AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 11, 2001 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 (I.R.S. Employer incorporation or organization) Industrial Identification Number) Classification Code 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: JULIE M. ALLEN, ESQ. MICHAEL W. BLAIR, ESQ. PROSKAUER ROSE LLP DEBEVOISE & PLIMPTON 1585 BROADWAY 875 THIRD AVENUE NEW YORK, NEW YORK 10036-8299 NEW YORK, NEW YORK 10022 (212) 969-3000 (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 TITLE OF EACH CLASS OF MAXIMUM AGGREGATE AMOUNT OF SECURITIES TO BE REGISTERED OFFERING PRICE(1) REGISTRATION FEE Common Stock, par value $.01 per share...................... $143,750,000 $35,938 (1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended. ------------------------------ 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. - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------

EXPLANATORY NOTE This registration statement contains two separate prospectuses. The first prospectus relates to a public offering in the United States and Canada of an aggregate of shares of common stock. The second prospectus relates to a concurrent offering outside the United States and Canada of an aggregate of shares of common stock. The prospectuses for each of the U.S. offering and the international offering will be identical with the exception of an alternate front cover page, an alternate back cover page, and an alternate "Underwriting" section for the international offering. These alternate pages appear in this registration statement immediately following the complete prospectus for the U.S. offering.

SUBJECT TO COMPLETION PRELIMINARY PROSPECTUS DATED JULY 11, 2001 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.

PROSPECTUS SHARES [LOGO] CROSS COUNTRY, INC. COMMON STOCK ------------------ This is Cross Country, Inc.'s initial public offering. We are selling all of the shares. The U.S. underwriters are offering shares in the U.S. and Canada and the international managers are offering shares outside the U.S. and Canada. We expect the public offering price to be between $ and $ per share. Currently, no public market exists for the shares. After pricing of the offering, we expect that the shares will be quoted on the Nasdaq National Market under the symbol CCRN. INVESTING IN THE COMMON STOCK INVOLVES RISKS WHICH ARE DESCRIBED IN THE "RISK FACTORS" SECTION BEGINNING ON PAGE 9 OF THIS PROSPECTUS. ------------------------ PER SHARE TOTAL --------- -------- Public offering price....................................... $ $ Underwriting discount....................................... $ $ Proceeds, before expenses, to Cross Country, Inc............ $ $ The U.S. underwriters may also purchase up to an additional shares from us at the public offering price, less the underwriting discount, within 30 days from the date of this prospectus to cover over-allotments. The international managers may similarly purchase up to an additional shares from us. 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 , 2001. ------------------------ MERRILL LYNCH & CO. SALOMON SMITH BARNEY BANC OF AMERICA SECURITIES LLC ROBINSON-HUMPHREY CIBC WORLD MARKETS ------------------------ The date of this prospectus is , 2001.

[DESCRIPTION OF INSIDE FRONT COVER ARTWORK TO BE PROVIDED BY AMENDMENT.]

TABLE OF CONTENTS PAGE -------- Prospectus Summary.......................................... 1 Risk Factors................................................ 9 Special Note Regarding Forward-Looking Statements........... 14 Use of Proceeds............................................. 15 Dividend Policy............................................. 15 Capitalization.............................................. 16 Dilution.................................................... 17 Selected Consolidated Financial and Other Data.............. 18 Unaudited Pro Forma Condensed Consolidated Statement of Operations................................................ 22 Management's Discussion and Analysis of Financial Condition and Results of Operations................................. 25 Business of Cross Country, Inc.............................. 36 Management.................................................. 45 Related Party Transactions.................................. 50 Principal Stockholders...................................... 51 Description of Capital Stock................................ 53 Shares Eligible for Future Sale............................. 55 United States Federal Tax Considerations for Non-United States Holders............................................ 57 Underwriting................................................ 60 Legal Matters............................................... 65 Experts..................................................... 65 Where You Can Find More Information......................... 65 ------------------------ You should rely on only the information contained in this prospectus. We have not, 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. UNLESS OTHERWISE SPECIFIED, ALL INFORMATION IN THIS PROSPECTUS ASSUMES NO EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION. THE INFORMATION IN THIS PROSPECTUS WILL BE ADJUSTED TO REFLECT A FOR STOCK SPLIT, WHICH WILL BE APPROVED AND CONSUMMATED PRIOR TO THIS OFFERING. CROSS COUNTRY, INC. We are the largest provider of healthcare staffing services in the United States. Approximately 80% of our revenue is derived from travel nurse staffing. We also provide complementary services, including staffing of clinical trials and allied health professionals, search and recruitment, consulting and education and training. Our active client base includes over 2,500 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 year ended December 31, 2000, our revenue and EBITDA, pro forma for the acquisitions of ClinForce, Inc. and Heritage Professional Education, LLC, were $407.3 million and $51.1 million, respectively. INDUSTRY DYNAMICS The STAFFING INDUSTRY REPORT, an independent staffing industry publication, estimates that the healthcare segment of the temporary staffing market generated $7.2 billion in revenue in 2000 and that this segment will 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 delivery. - 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: - 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. 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 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. 1

- STRONG AND DIVERSE CLIENT RELATIONSHIPS. We provide staffing solutions to an active client base of over 2,500 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 2000. In 2000, 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 retention of highly qualified healthcare professionals. We recruit healthcare professionals from all 50 states and Canada. In 2000, we received approximately 28,000 requests for applications from potential field employees and approximately 12,500 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. Historically, approximately 70% of our nurses have accepted new assignments with us within 35 days of completion of previous assignments. In 2000, we were recognized by WORKING MOTHER MAGAZINE as a top 100 national employer of working mothers. - SCALABLE AND EFFICIENT OPERATING STRUCTURE. We have an efficient centralized operating structure that includes a database of more than 146,000 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, which averages 15 years of experience in the healthcare industry, has played a key role in the development of the travel nurse staffing industry. Our management team 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. - 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 2

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 intend to continue to 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 In May 2001, we acquired Gill/Balsano Consulting, L.L.C., or Gill/Balsano, a management consulting firm focused on the rehabilitation services sector. In March 2001, we acquired ClinForce, Inc., or ClinForce, the clinical trials staffing subsidiary of Edgewater Technology, Inc. These acquisitions broaden the array of services that complement our core travel nurse staffing business. ------------------------ 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, our predecessor, from W. R. Grace & Co. In December 1999, we acquired TravCorps Corporation, or TravCorps, which was owned by 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. 3

THE OFFERING Common stock offered by Cross Country, Inc.: U.S. offering...................................... shares International offering............................. shares Total............................................ shares Common stock outstanding after the offering.......... shares Use of proceeds...................................... We estimate that our net proceeds from this offering will be approximately $114.8 million. We intend to use these proceeds as follows: - approximately $75.6 million to repay indebtedness outstanding under our credit facility; and - approximately $39.2 million to redeem all of our senior subordinated notes and pay a redemption premium. 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 our common stock. Nasdaq National Market symbol........................ CCRN The number of shares outstanding after the offering excludes shares reserved for issuance under our stock option plans, of which options to purchase shares at a weighted average exercise price of $ have been granted. 4

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 three month periods ended March 31, 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 three months ended March 31, 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 three months ended March 31, 2001 are pro forma for the Heritage Professional Education, LLC, or Heritage, and ClinForce acquisitions and as adjusted for the offering and expected use of proceeds as if these events had occurred on January 1, 2000 and January 1, 2001, respectively. The as adjusted consolidated balance sheet data as of March 31, 2001 are as adjusted for the offering and expected use of proceeds as if these events had occurred on March 31, 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, Inc., the "Pro Forma Condensed Consolidated Statement of Operations" and related notes, "Management's Discussion and Analysis of Financial Condition and Results of Operations", "Use of Proceeds" and other financial information included elsewhere in this prospectus. 5

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 $ 407,276 Operating expenses: Direct operating expenses............. 121,951 80,187 68,036 273,095 297,796 Selling, general and administrative expenses(e).......... 19,070 12,688 9,257 49,027 57,840 Bad debt expense....... 722 157 511 433 543 Depreciation........... 264 212 155 1,324 1,459 Amortization........... 859 496 4,422 13,701 15,215 Non-recurring indirect transaction costs(f)............. -- -- -- 1,289 1,289 ---------- ---------- ---------- ---------- ---------- Total operating expenses........... 142,866 93,740 82,381 338,869 374,142 ---------- ---------- ---------- ---------- ---------- Income from operations... 15,726 12,307 5,346 28,821 33,134 Other expenses: Interest expense, net.................. 850 230 4,821 15,435 4,404 Other expenses......... 183 190 -- -- -- ---------- ---------- ---------- ---------- ---------- Income before income taxes and discontinued operations........... 14,693 11,887 525 13,386 28,730 Income tax expense(g)........... -- -- 672 6,730 12,673 ---------- ---------- ---------- ---------- ---------- Income (loss) before discontinued operations........... 14,693 11,887 (147) 6,656 16,057 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 $ 16,057 ========== ========== ========== ========== ========== Basic and diluted income (loss) per common share(i): Income (loss) before discontinued operations........... $ (.06) $ 1.66 $ Discontinued operations........... (.07) (.51) ---------- ---------- ---------- ---------- ---------- Net income (loss)...... $ (.13) $ 1.15 $ ========== ========== ========== ========== ========== Weighted-average number of shares outstanding: Basic and diluted.... 2,635,895 3,999,998 THREE MONTHS ENDED MARCH 31, ------------------------------------- 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.... $ 89,584 $ 103,872 $ 111,565 Operating expenses: Direct operating expenses............. 67,063 79,002 84,352 Selling, general and administrative expenses(e).......... 12,054 14,175 15,781 Bad debt expense....... 234 420 420 Depreciation........... 309 518 553 Amortization........... 3,435 3,592 3,853 Non-recurring indirect transaction costs(f)............. 267 -- -- ---------- ---------- ---------- Total operating expenses........... 83,362 97,707 104,959 ---------- ---------- ---------- Income from operations... 6,222 6,165 6,606 Other expenses: Interest expense, net.................. 3,833 4,008 1,796 Other expenses......... -- -- -- ---------- ---------- ---------- Income before income taxes and discontinued operations........... 2,389 2,157 4,810 Income tax expense(g)........... 1,202 1,085 2,106 ---------- ---------- ---------- Income (loss) before discontinued operations........... 1,187 1,072 2,704 Discontinued operations: Loss from discontinued operations, net of income taxes(h)...... (286) (440) -- Loss on disposal(h).... -- (623) -- ---------- ---------- ---------- Net income (loss)...... $ 901 $ 9 $ 2,704 ========== ========== ========== Basic and diluted income (loss) per common share(i): Income (loss) before discontinued operations........... $ .30 $ .27 $ Discontinued operations........... (.07) (.27) ---------- ---------- ---------- Net income (loss)...... $ .23 $ -- $ ========== ========== ========== Weighted-average number of shares outstanding: Basic and diluted.... 3,999,998 3,999,998 6

YEAR ENDED THREE MONTHS PREDECESSOR(A) DECEMBER 31, ENDED MARCH 31, ------------------------- ------------------------ ------------------------------------- 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 $ 51,097 $ 10,233 $ 10,275 $ 11,012 EBITDA as a % of revenue............. 10.6% 12.3% 11.3% 12.3% 12.5% 11.4% 9.9% 9.9% FTE's(k).............. 2,264 2,466 2,789 4,167 4,452 4,289 4,361 4,631 Weeks worked(l)....... 117,728 73,980 61,358 216,684 231,504 55,757 56,687 60,203 Average contract revenue per week(m)............. $ 1,347 $ 1,429 $ 1,417 $ 1,616 $ 1,638 $ 1,544 $ 1,698 $ 1,727 Net cash flow provided by (used in) operating activities.......... $ 14,434 $ 12,178 $ 6,301 $ 10,397 $ 3,286 $ 5,009 Net cash flow provided by (used in) investing activities.......... $ (977) $ (202) $ 1,380 $ (9,584) $ (506) $ (32,605) Net cash flow provided by (used in) financing activities.......... $ (13,458) $ (11,977) $ (3,111) $ (5,641) $ (7,417) $ 27,596 AS OF MARCH 31, 2001 ---------------------------- ACTUAL AS ADJUSTED(N) ---------- --------------- (DOLLARS IN THOUSANDS) CONSOLIDATED BALANCE SHEET DATA Working capital............................................. $ 37,691 $ 37,691 Cash and cash equivalents................................... -- -- Total assets................................................ 349,926 342,872 Total debt.................................................. 186,883 75,799 Stockholders' equity........................................ $ 122,424 $ 231,937 - ------------------------------ (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 the offering and the Heritage and ClinForce acquisitions had occurred on January 1, 2000: - additional amortization expense of $0.9 million related to $34.0 million of goodwill and other intangibles acquired in the Heritage and ClinForce acquisitions; - a reduction in interest expense of $11.0 million as a result of the repayment of $35.5 million of senior subordinated debt (12.00% interest rate) and $77.3 million of borrowings outstanding under our credit facility using the weighted average rate in effect during the year ended December 31, 2000 (9.74%); and - additional income tax expense of $5.9 million as a result of the above adjustments. (d) Reflects the following adjustments as if the offering and the Heritage and ClinForce acquisitions had occurred on January 1, 2001: - additional amortization expense of $0.2 million related to $34.0 million of goodwill and other intangibles acquired in the Heritage and ClinForce acquisitions; - a reduction in interest expense of $2.2 million as a result of the repayment of $36.6 million of senior subordinated debt (12.0% interest rate) and $75.6 million of borrowings outstanding under our credit facility using the weighted average interest rate in effect during the three months ended March 31, 2001 (9.27%); and - additional income tax expense of $1.0 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. 7

(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 the offering had occurred on March 31, 2001: - increase in stockholders' equity of $114.8 million from the offering. - repayment of $36.6 million of senior subordinated debt, plus a $1.5 million redemption premium, and repayment of $75.6 million of borrowings outstanding under our credit facility. 8

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. 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 2,900 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. 9

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 $10 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. 10

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 expect to continue pursuing acquisitions of temporary healthcare staffing companies and travel healthcare companies that complement or enhance our business. 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 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. 11

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 any representation or warranty 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, Charterhouse Equity Partners III, or CEP III, and investment funds managed by Morgan Stanley Private Equity together will own approximately % of our outstanding common stock. Accordingly, acting together, they will be able to: - elect our entire board of directors; - control our management and policies; and - determine, without the consent of our other stockholders, 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. CEP III and investment funds managed by Morgan Stanley Private Equity, acting together, will also be able to prevent or cause a change in control of us and will be able to amend our certificate of incorporation and bylaws at any time. Their interests may conflict with the interests of the other holders of common stock. YOU WILL EXPERIENCE IMMEDIATE AND SIGNIFICANT DILUTION IN BOOK VALUE PER SHARE. The initial public offering price of our common stock is substantially higher than the net tangible book value per share of our outstanding common stock will be immediately after this offering. Net tangible book value per share represents the amount of total tangible assets less total liabilities, divided by the number of shares outstanding. If you purchase our common stock in this offering, you will incur immediate dilution of approximately $ in the net tangible book value per share of common stock in this offering, based on an assumed initial public offering price of $ per share. We also have a significant number of outstanding options to purchase our common stock with exercise prices significantly below the initial public offering price of the common stock. To the extent these options are exercised, there will be further dilution. AN AGGREGATE OF APPROXIMATELY MILLION SHARES WILL BECOME ELIGIBLE FOR RESALE IN THE PUBLIC MARKET 180 DAYS AFTER THIS OFFERING, AND FUTURE SALES OF THIS STOCK MAY CAUSE OUR STOCK PRICE TO DECLINE. Sales of substantial amounts of our common stock in the public market after the completion of this offering, 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. An aggregate of shares of common stock will be outstanding after this offering. Of these, the shares offered by this prospectus will be freely tradable without restriction or further registration. In connection with this offering, we and our officers, directors and substantially all of our existing stockholders, who together hold shares, have agreed not to sell or transfer any shares of our common stock for 180 days after completion of this offering without the underwriters' consent. While 12

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. 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. These shares, along with shares held by others who can participate in the registrations, will represent % of our outstanding common stock after the offering. CEP III and the investment funds of Morgan Stanley Private Equity have informed us that they do not presently intend to exercise their demand registration rights, although they retain the right to do so. 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, after this offering, we also intend to register shares of common stock for issuance under our stock option plans. As of March 31, 2001, options to purchase shares of common stock were issued and outstanding, of which shares have vested. 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 Sale" for a more detailed description of the restrictions on selling shares of our common stock after this offering. IF OUR STOCK PRICE DECLINES AFTER THE INITIAL OFFERING, YOU COULD LOSE A SIGNIFICANT PART OF YOUR INVESTMENT. Prior to this offering, there has been no public market for our common stock. We do not know if an active trading market will develop for our common stock or how the common stock will trade in the future. Negotiations between the underwriters and us will determine the initial public offering price. You may not be able to resell your shares at or above the initial public offering price due to fluctuations in the market price of our common stock due to changes in our operating performance or prospects. In addition, the stock market in general has experienced extreme volatility that often has been unrelated to the operating performance or prospects of particular companies. 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, which is controlled by CEP III and investment funds managed by Morgan Stanley Private Equity, to issue up to 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. 13

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. 14

USE OF PROCEEDS We estimate that our net proceeds from the offering will be $114.8 million, assuming an initial offering price of $ per share and after deducting estimated expenses and underwriting discounts and commissions of $10.3 million. We intend to use the net proceeds of this offering to make the following payments: - approximately $75.6 million to repay a portion of the outstanding balances under our credit facility, which becomes due on July 29, 2005. As of July 1, 2001, the outstanding balance of principal and interest on our credit facility was approximately $146.9 million and the effective interest rate was 7.86%. On March 16, 2001, to finance our acquisition of ClinForce, we amended our credit facility to provide for an additional term loan in the aggregate principal amount of $30.0 million; and - approximately $39.2 million to redeem all of our outstanding senior subordinated notes and pay a redemption premium. The senior subordinated notes accrue interest at a rate of 12.00% per annum, compounded quarterly, and become due on January 1, 2006. As of July 1, 2001, the outstanding balance of principal and interest on the senior subordinated notes was $37.7 million. If the underwriters' over-allotment option is exercised in full, we estimate that our net proceeds will be $132.2 million. Any additional net proceeds will be used to repay additional indebtedness under our credit facility. DIVIDEND POLICY We have not declared or paid any cash dividends on our capital stock. We currently intend to retain future earnings, if any, for use in the operation and expansion of our business and do not anticipate declaring or paying any 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. 15

CAPITALIZATION The following table shows our capitalization as of March 31, 2001: - on an actual basis; and - on an as adjusted basis to give effect to the sale of shares of our common stock at an assumed public offering price of per share and the application of the net proceeds of the offering to repay a portion of our outstanding debt. See "Use of Proceeds." 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 MARCH 31, 2001 ---------------------------- ACTUAL AS ADJUSTED(A) ----------- -------------- (IN THOUSANDS) Long term debt: Revolving loan facility................................... $ 9,150 $ -- Term loan................................................. 141,780 75,337 12.00% senior subordinated pay-in-kind notes due 2006(b)................................................. 36,554 -- Note payable.............................................. 462 462 ---------- ---------- Total debt.................................................. 187,946 75,799 Less current maturities................................... 12,861 12,861 Total long-term debt.................................... 175,085 62,938 Stockholders' equity: Undesignated preferred stock, $ par value, shares authorized, none issued and outstanding--actual and as adjusted................................................ -- -- Common stock, $ par value; shares authorized, shares issued and outstanding--actual, shares authorized, shares issued and outstanding--as adjusted(c)............................................. 40 40 Additional paid-in capital................................ 119,043 233,793 Retained earnings(d)...................................... 4,265 (972) Accumulated other comprehensive earnings.................. (924) (924) ---------- ---------- Total stockholders' equity.............................. 122,424 231,937 ---------- ---------- Total capitalization.................................. $ 297,509 $ 294,875 ========== ========== - ------------------------ (a) As adjusted amounts do not include the use of $1.1 million of proceeds to repay pay-in-kind notes issued between March 31, 2001 and July 1, 2001, and a related redemption premium. (b) Actual amount includes $1.1 million of interest accrued between January 1, 2001 and March 31, 2001. (c) Gives effect to conversion of 131,053 shares of Class B common stock ($.01 par value) into a like amount of Class A common shares. (d) As adjusted amount includes the effects of a $1.5 million redemption premium associated with the prepayment of our pay-in-kind notes and the write-off of $7.1 million of related debt issuance costs as of March 31, 2001, net of taxes. 16

DILUTION Our net tangible book deficit as of March 31, 2001, was approximately $137.5 million, or $ per share of common stock. Net tangible book deficit is the difference between our total tangible assets and our total liabilities. We determined the net tangible book deficit per share by dividing our net tangible book deficit by the total number of shares of common stock outstanding. After giving effect to the issuance and sale of the shares of common stock offered by us in the offering at an assumed initial offering price of $ per share, and after deducting estimated underwriting discounts and commissions and offering expenses payable by us, our pro forma net tangible book deficit as of March 31, 2001 would have been approximately $24.2 million, or $ per share of common stock. This represents an immediate decrease in net tangible book deficit of $ per share to existing stockholders and an immediate dilution of $ per share to new investors purchasing shares of common stock in the offering. The following table illustrates this dilution on a per share basis: Assumed initial public offering price per share............. $ Net tangible book deficit per share as of March 31, 2001.................................................. $ Decrease in net tangible book deficit per share attributable to new investors......................... ---------- Pro forma net tangible book deficit per share after the offering.................................................. ---------- Dilution per share to new investors......................... $ ========== If the underwriters' over-allotment option is exercised in full, the pro forma net tangible book deficit per share after the offering would be $ per share, the decrease in net tangible book deficit per share to existing shareholders would be $ per share and the dilution in net tangible book value to new investors would be $ per share. The following table sets forth, as of March 31, 2001, the number of shares of common stock purchased from us, the total consideration paid and the average price per share paid by our existing stockholders and to be paid by new investors in the offering at $ , before deduction of estimated underwriting discounts and commissions and other expenses of the offering: SHARES PURCHASED TOTAL CONSIDERATION -------------------- --------------------- AVERAGE PRICE NUMBER PERCENT AMOUNT PERCENT PER SHARE --------- -------- ---------- -------- ------------- Existing stockholders.......... % $ % $ New investors.................. --------- ----- ---------- ----- ---------- Total...................... 100.0% $ 100.0% $ ========= ===== ========== ===== ========== The foregoing discussion and table assume no exercise of any outstanding stock options to purchase common stock. As of March 31, 2001 there were shares of common stock issuable upon the exercise of stock options outstanding at a weighted average exercise price of $ . To the extent these options are exercised, there will be further dilution to new investors. 17

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 March 31, 2001 and for the three month periods ended March 31, 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 three months ended March 31, 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 three months ended March 31, 2001 are pro forma for the Heritage and ClinForce acquisitions and as adjusted for the offering and expected use of proceeds as if these events had occurred on January 1, 2000 and January 1, 2001, respectively. The as adjusted consolidated balance sheet data as of March 31, 2001 are as adjusted for the offering and expected use of proceeds as if these events had occurred on March 31, 2001. The selected consolidated financial 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, Inc., 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. 18

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) expenses: Interest expense, net.......... 2,602 1,169 1,647 850 Other (income) expenses........ (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.................... 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 (used in) 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 provided by (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 $ 407,276 Operating expenses: Direct operating expenses...... 80,187 68,036 273,095 297,796 Selling, general and administrative expenses(d)... 12,688 9,257 49,027 57,840 Bad debt expense............... 157 511 433 543 Depreciation................... 212 155 1,324 1,459 Amortization................... 496 4,422 13,701 15,215 Non-recurring indirect transaction costs(e)......... -- -- 1,289 1,289 ---------- ---------- ---------- ---------- Total operating expenses....... 93,740 82,381 338,869 374,142 ---------- ---------- ---------- ---------- Income from operations........... 12,307 5,346 28,821 33,134 Other (income) expenses: Interest expense, net.......... 230 4,821 15,435 4,404 Other (income) expenses........ 190 -- -- -- ---------- ---------- ---------- ---------- Income before income taxes and discontinued operations........ 11,887 525 13,386 28,730 Income tax expense(f)............ -- 672 6,730 12,673 ---------- ---------- ---------- ---------- Income (loss) before discontinued operations..................... 11,887 (147) 6,656 16,057 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 $ 16,057 ========== Basic and diluted income (loss) per common share(h): Income (loss) before discontinued operations...... $ (.06) $ 1.66 Discontinued operations........ (.07) (.51) ---------- ---------- ---------- Net income (loss)............ $ (.13) $ 1.15 ========== ========== ========== Weighted-average number of shares outstanding.................... 2,635,895 3,999,998 ========== ========== ========== OTHER OPERATING DATA EBITDA(i)........................ $ 13,015 $ 9,923 $ 45,135 $ 51,097 EBITDA as % of revenue........... 12.3% 11.3% 12.3% 12.5% 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 (used in) 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 provided by (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 19

THREE MONTHS ENDED MARCH 31, ------------------------------------- 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....................................... $ 89,584 $ 103,872 $ 111,565 Operating expenses: Direct operating expenses................................. 67,063 79,002 84,352 Selling, general and administrative expenses.............. 12,054 14,175 15,781 Bad debt expense.......................................... 234 420 420 Depreciation.............................................. 309 518 553 Amortization.............................................. 3,435 3,592 3,853 Non-recurring indirect transaction costs(e)............... 267 -- -- ---------- ---------- ---------- Total operating expenses................................ 83,362 97,707 104,959 ---------- ---------- ---------- Income from operations...................................... 6,222 6,165 6,606 Other expenses: Interest expense, net..................................... 3,833 4,008 1,796 ---------- ---------- ---------- Income before income taxes and discontinued operations...... 2,389 2,157 4,810 Income tax expense(f)....................................... 1,202 1,085 2,106 ---------- ---------- ---------- Income before discontinued operations....................... 1,187 1,072 2,704 Discontinued operations: Loss from discontinued operations, net of income taxes.... (286) (440) -- Loss on disposal.......................................... -- (623) -- ---------- ---------- ---------- Net income.................................................. $ 901 $ 9 $ 2,704 ========== ========== ========== Basic and diluted income (loss) per common share(h): Income before discontinued operations..................... $ .30 $ .27 $ Discontinued operations................................... (.07) (.27) ---------- ---------- ---------- Net income.............................................. $ .23 $ -- $ ========== ========== ========== Weighted-average number of shares outstanding............... 3,999,998 3,999,998 OTHER OPERATING DATA EBITDA(i)................................................... $ 10,233 $ 10,275 $ 11,012 EBITDA as a % of revenue.................................... 11.4% 9.9% 9.9% FTE's(j).................................................... 4,289 4,361 4,631 Weeks worked(k)............................................. 55,757 56,687 60,203 Average contract revenue per week(l)........................ $ 1,544 $ 1,698 $ 1,727 Net cash flow provided by (used in) operating activities.... 3,286 5,009 Net cash flow provided by (used in) investing activities.... (506) (32,605) Net cash flow provided by (used in) financing activities.... $ (7,417) $ 27,596 AS OF MARCH 31, 2001 --------------------------- ACTUAL AS ADJUSTED(O) ---------- -------------- CONSOLIDATED BALANCE SHEET DATA Working capital............................................. $ 37,691 37,691 Cash and cash equivalents................................... -- -- Total assets................................................ 349,926 342,872 Total debt.................................................. 186,883 75,799 Stockholders' equity........................................ $ 122,424 $ 231,937 - ------------------------------ (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. 20

(c) Reflects the following adjustments as if the offering and the Heritage and ClinForce acquisitions had occurred on January 1, 2000: - additional amortization expense of $0.9 million related to $34.0 million of goodwill and other intangibles acquired in the Heritage and ClinForce acquisitions; - a reduction in interest expense of $11.0 million as a result of the repayment of $35.5 million of senior subordinated debt (12.0% interest rate) and $77.3 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%); and - additional income tax expense of $5.9 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 if the offering and the Heritage and ClinForce acquisitions had occurred on January 1, 2001: - additional amortization expense of $0.2 million related to $34.0 million of goodwill and other intangibles acquired in the Heritage and ClinForce acquisitions; - a reduction in interest expense of $2.2 million as a result of the repayment of $36.6 million of senior subordinated debt (12.0% interest rate) and $75.6 million of borrowings outstanding under our credit facility using the weighted average interest rate in effect during the three months ended March 31, 2001 (9.27%); and - additional income tax expense of $1.0 million as a result of the above adjustments. (o) Reflects the following adjustments as if the offering had occurred on March 31, 2001: - increase in stockholders' equity of $114.8 million of net proceeds from the offering; and - repayment of $36.6 million of senior subordinated debt, plus a $1.5 million redemption premium, and repayment of $75.6 million of borrowings outstanding under our credit facility. 21

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 three months ended March 31, 2001 give effect to the acquisitions of Heritage and ClinForce as if the transactions had occurred on January 1, 2000 and January 1, 2001, respectively. 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 the offering for the year ended December 31, 2000 and the three months ended March 31, 2000, assumes the repayment of certain of our indebtedness using a portion of the net proceeds received from the offering as if the offering and the repayment had occurred on January 1, 2000 and January 1, 2001, respectively. 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 ACQUISITION PRO FORMA ADJUSTMENTS PRO FORMA CROSS COUNTRY CLINFORCE(A) HERITAGE(B) ADJUSTMENTS COMBINED FOR OFFERING AS ADJUSTED ------------- ------------ ----------- ----------- ---------- ------------ ----------- (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) Revenue from services...... $ 367,690 $ 28,895 $ 10,690 $ 407,276 $ 407,276 Operating expenses: Direct operating expenses............... 273,095 20,128 4,572 297,796 297,796 Selling, general and administrative expenses............... 49,027 4,766 4,047 57,840 57,840 Bad debt expense......... 433 110 -- 543 543 Depreciation............. 1,324 135 -- 1,459 1,459 Amortization............. 13,701 660 -- 854(c) 15,215 15,215 Non-recurring indirect transaction costs...... 1,289 -- -- 1,289 1,289 ---------- ---------- ---------- ---------- ---------- Total operating expenses... 338,869 25,799 8,619 374,142 374,142 Income from operations..... 28,821 3,096 2,071 33,134 33,134 Interest expense, net...... 15,435 -- -- 3,623(d) 19,058 (14,654)(e) 4,404 ---------- ---------- ---------- ---------- ---------- Income before income taxes.................... 13,386 3,096 2,071 14,076 28,730 Income tax expense......... 6,730 1,227 -- (926)(f) 7,031 5,642 (f) 12,673 ---------- ---------- ---------- ---------- ---------- Income from continuing operations............... $ 6,656 $ 1,869 $ 2,071 $ 7,045 $ 16,057 ========== ========== ========== ========== ========== Basic and diluted income from continuing operations per common share.................... $ 1.66 -- -- $ 1.76 ========== ========== ========== ========== Weighted average common shares outstanding....... 3,999,998 -- -- 3,999,998 ========== ========== ========== ========== 22

- ------------------------------ (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. prior to being acquired by us in March 2001. The operating results of ClinForce are not necessarily indicative of amounts that would have been incurred had ClinForce operated as a stand-alone business during the period presented. (b) Represents the historical results of Heritage for the period from January 1, 2000 through December 26, 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 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 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%). (e) Adjustment to record pro forma interest expense reduction as if $114.8 million of estimated offering proceeds were used to reduce outstanding debt through the repayment of $35.5 million of senior subordinated debt and repayment of $77.3 million of borrowings outstanding under our credit facility as of January 1, 2000. (f) 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. 23

THREE MONTHS ENDED MARCH 31, 2001 ---------------------------------------------------------------------------------------- PRO FORMA ACQUISITION PRO FORMA ADJUSTMENTS PRO FORMA CROSS COUNTRY CLINFORCE(A) ADJUSTMENTS COMBINED FOR OFFERING AS ADJUSTED ------------- ------------ ----------- ---------- ------------ ----------- (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) Revenue from services............. $ 103,872 $ 7,693 $ 111,565 $ 111,565 Operating expenses: Direct operating expenses....... 79,002 5,350 84,352 84,352 Selling, general and administrative expenses....... 14,175 1,606 15,781 15,781 Bad debt expense................ 420 420 420 Depreciation.................... 518 35 553 553 Amortization.................... 3,592 92 169(b) 3,853 3,853 Non-recurring indirect transaction costs............. -- -- -- -- ---------- ---------- ---------- ---------- Total operating expenses.......... 97,707 7,083 104,959 104,959 Income from operations............ 6,165 610 6,606 6,606 Interest expense, net............. 4,008 179 421(c) 4,608 (2,812)(d) 1,796 ---------- ---------- ---------- ---------- Income before income taxes........ 2,157 431 1,998 4,810 Income tax expense................ 1,085 166 (228)(e) 1,023 1,083(e) 2,106 ---------- ---------- ---------- ---------- Income from continuing operations...................... $ 1,072 $ 265 $ 975 $ 2,704 ========== ========== ========== ========== Basic and diluted income from continuing operations per common share........................... $ 0.27 -- $ 0.24 $ -- ========== ========== ========== ========== Weighted average common shares outstanding..................... 3,999,998 -- 3,999,998 -- ========== ========== ========== ========== - -------------------------- (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 Technology, Inc. prior to being acquired by us in March 2001. The operating results of ClinForce are not necessarily indicative of amounts that would have been incurred had ClinForce operated as a stand-alone business during the period presented. (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 5--25 years. (c) 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 quarter ended March 31, 2001 (9.27%). (d) Adjustment to record pro forma interest expense reduction as if $114.8 million of estimated offering proceeds were used to reduce outstanding debt through the repayment of $36.6 million of senior subordinated debt and repayment of $75.6 million of borrowings outstanding under our credit facility as of January 1, 2001. (e) Pro forma adjustment for estimated income taxes at combined federal and state statutory rates for the effect of the other adjustments. 24

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 We are the largest provider of healthcare staffing services in the United States. Approximately 80% of our revenue is derived from travel nurse staffing. We also provide complementary services, including staffing of clinical trials and allied health professionals, search and recruitment, consulting and education and training. For the year ended December 31, 2000, our revenue and EBITDA, pro forma for the acquisitions of ClinForce and Heritage, were $407.3 million and $51.1 million, respectively. 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, 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. Our field employees work predominantly under contracts where the individual is our employee. We also offer mobile contracts, under which the individual is an employee of the client facility for the purposes of payroll and we are paid an hourly or weekly administrative fee. 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 25

undertaking layoffs of their regular employees. In addition, we may experience more competitive pricing pressure during periods of occupancy downturn. ACQUISITIONS 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. ClinForce supplies supplemental staffing services for clinical trials. ClinForce's revenue was $28.9 million for the year ended December 31, 2000. We believe this acquisition will enable us to extend our services into a fragmented and complementary segment of the healthcare staffing market. 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. TravCorps had revenues of $113.0 million for the period December 27, 1998 to December 15, 1999. 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 $153.4 million and $97.5 million, respectively, at March 31, 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 205% of our stockholders' equity as of March 31, 2001. The amount of goodwill and other intangible assets amortized equaled 58.3% of our income from operations for the three months ended March 31, 2001. In June 2001, the Financial Accounting Standards Board approved its exposure draft, BUSINESS COMBINATIONS AND INTANGIBLE ASSETS--ACCOUNTING FOR GOODWILL. The statements that will be derived from the exposure draft eliminate the pooling-of-interests method of accounting for business combinations and require 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. The standards are expected to be issued in July 2001 and will apply to us beginning January 1, 2002 for existing intangible assets and July 1, 2001 for business combinations completed after June 30, 2001. 26

RESULTS OF OPERATIONS The following table summarizes, for the periods indicated, selected statement of operations data expressed as a percentage of revenue: PREDECESSOR --------------------------- PERIOD FROM PERIOD FROM THREE MONTHS YEAR ENDED JANUARY 1- JULY 30- YEAR ENDED ENDED MARCH 31, 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 74.9 76.1 Selling, general and administrative expenses......... 12.0 12.0 10.5 13.3 13.4 13.6 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 11.4 9.9 Depreciation and amortization..... 0.7 0.7 5.2 4.1 4.2 4.0 Non-recurring indirect transaction costs........................... -- -- -- 0.4 0.3 -- ----- ----- ----- ----- ----- ----- Income from operations............ 9.9 11.6 6.1 7.8 6.9 5.9 Interest expense, net............. 0.5 0.2 5.5 4.2 4.3 3.9 Other expenses.................... 0.1 0.2 -- -- -- -- ----- ----- ----- ----- ----- ----- Income before income taxes and discontinued operations......... 9.3 11.2 0.6 3.6 2.6 2.0 Income tax expense(b)............. -- -- 0.8 1.8 1.3 1.0 ----- ----- ----- ----- ----- ----- Income (loss) before discontinued operations...................... 9.3 11.2 (0.2) 1.8 1.3 1.0 Loss from discontinued operations, net of income taxes............. -- -- (0.2) (0.4) (0.3) (0.4) Estimated loss on disposal of discontinued operations......... -- -- -- (0.1) -- (0.6) ----- ----- ----- ----- ----- ----- Net income (loss)................. 9.3% 11.2% (0.4)% 1.3% 1.0% 0.0% ===== ===== ===== ===== ===== ===== - ------------------------ (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) Prior to July 30, 1999, we were a partnership for which income tax expense was determined at the partner level. 27

The following sections should be read in conjunction with the History and Acquisitions sections that appear above in this Management's Discussion and Analysis. THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31, 2000 Revenue increased by 16.0% to $103.9 million for the three months ended March 31, 2001 as compared to $89.6 million for the three months ended March 31, 2000. Revenue included from Heritage and ClinForce, which were acquired on December 26, 2000 and March 16, 2001, respectively, totaled $4.9 million for the three months ended March 31, 2001. Excluding the effects of these acquisitions, revenue increased $9.6 million, or 10.7%, as compared with the three months ended March 31, 2000. This increase is primarily due to an increase in the average hourly bill rate offset, in part, by a modest reduction in the average number of hours billed per FTE per week. The average number of field employees remained relatively constant from period to period. The average hourly bill rate increased primarily as a result of bill rate increases and, to a lesser extent, an increase in the percentage of nurses working under staffing rather than mobile contracts. 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. Of the $103.9 million of revenue from the three months ended March 31, 2001, 83.2% of revenue was generated by travel nursing operations, 9.5% from other staffing operations and 7.3% from other services. Of the $89.6 million of revenue from the three months ended March 31, 2000, 87.7% was generated by travel nursing operations, 8.4% from other staffing operations and 3.9% from other services. Direct operating expenses are comprised primarily of field employee compensation expenses, housing expenses, travel expenses and field insurance expenses. Direct operating expenses totaled $79.0 million for the three months ended March 31, 2001 as compared to $67.1 million for the three months ended March 31, 2000. As a percentage of revenue, direct operating expenses represented 76.1% of revenue for the three months ended March 31, 2001 as compared with 74.9% for the three months ended March 31, 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. These increases were offset in part by the relatively lower direct operating expenses, as a percent of revenue, for each of Heritage and ClinForce. Selling, general and administrative expenses are comprised primarily of corporate and administrative personnel compensation, advertising, referral bonuses, insurance, communication, rent, utilities and postage and delivery. Selling, general and administrative expenses totaled $14.2 million for the three months ended March 31, 2001 as compared to $12.1 million for the three months ended March 31, 2000. As a percentage of revenue, selling, general and administrative expenses increased to 13.6% of revenue for the three months ended March 31, 2001, as compared with 13.4% for the three months ended March 31, 2000. We expect selling, general and administrative expenses as a percent of revenue to continue to remain higher throughout 2001, as compared to 2000, as a result of the acquisitions of Heritage and ClinForce, which have historically had higher selling, general and administrative expenses than our travel nurse staffing business. Bad debt expense totaled $0.4 million for the three months ended March 31, 2001 as compared to $0.2 million for the three months ended March 31, 2000. As a percentage of revenue, bad debt expense represented 0.4% of revenue for the three months ended March 31, 2001 as compared with 0.3% for the three months ended March 31, 2000. EBITDA, as a result of the above, totaled $10.3 million for the three months ended March 31, 2001 as compared to $10.2 million for the three months ended March 31, 2000. As a percentage of revenue, EBITDA represented 9.9% of revenue for the three months ended March 31, 2001 as compared with 11.4% for the three months ended March 31, 2000. 28

Depreciation and amortization expense totaled $4.1 million for the three months ended March 31, 2001 as compared to $3.7 million for the three months ended March 31, 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 4.0% of revenue for the three months ended March 31, 2001 as compared to 4.2% for the three months ended March 31, 2000. Non-recurring indirect transaction costs for the three months ended March 31, 2000 were $0.3 million, comprised of non capitalizable transition bonuses and integration costs related to the TravCorps acquisition. Income from operations totaled $6.2 million for each of the three months ended March 31, 2001 and for the three months ended March 31, 2000. As a percentage of revenue, income from operations represented 5.9% of revenue for the three months ended March 31, 2001 as compared with 6.9% for the three months ended March 31, 2000. Net interest expense totaled $4.0 million for the three months ended March 31, 2001 as compared to $3.8 million for the three months ended March 31, 2000. This increase was primarily due to borrowings related to the Heritage and ClinForce acquisitions. Income before income taxes and discontinued operations totaled $2.2 million for the three months ended March 31, 2001 as compared to $2.4 million for the three months ended March 31, 2000 due to the factors discussed above. Income tax expense totaled $1.1 million for the three months ended March 31, 2001 as compared to $1.2 million for the three months ended March 31, 2000. Income before discontinued operations totaled $1.1 million for the three months ended March 31, 2001 as compared to $1.2 million for the three months ended March 31, 2000. Losses from discontinued operations, net of income tax benefits, in connection with HospitalHub were $0.4 million for the three months ended March 31, 2001 as compared to $0.3 million for the three months ended March 31, 2000. A $0.6 million loss was recognized on the planned disposal of the HospitalHub operation during the three months ended March 31, 2001. The divestiture of HospitalHub was completed in the second quarter of 2001. Net income for the three months ended March 31, 2001 was $0.0 million as compared to $0.9 million for the three months ended March 31, 2000. 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 $193.7 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. 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, 87.5% of revenue was generated by travel nursing operations, 7.8% from other staffing operations and 4.7% from other services. Of the $306.6 million of revenue for the two periods that comprise 1999, and including TravCorps for the full year of 1999, 84.9% was generated by travel nursing operations, 8.4% from other staffing operations and 6.7% from other services. 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 29

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. 30

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 $193.7 million, representing a 22.1% increase over the year ended December 31, 1998. The increase primarily was due to increases in the number of hours worked by our travel nurses and in the average hourly bill rate, as well as a more favorable staffing mix. 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 31

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 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 was 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 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 32

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 March 31, 2001, we had a current ratio, the amount of current assets divided by current liabilities, of 1.9 to 1.0. Working capital increased by $3.4 million to $37.7 million as of March 31, 2001, compared to $34.3 million as of December 31, 2000. The increase in working capital is primarily due to a $6.1 million increase in accounts receivable. Although accounts receivable increased, days sales outstanding decreased to 62 days at March 31, 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 In March 2001, we amended our 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 facility matures on July 29, 2005 and the term loan facility has staggered maturities in 2001, 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 March 31, 2001, the weighted average effective interest rate under the amended credit facility was 8.99%. 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 July 1, 2001, we had availability under our revolving credit facility of $17.7 million and under our letter of credit sub-facility of $1.9 million. 33

The terms of the amended 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 $10.0 million. In addition, after this offering, if affiliates of Charterhouse and investment funds managed by Morgan Stanley Private Equity, as a group, cease to beneficially own at least 45.0% of our capital stock, a change of control, which constitutes an event of default, will occur under the credit facility. Borrowings under the amended credit facility are collateralized by substantially all our assets and the assets of our subsidiaries. Our credit facility requires us to use the first $40.0 million of proceeds from this offering to reduce amounts outstanding thereunder. If after giving effect to such application of proceeds, we satisfy the requisite debt to EBITDA ratio specified in the credit facility, we are permitted to use remaining net cash proceeds of this offering to redeem the outstanding principal on our senior subordinated pay-in-kind notes, plus accrued interest and any fees and expenses related to prepayment. SENIOR SUBORDINATED PAY-IN-KIND NOTES On July 29, 1999, we issued $30.0 million of senior subordinated pay-in-kind notes to two financial institutions. We used the proceeds of the senior subordinated notes to finance the acquisition of the assets of Cross Country Staffing, our predecessor, and to pay our transaction fees and expenses. Interest on the senior subordinated notes accrues at 12.0% per annum and is compounded quarterly. The senior subordinated notes mature at the earlier of six months after the final maturity of the amended credit facility or upon a change in control. We plan to redeem our senior subordinated pay-in-kind notes out of the proceeds of this offering. In connection with our proposed redemption of the senior subordinated pay-in-kind notes, we will be required to pay a redemption premium equal to 4.0% of outstanding principal plus accrued and unpaid interest on the notes. THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31, 2000 Net cash provided by operating activities for the three months ended March 31, 2001 increased $1.7 million to a provision of $5.0 million as compared to a provision of $3.3 million for the three months ended March 31, 2000. The use of cash from investing activities for the three months ended March 31, 2000 increased $32.1 million to a use of $32.6 million as compared to a use of $0.5 million for the three months ended March 31, 2000. Investing activities during the three months ended March 31, 2001 included $31.3 million for the acquisition of ClinForce. No acquisitions were completed during the three months ended March 31, 2000. Net cash provided by financing activities for the three months ended March 31, 2001 increased by $35.0 million to a provision of $27.6 million as compared to a use of $7.4 million for the three months ended March 31, 2000. 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, 19999 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 34

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. 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 $910,000. 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 $0.3 million for the three months ended March 31, 2001. 35

BUSINESS OF CROSS COUNTRY, INC. OVERVIEW OF OUR COMPANY We are the largest provider of healthcare staffing services in the United States. Approximately 80% of our revenue is derived from travel nurse staffing. We also provide complementary services, including staffing of clinical trials and allied health professionals, search and recruitment, consulting, and education and training. Our active client base includes over 2,500 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 year ended December 31, 2000, our revenue and EBITDA, pro forma for the acquisitions of ClinForce and Heritage, were $407.3 million and $51.1 million, respectively. OVERVIEW OF OUR INDUSTRY The STAFFING INDUSTRY REPORT, an independent staffing industry publication, estimates that the healthcare segment of the temporary staffing market generated $7.2 billion in revenue in 2000 and that this segment will grow 18% to $8.5 billion in 2001. 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. - Enrollment in nursing education programs is decreasing. According to the American Association of Colleges of Nursing, nursing school enrollments have declined at an average rate of 5% for each of the past six years. 36

- Many registered nurses are choosing to pursue careers outside of acute care hospitals or in professions other than nursing. 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 delivery. The U.S. Healthcare Financing Administration projects total healthcare expenditures to 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. 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 2,500 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 2000. In 2000, 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. 37

- 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 2000, we received approximately 28,000 requests for applications from potential field employees and approximately 12,500 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. Historically, approximately 70% of our nurses accepted new assignments with us within 35 days of completion of previous assignments. In 1996, we established Cross Country University, the first educational program in the travel nurse industry to be accredited by the American Nurse Credentialing Center. In 2000, we were recognized by WORKING MOTHER MAGAZINE as a top 100 national employer of working mothers. - SCALABLE AND EFFICIENT OPERATING STRUCTURE. We have an efficient centralized operating structure that includes a database of more than 146,000 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 15 years of experience in the healthcare industry, has consistently demonstrated the ability to successfully identify and integrate strategic acquisitions. OUR BUSINESS TRAVEL STAFFING SERVICES OVERVIEW We are a leading provider of travel nurse staffing services. Under the Cross Country TravCorps brand, we provide nurses on a fixed-term contract basis throughout the U.S. 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 in a wide range of specialties. We recruit credentialed nurses and other healthcare professionals and place them on assignments away from their homes. While these traveling nurses and other healthcare professionals may be registered with multiple staffing companies, we distinguish ourselves by providing our field employees with high levels of customer service, including access to a large inventory of assignments, free or subsidized housing, competitive benefits, retention programs, professional liability and other insurance, ongoing training and education, and state licensing assistance. CONTRACTS WITH FIELD EMPLOYEES AND CLIENTS Our field employees work predominantly under contracts where the individual is our employee and, as such, we 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. Clients are billed an hourly rate payable to us, from which the nurse or practitioner is paid a predetermined salary and, in some cases, a bonus. 38

We operate under client contracts that typically have a term of 13 weeks or longer. We also offer mobile contracts, under which the individual is an employee of the client facility for the purposes of payroll and we accept an hourly or weekly administrative fee. Our fees are paid directly by our clients rather than by government or other third-party payors. In 2000, we completed approximately 11,000 individual assignments, typically lasting 13 weeks. RECRUITING AND RETENTION In 2000, we received approximately 28,000 requests for applications from potential field employees and approximately 12,500 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. 39

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 2,900 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 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 40

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 Cross Country Local provides per diem nurse staffing services to healthcare facilities in select markets. Per diem staffing is short-term, shift-by-shift staffing to augment, or replace, longer term, temporary assignments. While per diem services accounted for less than 1% of our revenue in 2000, 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 2,600 seminars and conferences that were attended by over 65,000 registrants in more than 200 cities across the U.S. in 2000. 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 a subscription-based, 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 41

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 an industry 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: - 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 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. - 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 intend to continue to 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. 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 American Mobile Healthcare. 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. 42

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, general office use and 27,812 June 30, 2005 storage space Clayton, Missouri Search and recruitment headquarters 26,411 November 30, 2003 Durham, North Clinical research and trials staffing 12,744 December 31, 2004 Carolina 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 43

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 March 31, 2001, we had approximately 650 corporate employees and approximately 5,000 field employees. None of our employees are 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. 44

MANAGEMENT DIRECTORS AND EXECUTIVE OFFICERS The table below provides information regarding our directors and executive officers. In connection with our application to list our common stock on the Nasdaq National Market, we intend to appoint three additional directors prior to the offering who will not be our employees or affiliated with management. NAME AGE POSITION - ---- -------------------- ---------------------------------------------------- Joseph A. Boshart...................... 45 President and Chief Executive Officer and Director Emil Hensel............................ 50 Chief Financial Officer and Chief Operating Officer and Director Vickie Anenberg........................ 36 President, Travel Staffing Division Kevin Conlin........................... 43 President, Consulting Division Dr. Franklin A. Shaffer, RN............ 58 President, Education and Training Division Tony Sims.............................. 41 President, Clinical Trials Staffing Division Carol D. Westfall...................... 51 President, Search and Recruitment Division Karen H. Bechtel....................... 52 Director Bruce A. Cerullo....................... 42 Director Thomas C. Dircks....................... 43 Director A. Lawrence Fagan...................... 71 Director Alan Fitzpatrick....................... 31 Director Fazle Husain........................... 37 Director Lori Livers............................ 35 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 and Chief Operating 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 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 45

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. KAREN H. BECHTEL has been a director since December 1999. Ms. Bechtel has been a Managing Director of MSDW Capital Partners IV, Inc. 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 a number of privately held companies. 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. ALAN FITZPATRICK has been a director since March 2001. Mr. Fitzpatrick has been a Vice President of Morgan Stanley & Co. Incorporated and MSDW Capital Partners IV, Inc. since 2000. He joined Morgan Stanley Private Equity in June 1999. Mr. Fitzpatrick was previously employed as an Associate at J.P. Morgan & Co. from August 1997 to May 1999 and attended The Wharton School from 1995 to May 1997. He received a B.A. in Economics from Carleton College and an M.B.A. from the University of Pennsylvania. FAZLE HUSAIN has been a director since December 1999. He has been an Executive Director of Morgan Stanley Private Equity and Morgan Stanley & Co., Inc. since February 1997. Mr. Husain has been at Morgan Stanley Private Equity since 1987, and since 1991 has focused on investing in medical technology and enterprise software industries. Mr. Husain received a B.S. in Chemical Engineering from Brown University and an M.B.A. from Harvard Graduate School of Business Administration. He also is a director of Allscripts, Inc., The Medicines Company, HealthStream, Cardiac Pathways and several privately held companies. LORI LIVERS has been a director since December 1999. Ms. Livers has been a Senior Vice President of Charterhouse since June 2001 and was a Vice President of Charterhouse from January 1997 until 46

June 2001. Ms. Livers has been employed at Charterhouse since April 1994. She holds a B.A. from the University of Pennsylvania and an M.B.A. from Columbia University. THE BOARD OF DIRECTORS Currently, we have nine members on our board of directors. We intend to add three independent directors before the date of the offering. Each of our directors was elected by Charterhouse and investment funds managed by Morgan Stanley Private Equity in accordance with the provisions of our by-laws and our stockholders' agreement. 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. 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 currently consists of Thomas Dircks, Lori Livers and Fazle Husain. In connection with our application to list our common stock on the Nasdaq National Market, we intend to change the membership of our audit committee to consist of three directors who are not our employees or otherwise affiliated with us. 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, Lori Livers and Karen Bechtel. EXECUTIVE COMPENSATION The following table sets forth certain summary information with respect to compensation we paid in 2000 to our Chief Executive Officer and our four other most highly compensated executive officers as of December 31, 2000 whose salary and bonus earned in 2000 exceeded $100,000. ALL OTHER SALARY BONUS COMPENSATION NAME AND POSITION ($) ($) ($)(A) - ----------------- -------- -------- ------------ Joseph A. Boshart........................................... 263,465 193,883 5,250 President and Chief Executive Officer Emil Hensel................................................. 218,976 159,794 5,250 Chief Financial Officer and Chief Operating Officer Vickie Anenberg............................................. 112,769 70,318 3,938 President, Travel Staffing Division Dr. Franklin A. Shaffer, RN................................. 114,000 12,000 3,201 President, Education and Training Division Carol D. Westfall........................................... 140,000 280,740 8,603 President, Search and Recruitment Division - ------------------------ (a) Amounts consist of employer matching contributions to our 401(k) plan, except that Ms. Westfall's amount also includes a $3,503 matching contribution to a non-qualified savings program. 47

AGGREGATED OPTION VALUES AS OF DECEMBER 31, 2000 The executive officers named in the summary compensation table did not exercise any stock options during the year ended December 31, 2000. The following table sets forth information concerning the year-end number and value of unexercised options with respect to our named executive officers. There was no public trading market for our common stock as of December 31, 2000. Accordingly, the values set forth below have been calculated on the basis of the assumed initial public offering price of $ per share, less the applicable exercise price per share, multiplied by the number of shares underlying the options. NUMBER OF SECURITIES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED OPTIONS AT FISCAL IN-THE-MONEY OPTIONS YEAR-END (#) AT FISCAL YEAR-END ($) --------------------------- --------------------------- EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE ----------- ------------- ----------- ------------- Joseph A. Boshart.............................. 22,094 66,281 Emil Hensel.................................... 17,675 53,025 Vickie Anenberg................................ 8,838 26,512 Dr. Franklin A. Shaffer, RN.................... 2,488 7,462 Carol D. Westfall.............................. 1,450 4,350 OPTION GRANTS No stock options were granted for the year ended 2000 to any of Mr. Boshart, Mr. Hensel, Ms. Anenberg, Dr. Shaffer 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 operating officer and 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. 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 1999 STOCK OPTION PLAN. We have reserved for issuance 209,302 shares of common stock under our 1999 Stock Option Plan, subject to adjustment for stock splits or similar corporate events. Our 1999 Stock Option Plan provides for the granting of options to purchase shares of our common stock to any of our employees or consultants. Each stock option granted under our 1999 Stock Option Plan is either 48

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 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. As of March 31, 2001, under our 1999 Stock Option Plan, options to purchase shares of common stock were outstanding. EQUITY PARTICIPATION PLAN. We have reserved for issuance 441,860 shares of common stock under our Equity Participation Plan, subject to adjustment for stock splits or similar corporate events. Our 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 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 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. As of March 31, 2001, under our Equity Participation Plan, options to purchase shares of common stock were outstanding. 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. 49

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 2,039,228 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 29,829, 14,204 and 2,842 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 1,525, 1,500, 375 and 725 shares of our common stock for a purchase price of $0.01 per share. In connection with our acquisition of TravCorps in December 1999, investment funds managed by Morgan Stanley Private Equity acquired 1,233,345 shares of our common stock in exchange for their shares of TravCorps common stock. In addition, in connection with the 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, pursuant to which Mr. Cerullo has agreed to continue as a Director and provide certain consulting services to us. 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 will pay him an hourly sum for such consulting services. Additionally, he retained all options that were vested and exercisable as of December 31, 2000 in consideration of his continued service as a director. 50

PRINCIPAL STOCKHOLDERS The following table sets forth certain information regarding the beneficial ownership of our common stock as of July 1, 2001 and as adjusted to reflect the sale of the shares of common stock pursuant to this offering for: - 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; and - all directors and executive officers as a group. In connection with our application to list our common stock on the Nasdaq National Market, we intend to appoint three additional directors prior to this offering who will not be our employees or affiliated with management. 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. PERCENT BENEFICIALLY OWNED(A) SHARES BENEFICIALLY --------------------- OWNED PRIOR TO BEFORE AFTER NAME AND ADDRESS OFFERING OFFERING OFFERING - ---------------- ------------------- --------- --------- 5% STOCKHOLDERS: Charterhouse Equity Partners III, L.P.(b)................... 2,167,681 51.8% % c/o Charterhouse Group International, Inc. 535 Madison Avenue New York, NY 10022 Morgan Stanley Private Equity(c)............................ 1,357,926 32.4 1221 Avenue of the Americas, 33rd Floor New York, NY 10020 DIRECTORS: Karen H. Bechtel(d)......................................... -- Joseph A. Boshart(e)........................................ 68,600 1.6 Bruce A. Cerullo(f)......................................... 75,636 1.8 Thomas C. Dircks(g)......................................... -- -- A. Lawrence Fagan(g)........................................ -- -- Alan Fitzpatrick(d)......................................... -- -- Emil Hensel(h).............................................. 45,262 1.1 Fazle Husain(d)............................................. -- -- Lori Livers(g).............................................. -- -- OTHER NAMED EXECUTIVE OFFICERS: Vickie Anenberg(i).......................................... 17,737 * * Dr. Franklin A. Shaffer, RN(j).............................. 6,001 * * Carol D. Westfall(k)........................................ 3,066 * * All directors and executive officers as a group (14 216,302 5.2% % persons)(l)............................................... - ------------------------ * 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 51

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 1,223,320 shares owned by Morgan Stanley Dean Witter Capital Partners IV, L.P. and its related investment funds (collectively, "MSDWCP") and 134,606 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., the institutional managing member of which is Morgan Stanley Venture Partners III, Inc. ("MSVP 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. Alan Fitzpatrick is a Vice President of MSDWCP Inc. and MS & Co. Fazle Husain is an Executive Director of MSVP Inc. and MS & Co. Ms. Bechtel and Messrs. Fitzpatrick and Husain each disclaim beneficial ownership of the shares of common stock beneficially owned by Morgan Stanley Private Equity and its affiliates, except to the extent of any direct pecuniary interest therein. (e) Includes 33,141 shares subject to options that are currently exercisable or exercisable within 60 days of the date of this prospectus. (f) Includes 22,094 shares subject to options that are currently exercisable or exercisable within 60 days of the date of this prospectus. (g) Thomas C. Dircks, A. Lawrence Fagan and Lori Livers are executive officers of Charterhouse. Mr. Fagan is also a director and stockholder of Charterhouse. Messrs. Dircks and Fagan and Ms. Livers each disclaim beneficial ownership of the shares of common stock beneficially owned by Charterhouse. (h) Includes 26,513 shares subject to options that are currently exercisable or exercisable within 60 days of the date of this prospectus. (i) Includes 13,256 shares subject to options that are currently exercisable or exercisable within 60 days of the date of this prospectus. (j) Includes 3,731 shares subject to options that are currently exercisable or exercisable within 60 days of the date of this prospectus. (k) Includes 1,863 shares subject to options that are currently exercisable or exercisable within 60 days of the date of this prospectus. (l) Includes an aggregate of 100,598 shares subject to options that are currently exercisable or exercisable within 60 days of the date of this prospectus. 52

DESCRIPTION OF CAPITAL STOCK Our amended and restated certificate of incorporation, which will become effective prior to the consummation of the offering, authorizes the issuance of up to shares of common stock and shares of preferred stock, the rights and preferences of which may be established from time to time by our board of directors. As of , 2001, we had 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 that will become effective prior to the effective date of the registration statement registering shares included in this offering. 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. Morgan Stanley and Charterhouse have certain rights with respect to the board of directors and other related matters. 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 53

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 . Its address is . LISTING We expect our common stock to be approved for quotation on the Nasdaq National Market under the symbol CCRN. 54

SHARES ELIGIBLE FOR FUTURE SALE RULE 144 SECURITIES Upon the consummation of this offering, we will have shares of common stock outstanding, assuming no exercise of the underwriters' over-allotment option and no exercise of outstanding options. All of the 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. The shares of common stock held by our affiliates and our directors and executive officers and other existing shareholders 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, beginning 90 days after the date of this prospectus, 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 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 substantially all existing stockholders have agreed that, without the prior written consent of Merrill Lynch & Co. on behalf of the underwriters, we will not, during the period ended 180 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." RULE 701 In general, under Rule 701, any of our employees, directors, officers, consultants or advisors who purchases common stock from us in connection with a compensatory stock or option plan or other written agreement before the effective date of this prospectus is entitled to resell those shares 90 days after the effective date of this prospectus in reliance on Rule 144, without having to comply with certain restrictions (including the holding period) contained in Rule 144. Rule 701 permits affiliates to sell their Rule 701 shares under Rule 144 without complying with the holding period requirements of Rule 144. It permits non-affiliates to sell their Rule 701 shares in reliance on Rule 144 without having to comply with the holding period, public information, volume limitation or notice provisions of Rule 144. All holders of Rule 701 shares are required to wait until 90 days after the date of this prospectus before selling those shares. 55

STOCK OPTIONS Following the completion of this offering, we intend to file 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. The registration statement will become effective automatically upon filing. As of March 31, 2001, options to purchase shares of common stock were issued and outstanding, of which shares have vested. Accordingly, shares registered will, subject to vesting provisions and Rule 144 volume limitations applicable to our affiliates, be available for sale in the open market immediately after the 180-day lock-up agreements expire. REGISTRATION RIGHTS Each of CEP III and investment funds managed by Morgan Stanley Private Equity may require us on up to two 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. DB Capital Investors, L.P. and The Northwestern Mutual Life Insurance Company may require us on one occasion to use our best efforts to file a registration statement covering the 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. The registration rights expire at such time as the shares are eligible for resale under Rule 144 of the Securities Act. 56

