SEC Filing | Cross Country Healthcare, Inc.

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 7, 2001

REGISTRATION NO. 333-64914
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

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

AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933

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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 STEVEN J. SLUTZKY, ESQ.
1585 BROADWAY DEBEVOISE & PLIMPTON
NEW YORK, NEW YORK 10036-8299 919 THIRD AVENUE
(212) 969-3000 NEW YORK, NEW YORK 10022
(212) 909-6000

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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. / /

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

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.

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SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED SEPTEMBER 7, 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

7,812,500 SHARES

[LOGO]

COMMON STOCK

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

This is Cross Country, Inc.'s initial public offering. We are selling all
of the shares.

We expect the public offering price to be between $15.00 and $17.00 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.

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PER SHARE
---------

Public offering price...................... $
Underwriting discount...................... $
Proceeds, before expenses, to Cross
Country, Inc............................. $

TOTAL
--------

Public offering price...................... $
Underwriting discount...................... $
Proceeds, before expenses, to Cross
Country, Inc............................. $

The underwriters may also purchase up to an additional 1,171,875 shares
from us at the public offering price, less the underwriting discount, within
30 days from the date of this prospectus to cover overallotments.

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

The shares will be ready for delivery on or about , 2001.

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MERRILL LYNCH & CO. SALOMON SMITH BARNEY

BANC OF AMERICA SECURITIES LLC

SUNTRUST ROBINSON HUMPHREY

CIBC WORLD MARKETS

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The date of this prospectus is , 2001.

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

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

TABLE OF CONTENTS

PAGE
--------

Prospectus Summary.......................................... 1
Risk Factors................................................ 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.............................. 37
Management.................................................. 46
Related Party Transactions.................................. 51
Principal Stockholders...................................... 52
Description of Capital Stock................................ 54
Shares Eligible for Future Sale............................. 57
Underwriting................................................ 59
Legal Matters............................................... 62
Experts..................................................... 63
Where You Can Find More Information......................... 63

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

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 HAS BEEN ADJUSTED TO REFLECT A 5.80135-FOR-1
STOCK SPLIT.

CROSS COUNTRY, INC.

We are the largest provider of healthcare staffing services in the United
States based on revenue. Approximately 80% of our revenue is derived from travel
nurse staffing services. We also provide staffing of clinical research
professionals and allied healthcare professionals, such as radiology
technicians, rehabilitation therapists and respiratory therapists. Our staffing
operations are complemented by other human capital management services,
including search and recruitment, consulting, education and training and
resource management services. Our active client base includes over 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 $407.7 million
and $50.7 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 treatment methods
which attract a greater number of patients with complex medical conditions
requiring a higher intensity of care.

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

OUR COMPETITIVE STRENGTHS

Our competitive strengths include:

- LEADER IN THE RAPIDLY GROWING NURSE STAFFING INDUSTRY. We have operated in
the travel nurse staffing industry since the 1970s and have the leading
brand name, based on revenue. Our Cross Country TravCorps brand is well
recognized among leading healthcare providers and professionals. We
believe that through our relationships with existing travel nurse staffing
clients, we are positioned to 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.

- 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 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. The acquisitions of
Gill/Balsano and ClinForce broaden the range of services we provide to include
rehabilitation services, consulting and clinical research staffing. These
acquisitions complement our healthcare staffing business by increasing the
opportunities we provide our healthcare professionals.

RISK FACTORS

For a discussion of the risks we face, see "Risk Factors," including those
under the captions "Currently we are unable to recruit enough nurses to meet our
clients' demands for our nurse staffing services, limiting the potential growth
of our staffing business," "The costs of attracting and retaining qualified
nurses and other healthcare personnel may rise more than we anticipate" and "Our
costs of providing housing for nurses and other healthcare personnel may be
higher than we anticipate and, as a result, our margins could decline." In
addition, we operate in a highly competitive industry, with limited barriers to
entry.

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

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

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

THE OFFERING

Common stock offered by Cross Country, Inc........... 7,812,500 shares

Common stock outstanding after the offering.......... 31,018,958 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 $74.8 million to repay
indebtedness outstanding under our credit
facility; and

- approximately $39.9 million to redeem all of
our senior subordinated notes and pay a
redemption premium. The required redemption
premium is $1.5 million.

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

The number of shares outstanding after the offering excludes 4,396,841
shares reserved for future issuance under our stock option plans, of which
options to purchase 3,268,615 shares at a weighted average exercise price of
$12.48 have been granted.

SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA

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

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

The pro forma as adjusted consolidated statement of operations for the year
ended December 31, 2000 and the six months ended June 30, 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. The as adjusted consolidated
balance sheet data as of June 30, 2001 are as adjusted for the offering and
expected use of proceeds as if these events had occurred on June 30, 2001.

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

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

CONSOLIDATED STATEMENT
OF OPERATIONS DATA

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

Operating expenses:
Direct operating
expenses.......... 121,951 80,187 68,036 273,095 298,159
Selling, general and
administrative
expenses(e)....... 19,070 12,688 9,257 49,027 58,356
Bad debt expense.... 722 157 511 433 543
Depreciation........ 264 212 155 1,324 1,459
Amortization........ 859 496 4,422 13,701 15,270
Non-recurring
indirect
transaction
costs(f).......... -- -- -- 1,289 1,289
---------- ---------- ----------- ----------- ----------
Total operating
expenses........ 142,866 93,740 82,381 338,869 375,076
---------- ---------- ----------- ----------- ----------
Income from
operations.......... 15,726 12,307 5,346 28,821 32,657

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 28,253
Income tax
expense(g)........ -- -- 672 6,730 12,489
---------- ---------- ----------- ----------- ----------
Income (loss) before
discontinued
operations........ 14,693 11,887 (147) 6,656 15,764
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 $ 15,764
========== ========== =========== =========== ==========
Basic and diluted
income (loss) per
common share(i):
Income (loss) before
discontinued
operations........ $ (.01) $ .29
Discontinued
operations........ (.01) (.09)
----------- -----------
Net income (loss)... $ (.02) $ .20
=========== ===========

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

SIX MONTHS
ENDED JUNE 30,
---------------------------------------

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

CONSOLIDATED STATEMENT
OF OPERATIONS DATA
Revenue from
services............ $ 177,650 $ 222,707 $ 230,400
Operating expenses:
Direct operating
expenses.......... 131,870 167,099 172,449
Selling, general and
administrative
expenses(e)....... 24,229 31,511 33,117
Bad debt expense.... 464 862 862
Depreciation........ 610 1,163 1,198
Amortization........ 7,317 7,495 7,768
Non-recurring
indirect
transaction
costs(f).......... 433 -- --
----------- ----------- ----------
Total operating
expenses........ 164,923 208,130 215,394
----------- ----------- ----------
Income from
operations.......... 12,727 14,577 15,006
Other expenses:
Interest expense,
net............... 7,738 8,532 3,354
Other expenses...... -- -- --
----------- ----------- ----------
Income before income
taxes and
discontinued
operations........ 4,989 6,045 11,652
Income tax
expense(g)........ 2,509 2,827 4,986
----------- ----------- ----------
Income (loss) before
discontinued
operations........ 2,480 3,218 6,666
Discontinued
operations:
Loss from
discontinued
operations, net of
income taxes(h)... (688) -- --
Loss on
disposal(h)....... -- (544) --
----------- ----------- ----------
Net income (loss)... $ 1,792 $ 2,674 $ 6,666
=========== =========== ==========
Basic and diluted
income (loss) per
common share(i):
Income (loss) before
discontinued
operations........ $ .11 $ .14
Discontinued
operations........ (.03) (.02)
----------- -----------
Net income (loss)... $ .08 $ .12
=========== ===========
Weighted-average
number of shares
outstanding:
Basic and
diluted......... 23,205,388 23,205,586

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

OTHER OPERATING DATA

EBITDA(j)............. $ 16,849 $ 13,015 $ 9,923 $ 45,135 $ 50,675 $ 21,087 $ 23,235 $ 23,972
EBITDA as a % of
revenue............. 10.6% 12.3% 11.3% 12.3% 12.4% 11.9% 10.4% 10.4%

FTE's(k).............. 2,264 2,466 2,789 4,167 4,452 4,195 4,509 4,647
Weeks worked(l)....... 117,728 73,980 61,358 216,684 231,504 109,070 117,234 120,822
Average contract
revenue per
week(m)............. $ 1,347 $ 1,429 $ 1,417 $ 1,616 $ 1,638 $ 1,532 $ 1,751 $ 1,763

Net cash flow provided
by (used in)
operating
activities.......... $ 14,434 $ 12,178 $ 6,301 $ 10,397 $ 10,513 $ 12,984
Net cash flow provided
by (used in)
investing
activities.......... $ (977) $ (202) $ 1,380 $ (9,584) $ (746) $ (36,284)
Net cash flow provided
by (used in)
financing
activities.......... $ (13,458) $ (11,977) $ (3,111) $ (5,641) $ (13,423) $ 23,300

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

CONSOLIDATED BALANCE SHEET DATA
Working capital............................................. $ 30,505 $ 30,505
Cash and cash equivalents................................... -- --
Total assets................................................ 350,783 344,139
Total debt.................................................. 183,650 72,285
Stockholders' equity........................................ $ 125,116 $ 234,853

- ------------------------------
(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 $35.4 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 $4.5 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, 2000:

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

- a reduction in interest expense for the six months ended June 30, 2001 of
$5.4 million as a result of the repayment of $37.7 million of senior
subordinated debt (12.00% interest rate) and $75.2 million of borrowings
outstanding under our credit facility using the weighted average interest
rate in effect during the six months ended June 30, 2001 (9.17%); and

- additional income tax expense for the six months ended June 30, 2001 of
$2.0 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.

(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
June 30, 2001:

- increase in stockholders' equity of $114.8 million from the offering.

- repayment of $37.7 million of senior subordinated debt, plus a
$1.5 million redemption premium, and repayment of $75.2 million of
borrowings outstanding under our credit facility and includes the effects
of the redemption premium and the write-off of $6.6 million of debt
issuance costs, net of taxes.

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.

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.

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

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

These acquisitions involve numerous risks, including:

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

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

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

- diversion of management attention from existing operations; and

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

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

SIGNIFICANT LEGAL ACTIONS COULD SUBJECT US TO SUBSTANTIAL UNINSURED LIABILITIES.

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

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

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

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

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

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

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

In connection with our acquisition from W. R. Grace & Co. of the assets of
Cross Country Staffing, our predecessor, Grace agreed to indemnify us against
damages arising out of the breach of 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 66% 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.

Currently, our board of directors is comprised of seven members, two of whom are
designees of CEP III and two of whom are designees of investment funds managed
by Morgan Stanley Private Equity. We intend to add three independent directors
to our board before the date of this offering or within 90 days thereafter.
Under our stockholders' agreement, CEP III and the funds managed by Morgan
Stanley Private Equity will each have the right to designate two directors for
nomination to our board of directors. This number decreases if either CEP III or
the funds managed by Morgan Stanley Private Equity reduce their respective
ownership by more than 50%. 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 $16.53 in the net
tangible book value per share of common stock in this offering, based on an
assumed initial public offering price of $16.00 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 23,206,458 MILLION SHARES WILL BECOME ELIGIBLE FOR
RESALE IN THE PUBLIC MARKET WITHIN 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 31,018,958 shares of common stock will be
outstanding after this offering. Of these, the 7,812,500 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 22,867,610
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 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 will
represent approximately 66% 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 4,396,841
shares of common stock for issuance under our stock option plans. As of
June 30, 2001, options to purchase 3,268,615 shares of common stock were issued
and outstanding, of which options to purchase 1,058,947 shares were 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 10,000,000 shares of "blank check"
preferred stock. Without stockholder approval, the board of directors has the
authority to attach special rights, including voting and dividend rights, to
this preferred stock. With these rights, preferred stockholders could make it
more difficult for a third party to acquire us. Delaware law may also
discourage, delay or prevent someone from acquiring or merging with us.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

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

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

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

- the functioning of our information systems;

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

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

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

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

- the effect of competition in the markets we serve.

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

USE OF PROCEEDS

We estimate that our net proceeds from the offering will be $114.8 million,
assuming an initial offering price of $16.00 per share, based on the midpoint of
our filing range, and after deducting estimated expenses payable out of such
proceeds 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 $74.8 million to repay a portion of the outstanding balances
under our credit facility, which becomes due on July 29, 2005. As of
September 1, 2001, the outstanding balance of principal and interest on
our credit facility was approximately $147.4 million and the effective
interest rate was 7.68%. Amounts outstanding under our credit facility
include amounts borrowed under a revolving loan facility, which we use to
finance working capital. 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 $39.9 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 September 1, 2001, the
outstanding balance of principal and interest on the senior subordinated
notes was $38.4 million. As of September 1, 2001, the required redemption
premium on our senior subordinated notes was $1.5 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.

CAPITALIZATION

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

- on an actual basis; and

- on an as adjusted basis to give effect to the sale of 7,812,500 shares of
our common stock at an assumed public offering price of $16.00 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 JUNE 30, 2001
----------------------------
ACTUAL AS ADJUSTED(A)
----------- --------------
(IN THOUSANDS)

Long term debt:
Revolving loan facility................................... $ 8,250 $ --
Term loan................................................. 138,680 72,119
12.00% senior subordinated pay-in-kind notes due
2006(b)................................................. 37,650 --
Capitalized lease obligation.............................. 166 166
-------- --------
Total debt.................................................. 184,746 72,285
Less current maturities................................... 20,446 0
-------- --------
Total long-term debt.................................... 164,300 72,285

Stockholders' equity:
Undesignated preferred stock, none authorized--actual,
$0.01 par value, 10,000,000 shares authorized--as
adjusted, none issued and outstanding--actual and as
adjusted................................................ -- --
Common stock, $0.01 par value, 8,000,000 shares
authorized--actual, $0.0001 par value, 100,000,000
shares authorized--as adjusted, 23,206,458 shares issued
and outstanding--actual, 31,018,958 shares issued and
outstanding--as adjusted(c)............................. 2 2
Additional paid-in capital................................ 119,090 233,840
Retained earnings(d)...................................... 6,931 1,918
Accumulated other comprehensive earnings.................. (907) (907)
-------- --------
Total stockholders' equity.............................. 125,116 234,853
-------- --------
Total capitalization.................................. $289,416 $307,138
======== ========

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

(a) As adjusted amounts do not include the use of $0.8 million of proceeds to
repay pay-in-kind notes issued between June 30, 2001 and September 1, 2001,
and a related redemption premium.

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

(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
$6.6 million of related debt issuance costs as of June 30, 2001, net of
taxes.

DILUTION

Our net tangible book deficit as of June 30, 2001, was approximately
$132.9 million, or $5.73 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 7,812,500 shares of common stock
offered by us in the offering at an assumed initial offering price of $16.00 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
June 30, 2001 would have been approximately $16.5 million, or $0.53 per share of
common stock. This represents an immediate decrease in net tangible book deficit
of $5.19 per share to existing stockholders and an immediate dilution of $16.53
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............. $16.00
Net tangible book deficit per share as of June 30,
2001.................................................. $(5.73)
Decrease in net tangible book deficit per share
attributable to new investors......................... 5.19
------
Pro forma net tangible book deficit per share after the
offering.................................................. (0.53)
------
Dilution per share to new investors......................... $16.53
======

If the underwriters' over-allotment option is exercised in full, the pro
forma net tangible book value per share after the offering would be $0.03 per
share, the increase in net tangible book value per share to existing
shareholders would be $5.76 per share and the dilution in net tangible book
value to new investors would be $15.97 per share.

The following table sets forth, as of June 30, 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 $16.00, 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....... 23,206,458 74.8% $122,500,169 49.5% $ 5.28
New investors............... 7,812,500 25.2 125,000,000 50.5 16.00
---------- ----- ------------ ----- ------
Total................... 31,018,958 100.0% $247,500,169 100.0% $ 7.98
========== ===== ============ ===== ======

The foregoing discussion and table assume no exercise of any outstanding
stock options to purchase common stock. As of June 30, 2001 there were 3,268,615
shares of common stock issuable upon the exercise of stock options outstanding
at a weighted average exercise price of $12.48. To the extent these options are
exercised, there will be further dilution to new investors.

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

The pro forma as adjusted consolidated statement of operations for the year
ended December 31, 2000 and the six months ended June 30, 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. The
as adjusted consolidated balance sheet data as of June 30, 2001 are as adjusted
for the offering and expected use of proceeds as if these events had occurred on
June 30, 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
and Heritage, the "Pro Forma Condensed Consolidated Statement of Operations" and
related notes, "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and other financial information included elsewhere in
this prospectus.

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

CONSOLIDATED STATEMENT OF
OPERATIONS DATA
Revenue from services............ $ 65,045 $ 59,209 $ 138,560 $ 158,592
Operating expenses:
Direct operating expenses...... 52,061 46,617 108,726 121,951
Selling, general and
administrative expenses(d)... 7,595 7,378 16,051 19,070
Bad debt expense............... 144 437 624 722
Depreciation................... 126 83 150 264
Amortization................... 536 446 875 859
Non-recurring indirect
transaction costs(e)......... -- -- -- --
---------- ---------- ---------- ----------
Total operating expenses....... 60,462 54,961 126,426 142,866
---------- ---------- ---------- ----------
Income from operations........... 4,583 4,248 12,134 15,726
Other (income) 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:
Basic and diluted............
OTHER OPERATING DATA
EBITDA(i)........................ $ 5,245 $ 4,777 $ 13,159 $ 16,849
EBITDA as % of revenue........... 8.1% 8.1% 9.5% 10.6%

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

Net cash flow provided by (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 $ 407,733
Operating expenses:
Direct operating expenses...... 80,187 68,036 273,095 298,159
Selling, general and
administrative expenses(d)... 12,688 9,257 49,027 58,356
Bad debt expense............... 157 511 433 543
Depreciation................... 212 155 1,324 1,459
Amortization................... 496 4,422 13,701 15,270
Non-recurring indirect
transaction costs(e)......... -- -- 1,289 1,289
---------- ---------- ---------- ----------
Total operating expenses....... 93,740 82,381 338,869 375,076
---------- ---------- ---------- ----------
Income from operations........... 12,307 5,346 28,821 32,657
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 28,253
Income tax expense(f)............ -- 672 6,730 12,489
---------- ---------- ---------- ----------
Income (loss) before discontinued
operations..................... 11,887 (147) 6,656 15,764
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 $ 15,764
========== ========== ========== ==========
Basic and diluted income (loss)
per common share(h):
Income (loss) before
discontinued operations...... $ (.01) $ .29
Discontinued operations........ (.01) (.09)
---------- ----------
Net income (loss)............ $ (.02) $ .20
========== ==========
Weighted-average number of shares
outstanding:
Basic and diluted............ 15,291,749 23,205,388
========== ==========
OTHER OPERATING DATA
EBITDA(i)........................ $ 13,015 $ 9,923 $ 45,135 $ 50,675
EBITDA as % of revenue........... 12.3% 11.3% 12.3% 12.4%
FTE's(j)......................... 2,466 2,789 4,167 4,452
Weeks worked(k).................. 73,980 61,358 216,684 231,504
Average contract revenue per
week(l)........................ $ 1,429 $ 1,417 $ 1,616 $ 1,638
Net cash flow provided by (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

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

CONSOLIDATED STATEMENT OF OPERATIONS DATA
Revenue from services....................................... $ 177,650 $ 222,707 $ 230,400
Operating expenses:
Direct operating expenses................................. 131,870 167,099 172,449
Selling, general and administrative expenses.............. 24,229 31,511 33,117
Bad debt expense.......................................... 464 862 862
Depreciation.............................................. 610 1,163 1,198
Amortization.............................................. 7,317 7,495 7,768
Non-recurring indirect transaction costs(e)............... 433 -- --
---------- ---------- ----------
Total operating expenses................................ 164,923 208,130 215,394
---------- ---------- ----------
Income from operations...................................... 12,727 14,577 15,006
Other expenses:
Interest expense, net..................................... 7,738 8,532 3,354
---------- ---------- ----------
Income before income taxes and discontinued operations...... 4,989 6,045 11,652
Income tax expense(f)....................................... 2,509 2,827 4,986
---------- ---------- ----------
Income before discontinued operations....................... 2,480 3,218 6,666
Discontinued operations:
Loss from discontinued operations, net of income taxes.... (688) -- --
Loss on disposal.......................................... -- (544) --
---------- ---------- ----------
Net income.................................................. $ 1,792 $ 2,674 $ 6,666
========== ========== ==========
Basic and diluted income (loss) per common share(h):
Income before discontinued operations..................... $ .11 $ .14
Discontinued operations................................... (.03) (.02)
---------- ----------
Net income.............................................. $ .08 $ .12
========== ==========
Weighted-average number of shares outstanding:
Basic and diluted......................................... 23,205,388 23,205,586

OTHER OPERATING DATA
EBITDA(i)................................................... $ 21,087 $ 23,235 $ 23,972
EBITDA as a % of revenue.................................... 11.9% 10.4% 10.4%

FTE's(j).................................................... 4,195 4,509 4,647
Weeks worked(k)............................................. 109,070 117,234 120,822
Average contract revenue per week(l)........................ $ 1,532 $ 1,751 $ 1,763

Net cash flow provided by (used in) operating activities.... 10,513 12,984
Net cash flow provided by (used in) investing activities.... (746) (36,284)
Net cash flow provided by (used in) financing activities.... $ (13,423) $ 23,300

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

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

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

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

(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 $35.4 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 interest rate in effect during the
year ended December 31, 2000 (9.74%); and

- additional income tax expense of $4.5 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, 2000:

- additional income tax expense for the six months ended June 30, 2001 of
$2.0 million as a result of the above adjustments.

(o) Reflects the following adjustments as if the offering had occurred on
June 30, 2001:

- increase in stockholders' equity of $114.8 million of net proceeds from
the offering; and

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 six months ended June 30, 2001 give effect to
the acquisitions of Heritage and ClinForce as if the transactions had occurred
on January 1, 2000.

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

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

The pro forma information as adjusted for the offering for the year ended
December 31, 2000 and the six months ended June 30, 2001, 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.

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 $ 11,148 $ 407,733 $ 407,733
Operating expenses:
Direct operating
expenses................ 273,095 20,128 4,936 298,159 298,159
Selling, general and
administrative
expenses................ 49,027 4,766 4,563 58,356 58,356
Bad debt expense.......... 433 110 -- 543 543
Depreciation.............. 1,324 135 -- 1,459 1,459
Amortization.............. 13,701 660 -- 909(c) 15,270 15,270
Non-recurring indirect
transaction costs....... 1,289 -- -- 1,289 1,289
---------- ---------- ---------- ---------- ----------
Total operating expenses.... 338,869 25,799 9,499 375,076 375,076

Income from operations...... 28,821 3,096 1,649 32,657 32,657

Interest expense, net....... 15,435 -- -- 3,758 (d) 19,193 (14,789)(e) 4,404
---------- ---------- ---------- ---------- ----------

Income before income
taxes..................... 13,386 3,096 1,649 13,464 28,253
Income tax expense.......... 6,730 1,227 -- (1,162)(f) 6,795 5,694 (f) 12,489
---------- ---------- ---------- ---------- ----------
Income from continuing
operations................ $ 6,656 $ 1,869 $ 1,649 $ 6,669 $ 15,764
========== ========== ========== ========== ==========

Basic and diluted income
from continuing operations
per common share.......... $ 0.29 -- -- $ 0.29
========== ========== ========== ==========
Weighted average common
shares outstanding:
Basic and diluted....... 23,205,388 -- -- 23,205,388
========== ========== ========== ==========

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

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

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

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

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

(d) Pro forma adjustment to 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.

SIX MONTHS ENDED JUNE 30, 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............. $ 222,707 $ 7,693 $ 230,400 $ 230,400
Operating expenses:
Direct operating expenses....... 167,099 5,350 172,449 172,449
Selling, general and
administrative expenses....... 31,511 1,606 33,117 33,117
Bad debt expense................ 862 862 862
Depreciation.................... 1,163 35 1,198 1,198
Amortization.................... 7,495 92 181(b) 7,768 7,768
Non-recurring indirect
transaction costs............. -- -- -- --
---------- ---------- ---------- ----------
Total operating expenses.......... 208,130 7,083 215,394 215,394

Income from operations............ 14,577 610 15,006 15,006

Interest expense, net............. 8,532 179 440(c) 9,151 (5,797)(d) 3,354
---------- ---------- ---------- ----------

Income before income taxes........ 6,045 431 5,855 11,652
Income tax expense................ 2,827 166 (239)(e) 2,754 2,232(e) 4,986
---------- ---------- ---------- ----------
Income from continuing
operations...................... $ 3,218 $ 265 $ 3,101 $ 6,666
========== ========== ========== ==========

Basic and diluted income from
continuing operations per common
share........................... $ 0.14 -- $ 0.13 $ --
========== ========== ========== ==========
Weighted average common shares
outstanding:
Basic and diluted............. 23,205,586 -- 23,205,586 --
========== ========== ========== ==========

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

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

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

(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 six months ended June 30, 2001 (9.17%).

(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 $37.7 million of senior
subordinated debt and repayment of $75.2 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.

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

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

OVERVIEW

HISTORY

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

REVENUE

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

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

without regard to the Company's cost of providing these services. Currently,
more than 95% of our employees work under payroll contracts.

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

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

ACQUISITIONS

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

In March 2001, we acquired ClinForce for $31.0 million in cash. In July 2001
a post-closing purchase price adjustment increased the purchase price and
goodwill by $1.4 million each. ClinForce supplies supplemental staffing services
for clinical trials. 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. Heritage's revenue was $11.1 million for the period
ended December 25, 2000.

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
$151.4 million and $98.0 million, respectively, at June 30, 2001. Goodwill and
other intangible assets are being amortized using the straight-line method over
their estimated useful lives ranging from 4.5 to 25 years. Goodwill and other
intangible assets represented 206% of our stockholders' equity as of June 30,
2001. The amount of goodwill and other intangible assets amortized equaled 51.4%
of our income from operations for the six months ended June 30, 2001.

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

RESULTS OF OPERATIONS

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

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

Revenue........................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Direct operating expenses......... 76.9 75.6 77.6 74.3 74.2 75.0
Selling, general and
administrative expenses......... 12.0 12.0 10.5 13.3 13.6 14.1
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 11.9 10.4
Depreciation and amortization..... 0.7 0.7 5.2 4.1 4.5 3.9
Non-recurring indirect transaction
costs........................... -- -- -- 0.4 0.2 --
----- ----- ----- ----- ----- -----
Income from operations............ 9.9 11.6 6.1 7.8 7.2 6.5
Interest expense, net............. 0.5 0.2 5.5 4.2 4.4 3.8
Other expenses.................... 0.1 0.2 -- -- -- --
----- ----- ----- ----- ----- -----
Income before income taxes and
discontinued operations......... 9.3 11.2 0.6 3.6 2.8 2.7
Income tax expense(b)............. -- -- 0.8 1.8 1.4 1.3
----- ----- ----- ----- ----- -----
Income (loss) before discontinued
operations...................... 9.3 11.2 (0.2) 1.8 1.4 1.4
Loss from discontinued operations,
net of income taxes............. -- -- (0.2) (0.4) (0.4) --
Estimated loss on disposal of
discontinued operations......... -- -- -- (0.1) -- (0.2)
----- ----- ----- ----- ----- -----
Net income (loss)................. 9.3% 11.2% (0.4)% 1.3% 1.0% 1.2%
===== ===== ===== ===== ===== =====

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

(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.

SEGMENT INFORMATION

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

Revenue:
Healthcare staffing........ $156,951 $101,398 $ 85,595 $350,856 $169,670 $205,753
Other human capital
management services...... 1,641 4,649 2,132 16,834 7,980 16,954
-------- -------- -------- -------- -------- --------
$158,592 $106,047 $ 87,727 $367,690 $177,650 $222,707
======== ======== ======== ======== ======== ========
Contribution
income/(loss)(a):
Healthcare staffing........ $ 28,344 $ 19,409 $ 15,518 $ 61,894 $ 29,794 $ 29,576
Other human capital
management services...... (397) 693 (95) 4,290 2,175 3,995
Unallocated corporate
overhead................... 11,098 7,087 5,500 21,049 10,882 10,336
-------- -------- -------- -------- -------- --------
EBITDA $ 16,849 $ 13,015 $ 9,923 $ 45,135 $ 21,087 $ 23,235
======== ======== ======== ======== ======== ========

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

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

The following sections should be read in conjunction with the History and
Acquisitions sections that appear above in this Management's Discussion and
Analysis.

