Document:

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                                                                    Exhibit 10.7

                          AMN HEALTHCARE SERVICES, INC.

                             2001 STOCK OPTION PLAN

                         (EFFECTIVE AS OF JULY 24, 2001)

1.       PURPOSE

            The purpose of the Plan is to provide a means through which the
Company and its Affiliates may attract able persons to enter and remain in the
employ of the Company and Affiliates and to provide a means whereby employees,
directors and consultants of the Company and its Affiliates can acquire and
maintain Common Stock ownership, thereby strengthening their commitment to the
welfare of the Company and Affiliates and promoting an identity of interest
between stockholders and these employees.

            The Plan provides for granting Nonqualified Stock Options.

2.       DEFINITIONS

            The following definitions shall be applicable throughout 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 a Participant's employment or service, as defined in any existing
employment, consulting or any other agreement between the Participant 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 Participant 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 Participant
has engaged or is about to engage in conduct materially injurious to the Company
or an Affiliate, (iii) the Participant 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 Participant to follow the lawful instructions of the Board or
his direct superiors; provided, however, that in the instances of classes (i),
(ii) and (iv), the Company or an Affiliate, as applicable, must give 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:
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            (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 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
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time he takes any action with respect to an 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) "Date of Grant" 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 indicated on the applicable
Stock Option Agreement.

            (j) "Disability" means, unless in the case of a particular Option,
the applicable Option Agreement states otherwise, 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 Participant 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 a
Participant was employed or served when such disability commenced or, as
determined by the Committee based upon medical evidence acceptable to it.

            (k) "Effective Date" means July 24, 2001.

            (l) "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.

            (m) "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).

            (n) "Exchange Act" means the Securities Exchange Act of 1934.
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            (o) "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 Committee 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.

            (p) "Nonqualified Stock Option" means an Option granted by the
Committee to a Participant 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 Participant;

               (ii) upon retirement;

               (iii) on account of death or Disability;

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

            (r) "Option" means an award granted under Section 7.

            (s) "Option Period" means the period described in Section 7(c).

            (t) "Option Price" means the exercise price for an Option as
described in Section 7(a).

            (u) "Participant" means an Eligible Person who has been selected by
the Committee to participate in the Plan and to receive an Option pursuant to
Section 6.

            (v) "Plan" means this AMN Healthcare Services, Inc. 2001 Stock
Option Plan.

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

            (y) "Stock Option Agreement" means the agreement between the Company
and a Participant who has been granted an Option pursuant to Section 7 which
defines the rights and obligations of the parties as required in Section 7(d).

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

3.       EFFECTIVE DATE, DURATION AND SHAREHOLDER APPROVAL

            The Plan is effective as of the Effective Date. The effectiveness of
the Plan and the validity and exercisability of any and all Options granted
pursuant to the Plan is contingent upon the close of the sale of no less than
$100 million of the Company's Common Stock in an underwritten public offering of
such Common Stock that is consummated on or before December 31, 2001.

            The expiration date of the Plan, on and after which no Options may
be granted hereunder, shall be the tenth anniversary of the Effective Date;
provided, however, that the administration of the Plan shall continue in effect
until all matters relating to the payment of Options previously granted have
been settled.

4.       ADMINISTRATION

            The Committee shall administer the Plan. The majority of the members
of the Committee shall constitute a quorum. The acts of a majority of the
members present at any meeting at which a quorum is present or acts approved in
writing by a majority of the Committee shall be deemed the acts of the
Committee.

            Subject to the provisions of the Plan and applicable law, the
Committee shall have the power, and in addition to other express powers and
authorizations conferred on the Committee by the Plan to: (i) designate
Participants; (ii) determine the type or types of Options to be granted to a
Participant; (iii) determine the number of Shares to be covered by, or with
respect to which payments, rights, or other matters are to be calculated in
connection with, Options; (iv) determine the terms and conditions of any
Options; (v) determine whether, to what extent, and under what circumstances
Options may be settled or exercised in cash, shares, other securities, other
Options, or other property, or canceled, forfeited, or suspended and the method
or methods by which Options may be settled, exercised, canceled, forfeited, or
suspended; (vi) determine whether, to what extent, and under what circumstances
cash, shares, other securities, other Options, other property, and other amounts
payable with respect to an Option shall be deferred either automatically or at
the election of the holder thereof or of the Committee; (vii) interpret,
administer, reconcile any inconsistency, correct any default and/or supply any
omission in the Plan and any instrument or agreement relating to, or Option
granted under, the Plan; (viii) establish, amend, suspend, or waive such rules
and
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regulations and appoint such agents as it shall deem appropriate for the proper
administration of the Plan; and (ix) make any other determination and take any
other action that the Committee deems necessary or desirable for the
administration of the Plan.

            (a) Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations, and other decisions under or with
respect to the Plan or any Option or any documents evidencing Options shall be
within the sole discretion of the Committee, may be made at any time granted
pursuant to the Plan and shall be final, conclusive, and binding upon all
parties, including, without limitation, the Company, Affiliate, any Participant,
any holder or beneficiary of any Option, and any shareholder.

            (b) No member of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Option
hereunder.

            (c) Notwithstanding the foregoing or any other provision of this
Plan, (i) the Board may at any time or from time to time resolve to administer
the Plan and, in such case, references herein to the Committee shall mean the
Board when so acting as the Committee, and (ii) when the Committee is acting and
not the Board, all of the Committee's decisions under this Plan will be subject
to approval by the Board.

