STAFFMARK INC, S-1, 1996-07-03

STAFFMARK INC
S-1, 1996-07-03

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 3, 1996.
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

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STAFFMARK, INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE
(State or other jurisdiction 7363 71-0788538
of incorporation or (Primary Standard Industrial (I.R.S. employer
organization) Classification Code Number) identification no.)
</TABLE>

302 EAST MILLSAP ROAD, FAYETTEVILLE, ARKANSAS 72703
(501) 973-6000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)

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

CLETE T. BREWER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
STAFFMARK, INC.
302 EAST MILLSAP ROAD
FAYETTEVILLE, ARKANSAS 72703
(501) 973-6000
(501) 973-6019 (FAX)
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

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

Copies of all correspondence to:

C. DOUGLAS BUFORD, JR., ESQ.
WRIGHT, LINDSEY & JENNINGS
200 WEST CAPITOL, SUITE 2200
LITTLE ROCK, ARKANSAS 72201
(501) 371-0808
(501) 376-9442 (FAX)

GLENN W. STURM, ESQ.
NELSON MULLINS RILEY & SCARBOROUGH, L.L.P.
400 COLONY SQUARE, SUITE 2200
1201 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30361
(404) 817-6000
(404) 817-6050 (FAX)

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED(1) SHARE(2) PRICE REGISTRATION FEE

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<S> <C> <C> <C> <C>
Common stock, $.01 par
value per share.......... 6,325,000 $12.00 $75,900,000 $26,172.41
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</TABLE>

(1) Includes 825,000 shares subject to the exercise of the Underwriters'
over-allotment option.

(2) Estimated solely for the purposes of calculating the registration fee
pursuant to Rule 457(a).

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

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A)
MAY DETERMINE.

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<PAGE> 2

STAFFMARK, INC.

CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K

<TABLE>
<CAPTION>
REGISTRATION STATEMENT ITEM AND CAPTION LOCATION IN PROSPECTUS
- -------------------------------------------------- ------------------------------------------
<S> <C> <C>
1. Forepart of the Registration Statement and
Outside Front Cover Page of
Prospectus.............................. Outside Front Cover Page; Inside Front and
Outside Back Cover Pages; Cross
Reference Sheet
2. Inside Front and Outside Back Cover Pages
of Prospectus........................... Inside Front and Outside Back Cover Pages
of Prospectus; Additional Information
3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges...... Prospectus Summary; Risk Factors; The
Company
4. Use of Proceeds........................... Prospectus Summary; Use of Proceeds
5. Determination of Offering Price........... Outside Front Cover Page; Risk Factors;
Underwriting
6. Dilution.................................. Dilution
7. Selling Security Holders.................. Not Applicable
8. Plan of Distribution...................... Outside Front Cover Page; Underwriting
9. Description of Securities to be
Registered.............................. Description of Capital Stock; Dividend
Policy
10. Interests of Named Experts and Counsel.... Legal Matters; Experts
11. Information with Respect to the
Registrant.............................. Prospectus Summary; Risk Factors; The
Company; Dividend Policy;
Capitalization; Selected Combined
Founding Companies' Financial and
Operating Data; Management's Discussion
and Analysis of Financial Condition and
Results of Operations; Business;
Management; Certain Transactions;
Principal Stockholders; Shares Eligible
for Future Sale; Consolidated Financial
Statements
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................. Not Applicable
</TABLE>
<PAGE> 3

***************************************************************************
* *
* Information contained herein is subject to completion or amendment. A *
* registration statement relating to these securities has been filed *
* with the Securities and Exchange Commission. These securities may not *
* be sold nor may offers to buy be accepted prior to the time the *
* registration statement becomes effective. This prospectus shall not *
* constitute an offer to sell or the solicitation of an offer to buy *
* nor shall there be any sale of these securities in any State in which *
* such offer, solicitation or sale would be unlawful prior to *
* registration or qualification under the securities laws of any such *
* State. *
* *
***************************************************************************

SUBJECT TO COMPLETION, DATED JULY 3, 1996
PROSPECTUS

5,500,000 SHARES

[STAFFMARK LOGO]

COMMON STOCK

The 5,500,000 shares of Common Stock offered hereby are being sold by
StaffMark, Inc. (the "Company"). Prior to this offering (the "Offering"), there
has been no public market for the Common Stock. It is currently anticipated that
the initial public offering price will be between $10.00 and $12.00 per share.
See "Underwriting" for information relating to the factors to be considered in
determining the initial public offering price. Application has been made for the
Common Stock to be approved for quotation on The Nasdaq Stock Market's National
Market (the "Nasdaq National Market") under the symbol "STAF."

SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN MATTERS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
------------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
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PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
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<S> <C> <C> <C>
Per Share......................... $ $ $
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Total(3).......................... $ $ $
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</TABLE>

(1) The Company has agreed to indemnify the Underwriters against certain civil
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated to be
$2,500,000.
(3) The Company has granted the Underwriters an over-allotment option to
purchase up to 825,000 additional shares of Common Stock on the same terms
and conditions as set forth above. If all such shares are purchased by the
Underwriters, the total Price to Public will be $ , the total
Underwriting Discount will be $ and the total Proceeds to Company
will be $ . See "Underwriting."

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

The shares of Common Stock are offered subject to receipt and acceptance by
the Underwriters, to prior sale and to the Underwriters' right to reject any
order in whole or in part and to withdraw, cancel or modify the offer without
notice. It is expected that certificates for the shares of Common Stock will be
available for delivery on or about , 1996.

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

J.C. Bradford & Co. Stephens Inc.

, 1996
<PAGE> 4

[INSIDE FRONT PAGE OF PROSPECTUS]

[MAP]

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED THROUGH THE NASDAQ NATIONAL MARKET, IN
THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

Following consummation of the Offering, the Company intends to furnish its
stockholders with annual reports containing financial statements audited by
independent accountants.
<PAGE> 5

PROSPECTUS SUMMARY

Simultaneously with and as a condition to the closing of this Offering,
StaffMark, Inc. will acquire, in separate merger transactions (the "Mergers") in
exchange for cash and shares of its Common Stock, all of the common stock of six
staffing service businesses (each a "Founding Company" and collectively, the
"Founding Companies"). Unless otherwise indicated, all references herein to the
"Company" include the Founding Companies, and references herein to "StaffMark"
shall mean StaffMark, Inc. prior to the consummation of the Mergers.

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements and
related notes appearing elsewhere in this Prospectus. Unless otherwise
indicated, all share, per share and financial information set forth herein: (i)
has been adjusted to give effect to the Mergers; (ii) assumes an initial public
offering price of $11.00 per share, the midpoint of the range set forth on the
cover page of this Prospectus; (iii) has been adjusted to reflect a
1,355-for-one stock split in the form of a stock dividend prior to the Offering;
and (iv) assumes no exercise of the Underwriters' over-allotment option.

This Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results may differ materially from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those discussed in "Risk
Factors."

THE COMPANY

StaffMark was founded in March 1996 to create a leading provider of
diversified staffing services to businesses, professional and service
organizations, governmental agencies and healthcare providers, primarily in
growth markets in the southeastern and southwestern United States. StaffMark has
entered into agreements to acquire, simultaneously with the closing of this
Offering, the six Founding Companies, which have on average operated for over 15
years. The Company will provide a wide variety of staffing services through 91
branch offices located in Arkansas, Colorado, Georgia, North Carolina, Oklahoma,
South Carolina, Tennessee and Virginia. The Company's senior management will be
comprised primarily of stockholders of the Founding Companies. Currently, the
six Founding Companies provide more than 10,000 employees to over 2,500 clients
during a typical week. Since 1993, the Founding Companies have expanded by
acquiring four staffing businesses with 17 offices and by opening an additional
32 branch offices.

The Company's business is organized into three divisions: Commercial,
Professional, and Specialty Medical. The Commercial division provides clerical
and light industrial staffing services, and generated approximately 86.4% and
84.7% of the Company's revenues for the year ended December 31, 1995 and the
three months ended March 31, 1996, respectively. The Professional division
provides technical, professional and information technology staffing services
and generated approximately 5.3% and 7.6% of the Company's revenues for the year
ended December 31, 1995 and the three months ended March 31, 1996, respectively.
The Specialty Medical division provides healthcare and medical staffing
services, such as physical and occupational therapists, speech pathologists and
clinical trials support services, and generated approximately 8.3% and 7.7% of
the Company's revenues for the year ended December 31, 1995 and the three months
ended March 31, 1996, respectively. According to Staffing Industry Report, an
industry publication, technical, professional and healthcare staffing are among
the fastest growing sectors of the staffing industry. The Company believes that
these specialized services offer a greater opportunity for growth and
profitability than commercial staffing services alone.

3
<PAGE> 6

The Company will seek to combine a decentralized, entrepreneurial operating
structure, which promotes decision-making, accountability and local name
recognition at the branch level, with strong corporate management, information
systems and marketing support. Following the consummation of the Offering, the
Company intends to centralize certain administrative functions, reduce or
eliminate redundant functions and facilities and implement the best practices of
the Founding Companies on a Company-wide basis. The Company's objective is to
become a premier provider of quality personnel staffing services to clients in
selected markets throughout the United States. The Company seeks to accomplish
this objective by undertaking the following growth strategy:

Pursuing Strategic Acquisitions. The Company seeks acquisitions of
profitable, well-managed staffing companies that will expand the
geographic scope of its operations, increase the revenues of its
Professional and Specialty Medical divisions, or offer services that may
be cross-sold to the Company's existing client base. The Company has
acquired four staffing businesses over the past three years and
currently has two acquisitions pending.

Growing Internally. The Company intends to increase the productivity and
profitability of existing operations by expanding and enhancing services
and by increasing penetration in existing geographic markets through
"spinning-off" new branches from existing branches. During fiscal 1995
and the first quarter of 1996, the Company opened 19 spin-off branches.
In addition, the Company may open new branch offices by following
existing clients into new geographic areas.

Increasing Vendor-On-Premises Relationships. The Company currently has
16 vendor-on-premises ("VOP") partnering relationships, as compared to
nine at December 31, 1995. VOP relationships represented 8.9% and 16.1%
of the Company's revenues for the year ended December 31, 1995 and the
three months ended March 31, 1996, respectively. Under these programs,
the Company assumes administrative responsibility for coordinating all
temporary personnel services throughout a client's location or
organization, including skills testing and training. The VOP program
provides the Company with an opportunity to establish long-term client
relationships, which results in a more stable source of revenue.

Cross-Selling Professional Services. The Company currently provides
commercial staffing services in the majority of its offices and plans to
introduce its professional services to certain branches that currently
do not offer such services. The Company believes there are substantial
growth opportunities that may be realized from the introduction of its
broad range of existing services throughout its network of branch
offices.

Expanding Specialty Medical Services. The Company believes that revenue
and profitability can be enhanced by providing specialty medical
services in additional markets. The Specialty Medical division generally
enjoys higher gross margins than the Commercial division because it
offers specialized expertise. The Company intends to expand its
Specialty Medical division through acquisitions and internal
development.

THE OFFERING

Common Stock offered by the Company..... 5,500,000 shares

Common Stock to be outstanding after the
Offering................................ 12,473,249 shares(1)

Use of proceeds......................... To repay indebtedness, to pay the
cash portion of the purchase price
for the Founding Companies and for
general corporate purposes,
including acquisitions.

Proposed Nasdaq National Market
symbol.................................. STAF

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

(1) Includes (i) 1,355,000 shares issued by StaffMark prior to the Offering, and
(ii) 5,618,249 shares of Common Stock to be issued to the stockholders of
the Founding Companies in connection with the Mergers, but excludes up to
935,494 shares of Common Stock subject to options to be issued under the
Company's 1996 Stock Option Plan. See "Management -- 1996 Stock Option
Plan."

4
<PAGE> 7

SUMMARY COMBINED FOUNDING COMPANIES' FINANCIAL AND OPERATING DATA

StaffMark will acquire, simultaneously with the closing of this Offering,
the Founding Companies. The historical financial statements of each of the
Founding Companies have been combined for all periods presented at historical
cost, as if these companies had always been members of the same operating group.
However, during the periods presented, the Founding Companies were not under
common control or management. Therefore, the data presented may not be
comparable to or indicative of post-combination results to be achieved by the
Company. Additionally, the Founding Companies' results of operations reflect two
tax structures, S Corporations and C Corporations. Accordingly, line items which
are not meaningful on a combined basis due to the combination of companies with
different tax structures, such as provision for income taxes and net income,
have been omitted. See "Selected Combined Founding Companies' Financial and
Operating Data."

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31,(1) ENDED MARCH 31,
------------------------------------------------- -----------------------
1991 1992 1993 1994 1995 1995 1996
------- ------- ------- -------- -------- --------- -----------
(IN THOUSANDS, EXCEPT PER SHARE AND SELECTED OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues:
Commercial................................ $36,734 $58,086 $75,288 $102,465 $126,684 $ 26,384 $34,667
Professional.............................. 1,920 6,870 7,216 7,664 7,761 1,940 3,110
Specialty Medical......................... 3,033 5,707 8,717 11,027 12,242 3,142 3,148
------- ------- ------- -------- -------- -------- -------
Total................................. 41,687 70,663 91,221 121,156 146,687 31,466 40,925
Gross profit................................ 9,004 14,818 19,104 24,044 29,584 6,082 8,475
Operating income............................ $ 1,270 $ 2,546 $ 3,231 $ 4,235 $ 4,358 $ 829 $ 1,109
PRO FORMA(2):
Revenues(3)......................................................................... $171,463 $42,204
Operating income(4)................................................................. 7,603 1,350
Net income(4)(5).................................................................... 3,106 477
Net income per share................................................................ $0.37 $0.06
Weighted average shares outstanding(6).............................................. 8,420 8,420
SELECTED OPERATING DATA (AT END OF PERIOD):
Branch offices:
Commercial................................................... 41 45 65 76
Professional................................................. 2 3 4 6
Specialty Medical............................................ 4 4 5 5
------- -------- -------- -------
Total.................................................... 47 52 74 87
======= ======== ======== =======
</TABLE>

<TABLE>
<CAPTION>
AS OF MARCH 31, 1996
----------------------------------
PRO FORMA AS
ACTUAL (2)(7) ADJUSTED(8)
-------- --------- -----------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital..................................................................... $ 4,579 $(16,422) $18,359
Total assets........................................................................ 43,684 43,779 53,433
Long-term debt, including current maturities........................................ 19,987 24,631 --
Shareholders' equity (deficit)...................................................... 8,943 (12,355) 41,235
</TABLE>

- ---------------
(1) Amounts for HRA are reported for the fiscal years ended September 30.

(2) See the Unaudited Pro Forma Combined Financial Statements of the Company for
pro forma financial information relating to fiscal year 1995 and the three
months ended March 31, 1996.

(3) Adjusted to reflect the acquisitions of E.P. Enterprises Corporation d/b/a
Caldwell Services, Inc. ("Caldwell"), On Call Employment Services, Inc. ("On
Call") and Strategic Sourcing, Inc. ("SSI").

(4) Adjusted to reflect the acquisitions of Caldwell, On Call and SSI and
reductions in salaries to certain owners of the Founding Companies which
have been agreed to in connection with the Mergers (the "Compensation
Differential").

(5) Gives effect to certain tax adjustments related to the taxation of certain
Founding Companies as S Corporations prior to the consummation of the
Mergers and the tax impact of the Compensation Differential in each period.

(6) Includes: (i) 1,355,000 shares issued by StaffMark prior to the Offering;
(ii) 5,618,249 shares to be issued to the stockholders of the Founding
Companies in connection with the Mergers; and (iii) 1,447,046 shares to be
issued in connection with the Offering to pay the cash portion of the
consideration for the Founding Companies but excludes up to 935,494 shares
of Common Stock subject to options to be issued under the Company's 1996
Stock Option Plan.

(7) Gives effect to: (i) the combination of the Founding Companies with
StaffMark as if such combination had occurred on March 31, 1996; (ii) a
liability for the cash consideration of $15,917,510 to be paid to the
stockholders of the Founding Companies in connection with the Mergers; (iii)
the transfer by the Founding Companies of certain assets to their
stockholders in connection with the Mergers; (iv) the additional cash to be
borrowed to fund the distribution of certain Founding Companies' S
Corporation Accumulated Adjustment Accounts; and (v) the acquisition of SSI
whose stockholders have signed a definitive agreement to be purchased by
First Choice, one of the Founding Companies.

(8) Adjusted to reflect the sale of 5,500,000 shares of Common Stock offered
hereby at an assumed initial public offering price of $11.00 per share and
the application of the estimated net proceeds therefrom. See "Use of
Proceeds."

5
<PAGE> 8

SUMMARY INDIVIDUAL FOUNDING COMPANY FINANCIAL DATA

The following table presents summary data for each of the individual
Founding Companies for the three most recent years as well as the most recent
interim period and comparative period of the prior year.

<TABLE>
<CAPTION>
PERIODS ENDED
YEAR ENDED DECEMBER 31,(1) MARCH 31,(2)
----------------------------------- --------------------
1993 1994 1995 1995 1996
------- ------- ------- ------ -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BREWER:
Revenues.................................................. $12,313 $27,894 $43,874 $7,490 $13,866
Cost of services.......................................... 10,063 22,906 35,115 6,281 10,953
------- ------- ------- ------ -------
Gross profit.............................................. 2,250 4,988 8,759 1,209 2,913
Operating expenses........................................ 1,744 3,739 6,394 924 2,300
------- ------- ------- ------ -------
Operating income.......................................... 506 1,249 2,365 285 613
Interest expense.......................................... 54 92 801 22 425
Net income................................................ 478 1,177 1,587 277 199
Total assets.............................................. 2,917 4,054 21,752 4,079 26,656
Total debt................................................ 1,232 949 16,295 613 20,258
Shareholders' equity...................................... 1,110 2,110 2,786 2,024 3,287

PROSTAFF:
Revenues.................................................. $27,245 $30,608 $34,330 $7,535 $ 8,586
Cost of services.......................................... 22,858 25,456 28,234 6,200 6,977
------- ------- ------- ------ -------
Gross profit.............................................. 4,387 5,152 6,096 1,335 1,609
Operating expenses........................................ 3,756 4,359 5,559 1,164 1,607
------- ------- ------- ------ -------
Operating income.......................................... 631 793 537 171 2
Interest expense.......................................... 87 29 20 5 8
Net income................................................ 399 522 446 77 4

MAXWELL:
Revenues.................................................. $16,324 $21,226 $23,093 $5,835 $ 6,149
Cost of services.......................................... 11,253 16,004 17,748 4,523 4,745
------- ------- ------- ------ -------
Gross profit.............................................. 5,071 5,222 5,345 1,312 1,404
Operating expenses........................................ 3,658 3,928 4,433 1,033 1,199
------- ------- ------- ------ -------
Operating income.......................................... 1,413 1,294 912 279 205
Interest expense.......................................... 28 34 -- -- 1
Net income................................................ 1,296 1,263 920 286 255

HRA:
Revenues.................................................. $13,333 $16,453 $18,306 $8,440 $10,645
Cost of services.......................................... 10,985 13,367 14,939 6,876 8,629
------- ------- ------- ------ -------
Gross profit.............................................. 2,348 3,086 3,367 1,564 2,016
Operating expenses........................................ 2,141 2,427 3,504 1,534 1,910
------- ------- ------- ------ -------
Operating income (loss)................................... 207 659 (137) 30 106
Interest expense.......................................... 84 101 107 33 53
Net income (loss)......................................... 85 353 (147) 4 (11)

FIRST CHOICE:
Revenues.................................................. $10,808 $13,007 $13,703 $3,228 $ 3,524
Cost of services.......................................... 8,825 10,573 11,149 2,621 2,868
------- ------- ------- ------ -------
Gross profit.............................................. 1,983 2,434 2,554 607 656
Operating expenses........................................ 1,397 2,519 2,292 520 562
------- ------- ------- ------ -------
Operating income (loss)................................... 586 (85) 262 87 94
Interest expense.......................................... -- 26 19 6 7
Net income................................................ 351 59 243 80 86

BLETHEN:
Revenues.................................................. $11,198 $11,967 $13,380 $3,182 $ 3,497
Cost of services.......................................... 8,132 8,806 9,918 2,355 2,629
------- ------- ------- ------ -------
Gross profit.............................................. 3,066 3,161 3,462 827 868
Operating expenses........................................ 3,178 2,837 3,043 716 728
------- ------- ------- ------ -------
Operating income (loss)................................... (112) 324 419 111 140
Interest expense.......................................... 135 137 141 28 34
Net income (loss)......................................... (91) 141 208 59 50
</TABLE>

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

(1) Amounts for HRA are reported for the fiscal years ended September 30.

(2) Amounts for HRA are reported for the six months ended March 31, 1996.

6
<PAGE> 9

RISK FACTORS

In addition to the other information contained in this Prospectus, the
following risk factors should be considered carefully in evaluating the Company
and its business before purchasing shares of Common Stock offered hereby.

ABSENCE OF COMBINED OPERATING HISTORY. StaffMark was founded in March 1996
but has conducted no operations and generated no revenues to date. StaffMark has
entered into agreements to acquire the Founding Companies simultaneously with
the closing of this Offering. The Founding Companies have been operating as
separate independent entities, and there can be no assurance that the Company
will be able to successfully operate the Company, integrate the Founding
Companies businesses, achieve any cost savings as a result of the Mergers or
institute the necessary systems and procedures to successfully manage the
combined enterprise on a profitable basis. The Company may experience delays,
complications and expenses in implementing, integrating and operating such
systems, any of which could have a material adverse effect on the Company's
business, financial condition and results of operations. The management group on
a combined basis has been assembled only recently and there can be no assurance
that the management group will be able to oversee the combined entity and
effectively implement the Company's operating, growth, acquisition or business
strategies. The combined historical financial results of the Founding Companies
cover periods when the Founding Companies were not under common control or
management and, therefore, may not be indicative of the Company's future
financial or operating results. The mergers of the Founding Companies involve
the assumption of legal liabilities and amortization of certain acquired
intangible assets, some or all of which could have a material adverse effect on
the Company's business, financial condition and results of operations. The
inability of the Company to successfully integrate or operate the Founding
Companies would have a material adverse effect on the Company's business,
financial condition and results of operations and would make it unlikely that
the Company's acquisition program will be successful. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Management" and "Certain Transactions -- Organization of the Company."

EFFECT OF FLUCTUATIONS IN THE GENERAL ECONOMY. Demand for the Company's
staffing services is significantly affected by the general level of economic
activity and unemployment in the United States. When economic activity
increases, temporary employees are often added before full-time employees are
hired. However, as economic activity slows, many companies reduce their
utilization of temporary employees prior to undertaking layoffs of full-time
employees. In addition, the Company may experience more competitive pricing
pressure during periods of economic downturn. Therefore, any significant
economic downturn could have a material adverse effect on the Company's
business, financial condition and results of operations. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

RISKS RELATED TO THE COMPANY'S ACQUISITION STRATEGY. One of the Company's
primary business strategies is to increase its revenues and expand the markets
it serves through the acquisition of additional staffing service businesses.
Competition for acquisitions in the staffing industry has increased
significantly in recent years and, as a result, there may be fewer acquisition
candidates available to the Company, and the price of acquisitions may be
higher. There can be no assurance that the Company will be able to identify,
acquire or profitably manage additional businesses or successfully integrate
acquired businesses, if any, into the Company without substantial costs, delays
or other operational or financial problems. Further, acquisitions involve a
number of special risks, including possible adverse effects on the Company's
operating results, diversion of management's attention, dependence on retention,
hiring and training of key personnel, risks associated with unanticipated
problems or legal liabilities, and realization of acquired intangible assets,
some or all of which could have a material adverse effect on the Company's
business, financial condition and results of operations. In addition, there can
be no assurance that the Founding Companies or other staffing service businesses
acquired in the future will achieve anticipated revenues and earnings. To the
extent that the Company is unable to acquire additional staffing businesses or
integrate such businesses successfully, its ability to expand its operations and
increase its revenues to the degree desired would be reduced significantly. The
inability to acquire additional staffing businesses could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business -- Operating Strategy" and "-- Growth Strategy."

7
<PAGE> 10

ABILITY TO CONTINUE GROWTH. Certain of the Founding Companies have
experienced significant growth in the past, principally through acquisitions,
growth of existing offices and the opening of new offices. There can be no
assurance that the Company will be able to expand its market presence in its
current locations, successfully enter other markets through acquisitions or the
opening of new offices or integrate future acquired businesses, if any, into the
Company without substantial costs, delays or other operational or financial
problems. There also can be no assurance that future acquisitions or recently
completed acquisitions will not have an adverse effect on the Company's
operating results, particularly in the fiscal quarters immediately following the
consummation of such transactions. The ability of the Company to continue its
growth will depend on a number of factors, including the availability of working
capital to support such growth, existing and emerging competition and the
Company's ability to maintain profitability while facing pricing pressures. The
Company must also manage costs in a changing regulatory environment, adapt its
infrastructure and systems to accommodate growth, and recruit and train
additional qualified personnel. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources -- Combined" and "Business -- Operating Strategy" and "-- Growth
Strategy."

RISKS RELATED TO ACQUISITION FINANCING. The Company currently intends to
finance future acquisitions by using cash and shares of the Company's Common
Stock for all or a substantial portion of the consideration to be paid. In the
event that the Common Stock does not maintain a sufficient market value, or
potential acquisition candidates are unwilling to accept the Company's Common
Stock as part of the consideration for their businesses, the Company may be
required to utilize its cash resources, if available, in order to initiate and
maintain its acquisition program. Immediately following this Offering, the
Company will have limited cash resources to pursue acquisitions. If the Company
does not have sufficient cash resources to pursue acquisitions, its growth could
be limited unless it is able to obtain additional capital through debt or equity
financing. There can be no assurance that the Company will be able to obtain
such financing if and when it is needed or that, if available, such financing
can be obtained on terms the Company deems acceptable. The inability to acquire
such financing, if needed, could have a material adverse effect on the Company's
business, financial condition and results of operations. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources -- Combined" and "Business -- Growth Strategy."

COMPETITIVE MARKET. The temporary staffing industry is highly competitive,
with limited barriers to entry. The Company competes for employees and clients
in national, regional and local markets with full-service and specialized
temporary staffing services. A significant number of competitors have greater
marketing, financial and other resources and more established operations than
the Company. The Company expects that the level of competition will remain high
in the future, which could limit the Company's ability to maintain or increase
its market share or maintain or increase gross margins, either of which could
have a material adverse effect on the Company's business, financial condition
and results of operations. See "Business -- The Staffing Services Industry" and
"-- Competition."

DEPENDENCE ON AVAILABILITY OF QUALIFIED TEMPORARY PERSONNEL. The Company
depends on its ability to attract, train and retain personnel who possess the
skills and experience necessary to meet the staffing requirements of its
clients. Competition for individuals with proven skills in certain areas,
particularly medical and technical, is intense. The Company competes in several
markets in which unemployment is relatively low thereby increasing competition
for employees. The Company is also adversely affected by certain special events
such as the 1996 Summer Olympic Games in Atlanta, which have further reduced the
number of qualified temporary candidates available for the Company's Atlanta
branch offices. The Company must continually evaluate, train and upgrade its
base of available personnel to keep pace with clients' needs. There can be no
assurance that qualified personnel will continue to be available to the Company
in sufficient numbers and on terms of employment acceptable to the Company. The
inability to attract and retain qualified personnel could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business -- Operations -- Employees/Personnel."

INCREASED EMPLOYEE COSTS. The Company is required to pay unemployment
insurance premiums and workers' compensation for its temporary employees.
Unemployment insurance premiums may increase as a result of, among other things,
increased levels of unemployment and the lengthening periods for which

8
<PAGE> 11

unemployment benefits are available. Workers' compensation costs may increase as
a result of changes in the Company's experience rating or applicable laws. The
Company's workers' compensation insurance coverage provides for a $250,000
deductible per occurrence. The Company's workers' compensation insurance
premiums are subject to retroactive increases based upon audits of the Company's
employee classification practices and other data provided to the insurance
carrier. The Company has retained the services of an independent third-party
administrator and an independent actuary to assist the Company in establishing
appropriate reserves for the uninsured portion of claims (up to the deductible
amount), but such reserves are only estimates of future payments relating to
claims and are based upon limited prior experience. Although management believes
its recorded reserve is adequate, there can be no assurance that the Company's
actual future workers' compensation obligations will not exceed the amount of
its workers' compensation reserve. The Company may incur costs related to
workers' compensation claims at a higher rate due to such causes as higher than
anticipated losses from known claims or an increase in the number and severity
of new claims. See "Business -- Operations -- Workers' Compensation Program."

RISK OF GOVERNMENT REGULATIONS AND LEGISLATIVE PROPOSALS. The Company's
costs could increase if there are any material changes in government
regulations. Recent federal and certain state legislative proposals have
included provisions extending health insurance benefits to employees who do not
presently receive such benefits. Due to the wide variety of national and state
proposals currently under consideration, the impact of such proposals cannot be
predicted. There can be no assurance that the Company will be able to increase
the fees charged to its clients in a timely manner and sufficient amount to
cover increased costs related to any new benefits that may be extended to
temporary employees. It is not possible to predict whether other legislation or
regulations affecting the Company's operations will be proposed or enacted at
the federal or state level. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business -- Operations --
Employees/Personnel."

REGULATION OF INTERNATIONAL RECRUITING. The Company currently recruits
physical and occupational therapists internationally for domestic placement. The
entry of these employees into the United States is regulated by the U.S.
Department of Labor and U.S. Department of Justice -- Immigration and
Naturalization Services. The regulations governing the hiring of foreign
nationals are complex and change often. If either of these authorities or any
other regulatory or judicial body should determine that the Company is not in
compliance with the regulations, the Company could be subject to fines and/or
suspension of this part of the Company's business. Further, regulations could
change in a manner which would limit the Company's ability to employ foreign
nationals. Any of the foregoing could have a material adverse effect on the
Company's business, financial condition, and results of operation.

INDUSTRY RISKS. Providers of temporary staffing services generally place
their employees in the workplace of other businesses. An attendant risk of such
activity includes possible claims of discrimination and harassment, employment
of illegal aliens and other similar claims. Management has adopted and
implemented policies and guidelines to reduce the Company's exposure to these
risks. However, a failure of any Company employee to follow these policies and
guidelines may result in negative publicity, injunctive relief and the
assessment against the Company of damages or fines. Moreover, in certain
circumstances, the Company may be held responsible for the actions at a
workplace of persons not under the direct control of the Company.

Temporary staffing providers are also affected by fluctuations in the
business of their clients. Interruptions in the business of its clients can
adversely affect the Company's business. For example, inclement weather or
natural disasters, which may require clients to close or reduce their hours of
operation, could adversely affect the Company's business, financial condition
and results of operations.

RELIANCE ON KEY PERSONNEL. The Company is highly dependent on its
management. The Company believes that its success will depend to a significant
extent upon the efforts and abilities of the key executives of the Founding
Companies. Furthermore, the Company will likely be dependent on the senior
management of companies that may be acquired in the future. If any of these
individuals are unable to continue in their position with the Company, or if the
Company is unable to attract and retain other skilled employees, the

9
<PAGE> 12

Company's business, financial condition and results of operation could be
adversely affected. See "Management."

CONTROL BY EXISTING MANAGEMENT AND STOCKHOLDERS. Following the completion
of this Offering, officers and directors of the Company, and entities affiliated
with them, will beneficially own approximately 40.4% of the then outstanding
shares of Common Stock (37.9%, if the Underwriters' over-allotment option is
exercised in full) and are likely to exercise substantial control over the
Company's affairs. These stockholders acting together would likely be able to
elect a sufficient number of directors to control the Board of Directors of the
Company and to approve or disapprove any matter submitted to a vote of
stockholders. See "Principal Stockholders."

POTENTIAL LIABILITY AND INSURANCE; LEGAL PROCEEDINGS. The provision of
professional services, specialty medical and clinical trials services entails an
inherent risk of professional malpractice and other similar claims. The Company
expects to maintain insurance coverage that it believes will be adequate both as
to risks and amounts. The Company believes that such insurance will extend to
professional liability claims that may be asserted against employees of the
Company. In the ordinary course of its business, the Company is periodically
threatened with or named as a defendant in various lawsuits, including
discrimination and harassment and other similar claims, which could have a
material adverse effect on the Company's business, financial condition and
results of operations.

POTENTIAL EFFECT OF SHARES FOR FUTURE SALE ON PRICE OF COMMON STOCK. The
5,500,000 shares being sold in this Offering will be freely tradeable unless
acquired by affiliates of the Company. The market price of the Common Stock of
the Company could be adversely affected by the sale of substantial amounts of
Common Stock of the Company in the public market following this Offering.

Simultaneously with the closing of this Offering, the stockholders of the
Founding Companies will receive, in the aggregate, 5,618,249 shares of Common
Stock as a portion of the consideration for their businesses. These shares are
not being offered by this Prospectus; however, the stockholders who will receive
these shares also have certain registration rights with respect to such shares.
Certain other stockholders of StaffMark will hold, in the aggregate, an
additional 1,355,000 shares of Common Stock. See "Certain
Transactions -- Organization of the Company." None of these 6,973,249 shares
were acquired in transactions registered under the Securities Act and,
accordingly, such shares may not be sold except in transactions registered under
the Securities Act or pursuant to an exemption from registration.

The Company, all of the stockholders of the Founding Companies and the
executive officers and directors of the Company have agreed not to offer or sell
any shares of Common Stock of the Company for a period of 180 days (the "Lockup
Period") after the date hereof without the prior written consent of J.C.
Bradford & Co. and Stephens Inc., as representatives of the Underwriters (the
"Representatives"), except that the Company may issue shares of Common Stock in
connection with acquisitions or upon the exercise of options granted under the
Company's 1996 Stock Option Plan. After the Lockup Period, all of such shares
may be sold in accordance with Rule 144 promulgated under the Securities Act,
subject to the volume, holding period and other limitations of Rule 144. See
"Underwriting." However, the stockholders of the Founding Companies and
StaffMark have agreed with the Company that they will not sell the 6,973,249
shares of Common Stock issued to them for a period of two years after the
closing of this Offering.

The Company intends to issue under its 1996 Stock Option Plan (the "Plan")
options to purchase up to an aggregate of 935,494 shares of Common Stock. The
sale of Common Stock underlying such options will be subject to the expiration
of the Lockup Period. Substantially all of the options will vest over a period
of five years (40% two years after the date of grant and 20% each year
thereafter). The Company intends to register the shares issuable upon exercise
of options granted under the Plan and, upon such registration, such shares will
be eligible for resale in the public market. See "Management -- 1996 Stock
Option Plan."

The Company plans to register up to an additional 4,000,000 shares of its
Common Stock with the Securities and Exchange Commission (the "Commission")
under the Securities Act as soon as practicable after completion of this
Offering for use by the Company as all or a portion of the consideration to be
paid in

10
<PAGE> 13

conjunction with future acquisitions. These shares may be freely tradeable after
their issuance, unless the sale of such shares is restricted. See "Shares
Eligible for Future Sale."

NO PRIOR PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE. Prior to this
Offering, there has been no public market for the Common Stock. The Company has
filed application for the Common Stock to be approved for quotation on the
Nasdaq National Market; however, there can be no assurance that, following this
Offering, a regular trading market for the Common Stock will develop or be
sustained. The initial public offering price has been determined by negotiation
among the Company and the Representatives and may bear no relationship to the
market price of the Common Stock after this Offering. See "Underwriting." The
market price of the Common Stock could be subject to significant fluctuations in
response to variations in quarterly operating results and other factors. In
addition, the stock market in recent years has experienced extreme price and
volume fluctuations that often have been unrelated or disproportionate to the
operating performance of companies. Factors such as actual or anticipated
operating results, growth rates, changes in estimates by analysts, market
conditions in the industry, announcements by competitors, regulatory actions and
general economic conditions will vary from period to period. As a result of the
foregoing, the Company's operating results and prospects from time to time may
be below the expectations of public market analysts and investors. Any such
event would likely result in a material adverse effect on the price of the
Common Stock.

DIVIDEND POLICY; RESTRICTIONS ON PAYMENT. The Company anticipates that for
the foreseeable future its earnings will be retained for the operation and
expansion of its business and that it will not pay cash dividends. In addition,
the Company anticipates that its proposed credit facility will limit the payment
of cash dividends without the lender's consent. See "Dividend Policy."

SUBSTANTIAL PROCEEDS OF OFFERING PAYABLE TO AFFILIATES. Approximately $15.9
million of the net proceeds of this Offering will be used to pay the cash
portion of the purchase price for the common stock of the Founding Companies.
Approximately $10.4 million of such amount, representing 19.4% of the net
proceeds, will be paid to stockholders of the Founding Companies who will become
executive officers, directors or greater than 5% stockholders of the Company. In
addition, approximately $27.9 million, representing approximately 51.9% of the
net proceeds from the Offering, will be used to repay indebtedness assumed by
the Company in the acquisition of the Founding Companies. Approximately $8.4
million of such indebtedness has been guaranteed by stockholders of the Founding
Companies. See "Use of Proceeds" and "Certain Transactions."

IMMEDIATE AND SUBSTANTIAL DILUTION. The purchasers of the shares of Common
Stock offered hereby will experience immediate dilution in the net tangible book
value of their shares of $9.28 per share. In the event the Company issues
additional Common Stock in the future, including shares which may be issued in
connection with future acquisitions, purchasers of Common Stock in this Offering
may experience further dilution in the net tangible book value per share of the
Common Stock of the Company. See "Dilution."

ANTI-TAKEOVER EFFECT OF CERTAIN CHARTER PROVISIONS. The Board of Directors
of the Company is empowered to issue preferred stock in one or more series
without stockholder action. The existence of this "blank-check" preferred stock
provision could render more difficult or discourage an attempt to obtain control
of the Company by means of a tender offer, merger, proxy contest or otherwise.
Certain provisions of the Delaware General Corporation Law may also discourage
takeover attempts that have not been approved by the Board of Directors. See
"Management -- Directors and Executive Officers" and "Description of Capital
Stock."

11
<PAGE> 14

THE COMPANY

StaffMark, a Delaware corporation, was founded in March 1996 to create a
leading provider of diversified staffing services to businesses, professional
and service organizations, governmental agencies, and healthcare providers,
primarily in growth markets located in the southeastern and southwestern United
States. Although it has conducted no operations to date, StaffMark has entered
into agreements to acquire, simultaneously with and as a condition to the
consummation of the Offering, the following established staffing businesses and
their affiliates: (i) Brewer Personnel Services, Inc. ("Brewer"); (ii) Prostaff
Personnel, Inc. and its related entities ("Prostaff"); (iii) Maxwell Staffing,
Inc. and its related entities ("Maxwell"); (iv) HRA, Inc. ("HRA"); (v) First
Choice Staffing, Inc. ("First Choice"); and (vi) Blethen Temporaries, Inc. and
its related entities ("Blethen"). Each of the Founding Companies will become a
wholly-owned subsidiary of the Company. For a description of the transactions
pursuant to which these businesses will be acquired, see "Certain
Transactions -- Organization of the Company."

The Company's business is organized into three divisions: Commercial,
Professional and Specialty Medical. The Commercial division provides clerical
and light industrial staffing services. The Professional division provides
technical, professional and information technology staffing services. The
Specialty Medical division provides healthcare and medical staffing services.

The Company's senior management will be comprised primarily of stockholders
of the Founding Companies. Clete T. Brewer, President and Chief Executive
Officer of Brewer, will serve as President, Chief Executive Officer and a
director of the Company. Ted Feldman, President and Chief Executive Officer of
HRA, will become Chief Operating Officer of the Company. W. David Bartholomew,
Secretary/Treasurer of HRA, will become Executive Vice President -- Southeastern
Operations and a director of the Company. Donald A. Marr, Jr., Vice President of
Operations of Brewer, will become Executive Vice President -- Southwestern
Operations of the Company. Together, Messrs. Bartholomew and Marr will directly
manage the Company's Commercial and Professional divisions. Steven E. Schulte,
President and Chief Executive Officer of Prostaff, will become Executive Vice
President -- Administration and a director of the Company. The Specialty Medical
division of the Company will be managed directly by John H. Maxwell, Jr. and
Janice Blethen. Mr. Maxwell, President of Maxwell, will become the Executive
Vice President -- Medical Services and a director of the Company. Ms. Blethen,
the President and Chief Executive Officer of Blethen, will become the Executive
Vice President -- Clinical Trials Support Services and a director of the
Company. See "Management."

Certain information regarding the Founding Companies, including pending
acquisitions, is set forth below:

YEAR FISCAL 1995 BRANCHES AS OF
COMPANY FOUNDED REVENUE JUNE 1, 1996 STATES SERVICES PROVIDED
- ---------------- ------- -------------- -------------- ------------ -----------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Brewer.......... 1988 $ 43,874 27 AR, CO, GA, Commercial/Professional
TN, VA
Prostaff........ 1973 34,330 25 AR Commercial/Professional
Maxwell......... 1972 23,093 9 OK Commercial/Professional/
Specialty Medical
HRA............. 1991 18,306 15 TN Commercial/Professional
First Choice.... 1986 13,703 8 SC, NC Commercial/Professional
Blethen......... 1975 13,380 7 NC Commercial/Professional/
Specialty Medical
</TABLE>

12
<PAGE> 15

The aggregate consideration to be paid by StaffMark in the Mergers is
approximately $77.7 million, consisting of approximately $15.9 million in cash
and 5,618,249 shares of Common Stock.

The following table sets forth the consideration being paid for each
Founding Company:

<TABLE>
<CAPTION>
COMMON STOCK
-------------------------------
CASH SHARES VALUE OF SHARES(1) TOTAL
------- --------- ------------------ -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Brewer.......................................... $ 2,950 1,935,000 $ 21,285 $24,235
Prostaff........................................ 4,500 1,050,000 11,550 16,050
Maxwell......................................... 2,280 912,000 10,032 12,312
HRA............................................. 2,348 615,175 6,767 9,115
First Choice.................................... 2,075 622,500 6,848 8,923
Blethen......................................... 1,764 483,574 5,319 7,083
------- --------- -------- -------
Total................................. $15,917 5,618,249 $ 61,801 $77,718
======= ========= ======== =======
</TABLE>

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

(1) Represents the aggregate value of the shares of Common Stock issued as
consideration, based upon an assumed initial public offering price of
$11.00 per share.

In addition, immediately prior to the Mergers, certain of the Founding
Companies will make distributions to their stockholders of approximately $3.9
million, representing S Corporation earnings previously taxed to their
stockholders. Prior to the Mergers, certain Founding Companies also will
distribute to their stockholders approximately $349,000 in net book value of
assets. See "Certain Transactions."

The Company maintains its principal executive offices at 302 East Millsap
Road, Fayetteville, Arkansas, 72703. Its telephone number is (501) 973-6000.

13
<PAGE> 16

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 5,500,000 shares of
Common Stock offered hereby are estimated to be approximately $53.8 million
($62.2 million if the Underwriters' over-allotment option is exercised in full),
after deducting underwriting discounts and other offering expenses (estimated to
be approximately $2.5 million), all of which are payable by the Company.

Of this amount, $15.9 million will be used to pay the cash portion of the
purchase price for the Founding Companies, of which approximately $10.4 million,
representing 19.4% of the net proceeds of this Offering, will be paid to
stockholders of the Founding Companies who will become officers, directors, key
employees or holders of more than 5% of the Common Stock of the Company. In
addition, approximately $27.9 million of the net proceeds will be used to repay
indebtedness assumed by the Company in the Mergers, approximately $8.4 of which
is guaranteed by stockholders of the Founding Companies. See "Certain
Transactions." The indebtedness to be repaid bears interest at annual rates
ranging from 5.5% to 20.9%, with a weighted average interest rate of
approximately 8.9% for the three months ended March 31, 1996. Such indebtedness,
if not repaid, would otherwise mature at various dates through 2003.

The remaining net proceeds of approximately $9.9 million will be used for
working capital and for general corporate purposes, which are expected to
include future acquisitions. The Company currently has no agreements with
respect to any future acquisitions other than the two pending acquisitions
discussed herein. Pending such uses, the Company plans to invest the net
proceeds in short-term, interest-bearing, investment grade securities.

The Company has received a proposal from a major lending institution for a
credit facility of approximately $50.0 million to be used for working capital
and other general corporate purposes, including future acquisitions. There can
be no assurance the Company will enter into an agreement for this credit
facility. See "Risk Factors -- Risks Related to Acquisition Financing" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources -- Combined."

DIVIDEND POLICY

The Company does not anticipate paying any cash dividends on its Common
Stock in the foreseeable future because it intends to retain its earnings, if
any, to finance the expansion of its business and for general corporate
purposes, including future acquisitions. Any payment of future dividends will be
at the discretion of the Board of Directors and will depend upon, among other
things, the Company's earnings, financial condition, capital requirements, level
of indebtedness, contractual restrictions with respect to the payment of
dividends and other factors that the Company's Board of Directors deems
relevant. In the event the Company is successful in obtaining one or more lines
of credit, it is likely that any such facility will include restrictions on the
ability of the Company to pay dividends without the consent of the lender.

14
<PAGE> 17

DILUTION

The pro forma deficit in net tangible book value of the Company at March
31, 1996 was ($32,395,431) or ($4.65) per share after giving effect to the
Mergers. The deficit in pro forma net tangible book value per share represents
the amount by which the Company's pro forma total liabilities exceeds the
Company's pro forma net tangible assets divided by the number of shares of
Common Stock outstanding after giving effect to the Mergers. After giving effect
to the sale of the 5,500,000 shares of Common Stock offered hereby at an assumed
initial public offering price of $11.00 per share and after deducting
underwriting discounts and commissions and estimated offering expenses, the pro
forma net tangible book value of the Company at March 31, 1996 would have been
$21,481,463 or $1.72 per share, representing an immediate increase in net
tangible book value of $6.37 per share to existing stockholders and an immediate
dilution of $9.28 per share to the new investors purchasing the shares in this
Offering. The following table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price........................... $11.00
Pro forma deficit in net tangible book value before
Offering................................................... $(4.65)
Increase attributable to the sale of shares offered hereby.... 6.37
------
Pro forma net tangible book value after Offering................ 1.72
------
Dilution in net tangible book value to new investors............ $ 9.28
======
</TABLE>

The following table sets forth, on a pro forma basis to give effect to the
Mergers as of March 31, 1996, the number of shares of Common Stock purchased
from the Company, the total consideration paid and the average price per share
paid by existing stockholders and the new investors after giving effect to the
transactions described under "Certain Transactions -- Organization of the
Company."

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION(1) AVERAGE
---------------------- ------------------------ PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ------------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders................. 6,973,249 55.9% $(12,354,840) (25.7)% $ (1.77)
New investors......................... 5,500,000 44.1 60,500,000 125.7 11.00
---------- ----- ------------ -----
Total....................... 12,473,249 100.0% $ 48,145,160 100.0%
========== ===== ============ =====
</TABLE>

- ---------------
(1) Total consideration paid by existing stockholders represents the combined
stockholders' equity of the Founding Companies before this Offering,
adjusted to reflect: (i) the cash portion of the consideration payable to
the stockholders of the Founding Companies in connection with the Mergers;
(ii) the transfer of selected assets to certain stockholders of the Founding
Companies in connection with the Mergers; (iii) the distribution of certain
of the Founding Companies' S Corporation Accumulated Adjustment Accounts;
and (iv) a liability for deferred income taxes. See "Use of Proceeds" and
"Capitalization."

15
<PAGE> 18

CAPITALIZATION

The following table sets forth the short-term borrowings and current
portion of long-term debt and capitalization at March 31, 1996 (i) of StaffMark
and the combined Founding Companies; (ii) of the Company on a pro forma basis to
give effect to the Mergers; and (iii) of the Company on a pro forma as adjusted
basis, to give effect to both the Mergers and this Offering, and the application
of the estimated net proceeds from this Offering. See "Selected Combined
Founding Companies' Financial and Operating Data" and "Use of Proceeds." This
table should be read in conjunction with the Unaudited Pro Forma Combined
Financial Statements of the Company and the related notes thereto included
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
AS OF MARCH 31, 1996
---------------------------------------
ACTUAL(1) PRO FORMA AS ADJUSTED
--------- --------- -----------
(IN THOUSANDS EXCEPT SHARE DATA)
<S> <C> <C> <C>
Short-term borrowings and current portion of long-term
debt...................................................... $ 4,415 $ 8,519 $ --
======= ========= =======
Long-term debt, excluding current portion(2)................ $18,395 $ 18,935 $ --
------- --------- -------
Stockholders' equity:
Preferred Stock, $.01 par value, 1,000,000 shares
authorized;
none issued or outstanding............................. -- -- --
Common Stock, $.01 par value, 26,000,000 shares
authorized; 6,973,249 shares issued and outstanding,
pro forma; and 12,473,249 shares issued and
outstanding, as adjusted(3)............................ 47 70 125
Additional paid-in capital................................ 506 483 41,365
Subscriptions receivable.................................. (80) (80) (80)
Retained earnings......................................... 8,470 (12,828) (175)
------- --------- -------
Total stockholders' equity........................ 8,943 (12,355) 41,235
------- --------- -------
Total capitalization......................... $27,338 $ 6,580 $41,235
======= ========= =======
</TABLE>

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

(1) Combines the respective accounts of StaffMark and the combined Founding
Companies as reflected in the Unaudited Pro Forma Combined Balance Sheet at
March 31, 1996.

(2) For a description of the Company's long-term debt, see Note 7 to the
Founding Companies' Combined Financial Statements.

(3) Excludes up to 935,494 shares of Common Stock subject to options to be
issued under the Company's 1996 Stock Option Plan. See "Management -- 1996
Stock Option Plan."

16
<PAGE> 19

SELECTED COMBINED FOUNDING COMPANIES' FINANCIAL AND OPERATING DATA

The following selected combined financial and operating data of the
Founding Companies as of December 31, 1994 and 1995, and for each of the three
years in the period ended December 31, 1995, have been derived from the Combined
Founding Companies' Financial Statements, which have been audited by Arthur
Andersen LLP and appear elsewhere in this Prospectus. The selected combined
financial and operating data for the Founding Companies as of December 31, 1991,
1992 and 1993, and for the years ended December 31, 1991 and 1992, and for the
interim periods presented have been derived from unaudited financial statements
which have been prepared on the same basis as the audited financial statements
and, in the opinion of management of the Founding Companies, reflect all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of such data.

The Selected Combined Founding Companies' Financial and Operating Data
should be read in conjunction with the Combined Founding Companies' Financial
Statements, the Unaudited Pro Forma Combined Financial Statements of the
Company, the individual historical financial statements of each of the Founding
Companies, the related notes thereto and "Management's Discussion and Analysis
of Financial Condition and Results of Operations."

17
<PAGE> 20

SELECTED COMBINED FOUNDING COMPANIES' FINANCIAL AND OPERATING DATA

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31,(1) MARCH 31,
----------------------------------------------------- ------------------
1991 1992 1993 1994 1995 1995 1996
------- ------- ------- -------- -------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE AND SELECTED OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues:
Commercial................................... $36,734 $58,086 $75,288 $102,465 $126,684 $26,384 $34,667
Professional................................. 1,920 6,870 7,216 7,664 7,761 1,940 3,110
Specialty Medical............................ 3,033 5,707 8,717 11,027 12,242 3,142 3,148
------- ------- ------- -------- -------- ------- -------
Total...................................... 41,687 70,663 91,221 121,156 146,687 31,466 40,925
Cost of services............................... 32,683 55,845 72,117 97,112 117,103 25,384 32,450
------- ------- ------- -------- -------- ------- -------
Gross profit................................... 9,004 14,818 19,104 24,044 29,584 6,082 8,475
Operating expenses:
Selling, general and administrative.......... 7,514 11,940 15,358 19,067 24,069 5,061 6,939
Depreciation and amortization................ 220 332 515 742 1,157 192 427
------- ------- ------- -------- -------- ------- -------
Operating income............................... $ 1,270 $ 2,546 $ 3,231 $ 4,235 $ 4,358 $ 829 $ 1,109

PRO FORMA(2):
Revenues(3)................................................................................ $171,463 $42,204
Operating income(4)........................................................................ 7,603 1,350
Net income(4)(5)........................................................................... 3,106 477
Net income per share....................................................................... $0.37 $0.06
Weighted average shares(6)................................................................. 8,420 8,420

SELECTED OPERATING DATA (AT END OF PERIOD):
Branch offices:
Commercial........................................................ 41 45 65 76
Professional...................................................... 2 3 4 6
Specialty Medical................................................. 4 4 5 5
------- -------- -------- -------
Total......................................................... 47 52 74 87
======= ======== ======== =======
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital................................ $ 2,433 $ 2,159 $ 3,188 $ 4,992 $ 5,324 $ 4,579
Total assets................................... 5,930 10,460 15,088 18,120 37,827 43,684
Long-term debt, including current maturities... 1,655 1,927 2,371 862 16,438 19,987
Shareholders' equity........................... 2,095 3,089 5,141 7,624 8,616 8,943
</TABLE>

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

(1) Amounts for HRA are reported for the fiscal years ended September 30.

(2) See the Unaudited Pro Forma Combined Financial Statements of the Company for
pro forma financial information relating to fiscal year 1995 and the three
months ended March 31, 1996.

(3) Adjusted to reflect the acquisitions of Caldwell, On Call and SSI.

(4) Adjusted to reflect the acquisitions of Caldwell, On Call and SSI and the
Compensation Differential.

18
<PAGE> 21

SELECTED INDIVIDUAL FOUNDING COMPANY FINANCIAL DATA

The following table presents selected data for each of the individual
Founding Companies for the three most recent years as well as the most recent
interim period and comparative period of the prior year.

<TABLE>
<CAPTION>
PERIODS ENDED
YEAR ENDED DECEMBER 31,(1) MARCH 31,(2)
--------------------------------- -------------------
1993 1994 1995 1995 1996
------- ------- ------- ------ -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BREWER:
Revenues............................................ $12,313 $27,894 $43,874 $7,490 $13,866
Cost of services.................................... 10,063 22,906 35,115 6,281 10,953
------- ------- ------- ------ -------
Gross profit........................................ 2,250 4,988 8,759 1,209 2,913
Operating expenses.................................. 1,744 3,739 6,394 924 2,300
------- ------- ------- ------ -------
Operating income.................................... 506 1,249 2,365 285 613
Interest expense.................................... 54 92 801 22 425
Net income.......................................... 478 1,177 1,587 277 199
Total assets........................................ 2,917 4,054 21,752 4,079 26,656
Total debt.......................................... 1,232 949 16,295 613 20,258
Shareholders' equity................................ 1,110 2,110 2,786 2,024 3,287

PROSTAFF:
Revenues............................................ $27,245 $30,608 $34,330 $7,535 $ 8,586
Cost of services.................................... 22,858 25,456 28,234 6,200 6,977
------- ------- ------- ------ -------
Gross profit........................................ 4,387 5,152 6,096 1,335 1,609
Operating expenses.................................. 3,756 4,359 5,559 1,164 1,607
------- ------- ------- ------ -------
Operating income.................................... 631 793 537 171 2
Interest expense.................................... 87 29 20 5 8
Net income.......................................... 399 522 446 77 4

MAXWELL:
Revenues............................................ $16,324 $21,226 $23,093 $5,835 $ 6,149
Cost of services.................................... 11,253 16,004 17,748 4,523 4,745
------- ------- ------- ------ -------
Gross profit........................................ 5,071 5,222 5,345 1,312 1,404
Operating expenses.................................. 3,658 3,928 4,433 1,033 1,199
------- ------- ------- ------ -------
Operating income.................................... 1,413 1,294 912 279 205
Interest expense.................................... 28 34 -- -- 1
Net income.......................................... 1,296 1,263 920 286 255

HRA:
Revenues............................................ $13,333 $16,453 $18,306 $8,440 $10,645
Cost of services.................................... 10,985 13,367 14,939 6,876 8,629
------- ------- ------- ------ -------
Gross profit........................................ 2,348 3,086 3,367 1,564 2,016
Operating expenses.................................. 2,141 2,427 3,504 1,534 1,910
------- ------- ------- ------ -------
Operating income (loss)............................. 207 659 (137) 30 106
Interest expense.................................... 84 101 107 33 53
Net income (loss)................................... 85 353 (147) 4 (11)

FIRST CHOICE:
Revenues............................................ $10,808 $13,007 $13,703 $3,228 $ 3,524
Cost of services.................................... 8,825 10,573 11,149 2,621 2,868
------- ------- ------- ------ -------
Gross profit........................................ 1,983 2,434 2,554 607 656
Operating expenses.................................. 1,397 2,519 2,292 520 562
------- ------- ------- ------ -------
Operating income (loss)............................. 586 (85) 262 87 94
Interest expense.................................... -- 26 19 6 7
Net income.......................................... 351 59 243 80 86

BLETHEN:
Revenues............................................ $11,198 $11,967 $13,380 $3,182 $ 3,497
Cost of services.................................... 8,132 8,806 9,918 2,355 2,629
------- ------- ------- ------ -------
Gross profit........................................ 3,066 3,161 3,462 827 868
Operating expenses.................................. 3,178 2,837 3,043 716 728
------- ------- ------- ------ -------
Operating income (loss)............................. (112) 324 419 111 140
Interest expense.................................... 135 137 141 28 34
Net income (loss)................................... (91) 141 208 59 50
</TABLE>

- ---------------
(1) Amounts for HRA are reported for the fiscal years ended September 30.
(2) Amounts for HRA are reported for the six months ended March 31, 1996.

19
<PAGE> 22

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

The following discussion should be read in conjunction with the Founding
Companies' Combined Financial Statements and related notes thereto and "Selected
Combined Founding Companies' Financial and Operating Data" appearing elsewhere
in this Prospectus.

INTRODUCTION

The Company's revenues are derived from temporary staffing and permanent
placement services provided to its clients. Because the Company compensates its
temporary employees only for the hours actually worked, wages for the Company's
temporary personnel are a variable cost that increases or decreases in
proportion to revenues. Cost of services consists primarily of wages paid to
temporary employees, workers' compensation expenses and payroll taxes related to
temporary employees. Selling, general and administrative expenses consist
primarily of compensation and related benefits to the Founding Companies'
owners, administrative salaries and benefits, marketing and rent.

Certain of the Founding Companies have made, or are in the process of
making, acquisitions of other personnel service businesses whose financial
results are either completely excluded or only partially included (i.e.,
presentation of financial results of a company from the date of an acquisition
accounted for as a purchase) in the Founding Companies' individual financial
statements included herein. The financial results of these companies, had they
been included in the historical financial statements, would have had a
significant impact on the Company's financial results. Accordingly, pro forma
financial information has been provided elsewhere in this Prospectus for the
year ended December 31, 1995 and the first quarter ended March 31, 1996,
reflecting the financial results of the Founding Companies and the companies
which either have been acquired, or are expected to be acquired, before the date
of the Mergers.

The Founding Companies have been managed throughout the periods presented
as independent private companies, and, as such, their results of operations
reflect two tax structures, S Corporations and C Corporations, which have
influenced, among other things, the historical levels of their owners'
compensation. Certain owners have agreed to reductions in their compensation and
benefits in connection with the Mergers. The differential between the previous
compensation and benefits of these individuals and the compensation they have
agreed to receive subsequent to the Mergers is referred to as "Compensation
Differential." This Compensation Differential and the related income tax effects
have been reflected as pro forma adjustments in the accompanying pro forma
financial information provided elsewhere in this Prospectus.

The Company has preliminarily analyzed the savings that it expects to
realize as a result of: (i) consolidating certain general and administrative
functions, including workers' compensation insurance programs; (ii) the
reduction in interest payments related to the prepayment of the Founding
Companies' debt; and (iii) its ability to borrow at lower interest rates than
the Founding Companies. The Company cannot quantify these savings prior to
completion of the Mergers. It is anticipated that these savings will be
partially offset by the costs of being a public company and the incremental
increase in costs related to the Company's new corporate management. However,
these costs also cannot be accurately quantified. Accordingly, neither the
anticipated savings nor the anticipated costs have been included in the pro
forma financial information included herein. As a result, historical combined
results may not be comparable to, or indicative of, future performance.

The financial information provided below has been rounded in order to
simplify its presentation. However, the percentages provided below are
calculated using the detailed financial information contained in the financial
statements, the notes thereto and the other financial data included elsewhere in
this Prospectus.

RESULTS OF OPERATIONS -- COMBINED

The combined results discussed below occurred when the Founding Companies
were not under common control or management and may not be comparable to, or
indicative of, future performance. See "Risk Factors -- Absence of Combined
Operating History."

20
<PAGE> 23

The following table sets forth the percentage of revenues represented by
certain line items in the combined Founding Company financial statements for the
indicated periods:

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
------------------------- -----------------
1993 1994 1995 1995 1996
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Revenues:
Commercial...................................... 82.5% 84.6% 86.4% 83.8% 84.7%
Professional.................................... 7.9 6.3 5.3 6.2 7.6
Specialty medical............................... 9.6 9.1 8.3 10.0 7.7
----- ----- ----- ----- -----
100.0 100.0 100.0 100.0 100.0
Cost of services.................................. 79.1 80.2 79.8 80.7 79.3
----- ----- ----- ----- -----
Gross profit margin............................... 20.9 19.8 20.2 19.3 20.7
Operating expenses:
Selling, general and administrative............. 16.8 15.7 16.4 16.1 17.0
Depreciation and amortization................... 0.6 0.6 0.8 0.6 1.0
----- ----- ----- ----- -----
Operating income.................................. 3.5% 3.5% 3.0% 2.6% 2.7%
===== ===== ===== ===== =====
</TABLE>

COMBINED RESULTS FOR THE FIRST QUARTER OF 1996 COMPARED TO THE FIRST QUARTER OF
1995

Revenues. Revenues increased $9.5 million, or 30.1%, to $40.9 million for
the first quarter of 1996 compared to $31.5 million for the first quarter of
1995. This increase was largely attributable to: (i) an increase in Brewer's
revenues of $6.4 million, primarily attributable to the acquisitions of Caldwell
in July 1995 and On Call in February 1996; (ii) an increase in Prostaff's
revenues of $1.1 million, primarily due to the opening of new branches and an
increase in business conducted with a significant client; and (iii) an increase
in HRA's revenues of $1.1 million, primarily attributable to the opening of
several new branches. Also contributing to the increase in revenues was an
increase in Maxwell's, Blethen's and First Choice's revenues of $315,000,
$315,000 and $296,000, respectively.

Cost of Services. Cost of services increased $7.1 million, or 27.8%, to
$32.4 million for the first quarter of 1996 compared to $25.4 million for the
first quarter of 1995. This increase was primarily attributable to: (i) an
increase in Brewer's cost of services of $4.7 million, largely due to the
acquisitions of Caldwell and On Call; (ii) an increase in Prostaff's cost of
services of $777,000, primarily due to the opening of new branches and an
increase in business conducted with a significant client; and (iii) an increase
in HRA's cost of services of $871,000, primarily attributable to the opening of
several new branches. Also contributing to the increase in cost of services was
an increase in Maxwell's, Blethen's and First Choice's cost of services of
$222,000, $275,000 and $247,000, respectively.

Gross Profit. Gross profit increased $2.4 million, or 39.4%, to $8.5
million in the first quarter of 1996 compared to $6.1 million in the first
quarter of 1995. Gross margin increased to 20.7% during the first quarter of
1996 compared to 19.3% during the first quarter of 1995. This increase in gross
margin was primarily due to the acquisition of Caldwell, as well as an increase
in Brewer's gross margin, exclusive of acquisitions.

Operating Expenses. Selling, general and administrative expenses ("SG&A")
increased $1.9 million, or 37.1%, to $6.9 million for the first quarter of 1996
compared to $5.1 million for the first quarter of 1995. This increase was
primarily attributable to the opening of several new branches by many of the
Founding Companies, as well as an increase in Brewer's SG&A of $1.2 million,
primarily attributable to the acquisitions of Caldwell and On Call. SG&A as a
percentage of revenues increased to 17.0% in the first quarter of 1996 compared
to 16.1% for the first quarter of 1995. Depreciation and amortization expense
increased $235,000, or 122.4%, to $427,000 for the first quarter of 1996
compared to $192,000 for the first quarter of 1995. This increase was primarily
attributable to an increase in Brewer's depreciation and amortization of
$198,000, largely due to increased amortization of intangibles, which resulted
from the acquisitions of Caldwell and On Call.

21
<PAGE> 24

Operating Income. Operating income increased $280,000, or 33.8%, to $1.1
million for the first quarter of 1996 compared to $829,000 for the first quarter
of 1995. Operating income as a percentage of revenues increased to 2.7% for the
first quarter of 1996 compared to 2.6% for the first quarter of 1995.

COMBINED RESULTS FOR 1995 COMPARED TO 1994

Revenues. Revenues increased $25.5 million, or 21.1%, to $146.7 million for
1995 compared to $121.2 million for 1994. This increase was largely due to: (i)
an increase in Brewer's revenues of $16.0 million, primarily attributable to the
acquisition of Caldwell in July 1995; (ii) an increase in Prostaff's revenues of
$3.7 million, primarily due to the addition of new significant clients and the
opening of several new branches; and (iii) an increase in Maxwell's revenues of
$1.9 million, primarily attributable to a significant client contract. Also
contributing to the increase in revenues was an increase in HRA's, Blethen's and
First Choice's revenues of $1.8 million, $1.4 million and $696,000,
respectively.

Cost of Services. Cost of services increased $20.0 million, or 20.6%, to
$117.1 million for 1995 compared to $97.1 million for 1994. This increase was
primarily attributable to: (i) an increase in Brewer's cost of services of $12.2
million, largely due to the Caldwell acquisition; (ii) an increase in Prostaff's
cost of services of $2.8 million, primarily due to the addition of significant
clients and the opening of several new branches; and (iii) an increase in
Maxwell's cost of services of $1.7 million, primarily due to a significant
client contract. Also contributing to the increase in cost of services was an
increase in HRA's, Blethen's and First Choice's cost of services of $1.6
million, $1.1 million and $576,000, respectively.

Gross Profit. Gross profit increased $5.5 million, or 23.0%, to $29.6
million in 1995 compared to $24.0 million in 1994. Gross margin increased to
20.2% for 1995 compared to 19.8% for 1994. This increase in gross margin was
largely the result of the acquisition of Caldwell by Brewer.

Operating Expenses. SG&A increased $5.0 million, or 26.2%, to $24.1 million
for 1995 compared to $19.0 million for 1994. This increase was primarily
attributable to: (i) an increase in Brewer's SG&A of $2.3 million, largely
related to the acquisition of Caldwell; (ii) an increase in Prostaff's SG&A of
$1.2 million, primarily due to increased compensation associated with the
opening of several new branches; and (iii) an increase in HRA's SG&A of $1.0
million, primarily attributable to costs associated with the opening of several
new branches. SG&A as a percentage of revenues increased to 16.4% in 1995
compared to 15.7% in 1994. Depreciation and amortization expense increased
$415,000, or 56.0%, to $1.2 million for 1995 compared to $742,000 for 1994. This
increase was primarily attributable to increased amortization of intangibles by
Brewer, resulting from the acquisition of Caldwell in 1995.

Operating Income. Operating income increased $123,000, or 2.9%, to $4.4
million for 1995 compared to $4.2 million for 1994. Operating income as a
percentage of revenues decreased to 3.0% for 1995 compared to 3.5% for 1994.

COMBINED RESULTS FOR 1994 COMPARED TO 1993

Revenues. Revenues increased $29.9 million, or 32.8%, to $121.2 million for
1994 compared to $91.2 million for 1993. The increase is primarily attributable
to: (i) an increase in Brewer's revenue of $15.6 million, largely due to the
acquisition of Aaron Temporary Services, Inc. ("Aaron") in November 1993; (ii)
an increase in Prostaff's revenues of $3.4 million, primarily due to the opening
of new branches; and (iii) an increase in Maxwell's revenues of $4.9 million,
primarily attributable to the addition of a significant customer. Also
contributing to the increase in revenues was an increase in HRA's, First
Choice's and Blethen's revenues of $3.1 million, $2.2 million and $769,000,
respectively.

Cost of Services. Cost of services increased $25.0 million, or 34.6%, to
$97.1 million in 1994 compared to $72.1 million in 1993. This increase was
attributable to: (i) an increase in Brewer's cost of services of $12.8 million,
primarily due to the acquisition of Aaron; (ii) an increase in Prostaff's cost
of services of $2.6 million, primarily due to the opening of new branches; and
(iii) an increase in Maxwell's cost of services of $4.8 million, primarily due
to the addition of a significant client in 1994. Also contributing to the
increase in

22
<PAGE> 25

cost of services was an increase in HRA's, First Choice's and Blethen's cost of
services of $2.4 million, $1.7 million and $674,000, respectively.

Gross Profit. Gross profit increased $4.9 million, or 25.9%, to $24.0
million in 1994 compared to $19.1 million in 1993. Gross margin decreased to
19.8% in 1994 compared to 20.9% in 1993 primarily due to a decrease in Maxwell's
gross margin, which resulted from lower margin contracts negotiated with two
significant customers and increased competition.

Operating Expenses. SG&A increased $3.7 million, or 24.2%, to $19.1 million
for 1994 compared to $15.4 million for 1993. This increase was primarily
attributable to an increase in Brewer's SG&A of $1.9 million, related to the
acquisition of Aaron during November 1993. SG&A as a percentage of revenues
decreased to 15.7% in 1994 compared to 16.8% in 1993. Depreciation and
amortization expense increased $227,000, or 44.0%, to $742,000 for 1994 compared
to $515,000 for 1993. This increase was primarily attributable to significant
capital expenditures by many of the Founding Companies during 1993 and 1994.

Operating Income. Operating income increased $1.0 million, or 31.1%, to
$4.2 million for 1994 compared to $3.2 million for 1993. Operating income as a
percentage of revenues remained unchanged at 3.5% in 1994 and 1993.

LIQUIDITY AND CAPITAL RESOURCES -- COMBINED

Net cash provided by combined operating activities was $1.6 million, $2.8
million, $4.7 million and $287,000 for 1993, 1994, 1995 and the first quarter of
1996, respectively. The net cash provided by combined operating activities for
the periods presented was primarily attributable to net income and changes in
operating assets and liabilities.

Net cash provided by (used in) combined investing activities was $69,000,
($1.1) million, ($13.0) million and ($3.6) million for 1993, 1994, 1995 and the
first quarter of 1996, respectively. Cash provided by combined investing
activities in 1993 resulted from the sale of investments by Brewer and Prostaff
totaling approximately $1.4 million, which was substantially offset by cash used
for capital expenditures and the acquisition of Aaron by Brewer. Cash used in
combined investing activities in 1994 was primarily for significant capital
expenditures by several of the Founding Companies. Cash used in combined
investing activities for 1995 was primarily related to the acquisition of
Caldwell by Brewer for cash totaling $11.5 million. Cash used in combined
investing activities in the first quarter of 1996 was largely for the
acquisition of On Call by Brewer for cash totaling $3.0 million.

Net cash provided by (used in) combined financing activities was ($1.3)
million, ($1.6) million, $8.7 million and $3.4 million for 1993, 1994, 1995 and
the first quarter of 1996, respectively. Cash used in combined financing
activities in 1993 and 1994 consisted of dividends paid to owners of the
individual Founding Companies, partially offset by proceeds from issuances of
long-term debt obligations, net of repayments. Cash provided by financing
activities in 1995 and the first quarter of 1996 was primarily attributable to
the proceeds from debt issued by Brewer in conjunction with the acquisitions of
Caldwell and On Call, respectively, partially offset by dividends paid to the
owners of the individual Founding Companies.

As a result of the foregoing, combined cash and cash equivalents increased
$404,000, $82,000, $524,000 and $81,000 for 1993, 1994, 1995 and the first
quarter of 1996, respectively.

As of March 31, 1996, the Company had total borrowings outstanding of $2.8
million on various line of credit facilities. In addition, the Company had total
long-term debt outstanding, including current maturities, of approximately $20.5
million as of March 31, 1996. The Company plans to repay all indebtedness with
proceeds from the Offering.

Certain of the Founding Companies will make cash distributions to their
stockholders, prior to or coincident with the Mergers, which represent the
companies' estimated S Corporation Accumulated Adjustment Accounts totaling $3.9
million, as follows: (i) Prostaff, $752,000; (ii) Maxwell, $2.5 million; (iii)
Blethen, $138,000; and (iv) First Choice, $504,000. These distributions will be
funded with additional debt, which the Company plans to repay with proceeds from
the Offering. See "Certain Transactions."

23
<PAGE> 26

The net proceeds from the Offering, after deducting (i) underwriting
discounts, (ii) offering expenses, (iii) the cash portion of the consideration
being paid for the Founding Companies; and (iv) the repayment of all debt
obligations, are expected to total approximately $9.9 million. The Company plans
to use these net proceeds for working capital and general corporate purposes,
including future acquisitions. Pending such uses, the Company plans to invest
the net proceeds in short-term, interest bearing, investment grade securities.

The Company also plans to register up to an additional 4,000,000 shares of
its Common Stock as soon as practicable after completion of this Offering for
use by the Company as consideration to be paid in conjunction with future
acquisitions.

While there can be no assurance, management of the Company believes that
the funds provided by operations, amounts available under its various line of
credit facilities and current amounts of cash and cash equivalents on hand will
be sufficient to meet the Company's presently anticipated needs for working
capital and capital expenditures for at least the next twelve months.

RESULTS OF OPERATIONS -- BREWER

BREWER RESULTS FOR THE FIRST QUARTER OF 1996 COMPARED TO THE FIRST QUARTER OF
1995

Revenues. Revenues increased $6.4 million, or 85.1%, to $13.9 million for
the first quarter of 1996 compared to $7.5 million for the first quarter of
1995. This increase was primarily attributable to the acquisition of Caldwell in
July 1995, and the acquisition of On Call in February 1996. The acquisitions of
Caldwell and On Call accounted for $4.8 million and $2.5 million, respectively,
of the increase in revenues, which was partially offset by a decrease in
Brewer's revenues, exclusive of acquisitions, of approximately $900,000.

Cost of Services. Cost of services increased $4.7 million, or 74.4%, to
$11.0 million for the first quarter of 1996 compared to $6.3 million for the
first quarter of 1995. This increase was primarily attributable to the Caldwell
and On Call acquisitions, which accounted for $3.7 million and $2.1 million,
respectively, of the increase, which was partially offset by a decrease in
Brewer's cost of services, exclusive of acquisitions, of approximately $1.1
million.

Gross Profit. Gross profit increased $1.7 million, or 140.9%, to $2.9
million in the first quarter of 1996 compared to $1.2 million in the first
quarter of 1995. This increase was primarily attributable to the acquisitions of
Caldwell and On Call. Gross margin increased to 21.0% during the first quarter
of 1996 compared to 16.1% during the first quarter of 1995. This increase was
primarily attributable to the acquisition of Caldwell, as well as an increase in
Brewer's gross margin, exclusive of acquisitions.

Operating Expenses. SG&A increased $1.2 million, or 137.7%, to $2.0 million
for the first quarter of 1996 compared to $856,000 for the first quarter of
1995. This increase was primarily attributable to the acquisitions of Caldwell
and On Call, which accounted for $520,000 and $241,000 of the increase,
respectively. This increase was also influenced by Brewer's decision to enhance
its organizational structure in order to achieve its growth strategy, which
resulted in an increase in personnel costs and costs associated with moving into
its new corporate headquarters. SG&A as a percentage of revenues increased to
14.7% for the first quarter of 1996 compared to 11.4% for the first quarter of
1995. Depreciation and amortization expense increased $198,000, or 293.2%, to
$265,000 for the first quarter of 1996 compared to $67,000 for the first quarter
of 1995. This increase was primarily attributable to increased amortization of
intangibles resulting from the acquisitions of Caldwell and On Call, which were
accounted for using the purchase accounting method.

24
<PAGE> 27

Operating Income. Operating income increased $327,000, or 114.7%, to
$613,000 for the first quarter of 1996 compared to $286,000 for the first
quarter of 1995. Operating income as a percentage of revenues increased to 4.4%
for the first quarter of 1996 compared to 3.8% for the first quarter of 1995.

Interest Expense. Interest expense increased $403,000 to $425,000 in the
first quarter of 1996 compared to $22,000 in the first quarter of 1995. This
increase was primarily attributable to debt incurred to finance the acquisitions
of Caldwell and On Call.

Net Income. Net income decreased $78,000, or 28.1%, to $199,000 for the
first quarter of 1996 compared to $277,000 for the first quarter of 1995. Net
income as a percentage of revenues decreased to 1.4% for the first quarter of
1996 compared to 3.7% for the first quarter of 1995.

BREWER RESULTS FOR 1995 COMPARED TO 1994

Revenues. Revenues increased $16.0 million, or 57.3%, to $43.9 million for
1995 compared to $27.9 million for 1994. This increase was primarily
attributable to the acquisition of Caldwell in July 1995, which accounted for
$11.7 million of the increase in revenues.

Cost of Services. Cost of services increased $12.2 million, or 53.3%, to
$35.1 million for 1995 compared to $22.9 million for 1994. This increase was
primarily related to the Caldwell acquisition, which accounted for $9.4 million
of the increase.

Gross Profit. Gross profit increased $3.8 million, or 75.6%, to $8.8
million in 1995 compared to $5.0 million in 1994. Gross margin increased to
20.0% for 1995 compared to 17.9% for 1994. These increases were primarily
attributable to the impact of the acquisition of Caldwell and the improvement in
gross margins for the branches acquired from Aaron in November 1993.

Operating Expenses. SG&A increased $2.3 million, or 66.6%, to $5.8 million
for 1995 compared to $3.5 million for 1994. This increase was primarily
attributable to the acquisition of Caldwell. SG&A as a percentage of revenues
increased to 13.2% in 1995 compared to 12.5% in 1994. Depreciation and
amortization expense increased $334,000, or 130.5%, to $590,000 for 1995
compared to $256,000 for 1994. This increase was primarily attributable to
increased amortization of intangibles resulting from the acquisition of
Caldwell.

Operating Income. Operating income increased $1.1 million, or 89.3%, to
$2.4 million for 1995 compared to $1.2 million for 1994. Operating income as a
percentage of revenues increased to 5.4% for 1995 compared to 4.5% for 1994.

Interest Expense. Interest expense increased $709,000 to $801,000 in 1995
compared to $92,000 in 1994. This increase was primarily attributable to higher
interest costs on debt incurred to finance the acquisition of Caldwell.

Net Income. Net income increased $410,000, or 34.8%, to $1.6 million for
1995 compared to $1.2 million for 1994. Net income as a percentage of revenues
decreased to 3.6% in 1995 compared to 4.2% in 1994.

BREWER RESULTS FOR 1994 COMPARED TO 1993

Revenues. Revenues increased $15.6 million, or 126.5%, to $27.9 million for
1994 compared to $12.3 million for 1993. This increase was primarily
attributable to the acquisition of Aaron, which accounted for $13.0 million of
the increase.

Cost of Services. Cost of services increased $12.8 million, or 127.6%, to
$22.9 million in 1994 from $10.1 million in 1993. This increase was primarily
due to the acquisition of Aaron, which accounted for $11.2 million of the
increase.

Gross Profit. Gross profit increased $2.7 million, or 121.6%, to $5.0
million in 1994 compared to $2.3 million in 1993. This increase was primarily
attributable to the acquisition of Aaron. Gross margin decreased slightly to
17.9% in 1994 compared to 18.3% in 1993 because Aaron had historically lower
gross margins than Brewer.

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Operating Expenses. SG&A increased $1.9 million, or 114.6%, to $3.5 million
for 1994 compared to $1.6 million for 1993. This increase was primarily
attributable to the acquisition of Aaron, which accounted for $1.6 million of
the increase. SG&A as a percentage of revenues decreased to 12.5% in 1994
compared to 13.2% in 1993. Depreciation and amortization expense increased
$135,000, or 110.8%, to $256,000 for 1994 compared to $121,000 for 1993. This
increase was primarily attributable to increased amortization of intangibles
resulting from the acquisition of Aaron.