SIX MONTHS ENDED JUNE 30, 2001 COMPARED TO SIX MONTHS ENDED JUNE 30, 2000

Revenue increased by 25.4% to $222.7 million for the six months ended
June 30, 2001 as compared to $177.7 million for the six months ended June 30,
2000. Revenue from our healthcare staffing segment increased 21.3% to
$205.8 million for the six months ended June 30, 2001 as compared to
$169.7 million for the six months ended June 30, 2000. Revenue included from
ClinForce, which was acquired on March 16, 2001 totaled $10.7 million for the
six months ended June 30, 2001. Excluding the effect of this acquisition,
revenue increased $25.4 million, or 15.0%, as compared with the six months ended
June 30, 2000. This increase is primarily due to an increase in the average
hourly bill rate along with an increase in the average number of field
employees, offset, in part, by a modest reduction in the average number of hours
billed per FTE per week. 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. For the six months ended June 30, 2001, 87.1% of healthcare
staffing revenue was generated by nurse staffing operations and 12.9% was
generated by other operations. For the six months ended June 30, 2000, 92.1% of
healthcare staffing revenue was generated by nurse staffing operations and 7.9%
was generated by other operations.

Revenue from our other human capital management services segment increased
112.5% to $17.0 million for the six months ended June 30, 2001 as compared to
$8.0 million for the six months ended June 30, 2000. Revenue included from
Heritage, which was acquired on December 26, 2000, totaled $6.7 million for the
six months ended June 30, 2001. Excluding the effect of this acquisition,
revenue increased $2.3 million, or 28.5%, as compared with the six months ended
June 30, 2000. This increase is primarily due to revenue from growth in our
physician search and existing consulting businesses, as well as our acquisition
of Gill/Balsano.

Direct operating expenses are comprised primarily of field employee
compensation expenses, housing expenses, travel expenses and field insurance
expenses. Direct operating expenses totaled $167.1 million for the six months
ended June 30, 2001 as compared to $131.9 million for the six months ended
June 30, 2000. As a percentage of revenue, direct operating expenses represented
75.0% of

revenue for the six months ended June 30, 2001 as compared with 74.2% for the
six months ended June 30, 2000. The increase in direct operating expenses as a
percent of revenue was mostly attributable to an increase in field salaries,
housing costs and health insurance. 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 $31.5 million for the six
months ended June 30, 2001 as compared to $24.2 million for the six months ended
June 30, 2000. As a percentage of revenue, selling, general and administrative
expenses increased to 14.1% of revenue for the six months ended June 30, 2001,
as compared with 13.6% for the six months ended June 30, 2000. The increase is a
result of the acquisitions of Heritage and ClinForce, which have historically
higher selling, general and administrative expense than the travel nurse
staffing business. 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 $0.9 million for the six months ended June 30, 2001
as compared to $0.5 million for the six months ended June 30, 2000. As a
percentage of revenue, bad debt expense represented 0.4% of revenue for the six
months ended June 30, 2001 as compared with 0.3% for the six months ended
June 30, 2000.

EBITDA, as a result of the above, totaled $23.2 million for the six months
ended June 30, 2001 as compared to $21.1 million for the six months ended
June 30, 2000. As a percentage of revenue, EBITDA represented 10.4% of revenue
for the six months ended June 30, 2001 as compared with 11.9% for the six months
ended June 30, 2000.

Depreciation and amortization expense totaled $8.7 million for the six
months ended June 30, 2001 as compared to $7.9 million for the six months ended
June 30, 2000. The increase was primarily due to the increased amortization of
goodwill and other intangibles resulting from the Heritage and ClinForce
acquisitions. As a percentage of revenue, depreciation and amortization expense
declined to 3.9% of revenue for the six months ended June 30, 2001 as compared
to 4.5% for the six months ended June 30, 2000.

Non-recurring indirect transaction costs for the six months ended June 30,
2000 were $0.4 million, comprised of non capitalizable transition bonuses and
integration costs related to the TravCorps acquisition.

Income from operations totaled $14.6 million for the six months ended
June 30, 2001 and $12.7 million for the six months ended June 30, 2000. As a
percentage of revenue, income from operations represented 6.5% of revenue for
the six months ended June 30, 2001 as compared with 7.2% for the six months
ended June 30, 2000.

Net interest expense totaled $8.5 million for the six months ended June 30,
2001 as compared to $7.7 million for the six months ended June 30, 2000. This
increase was primarily due to borrowings related to the Heritage and ClinForce
acquisitions, offset in part by lower average borrowing costs.

Income before income taxes and discontinued operations totaled $6.0 million
for the six months ended June 30, 2001 as compared to $5.0 million for the six
months ended June 30, 2000 due to the factors discussed above.

Income tax expense totaled $2.8 million for the six months ended June 30,
2001 as compared to $2.5 million for the six months ended June 30, 2000.

Income before discontinued operations totaled $3.2 million for the six
months ended June 30, 2001 as compared to $2.5 million for the six months ended
June 30, 2000.

Losses from discontinued operations, net of income tax benefits, in
connection with HospitalHub were $0.5 million for the six months ended June 30,
2001 as compared to $0.7 million for the six months ended June 30, 2000.
A $0.5 million loss was recognized on the planned disposal of the HospitalHub
operation during the six months ended June 30, 2001. The divestiture of
HospitalHub was completed in the second quarter of 2001. An additional charge
was necessary as the actual losses on disposal incurred and anticipated were
more than estimated in December 2000.

Net income for the six months ended June 30, 2001 was $2.7 million as
compared to $1.8 million for the six months ended June 30, 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 $193.8 million for the two periods that comprise 1999. Revenue for
the two periods that comprise 1999 includes the results of TravCorps from its
date of acquisition on December 16, 1999. Had the results of TravCorps'
operations for the full year of 1999 been included with the combined revenue for
the two periods in 1999, revenue would have increased by 19.9% to
$367.7 million in 2000 from $306.6 million in 1999.

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

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

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

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

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

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

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

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

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

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

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

Income tax expense for the year ended December 31, 2000 was $6.7 million as
compared to $0.7 million for the five-month period July 30-December 31, 1999.
Our effective tax rate was 50.3% for the year ended December 31, 2000 and 128.0%
for the period July 30-December 31, 1999 largely as a

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

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

Losses from discontinued operations, net of income tax benefits, for the
year ended December 31, 2000, and the five-month period July 30-December 31,
1999, were $1.6 million and $0.2 million, respectively, in connection with
HospitalHub, which began operations in 1999. Also for the year ended
December 31, 2000, a $0.5 million loss was recognized on the planned disposal of
HospitalHub. The divestiture of HospitalHub was completed in the second quarter
of 2001.

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

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

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

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

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

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

revenue for the five-month period July 30-December 31, 1999. The relative
improvement, as a percent of revenue, during the seven-month period
January 1-July 29, 1999 as compared to the year ended December 31, 1998 was due
to a 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 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 June 30, 2001, we had a current ratio, the amount of current assets
divided by current liabilities, of 1.6 to 1.0. Working capital decreased by
$3.9 million to $30.5 million as of June 30, 2001, compared to $34.4 million as
of December 31, 2000. The decrease in working capital is primarily due to an
increase in the current portion of long-term debt and accrued employee
compensation and benefits, partially offset by an increase in accounts
receivable. Accrued employee compensation and benefits increased due to timing
of employee payroll payments. Although accounts receivable increased, days sales
outstanding decreased to 59 days at June 30, 2001 compared with 64 days at
December 31, 2000.

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

CREDIT FACILITY

The credit facility is provided by a lending syndicate comprised of Citicorp
USA, GE Capital, Wachovia Bank, Deutsche Bank, Suntrust Bank, Fleet Bank, IBJ
Whitehall, ING US Capital, Sovereign Bank, Merrill Lynch, Bank of America and
Provident Bank of Maryland. 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 June 30, 2001, the
weighted average effective interest rate under the amended credit facility was
7.86%. 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 August 1,
2001, we had

availability under our revolving credit facility of $25.9 million and under our
letter of credit sub-facility of $1.9 million.

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. In
the event of an event of default, our lenders may terminate their lending
commitments to us and declare our outstanding indebtedness under the credit
facility due and payable, together with accrued but unpaid interest and fees.
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 BT Investment Partners, Inc. and The Northwestern Mutual Life Insurance
Company. 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.

SIX MONTHS ENDED JUNE 30, 2001 COMPARED TO SIX MONTHS ENDED JUNE 30, 2000

Net cash provided by operating activities for the six months ended June 30,
2001 increased $2.5 million to $13.0 million compared to $10.5 million for the
six months ended June 30, 2000. The use of cash from investing activities
totaled $36.3 million for the six months ended June 30, 2001 compared to a use
of $0.7 million in the six months ended June 30, 2000. Investing activities for
the six months ended June 30, 2001 included approximately $31.4 million for the
acquisition of ClinForce and $2.1 million for the acquisitions of Heritage and
Gill/Balsano. No acquisitions were completed during the six months ended
June 30, 2000. Net cash provided by financing activities for the six months
ending June 30, 2001 increased by $36.7 million to a provision of the
$23.3 million as compared to a use of $13.4 million for the six months ended
June 30, 2000. The source of the $23.3 million in the six months ended June 30,
2001 was primarily new debt associated with the acquisitions offset by repayment
of prior borrowings with cash provided by operating activities.

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

Net cash provided by operating activities for 2000 increased $4.1 million to
a provision of $10.4 million as compared to a provision of $6.3 million for the
five-month period July 30-December 31, 1999 and a provision of $12.2 million for
the seven-month period January 1-July 29, 1999. Excluding income tax expense,
our cash flow from operations was $17.1 million in 2000 compared with
$7.0 million for the period July 30-December 31, 1999 and $12.2 million for the
period January 1-July 29, 1999. The use of cash from investing activities for
2000 increased

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

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

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

INFLATION

During the last several years, the rate of inflation in healthcare related
services has exceeded that of the economy as a whole. This inflation has
increased our direct operating costs. We are also impacted by fluctuations in
housing costs. 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 $0.7 million for the six months ended June 30, 2001.

BUSINESS OF CROSS COUNTRY, INC.

OVERVIEW OF OUR COMPANY

We are the largest provider of healthcare staffing services in the United
States based on revenue. Approximately 80% of our revenue is derived from travel
nurse staffing services. Other staffing services include the placement of
clinical research professionals and allied healthcare professionals such as
radiology technicians, rehabilitation therapists and respiratory therapists. We
also provide other human capital management services, including search and
recruitment, consulting, education and training and resource management
services. Our active client base includes over 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 $407.7 million
and $50.7 million, respectively.

OVERVIEW OF OUR INDUSTRY

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

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

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

INDUSTRY DYNAMICS

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

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

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

- 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.

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

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 based on revenue. Our Cross Country TravCorps brand is well
recognized among leading healthcare providers and professionals. We
believe that through our relationships with existing travel nurse staffing
clients, we are positioned to effectively market complementary services,
including staffing of clinical trials and allied health professionals,
search and recruitment, consulting, and education and training to our
existing client base.

- 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.

- 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

HEALTHCARE STAFFING SERVICES

TRAVEL STAFFING

OVERVIEW

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

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

CONTRACTS WITH FIELD EMPLOYEES AND CLIENTS

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

OSHA requirements, as well as any travel and housing arrangements. Mobile
contract employees are hourly employees of the hospital client and receive an
agreement that specifies the hourly rates they will be paid by the hospital
employer, as well as any benefits they are entitled to receive from us. For
mobile contract employees, we provide recruitment, housing in apartments leased
by the Company and travel services. The Company's contract with the healthcare
professional obligates it to provide these services to the healthcare
professional. The Company is compensated for the services it provides at a
predetermined rate negotiated between the Company and its hospital client,
without regard to the Company's cost of providing these services. Currently more
than 95% of our employees work for us under payroll contracts. Our fees are paid
directly by our clients rather than by government or other third-party payors.
In 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.

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 terms of brand recognition, in temporary nurse
staffing.

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

CLINICAL RESEARCH AND TRIALS STAFFING

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

PER DIEM STAFFING

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

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

- expanding our advertising presence to reach more nursing professionals;

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

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

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

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

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

COMPETITIVE ENVIRONMENT

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

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

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

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

FACILITIES

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

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

Boca Raton, Florida Headquarters 43,000 April 30, 2008

Malden, Massachusetts Staffing administration, general office use 27,812 June 30, 2005
and storage space

Clayton, Missouri Search and recruitment headquarters 26,411 November 30, 2003

Durham, North Carolina Clinical research and trials staffing 12,744 December 31, 2004
headquarters

REGULATORY ISSUES

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

an aggregate limit of $3.0 million. We also have a fully insured umbrella
liability insurance policy with a limit of $10.0 million.

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

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

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

EMPLOYEES

As of June 30, 2001, we had approximately 675 corporate employees and
approximately 5,000 field employees, 98% of whom were working for us on a full
time basis. 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.

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 or within 90 days thereafter 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............................ 51 Chief Financial Officer and Director
Vickie Anenberg........................ 37 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
M. Fazle Husain........................ 37 Director

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

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

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

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

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

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

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

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

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

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

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

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

M. FAZLE HUSAIN has been a director since December 1999. He has been an
Executive Director of Morgan Stanley Private Equity and Morgan Stanley & Co.
Incorporated since February 1997. Mr. Husain 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 the Harvard Graduate School
of Business Administration. He also is a director of Allscripts Healthcare
Solutions, Inc., Cardiac Pathways Corporation, Healthstream Inc., The Medicines
Company and several privately held companies.

THE BOARD OF DIRECTORS

Currently, we have seven members on our board of directors. We intend to add
three independent directors before the date of the offering or within 90 days
thereafter. Each of our directors was elected by Charterhouse and investment
funds managed by Morgan Stanley Private Equity, who together own a majority of
our common shares. 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 and M. 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 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
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.

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 $16.00 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.............................. 128,174 384,520 $399,914 $1,199,743
Emil Hensel.................................... 102,539 307,616 $319,932 $ 959,796
Vickie Anenberg................................ 51,270 153,808 $159,966 $ 479,898
Dr. Franklin A. Shaffer, RN.................... 14,431 43,292 $ 45,025 $ 135,076
Carol D. Westfall.............................. 8,412 25,235 $ 44,846 $ 134,539

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

OUR STOCK PLANS

AMENDED AND RESTATED 1999 STOCK OPTION PLAN. We have reserved for issuance
2,145,515 shares of common stock under our Amended and Restated 1999 Stock
Option Plan, subject to adjustment for

stock splits or similar corporate events. Our Amended and Restated 1999 Stock
Option Plan provides for the granting of options to purchase shares of our
common stock to any of our employees or consultants. Each stock option granted
under our Amended and Restated 1999 Stock Option Plan is either intended to
qualify as an incentive stock option or is a non-qualified stock option. The
plan is currently administered by the compensation committee of our board of
directors. The exercise price of options granted under our Amended and Restated
1999 Stock Option Plan is determined by the committee, except that in the case
of substitute options, the exercise price cannot be less than 100% of the fair
market value of the common stock on the date of the grant. In the case of
incentive stock options granted to ten percent stockholders, the exercise price
cannot be less than 110% of the fair market value of the common stock. In the
event of a change of control of our company, stock options granted and not
previously exercisable, will become exercisable unless the committee determines
in good faith that an alternative option will be substituted. As of June 30,
2001, under our Amended and Restated 1999 Stock Option Plan, options to purchase
1,016,136 shares of common stock were outstanding.

AMENDED AND RESTATED EQUITY PARTICIPATION PLAN. We have reserved for
issuance 2,252,486 shares of common stock under our Amended and Restated Equity
Participation Plan, subject to adjustment for stock splits or similar corporate
events. Our Amended and Restated Equity Participation Plan provides for the
granting of options to purchase shares of our common stock to key management
employees of our company and our affiliates. Each stock option granted under our
Amended and Restated Equity Participation Plan is either intended to qualify as
an incentive stock option or is a non-qualified stock option. The exercise price
of options granted under our Amended and Restated Equity Participation Plan is
divided into five tranches ranging from 100 percent to 300 percent of the fair
market value of the common stock on the date of grant. However, for incentive
stock options granted to ten percent stockholders, the exercise price in the
first tranche cannot be less than 110 percent of the fair market value of the
common stock on the date of grant. The plan is currently administered by the
compensation committee of our board of directors. In the event of a change in
control of our company, stock options granted and not previously exercisable,
will become exercisable unless the committee determines in good faith that an
alternative option will be substituted. As of June 30, 2001, under our Amended
and Restated Equity Participation Plan, options to purchase 2,252,479 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.

RELATED PARTY TRANSACTIONS

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

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

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

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

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)................... 12,575,475 54.2% 40.5%
c/o Charterhouse Group International, Inc.
535 Madison Avenue
New York, NY 10022
Morgan Stanley Private Equity and related entities(c)....... 7,877,802 33.9 25.4
1221 Avenue of the Americas, 33rd Floor
New York, NY 10020

DIRECTORS:
Karen H. Bechtel(d)......................................... -- -- --
Joseph A. Boshart(e)........................................ 397,972 1.7 1.3
Bruce A. Cerullo(f)......................................... 438,682 1.9 1.4
Thomas C. Dircks(g)......................................... -- -- --
A. Lawrence Fagan(g)........................................ -- -- --
Emil Hensel(h).............................................. 262,573 1.1 *
M. Fazle Husain(d).......................................... -- -- --

OTHER NAMED EXECUTIVE OFFICERS:
Vickie Anenberg(i).......................................... 102,897 * *
Dr. Franklin A. Shaffer, RN(j).............................. 34,813 * *
Carol D. Westfall(k)........................................ 17,789 * *
All directors and executive officers as a group (7 1,254,726 5.3% 4.0%
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 common stock held by each person or
group of persons named above, any shares which such person or persons have
the right to acquire within 60 days after the date of this prospectus is

deemed to be outstanding but is not deemed to be outstanding for the purpose
of computing the percentage ownership of any other person.

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

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

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

(e) Includes 192,260 shares subject to options that are currently exercisable or
exercisable within 60 days of the date of this prospectus.

(f) Includes 128,174 shares subject to options that are currently exercisable or
exercisable within 60 days of the date of this prospectus.

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

(h) Includes 153,808 shares subject to options that are currently exercisable or
exercisable within 60 days of the date of this prospectus.

(i) Includes 76,904 shares subject to options that are currently exercisable or
exercisable within 60 days of the date of this prospectus.

(j) Includes 21,646 shares subject to options that are currently exercisable or
exercisable within 60 days of the date of this prospectus.

(k) Includes 10,805 shares subject to options that are currently exercisable or
exercisable within 60 days of the date of this prospectus.

(l) Includes an aggregate of 583,597 shares subject to options that are
currently exercisable or exercisable within 60 days of the date of this
prospectus.

DESCRIPTION OF CAPITAL STOCK

Our amended and restated certificate of incorporation, which will become
effective prior to the consummation of the offering, authorizes the issuance of
up to 100,000,000 shares of common stock and 10,000,000 shares of preferred
stock, the rights and preferences of which may be established from time to time
by our board of directors. As of the date of this prospectus, we had 23,206,458
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. Pursuant to a stockholders
agreement, investment funds managed by Morgan Stanley Private Equity and
Charterhouse have certain rights with respect to the board of directors and
other related matters. Specifically, this stockholders agreement provides that
we shall nominate for election to the board of directors, and recommend that the
stockholders elect to the board of directors, two designees of each of CEP III
and investment funds managed by Morgan Stanley Private Equity. A 50% reduction
in the number of shares of common stock owned by either CEP III or investment
funds managed by Morgan Stanley Private Equity reduces the number of designees
we are required to nominate, on behalf of such stockholder, to one and a 90%
reduction results in the elimination of the right to have us nominate a
designee, on behalf of such stockholder. Under our stockholders agreement, in
the event that either CEP III or investment funds managed by Morgan Stanley
Private Equity propose to sell more than ten percent of the total number of
shares of common stock owned by them, the other party is entitled to include in
such sale a pro rata portion of its common stock, on the same terms and for the
same consideration. Our stockholders agreement also provides that if both
Charterhouse and investment funds managed by Morgan Stanley desire to sell
shares into the public market, they shall endeavor, subject to applicable
securities laws, to effect such sales in a manner that will not adversely
disrupt the market for our common stock. In addition, Charterhouse and
investment funds managed by Morgan Stanley have agreed, to the extent
practicable, to sell their shares of common stock through a single broker, and
that all sales will be made proportionally based on the number of shares desired
to be sold by such stockholders. Pursuant to an additional shareholders
agreement, each of Joseph Boshart, our President and Chief Executive Officer,
and Emil Hensel, our Chief Financial Officer (collectively, the "Management
Investors"), agree not to transfer any shares of our common stock, except to
certain permitted transferees. The limitation on the ability of Management
Investors to transfer common stock terminates on the earliest of (x) the first
anniversary of the consummation of this offering and (y) the date of the
consummation of our first registered secondary public offering of common stock
after this offering. Holders of common stock are entitled to receive ratably
such dividends, if any, as may be declared by the board of directors out of
legally available funds. Upon our liquidation, dissolution or winding-up,
holders of common stock are entitled to receive ratably our net assets available
for distribution after the payment of all of our liabilities. The outstanding
shares of common stock are, and the shares sold in the offering will be, when
issued and paid for, validly issued, fully paid and nonassessable.

PREFERRED STOCK

The board of directors has the authority, without action by the
stockholders, to designate and issue preferred stock and to designate the
rights, preferences and privileges of each series of preferred stock, which may
be greater than the rights attached to the common stock. It will not be possible
to state the actual effect of the issuance of any shares of preferred stock on
the rights of holders of common stock until the board of directors determines
the specific rights attached to that preferred stock. The effects of issuing
preferred stock could include one or more of the following:

- restricting dividends on the common stock;

- diluting the voting power of the common stock;

- impairing the liquidation rights of the common stock; or

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

LIMITATION ON LIABILITY AND INDEMNIFICATION MATTERS

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

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

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

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

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

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

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

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

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

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

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

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

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

SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW. We are subject to the
provisions of Section 203 of the Delaware General Corporation Law. Subject to
certain exceptions, Section 203 of Delaware law prohibits a publicly held
Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the
interested stockholder attained such status with the approval of the board of
directors or unless the "business combination" is approved in a prescribed
manner. A "business combination" is defined as a merger, asset sale or other
transaction resulting in a financial benefit to the interested stockholder.
Subject to various exceptions, an "interested stockholder" is a person who,
together with affiliates and associates, owns, or within the past three years
did own 15% or more of a corporation's voting stock. This statute could prohibit
or delay the accomplishment of mergers or other takeover or change in control
attempts with respect to us and, accordingly, may discourage attempts to acquire
us.

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

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

TRANSFER AGENT AND REGISTRAR

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

LISTING

Our common stock has been approved for quotation on the Nasdaq National
Market under the symbol CCRN, subject to official notice of issuance.

SHARES ELIGIBLE FOR FUTURE SALE

RULE 144 SECURITIES

Upon the consummation of this offering, we will have 31,018,958 shares of
common stock outstanding, assuming no exercise of the underwriters'
over-allotment option and no exercise of outstanding options. All of the
7,812,500 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 23,206,458 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 310,190 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.

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
June 30, 2001, options to purchase 3,268,615 shares of common stock were issued
and outstanding, of which options to purchase 1,058,947 shares have vested.
Accordingly, these shares will, subject to vesting provisions, the provisions of
the shareholders agreement with the Management Investors, 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.

UNDERWRITING

We intend to offer the shares through the underwriters. Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Salomon Smith Barney Inc., Banc of America
Securities LLC, SunTrust Capital Markets, Inc. and CIBC World Markets Corp. are
acting as representatives of the underwriters named below. Subject to the terms
and conditions described in a purchase agreement between us and the
underwriters, we have agreed to sell to the underwriters, and the underwriters
severally have agreed to purchase from us, the number of shares listed opposite
their names below.

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

Merrill Lynch, Pierce, Fenner & Smith
Incorporated......................................
Salomon Smith Barney Inc....................................
Banc of America Securities LLC..............................
SunTrust Capital Markets, Inc...............................
CIBC World Markets Corp.....................................
---------
Total............................................. 7,812,500
=========

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

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

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

COMMISSIONS AND DISCOUNTS

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

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 $2.5 million and are payable by Cross Country. At June 30, 2001,
Cross Country had paid $1.0 million of such expenses.

OVERALLOTMENT OPTION

We have granted an option to the underwriters to purchase up to 1,171,875
additional shares at the public offering price less the underwriting discount.
The underwriters may exercise this option for 30 days from the date of this
prospectus solely to cover any overallotments. If the underwriters exercise this
option, each will be obligated, subject to conditions contained in the purchase
agreement, to purchase a number of additional shares proportionate to that
underwriter's initial amount reflected in the above table.

RESERVED SHARES

At our request, the underwriters have reserved for sale, at the initial
public offering price, up to 500,000 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 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

Our shares have been 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 representatives. 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
representatives 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 underwriters do not expect to sell more than 5% of the shares in the
aggregate to accounts over which they exercise discretionary authority.

NASD REGULATIONS

Approximately 24.2 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 SunTrust Capital Markets, Inc.
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 representatives may engage in transactions that
stabilize the price of the common stock, such as bids or purchases to peg, fix
or maintain that price.

The underwriters may purchase and sell our common stock in the open market.
These transactions may include short sales, stabilizing transactions and
purchases to cover positions created by short sales. Short sales involve the
sale by the underwriters of a greater number of shares than they are required to
purchase in the offering. "Covered" short sales are sales made in an amount not
greater than the underwriters' option to purchase additional shares from the
issuer in the offering. The underwriters may close out any covered short
position by either exercising their option to purchase additional shares or
purchasing shares in the open market. In determining the source of shares to
close out the covered short position, the underwriters will consider, among
other things, the price of shares available for purchase in the open market as
compared to the price at which they may purchase shares through the

over-allotment option. "Naked" short sales are any sales in excess of such
option. The underwriters must close out any naked short position by purchasing
shares in the open market. A naked short position is more likely to be created
if the underwriters are concerned that there may be downward pressure on the
price of the common shares in the open market after pricing that could adversely
affect investors who purchase in the offering. Stabilizing transactions consist
of various bids for or purchases of common shares made by the underwriters in
the open market prior to the completion of the offering.

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

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

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

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 lead
arranger, and affiliates of Salomon Smith Barney Inc. acted as administrative
agent, collateral agent, issuing bank and swingline lender under our credit
facility. In addition, affiliates of Merrill Lynch, Salomon Smith Barney Inc.,
Banc of America Securities LLC and SunTrust Capital Markets, Inc. are lenders
under our credit facility. During the past two years we paid $3.8 million in
fees to Salomon Smith Barney Inc. and its affiliates and $0.1 million to each of
Merrill Lynch, Banc of America Securities LLC, SunTrust Capital Markets, Inc.
and their affiliates, primarily in connection with lending activities.

INTERNET DISTRIBUTION

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

LEGAL MATTERS

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

EXPERTS

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

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

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

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

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

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Commission a registration statement on Form S-1,
which includes amendments, exhibits, schedules and supplements, under the
Securities Act and the rules and regulations under the Securities Act, for the
registration of the common stock offered by this prospectus. Although this
prospectus, which forms a part of the registration statement, contains all
material information included in the registration statement, parts of the
registration statement have been omitted from this prospectus as permitted by
the rules and regulations of the Commission. For further information with
respect to us and the common stock offered by this prospectus, please refer to
the registration statement. Statements contained in this prospectus as to the
contents of any contracts or other document referred to in this prospectus are
not necessarily complete and, where such contract or other document is an
exhibit to the registration statement, each such statement is qualified in all
respects by the provisions of such exhibit, to which reference is now made. The
registration statement can be inspected and copied at prescribed rates at the
public reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices
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.