5.       GRANT OF AWARDS; SHARES SUBJECT TO THE PLAN

            The Committee may, from time to time, grant Options to one or more
Eligible Persons; provided, however, that:

            (a) Subject to Section 9, the aggregate number of shares of Stock in
respect of which Options may be granted under the Plan is 50,524 of the fully
diluted outstanding shares as of the Effective Date;

            (b) Such shares shall be deemed to have been used in payment of
Options when they are actually delivered. In the event any Option shall be
surrendered, terminate, expire, or be forfeited, the number of shares of Stock
no longer subject thereto shall thereupon be released and shall thereafter be
available for new grants under the Plan;

            (c) Stock delivered by the Company in settlement of Options granted
under the Plan may be authorized and unissued Stock or Stock held in the
treasury of the Company or may be purchased on the open market or by private
purchase; and

            (d) Subject to Section 9, no person may be granted Options under the
Plan during any calendar year with respect to more than 12,631 of the shares
available under the Plan; provided that such number shall be adjusted pursuant
to Section 9, and shares otherwise counted against such number, only in a manner
which will not cause the Options granted under the Plan to fail to qualify as
"performance-based compensation" Section 162(m) of the Code.
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            (e) Without limiting the generality of the preceding provisions of
this Section 5, the Committee may, but solely with the Participant's consent,
agree to cancel any Option under the Plan and issue a new Option in substitution
therefor upon such terms as the Committee may in its sole discretion determine,
provided that the substituted Option satisfies all applicable Plan requirements
as of the date such new Option is made.

6.       ELIGIBILITY

            Participation shall be limited to Eligible Persons who have received
written notification from the Committee, or from a person designated by the
Committee, that they have been selected to participate in the Plan.

7.       TERMS OF OPTIONS

            The Committee is authorized to grant one or more Nonqualified Stock
Options to any Eligible Person. Each Option so granted shall be subject to the
following conditions, or to such other conditions as may be reflected in the
applicable Stock Option Agreement.

            (a) OPTION PRICE. The exercise price ("Option Price") per share of
Stock for each Option shall be set by the Committee at the time of grant but
shall not be less than the Fair Market Value of a share of Stock at the Date of
Grant.

            (b) MANNER OF EXERCISE AND FORM OF PAYMENT. No shares of Stock shall
be delivered pursuant to any exercise of an Option until payment in full of the
aggregate exercise price therefor is received by the Company. Options which have
become exercisable may be exercised by delivery of written notice of exercise to
the Committee accompanied by payment of the Option Price. The Option Price shall
be payable in cash and/or, at the Committee's sole discretion, in shares of
Stock valued at the Fair Market Value at the time the Option is exercised
(including by 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 Participant for six months, previously
acquired by the Participant 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.

            (c) VESTING, OPTION PERIOD AND EXPIRATION. Options shall vest and
become exercisable in increments of 25% on each of the first four anniversaries
of the Date of Grant, such that each Option shall be 100% vested and exercisable
on the fourth anniversary of its Date of Grant. The Options shall expire after
such period, not to
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exceed ten years, as may be determined by the Committee (the "Option Period");
provided, however, that notwithstanding the vesting schedule set forth above,
the Committee may in its sole discretion accelerate the exercisability of any
Option, which acceleration shall not affect the terms and conditions of any such
Option other than with respect to exercisability. Options are exercisable in
installments, and such installments or portions thereof which become exercisable
shall remain exercisable until the Option expires. Unless otherwise stated in
the applicable Stock Option Agreement, the Option shall expire earlier than the
end of the Option Period in the following circumstances:

                  (i) If prior to the end of the Option Period, the Participant
shall undergo a Normal Termination other than due to death or Disability, (x)
the portion of the Option that is not vested at the time of such Normal
Termination shall expire on such date; and (y) the portion of the Option which
is vested at the date of such Normal Termination shall expire on the earlier of
the last day of the Option Period or the date that is three months after the
date of such Normal Termination.

                  (ii) If prior to the end of the Option Period, the Participant
dies or incurs a Disability while still in the employ or service of the Company,
a Subsidiary or Affiliate, or if the Participant dies within three months
following a Normal Termination, (x) the portion of the Option that is not vested
on the date of such termination shall expire on such date; and (y) the portion
of the Option which is vested at the date of such termination shall expire on
the earlier of the last day of the Option Period 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 Participant's personal
representative or executor, or by the person or persons to whom the
Participant's rights under the Option pass by will or the applicable laws of
descent and distribution until its expiration.

                  (iii) If prior to the end of the Option Period the Participant
is terminated from the employment or service with the Company and Affiliates for
Cause or for reasons other than Normal Termination, the Option (whether or not
vested) shall expire immediately upon such cessation of employment or service.

            (d) STOCK OPTION AGREEMENT - OTHER TERMS AND CONDITIONS. Each Option
granted under the Plan shall be evidenced by a Stock Option Agreement, which
shall contain such provisions as may be determined by the Committee and, except
as may be specifically stated otherwise in such Stock Option Agreement, which
shall be subject to the following terms and conditions:

                  (i) Each Option or portion thereof that is exercisable shall
be exercisable for the full amount or for any part thereof.

                  (ii) Each share of Stock purchased through the exercise of an
Option shall be paid for in full at the time of the exercise. Each Option shall
cease to be exercisable, as to any share of Stock, when the Participant
purchases the share or when the Option expires.
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                  (iii) Subject to Section 8(h), Options shall not be
transferable by the Participant except by will or the laws of descent and
distribution and shall be exercisable during the Participant's lifetime only by
him.

                  (iv) Each Option shall vest and become exercisable by the
Participant in accordance with the vesting schedule established by the Committee
and set forth in the Stock Option Agreement.

                  (v) Each Stock Option Agreement may contain a provision that,
upon demand by the Committee for such a representation, the Participant shall
deliver to the Committee at the time of any exercise of an Option a written
representation that the shares to be acquired upon such exercise are to be
acquired for investment and not for resale or with a view to the distribution
thereof. Upon such demand, delivery of such representation prior to the delivery
of any shares issued upon exercise of an Option shall be a condition precedent
to the right of the Participant or such other person to purchase any shares. In
the event certificates for Stock are delivered under the Plan with respect to
which such investment representation has been obtained, the Committee may cause
a legend or legends to be placed on such certificates to make appropriate
reference to such representation and to restrict transfer in the absence of
compliance with applicable federal or state securities laws.

            (e) VOLUNTARY SURRENDER. The Committee may permit the voluntary
surrender of all or any portion of any Nonqualified Stock Option granted under
the Plan to be conditioned upon the granting to the Participant of a new option
for the same or a different number of shares as the option surrendered or
require such voluntary surrender as a condition precedent to a grant of a new
Option to such Participant. Such new Option shall be exercisable at an Option
Price, during an Option Period, and in accordance with any other terms or
conditions specified by the Committee at the time the new Option is granted, all
determined in accordance with the provisions of the Plan without regard to the
Option Price, Option Period, or any other terms and conditions of the
Nonqualified Stock Option surrendered.

