminated by rounding.
         Notice of any adjustment shall be given by the Committee to each
         Participant whose Option has been adjusted and such adjustment (whether
         or not such notice is given) shall be effective and binding for all
         purposes of this Plan.

         4.3 MINIMUM PURCHASE PRICE. Notwithstanding any provision of this Plan
to the contrary, if authorized but previously unissued shares of Common Stock
are issued under this Plan, such shares shall not be issued for a consideration
which is less than as permitted under applicable law.



                                       10


                                   ARTICLE V

                                   ELIGIBILITY

         5.1 NON-QUALIFIED STOCK OPTIONS. All Eligible Employees are eligible to
be granted Non-Qualified Stock Options. Eligibility for the grant of a
Non-Qualified Stock Option and actual participation in this Plan shall be
determined by the Committee in its sole discretion.

         5.2 INCENTIVE STOCK OPTIONS. All Eligible Employees of the Company, its
Subsidiaries and its Parent (if any) are eligible to be granted Incentive Stock
Options under this Plan. Eligibility for the grant of an Incentive Stock Option
and actual participation in this Plan shall be determined by the Committee in
its sole discretion.

                                   ARTICLE VI

                                  STOCK OPTIONS

         6.1 STOCK OPTIONS. Each Stock Option granted hereunder shall be one of
two types: (i) an Incentive Stock Option intended to satisfy the requirements of
Section 422 of the Code; or (ii) a Non-Qualified Stock Option.

         6.2 GRANTS. (a) Subject to the provisions of Article V, the Committee
shall have the authority to grant to any Eligible Employee one or more Incentive
Stock Options, Non-Qualified Stock Options or both types of Stock Options. To
the extent that any Stock Option does not qualify as an Incentive Stock Option
(whether because of its provisions or the time or manner of its exercise or
otherwise), such Stock Option or the portion thereof which does not qualify,
shall constitute a separate Non-Qualified Stock Option. Notwithstanding any
other provision of this Plan to the contrary or any provision in an agreement
evidencing the grant of a Stock Option to the contrary, any Stock Option granted
to an Eligible Employee of an Affiliate (other than an Affiliate which is a
Parent or a Subsidiary) shall be a Non-Qualified Stock Option.

                  (b) Each Stock Option granted under the Plan shall be
         sub-divided into 5 tranches. The number of shares of Common Stock in
         each tranche for any Stock Option shall be the total number of shares
         of Common Stock subject to the Stock Option multiplied by the
         applicable percentage for such tranche in the following table:



              Tranche                       Percentage of Shares
              -------                        Subject to Tranche
                                             ------------------
                                              
                 1                               17.8947368%

                 2                               33.6842105%

                 3                               33.6842105%



                                       11


                 4                                7.368421%

                 5                                7.368421%


         6.3 TERMS OF STOCK OPTIONS. Stock Options granted under this Plan shall
be subject to the following terms and conditions, and shall be in such form and
contain such additional terms and conditions, not inconsistent with the terms of
this Plan, as the Committee shall deem desirable:

                  (a) EXERCISE PRICE. Stock Options under this Plan shall be
         exercisable at the exercise prices set forth in the following table;
         provided, however, that if an Incentive Stock Option is granted to a
         Ten Percent Stockholder, the exercise price of the first tranche shall
         be no less than 110% of the Fair Market Value of the Common Stock at
         the time of grant:



                                                                          Actual Exercise Price of Options
                                              Exercise Price of                   Granted on the
              Tranche                          Options Granted                    Effective Date
- ------------------------------------- ---------------------------------- ----------------------------------
                                                                                
                 1                    100% of Fair Market Value on the                 $7.75
                                                Date of Grant

                 2                    150% of Fair Market Value on the                $11.62
                                                Date of Grant

                 3                    200% of Fair Market Value on the                $15.50
                                                Date of Grant

                 4                    250% of Fair Market Value on the                $19.37
                                                Date of Grant

                 5                    300% of Fair Market Value on the                $23.25
                                                Date of Grant



                  (b) STOCK OPTION TERM. The term of each Stock Option shall be
         fixed by the Committee; provided, however, that no Stock Option shall
         be exercisable more than 10 years after the date such Stock Option is
         granted; and further provided that the term of an Incentive Stock
         Option granted to a Ten Percent Stockholder shall not exceed 5 years.