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 June 30, 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 Six Months Ended June 30,
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 Six Months
Ended June 30, 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 Six Months Ended
June 30, 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-27
Balance Sheets as of July 29, 1999 and December 31,
1998.................................................... F-28
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-29
Statements of Cash Flows for the Period from January 1,
1999 to July 29, 1999 and for the Year Ended December
31, 1998................................................ F-30
Notes to Financial Statements............................. F-31

TRAVCORPS CORPORATION AND SUBSIDIARY
Independent Auditors' Report.............................. F-37
Consolidated Balance Sheets as of December 15, 1999 and
December 26, 1998....................................... F-39
Consolidated Statements of Income for the Year Ended
December 26, 1998 and for the Period from December 27,
1998 to December 15, 1999............................... F-41
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-42
Consolidated Statements of Cash Flows for the Period from
December 27, 1998 to December 15, 1999 and the Year
Ended December 26, 1998................................. F-43
Notes to the Consolidated Financial Statements............ F-44

CLINFORCE, INC.
Report of Independent Auditors............................ F-52
Consolidated Statements of Assets Acquired and Liabilities
Assumed as of December 31, 2000 and 1999................ F-53
Consolidated Statements of Operating Revenues and Expenses
for the Years Ended December 31, 2000 and 1999.......... F-54
Notes to the Consolidated Statements........................ F-55

HERITAGE PROFESSIONAL EDUCATION, LLC
Report of Independent Auditors............................ F-61
Balance Sheet as of December 25, 2000..................... F-62
Statement of Income for the Period from January 1, 2000
through December 25, 2000............................... F-63
Statement of Members' Deficit for the Period from January
1, 2000 through December 25, 2000....................... F-64
Statement of Cash Flows for the Period from January 1,
2000 through December 25, 2000.......................... F-65
Notes to Financial Statements............................. F-66

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, except for
the third paragraph of
Note 11, as to which
the date is August 23, 2001

F-2

CROSS COUNTRY, INC.

CONSOLIDATED BALANCE SHEETS

DECEMBER 31
--------------------------- JUNE 30,
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 $2,764,600
in 2001................................................. 50,243,772 65,087,380 72,550,119
Deferred income taxes..................................... 1,779,592 3,140,522 3,140,522
Income taxes receivable................................... 2,936,436 2,076,471 642,514
Prepaid rent on employees' apartments..................... 2,922,723 3,309,673 3,612,616
Deposits on employees' apartments, net of allowance of
$300,445 in 1999, $418,775 in 2000 and $300,585 in
2001.................................................... 1,518,071 1,055,106 1,235,417
Other current assets...................................... 449,595 2,032,437 3,202,925
------------ ------------ ------------
Total current assets........................................ 64,678,066 76,701,589 84,384,113
Property and equipment, net of accumulated depreciation and
amortization of $3,470,984 in 1999, $5,024,756 in 2000 and
$7,287,326 in 2001........................................ 3,975,129 6,168,505 8,280,860
Trademark, net of accumulated amortization of $158,644 in
1999, $746,669 in 2000 and $1,065,169 in 2001............. 14,541,356 13,953,331 15,734,831
Goodwill, net of accumulated amortization of $2,417,217 in
1999, $10,767,664 in 2000 and $15,431,774 in 2001......... 200,315,122 199,373,353 221,138,393
Other identifiable intangible assets, net of accumulated
amortization of $949,236 in 1999, $3,746,200 in 2000 and
$5,196,577 in 2001........................................ 15,480,764 12,683,800 12,533,423
Debt issuance costs, net of accumulated amortization of
$746,341 in 1999, $2,616,598 in 2000 and $3,617,182 in
2001...................................................... 10,475,198 8,604,941 8,586,190
Other assets................................................ 229,634 140,148 125,689
------------ ------------ ------------
Total assets................................................ $309,695,269 $317,625,667 $350,783,499
============ ============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 4,677,411 $ 6,445,501 $ 5,481,644
Accrued employee compensation and benefits................ 13,818,840 17,430,804 23,178,599
Accrued expenses.......................................... 5,963,985 3,801,172 2,350,854
Current portion of long-term debt......................... 5,120,000 12,400,000 20,280,000
Note payable and capital lease obligation................. 54,972 484,108 166,169
Net liabilities from discontinued operations.............. 309,670 534,999 480,924
Other current liabilities................................. 735,219 1,229,840 1,941,219
------------ ------------ ------------
Total current liabilities................................... 30,680,097 42,326,424 53,879,409
Interest rate swap.......................................... -- -- 962,045
Deferred income taxes....................................... 6,374,436 7,571,311 7,621,997
Long-term debt.............................................. 153,899,000 144,388,000 163,203,960
------------ ------------ ------------
Total liabilities........................................... 190,953,533 194,285,735 225,667,411
Commitments and contingencies
Stockholders' equity:
Common stock, Class A--$.0001 par value; 100,000,000
shares authorized; 22,445,104 shares issued and
outstanding at December 31, 1999 and 2000, and
23,206,458 shares issued and outstanding at June 30,
2001.................................................... 2,245 2,245 2,321
Common stock, Class B--$.0001 par value; 870,203 shares
authorized; 760,284 shares issued and outstanding at
December 31, 1999 and 2000, and 0 shares issued and
outstanding at June 30, 2001............................ 76 76 --
Additional paid-in capital................................ 119,080,880 119,080,880 119,089,872
Accumulated other comprehensive income.................... -- -- (907,184)
(Accumulated deficit) retained earnings................... (341,465) 4,256,731 6,931,079
------------ ------------ ------------
Total stockholders' equity.................................. 118,741,736 123,339,932 125,116,088
------------ ------------ ------------
Total liabilities and stockholders' equity.................. $309,695,269 $317,625,667 $350,783,499
============ ============ ============

See accompanying notes.

F-3

CROSS COUNTRY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

SIX MONTHS ENDED
PERIOD FROM JULY 30, YEAR ENDED JUNE 30
1999 TO DECEMBER 31, DECEMBER 31, ---------------------------
1999 2000 2000 2001
-------------------- ------------ ------------ ------------
(UNAUDITED)

Revenue from services.................... $87,727,219 $367,689,902 $177,649,900 $222,706,485
Operating expenses:
Direct operating expenses.............. 68,036,524 273,094,434 131,870,100 167,098,892
Selling, general and administrative
expenses............................. 9,256,719 49,027,376 24,229,494 31,510,975
Bad debt expense....................... 511,341 432,973 464,206 861,739
Depreciation........................... 154,590 1,323,397 610,276 1,163,312
Amortization........................... 4,421,577 13,701,384 7,317,010 7,495,287
Non-recurring indirect transaction
costs................................ -- 1,289,217 432,600 --
----------- ------------ ------------ ------------
Total operating expenses................. 82,380,751 338,868,781 164,923,686 208,130,205
----------- ------------ ------------ ------------
Income from operations................... 5,346,468 28,821,121 12,726,214 14,576,280

Other expenses:
Interest expense, net.................. 4,821,302 15,435,236 7,737,900 8,531,663
----------- ------------ ------------ ------------
Income before income taxes and
discontinued operations................ 525,166 13,385,885 4,988,314 6,044,617

Income tax expense....................... (671,917) (6,730,024) (2,509,059) (2,826,463)
----------- ------------ ------------ ------------
(Loss) income before discontinued
operations............................. (146,751) 6,655,861 2,479,255 3,218,154
Discontinued operations:
Loss from discontinued operations of
HospitalHub, less income tax benefit
of $140,710 in 1999, $1,159,013 in
2000, and $0 and $495,959 for the six
months ended June 30, 2000 and 2001,
respectively (194,714) (1,603,833) (687,715) --
Loss on disposal of HospitalHub, less
income tax benefit of $0 in 1999,
$327,963 in 2000 and $0 and $477,618
for the six months ended June 30,
2000 and 2001, respectively.......... -- (453,832) (543,806)
----------- ------------ ------------ ------------
Net (loss) income........................ $ (341,465) $ 4,598,196 $ 1,791,540 $ 2,674,348
=========== ============ ============ ============

Net (loss) income per common share--basic
and diluted:
(Loss) income before discontinued
operations........................... $ (.01) $ .29 $ .11 $ .14
Discontinued operations................ (.01) (.09) (.03) (.02)
----------- ------------ ------------ ------------
Net (loss) income........................ $ (.02) $ .20 $ .08 $ .12
=========== ============ ============ ============

Weighted average common shares
outstanding............................ 15,291,749 23,205,388 23,205,388 23,205,586
=========== ============ ============ ============

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)........... 13,114,880 $1,312 -- $ -- $ 79,588,811 $ -- $ --

Issuance of common stock in
conjunction with issuance
of long-term debt......... 380,163 38 760,284 76 6,919,924 -- --

Issuance of common stock in
exchange for employee
services.................. 132,010 13 -- -- 470,627 -- --

Issuance of common stock in
conjunction with
acquisition of TravCorps
Corporation............... 8,817,961 882 -- -- 32,101,518 -- --

Net loss.................... -- -- -- -- -- -- (341,465)
---------- ------ -------- ---- ------------ ---------- ----------

Balance at December 31,
1999........................ 22,445,014 2,245 760,284 76 119,080,880 -- (341,465)

Net income.................. -- -- -- -- -- -- 4,598,196
---------- ------ -------- ---- ------------ ---------- ----------

Balance at December 31,
2000........................ 22,445,014 2,245 760,284 76 119,080,880 -- 4,256,731

Accumulated derivative loss
(unaudited)................. -- -- -- -- -- (907,184) --

Net income (unaudited)........ -- -- -- -- -- -- 2,674,348

Conversion of Class B common
stock to Class A............ 760,284 76 (760,284) (76) -- -- --

Exercise of stock options..... 1,160 -- -- -- 8,992 -- --
---------- ------ -------- ---- ------------ ---------- ----------

Balance at June 30, 2001
(unaudited)................. 23,206,458 $2,321 -- $ -- $119,089,872 $ (907,184) $6,931,079
========== ====== ======== ==== ============ ========== ==========

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
Accumulated derivative loss
(unaudited)................. (907,184)
Net income (unaudited)........ 2,674,348
Conversion of Class B common
stock to Class A............ --
Exercise of stock options..... 8,992
------------
Balance at June 30, 2001
(unaudited)................. $125,116,088
============

See accompanying notes.

F-5

CROSS COUNTRY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

PERIOD FROM SIX MONTHS ENDED
JULY 30, 1999 TO YEAR ENDED JUNE 30,
DECEMBER 31, DECEMBER 31, ---------------------------
1999 2000 2000 2001
---------------- ------------ ----------- -------------
(UNAUDITED)

OPERATING ACTIVITIES
Net (loss) income.............................. $ (341,465) $ 4,598,196 $ 1,791,540 $ 2,674,348
Adjustments to reconcile net (loss) income to
net cash provided by operating activities:
Amortization............................... 4,421,577 13,701,384 7,317,010 7,495,287
Depreciation............................... 154,590 1,323,397 610,276 1,163,312
Bad debt expense........................... 511,341 432,973 464,206 861,739
Cumulative interest due at maturity........ 1,537,000 3,839,000 1,863,000 2,095,960
Estimated loss on disposal of discontinued
operations............................... -- 453,832 -- 543,806
Loss on derivative instrument.............. -- -- -- 54,861
Changes in operating assets and
liabilities:
Accounts receivable........................ (1,874,246) (15,096,581) 2,781,466 (2,350,558)
Prepaid rent, deposits, and other current
assets................................... (3,381,084) (1,385,374) (1,146,949) (1,342,022)
Accounts payable and accrued expenses...... 1,793,712 2,679,076 (6,215,536) 1,673,817
Net liabilities from discontinued
operations............................... 309,670 (228,503) 1,075,420 (597,881)
Other current liabilities.................. 3,170,112 79,621 1,972,781 711,379
------------ ----------- ----------- -------------
Net cash provided by operating activities...... 6,301,207 10,397,021 10,513,214 12,984,048

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 -- -- --
Exercise of stock options...................... -- -- -- 8,992
Acquisition of E-Staff, Inc.................... -- (1,500,000) -- --
Acquisition of Heritage Professional Education,
LLC.......................................... -- (6,200,000) -- (219,930)
Acquisition of Clinforce, Inc.................. -- -- -- (31,409,250)
Acquisition of Gill/Balsano Consulting, L.L.C.
Assets....................................... -- -- -- (1,831,000)
(Increase) decrease in other assets............ -- (6,205) (192,710) (12,968)
Increase in other liabilities.................. -- 1,196,875 -- --
Purchase of property and equipment............. (167,170) (1,992,109) (553,167) (2,038,451)
Increase in software development costs......... -- (1,082,595) -- (781,669)
------------ ----------- ----------- -------------
Net cash provided by (used in) investing
activities................................... 1,380,264 (9,584,034) (745,877) (36,284,276)

FINANCING ACTIVITIES
Debt issuance costs............................ 494,535 -- -- (981,833)
Repayment of debt.............................. (148,305,305) (65,258,097) (51,005,798) (63,067,939)
Proceeds from issuance of debt................. 144,700,000 59,617,233 37,583,126 87,350,000
------------ ----------- ----------- -------------
Net cash (used in) provided by financing
activities................................... (3,110,770) (5,640,864) (13,422,672) 23,300,228
Change in cash................................. 4,570,701 (4,827,877) (3,655,335)
Cash at beginning of period.................... 257,176 4,827,877 4,827,877 --
------------ ----------- ----------- -------------
Cash at end of period.......................... $ 4,827,877 $ -- $ 1,172,542 $ --
============ =========== =========== =============

See accompanying notes.

F-6

CROSS COUNTRY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

PERIOD FROM SIX MONTHS ENDED
JULY 30, 1999 TO YEAR ENDED JUNE 30
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 $5,511,176 $7,215,446
=========== =========== ========== ==========
Income taxes paid.......................... $ 437,873 $ 221,467 $3,616,367 $2,229,550
=========== =========== ========== ==========

See accompanying notes.

F-7

CROSS COUNTRY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1999 AND 2000
(INFORMATION PERTAINING TO JUNE 30, 2001 AND TO THE
SIX MONTH PERIODS ENDED JUNE 30, 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 and
liabilities of Cross Country Staffing (the Partnership), a Delaware general
partnership. The acquisition included certain identifiable intangible assets
primarily related to proprietary databases and contracts. The Partnership was
engaged in the business of providing nurses and other allied health personnel to
health care providers primarily on a contract basis. CCS recorded the assets and
certain assumed liabilities, as defined in the asset purchase agreement, at fair
market value. The purchase price of approximately $189,000,000 exceeded the fair
market value of the assets less the assumed liabilities by approximately
$167,537,000, of which $20,890,000 was allocated to certain identifiable
intangible assets ($8,900,000--trademark, $8,440,000--databases,
$1,040,000--workforce, and $2,510,000--hospital relations), and $250,000
relating to a covenant not to compete. The remaining $146,397,000 was allocated
to goodwill.

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

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

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

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

The accompanying unaudited condensed consolidated financial statements as of
June 30, 2001 and for the six months ended June 30, 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 operations for

F-8

CROSS COUNTRY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999 AND 2000
(INFORMATION PERTAINING TO JUNE 30, 2001 AND TO THE
SIX MONTH PERIODS ENDED JUNE 30, 2001 AND 2000 IS UNAUDITED)

1. ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)
the six months ended June 30, 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 June 30, 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 JUNE 30, 2001 AND TO THE
SIX MONTH PERIODS ENDED JUNE 30, 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. Through June 30, 2001, the Company has not recognized any revenue from
the sale of software.

RESERVES FOR CLAIMS

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

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 $7,121,000), workforce (approximately $1,593,000, $1,315,000,
and $2,014,000) and hospital relations (approximately $3,338,000, $3,110,000,
and $3,399,000) at December 31, 1999, December 31, 2000, and June 30, 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 June 30, 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

F-10

CROSS COUNTRY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999 AND 2000
(INFORMATION PERTAINING TO JUNE 30, 2001 AND TO THE
SIX MONTH PERIODS ENDED JUNE 30, 2001 AND 2000 IS UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
approximately $11,222,000, less accumulated amortization of approximately
$746,000 and $2,617,000 at December 31, 1999 and December 31, 2000,
respectively, are recorded in the consolidated balance sheets. Debt issuance
costs of approximately $12,203,000, less accumulated amortization of
approximately $3,617,000 are recorded in the consolidated balance sheet at
June 30, 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 June 30, 2001, the amounts accrued
are approximately $5,526,000, $14,970,000, and $14,806,000, respectively.

Revenues on permanent and temporary placements are recognized when services
provided are substantially completed. The Company does not, in the ordinary
course of business, give refunds. If a candidate leaves a permanent placement
within a short period of time I.E., one month, it is customary for us to seek a
replacement at no additional cost. Allowances are established as considered
necessary to estimate significant losses due to placed candidates not remaining
employed for the Company's guarantee period. During 2000, 1999 and 1998, such
replacements and refunds were not material and, accordingly, related allowances
were not recorded.

STOCK-BASED COMPENSATION

The Company, from time to time, grants stock options for a fixed number of
common shares to employees. The Company accounts for employee stock option
grants in accordance with Accounting Principles Board Opinion No. 25, ACCOUNTING
FOR STOCK ISSUED TO EMPLOYEES, and accordingly, recognizes no compensation
expense for the stock option grants when the exercise price of the options
equals, or is greater than, the market value of the underlying stock on the date
of grant. Accordingly, the Company did not recognize any compensation cost
during the period from July 30, 1999 to December 31, 1999, the year ended
December 31, 2000, or the six months ended June 30, 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
$1,245,000 and $1,391,000 for the six months ended June 30, 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.

F-11

CROSS COUNTRY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999 AND 2000
(INFORMATION PERTAINING TO JUNE 30, 2001 AND TO THE
SIX MONTH PERIODS ENDED JUNE 30, 2001 AND 2000 IS UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
COMPREHENSIVE INCOME

The Company has adopted FASB Statement No. 130, COMPREHENSIVE INCOME, which
requires that an enterprise: (a) classify items of other comprehensive income by
their nature in the financial statements; and (b) display the accumulated
balance of other comprehensive income separately from retained earnings and
additional paid-in capital in the equity section of the balance sheet. The items
of other comprehensive income that are typically required to be displayed are
foreign currency items, minimum pension liability adjustments and unrealized
gains and losses on certain investments in debt and equity securities. There are
no other components of comprehensive income or loss other than the Company's
consolidated net (loss) income for the period from July 30, 1999 to
December 31, 1999, the year ended December 31, 2000, and the six months ended
June 30, 2000 and the accumulated derivative loss for the six months ended
June 30, 2001.

During 1998, the FASB issued Statement No. 133, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES, which was effective beginning January 1,
2001. FASB Statement No. 133 requires companies to recognize all of its
derivative instruments as either assets or liabilities in the statement of
financial position at fair value. The accounting for changes in the fair value
(i.e., gains or losses) of a derivative instrument depends on whether it has
been designated and qualifies as part of a hedging relationship and further, on
the type of hedging relationship. For those derivative instruments that are
designated and qualify as hedging instruments, a company must designate the
hedging instrument, based upon the exposure being hedged, as either a fair value
hedge, cash flow hedge or a hedge of a net investment in a foreign operation. As
the Company's derivative instrument is designated and qualifies as a cash flow
hedge (i.e., hedging the exposure to variability in expected future cash flows
that is attributable to a particular risk), the effective portion of the gain or
loss on the derivative instrument is reported as a component of other
comprehensive income and reclassified into earnings in the same period or
periods during which the hedged transaction affects earnings. The remaining gain
or loss on the derivative instrument in excess of the cumulative change in the
present value of future cash flows of the hedged item, if any, is recognized in
current earnings during the period of change.

The Company implemented the provisions of FASB Statement No. 133 on
January 1, 2001. The implementation of FASB Statement No. 133 resulted in a
reduction in consolidated stockholders' equity of approximately $910,000 as of
January 1, 2001. During the six months ended June 30, 2001, the Company recorded
the following in accumulated other comprehensive income:

Accumulated derivative loss at January 1, 2001.............. $(910,009)
Net change in hedging transaction........................... 2,825
---------
Accumulated derivative loss at June 30, 2001................ $(907,184)
=========

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

F-12

CROSS COUNTRY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999 AND 2000
(INFORMATION PERTAINING TO JUNE 30, 2001 AND TO THE
SIX MONTH PERIODS ENDED JUNE 30, 2001 AND 2000 IS UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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

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

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

RECLASSIFICATIONS

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

3. ACQUISITIONS

Effective July 31, 2000, the Company acquired substantially all of the
assets of E-Staff, a Pennsylvania corporation, for $1,500,000. E-Staff is a
development-stage company creating an Internet, subscription-based
communication, scheduling, credentialing and training service business. The
acquisition met the accounting criteria of a purchase and, accordingly, the
accompanying consolidated financial statements include the results of E-Staff
from the acquisition date. The consideration for this acquisition included
$1,500,000 in cash. In addition, the asset purchase agreement provides for
potential earnout payments of up to $3,250,000 to the seller based on the
profits of E-Staff over a three-year period ending July 31, 2003. This
contingent consideration is not related to the seller's employment. Upon
payment, the earnouts will be allocated to goodwill as additional purchase price
and amortized over the remaining life of the asset. The excess of the aggregate
purchase price over the fair market value of the assets acquired of
approximately $927,000 was allocated to goodwill and is being amortized over
five years.

Effective December 26, 2000, Cross Country Seminars acquired substantially
all of the assets of Heritage Professional Education, LLC (Heritage), a
Tennessee limited liability company. Heritage provides continuing professional
education courses to medical and healthcare personnel through seminars and study
programs servicing the healthcare industry. The acquisition met the accounting
criteria of a purchase and, accordingly, the accompanying consolidated financial
statements include the

F-13

CROSS COUNTRY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999 AND 2000
(INFORMATION PERTAINING TO JUNE 30, 2001 AND TO THE
SIX MONTH PERIODS ENDED JUNE 30, 2001 AND 2000 IS UNAUDITED)

3. ACQUISITIONS (CONTINUED)
results of Heritage from the acquisition date. The consideration for this
acquisition included $6,200,000 in cash and a post-closing adjustment of
approximately $300,000, to be paid 90 days from the closing date. In addition,
the asset purchase agreement provides for potential earnout payments of
approximately $6,500,000 based on adjusted earnings before interest, taxes,
depreciation, and amortization (EBITDA) (as defined in the asset purchase
agreement) of Heritage over a three-year period ending December 31, 2003. This
contingent consideration is not related to the seller's employment. Upon
payment, the earnouts will be allocated to goodwill as additional purchase price
and amortized over the remaining life of the asset. The excess of the aggregate
purchase price over the fair market value of the assets acquired of
approximately $6,482,000 was allocated to goodwill and is being amortized over
25 years.

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

In May 2001, Cejka acquired substantially all of the assets of Gill/Balsano
Consulting, L.L.C. (Gill/ Balsano), a Delaware limited liability company.
Gill/Balsano provides management consulting services to the healthcare industry.
The acquisition met the accounting criteria of a purchase, and, accordingly, the
accompanying consolidated financial statements include the results of
Gill/Balsano from the acquisition date. The consideration for this acquisition
was $1,831,000 in cash. In addition, the asset purchase agreement provides for
potential earnout payments of approximately $1,995,000 based on adjusted EBITDA
(as defined in the asset purchase agreement) of Gill/Balsano over a three-year
period ending March 31, 2004. This contingent consideration is not related to
the seller's employment. Upon payment, the earnouts will be allocated to
goodwill as additional purchase price and amortized over the remaining life of
the asset. The excess of the aggregate purchase price over the fair market value
of the assets acquired of approximately $1,674,000 was allocated to goodwill and
is being amortized over 25 years.

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

F-14

CROSS COUNTRY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999 AND 2000
(INFORMATION PERTAINING TO JUNE 30, 2001 AND TO THE
SIX MONTH PERIODS ENDED JUNE 30, 2001 AND 2000 IS UNAUDITED)

3. ACQUISITIONS (CONTINUED)
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 SIX MONTHS
JULY 30, 1999 YEAR ENDED ENDED
TO DECEMBER 31, DECEMBER 31, JUNE 30,
1999 2000 2001
--------------- ------------ ------------

Revenue from services.............. $151,847,118 $407,732,700 $230,400,235
============ ============ ============
Net (loss) income.................. $ (3,133,254) $ 4,611,097 $ 2,557,481
============ ============ ============
Net (loss) income per common
share--basic and diluted......... $ (0.20) $ 0.20 $ 0.11
============ ============ ============

4. PROPERTY AND EQUIPMENT

At December 31, 1999, December 31, 2000 and June 30, 2001, property and
equipment consist of the following:

DECEMBER 31,
------------------------- JUNE 30,
1999 2000 2001
----------- ----------- -----------

Computer equipment.................... $ 4,601,677 $ 4,830,242 $ 5,954,893
Computer software..................... 875,672 3,900,076 5,815,082
Office equipment...................... 548,190 760,527 1,117,394
Furniture and fixtures................ 736,551 833,786 1,567,979
Leasehold improvements................ 684,023 868,630 1,112,838
----------- ----------- -----------
7,446,113 11,193,261 15,568,186
Less accumulated depreciation and
amortization........................ (3,470,984) (5,024,756) (7,287,326)
----------- ----------- -----------
$ 3,975,129 $ 6,168,505 $ 8,280,860
=========== =========== ===========

At December 31, 2000 and June 30, 2001, computer software includes
approximately $1,481,000 and $2,263,000, respectively, of software development
costs capitalized in accordance with the provisions of FASB Statement No. 86.

F-15

CROSS COUNTRY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999 AND 2000
(INFORMATION PERTAINING TO JUNE 30, 2001 AND TO THE
SIX MONTH PERIODS ENDED JUNE 30, 2001 AND 2000 IS UNAUDITED)

5. ACCRUED COMPENSATION AND BENEFITS

At December 31, 1999, December 31, 2000 and June 30, 2001, accrued employee
compensation and benefits consist of the following:

DECEMBER 31,
------------------------- JUNE 30,
1999 2000 2001
----------- ----------- -----------

Salaries.............................. $ 5,660,772 $ 6,903,347 $ 9,706,448
Bonuses............................... 5,686,305 6,858,620 8,769,918
Accrual for workers' compensation
claims.............................. 1,896,543 2,095,720 2,442,809
Accrual for health care benefits...... 372,000 1,295,632 1,628,960
Accrual for vacation.................. 203,220 277,485 630,464
----------- ----------- -----------
$13,818,840 $17,430,804 $23,178,599
=========== =========== ===========

6. LONG-TERM DEBT AND NOTE PAYABLE

At December 31, 1999, December 31, 2000 and June 30, 2001, long-term debt
consists of the following:

DECEMBER 31,
--------------------------- JUNE 30,
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 6.73% and 6.88% for
$108,680,000 and $30,000,000, at
June 30, 2001.................... $120,000,000 $114,880,000 $138,680,000
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 8.75% for $8,250,000, at
June 30, 2001.................... 8,400,000 7,450,000 8,250,000
Subordinated Pay-In-Kind Notes,
interest at 12%.................. 30,619,000 34,458,000 36,553,960
------------ ------------ ------------
159,019,000 156,788,000 183,483,960
Less current portion............... (5,120,000) (12,400,000) (20,280,000)
------------ ------------ ------------
$153,899,000 $144,388,000 $163,203,960
============ ============ ============

F-16

CROSS COUNTRY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999 AND 2000
(INFORMATION PERTAINING TO JUNE 30, 2001 AND TO THE
SIX MONTH PERIODS ENDED JUNE 30, 2001 AND 2000 IS UNAUDITED)

6. LONG-TERM DEBT AND NOTE PAYABLE (CONTINUED)
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 June 30, 2001
respectively, or LIBOR plus a margin of 3.00%, 2.75%, and 3.00% at December 31,
1999, December 31, 2000, and June 30, 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.

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

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
June 30, 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
504,468 shares of its common stock to the financial institutions. Debt issuance
costs of $6,920,000 relating to this transaction were recorded, which
represented the fair market value of the shares at the time of issuance.

F-17

CROSS COUNTRY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999 AND 2000
(INFORMATION PERTAINING TO JUNE 30, 2001 AND TO THE
SIX MONTH PERIODS ENDED JUNE 30, 2001 AND 2000 IS UNAUDITED)

6. LONG-TERM DEBT AND NOTE PAYABLE (CONTINUED)
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 June 30, 2001,
respectively, the outstanding balance was $484,108 and $0.

7. EMPLOYEE BENEFIT PLANS

The Company maintains a voluntary defined contribution 401(k) profit-sharing
plan covering all eligible employees as defined in the plan documents. The plan
provides for a discretionary matching contribution, which is equal to a
percentage of each contributing participant's elective deferral, which the
Company, at its sole discretion, determines from year to year. Contributions by
the Company, net 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 $461,000 and $1,212,000
for the six months ended June 30, 2000 and 2001, respectively.

TVCM employees were covered under a separate benefit plan for both 2000 and
1999. TVCM had a 401(k) defined contribution plan for eligible employees.
Eligible employees made pretax savings contributions to the 401(k) Plan of up to
20% of their earnings to a certain statutory limit. TVCM matched employee
contributions from 1% to 3% of compensation based on years of service.
Contributions to the 401(k) Plan were approximately $630,000 for the year ended
December 31, 2000 and $270,000 for the six months ended June 30, 2000. Effective
fiscal 2001, TVCM employees participated in the Company's defined contribution
401(k) profit-sharing plan.