Operating Income. Operating income increased $743,000, or 146.6%, to $1.2
million for 1994 compared to $506,000 for 1993. Operating income as a percentage
of revenues increased to 4.5% in 1994 compared to 4.1% in 1993.

Interest Expense. Interest expense increased $38,000 to $92,000 in 1994
compared to $54,000 in 1993. This increase was primarily attributable to debt
incurred to finance the acquisition of Aaron.

Net Income. Net income increased $699,000, or 146.4%, to $1.2 million for
1994 compared to $478,000 for 1993. Net income as a percentage of revenues
increased to 4.2% in 1994 from 3.9% in 1993.

LIQUIDITY AND CAPITAL RESOURCES -- BREWER

Net cash provided by (used in) operating activities was ($382,000),
$894,000, $1.6 million and ($692,000) for 1993, 1994, 1995 and the first quarter
of 1996, respectively. The net cash provided by (used in) operating activities
for the periods presented was primarily attributable to net income and changes
in operating assets and liabilities.

Cash provided by (used in) investing activities was $442,000, ($345,000),
($12.0) million and ($3.2) million for 1993, 1994, 1995 and the first quarter of
1996, respectively. Cash provided by investing activities in 1993 was primarily
attributable to proceeds from the release of an investment which had been
restricted as a condition of Brewer's self-insurance program, and was partially
offset by the acquisition of Aaron and routine capital expenditures. Cash used
in investing activities for 1994 was primarily attributable to routine capital
expenditures. Cash used in investing activities in 1995 and the first quarter of
1996 was primarily attributable to the acquisitions of Caldwell and On Call,
respectively.

Cash provided by (used in) financing activities was ($179,000), ($512,000),
$10.6 million and $3.9 million for 1993, 1994, 1995 and the first quarter of
1996, respectively. Cash used in financing activities in 1993 was primarily for
cash dividends paid to Brewer's stockholders. Cash used in financing activities
in 1994 was primarily attributable to debt repayments and was also influenced by
cash dividends paid to Brewer's stockholders. Cash provided by financing
activities for 1995 and the first quarter of 1996 was primarily attributable to
the proceeds from debt issued in conjunction with the acquisitions of Caldwell
and On Call, respectively.

As a result of the foregoing, cash and cash equivalents decreased $119,000
in 1993 and increased $37,000, $211,000 and $9,000 in 1994, 1995 and the first
quarter of 1996, respectively.

Brewer's primary sources of funds are from operations and the issuance of
debt under its term loan and line of credit arrangements. Brewer's principal
uses of cash are for acquisitions, working capital purposes and capital
expenditures.

As of March 31, 1996, Brewer had total debt outstanding of approximately
$20.3 million.

While there can be no assurance, management of Brewer believes that the
funds provided by operations, amounts available under its line of credit
facility and amounts of cash and cash equivalents on hand will be sufficient to
meet its presently anticipated needs for working capital and capital
expenditures for at least the next twelve months.

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RESULTS OF OPERATIONS -- PROSTAFF

PROSTAFF RESULTS FOR THE FIRST QUARTER OF 1996 COMPARED TO THE FIRST QUARTER OF
1995

Revenues. Revenues increased $1.1 million, or 14.0%, to $8.6 million in the
first quarter of 1996 compared to $7.5 million in the first quarter of 1995. The
increase in Prostaff's revenues was primarily attributable to the opening of
several new branches during 1995 and the first quarter of 1996 and a significant
increase in business conducted with its largest client.

Cost of Services. Cost of services increased $777,000, or 12.5%, to $7.0
million in the first quarter of 1996 compared to $6.2 million in the first
quarter of 1995.

Gross Profit. Gross profit increased $275,000, or 20.6%, to $1.6 million in
the first quarter of 1996 compared to $1.3 million in the first quarter of 1995.
Gross margin increased to 18.8% in the first quarter of 1996 compared to 17.7%
in the first quarter of 1995, primarily attributable to a decrease in the
Arkansas state unemployment tax rate.

Operating Expenses. Operating expenses increased $444,000, or 38.1%, to
$1.6 million in the first quarter of 1996 compared to $1.2 million in the first
quarter of 1995. This increase was primarily attributable to consulting fees
paid in conjunction with Prostaff's efforts to become certified pursuant to
International Standards Organization 9000 (ISO 9000) quality system requirements
and the start-up costs of several new branches. Operating expenses as a
percentage of revenues increased to 18.7% in the first quarter of 1996 compared
to 15.4% in the first quarter of 1995.

Operating Income. Operating income decreased $169,000, or 98.6%, to $2,000
in the first quarter of 1996 compared to $171,000 in the first quarter of 1995.
Operating income as a percentage of revenues decreased to 0.03% in the first
quarter of 1996, compared to 2.3% in the first quarter of 1995.

Net Income. Net income decreased $73,000, or 94.7%, to $4,000 in the first
quarter of 1996 compared to $77,000 in the first quarter of 1995. Net income as
a percentage of revenues decreased to 0.05% in the first quarter of 1996
compared to 1.0% in the first quarter of 1995.

PROSTAFF RESULTS FOR 1995 COMPARED TO 1994

Revenues. Revenues increased $3.7 million, or 12.2%, to $34.3 million in
1995 compared to $30.6 million in 1994. The increase was primarily attributable
to the addition of new significant clients, as well as the opening of several
branches in 1995.

Cost of Services. Cost of services increased $2.8 million, or 10.9%, to
$28.2 million in 1995 compared to $25.5 million in 1994.

Gross Profit. Gross profit increased $944,000, or 18.3%, to $6.1 million in
1995 compared to $5.2 million in 1994. Gross margin increased to 17.8% in 1995
compared to 16.8% in 1994. This increase in gross margin was attributable to
slightly improved rates charged to clients and a decrease in the Arkansas state
unemployment tax rate.

Operating Expenses. Operating expenses increased $1.2 million, or 27.5%, to
$5.6 million in 1995 compared to $4.4 million in 1994. This increase was
attributable to increased compensation relating to the opening of several new
branches and expansion of the corporate headquarters. Operating expenses as a
percentage of revenues increased to 16.2% in 1995 compared to 14.2% in 1994.

Operating Income. Operating income decreased $256,000, or 32.3%, to
$537,000 in 1995 compared to $793,000 in 1994. Operating income as a percentage
of revenues decreased to 1.6% in 1995 compared to 2.6% in 1994.

Net Income. Net income decreased $76,000, or 14.5%, to $446,000 in 1995
compared to $522,000 in 1994. Net income as a percentage of revenues decreased
to 1.3% in 1995 compared to 1.7% in 1994.

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PROSTAFF RESULTS FOR 1994 COMPARED TO 1993

Revenues. Revenues increased $3.4 million, or 12.3%, to $30.6 million in
1994 compared to $27.2 million in 1993. The increase was primarily attributable
to the opening of several new branches during 1994.

Cost of Services. Cost of services increased $2.6 million, or 11.4%, to
$25.5 million in 1994 compared to $22.9 million in 1993.

Gross Profit. Gross profit increased $766,000, or 17.5%, to $5.2 million in
1994 compared to $4.4 million in 1993. Gross margin increased slightly to 16.8%
in 1994 compared to 16.1% in 1993. The overall increase in gross margin was
primarily the result of a slight increase in rates charged to clients and a
decrease in the Arkansas state unemployment tax rate.

Operating Expenses. Operating expenses increased $603,000, or 16.1%, to
$4.4 million in 1994 compared to $3.8 million in 1993. Operating expenses as a
percentage of revenues increased slightly to 14.2% in 1994 compared to 13.8% in
1993.

Operating Income. Operating income increased $162,000, or 25.7%, to
$793,000 in 1994 compared to $631,000 in 1993. Operating income as a percentage
of revenues increased slightly to 2.6% in 1994 compared to 2.3% in 1993.

Net Income. Net income increased $123,000, or 30.8%, to $522,000 in 1994
compared to $399,000 in 1993. Net income as a percentage of revenues increased
to 1.7% in 1994 compared to 1.5% in 1993.

LIQUIDITY AND CAPITAL RESOURCES -- PROSTAFF

Net cash provided by (used in) operating activities was $181,000, $740,000,
$834,000 and ($20,000) for 1993, 1994, 1995 and the first quarter of 1996,
respectively. The net cash provided by (used in) operating activities for each
period presented resulted primarily from changes in operating assets and
liabilities and net income.

Cash provided by (used in) investing activities was $195,000, ($293,000),
($362,000) and ($145,000) for 1993, 1994, 1995 and the first quarter of 1996.
Cash used in investing activities for 1995 was primarily for capital
expenditures associated with the opening of several new branches.

Cash provided by (used in) financing activities was ($390,000), ($261,000),
($512,000) and $140,000 for 1993, 1994, 1995 and the first quarter of 1996. The
cash used in financing activities in 1995 was the result of additional net
payments on the line of credit.

As a result of the foregoing, cash and cash equivalents decreased $15,000
in 1993, increased $186,000 in 1994 and decreased $40,000 and $25,000 in 1995
and the first quarter of 1996, respectively.

As of March 31, 1996, Prostaff had total debt, including line of credit and
current maturities of long-term debt of $366,000. Prostaff currently has three
revolving credit facilities, with funds available under these facilities
totaling approximately $1.8 million at March 31, 1996.

While there can be no assurance, management of Prostaff believes that funds
provided by operations, amounts available under its line of credit facilities
and the current amount of cash and cash equivalents on hand will be sufficient
to meet its presently anticipated needs for working capital and capital
expenditures for at least the next twelve months.

RESULTS OF OPERATIONS -- MAXWELL

MAXWELL RESULTS FOR THE FIRST QUARTER OF 1996 COMPARED TO THE FIRST QUARTER OF
1995

Revenues. Revenues increased $315,000, or 5.4%, to $6.1 million for the
first quarter of 1996 compared to $5.8 million for the first quarter of 1995.
This increase was primarily attributable to a significant client contract, which
started in July 1995, and the acquisition of Sumner Ray Technical Resources,
Inc. ("Sumner Ray") in February 1996. This increase was partially offset by a
decrease in the staffing needs of another

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significant client and government shutdowns in December 1995 and January 1996,
which caused delays in the issuance of H1-B Visas to foreign-trained therapists
and delays in the therapists' arrival to the U.S.

Cost of Services. Cost of services increased $222,000, or 4.9%, to $4.7
million for the first quarter of 1996 compared to $4.5 million for the first
quarter of 1995.

Gross Profit. Gross profit increased $92,000, or 7.0%, to $1.4 million in
the first quarter of 1996 compared to $1.3 million for the first quarter of
1995. Gross margin remained relatively stable at 22.8% and 22.5% for the first
quarter of 1996 and 1995, respectively.

Operating Expenses. Operating expenses increased $166,000, or 16.1%, to
$1.2 million for the first quarter of 1996 compared to $1.0 million for the
first quarter of 1995. Operating expenses as a percentage of revenues increased
to 19.5% in the first quarter of 1996 compared to 17.7% in the first quarter of
1995.

Operating Income. Operating income decreased $74,000, or 26.5%, to $205,000
for the first quarter of 1996 compared to $279,000 for the first quarter of
1995. Operating income as a percentage of revenues decreased to 3.3% for the
first quarter of 1996 compared to 4.9% for the first quarter of 1995.

Net Income. Net income decreased $31,000, or 10.8%, to $255,000 for the
first quarter of 1996 compared to $286,000 for the first quarter of 1995. Net
income as a percentage of revenues decreased to 4.2% for the first quarter of
1996 compared to 4.9% for the first quarter of 1995.

MAXWELL RESULTS FOR 1995 COMPARED TO 1994

Revenues. Revenues increased $1.9 million, or 8.8%, to $23.1 million for
1995 compared to $21.2 million for 1994. This increase was primarily
attributable to a significant client contract, which started in July 1995, and
an increase in the average number of foreign-trained therapists working.

Cost of Services. Cost of services increased $1.7 million, or 10.9%, to
$17.7 million for 1995 compared to $16.0 million for 1994.

Gross Profit. Gross profit increased $122,000, or 2.3%, to $5.3 million in
1995 compared to $5.2 million in 1994. Gross margin decreased to 23.1% for 1995
compared to 24.6% for 1994. This decrease resulted primarily from increased
competition and a high volume, lower margin contract with one significant
client.

Operating Expenses. Operating expenses increased $505,000, or 12.9%, to
$4.4 million for 1995 compared to $3.9 million for 1994. This increase was
partially attributable to the write-off of $165,000 in accounts receivable
related to one client. Operating expenses as a percentage of revenues increased
to 19.2% in 1995 compared to 18.5% in 1994.

Operating Income. Operating income decreased $383,000, or 29.6%, to
$912,000 for 1995 compared to $1.3 million for 1994. Operating income as a
percentage of revenues decreased to 3.9% for 1995 compared to 6.1% for 1994.

Net Income. Net income decreased $344,000, or 27.2%, to $920,000 for 1995
compared to $1.3 million for 1994. Net income as a percentage of revenues
decreased to 4.0% in 1995 compared to 6.0% in 1994.

MAXWELL RESULTS FOR 1994 COMPARED TO 1993

Revenues. Revenues increased $4.9 million, or 30.0%, to $21.2 million for
1994 compared to $16.3 million for 1993. This increase was primarily
attributable to the addition of a significant client in 1994, which accounted
for increased revenues of $2.5 million, and an increase in business conducted
with certain other clients.

Cost of Services. Cost of services increased $4.8 million, or 42.2%, to
$16.0 million in 1994 compared to $11.3 million in 1993. This increase was also
primarily attributable to the addition of a significant client in 1994.

Gross Profit. Gross profit increased $152,000, or 3.0%, to $5.2 million in
1994 compared to $5.1 million in 1993. Gross margin decreased to 24.6% in 1994
compared to 31.1% in 1993. This decrease was a result of

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lower margin contracts negotiated with two of the Company's significant clients
as well as increased workers' compensation costs and increased competition.

Operating Expenses. Operating expenses increased $270,000, or 7.4%, to $3.9
million for 1994 compared to $3.7 million for 1993. Operating expenses as a
percentage of revenues decreased to 18.5% for 1994 compared to 22.4% for 1993.

Operating Income. Operating income remained fairly constant at $1.3 million
in 1994 compared to $1.4 million in 1993. Operating income as a percentage of
revenues decreased to 6.1% in 1994 compared to 8.7% in 1993.

Net Income. Net income was $1.3 million for both 1994 and 1993. Net income
as a percentage of revenues decreased to 6.0% in 1994 compared to 7.9% in 1993.

LIQUIDITY AND CAPITAL RESOURCES -- MAXWELL

Net cash provided by operating activities was $1.4 million, $719,000, $1.9
million and $621,000 for 1993, 1994, 1995 and the first quarter of 1996,
respectively. Net cash provided by operating activities for each period
presented resulted primarily from changes in operating assets and liabilities
and net income.

Cash used in investing activities was $264,000, $225,000, $174,000 and
$208,000 for 1993, 1994, 1995 and the first quarter of 1996, respectively. Cash
used in investing activities was primarily for additions of property and
equipment and purchases of investments.

Cash used in financing activities was $860,000, $1.0 million, $1.2 million
and $408,000 for 1993, 1994, 1995 and the first quarter of 1996. Cash used in
financing activities in each year was primarily for dividends paid to
stockholders.

Subsequent to March 31, 1996, Maxwell entered into a debt agreement for a
$1.75 million term loan. Accrued interest is due and payable monthly beginning
June 1, 1996 at a rate of 8.25%. The outstanding principal balance plus unpaid
accrued interest is due November 1, 1996. The proceeds of the loan were used to
fund cash dividends paid to Maxwell's stockholders.

While there can be no assurance, management of Maxwell believes that funds
provided by operations, amounts provided under the debt agreement discussed
above, and current amounts of cash and cash equivalents will be sufficient to
meet its presently anticipated needs for working capital and capital
expenditures for at least the next twelve months.

RESULTS OF OPERATIONS -- HRA

HRA RESULTS FOR THE SIX MONTHS ENDED MARCH 31, 1996 COMPARED TO THE SIX MONTHS
ENDED MARCH 31, 1995

Revenues. Revenues increased $2.2 million, or 26.1%, to $10.6 million for
the six months ended March 31, 1996 compared to $8.4 million for the six months
ended March 31, 1995. This increase was primarily attributable to the opening of
new branches.

Cost of Services. Cost of services increased $1.8 million, or 25.5%, to
$8.6 million for the six months ended March 31, 1996 compared to $6.9 million
for the six months ended March 31, 1995. This increase was primarily
attributable to the opening of new branches as well as increased workers'
compensation costs.

Gross Profit. Gross profit increased $453,000, or 28.9%, to $2.0 million
for the six months ended March 31, 1996 compared to $1.6 million for the six
months ended March 31, 1995. Gross margin increased to 18.9% for the six months
ended March 31, 1996 compared to 18.5% for the six months ended March 31, 1995.

Operating Expenses. Operating expenses increased $376,000, or 24.6%, to
$1.9 million for the six months ended March 31, 1996 compared to $1.5 million
for the six months ended March 31, 1995. This increase was primarily due to
increased overhead associated with the opening of new branches. In addition, HRA
expensed a severance arrangement of approximately $136,000 during the six months
ended March 31, 1996. Operating

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expenses as a percentage of revenues decreased to 17.9% for the six months ended
March 31, 1996 compared to 18.2% for the six months ended March 31, 1995.

Operating Income. Operating income increased $76,000, or 251.4%, to
$106,000 for the six months ended March 31, 1996 compared to $30,000 for the six
months ended March 31, 1995. Operating income as a percentage of revenues
increased to 1.0% for the six months ended March 31, 1996 compared to 0.4% for
the six months ended March 31, 1995.

Other Expenses, Net. Other expenses increased $99,000 to $90,000 for the
six months ended March 31, 1996 compared to $9,000 of income for the six months
ended March 31, 1995. The change was principally related to a $90,000 payment by
HRA, on behalf of two existing stockholders, to settle an outstanding option
agreement to purchase 30% of HRA.

Net Income (Loss). Net income decreased $15,000 from $4,000 for the six
months ended March 31, 1995 to a net loss of $11,000 for the six months ended
March 31, 1996.

HRA RESULTS FOR 1995 COMPARED TO 1994

Revenues. Revenues increased $1.8 million, or 11.3%, to $18.3 million in
1995 compared to $16.5 million in 1994. This increase was attributable to the
opening of new branches.

Cost of Services. Cost of services increased $1.6 million, or 11.8%, to
$14.9 million in 1995 compared to $13.4 million in 1994. This increase was
primarily attributable to the opening of new branches and an increase in
workers' compensation costs.

Gross Profit. Gross profit increased $281,000, or 9.1%, to $3.4 million in
1995 compared to $3.1 million in 1994. Gross margin decreased to 18.4% in 1995
compared to 18.8% in 1994.

Operating Expenses. Operating expenses increased $1.1 million, or 44.4%, to
$3.5 million in 1995 compared to $2.4 million in 1994. This increase was
partially attributable to the overhead costs associated with the opening of new
branches. Operating expenses as a percentage of revenues increased to 19.1% in
1995 compared to 14.8% in 1994.

Operating Income (Loss). Operating income decreased $796,000 to an
operating loss of $137,000 in 1995 compared to operating income of $659,000 in
1994.

Net Income (Loss). Net income decreased $500,000 to a net loss of $147,000
in 1995 compared to net income of $353,000 in 1994. Net income as a percentage
of revenues decreased to (0.8)% in 1995 compared to 2.1% in 1994.

HRA RESULTS FOR 1994 COMPARED TO 1993

Revenues. Revenues increased $3.1 million, or 23.4%, to $16.5 million in
1994 compared to $13.3 million in 1993. This increase was primarily attributable
to an increase in business conducted with new and existing clients.

Cost of Services. Cost of services increased $2.4 million, or 21.7%, to
$13.4 million in 1994 compared to $11.0 million in 1993. This increase was
primarily attributable to the increase in revenues and rising workers'
compensation and temporary employee vacation costs.

Gross Profit. Gross profit increased $738,000, or 31.4%, to $3.1 million in
1994 compared to $2.3 million in 1993. Gross margin increased to 18.8% in 1994
compared to 17.6% in 1993.

Operating Expenses. Operating expenses increased $286,000, or 13.3%, to
$2.4 million in 1994 compared to $2.1 million in 1993. Operating expenses as a
percentage of revenues decreased to 14.8% in 1994 compared to 16.1% in 1993.

Operating Income. Operating income increased $452,000, or 219.0%, to
$659,000 in 1994 compared to $207,000 in 1993. Operating income as a percentage
of revenues increased to 4.0% in 1994 compared to 1.5% in 1993.

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Net Income. Net income increased $268,000 to $353,000 in 1994 compared to
$85,000 in 1993. Net income as a percentage of revenues increased to 2.1% in
1994 compared to 0.6% in 1993.

LIQUIDITY AND CAPITAL RESOURCES -- HRA

Net cash provided by operating activities was $101,000, $98,000, $89,000
and $93,000 for 1993, 1994, 1995 and the six months ended March 31, 1996,
respectively. The net cash provided by operating activities for each of the
periods presented was primarily due to changes in operating assets and
liabilities and net income (loss).

Net cash used in investing activities was $41,000, $40,000, $152,000 and
$49,000 for 1993, 1994, 1995 and the six months ended March 31, 1996,
respectively. Cash used in investing activities in each of the periods presented
was primarily for additions and replacements of office and computer equipment
and software.

Net cash provided by (used in) financing activities was $328,000, $128,000,
($156,000) and ($97,000) for 1993, 1994, 1995 and the six months ended March 31,
1996, respectively. Cash used in financing activities during 1995 consisted
primarily of net payments on the receivable financing agreement and repayment of
borrowings from a stockholder.

As a result of the foregoing, cash and cash equivalents increased $388,000
and $186,000 in 1993 and 1994, respectively, and decreased $219,000 and $53,000
in 1995 and the six months ended March 31, 1996, respectively.

HRA is obligated under certain compensation and non-compete arrangements to
make payments to a former consultant, former stockholder and other third parties
over the next ten years. HRA anticipates that cash generated by operations and
borrowings available under its line of credit will be sufficient to meet these
requirements.

While there can be no assurance, management of HRA believes that funds
provided by operations, amounts available under its revolving line of credit
facility and the current amount of cash and cash equivalents on hand will be
sufficient to meet its presently anticipated needs for working capital, capital
expenditures and acquisitions for at least the next twelve months.

RESULTS OF OPERATIONS -- FIRST CHOICE

FIRST CHOICE RESULTS FOR THE FIRST QUARTER OF 1996 COMPARED TO THE FIRST QUARTER
OF 1995

Revenues. Revenues increased $296,000, or 9.2%, to $3.5 million in the
first quarter of 1996 compared to $3.2 million in the first quarter of 1995.

Cost of Services. Cost of services increased $247,000, or 9.4%, to $2.9
million in the first quarter of 1996 compared to $2.6 million in the first
quarter of 1995.

Gross Profit. Gross profit increased $49,000, or 8.1%, to $656,000 in the
first quarter of 1996 compared to $607,000 in the first quarter of 1995. Gross
margin decreased slightly to 18.6% in the first quarter of 1996 compared to
18.8% in the first quarter of 1995.

Operating Expenses. Operating expenses increased $42,000, or 8.1%, to
$562,000 in the first quarter of 1996 compared to $520,000 in the first quarter
of 1995. Operating expenses as a percentage of revenues decreased slightly to
16.0% in the first quarter of 1996 compared to 16.1% in the first quarter of
1995.

Operating Income. Operating income increased $6,000, or 7.7%, to $93,000 in
the first quarter of 1996 compared to $87,000 in the first quarter of 1995.
Operating income as a percentage of revenues was 2.7% in both the first quarter
of 1996 and the first quarter of 1995.

Net Income. Net income increased $6,000, or 7.5%, to $86,000 in the first
quarter of 1996 compared to $80,000 in the first quarter of 1995. Net income as
a percentage of revenues remained steady, however, at 2.4% in the first quarter
of 1996 compared to 2.5% in the first quarter of 1995.

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FIRST CHOICE RESULTS FOR 1995 COMPARED TO 1994

Revenues. Revenues increased $696,000, or 5.4%, to $13.7 million in 1995
compared to $13.0 million in 1994.

Cost of Services. Cost of services increased $576,000, or 5.4%, to $11.1
million in 1995 compared to $10.6 million in 1994.

Gross Profit. Gross profit increased $120,000, or 4.9%, to $2.6 million in
1995 compared to $2.4 million in 1994. Gross margin remained steady, however, at
18.6% in 1995 compared to 18.7% in 1994.

Operating Expenses. Operating expenses decreased $228,000, or 9.0%, to $2.3
million in 1995 compared to $2.5 million in 1994. This decrease was primarily
attributable to a $680,000 decrease in compensation to First Choice's president
and majority shareholder. This decrease was partially offset by increases in
administrative salaries, recruiting, testing and rent expense in 1995. Operating
expenses as a percentage of revenues decreased to 16.7% in 1995 compared to
19.4% in 1994.

Operating Income (Loss). Operating income increased $348,000 to $263,000 in
1995 compared to an operating loss of $85,000 in 1994.

Net Income. Net income increased $184,000 to $243,000 in 1995 compared to
$59,000 in 1994. Net income as a percentage of revenues increased to 1.8% in
1995 compared to 0.5% in 1994.

FIRST CHOICE RESULTS FOR 1994 COMPARED TO 1993

Revenues. Revenues increased $2.2 million, or 20.3%, to $13.0 million in
1994 compared to $10.8 million in 1993.

Cost of Services. Cost of services increased $1.7 million, or 19.8%, to
$10.6 million in 1994 compared to $8.8 million in 1993.

Gross Profit. Gross profit increased $451,000, or 22.7%, to $2.4 million in
1994 compared to $2.0 million in 1993. Gross margin increased to 18.7% in 1994
compared to 18.3% in 1993.

Operating Expenses. Operating expenses increased $1.1 million, or 80.4%, to
$2.5 million in 1994 compared to $1.4 million in 1993. This increase was
primarily attributable to a $657,000 increase in compensation to First Choice's
president and majority shareholder. Operating expenses as a percentage of
revenues increased to 19.4% in 1994 compared to 12.9% in 1993.

Operating Income (Loss). First Choice generated an operating loss of
$85,000 in 1994 compared to operating income generated in 1993 of $586,000.

Net Income. Net income decreased $292,000 to $59,000 in 1994 compared to
$351,000 in 1993. Net income as a percentage of revenues decreased to 0.5% in
1994 compared to 3.2% in 1993.

LIQUIDITY AND CAPITAL RESOURCES -- FIRST CHOICE

Net cash provided by (used in) operating activities was $208,000, $46,000,
$108,000 and ($138,000) for 1993, 1994, 1995 and the first quarter of 1996,
respectively. Net cash provided by (used in) operating activities for each
period presented resulted primarily from changes in operating assets and
liabilities and net income.

Net cash used in investing activities was $54,000, $120,000, $164,000 and
$40,000 for 1993, 1994, 1995 and the first quarter of 1996, respectively. Cash
used in investing activities for each period presented was primarily for
additions to property and equipment.

Net cash provided by (used in) financing activities was ($182,000),
$241,000, $130,000 and ($50,000) for 1993, 1994, 1995 and the first quarter of
1996, respectively. Cash provided by (used in) financing activities consisted
primarily of proceeds from the issuance of short-term debt obligations and a
note payable to a shareholder and principal payments on such instruments.

33
<PAGE> 36

As a result of the foregoing, cash and cash equivalents decreased $27,000
in 1993, increased $166,000 in 1994, increased $74,000 in 1995, and decreased
$228,000 for the first quarter of 1996.

As of March 31, 1996, First Choice had total debt of $330,000.

While there can be no assurance, management of First Choice believes that
cash flows provided by operations, amounts available under its revolving line of
credit facility and current amounts of cash and cash equivalents on hand will be
sufficient to meet its liquidity requirements for at least the next twelve
months.

RESULTS OF OPERATIONS -- BLETHEN

BLETHEN RESULTS FOR THE FIRST QUARTER OF 1996 COMPARED TO THE FIRST QUARTER OF
1995

Revenues. Revenues increased $315,000, or 9.9%, to $3.5 million in the
first quarter of 1996 compared to $3.2 million in the first quarter of 1995.

Cost of Services. Cost of services increased $275,000, or 11.7%, to $2.6
million in the first quarter of 1996 compared to $2.4 million in the first
quarter of 1995.

Gross Profit. Gross profit increased $40,000, or 4.9%, to $867,000 in the
first quarter of 1996 compared to $827,000 in the first quarter of 1995. Gross
margin decreased to 24.8% during the first quarter of 1996 compared to 26.0%
during the first quarter of 1995.

Operating Expenses. Operating expenses increased $12,000, or 1.6%, to
$728,000 in the first quarter of 1996 compared to $716,000 in the first quarter
of 1995. Operating expenses as a percentage of revenues decreased to 20.8% in
the first quarter of 1996 compared to 22.5% in the first quarter of 1995.

Operating Income. Operating income increased $29,000, or 25.8%, to $140,000
in the first quarter of 1996 compared to $111,000 in the first quarter of 1995.
Operating income as a percentage of revenues increased to 4.0% in the first
quarter of 1996 compared to 3.5% in the first quarter of 1995.

Net Income. Net income decreased 15.0%, to $50,000, or 1.4% of revenues in
the first quarter of 1996 compared to $59,000, or 1.9% of revenues in the first
quarter of 1995.

BLETHEN RESULTS FOR 1995 COMPARED TO 1994

Revenues. Revenues increased $1.4 million, or 11.8%, to $13.4 million in
1995 compared to $12.0 million in 1994.

Cost of Services. Cost of services increased $1.1 million, or 12.6%, to
$9.9 million in 1995 compared to $8.8 million in 1994.

Gross Profit. Gross profit increased $302,000, or 9.6%, to $3.5 million in
1995 compared to $3.2 million in 1994. Gross margin decreased to 25.9% during
1995 compared to 26.4% during 1994.

Operating Expenses. Operating expenses increased $207,000, or 7.3%, to $3.0
million in 1995 compared to $2.8 million in 1994. Operating expenses as a
percentage of revenues decreased to 22.7% in 1995 compared to 23.7% in 1994.

Operating Income. Operating income increased $95,000, or 29.3%, to $419,000
in 1995 compared to $324,000 in 1994. Operating income as a percentage of
revenues increased to 3.1% during 1995 compared to 2.7% during 1994.

Net Income. Net income increased 48.2% to $208,000, or 1.6% of revenues in
1995 compared to $141,000, or 1.2% of revenues in 1994.

BLETHEN RESULTS FOR 1994 COMPARED TO 1993

Revenues. Revenues increased $769,000, or 6.9%, to $12.0 million in 1994
compared to $11.2 million in 1993.

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<PAGE> 37

Cost of Services. Cost of services increased $674,000, or 8.3%, to $8.8
million in 1994 compared to $8.1 million in 1993.

Gross Profit. Gross profit increased $95,000, or 3.1%, to $3.2 million in
1994 compared to $3.1 million in 1993. Gross margin decreased to 26.4% during
1994 compared to 27.4% during 1993.

Operating Expenses. Operating expenses decreased $341,000, or 10.7%, to
$2.8 million in 1994 compared to $3.2 million in 1993. Operating expenses as a
percentage of revenues decreased to 23.7% in 1994 compared to 28.4% in 1993.

Operating Income (Loss). Operating income increased $436,000 to $324,000 in
1994 compared to a loss of $112,000 in 1993.

Net Income (Loss). Net income increased $232,000 to $141,000 in 1994
compared to a loss of $91,000 in 1993.

LIQUIDITY AND CAPITAL RESOURCES -- BLETHEN

Net cash provided by operating activities was $67,000, $218,000, $100,000
and $155,000 for 1993, 1994, 1995 and the first quarter of 1996, respectively.
Net cash provided by operating activities for all periods presented was
primarily due to changes in operating assets and liabilities and net income
(loss).

Net cash used in investing activities was $130,000, $72,000, $25,000 and
$15,000 for 1993, 1994, 1995 and the first quarter of 1996, respectively. Cash
used in investing activities for all periods presented was solely for capital
expenditures, primarily related to the opening of new branches.

Net cash used in financing activities was $129,000, $61,000 and $143,000
for 1994, 1995 and the first quarter of 1996. Cash used in financing activities
during the first quarter of 1996 consisted of net payments on the lines of
credit and increases in amounts due from shareholders.

As a result of the foregoing, cash and cash equivalents decreased $64,000
in 1993, increased $17,000 in 1994, increased $13,000 in 1995 and decreased
$3,000 in the first quarter of 1996.

As of March 31, 1996, Blethen had total debt of $1.1 million.

While there can be no assurance, management of Blethen believes that the
funds provided by operations, amounts available under bank credit agreements and
amounts of cash and cash equivalents on hand will be sufficient to meet its
presently anticipated needs for working capital and capital expenditures for at
least the next twelve months.

35
<PAGE> 38

BUSINESS

The Company's immediate goal is to expand throughout the regions it
currently serves, and ultimately to expand nationally to meet the broad
geographic needs of regional and national companies seeking to centralize
purchasing decisions for temporary staffing needs. The Company plans to achieve
these goals through acquisitions and internal growth.

OPERATING STRATEGY

Provide a Decentralized Entrepreneurial Environment. The Company believes
an entrepreneurial business environment that rewards performance tends to
attract and retain self-motivated, achievement-oriented individuals. Each of the
Company's branches will operate as a separate profit center with local
management having primary profit and loss responsibility. Each branch office
will be given latitude in many fundamental operational functions, including
hiring, pricing, training, sales, and marketing. This will permit each branch
manager to be flexible and responsive to the specific needs of local clientele.
In addition, the Company intends to establish profit-based compensation at the
regional and local levels and to implement a stock option program to further
motivate employees through ownership in the Company. See "Management -- 1996
Stock Option Plan."

Capitalize on Strong Reputation and Local Name Recognition. The Company
intends to continue to build on the Founding Companies' strong reputations and
client familiarity with their local names. The Company believes that its local
presence, accessible management and sophisticated support services position it
as a provider of choice of staffing services in the markets it serves. The
Company believes that it is one of the leading providers of staffing services in
most of its markets.

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<PAGE> 39

Capitalize on New Corporate Structure. The Company intends to take
advantage of its new corporate structure by:

Increasing Operating Efficiencies. The Company believes that it can
achieve economies of scale by combining a number of general and
administrative functions at the corporate level and by reducing or
eliminating redundant functions and facilities of the Founding Companies.
The Founding Companies have made substantial investments in technology and
systems, which will facilitate the integration of the operational,
financial and administrative functions of their respective businesses.
Currently, four of the six Founding Companies employ versions of the
Caldwell-Spartin computer system, and the Company plans to add the other
two companies to the system within six months of the completion of this
Offering. The Company will benefit from further economies of scale through
common regional management and the spreading of recruiting, training,
advertising, administrative and branch office costs over a larger number of
temporary employees and clients.

Centralizing Control Functions. The Company will support its branch
office network by providing risk management, payroll, billing and
collection, purchasing, cash management, internal audit, human resources
and other administrative support services. This centralization will provide
senior management with a significant source of control and the ability to
monitor the key operating areas of the Company at the branch level.

Adopting the Best Practices of Founding Companies. Management of the
Company routinely evaluates the operating policies and procedures of each
of the Founding Companies and will implement Company-wide the practices
that best serve the needs of the Company. For example, three of the
Founding Companies employ an incentive compensation system for their branch
offices which encourages cost savings at the branch level by rewarding
branch office profitability. Management intends to implement this
compensation system throughout the Company.

Offer a Diversified Range of Services. The Company provides virtually all
commercial staffing services, including secretarial, clerical, word processing,
light industrial and electronic assembly. In addition to commercial staffing
services, the Company provides professional and specialty medical staffing
services in certain markets by providing personnel such as computer operators,
programmers, engineers, physical and occupational therapists, and clinical trial
support employees. The Professional and Specialty Medical divisions, which
management believes offer substantial growth opportunities, tend to generate
higher gross margins than the Commercial division. The Company also offers
permanent placement services in several of its branches and believes that the
relatively higher margins and cross-selling opportunities associated with
permanent placement make it a profitable complement to its other staffing
services.

Offer Customized Client Services. The Company seeks to satisfy the needs of
its clients by providing customized services such as on-site management and
permanent placement services. The flexibility of the Company's decentralized
organization will allow it to tailor its operations to meet local client
requirements. For example, clients may be provided with customized billings,
utilization reports, and safety awareness and training programs. The Company
believes that the quality of the Founding Companies' services has enabled them
to establish and maintain long-term relationships with clients by understanding
the clients' businesses, responding promptly to client requests, proactively
assessing clients' staffing needs, and continually monitoring job performance
and client satisfaction. Certain of the Founding Companies maintain quality
assurance programs that include such procedures as: (i) a 30 minute response
time on status of pending orders; (ii) customized reporting and invoicing for
clients; and (iii) customized Caldwell-Spartin call-back reports and other
personalized daily reports to ensure a timely response to the daily needs of its
clients and temporary employees.

Attract and Retain Qualified Management and Personnel. The Company believes
that experienced management and branch office personnel with strong ties to and
knowledge of the local community are integral to establishing long-term
relationships at the local level. The Company believes that its decentralized
structure, which grants regional and local management significant autonomy, will
result in the attraction and retention of experienced, entrepreneurial managers.

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<PAGE> 40

GROWTH STRATEGY

Pursuing Strategic Acquisitions. The Company seeks acquisitions of
profitable, well-managed staffing companies that will expand the geographic
scope of its operations, increase the revenues of its Professional and Specialty
Medical divisions, or offer services that may be cross-sold to the Company's
existing client base. The Company has acquired four staffing businesses over the
past three years and currently has two acquisitions pending as outlined below:

<TABLE>
<CAPTION>
ACQUISITION ACQUIRED SERVICES ACQUIRED
ACQUIRING COMPANY DATE COMPANY LOCATION OFFERED BRANCHES REVENUES(1)
- --------------------------- ----------- ----------------- -------- ----------- -------- --------------
(IN THOUSANDS)

<S> <C> <C> <C> <C> <C> <C>
Brewer..................... 11/93 Aaron Temporaries AR Commercial 7 $ 10,000

Brewer..................... 7/95 Caldwell GA Commercial 5 17,000

Brewer..................... 2/96 On Call CO Commercial/ 4 12,000
Professional

Maxwell.................... 2/96 Sumner-Ray OK Professional 1 1,400

First Choice(2)............ 7/96 Strategic Sourcing NC Professional 1 1,200

HRA(2)..................... 7/96 Dorothy Johnson TN Professional 1 1,000
Career Consultants

</TABLE>

- ---------------
(1) Represents approximate revenues for fiscal year prior to acquisition.

(2) Acquisition pending.

Immediately following the consummation of the Offering, the Company intends
to pursue a strategic acquisition program. The Company will evaluate
acquisitions using numerous criteria, including profitability of operations,
management strength, market location, market share, staffing services offered,
and the quality of service. Certain of the Company's executive officers and
directors hold leadership positions in national and regional staffing trade
associations, and as a result have developed personal relationships with the
owners of numerous independent staffing companies. The Company believes that it
will have a strategic advantage in completing acquisitions based on (i) these
personal relationships, (ii) the successful assimilation of previous
acquisitions, (iii) its decentralized entrepreneurial environment and (iv) its
greater visibility and resources as a public company.

As consideration for future acquisitions, the Company intends to use
various combinations of equity, debt or cash. The Company initially plans to
register up to an additional 4,000,000 shares of its Common Stock as soon as
practicable after completion of the Offering for use in future acquisitions. The
Company has also received a proposal from a major lending institution to provide
the Company with a line of credit of $50.0 million, some or all of which could
be used in connection with future acquisitions.

Growing Internally. A key element of the Company's growth strategy is to
increase the productivity and profitability of existing operations by expanding
and enhancing services and by increasing penetration in existing geographic
markets. Spinning-off new branch offices from existing branches is a primary
method of expansion in the Company's existing markets. Spin-offs usually occur
in metropolitan areas where a branch has grown too large to efficiently manage
the number of temporary staffing hours generated. The branch splits into two
offices which allows the new branch to open with an existing client base and
provides the Company with geographical expansion at low marginal cost. During
fiscal 1995 and the first quarter of 1996, the Company opened 19 spin-off
branches. In addition, the Company may open new branch offices by following
existing clients into new geographic areas.

Increasing Vendor-on-Premises Relationships. The Company currently has 16
VOP partnering relationships, as compared to nine at December 31, 1995. VOP
relationships represented 8.9% and 16.1% of the Company's revenues for the year
ended December 31, 1995 and the three months ended March 31, 1996, respectively.
Under these programs, the Company assumes administrative responsibility for
coordinating all temporary personnel services throughout a client's location or
organization, including skills testing and

38
<PAGE> 41

training. While these partnering relationships tend to have lower gross margins
than traditional temporary staffing services, the higher volumes and
comparatively lower operating expenses associated with these relationships
result in attractive operating profits for the Company. The Company seeks to
expand its VOP program to comprehensive outsourcing arrangements, in which the
Company staffs and manages an entire department or function on a turn-key basis.
The VOP program provides the Company with an opportunity to establish long-term
client relationships, which result in a more stable source of revenue, while
providing clients with a dedicated on-site account manager who can more
effectively meet the client's changing staffing needs with high quality and
consistent service.

Cross-Selling Professional Services. The Company currently provides
commercial staffing services in the majority of its offices and plans to
introduce its professional services to certain branches that currently do not
offer such services. The Company believes there are substantial growth
opportunities through the introduction of its broad range of existing services
throughout its network of branch offices.

Expanding Specialty Medical Services. The Company believes that revenue and
profitability can be enhanced by providing specialty medical services in
additional markets. The Company's specialty medical services personnel currently
include physical and occupational therapists, speech pathologists, and clinical
trials support services such as clinical monitoring, project management, data
management, programming, statistical analysis, regulatory affairs, medical
writing and training. The Specialty Medical division generally enjoys higher
gross margins than the Commercial division because it offers specialized
expertise. The Company intends to expand its Specialty Medical division through
acquisitions and internal development.

THE STAFFING SERVICES INDUSTRY

The temporary staffing industry has grown rapidly in recent years as
competitive pressures have caused businesses to focus on reducing costs,
including converting fixed labor costs to variable costs. The use of temporary
employees also enables companies to improve flexibility in employee hiring and
scheduling and allows them to focus on their core business functions. According
to NATSS, the U.S. market for temporary services grew at a compound average
annual growth rate of approximately 17.7%, from approximately $20.4 billion in
revenue in 1991 to approximately $39.2 billion in 1995. Studies show that more
than 90% of all U.S. businesses use temporary staffing services, and that
temporary staffing personnel now account for approximately 2% of the total U.S.
workforce. The use of temporary personnel has become widely accepted as a
valuable tool for managing personnel costs, supplementing permanent workforces
and meeting specialized or fluctuating employment requirements. Vacations,
illnesses, resignations, seasonal increases in work volume, marketing promotions
and month-end requirements have historically created demand for temporary
staffing. More recently, the growing cost and difficulty of hiring, laying off
and terminating full-time workers has also encouraged greater use of temporary
workers. In addition, entrants into the labor force increasingly look to
temporary assignments as a way to build experience, make contacts, and receive
training and valuable exposure to a variety of work settings, as well as a means
to gain full-time employment.

Organizations have also begun using flexible staffing to reduce
administrative overhead by strategically outsourcing operations that are not
part of their core business functions, such as recruiting, training and benefit
administration. By utilizing temporary employees, businesses are able to avoid
the management and administrative costs incurred if full-time personnel are
employed. An ancillary benefit, particularly for smaller businesses, is that use
of temporary employees shifts certain employment costs and risks (e.g., workers'
compensation and unemployment insurance) to the temporary personnel provider,
which can spread the costs and risks over a much larger pool of employees.
Businesses are also utilizing staffing services to selectively hire and add to
their full-time staff. This concept, typically referred to as "temp-to-perm,"
provides the client with an opportunity to evaluate skills and proficiency prior
to extending full-time employment offers. NATSS estimates that approximately 40%
of temporary employees are ultimately offered full-time employment by clients.

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<PAGE> 42

THE COMPANY'S STAFFING SERVICES

The Company's staffing services are provided through three divisions:

Commercial Division. The Company's Commercial division, which accounted for
approximately 86.4% and 84.7% of the Company's revenues for the year ended
December 31, 1995 and the three months ended March 31, 1996, respectively,
provides personnel to clients with traditional clerical and light industrial
needs. The Company's clerical services personnel include secretarial, clerical
and word processing personnel, receptionist/switchboard operators, typists, data
entry operators, cashiers, client service representatives, medical/legal
transcriptionists, file clerks, and other miscellaneous office personnel. Light
industrial services personnel include warehouse workers, maintenance workers,
assemblers, quality control clerks, order pullers, food service workers,
production workers, shipping/receiving clerks, janitors, packagers, inventory
clerks, textile manufacturers, and machinists.

Professional Division. The Company's Professional division provides
personnel for technical, information technology, legal and accounting services
and accounted for 5.3% and 7.6% of the Company's revenues for the year ended
December 31, 1995 and the three months ended March 31, 1996, respectively. The
Company provides technical services personnel such as drafters, designers and
engineers in the mechanical and electrical engineering and computer science
fields. Information technology services include systems planning and design,
project management, software applications development, systems and network
implementation, systems integration and higher-level contract programming
services, facilities management, systems maintenance, "help-desk" assistance and
education and training. The Company also provides accounting personnel,
paralegals and other legal assistants, and sales and marketing professionals.

Specialty Medical Division. The Company's Specialty Medical division
accounted for 8.3% and 7.7% of the Company's revenues for the year ended
December 31, 1995 and the three months ended March 31, 1996, respectively. The
Company offers specialty medical staffing services to meet the growing demand
for physical and occupational therapists in the U.S. healthcare market. The
Company recruits, both domestically and internationally, trained physical
therapists, occupational therapists and speech pathologists to work in a variety
of healthcare settings in more than 15 states. The Company also provides
complete physical therapy management and staffing services to out-patient
clinics as well as rural and suburban acute care hospitals. The Company targets
hospitals in the 80-250 bed range with at least one orthopedic surgeon on staff,
minimal competition in the area, and moderate to heavy surrounding industry.

The Company offers clinical trials support personnel to meet the demands of
the pharmaceutical, biotechnology, medical device and medical research data
industries. The Company provides contract personnel with a wide variety of
expertise in the clinical research field, including clinical monitoring, project
management, data management, programming, statistical analysis, regulatory
affairs, medical review and writing and training. The Company maintains a
national database of qualified contract professionals and is able to source
potential candidates for its clients on a nationwide basis.

OPERATIONS

Branch Offices. The Company offers its services through 91 branch offices
in Arkansas, Colorado, Georgia, North Carolina, Oklahoma, South Carolina,
Tennessee and Virginia. The following table shows the Company's branch offices,
including pending acquisitions, as of the dates indicated:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, JUNE 1,
1993 1994 1995 1996
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Commercial.................... 41 45 65 78
Professional.................. 2 3 4 8
Specialty Medical............. 4 4 5 5
--- --- --- ---
Total branch offices........ 47 52 74 91
=== === === ===

</TABLE>

40
<PAGE> 43

Branch managers will operate their offices with a significant degree of
autonomy and accountability and will receive bonuses based on the profitability
of the branch. This compensation system is designed to motivate the managers to
maximize the growth and profitability of their offices. Other branch personnel,
including account coordinators, will also receive bonuses directly related to
the growth and profitability of their branch. Branch managers will report to
regional managers or subsidiary presidents. Operating within the guidelines set
by the Company, the branch managers will be responsible for pursuing new
business opportunities and focusing on sales and marketing, account development,
and employee recruitment and retention.

Sales and Marketing. StaffMark's services are marketed through its network
of offices whose branch managers, supported by the Company's marketing staff,
make regular personal sales visits to clients and prospects. The Company
emphasizes long-term personal relationships with clients which are developed
through regular assessment of client requirements and constant monitoring of
temporary staff performance. New clients are obtained through client referrals,
telemarketing and advertising in a variety of local and regional media,
including television, radio, direct mail, Yellow Pages, newspapers, magazines
and trade publications. The Company will continue to sponsor job fairs and other
community events. The Company's officers and senior management also participate
in national and regional trade associations, local chambers of commerce and
other civic associations.

Recruiting. One of the Company's most successful recruiting tools is
referrals by its temporary staffing employees. The Company finds that referrals
from its existing labor force provide the highest quality and largest number of
new temporary employees and, in certain markets, the Company pays a referral fee
to employees for recruiting a new temporary employee. The Company employs
full-time regional recruiters who regularly monitor the skills and availability
of their region's temporary employees to ensure a base of qualified employees to
meet client demands. These recruiters also visit schools, clubs, and
professional associations and present career development programs to various
organizations. In addition, the Company obtains applicants from advertising on
radio, television, in the Yellow Pages and through other print media.

Employees/Personnel. Currently, the six Founding Companies provide over
10,000 employees to more than 2,500 clients during a typical week. As of March
31, 1996, the Company employed approximately 500 full-time employees. None of
the Company's employees, including its staffing employees, are represented by a
collective bargaining agreement. The Company believes its employee relations are
good. Hourly wages for the Company's staffing employees are determined according
to market conditions. The Company pays mandated costs of employment, including
the employer's share of social security taxes (FICA), federal and state
unemployment taxes, unemployment compensation insurance, general payroll
expenses and workers' compensation insurance. The Company offers access to
various insurance programs and benefits to its staffing employees.

Assessment, Training and Quality Control. The Company uses a comprehensive
system to assess, select and train its employees in order to provide quality
assurance for its temporary personnel operations. Applicants are given a range
of tests, applicable to the position(s) they seek. Clerical and office-support
applicants receive state-of-the-art tests in computer skills, word processing,
typing, data entry, accounting, and other business applications. These
sophisticated tests cover the latest software, and thoroughly and objectively
evaluate each individuals' skills and experience. The Company feels it is
imperative to customize testing and training to match the specific office
environment in which the individual will be placed. In the technical arena,
specific programming tests are also given to assess the expertise of the
candidate seeking placement. Such testing measures proficiency in programming
languages, electromechanical skills, autocad, schematics and other technical
applications. Industrial electronic assembly applicants are tested to determine
basic competency, industrial aptitude, hand and finger dexterity, soldering,
mathematics, ability to read a blue print, and measurement calculations.

Management recognizes that certain clients have specialized staffing
requirements that can only be fulfilled with customized training. The Company
provides training programs for specific staffing requirements, such as
electronic or mechanical assembly or the use of specialized software
applications. Computerized tutorials are generally available for temporary
employees seeking to upgrade their typing, data entry, office

41
<PAGE> 44

automation or word processing skills, and classes on topics such as spreadsheets
and software applications are conducted periodically in branch offices.

The Company stresses specialization, training and empowerment of employees
to ensure that clients receive the highest quality service for the most
cost-effective price. The Company currently operates a career training center
where temporary employees as well as the general public can enroll in career
advancement classes. This center helps to increase the number of trained and
qualified applicants eligible for placement with the Company's clients.

Management Information Systems. The operating system software utilized by
the Company is the Caldwell-Spartin system which management believes is
currently one of the leading applications software systems in the staffing
industry. This system permits access to a shared database at the branch level,
allowing the branch office to fill client orders, communicate with clients
regarding invoices and screen candidates for the most suitable job opportunity.
As of the date of this Offering, four of the six Founding Companies utilize
versions of the Caldwell-Spartin system. The Company anticipates the other
Founding Companies will be brought on-line with this system within six months of
the completion of the Offering. The Company believes that the Caldwell-Spartin
system, once implemented throughout the Founding Companies and connected to all
branch offices, can readily be expanded to meet increased demands without
significant additional capital expenditures.

Workers' Compensation Program. The Company intends to maintain workers'
compensation insurance for all claims in excess of a retention level of $250,000
per occurrence. The Company's risk management team will take a proactive
approach to safety and risk control. The team will work diligently to train the
Company's full-time staff to better screen, test and orient the Company's
temporary employees to a more safety-conscious environment. The team will also
perform periodic safety inspections at client locations to help determine
potential risk for employee injury and to assist clients in making the workplace
safer through customized safety program development, implementation and
evaluation. Company policies prohibit staffing of high risk activities such as
working on unprotected elevated platforms or the handling of hazardous
materials. The risk management team will evaluate new clients and will have the
authority to decline service if the work environment is perceived to be unsafe
or potentially hazardous.

An independent actuary provides advice on overall workers' compensation
costs and performs an actuarial valuation regarding the adequacy of the
accruals. The Company believes such accruals are reasonable. Currently, three of
the Founding Companies are self-insured in the states of Arkansas, Georgia and
Oklahoma. One Founding Company participates in a large retention program and
another participates in a group captive program. The remaining company
participates in the voluntary insurance market. The Founding Companies and any
acquired operations will be integrated into the Company's program at such time
as, in management's judgment, is most cost effective.

COMPETITION

The staffing industry is highly competitive and highly fragmented,
consisting of more than 7,000 firms. There are limited barriers to entry and new
competitors frequently enter the market. The Company also faces intense
competition from large international, national, regional and local companies.
Principal competitors in the Company's markets are generally national temporary
personnel companies with substantially greater financial and marketing resources
than those of the Company.

The Company competes for qualified temporary staffing employees and for
clients who require the services of such employees. The principal competitive
factors in attracting and retaining qualified temporary staffing employees are
competitive salaries and benefits, quality and frequency of assignments and
responsiveness to employee needs. The Company believes that many persons who
seek temporary employment are also seeking regular employment and that the
availability of assignments which may lead to regular employment is an important
factor in its ability to attract qualified temporary staffing employees.

The principal competitive factors in obtaining clients are a strong sales
and marketing program, the timely availability of qualified temporary staffing
employees, the ability to match client requirements with

42
<PAGE> 45

available temporary staffing employees, competitive pricing of services and
satisfying work production requirements. The Company believes its long-term
client relationships and strong emphasis on providing service and value to its
clients and temporary staffing employees are important competitive advantages.

The Company also competes for acquisition candidates. The Company believes
that further industry consolidation will continue during the next few years.
However, there is likely to be significant competition which could lead to
higher prices being paid for such businesses. The Company believes that it will
have a strategic advantage in completing acquisitions as a result of (i)
management's personal relationships with existing staffing companies, (ii) the
successful assimilation of previous acquisitions, (iii) its decentralized
entrepreneurial environment and (iv) its greater visibility and resources as a
public company. See "-- Growth Strategy." However, no assurance can be given
that the Company's acquisition program will be successful or that the Company
will be able to compete effectively in its markets.

FACILITIES

The Company owns no real property. It leases its corporate headquarters as
well as space for all of its branch offices. The Company believes that its
facilities are adequate for its needs and does not anticipate inordinate
difficulty in replacing such facilities or opening additional facilities, if
needed.

The Company's headquarters is located at 302 East Millsap Road,
Fayetteville, Arkansas 72703. The premises are leased from a related party for a
term ending on January 1, 2001, with three options to renew for five additional
years each. A substantial number of other facilities are also leased from
related parties. The Company believes that the lease terms are at least as
favorable as could be obtained from any unrelated third party. See "Certain
Transactions."

REGULATION

The Company's operations are not generally subject to state or local
licensing requirements or other regulations specifically governing the provision
of commercial and professional staffing services. There can be no assurance,
however, that states in which the Company operates or may in the future operate
will not adopt such licensing or other regulations affecting the Company.

State mandated workers' compensation and unemployment insurance premiums
have increased in recent years and have directly increased the Company's cost of
services. In addition, the extent and type of health insurance benefits that
employers are required to provide employees have been the subject of intense
scrutiny and debate in recent years at both the national and state level.
Proposals have been made to mandate that employers provide health insurance
benefits to staffing employees, and some states could impose sales taxes, or
raises sales tax rates, on staffing services. Further increases in such premiums
or rates, or the introduction of new regulatory provisions, could substantially
raise the costs associated with hiring and employing staffing employees. See
"Risk Factors -- Increased Employee Costs" and "-- Risk of Government
Regulations and Legislative Proposals."

The Company currently recruits physical and occupational therapists
internationally for domestic placement. The entry of these employees into the
United States is regulated by the U.S. Department of Labor and U.S. Department
of Justice -- Immigration and Naturalization Services. The regulations governing
the hiring of foreign nationals are complex and change often. If either of these
authorities or any other regulatory or judicial body should determine that the
Company is not in compliance with the regulations, the Company could be subject
to fines and/or suspension of this part of the Company's business. Further,
regulations could change in a manner which would limit the Company's ability to
employ foreign nationals. Any of the foregoing could have a material adverse
effect on the Company's business, financial condition, and results of operation.

INTELLECTUAL PROPERTY

The Company has applied for Federal Service Mark registration of
"StaffMark" and the associated Company logo with the U.S. Patent and Trademark
Office. No assurance can be given that any such

43
<PAGE> 46

registration will be granted or that, if granted, such registration will be
effective to prevent others from: (i) using the mark concurrently; or (ii)
challenging the Company's use of the service mark in certain locations. The
Company owns and licenses several other state and federal trademarks used by the
Founding Companies. The Company believes that it has all rights to trademarks
and trade names necessary for the conduct of its business.

LEGAL AND ADMINISTRATIVE PROCEEDINGS

On July 13, 1995, Liberty Mutual Insurance Company ("Liberty") filed a
complaint against HRA in the Chancery Court of Davidson County, Tennessee, Case
No. 95-2160 II (III) alleging that HRA failed to pay certain insurance premiums
due and owing to Liberty for its provision of worker's compensation insurance to
HRA in fiscal years 1993 and 1994, and a portion of fiscal year 1995. A judgment
was rendered against the Company for approximately $718,000, which was inclusive
of the disputed amounts plus accrued interest. The Company filed an appeal to
this judgment and is negotiating settlement. HRA reserved for these disputed
amounts in the fiscal years in which the claims were raised. Accordingly,
management anticipates that the ultimate resolution of this matter will not have
a material adverse effect on the financial position or results of operations of
the Company.

In the ordinary course of its business, the Company is periodically
threatened with or named as a defendant in various lawsuits, including
discrimination and harassment and other similar claims. The Company maintains
insurance in such amounts and with such coverage and deductibles as management
believes are reasonable.

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<PAGE> 47

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information concerning each of the
directors, executive officers and persons who will become directors or executive
officers of the Company following consummation of this Offering:

<TABLE>
<CAPTION>
NAME AGE POSITION
------------------------------------- --- -------------------------------------
<S> <C> <C>
Jerry T. Brewer(1)................... 55 Chairman of the Board

Clete T. Brewer(1)................... 31 Chief Executive Officer and
President; Director

Ted Feldman.......................... 43 Chief Operating Officer

Robert H. Janes III.................. 29 Executive Vice President -- Finance,
Mergers and Acquisitions

W. David Bartholomew................. 39 Executive Vice
President -- Southeastern Operations;
Director

Donald A. Marr, Jr. ................. 32 Executive Vice
President -- Southwestern Operations

Steven E. Schulte.................... 33 Executive Vice President --
Administration; Director

John H. Maxwell, Jr.................. 53 Executive Vice President -- Medical
Services; Director

Janice Blethen....................... 52 Executive Vice President -- Clinical
Trials Support Services; Director

William T. Gregory................... 54 General Manager -- Carolina Region;
Director

Mary Sue Maxwell..................... 53 General Manager -- Oklahoma Region

William J. Lynch..................... 53 Director
</TABLE>

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

(1) Jerry T. Brewer is the father of Clete T. Brewer.

Jerry T. Brewer co-founded StaffMark in March 1996 and has served since
then as its Chairman of the Board. Mr. Brewer also co-founded Brewer in July
1988, and currently serves as its Chairman of the Board. From July 1988 to April
1995, Mr. Brewer served as President and Chief Executive Officer of Brewer.

Clete T. Brewer co-founded StaffMark in March 1996 and has served since
then as its President and Chief Executive Officer and a director. Mr. Brewer
also co-founded Brewer in July 1988, and has served since April 1995 as
President, Chief Executive Officer and a Director of Brewer. From July 1988 to
April 1995, Mr. Brewer served as Vice President and a Director of Brewer.

Ted Feldman will become Chief Operating Officer of the Company upon
consummation of this Offering. Mr. Feldman founded HRA in 1991 and since its
inception has served as its President and Chief Executive Officer. He will
continue to serve in that capacity after the consummation of this Offering. From
1979 until 1992, Mr. Feldman served as President of Nashville Trunk & Bag Co.

Robert H. Janes III co-founded StaffMark in March 1996 and will become
Executive Vice President -- Finance, Mergers and Acquisitions upon consummation
of this Offering. Mr. Janes has served as Vice President of Finance of Brewer
since April 1995. From 1988 to 1990 and 1992 to 1995, he was employed in the
corporate finance department of Stephens Inc., an investment banking firm and
one of the Representatives. In 1992, Mr. Janes obtained an MBA from The Wharton
School.

W. David Bartholomew will become a director and Executive Vice
President -- Southeastern Operations of the Company upon consummation of this
Offering and will oversee the Company's Commercial and Professional divisions in
that region. Mr. Bartholomew has served as Secretary/Treasurer of HRA since 1993

45
<PAGE> 48

and will continue to serve in that capacity after the consummation of this
Offering. From 1991 through 1993, Mr. Bartholomew was President of Cobble
Personnel of Nashville.

Donald A. Marr, Jr. will become Executive Vice President -- Southwestern
Operations of the Company upon consummation of this Offering and will oversee
the Company's Commercial and Professional divisions in that region. He has been
employed by Brewer since 1990 and has served as Brewer's Vice President of
Operations since 1994 and will continue to serve in that capacity after the
consummation of this Offering.

Steven E. Schulte will become a director and Executive Vice
President -- Administration of the Company upon consummation of this Offering.
He has been employed by Prostaff since August 1987, and has served as Prostaff's
President and Chief Executive Officer since June 1992 and will continue to serve
in that capacity after the consummation of this Offering.

John H. Maxwell, Jr. will become a director and Executive Vice
President -- Medical Services of the Company upon the consummation of this
Offering. Mr. Maxwell has served as the Chief Executive Officer of Maxwell since
1973 and will continue to serve in that capacity after the consummation of this
Offering. He is a Certified Personnel Consultant and a Certified International
Personnel Consultant.

Janice Blethen will become a director and Executive Vice
President -- Clinical Trials Support Services of the Company upon the
consummation of this Offering. Ms. Blethen has served as Chief Executive Officer
of Blethen since its inception in 1975. Ms. Blethen is a Certified Personnel
Consultant.

William T. Gregory will become a director and General Manager -- Carolina
Region of the Company upon the consummation of this Offering. Mr. Gregory has
served as President of First Choice since 1985 and will continue to serve in
that capacity after the consummation of this Offering. Mr. Gregory is a
Certified Personnel Consultant.

Mary Sue Maxwell will become General Manager -- Oklahoma Region of the
Company upon consummation of this Offering. Ms. Maxwell has served as President
of Maxwell Staffing, Inc. since 1983 and will continue to serve in that capacity
after the consummation of this Offering.

William J. Lynch will become a director of the Company upon the
consummation of this Offering. Mr. Lynch is a Managing Director of Capstone
Partners, LLC, a special situations venture capital firm. From October 1989 to
March 1996, Mr. Lynch was a partner of the law firm of Morgan, Lewis & Bockius
LLP. Mr. Lynch also serves as a director of Sanifill, Inc., a publicly traded
environmental services company and Coach USA, Inc., a publicly traded motorcoach
services company.

The number of directors on the Board of Directors is currently fixed at
eight. Directors of the Company are elected at the annual meeting of
stockholders. Officers of the Company are appointed at the first meeting of the
Board of Directors after each annual meeting of stockholders. Directors and
executive officers of the Company are elected to serve until they resign or are
removed or are otherwise disqualified to serve, or until their successors are
elected and qualified.

The Company expects that the Board of Directors will establish an Audit
Committee, a Compensation Committee, and an Executive Committee. The members of
each committee are expected to be determined at the first meeting of the Board
of Directors following the closing of the Offering, however, the members of the
Audit and Compensation Committees will consist solely of outside directors.

DIRECTOR COMPENSATION

Directors who are employees of the Company do not receive additional
compensation for serving as directors. Each director who is not an employee of
the Company will receive a fee of $2,000 for attendance at each Board of
Directors meeting and $500 for each committee meeting (unless held on the same
day as a Board of Directors meeting). Each non-employee Director who has agreed
to serve as such prior to the consummation of this Offering has also been
granted nonqualified stock options to purchase 10,000 shares of Common Stock at
an exercise price equal to the initial public offering price per share in this
Offering, exercisable in three equal installments on the date of grant and the
next two anniversaries thereof. Non-employee directors will, beginning with the
first annual meeting of the Company's stockholders, receive annual

46
<PAGE> 49

grants of non-qualified stock options to purchase 2,000 shares of Common Stock.
See "Management -- 1996 Stock Option Plan." All directors of the Company are
reimbursed for out-of-pocket expenses incurred in attending meetings of the
Board of Directors or committees thereof, or for other expenses incurred in
their capacity as Directors.

EXECUTIVE COMPENSATION; EMPLOYMENT AGREEMENTS; COVENANTS NOT TO COMPETE

StaffMark was incorporated in March 1996, and did not conduct any
operations prior to that time. The Company anticipates that during fiscal 1996
its Chief Executive Officer and the four other most highly compensated officers,
and their annualized base salaries for 1996, will be: Clete T. Brewer --
$150,000, Ted Feldman -- $145,000, W. David Bartholomew -- $125,000, Steven E.
Schulte -- $125,000, and Robert H. Janes III -- $100,000 (collectively, the
"named executive officers").

Each named executive officer will enter into an employment agreement with
the Company or a subsidiary thereof, commencing on the date of the closing of
this Offering. Pursuant to such employment agreements, each such officer will be
eligible for additional year-end bonus compensation to be determined pursuant to
an incentive bonus plan to be established by the Company. Each employment
agreement will be for a term of five years, and unless terminated or not renewed
by the Company or not renewed by the employee, the term will continue thereafter
on a year-to-year basis on the same terms and conditions existing at the time of
renewal.

Each of the employment agreements provides that, in the event of a
termination of employment by the Company, except for specific instances of
"cause" as defined in the employment agreement, such employee shall be entitled
to receive from the Company such employee's then current salary for a period no
longer than two years after this Offering. Each employment agreement contains a
covenant not to compete with the Company for a period of two years immediately
following the termination of his employment.

1996 STOCK OPTION PLAN

The Company was incorporated in March 1996 and did not conduct any
operations prior to that time. Accordingly, no stock options were granted to, or
exercised by or held by any executive officers in fiscal 1995. In June 1996, the
Board of Directors and the Company's stockholders approved the Company's 1996
Stock Option Plan (the "Plan"). The purpose of the Plan is to provide directors,
officers, key employees and consultants with additional incentives by increasing
their ownership interests in the Company. Directors, officers and other key
employees of the Company and its subsidiaries are eligible to participate in the
Plan. In addition, awards may be granted to consultants providing valuable
services to the Company. Awards under the Plan are granted by the Compensation
Committee of the Board of Directors and may include incentive stock options
("ISOs"), and/or non-qualified stock options ("NQSO's").

The Compensation Committee of the Board of Directors, which will administer
the Plan, is required to consist of two or more directors who qualify as
disinterested persons within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The Compensation
Committee generally has discretion to determine the terms of an option grant,
including the number of option shares, option price, term, vesting schedule, the
post-termination exercise period, and whether the grant will be an ISO or NQSO.
Notwithstanding this discretion: (i) the number of shares subject to options
granted to any individual in any calendar year may not exceed 500,000 shares;
(ii) the option price per share of Common Stock may not be less than 100% of the
fair market value of such share at the time of grant or 110% of the fair market
value of such shares if the option is intended to be an ISO and is granted to a
stockholder owning more than 10% of the combined voting power of all class of
the Company stock or of its' parent or subsidiary on the date of the grant of
the option; and (iii) the term of any option may not exceed 10 years or five
years if the option is intended to be an ISO and is granted to a stockholder
owning more than 10% of the total combined voting power of all classes of stock
on the date of the grant of the option. In addition, unless otherwise specified
by the Compensation Committee, all outstanding options vest upon a "change in
control" of the Company (as defined in the Plan), and all options will terminate
three months following any termination of employment.

The Plan also provides for automatic option grants to directors who are not
otherwise employed by the Company or its subsidiaries. Upon commencement of
service (or upon agreeing to serve in the case of the

47
<PAGE> 50

initial non-employee directors), a non-employee director will receive an NQSO
option to purchase 10,000 shares of Common Stock, and continuing non-employee
directors will receive annual options to purchase 2,000 shares of Common Stock.
Options granted to non-employee directors become exercisable one-third on the
date of grant and one-third on each of the next two anniversaries of the date of
grant. Non-employee directors' options have a term of five years from the date
of grant.

The maximum number of shares of Common Stock that may be subject to
outstanding options, determined immediately after the grant of any option, is
the greater of 1,500,000 or 12% of the aggregate number of shares of the
Company's Common Stock outstanding, provided, however, that options to purchase
no more than 1,500,000 shares of Common Stock may be granted as ISOs as of the
preceding January 1, less, in each case, the number of shares subject to
previously outstanding awards under the Plan. Shares of Common Stock which are
attributable to awards which have expired, terminated or been cancelled or
forfeited during any calendar year are available for issuance or use in
connection with future awards during such calendar year.

The Plan will remain in effect until terminated by the Board of Directors.
No ISO may be granted more than 10 years after the adoption of the Plan by the
Board or approval of the Plan by the stockholders, whichever is earlier. The
Plan may be amended by the Board of Directors without the consent of the
stockholders of the Company, except that any amendment, although effective when
made, will be subject to stockholder approval within one year after approval by
the Board of Directors if required by any Federal or state law or regulation or
by the rules of any stock exchange or automated quotation system on which the
Common Stock may then be listed or quoted.

The Omnibus Budget Reconciliation Act of 1993 added Section 162(m) to the
Internal Revenue Code, which generally disallows a public company's tax
deduction for compensation to the chief executive officer and the four other
most highly compensated executive officers in excess of $1 million in any tax
year beginning on or after January 1, 1994. Compensation that qualifies as
"performance-based compensation" is excluded from the $1 million deductibility
cap, and therefore remains fully deductible by the company that pays it. The
Company intends that options granted with an exercise price at least equal to
100% of fair market value of the underlying stock at the date of grant will
qualify as such "performance-based compensation," although other awards under
the Plan may not so qualify. Until final regulations are adopted and other
guidance made available by the Internal Revenue Service, there can be no
assurance that any awards under the Plan will qualify as "performance-based
compensation" that is fully deductible by the Company under Section 162(m).

The Company plans to issue options to purchase a total of up to 919,097
shares of the Company Stock upon completion of this Offering at the initial
public offering price. In addition and in accordance with the Mergers, options
to purchase shares of Brewer previously granted to employees of On Call will be
converted into options to purchase 16,397 shares of StaffMark at $2.13 per
share. Options to be issued, other than those granted to non-employee directors,
will generally be exercisable as to 40% of the underlying shares two years from
the date of grant and as to an additional 20% on each of the next three
anniversaries of the date of option grant. No options were granted during fiscal
year 1995.

OFFICER AND DIRECTOR LIABILITY

Pursuant to the Company's Certificate of Incorporation and under Delaware
law, directors of the Company are not liable to the Company or its stockholders
for monetary damages for breach of fiduciary duty, except for liability in
connection with a breach of duty of loyalty, for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law, for
dividend payments or stock repurchases illegal under Delaware law, or any
transaction in which a director has derived improper personal benefit.

As permitted by Delaware law, the Company will enter into an
indemnification agreement with its directors, pursuant to which the Company will
agree to pay certain expenses, including attorney's fees, judgments, fines and
amounts paid in settlement incurred by such directors in connection with certain
actions, suits or proceedings. These agreements require directors to repay the
amount of any expenses advanced if it shall be determined that they shall not
have been entitled to indemnification.

The Company intends to maintain liability insurance for the benefit of its
directors and officers.

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<PAGE> 51

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock of the Company, after giving effect to
the Mergers and this Offering, by (i) each person known to the Company to be the
beneficial owner of 5% or more of the outstanding shares of Common Stock, (ii)
each director and person who will become a director upon consummation of the
Offering; (iii) each named executive officer, and (iv) all executive officers
and directors as a group. All persons listed have an address c/o the Company's
principal executive offices and have sole voting and investment power with
respect to their shares unless otherwise indicated.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED AFTER THE
OFFERING
----------------------
NAME NUMBER PERCENT
- ----------------------------------------------------------------------- --------- -------
<S> <C> <C>
Jerry T. Brewer(1)..................................................... 722,944 5.8%
Clete T. Brewer(2)..................................................... 1,200,042 9.6
Ted Feldman............................................................ 302,611 2.4
Robert H. Janes III.................................................... 184,957 1.5
W. David Bartholomew(3)................................................ 282,437 2.3
Donald A. Marr, Jr..................................................... 117,010 1.0
Steven E. Schulte(4)................................................... 455,925 3.6
John H. Maxwell, Jr.(5)................................................ 719,623 5.8
Mary Sue Maxwell(6).................................................... 719,623 5.8
Janice Blethen(7)...................................................... 476,478 3.8
William T. Gregory..................................................... 435,750 3.5
William J. Lynch(8).................................................... 136,042 1.1
All directors and executive officers as a group (12 persons)........... 5,033,819 40.4
</TABLE>

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

(1) Includes 225,000 shares held by Mr. Brewer's spouse, as to which Mr. Brewer
disclaims beneficial ownership.

(2) Includes 66,044 shares held by the Clete Brewer Irrevocable Trust for which
Mr. Brewer is the trustee, and includes 66,044 shares held by a trust for
the benefit of Mr. Brewer's spouse, for which Mr. Brewer is trustee.

(3) These shares are held by Bartfund I Limited Partnership, of which Mr.
Bartholomew is the general partner.

(4) Includes 437,025 shares held by the Steven E. Schulte Revocable Trust for
which Mr. Schulte is a trustee.

(5) Includes 354,402 shares held by the John H. Maxwell, Jr. Revocable Living
Trust, of which Mr. Maxwell is the trustee, and includes 365,221 shares
held by a trust for the benefit of Mr. Maxwell's spouse, as to which Mr.
Maxwell disclaims beneficial ownership.

(6) Includes 365,221 shares held by the Mary Sue Maxwell Revocable Living
Trust, of which Ms. Maxwell is the trustee, and includes 354,402 shares
held by a trust for the benefit of Ms. Maxwell's spouse, as to which
Ms. Maxwell disclaims beneficial ownership.

(7) Includes 71,905 shares held by Blethen Family Investments Limited
Partnership, the general partner of which is a corporation controlled by
Ms. Blethen.

(8) Includes 136,042 shares held by Capstone Partners LLC, of which Mr. Lynch
is a manager.

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<PAGE> 52

DESCRIPTION OF CAPITAL STOCK

GENERAL

The Company's authorized capital stock consists of 26,000,000 shares of
Common Stock, par value $.01 per share (the "Common Stock"), and 1,000,000
shares of preferred stock, par value $.01 per share (the "Preferred Stock").
After giving effect to the Mergers, but prior to the consummation of this
Offering, the Company will have outstanding 6,973,249 shares of Common Stock and
no shares of Preferred Stock. Upon completion of this Offering, the Company will
have outstanding 12,473,249 shares of Common Stock (13,298,249 if the
Underwriters' over-allotment option is exercised in full) and no shares of
Preferred Stock. Prior to the Mergers and as of March 31, 1996, there were 10
record holders of Common Stock.

COMMON STOCK

The holders of Common Stock are entitled to one vote for each share on all
matters voted upon by stockholders, including the election of directors.

Subject to the rights of any then outstanding shares of Preferred Stock,
the holders of the Common Stock are entitled to such dividends as may be
declared in the discretion of the Board of Directors out of funds legally
available therefore. See "Dividend Policy." Holders of Common Stock are entitled
to share ratably in the net assets of the Company upon liquidation after payment
or provision for all liabilities and any preferential liquidation rights of any
Preferred Stock then outstanding. The holders of Common Stock have no preemptive
rights to purchase shares of stock of the Company. Shares of Common Stock are
not subject to any redemption provisions and are not convertible into any other
securities of the Company. All outstanding shares of Common Stock are, and the
shares of Common Stock to be issued pursuant to this Offering will be upon
payment therefor, fully paid and non-assessable.

PREFERRED STOCK

The Preferred Stock may be issued from time to time by the Board of
Directors as shares of one or more classes or series. Subject to the provisions
of the Company's Certificate of Incorporation and limitations prescribed by law,
the Board of Directors is expressly authorized to adopt resolutions to issue the
shares, to fix the number of shares and to change the number of shares
constituting any series, and to provide for or change the voting powers,
designations, preferences and relative, participating, optional or other special
rights, qualifications, limitations or restrictions thereof, including dividend
rights (including whether dividends are cumulative), dividend rates, terms of
redemption (including sinking fund provisions), redemption prices, conversion
rights and liquidation preferences of the shares constituting any class or
series of the Preferred Stock, in each case without any further action or vote
by the stockholders. The Company has no current plans to issue any shares of
Preferred Stock of any class or series.

One of the effects of undesignated Preferred Stock may be to enable the
Board of Directors to render more difficult or to discourage an attempt to
obtain control of the Company by means of a tender offer, proxy contest, merger
or otherwise, and thereby to protect the continuity of the Company's management.
The issuance of shares of the Preferred Stock pursuant to the Board of
Directors' authority described above may adversely affect the rights of the
holders of Common Stock. For example, Preferred Stock issued by the Company may
rank prior to the Common Stock as to dividend rights, liquidation preference or
both, may have full or limited voting rights and may be convertible into shares
of Common Stock. Accordingly, the issuance of shares of Preferred Stock may
discourage bids for the Common Stock or may otherwise adversely affect the
market price of the Common Stock.

STATUTORY BUSINESS COMBINATION PROVISION

The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law ("Section 203"). Section 203 provides, with certain
exceptions, that a Delaware corporation may not engage in any of a broad range
of business combinations with a person or an affiliate, or associate of such
person, who is an "interested stockholder" for a period of three years from the
date that such person became an interested

50
<PAGE> 53

stockholder unless: (i) the transaction resulting in a person becoming an
interested stockholder, or the business combination, is approved by the Board of
Directors of the corporation before the person becomes an interested
stockholder; (ii) the interested stockholder acquired 85% or more of the
outstanding voting stock of the corporation in the same transaction that makes
such person an interested stockholder (excluding shares owned by persons who are
both officers and directors of the corporation, and shares held by certain
employee stock ownership plans); or (iii) on or after the date the person
becomes an interested stockholder, the business combination is approved by the
corporation's board of directors and by the holders of at least 66 2/3% of the
corporation's outstanding voting stock at an annual or special meeting,
excluding shares owned by the interested stockholder. Under Section 203, an
"interested stockholder" is defined as any person who is: (i) the owner of 15%
or more of the outstanding voting stock of the corporation; or (ii) an affiliate
or associate of the corporation and who was the owner of 15% or more of the
outstanding voting stock of the corporation at any time within the three-year
period immediately prior to the date on which it is sought to be determined
whether such person is an interested stockholder.

A corporation may, at its option, exclude itself from the coverage of
Section 203 by amending its certificate of incorporation or bylaws, through
action of its stockholders, to exempt itself from coverage, provided that such
bylaw or certificate of incorporation amendment shall not become effective until
12 months after the date it is adopted. The Company has not adopted such an
amendment to its Certificate of Incorporation or Bylaws.

LIMITATION ON DIRECTORS' LIABILITIES

Pursuant to the Company's Certificate of Incorporation and under Delaware
law, Directors of the Company are not liable to the Company or its stockholders
for monetary damages for breach of fiduciary duty, except for liability in
connection with a breach of duty of loyalty, for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law, for
dividend payments or stock repurchases illegal under Delaware law or any
transaction in which a Director has derived an improper personal benefit.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Common Stock is Boatmen's Trust
Company of St. Louis.