8.       GENERAL

            (a) ADDITIONAL PROVISIONS OF AN OPTION. Options granted to a
Participant under the Plan also may be subject to such other provisions (whether
or not applicable to the benefit awarded to any other Participant) as the
Committee determines appropriate including, without limitation, provisions to
assist the Participant in financing the purchase of Stock upon the exercise of
options, provisions for the forfeiture of or restrictions on resale or other
disposition of shares of Stock acquired under any Option, provisions giving the
Company the right to repurchase shares of Stock acquired under any Option in the
event the Participant elects to dispose of such shares, provisions allowing the
Participant to elect to defer the receipt of shares of Stock upon the exercise
of Options for a specified time or until a specified event, and provisions to
comply with Federal and state securities laws and Federal and state tax
withholding requirements. Any such provisions shall be reflected in the
applicable Stock Option Agreement.
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            (b) PRIVILEGES OF STOCK OWNERSHIP. Except as otherwise specifically
provided in the Plan, no person shall be entitled to the privileges of ownership
in respect of shares of Stock which are subject to Options hereunder until such
shares have been issued to that person.

            (c) GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company
to make payment of Options in Stock or otherwise shall be subject to all
applicable laws, rules, and regulations, and to such approvals by governmental
agencies as may be required. Notwithstanding any terms or conditions of any
Option to the contrary, the Company shall be under no obligation to offer to
sell or to sell and shall be prohibited from offering to sell or selling any
shares of Stock pursuant to an Option unless such shares have been properly
registered for sale pursuant to the Securities Act with the Securities and
Exchange Commission or unless the Company has received an opinion of counsel,
satisfactory to the Company, that such shares may be offered or sold without
such registration pursuant to an available exemption therefrom and the terms and
conditions of such exemption have been fully complied with. The Company shall be
under no obligation to register for sale under the Securities Act any of the
shares of Stock to be offered or sold under the Plan, 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. If the shares of Stock offered for sale or sold
under the Plan are offered or sold pursuant to an exemption from registration
under the Securities Act, the Company may restrict the transfer of such shares
and may legend the Stock certificates representing such shares in such manner as
it deems advisable to ensure the availability of any such exemption.

            (d) TAX WITHHOLDING.

                  (i) A Participant 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 any Option or from any compensation or other amounts owing to a
Participant 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.

                  (ii) Without limiting the generality of clause (i) above, if
so provided in a Stock Option Agreement, a Participant 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
Participant (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 Stock otherwise
issuable pursuant to the exercise of the Option a number of shares with a Fair
Market Value equal to such withholding liability.
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            (e) CLAIM TO OPTIONS AND EMPLOYMENT RIGHTS. No employee of the
Company, a Subsidiary or Affiliate, or other person, shall have any claim or
right to be granted an Option under the Plan or, having been selected for the
grant of an Option, to be selected for a grant of any other Option. Neither the
Plan nor any action taken hereunder shall be construed as giving any Participant
any right to be retained in the employ or service of the Company, a Subsidiary
or an Affiliate.

            (f) NO LIABILITY OF COMMITTEE MEMBERS. No member of the Committee
shall be personally liable by reason of any contract or other instrument
executed by such member or on his behalf in his capacity as a member of the
Committee nor for any mistake of judgment made in good faith, and the Company
shall indemnify and hold harmless each member of the Committee and each other
employee, officer or director of the Company to whom any duty or power relating
to the administration or interpretation of the Plan may be allocated or
delegated, against any cost or expense (including counsel fees) or liability
(including any sum paid in settlement of a claim) arising out of any act or
omission to act in connection with the Plan unless arising out of such person's
own fraud or willful bad faith; provided, however, that approval of the Board
shall be required for the payment of any amount in settlement of a claim against
any such person. The foregoing right of indemnification shall not be exclusive
of any other rights of indemnification to which such persons may be entitled
under the Company's Articles of Incorporation or By-Laws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.

            (g) GOVERNING LAW. The Plan shall be governed by and construed 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 jurisdiction which could cause the application of the laws of any
jurisdiction other than the State of Delaware.

            (h) NONTRANSFERABILITY.

                  (i) Each Option shall be exercisable only by the Participant
during the Participant's lifetime, or, if permissible under applicable law, by
the Participant's legal guardian or representative. No Option may be assigned,
alienated, pledged, attached, sold or otherwise transferred or encumbered by a
Participant otherwise than by will or by the laws of descent and distribution
and any such purported assignment, alienation, pledge, attachment, sale,
transfer or encumbrance shall be void and unenforceable against the Company, a
Subsidiary or an Affiliate; provided that the designation of a beneficiary shall
not constitute an assignment, alienation, pledge, attachment, sale, transfer or
encumbrance.

                  (ii) Notwithstanding the foregoing, the Committee may in the
applicable Stock Option Agreement or at any time after the Date of Grant in an
amendment to a Stock Option Agreement provide that Options may be transferred by
a Participant without consideration, subject to such rules as the Committee may
adopt consistent with any applicable Option agreement to preserve the purposes
of the Plan, to:
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                           (A)      any person who is a "family member" of the
                                    Participant, as such term is used in the
                                    instructions to Form S-8 (collectively, the
                                    "Immediate Family Members");

                           (B)      a trust solely for the benefit of the
                                    Participant and his or her Immediate Family
                                    Members;

                           (C)      a partnership or limited liability company
                                    whose only partners or shareholders are the
                                    Participant and his or her Immediate Family
                                    Members; or

                           (D)      any other transferee as may be approved
                                    either (a) by the Board or the Committee in
                                    its sole discretion, or (b) as provided in
                                    the applicable Stock Option Agreement;

(each transferee described in clauses (A), (B), (C) and (D) above is hereinafter
referred to as a "Permitted Transferee"); provided that the Participant gives
the Committee advance written notice describing the terms and conditions of the
proposed transfer and the Committee notifies the Participant in writing that
such a transfer would comply with the requirements of the Plan and any
applicable Stock Option Agreement.