                  (c) EXERCISABILITY. Except as otherwise provided by the
         Committee in accordance with the provisions of this Section, 25% of
         each tranche of any Stock Option granted under this Article VI shall be
         exercisable on the first anniversary of the date of grant and 12.5% of
         each tranche of any Stock Option granted under this Article VI shall be
         exercisable at the end of each six-month period thereafter.
         Notwithstanding the foregoing, Stock Options shall be exercisable at
         such time or times and subject to such terms and conditions as shall be
         determined by the Committee at grant. If the Committee provides, in its
         discretion, that any Stock


                                       12


         Option is exercisable subject to certain limitations (including,
         without limitation, that such Stock Option is exercisable only in
         installments or within certain time periods), the Committee may waive
         such limitations on the exercisability at any time at or after grant in
         whole or in part (including, without limitation, waiver of the
         installment exercise provisions or acceleration of the time at which
         such Stock Option may be exercised), based on such factors, if any, as
         the Committee shall determine, in its sole discretion. Unless otherwise
         determined by the Committee at grant, the grant shall provide that (i)
         in the event the Participant engages in Detrimental Activity prior to
         any exercise of the Stock Option, all Stock Options held by the
         Participant shall thereupon terminate and expire, (ii) as a condition
         of the exercise of a Stock Option, the Participant shall be required to
         certify at the time of exercise in a manner acceptable to the Company
         that the Participant is in compliance with the terms and conditions of
         the Plan and that the Participant has not engaged in, and does not
         intend to engage in, any Detrimental Activity, (iii) in the event the
         Participant engages in Detrimental Activity during the 6 month period
         commencing on the date the Stock Option is exercised, the Company shall
         be entitled to recover from the Participant at any time within one year
         after such exercise, and the Participant shall pay over to the Company,
         any gain realized as a result of the exercise (whether at the time of
         exercise or thereafter) and (iv) the foregoing provisions described in
         (i), (ii) and (iii) shall cease to apply upon a Change in Control.

                  (d) METHOD OF EXERCISE. Subject to whatever installment
         exercise and waiting period provisions apply under subsection (c)
         above, Stock Options may be exercised in whole or in part at any time
         and from time to time during the Stock Option term by giving written
         notice of exercise to the Committee specifying the number of shares to
         be purchased. Such notice shall be accompanied by payment in full of
         the purchase price as follows: (i) in cash or by check, bank draft or
         money order payable to the order of the Company; (ii) if the Common
         Stock is traded on a national securities exchange, The Nasdaq Stock
         Market, Inc. or quoted on a national quotation system sponsored by the
         National Association of Securities Dealers, through a "cashless
         exercise" procedure whereby the Participant delivers irrevocable
         instructions to a broker approved by the Committee to deliver promptly
         to the Company an amount equal to the purchase price; or (iii) on such
         other terms and conditions as may be acceptable to the Committee
         (including, without limitation, the relinquishment of Stock Options or
         by payment in full or in part in the form of Common Stock owned by the
         Participant for a period of at least 6 months (and for which the
         Participant has good title free and clear of any liens and
         encumbrances) based on the Fair Market Value of the Common Stock on the
         payment date). No shares of Common Stock shall be issued until payment
         therefor, as provided herein, has been made or provided for.

