STAFF LEASING INC, S-1/A, 1997-05-30

STAFF LEASING INC
S-1/A, 1997-05-30
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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 29, 1997.

REGISTRATION NO. 333-22933

================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------

AMENDMENT NO. 1

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

STAFF LEASING, INC.
(Exact name of Registrant as Specified in its Charter)

<TABLE>
<S> <C> <C>
FLORIDA 7363 65-0735612
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification No.)
Incorporation or Organization)
</TABLE>

600 301 BOULEVARD WEST, SUITE 202
BRADENTON, FLORIDA 34205

(941) 748-4540

(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
---------------------
RICHARD A. GOLDMAN
PRESIDENT
STAFF LEASING, INC.
600 301 BOULEVARD WEST, SUITE 202
BRADENTON, FLORIDA 34205

(941) 748-4540

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
---------------------
COPIES OF COMMUNICATIONS TO:

<TABLE>
<C> <C>
G. WILLIAM SPEER, ESQ. RICHARD A. BOEHMER, ESQ.
POWELL, GOLDSTEIN, FRAZER & MURPHY LLP O'MELVENY & MYERS LLP
SIXTEENTH FLOOR 400 SOUTH HOPE STREET
191 PEACHTREE STREET, N.E. LOS ANGELES, CALIFORNIA 90071-2899
ATLANTA, GEORGIA 30303 (213) 669-6000
(404) 572-6600
</TABLE>

---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective.
If any of the securities 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 the delivery of the Prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
---------------------
CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
=============================================================================================================================
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value........ 4,600,000(1)(2) $18.00 $82,800,000 $25,091(3)
=============================================================================================================================
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933.

(2) Includes 600,000 shares subject to the Underwriters' over-allotment option.

(3) Previously paid.

---------------------
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.
================================================================================
<PAGE> 2

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.

PROSPECTUS SUBJECT TO COMPLETION, DATED MAY , 1997

<TABLE>
<S> <C> <C>
4,000,000 SHARES [STAFF LEASING,
STAFF LEASING, INC. INC. LOGO]
COMMON STOCK
</TABLE>

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

Of the 4,000,000 shares of common stock ("Common Stock") offered hereby
(the "Offering"), 3,500,000 are being sold by Staff Leasing, Inc. ("Staff
Leasing" or the "Company") and 500,000 are being sold by the Selling
Shareholder. See "Principal and Selling Shareholders." Prior to the Offering,
there has been no public market for the Common Stock. It is currently estimated
that the initial public offering price will be between $15.00 and $17.00 per
share. See "Underwriting" for a discussion of the factors to be considered in
determining the initial offering price. The Common Stock has been approved for
quotation on the Nasdaq National Market under the symbol "STFF," subject to
official notice of issuance.

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

THE SHARES OF COMMON STOCK OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 9 OF THIS PROSPECTUS.
---------------------------

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>
=============================================================================================================
UNDERWRITING PROCEEDS TO THE
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) SHAREHOLDER
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share.................... $ $ $ $
- -------------------------------------------------------------------------------------------------------------
Total(3)..................... $ $ $ $
=============================================================================================================
</TABLE>

(1) The Company and the Selling Shareholders (as defined below) have agreed to
indemnify the Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended (the "Securities
Act"). See "Underwriting."

(2) Before deducting estimated expenses of $1,300,000, payable by the Company.

(3) The Company and certain shareholders, including the Selling Shareholders
(the "Selling Shareholders"), have granted the Underwriters a 30-day option
to purchase up to 600,000 additional shares of Common Stock on the same
terms and conditions as set forth above, solely to cover over-allotments,
if any. The Company will not receive any proceeds from the sale of shares
by the Selling Shareholders. If the option is exercised in full, the total
Price to Public, Underwriting Discounts and Commissions, Proceeds to
Company and Proceeds to the Selling Shareholders will be $ ,
$ , $ and $ , respectively. See "Underwriting"
and "Principal and Selling Shareholders."

---------------------------
The shares of Common Stock offered by this Prospectus are offered by the
Underwriters, subject to prior sale, to withdrawal, cancellation or modification
of the offer without notice, to delivery to and acceptance by the Underwriters
and to certain further conditions. It is expected that delivery of the
certificates representing the shares of Common Stock will be made at the offices
of Lehman Brothers Inc., New York, New York, on or about , 1997.
---------------------------

LEHMAN BROTHERS

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

MONTGOMERY SECURITIES

, 1997
<PAGE> 3

[MAP SHOWING LOCATION OF COMPANY OFFICES]

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK. SUCH
TRANSACTIONS MAY INCLUDE THE PURCHASE OF SHARES OF COMMON STOCK FOLLOWING THE
PRICING OF THE OFFERING TO COVER A SYNDICATE SHORT POSITION IN THE COMMON STOCK
OR FOR THE PURPOSE OF MAINTAINING THE PRICE OF THE COMMON STOCK, AND THE
IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."

The Company intends to distribute to its shareholders annual reports
containing audited financial statements and will make available copies for
quarterly reports containing unaudited financial information for the first three
quarters of each fiscal year.

2
<PAGE> 4

PROSPECTUS SUMMARY

The following summary should be read in conjunction with, and is qualified
in its entirety by, the more detailed information, including "Risk Factors"
appearing elsewhere in this Prospectus, and the financial statements and notes
thereto. Unless the context otherwise requires, the information set forth in
this Prospectus gives effect to the proposed transactions described herein under
"The Reorganization," and the term "Company" refers to Staff Leasing, Inc. and
to Staff Capital, L.P. (the "Partnership") and its consolidated partnerships
after giving effect to such transactions. Unless otherwise indicated, the
information set forth in this Prospectus does not give effect to the exercise of
the Underwriters' over-allotment option.

THE COMPANY

Staff Leasing, Inc. ("Staff Leasing" or the "Company") is the largest
professional employer organization ("PEO") in the United States. As of March 31,
1997, the Company served over 8,000 clients with over 92,000 worksite employees,
principally in Florida, Texas and Georgia. The Company believes that it has more
than twice the number of clients and worksite employees as any PEO competitor
and that its 1996 revenues of $1.4 billion exceeded the PEO revenues of any
competitor by more than $500 million.

Staff Leasing provides its clients with a broad range of services,
including payroll administration, risk management, benefits administration,
unemployment services and human resource consulting services. The Company's
clients are typically small to medium-sized businesses with between five and 100
employees. Based upon data provided by the U.S. Small Business Administration,
this segment of the U.S. economy is estimated by the Company to consist of six
million businesses, with 53 million employees and $1.3 trillion in annual wages,
and is projected to be a major source of employment growth in the U.S. economy.
The Company's revenues have increased annually since its inception in 1984 and,
during the last three years, have increased from $735.8 million in 1994 to $1.4
billion in 1996.

Staff Leasing's services are designed to improve the productivity and
profitability of its clients' businesses by:

- Allowing managers of these businesses to focus on revenue producing
activities by relieving them of the time-consuming burdens associated with
employee administration;

- Helping these businesses to better manage certain employment-related
risks, including those associated with workers' compensation and state
unemployment taxes;

- Improving the cash management of these businesses with respect to
payroll-related expenses; and

- Enabling these businesses to attract and retain employees by providing
health and retirement benefits to worksite employees on a cost-effective
and convenient basis.

In providing these services, Staff Leasing becomes a co-employer of the
worksite employees. Employment-related liabilities are contractually allocated
between the Company and the client. The Company assumes responsibility for and
manages the risks associated with: (i) worksite employee payroll; (ii) workers'
compensation insurance coverage; and (iii) compliance with certain
employment-related governmental regulations that can be effectively managed away
from the client's business. The client retains the worksite employees' services
in its business and remains responsible for compliance with other
employment-related governmental regulations that are more closely related to
worksite employee supervision. The service fee charged by Staff Leasing to its
clients covers the cost of certain employment-related taxes, workers'
compensation insurance coverage and administrative and field services. This
service fee is invoiced together with salaries and wages of the worksite
employees and the client's portion of health and retirement benefit plan costs.
3
<PAGE> 5

The Company was unprofitable in 1995 and 1996, with net losses of $24.9
million and $3.9 million, respectively, due in large part to subsidies of its
health benefit plans. The Company has taken significant actions to reposition
itself for future profitability, to enhance the quality of its services and to
implement its growth strategy. These actions include: (i) changing health
benefit providers effective January 1, 1997, increasing premiums and redesigning
its health benefit plans, all in order to reduce the level of subsidies (which
subsidies were $20.6 million in 1995 and $10.1 million in 1996, and are expected
to be progressively lesser amounts in 1997 and 1998); (ii) expanding its
strategic alliance with Liberty Mutual Insurance Company ("Liberty Mutual") to
reduce workers' compensation costs and to more effectively manage claims
(effective January 1, 1997 the workers' compensation rate is 26.8% lower than
the rate paid in 1996); (iii) investing in new technology to improve client
service, increase processing capability and provide cost efficiencies; and (iv)
attracting new senior management. The Company believes that these actions have
addressed the major issues affecting the Company's profitability in 1995 and
1996.

The Company believes that it has a number of key advantages which enable it
to compete effectively in its target markets, including the following:

Size and geographic concentration. At March 31, 1997, the Company
served over 72,000 worksite employees in Florida. The Company's size and
the geographic concentration of its business in Florida have enabled it to
leverage its existing client base for referrals (the source of more than
40% of its new clients in 1996); capitalize on its vendor relationships;
increase the productivity of its sales force and safety consultants;
benefit from economies of scale in claims processing; attract regional
health benefit providers that are looking for increased utilization of
their provider networks; and establish other strategic alliances.

Comprehensive risk management focus. The Company assumes
employer-related risks with the addition of each new client. A critical
focus of the Company's operations is the management of workers'
compensation and state unemployment tax risks. Workers' compensation risk
is managed by careful selection of clients, on-site loss prevention
services by Staff Leasing's 27 safety consultants and sophisticated claims
management. Unemployment tax risk is controlled, in part, through
aggressive management of its state unemployment tax exposure.

Strategic vendor alliances. The Company has entered into strategic
alliances with two large vendors. The Company's workers' compensation
insurance coverage is provided by Liberty Mutual, which is the largest
workers' compensation insurance carrier in the United States. The coverage
is provided under a fully insured, guaranteed cost arrangement, with no
liability to the Company for costs in excess of the fixed rate paid to
Liberty Mutual. This arrangement extends through December 31, 1999 and
provides for: (i) a dedicated claims processing unit adjacent to the
Company's headquarters; (ii) intensive training of the Company's safety
consultants and risk assessors; and (iii) favorable rates and payment
terms. In terms of premiums paid, Staff Leasing is Liberty Mutual's second
largest client. The Company's group health benefit plans are provided by
three Blue Cross/Blue Shield ("Blue Cross") entities in the states of
Florida, Texas and Georgia on terms that allow the Company to better manage
the costs of health benefits offered by it. Blue Cross/Blue Shield of
Florida ("Blue Cross/Florida"), which is the largest health benefit
provider in Florida, has also provided substantial marketing support to
increase enrollment in the Company's Florida health benefit plan. In terms
of the number of enrolled employees, Staff Leasing is Blue Cross/Florida's
second largest client.

Growth in the PEO industry has been significant. According to the National
Association of Professional Employer Organizations ("NAPEO"), the number of
employees under PEO arrangements in the United States has grown from
approximately 10,000 in 1984 to approximately 2.0 million in 1995. Staffing
Industry Analysts, Inc., an employee industry research firm, estimates that
gross revenues in the PEO industry grew
4
<PAGE> 6

from $5.0 billion in 1991 to $17.6 billion in 1996, representing a compounded
annual growth rate of approximately 29%.

In order to take advantage of this opportunity, Staff Leasing is pursuing
the following growth strategy:

Increase the Company's penetration in its existing geographic
markets. The Company believes that there is substantial potential for
additional growth in its existing geographic markets. The Company views
Florida as consisting of six distinct markets in which the Company
co-employs from two percent to ten percent of the small to medium-sized
business workforce. The Company believes that it has penetrated less than
one percent of the small to medium-sized business markets in Texas and
Georgia. In addition, these states have had relatively high growth in small
to medium-sized business formation and employment. The Company intends to
further leverage its existing client referral base, which was the source of
approximately 41% of the Company's new clients during the eight months
ended April 30, 1997, and to utilize its extensive branch network to take
advantage of these opportunities.

Establish branch offices in new states. The Company will enter new
markets that possess favorable demographics, in terms of the number of
potential clients within industries typically served by the Company, and a
favorable regulatory environment with respect to PEOs and workers'
compensation. The Company has demonstrated its ability to grow outside of
its Florida base through its Texas expansion. In December 1994, the Company
opened an office in Dallas, Texas and opened four additional offices in
Texas in May 1995. With over 9,800 worksite employees co-employed by its
Texas operations at March 31, 1997, the Company believes it is one of the
three largest PEOs in that state. Branch offices opened in Texas generated
monthly aggregate branch gross profits in excess of monthly aggregate
direct branch expenses in less than 12 months after opening. The Company
opened an office in Phoenix in May 1997, will open an office in Tucson in
July 1997, and plans to open three additional offices in one or more states
during the last half of 1997.

Pursue strategic acquisitions. The Company believes the PEO industry
is highly fragmented with, according to NAPEO, over 2,000 PEOs operating in
the United States. The Company believes that its investment in
infrastructure and its existing management resources will allow it to
benefit from consolidation opportunities in its industry. The Company will
consider strategic acquisitions of PEOs and related businesses to provide
further penetration of its existing markets and to establish a base in new
markets from which to operate and expand.

Distribute new services and products. The Company believes it
possesses unique direct access to, and information about, its clients and
worksite employees. The Company believes it can distribute additional
products and services, such as commercial and personal insurance, in a more
convenient manner to its clients and worksite employees and on a more
cost-effective basis than vendors of these services and products could were
they to market them directly.

Staff Leasing, Inc. is a Florida corporation which was organized in
February 1997. Its principal executive offices are located at 600 301 Boulevard
West, Bradenton, Florida 34205, and its telephone number is (941) 748-4540.

5
<PAGE> 7

THE OFFERING

Common Stock offered by the
Company........................... 3,500,000 shares

Common Stock offered by the
Selling Shareholder............... 500,000 shares

Common Stock to be outstanding
after the Offering................ 22,694,385 shares(1)

Use of proceeds..................... To repay indebtedness outstanding under
the Company's bank credit facility, to
prepay certain capitalized lease
obligations and to repurchase certain
preferred limited partnership interests
in the Partnership; The balance of the
net proceeds will be used for general
corporate purposes, which may include
strategic acquisitions of PEOs and
related businesses.

Nasdaq National Market symbol....... STFF

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

(1) Excludes 2,500,000 shares of Common Stock reserved for issuance under the
Company's stock incentive plan. The Company intends to grant options under
this plan to all full time employees and non-management directors as of the
date of consummation of the Offering, at an exercise price equal to the
initial price to the public in the Offering, and estimates that
approximately 555,000 options will be granted. Also excludes 1,352,253
shares of Common Stock issuable upon the exercise of warrants issued in the
Reorganization, which have an exercise price of $7.24 per share. See
"Management -- Stock Incentive Plan" and "The Reorganization."

RISK FACTORS

See "Risk Factors" beginning on page 9 for information that should be
considered by prospective investors. Such risk factors include the potential for
additional subsidies of the Company's health benefit plans; the geographic
market concentration and the concentration of clients in the construction
industry; the attrition of clients; termination of referral program; the
volatility in workers' compensation insurance rates and unemployment tax; the
failure to manage growth; possible loss of the qualified status of the Company's
401(k) retirement plan and failure of the cafeteria plan to meet certain tax
requirements; the possible adverse application of certain Federal and state
laws; dependence on key vendors; possible liability for client and employee
actions; liability for worksite employee payroll and payroll taxes; state and
local regulation of the PEO industry; competition and new market entrants;
dependence on key personnel; risks associated with expansion into additional
states; anti-takeover effects of certain charter and bylaw provisions and
Florida law; control by existing shareholders; absence of a prior trading market
and potential volatility of stock price; shares eligible for future sale; and
dilution to new investors.

6
<PAGE> 8

SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA

The following table sets forth certain selected historical financial and
operating data of the Company as of the dates and for the periods indicated. The
Company was formed in November 1993 to acquire six related entities
(collectively, the "Predecessor"). The entities comprising the Predecessor all
operated as S-corporations under the Internal Revenue Code of 1986, as amended
(the "Code"). The Partnership has operated as a limited partnership for all
periods presented. After the Offering, the Company will operate as a
C-corporation under the Code. The statement of operations data for the three
months ended March 31, 1996 and 1997 and the pro forma balance sheet data as of
March 31, 1997 are derived from unaudited financial statements of the Company
that, in the opinion of management, reflect all adjustments, which are of a
normal recurring nature, necessary to present fairly the information set forth
therein. The results for the three-months ended March 31, 1997 are not
necessarily indicative of the results that may be expected for any other interim
period or for the full year. The following selected financial data are qualified
by reference to, and should be read in conjunction with, the consolidated
financial statements, related notes and other financial information included
elsewhere in this Prospectus, as well as "Management's Discussion and Analysis
of Financial Condition and Results of Operations."

<TABLE>
<CAPTION>
THE PREDECESSOR THE COMPANY
-------------------------- ---------------------------------------------------
FOR THE FOR THE
PERIOD PERIOD
FOR THE YEAR JANUARY 1, NOVEMBER 6,
ENDED 1993 TO 1993 TO FOR THE YEARS ENDED DECEMBER 31,
DECEMBER 31, NOVEMBER 5, DECEMBER 31, ----------------------------------
1992 1993 1993 1994 1995 1996
------------ ----------- -------------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF OPERATIONS
DATA:
Revenues.................. $235,043 $354,634 $83,553 $735,763 $1,091,588 $1,432,131
Cost of services:
Salaries, wages and
payroll taxes......... 207,761 312,272 73,580 657,534 975,887 1,283,787
Benefits, workers'
compensation, state
unemployment taxes and
other costs........... 19,592 26,980 6,071 46,194 83,664 88,839
-------- -------- ------- -------- ---------- ----------
Total cost of
services.......... 227,353 339,252 79,651 703,728 1,059,551 1,372,626
-------- -------- ------- -------- ---------- ----------
Gross profit.............. 7,690 15,382 3,902 32,035 32,037 59,505
Operating expenses:
Salaries, wages and
commissions........... 3,179 7,959 1,592 15,537 29,674 37,264
Other general and
administrative........ 4,953 3,598 1,119 6,836 19,420 19,528
Depreciation and
amortization.......... 217 257 193 1,307 3,219 3,154
-------- -------- ------- -------- ---------- ----------
Total operating
expenses.......... 8,349 11,814 2,904 23,680 52,313 59,946
-------- -------- ------- -------- ---------- ----------
Operating income (loss)... (659) 3,568 998 8,355 (20,276) (441)
Interest (income)
expense................. (115) (104) 294 3,448 4,764 3,401
Other expenses (income)... 68 (1,244) 11 95 (98) 23
-------- -------- ------- -------- ---------- ----------
Net income (loss)......... $ (612) $ 4,916 693 4,812 (24,942) (3,865)
======== ========
Fixed return amount on
preferred partnership
interests............... (28) (164) -- (1,772)
------- -------- ---------- ----------
Net income (loss)
attributable to common
limited partnership
interests. ............. $ 665 $ 4,648 $ (24,942) $ (5,637)
======= ======== ========== ==========
Pro forma net income
(loss) per share
attributable to common
shareholders(1)......... $ (.28)(2)
==========
Pro forma weighted average
common shares (in
thousands)(1)........... 19,935(2)
==========

<CAPTION>
THE COMPANY
---------------------

FOR THE THREE MONTHS
ENDED MARCH 31,
---------------------
1996 1997
--------- ---------
<S> <C> <C>

STATEMENT OF OPERATIONS
DATA:
Revenues.................. $324,720 $402,455
Cost of services:
Salaries, wages and
payroll taxes......... 290,638 362,837
Benefits, workers'
compensation, state
unemployment taxes and
other costs........... 20,793 19,723
-------- --------
Total cost of
services.......... 311,431 382,560
-------- --------
Gross profit.............. 13,289 19,895
Operating expenses:
Salaries, wages and
commissions........... 8,956 10,239
Other general and
administrative........ 4,245 5,387
Depreciation and
amortization.......... 756 845
-------- --------
Total operating
expenses.......... 13,957 16,471
-------- --------
Operating income (loss)... (668) 3,424
Interest (income)
expense................. 1,016 675
Other expenses (income)... 11 38
-------- --------
Net income (loss)......... (1,695) 2,711

Fixed return amount on
preferred partnership
interests............... (60) (655)
-------- --------
Net income (loss)
attributable to common
limited partnership
interests. ............. $ (1,755) $ 2,056
======== ========
Pro forma net income
(loss) per share
attributable to common
shareholders(1)......... $ 0.11(3)
========
Pro forma weighted average
common shares (in
thousands)(1)........... 19,935(3)
========
</TABLE>

(footnotes appear on following page)

7
<PAGE> 9

<TABLE>
<CAPTION>
THE PREDECESSOR THE COMPANY
-------------------------- -----------------------------------------------------------------
FOR THE FOR THE
PERIOD PERIOD FOR THE THREE
FOR THE YEAR JANUARY 1, NOVEMBER 6, FOR THE YEARS ENDED DECEMBER MONTHS
ENDED 1993 TO 1993 TO 31, ENDED MARCH 31,
DECEMBER 31, NOVEMBER 5, DECEMBER 31, ------------------------------ ---------------
1992 1993 1993 1994 1995 1996 1996 1997
------------ ----------- -------------- ------- --------- -------- ------ ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATISTICAL AND OPERATING DATA:
Worksite employees at period
end........................ 18,284 29,861 31,888 50,848 73,116 86,000 77,089 92,463
Clients at period end........ 1,960 3,436 3,626 5,242 6,490 7,511 6,711 8,073
Average number of worksite
employees per client at
period end................. 9.33 8.69 8.79 9.70 11.27 11.45 11.49 11.45
Capital expenditures......... $ 682 $ 614 $ 34 $ 751 $ 11,619 $ 5,923 $ 958 $ 858
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1997
-----------------------------
PRO FORMA(4) AS ADJUSTED(5)
------------ --------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Total assets.............................................. $ 73,084 $84,200
Long-term capital leases, including current portion....... 3,241 --
Long-term borrowings, including current portion........... 16,450 --
Shareholders' equity (deficit)............................ $(33,758) $15,743
</TABLE>

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

(1) Pro forma net income (loss) per share attributable to common shareholders
and pro forma weighted average shares outstanding for the periods presented
are calculated after giving effect to the Reorganization. See "The
Reorganization." In connection with the Reorganization, the Company will
issue 19,194,385 shares of Common Stock and warrants to acquire 1,352,253
shares of Common Stock, at an exercise price of $7.24 per share. Pro forma
weighted average common shares have been calculated using the treasury stock
method. Pursuant to the rules of the Securities and Exchange Commission, the
warrants issued have been included as common stock equivalents in the
calculation of weighted average shares outstanding.

(2) Assuming the Offering was consummated on January 1, 1996, the pro forma net
loss per share attributable to common shareholders would have been $(.10)
per share based upon pro forma weighted shares of 23,434,949.

(3) Assuming the Offering was consummated on January 1, 1997, the pro forma net
income per share attributable to common shareholders would have been $.09
per share based upon pro forma weighted shares of 23,434,949.

(4) Assumes the Reorganization had occurred at March 31, 1997. See "The
Reorganization."

(5) Assumes the Reorganization had occurred at March 31, 1997, as adjusted to
give effect to the sale of 3,500,000 shares of Common Stock offered by the
Company hereby (assuming an initial offering price of $16.00 per share, the
midpoint of the filing range) and the application of the net proceeds
therefrom. See "The Reorganization" and "Use of Proceeds."

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<PAGE> 10

RISK FACTORS

An investment in the Company involves a significant degree of risk.
Prospective purchasers should carefully consider the factors set forth below, as
well as the other information provided elsewhere in this Prospectus, before
making any investment in the Common Stock. When used in this Prospectus, the
words "anticipate," "estimate," "project," "expect" and similar expressions are
intended to identify forward-looking statements. Such statements are subject to
certain risks, uncertainties and assumptions. The factors discussed below and
others elsewhere in this Prospectus may affect the Company's operations and the
PEO industry in which it operates. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, estimated, projected
or expected.