                  (iii) The terms of any Option transferred in accordance with
the immediately preceding sentence shall apply to the Permitted Transferee and
any reference in the Plan or in a Stock Option Agreement to a Participant shall
be deemed to refer to the Permitted Transferee, except that (a) Permitted
Transferees shall not be entitled to transfer any Options, other than by will or
the laws of descent and distribution; (b) Permitted Transferees shall not be
entitled to exercise any transferred Options unless there shall be in effect a
registration statement on an appropriate form covering the shares to be acquired
pursuant to the exercise of such Option if the Committee determines, consistent
with any applicable Stock Option Agreement, that such a registration statement
is necessary or appropriate, (c) the Committee or the Company shall not be
required to provide any notice to a Permitted Transferee, whether or not such
notice is or would otherwise have been required to be given to the Participant
under the Plan or otherwise, and (d) the consequences of termination of the
Participant's employment by, or services to, the Company, a Subsidiary or an
Affiliate under the terms of the Plan and the applicable Stock Option Agreement
shall continue to be applied with respect to the Participant, following which
the Options shall be exercisable by the Permitted Transferee only to the extent,
and for the periods, specified in the Plan and the applicable Stock Option
Agreement.

            (i) RELIANCE ON REPORTS. Each member of the Committee and each
member of the Board shall be fully justified in relying, acting or failing to
act, and shall not be liable for having so relied, acted or failed to act in
good faith, upon any report made by the independent public accountant of the
Company and Affiliates and upon any
<PAGE>   13
                                                                              13

other information furnished in connection with the Plan by any person or persons
other than himself.

            (j) RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan shall
be taken into account in determining any benefits under any pension, retirement,
profit sharing, group insurance or other benefit plan of the Company or any
Subsidiary except as otherwise specifically provided in such other plan.

            (k) EXPENSES. The expenses of administering the Plan shall be borne
by the Company and Affiliates.

            (l) PRONOUNS. Masculine pronouns and other words of masculine gender
shall refer to both men and women.

            (m) TITLES AND HEADINGS. The titles and headings of the sections in
the Plan are for convenience of reference only, and in the event of any
conflict, the text of the Plan, rather than such titles or headings shall
control.

            (n) TERMINATION OF EMPLOYMENT. For all purposes herein, a person who
transfers from employment or service with the Company to employment or service
with a Subsidiary or Affiliate or vice versa shall not be deemed to have
terminated employment or service with the Company, a Subsidiary or Affiliate.

            (o) SEVERABILITY. If any provision of the Plan or any Stock Option
Agreement is or becomes or is deemed to be invalid, illegal, or unenforceable in
any jurisdiction or as to any person or Option, or would disqualify the Plan or
any Option under any law deemed applicable by the Committee, such provision
shall be construed or deemed amended to conform to the applicable laws, or if it
cannot be construed or deemed amended without, in the determination of the
Committee, materially altering the intent of the Plan or the Option, such
provision shall be stricken as to such jurisdiction, person or Option and the
remainder of the Plan and any such Option shall remain in full force and effect.

9.       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)
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) 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
<PAGE>   14
                                                                              14

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 this Section 13 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 Participant notice of an 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 cause the holders thereof to be paid, 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. The terms of this Section 9 may be varied by the Committee
in any particular Stock Option Agreement.

10.      EFFECT OF CHANGE IN CONTROL

            Except to the extent reflected in a particular Stock Option
Agreement:

                  (a) In the event of a Change in Control, notwithstanding any
vesting schedule, all Options 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 affected Participants the ability to exercise their Options
and participate in the Change in Control transaction with respect to the Stock
subject to such Options.

                  (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
affected persons, cancel any outstanding Options and pay to the holders thereof,
in cash or stock,
<PAGE>   15
                                                                              15

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.

                  (c) The obligations of the Company under the Plan 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 Participants' rights under the
Plan in any agreement or plan which it may enter into or adopt to effect any
such merger, consolidation, reorganization or transfer of assets.

11.      NONEXCLUSIVITY OF THE PLAN

            Neither the adoption of this Plan by the Board nor the submission of
this Plan to the stockholders of the Company for approval shall be construed as
creating any limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options otherwise than under this Plan, and such arrangements
may be either applicable generally or only in specific cases.

12.      AMENDMENTS AND TERMINATION

                  (a) AMENDMENT AND TERMINATION OF THE PLAN. The Board may
amend, alter, suspend, discontinue, or terminate the Plan or any portion thereof
at any time; provided that no such amendment, alteration, suspension,
discontinuation or termination shall be made without shareholder approval if
such approval is necessary to comply with any tax or regulatory requirement
applicable to the Plan (including as necessary to prevent Options granted under
the Plan from failing to qualify as "performance-based compensation" for
purposes of Section 162(m) of the Code); and provided further that any such
amendment, alteration, suspension, discontinuance or termination that would
impair the rights of any Participant or any holder or beneficiary of any Option
theretofore granted shall not to that extent be effective without the consent of
the affected Participant, holder or beneficiary.

                  (b) AMENDMENT OF STOCK OPTION AGREEMENTS. The Committee may,
to the extent consistent with the terms of any applicable Stock Option
Agreement, waive any conditions or rights under, amend any terms of, or alter,
suspend, discontinue, cancel or terminate, any Option theretofore granted,
prospectively or retroactively; provided that any such waiver, amendment,
alteration, suspension, discontinuance, cancellation or termination that would
impair the rights of any Participant in respect of any Option theretofore
granted shall not to that extent be effective without the consent of the
affected Participant.

                                      * * *

As adopted by the Board of Directors of
AMN Healthcare Services, Inc. as of July 24, 2001.<PAGE>   1
                                                                    Exhibit 10.8
                    EMPLOYMENT AND NON-COMPETITION AGREEMENT

                  This Employment and Non-Competition Agreement (the
"Agreement") is dated as of November 19, 1999, and is entered into among AMN
Holdings, Inc., a Delaware corporation (the "Company"), AMN Acquisition Corp.
("Buyer") and STEVEN C. FRANCIS (the "Employee").

