<PAGE>

                                                                   EXHIBIT 10.38

                          AMN HEALTHCARE SERVICES, INC.
                             2001 STOCK OPTION PLAN
                             STOCK OPTION AGREEMENT

            THIS STOCK OPTION AGREEMENT (the "Agreement"), made this 17th day of
January, 2002, by and between AMN Healthcare Services, Inc. (the "Company"), a
Delaware corporation, and Steven C. Francis (the "Optionee").

                              W I T N E S S E T H:

            WHEREAS, the Company sponsors the AMN Healthcare Services, Inc. 2001
Stock Option Plan (the "Plan"), and desires to afford the Optionee the
opportunity to acquire and maintain the Optionee's ownership of the Company's
common stock, par value $.01 per share ("Stock") thereunder, thereby
strengthening the Optionee's commitment to the welfare of the Company and
Affiliates and promoting an identity of interest between stockholders and the
Optionee.

            NOW THEREFORE, in consideration of the covenants and agreements
herein contained, the parties hereto hereby agree as follows:

            1. DEFINITIONS.

                  The following definitions shall be applicable throughout the
Agreement. Where defined terms are not defined herein, their meaning shall be
that set forth in the Plan.

                  (a) "Affiliate" means (i) any entity that directly or
indirectly is controlled by, or is under common control with the Company and
(ii) any entity in which the Company has a significant equity interest, in
either case as determined by the Committee.

                  (b) "Board" means the Board of Directors of the Company.

                  (c) "Cause" means the Company or an Affiliate having "cause"
to terminate an Optionee's employment or service, as defined in any existing
employment, consulting or any other agreement between the Optionee and the
Company or a Subsidiary or Affiliate, or, in the absence of such an employment,
consulting or other agreement, upon (i) the determination by the Committee that
the Optionee has ceased to perform his duties to the Company or an Affiliate
(other than as a result of his incapacity due to physical or mental illness or
injury), which failure amounts to an intentional and extended neglect of his
duties to such party, (ii) the Committee's determination that the Optionee has
engaged or is about to engage in conduct injurious to the Company or an
Affiliate, (iii) the Optionee having been convicted of, or pleaded guilty or no
contest to, a felony or a crime involving moral turpitude or (iv) the failure of
the Optionee to follow the lawful instructions of the Board or his direct
superiors; provided, however, that in the instances of clauses (i), (ii) and
(iv), the Company or Affiliate, as applicable, must give


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                                                                               2

the optionee twenty (20) days' prior written notice of the defaults constituting
"cause" hereunder.

                  (d) "Change in Control" shall, unless in the case of a
particular Option the applicable Stock Option Agreement states otherwise or
contains a different definition of "Change in Control," be deemed to occur upon:

                        (i) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") (other than any of
the following (each an "Excluded Person"): HWH Capital Partners, L.P., HWP
Capital Partners II, L.P., HWH Nightingale Partners, L.P., HWP Nightingale
Partners II, L.P., Haas Wheat & Partners, L.P., any Affiliate of any of the
foregoing, or any such group of which any of the foregoing is a member) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of a majority of the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of
directors, or the acquisition by a Person other than an Excluded Person of at
least thirty percent (30%) of the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of
directors, if at such time the Excluded Persons in the aggregate own a lesser
percentage of such securities than the Person making such acquisition of such
securities;

                        (ii) the dissolution or liquidation of the Company;

                        (iii) the sale of all or substantially all of the
business or assets of the Company; or

                        (iv) the consummation of a merger, consolidation or
similar form of corporate transaction involving the Company that requires the
approval of the Company's stockholders, whether for such transaction or the
issuance of securities in the transaction (a "Business Combination"), if
immediately following such Business Combination: (x) a Person (other than an
Excluded Person), is or becomes the beneficial owner, directly or indirectly, of
a majority of the combined voting power of the outstanding voting securities
eligible to elect directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation), or (y) the Company's shareholders cease
to beneficially own, directly or indirectly, in substantially the same
proportion as they owned the then outstanding voting securities immediately
prior to the Business Combination, a majority of the combined voting power of
the outstanding voting securities eligible to elect directors of the Parent
Corporation (or, if there is no Parent Corporation, the Surviving Corporation).
"Surviving Corporation" shall mean the corporation resulting from a Business
Combination, and "Parent Corporation" shall mean the ultimate parent corporation
that directly or indirectly has beneficial ownership of a majority of the
combined voting power of the then outstanding voting securities of the Surviving
Corporation entitled to vote generally in the election of directors.