UNITED STATES FEDERAL TAX CONSIDERATIONS FOR NON-UNITED STATES HOLDERS The following is a general discussion of the principal United States Federal income and estate tax consequences of the ownership and disposition of our common stock by a non-U.S. holder. As used in this discussion, the term "non-U.S. holder" means a beneficial owner of our common stock that is not, for U.S. Federal income tax purposes: - an individual who is a citizen or resident of the United States; - a corporation created or organized in or under the laws of the United States or of any political subdivision of the United States or a partnership not engaged in trade or business within the United States; - an estate whose income is includible in gross income for U.S. Federal income tax purposes regardless of its source; or - a trust, in general, if a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have authority to control all substantial decisions of the trust. An individual may be treated as a resident of the United States in any calendar year for U.S. Federal income tax purposes, instead of a nonresident, by, among other ways, being present in the United States on at least 31 days in that calendar year and for an aggregate of at least 183 days during a three-year period ending in the current calendar year. For purposes of this calculation, you would count all of the days present in the current year, one-third of the days present in the immediately preceding year and one-sixth of the days present in the second preceding year. Residents are taxed for U.S. Federal income purposes as if they were U.S. citizens. This discussion does not consider: - U.S. state and local or non-U.S. tax consequences; - specific facts and circumstances that may be relevant to a particular non-U.S. holder's tax position, including, if the non-U.S. holder is a partnership that the U.S. tax consequences of holding and disposing of our common stock may be affected by certain determinations made at the partner level; - the tax consequences for the shareholders, partners or beneficiaries of a non-U.S. holder; - special tax rules that may apply to particular non-U.S. holders, such as financial institutions, insurance companies, tax-exempt organizations, U.S. expatriates, broker-dealers, and traders in securities; or - special tax rules that may apply to a non-U.S. holder that holds our common stock as part of a "straddle," "hedge," "conversion transaction," "synthetic security" or other integrated investment. The following discussion is based on provisions of the U.S. Internal Revenue Code of 1986, as amended, applicable U.S. Treasury regulations and administrative and judicial interpretations, all as in effect on the date of this prospectus, and all of which are subject to change, retroactively or prospectively. The following summary assumes that a non-U.S. holder holds our common stock as a capital asset. EACH NON-U.S. HOLDER SHOULD CONSULT A TAX ADVISOR REGARDING THE U.S. FEDERAL, STATE, LOCAL, AND NON-U.S. INCOME AND OTHER TAX CONSEQUENCES OF ACQUIRING, HOLDING, AND DISPOSING OF SHARES OF OUR COMMON STOCK. DIVIDENDS We do not anticipate paying cash dividends on our common stock in the foreseeable future. See "Dividend Policy." In the event, however, that we pay dividends on our common stock, we will have to withhold a U.S. Federal withholding tax at a rate of 30%, or a lower rate under an applicable income 57

tax treaty, from the gross amount of the dividends paid to a non-U.S. holder. Non-U.S. holders should consult their tax advisors regarding their entitlement to benefits under a relevant income tax treaty. With respect to any such dividends: - a non-U.S. holder who claims the benefit of an applicable income tax treaty rate generally will be required to satisfy applicable certification and other requirements; - in the case of common stock held by a foreign partnership, the certification requirement will generally be applied to the partners of the partnership and the partnership will be required to provide certain information, including a U.S. taxpayer identification number; and - look-through rules will apply for tiered partnerships. A non-U.S. holder that is eligible for a reduced rate of U.S. Federal withholding tax under an income tax treaty may obtain a refund or credit of any excess amounts withheld by filing an appropriate claim for refund with the U.S. Internal Revenue Service. Dividends that are effectively connected with a non-U.S. holder's conduct of a trade or business in the United States or, alternatively, if an income tax treaty applies, are attributable to a permanent establishment maintained by the non-U.S. holder in the United States, are taxed on a net income basis at the regular graduated rates and in the manner applicable to U.S. persons. In that case, we will not have to withhold U.S. Federal withholding tax if the non-U.S. holder complies with applicable certification and disclosure requirements. In addition, a "branch profits tax" may be imposed at a 30% rate, or a lower rate under an applicable income tax treaty, on dividends received by a foreign corporation that are effectively connected with the conduct of a trade or business in the United States. GAIN ON DISPOSITION OF COMMON STOCK A non-U.S. holder generally will not be taxed on gain recognized on a disposition of our common stock unless: - the gain is effectively connected with the non-U.S. holder's conduct of a trade or business in the United States or, alternatively, if an income tax treaty applies, is attributable to a permanent establishment maintained by the non-U.S. holder in the United States; in these cases, the gain will be taxed on a net income basis at the regular graduated rates and in the manner applicable to U.S. persons and, if the non-U.S. holder is a foreign corporation, the "branch profits tax" described above may also apply; - the non-U.S. holder is an individual who holds our common stock as a capital asset, is present in the United States for more than 182 days in the taxable year of the disposition and meets other requirements; or - we are or have been a "U.S. real property holding corporation" for U.S. Federal income tax purposes at any time during the shorter of the five year period ending on the date of disposition or the period that the non-U.S. holder held our common stock. In general, we will be treated as a "U.S. real property holding corporation" if the fair market value of our "U.S. real property interests" equals or exceeds 50% of the sum of the fair market value of our worldwide real property interests and our other assets used or held for use in a trade or business. Currently, it is our best estimate that the fair market value of our U.S. real property interests is, and has been for at least the previous five years, less than 50% of the sum of the fair market value of our worldwide real property interests and our other assets, including goodwill, used or held for use in a trade or business. Therefore, we believe that we are not currently a U.S. real property holding corporation. Nor do we anticipate becoming a U.S. real property holding corporation in the future. However, even if we are or have been a U.S. real property holding corporation, a non-U.S. holder that did not beneficially own, directly or indirectly, more than 5% of the total fair market value of our common stock at any time during the shorter of the five-year period ending on the date of disposition 58

or the period that our common stock was held by the non-U.S. holder (a "non-5% holder") and which is not otherwise taxed under any other circumstances described above, generally will not be taxed on any gain realized on the disposition of our common stock if, at any time during the calendar year of the disposition, our common stock was regularly traded on an established securities market within the meaning of the applicable U.S. Treasury regulations. We have applied to have our common stock listed on the Nasdaq National Market. Although not free from doubt, our common stock should be considered to be regularly traded on an established securities market for any calendar quarter during which it is regularly quoted on the Nasdaq National Market by brokers or dealers which hold themselves out to buy or sell our common stock at the quoted price. If our common stock were not considered to be regularly traded on the Nasdaq National Market at any time during the applicable calendar quarter and we are or have been a U.S. real property holding corporation, then a non-5% holder would be taxed for U.S. Federal income tax purposes on any gain realized on the disposition of our common stock on a net income basis as if the gain were effectively connected with the conduct of a U.S. trade or business by the non-5% holder during the taxable year and, in such case, the person acquiring our common stock from a non-5% holder generally would have to withhold 10% of the amount of the proceeds of the disposition. Such withholding may be reduced or eliminated pursuant to a withholding certificate issued by the U.S. Internal Revenue Service in accordance with applicable U.S. Treasury regulations. We urge all non-U.S. holders to consult their own tax advisors regarding the application of these rules to them. FEDERAL ESTATE TAX Common stock owned or treated as owned by an individual who is a non-U.S. holder at the time of death will be included in the individual's gross estate for U.S. Federal estate tax purposes, unless an applicable estate tax or other treaty provides otherwise and, therefore, may be subject to U.S. Federal estate tax. INFORMATION REPORTING AND BACKUP WITHHOLDING TAX We must report annually to the U.S. Internal Revenue Service and to each non-U.S. holder the amount of dividends paid to that holder and the tax withheld from those dividends. Copies of the information returns reporting those dividends and withholding may also be made available to the tax authorities in the country in which the non-U.S. holder is a resident under the provisions of an applicable income tax treaty or agreement. The gross amount of dividends paid to a non-U.S. holder that fails to certify its non-U.S. holder status in accordance with applicable U.S. Treasury regulations generally will be reduced by backup withholding at a rate of 31%. The payment of the proceeds of the disposition of common stock by a non-U.S. holder to or through the U.S. office of a broker generally will be reported to the U.S. Internal Revenue Service and reduced by backup withholding at a rate of 31% unless the non-U.S. holder either certifies its status as a non-U.S. holder under penalties of perjury or otherwise establishes an exemption and the broker has no actual knowledge to the contrary. The payment of the proceeds on the disposition of common stock by a non-U.S. holder to or through a non-U.S. office of a broker generally will not be reduced by backup withholding or reported to the U.S. Internal Revenue Service. If however, the broker is a U.S. person or has certain enumerated connections with the United States, the proceeds from such disposition generally will be reported to the U.S. Internal Revenue Service (but not reduced by backup withholding) unless certain conditions are met. Non-U.S. holders should consult their own tax advisors regarding the application of the information reporting and backup withholding rules to them. Any amounts withheld under the backup withholding rules from a payment to a non-U.S. holder will be refunded, or credited against the holder's U.S. Federal income tax liability, if any, provided that the required information is furnished to the U.S. Internal Revenue Service. 59

UNDERWRITING We intend to offer the shares in the U.S. and Canada through the U.S. underwriters and elsewhere through the international managers. Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith Barney Inc., Banc of America Securities LLC, The Robinson-Humphrey Company, LLC and CIBC World Markets Corp. are acting as U.S. representatives of the U.S. underwriters named below. Subject to the terms and conditions described in a U.S. purchase agreement between us and the U.S. underwriters, and concurrently with the sale of shares to the international managers, we have agreed to sell to the U.S. underwriters, and the U.S. underwriters severally have agreed to purchase from us, the number of shares listed opposite their names below. NUMBER OF SHARES U.S. UNDERWRITER --------- Merrill Lynch, Pierce, Fenner & Smith Incorporated...................................... Salomon Smith Barney Inc.................................... Banc of America Securities LLC.............................. The Robinson-Humphrey Company, LLC.......................... CIBC World Markets Corp..................................... ------ Total............................................. ====== We have also entered into an international purchase agreement with the international managers for sale of the shares outside the U.S. and Canada for whom Merrill Lynch International, Salomon Brothers International Limited, Banc of America Securities Limited, The Robinson-Humphrey Company, LLC and CIBC World Markets plc are acting as lead managers. Subject to the terms and conditions in the international purchase agreement, and concurrently with the sale of shares to the U.S. underwriters pursuant to the U.S. purchase agreement, we have agreed to sell to the international managers, and the international managers severally have agreed to purchase shares from us. The initial public offering price per share and the total underwriting discount per share are identical under the U.S. purchase agreement and the international purchase agreement. The U.S. underwriters and the international managers have agreed to purchase all of the shares sold under the U.S. and international purchase agreements if any of these shares are purchased. If an underwriter defaults, the U.S. and international purchase agreements provide that the purchase commitments of the nondefaulting underwriters may be increased or the purchase agreements may be terminated. The closings for the sale of shares to be purchased by the U.S. underwriters and the international managers are conditioned on one another. We have agreed to indemnify the U.S. underwriters and the international managers against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the U.S. underwriters and international managers may be required to make in respect of those liabilities. The U.S. 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 agreements, such as the receipt by the underwriters of officer's certificates and legal opinions. The U.S. 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 U.S. representatives have advised us that the U.S. 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 U.S. underwriters may 60

allow, and the dealers may reallow, a discount not in excess of $ per share to other dealers. After the initial 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 Cross Country. The information assumes either no exercise or full exercise by the U.S. underwriters and the international managers of their over-allotment options. PER SHARE WITHOUT OPTION WITH OPTION --------- -------------- ----------- Public offering price..................... $ $ $ Underwriting discount..................... $ $ $ Proceeds, before expenses, to Cross Country................................. $ $ $ The expenses of the offering, not including the underwriting discount, are estimated at $ and are payable by Cross Country. OVERALLOTMENT OPTIONS We have granted an option to the U.S. underwriters to purchase up to additional shares at the public offering price less the underwriting discount. The U.S. underwriters may exercise this option for 30 days from the date of this prospectus solely to cover any overallotments. If the U.S. underwriters exercise this option, each will be obligated, subject to conditions contained in the purchase agreements, to purchase a number of additional shares proportionate to that U.S. underwriter's initial amount reflected in the above table. We have also granted an option to the international managers, exercisable for 30 days from the date of this prospectus, to purchase up to additional shares to cover any overallotments on terms similar to those granted to the U.S. underwriters. INTERSYNDICATE AGREEMENT The U.S. underwriters and the international managers have entered into an intersyndicate agreement that provides for the coordination of their activities. Under the intersyndicate agreement, the U.S. underwriters and the international managers may sell shares to each other for purposes of resale at the initial public offering price, less an amount not greater than the selling concession. Under the intersyndicate agreement, the U.S. underwriters and any dealer to whom they sell shares will not offer to sell or sell shares to persons who are non-U.S. or non-Canadian persons or to persons they believe intend to resell to persons who are non-U.S. or non-Canadian persons, except in the case of transactions under the intersyndicate agreement. Similarly, the international managers and any dealer to whom they sell shares will not offer to sell or sell shares to U.S. persons or Canadian persons or to persons they believe intend to resell to U.S. or Canadian persons, except in the case of transactions under the intersyndicate agreement. RESERVED SHARES At our request, the underwriters have reserved for sale, at the initial public offering price, up to shares offered by this prospectus for sale to some of our directors, officers, employees, distributors, dealers, business associates and related persons. If these persons purchase reserved shares, this will reduce the number of shares available for sale to the general public. Any reserved shares that are not orally confirmed for purchase within one day of the pricing of this offering will be offered by the underwriters to the general public on the same terms as the other shares offered by this prospectus. 61

NO SALES OF SIMILAR SECURITIES We and our executive officers and directors and substantially all existing stockholders have agreed, with exceptions, not to sell or transfer any common stock for 180 days after the date of this prospectus without first obtaining the written consent of Merrill Lynch. Specifically, we and these other individuals 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 We expect the shares to be approved for quotation on the Nasdaq National Market, subject to notice of issuance, under the symbol "CCRN." Before this offering, there has been no public market for our common stock. The initial public offering price will be determined through negotiations among us and the U.S. representatives and lead managers. In addition to prevailing market conditions, the factors to be considered in determining the initial public offering price are: - the valuation multiples of publicly traded companies that the U.S. representatives and the lead managers believe to be comparable to us; - our financial information; - the history of, and the prospects for, our company and the industry in which we compete; - an assessment of our management, its past and present operations, and the prospects for, and timing of, our future revenue; - the present state of our development; and - the above factors in relation to market values and various valuation measures of other companies engaged in activities similar to ours. An active trading market for the shares may not develop. It is also possible that after the offering the shares will not trade in the public market at or above the initial public offering price. The U.S. underwriters do not expect to sell more than 5% of the shares in the aggregate to accounts over which they exercise discretionary authority. 62

NASD REGULATIONS More than ten percent of the proceeds of the offering will be applied to pay down debt obligations owed to affiliates of Merrill Lynch, Salomon Smith Barney Inc., Banc of America Securities LLC and The Robinson-Humphrey Company, LLC. Because more than ten percent of the net proceeds of the offering will be paid to members or affiliates of members of the National Association of Securities Dealers, Inc. participating in the offering, the offering will be conducted in accordance with NASD Conduct Rule 2710(c)(8). This rule requires that the public offering price of an equity security be no higher than the price recommended by a qualified independent underwriter which has participated in the preparation of the registration statement and performed its usual standard of due diligence with respect to that registration statement. CIBC World Markets Corp. has agreed to act as qualified independent underwriter for the offering. The price of the shares will be no higher than that recommended by CIBC World Markets Corp. The underwriters will not confirm sales of shares to any account over which they exercise discretionary authority without the prior written specific approval of the customer. PRICE STABILIZATION, SHORT POSITIONS AND PENALTY BIDS Until the distribution of the shares is completed, SEC rules may limit underwriters and selling group members from bidding for and purchasing our common stock. However, the U.S. 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. 63

representatives or the lead managers will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice. 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. Salomon Smith Barney Inc. acted as the arranger, and affiliates of Salomon Smith Barney Inc. and The Robinson-Humphrey Company, LLC 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 The Robinson-Humphrey Company, LLC are lenders under our credit facility. 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. 64

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. 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. 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 at Seven World Trade Center, 13th Floor, New York, New York 10048 and 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. After the offering, we will be subject to the full informational requirements of the Securities Exchange Act. To comply with these requirements, we will file periodic reports, proxy statements and other information with the Commission. 65

INDEX TO FINANCIAL STATEMENTS PAGE -------- HISTORICAL FINANCIAL STATEMENTS CROSS COUNTRY, INC. Report of Independent Certified Public Accountants........ F-2 Consolidated Balance Sheets as of December 31, 1999 and 2000 and March 31, 2001 (Unaudited)..................... F-3 Consolidated Statements of Operations for the Period from July 30, 1999 to December 31, 1999, for the Year Ended December 31, 2000 and for the Three Months Ended March 31, 2000 and 2001 (Unaudited)........................... F-4 Consolidated Statements of Stockholders' Equity for the Period from July 30, 1999 to December 31, 1999, for the Year Ended December 31, 2000, and for the Three Months Ended March 31, 2001 (Unaudited)........................ F-5 Consolidated Statements of Cash Flows for the Period from July 30, 1999 to December 31, 1999, for the Year Ended December 31, 2000, and for the Three Months Ended March 31, 2000 and 2001 (Unaudited)........................... F-6 Notes to the Consolidated Financial Statements............ F-8 CROSS COUNTRY STAFFING ("PREDECESSOR COMPANY") Report of Independent Certified Public Accountants........ F-24 Balance Sheets as of July 29, 1999 and December 31, 1998.................................................... F-25 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-26 Statements of Cash Flows for the Period from January 1, 1999 to July 29, 1999 and for the Year Ended December 31, 1998................................................ F-27 Notes to Financial Statements............................. F-28 TRAVCORPS CORPORATION AND SUBSIDIARY Independent Auditors' Report.............................. F-34 Consolidated Balance Sheets as of December 15, 1999 and December 26, 1998....................................... F-36 Consolidated Statements of Income for the Year Ended December 26, 1998 and for the Period from December 27, 1998 to December 15, 1999............................... F-38 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-39 Consolidated Statements of Cash Flows for the Period from December 27, 1998 to December 15, 1999 and the Year Ended December 26, 1998................................. F-40 Notes to the Consolidated Financial Statements............ F-41 CLINFORCE, INC. Report of Independent Auditors............................ F-49 Consolidated Statements of Assets Acquired and Liabilities Assumed as of December 31, 2000 and 1999................ F-50 Consolidated Statements of Operating Revenues and Expenses for the Years Ended December 31, 2000 and 1999.......... F-51 Notes to the Financial Statements........................... F-52 F-1

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 F-2

CROSS COUNTRY, INC. CONSOLIDATED BALANCE SHEETS DECEMBER 31 --------------------------- MARCH 31, 1999 2000 2001 ------------ ------------ ------------ (UNAUDITED) ASSETS Current assets: Cash...................................................... $ 4,827,877 $ -- $ -- Accounts receivable, less allowance for doubtful accounts of $2,144,110 in 1999, $2,087,747 in 2000 and $2,410,068 in 2001................................................. 50,243,772 65,087,380 71,148,856 Deferred income taxes..................................... 1,779,592 3,140,522 3,140,522 Income taxes receivable................................... 2,936,436 2,076,471 814,445 Prepaid rent on employees' apartments..................... 2,922,723 3,309,673 3,402,909 Deposits on employees' apartments, net of allowance of $300,445 in 1999, $418,775 in 2000 and $332,485 in 2001.................................................... 1,518,071 1,055,106 1,063,268 Other current assets...................................... 449,595 2,032,437 2,993,494 ------------ ------------ ------------ Total current assets........................................ 64,678,066 76,701,589 82,563,494 Property and equipment, net of accumulated depreciation and amortization of $3,470,984 in 1999, $5,024,756 in 2000 and $6,420,976 in 2001........................................ 3,975,129 6,168,505 7,294,542 Trademark, net of accumulated amortization of $158,644 in 1999, $746,669 in 2000 and $897,144 in 2001............... 14,541,356 13,953,331 15,902,856 Goodwill, net of accumulated amortization of $2,417,217 in 1999, $10,767,664 in 2000 and $13,001,554 in 2001......... 200,315,122 199,373,353 221,659,546 Other identifiable intangible assets, net of accumulated amortization of $949,236 in 1999, $3,746,200 in 2000 and $4,453,961 in 2001........................................ 15,480,764 12,683,800 13,276,039 Debt issuance costs, net of accumulated amortization of $746,341 in 1999, $2,616,598 in 2000 and $3,100,039 in 2001...................................................... 10,475,198 8,604,941 9,103,333 Other assets................................................ 229,634 140,148 125,820 ------------ ------------ ------------ Total assets................................................ $309,695,269 $317,625,667 $349,925,630 ============ ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable.......................................... $ 4,677,411 $ 6,445,501 $ 3,674,072 Accrued employee compensation and benefits................ 13,818,840 17,430,804 20,026,057 Accrued expenses.......................................... 5,963,985 3,801,172 4,309,393 Current portion of long-term debt......................... 5,120,000 12,400,000 12,400,000 Note payable.............................................. 54,972 484,108 461,810 Net liabilities from discontinued operations.............. 309,670 534,999 2,033,103 Other current liabilities................................. 735,219 1,229,840 1,967,221 ------------ ------------ ------------ Total current liabilities................................... 30,680,097 42,326,424 44,871,656 Interest rate swap.......................................... -- -- 987,423 Deferred income taxes....................................... 6,374,436 7,571,311 7,621,997 Long-term debt.............................................. 153,899,000 144,388,000 174,021,000 ------------ ------------ ------------ Total liabilities........................................... 190,953,533 194,285,735 227,502,076 Commitments and contingencies Stockholders' equity: Common stock, Class A--$.01 par value; 7,850,000 shares authorized; 3,868,945 shares issued and outstanding at December 31, 1999, 2000 and March 31, 2001.............. 38,689 38,689 38,689 Common stock, Class B--$.01 par value; 150,000 shares authorized; 131,053 shares issued and outstanding at December 31, 1999, 2000 and March 31, 2001.............. 1,311 1,311 1,311 Additional paid-in capital................................ 119,043,201 119,043,201 119,043,201 Accumulated other comprehensive income.................... -- -- (924,929) (Accumulated deficit) retained earnings................... (341,465) 4,256,731 4,265,282 ------------ ------------ ------------ Total stockholders' equity.................................. 118,741,736 123,339,932 122,423,554 ------------ ------------ ------------ Total liabilities and stockholders' equity.................. $309,695,269 $317,625,667 $349,925,630 ============ ============ ============ See accompanying notes. F-3

CROSS COUNTRY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS THREE MONTHS ENDED PERIOD FROM JULY 30, YEAR ENDED MARCH 31 1999 TO DECEMBER 31, DECEMBER 31, -------------------------- 1999 2000 2000 2001 -------------------- ------------ ----------- ------------ (UNAUDITED) Revenue from services..................... $87,727,219 $367,689,902 $89,583,837 $103,871,739 Operating expenses: Direct operating expenses............... 68,036,524 273,094,434 67,062,402 79,001,406 Selling, general and administrative expenses.............................. 9,256,719 49,027,376 12,053,999 14,175,411 Bad debt expense........................ 511,341 432,973 234,300 419,926 Depreciation............................ 154,590 1,323,397 309,424 518,213 Amortization............................ 4,421,577 13,701,384 3,434,811 3,592,093 Non-recurring indirect transaction costs................................. -- 1,289,217 266,921 -- ----------- ------------ ----------- ------------ Total operating expenses.................. 82,380,751 338,868,781 83,361,857 97,707,049 ----------- ------------ ----------- ------------ Income from operations.................... 5,346,468 28,821,121 6,221,980 6,164,690 Other expenses: Interest expense, net................... 4,821,302 15,435,236 3,833,261 4,008,034 ----------- ------------ ----------- ------------ Income before income taxes and discontinued operations................. 525,166 13,385,885 2,388,719 2,156,656 Income tax expense........................ (671,917) (6,730,024) (1,201,526) (1,084,396) ----------- ------------ ----------- ------------ (Loss) income before discontinued operations.............................. (146,751) 6,655,861 1,187,193 1,072,260 Discontinued operations: Loss from discontinued operations of HospitalHub, less income tax benefit of $140,710 in 1999, $1,159,013 in 2000, and $200,564 and $450,976 for the three months ended March 31, 2000 and 2001, respectively, (194,714) (1,603,833) (286,423) (440,281) Estimated loss on disposal of HospitalHub, less income tax benefit of $0 in 1999, $327,963 in 2000 and $0 and $638,572 for the three months ended March 31, 2000 and 2001, respectively.......................... -- (453,832) -- (623,428) ----------- ------------ ----------- ------------ Net (loss) income......................... $ (341,465) $ 4,598,196 $ 900,770 $ 8,551 =========== ============ =========== ============ Net (loss) income per common share--basic and diluted: (Loss) income before discontinued operations............................ $ (.06) $ 1.66 $ .30 $ .27 Discontinued operations................. (.07) (.51) (.07) (.27) ----------- ------------ ----------- ------------ Net (loss) income......................... $ (.13) $ 1.15 $ .23 $ -- =========== ============ =========== ============ Weighted average common shares outstanding............................. 2,635,895 3,999,998 3,999,998 3,999,998 =========== ============ =========== ============ See accompanying notes. F-4

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)......... 2,260,660 $ 22,607 -- $ -- $ 79,567,516 $ -- $ -- Issuance of common stock in conjunction with issuance of long-term debt....... 65,530 655 131,053 1,311 6,918,072 -- -- Issuance of common stock in exchange for employee services.... 22,755 227 -- -- 470,413 -- -- Issuance of common stock in conjunction with acquisition of TravCorps Corporation.......... 1,520,000 15,200 -- -- 32,087,200 -- -- Net loss............... -- -- -- -- -- -- (341,465) --------- ---------- ------- ---------- ------------ ---------- ---------- Balance at December 31, 1999................... 3,868,945 38,689 131,053 1,311 119,043,201 -- (341,465) Net income............. -- -- -- -- -- -- 4,598,196 --------- ---------- ------- ---------- ------------ ---------- ---------- Balance at December 31, 2000................... 3,868,945 38,689 131,053 1,311 119,043,201 -- 4,256,731 Interest rate swap (unaudited)............ -- -- -- -- -- (924,929) -- Net income (unaudited)... -- -- -- -- -- -- 8,551 --------- ---------- ------- ---------- ------------ ---------- ---------- Balance at March 31, 2001 (unaudited)............ 3,868,945 $ 38,689 131,053 $ 1,311 $119,043,201 $ (924,929) $4,265,282 ========= ========== ======= ========== ============ ========== ========== 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 Interest rate swap (unaudited)............ (924,929) Net income (unaudited)... 8,551 ------------ Balance at March 31, 2001 (unaudited)............ $122,423,554 ============ See accompanying notes. F-5

CROSS COUNTRY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS PERIOD FROM THREE MONTHS ENDED JULY 30, 1999 TO YEAR ENDED MARCH 31 DECEMBER 31, DECEMBER 31, --------------------------- 1999 2000 2000 2001 ---------------- ------------ ----------- ------------- (UNAUDITED) OPERATING ACTIVITIES Net (loss) income.............................. $ (341,465) $ 4,598,196 $ 900,770 $ 8,551 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Amortization............................... 4,421,577 13,701,384 3,434,811 3,592,093 Depreciation............................... 154,590 1,323,397 309,424 518,213 Bad debt expense........................... 511,341 432,973 234,300 419,926 Cumulative interest due at maturity........ 1,537,000 3,839,000 918,000 1,033,000 Estimated loss on disposal of discontinued operations............................... -- 453,832 -- 623,428 Loss on derivative instrument.............. -- -- -- 62,494 Changes in operating assets and liabilities: Accounts receivable........................ (1,874,246) (15,096,581) 356,172 (697,405) Prepaid rent, deposits, and other current assets................................... (3,381,084) (1,385,374) 514,853 (923,069) Accounts payable and accrued expenses...... 1,793,712 2,679,076 (5,109,986) (1,240,494) Net liabilities from discontinued operations............................... 309,670 (228,503) 378,734 874,676 Other current liabilities.................. 3,170,112 79,621 1,348,681 737,381 ------------ ----------- ----------- ------------- Net cash provided by operating activities...... 6,301,207 10,397,021 3,285,759 5,008,794 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) -- (46,680) Acquisition of Clinforce, Inc.................. -- -- -- (31,347,239) (Increase) decrease in other assets............ -- (6,205) (241,014) 32,090 Increase in other liabilities.................. -- 1,196,875 -- -- Purchase of property and equipment............. (167,170) (1,992,109) (264,905) (948,559) Increase in software development costs......... -- (1,082,595) -- (294,275) ------------ ----------- ----------- ------------- Net cash provided by (used in) investing activities................................... 1,380,264 (9,584,034) (505,919) (32,604,663) FINANCING ACTIVITIES Debt issuance costs............................ 494,535 -- -- (981,833) Repayment of debt.............................. (148,305,305) (65,258,097) (27,450,198) (14,922,298) Proceeds from issuance of debt................. 144,700,000 59,617,233 20,033,126 43,500,000 ------------ ----------- ----------- ------------- Net cash (used in) provided by financing activities................................... (3,110,770) (5,640,864) (7,417,072) 27,595,869 Change in cash................................. 4,570,701 (4,827,877) (4,637,232) Cash at beginning of period.................... 257,176 4,827,877 4,827,877 -- ------------ ----------- ----------- ------------- Cash at end of period.......................... $ 4,827,877 $ -- $ 190,645 $ -- ============ =========== =========== ============= See accompanying notes. F-6

CROSS COUNTRY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) PERIOD FROM THREE MONTHS ENDED JULY 30, 1999 TO YEAR ENDED MARCH 31 DECEMBER 31, DECEMBER 31, ----------------------- 1999 2000 2000 2001 ---------------- ------------ ---------- ---------- (UNAUDITED) 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 $2,643,446 $3,013,259 =========== =========== ========== ========== Income taxes paid.......................... $ 437,873 $ 221,467 $ 62,750 $ -- =========== =========== ========== ========== See accompanying notes. F-7

CROSS COUNTRY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1999 AND 2000 (INFORMATION PERTAINING TO MARCH 31, 2001 AND TO THE THREE MONTH PERIODS ENDED MARCH 31, 2001 AND 2000 IS UNAUDITED) 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 of Cross Country Staffing (the Partnership), a Delaware general partnership. 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. In addition to the recorded assets and liabilities, the Partnership contributed the value of the business, which included certain intangible assets primarily related to proprietary databases and contracts. 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, 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 in January 2000, 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. The accompanying unaudited condensed consolidated financial statements as of March 31, 2001 and for the three months ended March 31, 2000 and 2001 have been prepared in accordance with generally accepted accounting principles for interim financial information. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to present fairly the financial position, results of operations and cash flows have been included. The results of F-8

CROSS COUNTRY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1999 AND 2000 (INFORMATION PERTAINING TO MARCH 31, 2001 AND TO THE THREE MONTH PERIODS ENDED MARCH 31, 2001 AND 2000 IS UNAUDITED) 1. ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED) operations for the three months ended March 31, 2001 are not necessarily indicative of the results that may be expected for the year ended December 31, 2001. 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. 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. As of March 31, 2001, approximately 10% of the outstanding accounts receivable were due from five 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 F-9

CROSS COUNTRY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1999 AND 2000 (INFORMATION PERTAINING TO MARCH 31, 2001 AND TO THE THREE MONTH PERIODS ENDED MARCH 31, 2001 AND 2000 IS UNAUDITED) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. 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. 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, $8,259,000, and $7,686,000), workforce (approximately $1,593,000, $1,315,000, and $2,128,000) and hospital relations (approximately $3,338,000, $3,110,000, and $3,462,000) at December 31, 1999, December 31, 2000, and March 31, 2001, 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, December 31, 2000 and March 31, 2001, 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 F-10

CROSS COUNTRY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1999 AND 2000 (INFORMATION PERTAINING TO MARCH 31, 2001 AND TO THE THREE MONTH PERIODS ENDED MARCH 31, 2001 AND 2000 IS UNAUDITED) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) December 31, 1999 and December 31, 2000, respectively, are recorded in the consolidated balance sheets. Debt issuance costs of approximately $12,203,000, less accumulated amortization of approximately $3,100,000 are recorded in the consolidated balance sheet at March 31, 2001. 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, December 31, 2000, and March 31, 2001, the amounts accrued are approximately $5,526,000, $14,970,000, and $12,536,000, respectively. 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, the year ended December 31, 2000, or the three months ended March 31, 2000 and 2001 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, $2,450,000 for the year ended December 31, 2000, and $556,000 and $521,000 for the three months ended March 31, 2000 and 2001, respectively. 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 F-11

CROSS COUNTRY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1999 AND 2000 (INFORMATION PERTAINING TO MARCH 31, 2001 AND TO THE THREE MONTH PERIODS ENDED MARCH 31, 2001 AND 2000 IS UNAUDITED) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Company's consolidated net (loss) income for the period from July 30, 1999 to December 31, 1999, the year ended December 31, 2000, and the three months ended March 31, 2000. During the three months ended March 31, 2001, the Company recorded the fair value of the interest rate swap transaction which resulted in a reduction in consolidated stockholders' equity of approximately $925,000. 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. RECENT ACCOUNTING PRONOUNCEMENTS During 1998, the FASB issued Statement No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES, which was effective beginning January 1, 2001. The Company implemented the provisions of FASB Statement No. 133 on January 1, 2001. FASB Statement No. 133 resulted in a reduction in consolidated stockholders' equity of approximately $910,000 as of January 1, 2001. 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. 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 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. F-12

CROSS COUNTRY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1999 AND 2000 (INFORMATION PERTAINING TO MARCH 31, 2001 AND TO THE THREE MONTH PERIODS ENDED MARCH 31, 2001 AND 2000 IS UNAUDITED) 3. ACQUISITIONS (CONTINUED) 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, for approximately $31,000,000. 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 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 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. 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 THREE MONTHS JULY 30, 1999 YEAR ENDED ENDED TO DECEMBER 31, DECEMBER 31, MARCH 31, 1999 2000 2001 --------------- ------------ ------------ Revenue from services.............. $151,849,680 $407,275,744 $111,564,489 ============ ============ ============ Net (loss) income.................. $ (4,702,050) $ 3,976,004 $ (212,212) ============ ============ ============ Net (loss) income per common share--basic and diluted......... $ (1.78) $ .99 $ .05 ============ ============ ============ F-13

CROSS COUNTRY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1999 AND 2000 (INFORMATION PERTAINING TO MARCH 31, 2001 AND TO THE THREE MONTH PERIODS ENDED MARCH 31, 2001 AND 2000 IS UNAUDITED) 4. PROPERTY AND EQUIPMENT At December 31, 1999, December 31, 2000 and March 31, 2001, property and equipment consist of the following: DECEMBER 31, ------------------------- MARCH 31, 1999 2000 2001 ----------- ----------- ------------ Computer equipment................... $ 4,601,677 $ 4,830,242 $ 5,443,015 Computer software.................... 875,672 3,900,076 4,751,537 Office equipment..................... 548,190 760,527 1,051,824 Furniture and fixtures............... 736,551 833,786 1,409,950 Leasehold improvements............... 684,023 868,630 1,059,192 ----------- ----------- ------------ 7,446,113 11,193,261 13,715,518 Less accumulated depreciation and amortization....................... (3,470,984) (5,024,756) (6,420,976) ----------- ----------- ------------ $ 3,975,129 $ 6,168,505 $ 7,294,542 =========== =========== ============ At December 31, 2000 and March 31, 2001, computer software includes approximately $1,481,000 and $1,775,000, respectively, of software development costs capitalized in accordance with the provisions of FASB Statement No. 86. 5. ACCRUED COMPENSATION AND BENEFITS At December 31, 1999, December 31, 2000 and March 31, 2001, accrued employee compensation and benefits consist of the following: DECEMBER 31, ------------------------- MARCH 31, 1999 2000 2001 ----------- ----------- ----------- Salaries.............................. $ 5,660,772 $ 6,903,347 $ 8,077,661 Bonuses............................... 5,686,305 6,858,620 7,884,852 Accrual for workers' compensation claims.............................. 1,896,543 2,095,720 2,217,594 Accrual for health care benefits...... 372,000 1,295,632 1,438,502 Accrual for vacation.................. 203,220 277,485 407,448 ----------- ----------- ----------- $13,818,840 $17,430,804 $20,026,057 =========== =========== =========== F-14

CROSS COUNTRY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1999 AND 2000 (INFORMATION PERTAINING TO MARCH 31, 2001 AND TO THE THREE MONTH PERIODS ENDED MARCH 31, 2001 AND 2000 IS UNAUDITED) 6. LONG-TERM DEBT AND NOTE PAYABLE At December 31, 1999, December 31, 2000 and March 31, 2001, long-term debt consists of the following: DECEMBER 31, --------------------------- MARCH 31, 1999 2000 2001 ------------ ------------ ------------ Term Loan, interest at 9.46% at December 31, 1999, 9.52%, 9.50%, and 9.41% for $65,000,000, $45,000,000 and $4,880,000, respectively at December 31, 2000 and 8.35% and 7.98% for $111,780,000 and $30,000,000, at March 31, 2001................... $120,000,000 $114,880,000 $141,780,000 Revolving Loan Facility, interest at 9.46% and 10.50% for $5,400,000 and $3,000,000, respectively, at December 31, 1999, 11.25% and 9.40% for $1,250,000 and $6,200,000, respectively at December 31, 2000 and 8.06% and 10.00% for $6,200,000 and $2,250,000, respectively, at March 31, 2001............................. 8,400,000 7,450,000 8,450,000 Swingline Loan, interest at 10.00% at March 31, 2001................ -- -- 700,000 Subordinated Pay-In-Kind Notes, interest at 12%.................. 30,619,000 34,458,000 35,491,000 ------------ ------------ ------------ 159,019,000 156,788,000 186,421,000 Less current portion............... (5,120,000) (12,400,000) (12,400,000) ------------ ------------ ------------ $153,899,000 $144,388,000 $174,021,000 ============ ============ ============ 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%, 1.75%, and 2.00% at December 31, 1999, December 31, 2000, and March 31, 2001 respectively, or LIBOR plus a margin of 3.00%, 2.75%, and 3.00% at December 31, 1999, December 31, 2000, and March 31, 2001, 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. F-15

CROSS COUNTRY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1999 AND 2000 (INFORMATION PERTAINING TO MARCH 31, 2001 AND TO THE THREE MONTH PERIODS ENDED MARCH 31, 2001 AND 2000 IS UNAUDITED) 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, $5,000,000, and $6,000,000 at December 31, 1999, December 31, 2000, and March 31, 2001, 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 86,957 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 ENDING 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 and March 31, 2001, respectively, the outstanding balance was $484,108 and $461,810. 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 F-16

CROSS COUNTRY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1999 AND 2000 (INFORMATION PERTAINING TO MARCH 31, 2001 AND TO THE THREE MONTH PERIODS ENDED MARCH 31, 2001 AND 2000 IS UNAUDITED) 7. EMPLOYEE BENEFIT PLANS (CONTINUED) 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 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. Contributions by the Company, net of forfeitures, under this plan amounted to approximately $319,000 and $384,000 for the three months ended March 31, 2000 and 2001, respectively. TVCM employees were covered under a separate benefit plan for both 2000 and 1999. TVCM has a 401(k) defined contribution plan for eligible employees. Eligible employees may make pretax savings contributions to the 401(k) Plan of up to 20% of their earnings to a certain statutory limit. TVCM matches 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 and $135,000 and $109,000 for the three months ended March 31, 2000 and 2001, respectively. Effective fiscal 2001, TVCM employees will participate 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, $1,527,000 for the year ended December 31, 2000, and $380,000 and $470,000 for the three months ended March 31, 2000 and 2001, respectively. 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 F-17

CROSS COUNTRY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1999 AND 2000 (INFORMATION PERTAINING TO MARCH 31, 2001 AND TO THE THREE MONTH PERIODS ENDED MARCH 31, 2001 AND 2000 IS UNAUDITED) 9. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED) carrying amount of the revolving credit note and term loan approximates fair value because the interest rate is tied to a quoted variable index. 10. INCOME TAXES The components of the income tax expense are as follows: DECEMBER 31, ----------------------- 1999 2000 ---------- ---------- Current.............................................. $ 15,000 $5,407,103 Deferred............................................. 516,207 (164,055) ---------- ---------- $ 531,207 $5,243,048 ========== ========== 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, ------------------------- 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-18

CROSS COUNTRY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1999 AND 2000 (INFORMATION PERTAINING TO MARCH 31, 2001 AND TO THE THREE MONTH PERIODS ENDED MARCH 31, 2001 AND 2000 IS UNAUDITED) 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 and March 31, 2001. 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 131,053 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. 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 651,162 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-19

CROSS COUNTRY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1999 AND 2000 (INFORMATION PERTAINING TO MARCH 31, 2001 AND TO THE THREE MONTH PERIODS ENDED MARCH 31, 2001 AND 2000 IS UNAUDITED) 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.......................................... 593,275 44.96-134.88 69.05 ------- Options outstanding at December 31, 1999........... 593,275 44.96-134.88 69.05 Granted.......................................... 35,813 58.76-176.28 69.13 Canceled......................................... (91,856) 44.96-134.88 69.05 ------- Options outstanding at December 31, 2000........... 537,232 44.96-176.28 68.49 GRANTED.......................................... CANCELED......................................... (2,513) 44.96-62.55 45.69 ------- OPTIONS OUTSTANDING AT MARCH 31, 2001.............. 534,719 $ 44.96-176.28 $68.30 ======= There were no exercisable options at December 31, 1999. The number of options exercisable at December 31, 2000 was 125,354 and at March 31, 2001 was 124,776. The weighted-average grant-date fair value of options granted during 1999 and 2000 was $23.50 per share and $35.07 per share, respectively. The weighted-average grant-date fair value of options granted during the three months ended March 31, 2001 was $37.92 per share. EXERCISE OPTIONS REMAINING OPTIONS PRICE OUTSTANDING CONTRACTUAL LIFE EXERCISABLE - --------------------- ----------- ---------------- ----------- $ 44.96 218,739 8.75 years 54,932 58.76 9,974 9.25 years -- 62.55 21,700 9.75 years -- 67.44 114,617 8.75 years 28,654 88.14 2,021 9.25 years -- 89.92 114,617 8.75 years 28,654 117.52 2,021 9.25 years -- 112.40 25,073 8.75 years 6,268 146.90 442 9.25 years -- 134.88 25,073 8.75 years 6,268 176.28 442 9.25 years -- Had compensation cost for stock options granted during 1999, 2000, and 2001 been measured under the fair value based method prescribed by FASB Statement No. 123, ACCOUNTING FOR STOCK-BASED F-20

CROSS COUNTRY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1999 AND 2000 (INFORMATION PERTAINING TO MARCH 31, 2001 AND TO THE THREE MONTH PERIODS ENDED MARCH 31, 2001 AND 2000 IS UNAUDITED) 11. STOCKHOLDERS' EQUITY (CONTINUED) COMPENSATION, the Company's consolidated net income (loss) would have changed to the pro forma amounts set forth below. DECEMBER 31, ----------------------- MARCH 31, 1999 2000 2001 ---------- ---------- ---------- Pro forma net (loss) income.............. $ (444,569) $2,481,763 $ (529,858) ========== ========== ========== Pro forma (loss) income per common share--basic and diluted: (Loss) income from continuing operations........................... $ (.10) $ 1.13 $ .13 Discontinued operations................ (.07) (.51) (.26) ---------- ---------- ---------- Net (loss) income...................... $ (.17) $ .62 $ (.13) ========== ========== ========== 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, ------------------- MARCH 31, 1999 2000 2001 -------- -------- --------- Dividend yield................................... 0.00% 0.00% 0.00% Expected volatility.............................. 60.00 60.00 60.00 Risk-free interest rate.......................... 5.19 5.19 5.19 Expected life.................................... 6 years 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, 2000, and 2001 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 F-21

CROSS COUNTRY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1999 AND 2000 (INFORMATION PERTAINING TO MARCH 31, 2001 AND TO THE THREE MONTH PERIODS ENDED MARCH 31, 2001 AND 2000 IS UNAUDITED) 13. INTEREST RATE SWAP (CONTINUED) exchange of the underlying notional amount. The Company entered into the Agreement to reduce the 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 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. 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 and March 31, 2001 was immaterial as to the net amount due from the financial institution. The fair value of the interest rate swap approximated a $910,000 and $987,000 net payable based on quoted market prices for similar instruments at December 31, 2000 and March 31, 2001, respectively. 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 March 31, 2001 which resulted in a reduction in consolidated stockholders' equity of approximately $925,000. 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. 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. F-22

CROSS COUNTRY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1999 AND 2000 (INFORMATION PERTAINING TO MARCH 31, 2001 AND TO THE THREE MONTH PERIODS ENDED MARCH 31, 2001 AND 2000 IS UNAUDITED) 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 $300,000 in transaction fees. These transaction fees were capitalized in accordance with the purchase method of accounting. 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. F-23

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-24

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-25

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-26

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-27

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-28

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-29

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-30

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-31

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-32

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 Corporation 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-33

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-34

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-35

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-36

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-37

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-38

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-39

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-40

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. 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. 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. F-41

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) 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. 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. F-42

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 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. 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 F-43

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) 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-44

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-45

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-46

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-47

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-48

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. 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. 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-49

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-50

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-51

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-52

CLINFORCE, INC. NOTES TO CONSOLIDATED STATEMENTS (CONTINUED) DECEMBER 31, 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 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 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. CORPORATE ALLOCATIONS Edgewater provided substantial services to the Company, including, but not limited to, general administration, treasury, tax, financial reporting, insurance and legal functions. Edgewater has traditionally charged the Company for certain of these 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 are not necessarily indicative of amounts that would have been incurred by the Company had it operated on a stand-alone basis. 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, 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. F-53

CLINFORCE, INC. NOTES TO CONSOLIDATED STATEMENTS (CONTINUED) DECEMBER 31, 2000 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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-54

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. 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. F-55

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. 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) ========== ========== 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, 2000 and 1999 is not necessary. F-56

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 ========== ========== F-57

- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Through and including , 2001 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. SHARES CROSS COUNTRY, INC. COMMON STOCK --------------------- P R O S P E C T U S --------------------- MERRILL LYNCH & CO. SALOMON SMITH BARNEY BANC OF AMERICA SECURITIES LLC ROBINSON-HUMPHREY CIBC WORLD MARKETS , 2001 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------

SUBJECT TO COMPLETION PRELIMINARY PROSPECTUS DATED JULY 11, 2001 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.

PROSPECTUS SHARES [LOGO] CROSS COUNTRY, INC. COMMON STOCK ------------------ This is Cross Country, Inc.'s initial public offering. We are selling all of the shares. The international managers are offering shares outside the U.S. and Canada and the U.S. underwriters are offering shares in the U.S. and Canada. We expect the public offering price to be between $ and $ per share. Currently, no public market exists for the shares. After pricing of the offering, we expect that the shares will be quoted on the Nasdaq National Market under the symbol CCRN. INVESTING IN THE COMMON STOCK INVOLVES RISKS WHICH ARE DESCRIBED IN THE "RISK FACTORS" SECTION BEGINNING ON PAGE 9 OF THIS PROSPECTUS. ------------------------ PER SHARE TOTAL --------- -------- Public offering price....................................... $ $ Underwriting discount....................................... $ $ Proceeds, before expenses, to Cross Country, Inc............ $ $ The international managers may also purchase up to an additional shares from us at the public offering price, less the underwriting discount, within 30 days from the date of this prospectus to cover over-allotments. The U.S. underwriters may similarly purchase up to an additional shares from us. 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 , 2001. ------------------------ MERRILL LYNCH INTERNATIONAL SALOMON SMITH BARNEY BANC OF AMERICA SECURITIES LIMITED ROBINSON-HUMPHREY CIBC WORLD MARKETS ------------------------ The date of this prospectus is , 2001. ALT-1

UNDERWRITING We intend to offer the shares outside the U.S. and Canada through the international managers and in the U.S. and Canada through the U.S. underwriters. Merrill Lynch International, Salomon Brothers International Limited, Banc of America Securities Limited, The Robinson-Humphrey Company, LLC and CIBC World Markets plc. are acting as lead managers for the international managers named below. Subject to the terms and conditions described in an international purchase agreement between us and the international managers, and concurrently with the sale of shares to U.S. underwriters, we have agreed to sell to the international managers, and the international managers severally have agreed to purchase from us, the number of shares listed opposite their names below. NUMBER OF SHARES INTERNATIONAL UNDERWRITER ---------------- Merrill Lynch International................................. Salomon Brothers International Limited...................... Banc of America Securities Limited.......................... The Robinson-Humphrey Company, LLC.......................... CIBC World Markets plc...................................... ------ Total............................................. ====== We have also entered into a U.S. purchase agreement with the U.S. underwriters for sale of the shares in the U.S. and Canada for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith Barney Inc., Banc of America Securities LLC, The Robinson-Humphrey Company, LLC and CIBC World Markets Corp. are acting as U.S. representatives. Subject to the terms and conditions in the U.S. purchase agreement, and concurrently with the sale of shares to the international managers pursuant to the international purchase agreement, we have agreed to sell to the U.S. underwriters, and the U.S. underwriters severally have agreed to purchase shares from us. The initial public offering price per share and the total underwriting discount per share are identical under the international purchase agreement and the U.S. purchase agreement. The international managers and the U.S. underwriters have agreed to purchase all of the shares sold under the international and U.S. purchase agreements if any of these shares are purchased. If an underwriter defaults, the international and U.S. purchase agreements provide that the purchase commitments of the nondefaulting underwriters may be increased or the purchase agreements may be terminated. The closings for the sale of shares to be purchased by the international managers and the U.S. underwriters are conditioned on one another. We have agreed to indemnify the international managers and the U.S. underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the international managers and the U.S. underwriters may be required to make in respect of those liabilities. The international manager 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 agreements, such as the receipt by the underwriters of officer's certificates and legal opinions. The international manager 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 lead managers have advised us that the international managers 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 international managers may allow, and the dealers may reallow, a discount not in excess of $ per share to other dealers. After the initial public offering, the public offering price, concession and discount may be changed. ALT-2

The following table shows the public offering price, underwriting discount and proceeds before expenses to Cross Country. The information assumes either no exercise or full exercise by the international managers and the U.S. underwriters of their over-allotment options. PER SHARE WITHOUT OPTION WITH OPTION --------- -------------- ----------- Public offering price..................... $ $ $ Underwriting discount..................... $ $ $ Proceeds, before expenses, to Cross Country................................. $ $ $ The expenses of the offering, not including the underwriting discount, are estimated at $ and are payable by Cross Country. OVERALLOTMENT OPTIONS We have granted an option to the international managers to purchase up to additional shares at the public offering price less the underwriting discount. The international managers may exercise this option for 30 days from the date of this prospectus solely to cover any overallotments. If the international managers exercise this option, each will be obligated, subject to conditions contained in the purchase agreements, to purchase a number of additional shares proportionate to that international manager's initial amount reflected in the above table. We have also granted an option to the U.S. underwriters, exercisable for 30 days from the date of this prospectus, to purchase up to additional shares to cover any overallotments on terms similar to those granted to the international managers. INTERSYNDICATE AGREEMENT The international managers and the U.S. underwriters have entered into an intersyndicate agreement that provides for the coordination of their activities. Under the intersyndicate agreement, the international managers and the U.S. underwriters may sell shares to each other for purposes of resale at the initial public offering price, less an amount not greater than the selling concession. Under the intersyndicate agreement, the international managers and any dealer to whom they sell shares will not offer to sell or sell shares to persons who are U.S. or Canadian persons or to persons they believe intend to resell to persons who are U.S. or Canadian persons, except in the case of transactions under the intersyndicate agreement. Similarly, the U.S. underwriters and any dealer to whom they sell shares will not offer to sell or sell shares to non-U.S. persons or non-Canadian persons or to persons they believe intend to resell to non-U.S. or non-Canadian persons, except in the case of transactions under the intersyndicate agreement. RESERVED SHARES At our request, the international managers have reserved for sale, at the initial public offering price, up to shares offered by this prospectus for sale to some of our [directors, officers, employees, distributors, dealers, business associates and related persons]. If these persons purchase reserved shares, this will reduce the number of shares available for sale to the general public. Any reserved shares that are not orally confirmed for purchase within one day of the pricing of this offering will be offered by the underwriters to the general public on the same terms as the other shares offered by this prospectus. NO SALES OF SIMILAR SECURITIES We and our executive officers and directors and all existing stockholders have agreed, with exceptions, not to sell or transfer any common stock for 180 days after the date of this prospectus ALT-3

without first obtaining the written consent of Merrill Lynch. Specifically, we and these other individuals 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 We expect the shares to be approved for quotation on the Nasdaq National Market, subject to notice of issuance, under the symbol "CCRN." Before this offering, there has been no public market for our common stock. The initial public offering price will be determined through negotiations among us and the U.S. representatives and lead managers. In addition to prevailing market conditions, the factors to be considered in determining the initial public offering price are: - the valuation multiples of publicly traded companies that the U.S. representatives and the lead managers believe to be comparable to us; - our financial information; - the history of, and the prospects for, our company and the industry in which we compete; - an assessment of our management, its past and present operations, and the prospects for, and timing of, our future revenue; - the present state of our development; and - the above factors in relation to market values and various valuation measures of other companies engaged in activities similar to ours. An active trading market for the shares may not develop. It is also possible that after the offering the shares will not trade in the public market at or above the initial public offering price. The international managers do not expect to sell more than 5% of the shares in the aggregate to accounts over which they exercise discretionary authority. UK SELLING RESTRICTIONS Each international manager has agreed that - it has not offered or sold and will not offer or sell any shares of common stock to persons in the United Kingdom, except to persons whose ordinary activities involve them in acquiring, holding, ALT-4

managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which do not constitute an offer to the public in the United Kingdom with the meaning of the Public Offers of Securities Regulations 1995. - it has complied and will comply with all applicable provisions of the Financial Service Act 1986 with respect to anything done by it in relation to the common stock in, from or otherwise involving the United Kingdom; and - it has only issued or passed on and will only issue or pass on in the United Kingdom any document received by it in connection with the issuance of common stock to a person who is of a kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements)(Exemptions) Order 1996 as amended by the Financial Services Act of 1986 (Investment Advertisements)(Exemptions) Order 1997 or is a person to whom such document may otherwise lawfully be issued or pass on. NO PUBLIC OFFERING OUTSIDE THE UNITED STATES No action has been or will be taken in any jurisdiction (except in the United States) that would permit a public offering of the shares of common stock, or the possession, circulation or distribution of this prospectus or any other material relating to our company, or shares of our common stock in any jurisdiction where action for that purpose is required. Accordingly, the shares of our common stock may not be offered or sold, directly or indirectly, and neither this prospectus nor any other offering materials or advertisements in connection with the shares of common stock may be distributed or published, in or from any country or jurisdiction except in compliance with any applicable rules and regulations of any such country or jurisdiction. Purchasers of the shares offered by this prospectus may be required to pay stamp taxes and other charges in accordance with the laws and practices of the country of purchase in addition to the offering price on the cover page of this prospects. NASD REGULATIONS More than ten percent of the proceeds of the offering will be applied to pay down debt obligations owed to affiliates of Merrill Lynch International, Salomon Brothers International Limited, Banc of America Securities Limited and The Robinson-Humphrey Company, LLC. Because more than ten percent of the net proceeds of the offering will be paid to members or affiliates of members of the National Association of Securities Dealers, Inc. participating in the offering, the offering will be conducted in accordance with NASD Conduct Rule 2710(c)(8). This rule requires that the public offering price of an equity security be no higher than the price recommended by a qualified independent underwriter which has participated in the preparation of the registration statement and performed its usual standard of due diligence with respect to that registration statement. CIBC World Markets Corp. has agreed to act as qualified independent underwriter for the offering. The price of the shares will be no higher than that recommended by CIBC World Markets Corp. The underwriters will not confirm sales of shares to any account over which they exercise discretionary authority without the prior written specific approval of the customer. PRICE STABILIZATION, SHORT POSITIONS AND PENALTY BIDS Until the distribution of the shares is completed, SEC rules may limit underwriters and selling group members from bidding for and purchasing our common stock. However, the U.S. 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. ALT-5

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. 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. Affiliates of Salomon Brothers International Limited acted as the arranger and affiliates of Salomon Brothers International Limited and The Robinson-Humphrey Company, LLC acted as administrative agent, collateral agent, issuing bank and swingline lender under our credit facility. In addition, affiliates of Merrill Lynch International, Salomon Brothers International Limited, Banc of America Securities Limited and The Robinson-Humphrey Company, LLC are lenders under our credit facility. 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. ALT-6

- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Through and including , 2001 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. SHARES CROSS COUNTRY, INC. COMMON STOCK --------------------- P R O S P E C T U S --------------------- MERRILL LYNCH INTERNATIONAL SALOMON SMITH BARNEY BANC OF AMERICA SECURITIES LLC ROBINSON-HUMPHREY CIBC WORLD MARKETS , 2001 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ALT-7

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 in connection with the issuance and distribution of common stock registered hereby, all of which expenses, except for the Securities and Exchange Commission registrant fee, the National Association of Securities Dealers, Inc. filing fee, and the Nasdaq National Market listing application fee, are estimated. Securities and Exchange Commission registration fee......... $ 35,938 National Association of Securities Dealers, Inc. filing fee....................................................... 14,875 Nasdaq National Market listing application fee.............. * Printing and engraving fees and expenses.................... * Legal fees and expenses..................................... * Accounting fees and expenses................................ * Blue Sky 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. 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 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 the following securities: On July 29, 1999, we issued and sold 2,040,503 shares of Common Stock 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 170,445 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 49,716 shares of Common Stock for gross proceeds of $1.8 million. On July 29, 1999, we issued 65,527 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 131,053 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 22,754 shares of Common Stock in consideration for the receipt of $0.01 per share. 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 March 31, 2001, the Company has granted options to purchase a total of 540,919 shares of Common Stock to employees, including certain senior managers, at a weighted average exercise price of approximately $ 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 with this registration statement. NO. DESCRIPTION --- ----------- 1.1* Form of U.S. Underwriting Agreement 1.2* Form of International 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 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 2.3 Stock Purchase Agreement, dated as of December 15, 2000, by and between Edgewater Technology, Inc. and the Registrant 3.1* Amended and Restated Certificate of Incorporation of the Registrant 3.2* Amended and Restated By-laws of the Registrant 4.1* Form of specimen common stock certificate 4.2* Stockholders Agreement, dated as of October 29, 1999, among the Registrant, a Delaware corporation, the CEP Investors and the MSDWCP Investors 4.3 Registration Rights Agreement, dated as of July 29, 1999, among the Registrant, a Delaware corporation and The Northwestern Mutual Life Insurance Company and DB Capital Investors, L.P. as Investors 4.4 Registration Rights Agreement, dated as of October 29, 1999, among the Registrant, a Delaware corporation and the Charterhouse Investors and the MSDW Investors. 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 10.2 Employment Agreement, dated as of June 24, 1999, between Emil Hensel and the Registrant 10.3 Employment Agreement termination, dated as of December 21, 2000, between Bruce Cerullo and the Registrant 10.4 Lease Agreement, dated April 28, 1997, between Meridian Properties and the Registrant 10.5 Lease Agreement, dated October 31, 2000, by and between Trustees of the Goldberg Brothers Trust, a Massachusetts Nominee Trust and TVCM, Inc. 10.6 222 Building Standard Office Lease between Clayton Investors Associates, LLC and Cejka & Company 10.7 1999 Stock Option Plan of the Registrant 10.8 Equity Participation Plan of the Registrant 10.9 Second Amended and Restated Credit Agreement, dated as of March 16, 2001, 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 II-3

NO. DESCRIPTION --- ----------- 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. 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 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 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 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 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 VALUATION AND QUALIFYING ACCOUNTS (FOR CONTINUING OPERATIONS) ------------------------------------------------------------------------------- BALANCE AT CHARGED TO BALANCE AT BEGINNING COSTS AND OTHER END DESCRIPTION OF PERIOD EXPENSES WRITEOFF'S RECOVERIES CHANGES OF PERIOD - ----------- ---------- ---------- ---------- ---------- ---------- ---------- ALLOWANCE FOR DOUBTFUL ACCOUNTS Period July 30-December 31, $1,159,039 $ 511,341 $ (273,142) $ -- $ 746,872 (a) $2,144,110 1999............................ Year ended December 31, 2000...... 2,144,110 431,397 (563,436) 75,676 -- 2,087,747 Three months ended March 31, 2,087,747 419,926 (150,104) -- 52,499 (b) 2,410,068 2001............................ - -------------------------- (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. II-4

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 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. (c) The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser. II-5

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 11th day of July, 2001. 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, and each of them, 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 might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or their 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 on the 11th day of July, 2001. SIGNATURE TITLE --------- ----- /s/ JOSEPH A. BOSHART President, Chief Executive Officer and ------------------------------------------- Director Joseph A. Boshart (Principal Executive Officer) /s/ EMIL HENSEL Chief Financial Officer, Chief Operating ------------------------------------------- Officer and Director (Principal Financial Emil Hensel Officer and Principal Accounting Officer) /s/ KAREN H. BECHTEL ------------------------------------------- Director Karen H. Bechtel /s/ BRUCE A. CERULLO ------------------------------------------- Director Bruce A. Cerullo /s/ THOMAS C. DIRCKS ------------------------------------------- Director Thomas C. Dircks II-6

SIGNATURE TITLE --------- ----- /s/ A. LAWRENCE FAGAN ------------------------------------------- Director A. Lawrence Fagan /s/ ALAN FITZPATRICK ------------------------------------------- Director Alan Fitzpatrick /s/ FAZLE HUSAIN ------------------------------------------- Director Fazle Husain /s/ LORI LIVERS ------------------------------------------- Director Lori Livers II-7