POTENTIAL FOR ADDITIONAL SUBSIDIES OF HEALTH BENEFIT PLANS

The Company provided subsidies to its health benefit plans of $20.6 million
and $10.1 million in 1995 and 1996, respectively. These subsidies related to a
minimum premium arrangement with Provident Life and Accident Insurance Company
("Provident"), which was terminated December 31, 1996, pursuant to which the
Company was obligated to reimburse Provident for the cost of the claims incurred
by participants under the plans, plus the cost of plan administration. Subsidies
arise when the foregoing costs exceed the premiums collected by the Company from
the participants in its health benefit plans. The Company's current arrangement
with Blue Cross/Florida for its worksite employees in Florida, and states other
than Texas and Georgia, is also a minimum premium arrangement. The Company, in
consultation with its actuarial consultants, William M. Mercer, Incorporated,
currently estimates that it will provide progressively lesser subsidies to its
health benefit plans in 1997 and 1998. The level of subsidies is affected, in
part, by: (i) the trend in medical cost inflation; (ii) the ability of the
Company to pass along price increases to the plan participants; (iii) the level
of utilization of services by plan participants; (iv) the percentage of
participants enrolled in managed care plans; and (v) the level of overall
participation in the Company's health benefit plans, not all of which are
predictable or within the Company's control. The Company has increased the
premiums charged its clients and worksite employees with respect to such plans
for 1996 and 1997; instituted more stringent enrollment qualifications; and
otherwise restructured its health benefit offerings to reduce the magnitude of
such subsidies. However, the Company and its carriers may not be successful in
managing the cost of such plans. Accordingly, the subsidies provided by the
Company to such plans may increase; may be greater than the Company's current
estimates; and may have a materially adverse effect on the Company's financial
condition, results of operations and liquidity. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and
"Business -- Vendor Relationships -- Blue Cross/Blue Shield."

GEOGRAPHIC MARKET CONCENTRATION AND CONCENTRATION OF CLIENTS IN CONSTRUCTION
INDUSTRY

While the Company currently has offices in three states and worksite
employees in 41 states, the Company's Florida operations accounted for
approximately 95%, 91% and 82% of the Company's total worksite employee salaries
and wages in 1994, 1995 and 1996, respectively. As a result of the size of the
Company's base of worksite employees in Florida and anticipated continued growth
from its Florida operations, the Company's profitability over the next several
years is expected to be largely dependent on economic and regulatory conditions
in Florida. At present, the Florida economy is growing at a rate greater than
the national average, and the regulatory posture in Florida towards the PEO
industry and workers' compensation is favorable. However, any adverse change in
either of these conditions could have a material adverse effect on the Company's
profitability and growth prospects.

In addition, 26% of the Company's revenues, accounting for more than half
of its gross profits in 1996, were generated by clients in the construction
industry. The level of activity in the construction market depends on many
factors, including interest rates, availability of financing, demographic trends
and economic outlook. Consequently, such level of activity is determined by
factors that are not within the Company's control. A reduction in the level of
activity in the construction industry within the markets in which the Company
operates could have a material adverse effect on the Company's profitability and
growth prospects.

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<PAGE> 11

ATTRITION OF CLIENTS

The Company's standard agreement with its clients (the "Client Leasing
Agreement") has an initial one-year term, but is subject to termination on 30
days' notice by either the Company or the client. As a result of the short-term
nature of the Client Leasing Agreement, the Company is potentially vulnerable to
attrition of clients. The Company's results of operations are dependent, in
part, upon the Company's ability to replace those clients that terminate the
Client Leasing Agreement. NAPEO's standard for measuring attrition is computed
by dividing the number of clients lost during the period, by the sum of the
number of clients at the beginning of the period plus the number of clients
added during the period (the "Client Attrition Rate"). Based on this standard,
the Company's Client Attrition Rate was 21.2% in 1994, 18.9% in 1995 and 26.4%
in 1996. The Company believes that its increased rate of attrition in 1996 was
the result, in part, of: (i) a significant increase in its health benefit plan
premiums for the 1996 plan year; (ii) slowness in health claims payments by its
former healthcare provider during late 1995 and the first half of 1996; (iii)
its efforts to audit its client base with respect to workers' compensation
classification coding during late 1995 and early 1996, which caused service fees
to rise for certain clients that were reclassified; and (iv) the changes that
the Company implemented in late 1995 in its payroll processing operations when
it initiated call center operations, which temporarily increased payroll errors
and disrupted client relations. While the Company has taken certain actions to
reduce the levels of client attrition, there can be no assurance that these
actions will be successful. See "Business -- Clients -- Client Selection and
Retention Strategy."

TERMINATION OF REFERRAL PROGRAM

In April 1996, the Company entered a joint marketing agreement with Barnett
Bank ("Barnett"). Under the terms of this agreement, Barnett referred its
customers to Staff Leasing in return for a referral fee. From September 1, 1996
(when the Barnett program was implemented on a system-wide basis) through April
30, 1997, 402 new clients (approximately 12% of Staff Leasing's new clients
obtained during such period) were obtained through Barnett referrals. This
agreement will terminate on June 30, 1997. Pursuant to the terms of the
agreement, Barnett is prohibited from entering into another referral agreement
for the provision of employee leasing services with another entity before
October 1, 1997. Barnett is also prohibited from disclosing the identity of the
clients generated from Barnett referrals for a period of at least two years.
While the Company has taken certain actions to redirect the activity of its
Florida salesforce to emphasize direct client referrals, there can be no
assurance that the Company's revenue growth will not be adversely affected by
the termination of the Barnett client referral program.

VOLATILITY IN WORKERS' COMPENSATION INSURANCE RATES AND UNEMPLOYMENT TAX

The Company's service fee includes components related to workers'
compensation insurance coverage and state unemployment taxes. In 1996,
approximately half of the Company's gross profits were derived from these
components of the service fee. The Company's profitability and growth prospects
are dependent upon its ability to provide these services at costs competitive
with clients' stand-alone costs for such services, and on its direct costs in
providing these services being less than the service fee component associated
therewith. The rate charged for the Company's workers' compensation insurance
has been fixed through December 31, 1999 pursuant to its agreement with Liberty
Mutual. The Company currently operates in states, such as Florida, that have
state-administered workers' compensation pricing structures. In these states,
the most significant price component of workers' compensation rates is fixed by
insurance regulatory agencies. The Company also operates in states, such as
Texas, that do not have state-administered pricing, but where workers'
compensation rates are subject to carrier-specific rate filings. Under either
pricing system, a decline in workers' compensation rates would likely force the
Company to lower its service fees in order to remain competitive. In January
1997, the Company reduced the service fees charged on average to its Florida
clients in response to a reduction in workers' compensation rates in the State
of Florida. In addition, a general reduction in state unemployment tax
assessments could have a similar effect on the Company's service fee revenues.
As such, the Company's profitability and growth prospects may be adversely
affected.

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<PAGE> 12

FAILURE TO MANAGE GROWTH

The Company has experienced significant growth, which has and will continue
to place a significant strain on the Company's management, financial and
operating resources. Failure to manage growth effectively could have a material
adverse effect on the Company's financial condition or results of operations.

POSSIBLE LOSS OF QUALIFIED STATUS FOR CERTAIN TAX PURPOSES

The Internal Revenue Service ("the IRS") is conducting a market segment
study of the PEO industry (the "Market Segment Study") focusing on selected PEOs
(not including the Company) in order to examine the relationship among PEOs,
their clients, worksite employees and the owners of clients. If the IRS
concludes that PEOs are not "employers" of certain worksite employees for
purposes of the Code the tax qualified status of the Company's 401(k) retirement
plan as in effect prior to April 1, 1997 (the date of inception of the Company's
new redesigned 401(k) retirement plan) could be revoked, its "cafeteria plan"
(which includes a flexible spending account allowing for payment of certain
health and dependent care coverages with pre-tax payroll dollars) may lose its
favorable tax status and the Company may no longer be able to assume its
clients' Federal employment tax withholding obligations. If the loss of
qualified tax status for such 401(k) retirement plan is applied retroactively,
worksite employees' vested account balances would become taxable immediately to
the worksite employees, the Company would lose its tax deduction to the extent
the contributions were not vested, the plan trust would become a taxable trust
and penalties could be assessed. In addition, if the cafeteria plan is not
considered to meet the requirements of Section 125 of the Code, clients may
become liable for failure to withhold income taxes and payroll taxes, failure to
pay social security taxes and failure to report taxable income. In such events,
the Company would face the risk of client dissatisfaction, as well as potential
litigation, and its financial condition, results of operations and liquidity
could be materially adversely affected. In addition, if the Company is required
to report and pay employment taxes for the separate accounts of its clients
rather than for its own account as a single employer, the Company could incur
increased administrative burdens. The Company is unable to predict the timing or
nature of the findings of the Market Segment Study or the ultimate outcome of
such findings. See "Industry Regulation."

POSSIBLE ADVERSE APPLICATION OF CERTAIN FEDERAL AND STATE LAWS

The Company's operations are affected by numerous Federal and state laws
and regulations relating to employment matters, benefit plans and taxes. By
entering into a co-employer relationship with its client, the Company assumes
certain obligations and responsibilities of an employer under these laws.
However, many of these laws (such as the Employee Retirement Income Security Act
("ERISA") and Federal and state employment tax laws) do not specifically address
the obligations and responsibilities of non-traditional employers such as PEOs,
and the definition of "employer" under these laws is not uniform. Many of the
states in which the Company operates have not addressed the PEO relationship for
purposes of compliance with applicable state laws governing the
employer/employee relationship. In addition, from time to time, states have
considered, and may in the future consider, imposing certain taxes on gross
revenues or service fees of the Company and its competitors. If these Federal or
state laws are ultimately adopted or applied in a manner unfavorable to the
Company, such adoption or application could have a material adverse effect on
the Company's results of operations and financial condition. See "Industry
Regulation."

DEPENDENCE ON KEY VENDORS

The Company's ability to offer competitive health benefit plans that cover
worksite employees is critical to retaining existing and attracting new clients.
The Company's current health benefit plans are provided by vendors with whom the
Company has recently established relationships. While the Company believes that
replacement plans could be obtained on competitive terms with other carriers,
such replacement could cause a significant disruption to the Company's business,
resulting in increased client dissatisfaction and attrition that could have a
material adverse effect on the Company's results of operations or financial
condition.

The Company's workers' compensation policy provided by Liberty Mutual was
initially issued in March 1994, renegotiated as of January 1, 1997 and does not
expire until December 31, 1999. In the event the

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<PAGE> 13

Company is unable to renew or replace such policy on the same or more favorable
terms, such failure could have a material adverse effect on the Company's
results of operations or financial condition. See "Business -- Vendor
Relationships."

LIABILITIES FOR CLIENT AND EMPLOYEE ACTIONS

A number of legal issues remain unresolved with respect to the
co-employment arrangement between a PEO and its client, including questions
concerning the ultimate liability for violations of employment and
discrimination laws. The Client Leasing Agreement establishes the contractual
division of responsibilities between the Company and its client for various
personnel management matters, including compliance with and liability under
various governmental regulations. However, because the Company acts as a
co-employer, the Company may be subject to liability for violations of these or
other laws despite these contractual provisions, even if it does not participate
in such violations. Although the Client Leasing Agreement provides that the
client is to indemnify the Company for any liability attributable to the conduct
of the client, the Company may not be able to effectively enforce such
contractual indemnification. In addition, worksite employees may be deemed to be
agents of the Company, subjecting the Company to liability for the actions of
such worksite employees. See "Business -- Clients" and "Industry Regulation."

LIABILITY FOR WORKSITE EMPLOYEE PAYROLL AND PAYROLL TAXES

In providing its services, the Company becomes a co-employer of worksite
employees and assumes the obligations to pay the salaries, wages and related
benefit costs and payroll taxes of such worksite employees. As a co-employer,
the Company assumes such obligations as a principal, not merely as an agent of
the client. The Company's obligations include responsibility for: (i) payment of
the salaries and wages for work performed by worksite employees at the Federal
minimum wage and overtime rates, regardless of whether the client makes timely
payment to the Company; and (ii) payment of payroll withholding taxes, Federal
and state unemployment taxes, and taxes due under the Federal Income
Contribution Act ("FICA"), even if the client defaults in its payment to the
Company. However, the Company retains the ability to immediately terminate the
Client Leasing Agreement, as well as its relationship with the worksite
employees, for failure to pay. In addition, the Company requires the owners of
substantially all of its clients to personally guarantee the performance of the
Client Leasing Agreement. There is no assurance, however, that such owners would
financially be able to satisfy such guarantee obligations. During 1996, the
Company recorded a total of approximately $651,000 in bad debt expense
(including direct costs and the unpaid portion of the Company's service fees) on
approximately $1.4 billion of total revenues. There can be no assurance that the
Company's ultimate liability for worksite employee payroll and related tax costs
will not have a material adverse effect on its results of operations or
financial condition. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

STATE AND LOCAL REGULATION OF THE PEO INDUSTRY

The Company employs worksite employees in 41 states and is subject to
regulation by various local and state agencies pertaining to a wide variety of
employment-related laws. Many of these regulations were developed prior to the
emergence of the PEO industry and do not specifically address non-traditional
employers. While many states do not explicitly regulate PEOs, 16 states
(including Florida and Texas) have passed laws that have licensing or
registration requirements for PEOs and at least three states, including Georgia,
are considering such regulations. Such laws vary from state to state but
generally provide for monitoring the fiscal responsibility of PEOs. While the
Company generally supports licensing because it serves to clarify the
co-employer relationship between a PEO and its client, there can be no assurance
that the Company will be able to satisfy licensing requirements or other
applicable regulations of any particular state. In addition, there can be no
assurance that the Company will be able to renew its licenses in the states in
which it currently operates upon expiration of such licenses. Certain state
licensing statutes require controlling persons of PEOs, which in some cases are
defined as persons owning as little as ten percent of a PEO's outstanding stock,
to register under such statutes. Failure of such persons to comply with such
registration

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<PAGE> 14

requirements could jeopardize the Company's license to conduct business in such
states. For a more complete description of these regulations, see "Industry
Regulation -- State Regulation."

COMPETITION AND NEW MARKET ENTRANTS

The PEO industry is highly fragmented. NAPEO estimates that there are
approximately 2,000 companies providing PEO services to some extent. Most of
these companies have limited operations and fewer than 1,000 worksite employees,
but there are several larger industry participants, three of which, the Company
believes, have PEO revenues in excess of $500 million. In addition, competitors
with greater resources than the Company have recently entered the PEO market,
such as payroll processing firms, temporary staffing providers, insurance
carriers and managed care providers. If the Company is unable to successfully
compete, its results of operations and financial condition would be adversely
affected. See "Business -- Competition."

DEPENDENCE ON KEY PERSONNEL

The Company's success is dependent upon the continued contributions of its
key management personnel. See "Management." Many of the Company's key personnel
would be difficult to replace. The Company's senior executives are subject to
noncompetition agreements, as are its sales personnel. If the Company were to
lose certain of its key personnel, the replacement of such personnel could cause
a significant disruption to the Company's business, which could have a material
adverse effect on the Company's results of operations or financial condition.

RISKS ASSOCIATED WITH EXPANSION INTO ADDITIONAL STATES

The Company operates primarily in Florida, Texas and Georgia, with such
states accounting for 82%, 9% and 6%, respectively, of the Company's total
worksite employee salaries and wages in 1996. Future growth of the Company's
operations depends, in part, on the Company's ability to offer its services to
prospective clients in additional states. In order to operate effectively in a
new state, the Company must obtain all necessary regulatory approval, adapt its
procedures to that state's regulatory requirements and modify its service
offerings to adapt to local market conditions. See "Industry Regulation."
Moreover, as the Company expands into additional states, there can be no
assurance that the Company will be able to duplicate in other markets the
revenue growth and operating results experienced in its current markets.

ANTI-TAKEOVER EFFECTS OF CERTAIN CHARTER AND BYLAW PROVISIONS AND FLORIDA LAW

The Company's Articles of Incorporation and Bylaws include provisions that
may have the effect of discouraging proposals by third parties to acquire a
controlling interest in the Company, which could deprive shareholders of the
opportunity to consider an offer that would be beneficial to them. These
provisions include: (i) a classified Board of Directors; (ii) the ability of the
Board of Directors to fix the number of directors and fill vacancies on the
Board of Directors; and (iii) restrictions on the ability of shareholders to
call special meetings, act by written consent or amend the foregoing provisions.
In addition, under certain conditions, the Florida Business Corporation Act (the
"Florida Act") would impose restrictions or moratorium on certain business
combinations between the Company and an "interested shareholder" (in general, a
shareholder owning ten percent or more of a corporation's outstanding voting
stock). The existence of such provisions may have a depressive effect on the
market price of the Common Stock in certain situations. See "Description of
Capital Stock -- Provisions Having Possible Anti-Takeover Effect."

CONTROL BY EXISTING SHAREHOLDERS

Immediately following the Offering, the Company's executive officers,
directors and more than five percent shareholders will beneficially own an
aggregate of 13,706,173 shares of Common Stock of the Company, constituting
approximately 60.4% of the outstanding shares of Common Stock (or such persons
will beneficially own 13,577,129 shares, representing approximately 58.7% of the
outstanding shares, if the Underwriters' over-allotment option is exercised in
full). Accordingly, such persons will be in a position to

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<PAGE> 15

control actions that require the consent of a majority of the Company's
outstanding voting stock, including the election of directors. See "Principal
and Selling Shareholders" and "Description of Capital Stock."

ABSENCE OF PRIOR TRADING MARKET; POTENTIAL VOLATILITY OF STOCK PRICE

Prior to the Offering, there has been no public market for the Common
Stock. Although each of the Representatives has indicated that it intends to
make a market in the Common Stock following the Offering, there can be no
assurance that an active trading market will develop for the Common Stock or, if
one does develop, that it will be maintained. The initial public offering price
of the Common Stock will be determined by negotiation between the Company and
the Representatives of the Underwriters. See "Underwriting" for information
relating to the factors to be considered in determining the initial public
offering price. The market price of the shares of Common Stock could be highly
volatile, fluctuating in response to factors such as variations in the Company's
operating results, announcements of new services or market expansions by the
Company or its competition, or developments relating to regulatory or other
issues affecting the PEO industry.

SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of the Common Stock in the public market
following the Offering could have an adverse effect on the prevailing market
price of the Common Stock. All of the Company's currently outstanding shares of
Common Stock are eligible for sale pursuant to the exemption from registration
pursuant to Rule 144 under the Securities Act ("Rule 144"), subject to
applicable holding periods, volume and other limitations. In addition, certain
holders of Common Stock will have registration rights for an aggregate of up to
5,171,853 shares of Common Stock. However, the officers, directors and all other
shareholders of the Company have agreed with the Underwriters (the "Lock-Up
Agreement") not to, directly or indirectly, offer for sale, sell or otherwise
dispose of (or enter into any device which is designed to or could be expected
to result in the disposition at any time in the future of) any of their shares
for a period of 180 days from the date of this Prospectus without the prior
written consent of Lehman Brothers Inc. Such shareholders will beneficially own
an aggregate of approximately 18,694,385 shares of Common Stock upon the
completion of the Offering. Immediately after completion of the Offering, a
total of 4,000,000 shares of Common Stock (4,600,000 shares if the Underwriters'
over-allotment option is exercised in full) will be eligible for resale in the
public market without restriction. See "Shares Eligible for Future Sale."

DILUTION

Purchasers of the Common Stock offered by the Company hereby will
experience immediate and significant dilution (approximately $15.85 per share
assuming an initial public offering price of $16.00 per share of Common Stock,
the midpoint of the filing range) in the pro forma net tangible book value of
their shares. See "Dilution."

THE REORGANIZATION

The Company's operations are currently conducted through the Partnership
and a number of operating limited partnerships ("OLPs"), all of which are
Delaware limited partnerships. Staff Leasing was formed for the purpose of
acquiring the 99% limited partnership interests in the Partnership, currently
held by various investors, including certain executive officers, directors and
employees of the Company, pursuant to a reorganization (the "Reorganization")
described below. The effect of the Reorganization will be that the Company will
become the sole limited partner of the Partnership, in effect incorporating the
business of the Company. Staff Acquisition, Inc., a Delaware corporation ("Staff
Acquisition"), is the sole general partner of the Partnership and each of the
OLPs. Staff Acquisition and the Partnership were formed for the purpose of
acquiring, in November 1993, the assets of the Predecessor that operated the
business now conducted by the Company. The general partnership interest of Staff
Acquisition in the Partnership and in each of the OLPs is a one percent interest
(for an aggregate ownership of 1.99% of the consolidated group). Charles S.
Craig, Chairman and Chief Executive Officer and a director of the Company, owns
all of the issued and outstanding

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<PAGE> 16

capital stock of Staff Acquisition. The following diagram sets forth the
ownership structure prior to the Reorganization:

PRIOR TO THE REORGANIZATION

CHART

Pursuant to the Reorganization, all of the holders of the limited
partnership interests in the Partnership will exchange their partnership
interests for shares of Common Stock, warrants to purchase Common Stock and/or
cash, and Staff Leasing will become the sole limited partner of the Partnership.

Upon the Reorganization and consummation of the Offering: (i) certain of
the Class A preferred limited partnership interests in the Partnership (the
"Class A Interests") will be exchanged for an aggregate of 2,029,657 shares of
Common Stock; (ii) certain of the Class A Interests will be exchanged (a) for
non-convertible preferred limited partnership interests in the Partnership,
which will be repurchased with approximately $9.8 million of the proceeds of the
Offering and (b) for Warrants (the "Warrants") to purchase an aggregate of
1,352,253 shares of Common Stock at an aggregate exercise price of approximately
$9.8 million ($7.24 per share); (iii) certain of the Class A Interests will be
exchanged for (a) an aggregate of 42,523 shares of Common Stock and (b)
approximately $0.6 million of the proceeds from the Offering; (iv) the Class B
non-convertible preferred limited partnership interests in the Partnership (the
"Class B Interests") will be purchased with approximately $3.4 million of the
proceeds of the Offering; (v) all of the common limited partnership interests in
the Partnership (the "Common Interests") will be exchanged for an aggregate of
17,122,205 shares of Common Stock; and (vi) approximately $2.3 million, payable
on the Class A Interests and Class B Interests in respect of the fixed return on
such interests (the "Fixed Return Amount"), will be paid from the proceeds of
the Offering to the holders of such interests as required under the partnership
agreement governing the Partnership.

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<PAGE> 17

to be operated through the Partnership and the OLPs and, for Federal tax
purposes, in accordance with the provisions of the partnership agreement
governing the Partnership, future taxable income generated by the Partnership
will be allocated to Staff Acquisition and not to the Company until Staff
Acquisition has been allocated income equal to certain net losses previously
allocated to it. The amount of such net losses as of December 31, 1996 was
approximately $12.9 million.

As part of the Reorganization, Mr. Craig will enter into a voting trust
agreement pursuant to which the Company, as trustee under the voting trust
agreement, will possess, and be entitled to exercise, all rights to vote the
stock of Staff Acquisition and to give consents or waivers in respect of such
stock. The same persons constitute the Boards of Directors of the Company and
Staff Acquisition. In addition, Mr. Craig will grant to the Company an option to
acquire the stock of Staff Acquisition in exchange for 417,900 shares of Common
Stock. The number of shares of Common Stock issuable to Mr. Craig in connection
with the exercise of such option was determined on the same basis used to
determine the number of shares of Common Stock issued in exchange for the Common
Interests.

The following diagram illustrates the ownership structure following the
Reorganization:

AFTER THE REORGANIZATION

CHART

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<PAGE> 18

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 3,500,000 shares of
Common Stock offered by the Company hereby are estimated to be $50.8 million
($57.4 million if the Underwriters' over-allotment option is exercised in full),
at an assumed initial public offering price of $16.00 per share (the midpoint of
the filing range) and after deduction of underwriting discounts and estimated
expenses payable by the Company. The Company will not receive any proceeds from
the sale of shares of Common Stock offered hereby by the Selling Shareholders.

The Company intends to use $34.2 million of the net proceeds of the
Offering as follows: (i) approximately $15.2 million of the net proceeds from
the Offering to repay indebtedness outstanding under the Company's bank credit
facility, which matures in December 1999 and bears interest at the option of the
Company at a floating rate of either (A) the base rate, defined as the higher of
(x) 1/2 of 1% in excess of the Federal funds rate and (y) the prime rate plus
2.5%, or (B) LIBOR plus 4.0%; (ii) approximately $2.7 million to prepay certain
capitalized lease obligations, which have final payment dates ranging from June
1998 to September 2000 and bear interest at fixed rates ranging from 8.86% to
10.03%, with a weighted average rate of 9.28%; (iii) approximately $3.4 million
to repurchase the Class B Interests; (iv) approximately $10.4 million to
repurchase certain Class A Interests and certain non-convertible preferred
limited partnership interests; and (v) approximately $2.5 million to pay the
Fixed Return Amount. See "The Reorganization." Of such $34.2 million of net
proceeds, $18.3 million will be paid to affiliates of the Company and entities
controlled by such affiliates, including $13.9 million which will be paid to
Banque Paribas and its affiliates and $3.3 million to William J. Mullis to
repurchase his Class B Interests. The remainder will be used for general
corporate purposes, which may include acquisitions of existing PEOs or other
companies with related operations should favorable acquisition opportunities
arise. The Company does not have any agreement, arrangement or understanding
regarding such acquisitions or any money budgeted for such acquisitions.