                  (e) INCENTIVE STOCK OPTION LIMITATIONS. To the extent that the
         aggregate Fair Market Value (determined as of the time of grant) of the
         Common Stock with respect to which Incentive Stock Options are
         exercisable for the first


                                       13


         time by an Eligible Employee during any calendar year under this Plan
         and/or any other stock option plan of the Company, any Subsidiary or
         any Parent exceeds $100,000, such Options shall be treated as
         Non-Qualified Stock Options. In addition, if an Eligible Employee does
         not remain employed by the Company, any Subsidiary or any Parent at all
         times from the time an Incentive Stock Option is granted until 3 months
         prior to the date of exercise thereof (or such other period as required
         by applicable law), such Stock Option shall be treated as a
         Non-Qualified Stock Option. Should any provision of this Plan not be
         necessary in order for the Stock Options to qualify as Incentive Stock
         Options, or should any additional provisions be required, the Committee
         may amend this Plan accordingly, without the necessity of obtaining the
         approval of the stockholders of the Company.

                  (f) FORM, MODIFICATION, EXTENSION AND RENEWAL OF STOCK
         OPTIONS. Subject to the terms and conditions and within the limitations
         of this Plan, Stock Options shall be evidenced by such form of
         agreement or grant as is approved by the Committee, and the Committee
         may (i) modify, extend or renew outstanding Stock Options granted under
         this Plan (provided that the rights of a Participant are not reduced
         without his consent), and (ii) accept the surrender of outstanding
         Stock Options (up to the extent not theretofore exercised) and
         authorize the granting of new Stock Options in substitution therefor
         (to the extent not theretofore exercised).

                  (g) DEFERRED DELIVERY OF COMMON SHARES. The Committee may in
         its discretion permit Participants to defer delivery of Common Stock
         acquired pursuant to a Participant's exercise of an Option in
         accordance with the terms and conditions established by the Committee.

                                  ARTICLE VII

                             NON-TRANSFERABILITY AND
                            TERMINATION OF EMPLOYMENT

         7.1 NON-TRANSFERABILITY. Except as provided herein, no Stock Option
shall be Transferable by the Participant otherwise than by will or by the laws
of descent and distribution. All Stock Options shall be exercisable, during the
Participant's lifetime, only by the Participant. No Stock Option shall, except
as otherwise specifically provided by law or herein, be Transferable in any
manner, and any attempt to Transfer any such Stock Option shall be void, and no
such Stock Option shall in any manner be liable for or subject to the debts,
contracts, liabilities, engagements or torts of any person who shall be entitled
to such Stock Option, nor shall it be subject to attachment or legal process for
or against such person. Notwithstanding the foregoing, the Committee may
determine at the time of grant or thereafter that a Non-Qualified Stock Option
that is otherwise not Transferable pursuant to this Section 7.1 is Transferable
to a Family Member in whole or in part and in such circumstances, and under such
conditions, as specified by the Committee. A Non-Qualified Stock Option that is
Transferred to a Family Member


                                       14


pursuant to the preceding sentence (i) may not be subsequently Transferred
otherwise than by will or by the laws of descent and distribution and (ii)
remains subject to the terms of this Plan and the Stock Option agreement. Any
shares of Common Stock acquired upon the exercise of a Stock Option by a
transferee of a Stock Option shall be subject to the terms of this Plan and the
Stock Option agreement, including, without limitation, the provisions of Article
X hereof.

         7.2 TERMINATION OF EMPLOYMENT. The following rules apply with regard to
the Termination of Employment of a Participant. Unless otherwise determined by
the Committee at grant or, if no rights of the Participant are reduced,
thereafter:

                  (a) TERMINATION BY REASON OF DEATH, DISABILITY OR RETIREMENT.
         If a Participant's Termination of Employment is by reason of death,
         Disability or Retirement, all Stock Options held by such Participant
         which are exercisable at the time of the Participant's Termination of
         Employment, may be exercised by the Participant (or, in the case of
         death, by the legal representative of the Participant's estate) at any
         time within a period of one year from the date of such Termination of
         Employment, but in no event beyond the expiration of the stated terms
         of such Stock Options; provided, however, that, in the case of
         Retirement, if the Participant dies within such exercise period, all
         unexercised Stock Options held by such Participant shall thereafter be
         exercisable, to the extent to which they were exercisable at the time
         of death, for a period of one year from the date of such death, but in
         no event beyond the expiration of the stated term of such Stock
         Options.