Exhibit 2.1 CROSS COUNTRY STAFFING ASSET PURCHASE AGREEMENT JUNE 24, 1999

TABLE OF CONTENTS PAGE ARTICLE 1 DEFINITIONS..............................................................................................2 1.01 GENERAL..................................................................................2 1.02 DEFINED TERMS............................................................................2 ARTICLE 2 PURCHASE AND SALE.......................................................................................14 2.01 SALE OF ASSETS; RETAINED ASSETS.........................................................14 2.02 ASSUMPTION OF LIABILITIES...............................................................15 2.03 OTHER CONTRACTS.........................................................................15 2.04 NO ENCUMBRANCES.........................................................................15 2.05 CONSIDERATION...........................................................................16 ARTICLE 3 CLOSING.................................................................................................16 3.01 SCHEDULED CLOSING DATE..................................................................16 3.02 TIME AND PLACE OF CLOSING, SIMULTANEITY.................................................16 3.03 ACTIONS AT THE CLOSING..................................................................17 3.04 FURTHER ASSURANCES......................................................................17 ARTICLE 4 POST-CLOSING ADJUSTMENT.................................................................................18 4.01 CLOSING OF BOOKS........................................................................18 4.02 COMPUTATION.............................................................................18 4.03 CLOSING STATEMENT. .....................................................................19 4.04 ACCEPTANCE; NON-ACCEPTANCE; RESOLUTION..................................................19 4.05 POST-CLOSING ADJUSTMENT. ...............................................................21 ARTICLE 5 SELLERS' REPRESENTATIONS AND WARRANTIES.................................................................21 5.01 CORPORATE STATUS AND AUTHORITY, OWNERSHIP, ETC..........................................21 5.02 AUTHORIZATION...........................................................................22 5.03 EXECUTION AND DELIVERY..................................................................22 5.04 NO CONFLICT.............................................................................23 5.05 ASSETS..................................................................................24 5.06 FINANCIAL STATEMENTS....................................................................24 5.07 LITIGATION; INVESTIGATIONS..............................................................26 5.08 ORDINARY COURSE OF BUSINESS.............................................................26 5.09 INSURANCE...............................................................................26 i

5.10 CONTRACTS...............................................................................27 5.11 LABOR AND EMPLOYMENT....................................................................27 5.12 EMPLOYEE BENEFIT PLANS..................................................................28 5.13 INTELLECTUAL PROPERTY...................................................................30 5.14 COMPLIANCE WITH LAWS....................................................................30 5.15 PERMITS.................................................................................30 5.16 TAXES...................................................................................31 5.17 CUSTOMERS...............................................................................32 5.18 YEAR 2000 COMPLIANCE....................................................................32 5.19 ENVIRONMENTAL MATTERS...................................................................32 5.20 QUESTIONABLE PAYMENTS...................................................................32 5.21 INVESTMENT INTENT.......................................................................33 ARTICLE 6 BUYER REPRESENTATIONS AND WARRANTIES....................................................................33 6.01 CORPORATE STATUS AND AUTHORITY..........................................................33 6.02 AUTHORIZATION...........................................................................33 6.03 CAPITALIZATION..........................................................................33 6.04 EXECUTION AND DELIVERY..................................................................34 6.05 NO CONFLICT.............................................................................34 6.06 SUFFICIENT FUNDS........................................................................35 ARTICLE 7 INVESTIGATION, ETC. ....................................................................................35 7.01 INVESTIGATION, ETC......................................................................35 7.02 NO ADDITIONAL REPRESENTATIONS...........................................................36 ARTICLE 8 COVENANTS OF SELLERS AND BUYER..........................................................................36 8.01 ACCESS AND INQUIRY......................................................................36 8.02 BULK TRANSFER...........................................................................36 8.03 HART-SCOTT-RODINO ACT...................................................................36 8.04 PERMITS.................................................................................37 8.05 NO SOLICITATION, ETC....................................................................37 8.06 MRA SHARES..............................................................................39 8.07 ASSIGNMENT OF NON-COMPETITION AGREEMENTS................................................39 8.08 FULFILLMENT OF CONDITIONS...............................................................39 8.09 NOTICES TO THIRD PARTIES................................................................39 8.10 REASONABLE EFFORTS......................................................................39 ARTICLE 9 CONDUCT OF BUSINESS PRIOR TO THE CLOSING................................................................40 ii

9.01 OPERATION IN ORDINARY COURSE............................................................40 9.02 DISPOSITION OF ASSETS...................................................................40 9.03 ASSUMED CONTRACTS.......................................................................40 9.04 RELATIONS WITH CUSTOMERS AND SUPPLIERS..................................................41 ARTICLE 10 CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS.............................................................41 10.01 ACCURACY OF REPRESENTATIONS AND WARRANTIES..............................................41 10.02 PERFORMANCE OF COVENANTS AND AGREEMENTS.................................................41 10.03 HART-SCOTT-RODINO ACT...................................................................41 10.04 PERMITS, CONSENTS, ETC..................................................................41 10.05 LITIGATION..............................................................................42 10.06 CERTIFICATES OF SELLERS.................................................................42 10.07 OPINION OF SELLERS' COUNSEL.............................................................43 10.08 MATERIAL ADVERSE CHANGE.................................................................43 10.09 LANDLORD CONSENT/ESTOPPEL LETTERS.......................................................43 ARTICLE 11 CONDITIONS PRECEDENT TO SELLERS' OBLIGATIONS............................................................43 11.01 ACCURACY OF REPRESENTATIONS AND WARRANTIES..............................................43 11.02 PERFORMANCE OF COVENANTS AND AGREEMENTS.................................................43 11.03 HART-SCOTT-RODINO ACT...................................................................44 11.04 LITIGATION..............................................................................44 11.05 CERTIFICATE OF BUYER....................................................................44 11.06 OPINION OF BUYER'S COUNSEL..............................................................44 ARTICLE 12 EMPLOYEE MATTERS........................................................................................45 12.01 EMPLOYMENT..............................................................................45 12.02 ASSUMED CCS PLANS.......................................................................45 ARTICLE 13 TERMINATION.............................................................................................46 13.01 RIGHTS TO TERMINATE.....................................................................46 13.02 CONSEQUENCES OF TERMINATION.............................................................47 ARTICLE 14 Indemnification.........................................................................................48 14.01 DEFINITIONS.............................................................................48 14.02 SELLERS' INDEMNIFICATION................................................................48 14.03 BUYER'S INDEMNIFICATION.................................................................49 14.04 LIMITATIONS WITH RESPECT TO CERTAIN CLAIMS..............................................50 iii

14.05 DEFENSE OF THIRD PARTY CLAIMS...........................................................51 14.06 PUNITIVE DAMAGES........................................................................54 ARTICLE 15 Cooperation in Various Matters..........................................................................54 15.01 MUTUAL COOPERATION......................................................................54 15.02 PRESERVATION OF SELLERS' FILES AND RECORDS..............................................54 ARTICLE 16 Post-Closing Matters....................................................................................55 16.01 INFORMATION FOR REPORTS.................................................................55 16.02 COVENANT NOT TO COMPETE.................................................................55 16.03 CONFIDENTIALITY AGREEMENTS..............................................................56 16.04 INSURANCE...............................................................................56 16.05 USE OF "CROSS COUNTRY" NAME.............................................................57 ARTICLE 17 Expenses................................................................................................57 17.01 BUYER'S EXPENSES........................................................................57 17.02 SELLERS' EXPENSES.......................................................................57 17.03 TRANSFER TAXES..........................................................................58 ARTICLE 18 Notices.................................................................................................58 18.01 NOTICES.................................................................................58 ARTICLE 19 General.................................................................................................59 19.01 ENTIRE AGREEMENT........................................................................59 19.02 GOVERNING LAW...........................................................................59 19.03 SUBMISSION TO JURISDICTION..............................................................60 19.04 SUCCESSORS AND ASSIGNS..................................................................60 19.05 AMENDMENTS AND WAIVERS..................................................................60 19.06 COUNTERPARTS............................................................................61 19.07 CAPTIONS................................................................................61 iv

CROSS COUNTRY STAFFING ASSET PURCHASE AGREEMENT EXHIBITS AND SCHEDULES EXHIBITS 1A Retained Assets 1B Retained Liabilities 10.07 Opinion of Sellers' Counsel 11.06 Opinion of Buyer's Counsel SCHEDULES 4.05 Base Working Capital Amount 5.01(a) Qualification 5.04 Conflicts 5.05 Real Property used in Business 5.06(a) Financial Statements 5.06(b) Other Business of CCS Parents 5.06(c) Related Party Transactions 5.07(a) Litigation 5.07(b) Investigations 5.08 Ordinary Course of Business 5.09(a) Insurance Contracts 5.09(b) Notices regarding Insurance Coverage 5.09(c) Insurance Policies of Seller Entities which are Retained Assets 5.10 Contracts 5.11(a) Collective Bargaining, Employment or Consulting Agreements 5.11(b) Labor Matters 5.12(a) Plans 5.12(c) Exceptions to the Plans 5.12(d) Promises to Create Plans 5.13(a) Intellectual Property 5.13(b) Licenses to Third Party to use Intellectual Property 5.13(c) Material Contracts with Third Party for CCS to use Intellectual Property 5.14 Compliance with Laws 5.15 Material Permits 5.16 Taxes 5.17 Customer List 9.01 Operation of Business 10.04(b) Buyer's Closing Conditions: Third Party Consents v

CROSS COUNTRY STAFFING ASSET PURCHASE AGREEMENT CROSS COUNTRY STAFFING ASSET PURCHASE AGREEMENT dated June ___, 1999, by and among W. R. Grace & Co.- Conn., a Connecticut corporation ("GRACE"), Cross Country Staffing, a Delaware general partnership ("CCS"), and Cross Country Holdings, Inc., a Delaware corporation ("BUYER"). WITNESSETH: WHEREAS, CCS is engaged in the business of recruiting and placing temporary health care and other professionals (the "BUSINESS"); WHEREAS, a 64% partnership interest in CCS is owned by CCHP, Inc., a Delaware corporation and an indirect subsidiary of Grace ("CCHP"), and a 36% partnership interest in CCS is owned by MRA Staffing Systems, Inc., a Delaware corporation ("MRA"), which will be an indirect wholly-owned subsidiary of Grace prior to the Closing (as defined); and WHEREAS, CCS desires to sell to Buyer, and Buyer desires to purchase from CCS, substantially all of the tangible and intangible assets and business of CCS, on the terms and conditions and for the consideration provided herein; NOW THEREFORE, in consideration of the mutual covenants herein contained, the parties hereby agree as follows:

ARTICLE 1 DEFINITIONS 1.01 GENERAL. All Article and Section numbers, and Exhibit and Schedule references used in this Agreement refer to Articles and Sections of this Agreement, and Exhibits and Schedules attached hereto or delivered simultaneously herewith, unless otherwise specifically stated. Any of the terms defined in this Agreement may be used in the singular or the plural. In this Agreement, unless otherwise specifically stated, "hereof," "herein," "hereto," "hereunder" and the like mean and refer to this Agreement as a whole and not merely to the specific Section, paragraph or clause in which the word appears; and words importing any gender include the other genders. 1.02 DEFINED TERMS. For purposes of this Agreement, including the Exhibits and Schedules, the following defined terms have the meanings set forth in this Section. "401(k) PLAN" has the meaning given such term in Section 5.12(c). "ACCOUNT" means the bank account designated by CCS within five days prior to Closing. "ACQUISITION PROPOSAL" has the meaning given such term in Section 8.05. "ADDITIONAL FINANCIAL INFORMATION" has the meaning given such term in Section 7.01. "AFFILIATE" of any specified Person at the time at which such status is being determined, means a Person that at such time, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the Person specified. "CONTROL" of a specified entity means the direct or indirect possession of the power to direct or cause the direction of the management and policies of such entity, whether through the ownership 2

of voting securities, by contract, or otherwise, and in any event shall include ownership, directly or indirectly through one or more intermediaries, of voting securities or other equity interests of such entity having a majority of the voting power of the voting securities or other equity interests of such entity. "AGREEMENT" means this Cross Country Staffing Asset Purchase Agreement. "ASSETS" has the meaning given such term in Section 2.01(a). "ASSUMED CONTRACTS" has the meaning given such term in Section 2.01(a). "ASSUMED LIABILITIES" has the meaning given such term in Section 2.02. "BALANCE SHEET DATE" has the meaning given such term in Section 5.06(c). "BASE WORKING CAPITAL AMOUNT" means such amount determined in accordance with SCHEDULE 4.05. "BREAK UP FEE" has the meaning given such term in Section 13.02(a). "BUSINESS" has the meaning given such term in the recitals hereto. "BUSINESS DAY" means a day that is not a Saturday or Sunday, nor a day on which banks are generally closed in New York City. "BUYER" means Cross Country Holdings, Inc., a Delaware corporation. "BUYER ENTITY" means a member of the Buyer Group. "BUYER GROUP" means, collectively, Buyer and its Affiliates. "BUYER SHARES" means the shares of Common Stock, par value $.01 per share, of Buyer. "BUYERS' CLAIMS" has the meaning given such term in Section 14.04(a). "BUYER'S EXPENSES" has the meaning given to such term in Section 13.02(a). 3

"CASH PURCHASE PRICE" has the meaning given such term in Section 2.05. "CCHP" means CCHP, Inc., a Delaware corporation. "CCS" means Cross Country Staffing, a Delaware general partnership. "CCS ENTITY" means CCS, CCHP, MRA and each entity (other than Grace International Holdings, Inc.) which is as of the date hereof or will be as of the Closing, a direct or indirect subsidiary of Grace and a direct or indirect shareholder of CCHP or MRA. "CCS EXECUTIVES" means Vickie Anenberg, Joseph A. Boshart, Emil Hensel and Jonathan Ward. "CCS PARENTS" means all CCS Entities other than CCS. "CCS PLAN" means any Employee Benefit Plan exclusively maintained, sponsored or contributed to by CCS or by CCHP, solely for the employees of CCS, other than the Phantom Equity Program and the Fixed Participation Program. "CLAIM" has the meaning given such term in Section 14.01. "CLOSING" means the actions to be taken by the parties described in Section 3.03. "CLOSING CURRENT ASSETS" means the aggregate amount, as of the Valuation Time, of CCS's current assets, computed in accordance with Section 4.02, but excluding those current assets that are Retained Assets. "CLOSING CURRENT LIABILITIES" means the aggregate amount, as of the Valuation Time, of CCS's current liabilities, computed in accordance with Section 4.02, but excluding those current liabilities that are Retained Liabilities. "CLOSING DATE" means the date on which the Closing takes place. "CLOSING STATEMENT" has the meaning given such term in Section 4.03. 4

"CLOSING WORKING CAPITAL AMOUNT" means the amount of the Closing Current Assets less the amount of the Closing Current Liabilities. "CODE" means the Internal Revenue Code of 1986, as amended, and any reference to a particular Code section shall include any revision or successor to that section regardless of how numbered or classified. "CONFIDENTIALITY AGREEMENT" means the confidentiality letter agreement dated January 5, 1999, between CCS and Buyer. "COVERED PARTIES" has the meaning given such term in Section 8.05. "CREDIT AGREEMENT" means that Credit Agreement dated July 1, 1996 by and among CCS, NationsBank, National Association (South) and the other lenders party thereto. "CUT-OFF TIME" has the meaning given such term in Section 16.04. "DAMAGES" has the meaning given such term in Section 14.01. "DIRECT CLAIMS" has the meaning given such term in Section 14.01. "DOJ" means the United States Department of Justice. "EMPLOYEE BENEFIT PLAN" means any written "employee benefit plan" (as defined under Section 3(3) of ERISA) and any other vacation, bonus, deferred compensation, pension, retirement, stock purchase, stock appreciation, severance, or change in control plan or any other employee benefit plan, policy, arrangement or practice (written or unwritten, insured or uninsured) providing compensation or benefits to current or former employees, directors or partners who are individuals. "ENVIRONMENTAL LAWS" means any federal, state, local or common law, rule, regulation, ordinance, code, order or judgment (including the common law and any judicial or 5

administrative interpretations, guidance, directives, policy statements or opinions) relating to the injury to, or the pollution or protection of human health and safety or the environment. "ENVIRONMENTAL LIABILITIES" means any claims, judgments, damages (including punitive damages), losses, penalties, fines, liabilities, encumbrances, liens, violations, costs and expenses (including attorneys and consultants fees) of investigation, assessment, remediation or defense of any matter relating to human health, safety or the environment of whatever kind or nature by any Person or governmental entity, (A) which are incurred as a result of (i) the existence of Hazardous Substances in, on, under, at or emanating from any real property presently or previously owned or operated by any CCS Entity, (ii) the offsite transportation, treatment, storage or disposal of Hazardous Substances generated by any CCS Entity or (iii) the violation of any Environmental Laws or (B) which arise under the Environmental Laws. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder. "FIELD STAFF" means employees of CCS who work for its clients pursuant to staffing contracts between CCS and the clients, and other individuals who staff a client facility under a contract between CCS and such client. "FINANCIAL STATEMENTS" has the meaning given such term in Section 5.06. "FTC" means the United States Federal Trade Commission. "GAAP" means generally accepted accounting principles in the United States. "GN" means GN Holdings, Inc., a Delaware corporation (formerly named CCHP Delaware, Inc.). 6

"GOVERNMENTAL AUTHORITY" means an entity, whether domestic or foreign, exercising executive, legislative, judicial, regulatory or administrative functions of government, including, but not limited to, agencies, departments, boards, commissions, or other instrumentalities. "GRACE" means W. R. Grace & Co. -Conn., a Connecticut corporation. "GRACE ENTITY" means a member of the Grace Group. "GRACE EXECUTIVES" means, collectively, Larry Ellberger, John A. McFarland, Paul McMahon and Bernd A. Schulte. "GRACE GROUP" means, collectively, Grace and its Subsidiaries (excluding any CCS Entities). "HAZARDOUS SUBSTANCE" means any substance, compound, chemical or element which is (a) defined as a hazardous substance, hazardous material, toxic substance, hazardous waste, pollutant or contaminant under any Environmental Law, (b) a petroleum hydrocarbon, including crude oil or any fraction thereof, or (c) regulated pursuant to any Environmental Law. "HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder. "INCOME TAX REGULATIONS" means the rules and regulations promulgated by the Internal Revenue Service (the "IRS") pursuant to the Code. "INDEMNITEE" and "INDEMNITOR" have the meanings given such terms in Section 14.05(a). "INTELLECTUAL PROPERTY" means Trade Secrets, patents and pending patent applications, registered and unregistered trademarks, service marks, logos, and copyrights, trade names and pending registrations and applications to register or renew the registration of any of the 7

foregoing, technical data, processes, designs (including originals of all product drawings and product spec sheets), licenses, and other similar intellectual property rights material to the Business. For purposes of this definition, the term "Trade Secrets" means any information which (i) is used in a business, (ii) is not generally known to the public or to Persons who can obtain economic value from its disclosure, and (iii) is subject to reasonable efforts to maintain its secrecy or confidentiality; the term may include but is not limited to inventions, processes, know-how, formulas, computer programs and backup programs, whether for manufacturing or otherwise and whether in source code, object code or executable code and mask works which are not patented and are not protected by registration (E.G., under copyright or mask work laws); lists of customers, vendors, suppliers, and employees, and data related thereto; business plans and analyses; and financial data. "JOINT VENTURE AGREEMENT" means the Joint Venture Agreement dated May 31, 1996, as amended by the letter agreement dated the same date, between CCHP, Grace, MRA and Nestor (then named Nestor-BNA plc) providing for the formation of CCS. "KNOWLEDGE" means actual knowledge on the date of this Agreement or on the Closing Date, as applicable, and in the case of the Sellers, their Knowledge shall mean such knowledge of the Grace Executives after consultation with the CCS Executives. "KPMG" means KPMG LLP. "LEASED REAL PROPERTY" means those parcels of leased real property used in the business of CCS, excluding leases of living quarters for Field Staff, as set forth in SCHEDULE 5.05. 8

"LIEN" means any mortgage, pledge, hypothecation, security interest, agreement to sell, option to buy, right of first refusal, title retention device or other lien or encumbrance, including any of the foregoing arising under a deed of trust or indenture. "LITIGATION EXPENSES" has the meaning given such term in Section 14.01. "MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on the business, assets, operations or condition (financial or other) of CCS. "MATERIAL CONTRACTS" has the meaning given such term in Section 5.10. "MATERIAL PERMITS" has the meaning given such term in Section 5.15. "MRA" means MRA Staffing Systems, Inc., a Delaware corporation. "NESTOR" means Nestor Healthcare Group plc, an English public limited liability company (formerly known as Nestor-BNA plc). "NESTOR SHAREHOLDERS' APPROVAL" has the meaning given such term in Section 13.01. "NOTICE CONDITION" has the meaning given such term in Section 14.05. "OTHER CONTRACTS" has the meaning given such term in Section 2.03. "PARTNERSHIP AGREEMENT" means the General Partnership Agreement of Cross Country Staffing dated May 31, 1996, between CCHP and MRA, as amended by the letter agreement dated the same date between CCHP, MRA, Grace and Nestor. "PENDING" has the meaning given such term in Section 5.07. "PERMITS" has the meaning given such term in Section 5.15. "PERMITTED LIENS" means (a) Liens for Taxes which are not due and payable or which may thereafter be paid without penalty, or which are being contested in good faith by appropriate proceedings; (b) mechanics', materialmen's, workers', repairmen's, 9

warehousemen's, carriers' and other similar Liens for amounts which are not yet due and payable, or which may be paid without penalty, or which are being contested in good faith by appropriate proceedings; and (c) any Liens which individually or in the aggregate will not have or will not reasonably be expected to have a Material Adverse Effect. "PERSON" means any individual, partnership, firm, trust, association, corporation, joint venture, unincorporated organization, other business entity or Governmental Authority. "PLAN" means any Employee Benefit Plan established, maintained, sponsored, or contributed to by any CCS Entity on behalf of any employee, director or partner of CCS who is an individual (whether current, former or retired) or their beneficiaries, with respect to which any CCS Entity has any current obligation on behalf of such individual. "PURCHASE PRICE" has the meaning given such term in Section 2.05. "PwC" means Pricewaterhouse Coopers LLP. "RETAINED ASSETS" means any CCS Entity's right, title and interest in (1) cash and cash items, other than deposits with third parties, (2) records relating solely to any of the Retained Liabilities, (3) Claims related to Retained Liabilities, including, without limitation, rights to refunds and credits of all Taxes that fall into the category of Retained Liabilities and (4) those assets listed in EXHIBIT 1A. "RETAINED LIABILITIES" means (1) all liabilities and obligations of any CCS Entity pertaining to all federal, state and local obligations (a) for income Taxes for any period through and including the Closing Date, (b) under Section 1.1502-6 of the Income Tax Regulations (or any comparable provision of law or regulation) resulting from the affiliation of any of the CCS Entities with any other entity during any period through and including the Closing Date, (c) for 10

employment Taxes (including without limitation, withholding Taxes) caused by or arising from any CCS Entity's practices with regard to meal and incidental expense payments, lodging allowances or in-kind lodging to the extent that the employment Tax obligation (i) relates to any period through and including, the Closing Date or (ii) relates to any period after the Closing Date and results from meal and incidental expense payments or lodging allowances paid, or in-kind lodging provided, pursuant to contracts with Field Staff or mobile agreements entered into on or prior to the Closing (but not including subsequent extensions or renewals of such contracts) and (d) to make a payment resulting from a failure to post a bond with respect to any of the obligations set forth in (a), (b) or (c) above, (2) any liability or obligation of CCS arising out of any agreement or arrangement with any CCS Parent, Grace or Nestor or any Affiliate thereof, (3) any liability or obligation under any Employee Benefit Plan (other than a CCS Plan) of any CCS Entity, Grace, Nestor or any entity, whether or not incorporated, which is or was part of a controlled group or under common control with any CCS Entity, Grace or Nestor or otherwise treated as a "single employer" with any CCS Entity, Grace or Nestor within the meaning of Section 414(b), (c), (m) or (o) of the Code or under Section 4001 of ERISA with respect to any Employee Benefit Plan established, maintained, sponsored or contributed to by any CCS Entity, Grace or Nestor or such entity, including, but not limited to (i) liabilities for complete and partial withdrawals under any "multiemployer plan" (as defined in Section 3(37) of ERISA) pursuant to Section 4203 or 4205 of ERISA, respectively; (ii) liabilities to the Pension Benefit Guaranty Corporation (including, without limitation, liabilities for premiums and terminations); (iii) liabilities under Section 4980B of the Code or Part 6 of Subtitle B of Title I of ERISA; and (iv) liabilities arising under Section 412 of the Code or 11

Section 302(a)(2) of ERISA; (4) any liability or obligation, with respect to any CCS Plan that is an "employee benefit plan" (as defined by Section 3(3) of ERISA) that satisfies each of the following two conditions: such liability or obligation (i) is not incurred under the terms of such Plan (or the terms of other agreements related to such Plan, including, but not limited to, agreements or policies between any CCS Entity and an insurance company) and (ii) arises solely and exclusively as a result of such CCS Plan having been established, maintained, sponsored or contributed to by an entity that was part of a controlled group or under common control with Grace or Nestor or by any entity treated as a "single employer" with Grace or Nestor, within the meaning of Section 414(b), (c), (m) or (o) of the Code ; (5) any liability or obligation of CCS under the Joint Venture Agreement, Partnership Agreement, Shareholders Agreement or Credit Agreement, (6) any liability or obligation relating to the Retained Assets; and (7) those liabilities listed in EXHIBIT 1B. "SCHEDULED CLOSING DATE" has the meaning given such term in Section 3.01. "SECURITIES ACT" has the meaning given such term in Section 5.21. "SELLERS" means collectively Grace and CCS. "SHAREHOLDERS AGREEMENT" means the Shareholders Agreement dated July 15, 1991, between GN, CCHP, Grace, and Robert L. Bok, Diane C. Bok, Kevin C. Clark and Michelle F. Clark, as amended and supplemented by the Amendment to Employment Agreement, Shareholders Agreement and Consulting Agreement dated as of January 15, 1994, between CCHP and Kevin C. Clark, CCNU, Inc., AAM, Inc., Michelle F. Clark, Robert L. Bok, Diane C. Bok, GN and Grace, and the Agreement dated as of February 9, 1996, between GN, CCHP, Grace, Robert L. Bok, Diane C. Bok, Kevin C. Clark and Michelle F. Clark. 12

"SUBSIDIARIES" of a party means any corporation or other organization, whether incorporated or unincorporated, of which at least a majority of the securities or interests having power to elect at least a majority of the board of directors or other Person performing similar functions, or having power to manage such organization, is directly or indirectly owned or controlled by such party and/or one or more of its Subsidiaries. "SUPERIOR PROPOSAL" has the meaning given such term in Section 8.05. "TAX RETURN" means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof. "TAXES" means all federal, state, county, local, foreign and other taxes (including, without limitation, income, profits, premium, estimated, excise, sales, use, occupancy, gross receipts, franchise, ad valorem, severance, capital levy, production, transfer, withholding, employment and payroll related and property taxes, import duties and other governmental charges and assessments), whether attributable to statutory or nonstatutory rules and whether or not measured in whole or in part by net income, and including, without limitation, interest, additions to tax or interest, charges and penalties with respect thereto. "THIRD PARTY CLAIMS" has the meaning given such term in Section 14.01. "TRANSACTION DOCUMENTS" means this Agreement and the transfer and assumption documents to be executed at or before the Closing pursuant to Section 3.03. "TRANSFERRED EMPLOYEE" has the meaning given such term in Section 12.01. "VALUATION TIME" means 11:59 p.m. local time on the day immediately preceding the Closing Date. 13

ARTICLE 2 PURCHASE AND SALE 2.01 SALE OF ASSETS; RETAINED ASSETS. (a) On the Closing Date, CCS shall sell, assign, transfer and deliver to Buyer, and Buyer shall purchase, acquire and accept from CCS, all right, title and interest of CCS in and to ALL of the assets, rights and properties of CCS other than the Retained Assets (collectively, the "ASSETS"), including, without limitation: (i) all of the machinery, furniture, leasehold improvements and fixtures, and all other tangible assets owned by CCS or used in the Business; (ii) the contracts and agreements of CCS (other than Other Contracts and contracts which are part of the Retained Assets) (the "ASSUMED CONTRACTS"); (iii) all of the Intellectual Property of CCS, including, without limitation, the items set forth on SCHEDULE 5.13(a) and the name "Cross Country Staffing"; (iv) the books, records and other data relating to the Business; (v) all of the accounts receivable of CCS; (vi) all deposits and prepaid expenses of CCS as well as CCS's rights under insurance policies covering the Assets or the Business (other than those rights under insurance policies listed on SCHEDULE 5.09(c)); (vii) the CCS Plans; (viii) all right, title and interest of CCS in and to any and all Permits to the extent transferable or assignable; 14

(ix) all customer and supplier lists and related information of CCS as well as all existing advertising plans of any kind, sales literature and related items (including, without limitation, all art work and printers' plates presently in the possession of CCS' advertising agencies and printers); and (x) all of the goodwill and other intangibles pertaining or relating to the Business. 2.02 ASSUMPTION OF LIABILITIES. At the Closing, Buyer shall assume all obligations and liabilities of CCS, other than the Retained Liabilities (the "ASSUMED LIABILITIES"), and no others. 2.03 OTHER CONTRACTS. Anything contained in this Agreement to the contrary notwithstanding, this Agreement shall not constitute an agreement to assign or transfer any contract or agreement of CCS or any claim or right to any benefit arising thereunder, if an attempted assignment or transfer thereof, without the consent to such assignment or transfer by the other parties thereto, would constitute a breach thereof (the "OTHER CONTRACTS") . In each case in which consent of a third party is required for assignment or transfer of such Other Contract to Buyer, Buyer shall use its reasonable efforts to obtain, and Sellers agree to cooperate with Buyer in its efforts to obtain, such consent. If such consent is not obtained, Sellers and Buyer shall cooperate in any reasonable arrangements designed to provide for Buyer the benefits and relieve Sellers of the obligations under such Other Contract including, without limitation, CCS appointing Buyer as its subcontractor with respect to such Other Contract. 15

2.04 NO ENCUMBRANCES. Seller hereby covenants that the sale, assignment, transfer and delivery of the Assets hereunder shall be made free and clear of all Liens, except Permitted Liens (for purposes of this Section 2.04, Permitted Liens shall not include Liens for those Taxes which are included within the Retained Liabilities). 2.05 CONSIDERATION. In consideration of the aforesaid sale, assignment, transfer and delivery of the Assets, Buyer shall at the Closing (i) pay to CCS $183,000,000 (the "CASH PURCHASE PRICE") by wire transfer to the Account and (ii) issue to CCS 75,396 Buyer Shares (the Cash Purchase Price, together with the shares in (ii) shall collectively be referred to as the "PURCHASE PRICE"). The Cash Purchase Price shall be subject to adjustment as set forth in Article 4. The parties agree that the value of the Buyer Shares is $6 million and that they will report consistently with such valuation on all Tax Returns. 2.06 ALLOCATION OF PURCHASE PRICE. Prior to the Closing Date, the parties hereto shall work together to establish a valuation of Grace's non-competition agreement set forth in Section 16.02 and those non-competition agreements assigned to Buyer pursuant to Section 8.07. Buyer shall pay any fees and expenses of Ernst & Young LLP, retained to assist in establishing a valuation of the non-competition agreements. ARTICLE 3 CLOSING 3.01 SCHEDULED CLOSING DATE. The "SCHEDULED CLOSING DATE" shall be July 30, 1999, or such other day as the parties may agree in an amendment to this Agreement executed and delivered in accordance with Section 19.05. 16

3.02 TIME AND PLACE OF CLOSING, SIMULTANEITY. Subject to fulfillment or waiver of the conditions set forth in Articles 10 and 11, the Closing shall take place at 10:00 a.m. local time on the Scheduled Closing Date at the offices of Proskauer Rose LLP, 1585 Broadway, New York, New York, or as the parties otherwise shall mutually agree. All of the actions to be taken and documents to be executed and delivered at the Closing shall be deemed to be taken, executed and delivered simultaneously, and no such action, execution or delivery shall be effective until all actions to be taken and executions and deliveries to be effected at the Closing are complete. 3.03 ACTIONS AT THE CLOSING. At the Closing, on the terms and subject to the conditions set forth in this Agreement: (a) CCS will execute and deliver to Buyer bills of sale, instruments of assignment and other instruments of transfer for the Assets, in form reasonably satisfactory to Buyer; (b) Buyer and each of Sellers will deliver to the other party all other documents, instruments and writings required to be delivered at or prior to the Closing Date pursuant to this Agreement; (c) Buyer will pay the Cash Purchase Price contemplated by Section 2.05 hereof; (d) Buyer will deliver to CCS a certificate representing 75,396 Buyer Shares; (e) Buyer will deliver to CCS an instrument or instruments in form reasonably satisfactory to CCS by which Buyer shall assume the Assumed Liabilities; and (f) Each of Buyer and Sellers will deliver to the other such certificates, opinions and other documents as are required by Articles 10 and 11. 17

3.04 FURTHER ASSURANCES. At any time and from time to time after the Closing, each of Sellers and Buyer shall execute and deliver, and cause to be executed and delivered, such other agreements, instruments and documents to effect, confirm or evidence the transactions contemplated by this Agreement as any other party hereto shall reasonably request consistent with the terms and conditions of this Agreement, and take, or cause to be taken, all such other actions, as such other party reasonably deems necessary or desirable to perfect, confirm or evidence the transactions contemplated by this Agreement. Each document of transfer or assumption executed and delivered pursuant to this Agreement shall be reasonably satisfactory in form and substance to Sellers and Buyer, but shall contain no terms, conditions, representations, warranties, covenants, agreements or indemnities either not provided by, or inconsistent with, the terms, conditions, representations, warranties, covenants, agreements or indemnities contained in this Agreement. ARTICLE 4 POST-CLOSING ADJUSTMENT 4.01 CLOSING OF BOOKS. Sellers and Buyer shall cooperate to close the books and related accounting records of CCS as of the Valuation Time. 4.02 COMPUTATION. The Closing Working Capital Amount shall be determined (in US dollars) on a going concern basis, in accordance with GAAP, applied on a basis consistent to the Financial Statements for 1998. In addition, the Closing Working Capital Amount shall be determined using the same account classifications, closing procedures and time schedules as those used in the preparation of the Financial Statements for 1998. The 18

parties hereto acknowledge that the use of the closing procedures used in the Financial Statements for 1998 shall not prevent the Buyer from objecting to the sufficiency of the amounts of accruals and allowances reported in the Closing Working Capital Amount. 4.03 CLOSING STATEMENT. Within 60 days following the Closing Date, Sellers shall deliver to Buyer a statement setting forth their determination of the Closing Working Capital Amount, together with a report of PwC (the "CLOSING STATEMENT") stating whether or not the Closing Working Capital Amount has been determined in accordance with the terms of this Agreement. Simultaneously with the delivery of the Closing Statement, Sellers shall deliver to Buyer a statement of the Base Working Capital Amount determined in accordance with the provisions of SCHEDULE 4.05. Upon and after delivery of the Closing Statement and the statement of the Base Working Capital Amount, upon Buyer's request, its independent accountants shall be given access to PwC's working papers and Grace's working papers to facilitate Buyer's review of the Closing Statement and the statement of the Base Working Capital Amount, respectively. 4.04 ACCEPTANCE; NON-ACCEPTANCE; RESOLUTION. (a) Buyer shall have 30 days after receipt of the Closing Statement and the statement of the Base Working Capital Amount to advise Sellers that Buyer disputes either of the working capital amounts. If Buyer fails to provide such notice (which shall describe in reasonable detail the basis of the objection and Buyer's proposed adjustments), then the Closing Working Capital Amount shown on the Closing Statement and the Base Working Capital Amount shall be final and binding on Sellers and Buyer. If Buyer provides notice that it disputes either of the working capital amounts within such 30-day period, Buyer and Sellers 19

shall promptly endeavor to resolve such dispute through negotiation. If written agreement settling all disputes has not been reached through negotiation within 45 days after receipt by Sellers of Buyer's notice of dispute, then either Sellers or Buyer may, by notice to the other, submit the dispute for determination by binding arbitration to KPMG, which shall have sole and absolute discretion with respect to the resolution of such dispute (subject to the provisions of Section 4.04(c)). KPMG shall settle any disputes regarding either the Closing Working Capital Amount or the Base Working Capital Amount separately. The working capital amounts, as modified by KPMG, shall be final and binding upon the parties, and shall constitute the final working capital amounts. (b) The fees and expenses of KPMG for any determination of the Closing Working Capital Amount shall be shared as follows: Sellers shall bear that portion thereof equal to the total amount of such fees and expenses multiplied by a fraction, the denominator of which shall be the difference between the Closing Working Capital Amount as finally proposed by Buyer and the Closing Working Capital Amount as finally proposed by Sellers, and the numerator of which shall be the difference between the Closing Working Capital Amount as determined by KPMG and the Closing Working Capital Amount as proposed by Sellers. Buyer shall bear the remainder of such fees and expenses. Buyer and Sellers (treating the Sellers as a single entity for this purpose) each shall pay 50% of the fees and expenses of KPMG for any determination of the Base Working Capital Amount. (c) KPMG shall not be authorized or permitted to (i) determine any question or matter whatsoever under or in connection with this Agreement, except the determination of what adjustments, if any, must be made to one or more of the items reflected in the 20

calculation of the Closing Working Capital Amount, (ii) modify the methods set forth in SCHEDULE 4.05 to calculate the Base Working Capital Amount, or (iii) determine working capital amounts that are not in the range between and including the final proposals of Sellers and Buyer. Nothing herein shall be construed to require KPMG to follow any rules or procedures of any arbitration association. 4.05 POST-CLOSING ADJUSTMENT. The Cash Purchase Price shall be increased by the amount, if any, by which the finally determined Closing Working Capital Amount exceeds the finally determined Base Working Capital Amount. The Cash Purchase Price shall be decreased by an amount, if any, by which the finally determined Closing Working Capital Amount is less than the finally determined Base Working Capital Amount. Such adjusting payment shall be made not later than 15 calendar days after the final determination of the working capital amounts. If the net amount of the adjusting payment exceeds $100,000, interest shall accrue on the entire amount of the net adjusting payment, from the Closing Date to the date of payment, at a floating rate equal to the U.S. prime rate in effect from time to time during the period from the Closing Date until the date of payment in full, as reported by the Eastern Edition of THE WALL STREET JOURNAL. 21

ARTICLE 5 SELLERS' REPRESENTATIONS AND WARRANTIES Sellers jointly and severally represent and warrant to Buyer as follows: 5.01 CORPORATE STATUS AND AUTHORITY, OWNERSHIP, ETC. 22

(a) STATUS AND AUTHORITY. CCS is a general partnership duly formed and existing under the laws of the State of Delaware with full partnership power and authority to own the Assets and to carry on the Business. CCS is licensed or qualified to transact business and is in good standing as a foreign entity in each jurisdiction set forth in SCHEDULE 5.01(a). Each of the Sellers has all requisite power and authority to execute, deliver and perform its obligations under this Agreement and the Transaction Documents to which it is or will be a party. A true, correct and complete copy of the Partnership Agreement has been made available to Buyer; such Partnership Agreement is in full force and effect and has not been amended either orally or in writing since the date thereof. (b) CCS, CCHP AND MRA OWNERSHIP. CCHP is the owner of a 64% partnership interest in CCS and MRA is the owner of a 36% partnership interest in CCS. Grace indirectly owns at least 90% of the outstanding capital stock of CCHP and, on the Closing, will own, directly or indirectly, all of the outstanding capital stock of MRA. CCS owns no equity security or any other equity interest of any Person. 5.02 AUTHORIZATION. The execution and delivery by each of the Sellers of this Agreement and the Transaction Documents to which it is or will be a party, and its performance of its obligations hereunder and thereunder have been duly authorized by all required partnership action, in the case of CCS, or corporate action, in the case of Grace. No vote of the stockholders of Grace or GN is required for the execution, delivery and performance by the Sellers of this Agreement. 5.03 EXECUTION AND DELIVERY. Each of the Sellers has duly and validly executed and delivered this Agreement and the Transaction Documents to which it is a party and which 23

are being executed and delivered simultaneously with this Agreement; and this Agreement and such Transaction Documents are valid and binding obligations of such Seller, enforceable against such Seller in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and general principles of equity (whether or not considered in a proceeding at law or in equity). The remaining Transaction Documents to which a Seller will be a party, when executed and delivered at the Closing, will be duly and validly executed and delivered by such Seller, and upon such execution and delivery, will be valid and binding obligations of such Seller enforceable against such Seller in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and general principles of equity (whether or not considered in a proceeding at law or in equity). 5.04 NO CONFLICT. Except as otherwise disclosed in SCHEDULE 5.04, the execution and delivery by each of the Sellers of this Agreement and the Transaction Documents to which it is or will be a party, and its performance of its obligations hereunder and thereunder, does not and will not: (i) violate any provision of the certificate of incorporation or by-laws of Grace or the Partnership Agreement; (ii) violate, result in a breach of or constitute a default (or an event which, with or without notice, lapse of time or both, would constitute a default) under or result in the invalidity of, or accelerate the performance required by or cause or give rise to any right of acceleration or termination of any right or obligation pursuant to any material agreement or contract to which either of the Sellers or any CCS Entity is a party or by which any of 24

them (or any of their respective assets) is subject or bound; (iii) violate, or result in the creation of, or give any party the right to create, any Lien upon any of the Assets; (iv) violate, result in a breach of or constitute a default (or an event which, with or without notice, lapse of time or both, would constitute a default) under any judgment, decree, order or process of any court or Governmental Authority binding upon either of the Sellers, or any of their respective businesses or properties, including the Assets; (v) violate any statute, law or regulation applicable to either of the Sellers, or any of their respective businesses or properties, including the Assets; (vi) terminate or modify, or give any third party the right to terminate or modify, the provisions or terms of any Assumed Contract; or (vii) require either of the Sellers to obtain any authorization, consent, approval or waiver from, or to make any filing with, any Person (other than those obtained by Sellers prior to the Closing, which are in full force and effect at the Closing), except for such violations, breaches, defaults, Liens, modifications, terminations or failures to obtain consents which would not reasonably be expected to have a Material Adverse Effect. 5.05 ASSETS. SCHEDULE 5.05 sets forth a description of the Leased Real Property, and any rights of third parties to occupy space at the leased premises. CCS enjoys peaceful possession of all such property. Except as specified in SCHEDULE 5.05 and except for leases of living quarters for Field Staff, no real property is used in the Business. CCS does not own any real property. 25

5.06 FINANCIAL STATEMENTS. (a) SCHEDULE 5.06(a) contains the balance sheet and related statements of income and partners' capital and of cash flows of CCS at and for the years ended December 31, 1998 and 1997, which have been audited and reported upon by PwC (collectively, the "FINANCIAL STATEMENTS"). The Financial Statements present fairly, in all material respects, the financial position of CCS at their respective dates, and the result of its operation and its cash flows for the years covered thereby, in conformity with GAAP consistently applied. Revenues of not less than $58,800,000 have been earned, fairly stated and recorded by CCS for the four-month period ended April 30, 1999, consistent with past practice and CCS's policies with respect to revenue recognition. (b) Except as set forth in SCHEDULE 5.06(b), no Seller nor any officer, director or Affiliate of any Seller or any CCS Entity owns any controlling interest in any corporation, partnership, firm, association or business organization, entity or enterprise, which is a competitor, supplier or customer of CCS and which relationship is material to the Business; owns, in whole or in part, any property, asset or right used in connection with, and is material to, the Business; has an interest in any Material Contract; or has any contractual arrangements with CCS which are Material Contracts. Without limiting the foregoing, SCHEDULE 5.06(c) sets forth all contracts, licenses, agreements, commitments or other arrangements between any CCS Parent, member of the Grace Group and CCS, whether written or oral, and whether express or implied, pursuant to which such entity provides management, administrative, legal, financial, accounting, data processing, insurance, technical support, or other services to CCS which are material to the Business, or the use by CCS of any assets of such entity, or pursuant 26

to which rights, privileges or benefits are accorded to CCS which are material to the Business. (c) Except for the Retained Liabilities, CCS has no liabilities or obligations of any nature, whether absolute, accrued, contingent or otherwise, except for (i) liabilities included or reflected in the Financial Statements; (ii) liabilities disclosed in the Schedules to this Agreement; (iii) liabilities incurred in the ordinary course of business subsequent to December 31, 1998 (the "BALANCE SHEET DATE"); or (iv) liabilities or performance obligations arising in the ordinary course of business (and not as a result of a breach or default by CCS) out of or under agreements, contracts, leases, arrangements or commitments to which CCS is a party. Sellers have no Knowledge of any basis for the assertion against CCS of any such liability. 5.07 LITIGATION; INVESTIGATIONS. (a) Except as set forth in SCHEDULE 5.07(a) AND EXCEPT WITH RESPECT TO RETAINED LIABILITIES, there are no actions, suits or proceedings Pending (which shall be defined as service of a written summons or complaint on the Person in question) or, to the Knowledge of Sellers, threatened against CCS, the CCS Parents, Sellers or the Plans (other than non-material notice claims for benefits, and appeals of such claims), any trustee or fiduciary of the Plans or any assets of any trust of the Plans which would reasonably be expected to have a Material Adverse Effect. (b) Except as set forth in the SCHEDULE 5.07(b) AND EXCEPT WITH RESPECT TO RETAINED LIABILITIES, there are no Pending or, to the Knowledge of Sellers, threatened 27

governmental investigations of CCS, the CCS Parents, the Business, or the Plans which would reasonably be expected to have a Material Adverse Effect. 5.08 ORDINARY COURSE OF BUSINESS. Except as set forth in SCHEDULE 5.08 and except for such actions which would not reasonably be expected to have a Material Adverse Effect, since the Balance Sheet Date the Business has been conducted only in the ordinary and usual course consistent with past practice. 5.09 INSURANCE. SCHEDULE 5.09(a) describes the insurance coverage maintained by or on behalf of CCS, the Business or the Assets. Except as set forth on SCHEDULE 5.09(b), no member of the Grace Group or any CCS Entity has received any written notice from, or on behalf of, any insurance carrier issuing to it those insurance policies which are among the Assumed Contracts to the effect that: (a) insurance rates will hereafter be substantially increased; (b) there will hereafter be no renewal of existing policies; or (c) material modification of any aspect of the Business will be required. 5.10 CONTRACTS. SCHEDULE 5.10 lists all the contracts and agreements of CCS that (i) (A) have a term of one year or more, (B) cannot be canceled by CCS without penalty upon notice of one year or less and (C) under which CCS may reasonably be expected to make expenditures or obtain receipts of $100,000 or more or (ii) could reasonably be expected to impose a material restriction on the conduct of the business of CCS (the agreements described in (i) and (ii) above shall collectively be referred to as the "MATERIAL CONTRACTS"). CCS heretofore has delivered or made available to Buyer complete copies of all such Material Contracts as currently in effect. Each Material Contract is valid and in full force and effect, and CCS is not in default thereunder. 28

5.11 LABOR AND EMPLOYMENT. SCHEDULE 5.11(a) lists each collective bargaining agreement between CCS and a labor union or similar organization covering any employee of any CCS Entity and each individual employment or consulting agreement that will remain in effect after the Closing covering any employee or consultant of a CCS Entity. Except as set forth in SCHEDULE 5.11(b), there is no labor strike, dispute, slowdown or stoppage actually Pending, threatened against or affecting any CCS Entity which may have a Material Adverse Effect; no CCS Entity has, during the twelve (12) month period prior to the date hereof, experienced any work stoppage or other labor dispute which may have a Material Adverse Effect. 5.12 EMPLOYEE BENEFIT PLANS. (a) Except as set forth in SCHEDULE 5.12(a), there are no Plans, individually, that are expected to have liabilities in excess of $100,000 annually. With respect to each Plan, as applicable, accurate and complete (i) copies of each written Plan (including all amendments thereto), (ii) copies of related trust or funding agreements, (iii) copies of written summary plan descriptions, (iv) copies of written summaries of material modifications, (v) copies of the most recent annual reports and financial statements, (vi) copies of the most recent determination letter from the IRS for each Plan intended to qualify under Code Section 401(a) and (vii) written summary descriptions of each unwritten Plan set forth in SCHEDULE 5.12(a), have been heretofore delivered or made available to Buyer. (b) No CCS Entity nor any of their respective predecessors, has ever contributed to, contributes to, or has ever been required to contribute to, any plan subject to Section 412 of the Code, Section 302 of ERISA or Title IV of ERISA, including, without 29

limitation, any "multiemployer plan" (within the meaning of Sections (3)(37) or 4001(a)(3) of ERISA or Section 414(f) of the Code), or any single employer pension plan (within the meaning of Section 4001(a)(15) of ERISA) which is subject to Sections 4063 and 4064 of ERISA. (c) With respect to each of the Plans on SCHEDULE 5.12(a), except as set forth on SCHEDULE 5.12(c) (i) all payments required to be made prior to Closing by any Plan with respect to all periods through the date of the Closing shall have been made; (ii) each Plan in form and in operation complies in all material respects with applicable law, including, without limitation, ERISA and the Code; (iii) no "prohibited transaction," within the meaning of Section 4975 of the Code and Section 406 of ERISA which would reasonably be expected to have a Material Adverse Effect, has occurred with respect to the Plan (and the consummation of the transactions contemplated by this Agreement will not constitute or directly or indirectly result in such a "prohibited transaction"); and (iv) with respect to each Plan that is funded mostly or partially through an insurance policy, no CCS Entity has any liability in the nature of retroactive rate adjustment or loss sharing arrangement. The CCHP 401(k) Plan (the "401(k) PLAN") is the only CCS Plan intended to qualify under Section 401(a) of the Code. The 401(k) Plan is a prototype plan. Nothing has occurred since the inception of the 401(k) Plan, or is expected to occur through the Closing Date, that would reasonably be expected to cause the loss of the 401(k) Plan's status as a plan qualified under Section 401 (a) of the Code. The IRS has issued to the 401(k) Plan's prototype sponsor a favorable determination letter that has been delivered to the Buyer. 30

(d) The consummation of the transactions specified in this Agreement will not give rise to any liability for severance pay, unemployment compensation, termination pay, or withdrawal liability, or accelerate the time of payment or vesting or increase the amount of compensation or benefits due to any employee, director or shareholder of any CCS Entity (whether current, former, or retired) or their beneficiaries under any Plan listed in SCHEDULE 5.12(a) solely by reason of such transactions. No CCS Entity maintains, contributes to, or in any way provides for any benefits of any kind whatsoever under an "employee welfare benefit plan" (as defined under Section 3(1) of ERISA) to any current or future retiree or terminee, other than under Section 4980B of the Code. Except as set forth in SCHEDULE 5.12(d), no authorized officer, director, partner or employee of Grace, Nestor or any CCS Entity has made any promises or commitments to create any additional plan, agreement, or arrangement, or to modify or change any existing Plan listed on SCHEDULE 5.12(a) that would materially increase the liabilities associated with such Plan. Except for the provisions of applicable law (including, without limitation, applicable contract law), no event, condition, or circumstance exists that would prevent the amendment or termination of any Plan set forth in SCHEDULE 5.12(a). 5.13 INTELLECTUAL PROPERTY. SCHEDULE 5.13(a) sets forth a list of all patents and patent applications, registered trademarks and trademark applications, registered service marks and service mark applications and copyrights and copyright applications owned by CCS and used directly and primarily in the Business. Except as set forth in SCHEDULE 5.13(b), CCS has not granted any third party any license to use any of such items. The Intellectual Property included in the Assets is the only Intellectual Property used directly and 31

primarily in the Business except for such Intellectual Property, the failure of which to be included in the Assets would not have a Material Adverse Effect. SCHEDULE 5.13(c) lists all Material Contracts under which CCS has a license from an unaffiliated Person to use the Intellectual Property in the Business. CCS heretofore has delivered or made available to Buyer complete copies of such Material Contracts as currently in effect. 5.14 COMPLIANCE WITH LAWS. Except as set forth in SCHEDULE 5.14, CCS, the CCS Parents and the Plans are in compliance with all federal, state, county, local or foreign laws, statutes, ordinances, rules and regulations, the failure to be in compliance with which would reasonably be expected to have a Material Adverse Effect. 5.15 PERMITS. CCS has duly obtained all permits, concessions, grants, franchises, licenses and other governmental authorizations and approvals (collectively, "PERMITS") necessary for the conduct of the Business, except for such Permits the failure of which to have obtained would not reasonably be expected to have a Material Adverse Effect (the "MATERIAL PERMITS"); each of the Material Permits is listed in SCHEDULE 5.15 and is in full force and effect; there are no proceedings Pending or, to the Knowledge of Sellers, threatened which may result in the revocation, cancellation, suspension or modification of any Material Permit. 5.16 TAXES. Except with respect to Taxes which are included within the Retained Liabilities and except as set forth in SCHEDULE 5.16: (a) each CCS Entity has filed (or had filed on its behalf) with appropriate tax authorities all Tax Returns required to be filed by it and has paid (or had paid on its behalf) all Taxes due for all periods ending on or prior to the Closing Date; (b) all amounts required to be withheld or collected by any CCS Entity from customers or from or on behalf of employees for income, social security and unemployment 32

insurance Taxes have been collected or withheld and either paid to the appropriate governmental agency or set aside and, to the extent required by law, held in accounts for such purpose; (c) there are no Pending or threatened actions or proceedings by any applicable taxing authority for the assessment, collection, adjustment or deficiency of Taxes against any CCS Entity and there are no Pending or threatened Tax audits of any CCS Entity; (d) there are no outstanding agreements or waivers extending the statutory period of limitation applicable to any assessment of Tax or audit of any Tax Return of any CCS Entity for any period; and (e) no CCS Entity is a party to any agreement, contract, arrangement or plan that as a result of the transactions contemplated by this Agreement would result, separately or in the aggregate, in the payment on behalf of any CCS Entity of any "excess parachute payments" within the meaning of Section 280G of the Code. 5.17 CUSTOMERS. Set forth in SCHEDULE 5.17 is a true and complete list of the top two and fourth through tenth largest customers of CCS in order of dollar amount of revenues during the last two fiscal years and for the period from the end of the last fiscal year through April 30, 1999, showing the total revenues in dollars from each such customer during each such period. 5.18 YEAR 2000 COMPLIANCE. Based on representations and warranties made by vendors to the CCS Entities, the computer systems (including all work stations and other components) of CCS are year 2000 compliant, except for such failures to be so compliant which would not reasonably be expected to have a Material Adverse Effect. 5.19 ENVIRONMENTAL MATTERS. All the operations of CCS comply and have at all times complied with all applicable Environmental Laws and CCS has not incurred any 33

Environmental Liabilities, except as, singularly or in the aggregate, would not have a Material Adverse Effect. 5.20 QUESTIONABLE PAYMENTS. No CCS Entity or any director, officer, agent, employee, or any other Person acting on behalf of a CCS Entity has, directly or indirectly, used any corporate funds for unlawful contributions, gifts, entertainment, or other unlawful expenses; made any unlawful payment to government officials or employees or to political parties or campaigns; established or maintained any unlawful fund of corporate monies or other assets; made or received any bribe, or any unlawful rebate, payoff, influence payment, kickback or other payment; given any favor or gift which is not deductible for federal income tax purposes; or made any bribe, kickback, or other payment of a similar or comparable nature, to any governmental or non-governmental Person, regardless of form, whether in money, property, or services, to obtain favorable treatment in securing business or to obtain special concessions, or to pay for favorable treatment for business or for special concessions secured, which such acts as described above, if discovered, would reasonably be expected to have a Material Adverse Effect. 5.21 INVESTMENT INTENT. CCS represents that it is acquiring the Buyer Shares for investment purposes and not with a view to the distribution thereof, provided that the disposition of its property shall at all times be within its control. Sellers acknowledge that the Buyer Shares have not been registered under the Securities Act of 1933, as amended (the "SECURITIES ACT") and may be resold only if registered pursuant to the provisions of the Securities Act or if an exemption from registration is available, except under circumstances where neither such registration nor such an exemption is required by law. 34

ARTICLE 6 BUYER REPRESENTATIONS AND WARRANTIES Buyer represents and warrants to Sellers as follows: 6.01 CORPORATE STATUS AND AUTHORITY. Buyer is a corporation duly organized and validly existing under the laws of Delaware. Buyer has full corporate power to enter into this Agreement and the Transaction Documents to which it is or will be a party and perform its obligations hereunder and thereunder. 6.02 AUTHORIZATION. The execution and delivery by Buyer of this Agreement and the Transaction Documents to which it is or will be a party, and its performance of its obligations hereunder and thereunder, have been duly authorized by all required corporate action (including stockholder action). 6.03 CAPITALIZATION. As of the date hereof, the authorized capital stock of Buyer consists of 2,000,000 Buyer Shares, of which, as of the Closing 1,000,000 shares (which includes those shares issued to CCS) will be issued and outstanding. Upon issuance of the Buyer Shares to CCS in connection with this Agreement, such Buyer Shares shall be validly issued and outstanding, fully paid and nonassessable, free of preemptive rights, and free and clear of all Liens, except for Liens resulting from actions of or on behalf of Sellers. 6.04 EXECUTION AND DELIVERY. Buyer has duly and validly executed and delivered this Agreement and the Transaction Documents to which it is a party and which are being executed and delivered simultaneously with this Agreement; and, this Agreement and such Transaction Documents are valid and binding obligations of Buyer, enforceable against Buyer in accordance with their respective terms, except as such enforceability may be limited by 35

applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and general principles of equity (whether or not considered on a proceeding at law or in equity). The remaining Transaction Documents to which Buyer will be a party, when executed and delivered at the Closing, will be duly and validly executed and delivered by Buyer, and upon such execution and delivery, will be valid and binding obligations of Buyer, enforceable against Buyer in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and general principles of equity (whether or not considered on a proceeding at law or in equity). 6.05 NO CONFLICT. The execution and delivery by Buyer of this Agreement and the Transaction Documents to which it is or will be a party, and its performance of its obligations hereunder and thereunder, does not and will not (a) conflict with its certificate of incorporation or by-laws; or (b) result in a breach of any of the provisions of, or constitute a default under, any judgment, order, decree, or agreement to which Buyer is bound, which breach or default would prevent Buyer from executing and delivering this Agreement or any Transaction Document to which it is or will be a party or performing its obligations hereunder or thereunder. 6.06 SUFFICIENT FUNDS. Buyer will have on the Scheduled Closing Date sufficient funds to consummate the transactions contemplated by this Agreement to be performed by Buyer. 36

ARTICLE 7 INVESTIGATION, ETC. 7.01 INVESTIGATION, ETC. Buyer hereby acknowledges the following: (a) Buyer has conducted its own investigation and has made its own evaluation of the CCS Entities and the Business, Assets and Assumed Liabilities. The scope of such investigation has been determined by Buyer. No such investigation shall limit any representation or warranty of Sellers contained herein. (b) As part of its investigation, Buyer is being given certain forecasts, projections and opinions prepared or furnished by or on behalf of Sellers with respect to the Business (the "ADDITIONAL FINANCIAL INFORMATION"). Buyer has taken responsibility for evaluating the adequacy of the Additional Financial Information. There are uncertainties inherent in attempting to make projections and forecasts and formulate opinions; Buyer is familiar with such uncertainties, and has taken such uncertainties into account in its evaluation of the Additional Financial Information. Except for the representations and warranties contained in Article 5 of this Agreement, neither of Sellers nor any of their respective Affiliates shall have any liability of any kind to Buyer or any other Buyer Entity, with respect to any of the Additional Financial Information. 7.02 NO ADDITIONAL REPRESENTATIONS. (a) Buyer hereby acknowledges that, except for the representations and warranties contained in Article 5 of this Agreement, no Seller nor any of its Affiliates is making any representation or warranty, express or implied, of any nature whatsoever with respect to the Business, Assets and Assumed Liabilities. 37

(b) Sellers hereby acknowledge that, except for the representations and warranties contained in Article 6 of this Agreement, neither Buyer nor any of its Affiliates is making any representation or warranty, express or implied, of any nature whatsoever, in connection with the transactions contemplated hereby. ARTICLE 8 COVENANTS OF SELLERS AND BUYER 8.01 ACCESS AND INQUIRY. Between the date of this Agreement and the Closing, Sellers shall give Buyer reasonable access to the facilities of the CCS Group and Buyer will be permitted to contact and make reasonable inquiry of employees and customers of CCS regarding the Business, Assets and Assumed Liabilities. Sellers shall make available to Buyer all books, records, and other financial data and files of the CCS Entities. Buyer acknowledges that the terms of the Confidentiality Agreement shall apply to information obtained pursuant to this Section. 8.02 BULK TRANSFER. The parties agree to waive compliance with any bulk transfer law applicable to any of the transactions contemplated hereby. 8.03 HART-SCOTT-RODINO ACT. As soon as practicable after the date hereof, Sellers and Buyer will file or cause to be filed appropriate Notification and Report Forms under the HSR Act. Sellers and Buyer shall cooperate to coordinate such filings, and to make reasonable efforts to respond to any governmental request or inquiry with respect thereto. 8.04 PERMITS. As soon as reasonably practicable after the date hereof, Buyer shall prepare and file or cause to be prepared and filed with the appropriate licensing and permitting authorities applications for the issuance to Buyer of all those Material Permits on 38

SCHEDULE 5.15 that are not assignable or will be revoked, canceled, suspended or modified as a result of the transactions contemplated by this Agreement. Buyer shall use all reasonable efforts to secure such Material Permits. Sellers shall use all reasonable efforts requested by Buyer to assist Buyer in the preparation of such applications and the securing of such Material Permits. 8.05 NO SOLICITATION, ETC. Sellers and the Covered Parties (as defined in the following sentence) shall immediately cease and terminate any existing solicitation, initiation, encouragement, activity, discussion or negotiation with any parties conducted heretofore by Sellers or the Covered Parties with respect to an Acquisition Proposal (as defined herein). From the date hereof, Sellers shall not, and shall not permit any of their respective Affiliates (including W.R. Grace & Co.) or any of the CCS Entities or any officer, director, employee or representative of any of them (collectively, the "COVERED PARTIES"), to directly or indirectly, solicit or initiate any inquiries or the making of any proposal which constitutes or may reasonably be expected to lead to an Acquisition Proposal from any Person, or engage in any discussion or negotiations relating thereto or accept any Acquisition Proposal; provided, however, that notwithstanding the foregoing, Sellers may at any time prior to the Closing: (i) engage in discussions or negotiations with a third party who (without any solicitation or initiation, directly or indirectly, by any of the Sellers or the Covered Parties after the date hereof) seeks to initiate such discussions or negotiations and may furnish such third party information concerning CCS and its business if (A) the third party has first made an unsolicited bona fide written Acquisition Proposal (so long as such proposal did not result from a breach of this Section 8.05) and Grace determines in good faith that to do so has a 39

reasonable prospect of leading to an Acquisition Proposal that is superior to the transaction contemplated by this Agreement (taking into account all legal, financial and regulatory aspects of the proposal and the Person making such proposal), has a reasonable likelihood of being consummated and for which financing for the Acquisition Proposal has a reasonable prospect to be obtained (any such more favorable proposal, a "SUPERIOR PROPOSAL") and (B) prior to furnishing such information to or entering into discussions or negotiations with such Person, Grace (x) provides prompt notice to Buyer to the effect that it is planning to furnish information to or enter into discussions or negotiations with such Person and (y) receives or shall have received from such Person an executed confidentiality agreement or (ii) accept a Superior Proposal from a third party, provided Grace concurrently terminates this Agreement pursuant to Section 13.01(c) and immediately pays the Break-Up Fee set forth in Section 13.02(a). Sellers and the Covered Parties shall notify Buyer orally of the terms and conditions of any Superior Proposals and the identity of the Person making it within 24 hours of the receipt thereof. As used herein, "ACQUISITION PROPOSAL" shall mean a proposal to offer (other than by a member of the Buyer Group) to acquire by merger, reorganization, consolidation, purchase or otherwise any equity securities of, or partnership interest in, any CCS Entity or 15% or more of the assets of any CCS Entity. 8.06 MRA SHARES. Grace shall acquire, directly or indirectly, from Nestor prior to Closing all of the outstanding capital stock of MRA (or such other entity as may be the partner of CCS); provided, however, that this Section shall be deemed void AB INITIO if this Agreement is terminated pursuant to Section 13.01 or because the conditions set forth in Article 11 shall not have been satisfied. 40