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<PAGE> 54

CERTAIN TRANSACTIONS

ORGANIZATION OF THE COMPANY

In connection with the formation of the Company, the Company issued 1,000
shares of Common Stock at $.01 per share and subsequently declared a stock
dividend of 1,355 shares of Common Stock for each share of Common Stock
outstanding. The shares were issued to various members of management including:
Jerry T. Brewer -- 179,944 shares; Clete T. Brewer -- 457,042 shares; Chad J.
Brewer -- 252,978 shares; Donald A. Marr, Jr. -- 34,010 shares; Robert H. Janes
III -- 184,957 shares; and Janice Blethen -- 25,068 shares. The Company also
issued 136,042 shares to Capstone Partners, LLC, a Delaware Limited Liability
Company, of which William J. Lynch is a member.

Simultaneously with the closing of this Offering, StaffMark will acquire by
merger all of the issued and outstanding stock of the six Founding Companies, at
which time each Founding Company will become a wholly-owned subsidiary of the
Company. The aggregate consideration to be paid by StaffMark in the mergers is
approximately $77.7 million, consisting of approximately $15.9 million in cash
and 5,618,249 shares of Common Stock. In addition, immediately prior to the
Mergers certain of the Founding Companies will make distributions of
approximately $3.9 million, representing S Corporation earnings previously taxed
to their respective stockholders. Also, prior to the Mergers, certain of the
Founding Companies will distribute to their respective stockholders
approximately $349,000 in net book value of assets.

The consummation of each Merger is subject to customary conditions. These
conditions include, among others, the continuing accuracy on the closing date of
the Mergers of the representations and warranties of the Founding Companies and
the principal stockholders thereof and of StaffMark, the performance by each of
the parties of all covenants included in the agreements relating to the Mergers
and the nonexistence of a material adverse change in the results of operations,
financial condition or business of each Founding Company.

There can be no assurance that the conditions of the Mergers will be
satisfied or waived or that the acquisition agreements will not be terminated
prior to consummation. If any of the Mergers is terminated for any reason, the
Company likely will not consummate this Offering on the terms described herein.
The following table sets forth the consideration being paid for each Founding
Company:

<TABLE>
<CAPTION>
COMMON STOCK
-------------------------------
CASH SHARES VALUE OF SHARES(1) TOTAL
------- --------- ------------------ -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Brewer.......................................... $ 2,950 1,935,000 $ 21,285 $24,235
Prostaff........................................ 4,500 1,050,000 11,550 16,050
Maxwell......................................... 2,280 912,000 10,032 12,312
HRA............................................. 2,348 615,175 6,767 9,115
First Choice.................................... 2,075 622,500 6,848 8,923
Blethen......................................... 1,764 483,574 5,319 7,083
------- --------- -------- -------
Total...................................... $15,917 5,618,249 $ 61,801 $77,718
======= ========= ======== =======
</TABLE>

- ---------------
(1) Represents the aggregate value of the shares of Common Stock issued as
consideration, based upon an assumed initial public offering price of
$11.00 per share.

52
<PAGE> 55

In connection with the Mergers, and as consideration for their interests in
the Founding Companies, certain officers, directors, key employees and holders
of more than 5% of the outstanding shares of the Company will receive cash and
shares of Common Stock of the Company as follows:

<TABLE>
<CAPTION>
FOUNDING COMPANY
CONSIDERATION
-------------------------------
SHARES OF
NAME CASH COMMON STOCK
-------------------------------------------------- ------------- ------------
(IN THOUSANDS)
<S> <C> <C>
Jerry T. Brewer................................... $ 1,376 318,000
Clete T. Brewer................................... -- 743,000
Ted Feldman....................................... 1,009 302,611
W. David Bartholomew.............................. 1,210 282,437
Donald A. Marr, Jr. .............................. -- 83,000
Steven E. Schulte................................. 1,954 455,925
John H. Maxwell, Jr. ............................. 886 354,402
Mary Sue Maxwell.................................. 913 365,221
Janice Blethen.................................... 1,626 451,410
William T. Gregory................................ 1,453 435,750
-------- ---------
Total................................... $ 10,427 3,791,756
======== =========
</TABLE>

Pursuant to the agreements to be entered into in connection with the
Mergers, all of the stockholders of the Founding Companies have agreed not to
compete with the Company for five years, unless reduced by applicable state law,
commencing on the date of consummation of this Offering.

Certain of the Founding Companies have incurred indebtedness which has been
personally guaranteed by its stockholders or by entities controlled by its
stockholders. The Company has agreed to repay approximately $27.9 million of
indebtedness of the Founding Companies with certain of the net proceeds of this
Offering, of which approximately $8.4 million will directly or indirectly
benefit persons who will become officers, directors or greater than 5%
stockholders of the Company as follows: Clete T. Brewer -- approximately $6.1
million; Janice Blethen -- approximately $857,000; Steven E. Schulte --
approximately $312,000; Ted Feldman -- approximately $580,000; and W. David
Bartholomew -- approximately $580,000. In each case, such person was either a
direct obligor or a guarantor of such indebtedness. See "Use of Proceeds."

LEASES OF FACILITIES

In connection with the acquisition of Brewer, the Company will assume a
lease by Brewer of property in Fayetteville, Arkansas that is owned by Brewer
Investments, an Arkansas limited partnership whose partners are Jerry T. Brewer
and Kay Brewer. Jerry T. Brewer is Clete T. Brewer's father and Kay Brewer is
Clete T. Brewer's mother and each is an officer, director and principal
stockholder of Brewer. Lease payments to Brewer Investments were $60,000 in each
of 1993, 1994 and 1995. In January 1996, Brewer Investments began leasing a
larger building to Brewer and the total lease payments to Brewer Investments for
the three months ended March 31, 1996 were $52,000. The annual rent for the
building is $208,000 and the lease extends for five years. The building leased
during previous years is no longer being leased to Brewer. Brewer is responsible
for all real estate taxes, insurance and maintenance.

In connection with the acquisition of Prostaff, the Company will assume
leases by Prostaff of property in Little Rock, Arkansas used by Prostaff in its
operations that are owned by an Arkansas limited liability company, one of whose
members is Steven E. Schulte, an officer, director and principal stockholder of
Prostaff. The aggregate rental expenses for this property was approximately
$61,000, $73,761 and $114,180 for fiscal years 1993, 1994 and 1995,
respectively, and approximately $22,125 for the three months ended March 31,
1996. The annual rent is $88,500 and Prostaff is responsible for all real estate
taxes, insurance and maintenance.

53
<PAGE> 56

Prior to the Mergers, Maxwell distributed real estate owned by it to John
H. Maxwell, Jr. and Mary Sue Maxwell, with an aggregate carrying value of
$207,000. Such real estate will be leased to the Company at an annual rent of
$100,000. The lease has a three year term and a two year renewal option.

The Company believes that the rent payments to be made for leased
facilities with related parties will be on terms that are as favorable to the
Company as those that could be obtained from unaffiliated third parties.

CERTAIN LOANS

In February 1996, Brewer advanced Donald A. Marr, Jr. the principal amount
of $80,000 due on February 14, 1999 pursuant to a promissory note that accrues
interest at six percent per annum. At March 31, 1996, Mr. Marr was indebted to
Brewer in the full principal amount of the note.

Blethen has made advances to Janice Blethen which totaled $231,328 as of
March 31, 1996. Such amount is expected to be repaid prior to the consummation
of the Mergers.

First Choice has an unsecured demand note payable to William T. Gregory in
the principal amount of $180,000 as of December 31, 1995 with interest payable
semiannually at 8% per annum. Such note was reduced by $70,000 in fiscal 1995.

OTHER TRANSACTIONS

In December 1995, a note receivable from Brewer Investments in the amount
of approximately $345,000 was distributed pro-rata to the individual
shareholders of Brewer, including approximately $72,000 to Jerry T. Brewer and
approximately $117,000 to Clete T. Brewer.

In November 1995, Ted Feldman and Bartfund I Limited Partnership, an
affiliate of W. David Bartholomew, purchased the common stock of a former
shareholder of HRA for $150,000, each issuing to him a promissory note in the
amount of $75,000. HRA guaranteed payment of Mr. Feldman's and Bartfund I
Limited Partnership's promissory notes to the former shareholder. Such amounts
are expected to be repaid prior to the consummation of the Mergers. In addition,
HRA agreed to pay the former shareholder a $30,000 bonus for fiscal 1995;
$150,000 as a severance arrangement to be paid in monthly installments of $5,690
through November 15, 1996; $5,647 through November 15, 1997, and $1,163 through
November 15, 1998; and $236,518 as a non-compete agreement payable monthly
through November 15, 2003.

In November 1995, Mr. Feldman and Mr. Bartholomew purchased an option held
by certain parties to acquire 30% of the common stock of HRA for $250,000. In
conjunction with this transaction, HRA advanced to each of Mr. Feldman and Mr.
Bartholomew the sum of $125,000. Such amounts are expected to be repaid prior to
the consummation of the Mergers. In addition, HRA entered into a Settlement
Agreement and Release with the holders of the option which released all claims
against HRA for the sum of $90,000.

COMPANY POLICY

Following the closing of this Offering, all transactions with the Company's
stockholders, officers and directors or their affiliates, if any, will be
subject to the approval of a majority of the independent and disinterested
outside directors and will be conducted on terms no less favorable than could be
obtained from unaffiliated third parties.

54
<PAGE> 57

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this Offering and the consummation of the Mergers, the
Company will have outstanding 12,473,249 shares of Common Stock. The 5,500,000
shares sold in this Offering (plus any additional shares sold upon exercise of
the Underwriters' over-allotment option) will be freely tradeable without
restriction unless purchased by affiliates of the Company. None of the remaining
6,973,249 outstanding shares of Common Stock (collectively, the "Restricted
Shares") have been registered under the Securities Act, which means that they
may be resold publicly only upon registration under the Securities Act or in
compliance with an exemption from the registration requirements of the
Securities Act, including the exemption provided by Rule 144 thereunder.

In general, under Rule 144 as currently in effect, if two years have
elapsed since the later of the date of the acquisition of restricted shares of
Common Stock from the Company or any affiliate of the Company, the acquiror or
subsequent holder thereof may sell, within any three-month period commencing 90
days after the date of this Prospectus, a number of shares that does not exceed
the greater of 1% of the then outstanding shares of Common Stock or the average
weekly trading volume of the Common Stock on the Nasdaq National Market during
the four calendar weeks preceding the date on which notice of the sale is filed
with the Securities and Exchange Commission (the "Commission"). Sales under Rule
144 are also subject to certain manner of sale provisions, notice requirements
and the availability of current public information about the Company. If three
years have elapsed since the later of the date of acquisition of restricted
shares of Common Stock from the Company or from any affiliate of the Company and
the acquiror or subsequent holder thereof is deemed not to have been an
affiliate of the Company at any time during the 90 days preceding a sale, such
person would be entitled to sell such shares under Rule 144(k) without regard to
the limitations described above.

The Company, all of the former stockholders of the Founding Companies and
the executive officers and directors of the Company have agreed that they will
not offer or sell any shares of Common Stock of the Company for a period of 180
days after the date hereof without the prior written consent of the
Representatives of the Underwriters, except that the Company may issue shares of
Common Stock in connection with acquisitions or upon the exercise of options
granted under the Company's 1996 Stock Option Plan. See "Underwriting." In
addition, the stockholders of the Founding Companies and StaffMark, who own in
the aggregate 6,973,249 shares of Common Stock, have agreed with the Company
that they will not sell such shares for a period of two years after the closing
of this Offering. However, such stockholders have the right, in the event the
Company proposes to register under the Securities Act any Common Stock for its
own account or for the account of others, subject to certain exceptions, to
require the Company to include their shares in the registration, subject to the
right of any managing underwriter of the offering to exclude some or all of the
shares for marketing reasons. In addition, the stockholders of the Founding
Companies have certain limited rights to require the Company to register shares
held by them after the second anniversary of the closing of this Offering.

The Company intends to issue under its 1996 Stock Option Plan options to
purchase up to an aggregate of 935,494 shares of Common Stock. The sale of
Common Stock underlying such options will be subject to the expiration of the
Lockup Period. Substantially all of the options will vest over a period of five
years (40% two years after the date of grant and 20% each year thereafter). The
Company intends to register the shares issuable upon exercise of options granted
under the Plan and, upon such registration, such shares will be eligible for
resale in the public market.

As soon as practical after the closing of this Offering, the Company
intends to register up to 4,000,000 shares of its Common Stock under the
Securities Act for use by the Company in connection with future acquisitions.
These shares will generally be freely tradeable after their issuance, unless the
sale thereof is contractually restricted.

Prior to this Offering, there has been no public market for the Common
Stock, and no prediction can be made as to the effect, if any, that the sale of
shares or the availability of shares for sale will have on the market price
prevailing from time to time. Nevertheless, sales of substantial amounts of the
Common Stock in the public market could adversely affect prevailing market
prices and the ability of the Company to raise equity capital in the future.

55
<PAGE> 58

UNDERWRITING

Pursuant to the Underwriting Agreement, and subject to the terms and
conditions thereof, the Underwriters named below, acting through J.C. Bradford &
Co. and Stephens Inc., as representatives of the several underwriters (the
"Representatives"), have severally agreed to purchase from the Company the
number of shares of Common Stock set forth below opposite their names:

<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
-------------------------------------------------------------- ----------------
<S> <C>
J.C. Bradford & Co............................................
Stephens Inc. ................................................

----------
Total....................................................... 5,500,000
==========
</TABLE>

In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all shares of Common Stock
offered hereby, if any of such shares are purchased.

The Company has been advised by the Representatives that the Underwriters
propose initially to offer the shares of Common Stock to the public at the
initial public offering price set forth on the cover page of this Prospectus and
to certain dealers at such price less a concession not in excess of
$ per share. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of $ per share to certain
other dealers. After the initial public offering, the public offering price and
concessions may be changed. The Representatives have informed the Company that
the Underwriters do not intend to confirm sales to accounts over which they
exercise discretionary authority.

The Offering of the shares of Common Stock is made for delivery when, as
and if accepted by the Underwriters and subject to prior sale and to withdrawal,
cancellation or modification of the offer without notice. The Underwriters
reserve the right to reject any offer for the purchase of shares.

The Company has granted the Underwriters an option, exercisable not later
than 30 days from the date of this Prospectus, to purchase up to 825,000
additional shares of Common Stock to cover over-allotments, if any. To the
extent that the Underwriters exercise such option, each of them will have a firm
commitment to purchase approximately the same percentage thereof which the
number of shares of Common Stock to be purchased by it shown in the table above
bears to the total number of shares in such table, and the Company will be
obligated, pursuant to the option, to sell such shares to the Underwriters. The
Underwriters may exercise such option only to cover over-allotments made in
connection with the sale of the 5,500,000 shares of Common Stock offered hereby.
If purchased, the Underwriters will sell these additional shares on the same
terms as those on which the 5,500,000 shares are being offered.

Prior to the Offering, there has been no public market for the Common
Stock. The offering price has been determined by negotiation among the Company
and the Representatives. In determining such price, consideration was given to,
among other things, the financial and operating history and trends of the
Company, the experience of its management, the position of the Company in its
industry, the Company's prospects and the Company's financial results. In
addition, consideration was given to the status of the securities markets,
market conditions for new offerings of securities and the prices of similar
securities of comparable companies.

The Company, its executive officers and directors and all of its
stockholders, have agreed with the Representatives not to offer, sell or
otherwise dispose of any shares of Common Stock, any securities exercisable for
or convertible into Common Stock or any options to acquire Common Stock owned by
them prior to the expiration of 180 days from the date of this Prospectus,
without the prior written consent of the Representatives, except that the
Company may issue shares in connection with acquisitions or upon the

56
<PAGE> 59

exercise of stock options granted or to be granted under the Company's stock
option plans. See "Shares Eligible for Future Sale." In addition, the
stockholders of the Founding Companies and StaffMark, who own in the aggregate
6,973,249 shares of Common Stock, have agreed with the Company that they will
not sell such shares for a period of two years after the closing of this
Offering. However, such stockholders have the right, in the event the Company
proposes to register under the Securities Act any Common Stock for its own
account or for the account of others, subject to certain exceptions, to require
the Company to include their shares in the registration, subject to the right of
any managing underwriter of the offering to exclude some or all of the shares
for marketing reasons. In addition, the stockholders of the Founding Companies
have certain limited rights to require the Company to register shares held by
them after the second anniversary of the closing of this Offering.

The Underwriting Agreement provides that the Company will indemnify the
Underwriters and controlling persons, if any, against certain civil liabilities,
including liabilities under the Securities Act, or will contribute to payments
that the Underwriters or any such controlling persons may be required to make in
respect thereof.

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby is being passed
upon for the Company by Wright, Lindsey & Jennings, Little Rock, Arkansas.
Counsel for the Underwriters is Nelson Mullins Riley & Scarborough, L.L.P.,
Atlanta, Georgia.

EXPERTS

The audited financial statements included elsewhere in this Prospectus have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving such reports.

ADDITIONAL INFORMATION

The Company has filed with the Commission, a Registration Statement on Form
S-1 under the Securities Act, with respect to the Common Stock offered hereby.
The Prospectus, which constitutes a part of the Registration Statement, does not
contain all the information set forth in the Registration Statement (and the
exhibits and schedules thereto), certain portions of which have been omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company and the Common Stock, reference is made
to such Registration Statement and the exhibits and schedules filed as part
thereof. Statements contained in this Prospectus as to the contents of any
contract or any other document referred to are not necessarily complete, and, in
each instance, reference is made to the copy of such contract or document filed
as an exhibit to the Registration Statement, each such statement being qualified
in all respects by such reference to such exhibit.

As a result of this offering, the Company will be subject to the
informational requirements of the Exchange Act and, in accordance therewith,
will file reports and other information with the Commission. A copy of the
Registration Statement, including exhibits and schedules thereto, may be
inspected without charge at the Commission's principal offices, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of
the Commission located at 7 World Trade Center, 13th Floor, New York, New York
10048, and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such materials may be obtained from the
Public Reference Section of the Commission, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and its public reference facilities in New York,
New York and Chicago, Illinois, upon payment of prescribed fees.

57
<PAGE> 60

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
STAFFMARK, INC. PRO FORMA COMBINED FINANCIAL STATEMENTS:
Introduction to Unaudited Pro Forma Combined Financial Statements.................. F-3
Unaudited Pro Forma Combined Balance Sheet......................................... F-4
Notes to Unaudited Pro Forma Combined Balance Sheet................................ F-6
Unaudited Pro Forma Combined Statement of Income for the Three Months Ended March
31, 1996........................................................................ F-7
Notes to Unaudited Pro Forma Combined Statement of Income for the Three Months
Ended
March 31, 1996.................................................................. F-8
Unaudited Pro Forma Combined Statement of Income for the Year Ended December 31,
1995............................................................................ F-9
Notes to Unaudited Pro Forma Combined Statement of Income for the Year Ended
December 31, 1995............................................................... F-10
HISTORICAL FINANCIAL STATEMENTS OF FOUNDING COMPANIES:
STAFFMARK, INC.
Report of Independent Public Accountants........................................... F-11
Balance Sheet...................................................................... F-12
Notes to Balance Sheet............................................................. F-13
THE COMBINED FOUNDING COMPANIES
Report of Independent Public Accountants........................................... F-14
Combined Balance Sheets............................................................ F-15
Combined Statements of Income...................................................... F-16
Combined Statements of Shareholders' Equity........................................ F-17
Combined Statements of Cash Flows.................................................. F-18
Notes to Combined Financial Statements............................................. F-20
BREWER PERSONNEL SERVICES, INC.
Report of Independent Public Accountants........................................... F-37
Balance Sheets..................................................................... F-38
Statements of Income............................................................... F-39
Statements of Shareholders' Equity................................................. F-40
Statements of Cash Flows........................................................... F-41
Notes to Financial Statements...................................................... F-43
THE PROSTAFF COMPANIES
Report of Independent Public Accountants........................................... F-53
Combined Balance Sheets............................................................ F-54
Combined Statements of Income...................................................... F-55
Combined Statements of Shareholders' Equity........................................ F-56
Combined Statements of Cash Flows.................................................. F-57
Notes to Combined Financial Statements............................................. F-59
THE MAXWELL COMPANIES
Report of Independent Public Accountants........................................... F-65
Combined Balance Sheets............................................................ F-66
Combined Statements of Income...................................................... F-67
Combined Statements of Shareholders' Equity........................................ F-68
Combined Statements of Cash Flows.................................................. F-69
Notes to Combined Financial Statements............................................. F-71
</TABLE>

F-1
<PAGE> 61

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
HRA, INC.
Report of Independent Public Accountants........................................... F-78
Balance Sheets..................................................................... F-79
Statements of Income (Loss)........................................................ F-80
Statements of Shareholders' Equity................................................. F-81
Statements of Cash Flows........................................................... F-82
Notes to Financial Statements...................................................... F-84
FIRST CHOICE STAFFING, INC.
Report of Independent Public Accountants........................................... F-92
Balance Sheets..................................................................... F-93
Statements of Income............................................................... F-94
Statements of Shareholders' Equity................................................. F-95
Statements of Cash Flows........................................................... F-96
Notes to Financial Statements...................................................... F-97
THE BLETHEN GROUP
Report of Independent Public Accountants........................................... F-103
Combined Balance Sheets............................................................ F-104
Combined Statements of Income (Loss)............................................... F-105
Combined Statements of Shareholders' Equity........................................ F-106
Combined Statements of Cash Flows.................................................. F-107
Notes to Combined Financial Statements............................................. F-108
HISTORICAL FINANCIAL STATEMENTS OF ACQUIRED COMPANIES:
E.P. ENTERPRISES CORPORATION
Report of Independent Public Accountants........................................... F-116
Balance Sheets..................................................................... F-117
Statements of Income............................................................... F-118
Statements of Shareholders' Equity (Deficit)....................................... F-119
Statements of Cash Flows........................................................... F-120
Notes to Financial Statements...................................................... F-121
ON CALL EMPLOYMENT SERVICES, INC.
Report of Independent Public Accountants........................................... F-125
Balance Sheets..................................................................... F-126
Statements of Income............................................................... F-127
Statements of Shareholders' Equity (Deficit)....................................... F-128
Statements of Cash Flows........................................................... F-129
Notes to Financial Statements...................................................... F-130
STRATEGIC SOURCING, INC.
Report of Independent Public Accountants........................................... F-133
Balance Sheets..................................................................... F-134
Statements of Income (Loss)........................................................ F-135
Statements of Shareholders' Equity (Deficit)....................................... F-136
Statements of Cash Flows........................................................... F-137
Notes to Financial Statements...................................................... F-138
</TABLE>

F-2
<PAGE> 62

STAFFMARK, INC.

INTRODUCTION TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

These pro forma combined financial statements should be read in conjunction
with other information contained elsewhere in this Prospectus under the heading
"Selected Combined Founding Companies' Financial Data" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations," the
historical combined financial statements of the Founding Companies, StaffMark's
financial statements and the individual Founding Company financial statements.
See "Index to Financial Statements."

The following unaudited pro forma combined financial statements of
StaffMark present the Founding Companies with StaffMark and give effect to the
following pro forma adjustments: (i) the effect of the acquisitions of Caldwell,
On Call and SSI; (ii) the adjustment to compensation expense for the difference
between the historical compensation paid to certain shareholders and the
employment contract compensation ("Compensation Differential"); (iii) the
incremental provision for income taxes attributable to the income of S
Corporations, net of the income tax benefits related to the Compensation
Differential; (iv) the liability for the cash consideration to be paid to the
shareholders of the Founding Companies; (v) the transfer of selected assets to
the shareholders of certain of the Founding Companies; (vi) the additional cash
to be borrowed from banks to pay S Corporation Accumulated Adjustment Account
balances; (vii) the issuance of 5,618,249 shares of Common Stock to shareholders
of the Founding Companies in connection with the Mergers; (viii) the issuance of
1,355,000 shares by StaffMark prior to the Offering; and (ix) the adjustment to
record the net deferred income tax liabilities attributable to the temporary
differences between the financial reporting and income tax basis of assets and
liabilities currently held in S Corporations. In addition, the "As Adjusted"
combined balance sheet of StaffMark includes post merger adjustments for the
sale of 5,500,000 shares of Common Stock and the application of the estimated
net proceeds. No pro forma statement of income adjustment is necessary to give
effect to the transfer of selected assets to the Founding Companies'
shareholders as the assets to be distributed had substantially no effect on net
income.

StaffMark, through wholly-owned subsidiaries, will merge, simultaneously
with and as a condition to the closing of the Offering, with Brewer, Prostaff,
Maxwell, HRA, First Choice and Blethen. The Mergers have been accounted for in
accordance with generally accepted accounting principles as a combination of the
Founding Companies at historical cost because: (i) the Founding Companies'
shareholders are transferring assets to StaffMark in exchange for Common Stock
simultaneously with StaffMark's initial public offering; (ii) the nature of
future operations of the Company will be substantially identical to the combined
operations of the Founding Companies; (iii) the shareholders of each of the
Founding Companies may be considered promoters; and (iv) no former shareholder
group of any of the Founding Companies will obtain a majority of the outstanding
voting shares of the Company. Accordingly, historical financial statements of
the Founding Companies have been combined throughout all relevant periods as if
the Founding Companies had always been members of the same operating group.
However, since the Founding Companies were not under common control or
management, historical combined results may not be comparable to, or indicative
of, future performance.

The Company has performed a preliminary analysis of the savings that it
expects to realize as a result of: (i) consolidating certain general and
administrative functions, including workers' compensation programs; (ii) the
reduction in interest payments related to the repayment of outstanding Founding
Company debt; (iii) its ability to borrow at lower interest rates than the
Founding Companies; (iv) the interest earned on the net proceeds of the Offering
remaining after payment of the expenses of the Offering, the cash portion of the
consideration paid for the Founding Companies and the repayment of outstanding
Founding Company debt; and (v) efficiencies in other general and administrative
areas. The Company has not and cannot quantify these savings until completion of
the combination of the Founding Companies. It is anticipated that these savings
will be partially offset by the costs of being a public company. However, these
costs, like the savings that they offset, cannot be quantified accurately.
Accordingly, neither the anticipated savings nor the anticipated costs have been
included in the accompanying pro forma financial information of StaffMark.

The pro forma financial data do not purport to represent what the Company's
financial position or results of operations would actually have been if such
transactions in fact had occurred on those dates or to project the Company's
financial position or results of operations for any future period. See "Risk
Factors" included elsewhere herein.

F-3
<PAGE> 63

STAFFMARK, INC.

UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF MARCH 31, 1996
(IN THOUSANDS)

ASSETS
<TABLE>
<CAPTION>
ACQUISITION RELATED ADJUSTMENTS
COMBINED ------------------------------------ PRO FORMA
STAFFMARK, FOUNDING PRO FORMA TOTAL MERGER
INC. COMPANIES SSI(A) ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS PRO FORMA
---------- --------- ------ ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents............... $ -- $ 1,985 $ 15 $ (15)(b) $ -- $ 3,894(e) $ 1,985
(3,894)(f)
Restricted cash and certificates of
deposit............................... -- 222 -- -- -- -- 222
Accounts receivable, net of allowance
for doubtful accounts................. -- 16,665 131 (131)(b) -- -- 16,665
Prepaid expenses and other.............. -- 1,259 -- -- -- -- 1,259
Income taxes receivable................. -- -- -- -- -- -- --
Deferred income taxes................... -- 228 -- -- -- (228)(i) --
Investments............................. -- 155 -- -- -- -- 155
Advances to shareholders................ -- 250 -- -- -- -- 250
---- ------- ---- ----- ----- ------- -------
Total current assets.............. -- 20,764 146 (146) -- (228) 20,536
PROPERTY AND EQUIPMENT, net............... -- 3,175 21 -- 21 (308)(g) 2,888
INTANGIBLE ASSETS, net.................... -- 19,312 -- 729(c) 729 -- 20,041
OTHER ASSETS:
Advances to shareholders................ -- 231 -- -- -- -- 231
Deferred income taxes................... -- 78 -- -- -- (78)(i) --
Cash surrender value of officers' life
insurance............................. -- 41 -- -- -- (41)(g) --
Other................................... -- 83 5 (5)(b) -- -- 83
---- ------- ---- ----- ----- ------- -------
Total other assets................ -- 433 5 (5) -- (119) 314
---- ------- ---- ----- ----- ------- -------
$ -- $43,684 $172 $ 578 $ 750 $ (655) $43,779
==== ======= ==== ===== ===== ======= =======
<CAPTION>

POST MERGER
ADJUSTMENTS AS ADJUSTED
---------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents............... $ 53,765(l) $11,906
(27,927)(m)
(15,917)(o)
Restricted cash and certificates of
deposit............................... 222
Accounts receivable, net of allowance
for doubtful accounts................. -- 16,665
Prepaid expenses and other.............. -- 1,259
Income taxes receivable................. 20(n) 20
Deferred income taxes................... -- --
Investments............................. -- 155
Advances to shareholders................ -- 250
--------- -------
Total current assets.............. 9,941 30,477
PROPERTY AND EQUIPMENT, net............... -- 2,888
INTANGIBLE ASSETS, net.................... (287)(n) 19,754
OTHER ASSETS:
Advances to shareholders................ -- 231
Deferred income taxes................... -- --
Cash surrender value of officers' life
insurance............................. -- --
Other................................... -- 83
--------- -------
Total other assets................ -- 314
--------- -------
$ 9,654 $53,433
========= =======
</TABLE>

The accompanying notes are an integral part of this balance sheet.

F-4
<PAGE> 64

STAFFMARK, INC.

UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF MARCH 31, 1996
(IN THOUSANDS)

LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
ACQUISITION RELATED ADJUSTMENTS
COMBINED ------------------------------------ PRO FORMA
STAFFMARK, FOUNDING PRO FORMA TOTAL MERGER
INC. COMPANIES SSI(A) ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS PRO FORMA
---------- --------- ------ ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
CURRENT LIABILITIES:
Accounts payable and other accrued
liabilities........................... $ -- $ 1,531 $ 31 $ (31)(b) $ -- $ -- $ 1,531
Outstanding checks...................... -- 857 -- -- -- -- 857
Payroll and related liabilities......... -- 4,751 5 (5)(b) -- -- 4,751
Reserve for workers' compensation
claims................................ -- 4,210 -- -- -- -- 4,210
Short-term borrowings................... -- 2,823 -- -- -- -- 2,823
Current maturities of notes payable to a
shareholder........................... -- 312 6 (6)(b) -- -- 312
Current maturities of debt.............. -- 1,592 -- 210(d) 210 3,894(e) 5,696
Income taxes payable.................... -- 92 -- -- -- -- 92
Deferred income taxes................... -- -- -- -- -- 752(i) 752
Accrued dividends....................... -- 17 -- -- -- -- 17
Pro forma distribution to Founding
Companies' shareholders............... -- -- -- -- -- 15,917(h) 15,917
---- ------- ---- ----- ----- ------- -------
Total current liabilities......... -- 16,185 42 168 210 20,563 36,958
LONG-TERM DEBT, less current maturities... -- 18,395 -- 540(d) 540 -- 18,935
NOTES PAYABLE TO A
SHAREHOLDER............................. -- 161 63 (63)(b) -- -- 161
DEFERRED INCOME TAXES..................... -- -- -- -- -- 80(i) 80
---- ------- ---- ----- ----- ------- -------
Total liabilities................. -- 34,741 105 645 750 20,643 56,134
SHAREHOLDERS' EQUITY:
Common stock............................ -- 47 3 (3)(b) -- (47)(j) 70
70(k)
Paid-in capital......................... -- 506 -- -- -- 47(j) 483
(70)(k)
Subscriptions receivable................ -- (80) -- -- -- -- (80)
Retained earnings....................... -- 8,470 64 (64)(b) -- (3,894)(f) (12,828)
(349)(g)
(15,917)(h)
(1,138)(i)
---- ------- ---- ----- ----- ------- -------
Total shareholders' equity........ -- 8,943 67 (67) -- (21,298) (12,355)
---- ------- ---- ----- ----- ------- -------
$ -- $43,684 $172 $ 578 $ 750 $ (655) $43,779
==== ======= ==== ===== ===== ======= =======

POST MERGER
ADJUSTMENTS AS ADJUSTED
----------- -----------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable and other accrued
liabilities........................... $ -- $ 1,531
Outstanding checks...................... -- 857
Payroll and related liabilities......... -- 4,751
Reserve for workers' compensation
claims................................ -- 4,210
Short-term borrowings................... (2,823)(m) --
Current maturities of notes payable to a
shareholder........................... (312)(m) --
Current maturities of debt.............. (5,696)(m) --
Income taxes payable.................... (92)(n) --
Deferred income taxes................... -- 752
Accrued dividends....................... -- 17
Pro forma distribution to Founding
Companies' shareholders............... (15,917)(o) --
--------- -------
Total current liabilities......... (24,840) 12,118
LONG-TERM DEBT, less current maturities... (18,935)(m) --
NOTES PAYABLE TO A
SHAREHOLDER............................. (161)(m) --
DEFERRED INCOME TAXES..................... -- 80
--------- -------
Total liabilities................. (43,936) 12,198
SHAREHOLDERS' EQUITY:
Common stock............................ 55(l) 125
--
Paid-in capital......................... 53,710(l) 41,365
(12,828)(p)
Subscriptions receivable................ -- (80)
Retained earnings....................... 12,828(p) (175)
(175)(n)

--------- -------
Total shareholders' equity........ 53,590 41,235
--------- -------
$ 9,654 $53,433
========= =======
</TABLE>

The accompanying notes are an integral part of this balance sheet.

F-5
<PAGE> 65

STAFFMARK, INC.

NOTES TO UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF MARCH 31, 1996

(a) Records the unaudited balance sheet of SSI, whose shareholders have
signed a definitive agreement to be purchased by First Choice.

(b) Records the adjustment to remove assets and liabilities not assumed by
First Choice in conjunction with the anticipated acquisition of SSI.

(c) Records an estimate of the intangible assets to be recorded by First Choice
in conjunction with the anticipated acquisition of SSI.

(d) Records the debt to be incurred by First Choice in conjunction with the
anticipated acquisition of SSI.

(e) Records cash borrowed from banks to fund the distribution of certain
Founding Companies' S Corporation Accumulated Adjustment Account balances.

(f) Records the distribution of certain Founding Companies' S Corporation
Accumulated Adjustment Account balances.

(g) Records the dividend of certain automobiles, cash surrender value of life
insurance policies, facilities and equipment to certain shareholders of the
Founding Companies.

(h) Records the liability for the cash consideration to be paid to the
shareholders of the Founding Companies in connection with the Mergers.

(i) Records the adjustment to the recorded deferred income tax balances
attributable to the temporary differences between the financial reporting
and income tax basis of assets and liabilities currently held in S
Corporations.

(j) Records the elimination of the Founding Companies' Common Stock as
additional paid-in capital.

(k) Records the issuance of (i) 1,355,000 shares issued by StaffMark prior to
the Offering, and (ii) 5,618,249 shares to be issued to the shareholders of
the Founding Companies in connection with the Mergers.

(l) Records the proceeds from the issuance of 5,500,000 shares of Common Stock
at an assumed initial public offering price of $11.00 per share, net of
estimated offering costs. Offering costs primarily consist of underwriting
discounts and commissions, accounting fees, legal fees and printing
expenses.

(m) Records the repayment of all debt obligations with proceeds from the
Offering.

(n) Records the elimination of capitalized deferred financing costs, net of the
applicable income tax benefit.

(o) Records the distribution of the cash portion of consideration due to the
Founding Companies' shareholders in connection with the Mergers.

(p) Records the elimination of the retained earnings of the Founding Companies.

F-6
<PAGE> 66

STAFFMARK, INC.

UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ACQUISITION RELATED ADJUSTMENTS
-----------------------------------------
ON CALL FOR
THE PERIOD FROM
COMBINED JANUARY 1, 1996 TO
STAFFMARK, FOUNDING FEBRUARY 2, PRO FORMA
INC. COMPANIES 1996(A) SSI(B) ADJUSTMENTS
---------- ---------- ------------------ ------ -----------
<S> <C> <C> <C> <C> <C>
SERVICE REVENUES......................................... $ -- $ 40,925 $1,127 $152 $ --
COST OF SERVICES......................................... -- 32,450 945 75 --
-------- -------- ------ ---- -----
Gross profit..................................... -- 8,475 182 77 --
OPERATING EXPENSES:
Selling, general and administrative.................... -- 6,939 116 82 --
Depreciation and amortization.......................... -- 427 3 1 16(c)
9(d)
-------- -------- ------ ---- -----
Operating income................................. -- 1,109 63 (6) (25)
-------- -------- ------ ---- -----
OTHER INCOME (EXPENSE):
Interest expense....................................... -- (504) -- -- (27)(e)
(14)(f)
Other, net............................................. -- 70 5 -- --
-------- -------- ------ ---- -----
INCOME BEFORE INCOME TAXES............................... -- 675 68 (6) (66)
INCOME TAX PROVISION..................................... -- 63 -- -- --
-------- -------- ------ ---- -----
Net income (loss)................................ $ -- $ 612 $ 68 $ (6) $ (66)
======== ======== ====== ==== =====
PRO FORMA NET INCOME PER COMMON SHARE....................

WEIGHTED AVERAGE SHARES OUTSTANDING......................

PRO FORMA
TOTAL MERGER
ADJUSTMENTS ADJUSTMENTS PRO FORMA
----------- ----------- ---------
<S> <C> <C> <C>
SERVICE REVENUES......................................... $ 1,279 $ -- $42,204
COST OF SERVICES......................................... 1,020 -- 33,470
------- ----- -------
Gross profit..................................... 259 -- 8,734
OPERATING EXPENSES:
Selling, general and administrative.................... 198 (209)(g) 6,928
Depreciation and amortization.......................... 29 -- 456

------- ----- -------
Operating income................................. 32 209 1,350
------- ----- -------
OTHER INCOME (EXPENSE):
Interest expense....................................... (41) -- (545)

Other, net............................................. 5 -- 75
------- ----- -------
INCOME BEFORE INCOME TAXES............................... (4) 209 880
INCOME TAX PROVISION..................................... -- 340(h) 403
------- ----- -------
Net income (loss)................................ $ (4) $(131) $ 477
======= ===== =======
PRO FORMA NET INCOME PER COMMON SHARE.................... $ 0.06
=======
WEIGHTED AVERAGE SHARES OUTSTANDING...................... 8,420(i)
=======
</TABLE>

The accompanying notes are an integral part of this statement.

F-7
<PAGE> 67

STAFFMARK, INC.

NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1996

(a) Records the audited financial results of On Call, which was purchased by
Brewer on February 2, 1996, for the period from January 1, 1996 through the
date of acquisition.

(b) Records the unaudited first quarter financial results of SSI, whose
shareholders have signed a definitive agreement to be purchased by First
Choice.

(c) Adjustment to reflect the amortization expense relating to the intangible
assets recorded in conjunction with the acquisition of On Call for the
period from January 1, 1996 through the date of acquisition.

(d) Adjustment to reflect the amortization expense relating to the intangible
assets to be recorded in conjunction with the anticipated acquisition of
SSI.

(e) Adjustment to reflect the increase in interest expense relating to debt
incurred in conjunction with the acquisition of On Call for the period from
January 1, 1996 through the date of acquisition.

(f) Adjustment to reflect the increase in interest expense relating to debt to
be incurred in conjunction with the anticipated acquisition of SSI.

(g) Adjusts compensation to the level the owners have agreed to receive from
the Founding Companies subsequent to the Mergers as follows:

<TABLE>
<S> <C>
Brewer........................................... $ (4,479)
Prostaff......................................... (163,081)
Maxwell.......................................... (40,652)
HRA.............................................. 30,566
First Choice..................................... 741
Blethen.......................................... (32,608)
---------
$(209,513)
=========
</TABLE>

(h) Records the incremental provision to reflect federal and state income taxes
as if the Founding Companies had been C Corporations. This adjustment
records income tax expense at an effective combined tax rate of 39%,
adjusted for nondeductible goodwill amortization.

(i) Includes: (i) 1,355,000 shares issued by StaffMark prior to the Offering;
(ii) 5,618,249 shares to be issued to the shareholders of the Founding
Companies in connection with the Mergers; and (iii) 1,447,046 shares to be
issued at an assumed initial public offering price of $11.00 per share in
connection with the Offering to pay the cash portion of the consideration
for the Founding Companies but excludes up to 935,494 shares of Common
Stock subject to options to be issued under the 1996 Stock Option Plan.

F-8
<PAGE> 68

STAFFMARK, INC.

UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ACQUISITION RELATED ADJUSTMENTS
-------------------------------------------------------
CALDWELL FOR
COMBINED THE PERIOD FROM
STAFFMARK, FOUNDING JANUARY 1, 1995 PRO FORMA
INC. COMPANIES TO JULY 10, 1995(A) ON CALL(B) SSI(C) ADJUSTMENTS
---------- --------- ------------------- ---------- ------ -----------
<S> <C> <C> <C> <C> <C> <C>
SERVICE REVENUES................................ $ -- $146,687 $11,035 $ 12,498 $1,243 $ --
COST OF SERVICES................................ -- 117,103 8,752 10,203 612 --
-------- -------- ------- -------- ----- -------
Gross profit............................ -- 29,584 2,283 2,295 631 --
OPERATING EXPENSES:
Selling, general and administrative........... -- 24,069 1,331 1,305 414 --
Depreciation and amortization................. -- 1,157 17 25 5 293 (d)
186 (e)
37 (f)
-------- -------- ------- -------- ----- -------
Operating income........................ -- 4,358 935 965 212 (516)
-------- -------- ------- -------- ----- -------
OTHER INCOME (EXPENSE):
Interest expense.............................. -- (1,089) (15) -- -- (816)(g)
(302)(h)
(56)(i)
Other, net.................................... -- 82 34 43 1 --
-------- -------- ------- -------- ----- -------
INCOME BEFORE INCOME TAXES...................... -- 3,351 954 1,008 213 (1,690)
INCOME TAX PROVISION............................ -- 94 -- -- -- --
-------- -------- ------- -------- ----- -------
Net income.............................. $ -- $ 3,257 $ 954 $ 1,008 $ 213 $(1,690)
======== ======== ======= ======== ===== =======
PRO FORMA NET INCOME PER COMMON SHARE...........
WEIGHTED AVERAGE SHARES OUTSTANDING.............

PRO FORMA
TOTAL MERGER
ADJUSTMENTS ADJUSTMENTS PRO FORMA
----------- ----------- ---------
<S> <C> <C> <C>
SERVICE REVENUES................................ $24,776 $ -- $171,463
COST OF SERVICES................................ 19,567 -- 136,670
------- ------- --------
Gross profit............................ 5,209 -- 34,793
OPERATING EXPENSES:
Selling, general and administrative........... 3,050 (1,649)(j) 25,470
Depreciation and amortization................. 563 -- 1,720

------- ------- --------
Operating income........................ 1,596 1,649 7,603
------- ------- --------
OTHER INCOME (EXPENSE):
Interest expense.............................. (1,189) -- (2,278)

Other, net.................................... 78 -- 160
------- ------- --------
INCOME BEFORE INCOME TAXES...................... 485 1,649 5,485
INCOME TAX PROVISION............................ -- 2,285(k) 2,379
------- ------- --------
Net income.............................. $ 485 $ (636) $ 3,106
======= ======= ========
PRO FORMA NET INCOME PER COMMON SHARE........... $ 0.37
========
WEIGHTED AVERAGE SHARES OUTSTANDING............. 8,420 (l)
========
</TABLE>

The accompanying notes are an integral part of this statement.

F-9
<PAGE> 69

STAFFMARK, INC.

NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995

(a) Records the audited financial results of Caldwell, which was purchased by
Brewer on July 10, 1995, for the period from January 1, 1995 through the
date of acquisition.

(b) Records the 1995 audited financial results of On Call, which was purchased
by Brewer on February 2, 1996.

(c) Records the 1995 audited financial results of SSI, whose shareholders have
signed a definitive agreement to be purchased by First Choice.

(d) Adjustment to reflect the amortization expense relating to the intangible
assets recorded in conjunction with the acquisition of Caldwell for the
period from January 1, 1995 through the date of acquisition.

(e) Adjustment to reflect the amortization expense relating to the intangible
assets recorded in conjunction with the acquisition of On Call.

(f) Adjustment to reflect the amortization expense relating to the intangible
assets to be recorded in conjunction with the anticipated acquisition of
SSI.

(g) Adjustment to reflect the increase in interest expense relating to debt
incurred in conjunction with the acquisition of Caldwell for the period
from January 1, 1995 through the date of acquisition.

(h) Adjustment to reflect the increase in interest expense relating to debt
incurred in conjunction with the acquisition of On Call.

(i) Adjustment to reflect the increase in interest expense relating to debt to
be incurred in conjunction with the anticipated acquisition of SSI.

(j) Adjusts compensation to the level the owners have agreed to receive from
the Founding Companies subsequent to the Mergers as follows:

<TABLE>
<S> <C>
Brewer.......................................... $ (250,016)
Prostaff........................................ (800,000)
Maxwell......................................... (165,000)
HRA............................................. (73,767)
First Choice.................................... (220,586)
Blethen......................................... (139,902)
-----------
$(1,649,271)
===========
</TABLE>

(k) Records the incremental provision to reflect federal and state income taxes
as if the Founding Companies had been C Corporations. This adjustment
records income tax expense at an effective combined tax rate of 39%,
adjusted for nondeductible goodwill amortization.

(l) Includes: (i) 1,355,000 shares issued by StaffMark prior to the Offering;
(ii) 5,618,249 shares to be issued to the shareholders of the Founding
Companies in connection with the Mergers; and (iii) 1,447,046 shares to be
issued at an assumed initial public offering price of $11.00 per share in
connection with the Offering to pay the cash portion of the consideration
for the Founding Companies but excludes up to 935,494 shares of Common
Stock subject to options to be issued under the 1996 Stock Option Plan.

F-10
<PAGE> 70

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To StaffMark, Inc.:

We have audited the accompanying balance sheet of StaffMark, Inc. (a
Delaware corporation, originally One Source Staffing, Inc.) as of March 31,
1996. This financial statement is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement based on our audit.

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

In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of StaffMark, Inc. as of March 31,
1996, in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Little Rock, Arkansas,
June 14, 1996.

F-11
<PAGE> 71

STAFFMARK, INC.

BALANCE SHEET
MARCH 31, 1996

<TABLE>
<S> <C>
SHAREHOLDERS' EQUITY:
Common stock, $.01 par value; authorized shares of 26,000,000;
shares issued and outstanding of 1,000........................... $ 10
Subscriptions receivable............................................ (10)
----
Total shareholders' equity.................................. $ --
====
</TABLE>

F-12
<PAGE> 72

STAFFMARK, INC.

NOTES TO BALANCE SHEET

1. BUSINESS AND ORGANIZATION:

StaffMark, Inc. ("StaffMark" or the "Company," a Delaware corporation) was
originally founded as One Source Staffing, Inc. on March 12, 1996, to create a
nationwide provider of temporary staffing services. On June 14, 1996, the
Company changed its name to StaffMark, Inc. The Company intends to acquire six
local and regional temporary staffing companies (the "Founding Companies"),
complete an initial public offering ("IPO") of its common stock and, subsequent
to the IPO, continue to acquire, through merger or purchase, similar companies
to expand the Company's national and regional operations.

As of March 31, 1996, the Company had not conducted any operations and all
activities to date were related to the acquisition and the IPO which have been
funded by the Founding Companies. Accordingly, statements of operations, changes
in shareholders' equity and cash flows would not provide meaningful information
and have been omitted. There is no assurance that the pending acquisitions
discussed above will be completed and that StaffMark will be able to generate
future operating revenue. StaffMark is dependent upon the IPO to fund the
pending acquisitions and future operations.

2. SHAREHOLDERS' EQUITY:

In conjunction with the organization and initial capitalization of
StaffMark, the Company issued 1,000 shares of common stock in exchange for notes
receivable totaling $10 which has been reflected as subscriptions receivable and
classified as contra equity in the accompanying balance sheet.

3. SUBSEQUENT EVENTS:

Subsequent to March 31, 1996, the Company has incurred significant costs,
including professional fees and travel, associated with the acquisition of the
Founding Companies and the IPO. The Company anticipates that these costs will
approximate $2.5 million.

In April 1996, the Founding Companies advanced approximately $375,000 to
the Company to help fund offering related costs.

4. EVENTS SUBSEQUENT TO DATE OF REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
(UNAUDITED):

In June 1996, StaffMark signed definitive agreements to acquire by merger
the Founding Companies to be effective with the IPO. The companies to be
acquired are Brewer Personnel Services, Inc., The Maxwell Companies, The
Prostaff Companies, HRA, Inc., The Blethen Group and First Choice Staffing, Inc.
The aggregate consideration that will be paid by StaffMark to acquire the
Founding Companies is approximately $77.7 million consisting of a combination of
cash and common stock.

In June 1996, the Company's Board of Directors declared a 1,355-for-one
stock split.

In July 1996, StaffMark filed a Registration Statement on Form S-1 for the
sale of its common stock. See "Risk Factors" included elsewhere herein.

F-13
<PAGE> 73

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To StaffMark, Inc.:

We have audited the accompanying combined balance sheets of the companies
identified in Note 1 to the combined financial statements (the "Founding
Companies") as of December 31, 1995 and 1994, and the related combined
statements of income, shareholders' equity and cash flows for each of the three
years in the period ended December 31, 1995. These combined financial statements
are the responsibility of the Companies' management. Our responsibility is to
express an opinion on these financial statements based on our audits.

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

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of the
Founding Companies as of December 31, 1995 and 1994, and the results of their
combined operations and their combined cash flows for each of the three years in
the period ended December 31, 1995, in conformity with generally accepted
accounting principles.

ARTHUR ANDERSEN LLP

Little Rock, Arkansas,
May 24, 1996.

F-14
<PAGE> 74

THE FOUNDING COMPANIES

COMBINED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------- MARCH 31,
1994 1995 1996
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents........................... $ 1,756,311 $ 2,279,990 $ 1,984,754
Restricted cash and certificates of deposit......... 290,481 253,171 222,367
Accounts receivable, net of allowance for doubtful
accounts of $171,019, $377,675 and $385,007,
respectively..................................... 12,046,250 14,877,756 16,665,525
Prepaid expenses and other.......................... 475,369 967,127 1,258,721
Deferred income taxes............................... 193,201 171,000 227,600
Investments......................................... 209,505 428,508 155,154
Advances to shareholders............................ -- -- 250,000
----------- ----------- -----------
Total current assets........................ 14,971,117 18,977,552 20,764,121
PROPERTY AND EQUIPMENT, net........................... 2,267,357 2,832,410 3,174,951
INTANGIBLE ASSETS, net................................ 282,215 15,592,615 19,311,582
OTHER ASSETS:
Advances to shareholders............................ 449,900 194,163 231,328
Deferred income taxes............................... 45,915 85,760 77,960
Cash surrender value of officers' life insurance.... 34,670 41,280 41,280
Other............................................... 69,087 103,225 82,646
----------- ----------- -----------
Total other assets.......................... 599,572 424,428 433,214
----------- ----------- -----------
$18,120,261 $37,827,005 $43,683,868
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and other accrued liabilities...... $ 918,878 $ 1,523,703 $ 1,530,833
Outstanding checks.................................. 244,104 418,397 857,291
Payroll and related liabilities..................... 3,314,563 4,177,816 4,750,497
Reserve for workers' compensation claims............ 1,614,494 4,000,801 4,210,141
Short-term borrowings............................... 2,507,475 2,003,016 2,823,391
Current maturities of long-term debt................ 394,273 1,048,357 1,591,569
Current maturities of notes payable to related
parties.......................................... 488,603 272,813 312,051
Income taxes payable................................ 298,883 57,458 92,257
Accrued dividends................................... 197,500 151,000 16,927
----------- ----------- -----------
Total current liabilities................... 9,978,773 13,653,361 16,184,957
LONG-TERM DEBT, less current maturities............... 468,098 15,390,019 18,394,362
NOTES PAYABLE TO RELATED PARTIES, less current
maturities.......................................... 49,037 167,271 161,271
COMMITMENTS AND CONTINGENCIES
(Notes 12 through 16)
SHAREHOLDERS' EQUITY:
Common stock (Note 11).............................. 86,423 46,100 47,100
Paid-in capital..................................... 8,940 106,999 506,148
Unrealized holding gain on investments.............. -- 43,296 --
Subscriptions receivable............................ -- -- (80,000)
Retained earnings................................... 7,528,990 8,419,959 8,470,030
----------- ----------- -----------
Total shareholders' equity.................. 7,624,353 8,616,354 8,943,278
----------- ----------- -----------
$18,120,261 $37,827,005 $43,683,868
=========== =========== ===========
</TABLE>

The accompanying notes to combined financial statements
are an integral part of these balance sheets.

F-15
<PAGE> 75

THE FOUNDING COMPANIES

COMBINED STATEMENTS OF INCOME

THREE MONTHS ENDED
FISCAL YEARS --------------------------
------------------------------------------- MARCH 31, MARCH 31,
1993 1994 1995 1995 1996
----------- ------------ ------------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
SERVICE REVENUES........... $91,220,809 $121,155,557 $146,687,368 $31,466,084 $40,924,744
COST OF SERVICES........... 72,116,476 97,111,845 117,103,666 25,384,520 32,449,442
----------- ------------ ------------ ----------- -----------
Gross profit..... 19,104,333 24,043,712 29,583,702 6,081,564 8,475,302
OPERATING EXPENSES:
Selling, general and
administrative........ 15,358,183 19,067,229 24,068,992 5,060,608 6,939,223
Depreciation and
amortization.......... 514,870 741,597 1,156,685 192,034 427,146
----------- ------------ ------------ ----------- -----------
Operating
income......... 3,231,280 4,234,886 4,358,025 828,922 1,108,933
----------- ------------ ------------ ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense......... (388,198) (419,055) (1,088,676) (37,589) (503,724)
Other, net............... 19,497 55,088 81,446 30,981 70,292
----------- ------------ ------------ ----------- -----------
INCOME BEFORE INCOME
TAXES.................... 2,862,579 3,870,919 3,350,795 822,314 675,501
PROVISION FOR INCOME
TAXES.................... 345,516 355,696 93,556 94,716 63,215
----------- ------------ ------------ ----------- -----------
Net income....... $ 2,517,063 $ 3,515,223 $ 3,257,239 $ 727,598 $ 612,286
=========== ============ ============ =========== ===========
</TABLE>

The accompanying notes to combined financial statements
are an integral part of these statements.

F-16
<PAGE> 76

THE FOUNDING COMPANIES

COMBINED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
NET
COMMON PAID-IN SUBSCRIPTION UNREALIZED RETAINED
STOCK CAPITAL RECEIVABLE HOLDING GAIN EARNINGS TOTAL
------- -------- ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1992........... $71,943 $ 32,265 $ -- $ -- $ 3,795,515 $ 3,899,723
Net income......................... -- -- -- -- 2,517,063 2,517,063
Contributions...................... 2,524 -- -- -- -- 2,524
Dividends.......................... -- -- -- -- (1,278,676) (1,278,676)
------- -------- ---------- -------- ----------- -----------
BALANCE, December 31, 1993........... 74,467 32,265 -- -- 5,033,902 5,140,634
Net income......................... -- -- -- -- 3,515,223 3,515,223
Shares issued (500 and 290 issued
by Maxwell and HRA,
respectively)................... 12,100 -- -- -- -- 12,100
Repurchase and retirement of common
stock by Blethen................ (144) (23,325) -- -- (1,531) (25,000)
Dividends.......................... -- -- -- -- (1,018,604) (1,018,604)
------- -------- ---------- -------- ----------- -----------
BALANCE, December 31, 1994........... 86,423 8,940 -- -- 7,528,990 7,624,353
Net income......................... -- -- -- -- 3,257,239 3,257,239
Change in par value of Brewer
shares from no par to $.01 per
share........................... (40,423) 40,423 -- -- -- --
Shares issued by Prostaff.......... 100 -- -- -- -- 100
Contributions...................... -- 57,636 -- -- -- 57,636
Dividends.......................... -- -- -- -- (2,366,270) (2,366,270)
Net unrealized holding gain........ -- -- -- 43,296 -- 43,296
------- -------- ---------- -------- ----------- -----------
BALANCE, December 31, 1995........... 46,100 106,999 -- 43,296 8,419,959 8,616,354
Net loss of HRA for the three
months ended December 31, 1995
(Unaudited) (Note 2)............ -- -- -- -- (27,772) (27,772)
Net income for the three months
ended March 31, 1996
(Unaudited)..................... -- -- -- -- 612,286 612,286
Shares issued by Maxwell
(Unaudited)..................... 1,000 -- -- -- -- 1,000
Shares issued by Brewer in
conjunction with purchase of On
Call (Unaudited)................ -- 319,149 -- -- -- 319,149
Exercise of Brewer stock options
(Unaudited)..................... -- 80,000 (80,000) -- -- --
Dividends (Unaudited).............. -- -- -- (43,296) (534,443) (577,739)
------- -------- ---------- -------- ----------- -----------
BALANCE, March 31, 1996
(Unaudited)........................ $47,100 $506,148 $ (80,000) $ -- $ 8,470,030 $ 8,943,278
======= ======== ========== ======== =========== ===========
</TABLE>

The accompanying notes to combined financial statements
are an integral part of these statements.

F-17
<PAGE> 77

THE FOUNDING COMPANIES

COMBINED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED
FISCAL YEARS --------------------------
------------------------------------------ MARCH 31, MARCH 31,
1993 1994 1995 1995 1996
----------- ----------- ------------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................... $ 2,517,063 $ 3,515,223 $ 3,257,239 $ 727,598 $ 612,286
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization......... 514,870 741,597 1,156,685 192,034 427,146
Provision for bad debts............... 156,723 154,959 437,731 50,771 41,141
Deferred income taxes................. (181,009) 10,933 (17,644) 73,016 (14,550)
Net loss (gain) on investments........ 102,536 12,500 (2,146) -- --
Change in operating accounts, net of
effects of acquisitions:
Accounts receivable................. (2,846,006) (2,805,949) (1,313,247) (5,709) (1,617,647)
Prepaid expenses and other.......... (159,724) (44,452) (474,478) (312,368) (126,146)
Other assets........................ (124,673) (19,345) (34,919) (6,120) 2,600
Accounts payable and other accrued
liabilities...................... 93,859 (175,929) 180,742 49,032 (252,571)
Outstanding checks.................. 68,552 175,552 (425,111) (39,198) 605,655
Payroll and related liabilities..... 848,518 574,744 110,371 1,366,449 595,705
Reserve for workers' compensation
claims........................... 557,069 596,083 2,101,307 646,200 (40,909)
Income taxes payable................ 57,033 49,779 (241,425) (34,874) 53,914
----------- ----------- ----------- ---------- -----------
Net cash provided by operating
activities..................... 1,604,811 2,785,695 4,735,105 2,706,831 286,624
----------- ----------- ----------- ---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of businesses.................. (200,000) -- (11,530,000) -- (3,168,000)
Purchases of investments................. (109,144) (13,750) (271,680) (161,871) --
Sales of investments..................... -- -- 98,119 -- --
Capital expenditures..................... (925,674) (991,560) (1,223,950) (254,496) (462,398)
Changes in restricted cash and
certificates of deposit............... 1,284,046 (72,499) 37,310 (33,067) 30,804
Other, net............................... 20,000 20,467 (64,610) -- --
----------- ----------- ----------- ---------- -----------
Net cash provided by (used in)
investing activities........... 69,228 (1,057,342) (12,954,811) (449,434) (3,599,594)
----------- ----------- ----------- ---------- -----------
</TABLE>

The accompanying notes to combined financial statements
are an integral part of these statements.

F-18
<PAGE> 78

THE FOUNDING COMPANIES

COMBINED STATEMENTS OF CASH FLOWS -- (CONTINUED)

THREE MONTHS ENDED
FISCAL YEARS --------------------------
----------------------------------------- MARCH 31, MARCH 31,
1993 1994 1995 1995 1996
----------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock.................. $ -- $ 12,100 $ 100 $ -- $ 1,000
Proceeds from issuance of long-term
debt................................... 388,612 1,660,231 13,366,512 -- 4,251,706
Payments on long-term debt................ (219,554) (2,438,852) (2,106,440) (389,190) (342,294)
Change in due from/to related parties,
net.................................... (612,667) 159,138 (146,483) (57,949) 2,073
Proceeds from (payments on) short-term
borrowings, net........................ 237,735 (46,489) (88,527) (855,178) (23,819)
Cash dividends............................ (1,059,723) (987,078) (2,067,663) (442,055) (438,458)
Deferred financing costs.................. -- -- (271,750) -- (56,250)
Other, net................................ (4,775) (5,749) 57,636 -- --
----------- ----------- ----------- ----------- -----------
Net cash provided by (used in)
financing activities............ (1,270,372) (1,646,699) 8,743,385 (1,744,372) 3,393,958
----------- ----------- ----------- ----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS... 403,667 81,654 523,679 513,025 80,988
CASH AND CASH EQUIVALENTS,
beginning of period....................... 1,270,990 1,674,657 1,756,311 1,359,624 1,903,766
----------- ----------- ----------- ----------- -----------
CASH AND CASH EQUIVALENTS,
end of period............................. $ 1,674,657 $ 1,756,311 $ 2,279,990 $ 1,872,649 $ 1,984,754
=========== =========== =========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Interest paid............................. $ 326,492 $ 434,794 $ 715,668 $ 68,306 $ 677,627
=========== =========== =========== =========== ===========
Income taxes paid......................... $ 453,500 $ 300,333 $ 363,981 $ 222,782 $ 51,009
=========== =========== =========== =========== ===========
Non-cash transactions:
Notes payable issued to purchase
businesses........................... $ 299,010 $ -- $ 3,100,000 $ -- $ 149,180
=========== =========== =========== =========== ===========
Distribution of notes receivable to
shareholders......................... $ -- $ -- $ 345,107 $ -- $ --
=========== =========== =========== =========== ===========
Transfer of investments to
shareholders......................... $ -- $ -- $ -- $ -- $ 273,354
=========== =========== =========== =========== ===========
Issuance of subscription receivable in
conjunction with the exercise of
stock options........................ $ -- $ -- $ -- $ -- $ 80,000
=========== =========== =========== =========== ===========
</TABLE>

The accompanying notes to combined financial statements
are an integral part of these statements.

F-19
<PAGE> 79

THE FOUNDING COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS

1. BUSINESS AND ORGANIZATION:

In March 1996, StaffMark, Inc. ("StaffMark") was founded to create a
national company to provide temporary staffing services.

Concurrent with the initial public offering of its common stock (the
"Offering"), wholly-owned subsidiaries of StaffMark will merge (the "Mergers")
with the following six companies (each a "Founding Company" and collectively,
the "Founding Companies"): Brewer Personnel Services, Inc. ("Brewer"), The
Prostaff Companies ("Prostaff"), The Maxwell Companies ("Maxwell"), Human
Resources, Inc. ("HRA"), First Choice Staffing, Inc. ("First Choice") and The
Blethen Group ("Blethen"). The Mergers will be effected by StaffMark through
issuance of its common stock and cash.

The Founding Companies operate offices in eight states located in the
Southeastern and Southwestern regions of the United States and provide temporary
staffing in the commercial, professional and specialty medical staffing service
lines. The Founding Companies extend trade credit to customers representing a
variety of industries. There are no individual customers that account for more
than ten percent of service revenues of the Founding Companies in any of the
fiscal years or unaudited periods presented.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Basis of Presentation --

The accompanying combined financial statements and related notes represent
the combined financial position, results of combined operations and combined
cash flows of the Founding Companies without giving effect to the Mergers and
the Offering. The assets and liabilities of the Founding Companies are reflected
at their historical amounts. The Founding Companies were not under common
control or management during any of the periods presented.

Fiscal Periods --

The fiscal years of several of the Founding Companies end on the Sunday
closest to December 31. The fiscal years 1995, 1994 and 1993 each included 52
weeks. The fiscal years of HRA end on September 30. For purposes of preparing
the accompanying combined financial statements for fiscal years 1995, 1994 and
1993, the financial statements of this company have been combined with the
December 31 financial statements of the other Founding Companies. The unaudited
interim periods include operating results for the three months ended March 31,
1996 and 1995 for each of the Founding Companies.

For purposes of presenting the unaudited statement of shareholders' equity
for the three months ended March 31, 1996, the net loss for HRA for the three
months ended December 31, 1995, is included as an adjustment to reconcile
shareholders' equity to March 31, 1996.

Interim Financial Statements --

The accompanying combined interim financial statements and related
disclosures have not been audited by independent accountants. However, they have
been prepared in conformity with the accounting principles stated in the audited
financial statements for the three years in the period ended December 31, 1995,
and include all adjustments of a normal, recurring nature which, in the opinion
of management, are necessary to present fairly the combined financial position
of the Founding Companies and results of their combined operations and their
combined cash flows for each of the periods presented. The operating results for
the interim periods presented are not necessarily indicative of results for the
full year.

Revenue Recognition --

Service revenues are recognized as income at the time staffing services are
provided.

F-20
<PAGE> 80

THE FOUNDING COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Use of Estimates --

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses and disclosure of contingent assets and liabilities. The estimates
and assumptions used in the accompanying combined financial statements are based
upon management's evaluation of the relevant facts and circumstances as of the
date of the financial statements. However, actual results may differ from the
estimates and assumptions used in preparing the accompanying financial
statements.

Cash and Cash Equivalents --

For statement of cash flow purposes, the Founding Companies consider cash
on deposit with financial institutions and all highly liquid investments with
original maturities of three months or less to be cash equivalents.

Accounts Receivable --

The Founding Companies maintain allowances for potential losses which
management believes are adequate to absorb losses to be incurred in realizing
the amounts recorded in the accompanying combined financial statements. Included
in accounts receivable in the accompanying combined balance sheets are unbilled
amounts of approximately $1,345,000, $1,685,000 and $2,823,000 (unaudited) at
December 31, 1994, December 31, 1995 and March 31, 1996, respectively.

Restricted Cash and Certificates of Deposit --

Restricted cash and certificates of deposit represent funds required to be
maintained on behalf of certain of the Founding Companies' self-insured health
benefit plans and state-administered workers' compensation insurance
commissions. The use of these assets is either restricted to the payment of
health benefits of participating employees or required as collateral on letters
of credit provided to state insurance commissions.

Investments --

The Founding Companies have adopted Statement of Financial Accounting
Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and
Equity Securities," which requires that investments in debt securities and
marketable equity securities be designated as trading, held-to-maturity or
available-for-sale. At December 31, 1994 and 1995, marketable debt and equity
securities have been categorized as available-for-sale and are stated at fair
value in the accompanying combined balance sheets. Unrealized gains on
available-for-sale securities are recorded as adjustments to shareholders'
equity. Realized gains and losses on the sale of available-for-sale securities
are determined using the specific identification method.

Property and Equipment --

Property and equipment are recorded at cost and are depreciated or
amortized on a straight-line basis over the estimated useful lives of the assets
which are as follows:

<TABLE>
<S> <C>
Office equipment................................................. 3-7 years
Computer equipment and software.................................. 3-5 years
Building and improvements........................................ 7-32 years
Vehicles......................................................... 5 years
Leasehold improvements........................................... 3-15 years
</TABLE>

F-21
<PAGE> 81

THE FOUNDING COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Additions that extend the lives of the assets are capitalized while repairs
and maintenance costs are expensed as incurred. When property and equipment are
retired, the related cost and accumulated depreciation or amortization are
removed from the balance sheet and any resultant gain or loss is recorded.

Intangible Assets --

Intangible assets primarily consist of goodwill, which is amortized using
the straight-line method over periods ranging from 15 to 30 years. Deferred
financing costs are amortized over the life of the respective debt obligation
using a method which approximates the interest method. Intangibles associated
with non-compete agreements are amortized using the straight-line method over
the life of the respective agreements.

Income Taxes --

For the Founding Companies that are C Corporations for income tax reporting
purposes, income taxes are provided based upon the provisions of SFAS No. 109,
"Accounting for Income Taxes," which requires recognition of deferred income
taxes under the liability method.

Certain of the Founding Companies are S Corporations for income tax
reporting purposes. Accordingly, the accompanying combined financial statements
include no provision for federal income taxes related to the income of these
companies as such taxes are liabilities of the individual shareholders. These
companies' S Corporation status will terminate with the effective date of the
Mergers.

Workers' Compensation --

Several of the Founding Companies self-insure certain risks related to
workers' compensation claims. The estimated costs of existing and future claims
are accrued as incidents occur based upon historical loss development trends and
may be subsequently revised based on developments relating to such claims. The
Founding Companies engage the services of a third party actuary to assist with
the development of these cost estimates.

Financial Instruments --

The Founding Companies' financial instruments include cash and cash
equivalents, restricted cash and certificates of deposit, investments, advances
to shareholders, notes receivable from related parties, cash surrender value of
officers' life insurance and debt. Excluding investments, which are carried at
fair market value as discussed in Note 6, management believes that these
financial instruments bear interest at rates which approximate prevailing market
rates for instruments with similar characteristics and, accordingly, that the
carrying values for these instruments are reasonable estimates of fair value.

Stock Based Compensation --

During 1995, the Financial Accounting Standards Board issued SFAS No. 123,
"Accounting for Stock Based Compensation," which encourages all companies to
recognize compensation expense based on the fair value, at grant date, of
instruments issued pursuant to stock based compensation plans. Under the
provision of SFAS No. 123, the fair value of the instruments granted, which is
measured pursuant to the provisions of the statement, is to be recognized as
compensation expense on a straight-line basis over the vesting period of the
instrument.

However, the statement also allows companies to continue to measure
compensation costs for these instruments using the method of accounting
prescribed by Accounting Principles Board Opinion No. 25 ("APB 25"), "Accounting
for Stock Issued to Employees." Companies electing to account for stock-based
compensation plans pursuant to the provisions of APB 25 must make pro forma
disclosures of net income as if the fair value method defined in SFAS No. 123
had been applied. The Founding Companies have elected to

F-22
<PAGE> 82

THE FOUNDING COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

account for its stock options under the provisions of APB 25 and has included
the disclosures required by SFAS No. 123 in Note 11.

Impairment of Long-Lived Assets --

In the event that facts and circumstances indicate that the cost of
intangible or other long-lived assets may be impaired, an evaluation of
recoverability would be performed pursuant to the provisions of SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of." If an evaluation is required, the estimated future undiscounted
cash flows associated with the asset would be compared to the asset's carrying
amount to determine if a write-down to market value or discounted cash flow
value is required.

3. BUSINESS COMBINATIONS:

Aaron Temporary Services, Inc. --

On November 22, 1993, Brewer acquired certain assets of Aaron Temporary
Services, Inc. ("Aaron"). Aaron was engaged in providing temporary personnel
services in Central and Northeast Arkansas. The total purchase price of $527,600
was comprised of a cash payment of $200,000 and the issuance of a note with
payments, including interest, totaling $327,600. The acquisition has been
accounted for as a purchase, and the results of Aaron have been included in the
accompanying financial statements since the date of acquisition. The cost of the
acquisition has been allocated on the basis of the estimated fair market value
of the assets acquired. The tangible assets acquired have been recorded at
historical, depreciated cost, which approximated fair value as of the
acquisition date, with the remaining acquisition costs being recorded as
intangible assets.

Caldwell Services, Inc. --

On July 10, 1995, Brewer acquired the stock of E.P. Enterprises
Corporation, d.b.a. Caldwell Services, Inc. ("Caldwell"). Caldwell is engaged in
providing temporary personnel services through seven staffing offices located in
Georgia. The acquisition has been accounted for as a purchase, and the results
of Caldwell have been included in the accompanying financial statements since
the date of acquisition. The cost of the acquisition has been allocated on the
basis of the estimated fair market value of the assets and liabilities acquired.

Total consideration paid for Caldwell was approximately $17.3 million. The
purchase price included cash of $11.5 million, a note to the seller of $3.1
million and the assumption of certain liabilities of Caldwell. The assets
acquired have been recorded at historical, depreciated cost, which approximated
fair value as of the acquisition date, with the remaining acquisition costs of
approximately $15.3 million being recorded as goodwill.

On Call Employment Services, Inc. (Unaudited) --

On February 2, 1996, Brewer acquired the stock of On Call Employment
Services, Inc. ("On Call"). On Call is engaged in providing temporary personnel
services through four staffing offices in Colorado. The acquisition has been
accounted for as a purchase, and the results of On Call have been included in
the accompanying combined financial statements since the date of acquisition.
The cost of the acquisition has been allocated on the basis of the estimated
fair market value of the assets and liabilities acquired.

Total consideration paid for On Call was approximately $3.8 million which
was comprised of cash totaling $3.0 million, including $360,000 associated with
a non-compete agreement, 10 shares of Brewer's common stock valued at
approximately $320,000 and the assumption of liabilities totaling approximately
$480,000. The assets acquired have been recorded at historical, depreciated
cost, which approximated fair

F-23
<PAGE> 83

THE FOUNDING COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

value as of the acquisition date, with the remaining acquisition costs of
approximately $3.1 million being recorded as goodwill.

Sumner-Ray Technical Resources, Inc. (Unaudited) --

On February 23, 1996, Maxwell acquired substantially all of the assets of
Sumner-Ray Technical Resources, Inc. ("Sumner-Ray"), which is engaged in
providing temporary and permanent placement of professional and technical
personnel in the engineering, drafting and manufacturing fields. The acquisition
did not have a material impact on the combined financial position or results of
operations of the Founding Companies and, therefore, is not reflected in the pro
forma results of operations shown below.

The unaudited combined results of operations on a pro forma basis as though
Aaron, Caldwell and On Call had been acquired as of the beginning of 1993 are as
follows:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL YEAR -------------------------
------------------------------------------ MARCH 31, MARCH 31,
1993 1994 1995 1995 1996
------------ ------------ ------------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues..................... $132,211,996 $148,807,505 $170,219,807 $38,707,586 $42,051,835
============ ============ ============ =========== ===========
Net income................... $ 3,739,735 $ 3,277,888 $ 3,621,657 $ 842,159 $ 636,636
============ ============ ============ =========== ===========
</TABLE>

4. INTANGIBLE ASSETS:

Intangible assets consisted of the following:

DECEMBER 31, MARCH 31,
------------------------ 1996
1994 1995 -----------
-------- ----------- (UNAUDITED)
<S> <C> <C> <C>
Goodwill....................................... $ 25,000 $15,356,334 $18,731,611
Deferred financing costs....................... -- 271,750 328,000
Non-compete agreements......................... 299,010 340,010 839,647
Other.......................................... 75,000 140,262 140,262
-------- ----------- -----------
399,010 16,108,356 20,039,520
Less accumulated amortization........ 116,795 515,741 727,938
-------- ----------- -----------
$282,215 $15,592,615 $19,311,582
======== =========== ===========
</TABLE>

Amortization expense related to intangible assets for fiscal years 1993,
1994 and 1995 totaled approximately $53,000, $106,000 and $395,000,
respectively. Unaudited amortization expense for the three months ended March
31, 1995 and 1996 totaled approximately $30,000 and $204,000, respectively.

F-24
<PAGE> 84

THE FOUNDING COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

5. PROPERTY AND EQUIPMENT:

Components of property and equipment are as follows:

DECEMBER 31, MARCH 31,
------------------------- 1996
1994 1995 -----------
---------- ---------- (UNAUDITED)
<S> <C> <C> <C>
Office equipment................................ $1,479,614 $1,884,367 $2,211,150
Computer equipment and software................. 1,736,847 2,463,017 2,641,889
Buildings and improvements...................... 483,136 502,130 518,401
Vehicles........................................ 382,102 389,761 393,394
Leasehold improvements.......................... 261,521 379,175 428,607
Land............................................ 13,000 13,000 13,000
---------- ---------- ----------
4,356,220 5,631,450 6,206,441
Less accumulated depreciation and
amortization........................ 2,088,863 2,799,040 3,031,490
---------- ---------- ----------
$2,267,357 $2,832,410 $3,174,951
========== ========== ==========
</TABLE>

Depreciation and amortization expense related to property and equipment for
fiscal years 1993, 1994 and 1995 totaled approximately $462,000, $635,000 and
$762,000, respectively. Unaudited depreciation and amortization expense for the
three months ended March 31, 1995 and 1996 totaled approximately $162,000 and
$223,000, respectively.

6. INVESTMENTS:

The carrying value and market value of available-for-sale investment
securities were as follows:

<TABLE>
<CAPTION>
GROSS GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
--------- ---------- ---------- --------
<S> <C> <C> <C> <C>
December 31, 1994:
Equity securities......................... $ 180,826 $ -- $ -- $180,826
United States government obligations...... 28,679 -- -- 28,679
--------- -------- --------- --------
$ 209,505 $ -- $ -- $209,505
========= ======== ========= ========
December 31, 1995:
Equity securities......................... $ 201,379 $ 38,551 $ -- $239,930
United States government obligations...... 28,679 4,745 -- 33,424
--------- -------- --------- --------
$ 230,058 $ 43,296 $ -- $273,354
========= ======== ========= ========
</TABLE>

The United States government obligations held as of December 31, 1994 and
1995 represent one issue which matures in 2003.

Losses totaling $102,536 and $12,500 in 1993 and 1994, respectively, were
recognized related to one security whose impairment of value was deemed to be
other than temporary. These amounts are reflected in other expense, in the
accompanying combined statements of income. There were no sales of securities
during 1994. Proceeds from the sale of available-for-sale securities totaled
$98,119 for the year ended December 31, 1995, including realization of a gross
gain of $2,146. All available-for-sale securities were distributed to the
shareholders in March 1996.

Included in investments in the accompanying combined balance sheets are
certificates of deposit with maturities between three and twelve months of
$155,154 at December 31, 1995 and March 31, 1996.

