AMENDMENT NO. 1

 

 

 

EMPLOYMENT AND NON-COMPETITION AGREEMENT

 

 

 

This addendum shall amend certain portions of the Employment and Non-Competition Agreement (“the Agreement”), dated November 19, 1999, entered into among AMN Holdings, Inc. a Delaware Corporation, AMN Acquisition Corporation and STEVEN C. FRANCIS (the “Employee).

 

 

 

1. AMN Acquisition Corp. merged into AMN Holdings, Inc. on March 29, 2001; 

 

 

 

2. AMN Holdings, Inc. changed its name to AMN Healthcare Services, Inc. (hereinafter “the Company”) on October 18, 2001; 

 

 

 

3. On May 8, 2003, EMPLOYEE began serving in the exclusive role of Chief Executive Officer, ceasing to serve as the Company’s President; 

 

 

 

4. Paragraph 2.01 is deleted, and replaced with the following: 

 

 

 

Term. The term of this Agreement (the “Term”) shall commence on the effective date and shall continue until December 31, 2004, unless terminated earlier as provided in Article V. The Term shall be automatically extended for additional periods of one year 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 Term.

 

 

 

5. Paragraph 3.01(b) of the Agreement is amended by deleting the entire paragraph, and inserting in its place the following: 

 

 

 

Bonus Amount. The Company’s Compensation Committee will determine the criteria and target(s) for EMPLOYEE’S bonus, on an annual basis, in accordance with the Company’s Senior Management Incentive Bonus Plan (“Bonus Plan”). EMPLOYEE shall receive a graduated bonus depending upon achievement of between 95% and 100% of the Bonus Plan target(s) for the given fiscal year, and that if the Company achieves 100% of the Bonus Plan target(s), 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 last day of the particular fiscal year.

 

 

 

6. The effective date of this addendum shall be September 25, 2003. 

 

 

 

        

AMN HEALTHCARE SERVICES, INC.

        

   

By:   /s/    ROBERT B. HAAS       Dated: December 12, 2003

 

   

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

          

Name:

   Robert B. Haas

            

Title:

   Chairman of the Board

            

 

 

 

    

EMPLOYEE

        

  

/s/    STEVEN C. FRANCIS       Dated: December 15, 2003

 

 

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

        

Steven C. Francis

        

 

                          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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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

 

 

<PAGE>

 

                                                                              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

 

 

                                                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