F-18

CROSS COUNTRY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999 AND 2000
(INFORMATION PERTAINING TO JUNE 30, 2001 AND TO THE
SIX MONTH PERIODS ENDED JUNE 30, 2001 AND 2000 IS UNAUDITED)

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 $645,000 and $1,044,000 for the six months ended
June 30, 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 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:

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

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

F-19

CROSS COUNTRY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999 AND 2000
(INFORMATION PERTAINING TO JUNE 30, 2001 AND TO THE
SIX MONTH PERIODS ENDED JUNE 30, 2001 AND 2000 IS UNAUDITED)

10. INCOME TAXES (CONTINUED)
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
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 June 30, 2001.

F-20

CROSS COUNTRY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999 AND 2000
(INFORMATION PERTAINING TO JUNE 30, 2001 AND TO THE
SIX MONTH PERIODS ENDED JUNE 30, 2001 AND 2000 IS UNAUDITED)

11. STOCKHOLDERS' EQUITY

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

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

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

STOCK OPTIONS

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

Information regarding the Company's stock option activity is summarized
below:

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

Options outstanding at July 29, 1999............... -- $ -- $ --
Granted.......................................... 3,441,796 7.75-23.25 11.90
---------
Options outstanding at December 31, 1999........... 3,441,796 7.75-23.25 11.90
Granted.......................................... 194,055 10.13-32.35 14.75
Canceled......................................... (516,191) 7.75-23.25 12.82
---------
Options outstanding at December 31, 2000........... 3,119,660 7.75-32.35 11.93
GRANTED.......................................... 182,743 12.38-37.13 21.07
CANCELED......................................... (32,628) 7.75-10.80 8.10
EXERCISED........................................ (1,160) 7.75 7.75
---------
OPTIONS OUTSTANDING AT JUNE 30, 2001............... 3,268,615 $ 7.75-37.13 $ 12.48
=========

F-21

CROSS COUNTRY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999 AND 2000
(INFORMATION PERTAINING TO JUNE 30, 2001 AND TO THE
SIX MONTH PERIODS ENDED JUNE 30, 2001 AND 2000 IS UNAUDITED)

11. STOCKHOLDERS' EQUITY (CONTINUED)

There were no exercisable options at December 31, 1999. The number of
options exercisable at December 31, 2000 was 737,543 and at June 30, 2001 was
1,058,947. The weighted-average grant-date fair value of options granted during
1999 and 2000 and the six months ended June 30, 2001 was $4.05 per share, $5.56
per share and $6.15 per share, respectively.

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

$ 7.75 1,300,354 8.50 385,382
10.13 39,291 9.00 --
10.78 34,956 9.25 --
11.62 664,931 8.50 276,338
12.38 44,609 9.75 --
15.19 11,724 9.00 --
15.50 664,931 8.50 276,338
16.17 25,404 9.25 --
18.57 56,670 9.75 --
19.37 145,453 8.50 60,449
20.26 11,724 9.00 --
21.56 25,404 9.25 --
23.25 145,454 8.50 60,440
24.76 56,670 9.75 --
25.32 2,565 9.00 --
26.96 5,557 9.25 --
30.39 2,567 9.00 --
30.95 12,397 9.75 --
32.35 5,557 9.25 --
37.13 12,397 9.75 --

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-22

CROSS COUNTRY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999 AND 2000
(INFORMATION PERTAINING TO JUNE 30, 2001 AND TO THE
SIX MONTH PERIODS ENDED JUNE 30, 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.

PERIOD FROM
JULY 30, 1999 TO YEAR ENDED
DECEMBER 31, DECEMBER 31,
----------------- ------------- JUNE 30,
1999 2000 2001
----------------- ------------- ----------

Pro forma net (loss) income............ $ (444,569) $2,818,729 $1,727,147
========== ========== ==========
Pro forma (loss) income per common
share--basic and diluted:
(Loss) income from continuing
operations......................... $ (0.02) $ 0.21 $ 0.09
Discontinued operations.............. (0.01) (0.09) (0.02)
---------- ---------- ----------
Net (loss) income.................... $ (0.03) $ 0.12 $ 0.07
========== ========== ==========

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,
------------------- JUNE 30,
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

F-23

CROSS COUNTRY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999 AND 2000
(INFORMATION PERTAINING TO JUNE 30, 2001 AND TO THE
SIX MONTH PERIODS ENDED JUNE 30, 2001 AND 2000 IS UNAUDITED)

13. INTEREST RATE SWAP (CONTINUED)
Agreement) with a financial institution. Interest rate swap agreements involve
the exchange of floating interest rate payments for fixed interest rate payments
over the life of the agreement without an exchange of the underlying notional
amount. The Company entered into the Agreement to reduce the exposure to adverse
fluctuations in floating interest rates on the underlying debt obligation as
required by the senior credit facility and not for trading purposes.

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

For the period from February 7, 2000 through December 31, 2000, the Company
paid a fixed interest rate of 6.625% based on an underlying notional amount of
$45,000,000. The floating interest rate paid by the financial institution to the
Company approximated 6.7503%. The carrying value of the interest rate swap at
December 31, 2000 and June 30, 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 $962,000 net payable based on quoted market prices for similar
instruments at December 31, 2000 and June 30, 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 January 1, 2001 which
resulted in a reduction in consolidated stockholders' equity of approximately
$910,000. During the six months ended June 30, 2001, the Company recognized a
net loss of approximately $55,000 related to the ineffective portion of its
hedging instrument. The amount of net gain related to the portion of the hedging
instrument excluded from the assessment of hedge effectiveness during the six
months ended June 30, 2001 was not material.

The Company has no plans to terminate the Agreement earlier than the
maturity date. The Company is exposed to credit loss in the event of
nonperformance by the counterparty to the Agreement. The amount of such exposure
is limited to the unpaid portion of amounts due to the Company, if any, pursuant
to the Agreement. However, management believes that this exposure is mitigated
by provisions in the Agreement that allow for the legal right of offset of any
amounts due to the Company from the counter party with any amounts payable to
the counterparty by the Company. As a result, management considers the risk of
counter party default to be minimal. At December 31,

F-24

CROSS COUNTRY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999 AND 2000
(INFORMATION PERTAINING TO JUNE 30, 2001 AND TO THE
SIX MONTH PERIODS ENDED JUNE 30, 2001 AND 2000 IS UNAUDITED)

13. INTEREST RATE SWAP (CONTINUED)
2000, the Company expects to reclassify approximately $423,000 of net losses on
the derivative instrument from accumulated other comprehensive income to
earnings during the next twelve months. The amount the Company expects to
reclassify to earnings during the next twelve months as of June 30, 2001 was
immaterial.

14. RELATED PARTY TRANSACTIONS

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

15. DISCONTINUED OPERATIONS

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

16. SEGMENT INFORMATION

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

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

F-25

CROSS COUNTRY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1999 AND 2000
(INFORMATION PERTAINING TO JUNE 30, 2001 AND TO THE
SIX MONTH PERIODS ENDED JUNE 30, 2001 AND 2000 IS UNAUDITED)

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

SIX MONTHS ENDED
PERIOD FROM JULY 30, YEAR ENDED JUNE 30,
1999 TO DECEMBER 31, DECEMBER 31, ---------------------------
1999 2000 2000 2001
--------------------- ------------- ------------ ------------

Revenue from unaffiliated
customers:
Healthcare staffing............. $85,594,847 $350,856,054 $169,670,149 $205,752,322
Other human capital management
services...................... 2,132,372 16,833,848 7,979,770 16,954,163
----------- ------------ ------------ ------------
$87,727,219 $367,689,902 $177,649,919 $222,706,485
=========== ============ ============ ============

Contribution (expense) income:
Healthcare staffing............. $15,517,594 $ 61,894,291 $ 29,793,624 $ 29,576,322
Other human capital management
services...................... (94,852) 4,290,020 2,174,327 3,994,590
Unallocated corporate overhead.... 5,500,107 21,049,192 10,881,851 10,336,033
----------- ------------ ------------ ------------
EBITDA............................ $ 9,922,635 $ 45,135,119 $ 21,086,100 $ 23,234,879
=========== ============ ============ ============

Interest expense, net............. $ 4,821,302 $ 15,435,236 $ 7,737,900 $ 8,531,663
Depreciation and amortization..... 4,576,167 15,024,781 7,927,286 8,658,599
Nonrecurring indirect transaction
costs............................. 1,289,217 432,600
Other expenses....................
----------- ------------ ------------ ------------
Income before income taxes and
discontinued operations........... $ 525,166 $ 13,385,885 $ 4,988,314 $ 6,044,617
=========== ============ ============ ============

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

F-26

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-27

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-28

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-29

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-30

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-31

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-32

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-33

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-34

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-35

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-36

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-37

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-38

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-39

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-40

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-41

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-42

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-43

TRAVCORPS CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PERIOD FROM DECEMBER 27, 1998 TO DECEMBER 15, 1999
AND THE YEAR ENDED DECEMBER 26, 1998

1. NATURE OF BUSINESS

TravCorps Corporation ("TravCorps") and its wholly-owned subsidiary,
Cejka & Company ("Cejka") (collectively, the "Company") provide flexible
staffing, search, consulting and related outsourced services to health care
providers throughout the United States. The Company's fiscal year typically ends
on the last Saturday in December.

On December 16, 1999, the Company merged with Cross Country Staffing, Inc.
("CCS") (see Note 9). These financial statements are presented on a going
concern basis and do not reflect any effects on the financial statements
resulting from the merger with CCS.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REVENUE RECOGNITION--The Company recognizes revenue from temporary staffing
services as services are rendered based on hours worked by the assigned health
care professionals. Retainer fees earned for search and related outsourced
services are recognized over the contract term. Placement revenues are
recognized upon successful completion of the search assignment. Consulting
revenues are recognized as services are rendered.

Revenues on permanent and temporary placements are recognized when services
provided are substantially completed. The Company does not, in the ordinary
course of business, make refunds. If a candidate leaves a permanent placement
within a short period of time (i.e., one month) it is customary for us to seek a
replacement at no additional cost. Allowances are established as considered
necessary to estimate significant losses due to placed candidates not remaining
employed for the Company's guarantee period. During 2000, 1999 and 1998, such
replacements and refunds were not material and, accordingly, related allowances
were not recorded.

PRINCIPLES OF CONSOLIDATION--The consolidated financial statements include
the accounts of TravCorps Corporation and subsidiary. Upon consolidation, all
material intercompany accounts and transactions are eliminated.

CASH AND CASH EQUIVALENTS--The Company considers all investments in highly
liquid debt instruments with maturities of less than three months at the date of
purchase to be cash and cash equivalents.

USE OF ESTIMATES--The preparation of consolidated financial statements in
conformity with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements. Estimates included in the
consolidated financial statements include allowances for uncollectible accounts
and certain accrued expenses. Actual results could differ from those estimates.

PROPERTY AND EQUIPMENT--Property and equipment are recorded at cost.
Depreciation and amortization are provided using the straight-line method over
the estimated useful lives (three to seven years) of the related assets. This
caption also includes capitalized costs associated with the development of
internal-use software (see below). Such costs include charges for consulting
services and costs for personnel associated with programming, coding and testing
such software. These costs are not depreciated until the related software is
placed into service.

F-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

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ACCOUNTING FOR COMPUTER SOFTWARE COSTS--In March 1998, the American
Institute of Certified Public Accountants issued Statement of Position (SOP)
No. 98-1, ACCOUNTING FOR THE COSTS OF COMPUTER SOFTWARE DEVELOPED OR OBTAINED
FOR INTERNAL USE. SOP No. 98-1 delineated the types of costs that may be
capitalized in connection with the development and installation of internal-use
software. The Company historically has had accounting policies that are
consistent with those specified in SOP No. 98-1. Accordingly, its implementation
did not have a material impact on the consolidated financial statements.

IMPAIRMENT OF LONG-LIVED ASSETS--Long-lived assets to be held and used are
reviewed for impairment whenever circumstances indicate that the carrying amount
of an asset may not be recoverable. Long-lived assets to be disposed of are
reported at the lower of the carrying amount or fair value, less cost to sell.

GOODWILL--The excess of the purchase price of acquired companies over the
fair value of net identifiable assets ("goodwill") at the date of acquisition
are amortized on a straight-line basis over their estimated lives of twenty or
twenty-five years. The Company periodically reviews goodwill to assess
recoverability, based upon expectations of nondiscounted cash flows and
operating income of the activities, that generated the goodwill balance.
Impairments would be recognized in operating results if such expected cash flows
were less than the carrying value of the related assets. No such impairments
have been recorded through December 15, 1999.

DEFERRED FINANCING COSTS--Deferred financing costs represent commitment fees
and other costs incurred relating to the refinancing of the Company's revolving
credit agreement and are being amortized over the life of the agreement.

INCOME TAXES--Deferred income taxes are provided for differences in bases of
the Company's assets and liabilities for book and tax purposes. Deferred income
taxes are estimated using currently enacted tax rates.

CONCENTRATION OF CREDIT RISK--The Company extends credit to its customers on
an unsecured basis and requires no collateral. However, credit control policies
are in place to control the Company's exposure to potential uncollectible
receivables.

STOCK-BASED COMPENSATION--The Company accounts for stock-based awards to
employees using the intrinsic-value method.

ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS--The carrying amounts reported
in the consolidated balance sheets for cash, accounts receivable, accounts
payable and accrued expenses approximate fair value because of their short
maturity. The carrying amount of the long-term obligations approximates fair
value because the interest rate is tied to a quoted variable index.

3. ACQUISITION

On April 29, 1998, the Company acquired certain assets and assumed certain
liabilities of Cejka, a company that provides permanent placement, consulting
and related outsourced services for physicians and health care executives. The
acquisition has been accounted for as a purchase and, accordingly, the results
of Cejka are included in these consolidated financial statements from the date
of acquisition.

F-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

3. ACQUISITION (CONTINUED)
The purchase and related acquisition costs aggregated $12,826,000 and were
funded with the borrowing of $11,821,000 under the Company's revolving credit
agreement and the issuance of 90,000 shares of Class A common stock valued at
$855,000.

The consideration involved in the acquisition, after giving effect to
liabilities assumed, has been allocated to the assets acquired based on their
respective fair values as follows:

Assets:
Cash and cash equivalents................................. $ 300
Accounts receivable....................................... 1,785,969
Prepaid rent.............................................. 28,229
Deposits.................................................. 11,396
Property and equipment.................................... 379,047
Goodwill.................................................. 11,560,000
-----------
Assets acquired............................................. 13,764,941
Less assumed liabilities.................................... 939,187
-----------
Total consideration......................................... $12,825,754
===========

4. LONG-TERM OBLIGATIONS

Long-term obligations at December 15, 1999 and December 26, 1998 consist of
the following:

1999 1998
----------- -----------

Revolving Credit Agreement......................... $45,000,000 $12,664,500
Capital lease obligations.......................... 36,273 174,891
----------- -----------
Total.............................................. 45,036,273 12,839,391
Less current portion............................... 36,273 163,742
----------- -----------
Total long-term obligations........................ $45,000,000 $12,675,649
=========== ===========

CREDIT AGREEMENT--At December 15, 1999, the Company has a revolving credit
agreement with Chase Bank (the "Revolving Credit Agreement"), which provides for
a term loan of $45 million, revolving loans of up to $10,000,000 and swingline
loans up to $1,000,000, including letters of credit of up to $2,500,000,
maturing May 14, 2005. Revolving loans under the Revolving Credit Agreement can
be ABR loans or Eurodollar loans. Swingline loans must be ABR loans. Eurodollar
rate loans must have a minimum principal balance of $1,000,000 and must be in
integral multiples of $250,000. ABR Revolving loans must have a minimum
principal balance of $250,000 and must be in integral multiples of $50,000.
Swingline loans must have a minimum principal balance of $250,000 and must be in
integral multiples of $50,000. Amounts outstanding under the term loan at
December 15, 1999 totaled $45 million and are scheduled to be repaid with
interest at 9.40% in quarterly installments of $250,000 from December 25, 1999
through March 2004 and $10,125,000 through May 2005. There were no Revolving or
Swingline loans outstanding at December 15, 1999.

F-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

4. LONG-TERM OBLIGATIONS (CONTINUED)
ABR loans carry interest at the greatest of a) the Prime Rate, b) the Base
CD Rate plus 1%, or c) the Federal Funds Effective Rate plus 1/2of 1%.
Eurodollar loans carry interest at the LIBOR Rate for the interest period
multiplied by b) the Statutory Reserve Rate. The interest on any ABR or
Eurodollar loan is payable quarterly. The interest on any Swingline loan is
payable on the principal due date.

Letters of credit amounting to $404,099 and $399,508 at December 15, 1999
and December 26, 1998, respectively, had been issued pursuant to the Company's
workers' compensation insurance program.

The Agreement contains, among other things, restrictions on further
indebtedness, asset sales, capital expenditures, payment of dividends, changes
in the capital structure and changes in the ownership of the Company. The
Agreement also has covenants which require the Company to maintain a minimum
level of tangible net worth, achieve minimum levels of earnings before interest,
taxes, depreciation and amortization, and achieve certain financial ratios, all
as defined in the Agreement.

At December 26, 1998, the Company had a revolving credit agreement with
Fleet Bank NA that carried terms similar to the Chase Bank agreement. The Fleet
agreement did not include a term loan. The Fleet Bank agreement was terminated
and replaced with the Chase Bank agreement in connection with the leveraged
recapitalization discussed in Note 7.

CAPITAL LEASE OBLIGATIONS--The Company leases equipment under capital
leases. The leases bear interest at rates ranging from 8.0% to 9.0% and expire
in 2000. The Company intends to exercise its options to purchase the equipment.

5. COMMITMENTS AND CONTINGENCIES

OPERATING ACTIVITIES--The Company has entered into various operating leases
for temporary housing of its professional medical personnel, with terms of up to
twelve months. The Company also leases office space for its corporate
activities. Future lease payments for office space pursuant to the leases total
$736,088, $440,050, $449,188, $441,166 and $0 for the years ending
December 2000, 2001, 2002, 2003 and 2004, respectively. Total lease expense was
approximately $12,132,185 and $10,024,495 for the period December 27, 1998 to
December 15, 1999 and the year ended December 26, 1998, respectively.

F-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

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-48

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-49

TRAVCORPS CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

PERIOD FROM DECEMBER 27, 1998 TO DECEMBER 15, 1999
AND THE YEAR ENDED DECEMBER 26, 1998

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-50

TRAVCORPS CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

PERIOD FROM DECEMBER 27, 1998 TO DECEMBER 15, 1999
AND THE YEAR ENDED DECEMBER 26, 1998

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-51

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders
Cross Country, Inc.

We have audited the accompanying consolidated statements of assets acquired
and liabilities assumed of ClinForce, Inc. ("ClinForce") as of December 31, 2000
and 1999 and the related consolidated statement of operating revenues and
expenses for each of the two years in the period ended December 31, 2000. These
statements are the responsibility of ClinForce's management. Our responsibility
is to express an opinion on the statements based on our audits.

The accompanying consolidated statements of assets acquired and liabilities
assumed and the related consolidated statements of operating revenues and
expenses were prepared for inclusion in the Registration Statement on Form S-1
of Cross Country, Inc. for purposes of complying with the rules and regulations
of the Securities and Exchange Commission in lieu of the full financial
statements required by Rule 3-05 for the transaction between Cross Country, Inc.
and ClinForce. The statements are not intended to be a complete presentation of
the financial position of ClinForce.

In our opinion, the statements referred to above present fairly, in all
material respects, the consolidated assets acquired and liabilities assumed of
ClinForce at December 31, 2000 and 1999, and the operating revenues and expenses
for each of the two years in the period ended December 31, 2000 in conformity
with accounting principles generally accepted in the United States.

/s/ ERNST &YOUNG LLP

Raleigh, North Carolina

April 26, 2001

F-52

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-53

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-54

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-55

CLINFORCE, INC.

NOTES TO CONSOLIDATED STATEMENTS (CONTINUED)

DECEMBER 31, 2000

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
for us to seek a replacement at no additional cost. Allowances are established
as considered necessary to estimate significant losses due to placed candidates
not remaining employed for the Company's guarantee period. During 2000 and 1999,
such replacements and refunds were not material and, accordingly, related
allowances were not recorded.

CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to concentrations
of credit risk as defined by Financial Accounting Standards Board (FASB)
Statement No. 105, DISCLOSURE OF INFORMATION ABOUT FINANCIAL INSTRUMENTS WITH
OFF-BALANCE-SHEET RISK AND FINANCIAL INSTRUMENTS WITH CONCENTRATIONS OF CREDIT
RISK, consist principally of accounts receivable. The Company's customers are
clinical research organizations ("CROs") and accounts receivable represent
amounts due from these CROs. The Company performs ongoing credit evaluations of
its customers' financial conditions and, generally, does not require collateral.
Overall, based on the large number of customers in differing geographic areas
throughout the United States and its territories, the Company believes the
concentration of credit risk is limited. As of December 31, 2000, approximately
48% of the outstanding accounts receivable were due from four customers. As of
December 31, 1999, approximately 70% of the outstanding accounts receivable were
due from four customers.

PROPERTY AND EQUIPMENT

CORPORATE ALLOCATIONS

Edgewater provided substantial services to the Company during 2000,
Edgewater has traditionally charged the Company a management fee for tax
planning services and information system services through corporate allocations
which were generally based on a percent of sales. The amount of corporate
allocations was dependent upon the total amount of anticipated allocable costs
incurred by Edgewater less amounts charged as a specific cost or expense rather
than by allocation. The amounts allocated for these services are not included in
these statements because they are not necessarily indicative of amounts that
would have been incurred by the Company had it operated on a stand-alone basis.
Expenses relating to corporate advertising, accounting and legal services,
officer salaries and other selling, general and administrative expenses were not
allocated by Edgewater to ClinForce for internal financial statement purposes,
and therefore, no amounts have been allocated for their services in the pro
forma financial statements.

GOODWILL

Goodwill represents the excess of purchase price over the fair value of net
assets acquired. Goodwill associated with acquisitions in 1998 and 1997 is being
amortized using the straight-line method over its estimated useful life of
twenty years. In accordance with FASB Statement No. 121, ACCOUNTING FOR THE
IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF,

F-56

CLINFORCE, INC.

NOTES TO CONSOLIDATED STATEMENTS (CONTINUED)

DECEMBER 31, 2000

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable.
Recoverability of assets is measured by comparison of the carrying amount of the
asset to net future cash flows expected to be generated from the asset. At
December 31, 2000 and 1999, the Company believes that no impairment of goodwill
exists.

ADVERTISING

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-57

CLINFORCE, INC.

NOTES TO CONSOLIDATED STATEMENTS (CONTINUED)

DECEMBER 31, 2000

3. PROPERTY AND EQUIPMENT

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

2000 1999
---------- ----------

Computer equipment................................... $ 268,657 $ 251,398
Computer software.................................... 161,853 131,014
Office equipment..................................... 118,721 118,722
Furniture and fixtures............................... 558,968 556,770
Leasehold improvements............................... 138,701 85,431
---------- ----------
1,246,900 1,143,335
Less accumulated depreciation........................ (842,498) (707,356)
---------- ----------
$ 404,402 $ 435,979
========== ==========

4. ACCRUED COMPENSATION AND BENEFITS

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

2000 1999
---------- ----------

Salaries............................................. $ 305,446 $ 222,820
Bonuses.............................................. 512,225 238,169
Accrual for payroll taxes............................ 226,855 82,063
Accrual for vacation................................. 102,330 83,432
---------- ----------
$1,146,856 $ 626,484
========== ==========

5. COMMITMENTS AND CONTINGENCIES

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

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

2001................................................. $ 412,214
2002................................................. 363,176
2003................................................. 365,844
2004................................................. 294,378
2005................................................. 35,352
Thereafter........................................... 23,712
----------
$1,494,676
==========

Rent expense related to office facilities was approximately $355,161 and
$244,536 for the years ended December 31, 2000 and 1999, respectively.

F-58

CLINFORCE, INC.

NOTES TO CONSOLIDATED STATEMENTS (CONTINUED)

DECEMBER 31, 2000

6. INCOME TAXES

The Company has always been included in a consolidated return for United
States federal tax reporting purposes. The income tax expense and deferred
income taxes were calculated based on income from operations, and therefore are
not necessarily indicative of amounts that would have been incurred by the
Company had it operated as a stand-alone entity. These calculations were
prepared as if the Company filed on a separate return basis. Deferred income
taxes from years prior to 1999 have not been calculated.

The components of the income tax expense (benefit) are as follows:

2000 1999
---------- ----------

Current.............................................. $1,176,385 $ 884,515
Deferred............................................. 50,686 195,435
---------- ----------
$1,227,071 $1,079,950
========== ==========

Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets and liabilities are as follows:

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

Deferred tax assets:
Accrued expenses..................................... $ 67,953 $ --
Allowance for doubtful accounts...................... 40,924 --
---------- ----------
108,877 --
Deferred tax liabilities:
Goodwill amortization................................ (235,764) (149,686)
Depreciation......................................... (119,234) (45,749)
---------- ----------
Net deferred taxes................................... $ (246,121) $ (195,435)
========== ==========

F-59

CLINFORCE, INC.

NOTES TO CONSOLIDATED STATEMENTS (CONTINUED)

DECEMBER 31, 2000

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

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

Tax at U.S. statutory rate........................... $1,083,590 $ 930,375
State taxes, net of federal benefit.................. 140,039 119,221
Non-deductible items................................. 9,243 9,363
Other................................................ (5,801) 20,791
---------- ----------
$1,227,071 $1,079,950
========== ==========

7. CASH FLOW INFORMATION (UNAUDITED)

Based on available information and management's best estimates, cash flows
for the Company are as follows for the year ended December 31, 2000:

Provided by operating activities............................ 2,092,075
Used in investing activities................................ (103,564)
Provided by financing activities............................ 0

F-60

REPORT OF INDEPENDENT AUDITORS

To the Members of

Heritage Professional Education, LLC

We have audited the accompanying balance sheet of Heritage Professional
Education, LLC as of December 25, 2000, and the related statements of income,
members' deficit and cash flows for the period from January 1, 2000 through
December 25, 2000. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Heritage Professional
Education, LLC at December 25, 2000, and the results of its operations and its
cash flows for the period from January 1, 2000 through December 25, 2000, in
conformity with accounting principles generally accepted in the United States.

Ernst & Young LLP

Nashville, TN

August 10, 2001

F-61

HERITAGE PROFESSIONAL EDUCATION, LLC

BALANCE SHEET

DECEMBER 25, 2000

ASSETS
Current assets:
Cash and cash equivalents................................. $ 376,965
Accounts receivable, net of allowance for doubtful
accounts of $131,081.................................... 118,155
Prepaid expenses and other current assets................. 55,896
---------
Total current assets........................................ 551,016

Property and equipment:
Furniture and fixtures.................................... 10,541
Computer equipment........................................ 50,035
---------
60,576
Less accumulated depreciation and amortization............ (23,672)
---------
36,904
Other assets................................................ 3,226
---------
Total assets................................................ $ 591,146
=========

LIABILITIES AND MEMBERS' DEFICIT
Current liabilities:
Accounts payable and accrued liabilities.................. $ 609,459
Accrued compensation...................................... 138,106
Deferred revenue.......................................... 282,567
---------
Total current liabilities................................... 1,030,132
Members' deficit............................................ (438,986)
---------
Total liabilities and members' deficit...................... $ 591,146
=========

See accompanying notes.

F-62

HERITAGE PROFESSIONAL EDUCATION, LLC

STATEMENT OF INCOME

FOR THE PERIOD FROM JANUARY 1, 2000

THROUGH DECEMBER 25, 2000

Revenue..................................................... $11,147,522
Operating costs and expenses:
Cost of revenues.......................................... 4,935,771
Selling, general and administrative expenses.............. 4,562,912
-----------
Total operating costs and expenses.......................... 9,498,683
-----------
Net income.................................................. $ 1,648,839
===========

See accompanying notes.

F-63

HERITAGE PROFESSIONAL EDUCATION, LLC

STATEMENT OF MEMBERS' DEFICIT

MEMBERS' DEFICIT
----------------

Balance at January 1, 2000.................................. $ (551,003)
Net income.................................................. 1,648,839
Capital distribution........................................ (1,536,822)
----------
Balance at December 25, 2000................................ $ (438,986)
==========

See accompanying notes.