                  WHEREAS, the Employee is co-trustee of the Francis Family
Trust, which is a party to the Acquisition Agreement dated as of October 1, 1999
(the "Acquisition Agreement") by and among the Company, AMN Healthcare, Inc.
("Healthcare"), Buyer and certain other Sellers, including the Francis Family
Trust;

                  WHEREAS, following the transaction contemplated by the
Acquisition Agreement, the Buyer will own approximately 93.5% of the issued and
outstanding common stock of the Company, the Francis Family Trust will own
approximately 5.2% of such common stock and Olympus Growth Fund II, L.P. will
own the balance of the common stock;

                  WHEREAS, this Agreement shall become effective only upon and
as of the date of the closing of the transaction contemplated by the Acquisition
Agreement (the "Closing Date");

                  WHEREAS, the Company recognizes the value of the Employee's
experience and skills to the growth and success of the Company and desires to
assure the Company of the Employee's employment and to compensate the Employee
therefor; and

                  WHEREAS, the Employee is willing to commit to serve the
Company on the terms and conditions herein provided;

                  NOW THEREFORE, in consideration of the foregoing and of the
respective covenants and agreements of the parties herein contained, and for
other good and valuable consideration the receipt and sufficiency of which is
hereby acknowledged, the parties hereto hereby agree as follows:

                                    ARTICLE I

                     Employment, Duties and Responsibilities

                  1.01. Employment. The Employee shall serve as President and
Chief Executive Officer of the Company, effective as of the Closing Date.
Employee hereby accepts such employment. The Company and the Buyer shall use
their reasonable efforts to cause the Employee to be elected as a Director on
the

<PAGE>   2

Company's Board of Directors for so long as he shall serve as the Chief
Executive Officer of the Company, which reasonable efforts shall include, in the
case of the Company, nominating Employee for election as a Director, and in the
case of the Buyer, voting all shares of Common Stock of the Company in favor of
Employee's election as a Director. Employee agrees to devote not less than
ninety percent (90%) of his time, energy and skill to the business interests of
the Company and shall be able to devote the remaining ten percent (10%) of his
time, energy and skill to charitable work of his choosing.

                  1.02. Duties and Responsibilities. Employee shall have such
duties and responsibilities as the Board of Directors may from time to time,
reasonably require, consistent with services customarily incident to such office
and the position of President and Chief Executive Officer, including, but not
limited to, providing the Board of Directors with monthly financial statements
and a summary of material developments written by the Employee or the chief
financial officer of the Company. During the Term, the Employee shall report
solely and directly to the Board of Directors of the Company.

                                   ARTICLE II

                                      Term

                  2.01. Term. The term of this Agreement (the "Term") shall
commence on the Closing Date and shall continue until December 31, 2003, unless
terminated earlier as provided in Article V. The Term shall be automatically
extended for additional periods of one year each unless either party gives at
least 90 days prior written notice to the other of the intention to terminate
the Employee's employment hereunder at the end of the then current Term.

                                   ARTICLE III

                            Compensation and Expenses

                  3.01. Salary, Incentive Awards and Benefits. As compensation
and consideration for the performance by Employee of his obligations under this
Agreement, Employee shall be entitled, during the Term, to the following
(subject, in each case, to the provisions of Article V hereof):

                  (a) Salary. From the Closing Date, the Company shall pay
Employee base salary at the annual rate of $300,000 (the "Base Salary"), payable
in accordance with the normal payroll practices of the Company and subject to
such withholding and other normal employee deductions as may be required by law.
The Base Salary shall be reviewed no less frequently than annually during the
Term for

                                       2
<PAGE>   3
increase in the discretion of the Board. The Base Salary shall not be
decreased at any time, or for any purpose, during the Term (including, without
limitation, for the purpose of determining the benefits due under Article V).

                  (b) Bonus Amount. The Employee shall receive an incentive
bonus award of $50,000 for 1999. The Employee shall be eligible during each
complete fiscal year within the Term for an annual bonus under and in accordance
with the terms of the Company's Senior Management Bonus Plan (the "Bonus Plan"),
beginning in the Company's 2000 fiscal year, which plan shall be implemented by
the Board, after prior consultation with Employee. The Bonus Plan will provide
for a graduated bonus depending upon achievement of between 95% and 110% of
target EBITDA (as defined therein) for each fiscal year and that, if the Company
shall achieve 100% of target EBITDA for a given fiscal year, Employee's bonus
amount will be 50% of his base salary; provided, however, that except as
provided in Sections 5.02 and 5.03, the Employee shall only be paid such annual
bonus amount if he is employed by the Company on the date set for payment of
such annual bonuses granted to the employees of the Company under the Bonus
Plan, provided that such date for payment of any Bonus Amount accrued in respect
of a particular fiscal year shall be prior to the last day of the third month
following the end of such fiscal year. The determination of the date of such
payment to such Employee shall be in the Board of Directors' sole discretion
subject to the preceding proviso.

                  (c) Benefits. Employee shall be eligible to participate in
such life insurance, 401(k), health, disability and major medical insurance
benefits, stock option plans and such other employee benefit plans and programs
for the benefit of senior management employees of the Company, as may be
maintained from time to time during the Term, in each case subject to the terms
and provisions of such plan or program. Notwithstanding anything herein to the
contrary, the Company shall continue the benefits program in effect at the time
of the Closing of the transaction described in the Acquisition Agreement, with
such periodic changes (including terminations or substitutions) as are approved
by the Board of Directors after prior consultation with Employee.

                  (d) Paid Time Off. Employee shall be entitled to 30 days of
paid time off during each annual period of the Term to be taken at his
reasonable discretion, in a manner consistent with his obligations to the
Company under this Agreement. The accrual and vesting of such paid time off
shall be subject to the Company's policy on paid time off as in effect from time
to time.

                  (e) Stock Options. Employee will be granted on the Closing
Date options to purchase Common Stock of the Company in accordance with the
stock option plans and agreements attached hereto as Exhibits A and B (the
"Option Plans and Agreements").