F-25
<PAGE> 85

THE FOUNDING COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

7. DEBT:

Short-term borrowings consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------- MARCH 31,
1994 1995 1996
---------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Brewer --
Line of credit with Boatmen's National Bank of
St. Louis ("Boatmen's"). Maximum borrowings
equal the lesser of $6 million ($5 million at
December 31, 1995) or 85% of Brewer's eligible
accounts receivable balance reduced by the
letters of credit issued as security for
Brewer's workers' compensation obligations.
Interest payable monthly at a variable rate
which averaged 9.83% during the three months
ended March 31, 1996 and 10.23% during the year
ended December 31, 1995. Principal due on June
29, 1998. Secured by the assets and common
stock of Brewer and partially guaranteed by
certain shareholders of Brewer. $ -- $ 309,068 $ 1,060,774

Line of credit with Boatmen's, interest payable
quarterly at prime, 8.00% as of January 1, 1995
and averaging 6.80% for the year then ended.
Secured by accounts receivable of Brewer and
guaranteed by certain shareholders of Brewer. 725,000 -- --

Prostaff --
Line of credit with Boatmen's. Maximum
borrowings equal the lesser of $1.5 million
or 80% of Prostaff's eligible accounts
receivable. Interest accrues at a variable rate
which averaged 8.88% during the three months
ended March 31, 1996 and 7.75% during the year
ended December 31, 1994. The balance is due
upon demand and is secured by the accounts
receivable of Prostaff and guaranteed by the
shareholders of Prostaff. 417,000 -- 152,000
</TABLE>

F-26
<PAGE> 86

THE FOUNDING COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ MARCH 31,
1994 1995 1996
-------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
HRA --
"Purchases of Accounts" agreement with
SouthTrust Bank ("SouthTrust") by which
SouthTrust agreed to purchase up to $750,000 of
HRA's accounts receivable on a revolving basis.
The agreement gave HRA the option to repurchase
these receivables at any time and gave
SouthTrust full recourse for any accounts
receivable which were not collected, as well as
required HRA to meet certain restrictive
covenants. Service charge payable quarterly
which equaled 1.50% of the face amount of each
account financed by SouthTrust. $ 600,830 $ 502,512 $ --

Revolving line of credit with SouthTrust.
Maximum borrowings equal to 80% of HRA's
eligible accounts receivable, as defined, not
to exceed aggregate borrowings of $1.5 million.
Interest is payable monthly on outstanding
borrowings at SouthTrust's base rate plus 1.25%
(weighted average rate of 9.23% during the six
months ended March 31, 1996). The agreement
expires on November 20, 1996. Secured by the
accounts receivable of HRA and guaranteed by
the shareholders of HRA. -- -- 580,000

First Choice --
Revolving line of credit with NationsBank.
Maximum borrowings equal to the lesser of
$400,000 or 80% of First Choice's eligible
accounts receivable, as defined. Interest is
payable monthly at prime which averaged 8.33%
during the three months ended March 31, 1996
and 8.66% during 1995. Principal due May 31,
1996. Secured by the accounts receivable of
First Choice. -- 200,000 150,000

Blethen --
Revolving lines of credit with Lighthouse
Financial Corp. Maximum aggregate borrowings
equal to the lesser of $1.55 million or 85% of
the applicable Blethen companies' eligible
accounts receivable, as defined. Interest
payable monthly at a variable rate which
averaged 10.84% during the three months ended
March 31, 1996 and 11.33% during 1995. The
lines of credit are renewed annually and are
currently due April 6, 1997. Secured by certain
assets of Blethen and guaranteed by Blethen's
majority shareholder. 764,645 971,436 856,617
Other short-term borrowings -- 20,000 24,000
---------- ----------- -----------
$2,507,475 $ 2,003,016 $ 2,823,391
========== =========== ===========
</TABLE>

F-27
<PAGE> 87

THE FOUNDING COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ MARCH 31,
1994 1995 1996
-------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Long-term debt consisted of the following:

Brewer --
Term loan note with Boatmen's. Interest payable
monthly at a variable rate which averaged 8.9%
during the three months ended March 31, 1996
and 9.56% during the year ended December 31,
1995. Principal due in quarterly installments
beginning October 1, 1995 through maturity on
June 30, 2001. Secured by the assets and common
stock of Brewer and partially guaranteed by
certain shareholders of Brewer. $ -- $12,750,000 $16,000,000

Note payable to the previous owner of Caldwell,
interest at 8.00%, payable quarterly. Principal
to be paid in equal annual installments
beginning June 30, 1998 through June 30, 2001
or in full upon a change in control of Brewer.
Secured by a lien on the assets of Brewer and
guaranteed by certain shareholders of Brewer. -- 3,100,000 3,100,000
Note payable to the previous owner of Aaron,
imputed interest of 6.00%, payable in monthly
installments of $9,100. Secured by the personal
assets of the shareholders of Brewer. 197,235 97,332 71,341

Prostaff --
Term note payable to Boatmen's in the original
amount of $290,237, due in monthly installments
of $6,079, including interest at 5.5% through
August 31, 1998. Secured by certain equipment
of Prostaff and guaranteed by the shareholders
of Prostaff. 231,806 176,331 160,431

Maxwell --
Promissory note payable to the previous owner
of Sumner-Ray, due in annual installments of
$84,000, including interest payable at 8.00%.
Secured by a lien and security interest in
certain assets of Maxwell. -- -- 149,180

HRA --
Deferred compensation arrangements with various
consultants and/or employees of HRA. Due in
weekly and monthly installments, imputed
interest of approximately 8.75%. Maturities
ranging from 1996 to 2003. 195,722 171,031 391,896
</TABLE>

F-28
<PAGE> 88

THE FOUNDING COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ MARCH 31,
1994 1995 1996
-------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Blethen --
Obligations under capital leases related to
certain office equipment of Blethen,
including interest which averaged 20.90% during
the three months ended March 31, 1996 and
21.50% and 24.10% during the years ended
December 31, 1995 and 1994. $ 150,160 $ 69,623 $ 55,885
Other long-term debt 87,448 74,059 57,198
---------- ----------- -----------
862,371 16,438,376 19,985,931
Less current maturities 394,273 1,048,357 1,591,569
---------- ----------- -----------
$ 468,098 $15,390,019 $18,394,362
========== =========== ===========
</TABLE>

Certain obligations of the Founding Companies contain warranties and
covenants. At March 31, 1996, Blethen was not in compliance with certain of
these warranties and covenants relating to obligations totaling approximately
$857,000. Blethen requested and received a waiver from the lender for all events
of noncompliance and default.

As of December 31, 1995, annual maturities of long-term debt subsequent to
December 31, 1995 are as follows:

<TABLE>
<S> <C>
1996............................................ $ 1,048,357
1997............................................ 1,595,272
1998............................................ 3,236,349
1999............................................ 3,252,487
2000............................................ 3,905,911
Thereafter...................................... 3,400,000
-----------
$16,438,376
===========
</TABLE>

8. INCOME TAXES:

The income tax provision (benefit) consisted of the following:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, --------------------------
---------------------------------- MARCH 31, MARCH 31,
1993 1994 1995 1995 1996
--------- -------- --------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Current:
Federal................... $ 441,636 $329,332 $ 176,056 $ 114,207 $ 62,940
State..................... 84,888 34,584 18,100 4,209 14,825
--------- -------- --------- --------- ---------
526,524 363,916 194,156 118,416 77,765
Deferred:
Federal................... (149,201) (11,257) (90,230) (21,320) (13,090)
State..................... (31,807) 3,037 (10,370) (2,380) (1,460)
--------- -------- --------- --------- ---------
(181,008) (8,220) (100,600) (23,700) (14,550)
--------- -------- --------- --------- ---------
$ 345,516 $355,696 $ 93,556 $ 94,716 $ 63,215
========= ======== ========= ========= =========
</TABLE>

Deferred income taxes result from the effect of transactions which are
recognized in different periods for financial and tax reporting purposes and
relate primarily to depreciation and accrued vacation and workers'

F-29
<PAGE> 89

THE FOUNDING COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

compensation reserves. Deferred income taxes are recognized for tax consequences
of temporary differences by applying enacted statutory tax rates to differences
between the financial reporting and the tax basis of existing assets and
liabilities.

The components of deferred income tax assets and liabilities for the
applicable C Corporations are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------- MARCH 31,
1994 1995 1996
--------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Deferred income tax assets:
Vacation and workers' compensation reserves.... $ 192,972 $167,000 $ 121,500
Compensation agreements........................ 76,600 65,000 159,300
Net operating losses........................... 78,000 42,000 42,000
Other.......................................... 16,429 8,760 8,760
--------- -------- ---------
Total deferred income tax assets....... 364,001 282,760 331,560
Deferred income tax liabilities:
Depreciation................................... (87,885) (26,000) (26,000)
Change in income tax accounting method......... (37,000) -- --
--------- -------- ---------
Total deferred income tax
liabilities.......................... (124,885) (26,000) (26,000)
--------- -------- ---------
$ 239,116 $256,760 $ 305,560
========= ======== =========
</TABLE>

The components of net deferred income tax assets as stated in the
accompanying combined balance sheets are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- MARCH 31,
1994 1995 1996
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Current........................................... $193,201 $171,000 $ 227,600
Long-term......................................... 45,915 85,760 77,960
-------- -------- ---------
$239,116 $256,760 $ 305,560
======== ======== =========
</TABLE>

A valuation allowance for the deferred tax assets has not been recorded in
the accompanying combined financial statements because management believes that
all deferred tax assets are more likely than not to be recovered. In assessing
the realizability of deferred income tax assets, management has considered
scheduled reversals of the deferred income tax liabilities, income taxes paid in
available carryback periods and projected future taxable income.

F-30
<PAGE> 90

THE FOUNDING COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

The differences in income taxes determined by applying the federal
statutory tax rate of 34% to income before income taxes and the amounts recorded
result from the following:

THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, --------------------------
-------------------------------------- MARCH 31, MARCH 31,
1993 1994 1995 1995 1996
--------- ---------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Tax at statutory rate............. $ 973,277 $1,316,113 $ 1,139,270 $ 279,587 $ 229,670
Add (deduct):
State income taxes, net of
federal tax benefit........ 53,206 70,358 17,666 7,022 6,060
Effect of S Corporation
income..................... (644,809) (981,972) (1,057,329) (192,316) (172,190)
General business credits..... (44,609) (77,185) -- -- --
Other, net................... 8,451 28,382 (6,051) 423 (325)
--------- ---------- ----------- --------- --------
$ 345,516 $ 355,696 $ 93,556 $ 94,716 $ 63,215
========= ========== =========== ========= ========
</TABLE>

The Founding Companies have net operating loss and general business credit
carryforwards, which expire at various periods from 1996 through 2008.

9. WORKERS' COMPENSATION:

Certain of the Founding Companies are self-insured for certain workers'
compensation claims and are regulated by various state-administered workers'
compensation insurance commissions. These Founding Companies have purchased
insurance for medical claims which exceed certain thresholds and maintain
letters of credit to cover any potential unpaid claims. At December 31, 1995,
these letters of credit totaled $2,450,000. Workers' compensation expense for
fiscal years 1993, 1994 and 1995 totaled approximately $2,594,000, $3,440,000
and $4,978,000, respectively. Unaudited workers' compensation expense for the
three months ended March 31, 1995 and 1996 totaled approximately $1,055,000 and
$984,000, respectively.

10. EMPLOYEE BENEFIT PLANS:

Certain of the Founding Companies maintain employee benefit plans, some of
which allow eligible employees to defer a portion of their income through
contributions to the plans. Under provisions of the plans, certain of the
Founding Companies match a percentage of the employee contributions, up to a
maximum as specified in the individual plan, and may contribute additional
amounts at the discretion of management. Contributions by the Founding Companies
to the various plans were approximately $250,000, $190,000 and $62,000 in fiscal
years 1993, 1994 and 1995, respectively. Unaudited contributions to the various
plans were approximately $4,500 and $22,000 for the three months ended March 31,
1995 and 1996, respectively.

F-31
<PAGE> 91

THE FOUNDING COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

11. COMMON STOCK AND STOCK OPTIONS:

The common stock authorized, issued and outstanding of the Founding
Companies consisted of the following:

DECEMBER 31,
------------------- MARCH 31,
1994 1995 1996
------- ------- ---------
(UNAUDITED)
<S> <C> <C> <C>
Brewer --
Common stock, no par value in 1994 and $.01 par value
in 1995 and 1996; 1,000 shares authorized in 1994 and
10,000 in 1995 and 1996; 117.5 shares issued and
outstanding in 1994 and 1995 and 132.5 in 1996....... $40,424 $ 1 $ 1
Prostaff --
Common stock, par values of $.20 in 1994 and par
values ranging from $.20 to $1.00 in 1995 and 1996;
200,000 shares authorized in 1994 and 201,000 in 1995
and 1996; 55,000 shares issued and outstanding in
1994 and 55,100 in 1995 and 1996..................... 11,000 11,100 11,100
Maxwell --
Common stock, $1.00 par value in 1994, 1995 and 1996;
110,000 shares authorized in 1994 and 1995 and
160,000 in 1996; 4,000 shares issued and outstanding
in 1994 and 1995 and 5,000 in 1996................... 4,000 4,000 5,000
HRA --
Common stock, no par value, 1,000 shares authorized,
790 shares issued and outstanding in 1994, 1995 and
1996................................................. 12,600 12,600 12,600
First Choice --
Common stock, $1.00 par value, 100,000 shares
authorized, 10,000 shares issued and outstanding in
1994, 1995 and
1996................................................. 10,000 10,000 10,000
Blethen --
Common stock, $1.00 par value, 600,000 shares
authorized, 8,399 shares issued and outstanding in
1994, 1995 and
1996................................................. 8,399 8,399 8,399
------- ------- -------
$86,423 $46,100 $47,100
======= ======= =======
</TABLE>

Brewer has granted stock options to certain key employees. These options
were granted at fair value as determined by management, are exercisable in
installments and expire from June 30, 1999 to July 11, 2000.

In March 1996, a key employee of Brewer exercised his stock options and
received five shares of Brewer's common stock. In payment for this exercise,
Brewer executed a note receivable from this employee for $80,000, which
represented the entire exercise price of these options.

F-32
<PAGE> 92

THE FOUNDING COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

A summary of Brewer's stock option activity follows:

<TABLE>
<CAPTION>
WEIGHTED AVERAGE
SHARES UNDER PRICE PER
OPTION SHARE
------------ ----------------
<S> <C> <C>
Outstanding, December 31, 1993........................... -- $ --
Granted................................................ 5.0 16,000
----- ------------
Outstanding, December 31, 1994........................... 5.0 16,000
Granted................................................ 7.5 30,666
----- ------------
Outstanding, December 31, 1995........................... 12.5 24,800
Granted (Unaudited).................................... 1.0 35,000
Exercised (Unaudited).................................. (5.0) (16,000)
----- ------------
Outstanding, March 31, 1996 (Unaudited).................. 8.5 $ 31,176
======== ============
Exercisable, December 31, 1995........................... 5.0 $ 16,000
======== ============
Exercisable, March 31, 1996 (Unaudited).................. -- $ --
======== ============
</TABLE>

As discussed in Note 2, Brewer has elected to account for stock options
under the provisions of APB 25. Accordingly, pursuant to the requirements of
SFAS 123, Brewer has determined the value of all options granted during 1995 and
the unaudited three month period ended March 31, 1996 using the minimum value
method, as discussed in SFAS 123, and based on the following weighted average
assumptions used for grants:

<TABLE>
<CAPTION>
THREE MONTHS
FISCAL ENDED
1995 MARCH 31, 1996
---------- --------------
<S> <C> <C>
Risk-free interest rate..................................... 6.5% 5.6%
Expected dividend yield..................................... 0% 0%
Expected life............................................... 2.5 years 2.0 years
</TABLE>

Options were assumed to be exercised upon vesting for the purpose of this
valuation. Using these assumptions, the fair value of the stock options granted
in 1995 and the unaudited three months ended March 31, 1996 was approximately
$36,000 and $4,000, respectively. The fair value of these stock options was not
material to the combined results of operations of the Founding Companies and,
accordingly, the pro forma disclosures required by SFAS 123 have been omitted.

12. RELATED PARTY TRANSACTIONS:

Brewer --

In June 1995, Brewer entered into an agreement to merge its activities with
Chad J. Brewer, Incorporated (a Virginia corporation, "Chad Brewer"), which was
owned by a related party. Brewer issued 17.5 shares of common stock in exchange
for all outstanding shares of Chad Brewer. This merger has been accounted for as
a pooling-of-interests. Accordingly, the accompanying combined financial
statements have been prepared as if the merger had occurred at the beginning of
fiscal year 1993.

Prior to the merger, Brewer maintained a license agreement which entitled
Chad Brewer to do business in the state of Virginia as Brewer Personnel Services
and to use certain information of Brewer. In addition, Brewer provided payroll
administration, data processing and accounts receivable financing services to
Chad Brewer.

Brewer rents office space from Brewer Investments, a partnership owned by
certain shareholders. The rent expense related to these transactions was $60,000
for fiscal years 1993, 1994 and 1995. In January 1996, Brewer moved its
corporate offices into a new building, which is also owned by Brewer
Investments. Future

F-33
<PAGE> 93

THE FOUNDING COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

minimum lease payments related to this lease approximate $1,127,000 which have
been included in the table in Note 14.

In December 1995, a note receivable from Brewer Investments in the amount
of $345,107 was distributed to Brewer's shareholders.

Prostaff --

Prostaff leases the office facilities of its headquarters from a limited
liability corporation ("LLC") owned by the shareholders of Prostaff. For the
fiscal years 1993, 1994 and 1995, rent paid to the LLC totaled $61,100, $73,761
and $114,180, respectively. Unaudited rent expense paid to the LLC was $22,125
for the three months ended March 31, 1995 and 1996.

Maxwell --

Maxwell rents a duplex from certain shareholders which houses
foreign-trained physical and occupational therapists. Rent expense related to
the duplex amounted to $16,800 for each of the years ended December 31, 1993,
1994 and 1995. Unaudited rent expense totaled $4,200 for the three months ended
March 31, 1995 and 1996. These rent payments are not subject to a formal
agreement and, therefore, have not been considered in the disclosure included in
Note 14.

HRA --

Included in general and administrative expenses are advisor and/or director
fees paid or payable to the shareholders of HRA totaling $120,000, $69,000 and
$94,000 for fiscal years 1993, 1994 and 1995, respectively. No such fees were
accruable for the three months ended March 31, 1995 or 1996.

As of September 30, 1994 and 1995, HRA had a note payable to a shareholder
of HRA for $155,295 and $122,000, respectively. The note was due on demand with
interest payable at 8.75% and was secured by HRA's unpledged accounts
receivable. In connection with the purchase of this shareholder's common stock
in HRA by two remaining shareholders, this note was amended whereby, beginning
in December 1995, interest will be payable monthly at 9.75%. The amended note is
unsecured and requires principal payments beginning in December 1997. At March
1996, HRA owed $116,000 (unaudited) pursuant to this amended note agreement.

First Choice --

As of December 31, 1994 and 1995 and March 31, 1996, First Choice
maintained an unsecured note payable to the majority shareholder for $250,000,
$180,000 and $180,000 (unaudited), respectively. The note is due on demand with
interest payable at 8.00%.

Blethen --

Blethen leases offices and a vehicle from the majority shareholder through
informal agreements at a monthly cost of $600 each. In March 1996, the office
lease payments were increased to $1,200 per month. Market rental rates may
differ from these rental payments. Blethen also frequently borrows from the
majority shareholder. Due from shareholders primarily represents advances to the
majority shareholder. Rental expense under the above agreements totaled
approximately $14,000 for fiscal years 1993, 1994 and 1995, respectively, and
approximately $3,600 and $4,200 for the unaudited three months ended April 2,
1995 and March 31, 1996, respectively.

F-34
<PAGE> 94

THE FOUNDING COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Blethen rents an office facility from a shareholder under a month-to-month
agreement. Rent expense related to these facilities was $17,500, $19,000 and
$24,000 during the fiscal years 1993, 1994 and 1995, respectively, and $6,000
during the unaudited three months ended April 2, 1995 and March 31, 1996.

As of December 31, 1994 and 1995 and March 31, 1996, Blethen had advances
to shareholders of $185,236, $194,163 and $231,328 (unaudited), respectively.

13. COMMITMENTS AND CONTINGENCIES:

Certain of the Founding Companies have employment agreements with certain
executive officers, management personnel and former owners of businesses
acquired by the Founding Companies that provide for annual salaries,
cost-of-living adjustments, additional compensation in the form of performance
based bonuses and, for certain employees, options to purchase shares of common
stock. Certain agreements include a covenant against competition with the
respective Founding Companies, which extends for a period of time after
termination. These agreements generally continue until terminated by the
employee or the Founding Company.

HRA is involved in a lawsuit with its former workers' compensation
insurance carrier in which HRA is disputing the amount of insurance premiums
owed in fiscal 1993 and 1994 and a portion of fiscal 1995. A judgment has been
rendered against HRA for approximately $718,000, which is inclusive of the
disputed payments plus accrued interest. HRA has filed an appeal of this
judgment and is negotiating a settlement. HRA provided reserves for these
disputed amounts in the years in which they arose. Accordingly, management
believes that the ultimate resolution of this matter will not have a materially
adverse affect on the combined financial position or results of operations of
the Founding Companies.

The Founding Companies are subject to certain other claims and lawsuits
arising in the normal course of business, primarily relating to workers'
compensation and other employee related matters. The Founding Companies maintain
various insurance coverages in order to minimize the financial risk associated
with certain of these claims. The Founding Companies have provided for certain
of these actions in the accompanying combined financial statements and, in the
opinion of management of the Founding Companies, any uninsured losses resulting
from the ultimate resolution of these matters will not be material to the
Founding Companies' combined financial position or results of their combined
operations.

14. NONCANCELABLE OPERATING LEASES:

Certain of the Founding Companies lease office space under noncancelable
operating leases. As discussed in Note 12, certain of these facilities are
leased from a related party. Future minimum payments required under operating
leases that have an initial or remaining noncancelable lease term in excess of
one year at December 31, 1995, are as follows:

<TABLE>
<S> <C>
1996............................................. $1,382,041
1997............................................. 1,039,435
1998............................................. 839,839
1999............................................. 634,311
2000............................................. 472,734
Thereafter....................................... 78,000
----------
$4,446,360
==========
</TABLE>

Rent expense totaled approximately $636,000, $870,000 and $1,123,000 for
fiscal years 1993, 1994 and 1995, respectively. Unaudited rent expense was
$229,000 and $388,000 for the three months ended March 31, 1995 and March 31,
1996, respectively.

F-35
<PAGE> 95

THE FOUNDING COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

15. SUBSEQUENT EVENTS:

In conjunction with the shareholder transaction referred to in Note 12 and
other matters, HRA advanced $250,000 to two of its shareholders.

In April 1996, HRA settled a dispute with a professional firm that had
previously represented HRA in certain actions related to workers' compensation
insurance and received cash of approximately $245,000.

On May 17, 1996, Maxwell entered into a debt agreement with a bank which
provided for a $1.75 million term loan. The loan is secured by Maxwell's
accounts receivable. Accrued interest is due and payable monthly at a rate of
8.25%. The outstanding principal balance plus unpaid accrued interest is due
November 1, 1996.

16. EVENTS SUBSEQUENT TO THE DATE OF REPORT OF INDEPENDENT
PUBLIC ACCOUNTANTS (UNAUDITED):

In June 1996, StaffMark entered into a definitive agreement to acquire the
individual Founding Companies.

In connection with the Mergers, the Founding Companies will dividend
certain assets to their shareholders, consisting of automobiles, cash surrender
value of officers' life insurance, land and buildings, with an aggregate
carrying value of approximately $349,000 as of March 31, 1996. In addition, the
Founding Companies plan to make distributions of cash of approximately
$3,894,000 prior to the Mergers, which represent the S Corporation Accumulated
Adjustment Accounts of certain of the Founding Companies. Had these transactions
been recorded at March 31, 1996, the effect on the accompanying combined balance
sheet would be a decrease in total assets and shareholders' equity of
approximately $4,243,000.

Concurrent with the Mergers, certain of the Founding Companies will enter
into agreements with their shareholders to lease land and buildings used in the
operations of the Founding Companies for negotiated amounts and terms.
Furthermore, certain of the shareholders will enter into employment agreements
with StaffMark which provide for a set base salary, participation in future
incentive bonus plans, certain other benefits and a covenant against competition
following termination of such persons' employment.

F-36
<PAGE> 96

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Brewer Personnel Services, Inc.:

We have audited the accompanying balance sheets of Brewer Personnel
Services, Inc. (the "Company"), as of January 1, 1995 and December 31, 1995, and
the related statements of income, shareholders' equity and cash flows for each
of the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Brewer Personnel Services,
Inc. as of January 1, 1995 and December 31, 1995, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995 in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Little Rock, Arkansas,
May 24, 1996.

F-37
<PAGE> 97

BREWER PERSONNEL SERVICES, INC.

BALANCE SHEETS

JANUARY 1, DECEMBER 31, MARCH 31,
1995 1995 1996
---------- ------------ -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................ $ 108,066 $ 319,159 $ 328,558
Accounts receivable, net of allowance for doubtful
accounts of $34,308, $214,187 and $205,174,
respectively...................................... 2,703,493 4,798,476 6,072,332
Prepaid expenses and other........................... 191,838 253,143 374,524
---------- ------------ -----------
Total current assets......................... 3,003,397 5,370,778 6,775,414
PROPERTY AND EQUIPMENT, net............................ 486,510 796,930 1,003,601
INTANGIBLE ASSETS, net................................. 282,215 15,555,459 18,844,004
OTHER ASSETS:
Related party notes receivable....................... 264,664 -- --
Other................................................ 17,262 29,192 32,960
---------- ------------ -----------
Total other assets........................... 281,926 29,192 32,960
---------- ------------ -----------
$4,054,048 $ 21,752,359 $26,655,979
========== ============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable..................................... $ 179,063 $ 272,329 $ 347,224
Outstanding checks................................... 135,020 226,307 408,346
Payroll and related liabilities...................... 538,468 1,020,973 1,322,864
Reserve for workers' compensation claims............. 130,991 775,801 722,282
Line of credit....................................... 725,000 309,068 1,060,774
Current maturities of long-term debt................. 126,584 882,487 1,321,035
Accrued interest and other........................... 11,565 375,777 309,410
---------- ------------ -----------
Total current liabilities.................... 1,846,691 3,862,742 5,491,935
LONG-TERM DEBT, less current maturities................ 97,154 15,103,831 17,876,637
COMMITMENTS AND CONTINGENCIES (Notes 9 through 13)
SHAREHOLDERS' EQUITY:
Common stock, no par value in 1994 and $.01 par value
in 1995 and 1996; authorized shares of 1,000 in
1994, and 10,000 in 1995 and 1996; shares issued
and outstanding of 117.5 in 1994 and 1995 and
132.5 in 1996..................................... 40,424 1 1
Paid-in capital...................................... -- 98,059 497,208
Subscription receivable.............................. -- -- (80,000)
Retained earnings.................................... 2,069,779 2,687,726 2,870,198
---------- ------------ -----------
Total shareholders' equity................... 2,110,203 2,785,786 3,287,407
---------- ------------ -----------
$4,054,048 $ 21,752,359 $26,655,979
========== ============ ===========
</TABLE>

The accompanying notes to financial statements
are an integral part of these balance sheets.

F-38
<PAGE> 98

BREWER PERSONNEL SERVICES, INC.

STATEMENTS OF INCOME

<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL YEARS -------------------------
----------------------------------------- APRIL 2, MARCH 31,
1993 1994 1995 1995 1996
----------- ----------- ----------- ---------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
SERVICE REVENUES............. $12,313,300 $27,894,455 $43,874,246 $7,489,757 $13,866,251
COST OF SERVICES............. 10,062,704 22,906,230 35,115,355 6,280,674 10,953,381
----------- ----------- ----------- ---------- -----------
Gross profit....... 2,250,596 4,988,225 8,758,891 1,209,083 2,912,870
OPERATING EXPENSES:
Selling, general and
administrative.......... 1,622,737 3,483,070 5,804,348 856,257 2,035,310
Depreciation and
amortization............ 121,395 255,895 590,066 67,284 264,584
----------- ----------- ----------- ---------- -----------
Operating income... 506,464 1,249,260 2,364,477 285,542 612,976
OTHER INCOME (EXPENSE):
Interest expense........... (54,005) (92,132) (800,704) (21,801) (424,893)
Interest and other
income.................. 25,150 19,653 22,765 13,578 11,389
----------- ----------- ----------- ---------- -----------
Net income......... $ 477,609 $ 1,176,781 $ 1,586,538 $ 277,319 $ 199,472
=========== =========== =========== ========== ===========
</TABLE>

The accompanying notes to financial statements
are an integral part of these statements.

F-39
<PAGE> 99

BREWER PERSONNEL SERVICES, INC.

STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK
------------------ PAID-IN SUBSCRIPTION RETAINED
SHARES AMOUNT CAPITAL RECEIVABLE EARNINGS TOTAL
------ -------- -------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, January 3, 1993................... 117.5 $ 37,900 $ -- $ -- $ 807,985 $ 845,885
Net income............................... -- -- -- -- 477,609 477,609
Contribution............................. -- 2,524 -- -- -- 2,524
Dividends................................ -- -- -- -- (216,325) (216,325)
----- -------- -------- -------- ---------- ----------
BALANCE, January 2, 1994................... 117.5 40,424 -- -- 1,069,269 1,109,693
Net income............................... -- -- -- -- 1,176,781 1,176,781
Dividends................................ -- -- -- -- (176,271) (176,271)
----- -------- -------- -------- ---------- ----------
BALANCE, January 1, 1995................... 117.5 40,424 -- -- 2,069,779 2,110,203
Change in the par value of shares of
common stock from no par to $.01 per
share................................. -- (40,423) 40,423 -- -- --
Net income............................... -- -- -- -- 1,586,538 1,586,538
Contribution............................. -- -- 57,636 -- -- 57,636
Dividends................................ -- -- -- -- (968,591) (968,591)
----- -------- -------- -------- ---------- ----------
BALANCE, December 31, 1995................. 117.5 1 98,059 -- 2,687,726 2,785,786
Net income (Unaudited)................... -- -- -- -- 199,472 199,472
Dividends (Unaudited).................... -- -- -- -- (17,000) (17,000)
Exercise of stock options (Unaudited).... 5.0 -- 80,000 (80,000) -- --
Shares issued in conjunction with
purchase of On Call (Unaudited)....... 10.0 -- 319,149 -- -- 319,149
----- -------- -------- -------- ---------- ----------
BALANCE, March 31, 1996 (Unaudited)........ 132.5 $ 1 $497,208 $(80,000) $2,870,198 $3,287,407
===== ======== ======== ======== ========== ==========
</TABLE>

The accompanying notes to financial statements
are an integral part of these statements.

F-40
<PAGE> 100

BREWER PERSONNEL SERVICES, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL YEARS ------------------------
-------------------------------------- APRIL 2, MARCH 31,
1993 1994 1995 1995 1996
---------- ---------- ------------ ---------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................ $ 477,609 $1,176,781 $ 1,586,538 $ 277,319 $ 199,472
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation and amortization.......... 121,395 255,895 590,066 67,284 264,584
Provision for bad debts................ 6,664 24,058 169,879 3,270 111
Net (gain) loss on sales of property
and equipment........................ (672) (5,066) 4,095 -- --
Change in operating assets and
liabilities, net of effects of
acquisitions:
Accounts receivable.................. (870,585) (963,971) (334,940) (89,684) (1,014,175)
Prepaid expenses and other........... (86,090) (49,960) (44,025) 23,126 (96,381)
Other assets......................... -- (16,152) (6,101) (4,555) (2,099)
Accounts payable..................... (252,876) 88,208 21,210 (72,772) (24,368)
Outstanding checks................... 68,552 66,468 (508,117) 69,886 182,039
Payroll and related liabilities...... 131,887 241,001 (270,377) 352,805 83,862
Reserve for workers' compensation
claims............................ 54,600 76,391 359,810 85,652 (53,519)
Accrued interest and other........... (32,727) (112) 37,185 11,589 (231,471)
---------- ---------- ----------- ---------- ----------
Net cash provided by (used in)
operating activities............ (382,243) 893,541 1,605,223 723,920 (691,945)
---------- ---------- ----------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Aaron...................... (200,000) -- -- -- --
Acquisition of Caldwell................... -- -- (11,500,000) -- --
Acquisition of On Call.................... -- -- -- -- (3,000,000)
Capital expenditures...................... (130,665) (253,373) (414,569) (21,765) (188,466)
Proceeds from release of restricted
investments............................ 750,000 -- -- -- --
Acquisition of training licenses and
rights................................. -- -- (65,262) -- --
Proceeds from the sales of property and
equipment.............................. 10,000 19,067 16,652 -- --
Advances of notes receivable.............. (35,129) (220,445) (40,000) (31,894) --
Receipts on notes receivable.............. 48,116 110,000 -- -- --
---------- ---------- ----------- ---------- ----------
Net cash provided by (used in)
investing activities............ 442,322 (344,751) (12,003,179) (53,659) (3,188,466)
---------- ---------- ----------- ---------- ----------
</TABLE>

The accompanying notes to financial statements
are an integral part of these statements.

F-41
<PAGE> 101

BREWER PERSONNEL SERVICES, INC.

STATEMENTS OF CASH FLOWS (CONTINUED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL YEARS -------------------------
------------------------------------- APRIL 2, MARCH 31,
1993 1994 1995 1995 1996
---------- ---------- ----------- ---------- ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt............. $ 85,524 $1,584,500 $13,366,512 $ -- $ 4,251,706
Payments on debt........................... (103,805) (1,920,296) (1,919,865) (335,482) (288,646)
Cash dividends............................. (163,346) (176,271) (623,484) (363,999) (17,000)
Contributions from shareholder............. 2,524 -- 57,636 -- --
Deferred financing costs................... -- -- (271,750) -- (56,250)
---------- ---------- ----------- ---------- ------------
Net cash (used in) provided by
financing activities............. (179,103) (512,067) 10,609,049 (699,481) 3,889,810
---------- ---------- ----------- ---------- ------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS................................ (119,024) 36,723 211,093 (29,220) 9,399
CASH AND CASH EQUIVALENTS, beginning of
period..................................... 190,367 71,343 108,066 108,066 319,159
---------- ---------- ----------- ---------- ------------
CASH AND CASH EQUIVALENTS, end of period..... $ 71,343 $ 108,066 $ 319,159 $ 78,846 $ 328,558
========== ========== =========== ========== ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Interest paid.............................. $ 51,529 $ 107,222 $ 427,456 $ 11,115 $ 608,594
========== ========== =========== ========== ============
Non-cash transactions:
Notes payable issued in conjunction with
acquisitions.......................... $ 299,010 $ -- $ 3,100,000 $ -- $ --
========== ========== =========== ========== ============
Distribution of notes receivable to
shareholders.......................... $ -- $ -- $ 345,107 $ -- $ --
========== ========== =========== ========== ============
Issuance of subscription receivable in
conjunction with the exercise of stock
options............................... $ -- $ -- $ -- $ -- $ 80,000
========== ========== =========== ========== ============
</TABLE>

The accompanying notes to financial statements
are an integral part of these statements.

F-42
<PAGE> 102

BREWER PERSONNEL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization --

Brewer Personnel Services, Inc. (the "Company") was incorporated in the
state of Arkansas on June 27, 1988. The Company's primary business purpose is to
provide temporary personnel services. The Company is headquartered in
Fayetteville, Arkansas and as of March 31, 1996, operated staffing offices in
Arkansas, Georgia, Colorado, Virginia and Tennessee.

In June 1995, the Company opened the Brewer Career Center, which provides
training services to temporary personnel. In conjunction with opening the
facility, the Company acquired certain training licenses and rights from Career
Blazers Training Services, Inc.

Fiscal Periods --

The Company's fiscal period ends on the Sunday closest to month end. The
fiscal years 1993, 1994 and 1995 each included 52 weeks. The unaudited interim
periods included in the accompanying financial statements each included 13
weeks.

Interim Financial Statements --

The accompanying interim financial statements and related disclosures have
not been audited by independent accountants. However, they have peen prepared in
conformity with the accounting principles stated in the audited financial
statements for the three years in the period ended December 31, 1995, and
include all adjustments of a normal, recurring nature which, in the opinion of
management, are necessary to present fairly the financial position of the
Company and the results of operations and cash flows for each of the periods
presented. The operating results for the interim periods presented are not
necessarily indicative of results for the full year.

Use of Estimates --

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses and disclosure of contingent assets and liabilities. The estimates
and assumptions used in preparing the accompanying financial statements are
based upon management's evaluation of the relevant facts and circumstances as of
the date of the financial statements. However, actual results may differ from
the estimates and assumptions used in preparing the accompanying financial
statements.

Revenue Recognition --

Service revenues are recognized as income at the time staffing services are
provided.

Cash and Cash Equivalents --

For statement of cash flow purposes, the Company considers cash on deposit
with financial institutions and all highly liquid investments with original
maturities of three months or less to be cash equivalents.

Accounts Receivable --

The Company maintains allowances for potential losses which management
believes are adequate to absorb losses to be incurred in realizing the amounts
recorded in the accompanying financial statements. Included in accounts
receivable in the accompanying balance sheets are unbilled amounts of $277,351,
$541,906 and $1,121,175 (unaudited) at January 1, 1995, December 31, 1995 and
March 31, 1996, respectively.

F-43
<PAGE> 103

BREWER PERSONNEL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Property and Equipment --

Property and equipment are recorded at cost and are depreciated or
amortized on a straight-line basis over the estimated useful lives of the assets
which are as follows:

<TABLE>
<S> <C>
Office equipment.................................................... 5 years
Computer equipment.................................................. 5 years
Vehicles............................................................ 5 years
Computer software................................................... 3 years
Leasehold improvements.............................................. 3 years
</TABLE>

Additions that extend the lives of the assets are capitalized while repairs
and maintenance costs are expensed as incurred. When property and equipment are
retired, the cost of the property and equipment and the related accumulated
depreciation or amortization are removed from the balance sheet and any
resultant gain or loss is recorded.

Intangible Assets --

Intangible assets primarily consist of goodwill, which is amortized using
the straight-line method over periods of 15 to 30 years. Deferred financing
costs are amortized over the life of the respective debt obligation using a
method which approximates the interest method. Intangibles associated with
noncompete agreements are amortized using the straight-line method over the life
of the respective agreements. The Company regularly evaluates whether events and
circumstances have occurred which may indicate the carrying amount of goodwill
or other intangible assets may warrant revision or may not be recoverable. When
factors indicate that certain intangible assets should be evaluated for possible
impairment, the Company uses an estimate of the future undiscounted net cash
flows of the related assets over their remaining life in measuring whether the
assets are recoverable. As of January 1, 1995, December 31, 1995 and March 31,
1996, management considered the Company's intangible assets to be fully
recoverable.

Workers' Compensation --

The Company self-insures certain risks related to workers' compensation
claims. The estimated costs of existing and future claims are accrued as
incidents occur based upon historical loss development trends and may be
subsequently revised based on developments relating to such claims. The Company
engages the services of a third party actuary to assist with the development of
these cost estimates.

Accounting for Stock Options --

During 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123, "Accounting for Stock Based
Compensation" ("SFAS 123"), which encourages all companies to recognize
compensation expense based on the fair value, at grant date, of instruments
issued pursuant to stock based compensation plans. SFAS 123 requires the fair
value of the instruments granted, which is measured pursuant to the provisions
of the statement, be recognized as compensation expense on a straight-line basis
over the vesting period of the instrument. However, the statement also allows
companies to continue to measure compensation costs for these instruments using
the method of accounting prescribed by Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" ("APB 25"). Companies electing to
account for stock based compensation plans pursuant to the provisions of APB 25
must make pro forma disclosures of net income as if the fair value method
defined in SFAS 123 had been applied. The Company has elected to account for its
stock options under the provisions of APB 25 and has included the disclosures
required by SFAS 123 in Note 8.

F-44
<PAGE> 104

BREWER PERSONNEL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Fair Value of Financial Instruments --

The Company's financial instruments include cash and cash equivalents,
related party notes receivable and its debt obligations. Management believes
that these instruments bear interest at rates which approximate prevailing
market rates for instruments with similar characteristics and, accordingly, that
the carrying values for these instruments are reasonable estimates of fair
value.

2. BUSINESS COMBINATIONS:

Aaron Temporary Services, Inc. --

On November 22, 1993, the Company acquired certain assets of Aaron
Temporary Services, Inc. ("Aaron"). Aaron was engaged in providing temporary
personnel services in central and northeast Arkansas. The total purchase price
of $527,600 was comprised of a cash payment of $200,000 and the issuance of a
note with payments, including interest, totaling $327,600. The acquisition has
been accounted for as a purchase, and the results of Aaron have been included in
the accompanying financial statements since the date of acquisition. The cost of
the acquisition has been allocated on the basis of the estimated fair market
value of the assets acquired. The assets acquired have been recorded at
historical, depreciated cost, which approximated fair value as of the
acquisition date, with the remaining acquisition costs of $25,000 being recorded
as goodwill.

Caldwell Services, Inc. --

On July 10, 1995, the Company acquired the stock of E.P. Enterprises
Corporation, d.b.a. Caldwell Services, Inc. ("Caldwell"). Caldwell is engaged in
providing temporary personnel services through five staffing offices located in
Georgia. The acquisition has been accounted for as a purchase, and the results
of Caldwell have been included in the accompanying financial statements since
the date of acquisition. The cost of the acquisition has been allocated on the
basis of the estimated fair market value of the assets and liabilities acquired.

On Call Employment Services, Inc. (Unaudited) --

On February 2, 1996, the Company acquired the stock of On Call Employment
Services, Inc. ("On Call"). On Call is engaged in providing temporary personnel
services through four staffing offices in Colorado. The acquisition has been
accounted for as a purchase, and the results of On Call have been included in
the accompanying financial statements since the date of acquisition. The cost of
the acquisition has been allocated on the basis of the estimated fair market
value of the assets and liabilities acquired.

Total consideration paid for On Call was approximately $3.8 million which
was comprised of cash totaling $3 million, including $360,000 associated with a
noncompete agreement, 10 shares of the Company's common stock valued at
approximately $320,000 and the assumption of liabilities totaling approximately
$480,000. The assets acquired have been recorded at historical, depreciated
cost, which approximated fair value as of the acquisition date, with the
remaining acquisition costs of approximately $3.1 million being recorded as
goodwill.

F-45
<PAGE> 105

BREWER PERSONNEL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The unaudited consolidated revenues and net income on a pro forma basis as
though Aaron, Caldwell and On Call had been acquired as of the beginning of the
Company's 1993 fiscal year are as follows:

<TABLE>
<CAPTION>
FISCAL YEAR FIRST QUARTER
--------------------------------------- -------------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues................ $53,304,487 $55,546,403 $67,406,685 $14,731,259 $14,993,342
=========== =========== =========== =========== ===========
Net income.............. $ 1,700,281 $ 939,446 $ 2,091,956 $ 321,380 $ 223,822
=========== =========== =========== =========== ===========
</TABLE>

Chad J. Brewer, Incorporated --

In June 1995, the Company entered into an agreement to merge its activities
with Chad J. Brewer, Incorporated (a Virginia corporation, "Chad Brewer"), which
was owned by a related party. The Company issued 17.5 shares of common stock in
exchange for all outstanding shares of Chad Brewer. This merger has been
accounted for as a pooling-of-interests. Accordingly, the accompanying financial
statements have been prepared as if the merger had occurred at the beginning of
fiscal year 1993.

Prior to the merger, the Company maintained a license agreement which
entitled Chad Brewer to do business in the state of Virginia as Brewer Personnel
Services and to use certain information of the Company. In addition, the Company
provided payroll administration, data processing and accounts receivable
financing services to Chad Brewer.

3. PROPERTY AND EQUIPMENT:

Property and equipment consisted of the following:

JANUARY 1, DECEMBER 31, MARCH 31,
1995 1995 1996
---------- ------------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Office equipment.................................. $ 243,153 $ 419,606 $ 620,919
Computer equipment................................ 382,068 687,097 736,008
Vehicles.......................................... 167,678 133,722 133,722
Computer software................................. 44,880 62,653 79,426
Leasehold improvements............................ -- 31,483 37,376
--------- ----------- -----------
837,779 1,334,561 1,607,451
Less accumulated depreciation and
amortization................................. 351,269 537,631 603,850
--------- ----------- -----------
$ 486,510 $ 796,930 $ 1,003,601
========= =========== ===========
</TABLE>

Depreciation and amortization expense related to property and equipment for
fiscal years 1993, 1994 and 1995 totaled $68,159, $149,558 and $198,859,
respectively. Unaudited depreciation and amortization expense for the three
months ended April 2, 1995 and March 31, 1996 totaled $38,318 and $66,795,
respectively.

F-46
<PAGE> 106

BREWER PERSONNEL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

4. INTANGIBLE ASSETS:

Intangible assets consisted of the following:

JANUARY 1, DECEMBER 31, MARCH 31,
1995 1995 1996
---------- ------------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Goodwill...................................... $ 25,000 $ 15,356,334 $18,429,368
Deferred financing costs...................... -- 271,750 328,000
Noncompete agreements......................... 299,010 299,010 659,010
Other......................................... 75,000 140,262 140,262
--------- ------------ -----------
399,010 16,067,356 19,556,640
Less accumulated amortization............ 116,795 511,897 712,636
--------- ------------ -----------
$ 282,215 $ 15,555,459 $18,844,004
========= ============ ===========
</TABLE>

Amortization expense related to intangible assets totaled $53,236, $106,337
and $391,207 for fiscal years 1993, 1994 and 1995, respectively. Unaudited
amortization expense related to intangible assets totaled $28,966 and $197,789
for the three months ended April 2, 1995 and March 31, 1996, respectively.

5. DEBT:

Line of credit balances consisted of the following:

JANUARY 1, DECEMBER 31, MARCH 31,
1995 1995 1996
---------- ------------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Line of credit with Boatmen's National Bank of
St. Louis ("Boatmen's"). Maximum borrowings
equal the lesser of $6 million or 85% of the
Company's eligible accounts receivable
balance reduced by the letters of credit
issued as security for the Company's
workers' compensation obligations. Interest
payable monthly at a variable rate which
ranged from 9.75% to 10.25% and averaged
9.83% during the three months ended March
31, 1996 and 10.23% during the year ended
December 31, 1995. Principal due on June 29,
1998. Secured by the assets and common stock
of the Company and partially guaranteed by
certain shareholders........................ $ -- $ 309,068 $ 1,060,774
Line of credit, interest payable quarterly at
prime, 8.0% as of January 1, 1995 and
averaging 6.8% for the year then ended.
Secured by accounts receivable and
guaranteed by certain
shareholders................................ 725,000 -- --
--------- ------------ -----------
$ 725,000 $ 309,068 $ 1,060,774
========= ============ ===========
</TABLE>

F-47
<PAGE> 107

BREWER PERSONNEL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Long-term debt consisted of the following:

JANUARY 1, DECEMBER 31, MARCH 31,
1995 1995 1996
---------- ------------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Term loan note with Boatmen's. Interest
payable monthly at a variable rate which
ranged from 8.75% to 10.50% and averaged
8.97% during the three months ended March
31, 1996 and 9.56% during the year ended
December 31, 1995. Principal due in
quarterly installments beginning October 1,
1995 through maturity on June 30, 2001.
Secured by the assets and common stock of
the Company and partially guaranteed by
certain shareholders........................ $ -- $ 12,750,000 $16,000,000
Note payable to the previous owner of
Caldwell, interest at 8%, payable quarterly.
Principal to be paid in equal annual
installments beginning June 30, 1998 through
June 30, 2001 or in full upon a change in
control of the Company. Secured by a lien on
the assets of the Company and guaranteed by
certain shareholders........................ -- 3,100,000 3,100,000
Note payable to the previous owner of Aaron,
imputed interest of 6%, payable in monthly
installments of $9,100. Secured by the
personal assets of the shareholders......... 197,235 97,332 71,341
Other notes payable, maturing through 1997
with interest ranging from 6.00% to 6.99%.
Secured by certain assets of the Company.... 26,503 38,986 26,331
--------- ------------ -----------
223,738 15,986,318 19,197,672
Less current maturities.................. 126,584 882,487 1,321,035
--------- ------------ -----------
$ 97,154 $ 15,103,831 $17,876,637
========= =========== ===========
</TABLE>

The term loan note and line of credit with Boatmen's were entered into in
conjunction with the purchase of Caldwell. Interest on these facilities is
computed, at the Company's option, at either the LIBOR rate plus incremental
increases related to the Company's operating leverage, as defined in the
agreement, or the prime lending rate plus incremental increases related to the
Company's operating leverage. In September 1995, the Company signed a rate cap
transaction agreement with Boatmen's to freeze the LIBOR rate component of the
interest rate on a portion of the term loan note at 8.50% effective September
30, 1995 through September 30, 1998.

Under the terms of the credit agreement with Boatmen's, the Company is
required, among other restrictions, to maintain certain financial ratios.

In conjunction with the purchase of On Call, the Company amended its term
loan note and line of credit. Under the terms of the amendment, the term loan
note and the maximum borrowings under the line of credit were increased to $16
million and $6 million, respectively.

F-48
<PAGE> 108

BREWER PERSONNEL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Annual maturities of long-term debt subsequent to December 31, 1995 are as
follows:

<TABLE>
<S> <C>
1996.......................................... $ 882,487
1997.......................................... 1,444,763
1998.......................................... 3,146,568
1999.......................................... 3,212,500
2000.......................................... 3,900,000
Thereafter.................................... 3,400,000
-----------
$15,986,318
===========
</TABLE>

6. INCOME TAXES:

The Company operates as an S Corporation for federal and state income tax
reporting purposes. Accordingly, no provision for income taxes has been recorded
in the accompanying financial statements as such taxes are liabilities of the
individual shareholders.

The Company's tax returns are subject to examination by federal and state
taxing authorities. If such examinations result in a change to the Company's
reported income or loss, the taxable income or loss reported by the individual
shareholders could also change.

7. WORKERS' COMPENSATION:

The Company is self-insured for certain workers' compensation claims and is
regulated by the Workers' Compensation Insurance Commissions in the states of
Arkansas and Georgia. The Company had purchased insurance during 1993 and 1994
for medical claims which exceed $25,000 and other claims which exceed $350,000.
During 1995 the company purchased insurance which covers claims which exceed
$50,000. The Company maintains letters of credit with a bank to cover any
potential unpaid claims. At December 31, 1995, these letters of credit were
$750,000 and $500,000 for Arkansas and Georgia, respectively. In January 1996,
the letter of credit for Arkansas was reduced to $600,000. Workers' compensation
expense totaled $405,927, $738,663 and $1,317,579 for fiscal years 1993, 1994
and 1995, respectively. Unaudited workers' compensation expense totaled $266,485
and $304,342 for the three months ended April 2, 1995 and March 31, 1996,
respectively.

8. COMMON STOCK AND STOCK OPTIONS:

On May 30, 1995, the Company amended and restated its Articles of
Incorporation to increase the number of authorized shares of common stock from
1,000 to 10,000 and to change the par value of the shares of common stock from
no par to $.01 per share.

The Company has granted stock options to certain key employees. These
options were granted at fair value as determined by management, are exercisable
in installments and expire from June 30, 1999 to February 26, 2001. The
employment agreement for a certain executive granted an option to receive three
additional shares of the Company's common stock upon the employee's anniversary
date of April 17, 1996.

F-49
<PAGE> 109

BREWER PERSONNEL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

A summary of stock option activity follows:

<TABLE>
<CAPTION>
SHARES UNDER WEIGHTED AVERAGE
OPTION PRICE PER SHARE
------------ ----------------
<S> <C> <C>
Outstanding, January 3, 1993............................ -- $ --
Outstanding, January 2, 1994............................ -- --
Granted............................................... 5.0 16,000
----- --------
Outstanding, January 1, 1995............................ 5.0 16,000
Granted............................................... 7.5 30,666
----- --------
Outstanding, December 31, 1995.......................... 12.5 24,800
Granted (Unaudited)................................... 1.0 35,000
Exercised (Unaudited)................................. (5.0) (16,000)
----- --------
Outstanding, March 31, 1996 (Unaudited)................. 8.5 $ 31,176
===== ========
Exercisable, December 31, 1995.......................... 5.0 $ 16,000
===== ========
Exercisable, March 31, 1996 (Unaudited)................. -- $ --
===== ========
</TABLE>

In March 1996, a key employee exercised his stock options and received five
shares of the Company's common stock. In payment for this exercise, the Company
executed a note receivable from this employee for $80,000, which represented the
entire exercise price of these options. This note has been reflected as a
subscription receivable and is classified as contra equity in the accompanying
financial statements.

As discussed in Note 1, the Company has elected to account for its stock
options under the provisions of APB 25. Accordingly, pursuant to the
requirements of SFAS 123, the following disclosures are presented to reflect the
Company's pro forma net income for the year ended December 31, 1995 and for the
unaudited three month period ended March 31, 1996 as if the fair value method of
accounting prescribed by SFAS 123 had been used. In preparing these disclosures,
the Company has determined the value of all options granted during 1995 and the
unaudited three month period ended March 31, 1996 using the minimum value
method, as discussed in SFAS 123, and based on the following weighted average
assumptions used for grants:

THREE MONTHS
FISCAL ENDED
1995 MARCH 31, 1996
---------- --------------
(UNAUDITED)
<S> <C> <C>
Risk-free interest rate...................................... 6.5% 5.6%
Expected dividend yield...................................... 0% 0%
Expected life................................................ 2.5 years 2.0 years
</TABLE>

Options were assumed to be exercised upon vesting for the purpose of this
valuation. Using these assumptions, the fair value of the stock options granted
in 1995 and the unaudited three months ended March 31, 1996 was approximately
$36,000 and $4,000, respectively. Had compensation expense been determined
consistent with SFAS 123, utilizing the assumptions above and the straight-line
amortization method over the vesting period, the Company's net income would have
been reduced to the following pro forma amounts:

THREE MONTHS
FISCAL ENDED
1995 MARCH 31, 1996
---------- --------------
(UNAUDITED)
<S> <C> <C>
Net income, as reported................................... $1,586,538 $199,472
========== ========
Pro forma net income...................................... $1,578,367 $195,991
========== ========
</TABLE>

F-50
<PAGE> 110

BREWER PERSONNEL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

9. RELATED PARTY TRANSACTIONS:

The Company rents office space from Brewer Investments, a partnership owned
by certain shareholders. The rent expense related to these transactions was
$60,000 for fiscal years 1993, 1994 and 1995. In January 1996, the Company moved
its corporate offices into a new building, which is also owned by Brewer
Investments.

Unaudited rent expense related to these leases was approximately $15,000
and $52,000 for the three months ended April 2, 1995 and March 31, 1996,
respectively. Future minimum lease payments related to this lease as of December
31, 1995 approximate $1,127,000 which have been included in the table in Note
11.

In December 1995, a note receivable from Brewer Investments in the amount
of $345,107 was distributed to the individual shareholders of the Company.

10. COMMITMENTS:

In conjunction with the acquisition of Aaron, the Company entered into an
agreement to pay the former owner $12,000 per month for a five-year period
beginning November 29, 1993, in exchange for consulting services. The expense
associated with this agreement was $12,000 for fiscal year 1993, $144,000 for
fiscal years 1994 and 1995 and $36,000 (unaudited) for the three months ended
April 2, 1995 and March 31, 1996.

The Company has employment agreements with certain executive officers and
management personnel that provide for annual salaries, cost-of-living
adjustments, additional compensation in the form of performance based bonuses
and, for certain employees, options to purchase shares of the Company's common
stock. Certain agreements include a covenant against competition with the
Company, which extends for a period of time after termination. These agreements
generally continue until terminated by the employee or the Company.

The Company has historically paid dividends to its shareholders in amounts
sufficient to cover their estimated tax payments attributable to the respective
share of the Company's net income which will be included in their individual tax
returns. The Company plans to continue this practice in the future as long as it
maintains its S Corporation status.

11. NONCANCELABLE OPERATING LEASES:

The Company leases office space under noncancelable operating leases. As
discussed in Note 9, certain of these facilities are leased from a related
party. Future minimum annual payments required during each of the next five
years under operating leases that had an initial or remaining noncancelable
lease term in excess of one year at December 31, 1995, are as follows:

Rent expense totaled $100,646, $168,956 and $275,460 for fiscal years 1993,
1994 and 1995, respectively. Unaudited rent expense totaled $46,346 and $151,458
for the three months ended April 2, 1995 and March 31, 1996, respectively.

F-51
<PAGE> 111

BREWER PERSONNEL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

12. CONTINGENCIES:

The Company is a party to certain lawsuits primarily involving workers'
compensation claims. Management believes, based in part on consultation from
legal counsel, that the ultimate outcome of these matters will not have a
materially adverse effect on the Company's financial position, liquidity or
results of operations.

In May 1996, the Company was notified by the Arkansas Department of Revenue
of their plans to audit the Company's sales tax returns for the last three
fiscal years. Although the final outcome of the audit can not be estimated,
management is of the opinion that the ultimate resolution of this matter will
not have a material adverse impact on the Company's operating results or
financial condition.

13. EVENTS SUBSEQUENT TO DATE OF REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS (UNAUDITED):

In conjunction with the proposed merger discussed above, certain of the
owners will enter into employment agreements which provide for a set base
salary, participation in future incentive bonus plans, certain other benefits
and a covenant not to compete following termination of such person's employment.

F-52
<PAGE> 112

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To The Prostaff Companies:

We have audited the accompanying combined balance sheets of the companies
identified in Note 1 to the financial statements ("The Prostaff Companies"), as
of December 31, 1994 and 1995, and the related combined statements of income,
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Prostaff Companies as of
December 31, 1994 and 1995, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1995 in
conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Little Rock, Arkansas,
May 24, 1996.

F-53
<PAGE> 113

THE PROSTAFF COMPANIES

COMBINED BALANCE SHEETS

DECEMBER 31,
------------------------ MARCH 31,
1994 1995 1996
---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.............................. $ 228,372 $ 188,145 $ 163,402
Certificates of deposit................................ 152,028 155,154 155,154
Accounts receivable, net of allowance for doubtful
accounts of $10,000, $48,500 and $48,500,
respectively........................................ 2,634,108 3,020,622 3,393,819
Deferred tax asset..................................... 154,601 -- --
Prepaid expenses and other............................. 86,337 135,673 122,465
---------- ---------- ----------
Total current assets........................... 3,255,446 3,499,594 3,834,840
PROPERTY AND EQUIPMENT, net.............................. 640,552 756,983 843,934
OTHER ASSETS:
Cash surrender value of officer's life insurance....... 34,670 41,280 41,280
Other.................................................. 3,675 4,730 4,880
---------- ---------- ----------
Total other assets............................. 38,345 46,010 46,160
---------- ---------- ----------
$3,934,343 $4,302,587 $4,724,934
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of credit......................................... $ 417,000 $ 20,000 $ 176,000
Current maturities of long-term debt................... 61,742 64,872 48,972
Note payable to shareholder............................ -- 30,000 30,000
Accounts payable and accrued liabilities............... 83,413 117,339 110,828
Outstanding checks..................................... 109,084 -- 251,321
Payroll and related liabilities........................ 703,263 1,129,777 1,162,161
Reserve for workers' compensation claims............... 439,444 635,290 636,230
Income taxes payable........................... 54,883 -- --
---------- ---------- ----------
Total current liabilities...................... 1,868,829 1,997,278 2,415,512
LONG-TERM DEBT, less current maturities.................. 170,064 111,459 111,459
DEFERRED INCOME TAXES.................................... 57,885 -- --
COMMITMENTS AND CONTINGENCIES (Notes 6 through 9)........
SHAREHOLDERS' EQUITY:
Common stock, (par values of $.20 to $1.00) authorized
shares of 200,000 in 1994 and 201,000 in 1995 and at
March 31, 1996, shares issued and outstanding of
55,000 in 1994, 55,100 in 1995 and at March 31,
1996................................................ 11,000 11,100 11,100
Retained earnings...................................... 1,826,565 2,182,750 2,186,863
---------- ---------- ----------
Total shareholders' equity..................... 1,837,565 2,193,850 2,197,963
---------- ---------- ----------
$3,934,343 $4,302,587 $4,724,934
========== ========== ==========
</TABLE>

The accompanying notes to combined financial statements
are an integral part of these balance sheets.

F-54
<PAGE> 114

THE PROSTAFF COMPANIES

COMBINED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
--------------------------------------- -----------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- ---------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
SERVICE REVENUES................ $27,244,744 $30,607,744 $34,330,413 $7,534,577 $8,586,165
COST OF SERVICES................ 22,858,206 25,455,432 28,234,379 6,199,908 6,976,562
----------- ----------- ----------- ---------- ----------
Gross profit.......... 4,386,538 5,152,312 6,096,034 1,334,669 1,609,603
OPERATING EXPENSES:
Selling, general and
administrative............. 3,640,825 4,184,021 5,338,844 1,115,577 1,549,108
Depreciation and
amortization............... 114,796 174,998 220,433 47,864 58,113
----------- ----------- ----------- ---------- ----------
Operating income...... 630,917 793,293 536,757 171,228 2,382
OTHER INCOME (EXPENSE):
Interest expense.............. (87,181) (28,689) (20,393) (4,975) (8,351)
Interest income and other..... 60,745 10,987 26,537 7,689 10,082
----------- ----------- ----------- ---------- ----------
INCOME BEFORE PROVISION FOR
INCOME TAXES.................. 604,481 775,591 542,901 173,942 4,113
PROVISION FOR INCOME TAXES...... 205,742 253,847 96,716 96,716 --
----------- ----------- ----------- ---------- ----------
Net income............ $ 398,739 $ 521,744 $ 446,185 $ 77,226 $ 4,113
=========== =========== =========== ========== ==========
</TABLE>

The accompanying notes to combined financial statements
are an integral part of these statements.

F-55
<PAGE> 115

THE PROSTAFF COMPANIES

COMBINED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK
----------------- RETAINED
SHARES AMOUNT EARNINGS TOTAL
------ ------- ---------- ----------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1992......................... 55,000 $11,000 $ 976,186 $ 987,186
Net income....................................... -- -- 398,739 398,739
Dividends........................................ -- -- (25,625) (25,625)
------ ------- ---------- ----------
BALANCE, December 31, 1993......................... 55,000 11,000 1,349,300 1,360,300
Net income....................................... -- -- 521,744 521,744
Dividends........................................ -- -- (44,479) (44,479)
------ ------- ---------- ----------
BALANCE, December 31, 1994......................... 55,000.. 11,000 1,826,565 1,837,565
Net income....................................... -- -- 446,185 446,185
Initial capitalization of Professional........... 100 100 -- 100
Dividends........................................ -- -- (90,000) (90,000)
------ ------- ---------- ----------
BALANCE, December 31, 1995......................... 55,100 11,100 2,182,750 2,193,850
Net income (Unaudited)........................... -- -- 4,113 4,113
------ ------- ---------- ----------
BALANCE, March 31, 1996 (Unaudited)................ 55,100 $11,100 $2,186,863 $2,197,963
====== ======= ========== ==========
</TABLE>

The accompanying notes to combined financial statements
are an integral part of these statements.

F-56
<PAGE> 116

THE PROSTAFF COMPANIES

COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
------------------------------ ---------------------
1993 1994 1995 1995 1996
-------- -------- -------- --------- ---------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income......................................... $398,739 $521,744 $446,185 $ 77,226 $ 4,113
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization................... 114,796 174,998 220,433 47,864 58,113
Provision for deferred income taxes............. (35,138) (20,021) -- -- --
Write-off of net deferred tax assets............ -- -- 96,716 96,716 --
Provision for bad debts......................... 27,561 10,000 38,500 -- --
Loss on sale of property and equipment.......... -- 20,854 -- -- --
Change in operating assets and liabilities, net
of effects of acquisition:
Accounts receivable........................... (637,401) (143,183) (403,041) (369,142) (373,197)
Prepaid expenses and other.................... (38,493) (2,052) (49,336) (59,084) 13,208
Other assets.................................. 2,357 (8,979) (7,665) (1,055) (150)
Accounts payable and accrued liabilities...... 21,229 (10,535) 33,926 20,390 (6,511)
Outstanding checks............................ -- 109,084 (109,084) (109,084) 251,321
Payroll and related liabilities............... 193,651 5,365 426,514 673,346 32,384
Reserve for workers' compensation claims...... 148,385 101,480 195,846 40,806 940
Income taxes payable.......................... (15,039) (19,130) (54,883) (54,883) --
-------- -------- -------- -------- --------
Net cash provided by (used in) operating
activities............................... 180,647 739,625 834,111 363,100 (19,779)
-------- -------- -------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of personnel service business.......... -- -- (30,000) -- --
Capital expenditures............................... (405,265) (293,936) (328,837) (105,985) (145,064)
Proceeds from the sale of property and equipment... -- 1,400 -- -- --
Proceeds from release of restricted investment..... 600,000 -- 152,028 -- --
Purchase of certificates of deposit................ -- -- (155,154) -- --
-------- -------- -------- -------- --------
Net cash provided by (used in) investing
activities............................... 194,735 (292,536) (361,963) (105,985) (145,064)
-------- -------- -------- -------- --------
</TABLE>

The accompanying notes to combined financial statements
are an integral part of these statements.

F-57
<PAGE> 117

THE PROSTAFF COMPANIES

COMBINED STATEMENTS OF CASH FLOWS -- (CONTINUED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
--------------------------------- -------------------------
1993 1994 1995 1995 1996
--------- --------- --------- ----------- ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (payments) borrowings under line of credit... $(125,000) $(158,000) $(397,000) $(355,000) $156,000
Proceeds from note payable to shareholder........ -- -- 30,000 -- --
Payments on note payable to shareholder.......... (530,000) -- -- -- --
Proceeds from issuance of long-term debt......... 290,237 -- -- -- --
Payments on long-term debt....................... -- (58,431) (55,475) (15,163) (15,900)
Proceeds from issuance of common stock........... -- -- 100 -- --
Dividends........................................ (25,625) (44,479) (90,000) -- --
--------- --------- --------- --------- --------
Net cash provided by (used in) financing
activities............................. (390,388) (260,910) (512,375) (370,163) 140,100
--------- --------- --------- --------- --------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS...................................... (15,006) 186,179 (40,227) (113,048) (24,743)
CASH AND CASH EQUIVALENTS, beginning of period..... 57,199 42,193 228,372 228,372 188,145
--------- --------- --------- --------- --------
CASH AND CASH EQUIVALENTS, end of period........... $ 42,193 $ 228,372 $ 188,145 $ 115,324 $163,402
========= ========= ========= ========= ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid.................................... $ 84,708 $ 30,549 $ 21,006 $ 5,363 $ 5,325
========= ========= ========= ========= ========
Income taxes paid................................ $ 242,989 $ 284,847 $ 54,883 $ 54,883 $ --
========= ========= ========= ========= ========
</TABLE>

The accompanying notes to combined financial statements
are an integral part of these statements.

F-58
<PAGE> 118

THE PROSTAFF COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization --

The combined financial statements of The Prostaff Companies (the "Company")
include the activities of Prostaff Personnel, Inc. ("Prostaff"), d.b.a. Prostaff
Staffing Services, Office Staffing and Medical Staffing, Excel Temporary
Staffing, Inc. ("Excel") and Professional Resources, Inc. ("Professional"),
d.b.a. Performance Staffing which have common ownership. All intercompany
transactions have been eliminated in the combined financial statements.

Prostaff was originally incorporated in the state of Arkansas in 1973 as
Dunhill Personnel Agency of Little Rock, Inc. ("Dunhill"). Dunhill changed its
name to Prostaff in 1988. Prostaff's primary business purpose is to provide
temporary personnel services. At March 31, 1996, Prostaff operated staffing
offices in 22 locations in Arkansas. Excel was incorporated in the state of
Arkansas on October 25, 1990 and is engaged in providing temporary personnel
services to one large cosmetics manufacturer in Little Rock, Arkansas which
represents 100% of the revenue and accounts receivable of Excel. Revenues from
this one customer represent 14%, 13% and 14% of combined service revenues for
1993, 1994 and 1995, respectively. Professional was incorporated in the state of
Arkansas on October 24, 1995 ("inception date"). On October 31, 1995,
Professional purchased the assets of an existing temporary personnel service
business in Little Rock, Arkansas for $30,000. This acquisition was accounted
for as a purchase. There was no goodwill recorded in connection with this
acquisition. The combined financial statements of the Company include the
results of operations of Professional from the inception date.

Interim Financial Statements --

The accompanying interim financial statements and related disclosures have
not been audited by independent accountants. However, they have been prepared in
conformity with the accounting principles stated in the audited financial
statements for the three years in the period ended December 31, 1995, and
include all adjustments of a normal recurring nature which, in the opinion of
management, are necessary to present fairly the financial position of the
Company and the results of operations and cash flows for each of the periods
presented. The operating results for the interim periods presented are not
necessarily indicative of results for the full year.

Revenue Recognition --

Service revenues are recognized as income at the time staffing services are
provided.

Use of Estimates --

The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses and disclosure of contingent assets and liabilities. The estimates
and assumptions used in the accompanying financial statements are based upon
management's evaluation of the relevant facts and circumstances as of the date
of the financial statements. Actual results may differ from the estimates and
assumptions used in preparing the accompanying financial statements.

Cash and Cash Equivalents --

F-59
<PAGE> 119

THE PROSTAFF COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Accounts Receivable --

The Company maintains allowances for potential losses which management
believes are adequate to absorb losses to be incurred in realizing the amounts
recorded in the accompanying financial statements. Included in accounts
receivable in the accompanying balance sheets are unbilled amounts of $343,681,
$441,642 and $775,801 (unaudited) at December 31, 1994, 1995 and March 31, 1996,
respectively.

Property and Equipment --

Property and equipment are recorded at cost and are depreciated or
amortized on a straight-line basis over the estimated useful lives of the assets
which are as follows:

<TABLE>
<S> <C>
Office equipment................................................. 5 years
Computer equipment............................................... 5 years
Vehicles......................................................... 5 years
Computer software................................................ 5 years
Leasehold improvements........................................... 10 years
</TABLE>

Workers' Compensation and Employee Health Benefits --

The Company self-insures certain risks related to workers' compensation and
employee health benefit claims. The estimated costs of existing and future
claims are accrued as incidents occur based upon historical loss development
trends and may be subsequently revised based on developments relating to such
claims. The Company engages the services of a third party actuary to assist with
the development of the workers' compensation cost estimates.

Fair Value of Financial Instruments --

The Company's financial instruments include cash and cash equivalents,
certificates of deposit, note payable to shareholder and its other debt
obligations. Management believes that these instruments bear interest at rates
which approximate prevailing market rates for instruments with similar
characteristics and, accordingly, that the carrying values for those instruments
are reasonable estimates of fair value.

Income Taxes --

Prior to 1995, the Company operated as a C Corporation for federal and
state tax reporting purposes. Effective January 1, 1993, the Company adopted the
provisions of Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes" ("SFAS 109"). Under this new statement, deferred income taxes
are provided based on the estimated future tax effects of differences between
the financial statement carrying amounts and the tax basis of existing assets
and liabilities. The adoption of SFAS 109 did not have a material effect on the
Company's financial position or results of operations.

Effective January 1, 1995, the Company elected to be taxed as an S
Corporation for federal and state income tax reporting purposes. Accordingly, no
provision for income taxes has been recorded in the accompanying financial
statements for the period subsequent to January 1, 1995 as such taxes are
liabilities of the individual shareholders. Upon election of S Corporation
status, the Company wrote off net deferred tax assets totaling $96,716 related
to years prior to 1995, which is reflected as provision for income taxes in the
accompanying combined statements of income.

F-60
<PAGE> 120

THE PROSTAFF COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

2. PROPERTY AND EQUIPMENT:

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------- MARCH 31,
1994 1995 1996
-------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Office equipment.................................. $311,414 $ 412,661 $ 470,219
Computer equipment................................ 382,903 477,744 524,916
Vehicles.......................................... 107,900 136,859 140,492
Computer software................................. 113,884 165,635 172,604
Leasehold improvements............................ 83,593 136,949 166,155
-------- ---------- -----------
999,694 1,329,848 1,474,386
Less accumulated depreciation and
amortization................................. 359,142 572,865 630,452
-------- ---------- -----------
$640,552 $ 756,983 $ 843,934
======== ========== ===========
</TABLE>

3. DEBT:

Long-term debt consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- MARCH 31,
1994 1995 1996
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Term note payable to Boatmen's National Bank in the
original amount of $290,237 due in monthly
installments of $6,079, including interest at 5.5%
through August 31, 1998. Secured by certain
equipment of Prostaff and guaranteed by
shareholders...................................... $231,806 $176,331 $ 160,431
Less current maturities............................. 61,742 64,872 48,972
-------- -------- ---------
$170,064 $111,459 $ 111,459
======== ======== =========
</TABLE>

Annual maturities of long-term debt for the years subsequent to December
31, 1995 are $64,872, $68,531 and $42,928 for 1996, 1997 and 1998, respectively.

Line of credit balances consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------- MARCH 31,
1994 1995 1996
-------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Line of credit with Boatmen's Bank. Maximum
borrowings equal the lesser of $1.5 million or 80%
of Prostaff's eligible accounts receivable. Accrues
interest at a variable rate (8.5% at December 31,
1994 and 8.75% at March 31, 1996) and is due upon
demand. Secured by the accounts receivable of
Prostaff and guaranteed by shareholders............ $417,000 $ -- $ 152,000
Line of credit with First Commercial Bank. Maximum
borrowings of $50,000. Interest payable monthly at
9.5%. Due upon demand. Secured by the assets of
Professional and guaranteed by shareholder......... -- 20,000 24,000
-------- ------- ---------
$417,000 $20,000 $ 176,000
======== ======= =========
</TABLE>

F-61
<PAGE> 121

THE PROSTAFF COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Excel also maintains a line of credit with Mercantile Bank which accrues
interest at a variable rate and is due upon demand. Borrowings under the line
are limited to $250,000, secured by the accounts receivable of Excel and are
guaranteed by shareholders. There were no outstanding borrowings under this line
of credit at December 31, 1994, 1995 or March 31, 1996.

4. NOTE PAYABLE TO SHAREHOLDER:

In order to effect the acquisition made by Professional, as discussed in
Note 1, Professional borrowed $30,000 from the sole shareholder and signed a
promissory note dated October 30, 1995. Interest is paid monthly at the rate of
9.25%. The note is due on demand, or if no demand is made, on October 30, 1996.
Total interest paid to the shareholder in 1995 was $246.

During 1993, the Company repaid a $530,000 note payable to shareholder.
Total interest paid to the shareholder in 1993 was $44,200.

5. INCOME TAXES:

Provision (benefit) for income taxes consisted of the following components
for the years ended December 31:

<TABLE>
<CAPTION>
1993 1994
-------- --------
<S> <C> <C>
Current:
Federal....................................................... $213,892 $243,184
State......................................................... 26,988 30,684
-------- --------
240,880 273,868
-------- --------
Deferred:
Federal....................................................... (31,201) (17,778)
State......................................................... (3,937) (2,243)
-------- --------
(35,138) (20,021)
-------- --------
Total................................................. $205,742 $253,847
======== ========
</TABLE>

Provision for income taxes differs from amounts computed by applying the
statutory tax rate to pretax income as a result of certain nondeductible
expenses and the utilization of general business credits as follows:

<TABLE>
<CAPTION>
1993 1994
-------- --------
<S> <C> <C>
Income taxes on pretax income at the statutory rate of 34%...... $205,523 $263,701
Increase (reduction) in tax resulting from:
Nondeductible expenses........................................ 16,779 30,242
State income taxes, net of federal income tax benefit......... 28,049 37,089
Federal general business tax credits.......................... (44,609) (77,185)
-------- --------
$205,742 $253,847
======== ========
</TABLE>

F-62
<PAGE> 122

THE PROSTAFF COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Deferred income taxes reflect the impact of "temporary differences" between
the financial and tax basis of assets and liabilities as measured by enacted tax
laws. The temporary differences which gave rise to deferred tax assets and
liabilities as of December 31, 1993 and 1994 were as follows:

<TABLE>
<CAPTION>
1993 1994
-------- --------
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts.............................. $ 16,465 $ 3,829
Reserve for workers' compensation claims..................... 112,099 150,772
-------- --------
Total deferred tax assets...................................... $128,564 $154,601
======== ========
Deferred tax liabilities:
Accelerated depreciation..................................... $ 51,869 $ 57,885
======== ========
</TABLE>

6. WORKERS' COMPENSATION:

Prostaff is self-insured for certain workers' compensation claims and is
regulated by the Arkansas Workers' Compensation Insurance Commission (the
"Commission"). As a condition to authorization of the self-insurance program in
1991, the Commission required Prostaff to maintain a $750,000 deposit in a
depository considered acceptable by the Commission. In 1993, the Commission
altered the depository requirement and allowed Prostaff to provide the
Commission a $750,000 letter of credit. The letter of credit is guaranteed by
shareholders of the Company. As a condition to providing the letter of credit,
the bank required Prostaff to maintain as security a $150,000 deposit with the
bank. These restricted funds were in certificates of deposit with one year
maturities and are reflected with accrued interest as certificates of deposit in
the accompanying combined balance sheet at December 31, 1994. In 1995, the bank
no longer required the security for the letter of credit. Accordingly, Prostaff
reinvested these funds in 1995, and they are reflected as certificates of
deposit at December 31, 1995. Prostaff has purchased insurance for individual
claims which exceed $200,000 and for aggregate claims which exceed $2.0 million.
Workers' compensation expense totaled $820,569, $728,281 and $765,893 for 1993,
1994 and 1995, respectively. Unaudited workers' compensation expense for the
three months ended March 31, 1995 and 1996 was $184,763 and $129,684,
respectively. Excel and Professional are fully insured for workers'
compensation.

7. EMPLOYEE BENEFIT PLANS:

The Company adopted a defined contribution benefit plan for its eligible
permanent employees, as defined, effective June 1, 1995. This profit sharing
plan, which operates pursuant to an Internal Revenue Code section 401(k)
arrangement, allows eligible employees to contribute on a tax deferred basis up
to 15% of their annual wages, as defined. The Company makes a matching
contribution equal to 50% of the employees' contributions up to a maximum of 6%
of the respective employees' annual wages. Total matching contributions made by
the Company to the plan for the year ended December 31, 1995 were $12,448.

On September 1, 1995, the Company established a cafeteria plan to offer
health, dental, term life, accidental death and disability insurance to its
permanent full-time employees. Employees may also obtain coverage for family
members by making tax deferred contributions to the plan trust. The health
insurance coverage portion of the plan is self-insured by the Company. Pursuant
to this self-insurance program, the Company pays for the approved claims costs
of eligible participants subject to certain individual and family deductibles
and co-payments, as defined. The Company maintains insurance for annual claims
per employee in excess of $10,000 and aggregate claims in excess of an amount
equal to $75.80 multiplied by the number of personnel enrolled in the plan.
Total claims expense for the year ended December 31, 1995 was $35,550.

F-63
<PAGE> 123

THE PROSTAFF COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

8. COMMITMENTS:

The Company has a consulting agreement with the former owner of a temporary
personnel service business the Company acquired in March 1995 which provides for
monthly minimum payments of $5,250 for 36 months through March 1998. The
consulting agreement also includes a covenant against competition with the
Company for a five-year period.

The Company has an employment agreement with one member of management that
provides for a monthly salary of $6,833 through March 1998 and additional
compensation in the form of performance-based bonuses. The employment agreement
also includes a covenant against competition with the Company, which extends
through March 2000, or for two years after termination.

Upon election of S Corporation status effective January 1, 1995, the
Company pays dividends to its shareholders in amounts sufficient to cover their
estimated tax payments attributable to the respective share of the Company's net
income which will be included in their individual tax returns. The Company plans
to continue this practice in the future as long as it retains its S Corporation
status.

9. NONCANCELABLE OPERATING LEASES:

The Company leases office space under noncancelable operating leases.
Future minimum payments required under operating leases that have an initial or
remaining noncancelable lease term in excess of one year at December 31, 1995,
are as follows:

Rent expense totaled $147,835, $197,243 and $258,992 for fiscal years 1993,
1994 and 1995, respectively. Unaudited rent expense for the three months ended
March 31, 1995 and 1996 was $56,700 and $80,269, respectively. The Company
leases the office facilities of its headquarters from a limited liability
corporation ("LLC") owned by the shareholders of the Company. For the fiscal
years 1993, 1994 and 1995, rent paid to the LLC totaled $61,100, $73,761 and
$114,180, respectively. Unaudited rent paid to the LLC was $22,125 for the three
months ended March 31, 1995 and 1996.

10. EVENTS SUBSEQUENT TO DATE OF REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS (UNAUDITED):

In June 1996, the shareholders of the Company entered into a definitive
agreement to merge with StaffMark, Inc. ("StaffMark") in conjunction with
StaffMark's anticipated initial public offering. Prior to or coincident with
this proposed merger, the Company plans to dividend certain assets to the
shareholders consisting of vehicles and the cash surrender value of an officer's
life insurance policy, which had an unaudited aggregate carrying value of
$86,273 as of March 31, 1996. In addition, the Company plans to make a cash
distribution of approximately $751,775 prior to the proposed merger, which
represents the Company's estimated S Corporation Accumulated Adjustment Account
at March 31, 1996. Had these transactions occurred as of March 31, 1996, the
effect on the accompanying unaudited balance sheet would be a decrease in total
assets and shareholders' equity of approximately $838,048.

In conjunction with the proposed merger discussed above, certain of the
shareholders will enter into employment agreements which provide for a set base
salary, participation in future incentive bonus plans, certain other benefits
and a covenant not to compete following termination of such person's employment.

F-64
<PAGE> 124

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To The Maxwell Companies:

We have audited the accompanying combined balance sheets of the companies
identified in Note 1 to the financial statements ("The Maxwell Companies"), as
of December 31, 1994 and 1995, and the related combined statements of income,
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Maxwell Companies as of
December 31, 1994 and 1995, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1995 in
conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Little Rock, Arkansas,
May 24, 1996.