                  (e) "Code" means the Internal Revenue Code of 1986, as
amended. Reference in the Plan to any section of the Code shall be deemed to
include


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                                                                               3

any amendments or successor provisions to such section and any regulations under
such section.

                  (f) "Committee" means a committee of at least two people as
the Board may appoint to administer the Plan or, if no such committee has been
appointed by the Board, the Board. Unless the Board is acting as the Committee
or the Board specifically determines otherwise, each member of the Committee
shall, at the time he takes any action with respect to a Option under the Plan,
be an Eligible Director, however the mere fact that a Committee member shall
fail to qualify as an Eligible Director shall not invalidate any Option granted
by the Committee which Option is otherwise validly made under the Plan.

                  (g) "Common Stock" means the common stock, par value $0.01 per
share, of the Company.

                  (h) "Company" means AMN Healthcare Services, Inc.

                  (i) "Disability" means a condition entitling a person to
receive benefits under the long-term disability plan of the Company, a
Subsidiary or Affiliate, as may be applicable to the Optionee in question, or,
in the absence of such a plan, the complete and permanent inability by reason of
illness or accident to perform the duties of the occupation at which the
Optionee was employed or served when such disability commenced or, as determined
by the Committee based upon medical evidence acceptable to it.

                  (j) "Effective Date" means January 17, 2002.

                  (k) "Eligible Director" means a person who is (i) a
"non-employee director" within the meaning of Rule 16b-3 under the Exchange Act,
or a person meeting any similar requirement under any successor rule or
regulation and (ii) an "outside director" within the meaning of Section 162(m)
of the Code, and the Treasury Regulations promulgated thereunder; provided,
however, that clause (ii) shall apply only with respect to grants of Options
with respect to which the Company's tax deduction could be limited by Section
162(m) of the Code if such clause did not apply.

                  (l) "Eligible Person" means any (i) individual regularly
employed by the Company, a Subsidiary or Affiliate who satisfies all of the
requirements of Section 6; provided, however, that no such employee covered by a
collective bargaining agreement shall be an Eligible Person unless and to the
extent that such eligibility is set forth in such collective bargaining
agreement or in an agreement or instrument relating thereto; (ii) director of
the Company, or Affiliate or (iii) consultant or advisor to the Company, a
Subsidiary or Affiliate who is entitled to participate in an "employee benefit
plan" within the meaning of 17 CFR Section 230.405 (which, as of the Effective
Date, includes those who (A) are natural persons and (B) provide bona fide
services to the Company other than in connection with the offer or sale of
securities in a capital-raising transaction, and do not directly or indirectly
promote or maintain a market for the Company's securities).


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                                                                               4

                  (m) "Exchange Act" means the Securities Exchange Act of 1934.

                  (n) "Fair Market Value," on a given date means (i) if the
Stock is listed on a national securities exchange, the mean between the highest
and lowest sale prices reported as having occurred on the primary exchange with
which the Stock is listed and traded on the date prior to such date, or, if
there is no such sale on that date, then on the last preceding date on which
such a sale was reported; (ii) if the Stock is not listed on any national
securities exchange but is quoted in the National Market System of the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") on a
last sale basis, the average between the high bid price and low ask price
reported on the date prior to such date, or, if there is no such sale on that
date, then on the last preceding date on which a sale was reported; or (iii) if
the Stock is not listed on a national securities exchange nor quoted in the
NASDAQ on a last sale basis, the amount determined by the Board to be the fair
market value based upon a good faith attempt to value the Stock accurately and
computed in accordance with applicable regulations of the Internal Revenue
Service.