                                       3
<PAGE>   4

                  3.02. Business Expenses. During the Term, the Company will
reimburse Employee for reasonable business-related expenses incurred by him in
connection with the performance of his duties hereunder, subject, however, to
the Company's policies relating to business-related expenses as in effect from
time to time.

                  3.03. Travel. The Company shall provide Employee with first
class travel and accommodations for all travel undertaken solely for Company
purposes.

                                   ARTICLE IV

                                Exclusivity, Etc.

                  4.01. Exclusivity; Non-Competition; Non-Solicitation. Employee
agrees to perform his duties, responsibilities and obligations hereunder
efficiently and to the best of his ability. Employee agrees that he will devote
not less than ninety percent (90%) of his time, energy and skill to the business
of the Company throughout the Term and shall be able to devote the remaining ten
percent (10%) of his time, energy and skill to charitable work of his choosing.
Employee also agrees that during the Term and for a period of two years
thereafter (the "Coverage Period") he 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 (a) in
any State of the United States of America or (b) 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 similar entities and any and all business activities reasonably related
thereto in which the Company or any of its divisions, subsidiaries or affiliates
are currently engaged or are engaged during the Term or which are planned by the
Company or its divisions, subsidiaries or affiliates at the end of such Term. In
addition, the Employee 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 or client of the Company.

                  4.02. Confidential and Proprietary Information. Employee
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 subsidiaries,
divisions or affiliates. 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 Employee to be confidential
or proprietary information including, without limitation, customer information.
Employee acknowledges and agrees that for purposes of this Agreement, "customer
information" includes without limitation,

                                       4
<PAGE>   5
customer lists, all lists of professional personnel, names, addresses, phone
numbers, contact persons, preferences, pricing arrangements, requirements and
practices. Employee's obligation under this Section 4.02 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 Employee; or (iii) is
hereafter disclosed to Employee by a third party not under an obligation of
confidence to the Company. Employee 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 containing or reflecting any such confidential or
proprietary information. Employee recognizes that all such information, whether
developed by him or by someone else, will be the sole exclusive property of the
Company. Upon termination of his employment hereunder, Employee 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.

                  4.03. Validity of Article IV. The covenants of the Employee
contained in Article IV hereof shall each be construed as an agreement
independent of any other provisions in this Agreement. Both parties hereby
expressly agree and contract that it is not the intention of either party to
violate any public policy, statutory or common law, and that if any sentence,
paragraph, clause or combination of the same of this Article IV is in violation
of the law of any State where applicable, such sentence, paragraph, clause or
combination of the same shall be void in the jurisdictions where it is unlawful,
and the remainder of such paragraph and this Agreement shall remain binding on
the parties hereto. It is the intention of both parties to make the covenants of
this Article IV binding only to the extent that it may be lawfully done under
existing applicable laws. If the scope of any covenant is too broad to permit
enforcement of such covenant to its full extent then such covenant shall be
enforced to the maximum extent permitted by law, and Employee hereby agrees that
such scope may be so judicially modified and that as so modified the covenant
shall be as fully enforceable as if set forth herein by the parties themselves
in the modified form. Termination of this Agreement for any of the reasons set
forth in Article V of this Agreement shall not constitute a breach of this
Agreement by the Company and the provisions of this Article IV shall survive any
such termination.

                  4.04. Injunctive Relief. The Employee acknowledges that the
provisions of this Article IV are essential to the Company, that the Company
would not enter into this Agreement if it did not include the covenant not to
compete and confidentiality covenants in Article IV and that damages sustained
by the Company as a result of a breach of the covenant not to compete and
confidentiality covenants cannot be adequately remedied by damages, and the
Employee agrees that the

                                       5
<PAGE>   6
Company, in addition to any other remedy it may have under this Agreement or at
law, shall be entitled to injunctive and other equitable relief to prevent or
curtail any breach of this Article IV.

                                    ARTICLE V

                                   Termination

                  5.01. Termination by Company for Cause; Voluntary Termination.
The Company shall have the right to terminate Employee's employment under this
Agreement at any time for "Cause." For purposes of this Agreement, "Cause" for
termination of the Employee shall mean (a) Employee's failure to perform in any
material respect his duties under this Agreement (other than any such failure
resulting from the Employee's incapacity due to physical or mental illness or
any such actual or anticipated failure after the Employee's issuance of a notice
of termination for Good Reason), (b) the engaging by Employee in willful
misconduct or gross negligence which is injurious to the Company or any of its
affiliates, monetarily or otherwise, (c) the commission by Employee of an act of
fraud or embezzlement against the Company or any of its affiliates, (d) the
conviction of Employee of a crime which constitutes a felony or a pleading of
guilty or nolo contendre with respect to a crime which constitutes a felony; or
(e) Employee's breach in any material respect of the provisions of this
Agreement, provided, however, that in the case of (a), (b) or (e), the Company
shall furnish Employee with at least twenty (20) business days prior written
notice of such failure or breach and allow Employee twenty (20) business days
after receipt of such notice to cure such failure or breach, if such breach or
failure is curable in such period. If the Company terminates Employee's
employment under the Agreement for "Cause," the Company shall pay Employee any
earned but unpaid Base Salary. In such event, the Company shall have no
obligation to pay the Employee any bonus amount upon termination of this
Agreement. In addition, any stock options that are held by Employee that are
unvested at the date of termination automatically shall be canceled.

                  In the event that the Employee terminates his employment with
the Company on his own initiative (other than by death, for Disability (as
defined below), for Good Reason, or within 90 days following a Change of
Control), he shall have the same entitlements as provided above in the case of a
termination by the Company for Cause. A voluntary termination under this Section
5.01 shall be effective upon written notice to the Company and shall not be
deemed a breach of this Agreement.