F-64

HERITAGE PROFESSIONAL EDUCATION, LLC

STATEMENT OF CASH FLOWS

FOR THE PERIOD FROM JANUARY 1, 2000

THROUGH DECEMBER 25, 2000

OPERATING ACTIVITIES:
Net income.................................................. $1,648,839
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization............................. 11,259
Allowance for doubtful accounts........................... 88,096
Changes in operating assets and liabilities:
Accounts receivable..................................... (186,358)
Prepaid expenses and other current assets............... (55,792)
Accounts payable and accrued liabilities................ 285,668
Accrued compensation.................................... 115,142
Deferred revenue........................................ 21,258
----------
Net cash provided operating activities...................... 1,928,112

INVESTING ACTIVITIES:
Purchase of property and equipment.......................... (14,325)
----------
Net cash used in investing activities....................... (14,325)

FINANCING ACTIVITIES:
Distribution to members..................................... (1,536,822)
----------
Net cash used in financing activities....................... (1,536,822)
Net increase in cash and cash equivalents................... 376,965
Cash and cash equivalents at beginning of period............ --
----------
Cash and cash equivalents at end of period.................. $ 376,965
==========

See accompanying notes.

F-65

HERITAGE PROFESSIONAL EDUCATION, LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 25, 2000

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REPORTING ENTITY

Heritage Professional Education, LLC (the "Company") was organized on
January 1, 1998 and is based in Nashville, Tennessee. The Company provides one
day instructor-led seminars throughout the United States to meet the ongoing
training and continuing education needs of the healthcare community. The Company
has an infinite life unless terminated earlier in accordance with its Operating
Agreement dated January 1, 1998.

RECOGNITION OF REVENUE

Revenue is recognized as the instructor-led seminars are performed and the
related learning materials are delivered. The Company does not require
collateral on trade receivables.

USE OF ESTIMATES

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

CASH AND CASH EQUIVALENTS

The Company considers unrestricted, highly liquid investments with initial
maturities of less than three months to be cash equivalents.

PROPERTY AND EQUIPMENT

Property and equipment are stated on the basis of cost. Depreciation and
amortization are provided on the straight-line method over the following
estimated useful lives:

YEARS
--------

Furniture and fixtures...................................... 7
Computer equipment.......................................... 3-5

LONG-LIVED ASSETS

The Company accounts for long-lived assets in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," which
requires that companies consider whether events or changes in facts and
circumstances, both internally and externally, may indicate that an impairment
of long-lived assets held for use are present. Management periodically evaluates
the carrying value of long-live assets, including property and equipment and
intangible assets and has determined that there were no indications of
impairment as of December 25, 2000. Should there be an impairment in the future,
the Company would recognize the amount of the impairment based on expected
future cash flows from the impaired assets. The cash flow estimates that would
be used would be based on management's best estimates, using appropriate and
customary assumptions and projections at the time.

F-66

HERITAGE PROFESSIONAL EDUCATION, LLC

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 25, 2000

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DEFERRED REVENUE

Deferred revenue represents amounts which have been billed and collected,
but not yet recognized in revenue.

INCOME TAXES

The Company has elected to be treated as a partnership for federal income
tax purposes. Accordingly, for federal income tax purposes, the members report
their proportionate share of the Company's taxable income or loss on their
respective tax returns; therefore, no provision for federal income taxes is
included in the financial statements. Furthermore, because the Company's income
is subject to individual self-employment taxes, the income is not subject to
Tennessee income tax. As a result, no provision for state income taxes is
included in the financial statements.

SHIPPING AND HANDLING COSTS

Shipping and handling costs are included in cost of revenues.

ADVERTISING

The Company expenses the costs of advertising as incurred. Advertising
expense for the period from January 1, 2000 through December 25, 2000 was
$3,246,358 and is included in selling, general and administrative expenses.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial instruments:

CASH AND CASH EQUIVALENTS: The carrying amounts approximate the fair value
because of the short-term maturity or short-term nature of such instruments.

ACCOUNTS RECEIVABLE, ACCOUNTS PAYABLE, ACCRUED LIABILITIES AND DEFERRED
REVENUE: The carrying amounts approximate the fair value because of the
short-term nature of such instruments.

2. MEMBERS' DEFICIT

The Operating Agreement requires that a separate capital account be
maintained for each member. The respective capital account of each Member
consists of the opening capital account, increased by additional capital
contributions and share of profits transferred to capital by agreement between
the members, and decreased by the share of the Company losses and distributions
of capital. No member shall withdraw any part of his or her capital account
without the consent of the majority in interest of all the members of the
Company. If the capital account of a member becomes impaired, his or her share
of the subsequent Company profits shall be first credited to his or her capital
account until that account has been restored, before such profits are credited
to his or her income accounts. Income tax depreciation shall be taken by each
member based on the ratio that each member's capital account bears to the total
sum of all capital accounts.

F-67

HERITAGE PROFESSIONAL EDUCATION, LLC

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 25, 2000

2. MEMBERS' DEFICIT (CONTINUED)
The net profits and losses of the Company are divided between the members in
the same proportions as subsequent contributions to capital described above. A
separate income account shall be maintained for each member. Company profits and
losses shall be charged or credited to the separate income account for each
member. If a member has no credit balance in his or her income account, losses
shall be charged to his or her capital account.

Without the consent of a majority in interest of the members of the Company,
no member shall receive any salary for services or other remuneration rendered
to the Company. Withdrawals of income during each year shall be in amounts
agreed upon from time to time by the members. If a member has a debit balance in
his or her income account, it shall be deemed a debit due to the Company payable
quarterly upon the demand of any member.

3. PROFIT SHARING PLAN

The Company has a profit sharing plan (the "Plan"). Employees of the Company
must have attained the age of 21 and have completed one year of service to be
eligible to participate in the Plan. Under the provisions of the Plan, the
Company may make discretionary contributions to the Plan. The Company
contributed $9,725 during 2000.

4. LEASE COMMITMENTS

The Company leases its office facility in Nashville, Tennessee under an
agreement that expires on December 31, 2002. The lease agreement contains a
provision for escalating rent payments over the term of the lease. The Company
accounts for this lease by recognizing the straight-line rent expense and
adjusting the deferred rent expense liability for the difference between the
straight-line rent expense and the amount of rent paid. Total rent expense under
all operating leases was $39,710 in 2000. Future rental payment commitments at
December 25, 2000 under the non-cancelable facility-operating lease with an
initial term of one year or more, are as follows:

OPERATING LEASES
----------------

2001........................................................ $40,916
2002........................................................ 40,927
Thereafter.................................................. --
-------
Total minimum lease payments................................ $81,843
=======

5. SUBSEQUENT EVENTS

Effective December 26, 2000, Cross Country Seminars, a wholly-owned
subsidiary of Cross Country, Inc., acquired substantially all of the assets and
business of the Company. The Company received approximately $6,500,000 in cash.
In addition, the asset purchase agreement provides for potential earnout
payments of approximately $6,5000,000 based on adjusted earnings before
interest, taxes, depreciation, and amortization (EBITDA) (as defined in the
asset purchase agreement) of the business over a three-year period ending
December 31, 2003.

Subsequent to December 25, 2000, the Company changed its name to Caney Fork
Investments, LLP.

F-68

[Description of artwork: Depiction of patient and healthcare personnel]

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

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.

7,812,500 SHARES

[LOGO]

COMMON STOCK

------------------
PROSPECTUS
------------------

MERRILL LYNCH & CO.

SALOMON SMITH BARNEY

BANC OF AMERICA SECURITIES LLC

SUNTRUST ROBINSON HUMPHREY

CIBC WORLD MARKETS

, 2001
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

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......... $ 38,184
National Association of Securities Dealers, Inc. filing
fee....................................................... 15,774
Nasdaq National Market listing application fee.............. 95,000
Printing and engraving fees and expenses.................... 430,000
Legal fees and expenses..................................... 600,000
Accounting fees and expenses................................ 1,300,000
Blue Sky fees and expenses.................................. 10,000
Transfer Agent and Registrar fees and expenses.............. 10,000
Miscellaneous expenses...................................... 1,042
----------
Total................................................... $2,500,000
==========

* To be completed by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 102 of the General Corporation Law of Delaware allows a corporation
to limit a director's personal liability to the corporation or its stockholders
from monetary damages for breach of fiduciary duty as a director, with certain
exceptions. The Company's Certificate of Incorporation, as amended, provides
such limitation to the fullest extent permitted by the General Corporation Law
of Delaware.

Section 145 of the General Corporation Law of Delaware permits a
corporation, subject to the standards set forth therein, to indemnify any person
in connection with any action, suit or proceeding brought or threatened by
reason of the fact that such person is or was a director, officer, employee or
agent of the corporation or is or was serving as such with respect to another
entity at the request of the corporation. The Company's Certificate of
Incorporation, as amended, and the Company's By-Laws, as amended, provide for
full indemnification of its directors and officers to the extent permitted by
Section 145.

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

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

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

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

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

II-1

In addition, we maintain insurance on behalf of our directors and officers
insuring them against liabilities asserted against them in their capacities as
directors or officers or arising out of such status, except when we have
directly indemnified the directors and officers.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Since its inception, Cross Country has issued and sold the following
securities:

On July 29, 1999, we issued and sold 2,040,503 shares of Common Stock to
Charterhouse Equity Partners III, L.P. and CHEF Nominees, Ltd. for gross
proceeds of $71.8 million.

On July 29, 1999, in connection with our acquisition of substantially all
the assets of Cross Country Staffing, we issued 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. The following individuals purchased these shares:
Joseph Boshart, Emil Hensel, Vickie Anenberg, Jonathan Ward, Lee Ann O'Connor,
Frank Shaffer, Barbara Astler, Jerry Chua, Daniel Lewis, Richard Ives, Wendi
Dusseault, Katherine Miyares, Dijanan Lesh, Debbie Simpson, Jean Ann Johnson,
Denise Brodwyn, Kristin Dunn, Francine Denello, Lisa Vrana, Lisa Lapina, Mia
Wender, Hope Mello, Tom Homish, Christine Portner, Darren Portner, Marc Leon,
Tom Stevens, Brian Hekman, Sharon Boggs, Lynn Gianatasio, Ted Burg, Jeanette
McClary, Chris West, Karen McConnell, Darren Bounds, Michael MacNeill, Stephanie
Russo, Michael Britt, Melissa Rutherford, Mary Walker, Luz Torres, Kimberly
Hewlitt, Kathleen Salerno, Jill Wengerter, Jennifer Goldstein, Jackie Finz,
Gregg Proietti, Dawn Anderson, Beth Butler, Audrey Mariovich, Arlene Belue,
Anthony Pederson and Heather Stover.

On December 16, 1999, in connection with our acquisition of TravCorps, we
issued 1,520,000 shares of Common Stock to certain holders of stock of
TravCorps.

In addition, as of June 30, 2001, the Company has granted options to
purchase a total of 3,268,521 shares of Common Stock to employees, including
certain senior managers, at a weighted average exercise price of approximately
$12.48 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 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+ Amended and Restated Stockholders Agreement, dated
August 23, 2001, among the Registrant, a Delaware
corporation, the CEP Investors and the Investors

4.3+ Registration Rights Agreement, dated as of October 29, 1999,
among the Registrant, a Delaware corporation, and the CEP
Investors and the MSDWCP Investors

4.4+ Amendment to the Registration Rights Agreement, dated as of
August 23, 2001, among the Registrant, a Delaware
corporation, and the CEP Investors and the MSDWCP Investors

4.5+ Stockholders Agreement, dated as of August 23, 2001, among
the Registrant, Joseph Boshart and Emil Hensel and the
Financial 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** Amended and Restated 1999 Stock Option Plan of the
Registrant

10.8** Amended and Restated 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.

** Previously filed and filed in revised form.

+ Previously filed

(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, $1,158,039 $ 511,341 $ (272,142) $ -- $ 746,872 (a) $2,144,110
1999............................
Year ended December 31, 2000...... 2,144,110 432,973 (565,012) 75,676 -- 2,087,747
Six months ended June 30, 2001.... 2,087,747 861,739 (237,385) -- 52,499 (b) 2,764,600

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

(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 6th
day of September, 2001.

CROSS COUNTRY, INC.

By: *
-----------------------------------------
Joseph Boshart
PRESIDENT AND CHIEF EXECUTIVE OFFICER

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons on the 6th
day of September, 2001.

SIGNATURE TITLE
--------- -----

* President, Chief Executive Officer and
------------------------------------------- Director
Joseph A. Boshart (Principal Executive Officer)

* Chief Financial Officer, Chief Operating
------------------------------------------- Officer and Director (Principal Financial
Emil Hensel Officer and Principal Accounting Officer)

*
------------------------------------------- Director
Karen H. Bechtel

*
------------------------------------------- Director
Bruce A. Cerullo

*
------------------------------------------- Director
Thomas C. Dircks

*
------------------------------------------- Director
A. Lawrence Fagan

*
------------------------------------------- Director
M. Fazle Husain

*By: /s/ JOSEPH A. BOSHART
--------------------------------------
Joseph A. Boshart
Attorney-in-fact

II-6



                                                                    Exhibit 10.7








                               CROSS COUNTRY, INC.

                              AMENDED AND RESTATED

                             1999 STOCK OPTION PLAN




                                TABLE OF CONTENTS

                                                                            PAGE

ARTICLE I         PURPOSE.....................................................1

ARTICLE II        DEFINITIONS.................................................1

ARTICLE III       ADMINISTRATION..............................................5

ARTICLE IV        SHARE AND OTHER LIMITATIONS.................................8

ARTICLE V         ELIGIBILITY.................................................9

ARTICLE VI        STOCK OPTIONS..............................................10

ARTICLE VII       NON-TRANSFERABILITY AND TERMINATION OF
                  EMPLOYMENT/CONSULTANCY.....................................12

ARTICLE VIII      CHANGE IN CONTROL PROVISIONS...............................13

ARTICLE IX        TERMINATION OR AMENDMENT OF PLAN...........................15

ARTICLE X         COMPANY CALL RIGHTS........................................16

ARTICLE XI        UNFUNDED PLAN..............................................17

ARTICLE XII       GENERAL PROVISIONS.........................................17

ARTICLE XIII      EFFECTIVE DATE OF PLAN.....................................20

ARTICLE XIV       TERM OF PLAN...............................................20





                               CROSS COUNTRY, INC.

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

                              AMENDED AND RESTATED

                             1999 STOCK OPTION PLAN

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



                                    ARTICLE I

                                     PURPOSE

         The purpose of this Cross Country, Inc. Amended and Restated 1999 Stock
Option Plan is to enhance the profitability and value of the Company for the
benefit of its stockholders by enabling the Company to offer employees of and
Consultants to the Company and its Affiliates stock-based incentives in the
Company, thereby creating a means to raise the level of stock ownership by
employees and Consultants in order to attract, retain and reward such
individuals and strengthen the mutuality of interests between such individuals
and the Company's stockholders.

                                   ARTICLE II

                                   DEFINITIONS

         For purposes of this Plan, the following terms shall have the following
meanings:

                  2.1 "Affiliate" means each of the following: (i) any
         Subsidiary; (ii) any Parent; (iii) any corporation, trade or business
         (including, without limitation, a partnership or limited liability
         company) which is directly or indirectly controlled 50% or more
         (whether by ownership of stock, assets or an equivalent ownership
         interest or voting interest) by the Company or one of its Affiliates;
         and (iv) any other entity in which the Company or any of its Affiliates
         has a material equity interest and which is designated as an
         "Affiliate" by resolution of the Committee.

                  2.2 "Award" means any award under this Plan of a Stock Option.

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

                  2.4 "Cause" means, with respect to a Participant's
         Termination: (i) in the case where there is no employment agreement,
         consulting agreement, change in control agreement or similar agreement
         in effect between the Company or an Affiliate and the Participant at
         the




         time of the grant of the Award (or where there is such an agreement but
         it does not define "cause" (or words of like import)), termination due
         to a Participant's insubordination, dishonesty, fraud, incompetence,
         moral turpitude, misconduct, refusal to perform his or her duties or
         responsibilities for any reason other than illness or incapacity or
         materially unsatisfactory performance of his or her duties for the
         Company or an Affiliate as determined by the Committee in its sole
         discretion; or (ii) in the case where there is an employment agreement,
         consulting agreement, change in control agreement or similar agreement
         in effect between the Company or an Affiliate and the Participant at
         the time of the grant of the Award that defines "cause" (or words of
         like import), "cause" as defined under such agreement; provided,
         however, that with regard to any agreement that conditions "cause" on
         occurrence of a change in control, such definition of "cause" shall not
         apply until a change in control actually takes place and then only with
         regard to a termination thereafter. Notwithstanding the foregoing, a
         Participant shall be deemed to be terminated for "cause" if the
         Participant: (i) breaches the terms of any agreement between the
         Company and the Participant including, without limitation, an
         employment agreement or non-competition agreement or (ii) discloses to
         anyone outside the Company or its Affiliates, or uses in other than the
         Company's or its Affiliate's business, without written authorization
         from the Company, any confidential information or proprietary
         information, relating to the business of the Company or its Affiliates,
         acquired by the Participant prior to the Participant's Termination.

                  2.5 "CEP" means Charterhouse Equity Partners III, L.P., and
         its successors.

                  2.6 "Change in Control" has the meaning set forth in Article
         VIII.

                  2.7 "Code" means the Internal Revenue Code of 1986, as
         amended. Any reference to any section of the Code shall also be a
         reference to any successor provision.

                  2.8 "Committee" means a committee or subcommittee of the Board
         appointed from time to time by the Board, which committee or
         subcommittee shall consist of 2 or more non-employee directors;
         provided, however, that if and to the extent that no Committee exists
         which has the authority to administer this Plan, the functions of the
         Committee shall be exercised by the Board and all references herein to
         the Committee shall be deemed to be references to the Board.

                  2.9 "Common Stock" means the Common Stock, $.0001 par value
         per share, of the Company.

                  2.10 "Company" means Cross Country, Inc., a Delaware
         corporation, and its successors.

                  2.11 "Consultant" means any advisor or consultant to the
         Company or its Affiliates.

                  2.12 "Disability" means a disability which would qualify as
         such under the Company's long-term disability plan. A Disability shall
         only be deemed to occur at the time of the determination by the
         Committee of the Disability.


                                       -2-




                  2.13 "Effective Date" means the effective date of this Plan as
         defined in Article XIII.

                  2.14 "Eligible Employee" means each employee of the Company or
         an Affiliate.

                  2.15 "Exchange Act" means the Securities Exchange Act of 1934,
         as amended. Any references to any section of the Exchange Act shall
         also be a reference to any successor provision.

                  2.16 "Fair Market Value" means, for purposes of this Plan,
         unless otherwise required by any applicable provision of the Code or
         any regulations issued thereunder, as of any date, the price for Common
         Stock, as determined in good faith by the Committee and, prior to the
         initial public offering of the Common Stock of the Company, as agreed
         to by CEP and MSDWCP.

                  2.17 "Incentive Stock Option" means any Stock Option awarded
         to an Eligible Employee under this Plan intended to be and designated
         as an "Incentive Stock Option" within the meaning of Section 422 of the
         Code.

                  2.18 "MSDWCP" means a representative of Morgan Stanley Dean
         Witter Capital Partners IV, L.P. and its affiliated funds, and their
         respective successors.

                  2.19 "Non-Qualified Stock Option" means any Stock Option
         awarded under this Plan that is not an Incentive Stock Option.

                  2.20 "Parent" means any parent corporation of the Company
         within the meaning of Section 424(e) of the Code.

                  2.21 "Participant" means any Eligible Employee or Consultant
         to whom a Stock Option has been awarded under this Plan.

                  2.22 "Plan" means this Cross Country, Inc. Amended and
         Restated 1999 Stock Option Plan, as amended from time to time.

                  2.23 "Retirement" means a Termination without Cause by a
         Participant at or after age 65 or such earlier date after age 50 as may
         be approved by the Committee with regard to such Participant.

                  2.24 "Securities Act" means the Securities Act of 1933, as
         amended. Any reference to any section of the Securities Act shall also
         be a reference to any successor provision.

                  2.25 "Stock Option" or "Option" means any option to purchase
         shares of Common Stock granted to Eligible Employees or Consultants
         under Article VI.


                                       -3-




                  2.26 "Subsidiary" means any subsidiary corporation of the
         Company within the meaning of Section 424(f) of the Code.

                  2.27 "Substitute Options" means Stock Options issued in
         assumption of or substitution for stock options issued by a company
         acquired by the Company or with which the Company combines.

                  2.28 "Ten Percent Stockholder" means a person owning stock
         possessing more than 10% of the total combined voting power of all
         classes of stock of the Company, its Subsidiaries or its Parent.

                  2.29 "Termination" means a Termination of Consultancy or
         Termination of Employment, as the case may be.

                  2.30 "Termination of Consultancy" means (i) that the
         Consultant is no longer acting as a consultant to the Company or an
         Affiliate; or (ii) when an entity which is retaining a Participant as a
         Consultant ceases to be an Affiliate, unless the Participant otherwise
         is, or thereupon becomes, a Consultant to the Company or another
         Affiliate. In the event that a Consultant becomes an Eligible Employee
         upon the termination of his consultancy, the Committee, in its sole and
         absolute discretion, may determine that no Termination of Consultancy
         shall be deemed to occur until such time as such Consultant is no
         longer a Consultant or an Eligible Employee. The Committee may
         otherwise define Termination of Consultancy in the Award agreement or,
         if no rights of a Participant are reduced, may otherwise define
         Termination of Consultancy thereafter.

                  2.31 "Termination of Employment" means: (i) a termination of
         employment (for reasons other than a military or personal leave of
         absence granted by the Company) of a Participant from the Company and
         its Affiliates; or (ii) when an entity which is employing a Participant
         ceases to be an Affiliate, unless the Participant otherwise is, or
         thereupon becomes, employed by the Company or another Affiliate. In the
         event that an Eligible Employee becomes a Consultant upon the
         termination of his employment, the Committee, in its sole and absolute
         discretion, may determine that no Termination of Employment shall be
         deemed to occur until such time as such Eligible Employee is no longer
         an Eligible Employee or a Consultant. The Committee may otherwise
         define Termination of Employment in the Award agreement or, if no
         rights of a Participant are reduced, may otherwise define Termination
         of Employment thereafter.

                  2.32 "Transfer" means anticipate, alienate, attach, sell,
         assign, pledge, encumber, charge, hypothecate or otherwise transfer and
         "Transferred" has a correlative meaning.


                                       -4-




                                   ARTICLE III

                                 ADMINISTRATION

                  3.1 THE COMMITTEE. The Plan shall be administered and
         interpreted by the Committee.

                  3.2 GRANTS OF AWARDS. The Committee shall have full authority
         to grant Stock Options to Eligible Employees and Consultants pursuant
         to the terms of this Plan. All Stock Options shall be granted by,
         confirmed by, and subject to the terms of, a written agreement executed
         by the Company and the Participant. In particular, the Committee shall
         have the authority:

                           (a) to select from among those persons recommended by
                  the President of the Company the Eligible Employees and
                  Consultants to whom Stock Options may from time to time be
                  granted hereunder;

                           (b) to determine whether and to what extent Stock
                  Options are to be granted hereunder to one or more Eligible
                  Employees or Consultants after receipt of a recommendation by
                  the President of the Company;

                           (c) to determine, in accordance with the terms of
                  this Plan, the number of shares of Common Stock to be covered
                  by each Stock Option granted hereunder;

                           (d) to determine the terms and conditions, not
                  inconsistent with the terms of this Plan, of any Stock Option
                  granted hereunder (including, but not limited to, the exercise
                  or purchase price (if any), any restriction or limitation, any
                  vesting schedule or acceleration thereof and any forfeiture
                  restrictions or waiver thereof, regarding any Stock Option and
                  the shares of Common Stock relating thereto, based on such
                  factors, if any, as the Committee shall determine, in its sole
                  discretion);

                           (e) to determine whether and under what circumstances
                  a Stock Option may be settled in cash, Common Stock and/or
                  restricted stock under Section 6.3(d);

                           (f) to determine whether, to what extent and under
                  what circumstances to provide loans to Eligible Employees and
                  Consultants in order to exercise Stock Options under this
                  Plan;

                           (g) to determine whether a Stock Option is an
                  Incentive Stock Option or Non-Qualified Stock Option;

                           (h) to determine whether to require an Eligible
                  Employee or Consultant, as a condition of the granting of any
                  Stock Option, not to sell or otherwise dispose of shares of
                  Common Stock acquired pursuant to the exercise of an Option
                  for a period of time as determined by the Committee, in its
                  sole discretion, following the date of the acquisition of such
                  Option or Award; and

                           (i) to modify, extend or renew an Award, subject to
                  Article IX herein, provided, however, that if an Award is
                  modified, extended or renewed and thereby


                                       -5-




                  deemed to be the issuance of a new Award under the Code or the
                  applicable accounting rules, the exercise price of a Stock
                  Option may continue to be the original exercise price even if
                  less than the Fair Market Value of the Common Stock at the
                  time of such modification, extension or renewal.

                  3.3 GUIDELINES. Subject to Article IX hereof, the Committee
         shall have the authority to adopt, alter and repeal such administrative
         rules, guidelines and practices governing this Plan and perform all
         acts, including the delegation of its administrative responsibilities,
         as it shall, from time to time, deem advisable; to construe and
         interpret the terms and provisions of this Plan and any Stock Option
         issued under this Plan (and any agreements relating thereto); and to
         otherwise supervise the administration of this Plan. The Committee may
         correct any defect, supply any omission or reconcile any inconsistency
         in this Plan or in any agreement relating thereto in the manner and to
         the extent it shall deem necessary to effectuate the purpose and intent
         of this Plan. The Committee may adopt special guidelines and provisions
         for persons who are residing in or employed in, or subject to, the
         taxes of, foreign jurisdictions to comply with applicable tax and
         securities laws and may impose any limitations and restrictions that it
         deems necessary to comply with the applicable tax and securities laws
         of such foreign jurisdictions.

                  3.4 DECISIONS FINAL. Any decision, interpretation or other
         action made or taken in good faith by or at the direction of the
         Company, the Board or the Committee (or any of its members) arising out
         of or in connection with this Plan shall be within the absolute
         discretion of all and each of them, as the case may be, and shall be
         final, binding and conclusive on the Company and all employees and
         Participants and their respective heirs, executors, administrators,
         successors and assigns.

                  3.5 PROCEDURES. If the Committee is appointed, the Board shall
         designate one of the members of the Committee as chairman and the
         Committee shall hold meetings, subject to the By-Laws of the Company,
         at such times and places as it shall deem advisable, including, without
         limitation, by telephone conference or by written consent to the extent
         permitted by applicable law. A majority of the Committee members shall
         constitute a quorum. All determinations of the Committee shall be made
         by a majority of its members. Any decision or determination reduced to
         writing and signed by all the Committee members in accordance with the
         By-Laws of the Company, shall be fully as effective as if it had been
         made by a vote at a meeting duly called and held. The Committee shall
         keep minutes of its meetings and shall make such rules and regulations
         for the conduct of its business as it shall deem advisable.

                  3.6      DESIGNATION OF CONSULTANTS/LIABILITY.

                           (a) The Committee may designate employees of the
                  Company and professional advisors to assist the Committee in
                  the administration of this Plan and may grant authority to
                  officers to execute agreements or other documents on behalf of
                  the Committee.


                                       -6-




                           (b) The Committee may employ such legal counsel,
                  consultants and agents as it may deem desirable for the
                  administration of this Plan and may rely upon any opinion
                  received from any such counsel or consultant and any
                  computation received from any such consultant or agent.
                  Expenses incurred by the Committee or Board in the engagement
                  of any such counsel, consultant or agent shall be paid by the
                  Company. The Committee, its members and any person designated
                  pursuant to paragraph (a) above shall not be liable for any
                  action or determination made in good faith with respect to
                  this Plan. To the maximum extent permitted by applicable law,
                  no officer of the Company or member or former member of the
                  Committee or of the Board shall be liable for any action or
                  determination made in good faith with respect to this Plan or
                  any Stock Option granted under it. To the maximum extent
                  permitted by applicable law or the Certificate of
                  Incorporation or By-Laws of the Company and to the extent not
                  covered by insurance directly insuring such person, each
                  officer and member or former member of the Committee or the
                  Board shall be indemnified and held harmless by the Company
                  against any cost or expense (including reasonable fees of
                  counsel reasonably acceptable to the Company) or liability
                  (including any sum paid in settlement of a claim with the
                  approval of the Company), and advanced amounts necessary to
                  pay the foregoing at the earliest time and to the fullest
                  extent permitted, arising out of any act or omission to act in
                  connection with the administration of this Plan, except to the
                  extent arising out of such officer's, member's or former
                  member's own fraud or bad faith. Such indemnification shall be
                  in addition to any rights of indemnification the employees,
                  officers, directors or members or former officers, directors
                  or members may have under applicable law or under the
                  Certificate of Incorporation or By-Laws of the Company or any
                  Affiliate. Notwithstanding anything else herein, this
                  indemnification will not apply to the actions or
                  determinations made by an individual with regard to Stock
                  Option granted to him or her under this Plan.