Pending such uses of the net proceeds, the Company intends to invest such
funds in short-term, interest-bearing investment grade securities, certificates
of deposit or obligations issued or guaranteed by the United States government.

DIVIDEND POLICY

The Company does not anticipate declaring or paying dividends on its Common
Stock in the foreseeable future. The Company expects that it will retain all
available earnings generated by the Company's operations for the development and
growth of its business. Any future determination as to the payment of dividends
will be made at the discretion of the Board of Directors of the Company and will
depend upon the Company's operating results, financial condition, capital
requirements, general business conditions and such other factors as the Board of
Directors deems relevant. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."

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CAPITALIZATION

The following table sets forth the pro forma capitalization of the Company
as of March 31, 1997: (i) after giving effect to the Reorganization; and (ii) as
adjusted to give effect to the sale of 3,500,000 shares of Common Stock offered
by the Company hereby (assuming an initial offering price of $16.00 per share,
the midpoint of the filing range) and the application of the net proceeds
therefrom, as described in "Use of Proceeds." This table should be read in
conjunction with the Consolidated Financial Statements and the Unaudited Pro
Forma Consolidated Balance Sheet of the Company and the Notes thereto included
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
MARCH 31, 1997
-----------------------
PRO FORMA
PRO FORMA AS ADJUSTED
--------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Total debt and capitalized lease obligations(1)............. $ 19,691 $ --
Redeemable preferred stock.................................. 18,694 --
Shareholders' equity:
Preferred stock, par value $.01 per share
Shares authorized -- 10,000,000
Shares issued and outstanding -- none.................. -- --
Common stock, par value $.01 per share
Shares authorized -- 100,000,000
Shares issued and outstanding -- 19,194,385, pro forma,
and 22,694,385, as adjusted, respectively(2).......... 192 227
Additional paid in-capital(3)............................. 1,345 52,732
Accumulated deficit....................................... (35,295) (37,216)
-------- --------
Total shareholders' equity (deficit).............. (33,758) 15,743
-------- --------
Total capitalization............................ $ 4,627 $ 15,743
======== ========
</TABLE>

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

(1) Includes current maturities of long-term debt and capitalized lease
obligations of $7,387,000. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources" and Note 4 of Notes to Consolidated Financial Statements.

(2) Excludes 2,500,000 shares of Common Stock reserved for issuance under the
Company's stock incentive plan. The Company intends to grant options under
this plan to all full time employees and non-management directors as of the
date of consummation of the Offering, at an exercise price equal to the
initial price to the public in the Offering, and estimates that
approximately 555,000 options will be granted. Also excludes 1,352,253
shares of Common Stock issuable upon the exercise of warrants issued in the
Reorganization, which have an exercise price of $7.24 per share. See
"Management -- Stock Incentive Plan" and "The Reorganization."

(3) Net of $955,000 of shareholder notes receivable.

18
<PAGE> 20

DILUTION

The pro forma net tangible book value at March 31, 1997, after giving
effect to the Reorganization, was a deficit of $47.0 million or a deficit of
$2.45 per share. Pro forma net tangible book value per share represents the
amount of total tangible assets less total liabilities, divided by the number of
shares of Common Stock outstanding. After giving effect to the sale by the
Company of 3,500,000 shares of Common Stock (at an assumed initial offering
price of $16.00 per share, the midpoint of the filing range) and the application
of the estimated net proceeds therefrom, the pro forma net tangible book value
at March 31, 1997 would have been $3.4 million or $.15 per share. This
represents an immediate increase in pro forma net tangible book value of $2.60
per share to existing shareholders and an immediate dilution in pro forma net
tangible book value of $15.85 per share to new investors purchasing Common Stock
in the Offering. The following table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $ 16.00
Pro forma net tangible book value per share at March 31,
1997................................................... $ (2.45)
Increase per share attributable to new investors.......... 2.60
--------
Pro forma net tangible book value after the Offering........ .15
--------
Dilution per share to new investors......................... $ 15.85
========
</TABLE>

The following table sets forth, on a pro forma basis, as of March 31, 1997,
after giving effect to the Reorganization, the number of shares of Common Stock
purchased from the Company, the total consideration paid to the Company and the
average price paid per share by existing shareholders and by the new investors
purchasing of shares of Common Stock offered by the Company hereby (at an
assumed initial public offering price of $16.00 per share, the midpoint of the
filing range):

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION(1)
-------------------- ---------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing shareholders(2)......... 19,194,385 84.6% $ 2,495,734(3) 4.3% $ .13
New investors(2)................. 3,500,000 15.4 56,000,000 95.7 16.00
---------- ----- ----------- -----
Total.................. 22,694,385 100.0% $58,495,734 100.0%
========== ===== =========== =====
</TABLE>

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

(1) Sales by the Selling Shareholders in the Offering, assuming the
Underwriters' over-allotment option is exercised in full, will reduce the
number of shares held by existing shareholders to 18,539,363 or 80.1% of
the total number of shares of Common Stock to be outstanding after the
Offering, and will increase the number of shares held by new investors to
4,600,000 or 19.9% of the total number of shares of Common Stock to be
outstanding after the Offering. See "Principal and Selling Shareholders."

(3) Net of partnership distributions and redemptions.

19
<PAGE> 21

SELECTED FINANCIAL DATA

The following table sets forth certain selected historical financial and
operating data of the Company as of the dates and for the periods indicated. The
Company was formed in November 1993 to acquire the Predecessor. The entities
comprising the Predecessor all operated as S-corporations under the Code. The
Partnership has operated as a limited partnership for all periods presented.
After the Offering, the Company will operate as a C-corporation under the Code.
The following selected financial data are qualified by reference to, and should
be read in conjunction with, the consolidated financial statements, related
notes and other financial information included elsewhere in this Prospectus, as
well as "Management's Discussion and Analysis of Financial Condition and Results
of Operations." The statement of operations data set forth below, for each of
the three years in the period ended December 31, 1996, and the balance sheet
data at December 31, 1995 and 1996, are derived from the audited consolidated
financial statements of the Company, which are included elsewhere in this
Prospectus. The statement of operations data for the period November 6, 1993 to
December 31, 1993, and the balance sheet data at December 31, 1993, are derived
from the audited consolidated financial statements of the Company and are not
included herein. The statement of operations data for the year ended December
31, 1992, the period January 1, 1993 to November 5, 1993 and the balance sheet
data at December 31, 1992 are derived from audited combined financial statements
of the Predecessor and are not included herein.

The statement of operations data for the three months ended March 31, 1996
and 1997 and the balance sheet data as of March 31, 1996 and 1997 are derived
from unaudited financial statements of the Company that, in the opinion of
management, reflect all adjustments, which are of a normal recurring nature,
necessary to present fairly the information set forth therein. The results for
the three months ended March 31, 1997 are not necessarily indicative of the
results that may be expected for any other interim period or for the full year.

<TABLE>
<CAPTION>
THE PREDECESSOR THE COMPANY
----------------------------- ---------------------------------------------------
FOR THE PERIOD FOR THE PERIOD
FOR THE YEAR JANUARY 1, NOVEMBER 6,
ENDED 1993 TO 1993 TO FOR THE YEARS ENDED DECEMBER 31,
DECEMBER 31, NOVEMBER 5, DECEMBER 31, ----------------------------------
1992 1993 1993 1994 1995 1996
------------ -------------- -------------- -------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues....................... $235,043 $354,634 $83,553 $735,763 $1,091,588 $1,432,131
Cost of services:
Salaries, wages and payroll
taxes...................... 207,761 312,272 73,580 657,534 975,887 1,283,787
Benefits, workers'
compensation, state
unemployment taxes and
other costs................ 19,592 26,980 6,071 46,194 83,664 88,839
-------- -------- ------- -------- ---------- ----------
Total cost of services... 227,353 339,252 79,651 703,728 1,059,551 1,372,626
-------- -------- ------- -------- ---------- ----------
Gross profit................... 7,690 15,382 3,902 32,035 32,037 59,505
Operating expenses:
Salaries, wages and
commissions................ 3,179 7,959 1,592 15,537 29,674 37,264
Other general and
administrative............. 4,953 3,598 1,119 6,836 19,420 19,528
Depreciation and
amortization............... 217 257 193 1,307 3,219 3,154
-------- -------- ------- -------- ---------- ----------
Total operating
expenses............... 8,349 11,814 2,904 23,680 52,313 59,946
-------- -------- ------- -------- ---------- ----------
Operating (loss) income........ (659) 3,568 998 8,355 (20,276) (441)
Interest (income) expense...... (115) (104) 294 3,448 4,764 3,401
Other expenses (income)........ 68 (1,244) 11 95 (98) 23
-------- -------- ------- -------- ---------- ----------
Net income (loss).............. $ (612) $ 4,916 693 4,812 (24,942) (3,865)
======== ========
Fixed return amount on
preferred limited partnership
interests.................... (28) (164) -- (1,772)
------- -------- ---------- ----------
Net income (loss) attributable
to common limited partnership
interests.................... $ 665 $ 4,648 $ (24,942) $ (5,637)
======= ======== ========== ==========
Pro forma net income (loss) per
share attributable to common
shareholders(1).............. $ (.28)(2)
==========
Pro forma weighted average
common shares (in
thousands)(1)................ 19,935(2)
==========

<CAPTION>
THE COMPANY
---------------------

FOR THE THREE MONTHS
ENDED MARCH 31,
---------------------
1996 1997
--------- ---------

<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues....................... $324,720 $402,455
Cost of services:
Salaries, wages and payroll
taxes...................... 290,638 362,837
Benefits, workers'
compensation, state
unemployment taxes and
other costs................ 20,793 19,723
-------- --------
Total cost of services... 311,431 382,560
-------- --------
Gross profit................... 13,289 19,895
Operating expenses:
Salaries, wages and
commissions................ 8,956 10,239
Other general and
administrative............. 4,245 5,387
Depreciation and
amortization............... 756 845
-------- --------
Total operating
expenses............... 13,957 16,471
-------- --------
Operating (loss) income........ (668) 3,424
Interest (income) expense...... 1,016 675
Other expenses (income)........ 11 38
-------- --------
Net income (loss).............. (1,695) 2,711

Fixed return amount on
preferred limited partnership
interests.................... 60 (655)
-------- --------
Net income (loss) attributable
to common limited partnership
interests.................... $ (1,755) $ 2,056
======== ========
Pro forma net income (loss) per
share attributable to common
shareholders(1).............. $ 0.11(3)
========
Pro forma weighted average
common shares (in
thousands)(1)................ 19,935(3)
========
</TABLE>

(footnotes appear on following page)

20
<PAGE> 22

<CAPTION>
THE COMPANY
---------------------

FOR THE THREE MONTHS
ENDED MARCH 31,
---------------------
1996 1997
--------- ---------

<S> <C> <C>
STATISTICAL AND OPERATING DATA:
Worksite employees at period
end.......................... 77,089 92,463
Clients at period end.......... 6,711 8,073
Average number of worksite
employees per client at
period end................... 11.49 11.45
Capital expenditures........... $ 958 $ 858
</TABLE>

<TABLE>
<CAPTION>
THE
PREDECESSOR THE COMPANY
------------ -------------------------------------------------------------------
DECEMBER 31, MARCH 31,
DECEMBER 31, --------------------------------------------- -------------------
1992 1993 1994 1995 1996 1996 1997
------------ -------- -------- ---------- ---------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets.............................. $ 8,589 $ 31,980 $ 44,902 $ 56,932 $ 65,982 $ 60,708 $ 73,278
Long-term capital leases, including
current portion......................... -- -- -- 5,069 3,746 5,198 3,241
Long-term borrowings, including current
portion................................. -- 11,292 30,800 26,450 17,700 27,609 16,450
Redeemable preferred limited partnership
interests............................... -- 1,528 -- 2,000 31,208 2,000 32,220
Total shareholders' deficit............... (3,656) -- -- -- -- -- --
Total common partners' capital
(deficit)............................... -- 5,851 (9,173) (33,949) (49,213) (35,704) (47,176)
</TABLE>

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

(1) Pro forma net income (loss) per share attributable to common shareholders
and pro forma weighted average common shares outstanding for the period
presented are calculated after giving effect to the Reorganization. See "The
Reorganization." In connection with the Reorganization, the Company will
issue 19,194,385 shares of Common Stock and Warrants to acquire 1,352,253
shares of Common Stock, at an exercise price of $7.24 per share. Pro forma
weighted average common shares have been calculated using the treasury stock
method. Pursuant to the rules of the Securities and Exchange Commission, the
Warrants issued have been included as common stock equivalents in the
calculation of weighted average shares outstanding.

21
<PAGE> 23

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

OVERVIEW

The Company is the largest PEO in the United States. At March 31, 1997, the
Company served over 8,000 clients with over 92,000 worksite employees. With 34
branches located in Florida, Texas, Georgia and Arizona, the Company provides a
broad range of services, including payroll administration, risk management,
benefits administration, unemployment services and other human resource
management services. The Predecessor commenced operations in 1984. The Company
was created to acquire the Predecessor's assets on November 6, 1993 for $15.0
million (the "Purchase Price"). Financial information subsequent to November 5,
1993 reflects the allocation of the Purchase Price, in accordance with
Accounting Principles Board No. 16 "Business Combinations," to the tangible and
intangible assets acquired. The following discussion should be read in
conjunction with the Company's Consolidated Financial Statements and Notes
thereto included elsewhere in this Prospectus. Historical results are not
necessarily indicative of trends in operating results for any future period.

REVENUES. Revenues consist of charges by the Company for the salaries and
wages of the worksite employees (including the employee-paid portion of health
and other benefits), the service fee and the client's portion of health and
retirement benefits provided to the worksite employees. These charges are
invoiced to the client at the time of each periodic payroll. The service fee
covers the cost of certain employment-related taxes, workers' compensation
insurance coverage and administrative and field services provided by the Company
to the client, including payroll administration and safety, human resource and
regulatory compliance consultation. Salaries and wages of worksite employees are
affected by the inflationary effects on wage levels, including the effect of
increases in the Federal minimum wage, and by competition in the labor markets
in which the Company operates. Fluctuations in salaries and wages resulting from
these factors have a proportionate impact on the Company's service fee, which is
invoiced as a percentage of salaries and wages.

COST OF SERVICES. Cost of services includes salaries and wages of worksite
employees, payroll taxes, employee benefit costs, workers' compensation
insurance and state unemployment taxes.

Salaries, wages and payroll taxes consist of salaries and wages of worksite
employees, the employer's portion of amounts due with respect to FICA, which
includes Social Security and Medicare related taxes, and Federal unemployment
taxes ("FUTA"). FICA and FUTA rates are fixed by the appropriate Federal
regulations. The amounts payable under FICA and FUTA are dependent on an
employee's wage levels, but are not affected by an employer's claims experience
or other employer-related criteria. These amounts are thus not subject to the
Company's control.

Employee benefit costs are comprised primarily of health benefit costs, but
also include costs of other employee benefits such as dental, disability and
group life insurance. Worksite employee participation in the Company's health
benefit plans is optional, as is the client's contribution to the cost of such
plans. The Company's current group health benefit plans are under three separate
contracts in force in the states of Florida, Texas and Georgia with the Blue
Cross entities in each respective state. Plans offered in Texas and Georgia are
provided to the Company under guaranteed cost arrangements, with the Company's
liability capped at fixed amounts. The Company's policy with Blue Cross/Florida
is a three year minimum premium arrangement pursuant to which the Company is
obligated to reimburse Blue Cross/Florida for the cost of the claims incurred by
participants under the plan, plus the cost of plan administration. Although the
administrative costs associated with this policy are fixed for the three year
term and stop loss coverage for 1997 is provided at the level of 115% of
projected claims, stop loss coverage for succeeding years will be established
based on claims experience in the first year of the policy.

Workers' compensation costs are the amounts paid by the Company under its
workers' compensation arrangement with Liberty Mutual. The Company did not
assume any workers' compensation liabilities from the Predecessor and, since
November 6, 1993, the date of acquisition of the Predecessor, the Company has
been fully insured through a guaranteed cost arrangement. The Company has
recently renewed its guaranteed cost arrangement with Liberty Mutual for a
three-year period that expires on December 31, 1999. The rate of

22
<PAGE> 24

payment (on the basis of cost per $100 of worker's compensation payroll) under
this arrangement is 26.8% less than that in effect for 1996. This rate is
scheduled to decrease by an additional 3% on October 1, 1997. See "Risk
Factors -- Volatility in Workers' Compensation Insurance Rates and Unemployment
Tax."

State unemployment tax rates vary from state to state and are based upon
the employer's claims history. The Company aggressively manages its state
unemployment tax exposure by contesting unwarranted claims and offering
re-employment services to unemployed workers.

OPERATING EXPENSES. Operating expenses consist primarily of salaries,
wages and commissions associated with the Company's internal employees, and
general and administrative expenses. Over the past several years, the Company
has experienced an increase in its operating expenses as Staff Leasing has
expanded its senior management, sales and marketing staff, payroll processing
operations and client and worksite employee service functions. The Company
believes that these additional resources have enhanced the quality of its
operations and positioned the Company to achieve its objectives. The Company
expects that future revenue growth will result in increasing net income margins,
as the Company's fixed operating expenses are leveraged over a larger revenue
base.

INCOME TAXES. For the periods presented, the Company operated as a limited
partnership for Federal and state tax purposes. Accordingly, all earnings or
losses were passed directly to the partners and no provision for income taxes
was required. Following the Reorganization, the Company will continue to be
operated through the Partnership and the OLPs, and, for Federal income tax
purposes, future taxable income generated by the Partnership will be allocated
to Staff Acquisition and not to the Company until Staff Acquisition has been
allocated income equal to certain net losses previously allocated to it. As of
December 31, 1996, the amount of such net losses was approximately $12.9
million. Additionally, the Company will have deductible temporary differences
which could be utilized to offset future taxable income. Such deductible
temporary differences amounted to approximately $25.5 million at December 31,
1996 and relate primarily to assets with tax basis in excess of book basis and
certain reserves which will be deductible in future periods. As a result of the
Offering, the Company expects to generate additional deductible temporary
differences of approximately $15 million which can also be utilized to offset
future taxable income.

PROFITABILITY. Profitability is largely dependent upon the Company's
success in managing revenues and costs that are within its control. These
controllable revenues and costs primarily relate to workers' compensation,
health benefits and state unemployment taxes. The Company manages these
controllable costs through its use of: (i) its guaranteed cost arrangement with
Liberty Mutual; (ii) appropriately designed health benefit plans that encourage
worksite employee participation, high managed care utilization and efficient
risk pooling; and (iii) aggressive management of its state unemployment tax
exposure. Despite these initiatives, there are certain events that could have a
material adverse impact on the Company's profitability, which include the
factors described under "Risk Factors" and elsewhere in this Prospectus.

HEALTH BENEFIT PLAN SUBSIDIES. In June 1995, the Company's Board of
Directors realized that the Company had a major problem regarding its health
benefit plan. Selected remedial actions were taken in 1995 and 1996, which had
the effect of reducing the level of health benefit plan subsidies by 50.1% in
1996 from those in 1995. However, it was not until the plan year commencing
January 1, 1997 that the Company was able to implement a comprehensive action
plan to ameliorate this situation.

1995 and 1996 plan years. For the 1995 plan year, acting upon the
recommendation of its former health benefit consultants, the Company conducted
an "open enrollment" for its health benefit plan. This allowed worksite
employees not previously enrolled in the Company's plan, including those with
pre-existing conditions, to enroll in the plan without medical risk assessment.
In addition, the Company reduced the eligibility requirements for part-time
employees. Both of these actions increased adverse selection (namely, those in
need of medical treatment disproportionately elected to enroll in the plan
versus those who believed they would not need medical treatment). Based on
projections that showed the 1995 plan to be financially viable, the Company did
not raise the price of its health benefit plan offerings from 1994 to 1995.

In June 1995, the Company's Board of Directors recognized that the
Company's health benefit plan would require significant subsidies. The Company
did not immediately raise the price of its health benefit plan

23
<PAGE> 25

offerings in order to avoid a significant disruption of its client
relationships, which are the major source of referrals for new clients. However,
the Company implemented plan design changes in September 1995 that reduced costs
for the remainder of the plan year. In 1995, the Company's health benefit plan
required a subsidy of $20.6 million.

Effective January 1, 1996, the Company raised prices for its 1996 plan year
by approximately 25% on average and implemented additional cost-saving design
changes. Also in January 1996, the Company hired a senior executive with
extensive experience to manage its health benefit plans and to reduce its
reliance on outside consultants. In May 1996, in order to mitigate future
adverse selection, the Company re-instituted group health risk assessment for
prospective clients and individual medical risk assessment for late enrollees in
its plan. The Company also eliminated the eligibility of certain part-time
employees to participate in its health benefit plans. As a result of these
actions, the Company reduced its health benefit subsidies to $10.1 million in
1996.

1997 plan year. Effective January 1, 1997, the Company was able to
implement a comprehensive action plan, which it believes will reduce its health
benefit plan subsidies in 1997 and 1998. Key elements of this plan are as
follows:

- The Company changed from its single national healthcare company,
Provident, to a series of regional healthcare companies. These companies
have extensive provider networks in all of the Company's markets and offer
deeper discounts than those previously available. These new providers are
Blue Cross/Florida for the Company's Florida health benefit plans; Blue
Cross/Blue Shield of Texas for its Texas health benefit plans; and Blue
Cross/Blue Shield of Georgia for its Georgia health benefit plans. In
addition, the Company's new providers were able to offer health
maintenance organization ("HMO") coverage in substantially all of the
Company's markets, including Texas and Georgia, which did not have HMO
offerings in 1995 and 1996. The Company believes that healthcare is a
regional business in the United States and that it must align itself with
healthcare providers that have strong networks and reputations in the
specific markets in which the Company operates.

- The Company raised the price of its preferred provider organization
("PPO") offerings by an average of 10% and did not increase the rates for
its HMO offerings, which had the effect of increasing the percentage of
participants enrolled in the HMO from 30% as of December 31, 1996 to 55%
as of April 1, 1997. The Company believes that the managed care services
provided by an HMO are more cost-effective than those provided by a PPO.
The Company will continue to encourage migration of its plan participants
into its HMO offerings.

- The Company secured guaranteed cost contracts for 1997 for its plans in
Georgia and Texas and was able to reduce the stop loss coverage from 125%
to 115% of the projected claims for its Florida plan for the 1997 plan
year.

- The Company reduced the level of selected benefits provided under its
plans to better match the needs and price sensitivity of its worksite
employees, while reducing the cost to the Company.

- The Company re-configured its sales commission plan to reward its
salespersons for health benefit plan enrollment of new client employees.

The foregoing actions were designed to enable the Company to control its
health benefit plan costs, while providing competitive health benefit plan
offerings that are attractive to its clients and worksite employees. With time,
the positive effects of the comprehensive action strategy are expected to
increasingly reduce the level of subsidies provided to the Company's health
benefit plans. See "Risk Factors -- Potential for Additional Subsidies of Health
Benefit Plans."

24
<PAGE> 26

RESULTS OF OPERATIONS

The following table presents the Company's results of operations for the
years ended December 31, 1994, 1995 and 1996, and for the three months ended
March 31, 1996 and 1997, expressed as a percentage of revenues:

<TABLE>
<CAPTION>
FOR THE THREE
FOR THE YEARS ENDED MONTHS ENDED
DECEMBER 31, MARCH 31,
----------------------- --------------
1994 1995 1996 1996 1997
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Revenues................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of services:
Salaries, wages and payroll taxes........ 89.4 89.4 89.6 89.5 90.2
Benefits, workers' compensation, state
unemployment taxes and other costs.... 6.3 7.7 6.2 6.4 4.9
Total cost of services........... 95.7 97.1 95.8 95.9 95.1
----- ----- ----- ----- -----
Gross profit............................... 4.3 2.9 4.2 4.1 4.9
Operating expenses:
Salaries, wages and commissions.......... 2.1 2.7 2.6 2.8 2.5
Other general and administrative......... 0.9 1.8 1.4 1.3 1.3
Depreciation and amortization............ 0.2 0.3 0.2 0.2 0.2
----- ----- ----- ----- -----
Total operating costs............ 3.2 4.8 4.2 4.3 4.0
Operating (loss) income.................... 1.1 (1.9) 0.0 (0.2) 0.9
Interest expense........................... 0.5 0.4 0.2 0.3 0.2
Other expenses (income).................... 0.0 0.0 0.0 0.0 0.0
----- ----- ----- ----- -----
Net income (loss).......................... 0.6% (2.3)% (0.2)% (0.5)% 0.7%
===== ===== ===== ===== =====
</TABLE>

THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31, 1996

REVENUES. Revenues were $402.5 million for the three months ended March
31, 1997 compared to $324.7 million for the three months ended March 31, 1996,
representing an increase of $77.8 million, or 24.0%. This increase was due
primarily to an increased number of clients and worksite employees. From March
31, 1996 to March 31, 1997, the number of clients increased 20.3%, from 6,711 to
8,073, and the number of worksite employees increased 19.9%, from 77,089 to
92,463. The increase in the number of clients was the result of continuing sales
and marketing efforts in existing markets as well as the development of new
markets. Continued growth in revenues is primarily dependent upon increasing the
number of new clients, as well as limiting the attrition of the current client
base. The client referral program with Barnett, which accounted for 402 new
clients during the eight months ended April 30, 1997, will terminate June 30,
1997. See "Risk Factors -- Termination of Referral Program."