                  5.02. Termination by Company Without Cause; Death; Disability.
If (a) the Company terminates Employee's employment under the Agreement other
than pursuant to Section 5.01 (including by reason of Employee's "Disability")
(defined as a disability which prevents him from substantially performing his
duties under this Agreement for a period of at least 90 consecutive days, or 180
days non-consecutive days within any 365-day period), or (b) the Employee's
employment terminates due to

                                       6
<PAGE>   7
the Employee's death, the Employee (or his estate, if applicable) shall be
entitled to any earned but unpaid Base Salary, plus an immediate lump sum
severance payment in cash equal to Employee's salary for two years. In addition,
the Employee will be entitled to receive the bonus amount for the Company's
fiscal year in which such termination occurs, which is provided under the Bonus
Plan formula for such fiscal year, based on actual results for the year as if
Employee had remained in the employ of the Company through the end of such
fiscal year, and otherwise payable in accordance with the Bonus Plan. Treatment
of stock options shall be governed by the terms of the relevant stock option
plans and related stock option agreements.

                  5.03. Termination by Employee for Good Reason. The Employee
may resign with "Good Reason" upon (i) a breach by the Company in any material
respect of any of the affirmative or negative covenants or other agreements
contained in this Agreement, (ii) the relocation of Employee's work space to any
location more than thirty (30) miles from its current location in San Diego, CA;
(iii) any reduction in the Employee's title; (iv) any material diminution in the
nature of Employee's responsibilities or (v) the failure of the Company or its
stockholders to maintain Employee as a member of the Board of Directors of the
Company; provided, however, in the case of (i), (iii), (iv) and (v) the Employee
shall furnish the Company with at least twenty (20) business days' prior written
notice of such breach or change and allow the Company twenty (20) business days
after receipt of such notice to cure such breach or change. In addition, a
resignation by the Employee for any reason or no reason within 90 days following
a "Change in Control" (as defined below) shall be treated as a resignation with
Good Reason. If the Employee resigns for Good Reason, the Employee shall be
treated as if he had been terminated by the Company without Cause and shall have
the same entitlements as set forth in Section 5.02.

                  For purposes of this Agreement, a "Change in Control" shall
mean the occurrence of any of the following events: (a) any "person", (other
than HWH Capital Partners, L.P. or any of its affiliates) as "person" is
currently used in Section 13(d) of the Securities Exchange Act of 1934 (the
"1934 Act"), becomes a "beneficial owner," as such term is currently used in
Rule 13d-3 promulgated under the 1934 Act, of more than 50% of the voting
securities of the Company; (b) a majority of the Board consists of individuals
other than the Incumbent Directors, which term means the members of the Board on
the Closing Date; provided that any individual becoming a director subsequent to
such date whose election or nomination for election was supported by (i)
two-thirds of the directors who then comprised the Incumbent Directors or (ii)
HWH Capital Partners L.P. or any of its affiliates, shall be considered to be an
Incumbent Director; (c) all or substantially all of the assets or business of
the Company is disposed of pursuant to a merger, consolidation or other
transaction or series of transactions (unless the shareholders of the Company
immediately prior to such merger, consolidation or other transaction or series
of transactions beneficially own, directly or indirectly, in substantially the
same proportion as they owned the Voting Stock of the Company, more than 50% of
the voting securities or other ownership interests of the entity or entities, if
any, that

                                       7
<PAGE>   8
succeed to the business of the Company); or (d) the Company combines with
another company and is the surviving corporation but, immediately after the
combination, the shareholders of the Company immediately prior to the
combination hold, directly or indirectly, less than 50% of the voting securities
of the combined company.

                  5.04. Mutual Termination. The Employee and the Company may
agree at any time in a writing signed by both parties to terminate this
Agreement.

                  5.05. No Other Obligations. Except for the obligations of the
Company set forth above, the Company shall have no further obligations to the
Employee under this Agreement upon his termination of employment, including upon
expiration of the Term hereof, other than as required by applicable law or as
are generally applicable to former employees of the Company under the terms of
the Company's benefit plans and policies.

                  5.06. Subordination of Severance and Bonus Amount Rights.
Notwithstanding any other provision of this Agreement, Employee agrees that if
the Company is in default with respect to the financial covenants contained in
any credit facility at the time any payment is due to Employee by reason of
termination of this Agreement or if the payment thereof will cause the Company
to be in default with respect to such covenants, the Company may defer such
payment until the earlier of the date that the Company's debt obligations under
such credit facility (and any substitute therefor) have been paid in full or
such default shall no longer be continuing. The Company agrees to use its
commercially reasonable efforts (taking into account the interest of the Company
as a whole) to seek a waiver of any such covenants to permit payments to the
Employee hereunder.

                                   ARTICLE VI

                  6.01.    Excise Tax Payments.

                  (a) Subject to the provisions of Section 6.01(c) hereof, in
the event that any payment or benefit (within the meaning of Section 280G(b)(2)
of the Internal Revenue Code of 1986, as amended (the "Code")), to the Employee
or for his benefit paid or payable or distributed or distributable in connection
with this Agreement or in connection with, or arising out of, his employment
with the Company or the termination thereof (a "Payment" or "Payments"), would
be subject to the excise tax imposed by Section 4999 of the Code (or any
successor to such Section) or any interest or penalties are incurred by the
Employee with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Company shall pay to the Employee an additional payment
(a "Gross-Up Payment") in an amount such that after payment by the Employee of
all income, employment, excise and other taxes (including any interest and
penalties, other than interest and penalties imposed by

                                       8
<PAGE>   9
reason of the Employee's failure to file timely a tax return or pay taxes shown
due on his return) imposed with respect to the Excise Tax, including any Excise
Tax imposed upon the Gross-Up Payment, the Employee retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.

                  (b) An initial determination as to whether a Gross-Up Payment
is required pursuant to this Agreement and the amount of such Gross-Up Payment
shall be made at the Company's expense by an accounting firm selected by the
Company and reasonably acceptable to the Employee which is designated as one of
the five largest accounting firms in the United States and which has not, during
the two years preceding the date of its selection, acted in any way on behalf of
the Company or any of its affiliates (the "Accounting Firm"). The Accounting
Firm shall provide its determination (the "Determination"), together with
detailed supporting calculations and documentation to the Company and the
Employee within 15 business days following the date of termination if
applicable, or such other time as requested by the Company or by the Employee
(provided the Employee reasonably believes that any of the Payments may be
subject to the Excise Tax). The Gross-Up Payment, if any, as determined pursuant
to this Section 6(b) shall be paid (subject to the provisions of Section 6.01(c)
hereof) by the Company to the Employee no later than the earlier of (i) 15
business days following the receipt of the Accounting Firm's determination or
(ii) 15 business days preceding the date the Excise Tax becomes payable. The
Determination shall be binding, final and conclusive upon the Company and the
Employee. The parties hereto shall cooperate with each other in connection with
any proceeding or claim under this Section 6.01 relating to the existence or
amount of any liability for Excise Tax. All expenses relating to any such
proceeding or claim (including attorneys' fees and other expenses incurred by
the Employee in connection therewith) shall be paid (subject to the provisions
of Section 6.01(c) hereof) by the Company promptly upon demand by the Employee,
and any such payment shall be subject to gross-up under this Section 6.01 in the
event that the Employee is subject to Excise Tax on it.