                                   ARTICLE IV

                           SHARE AND OTHER LIMITATIONS

                  4.1      SHARES.

                           The aggregate number of shares of Common Stock which
                  may be issued or used for reference purposes under this Plan
                  or with respect to which Stock Options may be granted shall
                  not exceed 2,145,515* shares of Common Stock (subject to any
                  increase or decrease pursuant to Section 4.2) which may be
                  either authorized and unissued Common Stock or Common Stock
                  held in or acquired for the treasury of the Company or both.
                  If any Stock Option granted under this Plan other than a
                  Substitute Option expires, terminates or is forfeited for any
                  reason other than by reason of its exercise, the number of
                  shares of Common Stock underlying such unexercised or


- --------
(*) Note, this number reflects the stock split that occurred on August 23, 2001.


                                       -7-




                  forfeited Stock Option shall again be available for the
                  purposes of Awards under this Plan.

                           In the event Substitute Options are granted pursuant
                  to Section 5.4, the Committee may increase the aggregate
                  number of shares of Common Stock available under the Plan for
                  Non-Qualified Stock Options by the number of shares of Common
                  Stock subject to such Substitute Options. The maximum number
                  of shares of Common Stock which may be issued under this Plan
                  with respect to Incentive Stock Options shall not be increased
                  (subject to any increase or decrease pursuant to Section 4.2).

                  4.2 CHANGES.

                           (a) The existence of this Plan and the Stock Options
                  granted hereunder shall not affect in any way the right or
                  power of the Board or the stockholders of the Company to make
                  or authorize (i) any adjustment, recapitalization,
                  reorganization or other change in the Company's capital
                  structure or its business, (ii) any merger or consolidation of
                  the Company or any Affiliate, (iii) any issuance of bonds,
                  debentures, preferred or prior preference stock ahead of or
                  affecting the Common Stock, (iv) the dissolution or
                  liquidation of the Company or any Affiliate, (v) any sale or
                  transfer of all or part of the assets or business of the
                  Company or any Affiliate, or (vi) any other corporate act or
                  proceeding.

                           (b) In the event of any change in the capital
                  structure or business of the Company by reason of any stock
                  split, reverse stock split, stock dividend, combination or
                  reclassification of shares, recapitalization, or other change
                  in the capital structure of the Company, merger,
                  consolidation, spin-off, reorganization, partial or complete
                  liquidation, issuance of rights or warrants to purchase any
                  Common Stock or securities convertible into Common Stock, or
                  any other corporate transaction or event having an effect
                  similar to any of the foregoing, then the Committee may take
                  such action, if any, with respect to the Plan and outstanding
                  Stock Options, as it may deem equitable to prevent substantial
                  dilution or enlargement of the rights granted to, or available
                  for, Participants under this Plan, including, without
                  limitation, adjustment of the aggregate number and kind of
                  shares which thereafter may be issued under this Plan, the
                  number and kind of shares or other property (including cash)
                  to be issued upon exercise of an outstanding Stock Option
                  granted under this Plan and the purchase price thereof. Any
                  such action or adjustment determined by the Committee in good
                  faith shall be final, binding and conclusive on the Company
                  and all Participants and employees and their respective heirs,
                  executors, administrators, successors and assigns. Except as
                  provided in this Section 4.2, a Participant shall have no
                  rights by reason of any issuance by the Company of any class
                  or securities convertible into stock of any class of the
                  Company, any subdivision or consolidation of shares of stock
                  of any class of the Company, the payment of any stock
                  dividend, any other increase or decrease in the number of
                  shares of stock of any class of the Company, any sale or
                  transfer of all or


                                       -8-




                  part of the Company's assets or business or any other change
                  affecting the Company's capital structure or business.

                           (c) Fractional shares of Common Stock resulting from
                  any adjustment in Options pursuant to Section 4.2(a) or (b)
                  shall be aggregated until, and eliminated at, the time of
                  exercise by rounding-down for fractions less than one-half and
                  rounding-up for fractions equal to or greater than one-half.
                  No cash settlements shall be made with respect to fractional
                  shares eliminated by rounding. Notice of any adjustment shall
                  be given by the Committee to each Participant whose Option has
                  been adjusted and such adjustment (whether or not such notice
                  is given) shall be effective and binding for all purposes of
                  this Plan.

                  4.3 MINIMUM PURCHASE PRICE. Notwithstanding any provision of
         this Plan to the contrary, if authorized but previously unissued shares
         of Common Stock are issued under this Plan, such shares shall not be
         issued for a consideration which is less than as permitted under
         applicable law.


                                    ARTICLE V

                                   ELIGIBILITY

                  5.1 NON-QUALIFIED STOCK OPTIONS. All Eligible Employees and
         Consultants and prospective employees of and Consultants to the Company
         and its Affiliates are eligible to be granted Non-Qualified Stock
         Options. Eligibility for the grant of a Non-Qualified Stock Option and
         actual participation in this Plan shall be determined by the Committee
         in its sole discretion.

                  5.2 INCENTIVE STOCK OPTIONS. All Eligible Employees of the
         Company, its Subsidiaries and its Parent (if any) are eligible to be
         granted Incentive Stock Options under this Plan. Eligibility for the
         grant of an Incentive Stock Option and actual participation in this
         Plan shall be determined by the Committee in its sole discretion.

                  5.3 GENERAL REQUIREMENT. The vesting and exercise of Options
         granted to a prospective employee or Consultant are conditioned upon
         such individual actually becoming an Eligible Employee or Consultant.

                  5.4 SUBSTITUTE OPTIONS. Substitute Options may be granted by
         the Committee in its sole discretion to holders of stock options issued
         by a company acquired by the Company or with which the Company
         combines.


                                       -9-




                                   ARTICLE VI

                                  STOCK OPTIONS


                  6.1 STOCK OPTIONS. Each Stock Option granted hereunder shall
         be one of two types: (i) an Incentive Stock Option intended to satisfy
         the requirements of Section 422 of the Code; or (ii) a Non-Qualified
         Stock Option.

                  6.2 GRANTS. Subject to the provisions of Article V, the
         Committee shall have the authority to grant to any Eligible Employee
         one or more Incentive Stock Options, Non- Qualified Stock Options or
         both types of Stock Options. To the extent that any Stock Option does
         not qualify as an Incentive Stock Option (whether because of its
         provisions or the time or manner of its exercise or otherwise), such
         Stock Option or the portion thereof which does not qualify, shall
         constitute a separate Non-Qualified Stock Option. The Committee shall
         have the authority to grant any Consultant one or more Non-Qualified
         Stock Options. Notwithstanding any other provision of this Plan to the
         contrary or any provision in an agreement evidencing the grant of a
         Stock Option to the contrary, any Stock Option granted to an Eligible
         Employee of an Affiliate (other than an Affiliate which is a Parent or
         a Subsidiary) shall be a Non-Qualified Stock Option.

                  6.3 TERMS OF STOCK OPTIONS. Stock Options granted under this
         Plan shall be subject to the following terms and conditions, and shall
         be in such form and contain such additional terms and conditions, not
         inconsistent with the terms of this Plan, as the Committee shall deem
         desirable:

                           (a) EXERCISE PRICE. The exercise price per share of
                  Common Stock shall be determined by the Committee, but, except
                  in the case of Substitute Options, shall not be less than 100%
                  of the Fair Market Value of the Common Stock at the time of
                  grant; provided, however, that if an Incentive Stock Option is
                  granted to a Ten Percent Stockholder, the exercise price shall
                  be no less than 110% of the Fair Market Value of the Common
                  Stock.

                           (b) STOCK OPTION TERM. The term of each Stock Option
                  shall be fixed by the Committee; provided, however, that no
                  Stock Option shall be exercisable more than 10 years after the
                  date such Stock Option is granted; and further provided that
                  the term of an Incentive Stock Option granted to a Ten Percent
                  Stockholder shall not exceed 5 years.

                           (c) EXERCISABILITY. Stock Options shall be
                  exercisable at such time or times and subject to such terms
                  and conditions as shall be determined by the Committee at
                  grant. If the Committee provides, in its discretion, that any
                  Stock Option is exercisable subject to certain limitations
                  (including, without limitation, that such Stock Option is
                  exercisable only in installments or within certain time
                  periods), the Committee may waive such limitations on the
                  exercisability at any time at or after


                                      -10-




                  grant in whole or in part (including, without limitation,
                  waiver of the installment exercise provisions or acceleration
                  of the time at which such Stock Option may be exercised),
                  based on such factors, if any, as the Committee shall
                  determine, in its sole discretion. Any decision by the
                  Committee to waive such limitations must be first approved by
                  each of CEP and MSDWCP.

                           (d) METHOD OF EXERCISE. Subject to whatever
                  installment exercise and waiting period provisions apply under
                  subsection (c) above, Stock Options may be exercised in whole
                  or in part at any time and from time to time during the Stock
                  Option term by giving written notice of exercise to the
                  Committee specifying the number of shares to be purchased.
                  Such notice shall be accompanied by payment in full of the
                  purchase price as follows: (i) in cash or by check, bank draft
                  or money order payable to the order of the Company; (ii) if
                  the Common Stock is traded on a national securities exchange,
                  The Nasdaq Stock Market, Inc. or quoted on a national
                  quotation system sponsored by the National Association of
                  Securities Dealers, through a "cashless exercise" procedure
                  whereby the Participant delivers irrevocable instructions to a
                  broker approved by the Committee to deliver promptly to the
                  Company an amount equal to the purchase price; or (iii) on
                  such other terms and conditions as may be acceptable to the
                  Committee (including, without limitation, the relinquishment
                  of Stock Options or by payment in full or in part in the form
                  of Common Stock owned by the Participant for a period of at
                  least 6 months (and for which the Participant has good title
                  free and clear of any liens and encumbrances) based on the
                  Fair Market Value of the Common Stock on the payment date). No
                  shares of Common Stock shall be issued until payment therefor,
                  as provided herein, has been made or provided for.

                           (e) INCENTIVE STOCK OPTION LIMITATIONS. To the extent
                  that the aggregate Fair Market Value (determined as of the
                  time of grant) of the Common Stock with respect to which
                  Incentive Stock Options are exercisable for the first time by
                  an Eligible Employee during any calendar year under this Plan
                  and/or any other stock option plan of the Company, any
                  Subsidiary or any Parent exceeds $100,000, such Options shall
                  be treated as Non-Qualified Stock Options. In addition, if an
                  Eligible Employee does not remain employed by the Company, any
                  Subsidiary or any Parent at all times from the time an
                  Incentive Stock Option is granted until 3 months prior to the
                  date of exercise thereof (or such other period as required by
                  applicable law), such Stock Option shall be treated as a
                  Non-Qualified Stock Option. Should any provision of this Plan
                  not be necessary in order for the Stock Options to qualify as
                  Incentive Stock Options, or should any additional provisions
                  be required, the Committee may amend this Plan accordingly,
                  without the necessity of obtaining the approval of the
                  stockholders of the Company.

                           (f) FORM, MODIFICATION, EXTENSION AND RENEWAL OF
                  STOCK OPTIONS. Subject to the terms and conditions and within
                  the limitations of this Plan, Stock Options shall be evidenced
                  by such form of agreement or grant as is approved by the
                  Committee, and the Committee may (i) modify, extend or renew
                  outstanding Stock


                                      -11-




                  Options granted under this Plan (provided that the rights of a
                  Participant are not reduced without his consent), and (ii)
                  accept the surrender of outstanding Stock Options (up to the
                  extent not theretofore exercised) and authorize the granting
                  of new Stock Options in substitution therefor (to the extent
                  not theretofore exercised).

                           (g) DEFERRED DELIVERY OF COMMON SHARES. The Committee
                  may in its discretion permit Participants to defer delivery of
                  Common Stock acquired pursuant to a Participant's exercise of
                  an Option in accordance with the terms and conditions
                  established by the Committee.

                                   ARTICLE VII

                     NON-TRANSFERABILITY AND TERMINATION OF
                             EMPLOYMENT/CONSULTANCY

                  7.1 NON-TRANSFERABILITY. No Stock Option shall be Transferable
         by the Participant otherwise than by will or by the laws of descent and
         distribution. All Stock Options shall be exercisable, during the
         Participant's lifetime, only by the Participant. No Stock Option shall,
         except as otherwise specifically provided by law or herein, be
         Transferable in any manner, and any attempt to Transfer any such Stock
         Option shall be void, and no such Stock Option shall in any manner be
         liable for or subject to the debts, contracts, liabilities, engagements
         or torts of any person who shall be entitled to such Stock Option, nor
         shall it be subject to attachment or legal process for or against such
         person.

                  7.2 TERMINATION OF EMPLOYMENT AND TERMINATION OF CONSULTANCY.
         The following rules apply with regard to the Termination of a
         Participant. Unless otherwise determined by the Committee at grant or,
         if no rights of the Participant are reduced, thereafter:

                           (a) TERMINATION BY REASON OF DEATH, DISABILITY OR
                  RETIREMENT. If a Participant's Termination is by reason of
                  death, Disability or Retirement, all Stock Options held by
                  such Participant which are exercisable at the time of the
                  Participant's Termination may be exercised by the Participant
                  (or, in the case of death, by the legal representative of the
                  Participant's estate) at any time within a period of one year
                  from the date of such Termination, but in no event beyond the
                  expiration of the stated terms of such Stock Options;
                  provided, however, that, in the case of Retirement, if the
                  Participant dies within such exercise period, all unexercised
                  Stock Options held by such Participant shall thereafter be
                  exercisable, to the extent to which they were exercisable at
                  the time of death, for a period of one year from the date of
                  such death, but in no event beyond the expiration of the
                  stated term of such Stock Options.

                           (b) INVOLUNTARY TERMINATION WITHOUT CAUSE. If a
                  Participant's Termination is by involuntary termination
                  without Cause, all Stock Options held by such Participant
                  which are exercisable at the time of such Termination, may be
                  exercised by the Participant at any time within a period of 90
                  days from the date of

                                      -12-




                  such Termination, but in no event beyond the expiration of the
                  stated term of such Stock Options.

                           (c) VOLUNTARY TERMINATION. If a Participant's
                  Termination is voluntary (other than a voluntary termination
                  described in Section 7.2(d)(ii) below), all Stock Options held
                  by such Participant which are exercisable at the time of such
                  Termination, may be exercised by the Participant at any time
                  within a period of 30 days from the date of such Termination,
                  but in no event beyond the expiration of the stated terms of
                  such Stock Options.

                           (d) TERMINATION FOR CAUSE. If a Participant's
                  Termination (i) is for Cause or (ii) is a voluntary
                  termination (as provided in subsection (c) above) at any time
                  after an event which would be grounds for a Termination for
                  Cause, all Stock Options held by such Participant shall
                  thereupon terminate and expire as of the date of such
                  Termination.


                                  ARTICLE VIII

                          CHANGE IN CONTROL PROVISIONS

                  8.1 BENEFITS. In the event of a Change in Control of the
         Company, except as otherwise provided by the Committee upon the grant
         of a Stock Option, the Participant shall be entitled to the following
         benefits:

                           (a) Except to the extent provided in the applicable
                  Stock Option agreement, the Participant's employment agreement
                  with the Company or an Affiliate, as approved by the
                  Committee, or other written agreement approved by the
                  Committee (as such agreement may be amended from time to
                  time), Stock Options granted and not previously exercisable
                  shall become exercisable upon a Change in Control, subject to
                  subsection 8.1(b).

                           (b) Notwithstanding anything to the contrary herein,
                  unless the Committee provides otherwise at the time a Stock
                  Option is granted hereunder or thereafter, no acceleration of
                  exercisability shall occur with respect to such Stock Options
                  if the Committee reasonably determines in good faith, that the
                  Stock Options shall be honored or assumed, or new rights
                  substituted therefor (each such honored, assumed or
                  substituted stock option hereinafter called an "Alternative
                  Option"), by a Participant's employer (or the parent or a
                  subsidiary of such employer) immediately following the Change
                  in Control, provided that any such Alternative Option must
                  meet the following criteria:

                                    (i) the Alternative Option must provide such
                           Participant with rights and entitlements
                           substantially equivalent to or better than the
                           rights, terms and conditions applicable under such
                           Stock Option, including, but not limited to, an
                           identical or better exercise schedule; and


                                      -13-




                                    (ii) the Alternative Option must
                           substantially comply and in the case of an Incentive
                           Stock Option, must comply with the requirements of
                           Treasury Regulation ss. 1.425-1 (and any amendments
                           thereto), except that the Alternative Option need not
                           be an Incentive Stock Option.

                           (c) If the Company and the other party to a
                  transaction constituting a Change in Control agree that such
                  transaction shall be treated as a "pooling of interests" for
                  financial reporting purposes, and if the transaction is in
                  fact so treated, then the acceleration of exercisability,
                  vesting or lapse of the applicable Restriction Period shall
                  not occur to the extent that the Company's independent public
                  accountants determine in good faith that such acceleration
                  would preclude "pooling of interests" accounting.

                  8.2 CHANGE IN CONTROL. A "Change in Control" shall be deemed
         to have occurred:

                           (a) upon any "person" as such term is used in
                  Sections 13(d) and 14(d) of the Exchange Act (other than CEP,
                  MSDWCP, the Company, any trustee or other fiduciary holding
                  securities under any employee benefit plan of the Company, or
                  any company owned, directly or indirectly, by the stockholders
                  of the Company in substantially the same proportions as their
                  ownership of Common Stock of the Company), becoming the
                  beneficial owner (as defined in Rule 13d-3 under the Exchange
                  Act), directly or indirectly, of securities of the Company
                  representing 50% or more of the combined voting power of the
                  Company's then outstanding securities;

                           (b) during any period of 2 consecutive years,
                  individuals who at the beginning of such period constitute the
                  Board, and any new director (other than a director designated
                  by a person who has entered into an agreement with the Company
                  to effect a transaction described in paragraph (a), (c), or
                  (d) of this Section or a director whose initial assumption of
                  office occurs as a result of either an actual or threatened
                  election contest (as such term is used in Rule 14a-11 of
                  Regulation 14A promulgated under the Exchange Act) or other
                  actual or threatened solicitation of proxies or consents by or
                  on behalf of a person other than the Board) whose election by
                  the Board or nomination for election by the Company's
                  stockholders was approved by a vote of at least two-thirds of
                  the directors then still in office who either were directors
                  at the beginning of the two-year period or whose election or
                  nomination for election was previously so approved, cease for
                  any reason to constitute at least a majority of the Board;

                           (c) a merger or consolidation of the Company or a
                  Subsidiary with any other corporation, other than a merger or
                  consolidation which would result in the voting securities of
                  the Company outstanding immediately prior thereto continuing
                  to represent (either by remaining outstanding or by being
                  converted into voting securities of the surviving entity) more
                  than 35% of the combined voting power of the voting securities
                  of the Company or such surviving entity or such surviving
                  entity's parent outstanding immediately after such merger or
                  consolidation; or


                                      -14-




                           (d) upon the approval by the stockholders of the
                  Company of a plan of complete liquidation of the Company or an
                  agreement for the sale or disposition by the Company of all or
                  substantially all of the Company's assets other than the sale
                  or disposition of all or substantially all of the assets of
                  the Company to a person or persons who beneficially own,
                  directly or indirectly, at least 50% or more of the combined
                  voting power of the outstanding voting securities of the
                  Company at the time of the sale.

                  8.3 INITIAL PUBLIC OFFERING NOT A CHANGE IN CONTROL. For
         purposes of the Plan, an initial public offering of the Common Stock of
         the Company shall not be deemed to be a Change in Control.


                                   ARTICLE IX

                        TERMINATION OR AMENDMENT OF PLAN

                  Notwithstanding any other provision of this Plan, the Board or
         the Committee may at any time, and from time to time, amend, in whole
         or in part, any or all of the provisions of this Plan (including any
         amendment deemed necessary to ensure that the Company may comply with
         any regulatory requirement referred to in Article XII), or suspend or
         terminate it entirely, retroactively or otherwise; provided, however,
         that, unless otherwise required by law or specifically provided herein,
         the rights of a Participant with respect to Awards granted prior to
         such amendment, suspension or termination, may not be impaired without
         the consent of such Participant. In no event may this Plan be amended
         without the approval of the stockholders of the Company in accordance
         with the applicable laws of the State of Delaware to increase the
         aggregate number of shares of Common Stock that may be issued under
         this Plan, decrease the minimum exercise price of any Stock Option, or
         to make any other amendment that would require stockholder approval
         under the rules of any exchange or system on which the Company's
         securities are listed or traded.

                  The Committee may amend the terms of any Stock Option
         theretofore granted, prospectively or retroactively, but, subject to
         Article IV above or as otherwise specifically provided herein, no such
         amendment or other action by the Committee shall impair the rights of
         any holder without the holder's consent.


                                    ARTICLE X

                               COMPANY CALL RIGHTS

                  10.1 COMPANY CALL RIGHTS. (a) In the event of Termination for
         Cause, the Company may repurchase from the Participant any shares of
         Common Stock previously acquired by the Participant through the
         exercise of a Stock Option granted under this Plan at a repurchase
         price equal to the lesser of (i) the original purchase price or
         exercise price (as applicable), if any, or (ii) Fair Market Value as of
         the date of termination.


                                      -15-




                  (b) In the event of a Termination for any reason other than
         for Cause (including termination due to Retirement, death, Disability,
         involuntary termination without Cause or resignation), the Company may
         at any time within 270 days after the date of such Termination: (i)
         repurchase from the Participant each outstanding vested Stock Option
         based on the greater of (A) the difference between the exercise price
         of a share of Common Stock relating to such Stock Option and the Fair
         Market Value of a share of Common Stock on the date of termination and
         (B) $.01 and (ii) repurchase from the Participant any shares of Common
         Stock previously acquired by the Participant through the exercise of a
         Stock Option under this Plan at a repurchase price equal to Fair Market
         Value as of the date of termination, but in no event less than the
         exercise price of a share of Common Stock relating to such Stock
         Option. In addition, the Company may at any time within 270 days after
         a Participant acquires shares of Common Stock upon the exercise of a
         Stock Option after the date of the event of Termination for any reason
         other than Cause, repurchase from the Participant any shares of Common
         Stock previously acquired by the Participant through the exercise of a
         Stock Option under this Plan at a repurchase price equal to Fair Market
         Value as of the date of termination, but in no event less than the
         exercise price of a share of Common Stock relating to such Stock
         Option.

                  10.2 EFFECT OF IPO. Notwithstanding the foregoing, the Company
         shall cease to have rights pursuant to this Article X following an
         initial public offering of the Common Stock of the Company.


                                   ARTICLE XI

                                  UNFUNDED PLAN

                  11.1 UNFUNDED STATUS OF PLAN. This Plan is intended to
         constitute an "unfunded" plan for incentive and deferred compensation.
         With respect to any payments as to which a Participant has a fixed and
         vested interest but which are not yet made to a Participant by the
         Company, nothing contained herein shall give any such Participant any
         rights that are greater than those of a general unsecured creditor of
         the Company.


                                   ARTICLE XII

                               GENERAL PROVISIONS

                  12.1 LEGEND. The Committee may require each person receiving
         shares pursuant to an Award under this Plan to represent to and agree
         with the Company in writing that the Participant is acquiring the
         shares without a view to distribution thereof. In addition to any
         legend required by this Plan, the certificates for such shares may
         include any legend which the Committee deems appropriate to reflect any
         restrictions on Transfer.

                  All certificates for shares of Common Stock delivered under
         this Plan shall be subject to such stock transfer orders and other
         restrictions as the Committee may deem


                                      -16-




         advisable under the rules, regulations and other requirements of the
         Securities and Exchange Commission, any stock exchange upon which the
         Common Stock is then listed or any national securities association
         system upon whose system the Common Stock is then quoted, any
         applicable Federal or state securities law, and any applicable
         corporate law, and the Committee may cause a legend or legends to be
         put on any such certificates to make appropriate reference to such
         restrictions.

                  12.2 OTHER PLANS. Nothing contained in this Plan shall prevent
         the Board from adopting other or additional compensation arrangements,
         subject to stockholder approval if such approval is required; and such
         arrangements may be either generally applicable or applicable only in
         specific cases.

                  12.3 NO RIGHT TO EMPLOYMENT/CONSULTANCY. Neither this Plan nor
         the grant of any Award hereunder shall give any Participant or other
         employee or Consultant any right with respect to continuance of
         employment or consultancy by the Company or any Affiliate, nor shall
         they be a limitation in any way on the right of the Company or any
         Affiliate by which an employee is employed or a Consultant is retained
         to terminate his employment or consultancy at any time.

                  12.4 WITHHOLDING OF TAXES. The Company shall have the right to
         deduct from any payment to be made to a Participant, or to otherwise
         require, prior to the issuance or delivery of any shares of Common
         Stock or the payment of any cash hereunder, payment by the Participant
         of, any Federal, state or local taxes required by law to be withheld.

                  Any statutorily required withholding obligation with regard to
         any Eligible Employee may be satisfied, subject to the consent of the
         Committee, by reducing the number of shares of Common Stock otherwise
         deliverable or by delivering shares of Common Stock already owned. Any
         fraction of a share of Common Stock required to satisfy such tax
         obligations shall be disregarded and the amount due shall be paid
         instead in cash by the Participant.

                  12.5     LISTING AND OTHER CONDITIONS.

                           (a) Unless otherwise determined by the Committee, as
                  long as the Common Stock is listed on a national securities
                  exchange or system sponsored by a national securities
                  association, the issue of any shares of Common Stock pursuant
                  to a Stock Option shall be conditioned upon such shares being
                  listed on such exchange or system. The Company shall have no
                  obligation to issue such shares unless and until such shares
                  are so listed, and the right to exercise any Stock Option with
                  respect to such shares shall be suspended until such listing
                  has been effected.

                           (b) If at any time counsel to the Company shall be of
                  the opinion that any sale or delivery of shares of Common
                  Stock pursuant to a Stock Option is or may in the
                  circumstances be unlawful or result in the imposition of
                  excise taxes


                                      -17-




                  on the Company under the statutes, rules or regulations of any
                  applicable jurisdiction, the Company shall have no obligation
                  to make such sale or delivery, or to make any application or
                  to effect or to maintain any qualification or registration
                  under the Securities Act or otherwise with respect to shares
                  of Common Stock or Stock Option, and the right to exercise any
                  Stock Option shall be suspended until, in the opinion of said
                  counsel, such sale or delivery shall be lawful or will not
                  result in the imposition of excise taxes on the Company.

                           (c) Upon termination of any period of suspension
                  under this Section 12.5, a Stock Option affected by such
                  suspension which shall not then have expired or terminated
                  shall be reinstated as to all shares available before such
                  suspension and as to shares which would otherwise have become
                  available during the period of such suspension, but no such
                  suspension shall extend the term of any Stock Option.

                           (d) A Participant shall be required to supply the
                  Company with any certificates, representations and information
                  that the Company requests and otherwise cooperate with the
                  Company in obtaining any listing, registration, qualification,
                  exemption, consent or approval the Company deems necessary or
                  appropriate.

                  12.6 STOCKHOLDERS AGREEMENT. As a condition to the receipt of
         shares of Common Stock pursuant to a Stock Option under this Plan, to
         the extent required by the Committee, the Participant shall execute and
         deliver a stockholder's agreement or such other documentation which
         shall set forth certain restrictions on transferability of the shares
         of Common Stock acquired upon exercise or purchase, a right of first
         refusal of the Company with respect to shares, the right of the Company
         to purchase Common Stock in accordance with this Plan and such other
         terms as the Board or Committee shall from time to time establish. Such
         stockholder's agreement shall apply to all Common Stock acquired under
         the Plan.

                  12.7 GOVERNING LAW. This Plan shall be governed and construed
         in accordance with the laws of the State of Delaware (regardless of the
         law that might otherwise govern under applicable Delaware principles of
         conflict of laws).

                  12.8 CONSTRUCTION. Wherever any words are used in this Plan in
         the masculine gender they shall be construed as though they were also
         used in the feminine gender in all cases where they would so apply, and
         wherever any words are used herein in the singular form they shall be
         construed as though they were also used in the plural form in all cases
         where they would so apply.