8.07 ASSIGNMENT OF NON-COMPETITION AGREEMENTS. Effective as of the Closing, each member of the Grace Group hereby assigns to Buyer all its rights under all non-competition agreements with respect to the Business to which it is a party. Each member of the Grace Group covenants that it shall not terminate or modify, or agree to terminate or modify, such agreements. 8.08 FULFILLMENT OF CONDITIONS. Buyer and Sellers shall use their reasonable efforts to cause the conditions to Closing set forth in Articles 10 and 11 to be fulfilled in a timely manner. 8.09 NOTICES TO THIRD PARTIES. Buyer and Sellers shall cooperate to make all other filings and to give notice to all third parties that may reasonably be required to consummate the transactions contemplated by this Agreement. 8.10 REASONABLE EFFORTS. In using reasonable efforts under Sections 8.03, 8.04, and 8.08, neither Grace, CCS, Buyer nor their respective Affiliates shall be required to make any payment (other than for reasonable legal fees) that it is not presently legally or contractually required to make, divest any assets (including but not limited to the Assets), make any change in the conduct of its business, accept any limitation on the future conduct of its business, enter into any other agreement or arrangement with any Person that it is not presently contractually required to enter into, accept any significant modification in any existing agreement or arrangement, or agree to any of the foregoing. 8.11 LETTER REGARDING CONDITIONS. At the opening of business on the day before the Closing Date, Buyer shall provide Sellers with a letter (a) stating that as of that time, all the conditions set forth in Article 10 (other than the conditions in Sections 10.06 and 10.07) have 41

been satisfied, and that the forms of certificates and opinion required by Sections 10.06 and 10.07 are acceptable, or (b) specifying the conditions set forth in Article 10 that have not been satisfied. If, during the period from and after the delivery of such letter, Buyer determines that any condition set forth in Article 10 is no longer satisfied, Buyer shall not be obligated to cause the Closing to occur and shall have no liability to Sellers as a result of Buyer's delivery of such letter. ARTICLE 9 CONDUCT OF BUSINESS PRIOR TO THE CLOSING Sellers agree that except as otherwise contemplated by this Agreement or consented to by Buyer, from the date of this Agreement until the Closing: 9.01 OPERATION IN ORDINARY COURSE. Except as set forth in SCHEDULE 9.01, the Business shall be conducted only in the ordinary course and consistent with past practice. 9.02 DISPOSITION OF ASSETS. CCS shall not sell, lease (as lessor), transfer, license (as licensor), or otherwise dispose of, any of the Assets except the Retained Assets, other than in the ordinary course of business. 9.03 ASSUMED CONTRACTS. CCS shall not terminate or enter into any Material Contract. 9.04 RELATIONS WITH CUSTOMERS AND SUPPLIERS. CCS shall use all reasonable efforts to preserve its relations with customers and suppliers. 42

ARTICLE 10 CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS All obligations of Buyer under this Agreement are subject, at Buyer's option, to the fulfillment prior to or at the Closing, of each of the following conditions. 10.01 ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each and every representation and warranty of Sellers under this Agreement shall be true and accurate in all material respects. 10.02 PERFORMANCE OF COVENANTS AND AGREEMENTS. Sellers shall have performed, in all material respects, all of the covenants and agreements required to be performed by them at or prior to the Closing pursuant to this Agreement. 10.03 HART-SCOTT-RODINO ACT. All waiting periods under the HSR Act applicable to the transactions contemplated by this Agreement shall have expired, by passage of time or by valid termination by the FTC or the DOJ; no representative or member of the staff of either the FTC or the DOJ shall be taking the position that any such waiting period has not expired for any reason; and no representative or member of the staff of either the FTC or the DOJ shall have requested a delay of the Closing for a period which has not expired, which request has not been withdrawn. 10.04 PERMITS, CONSENTS, ETC. (a) There shall be no Material Permits, consents, or declarations to or filings with, any Governmental Authority required in connection with the transactions contemplated by this Agreement and the Transaction Documents that have not been accomplished 43

or obtained, the failure to have accomplished or obtained would reasonably be expected to have a Material Adverse Effect. (b) The non-governmental third party consents set forth on SCHEDULE 10.04(b) shall have been obtained at or prior to the Closing. 10.05 LITIGATION. No action, suit or proceeding by any third person (including, without limitation, any Governmental Authority) shall have been instituted (and remain Pending on the date of the Closing) against Grace, any CCS Entity or Buyer Entity that questions, or reasonably could be expected to lead to subsequent questioning of, the validity or legality of this Agreement or the transactions contemplated by this Agreement or seeks damages against any Buyer Entity or CCS Entity or injunctive relief in connection therewith. 10.06 CERTIFICATES OF SELLERS. (a) Each Seller shall have delivered to Buyer its certificate, dated the Closing Date, signed by such Seller or its Chief Executive Officer or President or any of its Vice Presidents, certifying that: (i) each and every representation and warranty made by it under this Agreement is true and accurate in all material respects as of the Closing; and (ii) such Seller has performed, in all material respects, at or prior to the Closing all of the covenants and agreements required to be performed by it at or prior to the Closing pursuant to this Agreement. (b) On or before the Closing Date, Sellers may deliver to Buyer one or more proposed amendments to the Schedules to reflect any information not included in the original Schedules. If Buyer accepts in writing (which acceptance or rejection shall be in Buyer's sole and absolute discretion) such amendments to the Schedules and/or the certificates described in clause (a) containing exceptions, and proceeds with the Closing, then 44

Buyer shall be deemed to have waived any rights against Sellers with respect to any misrepresentation or breach of warranty disclosed in such amendments or exceptions. 10.07 OPINION OF SELLERS' COUNSEL. Sellers shall have delivered to Buyer an opinion of Grace's General Counsel, dated the Closing Date, in the form of Exhibit 10.07. 10.08 MATERIAL ADVERSE CHANGE. No material adverse change shall have occurred since the Balance Sheet Date in the business, assets, operations, prospects or condition (financial or other) of CCS. 10.09 LANDLORD CONSENT/ESTOPPEL LETTERS. Sellers shall provide Buyer with an estoppel letter reasonably satisfactory to Buyer dated within five Business Days of the Closing Date from each of the lessors of Leased Real Property confirming the effectiveness of the applicable lease and the absence of any default thereunder and, for the property in Boca Raton, FL, consenting to the transactions contemplated by this Agreement. ARTICLE 11 CONDITIONS PRECEDENT TO SELLERS' OBLIGATIONS All obligations of Sellers under this Agreement are subject to the fulfillment prior to or at the Closing, of each of the following conditions. 11.01 ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each and every representation and warranty of Buyer under this Agreement shall be true and accurate in all material respects as of the Closing. 11.02 PERFORMANCE OF COVENANTS AND AGREEMENTS. Buyer shall have performed, in all material respects, all of the covenants and agreements required to be performed by Buyer at or prior to the Closing pursuant to this Agreement. 45

11.03 HART-SCOTT-RODINO ACT. All waiting periods under the HSR Act applicable to the transactions contemplated by this Agreement shall have expired, by passage of time or by valid termination by the FTC or the DOJ; no representative or member of the staff of either the FTC or the DOJ shall be taking the position that any such waiting period has not expired for any reason and no representative or member of the staff of either the FTC or the DOJ shall have requested a delay of the Closing for a period which has not expired, which request has not been withdrawn. 11.04 LITIGATION. No action, suit or proceeding by any third person (including, without limitation, any Governmental Authority) shall have been instituted (and remain Pending on the date of the Closing) against Grace or any CCS Entity that questions, or reasonably could be expected to lead to subsequent questioning of, the validity or legality of this Agreement or the transactions contemplated by this Agreement or seeks damages from either Seller or its respective Affiliates or injunctive relief in connection therewith. 11.05 CERTIFICATE OF BUYER. Buyer shall have delivered to Sellers a certificate of Buyer, dated the Closing Date, signed by its Chief Executive Officer or President or any of its Vice Presidents, certifying that: (i) each and every representation and warranty made by it under this Agreement is true and accurate in all material respects as of the Closing; and (ii) Buyer has performed, in all material respects, at or prior to the Closing all of the covenants and agreements required to be performed by it at or prior to the Closing pursuant to this Agreement. 46

11.06 OPINION OF BUYER'S COUNSEL. Buyer shall have delivered to Sellers an opinion of Proskauer Rose LLP, counsel to Buyer, dated the Closing Date, in the form of Exhibit 11.06. ARTICLE 12 EMPLOYEE MATTERS 12.01 EMPLOYMENT. Prior to the Closing Date, Buyer shall make an offer of employment to each employee who is actively employed by CCS on the Closing Date (each a "TRANSFERRED EMPLOYEE"); provided, however, that any such offer of employment shall be contingent on the consummation of the Closing. Sellers consent to Buyer contacting such employees with respect to the desire of such employees to enter the employ of Buyer. Notwithstanding the foregoing, nothing herein shall be construed as to prevent Buyer from terminating the employment of any Transferred Employee at any time after the Closing Date for any reason (or no reason). Sellers shall deliver to Buyer as of the Closing Date all personnel files relating to Transferred Employees. 12.02 ASSUMED CCS PLANS. On the Closing Date, Buyer shall assume all assets and liabilities under each of the CCS Plans and Sellers and Buyer shall take all action as may be necessary or appropriate to establish Buyer as the successor as to all rights, duties, assets and liabilities under, or with respect to, the CCS Plans so assumed. Notwithstanding the foregoing, Buyer shall have the right (consistent with applicable law) to continue, terminate, merge or make changes or cause changes to be made in any CCS Plan or in any compensation, benefits and other terms of employment of any Transferred Employee. 47

ARTICLE 13 TERMINATION 13.01 RIGHTS TO TERMINATE. (a) This Agreement may be terminated at any time prior to the Closing by written agreement of Sellers and Buyer. (b) If for any reason the Closing shall not take place on the Scheduled Closing Date (as it may be postponed by an amendment to this Agreement executed in accordance with Section 19.05) or within ten Business Days thereafter, then either Grace or Buyer may terminate this Agreement at any time thereafter. (c) This Agreement may be terminated by Sellers at any time prior to the Closing by written notice to Buyer if Grace determines that an Acquisition Proposal constitutes a Superior Proposal pursuant to the provisions of Section 8.05 herein. (d) This Agreement may be terminated at any time prior to the Closing by Sellers or Buyer if: (i) Nestor shall not have received, by the Scheduled Closing Date, the approval of the sale of Nestor's interest in CCS to Grace from the holders of the ordinary shares of Nestor by a simple majority of the votes cast at an extraordinary general meeting (the "NESTOR SHAREHOLDERS' APPROVAL"); or (ii) an action, suit or proceeding by a third person (including, without limitation, any Governmental Authority) has been instituted (and remains Pending on the date of the Closing) against Nestor or any of its Subsidiaries that questions or reasonably could be expected to lead to subsequent questioning of, the legality of the sale of Nestor's interest 48

in CCS to Grace or seeks damages against Nestor or any of its Subsidiaries or injunctive relief in connection therewith. 13.02 CONSEQUENCES OF TERMINATION. (a) The termination of this Agreement shall not affect a party's obligation to the other parties hereto (and all related Persons) for any prior breach of any covenant or agreement contained in this Agreement, except that upon termination of this Agreement in accordance with: (i) any of the provisions of Section 13.01, the parties (and all related Persons) shall be released from any and all liability for breach of any of the representations and warranties contained in Articles 5 and 6 of this Agreement, (ii) Section 13.01(c), Sellers shall pay to Buyer an aggregate fee of $6 million plus actual third party expenses of Buyer, not in excess of $900,000, relating to the transactions contemplated by this Agreement (including, without limitation, fees and expenses of Buyer's counsel and counsel to Buyer's lenders) (the "BUYER'- EXPENSES" and together with the $6 million fee, the "BREAK-UP FEE"), and (iii) Section 13.01(d)(i), Sellers shall pay to Buyer the amount of Buyer's Expenses; PROVIDED, HOWEVER, that if Sellers accept a Superior Proposal within 12 months from the date of termination of this Agreement pursuant to Section 13.01(d)(i), Sellers shall pay to Buyer the Break-Up Fee (less the amount of the Buyer's Expenses previously paid). Termination of this Agreement pursuant to Section 13.01(c) shall not be effective until the Break-Up Fee has been paid. (b) In the event of termination of this Agreement pursuant to Section 13.01 by either Sellers or Buyer, Sections 13.02, 17.01 and 17.02 shall survive any such termination. 49

ARTICLE 14 INDEMNIFICATION 14.01 DEFINITIONS. (a) "Claim" means any claim, demand, suit, action or proceeding. (b) "Damages" means any and all penalties, fines, damages, liabilities, losses, costs or expenses (including reasonable Litigation Expenses). (c) "Direct Claims" means Claims other than Third Party Claims. (d) "Litigation Expenses" means attorneys' fees and other costs and expenses incident to investigations or proceedings respecting, or the prosecution or defense of, a Claim. (e) "Third Party Claims" means any and all Claims by any Person, other than any Grace Entity, CCS Entity or Buyer, which could give rise to a right of indemnification under this Article. 14.02 SELLERS' INDEMNIFICATION. (a) Subject to the terms and limitations of this Article, each of the Sellers shall severally and jointly indemnify Buyer and the other Buyer Entities against any Damages which are caused by or arise out of: (i) the failure to perform or fulfill any covenant or agreement to be performed or fulfilled by the Sellers under this Agreement or any of the Transaction Documents, (ii) any inaccuracy in any representation or breach of any warranty made by the Sellers in Article 5, (iii) the failure to comply with any applicable bulk transfer law, or (iv) the Retained Liabilities. 50

(b) The representations and warranties set forth in Article 5 shall survive the Closing; PROVIDED, HOWEVER, that (i) the representations and warranties set forth in Sections 5.01 through 5.03 and Sections 5.12 and 5.16 shall expire and be of no further force or effect upon the expiration of the statute of limitations applicable to the relevant Claim and (ii) the representations and warranties set forth in Sections 5.04 and subsequent Sections of Article 5 (other than Sections 5.12 and 5.16) shall expire and be of no further force and effect 12 months after the Closing Date, except in both cases, with respect to Claims which Buyer or other Buyer Entities have previously asserted in writing against Sellers describing the nature of such Claims with reasonable specificity, such representation or warranty shall not expire until the Claims are finally resolved. (c) Any indemnification payment under this Section shall be treated as a reduction of the Purchase Price. 14.03 BUYER'S INDEMNIFICATION. (a) Subject to the terms and limitations of this Article, Buyer shall indemnify Sellers and the other Grace Entities against any Damages which are caused by or arise out of (i) the failure to perform or fulfill any covenant or agreement to be performed or fulfilled by Buyer under this Agreement or any of the Transaction Documents, (ii) any inaccuracy in any representation or breach of any warranty made by Buyer in Article 6 or (iii) the Assumed Liabilities. (b) The representations and warranties set forth in Article 6 shall survive the Closing; PROVIDED, HOWEVER, that the representations and warranties set forth in Sections 6.01 through 6.05 shall expire and be of no further force or effect upon the expiration of the 51

statute of limitations applicable to the relevant Claim, except with respect to Claims which Sellers or other Grace Entities have previously asserted in writing against Buyer describing the nature of such Claims with reasonable specificity, such representation or warranty shall not expire until the Claims are finally resolved. 14.04 LIMITATIONS WITH RESPECT TO CERTAIN CLAIMS. (a) No Buyer Entity may assert any Claim for indemnification (collectively, "BUYERS' CLAIMS"), with respect to the breach of any representation or warranty made in Section 5.04 or subsequent Sections of Article 5, unless (i) Buyers' Claims give rise to Damages, which individually or together with all other related Buyers' Claims exceed $25,000, and (ii) unless and until the aggregate amount of such Buyers' Claims assertable under clause (i) shall exceed $1,000,000, and then only with respect to the excess of such aggregate Buyers' Claims over said $1,000,000. (b) In no event shall the aggregate amount of the Sellers' indemnification obligations under Sections 14.02(a)(i) and 14.02(a)(ii) of this Agreement exceed the Purchase Price. In no event shall the aggregate amount of Buyer's indemnification obligations under Sections 14.03(a)(i) and 14.03(a)(ii) of this Agreement exceed the Purchase Price. (c) The dollar thresholds set forth in this Section have been negotiated for the special purpose of the provision to which they relate, and are not to be taken as evidence of the level of "materiality" for purposes of any statutory or common law which may be applicable to the transactions contemplated by this Agreement under which a level of materiality might be an issue. 52

(d) The limitations set forth in Sections 14.04(a) and 14.04(b) shall not apply to any other claims for indemnification under this Agreement. 14.05 DEFENSE OF THIRD PARTY CLAIMS. (a) If any Person intends to seek indemnification under this Agreement for a Third Party Claim, or to have a Third Party Claim taken into account for purposes of the dollar thresholds of Section 14.04, such Person (an "INDEMNITEE" with respect to such Third Party Claim) shall notify the Persons from whom it intends to seek such indemnification or request the taking into account of such Claim (the "INDEMNITORS" with respect to such Third Party Claim) in writing as soon as reasonably practicable after learning of such Third Party Claim. It shall be a necessary condition of any Claim by any Indemnitee for indemnification with respect to any Third Party Claim, or for such Third Party Claim to be taken into account for purposes of the dollar thresholds under Section 14.04, that such lndemnitee notify the Indemnitors prior to the time when the Indemnitors' ability to contest the Third Party Claim would be materially impaired by lack of notice (the "NOTICE CONDITION"). If the Notice Condition is not met with respect to a Third Party Claim, then the lndemnitees shall be deemed to have waived their rights to indemnification or payment with respect to such Third Party Claim to the extent the Indemnitor's ability to contest such Third Party Claim has been impaired by such lack of notice. (b) Except as otherwise provided in subsection (c) of this Section, the lndemnitors may undertake the defense of a Third Party Claim of which the Indemnitees have notified the Indemnitors, by notice to the Indemnitees not later than 30 calendar days after receipt by the lndemnitors of Indemnitees' notice of the claim. Failure on the part of the 53

Indemnitors to so notify the lndemnitees that they will undertake such defense shall be deemed to be a waiver of the lndemnitors' right to undertake such defense. If the Indemnitors undertake the defense of any Third Party Claim, they shall control the investigation and defense thereof, except that the Indemnitors shall not require any Indemnitee, without its prior written consent, to take or refrain from taking any action in connection with such Third Party Claim, or make any public statement, which such lndemnitee reasonably considers to be against its interest, nor shall the Indemnitors, without the prior written consent of the Indemnitees, consent to any settlement that does not consist solely of the payment of money by the Indemnitors (or by the Indemnitees if the thresholds in Section 14.04 have not yet been satisfied) and an unconditional release of the Indemnitees; and subject to the Indemnitors' control rights, the Indemnitees may participate in such investigation and defense, at their own expense. If the Indemnitors do not undertake the defense of a Third Party Claim, then except as otherwise provided in subsection (c) of this Section, the lndemnitees shall control such investigation and defense, except that the Indemnitees shall not require any Indemnitor, without its prior written consent, to take or refrain from taking any action in connection with such Third Party Claim, or make any public statement, which such lndemnitor reasonably considers to be against its interest; with respect to any Third Party Claim for which Indemnitors have agreed to assume the liability but have not undertaken the defense, no Indemnitee shall consent to any settlement of such Third Party Claim without the prior written consent of the Indemnitors which consent will not be unreasonably withheld; and subject to the lndemnitees' control rights, the Indemnitors may participate in such investigation and defense, at their own expense. 54

(c) If there is a material conflict of interest between the Indemnitors and the Indemnitees with respect to a Third Party Claim, neither group shall be entitled to assume the defense thereof. In that event the Indemnitors and the Indemnitees each shall be entitled to conduct their own respective investigations and defenses, but they shall cooperate to conduct such investigation and defense as efficiently as possible. If the Indemnitors are required to indemnify the lndemnitees with respect to such Third Party Claim, they shall pay the reasonable attorneys' fees and expenses of one individual or firm representing the Indemnitees and one local counsel in each relevant jurisdiction with respect thereto. (d) Buyer and Sellers shall make available to each other, their counsel and other representatives, all information and documents reasonably available to them which relate to any Third Party Claim or any Tax liability which is a Retained Liability, and otherwise cooperate as may reasonably be required in connection with the investigation and defense thereof. Grace shall have sole authority to conduct the defense on behalf of the CCS Entities of any IRS audit of the CCS Entities' meals and incidentals program for all Tax years ending on or prior to Closing. Buyer shall cooperate in providing reasonable assistance to Grace, at no cost to Buyer, in the defense thereof. Grace shall retain exclusive authority to settle any such audit on terms and conditions as Grace may determine. 14.06 PUNITIVE DAMAGES. No party to this Agreement, nor any other Grace Entity, CCS Entity or Buyer Entity, shall seek or be entitled to punitive Damages with respect to any Direct Claim, nor shall it accept payment of any award or judgment for such Direct Claim to the extent that such award or judgment includes such punitive Damages. 55

ARTICLE 15 COOPERATION IN VARIOUS MATTERS 15.01 MUTUAL COOPERATION. After the Closing, Sellers and Buyer shall cooperate with each other as reasonably requested between them in connection with the prosecution or defense of any claims or other matters relating to the Business or the Assets. Such cooperation shall include the furnishing of testimony and other evidence, permitting access to employees, and providing information regarding the whereabouts of former employees. 15.02 PRESERVATION OF SELLERS' FILES AND RECORDS. For a period of six years after the Closing, Sellers shall, and shall cause their respective Subsidiaries to, preserve all files and records in their possession relating directly and primarily to CCS and its business, allow the Buyer Group access to such files and records and the right to make copies and extracts therefrom at any time during normal business hours, and not dispose of any thereof, except that at any time after the Closing, either Seller may, but shall not be required to, give Buyer written notice of its intention to dispose of any records that are more than six years old, specifying the items to be disposed of in reasonable detail. Any Buyer Entity may, within a period of sixty days after receipt of any such notice, notify such Seller of the Buyer Group's desire to retain one or more of the items to be disposed of. Such Seller shall, upon receipt of such a notice from the Buyer Group, deliver such items as reasonably requested, at the Buyer Group's expense. 56

ARTICLE 16 POST-CLOSING MATTERS 16.01 INFORMATION FOR REPORTS. At the reasonable request of Sellers, Buyer shall provide to Sellers on a timely basis, in such form as Sellers may reasonably request, such information relating to CCS and the Business for periods ending on or prior to the Closing Date as Sellers may require in order to enable it to prepare financial, Tax and other reports and statements for such periods. 16.02 COVENANT NOT TO COMPETE. Grace agrees with respect to all Grace Entities that for a period of three (3) years after the Closing Date, no such entity shall engage directly or indirectly, anywhere in the United States, in the business of providing health care professionals to hospitals and other health care facilities on a temporary or short-term basis; PROVIDED that the foregoing shall not apply to provision of such services by a business acquired by a Grace Entity after the Closing Date if, in the year prior to such acquisition, its net sales of such services were less than 20% of the net sales of the entire acquired business. A Grace Entity may also acquire a business that exceeds the threshold set forth in the immediately preceding sentence; PROVIDED that the entity divests the unit of such business providing such services within one year after its acquisition; and PROVIDED, FURTHER, that if the entity shall not have effected such divestiture within one year after acquisition despite its reasonably diligent efforts, Buyer shall grant the entity reasonable extension of the divestiture period not to exceed six months. If the entity proposes to sell the unit of the acquired business that provides such services, it shall notify Buyer and give Buyer the opportunity to participate 57

in the bidding or other process for the sale of such unit on a basis substantially equal to other interested parties. 16.03 CONFIDENTIALITY AGREEMENTS. Each of the Sellers hereby agrees to assign their respective rights to those certain confidentiality agreements with Persons who had been previously solicited to acquire the Business. Such confidentiality agreements shall be among the Assumed Contracts. To the extent that such agreements may not be assigned to Buyer, Sellers agree to take all reasonable actions requested by Buyer to enforce such agreements, including the commencement of litigation. Buyer agrees to pay all third party costs and expenses incurred by Sellers in enforcing such agreements, and to indemnify and hold harmless Sellers against any Damages arising out of such enforcement activities. 16.04 INSURANCE. Buyer shall have no rights under any of the insurance policies maintained by any Seller or Grace Entity on behalf of the CCS Group or its business or assets with respect to events or occurrences after 11:59 p.m. local time on the Closing Date (the "CUT-OFF TIME"), or under any of the claims made policies included in such policies with respect to claims not made before the Cut-Off Time, and any amounts received with respect to such policies shall be promptly paid over to the relevant Person. With respect to rights and claims related to events or occurrences prior to the Cut-Off Time under such policies or the policies on SCHEDULE 5.09(a), Buyer shall be entitled to all rights under such insurance policies. In addition, Sellers agree to take all reasonable actions requested by Buyer to provide Buyer the rights set forth in the immediately proceeding sentence and Buyer shall be responsible for the making and administration of any claims, and Sellers shall provide such cooperation as Buyer may reasonably request in connection therewith. Any amounts 58

received with respect to such policies shall be promptly paid over to Buyer. All rights of Buyer with respect to such policies shall be subject to the terms and conditions of the policies included therein. 16.05 USE OF "CROSS COUNTRY" NAME. As soon as practicable after the Closing, Sellers shall use their reasonable efforts to change the name of CCS to a name that does not include any of the words "Cross Country Staffing." ARTICLE 17 EXPENSES 17.01 BUYER'S EXPENSES. Buyer shall pay and indemnify Sellers against all expenses incurred by or on behalf of Buyer in connection with the preparation, authorization, execution and performance of this Agreement and the transactions contemplated hereby, including, but not limited to, all fees and expenses of Buyer's brokers, finders, agents, representatives, counsel and accountants. 17.02 SELLERS' EXPENSES. Each Seller shall pay or cause to be paid and indemnify Buyer against all expenses incurred by or on behalf of it, or by or on behalf of its Affiliate, in connection with the preparation, authorization, execution and performance of this Agreement and the transactions contemplated hereby, including, but not limited to, all fees and expenses of CS First Boston and all fees and expenses of brokers, finders, agents, representatives, counsel and accountants of the Sellers and their respective Affiliates and CCS. 17.03 TRANSFER TAXES. Buyer and the Sellers (treating the Sellers as a single entity for this purpose) each shall pay 50% of any sales, transfer, value added, excise, recording, 59

registration or similar Taxes applicable to the transfer of the Assets pursuant to this Agreement. ARTICLE 18 NOTICES 18.01 NOTICES. All notices, requests, demands and other communications required or permitted to be given under this Agreement or any of the Transaction Documents shall be deemed to have been duly given if in writing and delivered personally, delivered by facsimile transmission (upon telephonic confirmation of receipt), or delivered by overnight courier or first-class, postage prepaid, registered or certified mail, return receipt requested, addressed as follows: If to Grace or CCS: W.R. Grace & Co.-Conn. 7500 Grace Drive Columbia, MD 12044 Attention: Corporate Secretary Fax: (410) 531-4783 Confirmation: (410) 531-4773 If to Buyer: Cross Country Holdings, Inc. c/o Charterhouse Group International, Inc. 535 Madison Avenue New York, New York 10022 Attention: Thomas C. Dircks Fax: (212) 750-9704 Confirmation: (212) 584-3200 60

with a copy to: Proskauer Rose LLP 1585 Broadway New York, New York 10036 Attention: Stephen W. Rubin, Esq. Fax: (212) 969-2900 Confirmation: (212) 969-3000 Any party may change the address to which such communications are to be directed to it by giving written notice to Sellers in the manner provided above. ARTICLE 19 GENERAL 19.01 ENTIRE AGREEMENT. The Transaction Documents set forth the entire agreement and understanding of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements, arrangements and understandings relating thereto. No representation, promise, inducement or statement of intention relating to the transactions contemplated by this Agreement has been made by any party or any related person which is not set forth in the Transaction Documents. 19.02 GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, excluding any conflict-of-laws provisions thereof that would otherwise require the application of the law of any other jurisdiction. 19.03 SUBMISSION TO JURISDICTION. Each party to this Agreement hereby irrevocably submits in any suit, action or proceeding arising out of or relating to this Agreement or any of the Transaction Documents to which it is or will be a party, or any of its obligations hereunder or thereunder, to the jurisdiction of the United States District Court for the Southern District of New York and the jurisdiction of any court of the State of New York 61

located in New York County, and waives any and all objections to such jurisdiction that it may have under the laws of the State of New York or any other jurisdiction. 19.04 SUCCESSORS AND ASSIGNS. This Agreement shall be assignable by Buyer only with the prior written consent of Sellers, and by Sellers only with the written prior consent of Buyer; PROVIDED, that Buyer may, without such consent, assign its rights under this Agreement to any Affiliate of Buyer or to any Person providing financing to Buyer. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. 19.05 AMENDMENTS AND WAIVERS. This Agreement may be amended, superseded or canceled, and any of the terms hereof may be waived, only by a written instrument specifically referring to this Agreement and specifically stating that it amends, supersedes or cancels this Agreement or waives any of its terms, executed by Sellers and Buyer. Failure of any party to insist upon strict compliance with any of the terms of this Agreement in one or more instances shall not be deemed to be a waiver of its rights to insist upon such compliance in the future, or upon compliance with other terms hereof. 19.06 COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which counterparts may be signed by one or more parties. Each such counterpart shall be an original, but all such counterparts shall constitute but one agreement. 19.07 CAPTIONS. The captions used in this Agreement are for convenience of reference only and shall not be considered in the interpretation of the provisions hereof. 62

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. W. R. GRACE & CO.-CONN. By: /s/ Bernd Schulte ---------------------------------- Name: Bernd A. Schulte Title: Vice President CROSS COUNTRY HOLDINGS, INC. By: /s/ Thomas C. Dircks ---------------------------------- Name: Thomas C. Dircks Title: Chairman CROSS COUNTRY STAFFING By: CCHP, INC., ITS GENERAL PARTNER By: /s/ Bernd Schulte ---------------------------------- Name: Bernd A. Schulte Title: By: MRA STAFFING SYSTEMS, INC., its general partner By: /s/ David Lyon ---------------------------------- Name: David Lyon Title: President 63

The performance by W. R. Grace & Co.-Conn. and Cross Country Staffing of their respective obligations under the foregoing Asset Purchase Agreement is hereby guaranteed: W. R. GRACE & CO. By: /s/ Bernd Schulte ------------------------------------ Name: Bernd A. Schulte Title: Vice President The performance by Cross Country Holdings, Inc. of its obligations under the foregoing Asset Purchase Agreement is hereby guaranteed: CHARTERHOUSE EQUITY PARTNERS III, L.P. BY CHUSA EQUITY INVESTORS III, L.P., ITS GENERAL PARTNER BY CHARTERHOUSE EQUITY III, INC., ITS GENERAL PARTNER By: /s/ Thomas C. Dircks ------------------------------------ Name: Thomas C. Dircks Title: Managing Director 64


                          AGREEMENT AND PLAN OF MERGER

                                   dated as of

                                October 29, 1999

                                  by and among

                      CROSS COUNTRY STAFFING, INC. ("CCS"),
                             CCTC ACQUISITION, INC.
                     AND CERTAIN OF THE STOCKHOLDERS OF CCS

                                       and

                            TRAVCORPS CORPORATION and
                    the STOCKHOLDERS OF TRAVCORPS CORPORATION

TABLE OF CONTENTS Page ---- ARTICLE I DEFINITIONS................................................................................................2 ARTICLE II THE MERGER; CLOSING.......................................................................................11 2.1 The Merger.....................................................................................11 2.2 Effective Time; Closing........................................................................11 2.3 Effect of the Merger...........................................................................11 2.4 Certificate of Incorporation; By-Laws..........................................................12 2.5 Directors and Officers.........................................................................12 2.6 Effect on Capital Stock........................................................................12 2.7 No Further Ownership Rights in TravCorps Common Stock..........................................13 2.8 Taking of Necessary Action; Further Action.....................................................14 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE TC STOCKHOLDERS....................................................................................14 3.1 Organization and Qualification.................................................................14 3.2 Authority; No Breach...........................................................................15 3.3 Securities and Ownership; Subsidiaries.........................................................17 3.4 TravCorps Financial Statements.................................................................20 3.5 Interests of Related Persons...................................................................20 3.6 Absence of Undisclosed Liabilities.............................................................21 3.7 Absence of Certain Changes or Events...........................................................21 3.8 Taxes..........................................................................................23 3.9 Assets.........................................................................................24 3.10 Intellectual Property..........................................................................25 3.11 Accounts Receivable............................................................................28 3.12 Contracts and Commitments......................................................................28 3.13 Customers and Suppliers........................................................................29 3.14 Inventory......................................................................................30 3.15 Insurance......................................................................................30 3.16 Litigation, etc................................................................................30 3.17 Compliance with Law; Necessary Authorizations; Securities Matters..............................31 3.18 Environmental Matters..........................................................................32 3.19 Labor Matters..................................................................................33 3.20 Employee Benefit Plans.........................................................................33 3.21 Questionable Payments..........................................................................36 3.22 Finders........................................................................................36 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE CCS STOCKHOLDERS........................................................................36 4.1 Organization and Qualification.................................................................37 4.2 Authority; No Breach...........................................................................37 4.3 Securities and Ownership; Subsidiaries.........................................................40 4.4 CCS Financial Statements.......................................................................42 4.5 Interests of Related Persons...................................................................42

Page ---- 4.6 Absence of Undisclosed Liabilities.............................................................43 4.7 Absence of Certain Changes or Events...........................................................43 4.8 Taxes..........................................................................................45 4.9 Assets.........................................................................................46 4.10 Intellectual Property..........................................................................47 4.11 Accounts Receivable............................................................................50 4.12 Contracts and Commitments......................................................................50 4.13 Customers and Suppliers........................................................................51 4.14 Inventory......................................................................................52 4.15 Insurance......................................................................................52 4.16 Litigation, etc................................................................................52 4.17 Compliance with Law; Necessary Authorizations; Securities Matters..............................53 4.18 Environmental Matters..........................................................................54 4.19 Labor Matters..................................................................................54 4.20 Employee Benefit Plans.........................................................................55 4.21 Questionable Payments..........................................................................57 4.22 Finders........................................................................................58 ARTICLE V COVENANTS.................................................................................................58 5.1 Conduct of Business............................................................................58 5.2 Records........................................................................................59 5.3 Filings and Authorizations.....................................................................59 5.4 Discussions with Others........................................................................59 5.5 Further Assurances.............................................................................60 5.6 Tax Matters....................................................................................60 5.7 Indemnification; Directors' and Officers' Insurance............................................60 5.8 Notification of Certain Matters................................................................62 5.9 Employee Matters...............................................................................62 5.10 Obligations of Merger Subsidiary...............................................................63 5.11 Confidentiality................................................................................63 5.12 Termination of Certain Agreements..............................................................64 5.13 PreClosing Payments............................................................................64 ARTICLE VI CONDITIONS TO CLOSING.....................................................................................64 6.1 Conditions Precedent to Obligations of CCS and the CCS Stockholders............................64 (a) Representations and Warranties Accurate........................................................65 (b) Performance by TC Stockholders and TravCorps...................................................65 (c) Consents.......................................................................................65 (d) No Legal Prohibition...........................................................................65 (e) Certificate....................................................................................65 (f) Opinion of Counsel for TravCorps...............................................................66 (g) No Material Adverse Change.....................................................................66 (h) HSR Act........................................................................................66 (i) Stockholders Agreement.........................................................................66 (j) Registration Rights Agreement..................................................................66 (k) Cancellation of Stock Options..................................................................66 6.2 Conditions Precedent to Obligations of TC Stockholders and TravCorps and the TC Stockholders............................................................................66 (a) Representations and Warranties Accurate........................................................67 (b) Performance by CCS.............................................................................67 (c) Consents.......................................................................................67

Page ---- (d) No Legal Prohibition...........................................................................67 (e) Certificate....................................................................................67 (f) Opinion of Counsel for CCS.....................................................................68 (g) No Material Adverse Change.....................................................................68 (h) HSR Act........................................................................................68 (i) Stockholders Agreement.........................................................................68 (j) Registration Rights Agreement..................................................................68 (k) Amendment of Certificate of Incorporation and By Laws..........................................68 (l) Stock Option Plan..............................................................................68 (m) Tax Opinion....................................................................................68 (n) Closing Working Capital........................................................................69 (o) Ashley One Issues..............................................................................69 ARTICLE VII SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION...............................................69 7.1 Survival of Representations and Warranties.....................................................69 7.2 Indemnification by CCS.........................................................................69 ARTICLE VIII MISCELLANEOUS.............................................................................................70 8.1 Termination....................................................................................70 8.2 Effect of Termination..........................................................................71 8.3 Expenses.......................................................................................71 8.4 Amendment......................................................................................71 8.5 Entire Agreement...............................................................................72 8.6 Waivers........................................................................................72 8.7 Notices........................................................................................72 8.8 Counterparts...................................................................................74 8.9 Governing Law..................................................................................74 8.10 Binding Effect; Third Party Beneficiaries; Assignment..........................................74 8.11 Severability...................................................................................75 8.12 Headings.......................................................................................75 8.13 No Agency......................................................................................75 8.14 Representative.................................................................................75 8.15 Public Announcements...........................................................................76 8.16 Knowledge Qualifications; Accounting Terms.....................................................76 8.17 Interpretation.................................................................................76

AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER, dated as of October 29, 1999 by and among Cross Country Staffing, Inc., a Delaware corporation ("CCS"), CCTC Acquisition, Inc., a Delaware corporation and a direct wholly-owned subsidiary of CCS ("Merger Sub"), certain of the stockholders of CCS (which Persons are listed on Exhibit 1 hereto and are individually referred to as a "CCS Stockholder" and collectively as the "CCS Stockholders") and TravCorps Corporation, a Delaware corporation ("TravCorps"), and each of the stockholders of TravCorps (which Persons are listed on Exhibit 2 hereto and are individually referred to as a "TC Stockholder" and collectively as the "TC Stockholders"). WHEREAS, the TC Stockholders own all of the issued and outstanding shares of capital stock of TravCorps; WHEREAS, the CCS Stockholders own all of the issued and outstanding shares of capital stock of CCS; WHEREAS, upon the terms and subject to the conditions of this Agreement and in accordance with the General Corporation Law of the State of Delaware ("Delaware Law"), CCS, Merger Sub, the CCS Stockholders, TravCorps and the TC Stockholders intend to enter into a business combination transaction; WHEREAS, the parties hereto intend that the Merger (as defined herein) qualify as a "reorganization" within the meaning of Section 368(a) of the Code (as defined herein); NOW, THEREFORE, in consideration of the foregoing, of the representations, warranties, covenants and mutual agreements hereinafter contained, and of other good and valuable consideration, receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

ARTICLE I DEFINITIONS The terms defined in this Article I, whenever used herein (including without limitation the Exhibits and Schedules hereto), shall have the following meanings for all purposes of this Agreement: "Affiliate" of a Person means any other Person that directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with such Person. "Agreement" means this agreement among the parties set forth on the first page hereof, including, without limitation, all Exhibits and Schedules hereto, as the same may be amended from time to time. "Balance Sheet Date" means July 31, 1999 in the case of CCS, and July 24, 1999 in the case of TravCorps. "Business Day" means any day other than a Saturday, Sunday or other day on which commercial banks in New York City are required or authorized by law to be closed. "CCS" has the meaning given to it in the caption hereto. "CCS APA" has the meaning set forth in Section 6.2(n). "CCS Common Stock" has the meaning set forth in Section 2.6(a). "CCS Environmental Liabilities" means any claims, judgments, damages (including punitive damages), losses, penalties, fines, liabilities, encumbrances, liens, violations, costs and expenses (including attorneys' and consultants' fees) of investigation, assessment, remediation or defense of any matter relating to human health, safety or the Environment of whatever kind or nature by any Person or Governmental Entity, (A) which are incurred as a result 2

of (i) the existence of Hazardous Substances in, on, under, at or emanating from any Real Property, (ii) the off-site transportation, treatment, storage or disposal of Hazardous Substances generated by CCS or its Subsidiaries, or (iii) the violation of any Environmental Laws, or (B) which arise under the Environmental Laws. "CCS ERISA Affiliate" means any entity that would be deemed a "single employer" with CCS under Section 414(b),(c),(m) or (o) of the Code or Section 4001 of ERISA. "CCS Financial Statements" means the unaudited balance sheet of CCS as of July 31, 1999 and the related pro forma consolidated statements of operations, and cash flows of CCS and Cross Country Staffing, a general partnership, for the 12-month period ended on July 31, 1999, including the related notes thereto. "CCS Material Adverse Effect" means any material adverse effect on the business, operations, financial condition or results of operations of CCS and its Subsidiaries taken as whole. "CCS Plan" means any Employee Benefit Plan established, maintained, sponsored, or contributed to by CCS or any Subsidiary or an ERISA Affiliate on behalf of any employee, director or stockholder (whether current, former or retired) or their beneficiaries, or with respect to which CCS or any Subsidiary or any ERISA Affiliate has or has had any obligation on behalf of such person. "CCS Stockholders" has the meaning given to it in the caption hereto. "Closing" has the meaning set forth in Section 2.2(b). "Closing Date" has the meaning set forth in Section 2.2(b). "Code" means the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder. 3

"Consent" means any consent, approval, authorization, license or order of, registration, declaration or filing with, or notice to, or waiver from, any federal, state, local, foreign or other Governmental Entity or any Person, including, without limitation, any security holder or creditor which is necessary to be obtained, made or given in connection with the execution and delivery of this Agreement and/or any Operative Document, the performance by a Person of its obligations hereunder and/or thereunder and the consummation of the transactions contemplated hereby and/or thereby. "Delaware Law" has the meaning given to it in the recitals hereto. "Designated Amount" has the meaning set forth in Section 5.13. "Directly or Indirectly" means as an individual, partner, shareholder, member, creditor, director, officer, principal, agent, employee, trustee, consultant, advisor or in any other relationship or capacity. "Effective Time" has the meaning set forth in Section 2.2(a). "Employee Benefit Plan" means any "employee benefit plan" (as defined under Section 3(3) of ERISA) or any other bonus, deferred compensation, pension, profit-sharing, retirement, stock purchase, stock option, stock appreciation, other forms of incentive compensation, excess benefit, supplemental pension insurance, disability, medical, supplemental unemployment, vacation benefits, payroll practice, fringe benefit, scholarship, sickness, accident, severance, or post-retirement compensation or benefit, welfare or any other employee benefit plan, policy, arrangement or practice, whether written or oral. "Encumbrance" means any security interests, liens, pledges, levies, escrows, encumbrances, options, rights of first refusal, transfer restrictions, conditional sale contracts, title retention contracts, mortgages, hypothecations, indentures or security agreements whether written or oral. 4

"Environment" means any surface or subsurface physical medium or natural resource, including, air, land, soil, surface waters, ground waters, stream and river sediments. "Environmental Action" means any complaint, summons, citation, notice, directive, order, claim, litigation, investigation, proceeding, judgment, letter or other communication from any Federal, state, local or municipal agency, department, bureau, office or other authority or any third party involving a Hazardous Discharge or any violation of any Permit or Environmental Laws. "Environmental Laws" means any federal, state, local or common law, rule, regulation, ordinance, code, order or judgment (including the common law and any judicial or administrative interpretations, guidances, directives, policy statements or opinions) relating to the injury to, or the pollution or protection of, human health and safety or the Environment. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder. "GAAP" means United States generally accepted accounting principles, applied on a consistent basis. "Governmental Entity" means any federal, state, local or foreign government, political subdivision, legislature, court, agency, department, bureau, commission or other governmental regulatory authority, body or instrumentality. "Grace Entity" means Cross Country Staffing, a Delaware general partnership, CCHP, Inc., a Delaware corporation ("CCHP"), MRA Staffing Systems, Inc., a Delaware corporation ("MRA"), and each entity which was as of July 29, 1999 a direct or indirect shareholder of CCHP or MRA. 5

"Hazardous Discharge" means any releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, disposing or dumping of Hazardous Substances, whether on or off the premises of CCS or TravCorps and their respective Subsidiaries, as the case may be. "Hazardous Substance" means petroleum, petroleum products, petroleum-derived substances, radioactive materials, hazardous wastes, polychlorinated biphenyls, lead based paint, radon, urea formaldehyde, asbestos or any materials containing asbestos, and any materials or substances regulated or defined as or included in the definition of "hazardous substances," "hazardous materials," "hazardous constituents," "toxic substances," "pollutants," "contaminants" or any similar denomination intended to classify or regulate substances by reason of toxicity, carcinogenicity, ignitability, corrosivity or reactivity under any Environmental Law. "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder. "Indebtedness" means, with respect to any Person, all obligations of such Person (i) for borrowed money, (ii) evidenced by notes, bonds, debentures or similar instruments, (iii) under conditional sale or other title retention agreements relating to property or assets purchased by such Person, (iv) issued or assumed as the deferred purchase price of property or services (other than trade accounts payable), (v) under capital leases, (vi) in respect of interest rate protection agreements, foreign currency exchange agreements or other interest or exchange rate hedging arrangements, (vii) as an account party in respect of letters of credit and bankers' acceptances, (viii) with respect to Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise to be secured by) any Encumbrances on property owned or acquired by such Person, (ix) in the nature of guarantees of Indebtedness of others, and (x) for all accrued interest, premiums and penalties upon prepayment of any of the foregoing. Indebtedness with respect to any Person shall not include obligations of 6

such Person for operating leases (including real property leases) so long as the payments under such leases in accordance with GAAP are reflected as expenses on such Person's statement of operations. "Indemnified Parties" has the meaning set forth in Section 5.7. "Indemnified Party" has the meaning set forth in Section 5.7. "IRS" means the Internal Revenue Service. "Licensed Service Provider" has the meaning set forth in Section 3.17(c). "Merger" has the meaning set forth in Section 2.1. "Merger Sub" has the meaning given to it in the caption hereto. "Operative Document" means any agreement, instrument or other document set forth on Exhibit 3 hereto. "PBGC" means the Pension Benefit Guaranty Corporation. "Pension Plan" means any "employee pension benefit plan" within the meaning of Section 3(2) of ERISA maintained or contributed to by or on behalf of CCS or TravCorps or any of their respective Subsidiaries, as the case may be. "Person" means an individual, corporation, partnership, limited liability company, firm, joint venture, association, joint stock company, trust, unincorporated organization or other entity, or any Governmental Entity or quasi-governmental body or regulatory authority. 7

"Permits" means all licenses, certificates of authority, permits, registrations, local siting approvals, authorizations, qualifications and similar filings under any federal, state or local laws or with any Governmental Entities. "Property" (or "Properties" when the context requires) means any Real Property and any personal or mixed property, whether tangible or intangible. "Real Property" means any real property presently owned, used, leased, occupied, managed or operated by CCS or TravCorps or their respective Subsidiaries, as the case may be. "Release" means release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration into the Environment or into or out of any property, including the movement of Hazardous Substances through or in the air, soil, surface water, groundwater or real property or other property, whether owned or leased. "Representative" has the meaning given to it in Section 8.14. "Subsidiary," or "Subsidiaries" with respect to any Person (the "Owner"), means any corporation, partnership, limited liability company or other entity in which the Owner, directly or indirectly, owns or controls 50% or more of the voting stock or other ownership interests. "Surviving Corporation" has the meaning set forth in Section 2.1. "Tax Return" means each and every report, return, declaration, information return, statement or other information required to be supplied to a taxing or governmental authority with respect to any Tax or Taxes, including without limitation any combined or consolidated return for any group of entities including CCS or TravCorps or any of their respective Subsidiaries, as the case may be. 8

"Taxes" (or "Tax" where the context requires) shall mean all federal, state, county, provincial, local, foreign and other taxes (including, without limitation, income, profits, premium, estimated, excise, sales, use, occupancy, gross receipts, franchise, ad valorem, severance, capital levy, production, transfer, withholding, employment and payroll related and property taxes and other governmental charges and assessments), whether attributable to statutory or nonstatutory rules and whether or not measured in whole or in part by net income, and including without limitation interest, additions to tax or interest, charges and penalties with respect thereto, and expenses associated with contesting any proposed adjustment related to any of the foregoing. "TC Stockholders" has the meaning given to it in the caption hereto. "Trade Secrets" means any information which (i) is used in a business, (ii) is not generally known to the public or to Persons who can obtain economic value from its disclosure, and (iii) is subject to reasonable efforts to maintain its secrecy or confidentiality; the term may include but is not limited to inventions, processes, know-how, formulas, computer software, and mask works which are not patented and are not protected by registration (e.g., under copyright or mask work laws); lists of customers, suppliers, and employees, and data related thereto; business plans and analyses; and financial data. "TravCorps" has the meaning given to it in the caption hereto. "TravCorps Common Stock" has the meaning set forth in Section 2.6(a). "TravCorps Environmental Liabilities" means any claims, judgments, damages (including punitive damages), losses, penalties, fines, liabilities, encumbrances, liens, violations, costs and expenses (including attorneys' and consultants' fees) of investigation, assessment, remediation or defense of any matter relating to human health, safety or the Environment of whatever kind or nature by any Person or Governmental Entity, (A) which are 9

incurred as a result of (i) the existence of Hazardous Substances in, on, under, at or emanating from any Real Property, (ii) the off-site transportation, treatment, storage or disposal of Hazardous Substances generated by TravCorps or its Subsidiaries, or (iii) the violation of any Environmental Laws, or (B) which arise under the Environmental Laws. "TravCorps ERISA Affiliate" means any entity that would be deemed a "single employer" with TravCorps under Section 414(b),(c),(m) or (o) of the Code or Section 4001 of ERISA. "TravCorps Financial Statements" means the unaudited consolidated balance sheet of TravCorps and its Subsidiaries as of July 24, 1999 and the related consolidated statement of operations, stockholders equity and cash flow of TravCorps and its Subsidiaries for the 12-month period ended July 24, 1999, including the notes thereto. "TravCorps Material Adverse Effect" means any material adverse effect on the business operations, financial condition or results of operations of TravCorps and its Subsidiaries taken as whole. "TravCorps Permitted Encumbrances" has the meaning set forth in Section 3.9. "TravCorps Plan" means any Employee Benefit Plan established, maintained, sponsored, or contributed to by TravCorps or any Subsidiary or an ERISA Affiliate on behalf of any employee, director or stockholder (whether current, former or retired) or their beneficiaries, or with respect to which TravCorps or any Subsidiary or any ERISA Affiliate has or has had any obligation on behalf of such Person. 10

ARTICLE II THE MERGER; CLOSING 2.1 The Merger. At the Effective Time and subject to and upon the terms and conditions of this Agreement and the applicable provisions of Delaware Law, Merger Sub shall be merged with and into TravCorps (the "Merger"), the separate corporate existence of Merger Sub shall cease, and TravCorps shall continue as the surviving corporation. TravCorps as the surviving corporation after the Merger is hereinafter sometimes referred to as the "Surviving Corporation." 2.2 Effective Time; Closing. (a) On the Closing Date, the parties hereto shall cause the Merger to be consummated by filing a certificate of merger with the Secretary of State of the State of Delaware, in such form as required by, and executed in accordance with the relevant provisions of, Delaware Law. When used in this Agreement, the term "Effective Time" shall mean the date and time at which the Merger shall become effective under Delaware Law. (b) The closing of the transactions contemplated by this Agreement (the "Closing") shall be held at the offices of Proskauer Rose LLP, 1585 Broadway, New York, New York 10036, at a time and date to be specified by the parties, which shall be no later than the second Business Day after the satisfaction or waiver, as the case may be, of the conditions set forth in Article VI, or at such other time, date and location as the parties hereto agree in writing (the "Closing Date"). 2.3 Effect of the Merger. At the Effective Time, the effect of the Merger shall be as provided in this Agreement and the applicable provisions of Delaware Law. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time all the rights, privileges, powers, franchises and property of Merger Sub and TravCorps shall vest in the Surviving Corporation, and all restrictions, disabilities, duties, debts and liabilities of Merger Sub 11

and TravCorps shall become the restrictions, disabilities, duties, debts and liabilities of the Surviving Corporation. 2.4 Certificate of Incorporation; By-Laws. (a) At the Effective Time, the Certificate of Incorporation of Merger Sub, in the form attached hereto as Exhibit 4, shall be the Certificate of Incorporation of the Surviving Corporation, and shall continue in full force and effect until thereafter amended; provided, however, that at the Effective Time Article I of the Certificate of Incorporation of the Surviving Corporation shall be amended to read: "The name of the corporation is TravCorps Corporation." (b) At the Effective Time, the Bylaws of Merger Sub, in the form attached hereto as Exhibit 5, shall be the Bylaws of the Surviving Corporation and shall continue in full force and effect until thereafter amended. 2.5 Directors and Officers. The directors and officers set forth on Schedule 2.5 hereto shall be the initial directors and officers of the Surviving Corporation, in each case until their respective successors are duly elected or appointed and qualified. 2.6 Effect on Capital Stock. At the Effective Time, by virtue of the Merger and without any action on the part of any party: (a) Conversion of TravCorps Common Stock. The shares of common stock, par value $0.01 per share, of TravCorps ("TravCorps Common Stock") issued and outstanding immediately prior to the Effective Time, other than any shares of TravCorps Common Stock to be canceled pursuant to Section 2.6(b), will be canceled and extinguished and automatically converted into the right to receive, in the aggregate, 1,520,000 shares of validly issued, fully paid and non-assessable Class A common stock, par value $0.01 per share, of CCS 12

("CCS Common Stock") upon surrender of the certificates representing such shares of TravCorps Common Stock at the Closing. (b) Cancellation of Parent-Owned Stock. Each share of TravCorps Common Stock held by TravCorps or owned by Merger Sub, CCS or any direct or indirect wholly-owned subsidiary of TravCorps or of CCS immediately prior to the Effective Time shall be canceled and extinguished without any conversion thereof. (c) Capital Stock of Merger Sub. Each share of common stock, par value $0.01 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall be exchanged for and converted into one validly issued, fully paid and non-assessable share of common stock, par value $0.01 per share, of the Surviving Corporation. Each stock certificate of Merger Sub evidencing ownership of any such shares shall evidence ownership of such shares of capital stock of the Surviving Corporation. (d) All Other Capital Stock of TravCorps. All other capital stock of TravCorps shall be canceled and retired and shall cease to exist, and no consideration shall be issued or delivered in exchange therefor. 2.7 No Further Ownership Rights in TravCorps Common Stock. All shares of CCS Common Stock issued in accordance with the terms hereof shall be deemed to have been issued in full satisfaction of all rights pertaining to such shares of TravCorps Common Stock and, after the Effective Time, there shall be no further registration of transfers on the records of the Surviving Corporation of shares of TravCorps Common Stock that were outstanding immediately prior to the Effective Time. If, after the Effective Time, certificates which immediately prior to the Effective Time represented outstanding shares of TravCorps Common Stock are presented to the Surviving Corporation for any reason, they shall be canceled and exchanged as provided in this Article II. 13

2.8 Taking of Necessary Action; Further Action. If, at any time after the Effective Time, any such further action is necessary or desirable to carry out the purposes of this Agreement and to vest the Surviving Corporation with full right, title and possession to all assets, property, rights, privileges, powers and franchises of TravCorps or Merger Sub, the officers and directors of TravCorps and Merger Sub are fully authorized in the name of their respective corporations or otherwise to take, and will take, all such lawful and necessary action. CCS shall cause Merger Sub to perform all of its obligations relating to this Agreement and the transactions contemplated hereby. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE TC STOCKHOLDERS Each of the TC Stockholders, on a basis that is several and not joint, hereby represents and warrants to CCS and the CCS Stockholders as follows (all such representations and warranties are qualified by the TravCorps Disclosure Schedule attached to this Agreement as Exhibit III): 3.1 Organization and Qualification. TravCorps is a corporation duly organized, validly existing and in good standing in the State of Delaware, with corporate power and authority to own, lease and operate its assets and Properties and carry on its business as presently owned or conducted. TravCorps is licensed or qualified to transact business and is in good standing as a foreign corporation in each jurisdiction in which the ownership, use or leasing of its assets or Properties, or the conduct or nature of its business makes such licensing or qualification necessary and in which the failure to be so licensed or qualified and in good standing would reasonably be expected to have a TravCorps Material Adverse Effect. Each such jurisdiction is set forth in Schedule 3.1 of the TravCorps Disclosure Schedule. The name of each director and officer of TravCorps on the date hereof, and the position held by each such individual with TravCorps, is set forth on Schedule 3.1 of the TravCorps Disclosure Schedule. 14

The copies of the certificate of incorporation, including all amendments thereto, and by-laws of TravCorps delivered to CCS prior to the date hereof are complete and accurate copies of such instruments as currently in effect. 3.2 Authority; No Breach. (a) Each of the TC Stockholders has all requisite power and authority to execute and deliver this Agreement and the Operative Documents to which it is or shall, pursuant to this Agreement, be a party, and to perform, carry out and consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement and the Operative Documents to which he or it is or shall, pursuant to this Agreement, be a party have been duly and validly authorized by all necessary limited partnership or other action on the part of such TC Stockholder. This Agreement and the Operative Documents to which he or it is, or will be a party, have been, or will be, duly executed and delivered by such TC Stockholder and (assuming the due authorization, execution and delivery by the other parties hereto and thereto) constitute the legal, valid and binding obligations of such TC Stockholder. (b) TravCorps has all requisite corporate power and authority to execute and deliver this Agreement and the Operative Documents to which it is or shall, pursuant to this Agreement, be a party, and to perform, carry out and consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement and the Operative Documents to which TravCorps is or shall, pursuant to this Agreement, be a party have been duly and validly authorized by all necessary corporate action on the part of TravCorps. This Agreement and the Operative Documents to which TravCorps is, or will be a party, has been, or will be, duly executed and delivered by TravCorps and (assuming the due authorization, execution and delivery by the other parties hereto and thereto) constitute the legal, valid and binding obligations of TravCorps. 15

(c) Except as set forth in Schedule 3.2(c) of the TravCorps Disclosure Schedule, neither the execution and delivery of this Agreement or any Operative Document by any of the TC Stockholders nor the consummation of any of the transactions contemplated herein or therein, nor the full performance by each of the TC Stockholders of their obligations hereunder or thereunder do or will: (i) if applicable, violate any provision of the limited partnership agreement of such TC Stockholder; (ii) conflict with, result in a breach or violation of, or constitute a default under (or an event which, with or without notice, lapse of time or both, would constitute a default) or result in the invalidity of, or accelerate the performance required by or cause or give rise to any right of acceleration or termination of any right or obligation pursuant to any agreement or commitment to which any of the TC Stockholders is a party or by which any of the TC Stockholders (or any of their respective assets or Properties) is subject or bound; (iii) result in the creation of, or give any third party the right to create, any Encumbrance upon any assets or Properties of any TC Stockholder; (iv) conflict with, violate, result in a breach of or constitute a default under any writ, injunction, statute, law, ordinance, rule, regulation, judgment, award, Permit, decree, order, or process of any Governmental Entity to which any TC Stockholder or any assets or Properties of any TC Stockholder are subject; (v) terminate or modify, or give any third party the right to terminate or modify, the provisions or terms of any contract or agreement to which any TC Stockholder is a party or by which any of the TC Stockholders (or any of their respective assets or Properties) is subject or bound which in the case of clauses (ii) through (v) would reasonably be expected to have a material adverse effect on the validity or enforceability of this Agreement or on the ability of such TC Stockholder to perform its obligations hereunder. (d) Except as set forth in Schedule 3.2(d) of the TravCorps Disclosure Schedule, neither the execution and delivery of this Agreement or any Operative Document by TravCorps nor the consummation of any of the transactions contemplated herein or therein, nor the full performance by TravCorps of its obligations hereunder or thereunder do or will: 16

(i) violate any provision of the certificate of incorporation or bylaws of TravCorps or any of its Subsidiaries; (ii) conflict with, result in a breach or violation of, or constitute a default under (or an event which, with or without notice, lapse of time or both, would constitute a default) or result in the invalidity of, or accelerate the performance required by or cause or give rise to any right of acceleration or termination of any right or obligation pursuant to any agreement or commitment to which TravCorps or any of its Subsidiaries is a party or by which any of them (or any of their respective assets or Properties) is subject or bound; (iii) result in the creation of, or give any third party the right to create, any Encumbrance upon any assets or Properties of TravCorps or any of its Subsidiaries; (iv) conflict with, violate, result in a breach of or constitute a default under any writ, injunction, statute, law, ordinance, rule, regulation, judgment, award, Permit, decree, order, or process of any Governmental Entity to which TravCorps, any of its Subsidiaries or any assets or Properties of any of the foregoing are subject, (v) terminate or modify, or give any third party the right to terminate or modify, the provisions or terms of any contract or agreement to which TravCorps or any of its Subsidiaries is a party or by which any of the foregoing (or any of their respective assets or Properties) is subject or bound; or (vi) result in or give to any Person any additional rights or entitlement to increased, additional, accelerated or guaranteed payments under any contract or agreement to which TravCorps or any of its Subsidiaries is a party or by which any of their respective assets or Properties is subject or bound; which, in the case of clauses (ii) through (vi), would reasonably be expected to have a TravCorps Material Adverse Effect. 3.3 Securities and Ownership; Subsidiaries. (a) The total number of shares of capital stock, and the classes and par values thereof, which TravCorps is authorized to issue, the designation, par value and number of such shares which are issued and outstanding and the identity of and number of such outstanding shares owned (of record) by each holder thereof are as set forth in Schedule 3.3(a) of the TravCorps Disclosure Schedule. 17