F-65
<PAGE> 125

THE MAXWELL COMPANIES

COMBINED BALANCE SHEETS

DECEMBER 31,
------------------------ MARCH 31,
1994 1995 1996
---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.............................. $ 556,544 $1,041,373 $ 1,045,677
Restricted cash........................................ 138,453 253,171 222,367
Investments............................................ 209,505 273,354 --
Accounts receivable, net of allowance for doubtful
accounts of $75,711, $63,988 and $80,333,
respectively........................................ 2,810,176 2,536,603 2,535,787
Prepaid expenses and other............................. 96,669 24,628 25,256
---------- ---------- -----------
Total current assets........................... 3,811,347 4,129,129 3,829,087
PROPERTY AND EQUIPMENT, net.............................. 480,594 499,792 510,667
INTANGIBLE ASSETS, net................................... -- -- 300,564
---------- ---------- -----------
$4,291,941 $4,628,921 $ 4,640,318
========== ========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable....................................... $ 167,991 $ 169,250 $ 170,178
Payroll and related liabilities........................ 653,772 570,444 836,735
Reserve for workers' compensation claims............... 476,000 1,153,000 1,153,000
Current maturities of long-term debt................... -- -- 71,618
Accrued dividends...................................... 197,500 151,000 16,927
Other accrued liabilities.............................. 20,728 25,462 46,757
---------- ---------- -----------
Total current liabilities...................... 1,515,991 2,069,156 2,295,215
LONG-TERM DEBT, less current maturities.................. -- -- 77,562
COMMITMENTS AND CONTINGENCIES
(Notes 8 through 13)
SHAREHOLDERS' EQUITY:
Common stock, $1.00 par value in 1994, 1995 and 1996;
authorized shares of 110,000 in 1994 and 1995 and
160,000 in 1996; shares issued and outstanding of
4,000 in 1994 and 1995 and 5,000 in 1996............ 4,000 4,000 5,000
Unrealized holding gain................................ -- 43,296 --
Retained earnings...................................... 2,771,950 2,512,469 2,262,541
---------- ---------- -----------
Total shareholders' equity..................... 2,775,950 2,559,765 2,267,541
---------- ---------- -----------
$4,291,941 $4,628,921 $ 4,640,318
========== ========== ===========
</TABLE>

The accompanying notes to combined financial statements
are an integral part of these balance sheets.

F-66
<PAGE> 126

THE MAXWELL COMPANIES

COMBINED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
----------------------------------------- --------------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
SERVICE REVENUES.............. $16,324,216 $21,225,866 $23,092,606 $ 5,835,140 $ 6,149,717
COST OF SERVICES.............. 11,253,565 16,003,387 17,748,020 4,522,824 4,745,235
----------- ----------- ----------- ----------- -----------
Gross profit........ 5,070,651 5,222,479 5,344,586 1,312,316 1,404,482
OPERATING EXPENSES:
Selling, general and
administrative........... 3,582,427 3,820,565 4,296,703 998,892 1,153,490
Depreciation and
amortization............. 75,368 107,601 136,135 34,034 45,779
----------- ----------- ----------- ----------- -----------
Operating income.... 1,412,856 1,294,313 911,748 279,390 205,213
OTHER INCOME (EXPENSE):
Interest income............. 14,767 21,645 43,213 6,856 33,083
Interest expense............ (27,678) (33,849) -- -- (995)
Other, net.................. (104,397) (18,836) (35,396) -- 18,141
----------- ----------- ----------- ----------- -----------
Net income.......... $ 1,295,548 $ 1,263,273 $ 919,565 $ 286,246 $ 255,442
=========== =========== =========== =========== ===========
</TABLE>

The accompanying notes to combined financial statements
are an integral part of these statements.

F-67
<PAGE> 127

THE MAXWELL COMPANIES

COMBINED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
NET UNREALIZED
HOLDING GAIN
COMMON STOCK ON INVESTMENT
---------------- AVAILABLE FOR RETAINED
SHARES AMOUNT SALE EARNINGS TOTAL
------ ------ -------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1992............. 3,500 $3,500 $ -- $1,890,892 $1,894,392
Net income........................... -- -- -- 1,295,548 1,295,548
Dividends declared................... -- -- -- (979,383) (979,383)
----- ------ -------- ---------- ----------
BALANCE, December 31, 1993............. 3,500 3,500 -- 2,207,057 2,210,557
Net income........................... -- -- -- 1,263,273 1,263,273
Issuance of stock.................... 500 500 -- -- 500
Dividends declared................... -- -- -- (698,380) (698,380)
----- ------ -------- ---------- ----------
BALANCE, December 31, 1994............. 4,000 4,000 -- 2,771,950 2,775,950
Net income........................... -- -- -- 919,565 919,565
Dividends declared................... -- -- -- (1,179,046) (1,179,046)
Net unrealized holding gain on
investments available for sale.... -- -- 43,296 -- 43,296
----- ------ -------- ---------- ----------
BALANCE, December 31, 1995............. 4,000 4,000 43,296 2,512,469 2,559,765
Net income (Unaudited)............... -- -- -- 255,442 255,442
Issuance of stock (Unaudited)........ 1,000 1,000 -- -- 1,000
Dividends declared:
Cash (Unaudited).................. -- -- -- (275,312) (275,312)
Investments (Unaudited)........... -- -- (43,296) (230,058) (273,354)
----- ------ -------- ---------- ----------
BALANCE, March 31, 1996 (Unaudited).... 5,000 $5,000 $ -- $2,262,541 $2,267,541
===== ====== ======== ========== ==========
</TABLE>

The accompanying notes to combined financial statements
are an integral part of these statements.

F-68
<PAGE> 128

THE MAXWELL COMPANIES

COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
---------------------------------------- -----------------------
1993 1994 1995 1995 1996
---------- ----------- ----------- --------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income................... $1,295,548 $ 1,263,273 $ 919,565 $ 286,246 $ 255,442
Adjustments to reconcile net
income to net cash
provided by operating
activities:
Depreciation and
amortization............ 75,368 107,601 136,135 34,034 45,779
Provision for bad debts... 77,690 100,615 223,216 47,501 40,541
Loss (gain) on
investments............. 102,536 12,500 (2,146) -- --
Change in operating assets
and liabilities, net of
effects of acquisition:
Restricted cash......... (65,954) (72,499) (114,718) (33,067) 30,804
Accounts receivable..... (777,846) (1,073,300) 50,357 23,250 (39,725)
Prepaid expenses and
other................ 26,124 (10,457) 72,041 32,386 (628)
Accounts payable........ 40,808 (74,812) 1,259 (31,287) 928
Payroll and related
liabilities.......... 525,769 33,483 (83,328) 137,401 266,291
Reserve for workers'
compensation
claims............... -- 476,000 677,000 131,047 --
Other accrued
liabilities.......... 64,574 (43,846) 4,734 (13,008) 21,295
---------- ----------- ----------- --------- ----------
Net cash provided by
operating
activities......... 1,364,617 718,558 1,884,115 614,503 620,727
---------- ----------- ----------- --------- ----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Acquisition of Sumner-Ray
Technical Resources,
Inc....................... -- -- -- -- (168,000)
Capital expenditures......... (155,150) (211,595) (155,333) (25,330) (40,038)
Purchase of investments...... (109,144) (13,750) (116,526) (161,871) --
Sales of investments......... -- -- 98,119 -- --
---------- ---------- ----------- --------- ----------
Net cash used in
investing
activities......... (264,294) (225,345) (173,740) (187,201) (208,038)
---------- ---------- ----------- --------- ----------
</TABLE>

The accompanying notes to combined financial statements
are an integral part of these statements.

F-69
<PAGE> 129

THE MAXWELL COMPANIES

COMBINED STATEMENTS OF CASH FLOWS -- (CONTINUED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
---------------------------------------- ----------------------
1993 1994 1995 1995 1996
---------- ----------- ----------- -------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM FINANCING
ACTIVITIES:
Cash dividends................ $ (813,409) $ (666,854) $(1,225,546) $(57,056) $ (409,385)
Payments on long-term debt.... (46,297) (336,801) -- -- --
Issuance of stock............. -- 500 -- -- 1,000
---------- ----------- ----------- -------- ----------
Net cash used in
financing
activities.......... (859,706) (1,003,155) (1,225,546) (57,056) (408,385)
---------- ----------- ----------- -------- ----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS.......... 240,617 (509,942) 484,829 370,246 4,304
CASH AND CASH EQUIVALENTS,
beginning of period........... 825,869 1,066,486 556,544 556,544 1,041,373
---------- ----------- ----------- -------- ----------
CASH AND CASH EQUIVALENTS, end
of period..................... $1,066,486 $ 556,544 $ 1,041,373 $926,790 $1,045,677
========== =========== =========== ======== ==========
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Interest paid................. $ 27,678 $ 23,950 $ -- $ -- $ --
========== =========== =========== ======== ==========
Non-cash transactions:
Notes payable issued in
conjunction with the
purchase of Sumner-Ray
Technical Resources,
Inc...................... $ -- $ -- $ -- $ -- $ 149,180
========== =========== =========== ======== ==========
Transfer of investments to
shareholders............. $ -- $ -- $ -- $ -- $ 273,354
========== =========== =========== ======== ==========
</TABLE>

The accompanying notes to combined financial statements
are an integral part of these statements.

F-70
<PAGE> 130

THE MAXWELL COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization --

The combined financial statements of The Maxwell Companies (the "Company")
include the activities of Maxwell Staffing, Inc. ("Staffing"), Maxwell Staffing
of Bristow, Inc. ("Bristow"), Maxwell/Healthcare, Inc. ("Healthcare"), Square
One Rehab, Inc. ("Square One") and Technical Staffing, Inc. ("Technical"), all
of which are incorporated in Oklahoma and have substantially common ownership.
All significant intercompany transactions have been eliminated in the
accompanying combined financial statements.

Staffing, which was incorporated in 1979, and Bristow, which was
incorporated in 1993, both provide temporary personnel services in the
northeastern Oklahoma area to the clerical, industrial and medical fields.
Healthcare, which was incorporated in 1989 to provide foreign-trained temporary
and permanent physical and occupational therapist services, is licensed to do
business in 22 states. Square One, which was incorporated in 1991, provides
contract management and physical and occupational therapist services to
companies located in the midwestern and southwestern United States. Technical,
which was incorporated in 1996, provides permanent and temporary technical
personnel services to companies located primarily in Oklahoma.

Interim Financial Statements --

The accompanying interim combined financial statements have not been
audited by independent accountants. However, they have been prepared in
conformity with the accounting principles stated in the audited combined
financial statements for the three years in the period ended December 31, 1995,
and include all adjustments of a normal, recurring nature which, in the opinion
of management, are necessary to present fairly the financial position of the
Company and the results of its operations and cash flows for each of the periods
presented. The operating results for the interim periods presented are not
necessarily indicative of results for the full year.

Use of Estimates --

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses and disclosure of contingent assets and liabilities. The estimates
and assumptions used in preparing the accompanying combined financial statements
are based upon management's evaluation of the relevant facts and circumstances
as of the date of the financial statements. However, actual results may differ
from the estimates and assumptions used in preparing the accompanying combined
financial statements.

Revenue Recognition --

Service revenues are recognized as income at the time services are
provided.

Cash and Cash Equivalents --

Restricted Cash --

Restricted cash represents funds deposited in an account maintained on
behalf of the Company's self-insured health benefits plan. The use of these
assets is restricted to the payment of health benefits of the participating
employees.

F-71
<PAGE> 131

THE MAXWELL COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Accounts Receivable --

The Company maintains allowances for potential losses which management
believes are adequate to absorb losses to be incurred in realizing the amounts
recorded in the accompanying financial statements. Included in accounts
receivable in the accompanying combined balance sheets are unbilled amounts of
$392,068, $379,163 and $618,289 (unaudited) at December 31, 1994, December 31,
1995 and March 31, 1996, respectively.

Investment Securities --

Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." In accordance with this pronouncement, investment
securities are to be classified as either trading, available-for-sale or held
for investment. Trading securities are recorded at market value, and any gains
or losses are recognized in the income statement. Securities available-for-sale
are also recorded at market value; however, any unrealized gains or losses are
recorded as an adjustment to shareholders' equity. Securities held for
investment are recorded at amortized cost, adjusted for necessary valuation
allowances.

Upon adoption of SFAS No. 115 on January 1, 1994, the Company classified
its investment securities as available-for-sale. The implementation of this
pronouncement did not have a material impact to the financial statements.

Property and Equipment --

Property and equipment are recorded at cost and are depreciated or
amortized using a method which approximates the straight-line method. The
estimated useful lives of the assets are as follows:

<TABLE>
<S> <C>
Office equipment................................................. 5-7 years
Computer equipment............................................... 5-7 years
Vehicles......................................................... 5 years
Building and improvements........................................ 7-32 years
</TABLE>

Intangible Assets --

Intangible assets consist primarily of goodwill recorded in conjunction
with the acquisition of Sumner-Ray Technical Resources, Inc. ("Sumner-Ray"), as
discussed in Note 2, which is being amortized using the straight-line method
over 30 years. In the event facts and circumstances indicate that the carrying
amount of this goodwill may be impaired, an evaluation of recoverability would
be performed. If an evaluation is required, the estimated future undiscounted
net cash flows of the related assets over their remaining lives would be
compared to the assets' carrying amounts in measuring whether the assets are
recoverable. As of March 31, 1996, the Company's intangible assets were
considered to be fully recoverable.

Workers' Compensation and Health Benefits --

The Company self-insures certain risks related to workers' compensation and
employee health benefits claims. The estimated costs of existing and future
claims are accrued as incidents occur based upon historical loss development
trends and may be subsequently revised based on developments relating to such
claims. The

F-72
<PAGE> 132

THE MAXWELL COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Company engaged the services of a third party actuary to assist with the
development of the workers' compensation cost estimates as of December 31, 1994
and 1995.

Fair Value of Financial Instruments --

The Company's financial instruments include cash and cash equivalents,
restricted cash, investments and long-term debt. Excluding investments, which
are carried at fair market value as discussed in Note 4, management believes
that the Company's financial instruments bear interest at rates which
approximate prevailing market rates for instruments with similar characteristics
and, accordingly, that the carrying values for these instruments are reasonable
estimates of fair value.

2. BUSINESS COMBINATIONS (UNAUDITED):

On February 23, 1996, the Company acquired certain assets of Sumner-Ray,
which is engaged in providing temporary and permanent placement of professional
and technical personnel in the engineering, drafting and manufacturing fields.
The acquisition has been accounted for as a purchase and the results of
Sumner-Ray have been included in the accompanying financial statements since the
date of acquisition. The cost of the acquisition has been allocated on the basis
of the estimated fair value of the assets and liabilities acquired.

Total consideration paid for Sumner-Ray was $336,000. The purchase price
included cash of $168,000 and a note to the seller for $168,000, which included
an interest component at a stated rate of 8% per year. The note has been
discounted using the prescribed rate, and the resulting principal amount of
$149,180 is included in the accompanying combined balance sheets. The assets
acquired have been recorded at their estimated fair value as of the acquisition
date, with the remaining acquisition costs of approximately $300,000 being
recorded as goodwill.

The acquisition of Sumner-Ray did not have a significant impact on the
Company's operating results.

3. PROPERTY AND EQUIPMENT:

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ MARCH 31,
1994 1995 1996
---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Building and improvements........................ $ 483,136 $ 502,130 $ 518,401
Office equipment................................. 346,530 386,411 412,480
Computer equipment............................... 204,268 300,265 310,557
Vehicles......................................... 25,105 27,561 27,561
Land............................................. 13,000 13,000 13,000
---------- ---------- -----------
1,072,039 1,229,367 1,281,999
Less accumulated depreciation and
amortization................................ 591,445 729,575 771,332
---------- ---------- -----------
$ 480,594 $ 499,792 $ 510,667
========== ========== ===========
</TABLE>

Depreciation and amortization expense related to property and equipment for
the years ended December 31, 1993, 1994 and 1995 totaled $75,368, $107,601 and
$136,135, respectively. Unaudited depreciation and amortization expense for the
three months ended March 31, 1995 and 1996 totaled $34,034 and $44,100,
respectively.

F-73
<PAGE> 133

THE MAXWELL COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

4. INVESTMENTS:

The Company has classified all investments as available-for-sale.
Accordingly these investments have been recorded at market value.

The carrying value and market value of available-for-sale investment
securities were as follows:

<TABLE>
<CAPTION>
GROSS GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
--------- ---------- ---------- --------
<S> <C> <C> <C> <C>
December 31, 1994:
Equity securities........................ $ 180,826 $ -- $ -- $180,826
United States government obligations..... 28,679 -- -- 28,679
--------- -------- -------- --------
$ 209,505 $ -- $ -- $209,505
========= ======== ======== ========
December 31, 1995:
Equity securities........................ $ 201,379 $ 38,551 $ -- $239,930
United States government obligations..... 28,679 4,745 -- 33,424
--------- -------- -------- --------
$ 230,058 $ 43,296 $ -- $273,354
========= ======== ======== ========
</TABLE>

The United States government obligations held as of December 31, 1994 and
1995 represent only one issue which matures in 2003.

Proceeds from the sale of securities totaled $98,119 for the year ended
December 31, 1995, including the realization of a gross gain of $2,146. There
were no sales of securities during 1994. Losses totaling $102,536 and $12,500 in
1993 and 1994, respectively, were recognized on one security whose impairment of
value was deemed to be other than temporary. These amounts are reflected in
other income (expense) in the accompanying combined statements of income.

All investments were distributed to the shareholders in March 1996. The
related unrealized holding gain was removed in connection with this dividend.

5. INTANGIBLE ASSETS (UNAUDITED):

Intangible assets, net of amortization, at March 31, 1996 consisted
primarily of the goodwill related to the acquisition of Sumner-Ray, as discussed
in Note 2.

Amortization expense related to intangible assets totaled $1,679
(unaudited) for the three months ended March 31, 1996.

6. LONG-TERM DEBT (UNAUDITED):

Long-term debt as of March 31, 1996 consisted of a promissory note payable
to the previous owner of Sumner-Ray which is due in annual installments of
$84,000, including interest at approximately 8%, payable on February 23, 1997
and 1998. The obligation is secured by a lien and security interest in certain
assets of the Company. Scheduled principal maturities of this obligation are
$71,618 in 1997 and $77,562 in 1998.

7. INCOME TAXES:

F-74
<PAGE> 134

THE MAXWELL COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

8. WORKERS' COMPENSATION:

Effective July 1, 1994, the Company began self-insuring certain workers'
compensation claims in the state of Oklahoma and is regulated by the Oklahoma
Workers' Compensation Insurance Commission. The Company has purchased insurance
for workers' compensation claims which exceed $250,000. The Company maintains a
letter of credit with a bank to cover any potential unpaid claims. At March 31,
1996, this letter of credit was in the amount of $450,000 (unaudited). Workers'
compensation expense totaled $485,151, $918,961 and $1,089,901 for the years
ended December 31, 1993, 1994 and 1995, respectively. Unaudited workers'
compensation expense totaled $199,670 and $132,324 for the three months ended
March 31, 1995 and 1996, respectively.

9. EMPLOYEE BENEFIT PLANS:

Prior to 1995, employees participated in a profit sharing plan to which the
Company made discretionary contributions. In 1993 and 1994, the Company made
contributions totaling $250,000 and $190,000, respectively. The Company elected
not to make a contribution in 1995. Effective January 1, 1996, the Company added
a defined contribution benefit plan to the existing profit sharing plan. This
new plan, which operates pursuant to an Internal Revenue Code section 401(k)
arrangement, allows employees to contribute on a tax deferred basis up to 10% of
their annual wages. The Company makes a matching contribution equal to 50% of
the employees' contributions up to a maximum of 3% of the respective employees'
annual wages. The Company may also contribute additional amounts for profit
sharing at its discretion. Total unaudited matching contributions to be made by
the Company to the plan for the three months ended March 31, 1996 were $12,419.
No discretionary contributions were made during the three months ended March 31,
1996.

On January 1, 1993, the Company established a self-insured plan to offer
health and dental insurance benefits to certain of its employees. Employees may
also purchase coverage for family members. Pursuant to this plan, the Company
pays for the approved claims costs of eligible participants subject to certain
individual and family deductibles and co-payments, as defined. Both the Company
and the participants make contributions to the plan based upon premiums which
are established by a third party administrator and the Company's benefits
committee. The Company maintained insurance for annual claims which exceeded
$10,000, $15,000, $25,000 and $25,000 at December 31, 1993, 1994, 1995 and March
31, 1996, respectively. Expenses related to this plan for the years ended
December 31, 1993, 1994 and 1995 were $190,357, $184,605 and $188,066,
respectively. Unaudited expense related to this plan for the three months ended
March 31, 1995 and 1996 were $42,247 and $85,913, respectively.

10. RELATED PARTY TRANSACTIONS:

The Company rents a duplex from certain shareholders which houses
foreign-trained physical and occupational therapists. Rent expense related to
the duplex amounted to $16,800 for each of the years ended December 31, 1993,
1994 and 1995. Unaudited rent expense totaled $4,200 for the three months ended
March 31, 1995 and 1996. These rent payments are not subject to a formal
agreement and, therefore, have not been considered in the disclosure included in
Note 12.

11. COMMITMENTS AND CONTINGENCIES:

The Company has employment agreements with certain executive officers and
management personnel that provide for annual salaries, cost-of-living
adjustments and additional compensation in the form of performance based
bonuses. Certain agreements include a covenant against competition with the
Company,

F-75
<PAGE> 135

THE MAXWELL COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

which extends for a period of time after termination. These agreements generally
continue until terminated by the employee or the Company.

One employment agreement provides for the purchase of up to 398 shares of
Square One stock from the existing shareholders subject to the satisfaction of
certain performance measures of Square One. As of March 31, 1996, Square One's
performance had exceeded the threshold required for the employee to purchase 100
shares; however, this option had not been exercised.

The Company pays dividends to its shareholders in amounts sufficient to
cover their estimated tax payments attributable to the respective share of the
Company's net income which will be included in their individual tax returns. The
Company plans to continue this practice in the future as long as it maintains
its S Corporation status.

The Company is a party to certain lawsuits and claims primarily involving
workers' compensation claims and other employee related matters. Management
believes, based in part on consultation from legal counsel, that the ultimate
outcome of these matters will not have a materially adverse effect on the
Company's financial position, liquidity or results of operations.

12. NONCANCELABLE OPERATING LEASES:

The Company leases equipment, vehicles and office space as well as
apartments for certain foreign-trained therapists under noncancelable operating
leases. Future minimum annual payments required during each of the next five
years under operating leases that have noncancelable lease terms expiring
subsequent to December 31, 1995, are as follows:

Rent expense totaled $75,472, $123,099 and $134,231 for the years ended
December 31, 1993, 1994 and 1995, respectively. Unaudited rent expense for the
three months ended March 31, 1995 and 1996 was $32,524 and $36,839,
respectively.

13. SIGNIFICANT CUSTOMERS:

The following table summarizes the number and aggregate revenues earned
from customers which individually account for 10% or more of the Company's
combined service revenues.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
------------------------------------ -------------------------
1993 1994 1995 1995 1996
---------- ---------- ---------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Number of significant
customers.................. 1 2 2 1 2
========== ========== ========== ========== ==========
Revenue from significant
customers.................. $3,476,685 $5,941,354 $5,013,469 $1,006,038 $1,558,283
========== ========== ========== ========== ==========
Percent of combined
revenues................... 21% 28% 22% 17% 25%
========== ========== ========== ========== ==========
</TABLE>

F-76
<PAGE> 136

THE MAXWELL COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

14. SUBSEQUENT EVENTS:

On May 17, 1996, the Company entered into a debt agreement with State Bank
& Trust, N.A. which provided for a $1.75 million term loan. The loan is secured
by the Company's accounts receivable. Accrued interest is due and payable
monthly beginning June 1, 1996 at a rate of 8.25%. The outstanding principal
balance plus unpaid accrued interest is due November 1, 1996. The proceeds from
this loan were used to partially fund the cash dividend discussed in Note 15.

15. EVENTS SUBSEQUENT TO DATE OF REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS (UNAUDITED):

In June 1996, the owners of the Company entered into a definitive agreement
to merge with StaffMark, Inc. ("StaffMark") in conjunction with StaffMark's
initial public offering. Prior to or coincident with this proposed merger, the
Company plans to dividend certain assets to the shareholders consisting of the
building in which the Company is headquartered, which had an aggregate carrying
value of approximately $207,000 (unaudited) as of March 31, 1996. In addition,
the Company plans to make a cash dividend of approximately $2.5 million prior to
the proposed merger, which represents the Company's estimated S Corporation
Accumulated Adjustment Account. Had these transactions occurred as of March 31,
1996, the effect on the accompanying unaudited interim combined balance sheet
would have been a decrease in total assets and shareholder's equity of
approximately $2.7 million (unaudited). StaffMark plans to lease the real
property distributed, as discussed above, from the owners at a market lease
rate.

In conjunction with the proposed merger discussed above, the owners will
enter into employment agreements which provide for a set base salary,
participation in future incentive bonus plans, certain other benefits and a
covenant not to compete following termination of such person's employment.

F-77
<PAGE> 137

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To HRA, Inc.:

We have audited the accompanying balance sheets of HRA, Inc. (the
"Company"), a Tennessee corporation, as of September 30, 1994 and 1995, and the
related statements of income (loss), shareholders' equity and cash flows for
each of the three years ended September 30, 1995. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of HRA, Inc. as of September
30, 1994 and 1995, and the results of its operations and its cash flows for each
of the three years ended September 30, 1995, in conformity with generally
accepted accounting principles.

ARTHUR ANDERSEN LLP

Memphis, Tennessee,
May 24, 1996.

F-78
<PAGE> 138

HRA, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
SEPTEMBER 30,
------------------------ MARCH 31,
1994 1995 1996
---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.............................. $ 637,297 $ 418,229 $ 364,965
Accounts receivable, net of allowance for doubtful
accounts of $26,000................................. 1,684,052 1,998,724 1,939,874
Advances to shareholders............................... -- -- 250,000
Prepaid expenses and other............................. 12,616 467,002 653,623
Income taxes receivable................................ -- 25,125 19,475
Deferred income taxes.................................. 33,100 160,000 216,600
---------- ---------- ----------
Total current assets........................... 2,367,065 3,069,080 3,444,537
PROPERTY AND EQUIPMENT, net.............................. 70,261 144,179 160,852
INTANGIBLE ASSETS, net................................... -- 37,156 167,014
OTHER ASSETS:
Deferred income taxes.................................. 79,700 65,000 57,200
Other.................................................. 400 21,071 1,423
---------- ---------- ----------
Total other assets............................. 80,100 86,071 58,623
---------- ---------- ----------
$2,517,426 $3,336,486 $3,831,026
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Borrowings under accounts receivable financing
agreement........................................... $ 600,830 $ 502,512 $ --
Line of credit......................................... -- -- 580,000
Current portion of deferred compensation
arrangements........................................ 97,898 43,699 106,208
Outstanding checks..................................... -- 166,761 197,624
Accounts payable....................................... 118,906 193,096 185,774
Payroll and related liabilities........................ 493,033 621,317 557,352
Reserve for workers' compensation claims............... 475,712 1,390,351 1,653,970
Income taxes payable................................... 228,217 -- --
Accrued expenses....................................... 72,084 138,416 128,297
Note payable to a shareholder.......................... 155,295 -- --
---------- ---------- ----------
Total current liabilities...................... 2,241,975 3,056,152 3,409,225
DEFERRED COMPENSATION ARRANGEMENTS, less current
portion................................................ 97,824 127,332 285,688
NOTE PAYABLE TO A SHAREHOLDER............................ -- 122,000 116,000
COMMITMENTS AND CONTINGENCIES (Notes 10, 11 and 13)
SHAREHOLDERS' EQUITY:
Common stock, no par value, 1,000 shares authorized,
790 shares issued and outstanding................... 12,600 12,600 12,600
Retained earnings...................................... 165,027 18,402 7,513
---------- ---------- ----------
Total shareholders equity...................... 177,627 31,002 20,113
---------- ---------- ----------
$2,517,426 $3,336,486 $3,831,026
========== ========== ==========
</TABLE>

The accompanying notes are an integral
part of these balance sheets.

F-79
<PAGE> 139

HRA, INC.

STATEMENTS OF INCOME (LOSS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEARS MARCH 31,
----------------------------------------- --------------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
SERVICE REVENUES............. $13,333,022 $16,453,375 $18,306,542 $ 8,439,639 $10,645,025
COST OF SERVICES............. 10,985,142 13,367,561 14,939,279 6,876,078 8,628,915
----------- ----------- ----------- ----------- -----------
Gross profit....... 2,347,880 3,085,814 3,367,263 1,563,561 2,016,110
OPERATING EXPENSES:
Selling, general and
administrative.......... 2,107,544 2,381,168 3,438,436 1,513,970 1,867,248
Depreciation and
amortization............ 33,773 45,783 65,691 19,285 42,374
----------- ----------- ----------- ----------- -----------
Operating income
(loss)........... 206,563 658,863 (136,864) 30,306 106,488
OTHER INCOME (EXPENSE):
Interest expense........... (84,448) (100,828) (107,364) (33,349) (52,735)
Interest and other, net.... 6,192 16,466 13,443 9,036 (89,792)
----------- ----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE
PROVISION (BENEFIT) FOR
INCOME TAXES............... 128,307 574,501 (230,785) 5,993 (36,039)
PROVISION (BENEFIT) FOR
INCOME TAXES............... 43,250 221,100 (84,160) 1,810 (25,150)
----------- ----------- ----------- ----------- -----------
Net income
(loss)........... $ 85,057 $ 353,401 $ (146,625) $ 4,183 $ (10,889)
=========== =========== =========== =========== ===========
</TABLE>

The accompanying notes are an integral
part of these financial statements.

F-80
<PAGE> 140

HRA, INC.

STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK RETAINED
----------------- EARNINGS
SHARES AMOUNT (DEFICIT) TOTAL
------ ------- --------- ---------
<S> <C> <C> <C> <C>
BALANCE, September 30, 1992.......................... 500 $ 1,000 $(273,431) $(272,431)
Net income......................................... -- -- 85,057 85,057
--- ------- --------- ---------
BALANCE, September 30, 1993.......................... 500 1,000 (188,374) (187,374)
Issuance of Common Stock........................... 290 11,600 -- 11,600
Net income......................................... -- -- 353,401 353,401
--- ------- --------- ---------
BALANCE, September 30, 1994.......................... 790 12,600 165,027 177,627
Net loss........................................... -- -- (146,625) (146,625)
--- ------- --------- ---------
BALANCE, September 30, 1995.......................... 790 12,600 18,402 31,002
Net loss (Unaudited)............................... -- -- (10,889) (10,889)
--- ------- --------- ---------
BALANCE, March 31, 1996 (Unaudited).................. 790 $12,600 $ 7,513 $ 20,113
=== ======= ========= =========
</TABLE>

The accompanying notes are an integral
part of these financial statements.

F-81
<PAGE> 141

HRA, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEARS MARCH 31,
--------------------------------- ---------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)............................... $ 85,057 $ 353,401 $(146,625) $ 4,183 $ (10,889)
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization................ 33,773 45,783 65,691 19,285 42,374
Provision for bad debts...................... 45,480 4,498 2,041 -- 492
Change in deferred income taxes.............. (5,700) (10,200) (112,200) (400) (48,800)
Change in operating assets and liabilities:
Accounts receivable........................ (231,286) (421,143) (316,713) 58,292 58,358
Income taxes receivable.................... -- -- (25,125) (3,073) 5,650
Prepaid expenses and other................. (15,147) 2,531 (454,386) (341,361) (186,621)
Other assets............................... 9,583 17 (20,671) (1,533) 19,648
Outstanding checks......................... -- -- 166,761 -- 30,863
Accounts payable........................... (50,994) 51,940 49,190 53,155 (7,322)
Payroll and related liabilities............ (117,269) (30,697) 128,284 40,147 (63,965)
Reserve for workers' compensation claims... 285,837 (68,655) 914,639 571,812 263,619
Accrued expenses........................... 30,053 (21,755) 66,332 (93,135) (10,119)
Income taxes payable....................... 31,508 192,487 (228,217) (228,217) --
--------- --------- --------- --------- ---------
Net cash provided by operating
activities.............................. 100,895 98,207 89,001 79,155 93,288
--------- --------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures............................ (50,834) (40,096) (135,765) (71,905) (49,268)
Other........................................... 10,000 -- (16,000) -- --
--------- --------- --------- --------- ---------
Net cash used in investing activities...... (40,834) (40,096) (151,765) (71,905) (49,268)
--------- --------- --------- --------- ---------
</TABLE>

The accompanying notes are an integral
part of these financial statements.

F-82
<PAGE> 142

HRA, INC.

STATEMENTS OF CASH FLOWS -- (CONTINUED)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEARS MARCH 31,
--------------------------------- ---------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in deferred compensation
arrangements................................. $ -- $ 21,559 $ -- $ -- $ 135,596
Payments on deferred compensation
arrangements................................. (24,996) -- (24,691) -- (54,368)
Net borrowings under an accounts receivable
financing agreement.......................... 500,000 100,830 (98,318) (109,138) (502,512)
Net borrowings under a revolving line of
credit....................................... -- -- -- -- 580,000
Principal payments on note payable to a
shareholder.................................. (140,154) -- (33,295) (18,000) (6,000)
Advances to shareholders........................ -- -- -- -- (250,000)
Proceeds from issuance of common stock.......... -- 11,600 -- -- --
Other........................................... (7,299) (5,749) -- -- --
--------- --------- --------- --------- ---------
Net cash provided by (used in) financing
activities.............................. 327,551 128,240 (156,304) (127,138) (97,284)
--------- --------- --------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS..................................... 387,612 186,351 (219,068) (119,888) (53,264)
CASH AND CASH EQUIVALENTS, beginning of period.... 63,334 450,946 637,297 637,297 418,229
--------- --------- --------- --------- ---------
CASH AND CASH EQUIVALENTS, end of period.......... $ 450,946 $ 637,297 $ 418,229 $ 517,409 $ 364,965
========= ========= ========= ========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid................................... $ 65,444 $ 77,737 $ 106,467 $ 33,349 $ 44,992
========= ========= ========= ========= =========
Taxes paid...................................... $ 20,742 $ 41,813 $ 267,622 $ 144,974 $ 18,000
========= ========= ========= ========= =========
</TABLE>

SUPPLEMENTAL DISCLOSURES OF NONCASH
INVESTING AND FINANCING ACTIVITIES:

During fiscal year 1995, the Company incurred a liability totaling $41,000
for the purchase of a consulting and noncompete agreement.

During the six month period ended March 31, 1996, the Company recorded a
deferred compensation arrangement liability for the purchase of a noncompete
agreement with a former shareholder totaling $139,637.

The accompanying notes are an integral
part of these financial statements.

F-83
<PAGE> 143

HRA, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization --

HRA, Inc. (the "Company") was incorporated on November 20, 1991, in the
state of Tennessee and provides temporary personnel services throughout central
Tennessee. Headquartered in Nashville, Tennessee, the Company does business
under the name of Human Resources and operates staffing offices in the following
Tennessee locations: Clarksville, Columbia, Franklin, Gallatin, Lebanon,
Lewisburg, Murfreesboro, Nashville, Pulaski, Portland, Smyrna, Springfield and
Tullahoma.

The majority of the Company's sales are derived from customers within a
100-mile radius of Nashville, Tennessee. The Company extends trade credit to its
customers which are represented by various industries. There are no individual
customers that account for more than 10% of service revenues in any of the
fiscal years or unaudited periods presented.

Fiscal Periods --

The Company's fiscal year ends on September 30. The fiscal years 1993, 1994
and 1995 each included 52 weeks. The unaudited interim periods included in the
accompanying financial statements each included 26 weeks.

Interim Financial Statements --

The accompanying interim financial statements have not been audited by
independent accountants. However, they have been prepared in conformity with the
accounting principles stated in the audited financial statements for the three
years in the period ended September 30, 1995, and include all adjustments of a
normal recurring nature which, in the opinion of management, are necessary to
present fairly the financial position of the Company and the results of
operations and cash flows for each of the periods presented. The operating
results for the interim periods presented are not necessarily indicative of
results for the full year.

Use of Estimates --

Revenue Recognition --

Service revenues are recognized as income at the time staffing services are
provided.

Cash and Cash Equivalents --

At September 30, 1994 and 1995, the Company had set aside cash reserves of
$60,083 and $50,251 as collateral on accounts receivable financed with recourse
(Note 4).

F-84
<PAGE> 144

HRA, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Accounts Receivable --

The Company maintains allowances for potential losses which management
believes are adequate to absorb losses related to the realization of the amounts
recorded in the accompanying balance sheets.

Property and Equipment --

Property and equipment are recorded at cost and are depreciated on
accelerated methods over the estimated useful lives of the assets. Leasehold
improvements are amortized on a straight-line basis over the shorter of the
economic lives or the terms of the lease. Estimates of useful lives by asset
classification are as follows:

<TABLE>
<S> <C>
Office equipment.................................................. 5-7 years
Computer equipment................................................ 5 years
Computer software................................................. 5 years
Leasehold improvements............................................ 5 years
</TABLE>

Expenditures for renewals and betterments are capitalized, while repairs
and maintenance costs are expensed as incurred.

Intangible Assets --

The Company amortizes its intangible assets over the lives of the
respective arrangements (Note 3). The Company regularly evaluates whether events
and circumstances have occurred which may indicate the carrying amount of
intangible assets may warrant revision or may not be recoverable. When factors
indicate that certain intangible assets should be evaluated for possible
impairment, the Company uses an estimate of the future undiscounted net cash
flows of the related assets over their remaining lives in measuring whether the
assets are recoverable. As of September 30, 1995 and March 31, 1996, the
Company's intangible assets were considered fully recoverable.

Self-Insurance Reserves --

During fiscal year 1995, the Company began self-insuring certain risks
related to workers' compensation claims. Additionally, during each of the fiscal
years ended September 30, and for the six months ended March 31, 1996, the
Company was substantially self-insured for employee health care costs. The
estimated costs of existing and future claims related to workers' compensation
claims and employee health care are accrued as incidents occur based upon
historical loss development trends and may be subsequently revised based on
developments relating to such claims. The Company engaged the services of a
third party actuary to assist with the development of cost estimates for
workers' compensation claims.

Income Taxes --

Deferred income taxes are provided for the effect of temporary differences
between the tax bases of assets and liabilities and their reported amounts in
the financial statements. The Company uses the liability method to account for
income taxes, which requires deferred taxes to be recorded at the statutory rate
expected to be in effect when the taxes are paid.

Fair Value of Financial Instruments --

The Company's financial instruments principally represent cash and cash
equivalents, a note payable to a shareholder and bank borrowing arrangements
secured by accounts receivable. The carrying value of cash and cash equivalents
approximates fair value due to its short-term nature. The carrying value of the
note payable to

F-85
<PAGE> 145

HRA, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

shareholder and the Company's borrowing arrangements secured by accounts
receivable approximate fair value based upon management's assessment of interest
rates currently available to the Company.

2. PROPERTY AND EQUIPMENT:

Components of property and equipment are as follows:

<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------------- MARCH 31,
1994 1995 1996
-------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Office equipment................................. $ 38,689 $ 65,237 $ 89,321
Computer equipment............................... 80,222 141,200 149,911
Computer software................................ 34,959 76,715 83,709
Leasehold improvements........................... 11,993 17,569 27,048
-------- --------- ---------
165,863 300,721 349,989
Less accumulated depreciation and
amortization................................ 95,602 156,542 189,137
-------- --------- ---------
$ 70,261 $ 144,179 $ 160,852
======== ========= =========
</TABLE>

Depreciation and amortization expense related to property and equipment
totaled $33,773, $45,783 and $61,847 for the years ended September 30, 1993,
1994 and 1995, respectively. Unaudited depreciation and amortization expense
related to property and equipment totaled $19,285 and $32,595 for the six months
ended March 31, 1995 and 1996, respectively.

3. INTANGIBLE ASSETS:

During fiscal year 1995, the Company entered into a Consulting and
Noncompetition Agreement with an individual operating a temporary personnel
agency in Lebanon, Tennessee. The agreement, as amended, called for an initial
payment of $41,000 and contingent consideration up to $67,000, based upon
certain performance events. Contingent consideration payments during fiscal year
1995 and the six months ended March 31, 1996 totaled approximately $1,700 and
$2,500 (unaudited), respectively. The Company is amortizing this arrangement
over the 48 month term of the agreement.

<TABLE>
<CAPTION>
MARCH 31,
1995 1996
------- -----------
(UNAUDITED)
<S> <C> <C>
Consulting and noncompetition agreement....................... $41,000 $ 41,000
Noncompete agreement with a former shareholder (see Note
10)......................................................... -- 139,637
------- ---------
41,000 180,637
Less accumulated amortization............................... 3,844 13,623
------- ---------
$37,156 $ 167,014
======= =========
</TABLE>

Amortization expense totaled $3,844 in fiscal year 1995 and $9,779
(unaudited) for the six months ended March 31, 1996.

4. BORROWINGS UNDER ACCOUNTS RECEIVABLE FINANCING ARRANGEMENT:

During fiscal year 1994, the Company entered into a "Purchase of Accounts"
agreement with SouthTrust Bank (the "Bank") whereby the Bank agreed to purchase
up to $750,000 of the Company's trade accounts receivable on a revolving basis.
The agreement gave the Company the option to repurchase these receivables from
the Bank at any time and gave the Bank full recourse to the Company for any
accounts receivable which

F-86
<PAGE> 146

HRA, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

were not collected. Accordingly, this arrangement has been reflected as a
financing transaction in the accompanying financial statements.

As of September 30, 1994 and 1995, the receivables financed pursuant to
this agreement totaled $600,830 and $502,512, respectively. The agreement
required the Company to pay a service charge equal to 1.50% of the face amount
of each account financed by the Bank. Service charges were $9,132 and $7,538 for
the fiscal years ended 1994 and 1995 and have been reflected in interest expense
in the accompanying statements of income. In addition, the Company was required
to maintain a cash reserve account at the Bank in an amount equal to at least
10% of the receivables financed and meet certain other restrictive covenants.

5. LINE OF CREDIT:

In November 1995, the Company replaced its "Purchase of Accounts" bank
agreement (Note 4) with a revolving line of credit with the same bank. Under the
revolving line of credit, the Company may borrow an amount equal to 80% of its
outstanding Eligible Accounts Receivable, as defined, not to exceed an aggregate
borrowing of $1,500,000. Borrowings are collateralized by the Company's accounts
receivable and are guaranteed by the Company's shareholders. Interest is payable
monthly on outstanding borrowings at the Bank's base rate plus 1.25% (weighted
average rate of 9.23% during the six months ended March 31, 1996). Unless
renewed, the agreement expires on November 20, 1996. Under the terms of the line
of credit agreement, the Company has certain dividend restrictions and is
required, among other things, to maintain certain financial ratios.

As of March 31, 1996, the Company had borrowed $580,000 (unaudited) under
this line of credit and principally used the proceeds to repurchase previously
sold accounts receivable.

6. NOTE PAYABLE TO A SHAREHOLDER:

As of September 30, 1994 and 1995, the Company had a note payable to a
former shareholder for $155,295 and $122,000, respectively. The note was due on
demand and bore interest at 8.75%. The note was secured by the Company's
accounts receivable not previously pledged. For the years ended September 30,
1993, 1994 and 1995, interest expense on this note totaled $22,860, $18,636 and
$12,100, respectively. For the six months ended March 31, 1995 and 1996,
interest expense on this note totaled $6,400 (unaudited) and $4,241 (unaudited),
respectively.

In connection with the purchase of this shareholder's common stock in the
Company by two of the remaining shareholders (Notes 10 and 14), this note was
amended whereby, beginning in December 1995, interest payments will be made
monthly at a rate of 9.75%. The note is unsecured and requires principal
payments beginning in December 1997.

Annual maturities pursuant to this note for the years subsequent to fiscal
year 1995 are as follows:

<TABLE>
<S> <C>
1996.............................................. $ 6,000
1997.............................................. --
1998.............................................. 35,753
1999.............................................. 57,917
2000.............................................. 20,301
Thereafter........................................ 2,029
--------
$122,000
========
</TABLE>

As of March 31, 1996, the Company owed $116,000 (unaudited) pursuant to
this amended note agreement.

F-87
<PAGE> 147

HRA, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

7. INCOME TAXES:

Components of the provision for income taxes were as follows:

<TABLE>
<CAPTION>
FISCAL YEAR SIX MONTHS ENDED MARCH 31,
------------------------------- --------------------------
1993 1994 1995 1995 1996
------- -------- -------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Current:
Federal...................... $39,550 $194,600 $ 10,180 $ 1,550 $ 17,950
State........................ 9,400 36,700 4,100 660 5,700
Deferred....................... (5,700) (10,200) (98,440) (400) (48,800)
------- -------- -------- ------- ---------
$43,250 $221,100 $(84,160) $ 1,810 $ (25,150)
======= ======== ======== ======= =========
</TABLE>

A reconciliation of taxes at the statutory federal income tax rate to the
Company's effective income tax rate for the years ended September 30 follows:

<TABLE>
<CAPTION>
FISCAL YEAR SIX MONTHS ENDED MARCH 31,
-------------------------------- --------------------------
1993 1994 1995 1995 1996
-------- -------- -------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Taxes at statutory U.S. income
tax rate.................... $ 43,624 $201,075 $(80,775) $ 2,098 $ (12,610)
Increase (decrease) resulting
from:
Tax penalties............... 4,281 846 -- -- --
State income taxes, net of
federal benefit.......... 6,204 23,855 2,666 428 3,705
Effect of graduated federal
income tax rate.......... (13,112) (7,672) (9,933) (2,466) (17,995)
Meals and entertainment and
other.................... 2,253 2,996 3,882 1,750 1,750
-------- -------- -------- ------- ---------
$ 43,250 $221,100 $(84,160) $ 1,810 $ (25,150)
======== ======== ======== ======= =========
</TABLE>

Deferred income taxes result from differences in the timing of recognition
of revenues and expenses for financial reporting and income tax purposes. The
components of the Company's net deferred income tax assets are as follows:

SEPTEMBER 30, SEPTEMBER 30, MARCH 31,
1994 1995 1996
------------- ------------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Compensation agreements...................... $ 76,600 $ 65,000 $ 114,500
Vacation and workers' compensation
reserves................................... 36,200 160,000 159,300
--------- --------- ---------
$ 112,800 $ 225,000 $ 273,800
========= ========= =========
</TABLE>

The deferred income tax assets recorded in the accompanying balance sheets
represent potential future income tax benefits. These future income tax benefits
are expected to be realized through the reduction of income taxes otherwise
payable when reversals of temporary differences occur between the financial
reporting and income tax basis of the Company's assets and liabilities.

F-88
<PAGE> 148

HRA, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

8. WORKERS' COMPENSATION:

During fiscal year 1995, the Company began self-insuring certain risks
related to workers' compensation claims and is regulated by the Workers'
Compensation Insurance Commission in the state of Tennessee. The Company has
purchased insurance for claims which exceed $250,000 per employee. To satisfy
unpaid claims, the Company deposits amounts with a third party administrator. At
the Company's option it may withdraw its deposits upon notification to its third
party administrator. Included in prepaids and other in the accompanying balance
sheets are deposits to fund workers compensation claims totaling $451,617 and
$612,590 (unaudited) as of September 30, 1995 and March 31, 1996, respectively.
Workers' compensation expense totaled $527,077, $664,468 and $1,270,271 for each
of the three fiscal years ended September 30, 1995. For the six months ended
March 31, 1995 and 1996, workers' compensation expense totaled $541,060
(unaudited) and $627,928 (unaudited), respectively.

9. RELATED PARTY TRANSACTIONS:

Included in general and administrative expenses are advisor and/or director
fees paid or payable to the shareholders of the Company totaling $120,000,
$69,000 and $94,000 for the years ended September 30, 1993, 1994 and 1995,
respectively. No such fees were accruable for the six months ended March 31,
1995 and 1996.

10. COMMITMENTS AND CONTINGENCIES:

The Company has deferred compensation arrangements with various consultants
and/or employees of the Company, some of which are no longer providing services
to the Company.

In November 1991, the Company entered into an arrangement with a consultant
for services rendered in connection with the formation of the Company. The
arrangements called for weekly payments of $1,000 for 312 weeks. The Company
expensed the discounted value of the obligation in fiscal year 1992 and
reflected a deferred compensation liability at that time. In fiscal year 1994,
the Company discontinued payments under this arrangement. In December 1994, the
consultant and the Company entered into an arbitration agreement and the Company
has resumed its payments under this agreement.

On November 28, 1995, the Company entered into severance and noncompete
agreements with a former shareholder in connection with the purchase of such
shareholder's common stock in the Company by two of the remaining shareholders
(Note 14). Pursuant to these agreements, the Company was to pay the former
shareholder, beginning on December 15, 1995, as follows:

- $30,000 as bonus for fiscal year 1995 to be paid in $2,500 monthly
installments.

- $150,000 as a severance arrangement to be paid in monthly installments of
$5,690 through November 15, 1996, $5,647 through November 15, 1997 and
$1,163 through November 15, 1998.

- $236,518 as a noncompete agreement to be paid in graduating monthly
payments through November 15, 2003.

With respect to these arrangements, the Company expensed the bonus payment
in fiscal year 1995. The discounted value of the severance agreement (8.75%
discount rate) was expensed in the six months ended March 31, 1996, with a
related liability established in the accompanying balance sheet. The discounted
value of the noncompete agreement (8.75% discount rate) was recorded as an
intangible asset (Note 3) and a related liability was established in the
accompanying balance sheet.

F-89
<PAGE> 149

HRA, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The following summarizes the Company's obligations under these deferred
compensation arrangements:

SEPTEMBER 30, SEPTEMBER 30, MARCH 31,
1994 1995 1996
------------- ------------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Consulting arrangement......................... $ 195,722 $ 171,031 $ 135,673
Severance agreement with a former
shareholder.................................. -- -- 116,586
Noncompete agreement with a former
shareholder.................................. -- -- 139,637
--------- --------- ---------
195,722 171,031 391,896
Less current portion...................... 97,898 43,699 106,208
--------- --------- ---------
$ 97,824 $ 127,332 $ 285,688
========= ========= =========
</TABLE>

Annual maturities pursuant to the consulting arrangement for years
subsequent to fiscal year 1995 are as follows:

11. NONCANCELABLE OPERATING LEASES:

The Company leases office locations and certain equipment under
noncancelable operating lease agreements expiring at various times through June
30, 1998. Future minimum payments required under operating leases that have an
initial or remaining noncancelable lease term in excess of one year at September
30, 1995, are as follows:

Rent expense totaled $156,224, $143,430 and $194,096 for fiscal years 1993,
1994 and 1995, respectively. For the six months ended March 31, 1995 and 1996,
rent expense totaled $81,602 (unaudited) and $105,177 (unaudited), respectively.

12. SAVINGS AND RETIREMENT PLAN:

During fiscal year 1995, the Company made available to all permanent
employees with one year of service a savings and retirement plan. The plan, at
the Company's option, may be terminated at any time and allows participants to
defer a portion of their after tax salary and receive a matching employer
contribution of up to 2% of the participants' annual salary based on years of
service. Matching contributions are made in January of the following fiscal year
for participants who remain employed by the Company. Matching contributions of
approximately $8,000 were made during fiscal year 1995. The plan also allows the
Company to contribute additional amounts at the discretion of management. Any
such amounts contributed are to be allocated equally among all eligible
participants. Management authorized discretionary contributions of $24,000 and
$7,700 (unaudited) for fiscal year 1995 and the six months ended March 31, 1996,
respectively. Contributions deposited into the plan are held by an unrelated
third party and are registered in the name of the participants.

13. LITIGATION:

The Company is involved in a lawsuit with its former workers compensation
insurance carrier, in which the Company is disputing the amount of insurance
premiums owed in fiscal years 1993 and 1994 and a portion

F-90
<PAGE> 150

HRA, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

of fiscal year 1995. Subsequent to September 30, 1995, a judgment was rendered
against the Company for approximately $718,000, which is inclusive of the
disputed payments plus accrued interest. The Company has filed an appeal of this
judgment and is negotiating a settlement. The Company reserved for these
disputed amounts in the fiscal years in which they arose. Accordingly,
management anticipates that the ultimate resolution of this matter will not have
a materially adverse affect on the financial position or results of operations
of the Company.

The Company is subject to other legal proceedings and claims which arise in
the ordinary course of its business. In the opinion of management, the aggregate
liability, if any, with respect to these proceedings will not materially
adversely affect the financial position or results of operations of the Company.

14. SUBSEQUENT EVENTS:

Shareholder Transaction --

During November 1995, two of the Company's shareholders purchased the
entire common stock interest in the Company (approximately 32%) from another
shareholder. In conjunction with this transaction, the Company acted as
guarantor on the notes payable issued by the acquiring shareholders for the
stock in the amount of $150,000. Separately, the Company entered into a
severance arrangement and noncompete agreement through November 2003 with this
former shareholder (Note 10).

Advances to Shareholders --

In conjunction with the shareholder transaction described above and other
matters, the Company advanced $250,000 to two of its shareholders during
November 1995.

Other Matters --

In April 1996, the Company settled a dispute with a professional firm that
had previously represented them in certain actions related to workers'
compensation insurance and received cash of approximately $245,000.

In November 1995, the Company settled a controversy concerning an option
held by certain parties to acquire 30% of the common stock of the Company.
Pursuant to the Settlement Agreement and Release, the rights under the option
were transferred to two of the Company's existing shareholders for $90,000,
which was paid by the Company. This payment was expensed in the six months ended
March 31, 1996.

15. EVENTS SUBSEQUENT TO DATE OF REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS (UNAUDITED):

StaffMark Inc. --

In June 1996, the owners of the Company entered into a definitive agreement
to merge with StaffMark, Inc. ("StaffMark") in conjunction with StaffMark's
anticipated initial public offering. Prior to or coincident with this proposed
merger, the Company's leased automobiles will be transferred to the respective
shareholders.

Other --

In June 1996, the Company entered into a definitive agreement to purchase
the assets and intellectual property of Dorothy Johnson's Career Consultants,
Inc. ("Career Consultants"). Career Consultants provides permanent placement
services on a fee basis to companies primarily in the Nashville, Tennessee area.
The purchase price approximates $850,000 and includes a payment for assets and a
non-compete agreement with the principal shareholder of Career Consultants. The
acquisition is expected to be consummated in July 1996, and will be accounted
for as a purchase business combination.

F-91
<PAGE> 151

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To First Choice Staffing, Inc.:

We have audited the accompanying balance sheets of First Choice Staffing,
Inc. (a South Carolina corporation) as of December 31, 1994 and 1995, and the
related statements of income, shareholders' equity and cash flows for each of
the three fiscal years in the period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of First Choice Staffing, Inc.
as of December 31, 1994 and 1995, and the results of its operations and its cash
flows for each of the three fiscal years in the period ended December 31, 1995,
in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Raleigh, North Carolina,
May 24, 1996.

F-92
<PAGE> 152

FIRST CHOICE STAFFING, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
FISCAL YEARS
------------------------ MARCH 31,
1994 1995 1996
---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.............................. $ 194,111 $ 268,440 $ 40,038
Accounts receivable, net............................... 1,078,340 1,145,532 1,255,886
Prepaid expenses and other............................. 71,100 72,171 73,662
---------- ---------- -----------
Total current assets........................... 1,343,551 1,486,143 1,369,586
PROPERTY AND EQUIPMENT, net.............................. 196,110 327,240 359,474
OTHER ASSETS............................................. 36,000 36,000 36,000
---------- ---------- -----------
$1,575,661 $1,849,383 $ 1,765,060
========== ========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of credit......................................... $ -- $ 200,000 $ 150,000
Accounts payable....................................... 21,326 65,608 71,668
Accrued workers' compensation.......................... 92,347 46,359 44,659
Payroll and related benefits........................... 630,555 534,047 414,797
Other accrued expenses................................. 7,000 5,735 --
Note payable to shareholder............................ 250,000 180,000 180,000
---------- ---------- -----------
Total current liabilities...................... 1,001,228 1,031,749 861,124
COMMITMENTS AND CONTINGENCIES
(Notes 5, 6 and 8)
SHAREHOLDERS' EQUITY:
Common stock, $1 par value, 100,000 shares authorized,
10,000 shares issued and outstanding................ 10,000 10,000 10,000
Retained earnings...................................... 564,433 807,634 893,936
---------- ---------- -----------
Total shareholders' equity..................... 574,433 817,634 903,936
---------- ---------- -----------
$1,575,661 $1,849,383 $ 1,765,060
========== ========== ===========
</TABLE>

The accompanying notes to financial statements
are an integral part of these balance sheets.

F-93
<PAGE> 153

FIRST CHOICE STAFFING, INC.

STATEMENTS OF INCOME

<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL YEARS ------------------------
----------------------------------------- MARCH 26, MARCH 31,
1993 1994 1995 1996, 1996
----------- ----------- ----------- ---------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
SERVICE REVENUES.............. $10,807,801 $13,007,484 $13,703,404 $3,227,701 $3,523,681
COST OF SERVICES.............. 8,825,086 10,573,111 11,149,085 2,620,573 2,867,964
----------- ----------- ----------- ---------- ----------
Gross profit........ 1,982,715 2,434,373 2,554,319 607,128 655,717
OPERATING EXPENSES:
Selling, general and
administrative........... 1,361,834 2,485,029 2,258,780 511,788 554,041
Depreciation................ 34,570 34,357 32,923 8,589 8,231
----------- ----------- ----------- ---------- ----------
Operating income
(loss)............ 586,311 (85,013) 262,616 86,751 93,445
OTHER INCOME (EXPENSE):
Interest expense............ (71) (26,109) (19,415) (6,285) (7,143)
Other, net.................. (2,427) 2,256 -- -- --
----------- ----------- ----------- ---------- ----------
INCOME (LOSS) BEFORE PROVISION
(BENEFIT) FOR INCOME
TAXES....................... 583,813 (108,866) 243,201 80,466 86,302
PROVISION (BENEFIT) FOR INCOME
TAXES....................... 232,787 (168,251) -- -- --
----------- ----------- ----------- ---------- ----------
Net income.......... $ 351,026 $ 59,385 $ 243,201 $ 80,466 $ 86,302
=========== =========== =========== ========== ==========
</TABLE>

The accompanying notes to financial statements
are an integral part of these statements.

F-94
<PAGE> 154

FIRST CHOICE STAFFING, INC.

STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK
------------------ RETAINED
SHARES AMOUNT EARNINGS TOTAL
------ ------- -------- --------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1992......................... 10,000 $10,000 $154,022 $164,022
Net income....................................... -- -- 351,026 351,026
------ ------- -------- --------
BALANCE, December 31, 1993......................... 10,000 10,000 505,048 515,048
Net income....................................... -- -- 59,385 59,385
------ ------- -------- --------
BALANCE, December 31, 1994......................... 10,000 10,000 564,433 574,433
Net income....................................... -- -- 243,201 243,201
------ ------- -------- --------
BALANCE, December 31, 1995......................... 10,000 10,000 807,634 817,634
Net income (Unaudited)........................... -- -- 86,302 86,302
------ ------- -------- --------
BALANCE, March 31, 1996 (Unaudited)................ 10,000 $10,000 $893,936 $903,936
====== ======= ======== ========
</TABLE>

The accompanying notes to financial statements
are an integral part of these statements.

F-95
<PAGE> 155

FIRST CHOICE STAFFING, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL YEARS -------------------------
--------------------------------- MARCH 26, MARCH 31,
1993 1994 1995 1995 1996
--------- --------- --------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income......................................... $ 351,026 $ 59,385 $ 243,201 $ 80,466 $ 86,302
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation.................................... 34,570 34,357 32,923 8,589 8,231
Deferred income taxes........................... (3,908) 11,256 -- -- --
Change in operating assets and liabilities:
Accounts receivable, net...................... (311,121) (149,482) (67,192) (38,291) (110,354)
Prepaid expenses and other.................... (32,022) (15,485) (1,071) 54,100 (1,491)
Other assets.................................. (158,104) -- -- -- --
Accounts payable.............................. 12,587 (2,923) 44,282 39,231 6,060
Accrued workers' compensation................. 68,247 10,867 (45,988) (26,107) (1,700)
Payroll and related liabilities............... 189,670 259,929 (96,508) (105,438) (119,250)
Accrued income taxes.......................... 54,275 (153,072) -- -- --
Other accrued expenses........................ 3,158 (9,256) (1,265) (7,000) (5,735)
--------- --------- --------- --------- ---------
Net cash provided by (used in)
operating activities..................... 208,378 45,576 108,382 5,550 (137,937)
--------- --------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures............................... (53,582) (120,441) (164,053) (45,926) (40,465)
--------- --------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit....................... -- 100,000 375,000 -- --
Payments on line of credit......................... (191,038) (100,000) (175,000) -- (50,000)
Proceeds from note payable to shareholder.......... 9,349 250,000 -- -- --
Payments on note payable to shareholder............ -- (9,349) (70,000) -- --
--------- --------- --------- --------- ---------
Net cash provided by (used in)
financing activities..................... (181,689) 240,651 130,000 -- (50,000)
--------- --------- --------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS........................................ (26,893) 165,786 74,329 (40,376) (228,402)
CASH AND CASH EQUIVALENTS,
beginning of period................................ 55,218 28,325 194,111 194,111 268,440
--------- --------- --------- --------- ---------
CASH AND CASH EQUIVALENTS,
end of period...................................... $ 28,325 $ 194,111 $ 268,440 $ 153,735 $ 40,038
========= ========= ========= ========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid...................................... $ 71 $ 26,109 $ 19,415 $ 6,285 $ 7,143
========= ========= ========= ========= =========
Taxes paid (refunded).............................. $ 189,769 (26,393) $ -- $ -- $ --
========= ========= ========= ========= =========
</TABLE>

The accompanying notes to financial statements
are an integral part of these statements.

F-96
<PAGE> 156

FIRST CHOICE STAFFING, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization --

First Choice Staffing, Inc. (the "Company"), a South Carolina corporation,
provides temporary personnel services primarily for industrial and clerical
needs in the greater Charlotte, North Carolina, metropolitan region. The
business was initially founded in 1986 as a Dunhill Temporary Systems franchise.
In 1989, the founders bought out the Dunhill franchise contract and formed First
Choice Temporary Staffing, Inc. In 1993, the Company changed its name to First
Choice Staffing, Inc.

Reorganization --

Prior to reorganization on April 1, 1994, the Company was a wholly owned
subsidiary of Gregory Personnel, Inc. ("Gregory Personnel"). Gregory Personnel
was formed as a holding company in connection with the acquisition by one 50%
shareholder of the other 50% shareholder's interest in the Company in 1990.
Gregory Personnel had no operations and had assets consisting primarily of a
noncompete agreement arising from the acquisition of the former 50%
shareholder's interest in the Company. The noncompete agreement was amortized
over three years. On April 1, 1994, Gregory Personnel was merged downstream with
the Company, leaving the Company as the surviving entity.

Basis of Presentation --

The accompanying financial statements include the accounts of Gregory
Personnel for the period prior to the merger effective April 1, 1994. As a
result of the change in control of the Company occurring in 1990, upon the
acquisition of the former 50% shareholder's interest, the acquisition was
accounted for as a purchase resulting in the recording of intangible assets as
discussed above.

Fiscal Periods --

For presentation purposes, the accompanying financial statements have been
prepared by the Company on a calendar year basis. However, the Company's fiscal
year actually ends on the last Sunday in December. The unaudited interim
financial information as of March 31, 1996, and for the three-month periods
ended March 26, 1995, and March 31, 1996, correspond to the Company's fiscal
quarters which ended on the last Sunday in March.

Interim Financial Statements --

The accompanying interim financial statements and related disclosures have
not been audited by independent accountants. However, they have been prepared in
conformity with the accounting principles stated in the audited financial
statements of the three years in the period ended December 31, 1995, and include
all adjustments of a normal recurring nature which, in the opinion of
management, are necessary to present fairly the financial position of the
Company and the results of operations and cash flows for each of the periods
presented. The operating results for the interim periods presented are not
necessarily indicative of results for the full year.

Revenue Recognition --

Service revenues are recognized as income at the time staffing services are
provided to the customer.

Use of Estimates --

F-97
<PAGE> 157

FIRST CHOICE STAFFING, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

revenues and expenses and disclosures of contingent assets and liabilities. The
estimates and assumptions used in the accompanying financial statements are
based upon management's evaluation of the relevant facts and circumstances as of
the date of the financial statements. Actual results may differ from the
estimates and assumptions used in preparing the accompanying financial
statements.

Cash and Cash Equivalents --

Accounts Receivable --

The Company maintains allowances for potential losses which management
believes are adequate to absorb losses to be incurred in realizing the amounts
recorded in the accompanying financial statements. The Company has recorded an
allowance for doubtful accounts of $25,000 at December 31, 1994, December 31,
1995 and March 31, 1996 (unaudited). Included in accounts receivable in the
accompanying balance sheets are unbilled amounts of $188,778, $172,834 and
$291,548 (unaudited) at December 31, 1994, December 31, 1995 and March 31, 1996,
respectively.

Property and Equipment --

Property and equipment are recorded at cost and are depreciated on a
straight-line basis over the estimated useful lives of the assets which are as
follows:

<TABLE>
<S> <C>
Office equipment.................................................... 7 years
Computer equipment.................................................. 5 years
Vehicles............................................................ 5 years
Computer software................................................... 3 years
Leasehold improvements.............................................. 7 years
</TABLE>

Additions that extend the lives of the assets are capitalized while repairs
and maintenance costs are expensed as incurred. When property and equipment are
retired, the cost of the property and equipment and the related accumulated
depreciation are removed from the balance sheet and any resultant gain or loss
is recorded.

Other Assets --

Other assets consists of an investment in a captive workers' compensation
insurance pool of which the Company is a member. The investment is accounted for
by the Company under the cost method.

Fair Value of Financial Instruments --

The Company's financial instruments include cash and cash equivalents, note
payable to shareholder and its other debt obligations. Management believes that
these instruments bear interest at rates which approximate prevailing market
rates for instruments with similar characteristics and, accordingly, that the
carrying values for these instruments are reasonable estimates of fair value.

Concentration of Credit Risk --

Credit risk with respect to accounts receivable is dispensed due to the
nature of the business, the large number of customers and the diversity of
industries serviced. The Company performs credit evaluations of all its
customers.

F-98
<PAGE> 158

FIRST CHOICE STAFFING, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Income Taxes --

Prior to April 1, 1994, the Company was a C Corporation and, accordingly,
was subject to federal and state income taxes. The Company accounted for income
taxes in accordance with Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," which recognizes deferred tax assets and
liabilities for future tax consequences attributed to differences between the
financial statement and income tax basis of assets and liabilities and operating
loss carryforwards.

In connection with the reorganization in April 1994, the Company elected S
Corporation status for federal and state income tax reporting purposes.
Accordingly, no provision for income taxes has been recorded for periods
subsequent to this change in tax status as such tax liabilities arising from the
date of election as an S Corporation are liabilities of the shareholders of the
Company. Also in connection with the April 1994 reorganization, the Company
changed its tax year-end from March 31 to December 31.

The Company's tax returns are subject to examination by federal and state
taxing authorities. If such examinations result in a change in the Company's
reported income or loss, the taxable income or loss reported by the individual
shareholders could also change.

2. PROPERTY AND EQUIPMENT:

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
FISCAL YEAR
----------------------- MARCH 31,
1994 1995 1996
--------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C>
Office equipment................................ $ 117,938 $ 171,842 $ 186,439
Computer equipment.............................. 123,966 153,405 170,216
Vehicles........................................ 16,301 26,501 26,501
Computer software............................... 33,531 45,775 49,979
Leasehold improvements.......................... 56,009 83,248 88,102
--------- --------- ---------
347,745 480,771 521,237
Less accumulated depreciation................. 151,635 153,531 161,763
--------- --------- ---------
$ 196,110 $ 327,240 $ 359,474
========= ========= =========
</TABLE>

3. LINE OF CREDIT:

The Company has a revolving line of credit with a bank. Maximum borrowings
under the line are equal to the lesser of $400,000 or 80% of the Company's
eligible accounts receivable, as defined within the line of credit agreement.
The line is secured by the Company's accounts receivable, and interest is
payable monthly at prime (8.5% at December 31, 1995), with principal due May 31,
1996. Amounts outstanding under the line were $0, $200,000 and $150,000
(unaudited) as of December 31, 1994, December 31, 1995 and March 31, 1996,
respectively.

In addition, the line of credit is secured by a personal guaranty of the
majority shareholder and, among other things, has certain financial ratios and
restrictions on incurring additional debt. The Company was in compliance with
these covenants as of December 31, 1995. The Company intends to renew this line
of credit upon its annual maturity date. The Company had approximately $400,000,
$200,000 and $250,000 available under its line of credit at December 31, 1994,
December 31, 1995 and March 31, 1996, respectively.

F-99
<PAGE> 159

FIRST CHOICE STAFFING, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

4. NOTE PAYABLE TO SHAREHOLDER:

The Company has an unsecured note payable to the majority shareholder with
interest payable semiannually at 8% and principal due on demand.

5. INCOME TAXES:

Components of the tax provision (benefit) for the periods prior to the S
Corporation election, effective April 1, 1994, are shown below:

<TABLE>
<CAPTION>
FISCAL YEARS
----------------------
1993 1994
-------- ---------
<S> <C> <C>
Provision for (benefit from) income taxes --
Federal:
Current.................................................. $188,194 $(127,554)
Deferred................................................. (3,607) (8,197)
-------- ---------
Total federal....................................... 184,587 (135,751)
-------- ---------
State:
Current.................................................. 48,500 (32,800)
Deferred................................................. (300) 300
-------- ---------
Total state......................................... 48,200 (32,500)
-------- ---------
$232,787 $(168,251)
======== =========
</TABLE>

The income tax provision (benefit) for the periods prior to the S
Corporation election, effective April 1, 1994, differs from the amount computed
by applying the federal statutory rate of 34% to income before taxes due to the
following:

<TABLE>
<CAPTION>
FISCAL YEARS
----------------------
1993 1994
-------- ---------
<S> <C> <C>
Income tax provision computed at the federal statutory rate... $199,321 $ (37,781)
State taxes, net of federal tax benefit....................... 30,953 (586)
Effect of permanent differences............................... 3,621 4,143
Elimination of net deferred tax liabilities upon S Corporation
election.................................................... -- 3,827
Taxable income earned after S Corporation election, not
subject to taxation......................................... -- (137,854)
Other......................................................... (1,108) --
-------- ---------
Provision (benefit) for income taxes........................ $232,787 $(168,251)
======== =========
</TABLE>

Deferred income taxes reflect the impact of the "temporary differences"
between the financial and tax basis of assets and liabilities as measured by
enacted tax laws. The temporary differences which gave rise to deferred tax
assets and liabilities as of December 31, 1993 (the period prior to the S
Corporation election), were as follows:

<TABLE>
<S> <C>
Deferred tax assets --
Allowance for doubtful accounts.......................................... $ 7,800
Vacation accrual......................................................... 12,805
-------
Total deferred tax assets........................................ $20,605
=======
Deferred tax liabilities -- Accelerated depreciation....................... $ 9,349
=======
</TABLE>

F-100
<PAGE> 160

FIRST CHOICE STAFFING, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

6. COMMITMENTS AND CONTINGENCIES:

Noncancelable Operating Leases --

The Company leases office space under noncancelable operating leases.
Approximate future minimum payments required under operating leases that have an
initial or remaining noncancelable lease term in excess of one year at September
30, 1995, are as follows:

<TABLE>
<S> <C>
1996.............................................. $ 92,000
1997.............................................. 86,000
1998.............................................. 85,000
1999.............................................. 67,000
2000.............................................. 43,000
Thereafter........................................ 78,000
--------
$451,000
========
</TABLE>

Rental expense totaled $61,000, $82,000 and $103,000 for fiscal years 1993,
1994 and 1995, respectively, and $22,000 and $30,000 for the unaudited
three-month periods ended March 26, 1995 and March 31, 1996, respectively.

401(k) Plan --

In 1995, the Company adopted a 401(k) Savings Plan for its employees in
which the Company matches 50% of the employee's contribution up to 3% of the
employee's salary. The Company's contribution expense was $18,000 for 1995 and
$6,000 for the unaudited three-month period ended March 31, 1996.

7. SIGNIFICANT CUSTOMERS:

The Company had one customer which represented 12%, 13%, 12%, 13% and 12%
of service revenues for the years ended December 31, 1993, 1994 and 1995, and
the unaudited three-month periods ended March 26, 1995 and March 31, 1996,
respectively. Another customer represented 11% of service revenues for the year
ended December 31, 1993. No other customer accounted for more than 10% of
service revenues for those periods.

F-101
<PAGE> 161

FIRST CHOICE STAFFING, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

8. EVENTS SUBSEQUENT TO DATE OF REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS (UNAUDITED):

StaffMark --

In June 1996, the shareholders of the Company entered into a definitive
agreement to merge the Company with StaffMark, Inc. ("StaffMark") in conjunction
with StaffMark's anticipated initial public offering. Prior to or coincident
with this proposed merger, the Company plans to make a cash distribution to the
majority shareholder representing the Company's S Corporation Accumulated
Adjustment Account. The balance of the Company's S Corporation Accumulated
Adjustment Account at December 31, 1995, was approximately $504,000.

In conjunction with the proposed merger discussed above, the majority
shareholder will enter into an employment agreement which provides for a set
base salary, participation in future incentive bonus plans, certain other
benefits and a covenant not to compete if and when the shareholder's employment
is terminated.

Strategic Sourcing, Inc. --

In June 1996, the Company entered into a definitive agreement to acquire
certain of the operating assets of Strategic Sourcing, Inc., a temporary
staffing business located in Charlotte, North Carolina. The proposed purchase
price is $750,000 with closing to occur in July 1996.

F-102
<PAGE> 162

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To The Blethen Group:

We have audited the accompanying combined balance sheets of the companies
identified in Note 1 to the financial statements ("The Blethen Group"), as of
December 31, 1995 and January 1, 1995, and the related combined statements of
income (loss), shareholders' equity and cash flows for each of the three fiscal
years in the period ended December 31, 1995. These financial statements are the
responsibility of the Company's managements. Our responsibility is to express an
opinion on these financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Blethen Group as of
December 31, 1995 and January 1, 1995, and the results of their operations and
their cash flows for each of the three fiscal years in the period ended December
31, 1995, in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Raleigh, North Carolina,
May 24, 1996.

F-103
<PAGE> 163

THE BLETHEN GROUP

COMBINED BALANCE SHEETS

JANUARY 1, DECEMBER 31, MARCH 31,
1995 1995 1996
---------- ------------ ----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................... $ 31,921 $ 44,644 $ 42,114
Accounts receivable..................................... 1,136,081 1,377,799 1,467,827
Deferred tax asset...................................... 5,500 11,000 11,000
Prepaid expenses and other.............................. 16,809 14,510 9,191
---------- ----------- ----------
Total current assets............................ 1,190,311 1,447,953 1,530,132
PROPERTY AND EQUIPMENT, net............................... 393,330 307,286 296,423
OTHER ASSETS:
Due from shareholders................................... 185,236 194,163 231,328
Deferred tax asset...................................... 24,100 20,760 20,760
Other................................................... 11,750 12,232 7,383
---------- ----------- ----------
Total other assets.............................. 221,086 227,155 259,471
---------- ----------- ----------
$1,804,727 $ 1,982,394 $2,086,026
========== =========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Lines of credit......................................... $ 764,645 $ 971,436 $ 856,617
Accounts payable........................................ 220,801 105,648 111,504
Outstanding checks...................................... -- 25,329 --
Payroll and related liabilities......................... 295,472 301,258 456,588
Current maturities of long-term debt.................... 25,341 10,151 5,047
Current maturities of capital lease obligations......... 82,708 47,148 38,689
Current maturities of notes payable to related
parties.............................................. 83,308 62,813 102,051
Income taxes payable.................................... 15,783 82,583 111,732
Accrued interest and other.............................. 16,001 55,043 49,193
---------- ----------- ----------
Total current liabilities....................... 1,504,059 1,661,409 1,731,421
LONG-TERM DEBT, less current maturities................... 35,604 24,922 25,820
CAPITAL LEASE OBLIGATIONS, less current maturities........ 67,452 22,475 17,196
NOTES PAYABLE TO RELATED PARTIES, less current
maturities.............................................. 49,037 45,271 45,271
COMMITMENTS AND CONTINGENCIES
(Notes 6, 7, 8 and 9)
SHAREHOLDERS' EQUITY:
Common stock............................................ 8,399 8,399 8,399
Additional paid-in capital.............................. 8,940 8,940 8,940
Retained earnings....................................... 131,236 210,978 248,979
---------- ----------- ----------
Total shareholders' equity...................... 148,575 228,317 266,318
---------- ----------- ----------
$1,804,727 $ 1,982,394 $2,086,026
========== =========== ==========
</TABLE>

The accompanying notes to combined financial
statements are an integral part of these balance sheets.

F-104
<PAGE> 164

THE BLETHEN GROUP

COMBINED STATEMENTS OF INCOME (LOSS)

The accompanying notes to combined financial statements
are an integral part of these statements.

F-105
<PAGE> 165

THE BLETHEN GROUP

COMBINED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS TOTAL
------ ---------- -------- --------
<S> <C> <C> <C> <C>
BALANCE, January 4, 1993............................ $8,543 $ 32,265 $239,861 $280,669
Net loss.......................................... -- -- (90,916) (90,916)
Dividends......................................... -- -- (57,343) (57,343)
------ -------- -------- --------
BALANCE, January 2, 1994............................ 8,543 32,265 91,602 132,410
Net income........................................ -- -- 140,639 140,639
Dividends......................................... -- -- (99,474) (99,474)
Repurchase and retirement of common stock......... (144) (23,325) (1,531) (25,000)
------ -------- -------- --------
BALANCE, January 1, 1995............................ 8,399 8,940 131,236 148,575
Net income........................................ -- -- 208,375 208,375
Dividends......................................... -- -- (128,633) (128,633)
------ -------- -------- --------
BALANCE, December 31, 1995.......................... 8,399 8,940 210,978 228,317
Net income (Unaudited)............................ -- -- 50,074 50,074
Dividends (Unaudited)............................. -- -- (12,073) (12,073)
------ -------- -------- --------
BALANCE, March 31, 1996 (Unaudited)................. $8,399 $ 8,940 $248,979 $266,318
====== ======== ======== ========
</TABLE>

The accompanying notes to combined financial statements
are an integral part of these statements.

F-106
<PAGE> 166

THE BLETHEN GROUP

COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FISCAL YEARS THREE MONTHS ENDED
----------------------------------- --------------------------
APRIL 2, MARCH 31,
1993 1994 1995 1995 1996
--------- -------- ---------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss).............................. $ (90,916) $140,639 $ 208,375 $ 58,897 $ 50,074
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization............... 134,968 122,963 111,437 23,554 26,060
Provision for (benefit from) deferred income
taxes..................................... (136,263) 29,898 (2,160) -- --
Change in operating assets and liabilities:
Accounts receivable....................... (17,767) (54,870) (241,718) (21,569) (90,028)
Prepaid expenses and other................ (14,096) 30,971 2,299 (8,919) 5,319
Other assets.............................. 21,491 5,769 (482) -- 4,849
Accounts payable.......................... 180,570 (97,532) (115,153) 52,578 5,856
Outstanding checks........................ -- -- 25,329 -- (25,329)
Payroll and related liabilities........... (75,190) 65,663 5,786 65,017 155,330
Income taxes payable (receivable)......... (13,711) 29,494 66,800 20,709 29,149
Accrued interest and other................ 77,477 (55,306) 39,042 44,694 (5,850)
--------- -------- ---------- --------- ---------
Net cash provided by operating
activities........................... 66,563 217,689 99,555 234,961 155,430
--------- -------- ---------- --------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures........................... (130,178) (72,119) (25,393) -- (15,197)
--------- -------- ---------- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Net proceeds from (payments on) lines of
credit...................................... 53,773 10,681 206,791 (109,737) (114,819)
Proceeds from issuance of long-term debt....... 12,851 54,172 -- -- --
Payments on long-term debt..................... (28,243) (10,282) (25,872) (15,900) (4,206)
Payments on capital lease obligations.......... (16,213) (113,042) (80,537) (22,645) (13,738)
Change in notes payable to related parties..... 34,314 73,031 (24,261) (22,586) 39,238
Cash distributions to shareholders............. (57,343) (99,474) (128,633) (21,000) (12,073)
Change in due from shareholders................ 837 (44,099) (8,927) 5,531 (37,165)
--------- -------- ---------- --------- ---------
Net cash provided by (used in)
financing activities................. (24) (129,013) (61,439) (186,337) (142,763)
--------- -------- ---------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS.................................... (63,639) 16,557 12,723 48,624 (2,530)
CASH AND CASH EQUIVALENTS, beginning of period... 79,003 15,364 31,921 31,921 44,644
--------- -------- ---------- --------- ---------
CASH AND CASH EQUIVALENTS, end of period......... $ 15,364 $ 31,921 $ 44,644 $ 80,545 $ 42,114
========= ======== ========== ========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Interest paid.................................. $ 97,062 $169,227 $ 141,324 $ 28,868 $ 34,069
========= ======== ========== ========= =========
Taxes paid..................................... $ -- $ 66 $ 41,476 $ 22,925 $ 33,009
========= ======== ========== ========= =========
Noncash transactions:
Repurchase of common stock through a note
payable................................... $ -- $ 25,000 $ -- $ -- $ --
========= ======== ========== ========= =========
Purchase of property and equipment through
capital leases............................ $ 45,975 $ -- $ -- $ -- $ --
========= ======== ========== ========= =========
</TABLE>

The accompanying notes to combined financial statements
are an integral part of these statements.