                  12.9 OTHER BENEFITS. No Award payment under this Plan shall be
         deemed compensation for purposes of computing benefits under any
         retirement plan of the Company or its subsidiaries nor affect any
         benefits under any other benefit plan now or


                                      -18-




         subsequently in effect under which the availability or amount of
         benefits is related to the level of compensation.

                  12.10 COSTS. The Company shall bear all expenses included in
         administering this Plan, including expenses of issuing Common Stock
         pursuant to any Awards hereunder.

                  12.11 NO RIGHT TO SAME BENEFITS. The provisions of Stock
         Options need not be the same with respect to each Participant, and such
         Stock Options to individual Participants need not be the same in
         subsequent years.

                  12.12 DEATH/DISABILITY. The Committee may in its discretion
         require the transferee of a Participant to supply it with written
         notice of the Participant's death or Disability and to supply it with a
         copy of the will (in the case of the Participant's death) or such other
         evidence as the Committee deems necessary to establish the validity of
         the transfer of an Award. The Committee may also require that the
         agreement of the transferee to be bound by all of the terms and
         conditions of this Plan.

                  12.13 SUCCESSORS AND ASSIGNS. The Plan shall be binding on all
         successors and permitted assigns of a Participant, including, without
         limitation, the estate of such Participant and the executor,
         administrator or trustee of such estate.

                  12.14 SEVERABILITY OF PROVISIONS. If any provision of this
         Plan shall be held invalid or unenforceable, such invalidity or
         unenforceability shall not affect any other provisions hereof, and this
         Plan shall be construed and enforced as if such provisions had not been
         included.

                  12.15 HEADINGS AND CAPTIONS. The headings and captions herein
         are provided for reference and convenience only, shall not be
         considered part of this Plan, and shall not be employed in the
         construction of this Plan.


                                  ARTICLE XIII

                             EFFECTIVE DATE OF PLAN

                  13.1 The Plan shall become effective upon adoption by the
         Board, subject to the approval of this Plan by the stockholders of the
         Company in accordance with the requirements of the laws of the State of
         Delaware, or such later date as provided in the adopting resolution.


                                      -19-




                                   ARTICLE XIV

                                  TERM OF PLAN

                  14.1 No Stock Option shall be granted pursuant to this Plan on
         or after the tenth anniversary of the earlier of the date this Plan is
         adopted or the date of stockholder approval, but Stock Options granted
         prior to such tenth anniversary may, and the Committee's authority to
         administer the terms of such Options shall, extend beyond that date.



                                      -20-



                                                                    Exhibit 10.8

















                               CROSS COUNTRY, INC.

                              AMENDED AND RESTATED

                            EQUITY PARTICIPATION PLAN






                                TABLE OF CONTENTS

                                                                            PAGE

ARTICLE I         PURPOSE.....................................................1

ARTICLE II        DEFINITIONS.................................................1

ARTICLE III       ADMINISTRATION..............................................5

ARTICLE IV        SHARE AND OTHER LIMITATIONS.................................9

ARTICLE V         ELIGIBILITY................................................11

ARTICLE VI        STOCK OPTIONS..............................................11

ARTICLE VII       NON-TRANSFERABILITY AND TERMINATION OF
                  EMPLOYMENT.................................................14

ARTICLE VIII      CHANGE IN CONTROL PROVISIONS...............................16

ARTICLE IX        TERMINATION OR AMENDMENT OF PLAN...........................18

ARTICLE X         COMPANY CALL RIGHTS AND OTHER LIMITATIONS..................18

ARTICLE XI        UNFUNDED PLAN..............................................19

ARTICLE XII       GENERAL PROVISIONS.........................................20

ARTICLE XIII      EFFECTIVE DATE OF PLAN.....................................23

ARTICLE XIV       TERM OF PLAN...............................................23





                               CROSS COUNTRY, INC.

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

                              AMENDED AND RESTATED

                            EQUITY PARTICIPATION PLAN
                           --------------------------



                                    ARTICLE I

                                     PURPOSE

         The purpose of this Cross Country, Inc. Amended and Restated Equity
Participation Plan is to enhance the profitability and value of the Company for
the benefit of its stockholders by enabling the Company to offer key management
employees of the Company and its Affiliates stock-based incentives in the
Company, thereby creating a means to raise the level of stock ownership by key
management employees in order to attract, retain and reward such employees and
strengthen the mutuality of interests between such employees and the Company's
stockholders.


                                   ARTICLE II

                                   DEFINITIONS

         For purposes of this Plan, the following terms shall have the following
meanings:

                  2.1 "Affiliate" means each of the following: (i) any
         Subsidiary; (ii) any Parent; (iii) any corporation, trade or business
         (including, without limitation, a partnership or limited liability
         company) which is directly or indirectly controlled 50% or more
         (whether by ownership of stock, assets or an equivalent ownership
         interest or voting interest) by the Company or one of its Affiliates;
         and (iv) any other entity in which the Company or any of its Affiliates
         has a material equity interest and which is designated as an
         "Affiliate" by resolution of the Committee.

                  2.2 "Award" means any award under this Plan of a Stock Option.

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

                  2.4 "Cause" means, with respect to a Participant's Termination
         of Employment: (i) in the case where there is no employment agreement,
         consulting




         agreement, change in control agreement or similar agreement in effect
         between the Company or an Affiliate and the Participant at the time of
         the grant of the Award (or where there is such an agreement but it does
         not define "cause" (or words of like import)), termination due to a
         Participant's insubordination, dishonesty, fraud, incompetence, moral
         turpitude, misconduct, refusal to perform his or her duties or
         responsibilities for any reason other than illness or incapacity or
         materially unsatisfactory performance of his or her duties for the
         Company or an Affiliate as determined by the Committee in its sole
         discretion; or (ii) in the case where there is an employment agreement,
         consulting agreement, change in control agreement or similar agreement
         in effect between the Company or an Affiliate and the Participant at
         the time of the grant of the Award that defines "cause" (or words of
         like import), "cause" as defined under such agreement; provided,
         however, that with regard to any agreement that conditions "cause" on
         occurrence of a change in control, such definition of "cause" shall not
         apply until a change in control actually takes place and then only with
         regard to a termination thereafter.

                  2.5 "CEP" means Charterhouse Equity Partners III, L.P., and
         its successors.

                  2.6 "Change in Control" has the meaning set forth in Article
         VIII.

                  2.7 "Code" means the Internal Revenue Code of 1986, as
         amended. Any reference to any section of the Code shall also be a
         reference to any successor provision.

                  2.8 "Committee" means a committee or subcommittee of the Board
         appointed from time to time by the Board, which committee or
         subcommittee shall consist of 2 or more non-employee directors;
         provided, however, that if and to the extent that no Committee exists
         which has the authority to administer this Plan, the functions of the
         Committee shall be exercised by the Board and all references herein to
         the Committee shall be deemed to be references to the Board.

                  2.9 "Common Stock" means the Common Stock, $.0001 par value
         per share, of the Company.

                  2.10 "Company" means Cross Country, Inc., a Delaware
         corporation, and its successors.

                  2.11 "Consultant" means any advisor or consultant to the
         Company or its Affiliates.

                  2.12 "Detrimental Activity" means (i) the disclosure to anyone
         outside the Company or its Affiliates, or the use in other than the
         Company's or its Affiliate's business, without written authorization
         from the Company, of any confidential information or proprietary
         information, relating to the business of the Company or its


                                       -2-




         Affiliates, acquired by a Participant prior to the Participant's
         Termination of Employment; (ii) activity while employed that results,
         or if known could result, in the Participant's Termination of
         Employment that is classified by the Company as a termination for
         Cause; (iii) any attempt, directly or indirectly, to solicit, induce or
         hire (or the identification for solicitation, inducement or hire) any
         non-clerical employee of the Company or its Affiliates to be employed
         by, or to perform services for, the Participant or any person or entity
         with which the Participant is associated (including, but not limited
         to, due to the Participant's employment by, consultancy for, equity
         interest in, or creditor relationship with such person or entity) or
         any person or entity from which the Participant receives direct or
         indirect compensation or fees as a result of such solicitation,
         inducement or hire (or the identification for solicitation, inducement
         or hire) without, in all cases, written authorization from the Company;
         (iv) any attempt, directly or indirectly, to solicit in a competitive
         manner any current customer of the Company or its Affiliates without,
         in all cases, written authorization from the Company; (v) the
         Participant's Disparagement, or inducement of others to do so, of the
         Company or its Affiliates or their past and present officers,
         directors, employees or products; (vi) without written authorization
         from the Company, the rendering of services for any organization, or
         engaging, directly or indirectly, in any business, which is competitive
         with the Company or its Affiliates, or which organization or business,
         or the rendering of services to such organization or business, is
         otherwise prejudicial to or in conflict with the interests of the
         Company or its Affiliates, provided, however, that competitive
         activities shall only be those competitive with any business unit or
         Affiliate of the Company with regard to which the Participant performed
         services at any time within the 2 years prior to the Participant's
         Termination of Employment; (vii) the Participant's breach of the terms
         of any agreement between the Company and the Participant including,
         without limitation, an employment agreement or non-competition
         agreement; or (viii) except as otherwise provided in the applicable
         Stock Option agreement, any other conduct or act determined by the
         Committee, in its sole discretion, to be injurious, detrimental or
         prejudicial to any interest of the Company or its Affiliates. For
         purposes of subparagraphs (i), (iii), (iv) and (vi) above, the Chief
         Executive Officer and the General Counsel of the Company shall each
         have authority, subject to the prior approval of the Board, to provide
         the Participant with written authorization to engage in the activities
         contemplated thereby and no other person shall have authority to
         provide the Participant with such authorization.

                  2.13 "Disability" means a disability which would qualify as
         such under the Company's long-term disability plan. A Disability shall
         only be deemed to occur at the time of the determination by the
         Committee of the Disability.

                  2.14 "Disparagement" means (unless modified in the applicable
         Stock Option agreement) making comments or statements to the press, the
         Company's or its Affiliates' employees or any individual or entity with
         whom the Company or its Affiliates has a business relationship which
         would adversely affect in any manner: (i)


                                       -3-




         the conduct of the business of the Company or its Affiliates
         (including, without limitation, any products or business plans or
         business prospects), or (ii) the business reputation of the Company or
         its Affiliates, or any of their products, or their past or present
         officers, directors or employees.

                  2.15 "Effective Date" means the effective date of this Plan as
         defined in Article XIII.

                  2.16 "Eligible Employee" means each key management employee of
         the Company or an Affiliate.

                  2.17 "Exchange Act" means the Securities Exchange Act of 1934,
         as amended. Any references to any section of the Exchange Act shall
         also be a reference to any successor provision.

                  2.18 "Fair Market Value" means, for purposes of this Plan,
         unless otherwise required by any applicable provision of the Code, any
         regulations issued thereunder or as provided in the applicable Stock
         Option agreement, as of any date, the price for Common Stock
         consistently applied on such date, as determined in good faith by the
         Committee and, prior to the initial public offering of the Common Stock
         of the Company, as agreed to by CEP and MSDWCP.

                  2.19 "Family Member" means any child, stepchild, grandchild,
         parent, stepparent, grandparent, spouse, former spouse, sibling, niece,
         nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
         brother-in-law, or sister-in-law, including adoptive relationships, any
         person sharing the employee's household (other than a tenant or
         employee), a trust in which these persons have more than 50% of the
         beneficial interest, a foundation in which these persons (or the
         employee) control the management of assets, and any other entity in
         which these persons (or the employee) own more than 50% of the voting
         interests.

                  2.20 "Incentive Stock Option" means any Stock Option awarded
         to an Eligible Employee under this Plan intended to be and designated
         as an "Incentive Stock Option" within the meaning of Section 422 of the
         Code.

                  2.21 "MSDWCP" means a representative of Morgan Stanley Dean
         Witter Capital Partners IV, L.P. and its affiliated funds, and their
         respective successors.

                  2.22 "Non-Qualified Stock Option" means any Stock Option
         awarded under this Plan that is not an Incentive Stock Option.

                  2.23 "Parent" means any parent corporation of the Company
         within the meaning of Section 424(e) of the Code.


                                       -4-




                  2.24 "Participant" means any Eligible Employee to whom a Stock
         Option has been awarded under this Plan.

                  2.25 "Plan" means this Amended and Restated Cross Country,
         Inc. Equity Participation Plan, as amended from time to time.

                  2.26 "Retirement" means a Termination of Employment without
         Cause by a Participant at or after age 65 or such earlier date after
         age 50 as may be approved by the Committee with regard to such
         Participant.

                  2.27 "Securities Act" means the Securities Act of 1933, as
         amended. Any reference to any section of the Securities Act shall also
         be a reference to any successor provision.

                  2.28 "Stock Option" or "Option" means any option to purchase
         shares of Common Stock granted to Eligible Employees under Article VI.

                  2.29 "Subsidiary" means any subsidiary corporation of the
         Company within the meaning of Section 424(f) of the Code.

                  2.30 "Ten Percent Stockholder" means a person owning stock
         possessing more than 10% of the total combined voting power of all
         classes of stock of the Company, its Subsidiaries or its Parent.

                  2.31 "Termination of Employment" means: (i) a termination of
         employment (for reasons other than a military or personal leave of
         absence granted by the Company) of a Participant from the Company and
         its Affiliates; or (ii) when an entity which is employing a Participant
         ceases to be an Affiliate, unless the Participant otherwise is, or
         thereupon becomes, employed by the Company or another Affiliate. In the
         event that an Eligible Employee becomes a Consultant upon the
         termination of his employment, the Committee, in its sole and absolute
         discretion, may determine that no Termination of Employment shall be
         deemed to occur until such time as such Eligible Employee is no longer
         an Eligible Employee or a Consultant. The Committee may otherwise
         define Termination of Employment in the Award agreement or, if no
         rights of a Participant are reduced, may otherwise define Termination
         of Employment thereafter.

                  2.32 "Transfer" means anticipate, alienate, attach, sell,
         assign, pledge, encumber, charge, hypothecate or otherwise transfer and
         "Transferred" has a correlative meaning.


                                       -5-




                                   ARTICLE III

                                 ADMINISTRATION

                  3.1 THE COMMITTEE. The Plan shall be administered and
         interpreted by the Committee.

                  3.2 GRANTS OF AWARDS. The Committee shall have full authority
         to grant Stock Options to Eligible Employees pursuant to the terms of
         this Plan. All Stock Options shall be granted by, confirmed by, and
         subject to the terms of, a written agreement executed by the Company
         and the Participant. In particular, the Committee shall have the
         authority:

                           (a) to select from among those persons recommended by
                  the President of the Company the Eligible Employees to whom
                  Stock Options may from time to time be granted hereunder;

                           (b) to determine whether and to what extent Stock
                  Options are to be granted hereunder to one or more Eligible
                  Employees after receipt of a recommendation by the President
                  of the Company;

                           (c) to determine, in accordance with the terms of
                  this Plan, the number of shares of Common Stock to be covered
                  by each Stock Option granted hereunder;

                           (d) to determine the terms and conditions, not
                  inconsistent with the terms of this Plan, of any Stock Option
                  granted hereunder (including, but not limited to, the exercise
                  or purchase price (if any), any restriction or limitation, any
                  vesting schedule or acceleration thereof and any forfeiture
                  restrictions or waiver thereof, regarding any Stock Option and
                  the shares of Common Stock relating thereto, based on such
                  factors, if any, as the Committee shall determine, in its sole
                  discretion);

                           (e) to determine whether and under what circumstances
                  a Stock Option may be settled in cash, Common Stock and/or
                  restricted stock under Section 6.3(d);

                           (f) to determine whether, to what extent and under
                  what circumstances to provide loans to Eligible Employees in
                  order to exercise Stock Options under this Plan;

                           (g) to determine whether a Stock Option is an
                  Incentive Stock Option or Non-Qualified Stock Option;
                  provided, however, that a Stock Option shall be, to the extent
                  practicable, designated as an Incentive Stock Option;

                           (h) to determine whether to require an Eligible
                  Employee, as a condition of the granting of any Stock Option,
                  not to sell or otherwise dispose of shares of Common Stock
                  acquired pursuant to the exercise of an Option for a


                                       -6-




                  period of time as determined by the Committee, in its sole
                  discretion, following the date of the acquisition of such
                  Option or Award; and

                           (i) to modify, extend or renew an Award, subject to
                  Article IX herein, provided, however, that if an Award is
                  modified, extended or renewed and thereby deemed to be the
                  issuance of a new Award under the Code or the applicable
                  accounting rules, the exercise price of a Stock Option may
                  continue to be the original exercise price even if less than
                  the Fair Market Value of the Common Stock at the time of such
                  modification, extension or renewal.

                  3.3 GUIDELINES. Subject to Article IX hereof, the Committee
         shall have the authority to adopt, alter and repeal such administrative
         rules, guidelines and practices governing this Plan and perform all
         acts, including the delegation of its administrative responsibilities,
         as it shall, from time to time, deem advisable; to construe and
         interpret the terms and provisions of this Plan and any Stock Option
         issued under this Plan (and any agreements relating thereto); and to
         otherwise supervise the administration of this Plan. The Committee may
         correct any defect, supply any omission or reconcile any inconsistency
         in this Plan or in any agreement relating thereto in the manner and to
         the extent it shall deem necessary to effectuate the purpose and intent
         of this Plan. The Committee may adopt special guidelines and provisions
         for persons who are residing in or employed in, or subject to, the
         taxes of, foreign jurisdictions to comply with applicable tax and
         securities laws and may impose any limitations and restrictions that it
         deems necessary to comply with the applicable tax and securities laws
         of such foreign jurisdictions.

                  3.4 DECISIONS FINAL. Any decision, interpretation or other
         action made or taken in good faith by or at the direction of the
         Company, the Board or the Committee (or any of its members) arising out
         of or in connection with this Plan shall be within the absolute
         discretion of all and each of them, as the case may be, and shall be
         final, binding and conclusive on the Company and all employees and
         Participants and their respective heirs, executors, administrators,
         successors and assigns.

                  3.5 PROCEDURES. If the Committee is appointed, the Board shall
         designate one of the members of the Committee as chairman and the
         Committee shall hold meetings, subject to the By-Laws of the Company,
         at such times and places as it shall deem advisable, including, without
         limitation, by telephone conference or by written consent to the extent
         permitted by applicable law. A majority of the Committee members shall
         constitute a quorum. All determinations of the Committee shall be made
         by a majority of its members. Any decision or determination reduced to
         writing and signed by all the Committee members in accordance with the
         By-Laws of the Company, shall be fully as effective as if it had been
         made by a vote at a meeting duly called and held. The Committee shall
         keep minutes of its meetings and shall make such rules and regulations
         for the conduct of its business as it shall deem advisable.


                                       -7-




                  3.6      DESIGNATION OF CONSULTANTS/LIABILITY.

                           (a) The Committee may designate employees of the
                  Company and professional advisors to assist the Committee in
                  the administration of this Plan and may grant authority to
                  officers to execute agreements or other documents on behalf of
                  the Committee.

                           (b) The Committee may employ such legal counsel,
                  consultants and agents as it may deem desirable for the
                  administration of this Plan and may rely upon any opinion
                  received from any such counsel or consultant and any
                  computation received from any such consultant or agent.
                  Expenses incurred by the Committee or Board in the engagement
                  of any such counsel, consultant or agent shall be paid by the
                  Company. The Committee, its members and any person designated
                  pursuant to paragraph (a) above shall not be liable for any
                  action or determination made in good faith with respect to
                  this Plan. To the maximum extent permitted by applicable law,
                  no officer of the Company or member or former member of the
                  Committee or of the Board shall be liable for any action or
                  determination made in good faith with respect to this Plan or
                  any Stock Option granted under it. To the maximum extent
                  permitted by applicable law or the Certificate of
                  Incorporation or By-Laws of the Company and to the extent not
                  covered by insurance directly insuring such person, each
                  officer and member or former member of the Committee or the
                  Board shall be indemnified and held harmless by the Company
                  against any cost or expense (including reasonable fees of
                  counsel reasonably acceptable to the Company) or liability
                  (including any sum paid in settlement of a claim with the
                  approval of the Company), and advanced amounts necessary to
                  pay the foregoing at the earliest time and to the fullest
                  extent permitted, arising out of any act or omission to act in
                  connection with the administration of this Plan, except to the
                  extent arising out of such officer's, member's or former
                  member's own fraud or bad faith. Such indemnification shall be
                  in addition to any rights of indemnification the employees,
                  officers, directors or members or former officers, directors
                  or members may have under applicable law or under the
                  Certificate of Incorporation or By-Laws of the Company or any
                  Affiliate. Notwithstanding anything else herein, this
                  indemnification will not apply to the actions or
                  determinations made by an individual with regard to Stock
                  Option granted to him or her under this Plan.


                                       -8-




                                   ARTICLE IV

                           SHARE AND OTHER LIMITATIONS

                  4.1      SHARES.

                           (a) The aggregate number of shares of Common Stock
                  which may be issued or used for reference purposes under this
                  Plan or with respect to which Stock Options may be granted
                  shall not exceed 2,252,486* shares of Common Stock (subject to
                  any increase or decrease pursuant to Section 4.2) which may be
                  either authorized and unissued Common Stock or Common Stock
                  held in or acquired for the treasury of the Company or both.

                           (b) Stock Options granted under the Plan shall be
                  sub-divided into 5 tranches (as described more fully in
                  Section 6.2). The number of shares of Common Stock available
                  for each tranche shall be as follows:




                                     NUMBER OF SHARES
                        TRANCHE     SUBJECT TO TRANCHE
                        -------     ------------------
                                      
                           1             403,076
                           2             758,732
                           3             758,732
                           4             165,973
                           5             165,973


                           (c) If any Stock Option granted under this Plan
                  expires, terminates or is forfeited for any reason other than
                  by reason of its exercise, the number of shares of Common
                  Stock underlying such unexercised or forfeited Stock Option
                  shall again be available for the purposes of Awards under this
                  Plan.

                  4.2      CHANGES.

                           (a) The existence of this Plan and the Stock Options
                  granted hereunder shall not affect in any way the right or
                  power of the Board or the stockholders of the Company to make
                  or authorize (i) any adjustment, recapitalization,
                  reorganization or other change in the Company's capital
                  structure or its business, (ii) any merger or consolidation of
                  the Company or any Affiliate, (iii) any issuance of bonds,
                  debentures, preferred or prior preference stock ahead of or
                  affecting the Common Stock, (iv) the dissolution or
                  liquidation of the Company or any Affiliate, (v) any sale or
                  transfer of all or part of the assets or business of the
                  Company or any Affiliate, or (vi) any other corporate act or
                  proceeding.

                           (b) In the event of any change in the capital
                  structure or business of the Company by reason of any stock
                  split, reverse stock split, stock dividend,



- --------
(*) Note, the number reflects the stock split that occurred on August 23, 2001.


                                       -9-




                  combination or reclassification of shares, recapitalization,
                  or other change in the capital structure of the Company,
                  merger, consolidation, spin-off, reorganization, partial or
                  complete liquidation, issuance of rights or warrants to
                  purchase any Common Stock or securities convertible into
                  Common Stock, or any other corporate transaction or event
                  having an effect similar to any of the foregoing, then the
                  Committee may take such action, if any, with respect to the
                  Plan and outstanding Stock Options, as it may deem equitable
                  to prevent substantial dilution or enlargement of the rights
                  granted to, or available for, Participants under this Plan,
                  including, without limitation, adjustment of the aggregate
                  number and kind of shares which thereafter may be issued under
                  this Plan, the number and kind of shares or other property
                  (including cash) to be issued upon exercise of an outstanding
                  Stock Option granted under this Plan and the purchase price
                  thereof. Any such action or adjustment determined by the
                  Committee in good faith shall be final, binding and conclusive
                  on the Company and all Participants and employees and their
                  respective heirs, executors, administrators, successors and
                  assigns. Except as provided in this Section 4.2, a Participant
                  shall have no rights by reason of any issuance by the Company
                  of any class or securities convertible into stock of any class
                  of the Company, any subdivision or consolidation of shares of
                  stock of any class of the Company, the payment of any stock
                  dividend, any other increase or decrease in the number of
                  shares of stock of any class of the Company, any sale or
                  transfer of all or part of the Company's assets or business or
                  any other change affecting the Company's capital structure or
                  business.

                           (c) Fractional shares of Common Stock resulting from
                  any adjustment in Options pursuant to Section 4.2(a) or (b)
                  shall be aggregated until, and eliminated at, the time of
                  exercise by rounding-down for fractions less than one-half and
                  rounding-up for fractions equal to or greater than one-half.
                  No cash settlements shall be made with respect to fractional
                  shares eliminated by rounding. Notice of any adjustment shall
                  be given by the Committee to each Participant whose Option has
                  been adjusted and such adjustment (whether or not such notice
                  is given) shall be effective and binding for all purposes of
                  this Plan.

                  4.3 MINIMUM PURCHASE PRICE. Notwithstanding any provision of
         this Plan to the contrary, if authorized but previously unissued shares
         of Common Stock are issued under this Plan, such shares shall not be
         issued for a consideration which is less than as permitted under
         applicable law.


                                      -10-




                                    ARTICLE V

                                   ELIGIBILITY

                  5.1 NON-QUALIFIED STOCK OPTIONS. All Eligible Employees are
         eligible to be granted Non-Qualified Stock Options. Eligibility for the
         grant of a Non-Qualified Stock Option and actual participation in this
         Plan shall be determined by the Committee in its sole discretion.

                  5.2 INCENTIVE STOCK OPTIONS. All Eligible Employees of the
         Company, its Subsidiaries and its Parent (if any) are eligible to be
         granted Incentive Stock Options under this Plan. Eligibility for the
         grant of an Incentive Stock Option and actual participation in this
         Plan shall be determined by the Committee in its sole discretion.


                                   ARTICLE VI

                                  STOCK OPTIONS

                  6.1 STOCK OPTIONS. Each Stock Option granted hereunder shall
         be one of two types: (i) an Incentive Stock Option intended to satisfy
         the requirements of Section 422 of the Code; or (ii) a Non-Qualified
         Stock Option.

                  6.2 GRANTS. (a) Subject to the provisions of Article V, the
         Committee shall have the authority to grant to any Eligible Employee
         one or more Incentive Stock Options, Non-Qualified Stock Options or
         both types of Stock Options. To the extent that any Stock Option does
         not qualify as an Incentive Stock Option (whether because of its
         provisions or the time or manner of its exercise or otherwise), such
         Stock Option or the portion thereof which does not qualify, shall
         constitute a separate Non-Qualified Stock Option. Notwithstanding any
         other provision of this Plan to the contrary or any provision in an
         agreement evidencing the grant of a Stock Option to the contrary, any
         Stock Option granted to an Eligible Employee of an Affiliate (other
         than an Affiliate which is a Parent or a Subsidiary) shall be a
         Non-Qualified Stock Option.

                           (b) Each Stock Option granted under the Plan shall be
                  sub-divided into 5 tranches. The number of shares of Common
                  Stock in each tranche for any Stock Option shall be the total
                  number of shares of Common Stock subject to the Stock Option
                  multiplied by the applicable percentage for such tranche in
                  the following table:




                                             PERCENTAGE OF SHARES
                              TRANCHE         SUBJECT TO TRANCHE
                              -------         ------------------
                                               
                                 1                17.8947368%
                                 2                33.6842105%
                                 3                33.6842105%
                                 4                 7.368421%
                                 5                 7.368421%



                                      -11-



                  6.3 TERMS OF STOCK OPTIONS. Stock Options granted under this
         Plan shall be subject to the following terms and conditions, and shall
         be in such form and contain such additional terms and conditions, not
         inconsistent with the terms of this Plan, as the Committee shall deem
         desirable:

                           (a) EXERCISE PRICE. Stock Options under this Plan
                  shall be exercisable at the exercise prices set forth in the
                  following table; provided, however, that if an Incentive Stock
                  Option is granted to a Ten Percent Stockholder, the exercise
                  price of the first tranche shall be no less than 110% of the
                  Fair Market Value of the Common Stock at the time of grant:




                                                        ACTUAL EXERCISE PRICE OF
                                  EXERCISE PRICE OF      OPTIONS GRANTED ON THE
                    TRANCHE        OPTIONS GRANTED           EFFECTIVE DATE
                    -------        ---------------           --------------
                                                           
                       1         100% of Fair Market             $  7.75
                               Value on Date of Grant
                       2         150% of Fair Market             $ 11.62
                               Value on Date of Grant
                       3         200% of Fair Market             $ 15.50
                               Value on Date of Grant
                       4         250% of Fair Market             $ 19.37
                               Value on Date of Grant
                       5         300% of Fair Market             $ 23.25
                               Value on Date of Grant


                           (b) STOCK OPTION TERM. The term of each Stock Option
                  shall be fixed by the Committee; provided, however, that no
                  Stock Option shall be exercisable more than 10 years after the
                  date such Stock Option is granted; and further provided that
                  the term of an Incentive Stock Option granted to a Ten Percent
                  Stockholder shall not exceed 5 years.