(b) TravCorps has not issued any securities in violation of any preemptive or similar rights. Except as set forth in Schedule 3.3(b) of the TravCorps Disclosure Schedule, there are no outstanding (i) securities convertible into or exchangeable for any shares of capital stock or other securities of TravCorps; (ii) subscriptions, options, "phantom" stock rights, warrants, calls, commitments, preemptive rights or other rights of any kind (absolute, contingent or otherwise) entitling any party to acquire or otherwise receive from TravCorps any shares of capital stock or other securities or receive or exercise any benefits or rights similar to any rights enjoyed by or enuring to the holder of capital stock of TravCorps; (iii) contracts, commitments, agreements, understandings or arrangements of any kind relating to the issuance of any capital stock, convertible or exchangeable securities, or any subscriptions, options, warrants or similar rights of TravCorps or granting to any Person any right to participate in the equity or income of TravCorps or to participate in or direct the election of any director or officer of TravCorps or the manner in which any shares of TravCorps' capital stock are voted. There are no shares of stock or other securities of TravCorps reserved for issuance for any purpose, other than pursuant to option plans described on Schedule 3.3(b) . (c) All of the outstanding shares of capital stock of TravCorps are duly authorized, validly issued, fully paid and nonassessable. (d) Schedule 3.3(d) of the TravCorps Disclosure Schedule sets forth the names of each Subsidiary of TravCorps and shows for each Subsidiary of TravCorps: (i) its jurisdiction of organization; (ii) the authorized and outstanding capital stock or other ownership interests of each Subsidiary of TravCorps; and (iii) the identity of and number of shares of such capital stock owned (of record and beneficially) by each holder thereof. (e) Each Subsidiary of TravCorps is duly organized, validly existing and in good standing in the state of its organization, with full corporate power and authority to own, lease and operate its assets and Properties and carry on its business as presently owned or con- 18

ducted. Each Subsidiary of TravCorps is licensed or qualified to transact business and is in good standing as a foreign corporation in each of the jurisdictions indicated in Schedule 3.3(e) of the TravCorps Disclosure Schedule, which are the only jurisdictions in which the ownership, use or leasing of its assets or Properties, or the conduct or nature of its business makes such licensing or qualification necessary, except where the failure to be so qualified or in good standing would not, individually or in the aggregate, have a TravCorps Material Adverse Effect. (f) All shares of capital stock of each Subsidiary of TravCorps issued and outstanding are duly authorized, validly issued, fully paid and nonassessable. (g) Except as set forth in Schedule 3.3(g) of the TravCorps Disclosure Schedule, there are no outstanding (i) securities convertible into or exchangeable for any shares of capital stock or other securities of any Subsidiary of TravCorps; (ii) subscriptions, options, warrants, calls, commitments, preemptive rights or other rights of any kind (absolute, contingent or otherwise) entitling any party to acquire or otherwise receive from any Subsidiary of TravCorps any shares of capital stock or other securities; (iii) contracts, preemptive rights, commitments, agreements, understandings or arrangements of any kind relating to the issuance of any capital stock, convertible or exchangeable securities, or any subscriptions, options, warrants or similar rights of any Subsidiary of TravCorps; or (iv) rights of any Person to be paid as if he, she or it were a holder of equity interests in any Subsidiary of TravCorps or securities convertible into or exchangeable for equity interests in any Subsidiary of TravCorps, including, without limitation, phantom stock and stock appreciation rights. Except as set forth in Schedule 3.3(g) of the TravCorps Disclosure Schedule, there are no shares of stock or other securities of any Subsidiary of TravCorps reserved for issuance for any purpose and no Subsidiary of TravCorps is a party to any voting agreements, voting trusts, proxies or other agreements, instruments or understandings with respect to the voting of any shares of the capital stock of such Subsidiary, or any agreement with respect to the transferability, purchase or redemption of any shares of capital stock of such Subsidiary. 19

(h) Except for the Subsidiaries of TravCorps set forth on Schedule 3.3(d) of the TravCorps Disclosure Schedule, and as set forth in Schedule 3.3(h) of the TravCorps Disclosure Schedule, TravCorps does not own, Directly or Indirectly, any economic, voting or other ownership interest in any Person. 3.4 TravCorps Financial Statements. TravCorps has heretofore delivered to CCS true and correct copies of the TravCorps Financial Statements. The TravCorps Financial Statements have been prepared from the books and records of TravCorps and its Subsidiaries, and present fairly (i) the consolidated unaudited financial position of TravCorps and its Subsidiaries at the date thereof and (ii) the consolidated unaudited results of operations of TravCorps and its Subsidiaries for the period then ended, in each case in accordance with GAAP (subject to normal year-end adjustments and except for the absence of footnotes). 3.5 Interests of Related Persons. Except as set forth in Schedule 3.5 of the TravCorps Disclosure Schedule, no officer or director of TravCorps or any of its Subsidiaries and none of the TC Stockholders nor any relative of any of the TC Stockholders that is an individual: (i) owns any interest in any Person which is a competitor, supplier or customer of TravCorps or any of its Subsidiaries or serves as an officer, director, employee or consultant for any such Person; (ii) owns, in whole or in part, any Property, asset or right, used in connection with the business of TravCorps or any of its Subsidiaries; (iii) has an interest in any contract or agreement with TravCorps or any of its Subsidiaries; or (iv) has any contractual arrangements with TravCorps or any of its Subsidiaries. 20

3.6 Absence of Undisclosed Liabilities. Except as set forth in Schedule 3.6 of the TravCorps Disclosure Schedule, neither TravCorps nor any of its Subsidiaries has any material liabilities, losses or obligations of any nature (whether absolute, known or unknown, accrued, fixed, contingent, liquidated, unliquidated, due or to become due, or otherwise), except for (i) liabilities included or reflected in the TravCorps Financial Statements and adequately reflected or reserved against therein, or (ii) liabilities or performance obligations arising in the ordinary course of business (and not as a result of a breach or default by TravCorps or any of its Subsidiaries). Neither TravCorps nor any of its Subsidiaries nor any TC Stockholder knows of any basis for the assertion against TravCorps of any such material liability. 3.7 Absence of Certain Changes or Events. Except as set forth in Schedule 3.7 of the TravCorps Disclosure Schedule, since the Balance Sheet Date the business of TravCorps and its Subsidiaries has been conducted only in the ordinary and usual course. Without limiting the generality of the foregoing, except as set forth in Schedule 3.7 of the TravCorps Disclosure Schedule, since the Balance Sheet Date neither TravCorps nor any of its Subsidiaries has: (a) suffered any TravCorps Material Adverse Effect; (b) suffered any material damage, destruction or casualty loss (whether or not covered by insurance) or condemnation taking or other proceeding which would reasonably be expected to have a TravCorps Material Adverse Effect; (c) except for increases in salary in the ordinary course of business, entered into or amended any employment or consulting contract or commitment (whether oral or written) or compensation arrangement or employee benefit plan, or changed or committed to change (including any change pursuant to any bonus, pension, profit-sharing or other plan, commitment, policy or arrangement) the compensation payable or to become payable to any of its officers, directors, key employees, agents or consultants, or made any pension, retirement, profit-sharing, 21

bonus or other employee welfare or benefit payment or contribution other than payments or contributions required by the governing documents of the foregoing, copies of which have been delivered or made available to CCS; (d) made or proposed any change in its accounting or tax methods, principles or practices, except for such changes which are required by GAAP or by law; (e) authorized, declared, set aside or paid any dividend or other distribution in respect of its capital stock; (f) Directly or Indirectly redeemed, purchased or otherwise acquired any of its shares of capital stock or authorized any stock split, reclassification or recapitalization or otherwise changed the terms or provisions of any of its capital stock; (g) incurred any material Indebtedness or made any loan, advance or capital contribution to any person except in the ordinary course of business; (h) paid, discharged or satisfied any material claim, liability or obligation other than the payment, discharge or satisfaction of liabilities and obligations incurred in the ordinary course of business; (i) (i) prepaid any material obligation having a fixed maturity of more than 90 days from the date such obligation was issued or incurred, or (ii) not paid, within a reasonable date of when due, any account payable, or sought the extension of the payment date of any such account payable; (j) permitted or allowed any material portion of its Property or assets to be subjected to any Encumbrance, except for liens for current Taxes not yet due; (k) sold, transferred, or otherwise disposed of any material portion of its Properties or assets, except in the ordinary course of business; 22

(l) made any capital expenditures or commitments in excess of $200,000 in the aggregate for repairs or additions to property, plant, equipment or tangible capital assets; or (m) agreed, whether in writing or otherwise, to take any action described in this Section 3.7. 3.8 Taxes. (a) Each of TravCorps and its Subsidiaries has duly, timely and properly filed when due, all federal, state, local, foreign and other Tax Returns required to be filed by it with respect to its sales, income, business or operations (including without limitation any consolidated or combined Tax Returns in which it is included) and such Tax Returns are true, complete and accurate in all material respects. Except as may otherwise have been communicated to CCS prior to the date hereof in a writing referring to this Section, each of TravCorps and its Subsidiaries has duly paid all Taxes due from TravCorps or any of its Subsidiaries as shown on such Tax Returns. (b) Except as set forth on Schedule 3.8(b), all amounts required to be withheld by TravCorps or any of its Subsidiaries from customers or from or on behalf of employees for income, payroll, social security and unemployment insurance taxes have been collected or withheld and either paid to the appropriate Governmental Entity or set aside and, to the extent required by law, held in accounts for such purpose. (c) Except as set forth in Schedule 3.8(c) of the TravCorps Disclosure Schedule, (i) there currently are no pending or, to the knowledge of TravCorps or any of its Subsidiaries, threatened actions or proceedings (including, without limitation, audit proceedings) by any applicable taxing authority for the assessment, collection, adjustment or deficiency of Taxes against TravCorps or any of its Subsidiaries, and (ii) neither TravCorps nor any of its Subsidiaries has received any notice of deficiency or assessment from any federal, state, local or 23

foreign taxing authority with respect to liabilities for any material Taxes of TravCorps or any of its Subsidiaries. Except as set forth in Schedule 3.8(c) of the TravCorps Disclosure Schedule, there are no outstanding agreements or waivers extending the statutory period of limitation applicable to any assessment or audit of any Tax or Tax Return of TravCorps or any of its Subsidiaries for any period. (d) To the knowledge of TravCorps, there is no existing fact or circumstance that will cause the Merger to fail to qualify as a "reorganization" within the meaning of Section 368 of the Code. 3.9 Assets. (a) Each of TravCorps and its Subsidiaries has good title to all the material items of personal property assets (tangible and intangible) which TravCorps or any of its Subsidiaries purports to own on the date hereof, including without limitation, those reflected in the TravCorps Financial Statements at the Balance Sheet Date, free and clear of all Encumbrances, except for (i) liens for current Taxes not yet due and payable; (ii) Encumbrances set forth in Schedule 3.9(a) of the TravCorps Disclosure Schedule or reflected on the TravCorps Financial Statements; and (iii) Encumbrances which do not materially detract from the value or materially interfere with any present use of such assets (clauses (i) through (iii) collectively, the "TravCorps Permitted Encumbrances"). (b) Schedule 3.9(b) of the TravCorps Disclosure Schedule contains a complete and correct list of all Real Property owned by TravCorps and each of its Subsidiaries as well as a list of any contracts or options to acquire any Real Property. Each of TravCorps and its Subsidiaries has good and marketable title to all such owned Real Property, free and clear of all Encumbrances except for TravCorps Permitted Encumbrances. 24

(c) Schedule 3.9(c) of the TravCorps Disclosure Schedule contains a complete and correct list of all material items of personal property and all Real Property leased by TravCorps and each of its Subsidiaries except for Real Property leased in the ordinary course of business for temporary housing of employees. TravCorps has previously delivered or made available to CCS true, complete and correct copies of all lease documents relating to such property. All lease documents are valid, binding and enforceable in accordance with their terms and are in full force and effect. No event has occurred which constitutes or, with the passing of time or giving of notice, or both, would constitute, a material default by TravCorps under any such lease document. 3.10 Intellectual Property. (a) Except as disclosed in Schedule 3.10(a) of the TravCorps Disclosure Schedule, each of TravCorps and its Subsidiaries is the exclusive owner of all right, title and interest in and to each of the following that are being used in the business of TravCorps or any of its Subsidiaries as currently conducted, and/or have been or are being developed or acquired for potential use in the business of TravCorps or any of its Subsidiaries: (i) all material computer programs and databases and their associated system and user documentation (collectively, the "Software Products") set forth in Schedule 3.10(a)(i) of the TravCorps Disclosure Schedule; (ii) all material copyrights and copyright registrations set forth in Schedule 3.10(a)(ii) of the TravCorps Disclosure Schedule; (iii) all material patents and applications set forth in Schedule 3.10(a)(iii) of the TravCorps Disclosure Schedule; (iv) all material trademarks, service marks and tradenames (collectively the "Marks"), and the registrations of, and/or applications to register, any one or more of Marks 25

in federal, state or foreign jurisdictions set forth in Schedule 3.10(a)(iv) of the TravCorps Disclosure Schedule; and (v) all material Trade Secrets and other proprietary rights. The items referred to in subparagraphs (i) through (v) of this Section 3.10(a), subject to the exclusions to ownership expressly set forth therein, are herein referred to collectively as the "TravCorps Intellectual Property Rights." The TravCorps Intellectual Property Rights constitute all such rights necessary to operate the business of TravCorps and its Subsidiaries in all material respects as it is currently conducted. (b) Schedule 3.10(b) of the TravCorps Disclosure Schedule sets forth a list of all material license and similar agreements between TravCorps any of its Subsidiaries and third parties, under which TravCorps or any of its Subsidiaries is granted rights to the use, reproduction, distribution, manufacture, sale or licensing of items embodying the patent, copyright, Trade Secret, trademark or other proprietary rights of such third parties (collectively, the "TravCorps License Rights"). Except as set forth in Schedule 3.10(b) of the TravCorps Disclosure Schedule, no Person is entitled to any material royalty, fee and/or other payment or other consideration of whatever nature with respect to the TravCorps License Rights or TravCorps Intellectual Property Rights. The TravCorps License Rights and the TravCorps Intellectual Property Rights are sometimes collectively referred to as the "TravCorps Rights". (c) Schedule 3.10(c) of the TravCorps Disclosure Schedule sets forth a list of all agreements under which TravCorps, any of its Subsidiaries, any TC Stockholder or any of their respective Affiliates has granted any material rights to third parties of, to or under the TravCorps Rights. All such rights granted have been and are non-exclusive. True, correct and complete copies of all such agreements have been delivered or made available to CCS. 26

(d) No material claims with respect to the TravCorps Rights have been asserted or, to the knowledge of TravCorps or any of its Subsidiaries, are threatened by any Person. To the knowledge of TravCorps or any of its Subsidiaries, as of the date hereof, there has not been and there is not any material infringement, misappropriation or any other unauthorized use of any of the TravCorps Rights by any third party, employee, consultant or former employee or consultant of TravCorps or any of its Subsidiaries. (e) Whenever used in this Agreement: (i) "TravCorps Computer Systems" means all the computer systems of TravCorps and its Subsidiaries including, without limitation, all mainframes, PC's and other work stations, peripherals and other components, and the Software Products; (ii) "TravCorps Licensed Software Products" means any software products licensed by third parties to TravCorps or its Subsidiaries, including, without limitation, the software products disclosed on Schedule 3.10(a)(i) or Schedule 3.10(b); (iii) "TravCorps Licensed Computer Systems" means all mainframes, PC's and other work stations, peripherals and other components, and the TravCorps Licensed Software Products; and (iv) "TravCorps Comprehensive Computer Systems" collectively refers to the TravCorps Computer Systems and TravCorps Licensed Computer Systems. (f) Except as disclosed in Schedule 3.10(f) of the TravCorps Disclosure Schedule or as will not, individually or in the aggregate, have a TravCorps Material Adverse Effect, the TravCorps Comprehensive Computer Systems: (i) are capable of recognizing, processing, managing, representing, interpreting, and manipulating correctly date-related data for dates earlier and later than January 1, 2000, including, without limitation, calculating, comparing, sorting (including without limitation, sorting by accurate ascending or descending sequence), storing, tagging, and sequencing, without resulting in or causing local or mathematical errors or inconsistencies in any user-interface functionalities, data storage, data fields, calculations, reports, processing, or any other input or output; (ii) have the ability to provide date recognition for any data element represented without a date, or whose year is 27

represented by only two digits and the ability to automatically function into and beyond the year 2000 without human intervention; (iii) correctly interpret data, dates and time into and beyond the year 2000, including, without limitation, any and all leap years; (iv) have the ability not to produce noncompliance in existing information, nor otherwise corrupt such data; and (v) have the ability to successfully interface with internal and external applications or systems that have not yet achieved year 2000 compliance during the time in which the systems and such applications and systems co-exist. 3.11 Accounts Receivable. Except as set forth in Schedule 3.11 of the TravCorps Disclosure Schedule, all of the accounts, notes and other receivables of TravCorps and its Subsidiaries (i) reflected on the TravCorps Financial Statements as of the Balance Sheet Date and (ii) as of the date hereof, represent sales actually made in the ordinary course of business consistent with past practice for goods or services delivered or rendered in bona fide arm's-length transactions. 3.12 Contracts and Commitments. Except as set forth in Schedule 3.12 of the TravCorps Disclosure Schedule: (a) Neither TravCorps nor any of its Subsidiaries has any agreements, contracts, or commitments, written or oral, which involve (i) the performance of services by TravCorps or its Subsidiaries in excess of $150,000 anticipated for fiscal year 1999 or (ii) the performance of services or delivery of goods to TravCorps or its Subsidiaries in excess of $150,000 anticipated for fiscal year 1999; (b) Neither TravCorps nor any of its Subsidiaries has any collective bargaining or union contracts or agreements; 28

(c) Neither TravCorps nor any of its Subsidiaries is restricted by any agreement or other commitment from carrying on its business as currently conducted anywhere in the world; (d) Neither TravCorps nor any of its Subsidiaries has any material obligations for Indebtedness; (e) Neither TravCorps nor any of its Subsidiaries is a party to any partnership or joint venture agreement whether or not a separate legal entity is created thereby or any contract or agreement relating to the acquisition or disposition of any portion of its business; (f) Neither TravCorps nor any of its Subsidiaries is in material breach or default, under any contract referred to in Schedule 3.12, and there exists no event or condition (other than the entering into of this Agreement and the consummation of the transactions contemplated hereby) which (whether with or without notice, lapse of time, or both) would constitute a material default by TravCorps or any Subsidiary thereunder, give rise to a right to accelerate, modify or terminate any material provision thereof or give rise to any material Encumbrance on their respective material Properties or assets or a right to any material, additional or guaranteed payments; and to the knowledge of TravCorps or any of its Subsidiaries, no other party to any such contract or agreement is in material breach or default thereof; (g) each contract and agreement referred to in Schedule 3.12 and each contract and agreement relating to a TravCorps License Right is valid and in full force and effect and constitutes a legal, valid and binding obligation of TravCorps or any of its Subsidiaries, and, to the knowledge of TravCorps or any of its Subsidiaries, the other parties thereto, enforceable in accordance with its terms, accurate and complete copies thereof, together with all amendments thereto, have been heretofore delivered or made available to CCS. 29

3.13 Customers and Suppliers. (a) Schedule 3.13(a) of the TravCorps Disclosure Schedule contains a true and complete list of the ten largest customers of TravCorps and its Subsidiaries in order of dollar volume of sales during the period from July 26, 1998 through the Balance Sheet Date showing the total sales in dollars to each such customer during such period. (b) Except as set forth on Schedule 3.13(b) of the TravCorps Disclosure Schedule, neither TravCorps nor any of its Subsidiaries is engaged in any material disputes with any material customers or suppliers. In addition, neither TravCorps nor any of its Subsidiaries has any knowledge that any material customer or group of customers of TravCorps or any of its Subsidiaries is materially dissatisfied with its services. 3.14 Inventory. Except as set forth in Schedule 3.14 of the TravCorps Disclosure Schedule neither TravCorps or any of its Subsidiaries maintains any material inventory. 3.15 Insurance. True and complete copies of all insurance policies or summaries of such policies (including, but not limited to, liability, property and casualty, workers compensation, directors and officers liability, surety bonds, key man or corporate owned life insurance, vehicular and other insurance policies and contracts) covering TravCorps or any of its Subsidiaries or otherwise held by or on behalf of it, or any aspect of its assets or business have been delivered or made available to CCS. Except as set forth on Schedule 3.15, there are no pending material claims under any of the foregoing. To the knowledge of TravCorps or any of its Subsidiaries, no party to any such insurance policy is in material default with respect thereto, nor does any condition exist (other than the transactions contemplated by this Agreement) that with notice or lapse of time or both would constitute such a material default by any party thereunder. All such insurance policies are sufficient in all material respects for 30

compliance with all requirements under all material agreements or contracts to which TravCorps or any of its Subsidiaries is a party or otherwise bound. 3.16 Litigation, etc. Except as set forth in Schedule 3.16 of the TravCorps Disclosure Schedule, there is no material claim, action, suit or proceeding that is pending or, to TravCorps' knowledge, threatened on the date hereof and to the knowledge of TravCorps there is no inquiry or investigation pending on the date hereof, of any kind or nature whatsoever, by or before any court or Governmental Entity against TravCorps or any of its Subsidiaries, or which questions or challenges the validity of this Agreement or any action taken or to be taken by any TC Stockholder pursuant to this Agreement or in connection with the transactions contemplated hereby; and, to the knowledge of TravCorps or any of its Subsidiaries, there is no valid basis for any such material claim, action, suit, inquiry, proceeding or investigation. Neither TravCorps nor any of its Subsidiaries is subject to any material judgment, order or decree. 3.17 Compliance with Law; Necessary Authorizations; Securities Matters. (a) Each of TravCorps and its Subsidiaries is duly complying and has duly complied, in all material respects, in respect of its business, operations and Properties, with all applicable laws, rules, regulations, orders, building and other codes, zoning and other ordinances, Permits, authorizations, judgments and decrees of all Governmental Entities. (b) Except as set forth in Schedule 3.17(b), each of TravCorps and its Sub sidiaries has duly obtained all material Permits and Consents necessary for the conduct of its business; each of the foregoing is set forth in Schedule 3.17(b) of the TravCorps Disclosure Schedule and is in full force and effect; each of TravCorps and its Subsidiaries is in compliance with all material terms of all the foregoing; there are no material proceedings pending or, to the knowledge of TravCorps or any of its Subsidiaries, threatened which are reasonably likely to result in the revocation, cancellation, suspension or modification thereof, and neither TravCorps nor any of its Subsidiaries has any knowledge of any basis therefor; and the consummation of the 31

transactions contemplated hereby will not result in any such revocation, cancellation, suspension or modification nor require TravCorps or any of its Subsidiaries or CCS to make any filing or take any action in order to maintain the validity of any item listed on Schedule 3.17(b). (c) Each person or entity employed or engaged by TravCorps or any of its Subsidiaries to provide services on behalf of TravCorps or any of its Subsidiaries ("Licensed Service Provider") has obtained (and maintains) all necessary licensure or certification to provide such services in compliance in all material respects with any applicable law. 3.18 Environmental Matters. To the knowledge of TravCorps and each of its Subsidiaries: (a) All of the operations of TravCorps and each of its Subsidiaries comply and have at all times complied, in all material respects, with all applicable Environmental Laws, and neither TravCorps nor any of its Subsidiaries is subject to any material TravCorps Environmental Liabilities. Neither TravCorps nor any of its Subsidiaries nor any other Person, has engaged in, authorized, allowed or suffered any operations or activities upon any of the Real Property of TravCorps or its Subsidiaries for the purpose of or in any way involving the handling, manufacture, treatment, processing, storage, use, generation, release, discharge, emission, dumping or disposal of any Hazardous Substances at, on or under the Real Property of TravCorps or its Subsidiaries, except in compliance in all material respects with all applicable Environmental Laws. (b) None of the Real Property or any assets of TravCorps or any of its Subsidiaries contain any Hazardous Substances in, on, over, under or at it in concentrations or amounts which would materially violate Environmental Laws or impose material liability or obligations on the present or former owner, manager, or operator of the Real Property under the Environmental Laws for any assessment, investigation, corrective action, remediation or monitoring of Hazardous Substances. None of such Real Property is listed or proposed for 32

listing on the National Priorities List pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. ss. 9601 et seq., ("CERCLA") or any similar inventory of sites requiring investigation or remediation maintained by any state. Neither TravCorps nor any of its Subsidiaries has received any notice, whether oral or written, from any Governmental Entity or third party of any actual or threatened material TravCorps Environmental Liabilities with respect to the Real Property of TravCorps or any of its Subsidiaries, any assets of TravCorps or any of its Subsidiaries or the conduct of the business of TravCorps or any of its Subsidiaries. 3.19 Labor Matters. (a) Except to the extent set forth in Schedule 3.19 of the TravCorps Disclosure Schedule: (i) there is no labor strike, or material dispute, grievance, arbitration proceeding, slowdown or stoppage, or charge of unfair labor practice actually pending, threatened against or affecting the operation of the business of TravCorps or any of its Subsidiaries, other than routine individual grievances; (ii) no unions or other collective bargaining units have been certified or recognized by TravCorps or any of its Subsidiaries as representing any of its employees and, to the knowledge of TravCorps, there are no existing union organizing efforts or representation questions with respect to any of the employees of TravCorps or any of its Subsidiaries. 3.20 Employee Benefit Plans. (a) Except as set forth in Schedule 3.20 of the TravCorps Disclosure Schedule, there are no Plans. With respect to each Plan, as applicable, accurate and complete (i) copies of each written Plan (including all amendments thereto), (ii) written descriptions of each oral Plan, (iii) copies of related trust or funding agreements, (iv) summary plan descriptions, (v) summaries of material modifications, (vi) copies of the most recent annual reports and actuarial valuations and (vii) copies of the most recent determination 33

letter from the IRS for each Plan intended to qualify under Code Section 401(a) have been heretofore delivered or made available to CCS. (b) None of TravCorps, any of its Subsidiaries, its TravCorps ERISA Affiliates, or any of their respective predecessors has ever contributed to, contributes to, has ever been required to contribute to, or otherwise participated in or participates in or in any way, directly or indirectly, has any liability with respect to any Employee Benefit Plan which is subject to Title IV of ERISA. (c) With respect to each of the Plans on Schedule 3.20, except as set forth on Schedule 3.20: (i) each Plan intended to qualify under Section 401(a) of the Code has received a determination letter from the IRS to the effect that the Plan is qualified under Section 401 of the Code and any trust maintained pursuant thereto is exempt from federal income taxation under Section 501 of the Code and nothing has occurred (since the date of the determination letter) or is expected to occur through the date of the Closing (including, without limitation, the transactions contemplated by this Agreement) that caused or could cause the loss of such qualification or exemption or the imposition of any material penalty or tax liability; (ii) all material payments required by any Plan, any agreement, or by law (including, without limitation, all contributions, insurance premiums, or intercompany charges) have been made; (iii) no material claim, lawsuit, arbitration or other action has been threatened, asserted, instituted, or anticipated against the Plans, any trustee or fiduciaries thereof, TravCorps, any of its Subsidiaries, any TravCorps ERISA Affiliate, any director, officer, or employee thereof, or any of the assets of any trust of the Plans; 34

(iv) the Plan complies and has been maintained and operated in all material respects in accordance with its terms and applicable law, including, without limitation, ERISA and the Code; (v) no "prohibited transaction," within the meaning of Section 4975 of the Code and Section 406 of ERISA, has occurred or is expected to occur with respect to the Plan (and the consummation of the transactions contemplated by this Agreement will not constitute or directly or indirectly result in such a "prohibited transaction"); (vi) with respect to each Plan that is funded mostly or partially through an insurance policy, neither TravCorps nor any of its Subsidiaries nor any TravCorps ERISA Affiliate has any material liability in the nature of retroactive rate adjustment, loss sharing arrangement or other actual or contingent liability arising wholly or partially out of events occurring on or before the Closing. (d) Except to the extent set forth in Schedule 3.20(d), the consummation of the transactions contemplated by this Agreement will not give rise to any material liability, including, without limitation, material liability for severance pay, unemployment compensation, termination pay, or withdrawal liability, or materially accelerate the time of payment or vesting or materially increase the amount of compensation or benefits due to any employee, director or stockholder of TravCorps or any of its Subsidiaries (whether current, former, or retired) or their beneficiaries solely by reason of such transactions. No material amounts payable under any Plan will fail to be deductible for federal income tax purposes by virtue of Sections 280G or 162(m) of the Code. (e) Neither TravCorps, any of its Subsidiaries nor any TravCorps ERISA Affiliate maintains, contributes to, or in any way provides for any benefits of any kind whatsoever (other than under Section 4980B of the Code, the Federal Social Security Act, or a plan qualified under Section 401(a) of the Code) to any current or future retiree or terminee. 35

(f) Neither TravCorps, any of its Subsidiaries nor any TravCorps ERISA Affiliate, or any officer or employee thereof, has made any promises or commitments, whether legally binding or not, to create any material additional plan, agreement, or arrangement, or to materially modify or change any existing Plan. 3.21 Questionable Payments. Neither the TC Stockholders nor any director, officer, agent, employee, or any other Person acting on behalf of the TC Stockholders, or TravCorps or any of its Subsidiaries, has, directly or indirectly, used any corporate funds for unlawful contributions, gifts, entertainment, or other unlawful expenses; made any unlawful payment to government officials or employees or to political parties or campaigns; established or maintained any unlawful fund of corporate monies or other assets; made or received any bribe, or any unlawful rebate, payoff, influence payment, kickback or other payment; given any favor or gift which is not deductible for federal income tax purposes; or made any bribe, kickback, or other payment of a similar or comparable nature, to any governmental or non-governmental Person, regardless of form, whether in money, property, or services, to obtain favorable treatment in securing business or to obtain special concessions, or to pay for favorable treatment for business or for special concessions secured. 3.22 Finders. No TC Stockholder and none of TravCorps' or its Subsidiaries' directors or officers, have taken any action that, directly or indirectly, would obligate CCS, TravCorps or any of its Subsidiaries, to anyone acting as broker, finder, financial advisor or in any similar capacity in connection with this Agreement or any of the transactions contemplated hereby. 36

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE CCS STOCKHOLDERS 37

Each of the CCS Stockholders, on a basis that is several and not joint, hereby represents and warrants to TravCorps and the TC Stockholders as follows (all such representations and warranties are qualified by the CCS Disclosure Schedule attached to this Agreement as Exhibit IV): 4.1 Organization and Qualification. CCS is a corporation duly organized, validly existing and in good standing in the State of Delaware, with corporate power and authority to own, lease and operate its assets and Properties and carry on its business as presently owned or conducted. CCS is licensed or qualified to transact business and is in good standing as a foreign corporation in each jurisdiction in which the ownership, use or leasing of its assets or Properties, or the conduct or nature of its business makes such licensing or qualification necessary and in which the failure to be so licensed or qualified and in good standing would reasonably be expected to have a CCS Material Adverse Effect. Each such jurisdiction is set forth in Schedule 4.1 of the CCS Disclosure Schedule. The name of each director and officer of CCS on the date hereof, and the position held by each such individual with CCS, is set forth on Schedule 4.1 of the CCS Disclosure Schedule. The copies of the certificate of incorporation, including all amendments thereto, and by-laws of CCS delivered to TravCorps prior to the date hereof are complete and accurate copies of such instruments as currently in effect. Since the date of its incorporation, Merger Subsidiary has not engaged in any activities other than in connection with or as contemplated by this Agreement. 4.2 Authority; No Breach. (a) Each of the CCS Stockholders has all requisite power and authority to execute and deliver this Agreement and the Operative Documents to which it is or shall, pursuant to this Agreement, be a party, and to perform, carry out and consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement and the Operative Documents to which he or it is or shall, pursuant to this Agreement, be a party have been duly and validly authorized by all necessary limited partnership or other action on the part of such CCS Stockholder. This Agreement and the 38

Operative Documents to which he or it is, or will be a party, have been, or will be, duly executed and delivered by such CCS Stockholder and (assuming the due authorization, execution and delivery by the other parties hereto and thereto) constitute the legal, valid and binding obligations of such CCS Stockholder. (b) CCS has all requisite corporate power and authority to execute and deliver this Agreement and the Operative Documents to which it is or shall, pursuant to this Agreement, be a party, and to perform, carry out and consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement and the Operative Documents to which CCS is or shall, pursuant to this Agreement, be a party have been duly and validly authorized by all necessary corporate action on the part of CCS. This Agreement and the Operative Documents to which CCS is, or will be a party, has been, or will be, duly executed and delivered by CCS and (assuming the due authorization, execution and delivery by the other parties hereto and thereto) constitutes the legal, valid and binding obligation of CCS. (c) Except as set forth in Schedule 4.2(c) of the CCS Disclosure Schedule, neither the execution and delivery of this Agreement or any Operative Document by any of the CCS Stockholders nor the consummation of any of the transactions contemplated herein or therein, nor the full performance by each of the CCS Stockholders of their obligations hereunder or thereunder do or will: (i) if applicable, violate any provision of the limited partnership agreement of such CCS Stockholder; (ii) conflict with, result in a breach or violation of, or constitute a default under (or an event which, with or without notice, lapse of time or both, would constitute a default) or result in the invalidity of, or accelerate the performance required by or cause or give rise to any right of acceleration or termination of any right or obligation pursuant to any agreement or commitment to which any of the CCS Stockholders is a party or by which any of the CCS Stockholders (or any of their respective assets or Properties) is subject or bound; (iii) result in the creation of, or give any third party the right to create, any Encumbrance upon any assets or Properties of any CCS Stockholder; (iv) conflict with, violate, result in a breach of 39

or constitute a default under any writ, injunction, statute, law, ordinance, rule, regulation, judgment, award, Permit, decree, order, or process of any Governmental Entity to which any CCS Stockholder or any assets or Properties of any CCS Stockholder are subject; (v) terminate or modify, or give any third party the right to terminate or modify, the provisions or terms of any contract or agreement to which any CCS Stockholder is a party or by which any of the CCS Stockholders (or any of their respective assets or Properties) is subject or bound; which in the case of clauses (ii) through (v) would reasonably be expected to have a material adverse effect on the validity or enforceability of this Agreement or on the ability of such CCS Stockholder to perform its obligations hereunder. (d) Except as set forth in Schedule 4.2(d) of the CCS Disclosure Schedule, neither the execution and delivery of this Agreement or any Operative Document by CCS nor the consummation of any of the transactions contemplated herein or therein, nor the full performance by CCS of its obligations hereunder or thereunder do or will: (i) violate any provision of the certificate of incorporation or bylaws of CCS or any of its Subsidiaries; (ii) conflict with, result in a breach or violation of, or constitute a default under (or an event which, with or without notice, lapse of time or both, would constitute a default) or result in the invalidity of, or accelerate the performance required by or cause or give rise to any right of acceleration or termination of any right or obligation pursuant to any agreement or commitment to which CCS or any of its Subsidiaries is a party or by which any of them (or any of their respective assets or Properties) is subject or bound; (iii) result in the creation of, or give any third party the right to create, any Encumbrance upon any assets or Properties of CCS or any of its Subsidiaries; (iv) conflict with, violate, result in a breach of or constitute a default under any writ, injunction, statute, law, ordinance, rule, regulation, judgment, award, Permit, decree, order, or process of any Governmental Entity to which CCS, any of its Subsidiaries or any assets or Properties of any of the foregoing are subject, (v) terminate or modify, or give any third party the right to terminate or modify, the provisions or terms of any contract or agreement to which CCS or any of its 40

Subsidiaries is a party or by which any of the foregoing (or any of their respective assets or Properties) is subject or bound; or (vi) result in or give to any Person any additional rights or entitlement to increased, additional, accelerated or guaranteed payments under any contract or agreement to which CCS or any of its Subsidiaries is a party or by which any of their respective assets or Properties is subject or bound; which, in the case of clauses (ii) through (vi), would reasonably be expected to have a CCS Material Adverse Effect. 4.3 Securities and Ownership; Subsidiaries. (a) The total number of shares of capital stock, and the classes and par values thereof, which CCS is authorized to issue, the designation, par value and number of such shares which are issued and outstanding and the identity of and number of such outstanding shares owned (of record) by each holder thereof are as set forth in Schedule 4.3(a) of the CCS Disclosure Schedule. (b) CCS has not issued any securities in violation of any preemptive or similar rights. Except as set forth in Schedule 4.3(b) of the CCS Disclosure Schedule, there are no outstanding (i) securities convertible into or exchangeable for any shares of capital stock or other securities of CCS; (ii) subscriptions, options, "phantom" stock rights, warrants, calls, commitments, preemptive rights or other rights of any kind (absolute, contingent or otherwise) entitling any party to acquire or otherwise receive from CCS any shares of capital stock or other securities or receive or exercise any benefits or rights similar to any rights enjoyed by or enuring to the holder of capital stock of CCS; (iii) contracts, commitments, agreements, understandings or arrangements of any kind relating to the issuance of any capital stock, convertible or exchangeable securities, or any subscriptions, options, warrants or similar rights of CCS or granting to any Person any right to participate in the equity or income of CCS or to participate in or direct the election of any director or officer of CCS or the manner in which any shares of CCS's capital stock are voted. There are no shares of stock or other securities of CCS reserved for issuance for any purpose other than pursuant to option plans described in Schedule 4.3(b). 41

(c) All of the outstanding shares of CCS Common Stock are duly authorized, validly issued, fully paid and nonassessable. (d) Schedule 4.3(d) of the CCS Disclosure Schedule sets forth the names of each Subsidiary of CCS and shows for each Subsidiary of CCS: (i) its jurisdiction of organization; (ii) the authorized and outstanding capital stock or other ownership interests of each Subsidiary of CCS; and (iii) the identity of and number of shares of such capital stock owned (of record and beneficially) by each holder thereof. (e) Each Subsidiary of CCS is duly organized, validly existing and in good standing in the state of its organization, with full corporate power and authority to own, lease and operate its assets and Properties and carry on its business as presently owned or conducted. Each Subsidiary of CCS is licensed or qualified to transact business and is in good standing as a foreign corporation in each of the jurisdictions indicated in Schedule 4.3(e) of the CCS Disclosure Schedule, which are the only jurisdictions in which the ownership, use or leasing of its assets or Properties, or the conduct or nature of its business makes such licensing or qualification necessary, except where the failure to be so qualified or in good standing would not, individually or in the aggregate, have a CCS Material Adverse Effect. (f) All shares of capital stock of each Subsidiary of CCS issued and outstanding are duly authorized, validly issued, fully paid and nonassessable. (g) Except as set forth in Schedule 4.3(g) of the CCS Disclosure Schedule, there are no outstanding (i) securities convertible into or exchangeable for any shares of capital stock or other securities of any Subsidiary of CCS; (ii) subscriptions, options, warrants, calls, commitments, preemptive rights or other rights of any kind (absolute, contingent or otherwise) entitling any party to acquire or otherwise receive from any Subsidiary of CCS any shares of capital stock or other securities; (iii) contracts, preemptive rights, commitments, agreements, understandings or arrangements of any kind relating to the issuance of any capital stock, 42

convertible or exchangeable securities, or any subscriptions, options, warrants or similar rights of any Subsidiary of CCS; or (iv) rights of any Person to be paid as if he, she or it were a holder of equity interests in any Subsidiary of CCS or securities convertible into or exchangeable for equity interests in any Subsidiary of CCS, including, without limitation, phantom stock and stock appreciation rights. Except as set forth in Schedule 4.3(g) of the CCS Disclosure Schedule, there are no shares of stock or other securities of any Subsidiary of CCS reserved for issuance for any purpose and no Subsidiary of CCS is a party to any voting agreements, voting trusts, proxies or other agreements, instruments or understandings with respect to the voting of any shares of the capital stock of such Subsidiary, or any agreement with respect to the transferability, purchase or redemption of any shares of capital stock of such Subsidiary. (h) Except for the Subsidiaries of CCS set forth in Schedule 4.3(d) of the CCS Disclosure Schedule, and as set forth in Schedule 4.3(h) of the CCS Disclosure Schedule, CCS does not own, Directly or Indirectly, any economic, voting or other ownership interest in any Person. 4.4 CCS Financial Statements. CCS has heretofore delivered to TravCorps true and correct copies of the CCS Financial Statements. The CCS Financial Statements have been prepared from the books and records of CCS and Cross Country Staffing, its predecessor entity, and present fairly (i) the consolidated unaudited financial position of CCS and its Subsidiary at the date thereof and (ii) the pro-forma consolidated unaudited results of operations of CCS and its predecessor for the period then ended, in each case in accordance with GAAP (subject to normal year-end adjustments and except for the absence of footnotes). 4.5 Interests of Related Persons. Except as set forth in Schedule 4.5 of the CCS Disclosure Schedule, no officer or director of TravCorps or any of its Subsidiaries and none of the CCS Stockholders nor any relative of any of the CCS Stockholders that is an individual: 43

(i) owns any interest in any Person which is a competitor, supplier or customer of CCS or any of its Subsidiaries or serves as an officer, director, employee or consultant for any such Person; (ii) owns, in whole or in part, any Property, asset or right, used in connection with the business of CCS or any of its Subsidiaries; (iii) has an interest in any contract or agreement with CCS or any of its Subsidiaries; or (iv) has any contractual arrangements with CCS or any of its Subsidiaries. 4.6 Absence of Undisclosed Liabilities. Except as set forth in Schedule 4.6 of the CCS Disclosure Schedule, neither CCS nor any of its Subsidiaries has any material liabilities, losses or obligations of any nature (whether absolute, known or unknown, accrued, fixed, contingent, liquidated, unliquidated, due or to become due, or otherwise), except for (i) liabilities included or reflected in the CCS Financial Statements and adequately reflected or reserved against therein, or (ii) liabilities or performance obligations arising in the ordinary course of business (and not as a result of a breach or default by CCS or any of its Subsidiaries). Neither CCS nor any of its Subsidiaries nor any CCS Stockholder knows of any basis for the assertion against CCS of any such material liability. 4.7 Absence of Certain Changes or Events. Except as set forth in Schedule 4.7 of the CCS Disclosure Schedule, since the Balance Sheet Date the business of CCS and its Subsidiaries has been conducted only in the ordinary and usual course. Without limiting the generality of the foregoing, except as set forth in Schedule 4.7 of the CCS Disclosure Schedule, since the Balance Sheet Date neither CCS nor any of its Subsidiaries has: (a) suffered any CCS Material Adverse Effect; 44

(b) suffered any material damage, destruction or casualty loss (whether or not covered by insurance) or condemnation taking or other proceeding which would reasonably be expected to have a CCS Material Adverse Effect; (c) except for increases in salary in the ordinary course of business, entered into or amended any employment or consulting contract or commitment (whether oral or written) or compensation arrangement or employee benefit plan, or changed or committed to change (including any change pursuant to any bonus, pension, profit-sharing or other plan, commitment, policy or arrangement) the compensation payable or to become payable to any of its officers, directors, key employees, agents or consultants, or made any pension, retirement, profit-sharing, bonus or other employee welfare or benefit payment or contribution other than payments or contributions required by the governing documents of the foregoing, copies of which have been delivered or made available to TravCorps; (d) made or proposed any change in its accounting or tax methods, principles or practices, except for such changes which are required by GAAP or by law; (e) authorized, declared, set aside or paid any dividend or other distribution with respect of its capital stock; (f) Directly or Indirectly redeemed, purchased or otherwise acquired any of its shares of capital stock or authorized any stock split, reclassification or recapitalization or otherwise changed the terms or provisions of any of its capital stock; (g) incurred any material Indebtedness or made any loan, advance or capital contribution to any person except in the ordinary course of business; (h) paid, discharged or satisfied any material claim, liability or obligation other than the payment, discharge or satisfaction of liabilities and obligations incurred in the ordinary course of business; 45

(i) (i) prepaid any material obligation having a fixed maturity of more than 90 days from the date such obligation was issued or incurred, or (ii) not paid, within a reasonable date of when due, any account payable, or sought the extension of the payment date of any such account payable; (j) permitted or allowed any material portion of its Property or assets to be subjected to any Encumbrance, except for liens for current Taxes not yet due; (k) sold, transferred, or otherwise disposed of any material portion of its Properties or assets, except in the ordinary course of business; (l) made any capital expenditures or commitments in excess of $200,000 in the aggregate for repairs or additions to property, plant, equipment or tangible capital assets; or (m) agreed, whether in writing or otherwise, to take any action described in this Section 4.7. 4.8 Taxes. (a) Each of CCS and its Subsidiaries has duly, timely and properly filed when due, all federal, state, local, foreign and other Tax Returns required to be filed by it with respect to its sales, income, business or operations (including without limitation any consolidated or combined Tax Returns in which it is included) and such Tax Returns are true, complete and accurate in all material respects. Except as may otherwise have been communicated to TravCorps prior to the date hereof in a writing referring to this Section, each of CCS and its Subsidiaries has duly paid all Taxes due from CCS or any of its Subsidiaries as shown on such Tax Returns. (b) Except as set forth in Schedule 4.8(b), all amounts required to be withheld by CCS or any of its Subsidiaries from customers or from or on behalf of employees for income, 46

payroll, social security and unemployment insurance taxes have been collected or withheld and either paid to the appropriate Governmental Entity or set aside and, to the extent required by law, held in accounts for such purpose. (c) Except as set forth in Schedule 4.8(c) of the CCS Disclosure Schedule, (i) there currently are no pending or, to the knowledge of CCS or any of its Subsidiaries, threatened actions or proceedings (including, without limitation, audit proceedings) by any applicable taxing authority for the assessment, collection, adjustment or deficiency of Taxes against CCS or any of its Subsidiaries, and (ii) neither CCS nor any of its Subsidiaries has received any notice of deficiency or assessment from any federal, state, local or foreign taxing authority with respect to liabilities for any material Taxes of CCS or any of its Subsidiaries. Except as set forth in Schedule 4.8(c) of the CCS Disclosure Schedule, there are no outstanding agreements or waivers extending the statutory period of limitation applicable to any assessment or audit of any Tax or Tax Return of CCS or any of its Subsidiaries for any period. (d) To the knowledge of CCS and each of its Subsidiaries, there is no existing fact or circumstance that will cause the Merger to fail to qualify as a "reorganization" within the meaning of Section 368 of the Code. (e) CCS is not liable as successor or transferee for any liability or obligation of any Grace Entity pertaining to Taxes (including, without limitation, withholding Taxes caused by or arising from any Grace Entity's practices with regard to meal and incidental expense payments, lodging allowances or in-kind lodging). 4.9 Assets. (a) Each of CCS and its Subsidiaries has good title to all the material items of personal property assets (tangible and intangible) which CCS or any of its Subsidiaries purports to own on the date hereof, including without limitation, those reflected in the CCS Financial 47

Statements at the Balance Sheet Date, free and clear of all Encumbrances, except for (i) liens for current Taxes not yet due and payable; (ii) Encumbrances set forth in Schedule 4.9(a) of the CCS Disclosure Schedule or reflected on the CCS Financial Statements; and (iii) Encumbrances which do not materially detract from the value or materially interfere with any present use of such assets. Neither CCS nor any of its Subsidiaries owns any Real Property. (b) Schedule 4.9(b) of the CCS Disclosure Schedule contains a complete and correct list of all material items of personal property and all Real Property leased by CCS and each of its Subsidiaries except for Real Property leased in the ordinary course of business for temporary housing of employees. CCS has previously delivered or made available to TravCorps true, complete and correct copies of all lease documents relating to such property. All lease documents are valid, binding and enforceable in accordance with their terms and are in full force and effect. No event has occurred which constitutes or, with the passing of time or giving of notice, or both, would constitute, a material default by CCS under any such lease document. 4.10 Intellectual Property. (a) Except as disclosed in Schedule 4.10(a) of the CCS Disclosure Schedule, each of CCS and its Subsidiaries is the exclusive owner of all right, title and interest in and to each of the following that are being used in the business of CCS or any of its Subsidiaries as currently conducted, and/or have been or are being developed or acquired for potential use in the business of CCS or any of its Subsidiaries: (i) all material computer programs and databases and their associated system and user documentation (collectively, the "Software Products") set forth in Schedule 4.10(a)(i) of the CCS Disclosure Schedule; (ii) all material copyrights and copyright registrations set forth in Schedule 4.10(a)(ii) of the CCS Disclosure Schedule; 48

(iii) All material trademarks, service marks and trade names (collectively the "Marks"), and the registrations of, and/or applications to register, any one or more of Marks in federal, state or foreign jurisdictions set forth in Schedule 4.10(a)(iv) of the CCS Disclosure Schedule; and (iv) all material Trade Secrets and other proprietary rights. The items referred to in subparagraphs (i) through (iv) of this Section 4.10(a), subject to the exclusions to ownership expressly set forth therein, are herein referred to collectively as the "CCS Intellectual Property Rights." The CCS Intellectual Property Rights constitute all such rights necessary to operate the business of CCS and its Subsidiaries in all material respects as it is currently conducted. (b) Schedule 4.10(b) of the CCS Disclosure Schedule sets forth a list of all material license and similar agreements between CCS any of its Subsidiaries and third parties, under which CCS or any of its Subsidiaries is granted rights to the use, reproduction, distribution, manufacture, sale or licensing of items embodying the copyright, Trade Secret, trademark or other proprietary rights of such third parties (collectively, the "CCS License Rights"). Except as set forth in Schedule 4.10(b) of the CCS Disclosure Schedule, no Person is entitled to any material royalty, fee and/or other payment or other consideration of whatever nature with respect to the CCS License Rights or CCS Intellectual Property Rights. The CCS License Rights and the CCS Intellectual Property Rights are sometimes collectively referred to as the "CCS Rights". (c) Schedule 4.10(c) of the CCS Disclosure Schedule sets forth a list of all agreements under which CCS or any of its Subsidiaries or any CCS Stockholder of any of their respective Affiliates, has granted any material rights to third parties of, to or under the CCS Rights. All such rights granted have been and are non-exclusive. True, correct and complete copies of all such agreements have been delivered or made available to TravCorps. 49

(d) No material claims with respect to the CCS Rights have been asserted or, to the knowledge of CCS or any of its Subsidiaries, are threatened by any Person. To the knowledge of CCS or any of its Subsidiaries, as of the date hereof, there has not been and there is not any material infringement, misappropriation or any other unauthorized use of any of the CCS Rights by any third party, employee, consultant or former employee or consultant of CCS or any of its Subsidiaries. (e) Whenever used in this Agreement: (i) "CCS Computer Systems" means all the computer systems of CCS and its Subsidiaries including, without limitation, all mainframes, PC's and other work stations, peripherals and other components, and the Software Products; (ii) "CCS Licensed Software Products" means any software products licensed by third parties to CCS or its Subsidiaries, including, without limitation, the software products disclosed on Schedule 4.10(a)(i) or Schedule 4.10(b); (iii) "CCS Licensed Computer Systems" means all mainframes, PC's and other work stations, peripherals and other components, and the CCS Licensed Software Products; and (iv) "CCS Comprehensive Computer Systems" collectively refers to the CCS Computer Systems and CCS Licensed Computer Systems. (f) Except as disclosed in Schedule 4.10(f) of the CCS Disclosure Schedule, or as will not, individually or in the aggregate, have a CCS Material Adverse Effect, the CCS Comprehensive Computer Systems: (i) are capable of recognizing, processing, managing, representing, interpreting, and manipulating correctly date-related data for dates earlier and later than January 1, 2000, including, without limitation, calculating, comparing, sorting (including without limitation, sorting by accurate ascending or descending sequence), storing, tagging, and sequencing, without resulting in or causing local or mathematical errors or inconsistencies in any user-interface functionalities, data storage, data fields, calculations, reports, processing, or any other input or output; (ii) have the ability to provide date recognition for any data element represented without a date, or whose year is represented by only two digits and the ability to automatically function into and beyond the year 2000 without human intervention; (iii) correctly 50

interpret data, dates and time into and beyond the year 2000, including, without limitation, any and all leap years; (iv) have the ability not to produce noncompliance in existing information, nor otherwise corrupt such data; and (v) have the ability to successfully interface with internal and external applications or systems that have not yet achieved year 2000 compliance during the time in which the systems and such applications and systems co-exist. 4.11 Accounts Receivable. Except as set forth in Schedule 4.11 of the CCS Disclosure Schedule, all of the accounts, notes and other receivables of CCS and its Subsidiaries (i) reflected on the CCS Financial Statements as of the Balance Sheet Date and (ii) as of the date hereof, represent sales actually made in the ordinary course of business consistent with past practice for goods or services delivered or rendered in bona fide arm's-length transactions. 4.12 Contracts and Commitments. Except as set forth in Schedule 4.12 of the CCS Disclosure Schedule: (a) Neither CCS nor any of its Subsidiaries has any agreements, contracts, or commitments, written or oral, which involve (i) the performance of services by CCS or its Subsidiaries in excess of $150,000 anticipated for fiscal year 1999 or (ii) the performance of services or delivery of goods to CCS or its Subsidiaries in excess of $150,000 anticipated for fiscal year 1999. (b) Neither CCS nor any of its Subsidiaries has any collective bargaining or union contracts or agreements; (c) Neither CCS nor any of its Subsidiaries is restricted by any agreement or other commitment from carrying on its business as currently conducted anywhere in the world; (d) Neither CCS nor any of its Subsidiaries has any material obligations for Indebtedness; 51

(e) Neither CCS nor any of its Subsidiaries is a party to any partnership or joint venture agreement whether or not a separate legal entity is created thereby or any contract or agreement relating to the acquisition or disposition of any portion of its business; (f) Neither CCS nor any of its Subsidiaries is in material breach or default, under any contract referred to in Schedule 4.12, and there exists no event or condition (other than the entering into of this Agreement and the consummation of the transactions contemplated thereby) which (whether with or without notice, lapse of time, or both) would constitute a material default by CCS or any Subsidiary thereunder, give rise to a right to accelerate, modify or terminate any material provision thereof or give rise to any material Encumbrance on their respective material Properties or assets or a right to any material, additional or guaranteed payments; and to the knowledge of CCS or any of its Subsidiaries, no other party to any such contract or agreement is in material breach or default thereof; (g) each contract and agreement referred to in Schedule 4.12 and each contract and agreement relating to a CCS License Right is valid and in full force and effect and constitutes a legal, valid and binding obligation of CCS or any of its Subsidiaries, and, to the knowledge of CCS or any of its Subsidiaries, the other parties thereto, enforceable in accordance with its terms, accurate and complete copies thereof, together with all amendments thereto, have been heretofore delivered or made available to TravCorps. 4.13 Customers and Suppliers. (a) Schedule 4.13(a) of the CCS Disclosure Schedule contains a true and complete list of the ten largest customers of CCS and its Subsidiaries in order of dollar volume of sales during the period from July 31, 1998 through the Balance Sheet Date showing the total sales in dollars to each such customer during such period. 52

(b) Except as set forth on Schedule 4.13(b) of the CCS Disclosure Schedule neither CCS nor any of its Subsidiaries is engaged in any material disputes with any material customers or suppliers. In addition, neither CCS nor any of its Subsidiaries has any knowledge that any material customer or group of customers of CCS or any of its Subsidiaries is materially dissatisfied with its services. 4.14 Inventory. Except as set forth in Schedule 4.14 of the CCS Disclosure Schedule, neither CCS nor any of its Subsidiaries maintains any material inventory. 4.15 Insurance. True and complete copies of all insurance policies or summaries of such policies (including, but not limited to, liability, property and casualty, workers compensation, directors and officers liability, surety bonds, key man or corporate owned life insurance, vehicular and other insurance policies and contracts) covering CCS or any of its Subsidiaries or otherwise held by or on behalf of it, or any aspect of its assets or business have been delivered or made available to TravCorps. Except as set forth on Schedule 4.15, there are no pending material claims under any of the foregoing. To the knowledge of CCS or any of its Subsidiaries, no party to any such insurance policy is in material default with respect thereto, nor does any condition exist that with notice or lapse of time or both would constitute such a material default by any party thereunder. All such insurance policies are sufficient in all material respects for compliance with all requirements under all material agreements or contracts to which CCS or any of its Subsidiaries is a party or otherwise bound. 4.16 Litigation, etc. Except as set forth in Schedule 4.16 of the CCS Disclosure Schedule, there is no material claim, action, suit, or proceeding that is pending or to CCS's knowledge, threatened on the date hereof, and to the knowledge of CCS there is no inquiry or investigation pending on the date hereof, of any kind or nature whatsoever, by or before any court or Governmental Entity against CCS or any of its Subsidiaries, or which questions or challenges the validity of this Agreement or any action taken or to be taken by CCS 53

or any CCS Stockholders pursuant to this Agreement or in connection with the transactions contemplated hereby; and, to the knowledge of CCS or any of its Subsidiaries, there is no valid basis for any such material claim, action, suit, inquiry, proceeding or investigation. Neither CCS nor any of its Subsidiaries is subject to any material judgment, order or decree. 4.17 Compliance with Law; Necessary Authorizations; Securities Matters. (a) Each of CCS and its Subsidiaries is duly complying and has duly complied, in all material respects, in respect of its business, operations and Properties, with all applicable laws, rules, regulations, orders, building and other codes, zoning and other ordinances, Permits, authorizations, judgments and decrees of all Governmental Entities. (b) Each of CCS and its Subsidiaries has duly obtained all material Permits and Consents necessary for the conduct of its business; each of the foregoing is set forth in Schedule 4.17(b) of the CCS Disclosure Schedule and is in full force and effect; each of CCS and its Subsidiaries is in compliance with all material terms of all the foregoing; there are no material proceedings pending or, to the knowledge of CCS or any of its Subsidiaries, threatened which are reasonably likely to result in the revocation, cancellation, suspension or modification thereof, and neither CCS nor any of its Subsidiaries has any knowledge of any basis therefor; and the consummation of the transactions contemplated hereby will not result in any such revocation, cancellation, suspension or modification nor require CCS or any of its Subsidiaries or TravCorps to make any filing or take any action in order to maintain the validity of any item listed on Schedule 4.17(b). (c) Each Licensed Service Provider employed or engaged by CCS or any of its Subsidiaries to provide services on behalf of CCS or any of its Subsidiaries has obtained (and maintains) all necessary licensure or certification to provide such services in compliance in all material respects with any applicable law. 54

4.18 Environmental Matters. To the knowledge of CCS and each of its Subsidiaries: (a) All of the operations of CCS and each of its Subsidiaries comply and have at all times complied, in all material respects, with all applicable Environmental Laws, and neither CCS nor any of its Subsidiaries is subject to any material CCS Environmental Liabilities. Neither CCS nor any of its Subsidiaries nor, any other Person, has engaged in, authorized, allowed or suffered any operations or activities upon any of the Real Property of CCS or its Subsidiaries for the purpose of or in any way involving the handling, manufacture, treatment, processing, storage, use, generation, release, discharge, emission, dumping or disposal of any Hazardous Substances at, on or under the Real Property of CCS or its Subsidiaries, except in compliance in all material respects with all applicable Environmental Laws. (b) None of the Real Property or any assets of CCS or any of its Subsidiaries contain any Hazardous Substances in, on, over, under or at it in concentrations or amounts which would materially violate Environmental Laws or impose material liability or obligations on the present or former owner, manager, or operator of the Real Property under the Environmental Laws for any assessment, investigation, corrective action, remediation or monitoring of Hazardous Substances. None of such Real Property of CCS or its Subsidiaries is listed or proposed for listing on the National Priorities List pursuant to CERCLA, or any similar inventory of sites requiring investigation or remediation maintained by any state. Neither CCS nor any of its Subsidiaries has received any notice, whether oral or written, from any Governmental Entity or third party of any actual or threatened material CCS Environmental Liabilities with respect to the Real Property of CCS or its Subsidiaries, any assets of CCS or any of its Subsidiaries or the conduct of the business of CCS or any of its Subsidiaries. 4.19 Labor Matters. (a) Except to the extent set forth in Schedule 4.19 of the CCS Disclosure Schedule: 55

(i) there is no labor strike, or material dispute, grievance, arbitration proceeding, slowdown or stoppage, or charge of unfair labor practice actually pending, threatened against or affecting the operation of the business of CCS or any of its Subsidiaries, other than routine individual grievances; (ii) no unions or other collective bargaining units have been certified or recognized by CCS or any of its Subsidiaries as representing any of its employees and, to the knowledge of CCS, there are no existing union organizing efforts or representation questions with respect to any of the employees of CCS or any of its Subsidiaries. 4.20 Employee Benefit Plans. (a) Except as set forth in Schedule 4.20 of the CCS Disclosure Schedule, there are no Plans. With respect to each Plan, as applicable, accurate and complete (i) copies of each written Plan (including all amendments thereto), (ii) written descriptions of each oral Plan, (iii) copies of related trust or funding agreements, (iv) summary plan descriptions, (v) summaries of material modifications, (vi) copies of the most recent annual reports and actuarial valuations and (vii) copies of the most recent determination letter from the IRS for each Plan intended to qualify under Code Section 401(a) have been heretofore delivered or made available to TravCorps. (b) None of CCS, any of its Subsidiaries, its CCS ERISA Affiliates, or any of their respective predecessors has ever contributed to, contributes to, has ever been required to contribute to, or otherwise participated in or participates in or in any way, directly or indirectly, has any liability with respect to any Employee Benefit Plan which is subject to Title IV of ERISA. (c) With respect to each of the Plans on Schedule 4.20, except as set forth on Schedule 4.20: 56

