Tired of Hillary's influence, Teri decides to quit Models Inc. and negotiate her own contracts. During an agency party, a drunken Teri plunges off a high-rise building to her death. It is initially believed to be a suicide, but soon ruled a murder. The suspects include Hillary, because of her anger about the financial losses she will suffer due to Teri's departure; Brian, whose advances she spurned; and Carrie, whom Teri taunted about her spiraling career and the child she gave up for adoption. Sarah moves out of Jo Reynolds' apartment and into the agency's beach house with the other models. She teases her friends Jake and Jo about their confused relationship before heading on her way. David immediately takes a special interest in Sarah, sparking jealousy in Julie. Sarah tries to win over Julie by helping her expose a photographer who promised career advances in exchange for sex. Julie goes on a drinking binge during a New York audition and loses the gig to Sarah. She accuses Sarah of

Grayson assumes day-to-day control of Models Inc., with Hillary falling into a secondary role. Grayson sets out to destroy Monique. She also opts to cut costs by selling the beach house and evicting the models. Julie convinces Craig to buy the house. She turns down a new admirer in order to reconcile with Craig. Sarah shows her support for Mark by attending his first Mass. She is stunned to learn that she is pregnant. Brian's concern for Cynthia grows after she faints during a photo shoot. He discovers her junk food stash and realizes that she is bulimic. Eric becomes a kept man as he enters a relationship with a wealthy client, Hillary's married friend Joan.

Sarah balks at telling Mark about her pregnancy. She finally shares the truth, and he must make a choice about his future. Julie wishes to turn Craig's novel into a television movie, intending to cast herself as the lead. She approaches a female writer about working on the teleplay, and the two become friends. Brian pleads with Cynthia to seek help; she denies having a problem. She passes out in the hot tub, and Craig and Julie fish her out and call an ambulance. Grayson drops hints to Adam about a secret that could end his engagement. He pays Eric to investigate, as he no longer trusts Ben. Adam and Eric find a two-year-old boy living at Grayson's house.