F-107
<PAGE> 167

THE BLETHEN GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization --

The Blethen Group's (the "Company") primary business purpose is to provide
temporary personnel services. The Company's administrative headquarters are in
Burlington, North Carolina, and as of December 31, 1995, the Company operated
staffing offices in Burlington, Henderson, Durham, West End, Research Triangle
Park and Winston-Salem, North Carolina.

The accompanying combined financial statements include the accounts of the
following separate entities which comprise The Blethen Group:

<TABLE>
<CAPTION>
FORM OF
DATE OF CORPORATION
INCORPORATION FOR INCOME
ENTITY IN NORTH CAROLINA TAX PURPOSES SERVICE TYPE
- -------------------------------- ------------------- --------------- ---------------------------
<S> <C> <C> <C>
Blethen Temporaries, Inc........ October 6, 1981 S Corporation Clerical and light
industrial
Dixon Enterprises of
Burlington, Inc............... February 7, 1992 C Corporation Clerical and light
industrial

DP Pros of Burlington, Inc...... June 6, 1985 C Corporation Information technology and
clinical

Personnel Placement, Inc........ October 6, 1981 C Corporation Permanent placement

TRASEC Corp..................... February 7, 1992 C Corporation Clerical and light
industrial
Jaeger Personnel Services,
Ltd........................... December 20, 1985 S Corporation Clerical and light
industrial
</TABLE>

Basis of Presentation --

The accompanying financial statements are presented on a combined basis as
the entities comprising the Company are under common ownership and/or common
management. Furthermore, Blethen Temporaries, Inc. has an option to purchase all
outstanding shares of common stock of Dixon Enterprises of Burlington, Inc. and
TRASEC Corp. for an amount not to exceed $5,000. Blethen Temporaries, Inc.
intends to exercise this option in 1996. As a result, upon exercise of this
option, all companies in the accompanying combined financial statements, with
the exception of Jaeger Personnel Services, Ltd., will be owned by one
individual (the majority shareholder). All significant intercompany transactions
have been eliminated.

Fiscal Periods --

The Company's fiscal year ends on the Sunday closest to December 31. Fiscal
year 1993 refers to the year ended January 2, 1994, fiscal year 1994 refers to
the year ended January 1, 1995, and fiscal year 1995 refers to the year ended
December 31, 1995. The fiscal years 1993, 1994 and 1995 each included 52 weeks.
The unaudited interim periods included in the accompanying combined financial
statements each included 13 weeks.

Interim Financial Statements --

The accompanying interim combined financial statements and related
disclosures have not been audited by independent accountants. However, they have
been prepared in conformity with the accounting principles stated in the audited
combined financial statements for the three years in the period ended December
31, 1995, and include all adjustments of a normal recurring nature which, in the
opinion of management, are necessary to present fairly the financial position of
the Company and the combined results of operations and

F-108
<PAGE> 168

THE BLETHEN GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

cash flows for each of the periods presented. The operating results for the
interim periods presented are not necessarily indicative of results for the full
year.

Revenue Recognition --

Service revenues and permanent placement fee revenues are recognized as
income at the time staffing services are provided or the permanent employee is
placed with the customer.

In addition to the services described above, the Company, through a
Licensing Agreement (see Note 7), employs and pays individuals to perform
services for the licensees' customers, invoices customers, maintains
professional liability insurance and supports the training, office
administration, systems and marketing needs of the licensee. All revenues
generated by the licensee, therefore, belong to the Company and are included in
the Company's revenues and expenses. The Company is primarily liable for
operating expenses.

Use of Estimates --

The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses and disclosure of contingent assets and liabilities. The estimates
and assumptions used in the accompanying combined financial statements are based
upon management's evaluation of the relevant facts and circumstances as of the
date of the combined financial statements. Actual results may differ from the
estimates and assumptions used in preparing the accompanying combined financial
statements.

Cash and Cash Equivalents --

Accounts Receivable --

The Company provides, if necessary, allowances for potential losses which
management believes are adequate to absorb losses to be incurred in realizing
the amounts recorded in the accompanying combined financial statements.
Management believes all accounts are collectible and accordingly, has not
recorded an allowance as of January 1, 1995, December 31, 1995 and March 31,
1996. Included in accounts receivable in the accompanying combined balance
sheets are unbilled amounts of $143,515, $149,665 and $16,280 (unaudited) at
January 1, 1995, December 31, 1995 and March 31, 1996, respectively. All
unbilled amounts are normally billable in the following month.

Credit risk with respect to accounts receivable is dispersed due to the
nature of the business, the large number of customers and the diversity of
industries serviced.

Property and Equipment --

Property and equipment are recorded at cost and are depreciated or
amortized on a straight-line basis over the estimated useful lives of the assets
which are as follows:

<TABLE>
<S> <C>
Office equipment............................................. 5 to 7 years
Computer equipment and software.............................. 5 years
Vehicles..................................................... 5 years
Leasehold improvements....................................... 5 to 15 years
</TABLE>

F-109
<PAGE> 169

THE BLETHEN GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

the related accumulated depreciation or amortization are removed from the
balance sheet and any resultant gain or loss is recorded.

Fair Value of Financial Instruments --

The Company's financial instruments include cash, related party notes
payable, due from shareholders and their debt obligations. Management believes
that these instruments bear interest at rates which approximate prevailing
market rates for instruments with similar characteristics, and accordingly, that
the carrying values for these instruments are reasonable estimates of fair
value.

Income Taxes --

Effective January 1, 1993, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
109"). Under this new statement, deferred income taxes are provided based on the
estimated future tax effects of differences between the financial statement
carrying amounts and the tax basis of existing assets and liabilities. The
adoption of SFAS 109 did not have a material effect on the Company's financial
position or results of operations.

Blethen Temporaries, Inc. and Jaeger Personnel Services, Ltd. have elected
to be taxed as S Corporations for federal and state income tax reporting
purposes. Accordingly, no income tax expense (benefit) has been recorded in the
accompanying combined financial statements related to these entities as such
taxes are liabilities of the respective shareholders. These entities' tax
returns are subject to examination by federal and state taxing authorities. If
such examinations result in a change to their reported income or loss, the
taxable income or loss reported by the respective shareholders could also
change.

2. PROPERTY AND EQUIPMENT:

Property and equipment consisted of the following:

JANUARY 1, DECEMBER 31, MARCH 31,
1995 1995 1996
---------- ------------ -----------
(UNAUDITED)

<S> <C> <C> <C>
Office equipment................................. $421,890 $ 428,610 $ 431,772
Computer equipment and software.................. 336,166 352,528 364,563
Vehicles......................................... 65,118 65,118 65,118
Leasehold improvements........................... 109,926 109,926 109,926
-------- ---------- ---------
933,100 956,182 971,379
Less accumulated depreciation and
amortization................................ 539,770 648,896 674,956
-------- ---------- ---------
$393,330 $ 307,286 $ 296,423
======== ========== =========
</TABLE>

F-110
<PAGE> 170

THE BLETHEN GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

3. DEBT:

Long-term debt consisted of the following:

JANUARY 1, DECEMBER 31, MARCH 31,
1995 1995 1996
---------- ------------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Note payable to Chase Auto Financial. Principal
and interest payable monthly. Interest payable
at a fixed rate of 7.75%. Secured by a
vehicle. ...................................... $ 35,172 $ 28,514 $ 25,143
Unsecured note payable to NationsBank of North
Carolina, N.A. Interest payable monthly at a
variable rate which ranged from 9.25% to 10.00%
and averaged 9.83% during 1995. Principal was
repaid in 1995. ............................... 15,900 -- --
Unsecured note payable to NationsBank of North
Carolina, N.A. Principal and interest are
payable in monthly installments of $320.
Interest rate is variable and ranged from 9.25%
to 10.00% and averaged 9.83% during 1995. ..... 9,873 6,559 5,724
---------- ---------- ---------
60,945 35,073 30,867
Less current maturities........................ 25,341 10,151 5,047
---------- ---------- ---------
$ 35,604 $ 24,922 $ 25,820
========== ========== =========
</TABLE>

The Company has two revolving lines of credit with Lighthouse Financial
Corp. that allow for maximum borrowings equal to the lesser of $800,000 and
$750,000 or 85% of the applicable Company's eligible accounts receivable, as
defined. Interest is payable monthly at a variable rate which ranged from 11.00%
to 11.50% and averaged 11.33% during 1995. The lines of credit are renewed
annually and are currently due April 6, 1997. They are secured by the assets of
the Company and guaranteed by the majority shareholder. Principal and interest
on the lines of credit are repaid by collection of accounts receivable under a
lockbox arrangement. Accordingly, such lines are classified as current
maturities of long-term debt. At December 31, 1995 approximately $31,424 of cash
held by the Company was subject to this arrangement. Under the terms of both
lines of credit, the Company is required to maintain certain financial ratios,
including working capital in excess of $125,000 and positive cash flow each
month, among other things. As of March 31, 1996, the Company did not comply with
certain of these ratios, as well as certain other negative covenants. However,
Lighthouse Financial Corp. has waived all events of noncompliance and default.
Balances outstanding under these lines were $764,645, $971,436 and $856,617
(unaudited) as of January 1, 1995, December 31, 1995 and March 31, 1996,
respectively.

Annual maturities of debt subsequent to December 31, 1995 were as follows:

F-111
<PAGE> 171

THE BLETHEN GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

4. CAPITAL LEASE OBLIGATIONS:

As of December 31, 1995, future minimum lease payments were as follows:

<TABLE>
<S> <C>
1996.................................................................... $ 53,957
1997.................................................................... 23,204
--------
Total minimum lease payments............................................ 77,161
Amount representing interest............................................ (7,538)
--------
Present value of net minimum lease payments............................. 69,623
Less current maturities............................................... 47,148
--------
$ 22,475
========
</TABLE>

The net book value of assets (primarily office equipment) held under
capital leases at December 31, 1995 was $102,483, net of accumulated
amortization of $180,375.

5. INCOME TAXES:

Provision (benefit) for income taxes consisted of the following components:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL YEARS -------------------------
----------------------------- APRIL 2, MARCH 31,
1993 1994 1995 1995 1996
--------- ------- ------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Current:
Federal.......................... $ -- $19,102 $69,160 $17,000 $42,000
State............................ -- -- 14,000 4,000 11,000
--------- ------- ------- ------- -------
-- 19,102 83,160 21,000 53,000
--------- ------- ------- ------- -------
Deferred:
Federal.......................... (109,263) 23,898 (1,660) -- --
State............................ (27,000) 6,000 (500) -- --
--------- ------- ------- ------- -------
(136,263) 29,898 (2,160) -- --
--------- ------- ------- ------- -------
Total.................... $(136,263) $49,000 $81,000 $21,000 $53,000
========= ======= ======= ======= =======
</TABLE>

Provision (benefit) for income taxes differs from the amount computed by
applying the federal statutory tax rate to pretax income due to the following:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL YEARS -------------------------
----------------------------- APRIL 2, MARCH 31,
1993 1994 1995 1995 1996
--------- ------- ------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Provision (benefit) for income
taxes computed at the federal
statutory rate................... $ (77,000) $64,000 $98,000 $27,000 $35,000
State taxes, net of federal tax
benefit.......................... (12,000) 10,000 15,000 4,000 5,000
Effect of permanent differences.... 1,000 2,000 3,000 1,000 1,000
(Income) loss of S Corporations not
subject to taxation.............. (43,000) (19,000) (32,000) (10,000) 13,000
Other.............................. (5,263) (8,000) (3,000) (1,000) (1,000)
--------- ------- ------- ------- -------
Provision (benefit) for income
taxes......................... $(136,263) $49,000 $81,000 $21,000 $53,000
========= ======= ======= ======= =======
</TABLE>

F-112
<PAGE> 172

THE BLETHEN GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Deferred income taxes reflect the impact of "temporary differences" between
the financial and tax basis of assets and liabilities. The temporary differences
which gave rise to deferred tax assets and (liabilities) are as follows:

<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31, MARCH 31,
1995 1995 1996
---------- ------------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Current --
Employee advances treated as compensation......... $ (1,000) $ -- $ --
Workers' compensation accrual..................... 4,000 4,000 4,000
Vacation accrual.................................. 2,000 3,000 3,000
Other............................................. 500 4,000 4,000
--------- -------- ---------
5,500 11,000 11,000
--------- -------- ---------
Long term --
NOLs.............................................. 78,000 42,000 42,000
Accelerated depreciation for tax purposes......... (30,000) (26,000) (26,000)
Alternative minimum tax and other credits......... 13,000 4,000 4,000
Change in income tax accounting method............ (37,000) -- --
Other............................................. 100 760 760
--------- -------- ---------
24,100 20,760 20,760
--------- -------- ---------
Net deferred tax assets............................. $ 29,600 $ 31,760 $ 31,760
========= ======== =========
</TABLE>

The NOL carryforward at December 31, 1995 was approximately $103,000.
Utilization of this carryforward may be limited as a result of the potential
change in ownership that would result in the event of the intended merger
subsequent to year-end (Note 9). However, management believes that the deferred
tax asset related to the NOL carryforward is fully realizable, and therefore no
valuation allowance has been recorded.

6. RELATED PARTY TRANSACTIONS:

Notes Payable to Related Parties --

The Company has an informal note payable to a member of the Boards of
Directors and relative of the majority shareholder. The note is payable in
monthly installments of $711. The note bears interest at an annually adjustable
rate equal to the six month average rate of two year treasury notes (6.49% at
December 31, 1995). The outstanding balances as of January 1, 1995, December 31,
1995 and March 31, 1996 were $68,694, $49,038 and $49,038 (unaudited),
respectively. Interest expense related to these notes amounted to approximately
$6,000, $5,000 and $3,000 during fiscal years 1993, 1994 and 1995, respectively,
and $1,000 during each of the unaudited three-month periods ended April 2, 1995
and March 31, 1996.

The Company had a note payable to a former shareholder which originated
through the Company's purchase of the former shareholder's equity interest in DP
Pros of Burlington, Inc. The note did not bear interest and was due in equal
quarterly installments of $4,000. The note was fully repaid in 1995. The
outstanding balance as of January 1, 1995, was $8,000.

The Company has two unsecured notes payable to shareholders, which bear
interest at variable rates ranging between 8.25% and 10.00%. Both notes are due
on demand and aggregate outstanding balances as of January 1, 1995, December 31,
1995 and March 31, 1996, were $52,337, $59,046 and $85,294 (unaudited),
respectively. Interest expense related to these notes amounted to $5,417 and
$5,764 during fiscal years 1994 and 1995, respectively, and $1,441 and $1,858
during the unaudited three-month periods ended April 2, 1995 and March 31, 1996,
respectively.

F-113
<PAGE> 173

THE BLETHEN GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Shareholder Transactions --

The Company leases offices and a vehicle from the majority shareholder
through informal agreements at a monthly cost of $600 each. In March 1996, the
office lease payments were increased to $1,200 per month. Market rental rates
may differ from these rental payments. The Company also frequently borrows from
the majority shareholder. Rental expense under the above agreements totaled
$14,400 for each of the fiscal years 1993, 1994 and 1995 and $3,600 and $4,200
for the unaudited three month periods ended April 2, 1995 and March 31, 1996,
respectively. Due from shareholders primarily represents advances to the
majority shareholder.

The Company rents its Henderson office facilities from a shareholder under
a month-to-month agreement. Rent expense related to these facilities was
$17,500, $19,000 and $24,000 during the fiscal years 1993, 1994 and 1995,
respectively, and $6,000 during each of the unaudited three month periods ended
April 2, 1995 and March 31, 1996.

During 1991 the Company entered into a three year noncompete agreement with
a related party. Pursuant thereto, the individual agreed not to compete, as
defined, with the Company for the term of the agreement, expiring in January
1994, in exchange for $150,000 payable in weekly installments of $962.

7. COMMITMENTS AND CONTINGENCIES:

Distributions to Shareholders --

Blethen Temporaries, Inc. and Jaeger Personnel Services, Ltd. pay dividends
to their shareholders in amounts sufficient to cover, among other things, their
estimated tax payments attributable to each entity's net income which will be
included in their individual tax returns.

Licensing Agreement --

During 1995, the Company entered into an agreement whereby it granted a
license to a third party to open and maintain a branch in West End, North
Carolina, for the purpose of providing temporary personnel services in that
market for an indefinite term. The Company also thereby granted the
non-exclusive right to utilize the Company's trade secrets, methods and
know-how. The Company receives 40% of gross margin, as defined, as payment for
management services. The balance of such gross margin is paid to the licensee.
Amounts expensed under the agreement amounted to $36,515 during fiscal year 1995
and $19,943 during the unaudited three month period ended March 31, 1996. Such
expense is included in selling, general and administrative expenses in the
accompanying combined statements of income (loss).

8. NONCANCELABLE OPERATING LEASES:

The Company leases office space and a vehicle (Note 6) under noncancelable
operating leases. As discussed in Note 6, certain of these facilities are leased
from related parties. Future minimum payments required under operating leases
that have an initial or remaining noncancelable lease term in excess of one year
at December 31, 1995, are as follows:

F-114
<PAGE> 174

THE BLETHEN GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Rental expense totaled $95,208, $155,230 and $157,121 for fiscal years
1993, 1994 and 1995, respectively, and $30,631 and $36,696 for the unaudited
three month periods ended April 2, 1995 and March 31, 1996, respectively.

9. EVENTS SUBSEQUENT TO DATE OF REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
(UNAUDITED):

In June 1996, certain of the shareholders, representing a majority thereof,
of each of the companies comprising The Blethen Group entered into a definitive
agreement to merge with StaffMark, Inc. ("StaffMark") in conjunction with
StaffMark's anticipated initial public offering. Prior to, or coincident with
this proposed merger, the Company plans to make a cash distribution of
approximately $138,000, which represents the Company's estimated S Corporation
Accumulated Adjustment Account. Had this transaction occurred as of March 31,
1996, the effect on the accompanying unaudited interim combined balance sheet
would be a decrease in total assets and shareholders' equity of approximately
$138,000.

In conjunction with the proposed merger discussed above, certain of the
shareholders will enter into employment agreements which provide for a set base
aggregate salary, participation in future incentive bonus plans, certain other
benefits and a covenant not to compete following termination of each person's
employment.

F-115
<PAGE> 175

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To E.P. Enterprises Corporation:

We have audited the accompanying balance sheets of E.P. Enterprises
Corporation (the "Company"), as of December 31, 1994 and July 10, 1995 and the
related statements of income, shareholders' equity (deficit) and cash flows for
the years ended December 31, 1993 and 1994 and for the period from January 1,
1995 through July 10, 1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of E.P. Enterprises Corporation
as of December 31, 1994 and July 10, 1995 and the results of its operations and
its cash flows for the years ended December 31, 1993 and 1994 and for the period
from January 1, 1995 through July 10, 1995, in conformity with generally
accepted accounting principles.

ARTHUR ANDERSEN LLP

Atlanta, Georgia,
May 17, 1996.

F-116
<PAGE> 176

E.P. ENTERPRISES CORPORATION

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, JULY 10,
1994 1995
------------ ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash............................................................. $ -- $ 2,331
Accounts receivable, net of allowance for doubtful accounts of
$10,000....................................................... 1,420,510 1,929,922
Prepaid expenses and other....................................... 58,591 57,723
---------- ----------
Total current assets..................................... 1,479,101 1,989,976
PROPERTY AND EQUIPMENT, net........................................ 124,523 111,561
OTHER ASSETS....................................................... 6,458 5,830
---------- ----------
$1,610,082 $2,107,367
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable................................................. $ 6,476 $ 72,050
Outstanding checks, net.......................................... 145,340 397,142
Payroll and related liabilities.................................. 405,296 660,807
Reserve for workers' compensation claims......................... 81,797 285,000
Current maturities of long-term debt and leases.................. 41,414 1,005,144
Accrued interest and other....................................... 27,759 7,690
---------- ----------
Total current liabilities................................ 708,082 2,427,833
LONG-TERM DEBT AND LEASES, less current maturities................. 10,282 8,769
COMMITMENTS AND CONTINGENCIES (Notes 7, 8 and 9)
SHAREHOLDERS' EQUITY (DEFICIT):
Common stock, $100 par value in 1995 and 1994; authorized and
issued shares of 150 in 1995 and 1994, outstanding shares of
10 in 1995 and 1994........................................... 15,000 15,000
Paid-in capital.................................................. 22,500 22,500
Retained earnings................................................ 1,323,718 102,765
Treasury stock, 140 shares....................................... (469,500) (469,500)
---------- ----------
Total shareholders' equity (deficit)..................... 891,718 (329,235)
---------- ----------
$1,610,082 $2,107,367
========== ==========
</TABLE>

The accompanying notes to financial statements
are an integral part of these balance sheets.

F-117
<PAGE> 177

E.P. ENTERPRISES CORPORATION

STATEMENTS OF INCOME

<TABLE>
<CAPTION>
FOR THE PERIOD
YEARS ENDED DECEMBER 31, FROM
--------------------------- JANUARY 1, 1995
1993 1994 TO JULY 10, 1995
----------- ----------- ----------------
<S> <C> <C> <C>
SERVICE REVENUES................................... $14,211,743 $17,553,687 $ 11,034,812
COST OF SERVICES................................... 10,833,922 13,583,176 8,751,870
----------- ----------- ------------
Gross profit............................. 3,377,821 3,970,511 2,282,942
OPERATING EXPENSES:
Selling, general and administrative.............. 2,308,467 2,338,574 1,330,700
Depreciation and amortization.................... 16,418 23,849 17,331
----------- ----------- ------------
Operating income......................... 1,052,936 1,608,088 934,911
----------- ----------- ------------
OTHER INCOME (EXPENSE):
Interest expense................................. (2,025) (2,564) (14,685)
Interest and other income (expense).............. 36,271 (4,230) 33,821
----------- ----------- ------------
Net income............................... $ 1,087,182 $ 1,601,294 $ 954,047
=========== =========== ============
</TABLE>

The accompanying notes to financial statements
are an integral part of these statements.

F-118
<PAGE> 178

E.P. ENTERPRISES CORPORATION

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
COMMON STOCK
----------------- PAID-IN RETAINED TREASURY
SHARES AMOUNT CAPITAL EARNINGS STOCK TOTAL
------ ------- ------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1992... 150 $15,000 $22,500 $ 1,165,242 $(469,500) $ 733,242
Net income................. -- -- -- 1,087,182 -- 1,087,182
Dividends.................. -- -- -- (230,000) -- (230,000)
--- ------- ------- ----------- --------- -----------
BALANCE, December 31, 1993... 150 15,000 22,500 2,022,424 (469,500) 1,590,424
Net income................. -- -- -- 1,601,294 -- 1,601,294
Dividends.................. -- -- -- (2,300,000) -- (2,300,000)
--- ------- ------- ----------- --------- -----------
BALANCE, December 31, 1994... 150 15,000 22,500 1,323,718 (469,500) 891,718
Net income................. -- -- -- 954,047 -- 954,047
Dividends.................. -- -- -- (2,175,000) -- (2,175,000)
--- ------- ------- ----------- --------- -----------
BALANCE, July 10, 1995....... 150 $15,000 $22,500 $ 102,765 $(469,500) $ (329,235)
=== ======= ======= =========== ========= ===========
</TABLE>

The accompanying notes to financial statements
are an integral part of these statements.

F-119
<PAGE> 179

E.P. ENTERPRISES CORPORATION

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE PERIOD
YEARS ENDED DECEMBER 31, FROM
-------------------------- JANUARY 1, 1995
1993 1994 TO JULY 10, 1995
---------- ----------- ----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income........................................ $1,087,182 $ 1,601,294 $ 954,047
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization.................. 16,418 23,849 17,331
Provision for bad debts........................ 2,420 12,557 --
Net (gain) loss on sale of equipment........... 5,351 230 (31,032)
Change in operating assets and liabilities:
Accounts receivable.......................... (766,117) 196,457 (509,412)
Prepaid expenses and other................... 54,414 23,460 868
Other assets................................. (838) (3,037) 628
Accounts payable............................. (8,750) (5,973) 65,574
Bank overdraft............................... -- 145,340 251,802
Payroll and related liabilities.............. 121,995 14,695 255,511
Reserve for workers' compensation claims..... 41,406 31,891 203,203
Accrued interest and other................... (170,597) (29,517) (20,069)
---------- ----------- ------------
Net cash provided by operating
activities.............................. 382,884 2,011,246 1,188,451
---------- ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures.............................. (61,867) (67,893) (13,612)
Proceeds from the sales of property and
equipment...................................... 12,529 -- 40,275
---------- ----------- ------------
Net cash provided by (used in) investing
activities.............................. (49,338) (67,893) 26,663
---------- ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of short-term debt......... -- -- 800,000
Net borrowings on revolving line of credit........ -- 38,207 164,055
Payments on capital leases........................ -- 13,489 (1,838)
Cash distributions to shareholders................ (230,000) (2,300,000) (2,175,000)
---------- ----------- ------------
Net cash used in financing activities..... (230,000) (2,248,304) (1,212,783)
---------- ----------- ------------
NET INCREASE (DECREASE) IN CASH..................... 103,546 (304,951) 2,331
CASH, beginning of period........................... 201,405 304,951 --
---------- ----------- ------------
CASH, end of period................................. $ 304,951 $ -- $ 2,331
========== =========== ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid..................................... $ 2,025 $ 2,564 $ 14,685
========== =========== ============
</TABLE>

The accompanying notes to financial statements
are an integral part of these statements.

F-120
<PAGE> 180

E.P. ENTERPRISES CORPORATION

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization --

E.P. Enterprises Corporation (the "Company"), doing business as Caldwell
Services, Inc., was incorporated in the state of Georgia on December 27, 1973.
The Company's primary business purpose is to provide temporary personnel
services. The Company is headquartered in Atlanta, Georgia, and as of July 10,
1995 operated five staffing offices in the Atlanta area.

On July 10, 1995, Brewer Personnel Services, Inc. ("Brewer") acquired the
stock of the Company. Total consideration paid by Brewer for the Company was
approximately $17.3 million. The purchase price included cash of $11.5 million,
a note for $3.1 million and the assumption of certain liabilities of the
Company. The accompanying balance sheet as of July 10, 1995 has been prepared as
of the date of acquisition and does not reflect the purchase accounting
adjustments which were recorded by Brewer in conjunction with this acquisition.

Revenue Recognition --

Service revenues are recognized as income at the time staffing services are
provided.

Use of Estimates --

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses and disclosure of contingent assets and liabilities. The estimates
and assumptions used in the accompanying financial statements are based upon
management's evaluation of the relevant facts and circumstances as of the date
of the financial statements. However, actual results may differ from the
estimates and assumptions used in preparing the accompanying financial
statements.

Accounts Receivable --

The Company maintains allowances for potential losses which management
believes are adequate to absorb losses to be incurred in realizing the amounts
recorded in the accompanying financial statements. Included in accounts
receivable in the accompanying balance sheets are unbilled amounts of $254,016
and $324,783 at December 31, 1994 and July 10, 1995, respectively.

Property and Equipment --

Property and equipment are recorded at cost and are depreciated or
amortized on a straight-line basis over the estimated useful lives of the assets
which are as follows:

<TABLE>
<S> <C>
Office equipment.................................................. 5-7 years
Computer equipment................................................ 5 years
Computer software................................................. 3 years
Leasehold improvements............................................ 39 years
</TABLE>

F-121
<PAGE> 181

E.P. ENTERPRISES CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Workers' Compensation --

The Company self-insures certain risks related to workers' compensation
claims. The estimated costs of existing and future claims are accrued as
incidents occur based upon historical loss development trends and may be
subsequently revised based on developments relating to such claims. The Company
engages the services of a third-party actuary to assist with the development of
these cost estimates.

2. PROPERTY AND EQUIPMENT:

Components of property and equipment at December 31, 1994 and July 10, 1995
are as follows:

<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
Office equipment............................................... $225,051 $118,787
Computer equipment............................................. 130,685 123,103
Computer software.............................................. 6,891 9,450
Leasehold improvements......................................... 81,194 7,231
-------- --------
443,821 258,571
Less accumulated depreciation and amortization............ 319,298 147,010
-------- --------
$124,523 $111,561
======== ========
</TABLE>

Depreciation and amortization expense related to property and equipment
totaled $16,418, $23,849 and $17,331 for the years ended 1993 and 1994 and the
period ended July 10, 1995, respectively.

3. LONG-TERM DEBT AND LEASES:

At December 31, 1994 and July 10, 1995, long-term debt consisted of the
following:

<TABLE>
<CAPTION>
1994 1995
-------- -----------
<S> <C> <C>
Term loan with Bank South; interest payable monthly at
6.85%; principal due September 23, 1995; secured by the
assets and common stock of the Company. .................. $ -- $ 600,000
Term loan with Bank South; interest payable monthly at
prime; principal due September 23, 1995; secured by the
assets and common stock of the Company. .................. -- 200,000
Line of Credit with Bank South; maximum borrowings equal the
lesser of $800,000 or 85% of the Company's eligible
accounts receivable balance; interest payable monthly at
prime; principal due on demand or by April 30, 1996;
secured by the assets and common stock of the Company. ... 38,207 202,262
Capital lease obligations................................... 13,489 11,651
-------- -----------
51,696 1,013,913
Less current maturities................................ 41,414 1,005,144
-------- -----------
Total long-term debt and leases............................. $ 10,282 $ 8,769
======== ===========
</TABLE>

F-122
<PAGE> 182

E.P. ENTERPRISES CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Annual maturities of long-term debt subsequent to July 10, 1995 are as
follows:

Long-term debt of the Company was repaid concurrent with the sale of the
Company (Note 9).

4. INCOME TAXES:

5. WORKERS' COMPENSATION:

The Company is self-insured for certain workers' compensation claims and is
regulated by the Workers' Compensation Insurance Commission in the state of
Georgia. Workers' compensation expense totaled $101,411, $240,908 and $349,934
for the years ended December 31, 1993 and 1994 and for the period ended July 10,
1995, respectively.

6. RELATED PARTY TRANSACTIONS:

Through July 1995, the Company occupied a building owned by an affiliated
partnership comprised of the Company's shareholders. Expenses related to this
building were $33,000 for both years ended December 31, 1993 and 1994, and
$17,325 for the period ended July 10, 1995.

The Company has hardware and software maintenance support agreements with
related companies. Amounts paid on these contracts were $10,327 and $16,141 for
the years ended December 31, 1993 and 1994, respectively, and $8,160 for the
period ended July 10, 1995.

The Company supplies some of its services to affiliated companies. Service
revenues from these companies were $32,944 and $52,941 for the years ended
December 31, 1993 and 1994, respectively, and $34,396 for the period ended July
10, 1995.

7. COMMITMENTS AND CONTINGENCIES:

The Company has historically paid bonuses to its shareholders in amounts
sufficient to cover their estimated tax payments attributable to the respective
share of the Company's net income included in their individual tax returns.

F-123
<PAGE> 183

E.P. ENTERPRISES CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

8. NONCANCELABLE OPERATING LEASES:

The Company leases branch office space under noncancelable operating
leases. Future minimum payments required under operating leases that have an
initial or remaining noncancelable lease term in excess of one year at July 10,
1995, are as follows:

Rental expense totaled $105,125, $115,945 and $83,399 for the years ended
December 31, 1993 and 1994, and for the period ended July 10, 1995,
respectively.

9. LITIGATION:

F-124
<PAGE> 184

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To On Call Employment Services, Inc.:

We have audited the accompanying balance sheets of On Call Employment
Services, Inc. (the "Company"), a Colorado corporation, as of December 31, 1994
and 1995 and February 2, 1996 and the related statements of income,
shareholders' equity (deficit) and cash flows for each of the three years in the
period ended December 31, 1995 and for the period from January 1, 1996 to
February 2, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of On Call Employment Services,
Inc. as of December 31, 1994 and 1995 and February 2, 1996, and the results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1995 and for the period from January 1, 1996 to February 2,
1996, in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Denver, Colorado,
May 24, 1996.

F-125
<PAGE> 185

ON CALL EMPLOYMENT SERVICES, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ FEBRUARY 2,
1994 1995 1996
---------- ---------- -----------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.............................. $ 95,313 $ 340,594 $ 4,849
Accounts receivable.................................... 1,678,682 2,068,461 273,067
Prepaid expenses and other............................. 1,071 1,671 8,878
---------- ---------- ----------
Total current assets........................... 1,775,066 2,410,726 286,794
PROPERTY AND EQUIPMENT, net.............................. 65,103 114,537 115,369
---------- ---------- ----------
$1,840,169 $2,525,263 $ 402,163
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable....................................... $ 68,302 $ 123,653 $ 129,970
Payroll and related liabilities........................ 140,195 183,410 253,601
Reserve for workers' compensation claims............... 30,360 40,815 43,305
Other.................................................. 10,000 11,275 12,000
---------- ---------- ----------
Total current liabilities...................... 248,857 359,153 438,876
COMMITMENTS AND CONTINGENCIES
(Notes 6, 7 and 8)
SHAREHOLDERS' EQUITY (DEFICIT):
Common stock, 1,000,000 shares authorized, issued and
outstanding......................................... 60,000 60,000 60,000
Paid-in capital........................................ 185,000 185,000 185,000
Retained earnings (deficit)............................ 1,346,312 1,921,110 (281,713)
---------- ---------- ----------
Total shareholders' equity (deficit)........... 1,591,312 2,166,110 (36,713)
---------- ---------- ----------
$1,840,169 $2,525,263 $ 402,163
========== ========== ==========
</TABLE>

The accompanying notes to financial statements
are an integral part of these balance sheets.

F-126
<PAGE> 186

ON CALL EMPLOYMENT SERVICES, INC.

STATEMENTS OF INCOME

<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
JANUARY 1,
YEARS ENDED DECEMBER 31, 1996 TO
----------------------------------------- FEBRUARY 2,
1993 1994 1995 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
SERVICE REVENUES.......................... $22,130,961 $10,098,261 $12,497,627 $ 1,127,091
COST OF SERVICES.......................... 18,364,966 8,176,489 10,203,428 945,388
----------- ----------- ----------- -----------
Gross profit.................... 3,765,995 1,921,772 2,294,199 181,703
OPERATING EXPENSES:
Selling, general and administrative..... 1,459,203 1,293,619 1,304,762 116,092
Depreciation and amortization........... 6,372 13,242 24,473 2,525
----------- ----------- ----------- -----------
Operating income................ 2,300,420 614,911 964,964 63,086
OTHER INCOME:
Interest income......................... 19,610 25,605 43,334 4,847
----------- ----------- ----------- -----------
Net income...................... $ 2,320,030 $ 640,516 $ 1,008,298 $ 67,933
=========== =========== =========== ===========
</TABLE>

The accompanying notes to financial statements
are an integral part of these statements.

F-127
<PAGE> 187

ON CALL EMPLOYMENT SERVICES, INC.

STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
COMMON STOCK
-------------------- PAID-IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS TOTAL
--------- ------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1992.......... 1,000,000 $60,000 $ -- $ 1,458,724 $ 1,518,724
Net income........................ -- -- -- 2,320,030 2,320,030
Dividends......................... -- -- -- (230,000) (230,000)
--------- ------- -------- ----------- -----------
BALANCE, December 31, 1993.......... 1,000,000 60,000 -- 3,548,754 3,608,754
Net income........................ -- -- -- 640,516 640,516
Contribution from shareholder..... -- -- 185,000 -- 185,000
Dividends......................... -- -- -- (2,842,958) (2,842,958)
--------- ------- -------- ----------- -----------
BALANCE, December 31, 1994.......... 1,000,000 60,000 185,000 1,346,312 1,591,312
Net income........................ -- -- -- 1,008,298 1,008,298
Dividends......................... -- -- -- (433,500) (433,500)
--------- ------- -------- ----------- -----------
BALANCE, December 31, 1995.......... 1,000,000 60,000 185,000 1,921,110 2,166,110
Net income for the period from
January 1, 1996 to
February 2, 1996............... -- -- -- 67,933 67,933
Dividends......................... -- -- -- (2,270,756) (2,270,756)
--------- ------- -------- ----------- -----------
BALANCE, February 2, 1996........... 1,000,000 $60,000 $185,000 $ (281,713) $ (36,713)
========= ======= ======== =========== ===========
</TABLE>

The accompanying notes to financial statements
are an integral part of these statements.

F-128
<PAGE> 188

ON CALL EMPLOYMENT SERVICES, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
JANUARY 1,
YEARS ENDED DECEMBER 31, 1996 TO
---------------------------------------- FEBRUARY 2,
1993 1994 1995 1996
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................................. $ 2,320,030 $ 640,516 $1,008,298 $ 67,933
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization....................... 6,372 13,242 24,473 2,525
Change in operating assets and liabilities:
Accounts receivable............................... (2,532,313) 2,634,981 (389,779) 581,883
Prepaid expenses and other........................ 465 -- (600) (10,564)
Accounts payable.................................. 52,716 (78,044) 55,351 6,317
Outstanding checks................................ 110,098 (110,098) -- --
Payroll and related liabilities................... 236,744 (302,925) 43,215 70,191
Reserve for workers compensation claims........... 7,520 (888) 10,455 2,490
Other............................................. -- -- 1,275 725
----------- ----------- ---------- -----------
Net cash provided by operating activities...... 201,632 2,796,784 752,688 721,500
----------- ----------- ---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures................................... (26,130) (43,513) (73,907) --
----------- ----------- ---------- -----------
Net cash used in investing activities.......... (26,130) (43,513) (73,907) --
----------- ----------- ---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends.............................................. (230,000) (2,842,958) (433,500) (1,057,245)
Contribution by shareholders........................... -- 185,000 -- --
----------- ----------- ---------- -----------
Net cash used in financing activities.......... (230,000) (2,657,958) (433,500) (1,057,245)
----------- ----------- ---------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS..... (54,498) 95,313 245,281 (335,745)
CASH AND CASH EQUIVALENTS, beginning of period........... 54,498 -- 95,313 340,594
----------- ----------- ---------- -----------
CASH AND CASH EQUIVALENTS, end of period................. $ -- $ 95,313 $ 340,594 $ 4,849
=========== =========== ========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Non-cash transactions:
Distribution of accounts receivable to shareholders
(Note 1).......................................... $ -- $ -- $ -- $ 1,213,511
=========== =========== ========== ===========
</TABLE>

The accompanying notes to financial statements
are an integral part of these statements.

F-129
<PAGE> 189

ON CALL EMPLOYMENT SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization --

On Call Employment Services, Inc. ("On Call" or the "Company") was
incorporated in the state of Colorado. The Company's primary business purpose
was to provide temporary personnel services to companies in northern Colorado,
mainly those which specialize in high tech manufacturing. The Company is
headquartered in Loveland, Colorado and as of February 2, 1996, operated
staffing offices in Loveland, Longmont, Boulder and Greeley, Colorado.

On January 19, 1996, the two shareholders of On Call who aggregately owned
100 percent of the Company entered into an Agreement and Plan of Reorganization
(the "Agreement") with Brewer Personnel Services, Inc. ("Brewer"), an Arkansas
corporation. The Agreement was effective February 2, 1996. Under the terms of
the Agreement, the outstanding shares of the Company prior to the merger
(1,000,000 shares) were converted into i) ten shares of Brewer's common stock at
an exchange rate of one share of Brewer for every 100,000 shares of the Company
and ii) $2.64 million in cash. Brewer was the surviving company of the merger.
The Agreement also specified that cash and certain accounts receivable would be
distributed to the two shareholders prior to the merger. The accompanying
balance sheet as of February 2, 1996 reflects such distributions of cash and
accounts receivable but does not reflect the purchase accounting adjustments
which were recorded by Brewer in conjunction with this acquisition.

Use of Estimates --

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses and disclosure of contingent assets and liabilities. The estimates
and assumptions used in the accompanying financial statements were based upon
management's evaluation of the relevant facts and circumstances as of the date
of the financial statements. Actual results may differ from the estimates and
assumptions used in preparing the accompanying financial statements.

Revenue Recognition --

Service revenues are recognized as income at the time staffing services are
provided.

Cash and Cash Equivalents --

For statements of cash flow purposes, the Company considers cash on deposit
with financial institutions and all highly liquid investments with original
maturities of three months or less to be cash equivalents.

Accounts Receivable --

Included in accounts receivable in the accompanying balance sheets are
unbilled amounts of $159,733, $173,238 and $273,067 at December 31, 1994 and
1995 and February 2, 1996, respectively.

Property and Equipment --

Property and equipment are recorded at cost and are depreciated or
amortized on a straight-line basis over the estimated useful lives of the assets
which are as follows:

<TABLE>
<S> <C>
Office equipment................................................ 5 to 7 years
Computer equipment.............................................. 3 to 5 years
Computer software............................................... 3 to 5 years
</TABLE>

F-130
<PAGE> 190

ON CALL EMPLOYMENT SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Concentration of Credit Risk --

The Company had no significant off-balance sheet concentrations of credit
risk such as foreign exchange contracts, options contracts or other foreign
hedging arrangements. The Company maintained its cash balances with financial
institutions, in the form of demand deposits. The Company performed ongoing
credit evaluations of its customers' financial condition and generally did not
require collateral. Its accounts receivable balances were domestic and were due
from companies located in northern Colorado which were primarily engaged in
businesses related to the high technology manufacturing industry.

2. PROPERTY AND EQUIPMENT:

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- FEBRUARY 2,
1994 1995 1996
-------- -------- ---------
<S> <C> <C> <C>
Office equipment................................ $ 6,412 $ 24,037 $ 24,037
Computer equipment.............................. 75,585 119,867 119,867
Computer software............................... 10,000 22,000 22,000
-------- -------- ---------
91,997 165,904 165,904
Less accumulated depreciation and
amortization............................. 26,894 51,367 50,535
-------- -------- ---------
$ 65,103 $114,537 $ 115,369
======== ======== =========
</TABLE>

Depreciation and amortization expense related to property and equipment
totaled $6,372, $13,242, $24,473 and $2,525 for the years ended December 31,
1993, 1994 and 1995 and the period from January 1, 1996 to February 2, 1996,
respectively.

3. INCOME TAXES:

Prior to February 2, 1996, the Company operated as an S Corporation for
federal and state income tax reporting purposes. Accordingly, no provision for
income taxes has been recorded in the accompanying financial statements as such
taxes were liabilities of the individual shareholders. The Company had
historically made distributions to its shareholders which were used, in part, to
satisfy the income tax liability reported by the shareholders related to the
Company's operations.

4. WORKERS' COMPENSATION:

The Company was insured by certain insurance companies for workers'
compensation claims and was regulated by the Workers' Compensation Insurance
Commission in the state of Colorado. Workers' compensation expense totaled
approximately $218,500, $171,100, $131,800 and $9,300 for the years ended
December 31, 1993, 1994 and 1995, and the period from January 1, 1996 to
February 2, 1996, respectively.

F-131
<PAGE> 191

ON CALL EMPLOYMENT SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

5. COMMON STOCK:

As of December 31, 1993, 1994 and 1995 and February 2, 1996, the Company
had an authorized capitalization consisting of 1,000,000 shares of common stock,
of which 1,000,000 shares were issued and outstanding and no shares were held as
treasury stock.

6. NONCANCELABLE OPERATING LEASES:

The Company leased office space for its four branch locations in northern
Colorado through noncancelable operating leases. Future minimum annual payments
required during each of the next five years under operating leases that had
initial or remaining noncancelable lease terms of one year or more at February
2, 1996, are as follows:

<TABLE>
<S> <C>
1996.............................................. $ 70,640
1997.............................................. 29,052
1998.............................................. 23,464
1999.............................................. 17,344
2000.............................................. 8,680
Thereafter........................................ 2,920
--------
$152,100
========
</TABLE>

Rent expense totaled approximately $66,900, $78,500, $82,200 and $7,200 for
the years ended December 31, 1993, 1994 and 1995 and the period from January 1,
1996 to February 2, 1996, respectively.

The shareholders committed to the construction of a commercial office
building in Loveland, Colorado which should be completed by October 1996. The
Company plans on moving its Loveland office to this new building once completed.
Brewer has agreed to sublease this office space from the shareholders for a
five-year period.

7. EMPLOYEE BENEFIT PLAN:

The Company had a 401(k) plan under which eligible employees may defer up
to 12% of their compensation. The Company's plan does not allow for matching
employer contributions.

8. CONTINGENCIES:

The Company is subject to various claims and business disputes in the
ordinary course of business. Management does not anticipate that the ultimate
outcome of these issues will have a material impact on the Company's financial
position or results of operations.

9. SIGNIFICANT CUSTOMERS:

The Company's sales to customers which individually account for 10% or more
of service revenues for the years ended December 31, 1993, 1994 and 1995 and the
period from January 1, 1996 to February 2, 1996, were as follows:

<TABLE>
<CAPTION>
JANUARY 1 TO
1993 1994 1995 FEBRUARY 2, 1996
-------------------------- -------------------------- --------------------------- ----------------------------
AMOUNTS PERCENTAGES AMOUNTS PERCENTAGES AMOUNTS PERCENTAGES AMOUNTS PERCENTAGES
------------- ----------- ------------- ----------- ------------- ----------- ------------- -------------
(IN MILLIONS) (IN MILLIONS) (IN MILLIONS) (IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Customer 1.... $13.3 60% $ 1.6 16% $ 1.5 12% $0.2 18%
Customer 2.... 3.1 14 2.2 22 3.2 26 0.3 23
Customer 3.... -- -- -- -- 1.6 13 0.2 17
</TABLE>

F-132
<PAGE> 192

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Strategic Sourcing, Inc.:

We have audited the accompanying balance sheets of Strategic Sourcing, Inc.
(the "Company") as of December 31, 1994 and 1995, and the related statements of
income (loss), shareholders' equity (deficit) and cash flows for the period from
the date of incorporation (May 25, 1993) to December 31, 1993, and each of the
two years in the period ended December 31, 1995. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Strategic Sourcing, Inc. as
of December 31, 1994 and 1995, and the results of its operations and its cash
flows for the period from the date of incorporation (May 25, 1993) to December
31, 1993, and each of the two years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Raleigh, North Carolina,
May 24, 1996.

F-133
<PAGE> 193

STRATEGIC SOURCING, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- MARCH 31,
1994 1995 1996
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash.................................................... $ 26,159 $ 13,281 $ 14,744
Accounts receivable..................................... 92,041 121,217 131,319
Prepaid expenses and other.............................. -- 1,675 --
-------- -------- ---------
Total current assets............................ 118,200 136,173 146,063
PROPERTY AND EQUIPMENT, net............................... 13,406 21,667 20,991
OTHER ASSETS.............................................. 2,435 2,347 5,056
-------- -------- ---------
$134,041 $160,187 $ 172,110
======== ======== =========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable........................................ $ 4,038 $ 9,118 $ 31,507
Payroll and related liabilities......................... 26,869 6,325 4,866
Current portion of note payable to shareholder.......... 55,000 6,145 6,145
-------- -------- ---------
Total current liabilities....................... 85,907 21,588 42,518
NOTE PAYABLE TO SHAREHOLDER............................... 69,166 63,021 63,021
COMMITMENTS AND CONTINGENCIES (Note 6)
SHAREHOLDERS' EQUITY (DEFICIT):
Common stock, no par value, 1,000 shares authorized, 600
shares issued and outstanding in 1994, 1995 and
1996................................................. 3,000 3,000 3,000
Retained earnings (deficit)............................. (24,032) 72,578 63,571
-------- -------- ---------
Total shareholders' equity (deficit)............ (21,032) 75,578 66,571
-------- -------- ---------
$134,041 $160,187 $ 172,110
======== ======== =========
</TABLE>

The accompanying notes to financial statements
are an integral part of these balance sheets.

F-134
<PAGE> 194

STRATEGIC SOURCING, INC.

STATEMENTS OF INCOME (LOSS)

PERIOD FROM
MAY 25, YEARS ENDED THREE MONTHS ENDED
1993, TO DECEMBER 31, MARCH 31,
DECEMBER 31, ---------------------- --------------------------
1993 1994 1995 1995 1996
------------ -------- ---------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES:
Service revenues................. $ 23,932 $608,030 $1,013,332 $ 304,161 $ 95,879
Permanent placement fee
revenues...................... 26,407 85,068 230,166 85,806 56,206
-------- -------- ---------- --------- ---------
50,339 693,098 1,243,498 389,967 152,085
COST OF SERVICES................... 10,236 358,228 612,197 125,196 75,047
-------- -------- ---------- --------- ---------
Gross profit............. 40,103 334,870 631,301 264,771 77,038
OPERATING EXPENSES:
Selling, general and
administrative................ 101,920 278,603 414,254 188,475 82,090
Depreciation and amortization.... 1,769 3,258 5,015 1,250 676
-------- -------- ---------- --------- ---------
Operating income
(loss)................. (63,586) 53,009 212,032 75,046 (5,728)
OTHER INCOME (EXPENSE), net........ (1,356) (12,099) 735 -- 37
-------- -------- ---------- --------- ---------
Net income (loss)........ $(64,942) $ 40,910 $ 212,767 $ 75,046 $ (5,691)
======== ======== ========== ========= =========
</TABLE>

The accompanying notes to financial statements
are an integral part of these statements.

F-135
<PAGE> 195

STRATEGIC SOURCING, INC.

STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
TOTAL
RETAINED SHAREHOLDERS'
COMMON EARNINGS EQUITY
STOCK (DEFICIT) (DEFICIT)
------ --------- -------------
<S> <C> <C> <C>
Initial capital contribution on May 25, 1993 (date of
incorporation)............................................ $3,000 $ -- $ 3,000
Net loss.................................................. -- (64,942) (64,942)
------ --------- ---------
BALANCE, December 31, 1993.................................. 3,000 (64,942) (61,942)
Net income................................................ -- 40,910 40,910
------ --------- ---------
BALANCE, December 31, 1994.................................. 3,000 (24,032) (21,032)
Net income................................................ -- 212,767 212,767
Dividends................................................. -- (116,157) (116,157)
------ --------- ---------
BALANCE, December 31, 1995.................................. 3,000 72,578 75,578
Net loss (Unaudited)...................................... -- (5,691) (5,691)
Dividends (Unaudited)..................................... -- (3,316) (3,316)
------ --------- ---------
BALANCE, March 31, 1996 (Unaudited)......................... $3,000 $ 63,571 $ 66,571
====== ========= =========
</TABLE>

The accompanying notes to financial statements
are an integral part of these statements.

F-136
<PAGE> 196

STRATEGIC SOURCING, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
PERIOD
FROM
MAY 25, YEARS ENDED THREE MONTHS ENDED
1993, TO DECEMBER 31, MARCH 31,
DECEMBER 31, --------------------- ---------------------
1993 1994 1995 1995 1996
------------ ------- --------- -------- --------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)............................... $(64,942) $40,910 $ 212,767 $ 75,046 $ (5,691)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:
Depreciation and amortization................ 1,769 3,258 5,015 1,250 676
Change in operating assets and liabilities:
Accounts receivable........................ (32,230) (59,811) (29,176) (28,505) (10,102)
Prepaid expenses and other................. -- -- (1,675) -- 1,675
Other assets............................... (1,072) (1,363) 88 (442) (2,709)
Accounts payable........................... 5,911 (1,873) 5,080 7,187 22,389
Payroll and related liabilities............ 2,099 24,770 (20,544) (3,628) (1,459)
-------- ------- --------- -------- --------
Net cash provided by (used in) operating
activities............................ (88,465) 5,891 171,555 50,908 4,779
-------- ------- --------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures............................ (17,691) (742) (13,276) -- --
-------- ------- --------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock.......... 3,000 -- -- -- --
Proceeds from line of credit.................... 50,000 -- -- -- --
Payments on line of credit...................... -- (50,000) -- -- --
Proceeds from note payable to shareholder....... 68,379 55,787 -- -- --
Payments on note payable to shareholder......... -- -- (55,000) (9,728) --
Dividends....................................... -- -- (116,157) -- (3,316)
-------- ------- --------- -------- --------
Net cash provided by (used in) financing
activities............................ 121,379 5,787 (171,157) (9,728) (3,316)
------- ------- --------- -------- --------
NET INCREASE (DECREASE) IN CASH................... 15,223 10,936 (12,878) 41,180 1,463
CASH, beginning of period......................... -- 15,223 26,159 26,159 13,281
-------- ------- --------- -------- --------
CASH, end of period............................... $ 15,223 $26,159 $ 13,281 $ 67,339 $ 14,744
======== ======= ========= ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid................................... $ 1,356 $ 2,901 $ -- $ -- $ --
======== ======= ========= ======== ========
</TABLE>

The accompanying notes to financial statements
are an integral part of these statements.

F-137
<PAGE> 197

STRATEGIC SOURCING, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization --

Strategic Sourcing, Inc. (the "Company"), a North Carolina corporation,
provides services related to the placement of information technology
professionals in both permanent and contract positions for companies located
primarily in North Carolina and South Carolina. The business was initially
founded in May 1993 as Strategic Staffing, Inc. and changed its name to
Strategic Sourcing, Inc. in February 1995. Accordingly, the 1993 results of
operations and cash flows included in the accompanying financial statements and
notes thereto reflect activity for the period from May 25, 1993 to December 31,
1993.

Interim Periods --

The accompanying interim financial statements and related disclosures have
not been audited by independent accountants. However, they have been prepared in
conformity with the accounting principles stated in the accompanying audited
financial statements and include all adjustments of a normal recurring nature
which, in the opinion of management, are necessary to present fairly the
financial position of the Company and the results of operations and cash flows
for each of the periods presented. The operating results for the interim periods
presented are not necessarily indicative of results for the full year.

Revenue Recognition --

Service revenues and permanent placement fee revenues are recognized as
income at the time staffing services are provided or the permanent employee is
placed with the customer.

Use of Estimates --

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses and disclosure of contingent assets and liabilities. The estimates
and assumptions used in the accompanying financial statements are based upon
management's evaluation of the relevant facts and circumstances as of the date
of the financial statements. However, actual results may differ from the
estimates and assumptions used in preparing the accompanying financial
statements.

Accounts Receivable --

The Company performs credit evaluations of potential customers prior to
entering into contracts. The Company provides, if necessary, allowances for
potential losses which management believes are adequate to absorb losses to be
incurred in realizing the amounts recorded in the accompanying financial
statements. Management believes all accounts are collectible and accordingly,
has not recorded an allowance as of December 31, 1994 and 1995, and as of March
31, 1996.

Significant Customers --

Revenues from two customers accounted for 52% and 34% of total revenues in
1993. Revenues from four customers accounted for 20%, 18%, 15% and 10% of total
revenues in 1994. Revenues from one customer accounted for 60% of total revenues
in 1995. Revenues from two customers accounted for 58% and 14% of total revenues
for the unaudited three-month period ended March 31, 1995. Revenues from three
customers accounted for 36%, 27% and 21% of total revenues for the unaudited
three-month period ended March 31, 1996.

F-138
<PAGE> 198

STRATEGIC SOURCING, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Property and Equipment --

Property and equipment are recorded at cost and are depreciated or
amortized on a straight-line basis over the estimated useful lives of the
assets, which are as follows:

<TABLE>
<S> <C>
Office equipment.................................................... 5 years
Computer software and equipment..................................... 5 years
</TABLE>

2. PROPERTY AND EQUIPMENT:

Components of property and equipment are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------- MARCH 31,
1994 1995 1996
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Office equipment...................................... $12,691 $16,797 $16,797
Computer software and equipment....................... 5,742 14,912 14,912
------- ------- --------
18,433 31,709 31,709
Less accumulated depreciation and amortization... 5,027 10,042 10,718
------- ------- --------
$13,406 $21,667 $20,991
======= ======= ========
</TABLE>

Depreciation and amortization expense related to property and equipment
totaled $1,769, $3,258 and $5,015 for 1993, 1994 and 1995, respectively, and
$1,250 and $676 for the unaudited three-month periods ended March 31, 1995 and
1996, respectively.

3. LINE OF CREDIT:

The Company maintained a line of credit with a bank which was repaid during
1994 and was not renewed. Interest on the line of credit accrued at the bank's
prime rate plus 1.5%.

F-139
<PAGE> 199

STRATEGIC SOURCING, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

4. NOTE PAYABLE TO SHAREHOLDER:

The Company had borrowings from a shareholder under an informal arrangement
of $124,166 and $69,166 as of December 31, 1994 and 1995, respectively. The
borrowings did not accrue interest during 1993 or 1995. During 1994, the Company
agreed to accrue interest of $9,198 on the borrowings from the shareholder,
which was added to the principal balance. In April 1996, in connection with the
change in ownership described in Note 7, the Company signed a promissory note
for $65,229, representing the net amount due to the former shareholder. The
terms of the note specify an interest rate of 7% and minimum monthly payments of
$700, representing principal and interest, commencing April 15, 1996, until paid
in full, with a final maturity of March 15, 2001. Based on the terms of this
note, the aggregate principal maturities subsequent to December 31, 1995, were
as follows:

<TABLE>
<S> <C>
1996............................................... $ 6,145
1997............................................... 3,214
1998............................................... 3,629
1999............................................... 4,079
2000............................................... 4,567
Thereafter......................................... 47,532
-------
$69,166
=======
</TABLE>

5. INCOME TAXES:

The Company has elected S Corporation status for federal and state income
tax reporting purposes. Accordingly, no provision for income taxes has been
recorded since such tax liabilities are liabilities of the shareholders of the
Company.

6. NONCANCELABLE OPERATING LEASE:

The Company leases office space under a noncancelable operating lease.
Future minimum payments required under this operating lease which has an initial
or remaining noncancelable lease term in excess of one year at December 31,
1995, are as follows:

Rental expense totaled $7,623, $13,062 and $18,075 for 1993, 1994 and 1995,
respectively, and $4,350 and $5,025 for the unaudited three-month periods ended
March 31, 1995 and 1996, respectively.

7. SUBSEQUENT EVENTS:

In April 1996, one of the Company's 50% shareholders (the "former
shareholder") transferred 300 shares of common stock of the Company,
representing the former shareholder's entire interest, to the other 50%
shareholder, with both parties entering into a security agreement whereby the
transferred shares are held in escrow until the repayment of the borrowings from
the former shareholder, as discussed in Note 4.

F-140
<PAGE> 200

STRATEGIC SOURCING, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

In April 1996, the Company entered into a line of credit arrangement with a
bank. Funds available for advance under the line of credit are limited to 80% of
accounts receivable less than 90 days old, up to a maximum borrowing of $50,000.
Advances under the line bear interest at the bank's base rate plus 1% (9.25% as
of April 10, 1996). Advances under the line of credit are collateralized by a
security agreement, providing the bank a first lien security interest on all
assets of the Company, as well as a personal guaranty from the remaining
shareholder.

In April 1996, the Company borrowed $45,000 from the remaining shareholder
under an informal arrangement. The borrowing accrues interest at prime plus
1.75%.

8. EVENTS SUBSEQUENT TO DATE OF REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
(UNAUDITED):

In June 1996, the remaining shareholder entered into a definitive agreement
to sell certain of the operating assets of the Company for $750,000, with
closing to occur in July 1996.

F-141
<PAGE> 201
================================================================================

NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING DESCRIBED HEREIN, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
OTHER THAN THOSE SPECIFICALLY OFFERED HEREBY OR OF ANY SECURITIES OFFERED HEREBY
IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE AN OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION
THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.

UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS),
ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 7
The Company........................... 12
Use of Proceeds....................... 14
Dividend Policy....................... 14
Dilution.............................. 15
Capitalization........................ 16
Selected Combined Founding Companies'
Financial and Operating Data........ 17
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 20
Business.............................. 36
Management............................ 45
Principal Stockholders................ 49
Description of Capital Stock.......... 50
Certain Transactions.................. 52
Shares Eligible for Future Sale....... 55
Underwriting.......................... 56
Legal Matters......................... 57
Experts............................... 57
Additional Information................ 57
Index to Financial Statements......... F-1
</TABLE>

================================================================================

5,500,000 SHARES
[STAFFMARK LOGO]

COMMON STOCK

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

J.C. BRADFORD & CO.

STEPHENS INC.

, 1996

================================================================================
<PAGE> 202

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table itemizes the expenses of this Offering to be incurred
by the Company in connection with this registration statement, other than
underwriting discounts and commissions. All the amounts shown are estimates
except the SEC registration fee, the NASD filing fee and the Nasdaq National
Market Application Listing Fee.

<TABLE>
<S> <C>
SEC Registration Fee........................................... $ 26,172.41
Nasdaq National Market Application and Listing Fee............. 5,250.00
NASD Filing Fee................................................ 8,090.00
Blue Sky Fees and Expenses..................................... 30,000.00
Accounting Fees and Expenses................................... *
Legal Fees and Expenses........................................ *
Printing and Engraving Costs................................... *
Transfer Agent Fees and Expenses............................... *
Miscellaneous.................................................. *
-------------
Total........................................................ $ 2,500,000
=============
</TABLE>

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

* To be supplied by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Company's By-laws provide that the Company shall, to the fullest extent
permitted by Section 145 of the General Corporation Law of the State of
Delaware, as amended from time to time, indemnify all persons whom it may
indemnify pursuant thereto.

Section 145 of the General Corporation Law of the State of Delaware permits
a corporation, under specified circumstances, to indemnify its directors,
officers, employees or agents against expenses (including attorney's fees),
judgments, fines and amounts paid in settlements actually and reasonably
incurred by them in connection with any action, suit or proceeding brought by
third parties by reason of the fact that they were or are directors, officers,
employee or agents acted in good faith and in a manner they reasonably believed
to be in or not opposed to the best interests of the corporation and, with
respect to any criminal action or proceeding, had no reason to believe their
conduct was unlawful. In a derivative action, i.e., one by or in the right of
the corporation, indemnification may be made only for expenses actually and
reasonably incurred by directors, officers, employees or agents in connection
with the defense or settlement of an action or suit, and only with respect to a
matter as to which they shall have acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification shall be made if such person shall
have been adjudged liable to the corporation, unless and only to the extent that
the court in which the action or suit was brought shall determine upon
application that the defendant directors, officers, employees or agents are
fairly and reasonably entitled to indemnity for such expenses despite such
adjudication of liability.

Article Seven of the Company's Certificates of Incorporation provides that
the Company's directors will not be personally liable to the Company or its
stockholders for monetary damages resulting from breaches of their fiduciary
duty as directors except (a) for any breach of the duty of loyalty to the
Company or its stockholders, (b) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (c) under
Section 174 of the General Corporation Law of the State of Delaware, which makes
directors liable for unlawful dividends or unlawful stock repurchases or
redemptions or (d) for transactions from which directors derive improper
personal benefit.

II-1
<PAGE> 203

Section 7 of the Underwriting Agreement filed as Exhibit 1.1 provides that
the Underwriters named therein will indemnify and hold harmless the Company and
each director, officer or controlling person of the Company from and against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act"). Section 8 of such Underwriting Agreement also
provides that such Underwriters will contribute to certain liabilities of such
persons under the Securities Act.

In accordance with Delaware law, the Company intends to enter into
indemnification agreements with its directors, pursuant to which it will agree
to pay certain expenses, including attorneys' fees, judgments, fines and amounts
paid in settlement incurred by such directors in connection with certain
actions, suits or proceedings. These agreements require directors to repay the
amount of any expenses advanced if it shall be determined that they are not
entitled to indemnification.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

The following information relates to securities of the Company issued or
sold within the past three years which were not registered under the Securities
Act:

(i) In March 1996, the Company issued 1,000 shares of Common Stock to
the founding stockholders of the Company for $.01 per share and
subsequently declared a 1,355-for-1 stock dividend in June 1996; and

(ii) Simultaneously with the completion of this Offering, the Company
will issue 5,618,249 shares of its Common Stock in connection with the
acquisition of six businesses. See "The Company" and "Business."

Each of these transactions was completed without registration of the
relevant security under the Securities Act in reliance upon the exemptions
provided by Section 4(2) of the Securities Act and the rules and regulations
promulgated thereunder on the basis that such transactions did not involve a
public offering, the purchasers were sophisticated with access to the kind of
information registration would provide and that such purchasers acquired such
securities without a view toward the distribution thereof.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -------------------- ----------------------------------------------------------------------
<S> <C> <C>
* 1.1 -- Form of Underwriting Agreement.
2.1 -- Agreement and Plan of Reorganization, dated as of June 17, 1996, by
and among StaffMark, Inc., Brewer Personnel Services Acquisition
Corp., Brewer Personnel Services, Inc. and the Stockholders named
therein.
2.2 -- Agreement and Plan of Reorganization, dated as of June 17, 1996, by
and among StaffMark, Inc., Prostaff Personnel Acquisition Corp., Excel
Temporary Staffing Acquisition Corp., Professional Resources
Acquisition Corp., Prostaff Personnel, Inc., Excel Temporary Staffing,
Inc., Professional Resources, Inc., and the Stockholders named
therein.
2.3 -- Agreement and Plan of Reorganization, dated as of June 17, 1996, by
and among StaffMark, Inc., Maxwell/Healthcare Acquisition Corp.,
Square One Rehab Acquisition Corp., Maxwell Staffing of Bristow
Acquisition Corp., Maxwell Staffing Acquisition Corp., Technical
Staffing Acquisition Corp., Maxwell/Healthcare, Inc., Square One
Rehab, Inc., Maxwell Staffing of Bristow, Inc., Maxwell Staffing,
Inc., Technical Staffing, Inc. and the Stockholders named therein.
2.4 -- Agreement and Plan of Reorganization, dated as of June 17, 1996, by
and among StaffMark, Inc., HRA Acquisition Corp., HRA, Inc., and the
Stockholders named therein.
</TABLE>

II-2
<PAGE> 204

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -------------------- ----------------------------------------------------------------------
<C> <S> <C>
2.5 -- Agreement and Plan of Reorganization, dated as of June 17, 1996, by
and among StaffMark, Inc., First Choice Staffing Acquisition Corp.,
First Choice Staffing, Inc., and the Stockholders named therein.
2.6 -- Agreement and Plan of Reorganization, dated as of June 17, 1996, by
and among StaffMark, Inc., DP Pros of Burlington Acquisition Corp.,
Blethen Temporaries Acquisition Corp., Personnel Placement Acquisition
Corp., Jaeger Personnel Services Acquisition Corp., Dixon Enterprises
of Burlington Acquisition Corp., Trasec Acquisition Corp., DP Pros of
Burlington, Inc., Blethen Temporaries, Inc., Personnel Placement,
Inc., Jaeger Personnel Services, Ltd., Dixon Enterprises of
Burlington, Inc., Trasec Corp., and the Stockholders named therein.
3.1 -- Certificate of Incorporation of the Company.
3.2 -- Certificate of amendment of Certificate of Incorporation.
3.3 -- Amended and Restated By-Laws of the Company, as amended to date.
*4.1 -- Form of certificate evidencing ownership of Common Stock of the
Company.
*5.1 -- Opinion of Wright, Lindsey & Jennings regarding legality.
10.1 -- StaffMark, Inc. 1996 Stock Option Plan.
10.2 -- Form of Employment Agreement between StaffMark, Inc. and key
employees.
10.3 -- Form of Director Indemnification Agreement
21.1 -- List of subsidiaries of StaffMark, Inc.
*23.1 -- Consent of Wright, Lindsey & Jennings (contained in Exhibit 5.1
hereto).
23.2 -- Consents of Arthur Andersen LLP, Independent Public Accountants.
23.3 -- Consent of W. David Bartholomew to serve as a Director.
23.4 -- Consent of Steven E. Schulte to serve as a Director.
23.5 -- Consent of John H. Maxwell, Jr. to serve as a Director.
23.6 -- Consent of Janice Blethen to serve as a Director.
23.7 -- Consent of William T. Gregory to serve as a Director.
23.8 -- Consent of William J. Lynch to serve as a Director.
27.1 -- Financial Data Schedule.
</TABLE>

- ---------------
* To be supplied by amendment.

(b) Financial Statement Schedules

All schedules are omitted since the required information is not present in
amounts sufficient to require submission of the schedule, or because the
information required is included in the financial statements and notes hereto.

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates on such
denominations and registered in such names as required by the Representatives to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit, or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been

II-3
<PAGE> 205

settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.

The undersigned Registrant hereby undertakes that:

1. For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in the form of
prospectus filed by Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under
the Securities Act shall be deemed to be part of the Registration Statement as
of the time it was declared effective.

2. For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new Registration Statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

II-4
<PAGE> 206

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Fayetteville, State of Arkansas, on July 2, 1996.

StaffMark, Inc.

By: /s/ CLETE T. BREWER
--------------------------------------
Clete T. Brewer
President and Chief Executive
Officer

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated. Each person whose signature to this
Registration Statement appears below hereby constitutes and appoints Clete T.
Brewer and Robert H. Janes III, and each of them, as his true and lawful
attorney-in-fact and agent, with full power of substitution, to sign on his or
her behalf individually and in the capacity stated below and to perform any acts
necessary to be done in order to file all amendments and post-effective
amendments to this Registration Statement, and any and all instruments or
documents filed as part of or in connection with this Registration Statement or
the amendments thereto and each of the undersigned does hereby ratify and
confirm all that said attorney-in-fact and agent, or his substitutes, shall do
or cause to be done by virtue hereof.

<TABLE>
<CAPTION>
NAME TITLE DATE
- --------------------------------------------- --------------------------------- -------------
<S> <C> <C>
/s/ CLETE T. BREWER President, Chief Executive July 2, 1996
- --------------------------------------------- Officer and
Clete T. Brewer Director (Principal
Executive Officer)

/s/ ROBERT H. JANES III Executive Vice President -- July 2, 1996
- --------------------------------------------- Finance, Mergers
Robert H. Janes III and Acquisitions
(Principal Financial
and Accounting Officer)

/s/ JERRY T. BREWER Chairman of the Board July 2, 1996
- ---------------------------------------------
Jerry T. Brewer
</TABLE>

II-5
<PAGE> 207

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- ---------------------------------------------------------------------
<S> <C> <C>
* 1.1 -- Form of Underwriting Agreement.
2.1 -- Agreement and Plan of Reorganization, dated as of June 17, 1996, by
and among StaffMark, Inc., Brewer Personnel Services Acquisition
Corp., Brewer Personnel Services, Inc. and the Stockholders named
therein.
2.2 -- Agreement and Plan of Reorganization, dated as of June 17, 1996, by
and among StaffMark, Inc., Prostaff Personnel Acquisition Corp.,
Excel Temporary Staffing Acquisition Corp., Professional Resources
Acquisition Corp., Prostaff Personnel, Inc., Excel Temporary
Staffing, Inc., Professional Resources, Inc., and the Stockholders
named therein.
2.3 -- Agreement and Plan of Reorganization, dated as of June 17, 1996, by
and among StaffMark, Inc., Maxwell/Healthcare Acquisition Corp.,
Square One Rehab Acquisition Corp., Maxwell Staffing of Bristow
Acquisition Corp., Maxwell Staffing Acquisition Corp., Technical
Staffing Acquisition Corp., Maxwell/ Healthcare, Inc., Square One
Rehab, Inc., Maxwell Staffing of Bristow, Inc., Maxwell Staffing,
Inc., Technical Staffing, Inc. and the Stockholders named therein.
2.4 -- Agreement and Plan of Reorganization, dated as of June 17, 1996, by
and among StaffMark, Inc., HRA Acquisition Corp., HRA, Inc., and the
Stockholders named therein.
2.5 -- Agreement and Plan of Reorganization, dated as of June 17, 1996, by
and among StaffMark, Inc., First Choice Staffing Acquisition Corp.,
First Choice Staffing, Inc., and the Stockholders named therein.
2.6 -- Agreement and Plan of Reorganization, dated as of June 17, 1996, by
and among StaffMark, Inc., DP Pros of Burlington Acquisition Corp.,
Blethen Temporaries Acquisition Corp., Personnel Placement
Acquisition Corp., Jaeger Personnel Services Acquisition Corp., Dixon
Enterprises of Burlington Acquisition Corp., Trasec Acquisition
Corp., DP Pros of Burlington, Inc., Blethen Temporaries, Inc.,
Personnel Placement, Inc., Jaeger Personnel Services, Ltd., Dixon
Enterprises of Burlington, Inc., Trasec Corp., and the Stockholders
named therein.
3.1 -- Certificate of Incorporation of the Company.
3.2 -- Certificate of amendment of Certificate of Incorporation.
3.3 -- Amended and Restated By-Laws of the Company, as amended to date.
*4.1 -- Form of certificate evidencing ownership of Common Stock of the
Company.
* 5.1 -- Opinion of Wright, Lindsey & Jennings regarding legality.
10.1 -- StaffMark, Inc. 1996 Stock Option Plan.
10.2 -- Form of Employment Agreement between StaffMark, Inc. and key
employees.
10.3 -- Form of Director Indemnification Agreement
21.1 -- List of subsidiaries of StaffMark, Inc.
*23.1 -- Consent of Wright, Lindsey & Jennings (contained in Exhibit 5.1
hereto).
23.2 -- Consents of Arthur Andersen LLP, Independent Public Accountants.
23.3 -- Consent of W. David Bartholomew to serve as a Director.
23.4 -- Consent of Steven E. Schulte to serve as a Director.
23.5 -- Consent of John H. Maxwell, Jr. to serve as a Director.
23.6 -- Consent of Janice Blethen to serve as a Director.
23.7 -- Consent of William T. Gregory to serve as a Director.
23.8 -- Consent of William J. Lynch to serve as a Director.
27.1 -- Financial Data Schedule
</TABLE>

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

* To be supplied by amendment.

<PAGE> 1
EXHIBIT 2.1

_________________________________________________________________

AGREEMENT AND PLAN OF REORGANIZATION

dated as of the 17th day of June, 1996

by and among

STAFFMARK, INC.

BREWER PERSONNEL SERVICES ACQUISITION CORPORATION

BREWER PERSONNEL SERVICES, INC.

and

the STOCKHOLDERS named herein

_________________________________________________________________
<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
I. THE MERGER

1.1 Delivery and Filing of Articles of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.2 Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.3 Certificate of Incorporation, By-laws and Board of Directors of Surviving Corporation . . . . . . . . . . . 4
1.4 Certain Information With Respect to the Capital Stock of the COMPANY, STAFFMARK and NEWCO . . . . . . . . . 5
1.5 Effect of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

II. CONVERSION OF STOCK

2.1 Manner of Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

III. DELIVERY OF MERGER CONSIDERATION

3.1 Delivery of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 Delivery of Stockholder Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

IV. CLOSING

4.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

V. REPRESENTATIONS AND WARRANTIES
OF COMPANY AND STOCKHOLDERS

5.1 Due Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.3 Capital Stock of the COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.4 Transactions in Capital Stock, Reorganization Accounting . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.5 No Bonus Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.6 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.7 Predecessor Status; etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.8 Spin-off by the COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.9 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.10 Liabilities and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.11 Accounts and Notes Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.12 Permits and Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.13 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.14 Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.15 Significant Customers; Material Contracts and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.16 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.17 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.18 Compensation; Employment Agreements; Organized Labor Matters . . . . . . . . . . . . . . . . . . . . . . . 13
5.19 Employee Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
<PAGE> 3

<TABLE>
PAGE
<S> <C> <C>
5.20 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.21 Conformity with Law; Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.22 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.23 No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.24 Government Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.25 Absence of Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.26 Deposit Accounts; Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.27 Validity of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.28 Relations with Governments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.29 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.30 Prohibited Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.31 Authority; Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.32 Preemptive Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.33 No Intention to Dispose of COMPANY Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

VI. REPRESENTATIONS OF STAFFMARK AND NEWCO

6.1 Due Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.3 Capital Stock of the COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.4 Transactions in Capital Stock, Reorganization Accounting . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.5 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.7 Liabilities and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.8 Conformity with Law; Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.9 No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.10 Validity of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.11 STAFFMARK Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.12 No Side Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.13 Business; Real Property; Material Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.15 Stock Option Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.16 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.17 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.18 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.19 Permits and Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

VII. COVENANTS PRIOR TO CLOSING

7.1 Access and Cooperation; Due Diligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.2 Conduct of Business Pending Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.3 Prohibited Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.4 No Shop . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.5 Notice to Bargaining Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.6 Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.7 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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7.8 Amendment of Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.9 Cooperation in Preparation of Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.10 Final Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.11 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

VIII. CONDITIONS PRECEDENT TO OBLIGATIONS
OF STOCKHOLDERS AND COMPANY

8.1 Representations and Warranties; Performance of Obligations . . . . . . . . . . . . . . . . . . . . . . . . 33
8.2 No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.3 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.4 Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.5 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.6 Good Standing Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.7 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.8 Closing of IPO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.9 Secretary's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.10 Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.11 NASDAQ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.12 Approval of Additional Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

IX. CONDITIONS PRECEDENT TO OBLIGATIONS OF STAFFMARK AND NEWCO

9.1 Representations and Warranties; Performance of Obligations . . . . . . . . . . . . . . . . . . . . . . . . 34
9.2 No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.3 Secretary's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.4 No Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.5 STOCKHOLDERS' Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.6 Termination of Related Party Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.7 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.8 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.9 Good Standing Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.10 Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.11 Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.12 Closing of IPO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.13 FIRPTA Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

X. COVENANTS OF STAFFMARK AFTER CLOSING

10.1 Release From Guarantees; Repayment of Certain Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.2 Preservation of Tax and Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.3 Preparation and Filing of Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.4 Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.5 Preservation of Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.6 Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.7 Right of First Refusal to Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
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XI. INDEMNIFICATION

11.1 General Indemnification by the STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.2 Indemnification by STAFFMARK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.3 Third Person Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.4 Exclusive Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.5 Limitations on Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

XII. TERMINATION OF AGREEMENT

12.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
12.2 Liabilities in Event of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

XIII. NONCOMPETITION

13.1 Prohibited Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
13.2 Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
13.3 Reasonable Restraint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
13.4 Severability; Reformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
13.5 Independent Covenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
13.6 Materiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

XIV. NONDISCLOSURE OF CONFIDENTIAL INFORMATION

14.1 STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
14.2 STAFFMARK and NEWCO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
14.3 Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
14.4 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

XV. TRANSFER RESTRICTIONS

15.1 Transfer Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

XVI. FEDERAL SECURITIES ACT REPRESENTATIONS

16.1 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
16.2 Economic Risk; Sophistication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
16.3 Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

XVII. REGISTRATION RIGHTS

17.1 Piggyback Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
17.2 Demand Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
17.3 Registration Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
17.4 Availability of Rule 144 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
17.5 Merger, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
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XVIII. GENERAL

18.1 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
18.2 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
18.3 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
18.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
18.5 Brokers and Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
18.6 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
18.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
18.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
18.9 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
18.10 Exercise of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
18.11 Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
18.12 Reformation and Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
18.13 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
18.14 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
18.15 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
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SCHEDULES and ANNEXES

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Annex I - Form of Articles of Merger
Annex II - Form of Certificate of Incorporation and By-laws of PC
Annex III - Consideration to Founding Companies
Annex IV - Stockholders and Stock Ownership of the COMPANY
Annex V - Stockholders and Stock Ownership of PC
Annex VI - Form of Opinion of Wright, Lindsey & Jennings
Annex VII - Form of Opinion of COMPANY Counsel
Annex VIII - Form of Employment Agreement

Schedule 1.4 - Authorized and Outstanding Capital Stock
Schedule 5.1 - Qualifications to do Business
Schedule 5.2 - Required Shareholder Approvals
Schedule 5.3 - Exceptions Regarding Capital Stock of COMPANY
Schedule 5.4 - Transactions in Capital Stock; Options & Warrants to Acquire Capital Stock
Schedule 5.5 - Stock Issued Pursuant to Awards, Grants and Bonuses
Schedule 5.6 - Subsidiaries; Capitalization of Subsidiaries
Schedule 5.7 - Names of Predecessor Companies
Schedule 5.8 - Sales or Spin-Offs of Significant Assets
Schedule 5.9 - Initial Financial Statements
Schedule 5.10 - Significant Liabilities and Obligations
Schedule 5.11 - Accounts and Notes Receivable
Schedule 5.12 - Licenses, Franchises, Permits and Other Governmental Authorizations
Schedule 5.13 - Environmental Matters
Schedule 5.15 - Significant Customers and Material Contracts
Schedule 5.16 - Real Property
Schedule 5.17 - Insurance Policies and Claims
Schedule 5.18 - Officers, Directors and Key Employees, Employment Agreements; Compensation
Schedule 5.19 - Employee Benefit Plans
Schedule 5.20 - Violations of ERISA
Schedule 5.21 - Violations of Law, Regulations or Orders
Schedule 5.22 - Tax Returns and Examinations
Schedule 5.22(v) - Federal, State, Local and Foreign Income Tax Returns Filed
Schedule 5.22(xvii) - Aggregate Tax Losses
Schedule 5.23 - Violations of Charter and Documents and Material Defaults
Schedule 5.24 - Governmental Contracts Subject to Price Redetermination or Renegotiation
Schedule 5.25 - Changes Since Balance Sheet Date
Schedule 5.26 - Deposit Accounts; Powers of Attorney
Schedule 5.30 - Prohibited Activities
Schedule 5.31 - Ownership of COMPANY Stock
Schedule 6.4 - Transactions in Capital Stock of STAFFMARK
Schedule 6.6 - Financial Statements of STAFFMARK
Schedule 6.7 - Liabilities and Obligations of STAFFMARK
Schedule 6.8 - Conformity with Law; Litigation of STAFFMARK
Schedule 6.9 - Violations of Charter Documents and Material Defaults of STAFFMARK
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Schedule 6.13 - Real Property and Material Personal Property and Agreements of STAFFMARK
Schedule 6.14 - Tax Returns of STAFFMARK
Schedule 7.2 - Exceptions to Conducting Business in the Ordinary Course Between Balance Sheet Date and
Consummation Date
Schedule 7.3 - Prohibited Activities
Schedule 7.5 - Notice to Bargaining Agents
Schedule 7.8 - Amendment of Schedules
Schedule 7.10 - Final Financial Statements
Schedule 9.7 - Termination of Related Party Agreements
Schedule 9.12 - Employment Agreements
Schedule 11.1(vi) - Existing or Threatened Litigation
Schedule 11.2(v) - Specifically Identified Indemnification Items
Schedule 13.1 - Prohibited Activities
Schedule 18.5 - Brokers and Agents
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AGREEMENT AND PLAN OF REORGANIZATION

THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of the 17th day of June, 1996, by and among STAFFMARK, INC., a Delaware
corporation ("STAFFMARK"), BREWER PERSONNEL SERVICES ACQUISITION CORPORATION, a
Delaware corporation ("NEWCO"), BREWER PERSONNEL SERVICES, INC., an Arkansas
corporation (the "COMPANY"), CLETE T. BREWER, JERRY T. BREWER, CHAD J. BREWER,
KAY A. BREWER, BETTY BECKER, JOHN BECKER and DONALD A. MARR, JR. (the
"STOCKHOLDERS"). The STOCKHOLDERS are all the stockholders of the COMPANY.