(i) each Plan intended to qualify under Section 401(a) of the Code has received a determination letter from the IRS to the effect that the Plan is qualified under Section 401 of the Code and any trust maintained pursuant thereto is exempt from federal income taxation under Section 501 of the Code and nothing has occurred (since the date of the determination letter) or is expected to occur through the date of the Closing (including, without limitation, the transactions contemplated by this Agreement) that caused or could cause the loss of such qualification or exemption or the imposition of any penalty or tax liability; (ii) all material payments required by any Plan, any agreement, or by law (including, without limitation, all contributions, insurance premiums, or intercompany charges) have been made; (iii) no material claim, lawsuit, arbitration or other action has been threatened, asserted, instituted, or anticipated against the Plans, any trustee or fiduciaries thereof, CCS, any of its Subsidiaries, any CCS ERISA Affiliate, any director, officer, or employee thereof, or any of the assets of any trust of the Plans; (iv) the Plan complies and has been maintained and operated in all material respects in accordance with its terms and applicable law, including, without limitation, ERISA and the Code; (v) no "prohibited transaction," within the meaning of Section 4975 of the Code and Section 406 of ERISA, has occurred or is expected to occur with respect to the Plan (and the consummation of the transactions contemplated by this Agreement will not constitute or directly or indirectly result in such a "prohibited transaction"); (vi) with respect to each Plan that is funded mostly or partially through an insurance policy, neither CCS nor any of its Subsidiaries nor any CCS ERISA Affiliate has any material liability in the nature of retroactive rate adjustment, loss sharing arrangement or 57

other actual or contingent liability arising wholly or partially out of events occurring on or before the Closing. (d) Except to the extent set forth in Schedule 4.20(d) the consummation of the transactions contemplated by this Agreement will not give rise to any material liability, including, without limitation, material liability for severance pay, unemployment compensation, termination pay, or withdrawal liability, or materially accelerate the time of payment or vesting or materially increase the amount of compensation or benefits due to any employee, director or stockholder of CCS or any of its Subsidiaries (whether current, former, or retired) or their beneficiaries solely by reason of such transactions. No material amounts payable under any Plan will fail to be deductible for federal income tax purposes by virtue of Sections 280G or 162(m) of the Code. (e) Neither CCS, any of its Subsidiaries nor any CCS ERISA Affiliate maintains, contributes to, or in any way provides for any benefits of any kind whatsoever (other than under Section 4980B of the Code, the Federal Social Security Act, or a plan qualified under Section 401(a) of the Code) to any current or future retiree or terminee. (f) Neither CCS, any of its Subsidiaries nor any CCS ERISA Affiliate, or any officer or employee thereof, has made any promises or commitments, whether legally binding or not, to create any material additional plan, agreement, or arrangement, or to materially modify or change any existing Plan. 4.21 Questionable Payments. Neither the CCS Stockholders nor any director, officer, agent, employee, or any other Person acting on behalf of the CCS Stockholders, or CCS or any of its Subsidiaries, has, directly or indirectly, used any corporate funds for unlawful contributions, gifts, entertainment, or other unlawful expenses; made any unlawful payment to government officials or employees or to political parties or campaigns; established or maintained any unlawful fund of corporate monies or other assets; made or received any bribe, or any 58

unlawful rebate, payoff, influence payment, kickback or other payment; given any favor or gift which is not deductible for federal income tax purposes; or made any bribe, kickback, or other payment of a similar or comparable nature, to any governmental or non-governmental Person, regardless of form, whether in money, property, or services, to obtain favorable treatment in securing business or to obtain special concessions, or to pay for favorable treatment for business or for special concessions secured. 4.22 Finders. No CCS Stockholder and none of CCS's or its Subsidiaries' directors or officers, have taken any action that, directly or indirectly, would obligate CCS, TravCorps or any of its Subsidiaries, to anyone acting as broker, finder, financial advisor or in any similar capacity in connection with this Agreement or any of the transactions contemplated hereby. ARTICLE V COVENANTS 5.1 Conduct of Business. From the date hereof and until the Closing Date, except as contemplated by this Agreement or expressly consented to by an instrument in writing signed by the other parties, TravCorps, on the one hand, and CCS, on the other hand, will each use its commercially reasonable best efforts to: (i) conduct its business and operations only in the ordinary course, consistent with past practice, (ii) maintain and preserve its Properties in good repair, order and condition, (iii) preserve its business operations and organizations intact, (iv) keep available the services of its current officers and satisfactorily performing employees, (v) preserve its current advantageous business relationships, including without limitation the goodwill of its customers and suppliers and others having business relationships with it; and (vi) not, Directly or Indirectly, redeem, purchase or otherwise acquire any of its shares of capital stock or, except as set forth on Schedule 5.1, authorize any stock split or recapitalization or issue any shares of capital stock (other than in connection with exercise of options outstanding on the date hereof) or grant options. 59

5.2 Records. Prior to the Closing Date, each of TravCorps and CCS shall and shall cause each of its Subsidiaries to afford the other party, its attorneys, accountants and representatives, free and full access to its business, books, records and employees, and shall provide such additional financial and operating data and other information as the other party, shall from time to time reasonably request. 5.3 Filings and Authorizations. Each of the parties, as promptly as practicable, (i) shall make, or cause to be made, all such filings and submissions under laws, rules and regulations applicable to him, her or it or his, her or its Affiliates, as may be required to consummate the Merger in accordance with the terms of this Agreement, (ii) shall use all commercially reasonable efforts to obtain, or cause to be obtained, all Consents necessary to be obtained by him, her or it or his, her or its Affiliates, in order to consummate the Merger, and (iii) shall use all commercially reasonable efforts to take, or cause to be taken, all other actions necessary, proper or advisable in order for him, her or it to fulfill his, her or its obligations hereunder. The parties shall coordinate and cooperate with one another in exchanging such information and supplying such reasonable assistance as may be reasonably requested by each in connection with the foregoing. 5.4 Discussions with Others. From the date hereof until the Closing Date the TC Stockholders, on the one hand, and the CCS Stockholders on the other hand, shall cause each of TravCorps and CCS and their respective officers, directors, employees or representatives not to, solicit or enter into negotiations with any party or encourage, facilitate or initiate any discussions with any party, with regard to a purchase and sale of any portion of the capital stock of either TravCorps or CCS, any material portion of the assets of either TravCorps or CCS or any merger or consolidation of either TravCorps or CCS with any third party. 60

5.5 Further Assurances. The parties hereto shall from time to time after the Closing Date execute and deliver such additional instruments and documents, as any party hereto may reasonably request to consummate the transfers and other transactions contemplated hereby. 5.6 Tax Matters. Each of TravCorps and CCS will not take any action that is reasonably likely to cause the Merger to fail to qualify as a "reorganization" within the meaning of Section 368 of the Code, and shall use its reasonable best efforts (including the provision of customary representations) to permit counsel to render the opinion described in Section 6.2(n). Neither TravCorps nor CCS shall take or cause to be taken any action which would cause to be untrue (or fail to take or cause not to be taken any action which would cause to be untrue) any of the representations set forth in certificates delivered to such counsel. 5.7 Indemnification; Directors' and Officers' Insurance. (a) From and after the Effective Time, to the fullest extent permitted by applicable law, the Surviving Corporation shall, and CCS shall cause the Surviving Corporation to, indemnify, defend and hold harmless each Person who is now, or has been at any time prior to the date hereof, or who becomes prior to the Effective Time, a director, officer or employee of the TravCorps or any of its Subsidiaries (each an "Indemnified Party" and, collectively, the "Indemnified Parties") against all losses, expenses (including reasonable attorneys' fees and expenses), claims, damages, liabilities or amounts paid in settlement arising out of actions or omissions occurring at or prior to the Effective Time and whether asserted or claimed prior to, at or after the Effective Time that are in whole or in part (i) based on or arising out of the fact that such Person is or was a director, officer or employee of TravCorps or one of its Subsidiaries or (ii) based on, arising out of or pertaining to the transactions contemplated by this Agreement. In the event of any such loss, expense, claim, damage or liability (whether or not arising before the Effective Time), (i) the Surviving Corporation shall pay the reasonable fees and expenses of counsel selected by the Indemnified Parties promptly after statements therefor are received and otherwise advance to such Indemnified Party upon request reimbursement of documented expenses reasonably incurred, in 61

either case to the extent not prohibited by Delaware Law upon receipt of any affirmation and undertaking required by Delaware Law, (ii) the Surviving Corporation will cooperate in the defense of any such matter and (iii) any determination required to be made with respect to whether an Indemnified Party's conduct complies with the standards set forth under Delaware Law and the Surviving Corporation's certificate of incorporation or bylaws shall be made by independent counsel mutually acceptable to the Surviving Corporation and the Indemnified Party; provided, however, that the Surviving Corporation shall not be liable for any settlement effected without its written consent (which consent shall not be unreasonably withheld). In addition to the indemnification provided above, to the fullest extent permitted by law, from and after the Effective Time, all rights to indemnification now existing in favor of the employees, agents, directors or officers of TravCorps and its Subsidiaries with respect to their activities as such prior to the Effective Time, as provided in TravCorp's certificate of incorporation or bylaws, in effect on the date hereof, shall survive the Merger and shall continue in full force and effect for a period of not less than six years from the Effective Time. (b) For a period of 6 years after the Effective Time, CCS shall cause to be maintained in effect the policies of directors' and officers' liability insurance maintained by TravCorps for the benefit of those Persons who are covered by such policies at the Effective Time (or CCS may substitute therefor policies of at least the same coverage with respect to matters occurring prior to the Effective Time). (c) In the event CCS or the Surviving Corporation or any of their successors or assigns consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or transfers all or substantially all of their properties and assets to any Person, then and in either such case, proper provision shall be made so that the successors and assigns of CCS or the Surviving Corporation, as the case may be, shall assume the obligations set forth in this Section. 62

(d) The provisions of this Section 5.7 are intended to be for the benefit of, and shall be enforceable by, each Indemnified Party, his or her heirs and his or her representatives. Section 5.8 Notification of Certain Matters. Each party hereto shall give prompt notice to each other party hereto of (i) the occurrence or nonoccurrence of any event the occurrence or nonoccurrence of which would be likely to cause any representation or warranty contained in this Agreement, which is qualified as to materiality, to be untrue or inaccurate, or any representation or warranty not so qualified, to be untrue or inaccurate in any material respect at or prior to the Effective Time, (ii) any material failure of any party hereto to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder, (iii) any notice of, or other communication relating to, a default or event which, with notice or lapse of time or both, would become a default, received by such party or any of its Subsidiaries subsequent to the date of this Agreement and prior to the Effective Time under any contract or agreement to which it or any of its Subsidiaries is a party or is subject material to the financial condition, business or results of operations of it and its Subsidiaries, taken as a whole or (iv) any notice or other communication from any third party alleging that the consent of such third party is or may be required in connection with the transactions contemplated by this Agreement; provided, however, that the delivery of any notice pursuant to this Section 5.8 shall not cure such breach or non-compliance or limit or otherwise affect the remedies available hereunder to the party receiving such notice. Section 5.9 Employee Matters. CCS shall cause the Surviving Corporation to honor the obligations of TravCorps or any of its Subsidiaries under the provisions of all employment, consulting, termination, severance, change in control and indemnification agreements between and among TravCorps or any of its Subsidiaries and any current or former officer, director, consultant or employee of TravCorps or any of its Subsidiaries. For a period of one year following the Effective Time, CCS agrees that it will maintain, or will cause the Surviving Corporation and its Subsidiaries to maintain, for the benefit of the employees of 63

TravCorps and any of its Subsidiaries following the Effective Time, compensation and benefit plans, programs, arrangements and policies as will provide compensation and benefits which in the aggregate are not materially less favorable than those provided to such employees as of the date hereof under the TravCorps employee benefit plans set forth on Schedule 5.9 attached hereto in accordance with their written terms and without regard to formal or informal discretionary provisions. Section 5.10 Obligations of Merger Subsidiary. CCS will take all action necessary to cause Merger Sub to perform its obligations under this Agreement and to consummate the Merger on the terms and conditions set forth in this Agreement. Section 5.11 Confidentiality. Prior to the Effective Time and after any termination of this Agreement, each party to this Agreement will hold, and each of TravCorps and CCS will use its best efforts to cause its officers, directors, employees, accountants, counsel, consultants, advisors and agents to hold, in confidence, unless compelled to disclose by judicial or administrative process or by other requirements of law, all confidential documents and information concerning the other parties furnished to it or its Affiliates in connection with the transactions contemplated by this Agreement, except to the extent that such information can be shown to have been (i) previously known by such party, (ii) in the public domain through no fault of such party or (iii) later lawfully acquired by such party from sources other than the other parties; provided that each party may disclose such information to its officers, directors, employees, accountants, counsel, consultants, advisors and agents in connection with the transactions contemplated by this Agreement so long as such party informs such Persons of the confidential nature of such information and directs them to treat it confidentially. Each party shall satisfy its obligation to hold any such information in confidence if it exercises the same care with respect to such information as it would take to preserve the confidentiality of its own similar information. If this Agreement is terminated, each party will, and will use its best efforts to cause its officers, directors, employees, accountants, counsel, consultants, advisors and agents to, 64

destroy or deliver to the other parties, upon request, all documents and other materials, and all copies thereof, that it or its Affiliates obtained, or that were obtained on their behalf, from the other parties in connection with this Agreement and that are subject to such confidence. 5.12 Termination of Certain Agreements. Effective as of the Closing, each of the agreements set forth on Schedule 5.12 shall terminate in full, be of no further force or effect, and no party shall have any further liability with respect thereto. 5.13 PreClosing Payments. TravCorps shall have the right, prior to the Effective Time, to pay up to an aggregate of $1,127,733 to its option holders in connection with the cancellation of all TravCorps stock options. CCS shall have the right, prior to the Effective Time, to distribute or pay to such parties as, and in such proportions as the Board of Directors of CCS may determine, an amount (the "Designated Amount") (if a positive number) determined on an after tax basis equal to the product of (x) 1.632 and (y) the amount actually paid by TravCorps pursuant to the first sentence of this Section 5.13 determined on an after tax basis and adjusted for any limitations on the use of TravCorps' net operating losses following the Merger. Without giving effect to the tax adjustments provided in the immediately preceding sentence, the aggregate amount to be distributed or paid by CCS pursuant to this Section 5.13 (which amount shall include all special bonus payments made to employees of CCS and all payment made to stockholders or their affiliates following the date hereof and prior to the Effective Time) shall not exceed the Designated Amount. 5.14 Permits. Each of CCS and TravCorps shall use its commercially reasonable efforts to secure all permits material to their respective businesses. 65

ARTICLE VI CONDITIONS TO CLOSING 6.1 Conditions Precedent to Obligations of CCS and the CCS Stockholders. The obligation of CCS and the CCS Stockholders under this Agreement to consummate the Merger on the Closing Date shall be subject to the satisfaction, at or prior to the Closing Date, of all of the following conditions, any one or more of which may be waived by CCS and the CCS Stockholders: (a) Representations and Warranties Accurate. The representations and warranties of the TC Stockholders contained in this Agreement which are qualified as to materiality shall be true and correct in all respects, and those not so qualified shall be true and correct in all material respects, as of the date of this Agreement and as of the Closing Date with the same force and effect as though made on and as of the Closing Date. (b) Performance by TC Stockholders and TravCorps. Each of the TC Stockholders and TravCorps shall have performed and complied in all material respects with all covenants and agreements required to be performed or complied with by such Person hereunder on or prior to the Closing Date. (c) Consents. The Consents set forth on Exhibit 6.1(c) hereto shall have been duly obtained, made or given and shall be in full force and effect, without the imposition upon CCS or TravCorps of any material condition, restriction or required undertaking. (d) No Legal Prohibition. No suit, action, investigation, inquiry or other proceeding by any Governmental Entity shall have been instituted or threatened which arises out of or relates to this Agreement or the transactions contemplated hereby and no injunction, order, decree or judgment shall have been issued and be in effect or threatened to be issued by any Governmental Entity of competent jurisdiction, and no statute, rule or regulation shall have been 66

enacted or promulgated by any Governmental Entity and be in effect, which in each case restrains or prohibits the consummation of the Merger. (e) Certificate. CCS shall have received a certificate, dated the Closing Date, signed by the Representative of the TC Stockholders and TravCorps, to the effect that the conditions set forth in Sections 6.1(a) and 6.1(b) have been satisfied. (f) Opinion of Counsel for TravCorps. CCS and the CCS Stockholders shall have received an opinion, dated the Closing Date, from Davis Polk & Wardwell, counsel to TravCorps, in form and substance reasonably acceptable to CCS. (g) No Material Adverse Change. No event, loss, damage, condition or state of facts of any kind shall exist which has had a TravCorps Material Adverse Effect or which may reasonably be expected to have a TravCorps Material Adverse Effect. (h) HSR Act. The required waiting period under the HSR Act shall have expired or been earlier terminated. (i) Stockholders Agreement. The Stockholders Agreement in the form annexed hereto as Exhibit 6.1(i) shall have been executed and delivered by the parties thereto and the individual set forth on Schedule 6.1(i)(1) shall have executed that certain side letter set forth on Exhibit 6.1(i)(2). (j) Registration Rights Agreement. The Registration Rights Agreement in the form annexed hereto as Exhibit 6.1(j) shall have been executed and delivered by the parties thereto. (k) Cancellation of Stock Options. All options to purchase shares of capital stock of TravCorps shall have been terminated. 67

6.2 Conditions Precedent to Obligations of TC Stockholders and TravCorps and the TC Stockholders. The obligations of the TC Stockholders under this Agreement to consummate the Merger on the Closing Date shall be subject to the satisfaction, at or prior to the Closing Date, of all of the following conditions, any one or more of which may be waived by TravCorps and the TC Stockholders: (a) Representations and Warranties Accurate. The representations and warranties of the CCS Stockholders contained in this Agreement which are qualified as to materiality shall be true and correct in all respects, and those not so qualified shall be true and correct in all material respects, as of the date of this Agreement and as of the Closing Date with the same force and effect as though made on and as of the Closing Date. (b) Performance by CCS and the CCS Stockholders. Each of CCS and the CCS Stockholders shall have performed and complied in all material respects with all covenants and agreements required to be performed or complied with by such Person hereunder on or prior to the Closing Date. (c) Consents. The Consents set forth on Exhibit 6.1(c) hereto shall have been duly obtained, made or given and shall be in full force and effect, without the imposition upon CCS or TravCorps of any material condition, restriction or required undertaking. (d) No Legal Prohibition. No suit, action, investigation, inquiry or other proceeding by any Governmental Entity shall have been instituted or threatened which arises out of or relates to this Agreement or the transactions contemplated hereby and no injunction, order, decree or judgment shall have been issued and be in effect or threatened to be issued by any Governmental Entity of competent jurisdiction, and no statute, rule or regulation shall have been enacted or promulgated by any Governmental Entity and be in effect, which in each case restrains or prohibits the consummation of the Merger. 68

(e) Certificate. The Representative of the TC Stockholders shall have received a certificate, dated the Closing Date, signed by the Representative of the CCS Stockholders and CCS to the effect that the conditions set forth in Sections 6.2(a) and 6.2(b) have been satisfied. (f) Opinion of Counsel for CCS. The TC Stockholders shall have received an opinion, dated the Closing Date, from Proskauer Rose LLP, counsel to CCS, in form and substance reasonably acceptable to the TC Stockholders. (g) No Material Adverse Change. No event, loss, damage, condition or state of facts of any kind shall exist which has had a CCS Material Adverse Effect or which may reasonably be expected to have a CCS Material Adverse Effect. (h) HSR Act. The required waiting period under the HSR Act shall have expired or been earlier terminated. (i) Stockholders Agreement. The Stockholders Agreement in the form annexed hereto as Exhibit 6.1(i) shall have been executed and delivered by the parties thereto. (j) Registration Rights Agreement. The Registration Rights Agreement in the form annexed hereto as Exhibit 6.1(j) shall have been executed and delivered by the parties thereto. (k) Amendment of Certificate of Incorporation and By Laws. The Certificate of Incorporation of CCS and the By-laws of CCS shall have been amended as set forth in Exhibit 6.2(k)(1), and Exhibit 6.2(k)(2), respectively. (l) Stock Option Plans. CCS shall have adopted the stock option plans having terms substantially the same as those set forth on the summary attached hereto as Exhibit 6.2(l), which plans shall be in forms reasonably acceptable to TravCorps. 69

(m) Tax Opinion. TravCorps shall have received an opinion of Davis Polk & Wardwell in form and substance reasonably satisfactory to TravCorps, on the basis of certain facts, representations and assumptions set forth in such opinion, dated the Effective Time, to the effect that the Merger will be treated for federal income tax purposes as a reorganization qualifying under the provisions of Section 368(a) of the Code, and that each of CCS, Merger Sub and TravCorps will be a party to the reorganization within the meaning of Section 368(b) of the Code. In rendering such opinion, such counsel shall be entitled to rely upon certain representations of officers of CCS and TravCorps. (n) Closing Working Capital. The Closing Working Capital Amount (as defined in the Asset Purchase Agreement dated June 24, 1999 among W.R. Grace & Co.-Conn., CCS and the other parties thereto (the "CCS APA")) shall have been finally determined and the Cash Purchase Price (as defined in the CCS APA) shall not have been increased pursuant to Section 4.5 of the CCS APA by more than $1,600,000. (o) Ashley One Issues. The investments by certain of the parties to the Agreement in Ashley One, Inc. shall have been consummated on substantially the terms set forth on Exhibit 6.2(o), with definitive documentation reasonably satisfactory to the TC Stockholders. ARTICLE VII SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION 7.1 Survival of Representations and Warranties. None of the representations and warranties contained in Articles III and IV shall survive the Closing 7.2 Indemnification by CCS. From and after the Closing, CCS shall indemnify and hold (i) the CCS Stockholders, their Affiliates and their respective directors, officers, employees, stockholders, members, partners, agents, successors and assigns and (ii) the TC Stockholders, their Affiliates and their respective directors, officers, employees, stockholders, members, partners, agents, successors and assigns harmless from and defend each 70

of them from and against any and all demands, claims, actions, liabilities, losses, costs, damages or expenses whatsoever (including, without limitation, reasonable attorneys' fees and expenses) asserted against, imposed upon or incurred by them resulting from or arising out of any breach following the Closing of any covenant or obligation of CCS contained herein and to be performed after the Closing. ARTICLE VIII MISCELLANEOUS 8.1 Termination. This Agreement may be terminated, and the transactions contemplated herein may be abandoned: (a) any time before the Closing, by mutual written agreement of CCS and TravCorps; (b) any time before the Closing, by CCS and the CCS Stockholders, on the one hand, or TravCorps and the TC Stockholders on the other hand, (i) in the event of a material breach of any covenant contained herein by any non-terminating party if such non-terminating party fails to cure such breach within five Business Days following notification thereof by the terminating party or (ii) upon notification to the non-terminating party by the terminating party that the satisfaction of any condition to the terminating party's obligations under this Agreement becomes impossible or impracticable with the use of commercially reasonable efforts if the failure of such condition to be satisfied is not caused by a breach hereof by the terminating party; or (c) any time after January 30, 2000 by CCS and the CCS Stockholders, on the one hand, or TravCorps and the TC Stockholders, on the other hand, upon notification to the non-terminating party by the terminating party if the Closing shall not have occurred on or before such date and such failure to consummate is not caused by a breach of this Agreement by the terminating party. 71

8.2 Effect of Termination. If this Agreement is validly terminated pursuant to Section 8.1, this Agreement will forthwith become null and void, and there will be no liability or obligation on the part of any party (or any of their respective officers, directors, employees, partners, agents or other representatives or Affiliates), except as provided in the next succeeding sentence and except that the provisions with respect to confidentiality in Section 5.11, expenses in Section 8.3 and public announcements in Section 8.15 will continue to apply following any such termination. Notwithstanding any other provision in this Agreement to the contrary, upon termination of this Agreement pursuant to Section 8.1(b) or (c), the TC Stockholders will remain liable to CCS and the CCS Stockholders for any willful and deliberate breach of this Agreement by the TC Stockholders existing at the time of such termination, TravCorps will remain liable to CCS and the CCS Stockholders for any willful and deliberate breach of this Agreement by TravCorps and its Subsidiaries existing at the time of such termination, CCS will remain liable to TravCorps and the TC Stockholders for any willful and deliberate breach of this Agreement by CCS existing at the time of such termination, and the CCS Stockholders will remain liable to TravCorps and the TC Stockholders for any willful and deliberate breach of this Agreement by the CCS Stockholders existing at the time of such termination and may seek such remedies, including damages against the other with respect to any such breach as are provided in this Agreement or as are otherwise available at law or in equity. 8.3 Expenses. Each party hereto shall pay its own expenses incurred in connection with this Agreement and the transactions contemplated hereby; provided, however, that if the Merger is consummated, CCS will pay the reasonable costs and expenses incurred by each of the parties. 8.4 Amendment. This Agreement may not be modified, amended, altered or supplemented except by a written agreement executed by each party. 72

8.5 Entire Agreement. This Agreement, together with the Exhibits and Schedules hereto, the Operative Documents and the instruments and other documents delivered pursuant to this Agreement, contain the entire agreement of the parties relating to the subject matter hereof and thereof, and supersede all prior agreements, understandings, representations, warranties and covenants of any kind between the parties with respect to the matters hereof and thereof. 8.6 Waivers. Waiver by any party of any breach of or failure to comply with any provision of this Agreement by the other parties shall not be construed as, or constitute, a continuing waiver of such provision, or a waiver of any other breach of, or failure to comply with, any other provision of this Agreement. No waiver of any such breach or failure or of any term or condition of this Agreement shall be effective unless in a written notice signed by the waiving party and delivered, in the manner required for notices generally, to each affected party. 8.7 Notices. All notices and other communications hereunder shall be validly given or made if in writing, (i) when delivered personally (by courier service or otherwise), (ii) when sent by telecopy, or (iii) when actually received if mailed by first-class certified or registered United States mail or recognized overnight courier service, postage-prepaid and return receipt requested, and all legal process with regard hereto shall be validly served when served in accordance with applicable law, in each case to the address of the party to receive such notice or other communication set forth below, or at such other address as any party hereto may from time to time advise the other parties pursuant to this Subsection: 73

If to the TC Stockholders: Morgan Stanley Dean Witter Capital Partners IV 1221 Avenue of the Americas New York, New York 10020 Telephone: (212) 762-4000 Telecopier: (212) 762-8282 Attention: Karen H. Bechtel, Managing Director If to TravCorps: TravCorps Corporation 40 Eastern Avenue Malden, Massachusetts 02148 Telephone: (800) 343-3270 Telecopier: (781) 322-1611 Attention: Bruce Cerullo, President in either case with a copy to: Davis Polk & Wardwell 450 Lexington Avenue New York, New York 10017 Telephone: (212) 450-4000 Fax: (212) 450-4800 Attention: Carole Schiffman, Esq. If to the CCS Stockholders: Charterhouse Equity Partners III, L.P., as Representative c/o Charterhouse Group International, Inc. 535 Madison Avenue New York, New York 10022 Telephone: (212) 584-3200 Telecopier: (212) 750-9704 Attention: Thomas C. Dircks, Managing Director 74

If to CCS: Cross Country Staffing, Inc. 6551 Park of Commerce Blvd., N.W. Suite 200 Boca Raton, Florida 33487 Telephone: (800) 998-5174 Telecopier: (561) 395-5693 Attention: Joseph A. Boshart, President in either case with a copy to: Proskauer Rose LLP 1585 Broadway New York, New York 10036 Telephone: (212) 969-3000 Telecopier: (212) 969-2900 Attention: Stephen W. Rubin, Esq. 8.8 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same document. 8.9 Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York (without regard to its conflicts of law rules). 8.10 Binding Effect; Third Party Beneficiaries; Assignment. This Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their respective legal representatives, successors and permitted assigns. Except as set forth in Section 5.7, nothing expressed or referred to in this Agreement is intended or shall by construed to give any Person other than the parties to this Agreement, or their respective legal representatives, successors and permitted assigns, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein. Neither party may assign this 75

Agreement nor any of its rights hereunder, other than any right to payment of a liquidated sum, nor delegate any of its obligations hereunder, without the prior written consent of the other. 8.11 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall not invalidate the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction, and any such provision, to the extent invalid or unenforceable, shall be replaced by a valid and enforceable provision which comes closest to the intention of the parties underlying such invalid or unenforceable provision. 8.12 Headings. The headings contained in this Agreement are for reference purposes only and shall not modify define, limit, expand or otherwise affect in any way the meaning or interpretation of this Agreement. 8.13 No Agency. Except as provided in Section 8.14 hereof, no party hereto shall be deemed hereunder to be an agent of, or partner or joint venturer with, any other party hereto. 8.14 Representative. Each TC Stockholder (other than any such Stockholder that is an Affiliate of Morgan Stanley Dean Witter Capital Partners IV, L.P.) does hereby irrevocably appoint Bruce Cerullo and each CCS Stockholder does hereby irrevocably appoint Charterhouse Equity Partners III, L.P. (each herein called a "Representative") as his true and lawful attorney-in-fact and agent, with full power of substitution or resubstitution, to act solely and exclusively on behalf of such TC Stockholder or CCS Stockholder, as the case may be, with respect to any matters relating to this Agreement and any document, certificate or other agreement to be executed and delivered by or on behalf of such TC Stockholder or CCS Stockholder pursuant hereto, with the full power, without the consent of such party, to exercise all of the powers which any such TC Stockholder or CCS Stockholder could exercise under the provisions of this Agreement or any document, certificate or other agreement to be executed and 76

delivered by or on behalf of any such TC Stockholder or CCS Stockholder pursuant hereto, including, without limitation, to (i) accept and give notices hereunder, (ii) consent to any modification or amendment hereof or (iii) give any waiver or consent hereunder. Each Representative does hereby accept such appointment. CCS and the CCS Stockholders, on the one hand, and TravCorps and such TC Stockholders, on the other hand, shall be entitled to rely exclusively upon such notices, waivers, consents, amendments, modifications and other acts of the Representative as being the binding acts of such TC Stockholders or the CCS Stockholders. 8.15 Public Announcements. None of the parties hereto will issue or cause the publication of any press release or otherwise make any public statement with respect to the transactions contemplated hereby without the prior written consent of the parties hereto, provided, that any party hereto may (i) make a public announcement to the extent required by law, judicial process or the rules, regulations or interpretations of the Securities and Exchange Commission or any national securities exchange or (ii) communicate with its investors in the ordinary course of business with respect to the performance of its investment in CCS. 8.16 Knowledge Qualifications; Accounting Terms. (a) Whenever any party makes any representation, warranty or other statement to such party's knowledge, such party will be deemed to have made reasonable inquiry into the subject matter of such representation, warranty or other statement, including reasonable inquiry of each executive officer and director of such party. (b) Any accounting terms used in this Agreement shall, unless otherwise defined in this Agreement, have the meaning ascribed thereto by GAAP. 8.17 Interpretation. In this Agreement, unless a contrary intention appears, (i) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision, and to any 77

certificates delivered pursuant hereto; and (ii) reference to any Article or Section means such Article or Section hereof. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. TravCorps Corporation By: /s/ Bruce A. Cerullo --------------------------------------- Name: Title: Cross Country Staffing, Inc. By: /s/ Thomas C. Dircks --------------------------------------- Name: Title: CCTC Acquisition, Inc. By: /s/ Thomas C. Dircks --------------------------------------- Name: Title: TC Stockholders: MORGAN STANLEY DEAN WITTER CAPITAL PARTNERS IV, L.P. By: MSDW Capital Partners IV, LLC, as general partner 78

By: MSDW Capital Partners IV, Inc., as member By: /s/ Karen H. Bechtel --------------------------------------- Name: Title: Address: 1221 Avenue of the Americas 33rd Floor New York, New York 10020 Telephone: (212) 762-6000 Telecopy: (212) 762-7986 MSDW IV 892 INVESTORS, L.P. By: MSDW Capital Partners IV, LLC, as general partner By: MSDW Capital Partners IV, Inc., as member By: /s/ Karen H. Bechtel --------------------------------------- Name: Title: Address: 1221 Avenue of the Americas 33rd Floor New York, New York 10020 Telephone: (212) 762-6000 Telecopy: (212) 762-7986 MORGAN STANLEY DEAN WITTER CAPITAL INVESTORS IV, L.P. By: MSDW Capital Partners IV, LLC, as general partner 79

By: MSDW Capital Partners IV, Inc., as member By: /s/ Karen H. Bechtel --------------------------------------- Name: Title: Address: 1221 Avenue of the Americas 33rd Floor New York, New York 10020 Telephone: (212) 762-6000 Telecopy: (212) 762-7986 MORGAN STANLEY VENTURE PARTNERS III, L.P. By: Morgan Stanley Venture Partners III, L.L.C., its General Partner By: Morgan Stanley Venture Capital III, Inc., its Institutional Managing Member By: Fazle Husain --------------------------------------- Name: Title: Address: 1221 Avenue of the Americas 33rd Floor New York, New York 10020 Telephone: (212) 762-6000 Telecopy: (212) 762-8424 MORGAN STANLEY VENTURE INVESTORS III, L.P. By: Morgan Stanley Venture Investors III, L.L.C., its General Partner 80

By: Morgan Stanley Venture Capital III, Inc., its Institutional Managing Member By: Fazle Husain --------------------------------------- Name: Title: Address: 1221 Avenue of the Americas 33rd Floor New York, New York 10020 Telephone: (212) 762-6000 Telecopy: (212) 762-8424 THE MORGAN STANLEY VENTURE PARTNERS ENTREPRENEUR FUND, L.P. By: Morgan Stanley Venture Partners III, L.L.C., its General Partner By: Morgan Stanley Venture Capital III, Inc., its Institutional Managing Member By: /s/ Fazle Husain --------------------------------------- Name: Title: Address: 1221 Avenue of the Americas 33rd Floor New York, New York 10020 Telephone: (212) 762-6000 Telecopy: (212) 762-8424 /s/ Charles N. Martin, Jr. --------------------------------------- Charles N. Martin, Jr. --------------------------------------- Susan A. Cejka 81

/s/ Bruce A. Cerullo --------------------------------------- Bruce A. Cerullo /s/ Karla T. Mount --------------------------------------- Karla T. Mount /s/ Charles J. Shea --------------------------------------- Charles J. Shea /s/ James Schmidt --------------------------------------- James Schmidt /s/ Michael Taylor --------------------------------------- Michael Taylor CCS Stockholders: CHARTERHOUSE EQUITY PARTNERS III, L.P. By: CHUSA Equity Investors III, L.P., general partner By: Charterhouse Equity III, Inc., general partner By: /s/ Thomas C. Dircks --------------------------------------- Thomas C. Dircks Managing Director 82

CHEF NOMINEES LIMITED By: Charterhouse Group International, Inc., Attorney-in-Fact By: /s/ Thomas C. Dircks --------------------------------------- Thomas C. Dircks Managing Director /s/ Joseph A. Boshart --------------------------------------- Joseph A. Boshart /s/ Emil Hensel --------------------------------------- Emil Hensel 83

Exhibit 2.3 =============================================================================== STOCK PURCHASE AGREEMENT by and between CROSS COUNTRY TRAVCORPS, INC. a Delaware corporation, and EDGEWATER TECHNOLOGY, INC., a Delaware corporation ---------------- Dated as of December 15, 2000 ---------------- ===============================================================================

TABLE OF CONTENTS PAGE SECTION 1. SALE AND PURCHASE OF STOCK......................................................................1 1.1 Sale and Purchase of the Acquired Stock.........................................................1 1.2 Purchase Price..................................................................................1 1.3 Payment of Purchase Price.......................................................................1 1.4 Post-Closing Purchase Price Adjustment..........................................................1 SECTION 2. CLOSING.........................................................................................3 2.1 General.........................................................................................3 2.2 Closing Transactions............................................................................3 SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER........................................................4 3.1 Organization and Corporate Power................................................................4 3.2 Authorization of Transactions...................................................................4 3.3 Capitalization..................................................................................5 3.4 Absence of Conflicts............................................................................5 3.5 Financial Statements and Related Matters........................................................6 3.6 Absence of Certain Developments.................................................................6 3.7 Taxes...........................................................................................7 3.8 Proprietary Rights..............................................................................8 3.9 Litigation; Proceedings.........................................................................9 3.10 Brokers........................................................................................10 3.11 Governmental Licenses and Permits..............................................................10 3.12 Employees......................................................................................10 3.13 Employee Benefit Matters.......................................................................11 3.14 Insurance......................................................................................12 3.15 Officers and Directors; Bank Accounts..........................................................13 3.16 Compliance with Laws...........................................................................13 3.17 Environmental Matters..........................................................................13 3.18 Contracts......................................................................................14 3.19 Absence of Undisclosed Liabilities.............................................................16 3.20 Real Property..................................................................................16 3.21 Affiliate Transactions.........................................................................16 i.

TABLE OF CONTENTS (CONTINUED) PAGE 3.22 Tangible Personal Property.....................................................................17 3.23 Proxy Statement................................................................................17 3.24 DGCL Section 203...............................................................................17 3.25 Rights Agreement...............................................................................17 SECTION 4. REPRESENTATIONS AND WARRANTIES OF PURCHASER....................................................17 4.1 Organization and Corporate Power...............................................................17 4.2 Authorization of Transaction...................................................................18 4.3 No Violation...................................................................................18 4.4 Governmental Authorities and Consents..........................................................18 4.5 Litigation.....................................................................................18 4.6 Brokers........................................................................................18 4.7 Access; Accredited Investor Status.............................................................18 4.8 Funds..........................................................................................19 4.9 Beneficial Ownership of Seller Common Stock; Acquisition of Acquired Stock.....................19 4.10 Proxy Statement................................................................................19 SECTION 5. PRE-CLOSING COVENANTS OF SELLER................................................................19 5.1 Affirmative Covenants of Seller................................................................19 5.2 Negative Covenants of Seller...................................................................20 5.3 Employees in North Carolina....................................................................22 5.4 Access.........................................................................................22 5.5 Conditions.....................................................................................22 5.6 Preparation of Proxy Statement; Stockholders Meeting...........................................22 5.7 Covenants Covering Competing Transactions for the Acquired Companies; Related Matters..........23 SECTION 6. PRE-CLOSING COVENANTS OF PURCHASER.............................................................25 6.1 Covenants of Purchaser.........................................................................25 6.2 Conditions.....................................................................................25 SECTION 7. CONDITIONS TO OBLIGATION OF PURCHASER TO CLOSE.................................................26 7.1 Accuracy of Representations and Warranties.....................................................26 7.2 Performance....................................................................................26 ii.

TABLE OF CONTENTS (CONTINUED) PAGE 7.3 Stockholder Approval...........................................................................26 7.4 Required Approvals.............................................................................26 7.5 No Injunction..................................................................................26 7.6 Closing Deliverables...........................................................................26 7.7 New Jersey Properties..........................................................................27 SECTION 8. CONDITIONS TO OBLIGATION OF SELLER TO CLOSE....................................................28 8.1 Accuracy of Representations and Warranties.....................................................28 8.2 Performance....................................................................................28 8.3 Stockholder Approval...........................................................................28 8.4 Required Approvals.............................................................................28 8.5 No Injunction..................................................................................28 8.6 Closing Deliverables...........................................................................28 SECTION 9. TERMINATION OF AGREEMENT.......................................................................29 9.1 Right to Terminate Agreement...................................................................29 9.2 Effect of Termination..........................................................................30 SECTION 10. INDEMNIFICATION RELATED MATTERS; TAXES.........................................................31 10.1 Expiration of Representations, Warranties and Covenants........................................31 10.2 Indemnification by Seller......................................................................32 SECTION 11. ADDITIONAL COVENANTS...........................................................................40 11.1 Covenant of Seller Not to Compete: Nonsolicitation.............................................40 11.2 Confidentiality................................................................................40 11.3 Divisibility...................................................................................41 11.4 Tax-Qualified Plans............................................................................41 SECTION 12. MISCELLANEOUS PROVISIONS.......................................................................42 12.1 Time of Essence................................................................................42 12.2 Compliance with Laws...........................................................................42 12.3 Publicity......................................................................................42 12.4 Access of Seller to Books and Records..........................................................42 12.5 Expenses.......................................................................................42 12.6 Governing Law..................................................................................42 iii.

TABLE OF CONTENTS (CONTINUED) PAGE 12.7 Notices........................................................................................42 12.8 Table of Contents and Headings.................................................................43 12.9 Assignment.....................................................................................43 12.10 Parties in Interest............................................................................43 12.11 Severability...................................................................................43 12.12 Entire Agreement...............................................................................44 12.13 Waiver.........................................................................................44 12.14 Amendments.....................................................................................44 12.15 Interpretation of Agreement....................................................................44 iv.

STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT ("AGREEMENT") is entered into as of December 15, 2000, by and between CROSS COUNTRY TRAVCORPS, INC., a Delaware corporation ("PURCHASER"), and EDGEWATER TECHNOLOGY, INC., a Delaware corporation ("SELLER"). Certain capitalized terms used in this Agreement are defined on EXHIBIT A. RECITALS A. Seller, through its subsidiaries listed on the ACQUIRED COMPANIES SCHEDULE, is engaged in the business of permanent placement and temporary staffing of clinical trials support services personnel. B. Seller owns 100% of the issued and outstanding Capital Stock of each of the companies listed on the ACQUIRED COMPANIES SCHEDULE (collectively, the "ACQUIRED COMPANIES"). C. Purchaser wishes to purchase all of the Capital Stock of the companies on the ACQUIRED COMPANIES SCHEDULE owned by Seller, as set forth on the ORGANIZATION SCHEDULE (the "ACQUIRED STOCK"), from Seller on the terms and subject to the conditions set forth in this Agreement, and Seller wishes to sell to Purchaser on the terms and subject to the conditions set forth in this Agreement, all of the Acquired Stock. AGREEMENT NOW, THEREFORE, in consideration of the premises and of the mutual representative warranties, and covenants, which are to be made and performed by the respective parties, Purchaser and Seller hereby agree as follows: SECTION 1. SALE AND PURCHASE OF STOCK 1.1 SALE AND PURCHASE OF THE ACQUIRED STOCK. At the Closing (as defined in Section 2.1 hereof), Seller shall sell to Purchaser, and Purchaser shall purchase from Seller, all of the Acquired Stock owned, directly or indirectly, by Seller as such ownership is set forth on the ORGANIZATION SCHEDULE in accordance with this Agreement. 1.2 PURCHASE PRICE. The purchase price payable by Purchaser for the Acquired Stock (the "PURCHASE PRICE") shall be Thirty-One Million Dollars ($31,000,000.00). 1.3 PAYMENT OF PURCHASE PRICE. The Purchase Price shall be paid by Purchaser to Seller on the Closing Date by wire transfer of immediately available funds to an account or accounts to be designated by Seller at least one (1) business day prior to the Closing. 1.4 POST-CLOSING PURCHASE PRICE ADJUSTMENT. (a) CLOSING DATE BALANCE SHEET; CALCULATION OF THE NET WORKING CAPITAL ADJUSTMENT. Within forty-five (45) days following the Closing Date, Purchaser shall cause the

Acquired Companies to prepare and deliver to Seller the Closing Date Balance Sheet, which will reflect the Net Working Capital. One hundred and twenty (120) days following the Closing Date (the "REALIZATION DATE"), Purchaser shall cause the Acquired Companies to prepare and deliver to Seller a calculation of the Net Working Capital Adjustment, if any. Following the Closing, each of Purchaser and Seller shall provide the other party and any independent auditors of such other party with access at all reasonable times to the properties, books, records, work papers (including those of the parties' respective accountants, subject to customary limitations) and personnel of the other for purposes of preparing and reviewing the Closing Date Balance Sheet, the Adjusted Net Working Capital and the Net Working Capital Adjustment and for the matters contemplated by this Section 1.4. (b) DISPUTES. Seller shall have thirty (30) days after delivery to it by Purchaser of each of the Closing Date Balance Sheet and the Net Working Capital Adjustment calculation during which to notify Purchaser of any good faith dispute of any item contained in the Closing Date Balance Sheet or the Net Working Capital Adjustment calculation, which notice shall set forth in reasonable detail the basis for such dispute. In the event that Seller shall so notify Purchaser of any such dispute on or before the last day of either such 30-day period, Purchaser and Seller and their respective accountants shall negotiate in good faith to resolve such dispute as promptly as possible. If Purchaser and Seller and their respective accountants are unable to resolve any such dispute within 30 days of Seller's delivery of such notice, such dispute shall be resolved by a jointly selected nationally recognized accounting firm retained to resolve any disputes between Purchaser and Seller over any item contained in the Closing Date Balance Sheet or the Net Working Capital Adjustment calculation (the "INDEPENDENT ACCOUNTING FIRM"), which shall make its determination as promptly as practicable, and such determination shall be final and binding on the parties. The Independent Accounting Firm shall, acting as experts and not as arbitrators, determine in a manner consistent with this Agreement, and only with respect to the remaining differences so submitted, whether and to what extent, if any, the Closing Date Balance Sheet or the Net Working Capital Adjustment calculation requires adjustment; PROVIDED, HOWEVER, the parties shall endeavor to have the Independent Accounting Firm conduct one review of the matters specified in this paragraph (b) in the event there is, or it is reasonably likely that there will be, a dispute concerning both the Closing Date Balance Sheet and the Net Working Capital Adjustment. If Seller and Purchaser cannot jointly agree on the identity of the Independent Accounting Firm, Seller and Purchaser shall each submit to their respective accountants the name of an accounting firm which does not at the time provide services to the Acquired Companies, Seller, or Purchaser, and the Independent Accounting Firm shall be selected from these two firms by the respective accountants of the parties. Any expenses relating to the engagement of the Independent Accounting Firm shall be shared equally by Seller and Purchaser. The Closing Date Balance Sheet and the Net Working Capital Adjustment calculation, as modified by resolution of any disputes, if any, by Purchaser and Seller or by the Independent Accounting Firm, shall be deemed final and binding on the parties on the earliest of: (i) the failure of Seller to notify Purchaser of a dispute within 30 days after the delivery of the Net Working Capital Adjustment calculation to Seller; (ii) the resolution of any disputes regarding the Net Working Capital Adjustment calculation by Purchaser and Seller and their respective accountants; and (iii) the resolution of any dispute regarding the Net Working Capital Adjustment pursuant to this Section by the Independent Accounting Firm (the "DETERMINATION DATE").

(c) PAYMENT AND ASSIGNMENT. If the Net Working Capital Adjustment is greater than zero, then within five (5) business days after the Determination Date Seller shall pay to Purchaser an amount equal to the Net Working Capital Adjustment, together with interest thereon at the applicable federal rate, calculated from the Closing Date to the date of payment. If the Net Working Capital Adjustment is equal to zero, then no payment shall be due by Seller to Purchaser. If the Net Working Capital Adjustment is less than zero, then within five (5) business days after the Determination Date Purchaser shall pay to Seller an amount equal to the absolute value of the Net Working Capital Adjustment, together with interest thereon at the applicable federal rate, calculated from the Closing Date to the date of payment. The amount of any payment required to be made pursuant to this Section 1.4(c) shall not exceed the amount of the Purchase Price to be paid at the Closing. If any amount of the accounts receivable line item listed on the Closing Date Balance Sheet remains unpaid on the Realization Date, such unpaid amount shall be assigned, as of the Realization Date, by Purchaser or the Acquired Companies, as applicable, to Seller. In connection with such assignment, Purchaser or the Acquired Companies, as applicable, shall promptly execute all documents, agreements and certificates that are necessary to effect any such assignment to Seller. SECTION 2. CLOSING 2.1 GENERAL. The Closing of the transactions contemplated by Section 1 (the "CLOSING") shall be held at the offices of Morgan, Lewis & Bockius, LLP, 101 Park Avenue, New York, NY 10178, or some other mutually agreeable location, at 10:00 a.m. on the date two (2) business days following the satisfaction or waiver of all conditions to the obligations of the parties to consummate the transactions contemplated hereby (other than conditions with respect to actions the parties will take at the Closing itself), or at such other place, time and/or date as may be jointly designated by Purchaser and Seller. By mutual agreement of the parties, closing may take place by conference call and facsimile with exchange of original signatures by overnight mail. 2.2 CLOSING TRANSACTIONS. Subject to the conditions set forth in this Agreement, the parties shall consummate the following transactions (the "CLOSING TRANSACTIONS") at the Closing: (a) Seller shall sell and transfer to Purchaser or its designees the Acquired Stock, free and clear of all Liens and Encumbrances, by delivering to Purchaser or its designees, one or more certificates representing the Acquired Stock, duly endorsed in blank (or accompanied by duly executed stock powers) and otherwise in form acceptable for transfer on the books of the Acquired Companies; (b) Purchaser shall pay the Purchase Price as contemplated by Section 1.2; and (c) Seller and Purchaser shall deliver the certificates and other documents and instruments required to be delivered by or on behalf of such Party under Section 7 and Section 8 of this Agreement, as applicable.

SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER Seller represents and warrants to Purchaser that, except as disclosed or otherwise referred to in any of the disclosure schedules attached hereto (collectively, "DISCLOSURE SCHEDULE") or in any of the documents attached to the DISCLOSURE SCHEDULE, as of the date of this Agreement: 3.1 ORGANIZATION AND CORPORATE POWER. (a) The "ORGANIZATION SCHEDULE" attached hereto contains a complete and accurate list for each Acquired Company of its name, its jurisdiction of incorporation or organization, other jurisdictions in which it is authorized to do business, and its capitalization (including the identity of each stockholder or equity holder and the number of shares or other equity interests held by each), determined as of the date hereof. Except as set forth on the ORGANIZATION SCHEDULE, none of the Acquired Companies owns or holds the right to acquire any Capital Stock in any other Person. Seller is validly existing and in good standing as a corporation under the laws of the State of Delaware, and, subject to the satisfaction of its conditions precedent to Closing, has all necessary corporate power to perform its obligations under the Transaction Documents. (b) Each Acquired Company is a company duly organized, validly existing, and in good standing under the laws of its jurisdiction of incorporation or organization, with full corporate or organizational power and authority, as appropriate, to conduct the business as it is now being conducted and to own or use the properties and assets that it purports to own or use. Each Acquired Company is duly qualified to do business as a foreign company and is in good standing under the laws of each state or other jurisdiction in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such qualification, except where the failure to be so duly qualified or licensed and in good standing would not individually or in the aggregate have a Material Adverse Effect. (c) Seller has delivered to Purchaser correct and complete copies of the certificate of incorporation and bylaws (or equivalent governing documents) of each Acquired Company, which documents reflect all amendments made thereto at any time before the date hereof. Correct and complete copies of the minute books containing the records of meetings of the stockholders and board of directors (or equivalent parties), the stock certificate books, and the stock record books of the Acquired Companies have been furnished to Purchaser. None of the Acquired Companies is in default under or in violation of any provision of its certificate of incorporation or by-laws (or equivalent governing documents). 3.2 AUTHORIZATION OF TRANSACTIONS. Seller and each Acquired Company has all requisite corporate power and authority to execute and deliver the Transaction Documents to which it is a party and, subject to the adoption and approval of this Agreement and the transactions contemplated hereby by the holders of a majority of the shares of common stock of Seller outstanding on the record date and entitled to vote thereon at the Stockholders Meeting (the "STOCKHOLDER VOTE CONDITION"), to consummate the transactions contemplated hereby and thereby and to carry out their respective obligations hereunder and thereunder. The board of directors of Seller has duly approved the execution and delivery of the Transaction Documents and the consummation of the transactions contemplated thereby. No other corporate proceedings

on the part of Seller or any Acquired Company are necessary to approve and authorize the execution and delivery of the Transaction Documents to which it is a party and, subject to the satisfaction of the Stockholder Vote Condition, the performance of their respective obligations thereunder or the consummation of the transactions contemplated thereby. All Transaction Documents to which Seller or any Acquired Company is a party have been duly executed and delivered by Seller and/or such Acquired Company and constitute the valid and binding agreements of Seller and/or such Acquired Company, enforceable against Seller and/or such Acquired Company in accordance with their terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors' rights, and as limited by general principles of equity that restrict the availability of equitable remedies. 3.3 CAPITALIZATION. The authorized Capital Stock of each Acquired Company consists of the number and type of shares or other interests (and par values) set forth relative to such Acquired Company's name on the ORGANIZATION SCHEDULE. Except as set forth on the ORGANIZATION SCHEDULE, all of the issued and outstanding Capital Stock of the Acquired Companies have been duly authorized, are validly issued, fully paid and nonassessable, and are held of record and owned beneficially by the Persons and in the manner described on the ORGANIZATION SCHEDULE, free and clear of all Liens and Encumbrances, and are not subject to, nor were they issued in violation of, any preemptive rights or rights of first refusal. The delivery of certificates at the Closing representing the Acquired Stock in the manner provided in Section 2.2 will transfer to Purchaser or its designees, directly or indirectly, good and valid title to the Acquired Stock, which constitutes all of the outstanding capital stock of or other ownership interests in each Acquired Company, in each case, free and clear of all Liens and Encumbrances. Except as set forth on the ORGANIZATION SCHEDULE, there are no outstanding or authorized options, warrants, rights, contracts, calls, puts, rights to subscribe, conversion rights, or other agreements or commitments to which Seller or any Acquired Company is a party or which are binding upon Seller or any Acquired Company providing for the issuance, disposition, or acquisition of any Acquired Company's Capital Stock (other than this Agreement). Other than as set forth on the ORGANIZATION SCHEDULE, there are no outstanding or authorized stock appreciation, phantom stock, or similar rights with respect to any Acquired Company. There are no voting trusts, proxies, or any other agreements or understandings with respect to the voting of the Capital Stock of any Acquired Company. No Acquired Company is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any of its Capital Stock. 3.4 ABSENCE OF CONFLICTS. Except as set forth on the "CONFLICTS SCHEDULE" attached hereto, the execution, delivery and performance of the Transaction Documents and the consummation of the transactions contemplated thereby by Seller and/or any Acquired Company do not and shall not (a) conflict with or result in any breach of any of the terms, conditions or provisions of, (b) constitute (with or without notice or lapse of time or both) a default under, (c) result in a violation of, (d) give any third party the right to modify, terminate or accelerate any obligation under, (e) result in the creation of any Lien or Encumbrance upon the Capital Stock (including, without limitation, the Acquired Stock) or any Lien or Encumbrance (excluding Permitted Encumbrances) upon the assets of any Acquired Company by any Person other than Purchaser pursuant to, or (f) require, to the extent not already obtained, any authorization, consent, approval, exemption or other action by or notice or declaration to, or filing with, any Person or any court or administrative or other governmental body or agency under: (1) the

certificate of incorporation or by-laws (or equivalent governing documents) of Seller or any of the Acquired Companies; (2) any indenture, mortgage, material lease, loan agreement or other material agreement or material instrument to which Seller or any of the Acquired Companies or their respective assets or properties is bound or affected; (3) any material law, statute, rule or regulation to which Seller or any of the Acquired Companies is subject (except in connection with the filing with the SEC of a proxy statement relating to the solicitation of votes concerning the approval necessary to satisfy the Stockholder Vote Condition (as amended or supplemented from time-to-time, the "PROXY STATEMENT"), the satisfaction of the Stockholder Vote Condition pursuant to the DGCL and the filing with the SEC of such reports under the Exchange Act as may be required in connection with this Agreement and the transactions contemplated by this Agreement); or (4) any judgment, order or decree to which Seller or any Acquired Company is subject. 3.5 FINANCIAL STATEMENTS AND RELATED MATTERS. Attached hereto as the "FINANCIAL STATEMENTS SCHEDULE" are copies of: (i) an unaudited combined balance sheet as of October 31, 2000 (the "LATEST BALANCE SHEET") and the related unaudited combined statement of income for the ten (10) months then-ended October 31, 2000 for the Acquired Companies; and (ii) an unaudited balance sheet and statement of income as of and for the fiscal year ended December 31, 1999, for the Acquired Companies (collectively, the "FINANCIAL STATEMENTS"). Except as set forth on the FINANCIAL STATEMENTS SCHEDULE, each of the Financial Statements is accurate and complete in all material respects, is consistent with the Acquired Companies' books and records (which, in turn, are accurate and complete in all material respects), presents fairly the Acquired Companies' financial condition and results of operations as of the times and for the periods referred to therein, and has been prepared in accordance with GAAP, subject in the case of interim unaudited financial statements to changes resulting from normal year-end adjustments and to the absence of footnote disclosure. 3.6 ABSENCE OF CERTAIN DEVELOPMENTS. Except for the execution and delivery of the Transaction Documents and the transactions to take place pursuant hereto on or before the Closing Date, since October 31, 2000, there has not been any Material Adverse Change, or any event or development which, individually or together with other such events, could reasonably be expected to result in a Material Adverse Change. Without limiting the foregoing, except as set forth on the attached "DEVELOPMENTS SCHEDULE," since October 31, 2000, neither Seller (solely with respect to the Acquired Companies) nor any of the Acquired Companies has: (a) subjected any material portion of the properties or assets of any Acquired Company to any Lien or Encumbrance (other than Permitted Encumbrances); (b) entered into, amended or terminated any material lease, contract, agreement or commitment applicable to any Acquired Company, or taken any other action or entered into any other material transaction applicable to any Acquired Company other than in the Ordinary Course of Business; (c) declared, set aside or paid outside of the Ordinary Course of Business any dividends or made any other distributions (whether in cash or in kind) with respect to any shares (or other interests) of the Capital Stock of any Acquired Company;

(d) made any capital expenditures or commitments for capital expenditures on behalf of any Acquired Company except for amounts less than $50,000; (e) (i) increased the salary, wages or other compensation of any officer or employee of any Acquired Company whose annual salary is, or after giving effect to such change would be, $150,000 or more; (ii) established or modified with respect to any Acquired Company any of the (x) targets, goals, pools or similar provisions in respect of any fiscal year under any Benefit Plan, employment contract or other employee compensation arrangement or (y) salary ranges, increase guidelines or similar provisions in respect of any Benefit Plan, employment contract or other employee compensation arrangement; or (iii) adopted, entered into, amended, modified or terminated (partial or complete) any Benefit Plan except to the extent required by applicable law; (f) (i) incurred, either directly or on behalf of an Acquired Company, any indebtedness in an aggregate principal amount exceeding $100,000 (net of any amounts discharged during such period), or (ii) voluntarily purchased, cancelled, prepaid or completely or partially discharged in advance of a scheduled payment date with respect to, or waived any right of any Acquired Company under, any indebtedness of or owing to any Acquired Company (in either case other than any indebtedness of any Acquired Company owing to another Acquired Company); (g) made any material change in the accounting policies of any Acquired Company; or (h) committed to do any of the foregoing. 3.7 TAXES. Except as set forth on the attached "TAXES SCHEDULE": (a) All Tax Returns with respect to each Acquired Company that were required to be filed prior to the date hereof have been timely filed and all such Tax Returns required to be filed prior to the Closing will be timely filed, and all of those Tax Returns were, or will be, true, correct and complete in all material respects; (b) all Taxes due and payable have been paid by each Acquired Company or will be paid by the appropriate due date and no amount of such Taxes is delinquent; (c) no deficiency for any amount of Tax in excess of $50,000 which has not been resolved has been asserted or assessed in writing by a taxing authority against any of the Acquired Companies, and Seller has no Knowledge that any such written assessment or asserted Tax liability shall be made; (d) there is no action, suit, taxing authority proceeding or audit now in progress, pending or, to the Knowledge of Seller, threatened in writing against or with respect to any of the Acquired Companies; (e) there is not currently in force with respect to any of the Acquired Companies any (A) waiver of any statute of limitations relating to Taxes, (B) agreement to any

extension of the period for assessment or collection of Taxes or (C) power of attorney relating to Taxes; (f) none of the Acquired Companies is a party to or bound by any Tax allocation, sharing, indemnity or similar agreement or arrangement with any Person with respect to the Acquired Companies and none of the Acquired Companies has any current or potential contractual obligation to indemnify any other Person with respect to Taxes regarding the Acquired Companies; (g) none of the Acquired Companies has any obligation to make any payment that could be non-deductible under Section 280G of the Code (or any corresponding provision of state, local or foreign Tax law); (h) no written claim has been made and delivered by a taxing authority in a jurisdiction where any of the Acquired Companies does not pay Taxes or file Tax Returns that Seller or any Acquired Company is or may be subject to Taxes assessed by such jurisdiction; (i) each of the Acquired Companies has withheld and paid over all Taxes required to have been withheld and paid over in connection with amounts paid or owing to any employee, creditor, independent contractor or other third party relating to the Acquired Companies; (j) the TAXES SCHEDULE contains a list of states, territories and jurisdictions (whether foreign or domestic) in which Seller and/or each of the Acquired Companies files Tax Returns relating to the Acquired Companies; there are no other jurisdictions in which Tax Returns are required to be filed; (k) none of the Acquired Companies has any liability for taxes under Treasury Regulations section 1.1502-6 or any similar state, local or foreign provision; and (l) Seller is the common parent of the affiliated group (as defined in Code section 338(h)(5)) of which the Acquired Companies are members. This affiliated group files consolidated federal income tax returns. 3.8 PROPRIETARY RIGHTS. (a) The "PROPRIETARY RIGHTS SCHEDULE" attached hereto contains a complete and accurate list of all material Proprietary Rights owned, licensed or used by any of the Acquired Companies, including (i) patented and registered Proprietary Rights owned or used by any of the Acquired Companies, (ii) pending patent applications and applications for registrations of other Proprietary Rights filed by or on behalf of or owned by any of the Acquired Companies, (iii) material unregistered trade names, Internet domain names, web sites and corporate names owned or used by Seller or any of its Affiliates (excluding the Acquired Companies) with respect to any of the Acquired Companies and (iv) material unregistered trademarks, service marks and logos and the computer software owned or used by Seller or any of its Affiliates (excluding the Acquired Companies) with respect to any of the Acquired Companies. Except as to licenses and agreements contained in customer contracts or entered into in connection therewith that grant customers the right to use or assign rights in Proprietary