                  (b) INVOLUNTARY TERMINATION WITHOUT CAUSE. If a Participant's
         Termination of Employment is by involuntary termination without Cause,
         all Stock Options held by such Participant which are exercisable at the
         time of such Termination of Employment, may be exercised by the
         Participant at any time within a period of 90 days from the date of
         such Termination of Employment, but in no event beyond the expiration
         of the stated term of such Stock Options.

                  (c) VOLUNTARY TERMINATION. If a Participant's Termination of
         Employment is voluntary (other than a voluntary termination described
         in Section 7.2(d)(ii) below), all Stock Options held by such
         Participant which are exercisable at the time of such Termination of
         Employment, may be exercised by the Participant at any time within a
         period of 30 days from the date of such Termination of Employment, but
         in no event beyond the expiration of the stated terms of such Stock
         Options.



                                       15


                  (d) TERMINATION FOR CAUSE. If a Participant's Termination of
         Employment (i) is for Cause or (ii) is a voluntary termination (as
         provided in subsection (c) above) at any time after an event which
         would be grounds for a Termination of Employment for Cause, all Stock
         Options held by such Participant shall thereupon terminate and expire
         as of the date of such Termination of Employment.

                                  ARTICLE VIII

                          CHANGE IN CONTROL PROVISIONS

         8.1 BENEFITS. In the event of a Change in Control of the Company,
except as otherwise provided by the Committee upon the grant of a Stock Option,
the Participant shall be entitled to the following benefits:

                  (a) Except to the extent provided in the applicable Stock
         Option agreement, the Participant's employment agreement with the
         Company or an Affiliate, as approved by the Committee, or other written
         agreement approved by the Committee (as such agreement may be amended
         from time to time), Stock Options granted and not previously
         exercisable shall become exercisable upon a Change in Control, subject
         to subsection 8.1(b).

                  (b) Notwithstanding anything to the contrary herein, unless
         the Committee provides otherwise at the time a Stock Option is granted
         hereunder or thereafter, no acceleration of exercisability shall occur
         with respect to such Stock Options if the Committee reasonably
         determines in good faith that the Stock Options shall be honored or
         assumed, or new rights substituted therefor (each such honored, assumed
         or substituted stock option hereinafter called an "Alternative
         Option"), by a Participant's employer (or the parent or a subsidiary of
         such employer) immediately following the Change in Control, provided
         that any such Alternative Option must meet the following criteria:

                           (i) the Alternative Option must provide such
                  Participant with rights and entitlements substantially
                  equivalent to or better than the rights, terms and conditions
                  applicable under such Stock Option, including, but not limited
                  to, an identical or better exercise schedule; and

                           (ii) the Alternative Option must substantially comply
                  and in the case of an Incentive Stock Option must comply with
                  the requirements of Treasury Regulation ss. 1.425-1 (and any
                  amendments thereto), except that the Alternative Option need
                  not be an Incentive Stock Option.

                  (c) If the Company and the other party to a transaction
         constituting a Change in Control agree that such transaction shall be
         treated as a "pooling of interests" for financial reporting purposes,
         and if the transaction is in fact so treated, then the acceleration of
         exercisability, vesting or lapse of the applicable


                                       16


         Restriction Period shall not occur to the extent that the Company's
         independent public accountants determine in good faith that such
         acceleration would preclude "pooling of interests" accounting.