                  (o) "Grant Date" means the date on which the granting of an
Option is authorized, or such other date as may be specified in such
authorization or, if there is no such date, the date of this Stock Option
Agreement.

                  (p) "Non-Qualified Stock Option" means an Option granted by
the Committee to an Optionee under the Plan which is not an incentive stock
option as described in Section 422 of the Code.

                  (q) "Normal Termination" means termination of employment or
service with the Company and Affiliates:

                        (i) by the Optionee;

                        (ii) upon retirement;

                        (iii) on account of death or Disability; or

                        (iv) by the Company, a Subsidiary or Affiliate without
Cause.

                  (r) "Option" means an award granted under Section 2.

                  (s) "Option Period" means the period described in Section 2.

                  (t) "Option Price" means the exercise price for an Option as
described in Section 2.

                  (u) "Optionee" means an Eligible Person who has been selected
by the Committee to participate in the Plan and to receive an Option pursuant to
Section 2.


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                                                                               5

                  (v) "Securities Act" means the Securities Act of 1933, as
amended.

                  (w) "Stock" means the Common Stock or such other authorized
shares of stock of the Company, as the Committee may from time to time authorize
for use under the Plan.

                  (x) "Subsidiary" means any subsidiary of the Company as
defined in Section 424(f) of the Code.

            2. GRANT OF OPTION. Subject to the terms and conditions set forth
herein, the Company hereby grants to the Optionee, during the period commencing
on the date of this Agreement and ending the day prior to the tenth anniversary
of the date hereof (the "Termination Date"), the right and option (the right to
purchase any one share of Stock hereunder being an "Option") to purchase from
the Company, at $22.98 per share (the "Option Price"), an aggregate of 200,000
shares of Stock (the "Option Shares"). The original ten-year term of such Option
shall be referred to herein as the "Option Period". The Options are not intended
to be "incentive stock options" within the meaning of Section 422 of the Code.

            3. LIMITATIONS ON EXERCISE OF OPTION. As set forth in the Plan, and
subject to the terms and conditions set forth herein, the Optionee may exercise
25% of the Option on and after the first annual anniversary of the Grant Date,
an additional 25% of the Option on and after the second anniversary of the Grant
Date, an additional 25% of the Option on and after the third anniversary of the
Grant Date, and a final 25% of the Option on and after the fourth anniversary of
the Grant Date.

            4. TERMINATION OF EMPLOYMENT.

                  (a) If, prior to the end of the Option Period, the Optionee
shall undergo a Normal Termination other than due to death or Disability, (i)
the portion of the Option which is vested at the time of such Normal Termination
shall be determined in accordance with Section 3, (ii) the portion of the Option
which is not vested at the date of such Normal Termination shall expire on such
date; and (iii) the portion of the Option which is vested at the date of such
Normal Termination shall expire on the earlier of the Termination Date or the
date that is three months after the date of such Normal Termination.

                  (b) If, prior to the end of the Option Period, the Optionee
dies or incurs a Disability while still in the employ or service of the Company,
a Subsidiary or Affiliate, or if the Optionee dies within three months following
a Normal Termination, (i) the portion of the Option which is not vested at the
date of such termination shall expire on such date; and (ii) the portion of the
Option which is vested at the date of such termination shall expire on the
earlier of the Termination Date or the date that is twelve months after the date
of such termination. In such event, the vested portion of the Option may be
exercised as described above by the Optionee's personal representative or


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                                                                               6

executor, or by the person or persons to whom the Optionee's rights under the
Option pass by will or the applicable laws of descent and distribution.

                  (c) If, prior to the Termination Date, the Optionee is
terminated from the employment or service with the Company for Cause or for
reasons other than a Normal Termination, all portions of the Option then held by
such Optionee (whether or not vested) shall expire immediately upon such
cessation of employment or service.