COST OF SERVICES. Cost of services were $382.6 million for the three
months ended March 31, 1997 compared to $311.4 million for the three months
ended March 31, 1996, representing an increase of $71.2 million, or 22.9%. Cost
of services were 95.1% of revenues for the three months ended March 31, 1997,
compared to 95.9% for the three months ended March 31, 1996.

Salaries, wages and payroll taxes of worksite employees were $362.8 million
for the three months ended March 31, 1997, compared to $290.6 million for the
three months ended March 31, 1996, representing an increase of $72.2 million, or
24.8%. The increase was slightly larger than the increase in the number of
worksite employees from the comparable period, due at least in part to the
effect of wage inflation. Salaries, wages and payroll taxes were 90.2% of
revenues for the three months ended March 31, 1997, compared to 89.5% for the
three months ended March 31, 1996.

Benefits, workers' compensation, state unemployment taxes and other costs
were $19.7 million for the three months ended March 31, 1997, compared to $20.8
million for the three months ended March 31, 1996, representing a decrease of
$1.1 million, or 5.3%. Benefits, workers' compensation, state unemployment taxes

25
<PAGE> 27

and other costs were 4.9% of revenue for the three months ended March 31, 1997,
compared to 6.4% for the three months ended March 31, 1996. This decrease was
due primarily to: (i) a 26.8% reduction in the workers' compensation expense
rate; and (ii) the implementation of the Company's comprehensive health benefits
action plan, leading to a reduction in the health benefit plan subsidy from $2.5
million for the three months ended March 31, 1996 to $1.0 million for the three
months ended March 31, 1997.

GROSS PROFIT. Gross profit was $19.9 million for the three months ended
March 31, 1997, compared to $13.3 million for the three months ended March 31,
1996, representing an increase of $6.6 million, or 49.6%. Gross profit was 4.9%
of revenues for the three months ended March 31, 1997, compared to 4.1% for the
three months ended March 31, 1996. The increase was due to the reduction in cost
of services as a percentage of revenues as described above.

OPERATING EXPENSES. Operating expenses were $16.5 million for the three
months ended March 31, 1997, compared to $14.0 million for the three months
ended March 31, 1996, representing an increase of $2.5 million, or 17.9%.
Operating expenses were 4.1% of revenues for the three months ended March 31,
1997, compared to 4.3% for the three months ended March 31, 1996.

Salaries, wages and commissions were $10.2 million for the three months
ended March 31, 1997, compared to $9.0 million for the three months ended March
31, 1996, representing an increase of $1.2 million, or 13.3%. This increase was
the result of an increase in corporate personnel hired to support the Company's
expanded operations and additional sales and sales support personnel located at
its branch offices. Salaries, wages and commissions were 2.5% of revenue for the
three months ended March 31, 1997, compared to 2.8% for the three months ended
March 31, 1996.

Other general and administrative expenses were $5.4 million for the three
months ended March 31, 1997, compared to $4.3 million for the three months ended
March 31, 1996, representing an increase of $1.1 million, or 25.6%. This
increase was primarily a result of expanded sales and marketing programs which
commenced in the first quarter of 1997. The balance of the increase was
attributable to the growth in the numbers of clients and worksite employees.
Other general and administrative expenses were 1.3% of revenue for each of the
three months ended March 31, 1997 and March 31, 1996.

Depreciation and amortization expenses increased by $0.1 million for the
three months ended March 31, 1997, compared to the three months ended March 31,
1996, representing an increase of 11.8%. This increase was primarily the result
of the Company's investment in management information systems hardware.
Capitalized software costs associated with the Company's development of new
payroll processing and management information systems will not begin until such
systems are operational. The Company anticipates that these systems will be
operational in the second half of 1997 at which time such costs will then be
amortized over a five-year period.

INTEREST EXPENSE. Interest expense was $.7 million for the three months
ended March 31, 1997, compared to $1.0 million for the three months ended March
31, 1996, representing a decrease of $.3 million, or 30.0%. This decrease was
primarily the result of the reduction in the Company's long term borrowings.

NET INCOME. Net income was $2.7 million for the three months ended March
31, 1997, compared to a loss of $1.7 million for the three months ended March
31, 1996, representing an increase of $4.4 million, or 258.8%, as a result of
the factors discussed above.

NEW ACCOUNTING STANDARD. The Company will adopt the Statement of Financial
Accounting Standards No. 128, "Earnings Per Share" (FAS 128) in the fourth
quarter of 1997, as required. The Company will continue to apply APB Opinion No.
15, "Earnings Per Share" until the adoption of FAS 128. The standard specifies
the computation, presentation and disclosure requirements for earnings per
share.

26
<PAGE> 28

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995

REVENUES. Revenues were $1,432.1 million for 1996, compared to $1,091.6
million for 1995, representing an increase of $340.5 million, or 31.2%. This
increase was due primarily to an increased number of clients and worksite
employees. From 1995 to 1996, the number of clients increased 15.7% from 6,490
to 7,511. The number of worksite employees increased 17.6%, from 73,116 to
86,000. The remaining increase in revenues is due primarily to the higher growth
rate of clients and worksite employees during the latter half of 1995, which did
not affect revenue levels during the entire 1995 period, but which (net of
client attrition) affected the entire 1996 period. The increase in the number of
worksite employees was the result of continuing sales and marketing efforts in
existing markets as well as the development of new markets. The Company opened
one new sales office in 1996, compared to seven new sales offices in 1995.

Continued growth in revenues is dependent upon increasing the number of
worksite employees, as well as limiting the attrition of the current worksite
employee base. The Company's Client Attrition Rate was 26.4% in 1996, compared
to 18.9% in 1995. The Company believes that the increased rate of attrition in
1996 was the result, in part, of: (i) a significant increase in its health
benefit plan premiums for the 1996 plan year; (ii) slowness in health claims
payments by the Company's former health benefits provider during late 1995 and
the first half of 1996; (iii) the Company's efforts to audit its client base
with respect to workers' compensation classification coding during late 1995 and
early 1996, which caused service fees to rise for certain clients that were
reclassified; and (iv) the changes that the Company implemented in late 1995 in
its payroll processing operations when it initiated call center options, which
temporarily increased payroll errors and disrupted client relations.

COST OF SERVICES. Cost of services were $1,372.6 million for 1996,
compared to $1,059.6 million for 1995, representing an increase of $313.0
million, or 29.5%. Cost of services were 95.8% of revenues for 1996, compared to
97.1% for 1995.

Salaries, wages and payroll taxes of worksite employees were $1,283.8
million for 1996, compared to $975.9 million for 1995, representing an increase
of $307.9 million, or 31.6%. This increase was consistent with the increase in
the number of worksite employees described above. Salaries, wages and payroll
taxes were 89.6% of revenues for 1996, compared to 89.4% for 1995.

Benefits, workers' compensation, state unemployment taxes and other costs
were $88.8 million for 1996, compared to $83.7 million for 1995, representing an
increase of $5.1 million, or 6.1%. Benefits, workers' compensation, state
unemployment taxes and other costs were 6.2% of revenues for 1996, compared to
7.7% for 1995. This decrease was due primarily to a reduction in the health
benefit plan subsidy, which was reduced to $9.9 million for 1996 from $17.5
million for 1995. An additional $0.2 million in 1996 and $3.1 million in 1995
arising from consultants and outside vendors engaged in connection with the
Company's health benefit plans were incurred as other general and administrative
expenses in such years and are included in total health benefit plan subsidy
costs. See "-- Overview -- Health Benefit Plan Subsidies." This decrease was
also affected by an 8.0% reduction in the workers' compensation expense rate (on
the basis of cost per $100 of worker compensation payroll) as a result of a
renegotiation of the Company's guaranteed cost arrangement with Liberty Mutual.

GROSS PROFIT. Gross profit was $59.5 million for 1996, compared to $32.0
million for 1995, representing an increase of $27.5 million, or 85.9%. Gross
profit was 4.2% of revenues for 1996, compared to 2.9% for 1995. The increase
was due to the reduction in cost of services as a percentage of revenues as
described above.

OPERATING EXPENSES. Operating expenses were $59.9 million for 1996,
compared to $52.3 million for 1995, representing an increase of $7.6 million, or
14.5%. Operating expenses were 4.2% of revenues for 1996, compared to 4.8% for
1995.

Salaries, wages and commissions were $37.3 million for 1996, compared to
$29.7 million for 1995, representing an increase of $7.6 million, or 25.6%. This
increase was the result of an increase in corporate personnel hired to support
the Company's expanded operations and additional sales and sales support
personnel located at its branch offices. Salaries, wages and commissions were
2.6% of revenues for 1996,

27
<PAGE> 29

compared to 2.5% for 1995 (without taking into account approximately $2.1
million of the costs associated with the restructuring of the Company's 1995
commission plan).

Other general and administrative expenses were essentially unchanged at
$19.5 million for 1996, compared to $19.4 million in 1995. Other general and
administrative expenses were 1.4% of revenues for 1996, compared to 1.8% for
1995, as the Company began to leverage its corporate management personnel and
decreased its reliance on outside vendors and consultants.

Depreciation and amortization expenses were unchanged at $3.2 million for
1996 and 1995. Amortization of $7.7 million of capitalized software costs
associated with the Company's development of new payroll processing and
management information systems will not begin until such systems are
operational. The Company anticipates that these systems will be operational in
1997 and such costs will then be amortized over a five-year period.

INTEREST EXPENSE. Interest expense was $3.4 million for 1996, compared to
$4.8 million for 1995, representing a decrease of $1.4 million, or 29.2%. The
higher interest expense in 1995 was due primarily to $1.1 million of original
issuance cost that was fully amortized in 1995. During the quarter in which the
Reorganization occurs, the Company will write off approximately $1.0 million of
unamortized debt issuance costs and approximately $0.2 million of unamortized
organization costs.

NET LOSS. Net loss was $3.9 million for 1996, compared to $24.9 million
for 1995, representing a decrease of $21.0 million, or 84.3%, as a result of the
factors discussed above.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994

REVENUES. Revenues were $1,091.6 million for 1995, compared to $735.8
million for 1994, representing an increase of $355.8 million, or 48.4%. This
increase was due primarily to an increased number of clients and worksite
employees in 1995. Between December 31, 1994 and December 31, 1995, the number
of clients increased 23.8%, from 5,242 to 6,490, and the number of worksite
employees increased 43.8%, from 50,848 to 73,116.

COST OF SERVICES. Cost of services were $1,059.6 million for 1995,
compared to $703.7 million for 1994, representing an increase of $355.9 million,
or 50.6%. Cost of services were 97.1% of revenues for 1995, compared to 95.7%
for 1994.

Salaries, wages and payroll taxes of worksite employees were $975.9 million
for 1995, compared to $657.5 million for 1994, representing an increase of
$318.4 million, or 48.4%. This increase is consistent with the increase in the
number of worksite employees described above. Salaries, wages and payroll taxes
were 89.4% of revenues for 1995 and 1994.

Benefits, workers' compensation, state unemployment taxes and other costs
were $83.7 million for 1995, compared to $46.2 million for 1994, representing an
increase of $37.5 million, or 81.2%. Health benefits, workers' compensation,
state unemployment taxes and other costs were 7.7% of revenues for 1995,
compared to 6.3% for 1994. This increase was due primarily to the net effect of
an increase in the health benefit plan subsidy, which was $17.5 million in 1995,
compared to $1.1 million for 1994. An additional $3.1 million in 1995 and $0.5
million in 1994 arising from consultants and outside vendors engaged in
connection with the Company's health benefit plans were incurred as other
general administrative expenses in such years and are included in total health
benefit plan subsidy costs. See "-- Overview -- Health Benefit Plan Subsidies."
This increase was partially offset by a 4.9% reduction in the workers'
compensation rate (on the basis of cost per $100 of workers' compensation
payroll) under the Company's guaranteed cost arrangement with Liberty Mutual.
See "Risk Factors."

GROSS PROFIT. Gross profit was unchanged at $32.0 million for 1995 and
1994. Gross profit was 2.9% of revenues for 1995, compared to 4.3% for 1994.
This decrease was due primarily to the increase in certain cost of services as a
percentage of revenues as described above.

28
<PAGE> 30

OPERATING EXPENSES. Operating expenses were $52.3 million for 1995,
compared to $23.7 million for 1994, representing an increase of $28.6 million,
or 120.7%. Operating expenses were 4.8% of revenues for 1995, compared to 3.2%
for 1994.

Salaries, wages and commissions were $29.7 million for 1995, compared to
$15.5 million for 1994, representing an increase of $14.2 million, or 91.6%.
Approximately $9.2 million of this increase was attributable to an increase in
personnel at corporate headquarters. During 1995, the Company expanded its
payroll processing operations, risk management department, human resource
department, benefits administration and marketing department in order to support
its existing client base and have resources available for future growth. The
balance of this increase consisted of: (i) $2.7 million of expenditures for
additional sales and sales support personnel hired in conjunction with Company's
market expansion; and (ii) $2.1 million attributable to the restructuring of the
Company's sales commission plan, which eliminated the residual payment feature
of the prior plan. Salaries, wages and commissions were 2.5% of revenues for
1995 (without taking into account the $2.1 million attributable the
restructuring of the Company's sales commission plan), compared to 2.1% for
1994.

Other general and administrative expenses were $19.4 million for 1995,
compared to $6.8 million in 1994, representing an increase of $12.6 million, or
185.3%. Other general and administrative expenses were 1.8% of revenues for
1995, compared to 0.9% for 1994. This increase consists of the following: (i)
$3.1 million in marketing and outside consulting costs attributable to the
Company's health benefit and retirement plans; (ii) $1.6 million of costs
related to the relocation of the Company's headquarters from four separate
facilities to the Company's current headquarters facility; (iii) $0.9 million of
new branch office costs associated with the Company's market expansion,
primarily in Texas and Georgia; and (iv) $0.8 million in information technology
support. The balance was primarily attributable to the increase in personnel
described above.

Depreciation and amortization expenses were $3.2 million for 1995, compared
to $1.3 million for 1994, representing an increase of $1.9 million, or 146.2%.
Of this, $0.6 million was associated with the Company's investment in new
payroll processing and management information systems. Amortization of
capitalized software costs associated with these systems will not begin until
such systems are operational. The Company anticipates that these systems will be
operational in 1997 and such costs will then be amortized over a five-year
period.

INTEREST EXPENSE. Interest expense was $4.8 million for 1995, compared to
$3.4 million for 1994, representing an increase of $1.4 million, or 41.2%. The
higher interest expense in 1995 was due primarily to $1.1 million of original
issuance cost associated with the Company's July 1995 financing.

NET LOSS. Net loss was $24.9 million for 1995, compared to net income of
$4.8 million for 1994, representing a decrease of $29.7 million, or 618.8%, as a
result of the factors discussed above.

29
<PAGE> 31

QUARTERLY OPERATING RESULTS

The following table presents certain unaudited results of operations data
for the interim quarterly periods during the years ended December 31, 1995 and
1996. The Company believes that all adjustments, consisting only of normal
recurring adjustments, necessary to present fairly the results of operations in
accordance with generally accepted accounting principles, have been made. The
results of operations for any interim period are not necessarily indicative of
the operating results for a full year or any future period.

<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------------------------------------------------------------
1995 1996 1997
--------------------------------------------- --------------------------------------------- ---------
MAR. 31 JUNE 30 SEPT. 30 DEC. 31 MAR. 31 JUNE 30 SEPT. 30 DEC. 31 MAR. 31
--------- --------- --------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues............. $ 242,460 $ 251,430 $ 287,101 $ 310,597 $ 324,720 $ 350,472 $ 367,484 $ 389,455 $ 402,555
Gross profit......... $ 7,838 $ 6,897 $ 8,323 $ 8,979 $ 13,289 $ 14,902 $ 15,734 $ 15,580 $ 19,895
Gross profit
margin(1).......... 3.2% 2.7% 2.9% 2.9% 4.1% 4.3% 4.3% 4.0% 4.9%
Operating income
(loss)............. $ (2,419) $ (4,291) $ (6,974) $ (6,592) $ (668) $ 490 $ (235) $ (28) $ 3,424
Net income (loss).... $ (3,253) $ (5,131) $ (9,104) $ (7,454) $ (1,695) $ (465) $ (958) $ (747) $ 2,711
</TABLE>

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

(1) Gross profit margin percentages in each of the quarters during 1995 were
negatively impacted by the health benefit plan subsidies, as described
under "-- Overview -- Health Benefit Plan Subsidies." The improvement
during 1996 was due primarily to a significant decrease in the level of
incurred health benefits subsidies coupled with the positive effect of
workers' compensation rate reductions.

LIQUIDITY AND CAPITAL RESOURCES

The Company periodically evaluates its liquidity requirements, capital
needs and availability of capital resources in view of its plans for expansion,
anticipated levels of health benefit plan subsidies, debt service requirements
and other operating cash needs. The Company has in the past sought, and may in
the future seek, to raise additional capital or take other measures to increase
its liquidity and capital resources. Historically, these funds have been raised
from the Company's partners, as well as from bank financing. The Company
currently believes that the proceeds from the Offering, cash flow from
operations, borrowing capacity under its available credit agreements and vendor
financing arrangements will be sufficient to meet its liquidity requirements
through 1998. The Company may also rely on public and private debt and equity
financing to meet its long-term liquidity needs.

At March 31, 1997 and December 31, 1996 and 1995, the Company had negative
working capital of $31.2 million, $32.2 million and $34.2 million, respectively,
an improvement at March 31, 1997 and December 31, 1996 of $1.0 million and $2.0
million, respectively. The improvement was primarily due to an increase in
current assets partially offset by a lesser increase in current liabilities. The
negative working capital at each such balance sheet date was the result of the
Company's investment of $18.4 million in its facilities and technology
infrastructure as well as its subsidy of $31.7 million of costs related to the
Company's health benefit plans during the period January 1995 through March
1997. These costs were, in part, offset by approximately $5.5 million in net
proceeds from financing activities during the same period. The Company's primary
short-term liquidity requirements relate to amounts due under its existing
credit facilities, the payment of accrued payroll and payroll taxes of its
internal and worksite employees, accounts payable for capital expenditures and
the payment of accrued workers' compensation expense and health benefit plan
premiums. At March 31, 1997, the Company had $10.0 million available under its
revolving credit facility.

For the three months ended March 31, 1997, cash provided by operating
activities of $4.6 million was primarily due to net income from operations of
$2.7 million, $1.0 million in depreciation and amortization costs, and a $0.7
million decrease in operating working capital. Cash used in investing activities
of $1.0 million was primarily due to continued capital investments in the
Company's technology infrastructure. Cash used in financing activities of $1.4
million was primarily due to the repayment of $1.8 million of borrowings, less
net contributions made by shareholders of $0.4 million.

30
<PAGE> 32

For the years ended December 31, 1995 and 1996 and the three months ended
March 31, 1997, the Company's cash and cash equivalents decreased by $7.6
million, were unchanged, and increased by $2.2 million, respectively. The
Company's cash position was affected by the following:

<TABLE>
<CAPTION>
FOR THE YEARS FOR THE
ENDED QUARTER
DECEMBER 31, ENDED
-------------- MARCH 31,
1995 1996 1997
------ ----- ---------
(IN MILLIONS)
<S> <C> <C> <C>
Cash provided by (used in) operating activities............. $ 4.9 $(1.9) $ 4.6
Cash (used in) investing activities......................... (11.6) (5.9) (1.0)
Cash (used in) provided by financing activities............. (0.9) 7.8 (1.4)
------ ----- -----
Net increase (decrease) in cash and cash equivalents........ $ (7.6) $ -- $ 2.2
====== ===== =====
</TABLE>

Cash provided by operating activities decreased by $6.8 million or 141.7%
from 1995 to 1996. In 1996, approximately $2.0 million of cash was used to fund
a deficit in working capital and another $3.9 million was used to fund a net
loss from operations.

Cash used in investing activities decreased $5.7 million or 49.2% from 1995
to 1996. Although the PEO industry has not historically been a capital intensive
industry, the Company has made substantial capital investments primarily in the
development of its technology infrastructure required to support the growth of
the Company. Capital expenditures included in cash from investing activities
were $11.6 million and $5.9 million during 1995 and 1996, respectively. During
1995 and 1996, $3.4 million and $0.6 million, respectively, of these
expenditures were financed through capital leases covering computer hardware,
software and furniture. The Company expects to implement its new information
systems in 1997. The Company anticipates capital expenditures in 1997 of
approximately $4.0 million primarily related to its information systems.

Cash provided by financing activities increased by $8.7 million from 1995
to 1996. The primary reason for this increase was an increase of approximately
$16.8 million in net partner contributions, offset by a reduction in net capital
lease financing of $4.0 million and the repayment of obligations under the
Company's credit agreement of $4.4 million. Substantially all of the partner
contributions were from the sale of Class A Interests in 1996.

In November 1993, the Company entered into a $15.0 million secured lending
credit agreement to fund the acquisition of the Predecessor, pay transaction
costs and fees, and provide working capital. This arrangement consisted of a
$12.0 million five-year term loan and $3.0 million revolving credit arrangement.
Interest on the revolving credit facility was at the base rate, as defined, plus
an applicable margin. Borrowings under the term loan were repaid in quarterly
installments which began in January 1994. The Company incurred debt issuance
costs of approximately $1.9 million in connection with this financing. In
addition, the Company issued warrants to acquire 15% of the Common Interests to
the agent under the credit agreement, with an assigned value of $0.8 million.
Such assigned value was recorded as an original issue discount of the term loan
described above.

In December 1994, the Company consummated a recapitalization consisting of
a $25.0 million senior secured term loan facility with a maturity of five years
and a $13.0 million revolving credit facility which reduced to $10.0 million on
March 31, 1995. A letter of credit payable to Provident, the Company's former
health benefit provider, in the amount of $5.0 million is currently pledged
under this revolving credit facility. Proceeds from the recapitalization of
$30.8 million were used to: (i) repay the outstanding interest and principal
under the previous credit agreement ($10.0 million); (ii) repurchase outstanding
preferred limited partnership interests ($1.7 million); (iii) repurchase 50% of
the warrants issued to the agent under the previous credit agreement ($8.1
million); (iv) make a capital distribution to common limited partners ($9.2
million); and (v) pay debt issuance costs ($1.7 million). As a result of this
recapitalization, the Company wrote off approximately $1.2 million of debt
issuance costs associated with the previous credit agreement and wrote off
approximately $0.7 million of unamortized original issue discount.

31
<PAGE> 33

In June 1995, the Company issued $2.0 million of 12% redeemable preferred
limited partnership interests (the "12% Interests") and increased its revolving
credit facility by $3.0 million for a 90-day period. In consideration for the
increase in its borrowing capacity under its revolving credit facility, the
Company issued to certain of the lenders a warrant to purchase 1% in aggregate
of the Common Interests. This warrant was valued at $1.1 million and was
completely amortized as original issue discount in 1995. The Company also
entered into a $5.1 million capital lease agreement with another lender for
certain computer and office equipment in July and August 1995.

In April 1996, the Company issued $19.5 million of Class A Interests and
converted the 12% Interests, including accrued and unpaid distributions thereon,
into an additional $2.2 million of Class A Interests. In August 1996, an
additional $3.0 million of Class A Interests were issued and $6.8 million of the
Class B Interests were issued in partial exchange for certain outstanding Common
Interests. In addition, pursuant to an option issued in August 1996, an
additional $0.4 million of Class A interests were issued in January 1997. On May
30, 1997, the Company will redeem 50% of the outstanding Class B Interests
pursuant to the terms of such interests for $3.4 million plus a Fixed Return
Amount of $149,000. See "Certain Transactions."