         8.2 CHANGE IN CONTROL. A "Change in Control" shall be deemed to have
occurred:

                  (a) upon any "person" as such term is used in Sections 13(d)
         and 14(d) of the Exchange Act (other than CEP, MSDWCP, the Company, any
         trustee or other fiduciary holding securities under any employee
         benefit plan of the Company, or any company owned, directly or
         indirectly, by the stockholders of the Company in substantially the
         same proportions as their ownership of Common Stock of the Company),
         becoming the beneficial owner (as defined in Rule 13d-3 under the
         Exchange Act), directly or indirectly, of securities of the Company
         representing 50% or more of the combined voting power of the Company's
         then outstanding securities;

                  (b) during any period of 2 consecutive years, individuals who
         at the beginning of such period constitute the Board, and any new
         director (other than a director designated by a person who has entered
         into an agreement with the Company to effect a transaction described in
         paragraph (a), (c), or (d) of this Section or a director whose initial
         assumption of office occurs as a result of either an actual or
         threatened election contest (as such term is used in Rule 14a-11 of
         Regulation 14A promulgated under the Exchange Act) or other actual or
         threatened solicitation of proxies or consents by or on behalf of a
         person other than the Board) whose election by the Board or nomination
         for election by the Company's stockholders was approved by a vote of at
         least two-thirds of the directors then still in office who either were
         directors at the beginning of the two-year period or whose election or
         nomination for election was previously so approved, cease for any
         reason to constitute at least a majority of the Board;

                  (c) a merger or consolidation of the Company or a Subsidiary
         with any other corporation, other than a merger or consolidation which
         would result in the voting securities of the Company outstanding
         immediately prior thereto continuing to represent (either by remaining
         outstanding or by being converted into voting securities of the
         surviving entity) more than 35% of the combined voting power of the
         voting securities of the Company or such surviving entity or such
         surviving entity's parent outstanding immediately after such merger or
         consolidation; or

                  (d) upon the approval by the stockholders of the Company of a
         plan of complete liquidation of the Company or an agreement for the
         sale or disposition by the Company of all or substantially all of the
         Company's assets other than the sale or disposition of all or
         substantially all of the assets of the Company to a person or persons
         who beneficially own, directly or indirectly, at least 50% or


                                       17


         more of the combined voting power of the outstanding voting securities
         of the Company at the time of the sale.

         8.3 INITIAL PUBLIC OFFERING NOT A CHANGE IN CONTROL. For purposes of
the Plan, an initial public offering of the Common Stock of the Company shall
not be deemed to be a Change in Control.

                                   ARTICLE IX

                        TERMINATION OR AMENDMENT OF PLAN

         Notwithstanding any other provision of this Plan, the Board or the
Committee may at any time, and from time to time, amend, in whole or in part,
any or all of the provisions of this Plan (including any amendment deemed
necessary to ensure that the Company may comply with any regulatory requirement
referred to in Article XII), or suspend or terminate it entirely, retroactively
or otherwise; provided, however, that, unless otherwise required by law or
specifically provided herein, the rights of a Participant with respect to Awards
granted prior to such amendment, suspension or termination, may not be impaired
without the consent of such Participant. In no event may this Plan be amended
without the approval of the stockholders of the Company, if and to the extent
required by the applicable provisions of Rule 16b-3 or, if and to the extent
required, by the applicable provisions of Section 162(m) of the Code, or with
regard to Incentive Stock Options, Section 422 of the Code, which would (i)
increase the aggregate number of shares of Common Stock that may be issued under
this Plan; (ii) decrease the minimum exercise price of any Stock Option; (iii)
increase the maximum individual Participant limitations for a calendar year
under Section 4.1; (iv) change the classification of employees eligible to
receive Stock Options under this Plan; or (v) any other amendment that would
require stockholder approval in order for the Plan to continue to comply with
the applicable provisions, if any, of Rule 16b-3, Section 162(m) of the Code or,
with regard to Incentive Stock Options, Section 422 of the Code or with the
rules of any exchange or system on which the Company's securities are listed or
traded.