            5. METHOD OF EXERCISING OPTION.

                  (a) The Optionee may exercise any or all of the Options after
the time they become vested pursuant to Section 3 hereof by delivering to the
Committee a written notice of exercise (in a form designated by the Committee)
signed by the Optionee stating the number of Options that the Optionee has
elected to exercise at that time and tendering the full payment of the Option
Price of the shares of Stock to be thereby purchased from the Company. Payment
of the Option Price of the shares may be made in cash and/or shares of Stock
valued at the Fair Market Value at the time the Option is exercised (including
any means of attestation of ownership of a sufficient number of shares of Stock
in lieu of actual delivery of such shares to the Company; provided, however,
that such shares are not subject to any pledge or other security interest and
have either been held by the Optionee for six months, previously acquired by the
Optionee on the open market or meet such other requirements as the Committee may
determine necessary in order to avoid an accounting earnings charge in respect
of the Option), or, in the discretion of the Committee, either (i) in other
property having a fair market value on the date of exercise equal to the Option
Price, (ii) by delivering to the Committee a copy of irrevocable instructions to
a stockbroker to deliver promptly to the Company an amount of loan proceeds, or
proceeds of the sale of the Stock subject to the Option, sufficient to pay the
Option Price, or (iii) by such other method as the Committee may allow.

                  (b) The Optionee may be required to pay to the Company or any
Affiliate and the Company or any Affiliate shall have the right and is hereby
authorized to withhold from any shares of Stock or other property deliverable
under the Option or from any compensation or other amounts owing to the Optionee
the amount (in cash, Stock or other property) of any required tax withholding
and payroll taxes in respect of an Option, its exercise, or any payment or
transfer under an Option or under the Plan and to take such other action as may
be necessary in the opinion of the Company to satisfy all obligations for the
payment of such taxes.

                  (c) Without limiting the generality of clause (b) above, in
the Committee's sole discretion the Optionee may satisfy, in whole or in part,
the foregoing withholding liability (but no more than the minimum required
withholding liability) by delivery of shares of Stock owned by the Optionee
(which are not subject to any pledge or other security interest and which have
been owned by the Participant for at least 6 months or purchased on the open
market) with a Fair Market Value equal to such withholding liability or by
having the Company withhold from the number of shares of


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                                                                               7

Stock otherwise issuable pursuant to the exercise of the Option a number of
shares with a Fair Market Value equal to such withholding liability.

            6. ISSUANCE OF SHARES. As promptly as practical after receipt of
written notification of exercise and full payment of the Option Price together
with any required income tax withholding, the Company shall issue or transfer to
the Optionee, the number of shares with respect to which the Option has been so
exercised (less shares withheld in satisfaction of tax withholding obligations,
if any), and shall deliver to the Optionee a certificate or certificates
therefor, registered in the Optionee's name. The shares delivered to the
Optionee pursuant to this Section 6 shall be free and clear of all liens, fully
paid and non-assessable.

            7. COMPANY; OPTIONEE.

                  (a) The term "Company" as used in this Agreement with
reference to employment shall include the Company, its Subsidiaries and its
Affiliates, as appropriate.

                  (b) Whenever the word "Optionee" is used in any provision of
this Agreement under circumstances where the provision should logically be
construed to apply to the beneficiaries, the executors, the administrators, or
the person or persons to whom the Options may be transferred by will or by the
laws of descent and distribution, the word "Optionee" shall be deemed to include
such person or persons.