Rights developed therefor, the PROPRIETARY RIGHTS SCHEDULE contains a complete and accurate list of all material licenses and other rights granted by Seller or any of the Acquired Companies to any third party with respect to any Proprietary Rights, in each case identifying the subject Proprietary Rights. Except as set forth on the PROPRIETARY RIGHTS SCHEDULE, the Acquired Companies own, free of all Liens and Encumbrances (except Permitted Encumbrances), all right, title and interest to, or have the right to use pursuant to a valid license, all of the Proprietary Rights set forth on the PROPRIETARY RIGHTS SCHEDULE and all other Proprietary Rights reasonably necessary for the operation of the Acquired Companies as presently conducted. Except as set forth on the PROPRIETARY RIGHTS SCHEDULE, the loss or expiration of any Proprietary Rights or related group of Proprietary Rights owned or used by any of the Acquired Companies has not had a Material Adverse Effect on the Acquired Companies and such a loss or expiration of Proprietary Rights is not pending or, to the Knowledge of Seller, threatened in writing. (b) Except as set forth on the PROPRIETARY RIGHTS SCHEDULE, (i) all of the Proprietary Rights owned or used by the Acquired Companies are valid and enforceable and have not been misused, and no claim by any third party contesting the validity, enforceability, use or ownership of any such Proprietary Rights has been made, is currently outstanding or to Seller's Knowledge, has been threatened in writing, and, to Seller's Knowledge, there are no grounds for the same; (ii) neither Seller nor any of the Acquired Companies has received any written notices of invalidity, infringement or misappropriation from any third party with respect to any such Proprietary Rights; (iii) to the Knowledge of Seller, neither Seller nor any of the Acquired Companies has interfered with, infringed upon, misappropriated or otherwise come into conflict with any Proprietary Rights of any third parties; and (iv) to the Knowledge of Seller, no third party has interfered with, infringed upon, misappropriated, or otherwise come into conflict with any Proprietary Rights of the Acquired Companies. (c) The transactions contemplated by this Agreement shall have no Material Adverse Effect on the Acquired Companies' rights, title and interest in and to any of their respective Proprietary Rights. Each of the Acquired Companies has taken all necessary actions to maintain and protect their respective material Proprietary Rights and shall continue to maintain and protect those rights prior to the Closing so as to not materially and adversely affect the validity or enforcement of such Proprietary Rights. To the Knowledge of Seller, the owners of any Proprietary Rights that are licensed to any Acquired Company (other than third party off-the-shelf computer software) have taken all necessary actions to maintain and protect such Proprietary Rights. 3.9 LITIGATION; PROCEEDINGS. Except as set forth on the "LITIGATION SCHEDULE" attached hereto, there are no (i) material actions, suits, complaints, charges in writing, proceedings, orders, investigations or claims pending or, to the Knowledge of Seller, threatened in writing against or affecting any of the Acquired Companies (or to the Knowledge of Seller, pending or threatened in writing against or affecting any of the officers, directors or key employees of any of the Acquired Companies with respect to the business of the Acquired Companies) at law or in equity, or before or by any federal, state, municipal or other governmental court, department, commission, board, bureau, agency or instrumentality, domestic or foreign, (including, without limitation, any actions, suits, complaints, charges, proceedings or investigations with respect to the transactions contemplated by this Agreement) or (ii) outstanding orders, laws, rules or regulations restraining, enjoining, prohibiting or otherwise

making illegal the purchase and sale of the Acquired Stock pursuant to this Agreement. Except as set forth on the LITIGATION SCHEDULE, none of the Acquired Companies is subject to any material grievance arbitration proceedings under collective bargaining agreements or otherwise or, to the Knowledge of Seller, any governmental investigations or inquiries. Except as set forth on the LITIGATION SCHEDULE, none of the Acquired Companies is subject to any judgment, order or decree of any court or other governmental agency (or settlement enforceable therein). 3.10 BROKERS. Except as set forth on the "BROKERAGE SCHEDULE" attached hereto, neither Seller nor any of the Acquired Companies has retained any broker or finder in connection with any of the transactions contemplated by this Agreement, and Seller has not incurred or agreed to pay, or taken any other action that would entitle any Person to receive, any brokerage fee, finder's fee or other similar fee or commission with respect to any of the transactions contemplated by this Agreement. 3.11 GOVERNMENTAL LICENSES AND PERMITS. The "PERMITS SCHEDULE" attached hereto contains a listing and summary description of all material Licenses used in the conduct of the business of the Acquired Companies as presently conducted (including, without limitation, material Licenses owned or possessed by any of the Acquired Companies). Except as indicated on the PERMITS SCHEDULE, the Acquired Companies own or possess all right, title and interest in and to all of the material Licenses that are necessary to conduct their business as presently conducted. Each of the Acquired Companies is in material compliance with the terms and conditions of such material Licenses and neither Seller nor any Acquired Company has received any notices that an Acquired Company is in violation of or default under (or with the giving of notice or lapse of time or both, would be in violation of or in default under) any of the terms or conditions of such material Licenses. Each of the Acquired Companies has taken all necessary action to maintain such material Licenses. No loss or expiration of any such material License is threatened (in writing) or pending other than expiration in accordance with the terms thereof. Except as indicated on the PERMITS SCHEDULE, all of the Licenses shall survive the transactions contemplated hereby. 3.12 EMPLOYEES. Except as set forth on the "EMPLOYEES SCHEDULE" attached hereto, to the Knowledge of Seller, no key executive employee and no group of key internal employees or independent contractors of any of the Acquired Companies has any plans to terminate his, her or its employment or relationship as an independent contractor with any of the Acquired Companies other than in the Ordinary Course of Business. Except as set forth on the EMPLOYEES SCHEDULE, each of the Acquired Companies has complied in all material respects with, and remains in compliance in all material respects with, all applicable laws relating to the employment of personnel and labor. Except as set forth on the EMPLOYEES SCHEDULE, none of the Acquired Companies is a party to or bound by any collective bargaining agreement, nor has such party experienced any strikes, grievances, unfair labor practices claims or other material employee or labor disputes. To the Knowledge of Seller, none of the Acquired Companies has engaged in any unfair labor practice. Seller has no Knowledge of any organizational effort presently being made or which has been threatened in writing by or on behalf of any labor union with respect to any employees of any of the Acquired Companies. None of the Acquired Companies has implemented any plant closing, mass layoff, collective dismissals or reductions as those terms are defined in the Worker Adjustment Retraining and Notification Act of 1988, as amended ("WARN"), or any similar state or local law or regulation, and no layoffs that could

implicate such laws or regulations will have been implemented before Closing without advance notification to Purchaser. 3.13 EMPLOYEE BENEFIT MATTERS. (a) Except as set forth on the "BENEFIT PLANS SCHEDULE" attached hereto, with respect to current or former employees (or their beneficiaries) of each of the Acquired Companies, none of Seller, any of the Acquired Companies or any entity that would be deemed a "single employer" with Seller or any Acquired Company under Section 414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA (an "ERISA AFFILIATE") maintained or contributed to or has any material actual or potential liability with respect to any (i) deferred compensation, profit sharing, severance, incentive, change in control, bonus or retirement plans or arrangements, (ii) qualified or nonqualified defined contribution or defined benefit plans or arrangements which are employee pension benefit plans (as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")), or (iii) employee welfare benefit plans, (as defined in Section 3(1) of ERISA), stock option, stock purchase, restricted stock, tuition refund, disability, fringe benefit or any other policies, plans or programs whether in writing or oral, insured or self-insured and whether or not terminated. None of Seller, any of the Acquired Companies or any ERISA Affiliate or any of their predecessors have within the previous six years contributed to any multiemployer pension plan (as defined in Section 3(37) of ERISA), and none of Seller, any of the Acquired Companies or any ERISA Affiliate or any of their predecessors have maintained or contributed within the previous six years to any defined benefit plan (as defined in Section 3(35) of ERISA). The plans and other arrangements, programs and agreements referred to in the preceding two sentences are referred to collectively as the "BENEFIT PLANS." None of Seller, any of the Acquired Companies or any ERISA affiliate maintains or contributes to any Benefit Plan which provides health, accident or life insurance benefits to current or future retirees or terminees, their spouses or dependents, other than in accordance with Section 4980B of the Code ("COBRA"). (b) Each Benefit Plan (and each related trust and insurance contract) set forth on the BENEFIT PLANS SCHEDULE (i) complies in form and in operation in all material respects with the requirements of applicable laws and regulations, including, without limitation, ERISA and the Code and the nondiscrimination rules thereof, (ii) has received or will have received prior to the Closing Date all contributions, premiums or payments required by any Benefit Plan with respect to all periods through the Closing Date, and (iii) with respect to each Benefit Plan which is intended to be qualified under section 401(a) of the Code, has been amended on a timely basis in compliance with the Code and, except as set forth on the BENEFIT PLANS SCHEDULE, has either received from the Internal Revenue Service a favorable determination letter which considers the terms of such Benefit Plan as amended or is within the remedial amendment period for obtaining such letter, and nothing has occurred or is expected to occur through the Closing Date that caused or could cause the revocation of such favorable determination letter or the imposition of any material penalty or tax. (c) Except as set forth on the BENEFIT PLANS SCHEDULE, all required reports and descriptions (including Form 5500 Annual Reports, Summary Annual Reports and Summary Plan Descriptions) with respect to the Benefit Plans set forth on the BENEFIT PLANS SCHEDULE have been properly and timely filed with the appropriate government agency and distributed to

participants as required. Seller, each of the Acquired Companies and each ERISA Affiliate have complied in all material respects with the requirements of COBRA. (d) With respect to each Benefit Plan set forth on the BENEFIT PLANS SCHEDULE, (i) there have been no prohibited transactions as defined in Section 406 of ERISA or Section 4975 of the Code, (ii) no fiduciary (as defined in Section 3(21) of ERISA) has any material liability for breach of fiduciary duty or any other failure to act or comply in connection with the administration or investment of the assets of such Benefit Plans, and (iii) no actions, investigations, suits or claims with respect to any Benefit Plan, any trustee or fiduciary thereof, Seller, any Acquired Company or any ERISA Affiliate, any director, officer or employee thereof or the assets of any trust of the Benefit Plans thereof (other than non-material routine claims for benefits) are pending and neither Seller nor any Acquired Company has Knowledge of any facts which would give rise to or could reasonably be expected to give rise to any such actions, investigations, suits or claims. (e) None of Seller, any of the Acquired Companies or any ERISA Affiliate has incurred or has any reason to expect that it will incur, any material liability to the Pension Benefit Guaranty Corporation (other than routine premium payments ) or otherwise under Title IV of ERISA (including any withdrawal liability) or under the Code with respect to any employee pension benefit plan (as defined in Section 3(2) of ERISA) that Seller, any of the Acquired Companies or any ERISA Affiliate maintains or ever has maintained or to which any of them contributes, ever has contributed or ever has been required to contribute to. (f) Except as set forth on the BENEFIT PLANS SCHEDULE, each individual who has received compensation for the performance of services on behalf of any Acquired Company has been properly classified as an employee or independent contractor in accordance with applicable laws. (g) None of Seller, the Acquired Companies or any ERISA Affiliate maintains any Benefit Plan which provides benefits to any employee or former employee (or to their beneficiaries or dependents) of the Acquired Companies employed outside the United States. (h) Except as disclosed on the BENEFITS PLANS SCHEDULE, the consummation of the transactions contemplated by this Agreement will not give rise to any liability, including, without limitation, liability for severance pay, unemployment compensation, termination pay or withdrawal liability or accelerate the time of payment or vesting or increase the amount of compensation or benefits due to any employee, director or shareholder of the Acquired Companies (whether current, former or retired) or their beneficiaries solely by reason of such transactions or by reason of a termination following such transactions. Except as disclosed on the BENEFITS PLAN SCHEDULE, neither Seller nor any Acquired Company has any unfunded liabilities pursuant to any Benefit Plan concerning an Acquired Company that is not intended to be qualified under Section 401(a) of the Code and that is an employee pension benefit plan within the meaning of Section 3(2) of ERISA, a nonqualified deferred compensation plan or an excess benefit plan. 3.14 INSURANCE. The "INSURANCE SCHEDULE" contains a true and complete list (including the names and addresses of the insurers, the expiration dates thereof, the annual

premiums and payment terms thereof and a brief description of the interests insured thereby) of all liability, property, workers' compensation, directors' and officers' liability and other insurance policies currently in effect (together with a two year claims history) that insure the business, operations or employees of the Acquired Companies or affect or relate to the ownership, use or operation of the Business or any of the assets and properties of the Acquired Companies and that (i) have been issued to any Acquired Company or (ii) have been issued to any Person (other than any Acquired Company) for the benefit of the Business or any Acquired Company. Except as set forth on the INSURANCE SCHEDULE, the insurance coverage provided by the policies described in clause (i) above will not terminate or lapse by reason of the transactions contemplated by this Agreement. Except as set forth on the INSURANCE SCHEDULE, each policy listed on the INSURANCE SCHEDULE is valid and binding and in full force and effect, no premiums due on or prior to the Closing Date thereunder have not been paid and none of Seller, any Acquired Company or the Person to whom such policy has been issued has received any notice of cancellation or termination in respect of any such policy or is in default thereunder. Except as set forth on the INSURANCE SCHEDULE, neither Seller nor any of the Acquired Companies has received notice that any insurer under any policy referred to in this Section is denying liability with respect to a claim thereunder or defending under a reservation of rights clause. 3.15 OFFICERS AND DIRECTORS; BANK ACCOUNTS. The "OFFICERS, DIRECTORS AND BANK ACCOUNTS SCHEDULE" attached hereto lists all officers and directors of each of the Acquired Companies, and all bank accounts, safety deposit boxes and lock boxes (designating each authorized signatory with respect thereto) for each of the Acquired Companies and all Persons having signatory power with respect thereto. 3.16 COMPLIANCE WITH LAWS. Except as set forth on the "COMPLIANCE SCHEDULE" attached hereto, the operations of the Business have, and each of the Acquired Companies has, complied in all material respects with and is in material compliance with all applicable laws, regulations and ordinances of foreign, federal, state and local governments and all agencies thereof which are applicable to it or which such Acquired Companies may otherwise be subject, and no material claims have been filed against any Acquired Companies, or Seller (concerning the Acquired Companies), alleging a material violation of any such laws or regulations, and none of the Acquired Companies or Seller has received written notice of any such past or present violations nor, to the Knowledge of Seller, has the Business or any Acquired Company been the subject of any inquiry or investigation by any governmental or regulatory authority regarding any such present or past failure. Except as set forth on the COMPLIANCE SCHEDULE, Seller (concerning the Acquired Companies) and the Acquired Companies have complied in all material respects with all laws, regulations and ordinances of federal, state and local governments and all agencies thereof applicable to present or former employees (or any Person found to be a present or former employee), employees' collective bargaining representatives, job applicants or any association or group of such Persons, of any Acquired Company, including without limitation any provisions thereof relating to terms and conditions of employment, wages, hours, the payment of social security and similar taxes and occupational safety and health. 3.17 ENVIRONMENTAL MATTERS. Except as set forth on the "ENVIRONMENTAL SCHEDULE" attached hereto, each of the Acquired Companies has complied in all material respects, and is currently in compliance in all material respects, with Environmental and Safety Requirements. Except as set forth on the ENVIRONMENTAL SCHEDULE, none of the Acquired Companies nor Seller

has received any oral or written notice, report or information regarding any liabilities (whether accrued, absolute, contingent, unliquidated or otherwise) or any corrective, investigatory or remedial obligations arising under Environmental and Safety Requirements which relate to any Acquired Company or any Acquired Company's properties or facilities. Without limiting the generality of the foregoing, each of the Acquired Companies has obtained and complied in all material respects with, and are currently in compliance in all material respects with, all permits, licenses and other authorizations that may be required pursuant to any Environmental and Safety Requirements for the use and occupancy of the properties and facilities and the operation of their business. None of the properties or facilities operated or leased by the Acquired Companies contains any chemicals, pollutants or substances in, on, over, under or at it, in concentrations which would be reasonably likely to result in the imposition of liability or obligations on the Acquired Companies for the investigation, corrective action, remediation or monitoring at those properties and facilities. The Acquired Companies have not contractually, or to the Knowledge of Seller by operation of law, including the Environmental and Safety Requirements, or otherwise assumed or succeeded to any environmental liabilities or obligations of any predecessors or any other Person or entity. 3.18 CONTRACTS. (a) Except as specifically contemplated by this Agreement and except as set forth on the "CONTRACTS SCHEDULE" attached hereto, neither Seller (only with respect to the Acquired Companies) nor any of the Acquired Companies is a party to or bound by any: (i) collective bargaining agreement or contact with any labor union or any bonus, pension, profit sharing, retirement or any other form of deferred compensation plan or any stock purchase, stock option, hospitalization insurance or similar plan or practice, whether formal or informal; (ii) contract for the internal employment of any officer, individual employee or other person on a full-time or part-time basis providing annual compensation in excess of $125,000; (iii) change of control or severance agreement or similar arrangement; (iv) agreement or indenture relating to the borrowing of money or to mortgaging, pleading or otherwise placing a Lien or Encumbrance on any of its assets; (v) contract under which any of the Acquired Companies has advanced or loaned any other Person amounts in the aggregate exceeding $50,000, other than trade credit extended in the Ordinary Course of Business; (vi) agreement with respect to the lending or investing of funds; (vii) guaranty of any obligation, other then endorsement made for collection and guarantees of obligation of an Acquired Company pursuant to any Lease; (viii) management, consulting, advertising, marketing, promotion, technical services, advisory or other contract or other similar arrangement relating to the design,

marketing, promotion, management or operation of the Acquired Companies involving payments in excess of $200,000 per year; (ix) lease or agreement under which it is lessee of, or holds or operates, any personal property owned by any other Person calling for payment is excess of $100,000 annually; (x) lease or agreement under which it is lessor of or permits any third party to hold or operate any property, real or personal, owned or controlled by it and calling for payments in excess of $100,000 per year; (xi) agreement or group of related agreements with the same Person for the purchase of products or services under which the annual expense of such products and services has a price in excess of $200,000; (xii) contracts relating to (A) the future disposition or acquisition of any assets or properties of the Acquired Companies, other than dispositions or acquisitions in the Ordinary Course of Business, and (B) any business combination; (xiii) contracts that incur indebtedness or incur or suffer to exist any Lien; (xiv) contracts arising solely out of an acquisitive or dispositive transaction (A) obligating an Acquired Company to make, or provide for, indemnification or (B) to which indemnification is provided to an Acquired Company or Seller (only with respect to and directly involving any Acquired Company); and (xv) contracts with any Person containing any provision or covenant prohibiting or limiting the ability of an Acquired Company to engage in any business or compete with any Person concerning any business or prohibiting or limiting the ability of any Person to compete with the Business or an Acquired Company. (b) The CONTRACTS SCHEDULE contains a complete and accurate list of the contracts or agreements with the top ten (10) customers of Seller with respect to the Acquired Companies, with such top customers determined based upon annual revenues with respect to such customers for period from January 1, 2000 through October 31, 2000. Except as disclosed on the CONTRACTS SCHEDULE, since October 31, 2000, no such customer has (i) ceased purchases from the Acquired Companies or the Business or (ii) materially reduced its purchases from the Acquired Companies or the Business (other than as a result of fluctuations that are customary in the Ordinary Course of Business). Except as disclosed on the CONTRACTS SCHEDULE, to the Knowledge of Seller, no such customer is threatened with bankruptcy or insolvency. (c) Except as disclosed on the CONTRACTS SCHEDULE: (i) no contract required to be disclosed on the CONTRACTS SCHEDULE and no other material contract or commitment has been materially breached or canceled by the Acquired Companies; (ii) each of the Acquired Companies has performed all of the material obligations required to be performed by them in connection with the contracts required to be disclosed on the CONTRACTS SCHEDULE and no Acquired Company is in material default (whereby such default is continuing and has not be

cured) under or in material breach of any such contracts, and no event has occurred which with the passage of time of the giving of notice or both, would result in such a continuing material default or material breach thereunder; (iii) each material agreement including any contract required to be disclosed on the CONTRACTS SCHEDULE, is legal, valid, binding, enforceable and in full force and effect; and (iv) except as disclosed on the CONTRACTS SCHEDULE, none of the Acquired Companies is, or has received notice that it is, in violation or breach of or default under any such contract (or with notice or lapse of time or both, would be in violation or breach of or default under any such contract). 3.19 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth on the "UNDISCLOSED LIABILITIES SCHEDULE" attached hereto, no Acquired Company has any liabilities except: (i) obligations under executory contracts described on the CONTRACTS SCHEDULE or under executory contracts or commitments not required to be disclosed thereon; (ii) liabilities reflected or reserved for on the liabilities side of the Latest Balance Sheet; (iii) liabilities which have arisen after the date of the Latest Balance Sheet in the Ordinary Course of Business or otherwise in accordance with the terms and conditions of this Agreement; and/or (iv) liabilities specifically identified and disclosed elsewhere in this Agreement or the liabilities specifically identified and disclosed in the DISCLOSURE SCHEDULES attached hereto. 3.20 REAL PROPERTY. All real property leased, used or occupied by the Acquired Companies (the "LEASES") is identified on the "REAL ESTATE SCHEDULE" and no other real property is used for the conduct of the Business. The Acquired Companies do not own any real property. (a) Except as disclosed on the REAL ESTATE SCHEDULE, each Acquired Company has a valid and subsisting leasehold estate in and the right to quiet enjoyment of the real properties subject to the Leases in accordance with the terms thereof. Each Lease is a legal, valid and binding agreement, enforceable in accordance with its terms, of such Acquired Company and of each other Person that is a party thereto, and except as set forth on the REAL ESTATE SCHEDULE, there is no, and neither Seller nor any Acquired Company has received notice of any, default (or any condition or event which, after notice or lapse of time or both, would constitute a default) thereunder. None of the Acquired Companies owes any brokerage commissions with respect to any such leased space. (b) Except as disclosed on the REAL ESTATE SCHEDULE, the improvements on the real property which are subject to the Leases are in good operating condition and in a state of good maintenance and repair, ordinary wear and tear excepted, are adequate and suitable for the purposes for which they are presently being used and, to the Knowledge of Seller, there are no condemnation or appropriation proceedings pending or threatened against any of such real property or the improvements thereon. 3.21 AFFILIATE TRANSACTIONS. Except as disclosed on the "AFFILIATED TRANSACTIONS SCHEDULE" attached hereto, (i) there are no intercompany liabilities between an Acquired Company, on the one hand, and Seller, any Affiliate of Seller or any Insider, (ii) neither Seller, any Affiliate of Seller or any Insider provides or causes to be provided to an Acquired Company any assets, services or facilities and (iii) neither Seller, any Affiliate of Seller or any Insider is party to any agreement, contract or commitment or transaction with any Acquired Company.

3.22 TANGIBLE PERSONAL PROPERTY. The Acquired Companies are in possession of and have good title to, or have valid leasehold interests in or valid rights under contract to use, all tangible personal property used in the conduct of the Business, including all tangible personal property reflected on the Latest Balance Sheet and tangible personal property acquired since October 31, 2000 other than property disposed of since such date in the Ordinary Course of Business. All such tangible personal property is free and clear of all Liens and Encumbrances, other than Permitted Encumbrances, and is in good working order and condition, ordinary wear and tear excepted, and its use complies in all material respects with all applicable laws. 3.23 PROXY STATEMENT. None of the information supplied or to be supplied by Seller for inclusion or incorporation by reference in the Proxy Statement will on the date it is first mailed to the Company's stockholders contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading; PROVIDED, HOWEVER, that no representation is made by Seller with respect to statements made therein based on information supplied in writing by Purchaser specifically for inclusion therein. The Proxy Statement will comply as to form with the applicable requirements of the Exchange Act. 3.24 DGCL SECTION 203. Assuming the truth and accuracy of the representations and warranties contained in Section 4 of this Agreement, Section 203 of the DGCL will not have any effect (including, without limitation, a special required vote of the stockholders of Seller owning more than a majority of the outstanding shares of Seller's Capital Stock as of the record date for the Stockholders Meeting) on this Agreement or the transactions contemplated by this Agreement. No other "fair price," "moratorium," "control share acquisition," or other similar anti-takeover statute or regulation of the DGCL or, to the knowledge of Seller, any other jurisdiction is applicable to this Agreement or the other transactions contemplated by this Agreement. 3.25 RIGHTS AGREEMENT. Assuming the truth and accuracy of the representations and warranties contained in Section 4 of this Agreement, solely as a result of entering into this Agreement or consummating the transactions contemplated hereby in accordance with the terms of this Agreement (i) Purchaser shall not be deemed to be an Acquiring Person (as defined in the Rights Agreement), (ii) the Distribution Date (as defined in the Rights Agreement) shall not be deemed to occur and (iii) the Rights (as defined in the Rights Agreement) will not separate from the Common Shares (as defined in the Rights Agreement). SECTION 4. REPRESENTATIONS AND WARRANTIES OF PURCHASER Purchaser represents and warrants to Seller that: 4.1 ORGANIZATION AND CORPORATE POWER. Purchaser is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, and has all necessary corporate power and authority to enter into the Transaction Documents to which Purchaser is a party and to perform its obligations hereunder and thereunder.

4.2 AUTHORIZATION OF TRANSACTION. The execution, delivery and performance of this Agreement and the other agreements contemplated hereby to which Purchaser is a party have been duly and validly authorized by all requisite corporate or organizational action on the part of Purchaser, and no other corporate or organizational proceedings on their part are necessary to authorize the execution, delivery or performance of this Agreement. This Agreement constitutes, and each of the other agreements contemplated hereby to which Purchaser is a party shall when executed constitute, a valid and binding obligation of Purchaser, enforceable in accordance with their terms. 4.3 NO VIOLATION. Purchaser is not subject to or obligated under its certificate of incorporation or by-laws (or equivalent governing documents) or any applicable material law, rule or regulation of any governmental authority, or any agreement or instrument, or any license, franchise or permit, or any order, writ, injunction or decree, that would be breached or violated by Purchaser's execution, delivery or performance of the Transaction Documents to which Purchaser is a party. 4.4 GOVERNMENTAL AUTHORITIES AND CONSENTS. Purchaser is not required to submit any notice, report or other filing (except in connection with the applicable requirements of the HSR Act) with any governmental authority in connection with the execution or delivery by Purchaser of the Transaction Documents to which Purchaser is a party or the consummation of the transactions contemplated hereby or thereby. No consent, approval or authorization of any governmental or regulatory authority (except in connection with the applicable requirements of the HSR Act) or any other party or Person is required to be obtained by Purchaser in connection with its execution, delivery and performance of the Transaction Documents to which Purchaser is a party or the transactions contemplated hereby or thereby. 4.5 LITIGATION. There are no material actions, suits, proceedings or orders pending or, to Purchaser's Knowledge, threatened against or affecting Purchaser at law or in equity, or before or by any federal, state, municipal or other governmental court, department, commission, board, bureau, agency or instrumentality, domestic or foreign, that would adversely affect Purchaser's ability to perform its obligations under the Transaction Documents to which Purchaser is a party or the consummation of the transactions contemplated hereby or thereby. 4.6 BROKERS. Neither Purchaser nor any of Purchaser's Affiliates has retained any broker or finder in connection with any of the transactions contemplated by this Agreement, and neither Purchaser nor any of Purchaser's Affiliates has incurred or agreed to pay, or taken any other action that would entitle any Person to receive, any brokerage fee, finder's fee or other similar fee or commission with respect to any of the transactions contemplated by this Agreement. 4.7 ACCESS; ACCREDITED INVESTOR STATUS. Purchaser and its agents and associates have been given access to the assets, books, records, contracts and employees of the Acquired Companies, and have been given the opportunity to meet with officers and other representatives of Seller and the Acquired Companies for the purpose of asking questions concerning, and investigating and obtaining information regarding the Acquired Companies' business, operations and legal affairs. Purchaser is an "ACCREDITED INVESTOR" within the meaning of Regulation D promulgated under the Securities Act.

4.8 FUNDS. As of the Closing Date, Purchaser shall have funds sufficient to pay the Purchase Price and to complete the transactions contemplated by this Agreement. 4.9 BENEFICIAL OWNERSHIP OF SELLER COMMON STOCK; ACQUISITION OF ACQUIRED STOCK. As of the date hereof, Purchaser and its Subsidiaries individually or collectively do not beneficially own (as such term is defined and interpreted pursuant to Rule 13d-3 under the Exchange Act) more than 4.99% of Seller's common stock outstanding as of the date hereof. Purchaser is acquiring the Acquired Stock for its own account and for investment, and not with a view to, or for sale in connection with, any distribution of any of such Acquired Stock, PROVIDED, HOWEVER, that the disposition of the Acquired Stock shall at all times remain in Purchaser's control. 4.10 PROXY STATEMENT. None of the information supplied or to be supplied in writing by Purchaser specifically for inclusion in the Proxy Statement will on the date it is first mailed to the Company's stockholders contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading. SECTION 5. PRE-CLOSING COVENANTS OF SELLER Seller agrees that, between the date of this Agreement and the Closing Date: 5.1 AFFIRMATIVE COVENANTS OF SELLER. Seller covenants and agrees that, from the date of this Agreement and until the Closing or the date, if any, on which this Agreement is earlier terminated pursuant to Section 9.1 hereof, unless Purchaser otherwise consents in writing (which consent shall not be unreasonably withheld or delayed) and except as expressly contemplated by this Agreement, Seller shall cause each of the Acquired Companies to: (a) conduct the business and operations of the Acquired Companies only in the Ordinary Course of Business; (b) keep in full force and effect the corporate existence of the Acquired Companies and all rights, franchises and material Proprietary Rights relating or pertaining to the Acquired Companies and use its reasonable best efforts to cause its current insurance (or reinsurance) policies not to be modified, canceled or terminated or any of the coverage thereunder to lapse; (c) use its reasonable best efforts to carry on the business of the Acquired Companies in the Ordinary Course of Business and to keep the business organizations and properties of the Acquired Companies intact in the Ordinary Course of Business, including business operations, physical facilities, working conditions and employees and relationships with lessors, licensors, suppliers and customers and others having business relations with it; (d) maintain the material assets of the Acquired Companies in such ordinary repair, order and condition (normal wear and tear excepted) consistent with historical needs, replace in accordance with reasonable business practices its inoperable, worn out or obsolete assets with assets of good quality consistent with prudent practices and current needs and, in the event of a casualty, loss or damage to any of such assets or properties prior to the Closing Date

(whether or not such casualty, loss or damage is covered by insurance), either repair or replace such damaged property or use the proceeds of such insurance in such other manner as mutually agreed upon by Seller and Purchaser; (e) encourage all key employees of the Acquired Companies to continue their employment with the Acquired Companies or Purchaser or its Subsidiaries after the Closing; (f) maintain the books, accounts and records of the Acquired Companies in accordance with past custom and practice as used in the preparation of the Financial Statements; (g) cooperate with Purchaser and use reasonable best efforts to cause the conditions to Purchaser's obligations to close to be satisfied (including, without limitation, the execution and delivery of all agreements contemplated hereunder to be so executed and delivered and the making and obtaining of all Required Approvals necessary to consummate the transactions contemplated hereby (including, without limitation, all approvals under the HSR Act); (h) maintain the existence of and use reasonable best efforts to protect all material Proprietary Rights used by the Acquired Companies; (i) maintain the existence of and protect all of the material governmental permits, licenses, approvals and other authorizations of the Acquired Companies; (j) comply in all material respects with all applicable laws, ordinances, and regulations in the operation of the Acquired Companies and promptly following receipt thereof, give Purchaser copies of any notice received from any governmental or regulatory authority or other Person alleging violation thereof; and (k) cooperate with Purchaser in its reasonable investigation of the business, assets and properties of the Acquired Companies and permit Purchaser and its employees, agents, accounting, legal and other authorized representatives, upon reasonable notice and at reasonable hours, to discuss the affairs, finances and accounts of any of the Acquired Companies with the officers, partners, key employees and independent accountants of the Acquired Companies. 5.2 NEGATIVE COVENANTS OF SELLER. Seller covenants and agrees that, from the date of this Agreement and until the Closing or the date, if any, on which this Agreement is earlier terminated pursuant to Section 9.1 hereof ((i) unless Purchaser otherwise consents in writing (which consent shall not be unreasonably withheld or delayed), (ii) unless Seller or an Acquired Company takes such action and causes any related obligations and liabilities to be fully and unconditionally discharged without any cost or expense to any Acquired Company associated therewith following the Closing Date, or (iii) except as expressly contemplated by this Agreement) Seller shall cause each of the Acquired Companies to not: (a) (i) make any loans, enter into any non-arm's length transaction with any Insider, (ii) make or grant any increase in any Acquired Company's employee's, officer's or consultant's compensation outside of the Ordinary Course of Business, (iii) adopt or amend any employee benefit plan, incentive arrangement or other benefit covering any of the employees or

consultants of the Acquired Companies outside of the Ordinary Course of Business, or (iv) adopt or modify any target performance goals which would have the effect of increasing compensation specified in clause (ii) or (iii) above; (b) except as specifically contemplated by this Agreement, enter into, modify, amend or terminate any contract, agreement or transaction, other than in the Ordinary Course of Business and at arm's length, with any unaffiliated Person or any Insider or waive, release or assign any material rights or claims thereunder; (c) cause any properties, assets, rights or interests related primarily to the Acquired Companies prior to the date hereof to become primarily used by or primarily related to Seller or any Subsidiary of Seller (excluding the Acquired Companies); (d) amend the certificates or articles of incorporation or by-laws (or other comparable corporate charter documents) of any of the Acquired Companies or take any action with respect to any such amendment or any reorganization, liquidation or dissolution of any such corporation; (e) authorize, issue, sell or otherwise dispose of any shares of Capital Stock of, securities convertible into shares of Capital Stock of, ownership interests in or any option with respect to, any Acquired Company, or modify or amend any right of any holder of outstanding shares of Capital Stock of, ownership interest in or option with respect to any Acquired Company; (f) directly or indirectly redeem, purchase or otherwise acquire any Capital Stock of, ownership interest in or any option with respect to any Acquired Company; (g) acquire, lease or dispose of any tangible assets or properties of any Acquired Company or the Business other than such amounts that in the aggregate do not exceed $50,000; (h) violate, breach or default under in any material respect, or take or fail to take any action that (with or without notice or lapse of time or both) would constitute a material violation or breach of, or default under, any term or provision of any material license held or used by any Acquired Company or any material contract to which any Acquired Company is a party or by which any of their respective assets and properties is bound; (i) (i) incur indebtedness of more than $20,000 or (ii) voluntarily purchase, cancel, prepay or otherwise provide for a complete or partial discharge in advance of a scheduled payment date with respect to, or waive any right of an Acquired Company under, any indebtedness of or owing to any Acquired Company (in either case other than indebtedness of any Acquired Company owing to any Acquired Company); (j) enter into change of control, severance agreements or similar arrangements;

(k) split, combine or reclassify any of shares of Capital Stock of any Acquired Company or issue or authorize the issuance of any other securities in respect of, in lieu of, or in substitution for such shares of Capital Stock of any Acquired Company; (l) acquire or agree to acquire by merging or consolidating with, or by purchasing any equity interest in or a portion of the assets of, or by any other manner, any business or any Person; (m) make any payments outside of the Ordinary Course of Business; (n) except as required by GAAP, make any material change in accounting methods, principles or practices; (o) settle any pending or threatened claim, action or proceeding brought by any Person (other than full and unconditional settlements which do not admit liability and only require payments of less than $5,000); (p) enter into any agreement to lease real property; or (q) agree in writing or otherwise take any of the actions described in Section 5.2. 5.3 EMPLOYEES IN NORTH CAROLINA. Seller shall terminate on or prior to the Closing Date, those employees listed on the TERMINATED EMPLOYEES SCHEDULE (the "TERMINATED EMPLOYEES") in accordance with the terms of any applicable employment agreement. Seller hereby agrees that all obligations and liabilities arising out of the termination of such Terminated Employees, including severance obligations that may be included in employment agreements, shall be the sole responsibility of (i) Seller or (ii) the Acquired Companies, but only if fully and unconditionally discharged and paid on or prior to the Closing Date. 5.4 ACCESS. Subject to the provisions of the Confidentiality Agreement and Section 6, Seller shall, after receiving reasonable advance notice from Purchaser, give Purchaser reasonable access (during normal business hours) to the books, records, properties, facilities and contracts of the Acquired Companies for the purpose of enabling Purchaser to further investigate and inspect, at Purchaser's sole expense, the business, properties, facilities, operations and legal affairs of the Acquired Companies. 5.5 CONDITIONS. Seller shall use reasonable best efforts to ensure that the conditions set forth in Section 7 and Section 8.3 are satisfied on a timely basis. 5.6 PREPARATION OF PROXY STATEMENT; STOCKHOLDERS MEETING. (a) As soon as practicable following the date of this Agreement, Seller shall prepare and file with the SEC the Proxy Statement. Seller shall use all reasonable best efforts to respond to comments of the SEC concerning the Proxy Statement to enable the SEC to orally confirm that it has no comments, or no further comments, concerning the Proxy Statement ("PROXY CLEARANCE") as promptly as practicable after such filing. Subject to Section 5.7(d), Seller will use its reasonable best efforts to cause the Proxy Statement to be mailed to Seller's

stockholders as promptly as practicable after oral notification of Proxy Clearance. The Proxy Statement shall not be filed, no amendment or supplement thereto shall be made by Seller nor shall the Proxy Statement be distributed without the prior consent of Purchaser and its counsel, which consent shall not be unreasonably withheld or delayed. Seller shall notify Purchaser of the receipt of any comments of the SEC and of any requests by the SEC for amendments or supplements to the Proxy Statement, or for additional information, and shall promptly supply Purchaser with copies of all correspondence between Seller (or its representatives) and the SEC (or its staff) with respect thereto. Whenever any event occurs which is required to be set forth in an amendment or supplement to the Proxy Statement, Seller or Purchaser, as the case may be, will promptly inform the other of such occurrence and cooperate in the filing with the SEC or its staff, and/or mailing to stockholders of Seller, such amendment or supplement. (b) Subject to Section 5.7(d), Seller will, as soon as reasonably practicable in connection with obtaining Proxy Clearance, establish a record date for, duly call, give notice of, convene and hold the Stockholders Meeting and take all related actions pursuant to DGCL and NASDAQ requirements and Seller's certificate of incorporation and bylaws required for a stockholders meeting. Subject to Section 5.7(d), the Proxy Statement shall include a statement to the effect that Seller's Board of Directors recommended that Seller's stockholders vote in favor of and adopt and approve this Agreement and the transactions contemplated hereby at the Stockholders Meeting. 5.7 COVENANTS COVERING COMPETING TRANSACTIONS FOR THE ACQUIRED COMPANIES; RELATED MATTERS. (a) From the date hereof until the termination of this Agreement, Seller (and its Affiliates) will not, and Seller (and its Affiliates) will use reasonable best efforts to ensure that their respective officers, directors, employees, investment bankers, attorneys, accountants and other agents do not, directly or indirectly: (i) initiate, solicit or encourage, or take any action to facilitate any inquiries or the making of, any offer or proposal which constitutes or is reasonably likely to lead to any Takeover Proposal (as defined below), or (ii) engage in negotiations or discussions with, or provide any non-public information or data concerning the Acquired Companies or the Business to, any Person (other than Purchaser or any of its Affiliates or representatives) relating to any Takeover Proposal whether made before or after the date of this Agreement, PROVIDED, HOWEVER, that Seller may, in response to an unsolicited bona fide written Takeover Proposal by any Person, disclose such non-public information to or engage in negotiations with such Person, if, prior to taking such actions: (i) the proposal did not result from a breach of this Section 5.7(a), (ii) Seller's Board of Directors determines in good faith after consultation with legal counsel that such action is consistent with its fiduciary duties under applicable law, (iii) the Board of Directors of Seller determines in good faith (after consultation with its financial advisor) that such Takeover Proposal is reasonably likely to be a Superior Proposal, and, (iv) Seller receives from such Person an executed confidentiality agreement with terms no less favorable to Seller than those contained in the Letter Agreement, dated as of June 26, 2000, between Seller and Purchaser ("CONFIDENTIALITY AGREEMENT"). Subject to Section 5.7(d), Seller may not withdraw, qualify or modify, or propose to withdraw, qualify or modify, its position with respect to this Agreement and the transactions contemplated hereby or approve or recommend, or propose to approve or recommend any Takeover Proposal, or enter into any letter of intent, agreement in principal, acquisition agreement or other similar agreement with

respect to any Takeover Proposal. Seller agrees that it will immediately cease and cause to be terminated any existing activities, discussions or negotiations with any parties conducted heretofore with respect to any Takeover Proposal Interest (as defined below). Seller agrees that it will take the necessary steps to promptly inform the individuals or entities referred to in the first sentence hereof of the obligations undertaken in this Section 5.7. At any time prior to the earlier of the Closing and the termination of this Agreement, Seller shall notify Purchaser as promptly as practicable, and in any event not later than the next day, of any inquiries, expressions of interest, requests for information, proposals or offers received by Seller or any of Seller's representatives relating to a Takeover Proposal (a "TAKEOVER PROPOSAL INTEREST") indicating, in connection with such notice, the name of the Person indicating such Takeover Proposal Interest and the material terms and conditions of any proposals or offers, and thereafter shall keep Purchaser informed, on a current basis, of any material changes in the status and content of any such proposals or offers (b) As used in this Agreement, "TAKEOVER PROPOSAL" shall mean (1) any proposal for a merger, consolidation or other business combination concerning only the Acquired Companies, (2) any proposal or offer to acquire in any manner, directly or indirectly, any part of the assets or Capital Stock of any or all of the Acquired Companies, and (3) any proposal or offer with respect to any recapitalization or restructuring concerning either of the Acquired Companies or any proposal or offer with respect to any other transaction similar to any of the foregoing relating to any of the Acquired Companies; PROVIDED, HOWEVER, that the term "TAKEOVER PROPOSAL" shall not include a proposal to engage in a merger, consolidation, or business combination transaction or similar transaction involving Seller or a proposal to divest or sell, or a proposal constituting any offer (other than an issuer self-tender offer or stock repurchase) for, any or all of Seller's Capital Stock and which proposal excludes the direct or indirect acquisition of Acquired Stock or the Acquired Companies or the Business. For purposes of this Agreement, "SUPERIOR PROPOSAL" means a Takeover Proposal that involves at least 75% of the fair market value of the assets or Capital Stock of the Acquired Companies, taken as a whole, which the Board of Directors of Seller determines in good faith (based on consultation with its financial advisor, taking into account all of the terms and conditions of the Takeover Proposal, including any conditions to consummation) to be more favorable and provide greater value to Seller than the sale and purchase of the Acquired Stock under this Agreement. (c) Nothing contained in this Agreement shall prevent Seller or its Board of Directors from taking and disclosing to its stockholders a position contemplated by Rule 14d-9 or complying with Rule 14e-2(a) promulgated under the Exchange Act. (d) Neither Seller's Board of Directors nor any committee thereof shall withdraw, qualify or modify or propose to withdraw, qualify or modify, in a manner adverse to Purchaser, the approval or recommendation of this Agreement and the transactions contemplated hereby by Seller's Board of Directors unless the Board of Directors of Seller determines in good faith, after consultation with outside counsel, that a failure to withdraw, qualify or modify such approval or recommendation of this Agreement and the transactions contemplated hereby (or propose to do such) would be inconsistent with its fiduciary duties to Seller's stockholders under applicable law. Neither Seller's Board of Directors nor any committee thereof shall (i) approve or recommend, or propose to approve or recommend, a Takeover Proposal that is not a Superior

Proposal or (ii) cause Seller or its Affiliates to enter into any letter of intent, agreement in principle, acquisition agreement or other similar agreement with respect to a Takeover Proposal that is not a Superior Proposal unless (A) in the case of clause (i) and (ii), Seller's Board of Directors determines in good faith, after consultation with Seller's financial and legal advisors that such action is consistent with their fiduciary duties under applicable law and (B) in the case of clause (ii), Seller complies with the termination provisions of Section 9. 5.8 INTERCOMPANY ACCOUNTS. Immediately prior to the Closing, Seller shall cause: (i) all intercompany accounts (including liabilities) that exist immediately prior to the Closing between any Acquired Company, on the one hand, and Seller or any of its subsidiaries on the other hand; and (ii) at the request of Purchaser, any intercompany accounts between the Acquired Companies that exist immediately prior to the Closing, to be canceled, contributed and/or liquidated on terms reasonably satisfactory to Purchaser without any post-Closing payment or obligation on the part of Seller or its Subsidiaries and without any cost, liability, expense or obligation to the Acquired Companies following the Closing Date. SECTION 6. PRE-CLOSING COVENANTS OF PURCHASER 6.1 COVENANTS OF PURCHASER. Purchaser agrees that, between the date of this Agreement and the Closing Date, Purchaser shall: (a) cooperate with Seller and use its reasonable best efforts to cause the conditions to Seller's obligation to close to be satisfied (including, without limitation, the execution and delivery of all agreements contemplated hereunder to be so executed and delivered and the making and obtaining of all third party and governmental filings, authorizations, approvals, consents, releases and terminations); (b) cooperate with Seller and use reasonable best efforts to obtain all Required Approvals necessary to consummate the transactions contemplated hereby (including, without limitation, all approvals under the HSR Act); (c) shall not interfere in any manner with the business or operations of the Acquired Companies or with the performance of any of the Acquired Companies' employees; and (d) furnish all information concerning itself or its involvement in the transactions contemplated by this Agreement as may be reasonably requested by Seller in connection with the preparation, filing and distribution of the Proxy Statement. 6.2 CONDITIONS. Purchaser shall use reasonable efforts to attempt to ensure that the conditions set forth in Section 7.3 and Section 8 are satisfied on a timely basis.

SECTION 7. CONDITIONS TO OBLIGATION OF PURCHASER TO CLOSE The obligation of Purchaser to purchase the Acquired Stock and otherwise consummate the transactions that are to be consummated at the Closing is subject to the satisfaction, as of the Closing Date, of the following conditions (any of which may be waived by Purchaser in whole or in part): 7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and warranties set forth in Section 3 hereof shall be true and correct in all respects (but without regard to any materiality qualifications or references to Material Adverse Effect contained in any specific representation or warranty) as of the Closing Date of this Agreement, except (x) for changes permitted by the terms of this Agreement; (y) that the accuracy of representations and warranties that by their terms speak as of the date of this Agreement or some earlier date will be determined as of such specified date; and (z) where any such failure of the representations and warranties, in the aggregate, to be true and correct in all respects would not have a Material Adverse Effect. 7.2 PERFORMANCE. Seller shall have performed and complied with, in all material respects, all obligations, covenants and agreements required by this Agreement to be performed by Seller on or before the Closing Date. 7.3 STOCKHOLDER APPROVAL. The holders of a majority of the shares of common stock of Seller outstanding on the record date and entitled to vote thereon at the Stockholders Meeting shall have adopted and approved this Agreement and the transactions contemplated hereby. 7.4 REQUIRED APPROVALS. The applicable waiting periods, if any, under the HSR Act shall have expired or been terminated and any other governmental filings, authorizations and approvals that are required for the consummation of the Closing (the "REQUIRED APPROVALS") shall have been obtained, except where the failure to obtain such Required Approvals are not reasonably likely to have a Material Adverse Effect; 7.5 NO INJUNCTION. There shall not be in effect, as of the Closing Date, any (i) injunction or binding order of any court or other tribunal having jurisdiction over Seller or Purchaser that prohibits or makes illegal the purchase of the Acquired Stock by Purchaser and there shall not be pending or threatened on the Closing Date any action, suit or proceeding by any governmental or regulatory authority which could reasonably be expected to result in the issuance of any such order, or (ii) law or regulation that is enacted or adopted in final form, that prohibits or makes illegal the purchase of the Acquired Stock by Purchaser. 7.6 CLOSING DELIVERABLES. On or prior to the Closing Date, Seller shall have delivered to Purchaser all of the following: (a) a certificate from Seller in a form reasonably satisfactory to Purchaser, dated the Closing Date, stating that the preconditions specified in Sections 7.1, 7.2 and 7.3 have been satisfied;

(b) copies of resolutions, certified by the Secretary of Seller, of Seller's board of directors and stockholders approving this Agreement and the transactions contemplated by this Agreement; (c) certificates of the Secretary of State of the State of Delaware and all other states where any of the Acquired Companies are qualified to do business providing that such Acquired Company is in good standing, except where any failure to be so qualified to do business, individually or in the aggregate, would not give rise to a Material Adverse Effect; (d) a copy of the certificate of incorporation or equivalent governing document for each Acquired Company, certified by the appropriate authority in the jurisdiction in which such entity was incorporated or organized; (e) a copy of the bylaws or equivalent governing document for each Acquired Company, certified by an officer of such Acquired Company; (f) all stock certificates and other instruments evidencing ownership of each of the Acquired Companies; (g) all minutes books, stock books, ledgers and registers, corporate seals and other corporate records relating to the organization, ownership and maintenance of each Acquired Company; (h) a counterpart executed copy of an assignment agreement in substantially the form attached hereto as EXHIBIT B of Seller's indemnification rights related to the Acquired Companies under the Asset Purchase Agreement, dated as of December 19, 1999, by and among StaffMark, Inc., StaffMark Acquisition Corporation Seventeen, ClinForce, L.L.C. and Irene Eisgrau Associates, Inc.; (i) resignation letters delivered by members of the Board of Directors of each Acquired Company, effective as of the Closing; (j) a legal opinion (subject to certain qualifications and assumptions) of counsel to Seller that such counsel is of the opinion that the Transaction Documents have been duly authorized by Seller and are enforceable against Seller in accordance with applicable law; and (k) such other documents or instruments as Purchaser may reasonably request to effect the transactions contemplated hereby. 7.7 NEW JERSEY PROPERTIES. For each property owned, leased or operated by any of the Acquired Companies in New Jersey, Seller shall have secured from the New Jersey Department of Environmental Protection ("NJDEP") and provided to Purchaser either (i) a Letter of Non-Applicability under New Jersey's Industrial Site Recovery Act, N.J.S.A. 12:K-6 et seq. ("ISRA"), or (ii) if it is determined that the transactions contemplated at Closing do trigger ISRA, for each of those properties for which ISRA is triggered, a written approval by the NJDEP of a negative declaration affidavit, which affidavit had been submitted by Seller to the NJDEP.

Seller shall provide Purchaser with copies of all submissions to, and any correspondence received from, NJDEP regarding ISRA. Any condition specified in this Section 7 may be waived by Purchaser in its sole discretion; PROVIDED that no such waiver shall be effective against Purchaser unless it is set forth in a writing executed by Purchaser. SECTION 8. CONDITIONS TO OBLIGATION OF SELLER TO CLOSE The obligation of Seller to sell the Acquired Stock to Purchaser and otherwise consummate the transactions that are to be consummated at the Closing is subject to the satisfaction, as of the Closing Date, of the following conditions (any of which may be waived by Seller in whole or in part): 8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and warranties of Purchaser set forth in Section 4 shall be accurate in all material respects as of the Closing Date. 8.2 PERFORMANCE. Purchaser shall have performed and complied with, in all material respects, all obligations, covenants and agreements required by this Agreement to be performed by Purchaser on or before the Closing Date. 8.3 STOCKHOLDER APPROVAL. The holders of a majority of the shares of common stock of Seller outstanding on the record date and entitled to vote thereon at the Stockholders Meeting shall have adopted and approved this Agreement and the transactions contemplated hereby. 8.4 REQUIRED APPROVALS. The Required Approvals shall have been obtained, except where the failure to obtain such Required Approvals are not reasonably likely to have a Material Adverse Effect; 8.5 NO INJUNCTION. There shall not be in effect, at the Closing Date, any (i) injunction or binding order of any court or other tribunal having jurisdiction over Seller or Purchaser that prohibits or makes illegal the sale of the Acquired Stock by Seller and there shall not be pending or threatened on the Closing Date any action, suit or proceeding by any governmental or regulatory authority which could reasonably be expected to result in the issuance of any such order, or (ii) or law or regulation that is enacted or adopted in final form, that prohibits or makes illegal the sale of the Acquired Stock by Seller. 8.6 CLOSING DELIVERABLES. On or prior to the Closing Date, Purchaser shall have delivered to Seller all of the following: (a) a certificate from Purchaser in a form reasonably satisfactory to Seller, dated the Closing Date, stating that the preconditions specified in Sections 8.1 and 8.2 have been satisfied; (b) copies of resolutions, certified by the Secretary of Purchaser, of the stockholders of Purchaser and of Purchaser's board of directors approving this Agreement and the transactions contemplated by this Agreement;

(c) certificates of the Secretary of State of the State of Delaware and all other states where Purchaser is qualified to do business providing that Purchaser is in good standing, except where any failure to be so qualified to do business, individually or in the aggregate, would not give rise to a Material Adverse Effect; (d) a copy of the certificate of incorporation and bylaws or equivalent governing documents of Purchaser certified by the appropriate authority in the jurisdiction in which such entity was incorporated or organized; (e) a legal opinion (subject to certain qualifications and assumptions) of counsel to Purchaser that such counsel is of the opinion that the Transaction Documents have been duly authorized by Purchaser and are enforceable against Purchaser in accordance with applicable law; (f) a counterpart executed copy of an assumption agreement in substantially the form attached hereto as EXHIBIT C whereby Purchaser and the Acquired Companies assume certain specified obligations of Seller related to the Acquired Companies; and (g) such other documents or instruments as Seller may reasonably request to effect the transactions contemplated hereby. Any condition specified in this Section 8 may be waived by Seller in its sole discretion; PROVIDED that no such waiver shall be effective unless it is set forth in a writing executed by Seller. SECTION 9. TERMINATION OF AGREEMENT 9.1 RIGHT TO TERMINATE AGREEMENT. This Agreement may be terminated at any time prior to the Closing: (a) by the mutual written agreement of Seller and Purchaser; (b) by Seller or Purchaser, if the Closing has not occurred on or prior to June 30, 2001; PROVIDED, HOWEVER, that neither Purchaser nor Seller shall be entitled to terminate this Agreement pursuant to this Section 9.1(b) if such party's failure to fulfill any of its obligations in any material respect under this Agreement has prevented the consummation of the transactions contemplated hereby at or prior to such time; (c) by Seller or Purchaser, if there shall be in effect any (i) final, non-appealable injunction or binding order of any court or other tribunal having jurisdiction over Seller or Purchaser that prohibits or makes illegal the purchase of the Acquired Stock by Purchaser or (ii) law or regulation that is enacted or adopted in final form, that prohibits or makes illegal the purchase of the Acquired Stock by Purchaser. (d) by Seller (subject to Seller's compliance in certain circumstances with Section 9.2(b)) or Purchaser, if this Agreement and the transactions contemplated hereby shall not have been approved at the Stockholders' Meeting in accordance with the Stockholder Vote Condition;

(e) by Purchaser, upon breach of any material representation, warranty or covenant on the part of Seller set forth in this Agreement, or if any representation or warranty of Seller shall have become untrue, in either case such that the conditions set forth in Section 7.1 or 7.2 would not be satisfied (a "TERMINATING SELLER BREACH"); PROVIDED, HOWEVER, that, if such Terminating Seller Breach is curable by Seller through exercise of all reasonable efforts and for so long as Seller continues to exercise such reasonable efforts, Purchaser may not terminate this Agreement under this Section 9.1(e); and PROVIDED FURTHER that the preceding proviso shall not in any event be deemed to extend any date set forth in clause (b) of this Section 9.1; (f) by Seller, upon breach of any material representation, warranty or covenant on the part of Purchaser set forth in this Agreement, or if any representation or warranty of Purchaser shall have become untrue, in either case such that the conditions set forth in Section 8.1 or 8.2 would not be satisfied (a "TERMINATING PURCHASER BREACH"); PROVIDED, HOWEVER, that, if such Terminating Purchaser Breach is curable by Purchaser through exercise of all reasonable efforts and for so long as Purchaser continues to exercise such reasonable efforts, Seller may not terminate this Agreement under this Section 9.1(f); and PROVIDED FURTHER that the preceding proviso shall not in any event be deemed to extend any date set forth in clause (b) of this Section 9.1; (g) by Purchaser under circumstances where (i) Seller's Board of Directors or any committee thereof withdraws, qualifies, or modifies, or proposes to withdraw, qualify or modify, in a manner adverse to Purchaser, the approval or recommendation of this Agreement and the transactions contemplated hereby by Seller's Board of Directors, (ii) Seller shall have failed to include in the Proxy Statement the recommendation of Seller's Board of Directors in favor of the adoption and approval of this Agreement and the transactions contemplated hereby, or (iii) Seller's Board of Directors or any committee thereof shall have approved or recommended, or proposed to approve or recommend, a Takeover Proposal; or (h) by Seller (subject to having complied with Section 5.7(d) and its compliance with Section 9.2(b)) or Purchaser, if Seller or its Affiliates shall have entered into a letter of intent, agreement in principle, acquisition agreement or other similar agreement with respect to a Takeover Proposal (a "DEFINITIVE COMPETING AGREEMENT"). Such right of termination shall be exercised by written notice of termination given by the terminating party to the other party hereto in the manner hereinafter provided. 9.2 EFFECT OF TERMINATION. (a) Subject to Sections 9.2(b) and 9.2(c) below, upon the termination of this Agreement pursuant to Section 9.1, each party's right of termination under Section 9.1 is in addition to any other rights it may have under this Agreement or otherwise, and the exercise of a right of termination will not be an election of remedies. If this Agreement is terminated pursuant to Section 9.1, all further obligations of the parties under this Agreement will terminate, except that the obligations in Sections 9.2(b), 9.2(c), 9.2(d) and Sections 12.5 and 12.12 will survive; PROVIDED, HOWEVER, that if this Agreement is terminated by a party because of the breach of the Agreement by the other party or because one or more of the conditions to the terminating party's obligations under this Agreement is not satisfied as a result of the other party's failure to comply with its obligations under this Agreement, the terminating party's right to pursue all legal remedies will survive such termination unimpaired.