         The Committee may amend the terms of any Stock Option theretofore
granted, prospectively or retroactively, but, subject to Article IV above or as
otherwise specifically provided herein, no such amendment or other action by the
Committee shall impair the rights of any holder without the holder's consent.

                                   ARTICLE X

                                  UNFUNDED PLAN

         10.1 UNFUNDED STATUS OF PLAN. This Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments as to which a Participant has a fixed and vested interest but which are
not yet made to a Participant by the Company, nothing contained herein shall
give any such Participant any


                                       18


rights that are greater than those of a general unsecured creditor of the
Company.

                                   ARTICLE XI

                               GENERAL PROVISIONS

         11.1 LEGEND. The Committee may require each person receiving shares
pursuant to an Award under this Plan to represent to and agree with the Company
in writing that the Participant is acquiring the shares without a view to
distribution thereof. In addition to any legend required by this Plan, the
certificates for such shares may include any legend which the Committee deems
appropriate to reflect any restrictions on Transfer.

         All certificates for shares of Common Stock delivered under this Plan
shall be subject to such stock transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations and other requirements
of the Securities and Exchange Commission, any stock exchange upon which the
Common Stock is then listed or any national securities association system upon
whose system the Common Stock is then quoted, any applicable Federal or state
securities law, and any applicable corporate law, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.

         11.2 OTHER PLANS. Nothing contained in this Plan shall prevent the
Board from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases.

         11.3 NO RIGHT TO EMPLOYMENT. Neither this Plan nor the grant of any
Award hereunder shall give any Participant any right with respect to continuance
of employment by the Company or any Affiliate, nor shall they be a limitation in
any way on the right of the Company or any Affiliate by which an employee is
employed to terminate his employment at any time.

         11.4 WITHHOLDING OF TAXES. The Company shall have the right to deduct
from any payment to be made to a Participant, or to otherwise require, prior to
the issuance or delivery of any shares of Common Stock or the payment of any
cash hereunder, payment by the Participant of, any Federal, state or local taxes
required by law to be withheld.

         Any statutorily required withholding obligation with regard to any
Eligible Employee may be satisfied, subject to the consent of the Committee, by
reducing the number of shares of Common Stock otherwise deliverable or by
delivering shares of Common Stock already owned. Any fraction of a share of
Common Stock required to satisfy such tax obligations shall be disregarded and
the amount due shall be paid instead in cash by the Participant.



                                       19


         11.5 LISTING AND OTHER CONDITIONS.

                  (a) Unless otherwise determined by the Committee, as long as
         the Common Stock is listed on a national securities exchange or system
         sponsored by a national securities association, the issue of any shares
         of Common Stock pursuant to a Stock Option shall be conditioned upon
         such shares being listed on such exchange or system. The Company shall
         have no obligation to issue such shares unless and until such shares
         are so listed, and the right to exercise any Stock Option with respect
         to such shares shall be suspended until such listing has been effected.

                  (b) If at any time counsel to the Company shall be of the
         opinion that any sale or delivery of shares of Common Stock pursuant to
         a Stock Option is or may in the circumstances be unlawful or result in
         the imposition of excise taxes on the Company under the statutes, rules
         or regulations of any applicable jurisdiction, the Company shall have
         no obligation to make such sale or delivery, or to make any application
         or to effect or to maintain any qualification or registration under the
         Securities Act or otherwise with respect to shares of Common Stock or
         Stock Option, and the right to exercise any Stock Option shall be
         suspended until, in the opinion of said counsel, such sale or delivery
         shall be lawful or will not result in the imposition of excise taxes on
         the Company.

                  (c) Upon termination of any period of suspension under this
         Section 12.5, a Stock Option affected by such suspension which shall
         not then have expired or terminated shall be reinstated as to all
         shares available before such suspension and as to shares which would
         otherwise have become available during the period of such suspension,
         but no such suspension shall extend the term of any Stock Option.