The Fixed Return Amount accrues on the Class A Interests from the date of
issuance at a rate of 8% per annum until April 30, 1997; 10% per annum until
April 30, 1998; and 12% per annum after April 30, 1998. In the case of Class B
Interests, the Fixed Return Amount accrues at a rate of 5.86% per annum. Upon
consummation of the Reorganization, the Class A Interests will be converted into
Common Stock, cash and/or Warrants, pursuant to elections made by the holders
thereof. See "The Reorganization."

A portion of the proceeds from the Offering will be used to repay in full
amounts borrowed under the Company's existing credit agreement, which will cause
such agreement to terminate. The Company is currently in discussions with
several lenders concerning a new credit facility which will replace the existing
one. The Company has obtained a proposal for a new credit facility with rates
and terms more favorable than the existing credit agreement. This facility will
consist of a revolving credit sub-facility, a letter of credit sub-facility, and
an acquisition sub-facility. Should the new credit agreement not be in place at
the time of the Offering, the Company believes that the proceeds from the
Offering, cash flow from operations and vendor financing arrangements will be
sufficient to meet its liquidity requirements through 1998.

INFLATION

The Company believes that inflation in salaries and wages of worksite
employees has a positive impact on its results of operations as its service fee
is proportional to such salaries and wages.

32
<PAGE> 34

BUSINESS

Staff Leasing is the largest PEO in the United States. As of March 31,
1997, the Company served over 8,000 clients with over 92,000 worksite employees,
principally in Florida, Texas and Georgia. The Company believes that it has more
than twice the number of clients and worksite employees as any PEO competitor
and that its 1996 revenues of $1.4 billion exceeded the PEO revenues of any
competitor by more than $500 million.

Staff Leasing's services are designed to improve the productivity and
profitability of its clients' businesses by:

- Allowing managers of these businesses to focus on revenue producing
activities by relieving them of the time-consuming burdens associated with
employee administration;

- Helping these businesses to better manage certain employment-related
risks, including those associated with workers' compensation and state
unemployment taxes;

- Improving the cash management of these businesses with respect to
payroll-related expenses; and

- Enabling these businesses to attract and retain employees by providing
health and retirement benefits to worksite employees on a cost-effective
and convenient basis.

PEO INDUSTRY

The PEO industry began to evolve in the early 1980's, largely in response
to the difficulties faced by small to medium-sized businesses in procuring
workers' compensation insurance coverage on a cost-effective basis and in
operating in an increasingly complex legal and regulatory environment. While
various service providers, such as payroll processing firms, benefits and safety
consultants and temporary staffing firms, were available to assist these
businesses with specific tasks, PEOs began to emerge as providers of a more
comprehensive outsourcing solution to these burdens.

Growth in the PEO industry has been significant. According to NAPEO, the
number of employees under PEO arrangements in the United States has grown from
approximately 10,000 in 1984 to approximately 2.0 million in 1995. Staffing
Industry Analysts, Inc., an employment industry research firm, estimates that
gross revenues in the PEO industry grew from $5.0 billion in 1991 to $17.6
billion in 1996, representing a compounded annual growth rate of approximately
29%.

33
<PAGE> 35

Staff Leasing believes that the key factors driving demand for PEO services
include:

- The increasing complexity of employment-related governmental regulations
and the related costs of compliance;

- The size and growth of the small to medium-sized business community in
the United States;

- The increasing acceptance in the small to medium-sized business community
of outsourcing of non-core functions;

- The need to manage cash expenditures associated with payroll and
payroll-related expenses, including workers' compensation insurance; and

- The need to provide health and retirement benefits on a cost-effective
and convenient basis.

Another contributor to the recent growth of the PEO industry has been the
increasing recognition and acceptance by regulatory authorities of PEOs and the
co-employer relationship created by PEOs, with the development of licensing or
registration requirements at the state level. Staff Leasing and other industry
leaders, in concert with NAPEO, have worked with the relevant government
entities for the establishment of a regulatory framework that would clarify the
roles and obligations of the PEO and the client in the "co-employer"
relationship. This framework imposes financial responsibility on the PEO and its
controlling persons in order to promote the increased acceptance and further
development of the industry. See "Industry Regulation -- State Regulation and
Other State Regulation."

While many states do not explicitly regulate PEOs, 16 states (including
Florida and Texas) have enacted legislation containing licensing or registration
requirements and, currently, at least three states including Georgia, are
considering such regulation. Such laws vary from state to state but generally
provide for monitoring the fiscal responsibility of PEOs.

COMPETITIVE ADVANTAGES

The Company believes that it has a number of key advantages which enable it
to compete effectively in its target markets, including the following:

Size and geographic concentration. At March 31, 1997, the Company served
over 8,000 clients with over 92,000 worksite employees, over 72,000 of which are
located in the Company's six Florida markets. Based upon U.S. Department of
Labor employment statistics, the Company believes that more than one percent of
the currently employed Florida workforce is co-employed by Staff Leasing.
However, the Company believes that its penetration of its target markets in
Florida is less than ten percent. The Company's size and geographic
concentration of its business in Florida have enabled it to leverage its
referral base and vendor relationships. This, in turn, increases the
productivity of the Company's sales force and safety consultants; allows the
Company to benefit from economies of scale in claims processing, which for
workers' compensation is state specific; and attracts regional health benefit
providers that are looking for increased utilization of their provider networks.

Comprehensive risk management focus. The Company assumes employee-related
risks with the addition of each new client. A critical focus of the Company's
operations is the management of workers' compensation and state unemployment tax
risks. Workers' compensation risk is managed by careful selection of clients,
on-site loss prevention services and sophisticated claims management. The
Company evaluates the claims history of prospective clients and determines
whether a more in-depth review, which may include on-site inspection by the
Company's or Liberty Mutual's safety consultants, is needed before acceptance.
The Company's 27 safety consultants perform on-site inspections of the client's
workplace to identify potential hazards and to communicate appropriate safety
measures. The Company believes that these efforts decrease the frequency and
severity of injury in the small to medium-sized business workplace, thus
changing the nature of the risk that the Company assumes. Finally, if injuries
do occur, the Company encourages prompt telephone reporting of the injury to
Liberty Mutual's dedicated claims operation, where nurses and claims adjusters,
working in tandem, direct the injured worker to an exclusive provider
organization of occupational health professionals for medical treatment, manage
the course of treatment and focus on returning the injured worksite employee to
work as soon as possible. Unemployment tax risk is controlled, in part, through
aggressive management of its state unemployment tax exposure, with the Company
participating in

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<PAGE> 36

approximately 600 adjudications per month. In addition, the Company operates a
placement service which seeks to place unemployed workers in new positions with
clients and other businesses.

Strategic vendor alliances. Vendors of employment-related insurance
products have encountered difficulty in efficiently distributing their products
and services to the small to medium-sized business market. Staff Leasing's
relationship with its clients provides an effective and cost-efficient
distribution channel for those products and services. The Company's workers'
compensation policy is provided by Liberty Mutual under a fully insured,
guaranteed cost arrangement. The Company has commenced the fourth year of this
alliance with Liberty Mutual. This relationship has recently been expanded to
provide for: (i) a 36-person dedicated claims processing unit adjacent to the
Company's headquarters, with processes and procedures jointly designed by Staff
Leasing, Liberty Mutual and their joint consultant, Marsh & McLennan; (ii)
intensive training of the Company's safety consultants and risk assessors; (iii)
technology sharing and joint development of automated underwriting systems; and
(iv) favorable rates and payment terms. Amounts paid under this arrangement are
a fixed percentage of workers' compensation payroll.

The Company's group health benefit plans are provided by three Blue Cross
entities. The Company has found that the Blue Cross health benefit plan
offerings are attractive to worksite employees, who are the primary source of
premium payments. Blue Cross/Florida has also provided substantial marketing
support to increase enrollment in the Company's Florida health benefit plan.

Advanced technology infrastructure. The Company invested approximately
$17.5 million in computer and telephone technology and related infrastructure in
1995 and 1996 to improve service and provide additional cost efficiencies. This
new infrastructure will provide additional operating leverage, enabling the
Company to handle increasing levels of incoming calls and payroll processing
with increasing levels of accuracy, without requiring substantial additions to
staff. The Company intends to further automate its call center and apply more
technology to its field staff and, within several years, expects to automate its
clients for purposes of payroll processing. See "-- Information Technology."

GROWTH STRATEGY

The Company's goal is to capitalize on its position as the leading provider
of PEO services in the United States, while achieving sustainable revenue and
income growth. The key elements of the Company's growth strategy are:

Increase the Company's penetration in its existing geographic markets. The
Company believes that there is potential for substantial growth in its existing
geographic markets. The Company currently has 24 offices throughout Florida,
with no one office accounting for more than ten percent of its Florida worksite
employee base. The Company views Florida as consisting of six distinct markets
in which the Company co-employs from two percent to ten percent of the small to
medium-sized business workforce. The Company believes that there is substantial
opportunity for increased penetration of these markets and has focused its sales
force on generating new clients from referrals by existing clients.

The Company believes that it has penetrated less than one percent of the
small to medium-sized business markets in Texas and Georgia. In addition, these
states have relatively high growth in small to medium-sized business formation
and employment. The Company opened a new office in Savannah, Georgia during the
second quarter of 1997 and plans to deploy additional salespersons in its Texas
markets throughout 1997.

Establish branch offices in new states. The Company has targeted new
geographic markets for expansion. The Company will enter new markets that
possess favorable demographics, in terms of the number of potential clients
within industries typically served by the Company, and a favorable regulatory
environment with respect to PEOs and workers' compensation. The Company has
demonstrated its ability to grow outside of its Florida base through its Texas
expansion. In December 1994, the Company opened an office in Dallas, Texas and
opened four additional offices in Texas in May 1995. The Company's Texas
operations had co-employed over 9,800 worksite employees as of March 31, 1997,
which the Company believes makes it one of the three largest PEOs in that state.
Within twelve months after opening, branch offices opened in Texas

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<PAGE> 37

generated monthly aggregate branch gross profits in excess of monthly aggregate
direct branch expenses. The Company opened an office in Phoenix in May 1997,
will open an office in Tucson in July 1997 and plans to open three additional
offices in one or more states during the last half of 1997.

Pursue strategic acquisitions. The Company believes that the PEO industry
is highly fragmented, which creates opportunities for consolidation. According
to NAPEO, there are currently over 2,000 PEOs operating in the United States.
The Company will consider strategic acquisitions of PEOs and related businesses
to provide further penetration of its existing markets and to establish a base
in new markets from which to operate and expand. The Company currently does not
have any agreement, arrangement or understanding regarding any such
acquisitions. See "Risk Factors -- Risks Associated with Expansion into
Additional States."

Distribute new services and products. The Company believes it possesses
unique direct access to, and information about, its clients and worksite
employees. The Company believes it can distribute additional products and
services, such as commercial and personal insurance, in a more convenient manner
to its clients and worksite employees and on a more cost-effective basis than
vendors of these products and services could were they to market them directly.

CLIENT SERVICES

The Company provides a broad range of services to its clients, including
payroll administration, risk management, benefits administration, unemployment
services and human resource consulting services. These services are offered by
the Company to its clients on a bundled basis, except for health and retirement
benefits, which are optional for worksite employees. Staff Leasing provides
these services to its clients through the following core activities:

Payroll administration. As a co-employer, the Company is responsible for
payroll administration, which includes recordkeeping, making payroll tax
deposits, reporting payroll taxes and related matters. The Company's call center
in Bradenton, Florida is staffed by approximately 105 client service
representatives and supervisors, organized into 14 teams, each of which is
assigned to serve specific clients. These representatives receive payroll and
employee-related information by telephone and facsimile transmission from
clients and input such data for processing. The call center generally handles
more than 30,000 phone calls per week. In 1996, the Company processed
approximately 2.7 million payroll checks and sent out approximately 187,000 W-2s
at the end of January 1997.

Risk management. As part of its risk management services, the Company
conducts on-site safety inspections for its clients with high-risk profiles
within 30 days of commencement of the Company's services to identify potential
safety hazards and to meet with clients to review their loss history, determine
loss exposure, evaluate current controls and recommend additional control
options to reduce exposure to loss or worker injury. These safety consultants
continue to monitor worksite safety concerns, as needed. The safety consultants
are also trained to ensure the proper workers' compensation classification of
worksite employees. These risk management services are designed to reduce
workers' compensation claims and to reduce other costs arising from workplace
injury, such as costs of employee turnover, employee retraining and recruiting
and reduced employee morale.

Liberty Mutual's dedicated claims center allows a client to report a
worksite injury through a toll free number, which eliminates the paperwork
burden otherwise associated with claims reporting. This prompt reporting allows
the immediate commencement of Liberty Mutual's claims management process,
further reducing the cost of the claim. During 1996, over 55% of worksite
injuries were reported to this claims center within 24 hours. The Company,
Liberty Mutual and their joint consultant, Marsh & McLennan, worked as a team to
design and implement the claims management process conducted at this facility,
which now fully integrates managed care and return-to-work activities with the
claims adjustment process. See "-- Vendor Relationships."

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<PAGE> 38

Benefits administration. The Company offers to its clients and worksite
employees optional health and dental insurance, life insurance, accidental death
and dismemberment insurance and long-term disability insurance. In addition, the
clients and worksite employees are offered a cafeteria plan which includes a
flexible spending account allowing for payment of certain health and dependent
care coverages with pre-tax payroll dollars.

The Company also offers retirement benefits under a 401(k) retirement plan
for worksite employees. Under a new multiple employer 401(k) retirement plan,
which the Company adopted effective as of April 1, 1997, the Company is able to
offer coverage to all employees, including owners of clients. See "Industry
Regulation -- Employee Benefit Plans." In addition to the 401(k) retirement
plan, the Company also provides numerous benefits-related human resource
services to its clients. These services for both health and retirement benefit
plans include client support for issues related to pre- and post-tax payroll
deductions, plan eligibility, Section 125 and ERISA requirements, Consolidated
Omnibus Budget Reconciliation Act of 1987 ("COBRA") administration for health
benefit plans and investment fund information for retirement benefit plans.

Unemployment services. The Company's unemployment services department is
responsible for processing all unemployment claims related to worksite employees
and during 1996 processed approximately 1,100 unemployment insurance claims each
month. Claims which are determined by the Company to be unwarranted are
protested by the Company under the appropriate regulatory procedures. The
Company also offers employment placement services to unemployed worksite
employees and attempts to place such employees who request such services either
with other clients or other businesses.

Human resource consulting services. The Company provides certain
consulting services to assist its clients in the human resource area, including
advice concerning appropriate employment-related policies and procedures, such
as policies related to vacation, termination, harassment, discrimination,
overtime and dress codes. These services are provided both on-site through the
Company's branch offices and at the Company's corporate headquarters by a
dedicated team of human resource professionals. The Company provides
standardized employment application forms and employee handbooks, which can be
customized to suit client needs. The Company conducts seminars for its clients
and worksite employees concerning human resource issues, such as interviewing
techniques, diversity awareness and sexual harassment training. These services
primarily appeal to the Company's larger clients and to those clients in white
collar industries.

CLIENTS

Overview. Staff Leasing's customer base consisted of over 8,000 client
companies as of March 31, 1997. As of December 31, 1996, the Company's clients
had an average of 11.5 employees, with approximately 62% having between five and
99 employees and approximately 33% (accounting for less than 8% of worksite
employees) having less than five employees. As of December 31, 1996, the Company
had clients classified in

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<PAGE> 39

approximately 600 Standard Industrial Classification ("SIC") codes. Staff
Leasing's approximate client distribution, based on 1996 revenues, by major SIC
code industry grouping was as follows:

<TABLE>
<CAPTION>
PERCENT OF
REVENUES TOTAL
CATEGORY (IN THOUSANDS) REVENUES
- -------- -------------- ----------
<S> <C> <C>
Services(1)................................................. $ 404,726 28.3%
Construction................................................ 373,403 26.1
Manufacturing............................................... 170,679 11.9
Restaurants................................................. 111,035 7.8
Retail Trade................................................ 109,573 7.6
Agriculture(2).............................................. 71,379 5.0
Transportation.............................................. 68,219 4.8
Wholesale Trade............................................. 57,624 4.0
Finance, Insurance, Real Estate............................. 47,060 3.3
Public Administration....................................... 6,282 0.4
Mining...................................................... 1,586 0.1
Other....................................................... 10,565 0.7
---------- -----
Total............................................. $1,432,131 100.0%
========== =====
</TABLE>

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

(1) Services consist principally of clients in the following: business services,
automotive repair, health services, personal services (e.g., laundry and
dry cleaning, beauty and barber shops), hotel and lodging services,
engineering, accounting and management services, recreational services,
social services and miscellaneous repair services.
(2) Agriculture consists primarily of landscaping and nursery services.

Client selection and retention strategy. As part of its client selection
strategy, the Company offers its services to businesses falling within specified
SIC codes and eliminates certain industries with respect to which it cannot, at
present, effectively manage the risk of employee injury (such as migratory
labor, asbestos removal, logging and oil and gas exploration). All prospective
clients are also evaluated individually on the basis of workers' compensation
risk and claims history, group health history, unemployment history and credit
status. With respect to potential clients operating in certain industries
believed by the Company to present a level of risk exceeding industry norms,
more rigorous approval requirements must be met before the Company enters into a
Client Leasing Agreement. This process may include an on-site inspection and
review of workers' compensation and unemployment claims experience for the last
three years. In addition, under the terms of the Company's agreement with
Liberty Mutual, potential clients in certain industries or with historically
high workers' compensation insurance claims experience must also be approved by
Liberty Mutual before a Client Leasing Agreement is executed.

The Company's sales force is directed to sell to all businesses within its
established workers' compensation risk parameters and receives additional
incentives with respect to those businesses that fall within the Company's
construction and blue-collar service target markets. Outside of the areas of
workers' compensation and group health risk, the Company does not have rigid
criteria regarding client selection. The Company takes into account factors such
as the size of the client by employee count and payroll volume and the length of
time the client has been in business when determining a service fee. The method
of payment is affected by the client's credit history. As a consequence of this
strategy, the Company's client base contains significant segments of businesses
with fewer than five employees, start-up businesses and small construction
businesses that tend to be more unstable and more likely to fail than larger
businesses with long operating histories in less cyclical industries.

The Company believes that the attrition rate of its client base is directly
affected by the natural instability in the small to medium-sized business market
that it serves. According to the U.S. Small Business Administration, the annual
failure rate for all businesses is 14%. The Company believes that the failure
rate for businesses with fewer than 100 employees is higher than this rate. In
1996, approximately 30% of the

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<PAGE> 40

clients that ceased to use the Company's services did so for reasons relating to
financial failure and approximately 38% of such clients were terminated at the
Company's option for reasons that include unacceptable credit risk, legal
non-compliance and low profitability for the Company. The Company believes that
it has the opportunity to reduce the level of attrition of the remaining
approximately one-third of those clients that cease to use the Company's
services for other reasons. The Company has taken certain actions intended to
increase client retention, such as replacing its former 401(k) retirement plan
with a multiple employer 401(k) retirement plan that allows owners and
highly-compensated employees to participate, elevating levels of client service
in the payroll and benefits administration areas, and increasing its efforts to
retain profitable clients that have indicated they may terminate their
relationship with the Company and to recapture lost but profitable clients.

Client Leasing Agreement. All clients enter into Staff Leasing's Client
Leasing Agreement. The Client Leasing Agreement provides for an initial one-year
term, subject to termination by the Company or the client at any time upon 30
days' prior written notice. After the initial term the contract may be renewed,
terminated or continued on a month-to-month basis. In most cases, such contracts
are continued on a month-to-month basis. The Company requires the owners of
substantially all of its clients to personally guarantee the clients'
obligations under the Client Leasing Agreement.

The service fee charged by the Company is invoiced along with each periodic
payroll of the client. The service fee covers the cost of certain
employment-related taxes, workers' compensation insurance coverage and
administrative and field services provided by Staff Leasing to the client,
including payroll administration, recordkeeping and safety, human resource and
regulatory compliance consultation. The client's portion of health and
retirement benefit plan costs is invoiced separately and is not included in the
service fee. The component of the service fee related to administration varies
according to the size of the client, the amount and frequency of payroll
payments and the method of delivery of such payments. The component of the
service fee related to workers' compensation and unemployment insurance is
based, in part, on the client's historical claims experience.

Employment-related liabilities are allocated between the Company and the
client pursuant to the Client Leasing Agreement, with the Company assuming
responsibility for worksite employee payroll and for compliance with certain
employment-related governmental regulations that can be effectively managed away
from the client's premises. The client remains responsible for compliance with
other employment-related governmental regulations that are more closely related
to the daily supervision of worksite employees. Certain responsibilities and
liabilities are shared by Staff Leasing and the client where such joint
responsibility is appropriate. The following table summarizes the division of
applicable responsibilities for regulatory compliance under the Client Leasing
Agreement:

<TABLE>
<CAPTION>
STAFF LEASING CLIENT
------------- ------
<S> <C>
- - All rules and regulations governing the - Occupational Safety and Health Act
reporting, collection and payment of ("OSHA") and related or similar
Federal and state payroll taxes on Federal, state or local regulations
wages, including, but not limited to:
(i) Federal income tax withholding - Government contracting requirements as
provisions of the Code; (ii) state regulated by, including, but not
and/or local income tax withholding limited to: (i) Executive Order 11246;
provisions; (iii) FICA; (iv) FUTA; and (ii) Vocational Rehabilitation Act of
(v) applicable state unemployment tax 1973; (iii) Vietnam Era Veterans'
provisions Readjustment Assistance Act of 1974;
(iv) Walsh-Healy Public Contracts Act;
- - Applicable workers' compensation laws (v) Davis-Bacon Act; (vi) the Service
including, but not limited to: (i) Contract Act of 1965; and (vii) any and
procuring workers' compensation all similar, related, or like Federal,
insurance; (ii) completing and filing state or local laws, regulations,
all required reports; and (iii) ordinances and statutes
administering, managing and otherwise
processing claims and related procedures - Professional licensing and liability
</TABLE>

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<PAGE> 41

<TABLE>
<S> <C>
- - Fair Labor Standards Act ("FLSA") - Fidelity bonding requirements
- - COBRA - Code Sections 414(m), (n) & (o) relating to
- - Section 1324(b) of the Immigration Reform and client maintained benefit plans
Control Act (employment eligibility verification) - Worker Adjustment and Retraining Notification Act
- - Consumer Credit Protection Act, Title III - Laws affecting the assignment and ownership of
intellectual property rights including, but not
- - All rules and regulations governing limited to, inventions, whether patentable or not
administration, procurement and payment of all and patents resulting therefrom, copyrights and
employee benefit plans elected by the client or trade secrets
worksite employee - Laws affecting the maintenance, storage and
disposal of hazardous materials
- FLSA*, Title VII (Civil Rights Act of 1964), the
Family and Medical Leave Act of 1993*, the
Americans with Disabilities Act, the Age
Discrimination in Employment Act (including
provisions thereunder relating to client's
premises), and any other Federal, state, country,
or local laws, regulations, ordinances and
statutes which govern the employer/employee
relationship
</TABLE>

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

* Shared responsibility

The Company sends worksite employees an employee enrollment package which
describes the "at-will" employment relationship of the worksite employees with
Staff Leasing. If the Client Leasing Agreement with any client is terminated,
the worksite employees of such client are dismissed from employment by Staff
Leasing. The worksite employees are informed that if the client fails to pay
Staff Leasing for the worksite employees' services, Staff Leasing will only be
responsible for the applicable minimum wage (and, if applicable, the legally
required overtime pay) for such worksite employees for work performed until such
worksite employees receive notice of termination.

Because Staff Leasing is a co-employer with the client, it is possible that
Staff Leasing could incur liability for violation of Federal and state
employment-related laws even if it is not responsible for the conduct giving
rise to such liability. The Client Leasing Agreement addresses this issue by
providing that the Company and the client will indemnify each other for
liability incurred to the extent the liability is attributable to conduct by the
indemnifying party. Notwithstanding this contractual right to indemnification,
it is possible that the Company could be unable to collect on a claim for
indemnification and may therefore be ultimately responsible for satisfying the
liability in question. See "Risk Factors -- Liabilities for Client and Employee
Actions" and "Risk Factors -- Liability for Worksite Employee Payroll and
Payroll Taxes." The Company maintains employer practices liability insurance and
general liability insurance in amounts the Company believes are reasonable to
protect it against liability as a co-employer.