                           (c) EXERCISABILITY. Except as otherwise provided by
                  the Committee in accordance with the provisions of this
                  Section, 25% of each tranche of any Stock Option granted under
                  this Article VI shall be exercisable on the first anniversary
                  of the date of grant and 12.5% of each tranche of any Stock
                  Option granted under this Article VI shall be exercisable at
                  the end of each six-month period thereafter. Notwithstanding
                  the foregoing, Stock Options shall be


                                      -12-




                  exercisable at such time or times and subject to such terms
                  and conditions as shall be determined by the Committee at
                  grant. If the Committee provides, in its discretion, that any
                  Stock Option is exercisable subject to certain limitations
                  (including, without limitation, that such Stock Option is
                  exercisable only in installments or within certain time
                  periods), the Committee may waive such limitations on the
                  exercisability at any time at or after grant in whole or in
                  part (including, without limitation, waiver of the installment
                  exercise provisions or acceleration of the time at which such
                  Stock Option may be exercised), based on such factors, if any,
                  as the Committee shall determine, in its sole discretion.
                  Unless otherwise determined by the Committee at grant, the
                  grant shall provide that (i) in the event the Participant
                  engages in Detrimental Activity prior to any exercise of the
                  Stock Option, all Stock Options held by the Participant shall
                  thereupon terminate and expire, (ii) as a condition of the
                  exercise of a Stock Option, the Participant shall be required
                  to certify at the time of exercise in a manner acceptable to
                  the Company that the Participant is in compliance with the
                  terms and conditions of the Plan and that the Participant has
                  not engaged in, and does not intend to engage in, any
                  Detrimental Activity, (iii) in the event the Participant
                  engages in Detrimental Activity during the 6 month period
                  commencing on the date the Stock Option is exercised, the
                  Company shall be entitled to recover from the Participant at
                  any time within one year after such exercise, and the
                  Participant shall pay over to the Company, any gain realized
                  as a result of the exercise (whether at the time of exercise
                  or thereafter), (iv) any decision by the Committee to waive
                  such limitations must be first approved by each of CEP and
                  MSDWCP and (v) the foregoing provisions described in (i),
                  (ii), (iii) and (iv) shall cease to apply upon a Change in
                  Control.

                           (d) METHOD OF EXERCISE. Subject to whatever
                  installment exercise and waiting period provisions apply under
                  subsection (c) above, Stock Options may be exercised in whole
                  or in part at any time and from time to time during the Stock
                  Option term by giving written notice of exercise to the
                  Committee specifying the number of shares to be purchased.
                  Such notice shall be accompanied by payment in full of the
                  purchase price as follows: (i) in cash or by check, bank draft
                  or money order payable to the order of the Company; (ii) if
                  the Common Stock is traded on a national securities exchange,
                  The Nasdaq Stock Market, Inc. or quoted on a national
                  quotation system sponsored by the National Association of
                  Securities Dealers, through a "cashless exercise" procedure
                  whereby the Participant delivers irrevocable instructions to a
                  broker approved by the Committee to deliver promptly to the
                  Company an amount equal to the purchase price; or (iii) on
                  such other terms and conditions as may be acceptable to the
                  Committee (including, without limitation, the relinquishment
                  of Stock Options or by payment in full or in part in the form
                  of Common Stock owned by the Participant for a period of at
                  least 6 months (and for which the Participant has good title
                  free and clear of any liens and encumbrances) based on the
                  Fair Market Value of the Common Stock on the


                                      -13-




                  payment date). No shares of Common Stock shall be issued until
                  payment therefor, as provided herein, has been made or
                  provided for.

                           (e) INCENTIVE STOCK OPTION LIMITATIONS. To the extent
                  that the aggregate Fair Market Value (determined as of the
                  time of grant) of the Common Stock with respect to which
                  Incentive Stock Options are exercisable for the first time by
                  an Eligible Employee during any calendar year under this Plan
                  and/or any other stock option plan of the Company, any
                  Subsidiary or any Parent exceeds $100,000, such Options shall
                  be treated as Non-Qualified Stock Options. In addition, if an
                  Eligible Employee does not remain employed by the Company, any
                  Subsidiary or any Parent at all times from the time an
                  Incentive Stock Option is granted until 3 months prior to the
                  date of exercise thereof (or such other period as required by
                  applicable law), such Stock Option shall be treated as a
                  Non-Qualified Stock Option. Should any provision of this Plan
                  not be necessary in order for the Stock Options to qualify as
                  Incentive Stock Options, or should any additional provisions
                  be required, the Committee may amend this Plan accordingly,
                  without the necessity of obtaining the approval of the
                  stockholders of the Company.

                           (f) FORM, MODIFICATION, EXTENSION AND RENEWAL OF
                  STOCK OPTIONS. Subject to the terms and conditions and within
                  the limitations of this Plan, Stock Options shall be evidenced
                  by such form of agreement or grant as is approved by the
                  Committee, and the Committee may (i) modify, extend or renew
                  outstanding Stock Options granted under this Plan (provided
                  that the rights of a Participant are not reduced without his
                  consent), and (ii) accept the surrender of outstanding Stock
                  Options (up to the extent not theretofore exercised) and
                  authorize the granting of new Stock Options in substitution
                  therefor (to the extent not theretofore exercised).

                           (g) DEFERRED DELIVERY OF COMMON SHARES. The Committee
                  may in its discretion permit Participants to defer delivery of
                  Common Stock acquired pursuant to a Participant's exercise of
                  an Option in accordance with the terms and conditions
                  established by the Committee.

                                   ARTICLE VII

                             NON-TRANSFERABILITY AND
                            TERMINATION OF EMPLOYMENT

                  7.1 NON-TRANSFERABILITY. Except as provided herein, no Stock
         Option shall be Transferable by the Participant otherwise than by will
         or by the laws of descent and distribution. All Stock Options shall be
         exercisable, during the Participant's lifetime, only by the
         Participant. No Stock Option shall, except as otherwise specifically
         provided by law or herein, be Transferable in any manner, and any
         attempt to Transfer any such Stock


                                      -14-




         Option shall be void, and no such Stock Option shall in any manner be
         liable for or subject to the debts, contracts, liabilities, engagements
         or torts of any person who shall be entitled to such Stock Option, nor
         shall it be subject to attachment or legal process for or against such
         person. Notwithstanding the foregoing, the Committee may determine at
         the time of grant or thereafter that a Non-Qualified Stock Option that
         is otherwise not Transferable pursuant to this Section 7.1 is
         Transferable to a Family Member in whole or in part and in such
         circumstances, and under such conditions, as specified by the
         Committee. A Non- Qualified Stock Option that is Transferred to a
         Family Member pursuant to the preceding sentence (i) may not be
         subsequently Transferred otherwise than by will or by the laws of
         descent and distribution and (ii) remains subject to the terms of this
         Plan and the Stock Option agreement. Any shares of Common Stock
         acquired upon the exercise of a Stock Option by a transferee of a Stock
         Option shall be subject to the terms of this Plan and the Stock Option
         agreement, including, without limitation, the provisions of Article X
         hereof.

                  7.2 TERMINATION OF EMPLOYMENT. The following rules apply with
         regard to the Termination of Employment of a Participant. Unless
         otherwise determined by the Committee at grant or, if no rights of the
         Participant are reduced, thereafter:

                           (a) TERMINATION BY REASON OF DEATH, DISABILITY OR
                  RETIREMENT. If a Participant's Termination of Employment is by
                  reason of death, Disability or Retirement, all Stock Options
                  held by such Participant which are exercisable at the time of
                  the Participant's Termination of Employment, may be exercised
                  by the Participant (or, in the case of death, by the legal
                  representative of the Participant's estate) at any time within
                  a period of one year from the date of such Termination of
                  Employment, but in no event beyond the expiration of the
                  stated terms of such Stock Options; provided, however, that,
                  in the case of Retirement, if the Participant dies within such
                  exercise period, all unexercised Stock Options held by such
                  Participant shall thereafter be exercisable, to the extent to
                  which they were exercisable at the time of death, for a period
                  of one year from the date of such death, but in no event
                  beyond the expiration of the stated term of such Stock
                  Options.

                           (b) INVOLUNTARY TERMINATION WITHOUT CAUSE. If a
                  Participant's Termination of Employment is by involuntary
                  termination without Cause, all Stock Options held by such
                  Participant which are exercisable at the time of such
                  Termination of Employment, may be exercised by the Participant
                  at any time within a period of 90 days from the date of such
                  Termination of Employment, but in no event beyond the
                  expiration of the stated term of such Stock Options.

                           (c) VOLUNTARY TERMINATION. If a Participant's
                  Termination of Employment is voluntary (other than a voluntary
                  termination described in Section 7.2(d)(ii) below), all Stock
                  Options held by such Participant which are exercisable at the
                  time of such Termination of Employment, may be exercised by
                  the Participant at any time within a period of 30 days from
                  the date of such


                                      -15-




                  Termination of Employment, but in no event beyond the
                  expiration of the stated terms of such Stock Options.

                           (d) TERMINATION FOR CAUSE. If a Participant's
                  Termination of Employment (i) is for Cause or (ii) is a
                  voluntary termination (as provided in subsection (c) above) at
                  any time after an event which would be grounds for a
                  Termination of Employment for Cause, all Stock Options held by
                  such Participant shall thereupon terminate and expire as of
                  the date of such Termination of Employment.


                                  ARTICLE VIII

                          CHANGE IN CONTROL PROVISIONS

                  8.1 BENEFITS. In the event of a Change in Control of the
         Company, except as otherwise provided by the Committee upon the grant
         of a Stock Option, the Participant shall be entitled to the following
         benefits:

                           (a) Except to the extent provided in the applicable
                  Stock Option agreement, the Participant's employment agreement
                  with the Company or an Affiliate, as approved by the
                  Committee, or other written agreement approved by the
                  Committee (as such agreement may be amended from time to
                  time), Stock Options granted and not previously exercisable
                  shall become exercisable upon a Change in Control, subject to
                  subsection 8.1(b).

                           (b) Notwithstanding anything to the contrary herein,
                  unless the Committee provides otherwise at the time a Stock
                  Option is granted hereunder or thereafter, no acceleration of
                  exercisability shall occur with respect to such Stock Options
                  if the Committee reasonably determines in good faith that the
                  Stock Options shall be honored or assumed, or new rights
                  substituted therefor (each such honored, assumed or
                  substituted stock option hereinafter called an "Alternative
                  Option"), by a Participant's employer (or the parent or a
                  subsidiary of such employer) immediately following the Change
                  in Control, provided that any such Alternative Option must
                  meet the following criteria:

                                    (i) the Alternative Option must provide such
                           Participant with rights and entitlements
                           substantially equivalent to or better than the
                           rights, terms and conditions applicable under such
                           Stock Option, including, but not limited to, an
                           identical or better exercise schedule; and

                                    (ii) the Alternative Option must
                           substantially comply and in the case of an Incentive
                           Stock Option must comply with the requirements of
                           Treasury Regulation ss. 1.425-1 (and any amendments
                           thereto), except that the Alternative Option need not
                           be an Incentive Stock Option.


                                      -16-




                           (c) If the Company and the other party to a
                  transaction constituting a Change in Control agree that such
                  transaction shall be treated as a "pooling of interests" for
                  financial reporting purposes, and if the transaction is in
                  fact so treated, then the acceleration of exercisability,
                  vesting or lapse of the applicable Restriction Period shall
                  not occur to the extent that the Company's independent public
                  accountants determine in good faith that such acceleration
                  would preclude "pooling of interests" accounting.

                  8.2 CHANGE IN CONTROL. A "Change in Control" shall be deemed
         to have occurred:

                           (a) upon any "person" as such term is used in
                  Sections 13(d) and 14(d) of the Exchange Act (other than CEP,
                  MSDWCP, the Company, any trustee or other fiduciary holding
                  securities under any employee benefit plan of the Company,
                  or any company owned, directly or indirectly, by the
                  stockholders of the Company in substantially the same
                  proportions as their ownership of Common Stock of the
                  Company), becoming the beneficial owner (as defined in Rule
                  13d-3 under the Exchange Act), directly or indirectly, of
                  securities of the Company representing 50% or more of the
                  combined voting power of the Company's then outstanding
                  securities;

                           (b) during any period of 2 consecutive years,
                  individuals who at the beginning of such period constitute the
                  Board, and any new director (other than a director designated
                  by a person who has entered into an agreement with the Company
                  to effect a transaction described in paragraph (a), (c), or
                  (d) of this Section or a director whose initial assumption of
                  office occurs as a result of either an actual or threatened
                  election contest (as such term is used in Rule 14a-11 of
                  Regulation 14A promulgated under the Exchange Act) or other
                  actual or threatened solicitation of proxies or consents by or
                  on behalf of a person other than the Board) whose election by
                  the Board or nomination for election by the Company's
                  stockholders was approved by a vote of at least two-thirds of
                  the directors then still in office who either were directors
                  at the beginning of the two-year period or whose election or
                  nomination for election was previously so approved, cease for
                  any reason to constitute at least a majority of the Board;

                           (c) a merger or consolidation of the Company or a
                  Subsidiary with any other corporation, other than a merger or
                  consolidation which would result in the voting securities of
                  the Company outstanding immediately prior thereto continuing
                  to represent (either by remaining outstanding or by being
                  converted into voting securities of the surviving entity) more
                  than 35% of the combined voting power of the voting securities
                  of the Company or such surviving entity or such surviving
                  entity's parent outstanding immediately after such merger or
                  consolidation; or


                                      -17-




                           (d) upon the approval by the stockholders of the
                  Company of a plan of complete liquidation of the Company or an
                  agreement for the sale or disposition by the Company of all or
                  substantially all of the Company's assets other than the sale
                  or disposition of all or substantially all of the assets of
                  the Company to a person or persons who beneficially own,
                  directly or indirectly, at least 50% or more of the combined
                  voting power of the outstanding voting securities of the
                  Company at the time of the sale.

                  8.3 INITIAL PUBLIC OFFERING NOT A CHANGE IN CONTROL. For
         purposes of the Plan, an initial public offering of the Common Stock of
         the Company shall not be deemed to be a Change in Control.


                                   ARTICLE IX

                        TERMINATION OR AMENDMENT OF PLAN

                  Notwithstanding any other provision of this Plan, the Board or
         the Committee may at any time, and from time to time, amend, in whole
         or in part, any or all of the provisions of this Plan (including any
         amendment deemed necessary to ensure that the Company may comply with
         any regulatory requirement referred to in Article XII), or suspend or
         terminate it entirely, retroactively or otherwise; provided, however,
         that, unless otherwise required by law or specifically provided herein,
         the rights of a Participant with respect to Awards granted prior to
         such amendment, suspension or termination, may not be impaired without
         the consent of such Participant. In no event may this Plan be amended
         without the approval of the stockholders of the Company in accordance
         with the applicable laws of the State of Delaware to increase the
         aggregate number of shares of Common Stock that may be issued under
         this Plan, decrease the minimum exercise price of any Stock Option, or
         to make any other amendment that would require stockholder approval
         under the rules of any exchange or system on which the Company's
         securities are listed or traded.

                  The Committee may amend the terms of any Stock Option
         theretofore granted, prospectively or retroactively, but, subject to
         Article IV above or as otherwise specifically provided herein, no such
         amendment or other action by the Committee shall impair the rights of
         any holder without the holder's consent.


                                    ARTICLE X

                    COMPANY CALL RIGHTS AND OTHER LIMITATIONS

                  10.1 COMPANY CALL RIGHTS. (a) In the event of Termination of
         Employment for Cause, the Company may repurchase from the Participant
         any shares of Common Stock previously acquired by the Participant
         through the exercise of a Stock Option granted under this Plan at a
         repurchase price equal to the lesser of (i) the original


                                      -18-




         purchase price or exercise price (as applicable), if any, or (ii) Fair
         Market Value as of the date of termination.

                  (b) In the event of a Termination of Employment for any reason
         other than for Cause (including termination due to Retirement, death,
         Disability, involuntary termination without Cause or resignation), the
         Company may at any time within 270 days after a Participant incurs a
         Termination of Employment or acquires shares of Common Stock upon the
         exercise of a Stock Option following his or her Termination of
         Employment for any reason other than for Cause: (i) repurchase from the
         Participant each outstanding vested Stock Option based on the greater
         of (A) the difference between the exercise price of a share of Common
         Stock relating to such Stock Option and the Fair Market Value of a
         share of Common Stock on the date of termination and (B) $.01 and (ii)
         repurchase from the Participant any shares of Common Stock previously
         acquired by the Participant through the exercise of a Stock Option
         under this Plan at a repurchase price equal to Fair Market Value as of
         the date of termination, but in no event less than the exercise price
         of a share of Common Stock relating to such Stock Option.

                  10.2 LIMITATIONS ON TRANSFER OF SHARES. A Participant only
         may, directly or indirectly, Transfer shares of Common Stock acquired
         by the Participant (or his or her estate or legal representative)
         through the exercise of an Option under this Plan in the same
         proportion to the aggregate amount of shares of Common Stock sold by
         CEP and MSDWCP to entities which are not Affiliates for cash or
         marketable securities.

                  10.3 EFFECT OF IPO. Notwithstanding the foregoing, the Company
         shall cease to have rights pursuant to Section 10.1 following an
         initial public offering of the Common Stock of the Company.


                                   ARTICLE XI

                                  UNFUNDED PLAN

                  11.1 UNFUNDED STATUS OF PLAN. This Plan is intended to
         constitute an "unfunded" plan for incentive and deferred compensation.
         With respect to any payments as to which a Participant has a fixed and
         vested interest but which are not yet made to a Participant by the
         Company, nothing contained herein shall give any such Participant any
         rights that are greater than those of a general unsecured creditor of
         the Company.


                                      -19-




                                   ARTICLE XII

                               GENERAL PROVISIONS

                  12.1 LEGEND. The Committee may require each person receiving
         shares pursuant to an Award under this Plan to represent to and agree
         with the Company in writing that the Participant is acquiring the
         shares without a view to distribution thereof. In addition to any
         legend required by this Plan, the certificates for such shares may
         include any legend which the Committee deems appropriate to reflect any
         restrictions on Transfer.

                  All certificates for shares of Common Stock delivered under
         this Plan shall be subject to such stock transfer orders and other
         restrictions as the Committee may deem advisable under the rules,
         regulations and other requirements of the Securities and Exchange
         Commission, any stock exchange upon which the Common Stock is then
         listed or any national securities association system upon whose system
         the Common Stock is then quoted, any applicable Federal or state
         securities law, and any applicable corporate law, and the Committee may
         cause a legend or legends to be put on any such certificates to make
         appropriate reference to such restrictions.

                  12.2 OTHER PLANS. Nothing contained in this Plan shall prevent
         the Board from adopting other or additional compensation arrangements,
         subject to stockholder approval if such approval is required; and such
         arrangements may be either generally applicable or applicable only in
         specific cases.

                  12.3 NO RIGHT TO EMPLOYMENT. Neither this Plan nor the grant
         of any Award hereunder shall give any Participant any right with
         respect to continuance of employment by the Company or any Affiliate,
         nor shall they be a limitation in any way on the right of the Company
         or any Affiliate by which an employee is employed to terminate his
         employment at any time.

                  12.4 WITHHOLDING OF TAXES. The Company shall have the right to
         deduct from any payment to be made to a Participant, or to otherwise
         require, prior to the issuance or delivery of any shares of Common
         Stock or the payment of any cash hereunder, payment by the Participant
         of, any Federal, state or local taxes required by law to be withheld.

                  Any statutorily required withholding obligation with regard to
         any Eligible Employee may be satisfied, subject to the consent of the
         Committee, by reducing the number of shares of Common Stock otherwise
         deliverable or by delivering shares of Common Stock already owned. Any
         fraction of a share of Common Stock required to satisfy such tax
         obligations shall be disregarded and the amount due shall be paid
         instead in cash by the Participant.


                                      -20-




                  12.5  LISTING AND OTHER CONDITIONS.

                           (a) Unless otherwise determined by the Committee, as
                  long as the Common Stock is listed on a national securities
                  exchange or system sponsored by a national securities
                  association, the issue of any shares of Common Stock pursuant
                  to a Stock Option shall be conditioned upon such shares being
                  listed on such exchange or system. The Company shall have no
                  obligation to issue such shares unless and until such shares
                  are so listed, and the right to exercise any Stock Option with
                  respect to such shares shall be suspended until such listing
                  has been effected.

                           (b) If at any time counsel to the Company shall be of
                  the opinion that any sale or delivery of shares of Common
                  Stock pursuant to a Stock Option is or may in the
                  circumstances be unlawful or result in the imposition of
                  excise taxes on the Company under the statutes, rules or
                  regulations of any applicable jurisdiction, the Company shall
                  have no obligation to make such sale or delivery, or to make
                  any application or to effect or to maintain any qualification
                  or registration under the Securities Act or otherwise with
                  respect to shares of Common Stock or Stock Option, and the
                  right to exercise any Stock Option shall be suspended until,
                  in the opinion of said counsel, such sale or delivery shall be
                  lawful or will not result in the imposition of excise taxes on
                  the Company.

                           (c) Upon termination of any period of suspension
                  under this Section 12.5, a Stock Option affected by such
                  suspension which shall not then have expired or terminated
                  shall be reinstated as to all shares available before such
                  suspension and as to shares which would otherwise have become
                  available during the period of such suspension, but no such
                  suspension shall extend the term of any Stock Option.

                           (d) A Participant shall be required to supply the
                  Company with any certificates, representations and information
                  that the Company requests and otherwise cooperate with the
                  Company in obtaining any listing, registration, qualification,
                  exemption, consent or approval the Company deems necessary or
                  appropriate.

                  12.6 STOCKHOLDERS AGREEMENT. As a condition to the receipt of
         shares of Common Stock pursuant to a Stock Option under this Plan, to
         the extent required by the Committee, the Participant shall execute and
         deliver a stockholder's agreement or such other documentation which
         shall set forth certain restrictions on transferability of the shares
         of Common Stock acquired upon exercise or purchase (including Section
         10.2), a right of first refusal of the Company with respect to shares,
         the right of the Company to purchase Common Stock in accordance with
         this Plan and such other


                                      -21-




         terms as the Board or Committee shall from time to time establish. Such
         stockholder's agreement shall apply to all Common Stock acquired under
         the Plan.

                  12.7 GOVERNING LAW. This Plan shall be governed and construed
         in accordance with the laws of the State of Delaware (regardless of the
         law that might otherwise govern under applicable Delaware principles of
         conflict of laws).

                  12.8 CONSTRUCTION. Wherever any words are used in this Plan in
         the masculine gender they shall be construed as though they were also
         used in the feminine gender in all cases where they would so apply, and
         wherever any words are used herein in the singular form they shall be
         construed as though they were also used in the plural form in all cases
         where they would so apply.

                  12.9 OTHER BENEFITS. No Award payment under this Plan shall be
         deemed compensation for purposes of computing benefits under any
         retirement plan of the Company or its subsidiaries nor affect any
         benefits under any other benefit plan now or subsequently in effect
         under which the availability or amount of benefits is related to the
         level of compensation.

                  12.10 COSTS. The Company shall bear all expenses included in
         administering this Plan, including expenses of issuing Common Stock
         pursuant to any Awards hereunder.

                  12.11 NO RIGHT TO SAME BENEFITS. The provisions of Stock
         Options need not be the same with respect to each Participant, and such
         Stock Options to individual Participants need not be the same in
         subsequent years.

                  12.12 DEATH/DISABILITY. The Committee may in its discretion
         require the transferee of a Participant to supply it with written
         notice of the Participant's death or Disability and to supply it with a
         copy of the will (in the case of the Participant's death) or such other
         evidence as the Committee deems necessary to establish the validity of
         the transfer of an Award. The Committee may also require that the
         agreement of the transferee to be bound by all of the terms and
         conditions of this Plan.

                  12.13 SUCCESSORS AND ASSIGNS. The Plan shall be binding on all
         successors and permitted assigns of a Participant, including, without
         limitation, the estate of such Participant and the executor,
         administrator or trustee of such estate.

                  12.14 SEVERABILITY OF PROVISIONS. If any provision of this
         Plan shall be held invalid or unenforceable, such invalidity or
         unenforceability shall not affect any other provisions hereof, and this
         Plan shall be construed and enforced as if such provisions had not been
         included.


                                      -22-



                  12.15 HEADINGS AND CAPTIONS. The headings and captions herein
         are provided for reference and convenience only, shall not be
         considered part of this Plan, and shall not be employed in the
         construction of this Plan.


                                  ARTICLE XIII

                             EFFECTIVE DATE OF PLAN

                  13.1 The Plan shall become effective upon adoption by the
         Board, subject to the approval of this Plan by the stockholders of the
         Company in accordance with the requirements of the laws of the State of
         Delaware, or such later date as provided in the adopting resolution.


                                   ARTICLE XIV

                                  TERM OF PLAN

                  14.1 No Stock Option shall be granted pursuant to this Plan on
         or after the tenth anniversary of the earlier of the date this Plan is
         adopted or the date of stockholder approval, but Stock Options granted
         prior to such tenth anniversary may, and the Committee's authority to
         administer the terms of such Options shall, extend beyond that date.




                                      -23-


                                                                 EXHIBIT 23.1(A)

                        CONSENT OF INDEPENDENT AUDITORS


    We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated May 7, 2001, except for the third paragraph of
Note 11, as to which the date is August 23, 2001, in Amendment No. 2 to the
Registration Statement (Form S-1) and related Prospectus of Cross Country, Inc.
dated September 7, 2001.


                                          /S/ ERNST & YOUNG LLP


West Palm Beach, FL
September 6, 2001


                                                                 EXHIBIT 23.1(B)

                        CONSENT OF INDEPENDENT AUDITORS


    We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated March 10, 2000 related to the consolidated financial
statements of TravCorps Corporation and Subsidiary, in Amendment No. 2 to the
Registration Statement (Form S-1) and related Prospectus of Cross Country, Inc.
dated September 7, 2001.


                                          /S/ ERNST & YOUNG LLP


Boston, Massachusetts
September 6, 2001


                                                                 EXHIBIT 23.1(C)

                        CONSENT OF INDEPENDENT AUDITORS


    We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated April 26, 2001 related to the consolidated financial
statements of ClinForce, Inc. in Amendment No. 2 to the Registration Statement
(Form S-1) and related Prospectus of Cross Country, Inc. dated September 7,
2001.


                                          /S/ ERNST & YOUNG LLP


Raleigh, North Carolina
September 6, 2001



                                                                 EXHIBIT 23.1(D)



                        CONSENT OF INDEPENDENT AUDITORS



    We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated August 10, 2001 related to the financial statements
of Heritage Professional Education, LLC included in the Amendment No. 2 to the
Registration Statement (Form S-1) and related Prospectus of Cross Country, Inc.
dated September 7, 2001.



                                          /S/ ERNST & YOUNG LLP



Nashville, Tennessee
September 6, 2001


                                                                    EXHIBIT 23.2

                       CONSENT OF INDEPENDENT ACCOUNTANTS

    We hereby consent to the use in this Registration Statement on Form S-1 of
our report dated November 5, 1999, except for Note 8 as to which the date is
December 16, 1999, relating to the financial statements of Cross Country
Staffing, a Partnership, as of July 29, 1999 and December 31, 1998 and for the
period from January 1, 1999 through July 29, 1999 and for the year ended
December 31, 1998, which appear in such Registration Statement. We also consent
to the reference to us under the heading "Experts" in such Registration
Statement.


/s/ PricewaterhouseCoopers LLP
Fort Lauderdale, Florida
September 6, 2001


                                                                    EXHIBIT 23.3

                         INDEPENDENT AUDITORS' CONSENT


    We consent to the use in this Amendment No. 2 to the Registration Statement
No. 333-64914 of Cross Country Inc. on Form S-1 of our report dated March 12,
1999 related to the consolidated financial statements of TravCorps Corporation
and Subsidiary for the year ended December 26, 1998, appearing in the
Prospectus, which is part of this Registration Statement. We also consent to the
reference to us under the heading "Experts" in such Prospectus.



/s/ Deloitte & Touche LLP
Boston, Massachusetts
September 6, 2001