            8. PURCHASE FOR INVESTMENT; LEGENDS. In the event that the offering
of Option Shares with respect to which the Options are being exercised is not
registered under the Securities Act, but an exemption is available that requires
an investment representation or other representation, the Optionee, if electing
to purchase Option Shares, shall represent that such Option Shares are being
acquired for investment and not with a view to distribution thereof, and to make
such other reasonable and customary representations regarding matters relevant
to compliance with applicable securities laws as are deemed necessary by counsel
to the Company. Stock certificates evidencing such unregistered Option Shares
that are acquired upon exercise of the Options shall bear restrictive legends in
substantially the following form and such other restrictive legends as are
required or advisable under the provisions of any applicable laws or are
provided for in the Shareholders Agreement or any other agreement to which
Optionee is a party:

            THE SHARES REPRESENTED BY THIS STOCK CERTIFICATE HAVE NOT BEEN
            REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
            "SECURITIES ACT"), NOR UNDER ANY STATE SECURITIES LAWS AND SHALL NOT
            BE TRANSFERRED AT ANY TIME IN THE ABSENCE OF (I) AN EFFECTIVE
            REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE
            SECURITIES LAWS WITH RESPECT TO SUCH SHARES AT SUCH TIME, OR (II) AN
            OPINION OF


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                                                                               8

            COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL, TO THE EFFECT
            THAT SUCH TRANSFER AT SUCH TIME WILL NOT VIOLATE THE SECURITIES ACT
            OR ANY APPLICABLE STATE SECURITIES LAWS.

            9. NON-TRANSFERABILITY. The Options are not transferable by the
Optionee other than to a designated beneficiary upon death, by will or the laws
of descent and distribution, or to a trust solely for the benefit of the
Optionee or his immediate family, and are exercisable during the Optionee's
lifetime only by him, or in the case of the Options being held by such a trust,
by the trustee.

            10. FORFEITURE FOR NON-COMPETE VIOLATION.

            (a) Non-Compete. The grantee agrees that during the term of
grantee's employment and for a period of two years thereafter (the "Coverage
Period") the grantee will not engage in, consult with, participate in, hold a
position as shareholder, director, officer, consultant, employee, partner or
investor, or otherwise assist any business entity (i) in any State of the United
States of America or (ii) in any other country in which the Company has business
activities, in either case, that is engaged in any activities which are
competitive with the business of providing healthcare or other personnel on a
temporary basis to hospitals, healthcare facilities or other entities and any
and all business activities reasonably related thereto in which the Company or
any of its divisions, affiliates or subsidiaries are then engaged.

            (b) Non-Solicit. The grantee agrees that during the Coverage Period,
he shall not solicit, attempt to solicit or endeavor to entice away from the
Company any person who, at any time during the Term was a traveling nurse or
other healthcare professional, employee, customer, client or supplier of the
Company.

            (c) Confidential and Proprietary Information. The grantee agrees
that he will not, at any time make use of or divulge to any other person, firm
or corporation any confidential or proprietary information concerning the
business or policies of the Company or any of its divisions, affiliates or
subsidiaries. For purposes of this Agreement, any confidential information shall
constitute any information designated as confidential or proprietary by the
Company or otherwise known by the grantee to be confidential or proprietary
information including, without limitation, customer information. Grantee
acknowledges and agrees that for purposes of this Agreement, "customer
information" includes without limitation, customer lists, all lists of
professional personnel, names, addresses, phone numbers, contact persons,
preferences, pricing arrangements, requirements and practices. Grantee's
obligation under this Section 10(c) shall not apply to any information which (i)
is known publicly; (ii) is in the public domain or hereafter enters the public
domain without the fault of grantee; or (iii) is hereafter disclosed to grantee
by a third party not under an obligation of confidence to the Company. Grantee
agrees not to remove from the premises of the Company, except as an employee of
the Company in pursuit of the business of the Company or except as specifically
permitted in writing by the Company, any document or other object


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                                                                               9

containing or reflecting any such confidential or proprietary information.
Grantee recognizes that all such information, whether developed by the grantee
or by someone else, will be the sole exclusive property of the Company. Upon
termination of employment, grantee shall forthwith deliver to the Company all
such confidential or proprietary information, including without limitation all
lists of customers, pricing methods, financial structures, correspondence,
accounts, records and any other documents, computer disks, computer programs,
software, laptops, modems or property made or held by him or under his control
in relation to the business or affairs of the Company or any of its divisions,
subsidiaries or affiliates, and no copy of any such confidential or proprietary
information shall be retained by him.