                  As a result of uncertainty in the application of Section 4999
of the Code at the time of the initial Determination by the Accounting Firm
hereunder, it is possible that the Gross-Up Payment made will have been an
amount less than the Company should have paid pursuant to Section 6.01(a) above
(the "Underpayment") or an amount greater than the Company should have paid
pursuant to Section 6.01(a) above (the "Overpayment"). In the event that it is
finally determined that an Underpayment exists and the Employee is required to
make a payment of any Excise Tax, the Underpayment shall be promptly paid
(subject to the provisions of Section 6.01(c) hereof) by the Company to the
Employee or for his benefit. In the event that it is finally determined that an
Overpayment exists and the Company paid a Gross-Up Payment to the Employee which
allowed the Employee to retain an amount in excess of the Excise Tax, the
Overpayment shall be promptly reimbursed by the Employee to the Company.

                                       9
<PAGE>   10

                  (c) Notwithstanding anything contained in this Agreement to
the contrary, a Gross-Up Payment and expenses related thereto, as described in
Section 6.01(b) hereof, shall only be paid to the Employee if any Excise Tax
arises pursuant to a Change in Control event which causes vesting of options
pursuant to the terms of such option agreements as a result of the payment to
HWP of proceeds in cash or marketable securities which equals or exceeds three
(3) times HWP's aggregate investment in the Company.

                                   ARTICLE VII

                                  Miscellaneous

                  7.01.    Benefit of Agreement; Assignment; Beneficiary.

                  (a) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns, including, without
limitation, any corporation or person which may acquire all or substantially all
of the Company's assets or business, or with or into which the Company may be
consolidated or merged. This Agreement shall also inure to the benefit of, and
be enforceable by, Employee and his personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees to the extent of any payments due in respect of the Employee hereunder.

                  (b) The Company shall require any successor (whether direct or
indirect, by operation of law, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the Company to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession had taken place.

                  7.02. Notices. Any notice required or permitted hereunder
shall be in writing and shall be sufficiently given if personally delivered or
if sent by telegram or telex or by registered or certified mail, postage
prepaid, with return receipt requested, addressed: (a) in the case of the
Company to the principal business office of the Company, or to such other
address and/or to the attention of such other person as the Company shall
designate by written notice to Employee; and (b) in the case of Employee, to
such address as Employee shall designate by written notice to the Company. Any
notice given hereunder shall be deemed to have been given at the time of receipt
thereof by the person to whom such notice is given.

                  7.03. Entire Agreement; Amendment. This Agreement contains the
entire agreement of the parties hereto with respect to the terms and conditions
of Employee's employment during the Term and supersedes any and all prior
agreements and understandings, whether written or oral, between the parties
hereto with respect to compensation due for services rendered hereunder.
Employee agrees that the Employment and Non-Competition Agreement dated December
5, 1997, between

                                       10
<PAGE>   11
AMN Healthcare, Inc. and Employee shall be deemed terminated upon execution of
this Agreement, provided that such termination shall not trigger any payments to
Employee or any severance, other than as provided in this Agreement. This
Agreement may not be changed or modified except by an instrument in writing
signed by both of the parties hereto.

                  7.04. Waiver. The waiver by either party of a breach of any
provision of this Agreement shall not operate or be construed as a continuing
waiver or as a consent to or waiver of any subsequent breach hereof.

                  7.05. Headings. The Article and Section headings herein are
for convenience of reference only, do not constitute a part of this Agreement
and shall not be deemed to limit or affect any of the provisions hereof.

                  7.06. Expenses of Litigation. If any proceeding is brought by
a party to this Agreement or its successors or assigns for the enforcement of
this Agreement, or as a result of any alleged dispute, breach, default or
misrepresentation by any other party of any of the provisions of the Agreement,
the party which is successful in such proceeding shall be entitled to recover
its reasonable attorneys' fees and other costs incurred in pursuing such
proceeding, in addition to such other relief to which it may be entitled.

                  7.07. Governing Law. This Agreement shall be governed by, and
construed and interpreted in accordance with, the laws of the State of
California without reference to the principles of conflict of laws.

                  7.08. Venue. Each of the parties consents and submits to the
jurisdiction of the state and federal courts located in the County of San Diego,
State of California in connection with any suits or other actions arising
between the parties under this Agreement, and consents and waives any objections
to the venue of such action or proceeding in the state or federal courts located
in the County of San Diego, State of California.

                  7.09. Survivorship. The respective rights and obligations of
the parties under this Agreement, including, without limitation, Article IV
shall survive any termination of this Agreement to the extent necessary to
effect the intended preservation of such rights and obligations.

                  7.10. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision or provisions of this Agreement, which shall remain in full
force and effect.

                  7.11. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.

                                       11
<PAGE>   12

                  IN WITNESS WHEREOF, the Company, Buyer and Employee have duly
executed this Agreement as of the date first above written.

                          AMN HOLDINGS, INC.

                          By: /s/ Diane K. Stumph
                             ____________________________
                               Name:  Diane K. Stumph
                               Title: Senior Vice President, Finance & CFO

                          AMN ACQUISITION CORP.

                          By: /s/ Robert B. Haas
                             ____________________________
                               Name:  Robert B. Haas
                               Title:    President and Treasurer

                          EMPLOYEE

                              /s/ Steven C. Francis
                             ____________________________
                               Steven C. Francis

                                       12

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