Clients are required to pay amounts owed to the Company by check or bank
wire or, in some cases, by certified or official bank check, which is delivered
to the Company upon delivery of the payroll checks to the client. Although the
Company is ultimately liable as a co-employer to pay worksite employees at the
applicable minimum wage and overtime rates for work performed, it retains the
ability to terminate immediately the Client Leasing Agreement as well as its
employment relationship with the worksite employees upon non-payment by a
client. The Company manages its exposure for payment of such amounts through
this right to terminate, the periodic nature of payroll, client credit checks,
owner guarantees and the Company's client selection process. During 1996, the
Company recorded approximately $651,000 in bad debt

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<PAGE> 42

expense (including direct costs and the unpaid portion of the Company's service
fee) on approximately $1.4 billion of total revenues.

SALES AND MARKETING

The Company markets its services through a direct sales force of
approximately 165 sales employees, as of March 31, 1997. The Company uses a
direct sales force that it controls, rather than selling through agents, because
this allows the Company to more closely monitor and manage employer-related
liabilities assumed with each sale. The Company's sales force is located
throughout its 34 branch offices, with four to eight sales persons located in
each branch office. The Company's sales persons are compensated by a combination
of salary and commissions which has, for top producers, exceeded $100,000 in
annual compensation.

The Company seeks to hire sales persons who have five years or more sales
experience in other business-to-business sales positions. The Company provides
at least one month of training for each new sales person in the field, followed
by a one week formal training program to familiarize new sales persons with the
Company's services, policies and procedures. The Company requires sales persons
to undergo training when new services are offered by the Company.

Staff Leasing generates sales leads from various sources, primarily
referrals from existing clients, which accounted for approximately 41% of the
Company's new clients during the eight months ended April 30, 1997, and other
sources such as accountants and other professionals. Each sales person is
required to visit his or her clients periodically in order to maintain an
ongoing relationship and to benefit from referrals. In a 1996 survey conducted
by an independent market research firm at the Company's direction, 89% of the
Company's clients indicated that they would refer a valued business associate to
the Company. In order to take advantage of this opportunity, the Company has
focused its sales efforts on client referrals and plans to introduce a new
client incentive program to encourage increased referral activity from its
clients. The Company also generates sales leads through contacts produced by its
telemarketing group, which makes calls to potential clients identified from
industry data, purchased lists and other sources.

The Company has also entered into an exclusive client referral relationship
with E.K. Williams/General Business Services, which provides financial and
accounting management services to business owners and has more than 500
franchised locations nationwide, including 87 locations in the Company's
existing markets. Under this arrangement E.K. Williams/General Business Services
will refer Staff Leasing to its small to medium-sized business clients. In
addition, the Company has obtained endorsements from national franchisors such
as SUBWAY(R), Mr. Rooter(R), Aire Serve(R), Mr. Electric(R) and Certa
ProPainters(R) by which these companies will recommend Staff Leasing's services
to their franchisees.

VENDOR RELATIONSHIPS

Staff Leasing provides benefits to its worksite employees under
arrangements with a number of vendors. The Company's most significant vendor
relationships are as follows:

Liberty Mutual. The Company's workers' compensation coverage is provided
by Liberty Mutual, which is the largest workers' compensation insurance carrier
in the United States. This program was initiated in March 1994, renegotiated
effective January 1, 1997, to, among other things, reduce rates charged to the
Company, and currently provides coverage through December 31, 1999. The Company
recently negotiated a further rate reduction from Liberty Mutual, which will
become effective October 1, 1997. Staff Leasing is now Liberty Mutual's second
largest client for workers' compensation insurance in terms of premiums.

The Company's arrangement with Liberty Mutual has always provided coverage
on a guaranteed cost basis. Amounts due to Liberty Mutual under this arrangement
are a fixed percentage of the Company's workers' compensation payroll and are
paid on a monthly basis. The Company has no liability in excess of such amounts
paid. Payouts on workers' compensation claims can extend for years. With the
Liberty Mutual arrangement, the Company's earnings are more predictable, since
changes in the frequency of claims do not affect current income and changes in
the ultimate severity of incurred claims do not affect future income. Under the
renegotiated arrangement, the rate per $100 of payroll charged to the Company
for workers'

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<PAGE> 43

compensation insurance coverage has decreased from that paid in 1996 by 26.8%,
even though the mix of clients and worksite employees by industry classification
has remained relatively constant. See "-- Client Services -- Risk Management."

Liberty Mutual has established a 36-person dedicated claims unit adjacent
to the Company's corporate headquarters to manage the Company's workers'
compensation claims exclusively. The Company, Liberty Mutual and their joint
consultant, Marsh & McLennan, worked as a team to design and implement the
claims management process conducted at this facility, which fully integrates
managed care and return-to-work activities with the claims adjustment process.
This enables Liberty Mutual and the Company, working together, to provide more
cost efficient claims administration and processing and better client service,
with a concomitant reduction in workers' compensation claims experience, which
the Company believes should have a favorable impact on future rates.
Approximately 900 new claims per month are currently managed at this facility.

Blue Cross/Blue Shield. The Company's group health benefit plans are
provided by three Blue Cross entities under separate contracts in the states of
Florida, Texas and Georgia. Premiums paid by worksite employees, and the portion
of premiums, if any, paid by the client, varies depending on the coverage
options selected and the place of residence of the worksite employee. Plans
offered in Texas and Georgia provide the Company with guaranteed cost contracts,
with the Company's liability capped at fixed amounts. The Company's policy with
Blue Cross/Florida is a three-year minimum premium arrangement. The
administrative costs associated with this policy are fixed for the three-year
term and stop loss coverage for 1997 is provided at the level of 115% of
projected claims. Stop loss coverage for succeeding years will be established
based on claims experience in the first year of the policy.

INFORMATION TECHNOLOGY

The Company has invested and is continuing to invest significant capital
and resources in the development and enhancement of its information systems.
During 1995 and 1996, the Company invested approximately $17.5 million in its
technology infrastructure, including computer hardware and software and
telephony. This investment was made to better serve its increasing client base,
to maintain a high level of customer service at increasing volumes and to
increase operating leverage in its processing operations. See "-- Growth
Strategy."

These systems provide the Company with the capability to promptly and
accurately deliver payroll and related services and generate in-depth management
reports. The Company's information systems manage all data relating to worksite
employee enrollment, payroll processing, benefits administration, management
information and other requirements of the Company's operations. The current
systems have high volume payroll processing capabilities which allow the Company
to produce and deliver weekly payrolls to its clients, each customized to the
needs of such clients. Currently, the Company processes in excess of 50,000
payroll checks per week. The Company believes that the current systems are
capable of supporting the Company's operations and the anticipated growth
therein through 1998.

The Company's investment through December 31, 1996 includes: (i) two
HP-9000 client servers; (ii) additional data storage capacity; (iii) 574 desktop
PC's; (iv) a wide area network to its branches; (v) a local area network in its
headquarters facility; (vi) a telephone system that is capable of detailed call
tracking, monitoring, routing and interactive voice response for enrollment
functions; and (vii) built-in redundancies in each of these areas, all of which
are fully operational. The Company is completing development, installation and
testing of the remaining software components of its new information system,
primarily the ORACLE(R) Human Resource and Payroll application. The Company
believes this application is the leading application in its field. The Company
anticipates that the new system will be operational during 1997. The Company
will operate its current software in parallel with the ORACLE(R) Human Resource
and Payroll application until it is satisfied with the operation of the new
system. The new technology should enable the Company to increase the
productivity of its call center representatives and to better direct its
business through improved managed information systems.

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<PAGE> 44

The Company's information technology staff has grown from five persons in
1994 to 27 persons at March 31, 1997, and the Company plans to continue to
increase staffing of this department. The Company believes that its information
systems are integral in achieving its growth objectives and, as such, the
Company intends to continue to invest in its technology infrastructure, although
at reduced levels. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."

COMPETITION

The PEO industry is highly fragmented. NAPEO estimates that there are
approximately 2,000 companies providing certain levels of PEO services. Most of
these companies have limited operations and fewer than 1,000 worksite employees.
However, there are several larger industry participants, and the Company
believes three competitors have PEO revenues in excess of $500 million. The
Company considers its primary competition to be PEOs, insurance agents and
fee-for-service providers, such as payroll processors and human resource
consultants. The market for PEO services is expected to become increasingly
competitive as larger companies, some of which have greater financial resources
than Staff Leasing and which have not traditionally operated in this industry,
enter the market. See "Risk Factors -- Competition and New Market Entrants."

The key competitive factors in the PEO industry are breadth and quality of
services, price, reputation, financial stability, as well as choice, quality and
cost of benefits. The Company believes that it competes favorably in these
areas.

INTERNAL COMPANY EMPLOYEES

The Company had 905 internal employees as of March 31, 1997. At such date,
444 employees were located at the Company's Bradenton, Florida headquarters. The
remaining employees were located in the Company's branch offices. None of the
Company's internal employees is a party to a collective bargaining agreement.

FACILITIES

The Company's operations are conducted from its 86,300 square foot
corporate headquarters located in Bradenton, Florida. The Company leases this
facility under a lease which expires in December 2005, but which can be renewed,
at the option of the Company, for two additional five-year periods. The Company
also leases approximately 10,200 square feet of ancillary space, adjacent to its
headquarters, under a lease which expires in March 1998, which space is
currently being used for file storage.

The Company also leases space for its 34 branch offices, located in
Florida, Georgia, Texas and Arizona. The Company believes that its branch office
leases, which generally have terms of three to five years, can either be renewed
on acceptable terms or that other, comparable space can be located upon the
expiration of any branch office lease without significant additional cost to the
Company. The Company considers its facilities to be adequate for its current and
prospective operations.

LEGAL PROCEEDINGS

While the Company is involved from time to time in routine legal matters
incidental to its business, there are presently no material legal proceedings
pending against the Company.

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<PAGE> 45

INDUSTRY REGULATION

INTRODUCTION

Some governmental agencies that regulate employment have developed rules
that specifically address issues raised by the relationship among PEOs, clients
and worksite employees. Existing regulations are relatively new and, therefore,
their interpretation and application by administrative agencies and Federal and
state courts is limited or non-existent. The development of additional
regulations and interpretation of existing regulations can be expected to evolve
over time. In addition, from time to time, states have considered, and may in
the future consider, imposing certain taxes on gross revenues or service fees of
the Company and its competitors. The Company cannot predict with certainty the
nature or direction of the development of Federal, state and local regulations
or whether any states will impose such taxes. See "Risk Factors -- Possible
Adverse Application of Certain Federal and State Laws" and "Risk
Factors -- State and Local Regulation of the PEO Industry."

The Company believes that its operations are currently in compliance in all
material respects with all applicable Federal and state statutes and
regulations.

EMPLOYEE BENEFIT PLANS

Effective April 1, 1997, the Company began to offer a new 401(k) retirement
plan, designed to be a "multiple employer" plan under Code Section 413(c). This
new plan enables owners of clients and highly-compensated worksite employees, as
well as highly-compensated internal employees of the Company, to participate.
Such persons were excluded from the prior 401(k) retirement plan to avoid issues
of discrimination in favor of highly-compensated employees. Generally, employee
benefit plans are subject to provisions of both the Code and ERISA.

Employer Status. In order to qualify for favorable tax treatment under the
Code, the plans must be established and maintained by an employer for the
exclusive benefit of its employees. Generally, an entity is an "employer" of
certain workers for Federal employment tax purposes if an employment
relationship exists between the entity and the workers under the common law test
of employment. In addition, the officers of a corporation are deemed to be
employees of that corporation for Federal employment tax purposes. The common
law test of employment, as applied by the IRS, involves an examination of
approximately 20 factors to ascertain whether an employment relationship exists
between a worker and a purported employer. That test is generally applied to
determine whether an individual is an independent contractor or an employee for
Federal employment tax purposes and not to determine whether each of two or more
companies is a "co-employer." Substantial weight is typically given to the
question of whether the purported employer has the right to direct and control
the details of an individual's work.

The IRS established the Market Segment Study for the purpose of identifying
specific compliance issues prevalent in certain segments of the PEO industry.
Approximately 70 PEOs have been randomly selected by the IRS for audit pursuant
to this program. The Company was not one of the PEOs selected for the audit. One
issue that has arisen from these audits is whether a PEO can be a co-employer of
worksite employees, including officers and owners of client companies, for
various purposes under the Code, including participation in the PEO's 401(k)
retirement plan.

The Company is not able to predict either the timing or the nature of any
final decision that may be reached by the IRS with respect to the Market Segment
Study and the ultimate outcome of such decisions.

44
<PAGE> 46

Further, the Company is unable to predict whether the Treasury Department will
issue a policy statement with respect to its position on these issues or, if
issued, whether such a statement would be favorable to the Company. The Company
believes that the establishment of its new multiple employer plan under Code
Section 413(c) will eliminate the exposure as to future contributions to that
plan resulting from an IRS determination that no employer relationship exists
between the sponsor of the plan and the plan participants. Since this plan will
be co-sponsored by each participating client, the Company believes that even if
the IRS were to determine that the worksite employees were not employees of the
Company, it could not reach the same conclusion as to the client co-sponsor.
However, if an adverse conclusion by the IRS were applied retroactively to
disqualify the Company's former 401(k) retirement plan, employees' vested
account balances under the former 401(k) retirement plan would become taxable,
the Company's tax deductions would only be allowed as matching contributions
become vested, the former 401(k) retirement plan's trust would become a taxable
trust, and the Company would be subject to liability with respect to its failure
to withhold and pay taxes applicable to salary deferral contributions by
employees, including worksite employees. In such event, the Company would also
face the risk of client dissatisfaction and potential litigation. A retroactive
application by the IRS of an adverse conclusion would have a material adverse
effect on the Company's financial position and results of operations. While the
Company believes that a retroactive disqualification is unlikely, there can be
no assurance as to the ultimate resolution of these issues by the IRS.

ERISA Requirements. Employee pension and welfare benefit plans are also
governed by ERISA. ERISA defines "employer" as "any person acting directly as an
employer, or indirectly in the interest of an employer, in relation to an
employee benefit plan." ERISA defines the term "employee" as "any individual
employed by an employer." The United States Supreme Court has held that the
common law test of employment must be applied to determine whether an individual
is an employee or an independent contractor under ERISA. A definitive judicial
interpretation of "employer" in the context of a PEO or employee leasing
arrangement has not been established.

If the Company were found not to be an employer for ERISA purposes, its
former 401(k) retirement plan would not comply with ERISA and could be subject
to retroactive disqualification by the IRS. Further, the Company would be
subject to liabilities, including penalties, with respect to its cafeteria plan
for the failure to withhold and pay taxes applicable to salary deferral
contributions by its worksite employees. In addition, as a result of such
finding the Company and its plans would not enjoy, with respect to worksite
employees, the preemption of state laws provided by ERISA and could be subject
to varying state laws and regulation, as well as to claims based upon state
common laws.

FEDERAL EMPLOYMENT TAXES

As a co-employer, the Company assumes responsibility and liability for the
payment of Federal and state employment taxes with respect to wages and salaries
paid to worksite employees. There are essentially three types of Federal
employment tax obligations: (i) withholding of income tax requirements governed
by Code Section 3401, et seq.; (ii) obligations under FICA, governed by Code
Section 3101, et seq.; and (iii) obligations under the FUTA, governed by Code
Section 3101, et seq. Under these Code sections, employers have the obligation
to withhold and remit the employer portion and, where applicable, the employee
portion of these taxes.

The Market Segment Study discussed above is examining, among other issues,
whether PEOs, such as the Company, are employers of worksite employees under the
Code provisions applicable to Federal employment taxes and, consequently,
responsible for payment of employment taxes on wages and salaries paid to such
worksite employees. Section 3401(d)(1) of the Code, which applies to Federal
income tax withholding requirements, contains an exception to the general common
law test applied to determine whether an entity is an "employer" for purposes of
Federal income tax withholding. Section 3401(d)(1) states that if the person for
whom services are rendered does not have control of the payment of wages, the
"employer" for this purpose is the person having control of the payment of
wages. The Treasury Regulations issued under Section 3401(d)(1) state that a
third party can be deemed to be the employer of workers under this section for
income tax withholding purposes where the person for whom services are rendered
does not have legal control of the payment of wages. While Section 3401(d)(1)
has been examined by several courts, its ultimate

45
<PAGE> 47

scope has not been delineated. Moreover, the IRS has to date relied extensively
on the common law test of employment in determining liability for failure to
comply with Federal income tax withholding requirements.

Accordingly, while the Company believes that it can assume the withholding
obligations for worksite employees, in the event the Company fails to meet these
obligations the client may be held jointly and severally liable therefor. While
this interpretive issue has not to the Company's knowledge discouraged clients
from utilizing the Company's services, there can be no assurance that a
definitive adverse resolution of this issue would not do so in the future.

STATE REGULATION

Florida. In Florida, the Company's PEO operations are licensed under the
Florida Employee Leasing Licensing Act of 1991 (the "Florida Licensing Act").
The Florida Licensing Act requires PEOs and their controlling persons to be
licensed, mandates reporting requirements and allocates several employer
responsibilities. The Florida Licensing Act also requires licensed PEOs to
submit annual audited financial statements and maintain a tangible accounting
net worth and positive working capital. The Florida Licensing Act also requires
PEOs to, among other things: (i) reserve the right of direction and control over
the leased employees; (ii) enter into a written agreement with the client; (iii)
pay wages to the leased employees; (iv) pay and collect payroll taxes; (v)
maintain authority to hire, terminate, discipline and reassign employees; (vi)
reserve a right to direct and control the management of safety, risk and hazard
control at the worksite; (vii) promulgate and administer employment and safety
policies; and (viii) manage workers' compensation claims.

Texas. The Texas Staff Leasing Act regulates and establishes a legal
framework for PEOs in Texas. The Texas Staff Leasing Act, which became effective
on September 1, 1993, established mandatory licensing for PEOs and expressly
recognizes a licensed PEO as the employer of the worksite employee for purposes
of the Texas Unemployment Compensation Act. The Texas Staff Leasing Act also
provides, to the extent governed by Texas law, that a licensed PEO may sponsor
and maintain employee benefit plans for the benefit of worksite employees. In
addition, the Texas Staff Leasing Act not only provides that a PEO may elect to
obtain workers' compensation insurance coverage for its worksite employees but
also provides that, for workers' compensation insurance purposes, a licensed PEO
and its client are treated as co-employers. In order to obtain a license,
applicants must undergo a background check, demonstrate a history of good
standing with tax authorities and meet certain capitalization requirements that
increase with the number of worksite employees employed. The Texas Staff Leasing
Act specifies that the Texas Department of Licensing and Regulation ("TDLR") is
responsible for enforcement of the Texas Staff Leasing Act and TDLR has adopted
regulations under the Texas Staff Leasing Act.

Other States. While many states do not explicitly regulate PEOs, 14 other
states have passed laws that have licensing or registration requirements for
PEOs and at least three states, including Georgia, are considering such
regulation. See "Risk Factors -- State and Local Regulation of the PEO
Industry." Such laws vary from state to state but generally provide for
monitoring the fiscal responsibility of PEOs. In addition to holding a license
in Texas and Florida, the Company holds licenses in six other states, has been
registered or certified in three other states, and has applied for licenses in
four other states. Whether or not a state has licensing, registration or
certification requirements, the Company faces a number of other state and local
regulations that could impact its operations. The Company's objective is to
establish excellent working relationships with state regulatory authorities in
states where it operates and the Company believes that to date it has been able
to do so.

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<PAGE> 48

MANAGEMENT

The Company's Board of Directors currently has eight members. In accordance
with the Articles of Incorporation of the Company, the members of the Board of
Directors are divided into three classes and are elected for a term of office
expiring at the third succeeding annual shareholders' meeting following their
election to office or until a successor is duly elected and qualified. The
Articles of Incorporation also provide that such classes shall be as nearly
equal in number as possible. The terms of office of the Class I, Class II and
Class III directors expire at the annual meeting of shareholders in 2000, 1999
and 1998, respectively.

The following tables sets forth certain information on the directors and
executive officers of the Company as of May 29, 1997:

<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION CLASS
---- --- -------- --------
<S> <C> <C> <C>
Charles S. Craig(1)(3)(4)(5)......... 46 Chairman of the Board and Chief Executive I
Officer
Richard A. Goldman(5)................ 41 President
John E. Panning(5)................... 46 Chief Financial Officer
James F. Manning..................... 67 Vice Chairman of the Board III
John Bilchak, Jr..................... 49 Senior Vice President, Benefits and Risk
Management
Joyce Lillis McGill.................. 50 Senior Vice President, Sales
David A. Varnadore................... 35 Senior Vice President, Operations
George B. Beitzel(1)(2)(3)........... 68 Director I
Ronald V. Davis(1)(2)(4)............. 50 Director I
Melvin R. Laird(2)(3)................ 74 Director II
William J. Mullis.................... 49 Director III
Elliot B. Ross(4).................... 51 Director II
David T.K. Sarda..................... 36 Director III
</TABLE>

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

(1) Member of the Executive Committee
(2) Member of the Audit Committee
(3) Member of the Compensation Committee
(4) Member of the Nominating Committee
(5) Member of the Office of the Chairman

Charles S. Craig has served as Chairman of the Board of Directors since
November 1993. He assumed the additional position of Chief Executive Officer in
July 1995. He currently serves as Chairman of the Executive Committee of the
Board of Directors. Mr. Craig is currently the sole shareholder of Staff
Acquisition. Mr. Craig has been a Managing Director of Craig Capital Corporation
("Craig Capital") since 1988 and Chairman of CSG, Inc. since 1989. An investor
group organized by Craig Capital acquired Staff Leasing in 1993. Mr. Craig holds
B.A., M.A. and J.D. degrees from Brown University, Cambridge University, and
University of Michigan Law School, respectively.

Richard A. Goldman has served as President and been a member of the
three-person Office of the Chairman since January 1997. Mr. Goldman served as
Senior Vice President of Risk Management and General Counsel of Staff Leasing
from July 1995 to January 1997. In May 1997, Mr. Goldman was appointed by
Governor Lawton Chiles to Florida's Board of Employee Leasing. Prior to joining
Staff Leasing, Mr. Goldman was a partner in the New York office of Dechert Price
& Rhoads from April 1993 to July 1995 and was special counsel at that firm from
December 1991 until April 1993. Mr. Goldman holds a B.A. degree from Princeton
University and a J.D. degree from Stanford University Law School.

John E. Panning has served as Chief Financial Officer and been a member of
the three-person Office of the Chairman since January 1997. From August 1996 to
December 1996, he served as Senior Vice President of Finance of Staff Leasing.
Mr. Panning served as Senior Vice President of Sales of Staff Leasing from
January 1995 to July 1996. Prior to joining Staff Leasing, Mr. Panning served as
Chief Financial Officer of CityForest Corporation from March 1993 to November
1994; Chief Financial Officer of Sinclair & Valentine,

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<PAGE> 49

L.P., from 1985 to 1990; and as Group Vice President of the Commercial & Packing
Division of Flint Ink Corporation from January 1991 to September 1992. Mr.
Panning received B.S. and M.B.A. degrees from the University of Minnesota.

James F. Manning has been Vice Chairman of Staff Leasing since January
1997. Mr. Manning served as President of Staff Leasing from July 1995 to
December 1996. He also served as Vice President and Chief Information Officer
from May 1995 to June 1995 and as a consultant to the Company from January 1995
to April 1995. Prior to joining Staff Leasing, Mr. Manning was a business
consultant from January 1987 to April 1995. Mr. Manning holds a B.A. degree in
Economics from Williams College.

John Bilchak, Jr. has been Senior Vice President, Benefits and Risk
Management since January 1997. Mr. Bilchak served as Vice President, Benefits
from January 1996 to December 1996. Prior to joining Staff Leasing, Mr. Bilchak
served as a Principal with Towers Perrin from June 1992 to January 1996 and as a
Principal with William M. Mercer, Inc. from 1983 to June 1992. Mr. Bilchak holds
B.A. and M.B.A. degrees from The Ohio State University.

Joyce Lillis McGill has been Senior Vice President, Sales of Staff Leasing
since March 1997. She previously served in various positions for Compaq Computer
Corporation, and was employed by that company as Vice President Eastern Region
from April 1996 until becoming employed by the Company. From February 1993 until
April 1996, she was Regional Director of Sales, Service & Operations, Northeast
Region for Compaq and from July 1988 to February 1993 served as Area Sales
Manager for Compaq. Ms. Lillis attended Somerset College.

David A. Varnadore has been Senior Vice President, Operations since July
1996. He previously served as Chief Financial Officer of Staff Leasing from
November 1993 to June 1996 and held various positions with the Predecessor from
1988 until November 1993. Mr. Varnadore received a B.S. degree in accounting
from Carson-Newman College.