            (d) Forfeiture for Violations. If the grantee shall at any time
violate the provisions of Section 10(a), (b), or (c), the grantee shall
immediately forfeit all options (whether vested or unvested) and any exercise of
an option which occurs after (or within 6 months before) any such violation
shall be void ab initio.

            11. RIGHTS AS STOCKHOLDER. The Optionee or a transferee of the
Options shall have no rights as a stockholder with respect to any share of Stock
covered by the Options until the Optionee shall have become the holder of record
of such share and no adjustment shall be made for dividends or distributions or
other rights in respect of such share of Stock for which the record date is
prior to the date upon which she shall become the holder of record thereof.

            12. CHANGES IN CAPITAL STRUCTURE. Options granted under the Plan and
any Stock Option Agreements, the maximum number of shares of Stock subject to
all Options stated in Section 5(a) of the Plan and the maximum number of shares
of Stock with respect to which any one person may be granted Options during any
period stated in Section 5(d) of the Plan shall be subject to adjustment or
substitution, as determined by the Committee in its sole discretion, as to the
number, price or kind of a share of Stock or other consideration subject to such
Options or as otherwise determined by the Committee to be equitable (i) in the
event of changes in the outstanding Stock or in the capital structure of the
Company by reason of stock or extraordinary cash dividends, stock splits,
reverse stock splits, recapitalization, reorganizations, mergers,
consolidations, combinations, exchanges, or other relevant changes in
capitalization occurring after the Date of Grant of any such Option or (ii) in
the event of any change in applicable laws or any change in circumstances which
results in or would result in any substantial dilution or enlargement of the
rights granted to, or available for, Participants, or which otherwise warrants
equitable adjustment because it interferes with the intended operation of the
Plan. Any adjustments under Section 11 of the Plan shall be made in a manner
which does not adversely affect the exemption provided pursuant to Rule 16b-3
under the Exchange Act. Further, with respect to Options intended to qualify as
"performance-based compensation" under Section 162(m) of the Code, such
adjustments or substitutions shall be made only to the extent that the Committee
determines that such adjustments or substitutions may be made without causing
Options granted under the Plan to fail to qualify as "performance-based
compensation" for purposes of Section 162(m) of the Code. The Company shall give
each Optionee notice of an


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                                                                              10

adjustment hereunder and, upon notice, such adjustment shall be conclusive and
binding for all purposes.

            Notwithstanding the above, in the event of any of the following:

                  (a) The Company is merged or consolidated with another
corporation or entity and, in connection therewith, consideration is received by
shareholders of the Company in a form other than stock or other equity interests
of the surviving entity;

                  (b) All or substantially all of the assets of the Company are
acquired by another person;

                  (c) The reorganization or liquidation of the Company; or

                  (d) The Company shall enter into a written agreement to
undergo an event described in clauses (a), (b) or (c) above, then the Committee
may, in its discretion and upon at least 10 days advance notice to the affected
persons, cancel any outstanding Options and pay to the holders thereof, in cash
or stock, or any combination thereof, the value of such Options based upon the
price per share of Stock received or to be received by other shareholders of the
Company in the event.

            13. EFFECT OF CHANGE IN CONTROL.

                  (a) In the event of a Change in Control, notwithstanding any
vesting schedule, the Option shall become immediately exercisable with respect
to 100 percent of the shares subject to such Option and, to the extent
practicable, such acceleration of exercisability shall occur in a manner and at
a time which allows the Optionee the ability to exercise his Option and
participate in the Change in Control transaction with respect to the Stock
subject to such Option.

                  (b) In addition, in the event of a Change in Control, the
Committee may in its discretion and upon at least 10 days' advance notice to the
Optionee, cancel any outstanding portions of the Option and pay to the Optionee,
in cash or stock, or any combination thereof, the value of such portions of the
Option based upon the price per share of Stock received or to be received by
other shareholders of the Company in the event.