(b) If or Purchaser shall have terminated this Agreement: (i) pursuant to clause (d) of Section 9.1, Seller shall, within one business day after the Stockholders Meeting, pay to Purchaser a termination fee of $500,000, payable in same day funds, if on or before the date of the Stockholders Meeting a Takeover Proposal shall have been disclosed, announced, commenced, submitted or made and either (A) such Takeover Proposal shall not have been affirmatively rejected by the Board of Directors of Seller or (B) Seller's Board of Directors shall have failed to recommend to Seller's stockholders the approval of this Agreement and the transactions contemplated hereby or withdrew, adversely modified or qualified any such recommendation previously given; (ii) pursuant to clause (g) of Section 9.1, Seller shall, within one business day following termination after such action or inaction specified therein, as the case may be, pay to Purchaser a termination fee of $500,000, in same day funds; or (iii) pursuant to clause (h) of Section 9.1, then Seller shall, on the day of execution of a Definitive Competing Agreement or, if such day is not a business day, the following business day, pay to Purchaser a termination fee of $1,240,000 payable in same day funds. (c) Any payment made pursuant to clause (i), (ii) or (iii) of Section 9.2(b) shall obviate any obligation to make a payment under any other clause of Section 9.2(b). If, following the occurrence of any event described in Section 9.2(b)(i) or Section 9.2(b)(ii), Seller or its Affiliates shall execute a Definitive Competing Agreement concerning a Takeover Proposal on or before the one-year anniversary of the date of termination of this Agreement pursuant to Section 9.1(d) or Section 9.1(g), as the case may be, Seller shall within one business day of such execution date pay to Purchaser a fee of $740,000 payable in same day funds, in addition to the $500,000 fee previously paid under Section 9.2(b)(i) or 9.2(b)(ii), as the case may be. It is expressly agreed that the remedies of Purchaser set forth in Section 9.2(b) and this Section 9.2(c) shall be its exclusive remedies for any termination of this Agreement pursuant to Sections 9.1(d), (g) or (h) hereof (and there shall be no other remedy for any other basis for termination hereunder) and, after any payment called for by this Section 9.2, following such termination and payment, all other obligations of Seller under this Agreement shall terminate. (d) Notwithstanding the occurrence of any termination pursuant to Section 9.1 hereof, no such termination shall have any effect upon the Confidentiality Agreement, which shall remain in full force and effect following any such termination. SECTION 10. INDEMNIFICATION RELATED MATTERS; TAXES 10.1 EXPIRATION OF REPRESENTATIONS, WARRANTIES AND COVENANTS. Except as set forth in the proviso hereto and except for Sections 5.3, 10.2, 10.3 and 11 hereof and the terms of the Confidentiality Agreement, the terms of which shall survive the Closing in accordance with the terms hereof and thereof, all of the representations, warranties and covenants of Seller and Purchaser set forth in this Agreement shall terminate and expire, and shall cease to be of any force or effect, on the Closing Date, and all liability of Seller and Purchaser with respect to such representations, warranties and covenants shall thereupon be extinguished; PROVIDED, HOWEVER,

that for the limited purposes of asserting an indemnification claim pursuant to Section 10.2, the provisions of introductory clause of Section 3 and (i) the representations and warranties in Sections 3.5, 3.18 and 3.19 hereof shall survive the Closing and shall expire on the eighteen (18) month anniversary of the Closing Date, (ii) the representations and warranties in Section 3.16 hereof shall survive the Closing and shall expire on the second anniversary of the Closing Date, and (iii) the representations and warranties in Sections 3.2 and 3.3 hereof shall survive the Closing and shall remain in full force and effect for an unlimited time. 10.2 INDEMNIFICATION BY SELLER. (a) Except for any claims for Damages under this Section 10.2 that properly constitute claims for Taxes under Section 10.3 (which claims shall be governed exclusively by Section 10.3 hereof and not by this Section 10.2), and subject to the provisions and limitations set forth in this Section 10.2, Seller shall indemnify Purchaser and the Acquired Companies and their respective directors and officers (each, an "INDEMNIFIED PARTY") against any Damages that an Indemnified Party incurs as a result of any misrepresentation or breach of any representation or warranty of Seller set forth in Sections 3.2, 3.3, 3.5, 3.16, 3.18 or 3.19 of this Agreement. (b) Without limiting the effect of any of the other limitations set forth herein, Seller shall not be required to make any indemnification payment under Section 10.2 hereof with respect to any breach of any of such representations and warranties referenced in this Section 10.2, except to the extent that the cumulative amount of the Damages actually incurred by the Indemnified Parties as a result of all such breaches of such representations and warranties actually exceeds the Deductible Amount (defined below); and Seller shall only be required to pay, and shall only be liable for, the amount by which the cumulative amount of the Damages actually incurred by the Indemnified Parties exceeds the Deductible Amount. The "DEDUCTIBLE AMOUNT" shall be $250,000 and there shall be excluded from the Deductible Amount any and all Damages with respect to Taxes, which shall be governed exclusively by Section 10.3 hereof. (c) The total amount of the payments that Seller can be required to make under or in connection with Section 10.2 of this Agreement (including all indemnification payments required to be made to the Indemnified Parties and all amounts payable to any counsel retained by Seller in accordance with this Section 10.2) shall be limited in the aggregate to a maximum amount equal to the Purchase Price, and Seller's cumulative liability shall in no event exceed such amount. (d) For purposes of this Section 10.2 only, Seller shall not be deemed to have breached any representation or warranty if the Indemnified Party had, on or prior to the Closing Date, any Knowledge of the breach of such representation or warranty. (e) Purchaser acknowledges that, except as expressly provided in Section 3, Seller has not made or is not making any representations or warranties whatsoever, implied or otherwise. (f) All claims for indemnification by any Indemnified Party under Section 10.2 will be asserted and resolved as follows:

(i) In the event any claim or demand in respect of which an Indemnified Party might seek indemnity under Section 10.2(a) is asserted against or sought to be collected from such Indemnified Party by a Person other than Seller (a "THIRD PARTY CLAIM"), the Indemnified Party shall deliver a Claim Notice with reasonable promptness to Seller. If the Indemnified Party fails to provide the Claim Notice with reasonable promptness after the Indemnified Party receives notice of such Third Party Claim, Seller will not be obligated to indemnify the Indemnified Party with respect to such Third Party Claim to the extent that Seller's ability to defend has been materially prejudiced by such failure of the Indemnified Party. Seller will notify the Indemnified Party as soon as practicable within the Dispute Period whether Seller disputes its liability to the Indemnified Party under Section 10.2, and whether Seller desires, at its sole cost and expense, to defend the Indemnified Party against such Third Party Claim. (A) If Seller notifies the Indemnified Party within the Dispute Period that Seller desires to defend the Indemnified Party with respect to the Third Party Claim pursuant to this Section 10.2(f), then Seller will have the right to defend, with counsel reasonably satisfactory to the Indemnified Party, at the sole cost and expense of Seller, such Third Party Claim by all appropriate proceedings, which proceedings will be vigorously and diligently prosecuted by Seller to a final conclusion or will be settled at the discretion of Seller (but only with the consent of the Indemnified Party in the case of any settlement that provides for any relief other than the payment of monetary damages or that provides for the payment of monetary damages as to which the Indemnified Party will not be indemnified in full (minus the Deductible Amount) pursuant to Section 10.2). Seller will have full control of such defense and proceedings; PROVIDED, HOWEVER, that the Indemnified Party may, at the sole cost and expense of the Indemnified Party, at any time prior to Seller's delivery of the notice referred to in the first sentence of this clause (A), file any motion, answer or other pleadings or take any other action that the Indemnified Party reasonably believes to be necessary or appropriate to protect its interests; and PROVIDED FURTHER, that if requested by Seller, the Indemnified Party will, at the sole cost and expense of Seller, provide reasonable cooperation to Seller in contesting any Third Party Claim that Seller elects to contest. The Indemnified Party may participate in, but not control, any defense or settlement of any Third Party Claim controlled by Seller pursuant to this clause (A), and except as provided in the preceding sentence, the Indemnified Party will bear its own costs and expenses with respect to such participation. Notwithstanding the foregoing, the Indemnified Party may take over the control of the defense or settlement of a Third Party Claim at any time if it irrevocably waives its right to indemnity under Section 10.2, with respect to such Third Party Claim. (B) If Seller fails to notify the Indemnified Party within the Dispute Period that Seller desires to defend the Third Party Claim pursuant to Section 10.2 or if Seller gives such notice but fails to prosecute vigorously and diligently or settle the Third Party Claim, or if Seller fails to give any notice whatsoever within the Dispute Period in respect of the foregoing, then the Indemnified Party will have the right to defend, at the sole cost and expense of Seller, the Third Party Claim by all commercially reasonable proceedings, which proceedings will be prosecuted by the Indemnified Party in a reasonable manner and in good faith or will be settled at the discretion of the Indemnified Party (with the consent of Seller, which consent will not be unreasonably withheld). The Indemnified Party will have full control of such defense and proceedings, including any compromise or settlement thereof; PROVIDED, HOWEVER, that if

requested by the Indemnified Party, Seller will, at its sole cost and expense, provide reasonable cooperation to the Indemnified Party and its counsel in contesting any Third Party Claim which the Indemnified Party is contesting. Notwithstanding the foregoing provisions of this clause (B), if Seller has notified the Indemnified Party within the Dispute Period that Seller disputes its liability hereunder to the Indemnified Party with respect to such Third Party Claim and if such dispute is resolved in favor of Seller in the manner provided in clause (C) below, Seller will not be required to bear the costs and expenses of the Indemnified Party's defense pursuant to this clause (B) or of Seller's participation therein at the Indemnified Party's request, and the Indemnified Party will reimburse Seller in full for all reasonable costs and expenses incurred by it in connection with such litigation. Seller may participate in, but not control, any defense or settlement controlled by the Indemnified Party pursuant to this clause (B), and Seller will bear its own costs and expenses with respect to such participation. (C) If Seller notifies the Indemnified Party that it does not dispute its liability to the Indemnified Party with respect to the Third Party Claim under Section 10.2, or fails to notify the Indemnified Party within the Dispute Period whether Seller disputes its liability to the Indemnified Party with respect to such Third Party Claim, the Damages in the amount specified in the Claim Notice will be conclusively deemed a liability of Seller under Section 10.2, and Seller shall pay the amount of such Damages to the Indemnified Party on demand. If Seller has timely disputed its liability with respect to such claim, Seller and the Indemnified Party will proceed in good faith to negotiate a resolution of such dispute, and if not resolved through negotiations within the Resolution Period, such dispute shall be resolved in accordance with paragraph (iii) of this Section 10.2(f). (ii) In the event any Indemnified Party should have a claim under Section 10.2 against Seller that does not involve a Third Party Claim, the Indemnified Party shall deliver an Indemnity Notice with reasonable promptness to Seller. The failure by any Indemnified Party to give the Indemnity Notice shall not impair such party's rights hereunder except to the extent that Seller demonstrates that it has been materially prejudiced thereby. If Seller notifies the Indemnified Party that it does not dispute the claim described in such Indemnity Notice or fails to notify the Indemnified Party within the Dispute Period that Seller disputes the claim described in such Indemnity Notice, the Damages in the amount specified in the Indemnity Notice will be conclusively deemed a liability of Seller under Section 10.2, and Seller shall pay the amount of such Damages to the Indemnified Party on demand. If Seller has timely disputed its liability with respect to such claim, Seller and the Indemnified Party will proceed in good faith to negotiate a resolution of such dispute, and if not resolved through negotiations within the Resolution Period, such dispute shall be resolved in accordance with paragraph (iii) of this Section 10.2. (iii) Any dispute pursuant to this Section 10.2 between the parties hereto and any Indemnified Party that is not a party hereto shall be finally and conclusively determined by the decision of a board of mediators consisting of three (3) members (hereinafter sometimes called the "BOARD OF MEDIATORS") selected as hereinafter provided. Each of the Indemnified Party and Seller shall select one (1) member and the third member shall be selected by mutual agreement of the other members, or if the other members fail to reach agreement on a third member within ten (10) days after their selection, such third member shall thereafter be selected by the American Arbitration Association upon application made to it for such purpose

by the Indemnified Party. Each of the Indemnified Party and Seller shall submit to the Board of Mediators the amount, if any, such party reasonably believes Seller is required to pay the Indemnified Party in respect of a claim filed by the Indemnified Party together with any supporting documentation necessary or appropriate to calculate such amount. The Board of Mediators shall meet in Boston, Massachusetts or such other place as a majority of the members of the Board of Mediators determines more appropriate, and shall reach and render a decision in writing (concurred by a majority of the members of the Board of Mediators) stating solely whether they agree with the amount submitted by Seller or the amount submitted by the Indemnified Party. The Board of Mediators' decision shall be limited to choosing between the two amounts presented and they shall not be permitted to disagree with both amounts submitted nor shall they be permitted to deviate from such amounts or propose an alternative resolution to the dispute. In connection with rendering its decisions, the Board of Mediators shall adopt and follow such rules and procedures as a majority of the members of the Board of Mediators deems necessary or appropriate. The decision of the Board of Mediators shall be rendered no more than thirty (30) calendar days following commencement of proceedings with respect thereto. The Board of Mediators shall cause its written decision to be delivered to the Indemnified Party and Seller. The decision of the Board of Mediators shall be final, binding and conclusive on the Indemnified Party and Seller and entitled to be enforced to the fullest extent permitted by law and entered in any court of competent jurisdiction. Each party to any mediation shall bear its own expense in relation thereto, including but not limited to such party's attorneys' fees, if any, and the expenses and fees of the member of the Board of Mediation appointed by such party, PROVIDED, HOWEVER, that the expenses and fees of the third member of the Board of Mediation and any other expenses of the Board of Mediation not capable of being attributed to any one member shall be borne in equal parts by Seller and the Indemnified Party. (g) The right of the Indemnified Parties to assert indemnification claims and receive indemnification payments pursuant to this Section 10.2 shall be the sole and exclusive right and remedy exercisable with respect to the breach of any representation or warranty specifically referenced in (and not excluded from) this Section 10.2. The Indemnified Parties acknowledge that the remedies for a breach of a representation or warranty of Seller under this Agreement shall be exclusively limited to the remedies under the provisions of Section 10.2 of this Agreement. 10.3 TAX MATTERS (a) From and after the Closing Date until 90 days after the expiration date of the applicable statute of limitations, Seller agrees to indemnify, without any gross-up for Taxes except as provided below, Purchaser and each Acquired Company against all Taxes: (i) relating to any Acquired Company (including Taxes arising out of the matters described in the LITIGATION SCHEDULE) for (A) any taxable period that ends on or before the Closing Date or (B) the portion ending on the Closing Date of any taxable period ending after the Closing Date; (ii) imposed on any Acquired Company under Treasury Regulations section 1.1502-6 or any similar state, local or foreign provision; PROVIDED, HOWEVER, that no indemnity shall be provided under this Agreement for any Taxes resulting from any transaction of any Acquired Company occurring after the Closing other than the deemed sales and liquidations resulting from the Section 338(h)(10) Elections as to which, subject to Section 10.3(j)(i), indemnity shall be provided; or (iii) relating to the failure of Seller to be the common parent of an affiliated group (as defined in

Code section 338(h)(5)) of which the Acquired Companies, on and before the Closing Date, are members or the failure of such affiliated group to file consolidated federal income tax returns for all periods of the Acquired Companies ending on or before the Closing Date. Any indemnity payment made hereunder by Seller to Purchaser shall, in accordance with Section 10.3(n)(i), be treated as an adjustment to the Purchase Price for Tax purposes; PROVIDED, HOWEVER, that to the extent all or any portion of any indemnification payment made pursuant to this Section 10.3 is finally determined by an applicable Tax authority to be treated other than as an adjustment to the Purchase Price and the payment of such claim is considered taxable income to Purchaser, then Seller shall also indemnify Purchaser for the amount of Taxes to be paid on such claim. (b) From and after the Closing Date until the expiration date of the applicable statute of limitations, Purchaser and the Acquired Companies shall indemnify, without any gross-up for Taxes except as provided below, Seller and its Affiliates against all Taxes resulting from any transaction of any such Acquired Company occurring after the Closing. Any indemnity payment made hereunder by Purchaser to Seller shall, in accordance with Section 10.3(n)(i), be treated as an adjustment to the Purchase Price for Tax purposes; PROVIDED, HOWEVER, that to the extent all or any portion of any indemnification payment made pursuant to this Section 10.3 is finally determined by an applicable Tax authority to be treated other than as an adjustment to the Purchase Price and the payment of such claim is considered taxable income to Seller, then Purchaser shall also indemnify Seller for the amount of Taxes to be paid on such claim. (c) Payment by the Tax indemnitor of any amount due under this Section 10.3 shall be made within ten days following written notice by the Tax indemnitee that payment of such amounts to the appropriate Tax authority is due; PROVIDED, that, the Tax indemnitor shall not be required to make any payment earlier than five days before it is due to the appropriate Tax authority. The provisions of the immediately preceding sentence shall apply with respect to a payment of Tax that is due despite the fact that the Tax is being contested; PROVIDED, HOWEVER, that the Tax indemnitor may post a bond or take any other action (that does not have any cost to, or adverse effect on, the Tax indemnitee) that prevents the payment of the Tax from becoming due. (d) For purposes of this Agreement, in the case of any Tax that is imposed on a periodic basis and is payable for a period that begins before the Closing Date and ends after the Closing Date, the portion of such Taxes payable for the portion of the period ending on the Closing Date shall be (i) in the case of any Tax other than a Tax based upon or measured by income, the amount of such Tax for the entire period multiplied by a fraction, the numerator of which is the number of days in the period ending on the Closing Date and the denominator of which is the number of days in the entire period and (ii) in the case of any Tax based upon or measured by income, the amount which would be payable if the taxable year ended on the Closing Date. Any credit that cannot be prorated pursuant to clause (ii) of the immediately preceding sentence shall be prorated based upon the fraction employed in clause (i) thereof. (e) Purchaser shall promptly pay to Seller any refund or credit (including any interest paid or credited with respect thereto) received by Purchaser or any Acquired Company of Taxes: (i) relating to taxable periods or portions thereof ending on or before the Closing Date; or (ii) attributable to an amount paid by Seller under Section 10.3(a) hereof, reduced in each case by the amount of any liability for Taxes incurred by Purchaser or the Acquired Companies as the

result of the receipt of the refund or credit. Purchaser shall, if Seller so requests and at Seller's expense, cause the relevant entity to file for and obtain any refund to which Seller is entitled under this Section 10.3(e). Purchaser shall permit Seller to control (at Seller's expense) the prosecution of any such refund claim, and shall cause the relevant entity to authorize by appropriate power of attorney such persons as Seller shall designate (subject to Purchaser's approval, which shall not be unreasonably withheld) to represent such entity with respect to such refund claim. (f) Purchaser and each Acquired Company shall elect, whenever permitted, to relinquish the entire carryback period with respect to any net operating loss, capital loss or Tax credit attributable to Purchaser or such Acquired Company in any taxable period beginning after the Closing Date that could be carried back to a taxable year of an Acquired Company ending on or before the Closing Date; whenever such an election is not permitted, Purchaser or any such Acquired Company may carry back such net operating loss, capital loss or Tax credit, as the case may be, to such prior taxable year and Seller shall pay to Purchaser, any Acquired Company, or any of their Affiliates any refund or credit of Taxes that results from such carryback. (g) After the Closing Date, Purchaser shall promptly notify Seller in writing of the commencement of any Tax audit or administrative or judicial proceeding or of any written demand or claim on Purchaser or any Acquired Company which, if determined adversely to the taxpayer would be grounds for indemnification under Section 10.3(a) or (b). Such notice shall include copies of any notice or other document received from any taxing authority in respect of any such asserted Tax liability. If Purchaser fails to give Seller prompt notice of an asserted Tax liability as required by this Section 10.3(g), then, if Seller is precluded by the failure to give prompt notice from contesting the asserted Tax liability in either the applicable administrative or the judicial forum, then Seller shall not have any obligation to indemnify for any loss arising out of such asserted Tax liability. (h) Seller may elect to direct, through Tax counsel of its own choosing (subject to Purchaser's approval, which shall not be unreasonably withheld) and at its own expense, the portion of any audit, claim for refund and administrative or judicial proceeding involving any asserted liability with respect to which indemnity may be sought under Section 10.3(a) (that portion of any such audit, claim for refund or proceeding relating to an asserted Tax liability is referred to herein as a "CONTEST"). If Seller elects to direct a Contest, it shall within 30 calendar days of receipt of the notice of asserted Tax liability, notify Purchaser in writing of its intent to do so and may not thereafter contest its obligation to indemnify Purchaser with respect to the subject matter of such Contest (but only with respect to such Taxes that are determined by the applicable Tax authority in such Contest to be Taxes that relate to any date, period, or portion of a period ending before the Closing Date), and Purchaser shall (i) cooperate and shall cause each Acquired Company or its respective successor or successors to cooperate, at Seller's expense, in each phase of such Contest and (ii) promptly empower and shall cause the Acquired Companies or their respective successors promptly to empower (by power of attorney and such other documentation as may be reasonably necessary and appropriate) such representatives of Seller as it may designate (subject to Purchaser's approval, which shall not be unreasonably withheld) to represent Purchaser or the Acquired Companies or their respective successors in the Contest insofar as the Contest involves an asserted Tax liability for which Seller would be liable under Section 10.3(a). If Seller elects not to direct the Contest, fails to notify Purchaser of its

election as herein provided or contests its obligation to indemnify under Section 10.3(a), Purchaser or any Acquired Company may pay, compromise or contest such asserted Tax liability. In any event, Seller may participate, at Seller's expense, in the Contest. (i) Seller shall prepare and file any Tax Returns and schedules relating to the Acquired Companies for the period ending on or before the Closing Date. Such Tax Returns and schedules shall be prepared on a basis consistent with those prepared for prior Tax years unless a different treatment of any item is required by an intervening change in law. Purchaser shall prepare or cause each Acquired Company to prepare any Tax Return relating to such Acquired Company for any period ending after the Closing Date. (j) The parties agree as follows with respect to Section 338(h)(10) of the Code: (i) Seller and, if applicable, its subsidiaries other than the Acquired Companies (the "NON-ACQUIRED SUBSIDIARIES") shall join with Purchaser in making a timely election under Section 338(h)(10) of the Code (and any corresponding election permitted under state or local tax law) with respect to the transactions contemplated hereby (the "SECTION 338(h)(10) ELECTIONS"); PROVIDED, HOWEVER, that Purchaser shall indemnify Seller for the Taxes that are imposed by any state taxing jurisdiction with respect to any Acquired Company as a result of any such Section 338(h)(10) Election to the extent that those Taxes exceed the amount of Taxes that would be imposed by that state taxing jurisdiction on a sale of the assets of the applicable Acquired Company and the Tax-free liquidation of that Acquired Company. At the closing, Seller shall deliver to Purchaser Internal Revenue Service Form 8023 and any other state or local forms required for the Section 338(h)(10) Elections (collectively, the "SECTION 338 FORMS"), each of the Section 338 Forms having been signed by Seller and any Non-acquired Subsidiaries requested by Purchaser. Each of the Section 338 Forms shall to the extent possible be completed at or prior to the Closing. To the extent that any item on a form has not been so completed, Purchaser's accountants shall complete the form in accordance with the purchase price allocation provided for in paragraph (ii) below. Seller shall at any time and from time to time after the Closing cooperate with Purchaser in connection with the Section 338 Elections, including the signing by Seller and the Non-acquired Subsidiaries of any forms that Purchaser may reasonably request in order to accomplish the Section 338 Elections. Purchaser and the Non-acquired Subsidiaries shall include any income, gain, loss, deduction, or other tax item resulting from the Section 338(h)(10) Elections on their Tax Returns to the extent required by applicable federal, state or local law. Purchaser shall be responsible for the preparation and filing of the Section 338 Forms. At least 30 days prior to the filing of the Section 338 Forms by Purchaser, Purchaser shall furnish such forms to Seller for Seller's review and approval, which approval shall not be unreasonably withheld. (ii) The Purchase Price and the liabilities of the Acquired Companies (plus other relevant items) (the "ALLOCABLE AMOUNT") shall be allocated to the categories of assets of the Acquired Companies for all purposes (including Tax and financial accounting) as shown on the "ALLOCATION SCHEDULE" attached hereto (which reflect the assets and liabilities of the Acquired Companies as of October 31, 2000), as adjusted to reflect: (i) changes in the amount of the Acquired Companies' liabilities from October 31, 2000

through the Closing Date and (ii) changes in the amounts of the Acquired Companies' assets from October 31, 2000 through the Closing Date; PROVIDED, HOWEVER, that the Allocable Amount shall be allocated among classes or categories of assets as provided by the Code and the related Treasury regulations, PROVIDED, FURTHER, that Purchaser shall provide the final allocation to Seller and consult with Seller prior to filing. The relative fair market values of the assets within each category and the amount allocated to the particular assets within each category shall be determined by Purchaser in a manner consistent with any requirements of the Code. Seller, Seller's subsidiaries, Purchaser and the Acquired Companies shall file all Tax Returns (including amended returns and claims for refund) and information reports in a manner consistent with such allocation. (k) All tax sharing agreements or similar agreements with respect to or involving the Acquired Companies shall be terminated as of the Closing Date and, after the Closing Date, the Acquired Companies shall not be bound thereby or have any liability thereunder. (l) Subject to the agreements in the other subsections of this Section 10.3, Seller and Purchaser will provide each other with such cooperation and information as either of them reasonably may request of the other in filing any Tax Return, amended Tax Return or claim for refund, determining a liability for Taxes or a right to a refund of Taxes or participating in or conducting any audit or other proceeding in respect of Taxes. Such cooperation and information shall include providing copies of relevant Tax Returns or portions thereof, together with accompanying schedules and related work papers and documents relating to rulings or other determinations by taxing authorities. Each party shall make its employees available on a mutually convenient basis to provide explanations of any documents or information provided hereunder. Each party will retain all Tax Returns, schedules and work papers and all material records or other documents relating to Tax matters of the Acquired Companies for the taxable period first ending after the Closing Date and for all prior taxable periods until the later of: (i) 90 days after the expiration of the statute of limitations of the taxable periods to which such Tax Returns and other documents relate, without regard to extensions except to the extent notified by the other party in writing of such extensions for the respective Tax periods; or (ii) eight years following the due date (without extension) for such Tax Returns. Any information obtained under this Section 10.3(l) shall be kept confidential, except as may be otherwise necessary in connection with the filing of Tax Returns or claims for refund or in conducting an audit or other proceeding. (m) Purchaser agrees to assume liability for and to pay all sales, use, transfer, stamp, stock transfer, real property transfer and similar Taxes incurred as a result of the Closing Transactions contemplated hereby. (n) The Parties agree as follows with respect to the following miscellaneous Tax matters: (i) The parties agree to treat all indemnification payments made under this Agreement as adjustments to the Purchase Price for Tax purposes; (ii) Section 10.3 shall be the sole provision governing Tax matters and indemnities therefor under this Agreement;

(iii) For purposes of this Section 10.3 all references to Purchaser, Seller, and the Acquired Companies include successors; and (iv) The covenants and agreements of the parties hereto contained in this Section 10.3 shall survive the Closing and shall remain in full force and effect until 90 days after the expiration of all statutes of limitations with respect to any Taxes that would be indemnifiable by Seller under Section 10.3(a) of this Agreement or by Purchaser under Section 10.3(b) of this Agreement. SECTION 11. ADDITIONAL COVENANTS 11.1 COVENANT OF SELLER NOT TO COMPETE: NONSOLICITATION. In consideration of the Purchase Price to be received under this Agreement, Seller agrees that, for a period of two (2) years after the Closing Date, it shall not directly or indirectly, do any of the following: (a) own, manage, operate, control, act as consultant or advisor to, render any services for, have any financial interest in, or otherwise be connected in any manner with the ownership, management, operation or control of any person, firm, partnership, corporation, or other entity that is engaged in the permanent placement and temporary staffing of clinical trials support services personnel (the "BUSINESS") anywhere within North America; PROVIDED, HOWEVER, that any one or more of the following items shall in no way breach, violate, or otherwise in any manner conflict with the noncompetition covenant in the preceding clause: (i) the operation by Seller directly or indirectly of all or a portion of its e-solutions, e-services, e-consulting, system hosting, web-hosting, custom software application development, custom system integration development and network configuration businesses (collectively, "E-SERVICES") and any maintenance for any such software or system development, including the rendering of any E-Services for, any Internet-based system or service for the temporary or permanent placement and staffing of clinical trials support services personnel; and (ii) the ownership of not more than five percent (5%) of any class of securities of any Person that engages in the Business and has a class of securities registered pursuant to Section 12 of the Exchange Act; or (b) solicit the Business of any Person who to Seller's Knowledge is a customer of the Acquired Companies or any Business from any Person who was a customer or account of any of the Acquired Companies at the time of the Closing or within the preceding one year period; PROVIDED, HOWEVER, that nothing in this Section 11.1 (b) shall restrict in any manner the ability of Seller or any of its Non-acquired Subsidiaries to solicit customers, suppliers, licensees, licensors or other business relations of the Acquired Companies in connection with operating the business of Seller and/or its Non-acquired Subsidiaries so long as such business does not violate Section 11.1(a). 11.2 CONFIDENTIALITY. Seller shall treat and hold as confidential for a period of two years following the Closing Date any information concerning the business and affairs of the Acquired Companies that is not available to the public as of the date of this Agreement or hereafter during such two-year period through no breach of this covenant by Seller (the "CONFIDENTIAL INFORMATION"), refrain from using any of the Confidential Information, except in connection with this Agreement, and deliver promptly to Purchaser or destroy, at the request and option of Purchaser, all tangible embodiments (and all copies) of the Confidential Information

which are Seller's possession or under Seller's control. In the event that Seller is requested or required (by oral question or request for information or documents in any legal proceeding, interrogatory, subpoena, civil investigative demand or similar process) to disclose any Confidential Information, Seller shall notify Purchaser promptly of the request or requirement so that Purchaser may seek an appropriate protective order at Purchaser's expense or waive compliance with the provisions of this Section 11.2. If, in the absence of a protective order or the receipt of a waiver hereunder, Seller on the advice of counsel, is compelled to disclose any Confidential Information to any tribunal or else stand liable for contempt, Seller may disclose the Confidential Information to the tribunal; PROVIDED, HOWEVER, that such disclosing Person shall use his or its reasonable best efforts to obtain, at the expense and request of Purchaser, an order or other assurance that confidential treatment shall be accorded to such expense and portion of the Confidential Information required to be disclosed as Purchaser shall designate. 11.3 DIVISIBILITY. Seller acknowledges that all of the foregoing provisions of Section 11 are reasonable and are necessary to protect and preserve the value of the Acquired Companies and to prevent any unfair advantage being conferred on Seller. If any of the covenants set forth in this Section are held to be unreasonable, arbitrary, or against public policy, the restrictive time period herein shall be deemed to be the longest period permissible by law under the circumstances and the restrictive geographical area herein shall be deemed to comprise the larger territory permissible by law under the circumstances. 11.4 TAX-QUALIFIED PLANS. On the Closing Date or as soon as practicable thereafter, Purchaser shall permit any active employee of an Acquired Company who has an account balance under the Edgewater Technology 401(k) Savings Plan (a "PARTICIPANT") to rollover (whether by direct or indirect rollover, as selected by such Participant) his or her "eligible rollover distribution" (as defined under Section 402(c)(4) of the Code) from the Edgewater Technology 401(k) Savings Plan to a retirement plan maintained by Purchaser or its affiliates that contains a cash or deferred arrangement under Section 401(k) of the Code ("PURCHASER 401(k) PLAN"). Seller acknowledges that on and after the Closing Date the account balances of employees of the Acquired Companies shall be distributable from the Edgewater Technology 401(k) Savings Plan in accordance with Section 401(k)(10) of the Code. Seller and the Edgewater Technology 401(k) Savings Plan shall not place any Participant's plan loan into default or declare a default with respect to any plan loan during the six-month period following the Closing Date or such shorter period as requested by Purchaser, so long as such Participant continues to make payments where due and transfers his or her account balance under the Edgewater Technology 401(k) Savings Plan, together with the note evidencing the plan loan, to the Purchaser 401(k) Plan through a direct rollover on or as soon as administratively practicable following the Closing. Purchaser shall be responsible for forwarding all loan payments under the Edgewater Technology 401(k) Savings Plan to the trustee of the Edgewater Technology 401(k) Savings Plan. Purchaser shall amend the Purchaser 401(k) Plan and Seller shall amend the Edgewater Technology 401(k) Savings Plan to the extent necessary in order to effectuate the transactions contemplated under this Section 11.4. Seller and Purchaser shall cooperate with each other (and cause the trustees of the Edgewater Technology 401(k) Savings Plan and Purchaser 401(k) Plan to cooperate with each other) with respect to the rollover of the distributions to the Participants.

SECTION 12. MISCELLANEOUS PROVISIONS 12.1 TIME OF ESSENCE. Time is of the essence of this Agreement. 12.2 COMPLIANCE WITH LAWS. Purchaser and Seller shall execute such agreements and other documents, and shall take such other actions, as Seller and Purchaser, as the case may be, may reasonably request (prior to, at or after the Closing) for the purpose of ensuring that the transactions contemplated by this Agreement are carried out in full compliance with the provisions of all applicable laws and regulations. 12.3 PUBLICITY. No press release, publicity, disclosure or notice to any Person concerning any of the transactions contemplated by this Agreement shall be issued, given, made or otherwise disseminated by Purchaser or Seller or any of their respective Affiliates or Associates at any time (whether prior to, at or after the Closing) without the prior consent of Seller and Purchaser, which consent shall not be unreasonably withheld. 12.4 ACCESS OF SELLER TO BOOKS AND RECORDS. At all times after the Closing Date, Purchaser shall give Seller and Seller's agents reasonable access to the books and records of the Acquired Companies (to the extent such books and records relate to the period prior to the Closing Date). 12.5 EXPENSES. Except as otherwise expressly provided in this Agreement, each party to this Agreement will bear its respective expenses incurred in connection with the preparation, execution and performance of this Agreement and the transactions contemplated thereby; PROVIDED, HOWEVER, that Purchaser shall deliver to Seller at Closing $22,500 in respect of HSR Act filing fees previously paid by Seller in connection with the transactions contemplated by this Agreement. 12.6 GOVERNING LAW. This Agreement shall be construed in accordance with, and governed in all respects by, the laws of the State of Delaware (without giving effect to principles of conflicts of law). 12.7 NOTICES. All notices and other communications under this Agreement shall be in writing and shall be deemed to have been duly given and duly delivered when received personally, by fax, mail or overnight delivery service by the intended recipient at the following address or fax number (or at such other address or fax number as the intended recipient shall have specified in a written notice given to the other party hereto): if to Purchaser: Cross Country TravCorps, Inc. 6551 Park of Commerce Blvd., N.W. Suite 200 Boca Raton, FL 33431 Attn: President Fax: (561) 912-9068

with a copy to: Proskauer Rose LLP 1585 Broadway New York, N.Y. 10036 Attn: Stephen Rubin, Esq. Fax: (212) 969-2900 if to Seller: Edgewater Technology, Inc. 234 East Millsap Rd. Fayetteville, Arkansas 72703 Attn: Clete T. Brewer Gordon Y. Allison, Esq. Fax: (501) 973-7909 with a copy to: Cooley Godward LLP One Freedom Square Reston Town Center 11951 Freedom Drive Reston, VA 20190-5601 Attn: Brian J. Lynch, Esq. Charles T. Haag, Esq. Fax: (703) 456-8100 12.8 TABLE OF CONTENTS AND HEADINGS. The table of contents of this Agreement and the underlined headings contained in this Agreement are for convenience of reference only, shall not be deemed to be a part of this Agreement and shall not be referred to in connection with the construction or interpretation of this Agreement. 12.9 ASSIGNMENT. Neither party hereto may assign any of its rights or delegate any of its obligations under this Agreement to any other Person without the prior written consent of the other party hereto, which shall not be unreasonably withheld; PROVIDED, HOWEVER, that Seller may, prior to the Closing, assign to any Person its right to receive all or any portion of the amount payable to Seller under Section 1.2. 12.10 PARTIES IN INTEREST. Nothing in this Agreement is intended to provide any rights or remedies to any Person (including any employee or creditor of the Company) other than the parties hereto and the Persons (in addition to the parties hereto) that may be entitled to indemnification pursuant to Section 10 of this Agreement. 12.11 SEVERABILITY. In the event that any provision of this Agreement, or the application of such provision to any Person or set of circumstances, shall be determined to be invalid, unlawful, void or unenforceable to any extent, the remainder of this Agreement, and the application of such provision to Persons or circumstances other than those as to which it is

determined to be invalid, unlawful, void or unenforceable, shall not be affected and shall continue to be valid and enforceable to the fullest extent permitted by law. 12.12 ENTIRE AGREEMENT. This Agreement, and the Confidentiality Agreement set forth the entire understanding of Purchaser and Seller and supersede all other agreements and understandings between Purchaser and Seller relating to the subject matter hereof and thereof. Regardless of any termination of this Agreement or any closing of the transactions contemplated by this Agreement, the Confidentiality Agreement shall remain in full force and effect in accordance with the terms thereof. 12.13 WAIVER. No failure on the part of either party hereto to exercise any power, right, privilege or remedy under this Agreement, and no delay on the part of either party hereto in exercising any power, right, privilege or remedy under this Agreement, shall operate as a waiver thereof; and no single or partial exercise of any such power, right, privilege or remedy shall preclude any other or further exercise thereof or of any other power, right, privilege or remedy. 12.14 AMENDMENTS. This Agreement may not be amended, modified, altered or supplemented except by means of a written instrument executed on behalf of both Purchaser and Seller. 12.15 INTERPRETATION OF AGREEMENT. (a) Each party hereto acknowledges that it has participated in the drafting of this Agreement, and any applicable rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be applied in connection with the construction or interpretation of this Agreement. (b) Whenever required by the context hereof, the singular number shall include the plural, and vice versa; the masculine gender shall include the feminine and neuter genders; and the neuter gender shall include the masculine and feminine genders. (c) As used in this Agreement, the words "INCLUDE" and "INCLUDING," and variations thereof, shall not be deemed to be terms of limitation, and shall be deemed to be followed by the words "WITHOUT LIMITATION." (d) References herein to "SECTIONS," "EXHIBITS," and "SCHEDULES" are intended to refer to Sections of and Exhibits and Schedules to this Agreement. [Signature Pages to Follow]

Purchaser and Seller have caused this Stock Purchase Agreement to be executed as of the date first written above. CROSS COUNTRY TRAVCORPS, INC. By: /s/ Joseph A. Boshart -------------------------------------- Name: Joseph A. Boshart Title: President and Chief Executive Officer EDGEWATER TECHNOLOGY, INC. By: /s/ Clete T. Brewer -------------------------------------- Name: Clete T. Brewer Title: Chairman and Chief Executive Officer

EXHIBIT A TO STOCK PURCHASE AGREEMENT DEFINED TERMS For purposes of this Agreement (including the Schedules thereto): "ACQUIRED COMPANIES" shall have the meaning specified in the recitals to this Agreement. "ACQUIRED STOCK" shall have the meaning specified in the recitals to this Agreement. "ADJUSTED NET WORKING CAPITAL" means the Net Working Capital MINUS any amount of the accounts receivable line item listed on the Closing Date Balance Sheet that remains unpaid on the Realization Date. "AFFILIATE" of any Person means any other Person controlling, controlled by or under common control with such first Person, where "CONTROL" means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities or otherwise. "AGREEMENT" means this Stock Purchase Agreement, including all Exhibits and Schedules hereto, as it may be amended from time to time in accordance with its terms. "ALLOCABLE AMOUNT" shall have the meaning specified in Section 10.3(j)(ii). "ASSOCIATES" of a Person shall include: (a) such Person's Affiliates, directors, officers, employees, agents, attorneys, accountants and representatives; and (b) all directors, officers, employees, agents, attorneys, accountants and representatives of each of such Person's Affiliates. "BUSINESS" shall have the meaning set forth in Section 11.1(a). "BENEFIT PLANS" shall have the meaning set forth in Section 3.13(a). "BOARD OF MEDIATORS" shall have the meaning set forth in Section 10.2(f)(iii). "CAPITAL STOCK" means (i) in the case of a corporation, any and all shares of capital stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of capital stock, (iii) in the case of a partnership or limited liability company, any and all partnership or membership interests (whether general or limited), (iv) in any case, any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, and (v) in any case, any right to acquire any of the foregoing.

"CLAIM NOTICE" means written notification pursuant to Section 10.2(f) of a Third Party Claim as to which indemnity under Section 10.2 is sought by an Indemnified Party, enclosing a copy of all papers served, if any, and specifying the nature of and basis for such Third Party Claim and for the Indemnified Party's claim against Seller under Section 10.2, together with the amount or, if not then reasonably ascertainable, the estimated amount determined in good faith, of such Third Party Claim. "CLOSING" shall have the meaning set forth in Section 2.1. "CLOSING DATE" shall mean the time and date as of which the Closing actually takes place. "CLOSING DATE BALANCE SHEET" means an unaudited combined balance sheet for the Acquired Companies as of the close of business on the Closing Date (determined on a pro forma basis as though the parties had not consummated the transactions contemplated by this Agreement) prepared in accordance with and applied on a basis consistent with the Latest Balance Sheet (subject to the same types of adjustments, including cutoff adjustments, as reflected in the Latest Balance Sheet, as well as being subject to the same inclusions, exclusions and exceptions set forth on the FINANCIAL STATEMENTS SCHEDULE); PROVIDED, HOWEVER, that the allowance for doubtful accounts amount in the Closing Date Balance Sheet shall be the same amount as that set forth in the Latest Balance Sheet. "CLOSING TRANSACTIONS" shall have the meaning set forth in Section 2.2. "COBRA" shall have the meaning set forth in Section 3.13(a). "CODE" means the United States Internal Revenue Code of 1986, as amended. "CONFIDENTIAL INFORMATION" shall have the meaning set forth in Section 11.2. "CONFIDENTIALITY AGREEMENT" shall have the meaning set forth in Section 5.7(a). "CONTEST" shall have the meaning specified in Section 10.3(j). "DAMAGES" shall mean out-of-pocket losses, out-of-pocket costs, including reasonable attorney fees for which an Indemnified Party shall have the right to receive reimbursement pursuant to Section 10 hereof, and out-of-pocket damages, excluding in each case lost profits, incidental, or special and consequential damages; PROVIDED, HOWEVER, that for purposes of computing the amount of Damages incurred by any Person, there shall be deducted: (a) in the case of an Acquired Company, an amount equal to the amount of any Tax benefit actually realized by such Acquired Company in connection with such Damages or the circumstances giving rise thereto; and (b) an amount equal to the amount of any insurance proceeds, indemnification payments, contribution payments or reimbursements received or receivable by such Person or any of such Person's Affiliates in connection with such Damages or the circumstances giving rise thereto. A-2

"DEDUCTIBLE AMOUNT" shall have the meaning specified in Section 10.2(b). "DEFINITIVE COMPETING AGREEMENT" shall have the meaning specified in Section 9.1(h). "DETERMINATION DATE" has the meaning set forth in Section 1.4(b). "DGCL" shall mean the General Corporation Law of the State of Delaware, as amended. "DISCLOSURE SCHEDULE" shall have the meaning set forth in Section 3. "DISPUTE NOTICE" means written notification during the Dispute Period to an Indemnified Party stating that Seller disputes its liability under Section 10.2 to such Indemnified Party with respect to the Indemnified Party's Claim Notice or Indemnity Notice. "DISPUTE PERIOD" means the period ending 30 calendar days following receipt by Seller of either a Claim Notice or an Indemnity Notice. "ENCUMBRANCE" shall mean any lien, pledge, hypothecation, charge, mortgage, security interest, equity, trust, equitable interest, claim, preference, right of possession, lease, tenancy, license, encroachment, covenant, interference, proxy, option, right of first refusal, preemptive right, community property interest, impediment, limitation, imperfection of title, condition or restriction of any nature (including any restriction on the transfer of any security or other asset, any restriction on the receipt of any income derived from any asset, any restriction on the use of any asset and any restriction on the possession, exercise or transfer of any other attribute of ownership of any asset). "ENVIRONMENTAL AND SAFETY REQUIREMENTS" means all federal, state, local and foreign statutes, regulations, rules, codes, judgments, ordinances and similar provisions having the force or effect of law, all judicial and administrative orders and determinations, all contractual obligations and all common law concerning public health and safety, worker health and safety and pollution or protection of the environment, including all such standards of conduct and bases of obligations relating to the presence, use, production, generation, handling, transport, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, or cleanup of any hazardous materials, substances or wastes, chemical substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum products or by-products, asbestos, polychlorinated biphenyls (or PCBs), noise or radiation. "ERISA" shall have the meaning set forth in Section 3.13(a). "ERISA AFFILIATE" shall have the meaning set forth in Section 3.13(a). "E-SERVICES" shall have the meaning set forth in Section 11.1(a). "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. "FINANCIAL STATEMENTS" shall have the meaning set forth in Section 3.5. "GAAP" means, at any given time, generally accepted accounting principles of the United States, consistently applied. A-3

"HSR ACT" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules promulgated thereunder. "INDEMNITY NOTICE" means written notification pursuant to Section 10.2 of a claim for indemnity under Section 10.2 by an Indemnified Party, specifying the nature of and basis for such claim, together with the amount or, if not then reasonably ascertainable, the estimated amount, determined in good faith, of such claim. "INDEPENDENT ACCOUNTING FIRM" has the meaning set forth in Section 1.4(b). "INITIAL NET WORKING CAPITAL" means $2,797,776, which is the amount equal to the difference of (x) the sum of the amounts from the Latest Balance Sheet of the following current asset accounts of the Acquired Companies: (A) cash accounts (which includes only payroll checks and accounts payable checks), (B) cash clearing (which includes only payments against accounts receivable), (C) restricted cash, (D) accounts receivable, (E) prepaid expenses, and (F) other current assets, MINUS (y) the sum of the amounts from the Latest Balance Sheet of the following current liability accounts of the Acquired Companies: (A) payroll and related liabilities, (B) accounts payable and (C) other accrued liabilities. "INSIDER" means, (i) any executive officer or director of Seller, any of the Acquired Companies, or any Affiliate of Seller (ii) any stockholder owning beneficially 5% or more of the Capital Stock of Seller (excluding any Person not otherwise referenced in clauses (i), (iii) or (iv) hereof that has filed, with respect to Seller, a beneficial ownership report on Schedule 13G under the Exchange Act), (iii) any partner of Seller or any of the Acquired Companies, or (iv) any Affiliate of Seller or any of the Acquired Companies, any spouse or descendant (natural or adopted) of any such individual, or any entity in which any such Person owns a controlling interest. "ISRA" shall have the meaning set forth in Section 7.7. "KNOWLEDGE" and terms of similar import mean, with respect to a Person, the actual knowledge of such individual, or if the Person is a corporation, the actual knowledge of the executive officers and directors of such Person (and in the case of Seller the directors and executive officers of the Acquired Companies) with respect to the particular matter in question. "LATEST BALANCE SHEET" shall have the meaning set forth in Section 3.5. "LEASES" has the meaning set forth in Section 3.20. "LICENSES" means all permits, licenses, franchises, certificates, approvals and other authorizations of third parties or foreign, federal, state or local governments or other similar rights. "LIENS" means, except with respect to any and all Permitted Encumbrances, any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including, without limitation, any conditional sale or other title retention agreement or lease in the nature thereof), any sale of receivables with recourse against Seller or any Affiliate, any filing or agreement to file a financing statement as debtor under the UCC or any similar statute other than to reflect A-4

ownership by a third party of property leased to any of the Acquired Companies under a lease which is not in the nature of a conditional sale or title retention agreement. "MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" means any material adverse effect on, or change in, the Business, financial condition or results of operations of the Acquired Companies, taken as a whole, other than any such effect directly arising out of or directly resulting from conditions affecting the permanent placement and temporary staffing of clinical trials support services personnel industry. "MATTER" shall mean any claim, demand, dispute, action, suit, examination, audit, proceeding, investigation, inquiry or other similar matter. "NET WORKING CAPITAL" means the amount equal to the difference of (x) the sum of the amounts from the Closing Date Balance Sheet of the following current asset accounts of the Acquired Companies: (A) cash accounts (which includes only payroll checks and accounts payable checks), (B) cash clearing (which includes only payments against accounts receivable), (C) restricted cash, (D) accounts receivable, (E) prepaid expenses, and (F) other current assets, MINUS (y) the sum of the amounts from the Closing Date Balance Sheet of the following current liability accounts of the Acquired Companies: (A) payroll and related liabilities, (B) accounts payable and (C) other accrued liabilities. "NET WORKING CAPITAL ADJUSTMENT" means the positive or negative difference of: (x) the Initial Net Working Capital MINUS (y) the Adjusted Net Working Capital. "NON-ACQUIRED SUBSIDIARIES" shall have the meaning set forth in Section 10.3(j)(i). "ORDINARY COURSE OF BUSINESS" means the ordinary course of any of the Acquired Companies' businesses, in each case consistent with past practice. "PARTICIPANT" shall have the meaning set forth in Section 11.4. "PERMITTED ENCUMBRANCES" shall mean: (A) statutory liens for current taxes or other governmental charges with respect to such property not yet due and payable or the amount or validity of which is being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP, which reserves are included in the Financial Statements; (B) mechanics, carriers, workers, repairers and similar statutory liens arising or incurred in the Ordinary Course of Business for amounts which are not reasonably likely, individually or in the aggregate, to have a Material Adverse Effect; (C) zoning, entitlement, building and other land use regulations imposed by governmental agencies having jurisdiction over such property which are not violated by the current use and operation of such property; and (D) covenants, conditions, restrictions, easements and other matters of record affecting title to such property which do not unreasonably interfere with the current use, occupancy, or value, or the marketability of title, of such property; (E) other Liens arising in the Ordinary Course of Business and not incurred in connection with the borrowing of money; (F) pledges or deposits in connection with or to secure workmen's compensation, unemployment insurance pension or other employee benefits; (G) any Lien renewing, extending or refunding any Lien permitted hereunder; and (H) Liens and imperfections of title the existence of which would not materially affect the use of the property subject thereto, consistent with past practice A-5

and (I) encumbrances arising out of any restriction on the receipt of income derived from any asset or on the possession or use of any asset, in either case resulting from the failure to obtain the consent of a third party in respect of the assignment of or conveyance of rights under any contract, lease or agreement of the Acquired Companies in connection with the transaction contemplated by this Agreement. "PERSON" shall mean any individual, corporation, association, general partnership, limited partnership, venture, trust, association, firm, organization, company, business, entity, union, society, government (or political subdivision thereof) or governmental agency, authority or instrumentality. "PROPRIETARY RIGHTS" means the following matters solely related to the business of the Acquired Companies only: (i) patents, patent applications, patent disclosures, as well as any reissues, continuations, continuations-in-part, divisions, extensions and reexaminations thereof, (ii) trademarks, service marks, trade dress, trade names, logos and corporate names, and registrations and applications for registration thereof, together with all of the goodwill associated therewith, (iii) copyrights (registered or unregistered) and copyrightable works and registrations and applications for registration thereof, (iv) Internet domain names and web sites, (v) computer software, data, data bases and documentation thereof, (vi) trade secrets and other confidential information (including, without limitation, formulas, compositions, inventions (whether patentable or unpatentable and whether or not reduced to practice), know-how, research and development information, drawings, specifications, designs, plans, proposals, technical data, financial and marketing plans, and customer and supplier lists and information), and (vii) license agreements related thereto. "PROXY CLEARANCE" shall have the meaning set forth in Section 5.6(a). "PROXY STATEMENT" shall have the meaning specified in Section 3.4. "PURCHASE PRICE" shall have the meaning specified in Section 1.2. "PURCHASER" shall mean Cross Country TravCorps, Inc., a Delaware Corporation. "PURCHASER 401(k) PLAN" shall have the meaning specified in Section 11.4. "REALIZATION DATE" shall have the meaning set forth in Section 1.4(a). "REQUIRED APPROVALS" shall have the meaning specified in Section 7.4. "RESOLUTION PERIOD" means the period ending thirty (30) calendar days following receipt by an Indemnified Party of a Dispute Notice. "RIGHTS AGREEMENT" means the Rights Agreement, dated as of July 21, 2000, between Seller and Equiserve Trust Company, N.A., as Rights Agent. "SELLER" shall mean Edgewater Technology, Inc., a Delaware corporation. "SEC" means the Securities and Exchange Commission of the United States. A-6

"SECTION 338(h)(10) ELECTIONS" shall have the meaning specified in Section 10.3(j)(i). "SECTION 338 FORMS" shall have the meaning specified in Section 10.3(j)(i). "SECURITIES ACT" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "STOCKHOLDER VOTE CONDITION" shall have the meaning set forth in Section 3.2. "STOCKHOLDERS MEETING" shall mean the meeting (and any adjournments or postponements thereof) of the stockholders of Seller convened to consider and vote upon the subject matter necessary to satisfy the Stockholder Vote Condition in accordance with DGCL. "SUBSIDIARY" means, with respect to any Person, any corporation a majority of the total voting power of shares of stock of which is entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or any partnership, limited liability company, association or other business entity a majority of the partnership or other similar ownership interest of which is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof. For purposes of this definition, a Person is deemed to have a majority ownership interest in a partnership, limited liability company, association or other business entity if such Person is allocated a majority of the gains or losses of such partnership, limited liability company, association or other business entity or is or controls the managing director or general partner of such partnership, limited liability company, association or other business entity. "SUPERIOR PROPOSAL" shall have the meaning set forth in Section 5.7(b). "TAKEOVER PROPOSAL" shall have the meaning set forth in Section 5.7(b). "TAKEOVER PROPOSAL INTEREST" shall have the meaning set forth in Section 5.7(a). "TAX RETURNS" means returns, declarations, reports, claims for refund, information returns or other documents (including any related or supporting schedules, statements or information) filed or required to be filed in connection with the determination, assessment or collection of Taxes of any party or the administration of any laws, regulations or administrative requirements relating to any Taxes. "TAXES" means any federal, state, local, or foreign income, gross receipts, sales, use, employment, unemployment, franchise, profits, property or other taxes, stamp taxes and duties, assessments or charges of any kind whatsoever (whether direct or withholding taxes), together with any interest and any penalties, additions to tax or additional amounts imposed by any taxing authority with respect thereto, and together with out-of-pocket expenses associated with the reasonable attorney fees for which Purchaser or the Acquired Companies shall have the right to receive reimbursement pursuant to Section 10 hereof. "TERMINATED EMPLOYEES" shall mean the employees identified in Section 5.3. A-7

"TERMINATING PURCHASER BREACH" shall have the meaning set forth in Section 9.1(f). "TERMINATING SELLER BREACH" shall have the meaning set forth in Section 9.1(e). "THIRD PARTY CLAIM" shall have the meaning set forth in Section 10.2(f)(i). "TRANSACTION DOCUMENTS" means this Agreement, and all other agreements, instruments, certificates and other documents to be entered into or delivered by any party in connection with the transactions contemplated to be consummated pursuant to this Agreement. "TREASURY REGULATIONS" means the United States Treasury Regulations promulgated pursuant to the Code. "UCC" means the Uniform Commercial Code. "WARN" shall have the meaning set forth in Section 3.12. A-8

INDEX OF SCHEDULES EXHIBITS Exhibit A - List of Defined Terms Exhibit B - Form of Assignment Agreement Exhibit C - Form of Assumption Agreement SCHEDULES Acquired Companies Schedule Organization Schedule Conflicts Schedule Financial Statements Schedule Developments Schedule Taxes Schedule Proprietary Rights Schedule Litigation Schedule Brokerage Schedule Permits Schedule Employees Schedule Benefit Plans Schedule Insurance Schedule Officers, Directors and Bank Accounts Schedule Compliance Schedule Environmental Schedule Contracts Schedule Real Estate Schedule Undisclosed Liabilities Schedule Affiliated Transactions Schedule Terminated Employees Schedule

EXHIBIT 4.3 REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT, dated as of July 29, 1999, among CROSS COUNTRY STAFFING, INC., a Delaware corporation (the "COMPANY") and the Investors (as defined below). W I T N E S S E T H: - - - - - - - - - - WHEREAS, pursuant to that certain Purchase Agreement dated as of July 29, 1999 (the "PURCHASE AGREEMENT"), among the Company and the Investors and their Affiliates, the Investors and their Affiliates have acquired (i) an aggregate of 86,957 shares of Common Stock (as defined herein), subject to adjustment and (ii) a right to receive an additional 11,944 shares of Common Stock, in the aggregate (subject to adjustment), pursuant to the provisions of Section 7.11 of the Purchase Agreement; WHEREAS, the Company desires to grant to the Investors certain registration rights relating to the shares of Common Stock. NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is agreed as follows: 1. DEFINITIONS. The following shall have (unless otherwise provided elsewhere in this Registration Rights Agreement) the following respective meanings (such meanings being equally applicable to both the singular and plural form of the terms defined): "AGREEMENT" means this Registration Rights Agreement, including all amendments, modifications and supplements and any exhibits or schedules to any of the foregoing, and shall refer to the Agreement as the same may be in effect at the time such reference becomes operative. "CLASS A COMMON STOCK" means the Class A Common Stock, $.01 par value, of the Company. "CLASS B COMMON STOCK" means the Class B Common Stock, $.01 par value, of the Company. "COMMISSION" means the Securities and Exchange Commission. "COMMON STOCK" means collectively, the Class A Common Stock and the Class B Common Stock. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

"INVESTORS" means DB Capital Investors, L.P. and The Northwestern Mutual Life Insurance Company. "NASD" means the National Association of Securities Dealers, Inc., or any successor corporation thereto. "INITIAL PUBLIC EQUITY OFFERING" means an underwritten public offering of the Class A Common Stock made on a primary basis by the Company pursuant to a registration statement filed with and declared effective by the Commission in accordance with the Securities Act resulting in net cash proceeds to the Company (after deducting any underwriting discounts and commissions) of at least $25.0 million. "PURCHASE AGREEMENT" has the meaning given to it in the recitals hereto. "REGISTERING SECURITY HOLDER" has the meaning given to it in SECTION 3. "REGISTRABLE SECURITIES" means, collectively (i) the shares of Class A Common Stock owned by the Investors on the date hereof; (ii) any shares of Class A Common Stock resulting from or which may result from the conversion of shares of Class B Common Stock owned by the Investors; (iii) any shares of Class A Common Stock hereafter acquired by the Investors; and (iv) any shares of Common Stock hereafter distributed by the Company to the holders of Registrable Securities as a stock dividend or otherwise; PROVIDED, HOWEVER, that any such securities shall cease to be Registrable Securities when (a) such securities shall have been registered under the Securities Act, the registration statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of pursuant to such effective registration statement; (b) such securities shall have been otherwise transferred, if new certificates or other evidences of ownership for them not bearing a legend restricting further transfer and not subject to any stop transfer order or other restrictions on transfer shall have been delivered by the Company and subsequent disposition of such securities shall not require registration or qualification of such securities under the Securities Act or any state securities law then in force; (c) such securities shall cease to be outstanding; or (d) such securities shall be eligible for sale pursuant to Rule 144(k) under the Securities Act or any successor rule which permits resale of such securities without restriction. "REGISTRATION REQUEST" has the meaning given to it in SECTION 2. "SECURITIES ACT" means the Securities Act of 1933, as amended. 2. REQUIRED REGISTRATION. If at any time following 180 days after the consummation of the Initial Public Equity Offering (or 90 days, if the managing underwriter for the Initial Public Equity Offering consents), the Company receives a written request (a "REGISTRATION REQUEST") from the Investors requesting that the Company effect the registration of Registrable Securities under the Securities Act and specifying the intended method or methods of disposition thereof, the Company 2

shall, as expeditiously as is possible, use its best efforts to effect the registration under the Securities Act of all Registrable Securities which the Company has been so requested to register by such holders for sale, all to the extent required to permit the disposition (in accordance with the intended method or methods thereof, as aforesaid) of the Registrable Securities so registered. In order to count as an "effected" registration statement, such registration statement shall not have been withdrawn and all shares registered pursuant to it (excluding any overallotment shares) shall have been sold. The Company shall have the right to defer the filing of any registration statement requested pursuant to this SECTION 2 for a period not to exceed ninety (90) days if in the good faith determination of the Board of Directors of the Company the filing of such registration statement would be seriously detrimental to the Company. In no event shall the Company be required to effect more than one registration under this Section 2. 3. INCIDENTAL REGISTRATION. (a) If at any time following the consummation of the Initial Public Equity Offering, the Company at any time proposes to file on its behalf and/or on behalf of any of its security holders (the "REGISTERING SECURITY HOLDERS"), a Registration Statement under the Securities Act on any form (other than a Registration Statement on Form S-4 or S-8 or any successor form for securities to be offered in a transaction of the type referred to in Rule 145 under the Securities Act or to employees of the Company pursuant to any employee benefit plan, respectively) for the general registration of securities to be sold for cash with respect to any class of equity security (as defined in Section 3(a)(11) of the Exchange Act) of the Company, it will give written notice to all holders of Registrable Securities at least 30 days before the initial filing with the Commission of such Registration Statement, which notice shall set forth the intended method of disposition of the securities proposed to be registered by the Company. The notice shall offer to include in such filing the aggregate number of shares of Registrable Securities as such holders may request. (b) Each holder of any such Registrable Securities desiring to have Registrable Securities registered under this SECTION 3 shall advise the Company in writing within 10 days after the date of receipt of such offer from the Company, setting forth the amount of such Registrable Securities for which registration is requested. The Company shall thereupon include in such filing the number of shares of Registrable Securities for which registration is so requested, subject to the next sentence, and shall use its best efforts to effect registration under the Securities Act of such shares. If the managing underwriter of a proposed public offering shall advise the Company in writing that, in its opinion, the distribution of the Registrable Securities requested to be included in the registration under this SECTION 3 concurrently with the securities being registered on behalf of the Company or such Registering Security Holder would materially and adversely affect the distribution of such securities by the Company or such Registering Security Holder, then all selling security holders that have requested that their Registrable Securities be included in the registration under this SECTION 3 shall reduce the amount of securities each intended to distribute through such offering on a pro rata basis. 3

4. REGISTRATION PROCEDURES. If the Company is required by the provisions of SECTION 2 OR 3 to use its best efforts to effect the registration of any of its securities under the Securities Act, the Company will, as expeditiously as possible: (a) prepare and file with the Commission a Registration Statement with respect to such securities and use its best efforts to cause such Registration Statement to become and remain effective for a period of time required for the disposition of such securities by the holders thereof, but not to exceed 180 days; (b) prepare and file with the Commission such amendments and supplements to such Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration Statement effective and to comply with the provisions of the Securities Act with respect to the sale or other disposition of all securities covered by such Registration Statement until the earlier of such time as all of such securities have been disposed of in a public offering or the expiration of 180 days; (c) furnish to such selling security holders such number of copies of a summary prospectus or other prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents, as such selling security holders may reasonably request; (d) use its best efforts to register or qualify the securities covered by such Registration Statement under such other securities or blue sky laws of such jurisdictions within the United States and Puerto Rico as each holder of such securities shall request (PROVIDED, HOWEVER, that the Company shall not be obligated to qualify as a foreign corporation to do business under the laws of any jurisdiction in which it is not then qualified or to file any general consent to service of process), and do such other reasonable acts and things as may be required of it to enable such holder to consummate the disposition in such jurisdiction of the securities covered by such Registration Statement; (e) furnish, in connection with any registration of Registrable Securities, on the date that such Registrable Securities are delivered to the underwriters for sale pursuant to such registration or, if such Registrable Securities are not being sold through underwriters, on the date that the Registration Statement with respect to such Registrable Securities becomes effective, (1) an opinion, dated such date, of the independent counsel representing the Company for the purposes of such registration, addressed to the underwriters, if any, and if such Registrable Securities are not being sold through underwriters, then to the holders making such request, in customary form and covering matters of the type customarily covered in such legal opinions; and (2) a comfort letter dated such date, from the independent certified public accountants of the Company, addressed to the underwriters, if any, and if such Registrable Securities are not being sold through underwriters, then to the holder(s) of Registrable Securities being registered and, if such accountants refuse to deliver such letter to such holder(s), then to the Company in a customary form and covering matters of the type customarily covered by such comfort letters and as the underwriters or such holder(s) shall reasonably request. 4

Such opinion of counsel shall additionally cover such other legal matters regarding the registration in respect of which such opinion is being given as such holder(s) of Registrable Securities may reasonably request consistent with opinions customarily provided in similar transactions. Such letter from the independent certified public accountants shall additionally cover such other financial matters (including information as to the period ending not more than 5 business days prior to the date of such letter) with respect to the registration in respect of which such letter is being given as such holders of the Registrable Securities being so registered may reasonably request consistent with comfort letters customarily provided in similar transactions; (f) enter into customary agreements (including an underwriting agreement in customary form) and take such other actions as are reasonably required in order to expedite or facilitate the disposition of such Registrable Securities; and (g) otherwise use its best efforts to comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, but not later than 18 months after the effective date of the Registration Statement, an earnings statement covering the period of at least 12 months beginning with the first full month after the effective date of such Registration Statement, which earnings statements shall satisfy the provisions of Section 11(a) of the Securities Act. It shall be a condition precedent to the obligation of the Company to take any action pursuant to this Agreement in respect of the securities which are to be registered at the request of any holder of Registrable Securities that (i) such holder shall furnish to the Company such information regarding the securities held by such holder and the intended method of disposition thereof as the Company shall reasonably request and as shall be required under the Securities Act in connection with the action taken by the Company and (ii) that such holder shall deliver and perform under such underwriting and selling shareholder agreements as may be reasonably requested by the underwriters. 5. EXPENSES. All expenses incurred in complying with this Agreement, including, without limitation, all registration and filing fees (including all expenses incident to filing with the NASD), printing expenses, fees and disbursements of counsel for the Company, expenses of any special audits incident to or required by any such registration and expenses of complying with the securities or blue sky laws of any jurisdictions pursuant to SECTION 4(d), shall be paid by the Company, except that: (a) The Company shall not be liable for any fees, discounts or commissions to any underwriter in respect of the securities sold by such holder of Registrable Securities; and (b) The Company shall only be responsible the fees or expenses of one counsel for the selling security holders as a group. 6. INDEMNIFICATION AND CONTRIBUTION. 5

(a) In the event of any registration of any Registrable Securities under the Securities Act pursuant to this Agreement, the Company shall indemnify and hold harmless the holder of such Registrable Securities, such holder's directors and officers, and each other Person (in cluding each underwriter) who participated in the offering of such Registrable Securities and each other Person, if any, who controls such holder or such participating Person within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which such holder or any such director or officer or participating Person or controlling Person may become subject under the Securities Act or any other statute or at common law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) any alleged untrue statement of any material fact contained in any Registration Statement under which such securities were registered under the Securities Act, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereto, or (ii) any alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse such holder or such director, officer or participating Person or controlling Person for any legal or any other expenses reasonably incurred by such holder or such director, officer or participating Person or controlling Person in connection with investi gating or defending any such loss, claim, damage, liability or action; PROVIDED, HOWEVER, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any alleged untrue statement or alleged omission made in such Registration Statement, preliminary prospectus, prospectus or amendment or supplement in reliance upon and in conformity with written information furnished to the Company by such holder specifically for use therein. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such holder or such director, officer or participating Person or controlling Person, and shall survive the transfer of such securities by such holder. (b) In the event of any registration of any Registrable Securities under the Securities Act pursuant to this Agreement, each selling holder of Registrable Securities severally and not jointly shall indemnify and hold harmless the Company, its directors and officers, and each other Person (including each underwriter) who participated in the offering of such Registrable Securities and each other Person, if any, who controls the Company or such participating Person within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which the Company or any such director or officer or participating Person or controlling Person may become subject under the Securities Act or any other statute or at common law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any alleged untrue statement of any material fact contained in any Registration Statement under which such securities were registered under the Securities Act, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereto, where such statement is in conformity with written information provided by such holder of Registrable Securities expressly for use therein, and shall reimburse the Company or such director, officer or participating Person or controlling Person for any legal or any other expenses reasonably incurred by the Company or such director, officer or participating Person or controlling Person in connection with investigating or defending any such loss, claim, damage, liability or action; PROVIDED, HOWEVER, that such holder of Registrable Securities shall not be liable for any amounts 6

in excess of the net proceeds received by such holder for the sale of its shares. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Company or such director, officer or participating Person or controlling Person, and shall survive the transfer of such securities by such holder. (c) If the indemnification provided for in this SECTION 6 is unavailable to an indemnified party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified parties in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified parties shall be deter mined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or indemnified parties, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this SECTION 6(c) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not also guilty of such fraudulent misrepresentation. 7. MARKET STAND-OFF AGREEMENT. If requested by an underwriter of securities of the Company, each holder of Registrable Securities shall not sell or otherwise transfer or dispose of any securities held by such holder during the ninety (90) day period following the effective date of a Registration Statement. 8. MISCELLANEOUS. (a) NO PRIOR AGREEMENTS. This agreement supersedes all prior agreements regarding registration rights between the Company and any of the parties hereto and all such prior agreements are deemed terminated hereby. (b) REMEDIES. Each holder of Registrable Securities, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. The Company agrees that monetary damages would 7

not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. (c) AMENDMENTS AND WAIVERS. Except as otherwise provided herein, the provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departure from the provisions hereof may not be given unless Company has approved the same in writing and obtained the written consent of Investors. (d) NOTICES. All notices and other communications hereunder shall be validly given or made if in writing, (i) when delivered personally (by courier service or otherwise); (ii) when sent by telecopy; or (iii) when actually received if mailed by first-class certified or registered United States mail, postage-prepaid and return receipt requested, and all legal process with regard hereto shall be validly served when served in accordance with applicable law, in each case to the address of the party to receive such notice or other communication set forth below, or at such other address as any party hereto may from time to time advise the other parties pursuant to this