                  (d) A Participant shall be required to supply the Company with
         any certificates, representations and information that the Company
         requests and otherwise cooperate with the Company in obtaining any
         listing, registration, qualification, exemption, consent or approval
         the Company deems necessary or appropriate.

         11.6 STOCKHOLDERS AGREEMENT. As a condition to the receipt of shares of
Common Stock pursuant to a Stock Option under this Plan, to the extent required
by the Committee, the Participant shall execute and deliver a stockholder's
agreement or such other documentation which shall set forth certain restrictions
on transferability of the shares of Common Stock acquired upon exercise or
purchase, a right of first refusal of the Company with respect to shares, the
right of the Company to purchase Common Stock in accordance with this Plan and
such other terms as the Board or Committee shall from time to time establish.
Such stockholder's agreement shall apply to all Common Stock acquired under the
Plan.



                                       20


         11.7 GOVERNING LAW. This Plan shall be governed and construed in
accordance with the laws of the State of Delaware (regardless of the law that
might otherwise govern under applicable Delaware principles of conflict of
laws).

         11.8 CONSTRUCTION. Wherever any words are used in this Plan in the
masculine gender they shall be construed as though they were also used in the
feminine gender in all cases where they would so apply, and wherever any words
are used herein in the singular form they shall be construed as though they were
also used in the plural form in all cases where they would so apply.

         11.9 OTHER BENEFITS. No Award payment under this Plan shall be deemed
compensation for purposes of computing benefits under any retirement plan of the
Company or its subsidiaries nor affect any benefits under any other benefit plan
now or subsequently in effect under which the availability or amount of benefits
is related to the level of compensation.

         11.10 COSTS. The Company shall bear all expenses included in
administering this Plan, including expenses of issuing Common Stock pursuant to
any Awards hereunder. 11.11 NO RIGHT TO SAME BENEFITS. The provisions of Stock
Options need not be the same with respect to each Participant, and such Stock
Options to individual Participants need not be the same in subsequent years.

         11.11 NO RIGHT TO SAME BENEFITS. The provisions of Stock Options need
not be the same with respect to each Participant, and such Stock Options to
individual Participants need not be the same in subsequent years.

         11.12 DEATH/DISABILITY. The Committee may in its discretion require the
transferee of a Participant to supply it with written notice of the
Participant's death or Disability and to supply it with a copy of the will (in
the case of the Participant's death) or such other evidence as the Committee
deems necessary to establish the validity of the transfer of an Award. The
Committee may also require that the agreement of the transferee to be bound by
all of the terms and conditions of this Plan.

         11.13 SUCCESSORS AND ASSIGNS. The Plan shall be binding on all
successors and permitted assigns of a Participant, including, without
limitation, the estate of such Participant and the executor, administrator or
trustee of such estate.

         11.14 SEVERABILITY OF PROVISIONS. If any provision of this Plan shall
be held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions hereof, and this Plan shall be construed and
enforced as if such provisions had not been included.

         11.15 HEADINGS AND CAPTIONS. The headings and captions herein are
provided for reference and convenience only, shall not be considered part of
this Plan, and shall not be employed in the construction of this Plan.

         11.16 SECTION 16(B) OF THE EXCHANGE ACT. All elections and transactions
under this Plan by persons subject to Section 16 of the Exchange Act involving
shares of


                                       21


Common Stock are intended to comply with any applicable exemptive condition
under Rule 16b-3. The Committee may establish and adopt written administrative
guidelines, designed to facilitate compliance with Section 16(b) of the Exchange
Act, as it may deem necessary or proper for the administration and operation of
this Plan and the transaction of business thereunder.

                                  ARTICLE XII

                             EFFECTIVE DATE OF PLAN

         12.1 The Plan shall become effective upon adoption by the Board,
subject to the approval of this Plan by the stockholders of the Company in
accordance with the requirements of the laws of the State of Delaware, or such
later date as provided in the adopting resolution.