                  (c) The obligations of the Company under this Agreement shall
be binding upon any successor corporation or organization resulting from the
merger, consolidation or other reorganization of the Company, or upon any
successor corporation or organization succeeding to substantially all of the
assets and business of the Company. The Company agrees that it will make
appropriate provisions for the preservation of the Optionee's rights under this
Agreement in any agreement or plan which it may enter into or adopt to effect
any such merger, consolidation, reorganization or transfer of assets.

            14. COMPLIANCE WITH LAW. Notwithstanding any of the provisions
hereof, the Optionee hereby agrees that the Optionee will not exercise the
Options, and


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                                                                              11

that the Company will not be obligated to issue or transfer any shares to the
Optionee hereunder, if the exercise hereof or the issuance or transfer of such
shares shall constitute a violation by the Optionee or the Company of any
provisions of any law or regulation of any governmental authority. Any
determination in this connection by the Committee shall be final, binding and
conclusive. The Company shall in no event be obliged to register any securities
for sale under the Securities Act or to take any other affirmative action in
order to cause the exercise of the Options or the issuance or transfer of shares
pursuant thereto to comply with any law or regulation of any governmental
authority.

            15. NOTICE. Every notice or other communication relating to this
Agreement shall be in writing, and shall be mailed to or delivered to the party
for whom it is intended at such address as may from time to time be designated
by it in a notice mailed or delivered to the other party as herein provided,
provided that, unless and until some other address be so designated, all notices
or communications by the Optionee to the Company shall be mailed or delivered to
the Company at its principal executive office, and all notices or communications
by the Company to the Optionee may be given to the Optionee personally or may be
mailed to her at her address as recorded in the records of the Company.

            16. NO RIGHT TO CONTINUED EMPLOYMENT. This Agreement shall not be
construed as giving the Optionee the right to be retained in the employ or
service of the Company, a Subsidiary or an Affiliate. Further, the Company or an
Affiliate may at any time dismiss the Optionee or discontinue any consulting
relationship, free from any liability or any claim under this Agreement, except
as otherwise expressly provided herein.

            17. BINDING EFFECT. Subject to Section 9 hereof, this Agreement
shall be binding upon the heirs, executors, administrators and successors of the
parties hereto.

            18. AMENDMENT OF AGREEMENT. The Committee may, to the extent
consistent with the terms of this Agreement, waive any conditions or rights
under, amend any terms of, or alter, suspend, discontinue, cancel or terminate,
any portion of the Option heretofore granted, prospectively or retroactively;
provided that any such waiver, amendment, alteration, suspension,
discontinuance, cancellation or termination that would impair the rights of the
Optionee in respect of any Option already granted shall not to that extent be
effective without the consent of the Optionee.

            19. OPTION SUBJECT TO PLAN. By entering into this Agreement, the
Optionee agrees and acknowledges that the Optionee has received and read a copy
of the Plan. The Option is subject to the Plan. The terms and provisions of the
Plan as it may be amended from time to time are hereby incorporated herein by
reference. In the event of a conflict between any term or provision contained
herein and a term or provision of the Plan, the applicable terms and provisions
of the Plan will govern and prevail.

            20. GOVERNING LAW. This Agreement shall be construed and interpreted
in accordance with the internal laws of the State of Delaware without regard to
the principles of conflicts of law thereof, or principles of conflicts of laws
of any other


<PAGE>

                                                                              12

jurisdiction which could cause the application of the laws of any jurisdiction
other than the State of Delaware.

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

                                        AMN HEALTHCARE SERVICES, INC.


                                        By:  /s/ SUSAN R. NOWAKOWSKI
                                             -----------------------------------
                                             Name:  Susan R. Nowakowski
                                             Title: Chief Operating Officer and
                                                    Executive Vice President


                                        OPTIONEE


                                        By:  /s/ STEVEN C. FRANCIS
                                             -----------------------------------
                                             Name: Steven C. Francis