WHEREAS, NEWCO is a corporation duly organized and existing under the
laws of the State of Delaware, having been incorporated on June 18, 1996,
solely for the purpose of completing the transactions set forth herein, and is
a wholly- owned subsidiary of STAFFMARK, a corporation organized and existing
under the laws of the State of Delaware;

WHEREAS, the respective Boards of Directors of NEWCO and the COMPANY
(which together are hereinafter collectively referred to as "Constituent
Corporations") deem it advisable and in the best interests of the Constituent
Corporations and their respective stockholders that NEWCO merge with and into
the COMPANY pursuant to this Agreement and the applicable provisions of the
laws of the States of Delaware and Arkansas;

WHEREAS, STAFFMARK is entering into other separate agreements not
materially different than this Agreement (the "Other Agreements"), each of
which is entitled "Agreement and Plan of Reorganization," with each of ProStaff
Personnel, Inc., HRA, Inc., Blethen Group, The Maxwell Companies, Creative
Temporaties Corporation, and First Choice Staffing, Inc. (together with the
COMPANY, the "Initial Founding Companies"), and such other entities as
STAFFMARK may elect to enter into a similar agreement with, as approved by each
of the Founding Companies, prior to the filing of the Registration Statement
(as defined herein) in order to acquire additional staffing services (the
Company, together with each of the entities with which STAFFMARK has entered
into the Other Agreements, are collectively referred to herein as the "Founding
Companies");

WHEREAS, this Agreement, the Other Agreements and the IPO of STAFFMARK
Stock constitute the "STAFFMARK Plan of Organization;"

WHEREAS, in consideration of the agreements of the Other Founding
Companies pursuant to the Other Agreements, the Board of Directors of the
COMPANY has approved this Agreement as part of the STAFFMARK Plan of
Organization in order to transfer the capital stock of the COMPANY to
STAFFMARK;

WHEREAS, unless the context otherwise requires, capitalized terms used
in this Agreement or in any schedule attached hereto and not otherwise defined
shall have the following meanings for all purposes of this Agreement:
<PAGE> 10
"1933 Act" means the Securities Act of 1933, as amended.

"1934 Act" means the Securities Exchange Act of 1934, as amended.

"Acquired Party" has the meaning set forth at the end of Section 5.22.

"Acquisition Companies" shall mean NEWCO and each of the other Delaware
companies wholly-owned by STAFFMARK prior to the Funding and Consummation Date.

"Articles of Merger" shall mean those Articles of Merger with respect
to the Merger substantially in the form of Annex I attached hereto or with such
other changes therein as may be required by applicable state laws.

"Balance Sheet Date" shall mean March 31, 1996.

"Charter Document" has the meaning set forth in Section 5.1.

"Closing" has the meaning set forth in Section 4.

"Closing Date" has the meaning set forth in Section 4.

"COMPANY" has the meaning set forth in the first paragraph of this
Agreement.

"COMPANY Stock" has the meaning set forth in Section 2.1.

"Constituent Corporations" has the meaning set forth in the second
recital of this Agreement.

"Effective Time of the Merger" shall mean the time as of which the
Merger becomes effective, which the parties hereto contemplate to occur on the
Funding and Consummation Date.

"Environmental Laws" has the meaning set forth in Section 5.13.

"Expiration Date" has the meaning set forth in Section 5(A).

"Founding Companies" has the meaning set forth in the third recital of
this Agreement.

"Funding and Consummation Date" has the meaning set forth in Section 4.

"Initial Founding Companies" has the meaning set forth in the third
recital of this Agreement.

"IPO" means the initial public offering of STAFFMARK Stock pursuant to
the Registration Statement.

"Material Adverse Effect" has the meaning set forth in Section 5.1.

"Material Documents" has the meaning set forth in Section 5.23.

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"Merger" means the merger of NEWCO with and into the COMPANY pursuant
to this Agreement and the applicable provisions of the laws of the State of
Delaware and other applicable state laws.

"NEWCO" has the meaning set forth in the first paragraph of this
Agreement.

"NEWCO STOCK" means the common stock, par value $.01 per share, of
NEWCO.

"Non-Controlling Stockholders" means any stockholder of the COMPANY
holding 10% or less of COMPANY Common Stock at the time of this Agreement.

"Other Agreements" has the meaning set forth in the third recital of
this Agreement.

"Other Founding Companies" means all of the Founding Companies other
than the Company.

"STAFFMARK" has the meaning set forth in the first paragraph of this
Agreement.

"STAFFMARK Charter Documents" has the meaning set forth in Section 6.1.

"STAFFMARK Stock" means the common stock, par value $.01 per share, of
STAFFMARK.

"Plans" has the meaning set forth in Section 5.19.

"Plan of Organization" means the consummation of Agreements executed on
the date hereof by the Founding Companies.

"Pricing" means the determination by STAFFMARK and the Underwriters of
the public offering price of the shares of STAFFMARK Stock in the IPO; the
Pricing shall take place on or before the Closing.

"Qualified Plans" has the meaning set forth in Section 5.20.

"Registration Statement" means that certain registration statement on
Form S-1 covering the IPO.

"Relevant Group" has the meaning set forth in Section 5.22(i).

"Returns" has the meaning set forth at the end of Section 5.22.

"Schedule" means each Schedule attached hereto, which shall reference
the relevant sections of this Agreement, on which parties hereto disclose
information as part of their respective representations, warranties and
covenants.

"SEC" means the United States Securities and Exchange Commission.

"STOCKHOLDER(S)" has the meaning set forth in the first paragraph of
this Agreement.

"Surviving Corporation" shall mean the COMPANY as the surviving party in
the Merger.

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<PAGE> 12
"Tax" has the meaning set forth at the end of Section 5.22.

"Taxing Authority" has the meaning set forth at the end of Section
5.22.

"Underwriters" means the prospective underwriters in the IPO, as
identified in the Registration Statement.

NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants herein
contained, the parties hereto hereby agree as follows:

I. THE MERGER

1.1 DELIVERY AND FILING OF ARTICLES OF MERGER. The Constituent
Corporations will cause Articles of Merger to be signed, verified and delivered
to the Secretary of State of the State of Delaware and, as required, a similar
filing to be made with the relevant authorities in the jurisdiction in which
the COMPANY is organized, on or before the Funding and Consummation Date.

1.2 EFFECTIVE TIME OF THE MERGER. At the Effective Time of the
Merger, NEWCO shall be merged with and into the COMPANY in accordance with the
Articles of Merger, the separate existence of NEWCO shall cease, the COMPANY
shall be the surviving party in the Merger and the COMPANY is sometimes
hereinafter referred to as the Surviving Corporation. The Merger will be
effected in a single transaction.

1.3 CERTIFICATE OF INCORPORATION, BY-LAWS AND BOARD OF DIRECTORS OF
SURVIVING CORPORATION. At the Effective Time of the Merger:

(i) the Certificate of Incorporation of the COMPANY then in effect
shall be the Certificate of Incorporation of the Surviving Corporation until
changed as provided by law;

(ii) the By-laws of NEWCO then in effect shall become the By-laws of
the Surviving Corporation; and subsequent to the Effective Time of the Merger,
such By-laws shall be the By-laws of the Surviving Corporation until they shall
thereafter be duly amended;

(iii) the Board of Directors of the Surviving Corporation shall
consist of the following persons:

Clete T. Brewer
Robert H. Janes, III

The Board of Directors of the Surviving Corporation shall hold office
subject to the provisions of the laws of the State of Arkansas and of the
Certificate of Incorporation and By-laws of the Surviving Corporation; and

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<PAGE> 13
Surviving Corporation, each of such officers to serve, subject to the
provisions of the Certificate of Incorporation and By-laws of the Surviving
Corporation, until his or her successor is duly elected and qualified.

1.4 CERTAIN INFORMATION WITH RESPECT TO THE CAPITAL STOCK OF THE
COMPANY, STAFFMARK AND NEWCO. The respective designations and numbers of
outstanding shares and voting rights of each class of outstanding capital stock
of the COMPANY, STAFFMARK and NEWCO as of the date of this Agreement are as
follows:

(i) as of the date of this Agreement, the authorized and outstanding
capital stock of the COMPANY is as set forth on Schedule 1.4 hereto;

(ii) immediately prior to the Funding and Consummation Date, the
authorized capital stock of STAFFMARK will consist of 26,000,000 shares of
STAFFMARK Stock, of which the number of issued and outstanding shares will be
set forth in the Registration Statement, and 1,000,000 shares of preferred
stock, $.01 par value, of which no shares will be issued and outstanding; and

(iii) as of the date of this Agreement, the authorized capital stock
of NEWCO consists of 3,000 shares of NEWCO Stock, of which ten (10) shares are
issued and outstanding.

1.5 EFFECT OF MERGER. At the Effective Time of the Merger, the
effect of the Merger shall be as provided in the applicable provisions of the
General Corporation Law of the State of Delaware (the "Delaware GCL") and the
law of the State of Arkansas. Except as herein specifically set forth, the
identity, existence, purposes, powers, objects, franchises, privileges, rights
and immunities of the COMPANY shall continue unaffected and unimpaired by the
Merger and the corporate franchises, existence and rights of NEWCO shall be
merged with and into the COMPANY, and the COMPANY, as the Surviving
Corporation, shall be fully vested therewith. At the Effective Time of the
Merger, the separate existence of NEWCO shall cease and, in accordance with the
terms of this Agreement, the Surviving Corporation shall possess all the
rights, privileges, immunities and franchises, of a public, as well as of a
private, nature, and all property, real, personal and mixed, and all debts due
on whatever account, including subscriptions to shares, and all taxes,
including those due and owing and those accrued, and all other choses in
action, and all and every other interest of or belonging to or due to the
COMPANY and NEWCO shall be taken and deemed to be transferred to, and vested
in, the Surviving Corporation without further act or deed; and all property,
rights and privileges, powers and franchises and all and every other interest
shall be thereafter as effectually the property of the Surviving Corporation as
they were of the COMPANY and NEWCO; and the title to any real estate, or
interest therein, whether by deed or otherwise, under the laws of the state of
incorporation vested in the COMPANY and NEWCO, shall not revert or be in any
way impaired by reason of the Merger. Except as otherwise provided herein, the
Surviving Corporation shall thenceforth be responsible and liable for all the
liabilities and obligations of the COMPANY and NEWCO and any claim existing, or
action or proceeding pending, by or against the COMPANY or NEWCO may be
prosecuted as if the Merger had not taken place, or the Surviving Corporation
may be substituted in their place. Neither the rights of creditors nor any
liens upon the property of the COMPANY or NEWCO shall be impaired by the
Merger, and all debts, liabilities and duties of the COMPANY and NEWCO shall
attach to the Surviving Corporation, and may be enforced against such Surviving
Corporation to the same extent as if said debts, liabilities and duties had
been incurred or contracted by such Surviving Corporation.

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<PAGE> 14
II. CONVERSION OF STOCK

2.1 MANNER OF CONVERSION. The manner of converting the shares of
(i) outstanding capital stock of the COMPANY ("COMPANY Stock") and (ii) NEWCO
Stock, issued and outstanding immediately prior to the Effective Time of the
Merger, respectively, into shares of (x) STAFFMARK Stock and (y) common stock
of the Surviving Corporation, respectively, shall be as follows:

As of the Effective Time of the Merger:

(i) all of the shares of COMPANY Stock issued and
outstanding immediately prior to the Effective Time of the Merger, by
virtue of the Merger and without any action on the part of the holder
thereof, automatically shall be deemed to represent (1) that number of
shares of STAFFMARK Stock set forth on Part I of Annex III hereto and
(2) the right to receive the amount of cash set forth on Part I of
Annex III hereto;

(ii) all shares of COMPANY Stock that are held by the COMPANY
as treasury stock shall be cancelled and retired and no shares of
STAFFMARK Stock or other consideration shall be delivered or paid in
exchange therefor; and

(iii) each share of NEWCO Stock issued and outstanding
immediately prior to the Effective Time of the Merger, shall, by virtue
of the Merger and without any action on the part of STAFFMARK,
automatically be converted into one fully paid and non-assessable share
of common stock of the Surviving Corporation which shall constitute all
of the issued and outstanding shares of common stock of the Surviving
Corporation immediately after the Effective Time of the Merger.

All STAFFMARK Stock received by the STOCKHOLDERS pursuant to this
Agreement shall, except for restrictions on resale or transfer described in
Sections 15 and 16 hereof, have the same rights as all the other shares of
outstanding STAFFMARK Stock by reason of the provisions of the Certificate of
Incorporation of STAFFMARK or as otherwise provided by the Delaware GCL. All
voting rights of such STAFFMARK Stock received by the STOCKHOLDERS shall be
fully exercisable by the STOCKHOLDERS and the STOCKHOLDERS shall not be
deprived nor restricted in exercising those rights. At the Effective Time of
the Merger, STAFFMARK shall have no class of capital stock issued and
outstanding other than the STAFFMARK Stock.

III. DELIVERY OF MERGER CONSIDERATION

3.1 DELIVERY OF SHARES. At the Effective Time of the Merger and on
the Funding and Consummation Date the STOCKHOLDERS, each of the holders of all
outstanding certificates representing shares of COMPANY Stock, shall, upon
surrender of such certificates, receive (i) the respective number of shares of
STAFFMARK Stock set forth on Part II of Annex III and (ii) the amount of cash
set forth on Part II of Annex III hereto, said cash to be payable by certified
check or wire transfer at the election of the STOCKHOLDERS.

3.2 DELIVERY OF STOCKHOLDER SHARES. The STOCKHOLDERS shall deliver
to STAFFMARK at the Closing the certificates representing COMPANY Stock, duly
endorsed in blank by the

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<PAGE> 15
STOCKHOLDERS, or accompanied by blank stock powers, with signatures guaranteed
by a national or state chartered bank or other financial institution, and with
all necessary transfer tax and other revenue stamps, acquired at the
STOCKHOLDERS' expense, affixed and cancelled. The STOCKHOLDERS agree promptly
to cure any deficiencies with respect to the endorsement of the stock
certificates or other documents of conveyance with respect to such COMPANY
Stock or with respect to the stock powers accompanying any COMPANY Stock.

IV. CLOSING

4.1 CLOSING. At or prior to the Pricing, the parties shall take all
actions necessary to prepare to (i) effect the Merger (including, if permitted
by applicable state law, the filing with the appropriate state authorities of
the Articles of Merger which shall become effective at the Effective Time of
the Merger) and (ii) effect the conversion and delivery of shares referred to
in Section 3 hereof; provided, that such actions shall not include the actual
completion of the Merger or the conversion and delivery of the shares and
certified check(s) or wire transfer(s) referred to in Section 3 hereof, each of
which actions shall only be taken upon the Funding and Consummation Date as
herein provided. The taking of the actions described in clauses (i) and (ii)
above (the "Closing") shall take place on the closing date (the "Closing Date")
at the offices of Wright, Lindsey & Jennings, 200 W. Capitol Avenue, Suite
2200, Little Rock, Arkansas 72201. On the Funding and Consummation Date (x)
the Articles of Merger shall be filed with the appropriate state authorities,
or if already filed shall become effective and the Merger shall thereby be
effected, (y) all transactions contemplated by this Agreement, including the
conversion and delivery of shares, the delivery of a certified check(s) or wire
transfer(s) in an amount equal to the cash portion of the consideration which
the STOCKHOLDERS shall be entitled to receive pursuant to the Merger referred
to in Section 3 hereof shall be completed and (z) the closing with respect to
the IPO shall occur and be deemed to be completed. The date on which the
actions described in the preceding clauses (x), (y) and (z) occurs shall be
referred to as the "Funding and Consummation Date." This Agreement shall in any
event terminate if the Funding and Consummation Date has not occurred within 15
business days of the Closing Date. Time is of the essence.

V. REPRESENTATIONS AND WARRANTIES
OF COMPANY AND STOCKHOLDERS

(A) REPRESENTATIONS AND WARRANTIES OF COMPANY AND STOCKHOLDERS.

Each of the COMPANY and the STOCKHOLDERS jointly and severally
represent and warrant that all of the following representations and warranties
in this Section 5(A) are true at the date of this Agreement and, subject to
Section 7.8 hereof, shall be true at the time of Closing and the Funding and
Consummation Date, and that such representations and warranties shall survive
the Funding and Consummation Date for a period of twenty-four (24) months (the
last day of such period being the "Expiration Date"), except that (i) the
warranties and representations set forth in Section 5.22 hereof shall survive
until such time as the limitations period has run for all tax periods ended on
or prior to the Funding and Consummation Date, which shall be deemed to be the
Expiration Date for Section 5.22 and (ii) solely for purposes of Section
11.1(iii) hereof, and solely to the extent that in connection with the IPO,
STAFFMARK actually incurs liability under the Securities Act of 1933, as
amended (the "1933 Act"), the Securities Exchange Act of 1934, as amended (the
"1934 Act"), or any other Federal or state

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<PAGE> 16
securities laws, the representations and warranties set forth herein shall
survive until the expiration of any applicable limitations period, which shall
be deemed to be the Expiration Date for such purposes. For purposes of this
Section 5, the term COMPANY shall mean and refer to the COMPANY and all of its
subsidiaries, if any.

5.1 DUE ORGANIZATION. The COMPANY is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation, and is duly authorized and qualified to do business under all
applicable laws, regulations, ordinances and orders of public authorities to
carry on its business in the places and in the manner as now conducted except
(i) as set forth on the Schedule 5.1 or (ii) where the failure to be so
authorized or qualified would not have a material adverse effect on the
business, operations, affairs, prospects, properties, assets or condition
(financial or otherwise), of the COMPANY taken as a whole (as used herein with
respect to the COMPANY, or with respect to any other person, a "Material
Adverse Effect"). Schedule 5.1 contains a list of all jurisdictions in which
the COMPANY is authorized or qualified to do business. A certified copy of the
Certificate or Articles of Incorporation and a true, complete and correct copy
of the By-laws, both as amended, of the COMPANY (the "Charter Documents") are
attached hereto as Schedule 5.1. The minute books and stock records of the
COMPANY, as heretofore made available to STAFFMARK, are correct and complete in
all material respects.

5.2 AUTHORIZATION. (i) The representatives of the COMPANY executing
this Agreement have the authority to enter into and bind the COMPANY to the
terms of this Agreement and (ii) the COMPANY has the full legal right, power
and authority to enter into this Agreement and the Merger, subject to any
required shareholder approval described on Schedule 5.2.

5.3 CAPITAL STOCK OF THE COMPANY. The authorized capital stock of
the COMPANY is as set forth in Section 1.4(i). All of the issued and
outstanding shares of the capital stock of the COMPANY are owned by the
STOCKHOLDERS in the amounts set forth in Annex IV and further, except as set
forth on Schedule 5.3, are owned free and clear of all liens, security
interests, pledges, charges, voting trusts, restrictions, encumbrances and
claims of every kind. All of the issued and outstanding shares of the capital
stock of the COMPANY have been duly authorized and validly issued, are fully
paid and nonassessable, are owned of record and beneficially by the
STOCKHOLDERS and further, such shares were offered, issued, sold and delivered
by the COMPANY in compliance with all applicable state and Federal laws
concerning the issuance of securities. Further, none of such shares were
issued in violation of the preemptive rights of any past or present
stockholder.

5.4 TRANSACTIONS IN CAPITAL STOCK, REORGANIZATION ACCOUNTING.
Except as set forth on Schedule 5.4, the COMPANY has not acquired any COMPANY
Stock since January 1, 1992. Except as set forth on Schedule 5.4, (i) no
option, warrant, call, conversion right or commitment of any kind exists which
obligates the COMPANY to issue any of its authorized but unissued capital
stock; (ii) the COMPANY has no obligation (contingent or otherwise) to
purchase, redeem or otherwise acquire any of its equity securities or any
interests therein or to pay any dividend or make any distribution in respect
thereof; and (iii) neither the voting stock structure of the COMPANY nor the
relative ownership of shares among any of its respective stockholders has been
altered or changed in contemplation of the Merger. Schedule 5.4 also includes
complete and accurate copies of all stock option or stock purchase plans,
including a list of all outstanding options, warrants or other rights to
acquire shares of the COMPANY's stock.

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5.5 NO BONUS SHARES. Except as set forth on Schedule 5.5, none of
the shares of COMPANY Stock was issued pursuant to awards, grants or bonuses.

5.6 SUBSIDIARIES. Schedule 5.6 attached hereto lists the name of
each of COMPANY's subsidiaries and sets forth the number and class of the
authorized capital stock of each of COMPANY's subsidiaries and the number of
shares of each of COMPANY's subsidiaries which are issued and outstanding, all
of which shares (except as set forth on Schedule 5.6) are owned by the COMPANY,
free and clear of all liens, security interests, pledges, voting trusts,
equities, restrictions, encumbrances and claims of every kind. Except as set
forth in Schedule 5.6, the COMPANY does not presently own, of record or
beneficially, or control, directly or indirectly, any capital stock, securities
convertible into capital stock or any other equity interest in any corporation,
association or business entity nor is the COMPANY, directly or indirectly, a
participant in any joint venture, partnership or other non-corporate entity.

5.7 PREDECESSOR STATUS; ETC. Set forth in Schedule 5.7 is a listing
of all names of all predecessor companies of the COMPANY, including the names
of any entities acquired by the COMPANY (by stock purchase, merger or
otherwise) or from whom the COMPANY previously acquired material assets.
Except as disclosed on Schedule 5.7, the COMPANY has not been a subsidiary or
division of another corporation or a part of an acquisition which was later
rescinded.

5.8 SPIN-OFF BY THE COMPANY. Except as set forth on Schedule 5.8,
there has not been any sale, spin-off or split-up of material assets of either
the COMPANY or any other person or entity that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under common
control with, the COMPANY ("Affiliates") since January 1, 1994.

5.9 FINANCIAL STATEMENTS. Attached hereto as Schedule 5.9 are
copies of the following financial statements (the "COMPANY Financial
Statements") of the COMPANY: the COMPANY's audited Consolidated Balance Sheet
as of December 31, 1995 and 1994 and Statements of Income, Cash Flows and
Retained Earnings for each of the years in the three-year period ended December
31, 1995 prepared by Arthur Andersen LLP and the COMPANY's unaudited
Consolidated Balance Sheet as of March 31, 1996 and Statement of Income, Cash
Flows and Retained Earnings for the three month period ended March 31, 1996
prepared by Arthur Andersen LLP (March 31, 1996 being hereinafter referred to
as the "Balance Sheet Date"). Such Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods indicated (except as noted thereon or
on Schedule 5.9). Except as set forth on Schedule 5.9, such Consolidated
Balance Sheets as of December 31, 1995, 1994, and 1993 and March 31, 1996
present fairly in all material respects the financial position of the COMPANY
as of the dates indicated thereon, and such Consolidated Statements of Income,
Cash Flows and Retained Earnings present fairly in all material respects the
results of operations for the periods indicated thereon.

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liabilities incurred in the ordinary course of business. The COMPANY has also
delivered to STAFFMARK on Schedule 5.10, in the case of those contingent
liabilities related to pending or threatened litigation, or other liabilities
which are not fixed or otherwise accrued or reserved, a reasonable estimate of
the maximum amount which may be payable. For each such contingent liability or
liability for which the amount is not fixed or is contested, the COMPANY has
provided to STAFFMARK the following information:

(i) a summary description of the liability together with the
following:
(a) copies of all relevant documentation relating thereto;
(b) amounts claimed and any other action or relief sought;
and
(c) name of claimant and all other parties to the claim,
suit or proceeding.

(ii) the name of each court or agency before which such claim, suit
or proceeding is pending; and

(iii) the date such claim, suit or proceeding was instituted; and

(iv) a reasonable best estimate (but not a representation or
warranty) of the maximum amount, if any, which is likely to become payable with
respect to each such liability. If no estimate is provided, the best estimate
shall for purposes of this Agreement be deemed to be zero.

5.11 ACCOUNTS AND NOTES RECEIVABLE. The COMPANY has delivered to
STAFFMARK an accurate list (Schedule 5.11) of the accounts and notes receivable
of the COMPANY, as of the Balance Sheet Date, including any such amounts which
are not reflected in the balance sheet as of the Balance Sheet Date, and
including receivables from and advances to employees and the STOCKHOLDERS.
Except to the extent reflected on Schedule 5.11, such accounts and notes are
collectible in the amount shown on Schedule 5.11, net of reserves reflected in
the balance sheet as of the Balance Sheet Date. The COMPANY shall also provide
STAFFMARK with an accurate list of all receivables obtained subsequent to the
Balance Sheet Date, but does not warrant the collectibility of the receivables
obtained subsequent to the Balance Sheet Date. The COMPANY shall provide
STAFFMARK with an aging of all accounts and notes receivable showing amounts
due in 30 day aging categories upon the execution of this Agreement and an
updated aging within 5 days prior to the Closing Date.

5.12 PERMITS AND INTANGIBLES. The COMPANY holds all licenses,
franchises, permits and other governmental authorizations the absence of any of
which could have a Material Adverse Effect on its business and the COMPANY has
delivered to STAFFMARK an accurate list and summary description (Schedule 5.12)
of all such licenses, franchises, permits and other governmental
authorizations, including permits, titles (including motor vehicle titles and
current registrations), fuel permits, licenses, franchises, certificates,
trademarks, trade names, patents, patent applications and copyrights owned or
held by the COMPANY (including interests in software or other technology
systems, programs and intellectual property). To the knowledge of the COMPANY,
the licenses, franchises, permits and other governmental authorizations listed
on Schedule 5.12 are valid, and the COMPANY has not received any notice that
any governmental authority intends to cancel, terminate or not renew any such
license, franchise, permit or other governmental authorization. The COMPANY
has conducted and is conducting its business in compliance with the
requirements, standards, criteria and conditions set forth in applicable
permits, licenses, orders, approvals, variances, rules and regulations and is
not in violation of any of the foregoing except where such non-compliance or
violation would not

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have a Material Adverse Effect on the COMPANY. Except as specifically provided
in the Schedule 5.12, the transactions contemplated by this Agreement will not
result in a default under or a breach or violation of, or adversely affect the
rights and benefits afforded to the COMPANY by, any such licenses, franchises,
permits or government authorizations.

5.13 ENVIRONMENTAL MATTERS. Except as set forth on the Schedule
5.13, (i) the COMPANY has complied with and is in compliance with all Federal,
state, local and foreign statutes (civil and criminal), laws, ordinances,
regulations, rules, notices, permits, judgments, orders and decrees applicable
to any of them or any of their respective properties, assets, operations and
businesses relating to environmental protection (collectively "Environmental
Laws") including, without limitation, Environmental Laws relating to air,
water, land and the generation, storage, use, handling, transportation,
treatment or disposal of Hazardous Wastes and Hazardous Substances (as such
terms are defined in any applicable Environmental Law); (ii) the COMPANY has
obtained and adhered to all necessary permits and other approvals necessary to
treat, transport, store, dispose of and otherwise handle Hazardous Wastes and
Hazardous Substances and have reported, to the extent required by all
Environmental Laws, all past and present sites owned and operated by the
COMPANY where Hazardous Wastes or Hazardous Substances have been treated,
stored, disposed of or otherwise handled; (iii) there have been no releases or
threats of releases (as defined in Environmental Laws) at, from, in or on any
property owned or operated by the COMPANY except as permitted by Environmental
Laws; (iv) the COMPANY knows of no on-site or off-site location to which the
COMPANY has transported or disposed of Hazardous Wastes and Hazardous
Substances or arranged for the transportation of Hazardous Wastes and Hazardous
Substances, which site is the subject of any Federal, state, local or foreign
enforcement action or any other investigation which could lead to any claim
against the COMPANY, STAFFMARK or NEWCO for any clean-up cost, remedial work,
damage to natural resources or personal injury, including, but not limited to,
any claim under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended; and (v) the COMPANY has no contingent
liability in connection with any release of any Hazardous Waste or Hazardous
Substance into the environment.

5.14 PERSONAL PROPERTY. The COMPANY has delivered to STAFFMARK an
accurate list (Schedule 5.14) of (x) all personal property included (or that
will be included) in "depreciable plant, property and equipment" on the balance
sheet of the COMPANY, (y) all other personal property owned by the COMPANY with
a value in excess of $2,500 (i) as of the Balance Sheet Date and (ii) acquired
since the Balance Sheet Date and (z) all leases and agreements in respect of
personal property, including, in the case of each of (x), (y) and (z), (1)
true, complete and correct copies of all such leases, (2) a listing of the
capital costs of all such assets which are subject to capital leases and (3) an
indication as to which assets are currently owned, or were formerly owned, by
STOCKHOLDERS or business or personal affiliates of the COMPANY or STOCKHOLDERS.
Except as set forth on Schedule 5.14, (i) all personal property used by the
COMPANY in its business is either owned by the COMPANY or leased by the COMPANY
pursuant to a lease included on Schedule 5.14, (ii) all of the personal
property listed on Schedule 5.14 is in good working order and condition,
ordinary wear and tear excepted and (iii) all leases and agreements included on
Schedule 5.14 are in full force and effect and constitute valid and binding
agreements of the parties (and their successors) thereto in accordance with
their respective terms.

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<PAGE> 20
entities) representing 5% or more of the COMPANY's annual revenues as of the
Balance Sheet Date. Except to the extent set forth on Schedule 5.15, none of
the COMPANY's significant customers (or persons or entities that are sources of
a significant number of customers) have cancelled or substantially reduced or,
to the knowledge of the COMPANY, are currently attempting or threatening to
cancel a contract or substantially reduce utilization of the services provided
by the COMPANY.

The COMPANY has listed on Schedule 5.15 all material contracts,
commitments and similar agreements to which the COMPANY is a party or by which
it or any of its properties are bound (including, but not limited to, contracts
with significant customers, joint venture or partnership agreements, contracts
with any labor organizations, strategic alliances, loan agreements, indemnity
or guaranty agreements, bonds, mortgages, options to purchase land, liens,
pledges or other security agreements), other than agreements listed on
Schedules 5.14 or 5.16, (a) in existence as of the Balance Sheet Date and (b)
entered into since the Balance Sheet Date, and in each case has delivered true,
complete and correct copies of such agreements to STAFFMARK. The COMPANY has
complied with all material commitments and obligations pertaining to it, and is
not in default under any contracts or agreements listed on Schedule 5.15 and no
notice of default under any such contract or agreement has been received. The
COMPANY has also indicated on Schedule 5.15 a summary description of all plans
or projects involving the opening of new operations, expansion of existing
operations, the acquisition of any personal property, business or assets
requiring, in any event, the payment of more than $50,000 by the COMPANY.

5.16 REAL PROPERTY. Schedule 5.16 includes a list of all real
property owned or leased by the COMPANY (i) as of the Balance Sheet Date and
(ii) acquired since the Balance Sheet Date, and all other property, if any,
used by the COMPANY in the conduct of its business. The COMPANY has good and
insurable title to the real property owned by it, including those reflected on
Schedule 5.14, subject to no mortgage, pledge, lien, conditional sales
agreement, encumbrance or charge, except for:

(i) liens reflected on Schedules 5.10 or 5.15 as securing specified
liabilities (with respect to which no material default exists);

(ii) liens for current taxes not yet payable and assessments not in
default;

(iii) easements for utilities serving the property only; and

(iv) easements, covenants and restrictions and other exceptions to
title shown of record in the office of the County Clerks in which the
properties, assets and leasehold estates are located which do not adversely
affect the current use of the property.

Schedule 5.16 shall, without limitation, contain true, complete and
correct copies of all title reports and title insurance policies received or
owned by the COMPANY with respect to real property owned by the COMPANY.

The COMPANY has also delivered to STAFFMARK an accurate list on
Schedule 5.16, true, complete and correct copies of all leases and agreements
in respect of real property leased by the COMPANY, and an indication as to
which such properties, if any, are currently owned, or were formerly owned, by
STOCKHOLDERS or business or personal affiliates of the COMPANY or STOCKHOLDERS.
Except as set forth on Schedule 5.16, all of such leases included on Schedule
5.16

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<PAGE> 21
are in full force and effect and constitute valid and binding agreements of the
parties (and their successors) thereto in accordance with their respective
terms.

5.17 INSURANCE. The COMPANY has delivered to STAFFMARK on Schedule
5.17 (i) an accurate list as of the Balance Sheet Date of all insurance
policies carried by the COMPANY, (ii) an accurate list of all insurance loss
runs or workers compensation claims received for the past three (3) policy
years and (iii) true, complete and correct copies of all insurance policies
currently in effect. Such insurance policies are currently in full force and
effect and shall remain in full force and effect through the Funding and
Consummation Date. No insurance carried by the COMPANY has ever been cancelled
by the insurer and the COMPANY has never been denied coverage.

5.18 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS.
The COMPANY has delivered to STAFFMARK an accurate schedule (Schedule 5.18)
showing all officers, directors, key employees and staff of the COMPANY,
listing all employment agreements with the officers, directors and key
employees and the rate of compensation (and the portions thereof attributable
to salary, bonus and other compensation, respectively) of each of such persons
as of (i) the Balance Sheet Date and (ii) the date hereof. The COMPANY has
provided to STAFFMARK true, complete and correct copies of any employment
agreements for persons listed on Schedule 5.18. Except as set forth on
Schedule 5.18, since the Balance Sheet Date, there have been no increases in
the compensation payable or any special bonuses to any officer, director, key
employee or other employee, except ordinary salary increases implemented on a
basis consistent with past practices.

Except as set forth on Schedule 5.18, (i) the COMPANY is not bound by
or subject to (and none of its respective assets or properties is bound by or
subject to) any arrangement with any labor union, (ii) no employees of the
COMPANY are represented by any labor union or covered by any collective
bargaining agreement, (iii) no campaign to establish such representation is in
progress and (iv) there is no pending or, to the best of the COMPANY's
knowledge, threatened labor dispute involving the COMPANY and any group of its
employees nor has the COMPANY experienced any labor interruptions over the past
three years. The COMPANY believes its relationship with employees to be
satisfactory.

5.19 EMPLOYEE PLANS. Attached hereto as Schedule 5.19 are complete
and accurate copies, as of the Balance Sheet Date, of all employee benefit
plans, all employee welfare benefit plans, all employee pension benefit plans,
all multi-employer plans and all multi-employer welfare arrangements (as
defined in Sections 3(3), (1), (2), (37) and (40), respectively, of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), which
are currently maintained and/or sponsored by the COMPANY, or any benefit plans
or arrangements, formal or informal, that are not subject to ERISA, including,
without limitation, employment agreements and any other agreements containing
"golden parachute" provisions and deferred compensation agreements, or to which
any COMPANY currently contributes, or has an obligation to contribute in the
future (including, without limitation, benefit plans or arrangements that are
not subject to ERISA, such as employment agreements and any other agreements
containing "golden parachute" provisions and deferred compensation agreements),
together with copies of any trusts related thereto and a classification of
employees covered thereby (collectively, the "Plans"). Schedule 5.19 sets
forth all of the Plans that have been terminated within the past three years.

5.20 COMPLIANCE WITH ERISA. Except for the Plans, the COMPANY does
not maintain or sponsor, and is not a contributing employer to, a pension,
profit-sharing, deferred compensation, stock

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<PAGE> 22
option, employee stock purchase or other employee benefit plan, employee
welfare benefit plan, or any other compensation or benefit arrangement, formal
or informal, with their respective employees, whether or not subject to ERISA.
Except as set forth on the Schedule 5.20, (i) all Plans are in substantial
compliance with all applicable provisions of ERISA and the regulations issued
thereunder, as well as with all other applicable laws, and, in all material
respects, have been administered, operated and managed in substantial
accordance with the governing documents; (ii) all Plans that are intended to
qualify (the "Qualified Plans") under Section 401(a) of the Code are so
qualified and have been determined by the Internal Revenue Service to be so
qualified, and copies of the current plan determination letters, most recent
actuarial valuation reports, if any, most recent Form 5500, or, as applicable,
Form 5500-C/R filed with respect to each such Qualified Plan or employee
welfare benefit plan and most recent trustee or custodian report, are included
as part of Schedule 5.20; (iii) to the extent that any Qualified Plans have not
been amended to comply with applicable law, the remedial amendment period
permitting retroactive amendment of such Qualified Plans has not expired and
will not expire within 120 days after the Funding and Consummation Date; (iv)
all reports and other documents required to be filed with any governmental
agency or distributed to plan participants or beneficiaries (including, but not
limited to, annual reports, summary annual reports, actuarial reports, PBGC-1
Reports, audits or tax returns) have been timely filed or distributed, or
failure to timely file or deliver will not result in a Material Adverse Effect
to the COMPANY; (v) none of the STOCKHOLDERS, any Plan, or the COMPANY has
engaged in any transaction prohibited under the provisions of Section 4975 of
the Code or Section 406 of ERISA; (vi) no Plan has incurred an accumulated
funding deficiency, as defined in Section 412(a) of the Code and Section 302(1)
of ERISA; (vii) no circumstances exist pursuant to which the COMPANY could have
any direct or indirect liability whatsoever (including being subject to any
statutory lien to secure payment of any such liability), to the Pension Benefit
Guaranty Corporation ("PBGC") under Title IV of ERISA or to the Internal
Revenue Service for any excise tax or penalty with respect to any plan now or
hereafter maintained or contributed to by the COMPANY or any member of a
"controlled group" (as defined in Section 4001(a)(14) of ERISA) that includes
the COMPANY; (viii) the COMPANY nor any member of a "controlled group" (as
defined above) that includes the COMPANY currently has (or at the Funding and
Consummation Date will have) any obligation whatsoever to contribute to any
"multi-employer pension plan" (as defined in ERISA Section 4001(a)(14)), nor
has any withdrawal liability whatsoever (whether or not yet assessed) arising
under or capable of assertion under Title IV of ERISA (including, but not
limited to, Sections 4201, 4202, 4203, 4204, or 4205 thereof) been incurred by
any Plan; (ix) there have been no terminations, partial terminations or
discontinuance of contributions to any Qualified Plan without notice to and
approval by the Internal Revenue Service; (x) no Plan which is subject to the
provisions of Title IV of ERISA, has been terminated; (xi) there have been no
"reportable events" (as that phrase is defined in Section 4043 of ERISA) with
respect to any Plan which were not properly reported; (xii) the valuation of
assets of any Qualified Plan, as of the Funding and Consummation Date, shall
exceed the actuarial present value of all accrued pension benefits under any
such Qualified Plan in accordance with the assumptions contained in the
Regulations of the PBGC governing the funding of terminated defined benefit
plans; (xiii) with respect to Plans which qualify as "group health plans" under
Section 4980B of the Internal Revenue Code and Section 607(1) of ERISA and
related regulations (relating to the benefit continuation rights imposed by
"COBRA"), the COMPANY and the STOCKHOLDERS have complied (and on the Funding
and Consummation Date will have complied) in all material respects with all
reporting, disclosure, notice, election and other benefit continuation
requirements imposed thereunder as and when applicable to such plans, and the
COMPANY has not incurred (and will not incur) any material direct or indirect
liability and is not (and will not be) subject to any material loss,
assessment, excise tax penalty, loss of Federal income tax deduction or other
sanction, arising on account of or in respect of any direct or

14
<PAGE> 23
indirect failure by the COMPANY or the STOCKHOLDERS, at any time prior to the
Funding and Consummation Date, to comply with any such Federal or state benefit
continuation requirement, which is capable of being assessed or asserted before
or after the Funding and Consummation Date directly or indirectly against the
COMPANY or the STOCKHOLDERS with respect to such group health plans; (xiv) The
COMPANY is not now nor has it been within the past five years a member of a
"controlled group" as defined in ERISA Section 4001(a)(14); (xv) there is no
pending litigation, arbitration, or disputed claim, settlement or adjudication
proceeding, and to the best of STOCKHOLDERS' knowledge, there is no threatened
litigation, arbitration or disputed claim, settlement or adjudication
proceeding, or any governmental or other proceeding, or investigation with
respect to any Plan, or with respect to any fiduciary, administrator, or
sponsor thereof (in their capacities as such), or any party in interest
thereof; (xvi) the Financial Statements as of the Balance Sheet Date reflect
the approximate total pension, medical and other benefit expense for all Plans,
and no material funding changes or irregularities are reflected thereon which
would cause such Financial Statements to be not representative of most prior
periods; and (xvii) The COMPANY has not incurred liability under Section 4062
of ERISA.

5.21 CONFORMITY WITH LAW; LITIGATION. Except to the extent set forth
on Schedule 5.21, the COMPANY is not in violation of any law or regulation or
any order of any court or Federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality having
jurisdiction over any of them which would have a Material Adverse Effect; and
except to the extent set forth in Schedule 5.10, there are no material claims,
actions, suits or proceedings, pending or, to the knowledge of the COMPANY,
threatened, against or affecting the COMPANY, at law or in equity, or before or
by any Federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality having jurisdiction over any of them
and no notice of any claim, action, suit or proceeding, whether pending or
threatened, has been received. The COMPANY has conducted and is conducting its
business in substantial compliance with the requirements, standards, criteria
and conditions set forth in applicable Federal, state and local statutes,
ordinances, permits, licenses, orders, approvals, variances, rules and
regulations and is not in violation of any of the foregoing which might have a
Material Adverse Effect.

5.22 TAXES. Except as set forth on Schedule 5.22

(i) All Returns required to have been filed by or with respect to
the COMPANY and any affiliated, combined, consolidated, unitary or similar
group of which the COMPANY is or was a member (a "Relevant Group") with any
Taxing Authority have been duly filed, and each such Return correctly and
completely reflects the income, franchise or other Tax liability and all other
information required to be reported thereon. All Taxes (whether or not shown
on any Return) owed by the COMPANY, any subsidiary and any member of a Relevant
Group (individually, the "Acquired Party" and collectively, the "Acquired
Parties") have been paid.

(ii) The provisions for Taxes due by the COMPANY and any subsidiaries
(as opposed to any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) in the COMPANY Financial Statements
are sufficient for all unpaid Taxes, being current taxes not yet due and
payable, of such Acquired Party.

(iii) No Acquired Party is a party to any agreement extending the time
within which to file any Return. No claim has ever been made by any Taxing
Authority in a jurisdiction in which an Acquired Party does not file Returns
that it is or may be subject to taxation by that jurisdiction.

15
<PAGE> 24
(iv) Each Acquired Party has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, creditor, independent contractor or other third party.

(v) No Acquired Party expects any Taxing Authority to assess any
additional Taxes against or in respect of it for any past period. There is no
dispute or claim concerning any Tax liability of any Acquired Party either (i)
claimed or raised by any Taxing Authority or (ii) otherwise known to any
Acquired Party. No issues have been raised in any examination by any Taxing
Authority with respect to any Acquired Party which, by application of similar
principles, reasonably could be expected to result in a proposed deficiency for
any other period not so examined. Schedule 5.22(v) attached hereto lists all
federal, state, local and foreign income Tax Returns filed by or with respect
to any Acquired Party for all taxable periods ended on or after January 1,
1991, indicates those Returns, if any, that have been audited, and indicates
those Returns that currently are the subject of audit. Each Acquired Party has
delivered to STAFFMARK complete and correct copies of all federal, state, local
and foreign income Tax Returns filed by, and all Tax examination reports and
statements of deficiencies assessed against or agreed to by, such Acquired
Party since January 1, 1991.

(vi) No Acquired Party has waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to any Tax
assessment or deficiency.

(vii) No Acquired Party has made any payments, is obligated to make
any payments, or is a party to any agreement that under certain circumstances
could require it to make any payments, that are not deductible under Section
280G of the Code.

(viii) No Acquired Party is a party to any Tax allocation or sharing
agreement.

(ix) None of the assets of any Acquired Party constitutes tax-exempt
bond financed property or tax-exempt use property, within the meaning of
Section 168 of the Code. No Acquired Party is a party to any "safe harbor
lease" that is subject to the provisions of Section 168(f)(8) of the Internal
Revenue Code as in effect prior to the Tax Reform Act of 1986, or to any
"long-term contract" within the meaning of Section 460 of the Code.

(x) No Acquired Party is a "consenting corporation" within the
meaning of Section 341(f)(1) of the Code, or comparable provisions of any state
statutes, and none of the assets of any Acquired Party is subject to an
election under Section 341(f) of the Code or comparable provisions of any state
statutes.

(xi) No Acquired Party is a party to any joint venture, partnership
or other arrangement that is treated as a partnership for federal income Tax
purposes.

(xii) There are no accounting method changes or proposed or, to
STOCKHOLDERS' and COMPANY'S knowledge, threatened accounting method changes, of
any Acquired Party that could give rise to an adjustment under Section 481 of
the Code for periods after the Funding and Consummation Date.

(xiii) No Acquired Party has received any written ruling of a Taxing
Authority related to Taxes or entered into any written and legally binding
agreement with a Taxing Authority relating to Taxes.

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<PAGE> 25
(xiv) Each Acquired Party has disclosed (in accordance with Section
6662(d)(2)(B)(ii) of the Code) on its federal income Tax Returns all positions
taken therein that could give rise to a substantial understatement of federal
income Tax within the meaning of Section 6662(d) of the Code.

(xv) No Acquired Party has any liability for Taxes of any person
other than such Acquired Party (i) under Section 1.1502-6 of the Treasury
regulations (or any similar provision of state, local or foreign law), (ii) as
a transferee or successor, (iii) by contract or (iv) otherwise.

(xvi) There currently are no limitations on the utilization of the net
operating losses, built-in losses, capital losses, Tax credits or other similar
items of any Acquired Party (collectively, the "Tax Losses") under (i) Section
382 of the Code, (ii) Section 383 of the Code, (iii) Section 384 of the Code,
(iv) Section 269 of the Code, (v) Section 1.1502-15 and Section 1.1502-15A of
the Treasury regulations, (vi) Section 1.1502-21 and Section 1.1502-21A of the
Treasury regulations or (vii) Sections 1.1502-91 through 1.1502-99 of the
Treasury regulations, in each case as in effect both prior to and following the
Tax Reform Act of 1986.

(xvii) At the Balance Sheet Date the Acquired Parties had aggregate Tax
Losses for federal income Tax purposes as described on Schedule 5.22(xvii)
attached hereto.

(xviii) At the Funding and Consummation Date, the COMPANY will
hold at least 90 percent of the fair market value of its net assets and at
least 70 percent of the fair market value of its gross assets held immediately
prior to the Funding and Consummation Date. For purposes of this
representation, amounts paid by the COMPANY to shareholders in the form of cash
or other property immediately prior to the Funding and Consummation Date,
amounts used by the COMPANY to pay reorganization expenses (including real
estate transfer or gains taxes, if any), and all redemptions and distributions
(except for regular, normal dividends) made by the COMPANY will be included as
assets of the COMPANY immediately prior to the Funding and Consummation Date.

(xix) At the Funding and Consummation Date, the COMPANY will not have
outstanding any warrants, options, convertible securities, or any other type of
right pursuant to which any person could acquire stock in the COMPANY which, if
exercised or converted, would affect STAFFMARK's acquisition or retention of
ownership of more than 100 percent of the total combined voting power of all
classes of COMPANY stock and more than 80 percent of the total number of shares
of each class of COMPANY non-voting stock.

(xx) The COMPANY is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.

(xxi) The fair market value of the assets of the COMPANY exceeds the
sum of its liabilities, plus the amount of liabilities, if any, to which the
assets are subject.

(xxii) The COMPANY is not under the jurisdiction of a court in a Title
11 or similar case within the meaning of Section 368(a)(3)(A) of the Code.

For purposes of this Section 5.22, the following definitions shall
apply:

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<PAGE> 26
"Returns" means any returns, reports or statements (including any information
returns) required to be filed for purposes of a particular Tax.

"Tax" or "Taxes" means all federal, state, local or foreign net or
gross income, gross receipts, net proceeds, sales, use, ad valorem, value
added, franchise, bank shares, withholding, payroll, employment, excise, sales,
use, property, deed, stamp, alternative or add-on minimum, environmental or
other taxes, assessments, duties, fees, levies or other governmental charges of
any nature whatever, whether disputed or not, together with any interest,
penalties, additions to tax or additional amounts with respect thereto.

"Taxing Authority" means any governmental agency, board, bureau, body,
department or authority of any United States federal, state or local
jurisdiction or any foreign jurisdiction, having or purporting to exercise
jurisdiction with respect to any Tax.

5.23 NO VIOLATIONS. The COMPANY is not in violation of any Charter
Document. Neither the COMPANY nor, to the knowledge of the COMPANY, any other
party thereto, is in default under any lease, instrument, agreement, license,
or permit set forth on Schedule 5.12, 5.14, 5.15 or 5.16, or any other material
agreement to which it is a party or by which its properties are bound (the
"Material Documents"); and, except as set forth in Schedule 5.23, (a) the
rights and benefits of the COMPANY under the Material Documents will not be
adversely affected by the transactions contemplated hereby and (b) the
execution of this Agreement and the performance of the obligations hereunder
and the consummation of the transactions contemplated hereby will not result in
any material violation or breach or constitute a default under, any of the
terms or provisions of the Material Documents or the Charter Documents. Except
as set forth on Schedule 5.23, none of the Material Documents requires notice
to, or the consent or approval of, any governmental agency or other third party
with respect to any of the transactions contemplated hereby in order to remain
in full force and effect and consummation of the transactions contemplated
hereby will not give rise to any right to termination, cancellation or
acceleration or loss of any right or benefit. Except as set forth on Schedule
5.23, none of the Material Documents prohibits the use or publication by the
COMPANY, STAFFMARK or NEWCO of the name of any other party to such Material
Document, and none of the Material Documents prohibits or restricts the COMPANY
from freely providing services to any other customer or potential customer or
the COMPANY, STAFFMARK, NEWCO or any Other Founding Company.

5.24 GOVERNMENT CONTRACTS. Except as set forth on Schedule 5.24, the
COMPANY is not now a party to any governmental contracts subject to price
redetermination or renegotiation.

5.25 ABSENCE OF CHANGES. Since the Balance Sheet Date, except as set
forth on Schedule 5.25, there has not been:

(i) any material adverse change in the financial condition, assets,
liabilities (contingent or otherwise), income or business of the COMPANY;

(ii) any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the properties or business of the
COMPANY;

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<PAGE> 27
(iii) any change in the authorized capital of the COMPANY or its
outstanding securities or any change in its ownership interests or any grant of
any options, warrants, calls, conversion rights or commitments;

(iv) any declaration or payment of any dividend or distribution in
respect of the capital stock or any direct or indirect redemption, purchase or
other acquisition of any of the capital stock of the COMPANY;

(v) any increase in the compensation, bonus, sales commissions or
fee arrangement payable or to become payable by the COMPANY to any of its
officers, directors, STOCKHOLDERS, employees, consultants or agents, except for
ordinary and customary bonuses and salary increases for employees in accordance
with past practice;

(vi) any work interruptions, labor grievances or claims filed, or any
event or condition of any character, materially adversely affecting the
business of the COMPANY;

(vii) any sale or transfer, or any agreement to sell or transfer, any
material assets, property or rights of COMPANY to any person, including,
without limitation, the STOCKHOLDERS and their affiliates;

(viii) any cancellation, or agreement to cancel, any indebtedness or
other obligation owing to the COMPANY, including without limitation any
indebtedness or obligation of any STOCKHOLDERS or any affiliate thereof;

(ix) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property or
rights of the COMPANY or requiring consent of any party to the transfer and
assignment of any such assets, property or rights;

(x) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets outside of
the ordinary course of the COMPANY's business;

(xi) any waiver of any material rights or claims of the COMPANY;

(xii) any breach, amendment or termination of any material contract,
agreement, license, permit or other right to which the COMPANY is a party;

(xiii) any transaction by the COMPANY outside the ordinary course of
its respective businesses;

(xiv) any cancellation or termination of a material contract with a
customer or client prior to the scheduled termination date; or

(xv) any other distribution of property or assets by the COMPANY.

5.26 DEPOSIT ACCOUNTS; POWERS OF ATTORNEY. The COMPANY has delivered
to STAFFMARK an accurate schedule (Schedule 5.26) as of the date of the
Agreement, of:

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<PAGE> 28
(i) the name of each financial institution in which the COMPANY has
accounts or safe deposit boxes;

(ii) the names in which the accounts or boxes are held;

(iii) the type of account and account number; and

(iv) the name of each person authorized to draw thereon or have
access thereto.

Schedule 5.26 also sets forth the name of each person, corporation,
firm or other entity holding a general or special power of attorney from the
COMPANY and a description of the terms of such power.

5.27 VALIDITY OF OBLIGATIONS. The execution and delivery of this
Agreement by the COMPANY and the performance of the transactions contemplated
herein have been duly and validly authorized by the Board of Directors of the
COMPANY and this Agreement has been duly and validly authorized by all
necessary corporate action and is a legal, valid and binding obligation of the
COMPANY.

5.28 RELATIONS WITH GOVERNMENTS. The COMPANY has not made, offered
or agreed to offer anything of value to any governmental official, political
party or candidate for government office nor has it otherwise taken any action
which would cause the COMPANY to be in violation of the Foreign Corrupt
Practices Act of 1977, as amended or any law of similar effect.

5.29 DISCLOSURE. (a) This Agreement, including the schedules hereto,
presents fairly the business and operations of the COMPANY as addressed in the
representations and warranties. The COMPANY's rights under the documents
delivered pursuant hereto would not be materially adversely affected by, and no
statement made herein would be rendered untrue by, any other document to which
the COMPANY is a party, or by which its properties are subject, or by any other
fact or circumstance regarding the COMPANY that is not disclosed pursuant
hereto. If, prior to the 25th day after the date of the final prospectus of
STAFFMARK utilized in connection with the IPO, the COMPANY or the STOCKHOLDERS
become aware of any fact or circumstance which would change (or, if after the
Funding and Consummation Date, would have changed) a representation or warranty
of COMPANY or STOCKHOLDERS in this Agreement or would affect any document
delivered pursuant hereto in any material respect, the COMPANY and the
STOCKHOLDERS shall immediately give notice of such fact or circumstance to
STAFFMARK. However, subject to the provisions of Section 7.8, such
notification shall not relieve either the COMPANY or the STOCKHOLDERS of their
respective obligations under this Agreement, and, subject to the provisions of
Section 7.8, at the sole option of STAFFMARK, the truth and accuracy of any and
all warranties and representations of COMPANY, or on behalf of the COMPANY and
of STOCKHOLDERS at the date of this Agreement and at the Closing, shall be a
precondition to the consummation of this transaction.

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<PAGE> 29
effective, the IPO to occur at a particular price or within a particular range
of prices or to occur at all; and (iii) that the decision of STOCKHOLDERS to
enter into this Agreement, or to vote in favor of or consent to the proposed
Merger, has been or will be made independent of, and without reliance upon, any
statements, opinions or other communications, or due diligence investigations
which have been or will be made or performed by any prospective Underwriter,
relative to STAFFMARK or the prospective IPO.

5.30 PROHIBITED ACTIVITIES. Except as set forth on Schedule 5.30,
the COMPANY has not taken any of the actions (Prohibited Activities) set forth
in Section 7.3.

(B) REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS

Each STOCKHOLDER severally represents and warrants that the
representations and warranties set forth below are true as of the date of this
Agreement and, subject to Section 7.8 hereof, shall be true at the time of
Closing and on the Funding and Consummation Date, and that the representations
and warranties set forth in Section 5.31 and 5.32 shall survive until the tenth
anniversary of the Funding and Consummation Date, which shall be deemed to the
Expiration Date for purposes of Sections 5.31 and 5.32.

5.31 AUTHORITY; OWNERSHIP. Such STOCKHOLDER has the full legal
right, power and authority to enter into this Agreement. Such STOCKHOLDER owns
beneficially and of record all of the shares of the COMPANY stock identified on
Annex IV as being owned by such STOCKHOLDER, and, except as set forth on the
Schedule 5.31, such COMPANY Stock is owned free and clear of all liens,
encumbrances and claims of every kind.

5.32 PREEMPTIVE RIGHTS. Such STOCKHOLDER does not have, or hereby
waives, any preemptive or other right to acquire shares of COMPANY Stock or
STAFFMARK Stock, that such STOCKHOLDER has or may have had other than rights of
any STOCKHOLDER to acquire STAFFMARK Stock pursuant to (i) this Agreement or
(ii) any option granted by STAFFMARK.

5.33 NO INTENTION TO DISPOSE OF COMPANY STOCK. There is no current
plan or intention by any STOCKHOLDER to sell, exchange or otherwise dispose of
shares of STAFFMARK Stock received in the Merger.

VI. REPRESENTATIONS OF STAFFMARK AND NEWCO

STAFFMARK and NEWCO jointly and severally represent and warrant that
all of the following representations and warranties in this Section 6 are true
at the date of this Agreement and, subject to Section 7.8 hereof, shall be true
at the time of Closing and the Funding and Consummation Date, and that such
representations and warranties shall survive the Funding and Consummation Date
for a period of twenty-four (24) months (the last day of such period being the
"Expiration Date"), except that (i) the warranties and representations set
forth in Section 6.14 hereof shall survive until such time as the limitations
period has run for all tax periods ended on or prior to the Funding and
Consummation Date, which shall be deemed to be the Expiration Date for Section
6.14 and (ii) solely for purposes of Section 11.2(iv) hereof, and solely to the
extent that in connection with the IPO, STOCKHOLDERS actually incur liability
under the Securities Act of 1933, as amended (the "1933 Act"), the Securities
Exchange

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<PAGE> 30
Act of 1934, as amended (the "1934 Act"), or any other Federal or state
securities laws, the representations and warranties set forth herein shall
survive until the expiration of any applicable limitations period, which shall
be deemed to be the Expiration Date for such purposes.

6.1 DUE ORGANIZATION. STAFFMARK and NEWCO are each corporations
duly organized, validly existing and in good standing under the laws of the
state of Delaware, and are duly authorized and qualified to do business under
all applicable laws, regulations, ordinances and orders of public authorities
to carry on their respective business in the places and in the manner as now
conducted except where the failure to be so authorized or qualified would not
have a Material Adverse Effect. True, complete and correct copies of the
Certificate of Incorporation and By-laws, each as amended, of STAFFMARK and
NEWCO (the "STAFFMARK Charter Documents") are all attached hereto as Annex II.

6.2 AUTHORIZATION. (i) The respective representatives of STAFFMARK
and NEWCO executing this Agreement have the authority to enter into and bind
STAFFMARK and NEWCO to the terms of this Agreement and (ii) STAFFMARK and NEWCO
have the full legal right, power and authority to enter into this Agreement and
the Merger.

6.3 CAPITAL STOCK OF THE COMPANY. The authorized capital stock of
STAFFMARK and NEWCO is as set forth in Section 1.4(ii) and (iii), respectively.
All of the issued and outstanding shares of the capital stock of NEWCO are
owned by STAFFMARK and all of the issued and outstanding shares of the capital
stock of STAFFMARK are owned by the persons set forth on Annex V hereof, in
each case, free and clear of all liens, security interests, pledges, charges,
voting trusts, restrictions, encumbrances and claims of every kind. All of the
issued and outstanding shares of the capital stock of STAFFMARK and NEWCO have
been duly authorized and validly issued, are fully paid and nonassessable, are
owned of record and beneficially by STAFFMARK and the persons set forth on
Annex V, respectively, and further, such shares were offered, issued, sold and
delivered by STAFFMARK and NEWCO in compliance with all applicable state and
Federal laws concerning the issuance of securities. Further, none of such
shares were issued in violation of the preemptive rights of any past or present
stockholder of STAFFMARK or NEWCO.

6.4 TRANSACTIONS IN CAPITAL STOCK, REORGANIZATION ACCOUNTING.
Except for the Other Agreements and as set forth on Schedule 6.4, (i) no
option, warrant, call, conversion right or commitment of any kind exists which
obligates STAFFMARK or NEWCO to issue any of their respective authorized but
unissued capital stock; and (ii) neither STAFFMARK nor NEWCO has any obligation
(contingent or otherwise) to purchase, redeem or otherwise acquire any of its
equity securities or any interests therein or to pay any dividend or make any
distribution in respect thereof. Schedule 6.4 also includes complete and
accurate copies of all stock option or stock purchase plans, including a list,
accurate as of the date hereof, of all outstanding options, warrants or other
rights to acquire shares of the COMPANY's stock.

6.5 SUBSIDIARIES. NEWCO has no subsidiaries. STAFFMARK has no
subsidiaries except for the companies identified as "NEWCO" in each of the
Other Agreements. Except as set forth in the preceding sentence, neither
STAFFMARK nor NEWCO presently owns, of record or beneficially, or controls,
directly or indirectly, any capital stock, securities convertible into capital
stock or any other equity interest in any corporation, association or business
entity nor are STAFFMARK or NEWCO, directly or indirectly, participants in any
joint venture, partnership or other non-corporate entity.

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6.6 FINANCIAL STATEMENTS. Attached hereto as Schedule 6.6 are
copies of the following financial statements (the "STAFFMARK Financial
Statements") of STAFFMARK, which reflect the results of its operations from
inception in March, 1996: STAFFMARK's unaudited Balance Sheet as of March 31,
1996 and Statements of Income, Cash Flows and Retained Earnings for the period
from inception through March 31, 1996. Such STAFFMARK Financial Statements
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods indicated (except as noted
thereon or on Schedule 6.6). Except as set forth on Schedule 6.6, such Balance
Sheets as of March 31, 1996 present fairly the financial position of STAFFMARK
as of such date, and such Statements of Income, Cash Flows and Retained
Earnings present fairly the results of operations for the period indicated.

6.7 LIABILITIES AND OBLIGATIONS. Except as set forth on Schedule
6.7, STAFFMARK and NEWCO have no material liabilities, contingent or otherwise,
except as set forth in or contemplated by this Agreement and the Other
Agreements and except for fees incurred in connection with the transactions
contemplated hereby and thereby.

6.8 CONFORMITY WITH LAW; LITIGATION. Except to the extent set forth
on Schedule 6.8, neither STAFFMARK nor NEWCO is in violation of any law or
regulation or any order of any court or Federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
having jurisdiction over either of them which would have a Material Adverse
Effect; and except to the extent set forth in Schedule 6.8, there are no
material claims, actions, suits or proceedings, pending or, to the knowledge of
STAFFMARK or NEWCO, threatened, against or affecting STAFFMARK or NEWCO, at law
or in equity, or before or by any Federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
having jurisdiction over either of them and no notice of any claim, action,
suit or proceeding, whether pending or threatened, has been received.
STAFFMARK and NEWCO have conducted and are conducting their respective
businesses in substantial compliance with the requirements, standards, criteria
and conditions set forth in applicable Federal, state and local statutes,
ordinances, permits, licenses, orders, approvals, variances, rules and
regulations and are not in violation of any of the foregoing which might have a
Material Adverse Effect.

6.9 NO VIOLATIONS. Neither STAFFMARK nor NEWCO is in violation of
any STAFFMARK Charter Document. None of STAFFMARK, NEWCO, or, to the knowledge
of STAFFMARK and NEWCO, any other party thereto, is in default under any lease,
instrument, agreement, license, or permit to which STAFFMARK or NEWCO is a
party, or by which STAFFMARK or NEWCO, or any of their respective properties,
are bound (collectively, the "STAFFMARK Documents"); and (a) the rights and
benefits of STAFFMARK and NEWCO under the STAFFMARK Documents will not be
adversely affected by the transactions contemplated hereby and (b) the
execution of this Agreement and the performance of the obligations hereunder
and the consummation of the transactions contemplated hereby will not result in
any material violation or breach or constitute a default under, any of the
terms or provisions of the STAFFMARK Documents or the STAFFMARK Charter
Documents. Except as set forth on Schedule 6.9, none of the STAFFMARK
Documents requires notice to, or the consent or approval of, any governmental
agency or other third party with respect to any of the transactions
contemplated hereby in order to remain in full force and effect and
consummation of the transactions contemplated hereby will not give rise to any
right to termination, cancellation or acceleration or loss of any right or
benefit.

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6.10 VALIDITY OF OBLIGATIONS. The execution and delivery of this
Agreement by STAFFMARK and NEWCO and the performance of the transactions
contemplated herein have been duly and validly authorized by the respective
Boards of Directors of STAFFMARK and NEWCO and this Agreement has been duly and
validly authorized by all necessary corporate action and is a legal, valid and
binding obligation of STAFFMARK and NEWCO.

6.11 STAFFMARK STOCK. At the time of issuance thereof, the STAFFMARK
Stock to be delivered to the STOCKHOLDERS pursuant to this Agreement will
constitute valid and legally issued shares of STAFFMARK, fully paid and
nonassessable, and with the exception of restrictions upon resale set forth in
Sections 15 and 16 hereof, will be identical in all respects to the STAFFMARK
Stock issued and outstanding as of the date hereof by reason of the provisions
of the Delaware GCL. The shares of STAFFMARK Stock to be issued to the
STOCKHOLDERS pursuant to this Agreement will not be registered under the 1933
Act, except as provided in Section 17 hereof.

6.12 NO SIDE AGREEMENTS. Neither STAFFMARK nor NEWCO has entered or
will enter into any agreement with any of the Founding Companies or any of the
stockholders of the Founding Companies or STAFFMARK other than the Other
Agreements and the agreements contemplated by each of the Other Agreements,
including the employment agreements referred to therein, none of which, except
for amounts of consideration (which shall, however, be derived from the same
methodology) and schedules attached thereto, shall be materially different than
this Agreement and the agreements contemplated by it. STAFFMARK has made
available to the COMPANY copies of all agreements entered into between
STAFFMARK or NEWCO and the Founding Companies or any stockholders of the
Founding Companies. Further, STAFFMARK will make available to the COMPANY
copies of any of the foregoing agreements entered into between the date hereof
and the Funding and Consummation Date promptly after such agreements are
entered into.

6.13 BUSINESS; REAL PROPERTY; MATERIAL AGREEMENTS. STAFFMARK was
formed in June, 1996, and has conducted limited operations since that time.
Neither STAFFMARK nor NEWCO has conducted any material business since the date
of its inception, except in connection with this Agreement, the Other
Agreements and the IPO. Neither STAFFMARK nor NEWCO owns or has at any time
owned any real property or any material personal property or is a party to any
other agreement, except as listed on Schedule 6.13 and except that STAFFMARK is
a party to the Other Agreements and the agreements contemplated thereby and to
such agreements as will be filed as Exhibits to the Registration Statement.

6.14 TAXES. NEWCO is a newly formed entity which has no tax or
operational history. Except as set forth on Schedule 6.14:

(i) All Returns required to have been filed by or with respect to
STAFFMARK and any affiliated, combined, consolidated, unitary or similar group
of which STAFFMARK is or was a member (a "STAFFMARK Relevant Group") with any
Taxing Authority have been duly filed, and each such Return correctly and
completely reflects the income, franchise or other Tax liability and all other
information required to be reported thereon. All Taxes (whether or not shown
on any Return) owed by the STAFFMARK Relevant Group have been paid.

(ii) The provisions for Taxes due by STAFFMARK and any subsidiaries
(as opposed to any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) in the

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STAFFMARK Financial Statements are sufficient for all unpaid Taxes, being
current taxes not yet due and payable, of the STAFFMARK Relevant Group.

(iii) No corporation in the STAFFMARK Relevant Group is a party to any
agreement extending the time within which to file any Return. No claim has
ever been made by any Taxing Authority in a jurisdiction in which a corporation
in the STAFFMARK Relevant Group does not file Returns that it is or may be
subject to taxation by that jurisdiction.

(iv) Each corporation in the STAFFMARK Relevant Group has withheld
and paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, creditor, independent contractor or
other third party.

(v) No corporation in the STAFFMARK Relevant Group expects any
Taxing Authority to assess any additional Taxes against or in respect of it for
any past period. There is no dispute or claim concerning any Tax liability of
any corporation in the STAFFMARK Relevant Group either (i) claimed or raised by
any Taxing Authority or (ii) otherwise known to any corporation in the
STAFFMARK Relevant Group. No issues have been raised in any examination by any
Taxing Authority with respect to any corporation in the STAFFMARK Relevant
Group which, by application of similar principles, reasonably could be expected
to result in a proposed deficiency for any other period not so examined.
Schedule 6.14(v) attached hereto lists all federal, state, local and foreign
income Tax Returns filed by or with respect to any corporation in the STAFFMARK
Relevant Group for all taxable periods ended on or after January 1, 1988,
indicates those Returns, if any, that have been audited, and indicates those
Returns that currently are the subject of audit. Each corporation in the
STAFFMARK Relevant Group will make available to the STOCKHOLDERS, at their
request, complete and correct copies of all federal, state, local and foreign
income Tax Returns filed by, and all Tax examination reports and statements of
deficiencies assessed against or agreed to by, STAFFMARK since January 1, 1991.

(vi) No corporation in the STAFFMARK Relevant Group has waived any
statute of limitations in respect of Taxes or agreed to any extension of time
with respect to any Tax assessment or deficiency.

(vii) No corporation in the STAFFMARK Relevant Group has made any
payments, is obligated to make any payments, or is a party to any agreement
that under certain circumstances could require it to make any payments, that
are not deductible under Section 280G the Code.

(viii) No corporation in the STAFFMARK Relevant Group is a party to any
Tax allocation or sharing agreement.

(ix) None of the assets of any corporation in the STAFFMARK Relevant
Group constitutes tax-exempt bond financed property or tax-exempt use property,
within the meaning of Section 168 of the Code. No corporation in the STAFFMARK
Relevant Group is a party to any "safe harbor lease" that is subject to the
provisions of Section 168(f)(8) of the Internal Revenue Code as in effect prior
to the Tax Reform Act of 1986, or to any "long-term contract" within the
meaning of Section 460 of the Code.

(x) No corporation in the STAFFMARK Relevant Group is a "consenting
corporation" within the meaning of Section 341(f)(1) of the Code, or comparable
provisions of any state statutes, and none of the assets of any corporation in
the STAFFMARK Relevant Group is subject to an election under Section 341(f) of
the Code or comparable provisions of any state statutes.

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(xi) No corporation in the STAFFMARK Relevant Group is a party to any
joint venture, partnership or other arrangement that is treated as a
partnership for federal income Tax purposes.

(xii) There are no accounting method changes or proposed or threatened
accounting method changes, of any corporation in the STAFFMARK Relevant Group
that could give rise to an adjustment under Section 481 of the Code for periods
after the Funding and Consummation Date.

(xiii) No corporation in the STAFFMARK Relevant Group has received any
written ruling of a Taxing Authority related to Taxes or entered into any
written and legally binding agreement with a Taxing Authority relating to
Taxes.

(xiv) Each corporation in the STAFFMARK Relevant Group has disclosed
(in accordance with Section 6662(d)(2)(B)(ii) of the Code) on its federal
income Tax Returns all positions taken therein that could give rise to a
substantial understatement of federal income Tax within the meaning of Section
6662(d) of the Code.

(xv) No corporation in the STAFFMARK Relevant Group has any liability
for Taxes of any person other than such corporation in the STAFFMARK Relevant
Group (i) under Section 1.1502-6 of the Treasury regulations (or any similar
provision of state, local or foreign law), (ii) as a transferee or successor,
(iii) by contract or (iv) otherwise.

(xvi) There currently are no limitations on the utilization of the net
operating losses, built-in losses, capital losses, Tax credits or other similar
items of any corporation in the STAFFMARK Relevant Group (collectively, the
"Tax Losses") under (i) Section 382 of the Code, (ii) Section 383 of the Code,
(iii) Section 384 of the Code, (iv) Section 269 of the Code, (v) Section
1.1502-15 and Section 1.1502-15A of the Treasury regulations, (vi) Section
1.1502- 21 and Section 1.1502-21A of the Treasury regulations or (vii) Sections
1.1502-91 through 1.1502-99 of the Treasury regulations, in each case as in
effect both prior to and following the Tax Reform Act of 1986.

(xvii) At March 31, 1996, the STAFFMARK consolidated return group had
aggregate Tax Losses for federal income Tax purposes as described on Schedule
6.15(xvii) attached hereto.

(xviii) At the Funding and Consummation Date, NEWCO will hold at
least 90 percent of the fair market value of its net assets and at least 70
percent of the fair market value of its gross assets held immediately prior to
the Funding and Consummation Date. For purposes of this representation,
amounts paid by NEWCO to shareholders in the form of cash or other property,
amounts used by NEWCO to pay reorganization expenses (including real estate
transfer or gains taxes, if any), and all redemptions and distributions (except
for regular, normal dividends) made by NEWCO will be included as assets of
NEWCO immediately prior to the Funding and Consummation Date.

(xix) Neither STAFFMARK nor NEWCO is an investment company as defined
in Section 368(a)(2)(F)(iii) and (iv) of the Code.

(xx) The fair market value of the assets of the NEWCO exceeds the sum
of its liabilities, plus the amount of liabilities, if any, to which the assets
are subject.

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(xxi) STAFFMARK is not under the jurisdiction of a court in a Title 11
or similar case within the meaning of Section 368(a)(3)(A) of the Code.

6.15 STOCK OPTION PLAN. Prior to the Funding and Consummation Date,
STAFFMARK will adopt a stock option plan for awards to be made to key employees
of the COMPANY. The grant and terms of all such awards will be determined by
the board of directors of STAFFMARK, subject to approval by the Stockholders.

6.16 SOLVENCY. Upon consummation of the Mergers contemplated herein,
STAFFMARK and its subsidiaries, individually and taken as a whole, shall be
solvent.

6.17 FINANCING. STAFFMARK has or, on consummation of the Public
Offering, will have sufficient funds or available financing to enable STAFFMARK
(i) to pay the Merger Consideration and all fees and expenses related to the
Merger and its obligations in connection with the Public Offering, and (ii) to
retire, release or refinance any indebtedness of the Founding Companies assumed
by STAFFMARK for which the Stockholders have provided personal guarantees.

6.18 DISCLOSURE. (a) This Agreement, including the schedules hereto,
present fairly the business and operations of STAFFMARK. STAFFMARK's rights
under the documents delivered pursuant hereto would not be materially adversely
affected by, and no statement made herein would be rendered untrue by, any
other document to which STAFFMARK is a party, or by which its properties are
subject, or by any other fact or circumstance regarding STAFFMARK that is not
disclosed pursuant hereto. If, prior to the 25th day after the date of the
final prospectus of STAFFMARK utilized in connection with the IPO, STAFFMARK
becomes aware of any fact or circumstance which would change (or, if after the
Funding and Consummation Date, would have changed) a representation or warranty
of STAFFMARK in this Agreement or would affect any document delivered pursuant
hereto in any material respect, STAFFMARK shall immediately give notice of such
fact or circumstance to the COMPANY and the STOCKHOLDERS. However, subject to
the provisions of Section 7.8, such notification shall not relieve STAFFMARK of
its obligations under this Agreement, and, subject to the provisions of Section
7.8, at the option of the COMPANY and the STOCKHOLDERS, the truth and accuracy
of any and all warranties and representations of STAFFMARK and at the Closing,
shall be a precondition to the consummation of this transaction.

6.19 PERMITS AND INTANGIBLES. STAFFMARK holds all licenses,
franchises, permits and other governmental authorizations the absence of any of
which could have a Material Adverse Effect on its business. To the knowledge
of STAFFMARK, its licenses, franchises, permits and other governmental
authorizations are valid, and it has not received any notice that any
governmental authority intends to cancel, terminate or not renew any such
license, franchise, permit or other governmental authorization. STAFFMARK has
conducted and is conducting its business in compliance with the requirements,
standards, criteria and conditions set forth in applicable permits, licenses,
orders, approvals, variances, rules and regulations and is not in violation of
any of the foregoing except where such non-compliance or violation would not
have a Material Adverse Effect on STAFFMARK. The transactions contemplated by
this Agreement will not result in a default under or a breach or violation of,
or adversely affect the rights and benefits afforded to STAFFMARK by, any such
licenses, franchises, permits or government authorizations.