                                  ARTICLE XIII

                                  TERM OF PLAN

         13.1 No Stock Option shall be granted pursuant to this Plan on or after
the tenth anniversary of the earlier of the date this Plan is adopted or the
date of stockholder approval, but Stock Options granted prior to such tenth
anniversary may, and the Committee's authority to administer the terms of such
Options shall, extend beyond that date.


                              Exhibit 21.1

Cross Country, Inc.
Cross Country Staffing, Inc.
Cross Country TravCorps, Inc.
CCTC, Inc.
CC Local, Inc.
CFRC, Inc.
TVCM, Inc.
TravCorps Corporation
Cejka & Company
E-Staff, Inc.
e2Staff, Inc.
Cross Country Seminars, Inc.
CC Staffing, Inc.
ClinForce, Inc.
Gill/Balsano Consulting, L.L.C.
HospitalHub, Inc. (f/k/a Ashley One, Inc.)
NovaPro, Inc.


                                                                 EXHIBIT 23.1(A)

                        CONSENT OF INDEPENDENT AUDITORS

    We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated May 7, 2001, except for the third paragraph of
Note 11, as to which the date is August 23, 2001, in the Registration Statement
(Form S-1) and related Prospectus of Cross Country, Inc. dated February 27,
2002.

                                          /s/ ERNST & YOUNG LLP

West Palm Beach, FL
February 25, 2002

                                                                 EXHIBIT 23.1(B)

                        CONSENT OF INDEPENDENT AUDITORS

    We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated March 10, 2000 related to the consolidated financial
statements of TravCorps Corporation and Subsidiary, in the Registration
Statement (Form S-1) and related Prospectus of Cross Country, Inc. dated
February 27, 2002.

                                          /s/ ERNST & YOUNG LLP

Boston, Massachusetts
February 25, 2002

                                                                 EXHIBIT 23.1(C)

                        CONSENT OF INDEPENDENT AUDITORS

    We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated April 26, 2001 related to the consolidated financial
statements of ClinForce, Inc. in the Registration Statement (Form S-1) and
related Prospectus of Cross Country, Inc. dated February 27, 2002.

                                          /S/ ERNST & YOUNG LLP

Raleigh, North Carolina
February 26, 2002

                                                                 EXHIBIT 23.1(D)

                        CONSENT OF INDEPENDENT AUDITORS

    We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated August 10, 2001 related to the financial statements
of Heritage Professional Education, LLC included in the Registration Statement
(Form S-1) and related Prospectus of Cross Country, Inc. dated February 27,
2002.

                                          /S/ ERNST & YOUNG LLP

Nashville, Tennessee
February 26, 2002


                                                                    EXHIBIT 23.2

                       CONSENT OF INDEPENDENT ACCOUNTANTS

    We hereby consent to the use in this Registration Statement on Form S-1 of
our report dated November 5, 1999, except for Note 8 as to which the date is
December 16, 1999, relating to the financial statements of Cross Country
Staffing, a Partnership, as of July 29, 1999 and December 31, 1998 and for the
period from January 1, 1999 through July 29, 1999 and for the year ended
December 31, 1998, which appear in such Registration Statement. We also consent
to the reference to us under the heading "Experts" in such Registration
Statement.

PricewaterhouseCoopers LLP
Fort Lauderdale, Florida
February 26, 2002


                                                                    EXHIBIT 23.3

                         INDEPENDENT AUDITORS' CONSENT

    We consent to the use in this registration statement of Cross Country, Inc.
on Form S-1 of our report dated March 12, 1999 related to the consolidated
financial statements of TravCorps Corporation and Subsidiary for the year ended
December 26, 1998, appearing in the Prospectus, which is part of this
Registration Statement. We also consent to the reference to us under the heading
"Experts" in such Prospectus.

                                          Deloitte & Touche LLP

Deloitte & Touche LLP
Boston, Massachusetts
February 26, 2002