George B. Beitzel has served as a director of the Company since November
1993. He currently serves as Chairman of the Audit and Compensation Committees
of the Board of Directors and as a member of the Executive Committee. Mr.
Beitzel is currently Chairman of the Board of the Colonial Williamsburg
Foundation and a director of Bankers Trust New York Corporation, Computer Task
Group, Inc., CSG, Inc., Phillips Petroleum Company and Rohm & Haas Company.

Ronald V. Davis has been a member of the Board of Directors of Staff
Leasing since November 1993 and serves as Chairman of the Board's Nominating
Committee. Mr. Davis is currently Chairman of Davis Capital LLC. Mr. Davis
served as President and Chief Executive Officer of the Perrier Group of America,
Inc. from January 1992 to December 1995. Mr. Davis is also a director of
Celestial Seasonings, Inc.

Melvin R. Laird has served as a director of Staff Leasing since February
1997. Mr Laird is currently a member of the Board of Directors of Reader's
Digest Association, Inc., American Express/IDS Mutual Funds Group and CSG, Inc.
Mr. Laird has been retired for over five years.

William J. Mullis was a founder of the Predecessor, which commenced
operations in 1984. He has served as a director of Staff Leasing since November
1993. Since January 1992, Mr. Mullis has been employed by and is the owner of
Associated Automotive, Inc.

Elliot B. Ross has been a director of Staff Leasing since March 1994. He
has been employed by ESSEF Corporation since February 1994, where he currently
serves as Chief Operating Officer. Prior to his employment with ESSEF
Corporation, Mr. Ross was Co-Chairman of Inverness Partners from January 1988 to
January 1994.

David T.K. Sarda has served as a director of Staff Leasing since November
1993. Mr. Sarda was a Managing Director of Craig Capital from May 1989 until
January 1997 and is a director of CSG, Inc.

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<PAGE> 50

BOARD COMMITTEES

The Board of Directors has appointed an Executive Committee, an Audit
Committee, a Compensation Committee and a Nominating Committee. The membership
of such committees is indicated by the footnotes to the table above. The
Executive Committee has and may exercise all of the powers and authority of the
Board of Directors of the Company during the periods between regularly scheduled
Board meetings to the fullest extent permitted under the bylaws of the Company
and the Florida Act. The Audit Committee reviews the scope and results of the
annual audit of the Company's consolidated financial statements conducted by the
Company's independent accountants, the scope of other services provided by the
Company's independent accountants, proposed changes in the Company's financial
and accounting standards and principles, and the Company's policies and
procedures with respect to its internal accounting, auditing and financial
controls, and makes recommendations to the Board of Directors on the engagement
of the independent accountants, as well as other matters which may come before
it or as directed by the Board of Directors. The Compensation Committee
administers the Company's compensation programs, including the Staff Leasing,
Inc. 1997 Stock Incentive Plan (the "Incentive Plan"), and performs such other
duties as may from time to time be determined by the Board of Directors. The
Nominating Committee is responsible for nominating candidates for election to
the Board of Directors of the Company.

BOARD COMPENSATION

Non-management directors of the Company will be paid annual compensation of
$10,000. Upon consummation of the Offering, each non-management director will be
granted an option to purchase 2,000 shares of Common Stock at an exercise price
equal to the initial price to the public of shares in the Offering.

EXECUTIVE COMPENSATION

The following tables sets forth in summary form all compensation paid by
the Company to the Chief Executive Officer and its other four most highly
compensated executive officers (collectively, the "Named Executive Officers")
for services rendered in all capacities to the Company for the year ended
December 31, 1996:

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION(1)
---------------
AWARDS
---------------
OTHER RESTRICTED
ANNUAL COMPENSATION ANNUAL STOCK
--------------------------- COMPENSATION AWARD(S)
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(2) ($)
--------------------------- ---- --------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Charles S. Craig(3)......................... 1996 $885,000
Chief Executive Officer
Richard A. Goldman.......................... 1996 $131,976 $ 74,250 $ 12,475(4) $66,595(5)
President
John E. Panning............................. 1996 $132,000 $ 74,250 $66,595(6)
Chief Financial Officer
James F. Manning............................ 1996 $194,131 $124,000
Vice Chairman(7)
David A. Varnadore.......................... 1996 $132,012 $ 74,250
Senior Vice President of Operations(8)
</TABLE>

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

(1) All long-term compensation identified in this table arises under the
Company's restricted equity plan (the "Restricted Equity Plan"). The
Restricted Equity Plan allowed the Company to issue Common Interests to its
senior executive officers holding positions of Vice President or above. See
"Certain Transactions." No Common Interests were issued under this Plan
subsequent to January 31, 1997.

(footnotes continued on next page)

49
<PAGE> 51

(2) Does not include perquisites and other personal benefits, securities or
property which do not aggregate in excess of the lessor of either $50,000
or 10% of the total of annual salary and bonus reported for the named
executive officer.

(3) In 1996, the Company paid to Craig Capital management fees of $375,000 and
consulting fees of $510,000 in connection with the Company's 1996 private
placement. See "Certain Transactions." Because Mr. Craig is the sole
shareholder of Craig Capital, these amounts are included as compensation to
Mr. Craig in this table. Effective March 1997, the Company discontinued the
payment of management fees to Craig Capital and employed Mr. Craig at an
annual base salary of $200,000. Mr. Craig will also be entitled to receive
a bonus as determined by the Board of Directors of the Company.

(4) Constitutes relocation expense reimbursement.

(5) Mr. Goldman was issued the equivalent of 31,120 shares on December 31, 1996
pursuant to the Restricted Equity Plan, which vest 25% per year on the
anniversary date of the original issuance. All of these 31,120 shares were
restricted and their value as of December 31, 1996 was $66,595. The Company
also issued to Mr. Goldman the equivalent of 203,932 shares on June 1, 1995
pursuant to the Restricted Equity Plan. These shares were subject to the
following vesting schedule: 20% vesting on June 1, 1995; 20% vesting on
June 1, 1996; 30% on June 1, 1997; and 30% on June 1, 1998. The remaining
restricted portion of this issuance as of December 31, 1996 was 122,359
shares, valued at $261,158 as of December 31, 1996. See footnote (9).

(6) Mr. Panning was issued the equivalent of 31,120 shares on December 31, 1996
pursuant to the Restricted Equity Plan which vest 25% per year on the
anniversary date of the original issuance. All of these 31,120 shares are
restricted and their value as of December 31, 1996 was $66,595. The Company
also issued to Mr. Panning the equivalent of 299,171 shares on January 1,
1995 pursuant to the Restricted Equity Plan. These shares vest 25% per year
on the anniversary date of the original issuance. The remaining restricted
portion of this issuance was 224,378 shares, valued at $486,169 as of
December 31, 1996. See footnote (9).

(7) The Company issued to Mr. Manning the equivalent of 204,160 shares on June
1, 1995 pursuant to the Restricted Equity Plan. These shares vest 25% per
year on the anniversary date of the original issuance; however upon
consummation of the Offering, these shares will fully vest. The remaining
restricted portion of this issuance is 153,120 shares with a value of
$331,448 as of December 31, 1996. He was issued an additional 199,393
shares on August 1, 1995 pursuant to the Restricted Equity Plan with the
same vesting terms as the shares described above. The remaining restricted
portion of this issuance was 149,545 shares, valued at $320,326 as of
December 31, 1996. See footnote (9).

(8) The Company issued to Mr. Varnadore the equivalent of 350,702 shares on
November 3, 1993 pursuant to the Restricted Equity Plan. These shares vest
at 25% per year on the anniversary date of the original issuance. The
Company repurchased the equivalent of 57,979 shares from Mr. Varnadore on
August 30, 1996 for $67,500 and Class B Interests valued at $157,500. The
remaining restricted portion of this issuance was 87,676 shares, valued at
$190,623 as of December 31, 1996. See footnote (9).

(9) All of the above-described values of restricted equity as of the end of
December 1996 are based on an independent third party appraisal. Share
amounts have been adjusted to reflect the effect of dilution and
anti-dilution provisions subsequent to the dates of issue of the respective
shares.

STOCK INCENTIVE PLAN

The Company maintains the Staff Leasing, Inc. 1997 Stock Incentive Plan.
The Board of Directors has reserved 2,500,000 shares of Common Stock for
issuance pursuant to awards that may be made under the Incentive Plan, subject
to adjustment as provided therein. Awards under the Incentive Plan are
determined by the Compensation Committee of the Board of Directors (the
"Committee").

Key employees, officers, directors and consultants of the Company or an
affiliate are eligible for awards under the Incentive Plan. The Incentive Plan
permits the Committee to make awards of shares of Common Stock, awards of
derivative securities related to the value of the Common Stock and certain cash
awards to eligible persons. These discretionary awards may be made on an
individual basis, or pursuant to a program approved by the Committee for the
benefit of a group for eligible persons. The Incentive Plan permits the
Committee to make awards of a variety of equity-based incentives, including (but
not limited to) stock

50
<PAGE> 52

awards, options to purchase shares of Common Stock and to sell shares of Common
Stock back to the Company, stock appreciation rights, so-called "cash-out" or
"limited stock appreciation rights" (which the Committee may make exercisable in
the event of certain changes in control of the Company or other events), phantom
shares, performance incentive rights, divided equivalent rights and similar
rights (together, "Stock Incentives"). The number of shares of Common Stock as
to which a Stock Incentive is granted and to whom any Stock Incentive is
granted, and all other terms and conditions of a Stock Incentive, is determined
by the Committee, subject to the provisions of the Incentive Plan. The terms of
particular Stock Incentives may provide that they terminate, among other
reasons, upon the holder's termination of employment or other status with
respect to the Company and any affiliate, upon a specified date, upon the
holder's death or disability, or upon the occurrence of a change in control of
the Company. Stock Incentives may also include exercise, conversion or
settlement rights to a holder's estate or personal representative in the event
of the holder's death or disability. At the Committee's discretion, Stock
Incentives that are held by an employee who suffers a termination of employment
may be cancelled, accelerated, paid or continued, subject to the terms of the
applicable Stock Incentive agreement and to the provisions of the Incentive
Plan. Stock Incentives generally are not transferable or assignable during a
holder's lifetime.

The number of shares of Common Stock reserved for issuance in connection
with the grant or settlement of Stock Incentives or to which a Stock Incentive
is subject, as the case may be, and the exercise price of each option are
subject to adjustment in the event of any recapitalization of the Company or
similar event, effected without the receipt of consideration. In the event of
certain corporate reorganizations and similar events, Stock Incentives may be
substituted, cancelled, accelerated, cashed-out or otherwise adjusted by the
Committee, provided such adjustment is not inconsistent with the express terms
of the Incentive Plan or the applicable Stock Incentive Agreement.

Upon consummation of the Offering, the Company intends to grant stock
options to purchase an aggregate of approximately 555,000 shares of Common Stock
at an exercise price equal to the initial public offering price for the shares
sold in the Offering to all full time employees and non-management directors.
Each option will be subject to a maximum ten-year term. Options granted to
employees who were employed by the Company for one year as of December 31, 1996
and options granted to new executive officers will vest and become exercisable
one third each on the second, third and fourth anniversary of the date of grant
(subject to the market price provision referred to below) and options granted to
all other employees will vest and become exercisable one third each on the
third, fourth and fifth anniversary of the date of grant (subject to the market
price provision referred to below). In order for an optionee to exercise the
option, the option must have vested according to such schedule and the average
closing price for the Common Stock for any period of 30 consecutive trading days
beginning 21 months after the date of grant must have exceeded 150% of the
exercise price. Vesting and exercisability accelerate upon a change of control
of the Company.

INDEMNIFICATION ARRANGEMENTS

The Company has entered into indemnification agreements pursuant to which
it has agreed to indemnify certain of its directors and officers against
judgments, claims, damages, losses and expenses incurred as a result of the fact
that any director or officer, in his capacity as such, is made or threatened to
be made a party to any suit or proceeding. Such persons will be indemnified to
the fullest extent now or hereafter permitted by the Florida Act. The
indemnification agreements also provide for the advancement of certain expenses
to such directors and officers in connection with any such suit or proceeding.
The Company's Articles of Incorporation and Bylaws provide for the
indemnification of the Company's directors and officers to the fullest extent
permitted by the Florida Act. See "Description of Capital Stock -- Special
Provisions of the Articles of Incorporation and Bylaws."

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<PAGE> 53

PRINCIPAL AND SELLING SHAREHOLDERS

The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of May 29, 1997, assuming
consummation of the Reorganization, and as adjusted to reflect the sale of the
shares of Common Stock offered hereby, by: (i) each of the Named Executive
Officers; (ii) each of the Company's directors; (iii) all executive officers and
directors of the Company as a group; (iv) each other person (or group of
affiliated persons) who is known by the Company to own beneficially 5% or more
of the Common Stock; and (v) each Selling Shareholder as if the Underwriters'
over-allotment option is exercised in full. The number of shares of Common Stock
being offered in, and beneficially owned after, the Offering assumes that the
Underwriters' over-allotment option is exercised in full.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED SHARES BEING OFFERED FOR OWNED AFTER THE
PRIOR TO OFFERING PURCHASE, INCLUDING THOSE OFFERING
-------------------- OFFERED IN THE OVER- --------------------
NAME AND ADDRESS OF BENEFICIAL OWNER(1) NUMBER PERCENT ALLOTMENT OPTION NUMBER PERCENT
--------------------------------------- ---------- ------- ------------------------- ---------- -------
<S> <C> <C> <C> <C> <C>
Charles S. Craig(2)........................ 5,128,932 26.7% 5,128,932 22.2%
Richard A. Goldman(3)...................... 312,662 1.6 312,662 1.4
John E. Panning(4)......................... 350,145 1.8 24,772 325,373 1.4
James F. Manning(5)........................ 421,995 2.2 421,995 1.8
David A. Varnadore......................... 293,409 1.5 29,272 264,137 1.1
George B. Beitzel(6)....................... 451,228 2.4 451,228 2.0
Ronald V. Davis............................ 500,207 2.6 500,207 2.2
Melvin R. Laird(7)......................... 168,150 * 168,150 *
William J. Mullis(8)....................... 1,984,148 10.3 1,984,148 8.6
Elliot B. Ross............................. 51,851 * 51,851 *
David T. K. Sarda(9)....................... 1,029,689 5.4 1,029,689 4.4
Banque Paribas(10)......................... 2,975,880 14.5 2,975,880 12.2
Indosuez Staff Capital Partners(11)........ 1,683,013 8.8 575,000 1,108,013 4.8
Executive Officers and Directors as a group
(13) persons(12)......................... 10,898,858 56.8 54,044 10,844,814 46.9
C. Everett Southwick....................... 234,781 1.2 23,478 211,303 *
Joseph A. Gulash, Jr....................... 10,832 * 1,000 9,832 *
Kim B. Rutledge............................ 10,000 * 1,500 8,500 *
</TABLE>

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

* Less than one percent.
(1) Unless otherwise stated, the address of all persons is in care of the
Company, 600 301 Boulevard West, Suite 202, Bradenton, Florida 34205.

(2) Includes 22,162 shares owned by the Charles S. Craig Rollover IRA, 10,894
shares owned by the SEP Plan of Charles Craig, 924,074 shares owned by the
11/24/87 Trust FBO KC Craig and 924,074 shares owned by the 12/17/86 Trust
FBO NH Craig. Does not include 417,900 shares issuable upon exercise of the
Company's option to exchange shares of Common Stock for Mr. Craig's
interest in Staff Acquisition. See "The Reorganization."

(3) Includes 26,965 shares owned by the Trust FBO Zachary I. Goldman and 26,965
shares owned by the Trust FBO Zoe A. Goldman.

(4) Includes 1,372 shares owned by Alyssa W. Panning and 1,372 shares owned by
Rachael Panning.

(5) Includes 7,318 shares owned by the Trust FBO Carey M. Dunne, 7,318 shares
owned by the Trust FBO Oliver Dunne, 7,318 shares owned by the Trust FBO
Eliza Dunne, 7,318 shares owned by the Trust FBO Allison P. Manning, 7,318
shares owned by the Trust FBO James F. Manning V, 7,318 shares owned by the
Trust FBO Reid M. Manning and 7,318 shares owned by the Trust FBO Colton J.
Manning. Does not include 12,536 shares owned by K. M. Manning, 12,536
shares owned by J. F. Manning IV and 12,536 shares owned by R. M. Manning,
the adult children of Mr. Manning.

(6) Includes 151,726 shares owned by Mary L. Beitzel, 125,052 shares owned by
the Mary L. Beitzel Grantor Trust and 125,052 shares owned by the George
Beitzel Grantor Trust. Does not include 36,694 shares owned by Tish Beitzel
Vredenburgh, the adult child of Mr. Beitzel.

52
<PAGE> 54

(7) Includes 42,037 shares owned by the Trust for Lifetime Benefit of John
Laird, 42,037 shares owned by the Trust for Lifetime Benefit of Alison
Large, 42,038 shares owned by the Trust for Lifetime Benefit of K.
Dalgleish and 42,038 shares owned by the Trust for Lifetime Benefit of
David Laird.

(8) Includes 1,566,420 shares owned by the William J. Mullis Grantor Trust and
417,729 shares owned by the William J. Mullis Grantor Annuity Trust. Does
not include 208,864 shares owned by Lisa Dawn Richardson, the adult child
of Mr. Mullis.

(9) Includes 95,222 shares and warrants to purchase 16,216 shares owned by the
IRA for David Sarda SEP, 357,461 shares owned by Professional Employer
Investments, Inc., 184,491 shares owned by Aileen Sarda and 68,420 shares
owned by the Sarda Family Trust.

(10) The address of Banque Paribas is Equitable Tower, 787 7th Avenue, New York,
New York 10019. Includes warrants to purchase 1,198,033 shares owned by
Paribas Principal Incorporated, warrants to purchase 137,329 shares owned
by Paribas North America, Inc. and 1,640,518 shares owned by Banque
Paribas.

(11) The shares are held by Indosuez Staff Capital Partners, the managing
partner of which is Indosuez CMII, Inc. The indirect sole shareholder of
Indosuez CMII is Banque Indosuez, whose address is 1211 Avenue of the
Americas, New York, New York 10036.

(12) See footnotes (2) through (9) above.

53
<PAGE> 55

CERTAIN TRANSACTIONS

The Company paid $375,000 to Craig Capital in 1996 for ongoing management
services and paid Craig Capital $66,667 through March 3, 1997, for management
services rendered. The Company terminated this arrangement and currently employs
Charles S. Craig at an annual base salary of $200,000. Mr. Craig is entitled to
receive an annual bonus in an amount determined by the Compensation Committee in
its discretion. In addition, the Company paid consulting fees to Craig Capital
of $510,000 in connection with the 1996 private placement made by the Company.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources." Mr. Craig is also the sole
shareholder of Staff Acquisition, the sole general partner of the Partnership
and each of the OLPs. Mr. Craig is also the sole shareholder and a Managing
Director of Craig Capital. During 1996 David T.K. Sarda was also a Managing
Director of Craig Capital.

The Company leases approximately 60 vehicles from Associated Automotive,
Inc. which is owned by William J. Mullis. The aggregate payment under these
leases amounted to approximately $433,000 in 1996 and $101,000 for the three
months ended March 31, 1997. The Company believes that these leases are on terms
no less favorable to the Company than could be obtained from unaffiliated third
parties. In connection with the acquisition of the Predecessor by the Company in
November 1993, the Company entered into a five-year agreement with Mr. Mullis
providing for annual payments of $312,000 and a five-year agreement related to
promotional activities, which provides for annual payments of $50,000 per year
to a company owned by Mr. Mullis.

On May 30, 1997, the Company will redeem 50% of the Class B Interests owned
by each of Mr. Mullis and David A. Varnadore, pursuant to the terms of such
interests, for $3.3 million and $82,000, respectively (which amount includes
$139,000 and $3,500, respectively, of the Fixed Return Amount).

The Company's Restricted Equity Plan allowed the Company to issue, from
time to time, Common Interests to its executive officers holding positions of
Vice President and above. The purchase price of these Common Interests was
determined on the basis of the original purchase price of the Common Interests
in the transaction in which the assets of the Predecessor were acquired by the
Company. The Company loaned the purchase price of these Common Interests to the
participants in the plan on a recourse basis and at the rate upon which interest
is imputed under the Code. The Common Interests issued under the Restricted
Equity Plan are subject to a pledge to the Company and to its senior lenders.
These Common Interests are subject to forfeiture restrictions, which allow the
Company to repurchase the "unvested" portion of these interests at a formula
price upon termination of employment of the executive. Subsequent to July 18,
1995, the Common Interests issued pursuant to the Restricted Equity Plan vested
25% on each anniversary date of the original date of issuance. The Restricted
Equity Plan was terminated on February 28, 1997; provided that Common Interests
issued pursuant to the plan remain subject to its terms.

As part of the Company's Restricted Equity Plan, the Company loaned the
following amounts to the individuals listed below:

In November 1993, the Company issued to David A. Varnadore a 1.7%
Common Interest in accordance with the Restricted Equity Plan. The Company
loaned him $106,000 at an interest rate of 4.83% to finance this purchase.
In December 1994 this loan was repaid in full.

In January 1995, the Company issued to John E. Panning a 1.5% Common
Interest in accordance with the Restricted Equity Plan. The Company loaned
him $95,227 at an interest rate of 7.7% to finance this purchase. This loan
was repaid in full on July 31, 1995.

In June 1995, the Company issued to James F. Manning, Richard A.
Goldman and John Whitney, Jr. (who served as a Senior Vice President of the
Company until May 20, 1997) a 1.0% Common Interest, a 1.0% Common Interest,
and a 0.6% Common Interest, respectively, in accordance with the Restricted
Equity Plan. The Company loaned them $63,480, $63,469 and $39,678,
respectively, at an interest rate of 6.60% per annum to finance these
purchases.

54
<PAGE> 56

In August 1995, the Company promoted Mr. Manning to President and
issued an additional 1.0% Common Interest to him in accordance with the
Restricted Equity Plan. The Company loaned him an additional $69,040 at an
interest rate of 5.91% to finance this purchase.

In January 1996, the Company issued to John Bilchak, Jr. a 0.3% Common
Interest in accordance with the Restricted Equity Plan. The Company loaned
him $18,986 at an interest rate of 6.06% to finance this purchase.

In April 1996, the Company loaned Mr. Bilchak, Mr. Goldman, and Mr.
Whitney $31,750, $82,500 and $131,000, respectively, at an interest rate
based on the Company's bank loan rate to purchase Class A Interests, which
if converted would entitle them to 0.02%, 0.06% and 0.09%, respectively, of
the Common Interests.

On August 30, 1996, the Company repurchased Common Interests from
William Mullis (10.0%), Everett Southwick (0.5%), and David Varnadore
(0.25%) for $2,700,000, $135,000 and $67,500, respectively, in cash and
$6,300,000, $315,000 and $157,500, respectively, in Class B Interests,
which will be redeemed upon consummation of the Reorganization.

In December 1996, the Company promoted Mr. Bilchak, Mr. Goldman, and
Mr. Panning and issued to each of them a 0.15% Common Interest in
accordance with the Restricted Equity Plan. The Company loaned them each
$10,356 at an interest rate of 6.77% to finance this purchase. Mr.
Panning's loan was repaid on February 28, 1997. Mr. Bilchak (on December
31, 1996) and Mr. Goldman (on March 18, 1997) were also each loaned
$30,966, at an interest rate of 6.77% per annum to pay taxes arising from
their purchase of this additional Common Interest.

In January 1997, the Company hired Joyce Lillis McGill and issued to
her a 0.5% Common Interest in accordance with the Restricted Equity Plan.
The Company loaned her $34,521 at an interest rate of 6.56% to finance this
purchase.

Loans made to finance purchases of Common Interests under the
Restricted Equity Plan are due November 1, 2000 and interest on such loans
is payable quarterly. Loans made to finance purchases of Class A Interests
are due March 31, 2001, together with accrued interest.

DESCRIPTION OF CAPITAL STOCK

AUTHORIZED AND OUTSTANDING CAPITAL STOCK

At the date hereof, the authorized capital stock of the Company is
110,000,000 shares, consisting of 100,000,000 shares of Common Stock of the
Company, par value $0.01 per share ("Common Stock"), and 10,000,000 shares of
Preferred Stock of the Company, par value $0.01 per share ("Preferred Stock").
The following summary is qualified in its entirety by reference to the Company's
Articles of Incorporation (the "Charter") and Bylaws (the "Bylaws"), copies of
which are included as exhibits to the Registration Statement of which this
Prospectus is a part. All outstanding shares of Common Stock and Preferred Stock
are fully paid and non-assessable.