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VII. COVENANTS PRIOR TO CLOSING

7.1 ACCESS AND COOPERATION; DUE DILIGENCE. (a) Between the date of
this Agreement and the Funding and Consummation Date, the COMPANY will afford
to the officers and authorized representatives of STAFFMARK and the Other
Founding Companies access to all of the COMPANY's sites, properties, books and
records and will furnish STAFFMARK with such additional financial and operating
data and other information as to the business and properties of the COMPANY as
STAFFMARK or the Other Founding Companies may from time to time reasonably
request. The COMPANY will cooperate with STAFFMARK and the Other Founding
Companies, its representatives, auditors and counsel in the preparation of any
documents or other material which may be required in connection with any
documents or materials required by this Agreement. STAFFMARK, NEWCO, the
STOCKHOLDERS and the COMPANY will treat all information obtained in connection
with the negotiation and performance of this Agreement or the due diligence
investigations conducted with respect to the Other Founding Companies as
confidential in accordance with the provisions of Section 14 hereof. In
addition, STAFFMARK will cause each of the Other Founding Companies to enter
into a provision similar to this Section 7.1 requiring each such Other Founding
Company, its stockholders, directors, officers, representatives, employees and
agents to keep confidential any information obtained by such Other Founding
Company.

(b) Between the date of this Agreement and the Funding and
Consummation Date, STAFFMARK will afford to the officers and authorized
representatives of the COMPANY access to all of STAFFMARK's and NEWCO's sites,
properties, books and records and will furnish the COMPANY with such additional
financial and operating data and other information as to the business and
properties of STAFFMARK and NEWCO as the COMPANY may from time to time
reasonably request. STAFFMARK and NEWCO will cooperate with the COMPANY, its
representatives, auditors and counsel in the preparation of any documents or
other material which may be required in connection with any documents or
materials required by this Agreement. The COMPANY will cause all information
obtained in connection with the negotiation and performance of this Agreement
to be treated as confidential in accordance with the provisions of Section 14
hereof.

7.2 CONDUCT OF BUSINESS PENDING CLOSING. Between the date of this
Agreement and the Funding and Consummation Date, the COMPANY will, except as
set forth on the Schedule 7.2

(i) carry on its respective businesses in substantially the same
manner as it has heretofore and not introduce any material new method of
management, operation or accounting;

(ii) maintain its respective properties and facilities, including
those held under leases, in as good working order and condition as at present,
ordinary wear and tear excepted;

(iii) perform all of its respective obligations under agreements
relating to or affecting its respective assets, properties or rights;

(iv) keep in full force and effect present insurance policies or
other comparable insurance coverage;

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(v) use its best efforts to maintain and preserve its business
organization intact, retain its respective present key employees and maintain
its respective relationships with suppliers, customers and others having
business relations with the COMPANY;

(vi) maintain compliance with all permits, laws, rules and
regulations, consent orders, and all other orders of applicable courts,
regulatory agencies and similar governmental authorities;

(vii) maintain present debt and lease instruments and not enter into
new or amended debt or lease instruments except for S-Corporation distributions
or bonuses (which debt will be deducted from the valuation of the COMPANY),
without the knowledge and consent of STAFFMARK (which consent shall not be
unreasonably withheld); and

(viii) maintain or reduce present salaries and commission levels for
all officers, directors, employees and agents.

7.3 PROHIBITED ACTIVITIES. Except as disclosed on Schedule 7.3,
between the date hereof and the Funding and Consummation Date, the COMPANY will
not, without prior written consent of STAFFMARK:

(i) make any change in its Articles of Incorporation or By-laws;

(ii) issue any securities, options (except options of the COMPANY
determined by Arthur Andersen to have no adverse effect on pooling), warrants,
calls, conversion rights or commitments relating to its securities of any kind
other than in connection with the exercise of options or warrants listed in
Schedule 5.4;

(iii) declare or pay any dividend, or make any distribution in
respect of its stock whether now or hereafter outstanding, or purchase, redeem
or otherwise acquire or retire for value any shares of its stock or declare any
dividends or make any distributions (other than S-Corporation distributions),
nor pay out any extraordinary bonuses in excess of pro rata bonuses customarily
paid, or fees, or commissions to the Stockholders, directors, management or
other personnel.

(iv) enter into any contract or commitment or incur or agree to
incur any liability or make any capital expenditures, except if it is in the
normal course of business (consistent with past practice) or involves an amount
not in excess of $100,000;

(v) create, assume or permit to exist any mortgage, pledge or other
lien or encumbrance upon any assets or properties whether now owned or
hereafter acquired, except (1) with respect to purchase money liens incurred in
connection with the acquisition of equipment with an aggregate cost not in
excess of $10,000 necessary or desirable for the conduct of the businesses of
the COMPANY, (2) (A) liens for taxes either not yet due or being contested in
good faith and by appropriate proceedings (and for which contested taxes
adequate reserves have been established and are being maintained) or (B)
materialmen's, mechanics', workers', repairmen's, employees' or other like
liens arising in the ordinary course of business (the liens set forth in clause
(2) being referred to herein as "Statutory Liens"), or (3) liens set forth on
Schedule 5.15 hereto;

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(vi) sell, assign, lease or otherwise transfer or dispose of any
property or equipment except in the normal course of business;

(vii) negotiate for the acquisition of any business or the start-up
of any new business;

(viii) merge or consolidate or agree to merge or consolidate with or
into any other corporation;

(ix) waive any material rights or claims of the COMPANY, provided
that the COMPANY may negotiate and adjust bills in the course of good faith
disputes with customers in a manner consistent with past practice, provided,
further, that such adjustments shall not be deemed to be included in Schedule
5.11 unless specifically listed thereon;

(x) commit a material breach or amend or terminate any material
agreement, permit, license or other right of the COMPANY;

(xi) enter into any other transaction outside the ordinary course of
its business or prohibited hereunder; or

(xii) change its accounts receivable collection practice or factor its
accounts receivable in any way.

7.4 NO SHOP. None of the STOCKHOLDERS, the COMPANY, nor any agent,
officer, director, trustee or any representative of any of the foregoing will,
during the period commencing on the date of this Agreement and ending with the
earlier to occur of the Funding and Consummation Date or the termination of
this Agreement in accordance with its terms, directly or indirectly:

(i) solicit or initiate the submission of proposals or offers from
any person for,

(ii) participate in any discussions pertaining to, or

(iii) furnish any information to any person other than STAFFMARK or
its authorized agents relating to,

any acquisition or purchase of all or a material amount of the assets of, or
any equity interest in, the COMPANY or a merger, consolidation or business
combination of the COMPANY.

7.5 NOTICE TO BARGAINING AGENTS. Prior to the Closing Date, the
COMPANY shall satisfy any requirement for notice of the transactions
contemplated by this Agreement under applicable collective bargaining
agreements, and shall provide STAFFMARK on Schedule 7.5 with proof that any
required notice has been sent.

7.6 AGREEMENTS. The STOCKHOLDERS and the COMPANY shall terminate
(i) any stockholders agreements, voting agreements, voting trusts, options,
warrants and employment agreements between the COMPANY and any employee and
(ii) any existing agreement between the COMPANY and any STOCKHOLDER, at or
prior to the Funding and Consummation Date.

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7.7 NOTIFICATION OF CERTAIN MATTERS. The STOCKHOLDERS and the
COMPANY shall give prompt notice to STAFFMARK of (i) the occurrence or
non-occurrence of any event the occurrence or non-occurrence of which would be
likely to cause any representation or warranty of the COMPANY or the
STOCKHOLDERS contained herein to be untrue or inaccurate in any material
respect at or prior to the Closing and (ii) any material failure of any
STOCKHOLDER or the COMPANY to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by such person hereunder. STAFFMARK
and NEWCO shall give prompt notice to the COMPANY of (i) the occurrence or
non-occurrence of any event the occurrence or non-occurrence of which would be
likely to cause any representation or warranty of STAFFMARK or NEWCO contained
herein to be untrue or inaccurate in any material respect at or prior to the
Closing and (ii) any material failure of STAFFMARK or NEWCO to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder. The delivery of any notice pursuant to this Section 7.7 shall
not be deemed to (i) modify the representations or warranties hereunder of the
party delivering such notice, which modification may only be made pursuant to
Section 7.8, (ii) modify the conditions set forth in Sections 8 and 9, or (iii)
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.

7.8 AMENDMENT OF SCHEDULES. Each party hereto agrees that, with
respect to the representations and warranties of such party contained in this
Agreement, such party shall have the continuing obligation until the Closing to
supplement or amend promptly the Schedules hereto with respect to any matter
hereafter arising or discovered which, if existing or known at the date of this
Agreement, would have been required to be set forth or described in the
Schedules, provided however, that supplements and amendments to Schedules 5.10,
5.11, 5.14 and 5.15 shall only have to be delivered at the Closing Date (the
supplement to Schedule 5.11 shall include receivables obtained by the Company
through the Friday immediately prior to the Closing Date), unless such Schedule
is to be amended to reflect an event occurring other than in the ordinary
course of business. Notwithstanding the foregoing sentence, no amendment or
supplement to a Schedule prepared by the COMPANY that constitutes or reflects
an event or occurrence that would have a Material Adverse Effect, may be made
unless STAFFMARK and a majority of the Founding Companies other than the
COMPANY consent to such amendment or supplement; and provided further, that no
amendment or supplement to a Schedule prepared by STAFFMARK or NEWCO that
constitutes or reflects an event or occurrence that would have a Material
Adverse Effect may be made unless a majority of the Founding Companies consent
to such amendment or supplement. For all purposes of this Agreement, including
without limitation for purposes of determining whether the conditions set forth
in Sections 8.1 and 9.1 have been fulfilled, the Schedules hereto shall be
deemed to be the Schedules as amended or supplemented pursuant to this Section
7.8. In the event that one of the Other Founding Companies seeks to amend or
supplement a Schedule pursuant to Section 7.8 of one of the Other Agreements,
and such amendment or supplement constitutes or reflects an event or occurrence
that would have a Material Adverse Effect on such Other Founding Company,
STAFFMARK shall give the COMPANY notice promptly after it has knowledge
thereof. If STAFFMARK and a majority of the Founding Companies consent to such
amendment or supplement, which consent shall have been deemed given if no
response is received within 24 hours after notice of such amendment or
supplement (or sooner if required by the circumstances under which such consent
is requested), but the COMPANY does not, the COMPANY may terminate this
Agreement pursuant to Section 12.1(iv) hereof. In the event that the COMPANY
seeks to amend or supplement a Schedule pursuant to this Section 7.8, and
STAFFMARK and a majority of the Other Founding Companies do not consent to such
amendment or supplement, this Agreement shall be deemed terminated by mutual
consent as set forth in Section 12.1(i) hereof. In the event that STAFFMARK or
NEWCO seeks to amend or supplement a Schedule pursuant to this Section 7.8 and
a majority of the

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Founding Companies do not consent to such amendment or supplement, this
Agreement shall be deemed terminated by mutual consent as set forth in Section
12.1(i) hereof. No party to this Agreement shall be liable to any other party
if this Agreement shall be terminated pursuant to the provisions of this
Section 7.8. No amendment of or supplement to a Schedule shall be made later
than 24 hours prior to the anticipated effectiveness of the Registration
Statement.

7.9 COOPERATION IN PREPARATION OF REGISTRATION STATEMENT. The
COMPANY and STOCKHOLDERS shall cooperate with STAFFMARK in its preparation of
the Registration Statement and shall furnish or cause to be furnished to
STAFFMARK and the Underwriters all of the information requested by STAFFMARK
concerning the COMPANY and the STOCKHOLDERS required for inclusion in, and will
cooperate with STAFFMARK and the Underwriters in the preparation of, the
Registration Statement and the prospectus included therein (including audited
and unaudited financial statements, prepared in accordance with generally
accepted accounting principles, in form suitable for inclusion in the
Registration Statement). The COMPANY and the STOCKHOLDERS agree promptly to
advise STAFFMARK if at any time during the period in which a prospectus
relating to the offering is required to be delivered under the Securities Act,
any information contained in the prospectus concerning the COMPANY or the
STOCKHOLDERS becomes incorrect or incomplete in any material respect, and to
provide the information needed to correct such inaccuracy. Insofar as the
information relates solely to the COMPANY or the STOCKHOLDERS, each of the
COMPANY and the STOCKHOLDERS represents and warrants that the Registration
Statement will not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading.

7.10 FINAL FINANCIAL STATEMENTS. The COMPANY shall provide prior to
the Funding and Consummation Date, and STAFFMARK shall have had sufficient time
to review the unaudited consolidated balance sheets of the COMPANY as of the
end of all fiscal quarters following the Balance Sheet Date, and the unaudited
consolidated statement of income, cash flows and retained earnings of the
COMPANY for all fiscal quarters ended after the Balance Sheet Date, disclosing
no material adverse change in the financial condition of the COMPANY or the
results of its operations from the financial statements as of the Balance Sheet
Date. Such financial statements shall have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods indicated (except as noted therein). Except as noted in
such financial statements, all of such financial statements will present fairly
the results of operations of the COMPANY for the periods indicated thereon.

7.11 FURTHER ASSURANCES. The parties hereto agree to execute and
deliver, or cause to be executed and delivered, such further instruments or
documents or take such other action as may be reasonably necessary or
convenient to carry out the transactions contemplated hereby.

7.12 FILINGS. If STAFFMARK determines that it is necessary to make a
Hart-Scott-Rodino filing, the COMPANY will cooperate fully in preparation of
such filing, and STAFFMARK shall pay the cost of the filing.

VIII. CONDITIONS PRECEDENT TO OBLIGATIONS
OF STOCKHOLDERS AND COMPANY

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The obligations of STOCKHOLDERS and the COMPANY with respect to actions
to be taken on the Closing Date are subject to the satisfaction or waiver on or
prior to the Closing Date of all of the following conditions. The obligations
of the STOCKHOLDERS and the COMPANY with respect to actions to be taken on the
Funding and Consummation Date are subject to the satisfaction or waiver on or
prior to the Funding and Consummation Date of the conditions set forth in
Sections 8.1, 8.7 and 8.8. As of the Closing Date or, with respect to the
conditions set forth in Sections 8.1, 8.7 and 8.8, as of the Funding and
Consummation Date, all conditions not satisfied shall be deemed to have been
waived, except that no such waiver shall be deemed to affect the survival of
the representations and warranties of STAFFMARK and NEWCO contained in Section
6 hereof:

8.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All
representations and warranties of STAFFMARK and NEWCO contained in Section 6
shall be true and correct in all material respects as of the Closing Date and
the Funding and Consummation Date as though such representations and warranties
had been made as of that time; all of the terms, covenants and conditions of
this Agreement to be complied with and performed by STAFFMARK and NEWCO on or
before the Closing Date and the Funding and Consummation Date shall have been
duly complied with and performed in all material respects; and a certificate to
the foregoing effect dated the Closing Date and the Funding and Consummation
Date and signed by the President or any Vice President of STAFFMARK shall have
been delivered to the STOCKHOLDERS.

8.2 NO LITIGATION. Prior to the Funding and Consummation Date, no
action or proceeding before a court or any other governmental agency or body
shall have been instituted or threatened to restrain or prohibit the merger of
NEWCO with and into the COMPANY or the offering and sale by STAFFMARK of
STAFFMARK Stock pursuant to the Registration Statement and no governmental
agency or body shall have taken any other action or made any request of the
COMPANY as a result of which the management of the COMPANY deems it inadvisable
to proceed with the transactions hereunder.

8.3 OPINION OF COUNSEL. The COMPANY shall have received an opinion
from counsel for STAFFMARK, dated the Funding and Consummation Date, in
substantially the form annexed hereto as Annex VI.

8.4 REGISTRATION STATEMENT. The Registration Statement shall have
been declared effective by the SEC and the underwriters named therein shall
have agreed to acquire on a firm commitment basis, subject to the conditions
set forth in the underwriting agreement, on terms such that the aggregate value
of the cash and the number of shares of STAFFMARK Stock to be received by the
STOCKHOLDERS is not less than the Minimum Value set forth on Annex III and the
allocation of the price between cash and the number of shares of STAFFMARK
Stock is as set forth on Annex III.

8.5 CONSENTS AND APPROVALS. All necessary consents of and filings
with any governmental authority or agency relating to the consummation of the
transaction contemplated herein shall have been obtained and made and no action
or proceeding shall have been instituted or threatened to restrain or prohibit
the Merger and no governmental agency or body shall have taken any other action
or made any request of COMPANY as a result of which COMPANY deems it
inadvisable to proceed with the transactions hereunder.

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8.6 GOOD STANDING CERTIFICATES. STAFFMARK and NEWCO each shall have
delivered to the COMPANY a certificate, dated as of a date no later than ten
days prior to the Closing Date, duly issued by the Delaware Secretary of State
and in each state in which STAFFMARK or NEWCO is authorized to do business,
showing that each of STAFFMARK and NEWCO is in good standing and authorized to
do business and that all state franchise and/or income tax returns and taxes
for STAFFMARK and NEWCO, respectively, for all periods prior to the Closing
have been filed and paid.

8.7 NO MATERIAL ADVERSE CHANGE. No event or circumstance shall have
occurred with respect to STAFFMARK or NEWCO which would constitute a Material
Adverse Effect.

8.8 CLOSING OF IPO. The closing of the sale of the STAFFMARK Stock
to the Underwriters in the IPO shall have occurred simultaneously with the
Funding and Consummation Date hereunder, resulting in an IPO price per share
for STAFFMARK Stock of $8 or greater.

8.9 SECRETARY'S CERTIFICATE. The COMPANY shall have received a
certificate or certificates, dated the Closing Date and signed by the secretary
of the COMPANY and of NEWCO, certifying the truth and correctness of attached
copies of the COMPANY's and NEWCO's respective Certificates of Incorporation
(including amendments thereto), By-Laws (including amendments thereto), and
resolutions of the boards of directors and, if required, the stockholders of
STAFFMARK and NEWCO approving STAFFMARK's and NEWCO's entering into this
Agreement and the consummation of the transactions contemplated hereby.

8.10 EMPLOYMENT AGREEMENTS. Each of the persons listed on Schedule
9.11 shall have had an opportunity to enter into an employment agreement
substantially in the form of Annex VIII hereto.

8.11 NASDAQ. The common stock of STAFFMARK shall have been listed on
the NASDAQ National Market or the New York Stock Exchange.

8.12 APPROVAL OF ADDITIONAL COMPANIES. Each of the Initial Founding
Companies shall have approved the addition of any Founding Company which is not
an Initial Founding Company.

IX. CONDITIONS PRECEDENT TO OBLIGATIONS OF STAFFMARK AND NEWCO

The obligations of STAFFMARK and NEWCO with respect to actions to be
taken on the Closing Date are subject to the satisfaction or waiver on or prior
to the Closing Date of all of the following conditions. The obligations of
STAFFMARK and NEWCO with respect to actions to be taken on the Funding and
Consummation Date are subject to the satisfaction or waiver on or prior to the
Funding and Consummation Date of the conditions set forth in Sections 9.1, 9.4
and 9.12. As of the Closing Date or, with respect to the conditions set forth
in Sections 9.1, 9.4 and 9.12, as of the Funding and Consummation Date, all
conditions not satisfied shall be deemed to have been waived, except that no
such waiver shall be deemed to affect the survival of the representations and
warranties of the COMPANY contained in Section 5 hereof.

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the same effect as though such representations and warranties had been made on
and as of such date; all of the terms, covenants and conditions of this
Agreement to be complied with or performed by the STOCKHOLDERS and the COMPANY
on or before the Closing Date or the Funding and Consummation Date, as the case
may be, shall have been duly performed or complied with in all material
respects; and the STOCKHOLDERS shall have delivered to STAFFMARK a certificate
dated the Closing Date and the Funding and Consummation Date and signed by them
to such effect.

9.2 NO LITIGATION. No action or proceeding before a court or any
other governmental agency or body shall have been instituted or threatened to
restrain or prohibit the merger of NEWCO with and into the COMPANY or the
offering and sale by STAFFMARK of STAFFMARK Stock pursuant to the Registration
Statement and no governmental agency or body shall have taken any other action
or made any request of STAFFMARK as a result of which the management of
STAFFMARK deems it inadvisable to proceed with the transactions hereunder.

9.3 SECRETARY'S CERTIFICATE. STAFFMARK shall have received a
certificate, dated the Closing Date and signed by the secretary of the COMPANY,
certifying the truth and correctness of attached copies of the COMPANY's
Certificate of Incorporation (including amendments thereto), By-Laws (including
amendments thereto), and resolutions of the board of directors and, if
required, the STOCKHOLDERS approving the COMPANY's entering into this Agreement
and the consummation of the transactions contemplated hereby.

9.4 NO MATERIAL ADVERSE EFFECT. No event or circumstance shall have
occurred with respect to the COMPANY which would constitute a Material Adverse
Effect, and the COMPANY shall not have suffered any material loss or damages to
any of its properties or assets, whether or not covered by insurance, which
change, loss or damage materially affects or impairs the ability of the COMPANY
to conduct its business.

9.5 STOCKHOLDERS' RELEASE. The STOCKHOLDERS shall have delivered to
STAFFMARK an instrument dated the Closing Date releasing the COMPANY from (i)
any and all claims of the STOCKHOLDERS against the COMPANY and STAFFMARK and
(ii) obligations of the COMPANY and STAFFMARK to the STOCKHOLDERS, except for
(w) director and officer indemnification claims as permitted by the COMPANY'S
Charter Documents or applicable state corporate law, (x) items specifically
identified on Schedules 5.10 and 5.15 as being claims of or obligations to the
STOCKHOLDERS, (y) continuing obligations to STOCKHOLDERS relating to their
employment by the COMPANY and (z) obligations arising under this Agreement or
the transactions contemplated hereby.

9.6 TERMINATION OF RELATED PARTY AGREEMENTS. Except as set forth on
Schedule 9.6, all existing agreements between the COMPANY and the STOCKHOLDERS
shall have been cancelled effective prior to or as of the Funding and
Consummation Date.

9.7 OPINION OF COUNSEL. STAFFMARK shall have received an opinion
from Counsel to the COMPANY and the STOCKHOLDERS, dated the Closing Date, in
substantially the form annexed hereto as Annex VII, and the Underwriters shall
have received a copy of the same opinion addressed to them.

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9.8 CONSENTS AND APPROVALS. All necessary consents of and filings
with any governmental authority or agency relating to the consummation of the
transactions contemplated herein shall have been obtained and made; all
consents and approvals of third parties listed on Schedule 5.23 shall have been
obtained; and no action or proceeding shall have been instituted or threatened
to restrain or prohibit the Merger and no governmental agency or body shall
have taken any other action or made any request of STAFFMARK as a result of
which STAFFMARK deems it inadvisable to proceed with the transactions
hereunder.

9.9 GOOD STANDING CERTIFICATES. The COMPANY shall have delivered to
STAFFMARK a certificate, dated as of a date no earlier than ten days prior to
the Closing Date, duly issued by the appropriate governmental authority in the
COMPANY's state of incorporation and, unless waived by STAFFMARK, in each state
in which the COMPANY is authorized to do business, showing the COMPANY is in
good standing and authorized to do business and that all state franchise and/or
income tax returns and taxes for the COMPANY for all periods prior to the
Closing have been filed and paid.

9.10 REGISTRATION STATEMENT. The Registration Statement shall have
been declared effective by the SEC.

9.11 EMPLOYMENT AGREEMENTS. Each of the persons listed on Schedule
9.11 shall have entered into an employment agreement substantially in the form
of Annex VIII hereto.

9.12 CLOSING OF IPO. The closing of the sale of the STAFFMARK Stock
to the Underwriters in the IPO shall have occurred simultaneously with the
Funding and Consummation Date hereunder.

9.13 FIRPTA CERTIFICATE. Each STOCKHOLDER shall have delivered to
STAFFMARK a certificate to the effect that he is not a foreign person pursuant
to Section 1.1445-2(b) of the Treasury regulations.

X. COVENANTS OF STAFFMARK AFTER CLOSING

10.1 RELEASE FROM GUARANTEES; REPAYMENT OF CERTAIN OBLIGATIONS.
STAFFMARK shall use its best efforts to have the STOCKHOLDERS released from any
and all guarantees on any indebtedness, and shall have the STOCKHOLDERS
released on or before the Funding and Consummation Date from any and all
guarantees on any indebtedness owing to any bank or related to accounts
receivable factoring, that they personally guaranteed for the benefit of the
COMPANY, with all such guarantees on indebtedness being assumed by STAFFMARK at
the Funding and Consummation Date. In the event that STAFFMARK cannot obtain
releases from other lenders of any other guaranteed indebtedness on or prior to
90 days subsequent to the Funding and Consummation Date, STAFFMARK shall pay
off or otherwise refinance or retire such other indebtedness and, in the event
that STAFFMARK cannot obtain releases on or prior to the Funding and
Consummation Date for such other indebtedness, STAFFMARK agrees to indemnify
the STOCKHOLDERS against any and all claims made by lenders under such
guarantees which arise as a result of STAFFMARK's failure to cause such
guarantees to be released on or prior to the Funding and Consummation Date.

10.2 PRESERVATION OF TAX AND ACCOUNTING TREATMENT. Except as
contemplated by this Agreement or the Registration Statement, after the Funding
and Consummation Date, STAFFMARK

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shall not and shall not permit any of its subsidiaries to undertake any act
that would jeopardize the tax-free status of the reorganization, including:

(a) the retirement or reacquisition, directly or indirectly, of all
or part of the STAFFMARK Stock issued in connection with the transactions
contemplated hereby;

(b) the entering into of financial arrangements for the benefit of
the STOCKHOLDERS;

(c) the disposition of any material part of the assets of the
COMPANY within the two years following the Funding and Consummation Date except
in the ordinary course of business or to eliminate duplicate services or excess
capacity.

10.3 PREPARATION AND FILING OF TAX RETURNS.

(i) The COMPANY shall, if possible, file or cause to be filed all
separate Returns of any Acquired Party for all taxable periods that end on or
before the Funding and Consummation Date. If the Company is an S Corporation,
each STOCKHOLDER shall pay or cause to be paid all Tax liabilities shown by
such Returns to be due.

(ii) STAFFMARK shall file or cause to be filed all separate Returns
of, or that include, any Acquired Party for all taxable periods ending after
the Funding and Consummation Date.

(iii) Each party hereto shall, and shall cause its subsidiaries and
affiliates to, provide to each of the other parties hereto such cooperation and
information as any of them reasonably may request in filing any Return, amended
Return or claim for refund, determining a liability for Taxes or a right to
refund of Taxes or in conducting any audit or other proceeding in respect of
Taxes. Such cooperation and information shall include providing copies of all
relevant portions of relevant Returns, together with relevant accompanying
schedules and relevant work papers, relevant documents relating to rulings or
other determinations by Taxing Authorities and relevant records concerning the
ownership and Tax basis of property, which such party may possess. Each party
shall make its employees reasonably available on a mutually convenient basis at
its cost to provide explanation of any documents or information so provided.
Subject to the preceding sentence, each party required to file Returns pursuant
to this Agreement shall bear all costs of filing such Returns.

(iv) Each of the COMPANY, NEWCO, STAFFMARK and each STOCKHOLDER shall
comply with the tax reporting requirements of Section 1.351-3 of the Treasury
Regulations promulgated under the Code, and treat the transaction as a tax-free
reorganization and contribution under Section 351(a) of the Code.

10.4 DIRECTORS. The persons named in the Registration Statement
shall be appointed as directors promptly following the Funding and Consummation
Date of the IPO.

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replacement plans that have the same terms and provisions as the existing
plans, provided, further, that any new health insurance plan shall provide for
coverage for preexisting conditions.

10.6 REGISTRATION RIGHTS. From and after the date of this Agreement,
STAFFMARK shall not, without the written consent of STOCKHOLDERS owning at
least 876,450 shares of STAFFMARK Stock issued to the Founding Stockholders in
the STAFFMARK Plan of Organization, enter into any agreement with any holder or
prospective holder of any securities of STAFFMARK relating to registration
rights unless such agreement includes: (a) to the extent the agreement will
allow such holder or such prospective holder to include such securities in any
registration filed under Section 17.1 or 17.2 hereof, a provision that such
holder or prospective holder may include such securities in any such
registration only to the extent that the inclusion of its securities will not
reduce the amount of Registrable Securities of the Founding Stockholders which
would otherwise be included; and (b) a provision that any demand registration
rights granted to such holder or prospective holder shall in no event be
exercisable prior to 25 months after the Closing Date.

10.7 RIGHT OF FIRST REFUSAL TO STOCKHOLDERS. If at any time prior to
the third anniversary of this Agreement STAFFMARK agrees to sell substantially
all the assets or common stock of the COMPANY (alone, and not in conjunction
with the sale of any of the other Founding Companies), the STOCKHOLDERS (or any
one of the STOCKHOLDERS) shall have a right- of-first refusal to purchase all
of such assets or common stock at a price and under terms and conditions equal
to the price, terms and conditions offered by the third-party purchaser.
Within five (5) days of entering into an agreement to sell the aforementioned
assets or common stock, STAFFMARK shall notify the STOCKHOLDERS in writing that
it has agreed to such sale and the price to be paid by the third-party
purchaser. Within ten (10) days of the receipt of such written notice, the
STOCKHOLDERS shall notify STAFFMARK in writing that STOCKHOLDERS intend to
purchase the assets or common stock. If notice is not received by STAFFMARK
within such ten (10) day period, STAFFMARK shall be free to consummate the sale
to the third-party purchaser. If notice is received by STAFFMARK that the
STOCKHOLDERS intend to purchase the assets or common stock, such sale must be
consummated within thirty (30) days of receipt of such notice by STAFFMARK or
STAFFMARK may consummate the sale of the assets or common stock to the
third-party purchaser. Upon consummation of sale hereunder, STAFFMARK and
STOCKHOLDERS shall enter into a new non-competition agreement which allows the
STOCKHOLDERS to operate the COMPANY in its current market areas and not
otherwise compete with STAFFMARK for a reasonable period of time.

XI. INDEMNIFICATION

The STOCKHOLDERS, STAFFMARK and NEWCO each make the following covenants
that are applicable to them, respectively:

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NEWCO, the COMPANY or the Surviving Corporation as a result of or arising from
(i) any breach of the representations and warranties of the STOCKHOLDERS or the
COMPANY set forth herein or on the schedules or certificates delivered in
connection herewith, (ii) any nonfulfillment of any agreement on the part of
the STOCKHOLDERS or the COMPANY under this Agreement, (iii) any liability under
the 1933 Act, the 1934 Act or other Federal or state law or regulation, at
common law or otherwise, arising out of or based upon any untrue statement of a
material fact relating to the COMPANY or the STOCKHOLDERS, and provided to
STAFFMARK or its counsel by the COMPANY or the STOCKHOLDERS contained in the
Registration Statement or any prospectus forming a part thereof, or any
amendment thereof or supplement thereto, or arising out of or based upon any
omission to state therein a material fact relating to the COMPANY or the
STOCKHOLDERS required to be stated therein or necessary to make the statements
therein not misleading, (iv) any Tax imposed upon or relating to an Acquired
Party for any pre-Funding and Consummation Date period, (v) any Tax imposed
upon or relating to any third party for a pre-Funding and Consummation Date
period, including, in each case, any such Tax for which an Acquired Party may
be liable under Section 1.1502-6 of the Treasury regulations (or any similar
provision of state, local or foreign law), as a transferee or successor, by
contract or otherwise, or (vi) the matters described on Schedule 11.1(vi)
[which will consist of specifically identified items such as existing or
threatened litigation], provided, however, that such indemnity shall not inure
to the benefit of STAFFMARK, NEWCO, the COMPANY or the Surviving Corporation to
the extent that such untrue statement was made in, or omission occurred in, any
preliminary prospectus and the STOCKHOLDERS provided, in writing, corrected
information to STAFFMARK counsel and to STAFFMARK for inclusion in the final
prospectus, and such information was not so included or properly delivered, and
provided further, that no STOCKHOLDER shall be liable for any indemnification
obligation pursuant to this Section 11.1 to the extent attributable to a breach
of any representation, warranty or agreement made herein individually by any
other STOCKHOLDER. In satisfying any indemnification obligation, the
STOCKHOLDERS may tender shares of STAFFMARK at the greater of the initial
public offering price or the fair market value of the shares on the date of
tender.

11.2 INDEMNIFICATION BY STAFFMARK. STAFFMARK covenants and agrees
that it will indemnify, defend, protect and hold harmless the STOCKHOLDERS at
all times from and after the date of this Agreement until the Expiration Date,
from and against all claims, damages, actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including specifically, but
without limitation, reasonable attorneys' fees and expenses of investigation)
incurred by the STOCKHOLDERS as a result of or arising from (i) any breach by
STAFFMARK or NEWCO of their representations and warranties set forth herein or
on the schedules or certificates attached hereto, (ii) any nonfulfillment of
any agreement on the part of STAFFMARK or NEWCO under this Agreement, (iii) any
liabilities which the STOCKHOLDERS may incur due to STAFFMARK's or NEWCO's
failure to be responsible for the liabilities and obligations of the COMPANY as
provided in Section 1 hereof (except to the extent that STAFFMARK or NEWCO has
claims against the STOCKHOLDERS by reason of such liabilities); (iv) any
liability under the 1933 Act, the 1934 Act or other Federal or state law or
regulation, at common law or otherwise, arising out of or based upon any untrue
statement or alleged untrue statement of a material fact relating to STAFFMARK,
NEWCO or any of the Other Founding Companies contained in any preliminary
prospectus, the Registration Statement or any prospectus forming a part
thereof, or any amendment thereof or supplement thereto, or arising out of or
based upon any omission or alleged omission to state therein a material fact
relating to STAFFMARK or NEWCO or any of the Other Founding Companies required
to be stated therein or necessary to make the statements therein not
misleading, or (v) the matters described on Schedule 11.2(v) [i.e.,
specifically identified items].

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11.3 THIRD PERSON CLAIMS. Promptly after any party hereto
(hereinafter the "Indemnified Party") has received notice of or has knowledge
of any claim by a person not a party to this Agreement ("Third Person"), or the
commencement of any action or proceeding by a Third Person, the Indemnified
Party shall, as a condition precedent to a claim with respect thereto being
made against any party obligated to provide indemnification pursuant to Section
11.1 or 11.2 hereof (hereinafter the "Indemnifying Party"), give the
Indemnifying Party written notice of such claim or the commencement of such
action or proceeding. Such notice shall state the nature and the basis of such
claim and a reasonable estimate of the amount thereof. The Indemnifying Party
shall have the right to defend and settle, at its own expense and by its own
counsel, any such matter so long as the Indemnifying Party pursues the same in
good faith and diligently, provided that the Indemnifying Party shall not
settle any criminal proceeding without the written consent of the Indemnified
Party. If the Indemnifying Party undertakes to defend or settle, it shall
promptly notify the Indemnified Party of its intention to do so, and the
Indemnified Party shall cooperate with the Indemnifying Party and its counsel
in the defense thereof and in any settlement thereof. Such cooperation shall
include, but shall not be limited to, furnishing the Indemnifying Party with
any books, records or information reasonably requested by the Indemnifying
Party that are in the Indemnified Party's possession or control. All
Indemnified Parties shall use the same counsel, which shall be the counsel
selected by Indemnifying Party, provided that if counsel to the Indemnifying
Party shall have a conflict of interest that prevents counsel for the
Indemnifying Party from representing Indemnified Party, Indemnified Party shall
have the right to participate in such matter through counsel of its own
choosing and Indemnifying Party will reimburse the Indemnified Party for the
expenses of its counsel. After the Indemnifying Party has notified the
Indemnified Party of its intention to undertake to defend or settle any such
asserted liability, and for so long as the Indemnifying Party diligently
pursues such defense, the Indemnifying Party shall not be liable for any
additional legal expenses incurred by the Indemnified Party in connection with
any defense or settlement of such asserted liability, except (i) as set forth
in the preceding sentence and (ii) to the extent such participation is
requested by the Indemnifying Party, in which event the Indemnified Party shall
be reimbursed by the Indemnifying Party for reasonable additional legal
expenses and out-of-pocket expenses. If the Indemnifying Party desires to
accept a final and complete settlement of any such Third Person claim and the
Indemnified Party refuses to consent to such settlement, then the Indemnifying
Party's liability under this Section with respect to such Third Person claim
shall be limited to the amount so offered in settlement by said Third Person
and the Indemnified Party shall reimburse the Indemnifying Party for any
additional costs of defense which it subsequently incurs with respect to such
claim and all additional costs of settlement or judgment. If the Indemnifying
Party does not undertake to defend such matter to which the Indemnified Party
is entitled to indemnification hereunder, or fails diligently to pursue such
defense, the Indemnified Party may undertake such defense through counsel of
its choice, at the cost and expense of the Indemnifying Party, and the
Indemnified Party may settle such matter, and the Indemnifying Party shall
reimburse the Indemnified Party for the amount paid in such settlement and any
other liabilities or expenses incurred by the Indemnified Party in connection
therewith, provided, however, that under no circumstances shall the Indemnified
Party settle any Third Person claim without the written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld or
delayed. All settlements hereunder shall effect a complete release of the
Indemnified Party, unless the Indemnified Party otherwise agrees in writing.
The parties hereto will make appropriate adjustments for insurance proceeds in
determining the amount of any indemnification obligation under this Section.

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herein shall be construed to limit the right of a party, in a proper case, to
seek injunctive relief for a breach of this Agreement.

11.5 LIMITATIONS ON INDEMNIFICATION. STAFFMARK, NEWCO, the Surviving
Corporation and the other persons or entities indemnified pursuant to Section
11.1 shall not assert any claim for indemnification hereunder against the
STOCKHOLDERS until such time as, and solely to the extent that, the aggregate
of all claims which such persons may have against such STOCKHOLDERS shall
exceed 1.0% of the sum of the cash paid to STOCKHOLDERS plus the value of the
STAFFMARK Stock delivered to STOCKHOLDERS (calculated as provided in the last
sentence of this section) (the "Indemnification Threshold"), provided, however,
that STAFFMARK, NEWCO, the Surviving Corporation and the other persons or
entities indemnified pursuant to Section 11.1 may assert and shall be
indemnified for any claim under Section 11.1(vi) at any time, regardless of
whether the aggregate of all claims which such persons may have against any
STOCKHOLDER or all STOCKHOLDERS exceeds the Indemnification Threshold, it being
understood that the amount of any such claim under Section 11.1(vi) shall not
be counted towards the Indemnification Threshold. STOCKHOLDERS shall not
assert any claim (other than a Third Person claim) for indemnification
hereunder against STAFFMARK or NEWCO until such time as, and solely to the
extent that, the aggregate of all claims which STOCKHOLDERS may have against
STAFFMARK or NEWCO shall exceed $20,000; provided, however, that STOCKHOLDER
and the other persons or entities indemnified pursuant to Section 11.2 may
assert and shall be indemnified for any claim under Section 11.2(v) at any
time, regardless of whether the aggregate of all claims which such persons may
have against any of STAFFMARK, or NEWCO exceeds $20,000, it being understood
that the amount of any such claim under Section 11.2(v) shall not be counted
towards such $20,000 amount.

No person shall be entitled to indemnification under this Section 11 if
and to the extent that such person's claim for indemnification is directly
related to a breach by such person of any representation, warranty, covenant or
other agreement set forth in this Agreement.

Notwithstanding any other term of this Agreement (except the proviso to
this sentence), no STOCKHOLDER shall be liable under this Section 11 for an
amount which exceeds the amount of proceeds received by such STOCKHOLDER in
connection with the Merger, provided that a STOCKHOLDER's indemnification
obligations pursuant to Section 11.1(vi) shall not be limited. For purposes of
calculating the value of the STAFFMARK Stock received by a STOCKHOLDER,
STAFFMARK Stock shall be valued at its initial public offering price as set
forth in the Registration Statement.

XII. TERMINATION OF AGREEMENT

12.1 TERMINATION. This Agreement may be terminated at any time prior
to the Funding and Consummation Date solely:

(i) by mutual consent of the boards of directors of STAFFMARK and
the COMPANY;

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consummated by December 31, 1996, unless the failure of such transactions to be
consummated is due to the willful failure of the party seeking to terminate
this Agreement to perform any of its obligations under this Agreement to the
extent required to be performed by it prior to or on the Funding and
Consummation Date;

(iii) by the STOCKHOLDERS or COMPANY, on the one hand, or by
STAFFMARK, on the other hand, if a material breach or default shall be made by
the other party in the observance or in the due and timely performance of any
of the covenants, agreements or conditions contained herein, and the curing of
such default shall not have been made on or before the Funding and Consummation
Date;

(iv) pursuant to Section 7.8 hereof; or

(v) pursuant to Section 4 hereof.

12.2 LIABILITIES IN EVENT OF TERMINATION. There shall be no
liability hereunder for termination except in the case of willful breach or
default, or fraud, by a party with respect to any of its representations,
warranties, covenants or agreements contained in this Agreement, in which case
there will be no limit on any obligation or liability of such party in such
circumstances including, but not limited to, legal and audit costs and out of
pocket expenses.

XIII. NONCOMPETITION

13.1 PROHIBITED ACTIVITIES. The STOCKHOLDERS will not, for a period
of five (5) years following the Funding and Consummation Date, for any reason
whatsoever, directly or indirectly, for themselves or on behalf of or in
conjunction with any other person, persons, company, partnership, corporation
or business of whatever nature:

(i) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a managerial capacity, whether as an employee,
independent contractor, consultant or advisor, or as a sales representative, in
any business or other entity that engages in the employee staffing industry
including, but not limited to, temporary services, permanent placement and
employee payrolling, that is in direct competition with STAFFMARK or any of the
subsidiaries thereof, within 100 miles of where the COMPANY or any of its
subsidiaries conducted business prior to the effectiveness of the Merger (the
"Territory");

(ii) call upon any person who is, at that time, within the Territory,
an employee of STAFFMARK (including the subsidiaries thereof) in a sales
representative or managerial capacity for the purpose or with the intent of
enticing such employee away from or out of the employ of STAFFMARK (including
the subsidiaries thereof);

(iii) call upon any person or entity which is, at that time, or which
has been, within one (1) year prior to the Funding and Consummation Date, a
customer of STAFFMARK (including the subsidiaries thereof), of the COMPANY or
of any of the Other Founding Companies within the Territory for the purpose of
soliciting or selling products or services in direct competition with STAFFMARK
within the Territory;

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(iv) call upon any prospective acquisition candidate, on any
STOCKHOLDER's own behalf or on behalf of any competitor in the temporary
services business, which candidate was either called upon by STAFFMARK
(including the subsidiaries thereof) or for which STAFFMARK (or any subsidiary
thereof) made an acquisition analysis, for the purpose of acquiring such
entity; or

(v) disclose customers, whether in existence or proposed, of the
COMPANY to any person, firm, partnership, corporation or business for any
reason or purpose whatsoever except to the extent that the COMPANY has in the
past disclosed such information to the public for valid business reasons.

Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit any STOCKHOLDER from acquiring as an investment not more than one
percent (1%) of the capital stock of a competing business whose stock is traded
on a national securities exchange or over-the-counter.

13.2 DAMAGES. Because of the difficulty of measuring economic losses
to STAFFMARK as a result of a breach of the foregoing covenant, and because of
the immediate and irreparable damage that could be caused to STAFFMARK for
which it would have no other adequate remedy, each STOCKHOLDER agrees that the
foregoing covenant may be enforced by STAFFMARK in the event of breach by such
STOCKHOLDER, by injunctions and restraining orders.

13.3 REASONABLE RESTRAINT. It is agreed by the parties hereto that
the foregoing covenants in this Section 13 impose a reasonable restraint on the
STOCKHOLDERS in light of the activities and business of STAFFMARK (including
the subsidiaries thereof) on the date of the execution of this Agreement and
the current plans of STAFFMARK; but it is also the intent of STAFFMARK and the
STOCKHOLDERS that such covenants be construed and enforced in accordance with
the changing activities and business of STAFFMARK (including the subsidiaries
thereof) throughout the term of this covenant.

13.4 SEVERABILITY; REFORMATION. The covenants in this Section 13 are
severable and separate, and the unenforceability of any specific covenant shall
not affect the provisions of any other covenant. Moreover, in the event any
court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention
of the parties that such restrictions be enforced to the fullest extent which
the court deems reasonable, and the Agreement shall thereby be reformed.

13.5 INDEPENDENT COVENANT. All of the covenants in this Section 13
shall be construed as an agreement independent of any other provision in this
Agreement, and the existence of any claim or cause of action of any STOCKHOLDER
against STAFFMARK (including the subsidiaries thereof), whether predicated on
this Agreement or otherwise, shall not constitute a defense to the enforcement
by STAFFMARK of such covenants. It is specifically agreed that the period of
five (5) years stated at the beginning of this Section 13, during which the
agreements and covenants of each STOCKHOLDER made in this Section 13 shall be
effective, shall be computed by excluding from such computation any time during
which such STOCKHOLDER is in violation of any provision of this Section 13.
The covenants contained in Section 13 shall not be affected by any breach of
any other provision hereof by any party hereto and shall have no effect if the
transactions contemplated by this Agreement are not consummated.

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13.6 MATERIALITY. The COMPANY and the STOCKHOLDERS hereby agree that
this covenant is a material and substantial part of this transaction.

XIV. NONDISCLOSURE OF CONFIDENTIAL INFORMATION

14.1 STOCKHOLDERS. The STOCKHOLDERS recognize and acknowledge that
they had in the past, currently have, and in the future may possibly have,
access to certain confidential information of the COMPANY, the Other Founding
Companies, and/or STAFFMARK, such as operational policies, and pricing and cost
policies that are valuable, special and unique assets of the COMPANY's, the
Other Founding Companies' and/or STAFFMARK's respective businesses. The
STOCKHOLDERS agree that they will not disclose such confidential information to
any person, firm, corporation, association or other entity for any purpose or
reason whatsoever, except (a) to authorized representatives of STAFFMARK, (b)
following the Closing, such information may be disclosed by the STOCKHOLDERS as
is required in the course of performing their duties for STAFFMARK or the
Surviving Corporation and (c) to counsel and other advisers, provided that such
advisers (other than counsel) agree to the confidentiality provisions of this
Section 14.1, unless (i) such information becomes known to the public generally
through no fault of the STOCKHOLDERS, (ii) disclosure is required by law or the
order of any governmental authority under color of law, provided, that prior to
disclosing any information pursuant to this clause (ii), the STOCKHOLDERS shall
give prior written notice thereof to STAFFMARK and provide STAFFMARK with the
opportunity to contest such disclosure, or (iii) the disclosing party
reasonably believes that such disclosure is required in connection with the
defense of a lawsuit against the disclosing party. In the event of a breach or
threatened breach by any of the STOCKHOLDERS of the provisions of this Section,
STAFFMARK shall be entitled to an injunction restraining such STOCKHOLDERS from
disclosing, in whole or in part, such confidential information. Nothing herein
shall be construed as prohibiting STAFFMARK from pursuing any other available
remedy for such breach or threatened breach, including the recovery of damages.
In the event the transactions contemplated by this Agreement are not
consummated, STOCKHOLDERS shall have none of the above-mentioned restrictions
on their ability to disseminate confidential information with respect to the
COMPANY.

14.2 STAFFMARK AND NEWCO. STAFFMARK and NEWCO recognize and
acknowledge that they had in the past and currently have access to certain
confidential information of the COMPANY, such as operational policies, and
pricing and cost policies that are valuable, special and unique assets of the
COMPANY's business. STAFFMARK and NEWCO agree that, prior to the Closing, or
if the Transactions contemplated by this Agreement are not consummated, they
will not disclose such confidential information to any person, firm,
corporation, association or other entity for any purpose or reason whatsoever,
except (a) to authorized representatives of the COMPANY, (b) to counsel and
other advisers, provided that such advisers (other than counsel) agree to the
confidentiality provisions of this Section 14.1 and (c) to the Other Founding
Companies and their representatives pursuant to Section 7.1(a), unless (i) such
information becomes known to the public generally through no fault of STAFFMARK
or NEWCO, (ii) disclosure is required by law or the order of any governmental
authority under color of law, provided, that prior to disclosing any
information pursuant to this clause (ii), STAFFMARK and NEWCO shall, if
possible, give prior written notice thereof to the COMPANY and the STOCKHOLDERS
and provide the COMPANY and the STOCKHOLDERS with the opportunity to contest
such disclosure, or (iii) the disclosing party reasonably believes that such
disclosure is required in connection with the defense of a lawsuit against the
disclosing party. In the event of a breach or

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threatened breach by STAFFMARK or NEWCO of the provisions of this Section, the
COMPANY and the STOCKHOLDERS shall be entitled to an injunction restraining
STAFFMARK and NEWCO from disclosing, in whole or in part, such confidential
information. Nothing herein shall be construed as prohibiting the COMPANY and
the STOCKHOLDERS from pursuing any other available remedy for such breach or
threatened breach, including the recovery of damages.

14.3 DAMAGES. Because of the difficulty of measuring economic losses
as a result of the breach of the foregoing covenants in Section 14.1 and 14.2,
and because of the immediate and irreparable damage that would be caused for
which they would have no other adequate remedy, the parties hereto agree that,
in the event of a breach by any of them of the foregoing covenants, the
covenant may be enforced against the other parties by injunctions and
restraining orders.

14.4 SURVIVAL. The obligations of the parties under this Article 14
shall survive the termination of this Agreement for a period of five years from
the Funding and Consummation Date.

XV. TRANSFER RESTRICTIONS

15.1 TRANSFER RESTRICTIONS. Except for transfers to immediate family
members who agree to be bound by the restrictions set forth in this Section
15.1 (or trusts for the benefit of the STOCKHOLDERS or family members, the
trustees of which so agree or family limited partnership)(who may participate
in registration rights pursuant to Section 17, but shall not vote their shares
pursuant to Section 17.2), for a period of two years from the Closing, except
pursuant to Section 17 hereof or in the event of death of any STOCKHOLDER, none
of the STOCKHOLDERS shall sell, assign, exchange, transfer, encumber, pledge,
distribute, appoint, or otherwise dispose of (a) any shares of STAFFMARK Stock
received by the STOCKHOLDERS in the Merger, or (b) grant any interest
(including, without limitation, an option to buy or sell) in any such shares of
STAFFMARK Stock, in whole or in part, and no such attempted transfer shall be
treated as effective for any purpose. The certificates evidencing the
STAFFMARK Stock delivered to the STOCKHOLDERS pursuant to Section 3 of this
Agreement will bear a legend substantially in the form set forth below and
containing such other information as STAFFMARK may deem necessary or
appropriate:

THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
ASSIGNED, EXCHANGED, TRANSFERRED, ENCUMBERED, PLEDGED,
DISTRIBUTED, APPOINTED OR OTHERWISE DISPOSED OF, AND THE ISSUER
SHALL NOT BE REQUIRED TO GIVE EFFECT TO ANY ATTEMPTED SALE,
ASSIGNMENT, EXCHANGE, TRANSFER, ENCUMBRANCE, PLEDGE,
DISTRIBUTION, APPOINTMENT OR OTHER DISPOSITION PRIOR TO [SECOND
ANNIVERSARY OF CLOSING DATE]. UPON THE WRITTEN REQUEST OF THE
HOLDER OF THIS CERTIFICATE, THE ISSUER AGREES TO REMOVE THIS
RESTRICTIVE LEGEND (AND ANY STOP ORDER PLACED WITH THE TRANSFER
AGENT) AFTER THE DATE SPECIFIED ABOVE.

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XVI. FEDERAL SECURITIES ACT REPRESENTATIONS

The STOCKHOLDERS acknowledge that the shares of STAFFMARK Stock to be
delivered to the STOCKHOLDERS pursuant to this Agreement have not been and will
not be registered under the 1933 Act and therefore may not be resold without
compliance with the 1933 Act. The STAFFMARK Stock to be acquired by such
STOCKHOLDERS pursuant to this Agreement is being acquired solely for their own
respective accounts, for investment purposes only, and with no present
intention of distributing, selling or otherwise disposing of it in connection
with a distribution.

16.1 COMPLIANCE WITH LAW. The STOCKHOLDERS covenant, warrant and
represent that none of the shares of STAFFMARK Stock issued to such
STOCKHOLDERS will be offered, sold, assigned, pledged, hypothecated,
transferred or otherwise disposed of except after full compliance with all of
the applicable provisions of the 1933 Act and the rules and regulations of the
SEC. All the STAFFMARK Stock shall bear the following legend in addition to the
legend required under Section 15 of this Agreement:

THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") AND MAY ONLY BE SOLD OR
OTHERWISE TRANSFERRED IF THE HOLDER HEREOF COMPLIES WITH THE ACT
AND APPLICABLE SECURITIES LAW.

16.2 ECONOMIC RISK; SOPHISTICATION. The STOCKHOLDERS are able to
bear the economic risk of an investment in the STAFFMARK Stock acquired
pursuant to this Agreement and can afford to sustain a total loss of such
investment and have such knowledge and experience in financial and business
matters that they are capable of evaluating the merits and risks of the
proposed investment in the STAFFMARK Stock. The STOCKHOLDERS party hereto have
had an adequate opportunity to ask questions and receive answers from the
officers of STAFFMARK concerning any and all matters relating to the
transactions described herein including, without limitation, the background and
experience of the current and proposed officers and directors of STAFFMARK, the
plans for the operations of the business of STAFFMARK, the business, operations
and financial condition of the Founding Companies other than the COMPANY, and
any plans for additional acquisitions and the like. The STOCKHOLDERS have
asked any and all questions in the nature described in the preceding sentence
and all questions have been answered to their satisfaction.

16.3 INVESTIGATION. STAFFMARK has made or caused to be made an
investigation of the COMPANY, its assets, business, liabilities and all other
matters affecting its judgment to enter into this Agreement and to engage in
the transactions contemplated hereby. STAFFMARK acknowledges that
notwithstanding the fact that the COMPANY or STOCKHOLDERS may have made
available to STAFFMARK certain information prepared by or in the possession of
the COMPANY or STOCKHOLDERS for their general use with respect to this
Agreement, neither the COMPANY nor STOCKHOLDERS have made any representations
or warranties, oral or written, except as expressly set forth in this Agreement
or in the Schedules attached hereto, upon which STAFFMARK has relied or is
entitled to rely. Neither the COMPANY nor the STOCKHOLDERS have made any
representations or warranties to STAFFMARK regarding the future success or
profitability of the business heretofore conducted by the COMPANY. STAFFMARK
has no actual knowledge of any existing breach of a representation or warranty
made herein by the COMPANY or the STOCKHOLDERS.

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XVII. REGISTRATION RIGHTS

17.1 PIGGYBACK REGISTRATION RIGHTS. At any time following the
Closing, whenever STAFFMARK proposes to register any STAFFMARK Stock for its
own or others account under the 1933 Act for a public offering, other than (i)
any shelf registration of shares to be used as consideration for acquisitions
of additional businesses by STAFFMARK and (ii) registrations relating solely to
employee benefit plans, STAFFMARK shall give each of the STOCKHOLDERS prompt
written notice of its intent to do so. Upon the written request of any of the
STOCKHOLDERS given within 30 days after receipt of such notice, STAFFMARK shall
cause to be included in such registration all of the STAFFMARK Stock received
pursuant to this Agreement ("Registrable Securities") which any such
STOCKHOLDER requests, provided that STAFFMARK shall have the right to reduce
the number of shares included in such registration to the extent that inclusion
of such shares could, in the opinion of tax counsel to STAFFMARK or its
independent auditors, jeopardize the status of the transactions contemplated
hereby and by the Registration Statement as a tax-free reorganization.

If a STOCKHOLDER requests inclusion of any shares of Registrable
Securities in a registration and if the public offering is to be underwritten,
STAFFMARK will request the underwriters of the offering to purchase and sell
such shares of Registrable Securities. If STAFFMARK is advised in writing in
good faith by any managing underwriter of an underwritten offering of the
securities being offered pursuant to any registration statement under this
Section 17.1 that the number of shares to be sold by persons other than
STAFFMARK is greater than the number of such shares which can be offered
without adversely affecting the offering, STAFFMARK may reduce pro rata the
number of shares offered for the accounts of such persons (based upon the
number of shares held by such person) to a number deemed satisfactory by such
managing underwriter; provided, that, for each such offering made by STAFFMARK
after the IPO, such reduction shall be made first by reducing the number of
shares to be sold by persons other than STAFFMARK, the STOCKHOLDERS and the
stockholders of the Other Founding Companies (collectively, the STOCKHOLDERS
and the stockholders of the other Founding Companies being referred to herein
as the "Founding Stockholders"), and thereafter, if a further reduction is
required, by reducing the number of shares to be sold by the Founding
Stockholders.

A STOCKHOLDER may at any time prior to the effectiveness of a
registration statement withdraw shares of Registrable Securities held by it
from the public offering. The fact that any shares of STAFFMARK Stock have
been the subject of a request for registration pursuant to this Section 17.1
shall not prevent such shares from being the subject of a future request for
registration pursuant to this Section 17.1 if for any reason such shares were
not included in the registration statement.

17.2 DEMAND REGISTRATION RIGHTS. At any time after the date 22
months after the Closing, STOCKHOLDERS owning at least 876,450 shares of
STAFFMARK Stock issued in the STAFFMARK Plan of Organization may request in
writing that STAFFMARK file a registration statement under the 1933 Act
covering the registration of the shares of Registrable Securities issued to the
Founding Stockholders in the STAFFMARK Plan of Organization (a "Demand
Registration"). Within ten (10) days of the receipt of such request, STAFFMARK
shall give written notice of such request to all other Founding Stockholders
and shall, as soon as practicable (but in no event later than 75 days after the
receipt of such request), file and use its best efforts to cause to become
effective a registration statement covering all such shares. STAFFMARK shall
be obligated to effect only one Demand Registration for the Founding
Stockholders collectively and will keep such Demand Registration current and
effective for not less than 60 days (or such shorter period as is required to
sell all of the shares registered thereon).

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Any Demand Registration which shall not have become effective in accordance
with this Section 17.2, and any Demand Registration pursuant to which the
Founding Stockholders are unable to include at least 70% of the shares of
STAFFMARK Stock which they desire to include, shall not be included in the
calculation of the number of Demand Registrations contemplated by this Section
17.2.

Notwithstanding the foregoing paragraph, following such a demand a
majority of the STAFFMARK's disinterested directors (i.e., directors who have
not demanded or elected to sell shares in any such public offering) may defer
the filing of the registration statement for a 60-day period.

If with respect to any public offering which is the subject of a Demand
Registration pursuant to this Section 17.2, STAFFMARK proposes to include
securities to be issued by it or any other person proposes to include
securities of STAFFMARK held by someone other than a Founding Stockholder, and
the underwriters advising STAFFMARK believe that the offering of such shares
cannot successfully be made if the offering includes such other securities as
well as the shares held by the Founding Stockholders, STAFFMARK may exclude the
securities to be issued by such other person from such offering and such
securities shall not be included in the registration statement.

If a Demand Registration is in connection with an underwritten public
offering, the principal underwriter will be selected by STAFFMARK and approved
by the Founding Stockholders holding a majority of the shares of STAFFMARK
Stock to be included in such registration.

17.3 REGISTRATION PROCEDURES. STAFFMARK will bear all expenses
incurred in connection with each registration statement filed in accordance
with this Article and any action taken by STAFFMARK in conjunction with the
offering made pursuant to such registration statement (including the expense of
preparing and filing of such registration statement, furnishing of such number
of copies of the prospectus included therein as may be reasonably required in
connection with the offering, printing expenses, fees and expenses of
independent certified public accountants (including the expense of any audit),
qualification of such offering under such state securities laws as the holders
of shares of STAFFMARK Stock shall reasonably request, and payment of the fees
and expenses of counsel for STAFFMARK, but excluding underwriting commissions
and discounts).

If and whenever STAFFMARK is required to effect or cause the
registration of any shares of STAFFMARK Stock under this Article, STAFFMARK
will, as expeditiously as possible:

(a) Prepare and file with the SEC an appropriate
registration statement with respect to such shares of STAFFMARK Stock and use
its best efforts to cause such registration statement to become effective,
provided that before filing a registration statement or prospectus or any
amendments or supplements thereto, STAFFMARK will furnish the STOCKHOLDERS with
copies of all such documents proposed to be filed;

(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith and use its best efforts to cause such registration
statement to remain effective for a period of at least sixty (60) days (or such
shorter period during which holders shall have sold all Registrable Securities
which they requested to be registered) and to comply with the provisions of the
1933 Act (to the extent applicable to STAFFMARK) with respect to the
disposition of all securities in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such registration
statement;

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(c) Furnish to each STOCKHOLDER selling shares of STAFFMARK
Stock such number of copies of the registration statement and of each amendment
and supplement thereto (in each case including all exhibits), such number of
copies of the prospectus included in such registration statement (including
each preliminary prospectus), in conformity with the requirements of the 1933
Act and the regulations thereunder and such other documents, as each seller may
reasonably request in order to facilitate a public sale or other disposition of
the shares of STAFFMARK Stock;

(d) Use its best efforts to register or qualify the shares
of STAFFMARK Stock covered by such registration statement under the securities
or blue sky laws of such states as any selling STOCKHOLDER reasonably requests,
and do any and all other acts and things which may be necessary or advisable to
enable such seller to consummate the public sale or other disposition in such
jurisdictions of shares of STAFFMARK Stock owned by such STOCKHOLDER, except
that STAFFMARK will not be required to qualify generally to do business as a
foreign corporation in any state wherein it would not but for the requirements
of this subparagraph be obligated to be qualified, to subject itself to
taxation in any such state, or to consent to general service of process in any
such state;

(e) Notify each STOCKHOLDER selling shares of STAFFMARK
Stock covered by such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the 1933 Act, of this
happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances then existing. At the request of any such STOCKHOLDER, STAFFMARK
will prepare and furnish to each STOCKHOLDER a reasonable number of copies of a
supplement or an amendment of such prospectus as may be necessary so that, as
thereafter delivered, such prospectus will not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing;

(f) Cause all shares of STAFFMARK Stock covered by such
registration statement to be listed on securities exchanges on which similar
securities issued by STAFFMARK are then listed, if any;

(g) Provide a transfer agent and registrar for all shares of
STAFFMARK Stock covered by such registration statement not later than the
effective date of such registration statement;

(h) Enter into such customary agreements (including an
underwriting agreement in customary form with underwriters) and take such other
reasonable and customary action necessary to facilitate the disposition of the
shares of STAFFMARK Stock being sold; and

(i) Make available for inspection by any seller (upon the
reasonable request of any such seller) of shares of STAFFMARK Stock covered by
such registration statement, by any underwriter participating in any
disposition to be effected pursuant to such registration statement and by any
attorney, accountant or other agent retained by any such seller or any such
underwriter, all financial and other records, pertinent corporate documents and
properties of STAFFMARK, and cause all of STAFFMARK's officers, directors and
employees to supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such registration
statement.

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17.4 AVAILABILITY OF RULE 144. STAFFMARK shall not be obligated to
register shares of STAFFMARK Stock held by any STOCKHOLDER pursuant to this
Section 17 if such Registrable Securities held by such STOCKHOLDER may be sold
in the public market without registration under the 1933 Act pursuant to Rule
144(k) and any applicable state securities laws.

17.5 MERGER, ETC. In the event that any capital stock or other
securities are issued in respect of, in exchange for, or in substitution of,
any of the shares of STAFFMARK held by the STOCKHOLDERS by reason of any
reorganization, recapitalization, reclassification, merger, consolidation,
spin-off, partial or complete liquidation, stock dividend, split-up, partial or
complete liquidation, stock dividend, split-up, sale of assets, distribution to
stockholders or combination of the shares of STAFFMARK, or any other change in
STAFFMARK's capital structure, appropriate adjustment shall be made to the
registration rights granted to the STOCKHOLDERS so as to fairly and equitably
preserve, as far as practical, the original rights and obligations of the
parties hereto under this Agreement.

XVIII. GENERAL

18.1 COOPERATION. The COMPANY, STOCKHOLDERS, STAFFMARK and NEWCO
shall each deliver or cause to be delivered to the other on the Funding and
Consummation Date, and at such other times and places as shall be reasonably
agreed to, such additional instruments as the other may reasonably request for
the purpose of carrying out this Agreement. The COMPANY will cooperate and use
its reasonable efforts to have the present officers, directors and employees of
the COMPANY cooperate with STAFFMARK on and after the Funding and Consummation
Date in furnishing information, evidence, testimony and other assistance in
connection with any tax return filing obligations, actions, proceedings,
arrangements or disputes of any nature with respect to matters pertaining to
all periods prior to the Funding and Consummation Date.

18.2 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the
parties hereunder may not be assigned (except by operation of law) and shall be
binding upon and shall inure to the benefit of the parties hereto, the
successors of STAFFMARK, and the heirs and legal representatives of the
STOCKHOLDERS.

18.3 ENTIRE AGREEMENT. This Agreement (including the schedules,
exhibits and annexes attached hereto) and the documents delivered pursuant
hereto constitute the entire agreement and understanding among the
STOCKHOLDERS, the COMPANY, NEWCO and STAFFMARK and supersede any prior
agreement and understanding relating to the subject matter of this Agreement.
This Agreement, upon execution, constitutes a valid and binding agreement of
the parties hereto enforceable in accordance with its terms and may be modified
or amended only by a written instrument executed by the STOCKHOLDERS, the
COMPANY, NEWCO and STAFFMARK, acting through their respective officers or
trustees, duly authorized by their respective Boards of Directors. Any
disclosure made on any Schedule delivered pursuant hereto shall be deemed to
have been disclosed for purposes of any other Schedule required hereby.

18.4 COUNTERPARTS. This Agreement may be executed simultaneously in
two (2) or more counterparts, each of which shall be deemed an original and all
of which together shall constitute but one and the same instrument.

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18.5 BROKERS AND AGENTS. Except as disclosed on Schedule 18.5, each
party represents and warrants that it employed no broker or agent in connection
with this transaction and agrees to indemnify the other parties hereto against
all loss, cost, damages or expense arising out of claims for fees or commission
of brokers employed or alleged to have been employed by such indemnifying
party.

18.6 EXPENSES. Whether or not the transactions herein contemplated
shall be consummated, STAFFMARK will pay the fees, expenses and disbursements
of STAFFMARK and its agents, representatives, accountants and counsel incurred
in connection with the subject matter of this Agreement and any amendments
thereto in excess of the initial aggregate deposits of the Founding Companies
(the "Deposits"), including all costs and expenses incurred in the performance
and compliance with all conditions to be performed by STAFFMARK under this
Agreement, including the fees and expenses of Arthur Andersen, LLP, Wright,
Lindsey & Jennings and the costs of preparing the Registration Statement. Each
STOCKHOLDER shall pay all sales, use, transfer, real property transfer,
recording, gains, stock transfer and other similar taxes and fees ("Transfer
Taxes") imposed in connection with the Merger, other than Transfer Taxes, if
any, imposed by the State of Delaware and his own personal professional fees
necessary to consummate this transaction, including legal and accounting fees
incurred by the COMPANY in connection with this transaction. Each STOCKHOLDER
shall file all necessary documentation and Returns with respect to such
Transfer Taxes. In addition, each STOCKHOLDER acknowledges that he, and not
the COMPANY or STAFFMARK, will pay all taxes due upon receipt of the
consideration payable pursuant to Section 2 hereof, and will assume all tax
risks and liabilities of such STOCKHOLDER in connection with the transactions
contemplated hereby. If the transactions herein contemplated are not
consummated, the remaining balance of the Deposits after payment of all
transaction expenses will be reimbursed to the COMPANY and the other Founding
Companies on a pro-rata basis based on the original Deposits made by each
Founding Company.

18.7 NOTICES. All notices of communication required or permitted
hereunder shall be in writing and may be given by depositing the same in United
States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, or by delivering the
same in person to an officer or agent of such party.

(a) If to STAFFMARK, or NEWCO, addressed to them at:

StaffMark, Inc.
302 East Millsap
Fayetteville, Arkansas 72702
Attn: Clete T. Brewer

with copies to:

Wright, Lindsey & Jennings
200 W. Capitol Avenue, Suite 220
Little Rock, Arkansas 72201
Attn: C. Douglas Buford, Jr.

(b) If to the STOCKHOLDERS, addressed to them at their addresses set
forth on Annex IV, with copies to such counsel as is set forth with respect to
each STOCKHOLDER on such Annex IV;

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(c) If to the COMPANY, addressed to it at:

Brewer Personnel Services, Inc.
302 East Millsap
Fayetteville, Arkansas 72702
Attn: Jerry T. Brewer

and marked "Personal and Confidential"

with copies to:

Lashlee, Butler & Darling, P.A.
2894 West Walnut
Rogers, Arkansas 72756
Attn: Steve Butler

or to such other address or counsel as any party hereto shall specify pursuant
to this Section 18.7 from time to time.

18.8 GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of Delaware.

18.9 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations, warranties, covenants and agreements of the parties made
herein and at the time of the Closing or in writing delivered pursuant to the
provisions of this Agreement shall survive the consummation of the transactions
contemplated hereby and any examination on behalf of the parties until the
Expiration Date.

18.10 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided
herein, no delay of or omission in the exercise of any right, power or remedy
accruing to any party as a result of any breach or default by any other party
under this Agreement shall impair any such right, power or remedy, nor shall it
be construed as a waiver of or acquiescence in any such breach or default, or
of any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.

18.11 TIME. Time is of the essence with respect to this Agreement.

18.12 REFORMATION AND SEVERABILITY. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.

18.13 REMEDIES CUMULATIVE. No right, remedy or election given by any
term of this Agreement shall be deemed exclusive but each shall be cumulative
with all other rights, remedies and elections available at law or in equity.

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18.14 CAPTIONS. The headings of this Agreement are inserted for
convenience only, shall not constitute a part of this Agreement or be used to
construe or interpret any provision hereof.

18.15 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived only
with the written consent of STAFFMARK, NEWCO, the COMPANY and STOCKHOLDERS who
will hold or who hold at least 50% of the STAFFMARK Stock issued or to be
issued to the STOCKHOLDERS upon consummation of the Merger. Any amendment or
waiver effected in accordance with this Section 18.15 shall be binding upon
each of the parties hereto, any other person receiving STAFFMARK Stock in
connection with the Merger and each future holder of such STAFFMARK Stock.

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

STAFFMARK, INC.

By /s/ CLETE T. BREWER
-----------------------------------
Name: Clete T. Brewer
------------------------------
Title: President

ATTEST:

/s/ JERRY T. BREWER
- -----------------------------------

BREWER PERSONNEL SERVICES, INC.

By /s/ CLETE T. BREWER
-----------------------------------
Name: Clete T. Brewer
------------------------------
Title: President

ATTEST:

/s/ JERRY T. BREWER
- -----------------------------------

BREWER PERSONNEL SERVICES ACQUISITION
CORPORATION

By /s/ CLETE T. BREWER
-----------------------------------
Name: Clete T. Brewer
------------------------------
Title: President

ATTEST:

/s/ JERRY T. BREWER
- -----------------------------------

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CLETE T. BREWER

/s/ CLETE T. BREWER
--------------------------------------

JERRY T. BREWER

/s/ JERRY T. BREWER
--------------------------------------

CHAD J. BREWER

/s/ CHAD J. BREWER
--------------------------------------

KAY A. BREWER

/s/ KAY A. BREWER
--------------------------------------

BETTY BECKER

/s/ BETTY BECKER
--------------------------------------

JOHN BECKER

/s/ JOHN BECKER
--------------------------------------

DONALD A. MARR, JR.

/s/ DONALD A. MARR, JR.
--------------------------------------

<PAGE> 1
EXHIBIT 2.2

_________________________________________________________________

AGREEMENT AND PLAN OF REORGANIZATION

dated as of the 17th day of June, 1996

by and among

STAFFMARK, INC.

PROSTAFF PERSONNEL ACQUISITION CORPORATION, EXCEL TEMPORARY STAFFING
ACQUISITION CORPORATION, PROFESSIONAL RESOURCES ACQUISITION CORPORATION

PROSTAFF PERSONNEL, INC., EXCEL TEMPORARY STAFFING, INC., PROFESSIONAL
RESOURCES, INC.

and

the STOCKHOLDERS named herein

_________________________________________________________________
<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
I. THE MERGER

II. CONVERSION OF STOCK

2.1 Manner of Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

III. DELIVERY OF MERGER CONSIDERATION

3.1 Delivery of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2 Delivery of Stockholder Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

IV. CLOSING

4.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

V. REPRESENTATIONS AND WARRANTIES
OF COMPANY AND STOCKHOLDERS

5.1 Due Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.3 Capital Stock of the COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.4 Transactions in Capital Stock, Reorganization Accounting . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.5 No Bonus Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.6 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.7 Predecessor Status; etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.8 Spin-off by the COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.9 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.10 Liabilities and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.11 Accounts and Notes Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.12 Permits and Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.13 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.14 Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.15 Significant Customers; Material Contracts and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.16 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.17 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>

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5.18 Compensation; Employment Agreements; Organized Labor Matters . . . . . . . . . . . . . . . . . . . . . . . 13
5.19 Employee Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.20 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.21 Conformity with Law; Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.22 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.23 No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.24 Government Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.25 Absence of Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.26 Deposit Accounts; Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.27 Validity of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.28 Relations with Governments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.29 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.30 Prohibited Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.31 Authority; Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.32 Preemptive Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.33 No Intention to Dispose of COMPANY Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

VI. REPRESENTATIONS OF STAFFMARK AND NEWCO

6.1 Due Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.3 Capital Stock of the COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.4 Transactions in Capital Stock, Reorganization Accounting . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.5 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.7 Liabilities and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.8 Conformity with Law; Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.9 No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.10 Validity of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.11 STAFFMARK Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.12 No Side Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.13 Business; Real Property; Material Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.15 Stock Option Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.16 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.17 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.18 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.19 Permits and Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

VII. COVENANTS PRIOR TO CLOSING

7.1 Access and Cooperation; Due Diligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.2 Conduct of Business Pending Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.3 Prohibited Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
</TABLE>

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7.4 No Shop . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.5 Notice to Bargaining Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.6 Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.7 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.8 Amendment of Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.9 Cooperation in Preparation of Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.10 Final Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.11 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

VIII. CONDITIONS PRECEDENT TO OBLIGATIONS
OF STOCKHOLDERS AND COMPANY

8.1 Representations and Warranties; Performance of Obligations . . . . . . . . . . . . . . . . . . . . . . . . 33
8.2 No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.3 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.4 Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.5 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.6 Good Standing Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.7 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.8 Closing of IPO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.9 Secretary's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.10 Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.11 NASDAQ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.12 Approval of Additional Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

IX. CONDITIONS PRECEDENT TO OBLIGATIONS OF STAFFMARK AND NEWCO

9.1 Representations and Warranties; Performance of Obligations . . . . . . . . . . . . . . . . . . . . . . . . 35
9.2 No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.3 Secretary's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.4 No Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.5 STOCKHOLDERS' Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.6 Termination of Related Party Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.7 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.8 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.9 Good Standing Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.10 Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.11 Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.12 Closing of IPO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.13 FIRPTA Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

X. COVENANTS OF STAFFMARK AFTER CLOSING

10.1 Release From Guarantees; Repayment of Certain Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 36
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10.2 Preservation of Tax and Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.3 Preparation and Filing of Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.4 Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.5 Preservation of Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.6 Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.7 Right of First Refusal to Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

XI. INDEMNIFICATION

11.1 General Indemnification by the STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.2 Indemnification by STAFFMARK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.3 Third Person Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.4 Exclusive Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
11.5 Limitations on Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

XII. TERMINATION OF AGREEMENT

12.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
12.2 Liabilities in Event of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

XIII. NONCOMPETITION

XIV. NONDISCLOSURE OF CONFIDENTIAL INFORMATION

XV. TRANSFER RESTRICTIONS

15.1 Transfer Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

XVI. FEDERAL SECURITIES ACT REPRESENTATIONS

16.1 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
16.2 Economic Risk; Sophistication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
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16.3 Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

XVII. REGISTRATION RIGHTS

17.1 Piggyback Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
17.2 Demand Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
17.3 Registration Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
17.4 Availability of Rule 144 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
17.5 Merger, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

XVIII. GENERAL

18.1 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
18.2 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
18.3 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
18.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
18.5 Brokers and Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
18.6 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
18.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
18.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
18.9 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
18.10 Exercise of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
18.11 Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
18.12 Reformation and Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
18.13 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
18.14 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
18.15 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
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SCHEDULES and ANNEXES

vi
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Schedule 6.9 - Violations of Charter Documents and Material Defaults of STAFFMARK
Schedule 6.13 - Real Property and Material Personal Property and Agreements of STAFFMARK
Schedule 6.14 - Tax Returns of STAFFMARK
Schedule 7.2 - Exceptions to Conducting Business in the Ordinary Course Between Balance Sheet Date and
Consummation Date
Schedule 7.3 - Prohibited Activities
Schedule 7.5 - Notice to Bargaining Agents
Schedule 7.8 - Amendment of Schedules
Schedule 7.10 - Final Financial Statements
Schedule 9.7 - Termination of Related Party Agreements
Schedule 9.12 - Employment Agreements
Schedule 11.1(vi) - Existing or Threatened Litigation
Schedule 11.2(v) - Specifically Identified Indemnification Items
Schedule 13.1 - Prohibited Activities
Schedule 18.5 - Brokers and Agents
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AGREEMENT AND PLAN OF REORGANIZATION

THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of the 17th day of June, 1996, by and among STAFFMARK, INC., a Delaware
corporation ("STAFFMARK"), PROSTAFF PERSONNEL ACQUISITION CORPORATION, a
Delaware corporation, EXCEL TEMPORARY STAFFING ACQUISITION CORPORATION, a
Delaware corporation, and PROFESSIONAL RESOURCES ACQUISITION CORPORATION, a
Delaware corporation (collectively, "NEWCO"), PROSTAFF PERSONNEL, INC., an
Arkansas corporation, EXCEL TEMPORARY STAFFING, INC., an Arkansas corporation,
and PROFESSIONAL RESOURCES, INC., an Arkansas corporation (collectively, the
"COMPANY"), EDWARD E. SCHULTE TRUST, STEVEN E. SCHULTE REVOCABLE TRUST, KARLA
LEIGH SCHULTE TRUST, AND STEVEN E. SCHULTE (the "STOCKHOLDERS"). The
STOCKHOLDERS are all the stockholders of the COMPANY.

WHEREAS, each of NEWCO is a corporation duly organized and existing
under the laws of the State of Delaware, having been incorporated on June 18,
1996, solely for the purpose of completing the transactions set forth herein,
and is a wholly-owned subsidiary of STAFFMARK, a corporation organized and
existing under the laws of the State of Delaware;

WHEREAS, the respective Boards of Directors of each of NEWCO and each
corresponding COMPANY (which together are hereinafter collectively referred to
as "Constituent Corporations") deem it advisable and in the best interests of
each of the Constituent Corporations and their respective stockholders that
each NEWCO merge with and into each corresponding COMPANY pursuant to this
Agreement and the applicable provisions of the laws of the States of Delaware
and Arkansas;

WHEREAS, STAFFMARK is entering into other separate agreements not
materially different than this Agreement (the "Other Agreements"), each of
which is entitled "Agreement and Plan of Reorganization," with each of Brewer
Personnel Services, Inc., HRA, Inc., Blethen Group, The Maxwell Companies,
Creative Temporaries Corporation, and First Choice Staffing, Inc. (together
with the COMPANY, the "Initial Founding Companies"), and such other entities as
STAFFMARK may elect to enter into a similar agreement with, as approved by each
of the Founding Companies, prior to the filing of the Registration Statement
(as defined herein) in order to acquire additional staffing services (the
Company, together with each of the entities with which STAFFMARK has entered
into the Other Agreements, are collectively referred to herein as the "Founding
Companies");

WHEREAS, this Agreement, the Other Agreements and the IPO of STAFFMARK
Stock constitute the "STAFFMARK Plan of Organization;"

WHEREAS, in consideration of the agreements of the Other Founding
Companies pursuant to the Other Agreements, the Board of Directors of each of
the COMPANY has approved this Agreement as part of the STAFFMARK Plan of
Organization in order to transfer the capital stock of the COMPANY to
STAFFMARK;
<PAGE> 10
WHEREAS, unless the context otherwise requires, capitalized terms used
in this Agreement or in any schedule attached hereto and not otherwise defined
shall have the following meanings for all purposes of this Agreement:

"1933 Act" means the Securities Act of 1933, as amended.