Common Stock. The holders of Common Stock are entitled to dividends in
such amounts and at such times as may be declared by the Board of Directors out
of funds legally available therefor. See "Dividend Policy." Holders of the
Common Stock are entitled to one vote per share for the election of directors
and other corporate matters. In the event of liquidation, dissolution or winding
up of the Company, holders of Common Stock would be entitled to share ratably in
all assets of the Company available for distributions to the holders of Common
Stock. The Common Stock carries no preemptive rights. All outstanding shares of
Common Stock are, and the shares of Common Stock to be sold by the Company in
the Offering when issued will be, duly authorized, validly issued, fully paid
and non-assessable.

Preferred Stock. The Board of Directors is authorized to issue from time
to time, without shareholder authorization, in one or more designated series,
shares of Preferred Stock with such dividend, redemption, conversion and
exchange provisions as are provided in the particular series. Prior to the date
hereof, none of

55
<PAGE> 57

such shares have been issued. Except as by law expressly provided, or except as
may be provided by resolution of the Board of Directors, the Preferred Stock
shall have no right or power to vote on any question or in any proceeding or to
be represented at, or to receive notice of, any meeting of shareholders of the
Company. The issuance of the Preferred Stock could have the effect of delaying
or preventing a change in control of the Company. The Board of Directors has no
present plans to issue any of the Preferred Stock.

PROVISIONS HAVING POSSIBLE ANTI-TAKEOVER EFFECT

The Company is subject to several anti-takeover provisions under the
Florida Act that apply to a public corporation organized under Florida law
unless the corporation has elected to opt out of such provisions in its Charter
or (depending on the provision in question) its Bylaws. The Company has not
elected to opt out of these provisions. The Florida Act contains a provision
that prohibits the voting of shares in a publicly-held Florida corporation which
are acquired in a "control share acquisition" unless the holders of a majority
of the corporation's voting shares (exclusive of shares held by officers of the
corporation, inside directors or the acquiring party) approve the granting of
voting rights as to the shares acquired in the control share acquisition. A
control share acquisition is defined as an acquisition that immediately
thereafter entitles the acquiring party, directly or indirectly, alone or as a
part of a group, to vote in the election of directors within any of the
following ranges of voting power: (i) one-fifth or more but less than one-third
of all voting power; (ii) one-third or more but less than a majority of all
voting power and (iii) a majority or more of all voting power.

The Florida Act also contains an "affiliated transaction" provision that
prohibits a publicly-held Florida corporation from engaging in a broad range of
business combinations or other extraordinary corporate transactions with an
"interested shareholder" unless (i) in addition to any affirmative vote required
by any other section of the Florida Act or by the articles of incorporation of
the Company, the transaction is approved by two-thirds of the corporation's
outstanding voting shares other than the shares beneficially owned by the
interested shareholder, (ii) the transaction is approved by a majority of the
disinterested directors, (iii) the interested shareholder has been the
beneficial owner of at least 80% of the corporation's outstanding voting shares
for at least five (5) years preceding the date of the transaction, or (iv) the
interested shareholder is the beneficial owner of at least 90% of the
outstanding voting shares of the corporation, exclusive of shares acquired
directly from the corporation in a transaction not approved by a majority of the
disinterested directors. The Company's Articles of Incorporation provide that
the so-called "fair price" exception to the two-thirds vote requirement referred
in clause (i) of this paragraph does not apply to an "affiliated transaction"
involving the Company. The term "interested shareholder" is defined as a person
who together with affiliates and associates beneficially owns more than 10% of
the company's outstanding voting shares.

The Board of Directors is divided into three classes, designated Class I,
Class II and Class III (the "Classified Directors"). Each class of directors
consists, as nearly as possible, of one-third of the total number of directors
constituting the entire Board of Directors. The number of directors will be a
number determined from time-to-time by the Board of Directors, as provided in
the Bylaws. The Bylaws provide that the number of directors may be fixed from
time to time by resolution of the Board of Directors, but will consist of not
less than five nor more than 12 members. The initial term for directors in Class
I expires at the annual meeting of shareholders to be held in 2000; the initial
term for directors in Class II expires at the annual meeting of shareholders to
be held in 1999; and the initial term for directors in Class III expires at the
annual meeting of shareholders to be held in 1998. A director of the Company may
be removed only for cause and only upon the affirmative vote of the holders of a
majority of the outstanding capital stock entitled to vote at an election of
directors.

The Bylaws provide that the Board of Directors shall fix the number of
directors and that a shareholder may nominate directors only if written notice
is delivered to the Company by such shareholder not more than 30 days prior to
nor after the deadline for submitting shareholder proposals pursuant to Rule
14a-8 under the Securities Exchange Act of 1934, as amended. The Bylaws also
provide that any newly-created directorship resulting from an increase in the
number of directors or a vacancy on the Board of Directors shall be filled by
vote of a majority of the remaining directors then in office, even though less
than a quorum. The Charter and Bylaws also provide that special meetings of the
shareholders may only be called by a majority of the Classified Directors, by
the Chairman of the Board and by the holders of not less than 25% of the
Company's

56
<PAGE> 58

voting stock and that the shareholders may not act by written consent. The
Charter provides that these provisions of the Charter may not be amended without
the approval of at least two-thirds of the voting power of all shares of the
Company entitled to vote generally in the election of directors, voting together
as a single class.

The foregoing provisions of the Charter and the Bylaws and of the Florida
Act, together with the ability of the Board of Directors to issue Preferred
Stock without further shareholder action, could delay or frustrate the removal
of incumbent directors or the assumption of control by the holder of a large
block of Common Stock even if such removal or assumption would be beneficial, in
the short term, to shareholders of the Company. The provisions could also
discourage or make more difficult a merger, tender offer or proxy contest even
if such event would be favorable to the interests of shareholders.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

The Charter requires the Company, to the fullest extent permitted or
required by the Florida Act, to indemnify its directors and officers against any
and all liabilities incurred by reason of the fact that such person was or is a
director or officer of the Company or was serving at the request of the Company
in the same or a similar capacity for any other corporation, partnership or
other entity. Generally, the Florida Act permits indemnification of a director
or officer upon a determination that he or she acted in good faith and in a
manner he or she 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 reasonable cause to believe his or her conduct was unlawful.
The right to indemnification granted in the Charter is not exclusive of any
other rights to indemnification against liabilities or the advancement of
expenses which a director or officer may be entitled under any written
agreement, Board resolution, vote of shareholders, the Florida Act or otherwise.

The Company has also entered into agreements with each of its current
directors and executive officers pursuant to which it is obligated to indemnify
those persons to the fullest extent authorized by law and to advance payments to
cover defense costs against an unsecured obligation to repay such advances if it
is ultimately determined that the recipient of the advance is not entitled to
indemnification. The indemnification agreements provide that no indemnification
or advancement of expenses shall be made (a) if a final adjudication establishes
that the indemnification actions or omissions were material to the cause of
certain adjudicated and constitute (i) a violation of criminal law (unless the
indemnitee had reasonable cause to believe that his actions were lawful), (ii) a
transaction from which the indemnitee derived an improper personal benefit,
(iii) an unlawful distribution or dividend when the Florida Act, or (iv) willful
misconduct or a conscious disregard for the just interests of the Company in a
derivative or shareholder action, (b) for liability under Section 16(b) of the
Exchange Act, or (c) if a final decision by a court having jurisdiction in the
matter determines that indemnification is not lawful.

At present, the Company is not aware of any pending or threatened
litigation or proceeding involving a director, officer, employee or agent of the
Company in which indemnification would be required or permitted under the
Charter, the indemnification agreements or Florida law.

TRANSFER AGENT

The Transfer Agent for the Common Stock is The Bank of New York.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, there will be 22,694,385 shares of Common
Stock outstanding. All of the 4,000,000 shares purchased in the Offering
(4,600,000 shares if the Underwriters' over-allotment option is exercised in
full) will be freely tradeable without registration or other restriction under
the Securities Act, except for any shares purchased by an affiliate of the
Company. All of the remaining shares of Common Stock outstanding (the
"Restricted Shares") may be sold only pursuant to an effective registration
statement filed by the Company or pursuant to an applicable exemption, including
an exemption under Rule 144 under the Securities Act. In this regard,
approximately 17,697,315 shares of the outstanding shares of

57
<PAGE> 59

Common Stock will be eligible for resale pursuant to Rule 144 after one year
from the date of consummation of the Offering. To the extent that such shares of
Common Stock were received in exchange for Common Interests (15,597,522 shares)
and holders of such shares are able to "tack" their holding period of such
Common Interests to the holding period of such shares, such shares may be
eligible for resale pursuant to Rule 144 immediately upon consummation of the
Offering subject to the Lock-Up Agreement.

In general, Rule 144 provides that if a person (including an affiliate)
holds Restricted Shares (regardless of whether such person is the initial holder
or a subsequent holder of such shares), and if at least one year has elapsed
since the later of the date on which the Restricted Shares were issued and fully
paid for or the date that they were acquired from an affiliate, then such person
is entitled to sell within any three-month period 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 such stock during the four calendar weeks
preceding the sale. After Restricted Shares are held for two years, a person who
is not deemed an "affiliate" of the Company would be entitled to sell such
shares under Rule 144 without regard to the volume limitations described above.

The holders of 2,072,180 shares of Common Stock and the Warrants to
purchase 16,808 shares of Common Stock have certain rights to require the
Company to register sales of such shares, or shares acquired pursuant to such
Warrants, under the Securities Act, subject to certain restrictions. If,
subsequent to the consummation of the Offering, the Company proposes to register
any of its securities under the Securities Act, such holders are entitled to
notice of such registration and to include their shares in such registration
with their expenses borne by the Company, subject to the right of an underwriter
participating in that offering to limit the number of shares included in such
registration. In addition, the holders of 1,747,420 shares of Common Stock and
the holders of Warrants to purchase 1,335,362 shares of Common Stock have the
right to demand, on two occasions, that the Company file a registration
statement covering sales of their respective shares, and the Company is
obligated to pay the expenses of such registrations.

The effect, if any, that future market sales of shares or the availability
of shares for sale will have on the prevailing market prices for the Common
Stock cannot be predicted. Nevertheless, sales of a substantial number of shares
in the public market could adversely affect prevailing market prices for the
Common Stock.

58
<PAGE> 60

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the form
of which is filed as an exhibit to the Registration Statement of which this
Prospectus forms a part, the Company and the Selling Shareholder have agreed to
sell to each of the underwriters named below and each of such underwriters, for
whom Lehman Brothers Inc., Donaldson, Lufkin & Jenrette Securities Corporation
and Montgomery Securities are acting as representatives (the "Representatives"),
has severally agreed to purchase from the Company and the Selling Stockholder,
the respective number of shares of Common Stock set forth opposite its name
below:

<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
UNDERWRITERS COMMON STOCK
------------ ------------
<S> <C>
Lehman Brothers Inc. .......................................
Donaldson, Lufkin & Jenrette Securities Corporation.........
Montgomery Securities.......................................
---------
Total............................................. 4,000,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the
Underwriters to purchase the shares of Common Stock are subject to certain
conditions, and that if any of the foregoing shares of Common Stock are
purchased by the Underwriters pursuant to the Underwriting Agreement, then all
of the shares of Common Stock agreed to be purchased by the Underwriters
pursuant to the Underwriting Agreement must be so purchased.

The Company and the Selling Shareholders have been advised that the
Underwriters propose to offer the shares of Common Stock in part directly to the
public at the public offering price set forth on the cover page of this
Prospectus, and in part to certain dealers (who may include the Underwriters) at
such initial public offering price, less a selling 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 brokers or
dealers. After the Offering, the public offering price, the concession to
selected dealers and the reallowance may be changed by the Underwriters.

The Company and the Selling Shareholders have granted the Underwriters
options to purchase up to an aggregate of 445,347 shares and 154,653 shares of
Common Stock, respectively, at the initial public offering price, less the
aggregate underwriting discounts and commissions shown on the cover page of this
Prospectus, exercisable solely to cover over-allotments, if any. Such options
may be exercised at any time until 30 days after the date of the Underwriting
Agreement. To the extent that either option is exercised, the Underwriters will
be committed, subject to certain conditions, to purchase a number of additional
shares of Common Stock proportionate to such Underwriter's initial commitment as
indicated in the preceding table and the Company and such Selling Shareholders
will be obligated, pursuant to such over-allotment options to sell such shares
of Common Stock to the Underwriters. To the extent that the over-allotment
options are not fully exercised, shares will be sold first by the Selling
Shareholders other than Indosuez Staff Capital Partners, pro rata, and then by
the Company and Indosuez Staff Capital Partners, pro rata.

The Company has agreed that for a period of 180 days from the date of the
Prospectus, not to, directly or indirectly, offer for sale, sell or otherwise
dispose of (or enter into any transaction or device which is designed to, or
could be expected to, result in the disposition by any person at any time in the
future of) any shares of Common Stock (other than the shares of Common Stock
offered hereby and shares issued in the Reorganization or pursuant to employee
benefit plans, qualified stock option plans or other employee compensation plans
existing on the date hereof or pursuant to currently outstanding options,
warrants or rights) and shares of Common Stock issued in acquisition
transactions not involving a public offering, or sell or grant options, rights
or warrants with respect to any shares of Common Stock (other than the grant of
options pursuant to option plans existing on the date hereof), without the prior
written consent of Lehman Brothers Inc. Each officer and director of the Company
and all other shareholders have agreed not to, directly or indirectly, offer for
sale, sell or otherwise dispose of (or enter into any transaction or device
which is

59
<PAGE> 61

designed to, or could be expected to, result in the disposition by any person at
any time in the future of) any shares of Common Stock for a period of 180 days
from the date of this Prospectus, without the prior written consent of Lehman
Brothers Inc.

Prior to the Offering, there has been no public market for the Common
Stock. The initial public offering price will be determined by negotiation among
the Company and the Representatives of the Underwriters. Among the factors
considered in determining the initial public offering price will be the
historical performance, capital structure, estimates of the business potential
and earnings prospects of the Company, an overall assessment of the Company,
assessment of the Company's management, and the contribution of the above
factors in relation to market valuation of companies in related businesses.

The Common Stock has been approved for quotation on the Nasdaq National
Market under the symbol "STFF."

The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933 and to contribute, under certain circumstances, to
payments that the Underwriters may be required to make in respect thereof.

If the Underwriters create a short position in the Common Stock in
connection with the Offering, (i.e., if they sell more shares of Common Stock
than are set forth on the cover page of this Prospectus), the Representatives
may reduce that short position by purchasing Common Stock in the open market.
The Representatives also may elect to reduce any short position by exercising
all or part of the over-allotment option described herein.

The Representatives also may impose a penalty bid on certain Underwriters
and selling group members. This means that if the Representatives purchase
shares of Common Stock in the open market to reduce the Underwriters' short
position or to stabilize the price of the Common Stock, they may reclaim the
amount of the selling concession from the Underwriters and selling group members
who sold those shares as part of the Offering.

In general, purchases of a security for the purpose of stabilization or to
reduce a syndicate short position could cause the price of the security to be
higher than it might otherwise be in the absence of such purchases. The
imposition of a penalty bid may have an effect on the price of a security to the
extent that it were to discourage resales of the security by purchasers in the
offering.

Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of, or any effect that the
transactions described above may have on, the price of the Common Stock. In
addition, neither the Company nor any of the Underwriters makes any
representation that the Representatives will engage in such transactions or,
once commenced, will not be discontinued without notice.

Any offers in Canada will be made only pursuant to an exemption from the
requirements to file a prospectus in the relevant province of Canada in which
such offer is made.

Purchasers of the Common Stock offered hereby may be required to pay stamp
taxes and other charges in accordance with the laws and practices of the country
of purchase in addition to the offering price set forth on the cover page
hereof.

The Representatives of the Underwriters have informed the Company and the
Selling Shareholders that the Underwriters do not intend to confirm sales to
accounts to which they exercise discretionary authority.

LEGAL MATTERS

Certain legal matters in connection with the Common Stock being offered
hereby will be passed upon for the Company by Powell, Goldstein, Frazer & Murphy
LLP, Atlanta, Georgia and for the Underwriters by O'Melveny & Myers LLP, Los
Angeles, California.

60
<PAGE> 62

EXPERTS

The financial statement of Staff Leasing, Inc. and the consolidated
financial statements of Staff Capital, L.P. included in this Prospectus and the
related financial statement schedule included elsewhere in the Registration
Statement have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their reports appearing herein and elsewhere in the Registration
Statement. These financial statements and financial statement schedule have been
included herein or elsewhere in the Registration Statement in reliance upon the
reports of said firm given upon their authority as experts in accounting and
auditing.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C. 20549, a Registration Statement on Form S-1
under the Securities Act with respect to the shares of Common Stock offered
hereby. This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto. Certain items are
omitted in accordance with the rules and regulations of the Commission. For
further information with respect to the Company and the Common Stock offered
hereby, reference is hereby made to the Registration Statement, including
exhibits, schedules and reports filed as part thereof. Statements contained in
this Prospectus as to the contents of any contract or other document referred to
are not necessarily complete, and, in each instance, reference is made to the
copy of such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference. The Registration Statement, including the exhibits and schedules
thereto, may be inspected without charge at the principal office of the
Commission in Washington, D.C. and copies of all or any part of which may be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Judiciary Plaza, Room 1024, Washington,
D.C. 20549 and at the Commission's Regional Offices located at the Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and
7 World Trade Center, 13th Floor, New York, New York 10048. Copies of such
material may be obtained at prescribed rates by mail from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549. In addition, the Company is required to file electronic
versions of these documents with the Commission through the Commission's
Electronic Data Gathering, Analysis and Retrieval (EDGAR) system. The Commission
maintains a World Wide Web site at http://www.sec.gov that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission.

61
<PAGE> 63

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
STAFF LEASING, INC.
Independent Auditors' Report.............................. F-2
Balance Sheet as of February 28, 1997..................... F-3
Notes to Balance Sheet.................................... F-4
STAFF CAPITAL, L.P. AND SUBSIDIARIES
Independent Auditors' Report.............................. F-6
Consolidated Balance Sheets as of December 31, 1995 and
1996................................................... F-7
Consolidated Statements of Operations for the Years Ended
December 31, 1994, 1995, and 1996...................... F-8
Consolidated Statements of Changes in Common Partners'
Capital (Deficit) for the Years Ended December 31,
1994, 1995, and 1996................................... F-9
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1994, 1995, and 1996...................... F-10
Notes to Consolidated Financial Statements................ F-11
STAFF CAPITAL, L.P. AND SUBSIDIARIES (UNAUDITED)
Consolidated Balance Sheet as of March 31, 1997
(Unaudited)............................................ F-21
Consolidated Statements of Operations for the Three Months
Ended March 31, 1996 and 1997 (Unaudited).............. F-22
Consolidated Statement of Changes in Common Partners'
Capital (Deficit) for the Three Months Ended March 31,
1997 (Unaudited)....................................... F-23
Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 1996 and 1997 (Unaudited).............. F-24
Notes to Consolidated Financial Statements (Unaudited).... F-25
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENT
Unaudited Pro Forma Consolidated Balance Sheet as of March
31, 1997............................................... F-27
Notes to Unaudited Pro Forma Consolidated Balance Sheet... F-29
</TABLE>

F-1
<PAGE> 64

INDEPENDENT AUDITORS' REPORT

Board of Directors
Staff Leasing, Inc.
Bradenton, Florida

We have audited the accompanying balance sheet of Staff Leasing Inc. (the
"Company") as of February 28, 1997. 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 balance sheet presentation. We
believe that our audit provides a reasonable basis for our opinion.

In our opinion, such balance sheet presents fairly, in all material
respects, the financial position of Staff Leasing, Inc. at February 28, 1997 in
conformity with generally accepted accounting principles.

Deloitte & Touche LLP

Stamford, Connecticut
February 28, 1997

(March 24, 1997

as to Note 3)

F-2
<PAGE> 65

STAFF LEASING, INC.

BALANCE SHEET
AS OF INCEPTION (FEBRUARY 28, 1997)

<TABLE>
<S> <C>
ASSETS
Cash........................................................ $ 1
===
SHAREHOLDERS' EQUITY
Preferred Stock -- authorized 10,000,000 shares of $0.01 par
value each; no shares issued and outstanding.............. --
Common Stock -- authorized 100,000,000 shares of $0.01 par
value each; 100 shares issued and outstanding............. $ 1
---
Total............................................. $ 1
===
</TABLE>

See notes to balance sheet.

F-3
<PAGE> 66

STAFF LEASING, INC.

NOTES TO BALANCE SHEET

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

1. INCORPORATION

Staff Leasing, Inc. (the "Company") was formed on February 28, 1997, to
facilitate a proposed reorganization (the "Reorganization") of Staff Capital,
L.P. ("Staff Capital"). As part of the Reorganization, the Company intends to
issue approximately 19,194,385 shares of its common stock and warrants to
purchase 1,352,253 shares of its common stock in exchange for outstanding
limited partnerships interests of Staff Capital to be accounted for as a
purchase among entities under common control. In addition, the Company intends
to file a registration statement for the initial underwritten offering of its
common stock (the "Offering"). The Offering is expected to close in the second
quarter of 1997.

2. REORGANIZATION

Staff Acquisition, Inc., a Delaware corporation ("Staff Acquisition"), is
the sole general partner of Staff Capital and of each of the operating limited
partnerships ("OLPs"), all of which are Delaware limited partnerships which
operate the business of Staff Capital. Staff Capital is the sole limited partner
of each of the OLPs. Upon the Reorganization and consummation of the Offering:
(i) certain of the Class A preferred limited partnership interests in the
Partnership (the "Class A Interests") will be exchanged for an aggregate of
2,029,657 shares of Common Stock; (ii) Certain of the Class A Interests will be
exchanged (a) for non-convertible preferred limited partnership interests in the
Partnership, which will be repurchased with approximately $9.8 million of the
proceeds of the Offering and (b) for warrants (the "Warrants") to purchase an
aggregate of 1,352,253 shares of Common Stock at an aggregate exercise price of
approximately $9.8 million ($7.24 per share); (iii) certain of the Class A
Interests will be exchanged for (a) an aggregate of 42,523 shares of Common
Stock and (b) approximately $0.6 million of the proceeds from the Offering; (iv)
the Class B non-convertible preferred limited partnership interests in the
Partnership (the "Class B Interests") will be purchased with approximately $6.8
million of the proceeds of the Offering; (v) all of the common limited
partnership interests in the Partnership (the "Common Interests") will be
exchanged for an aggregate of 17,122,205 shares of Common Stock; and (vi)
approximately $2.2 million, payable on the Class A Interests and Class B
Interests in respect of the fixed return on such interests (the "Fixed Return
Amount"), will be paid from the proceeds of the Offering to the holders of such
interests as required under the partnership agreement governing the Partnership.

Staff Acquisition will remain the general partner of the Partnership with a
one percent general partnership interest therein and Staff Leasing will be the
sole limited partner of the Partnership with a 99% limited partnership interest
therein. Following the Reorganization, the business of the Company will continue
to be operated through the Partnership and the OLPs, and for Federal tax
purposes, in accordance with the provisions of the partnership agreement
governing the Partnership, future taxable income generated by the Partnership
will be allocated to Staff Acquisition and not to the Company until Staff
Acquisition has been allocated income equal to certain net losses previously
allocated to it. The amount of such net losses as of December 1996 was
approximately $12.9 million.

As part of the Reorganization, Charles S. Craig the Chairman and CEO of the
Company and the owner of all of the stock of Staff Acquisition, will enter into
a voting trust agreement pursuant to which the Company, as trustee under the
voting trust agreement, will possess, and be entitled to exercise, all rights to
vote the stock of Staff Acquisition and to give consents or waivers in respect
of such stock. The same persons constitute the Boards of Directors of the
Company and Staff Acquisition. In addition, Mr. Craig will grant to the Company
an option to acquire the stock of Staff Acquisition in exchange for 417,900
shares of Common Stock. The number of shares of Common Stock issuable to Mr.
Craig in connection with the exercise of such option was determined on the same
basis used to determine the number of shares of Common Stock issued in exchange
for the Common Interests.

F-4
<PAGE> 67

STAFF LEASING, INC.

NOTES TO BALANCE SHEET -- (CONTINUED)

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

3. INCENTIVE PLAN

On March 24, 1997 the Company adopted the Staff Leasing, Inc. 1997 Stock
Incentive Plan (the "Incentive Plan") and reserved 2,500,000 shares of Common
Stock for issuance under the Incentive Plan. Awards under the Incentive Plan are
determined by the Compensation Committee of the Board of Directors (the
"Committee"). Key employees, officers, directors and consultants of the Company
or an affiliate are eligible for awards under the Incentive Plan. The Incentive
Plan permits the Committee to make awards of shares of Common Stock, awards of
derivative securities related to the value of the common stock and certain cash
awards to eligible persons. These discretionary awards may be made on an
individual basis, or pursuant to a program approved by the Committee for the
benefit of a group of eligible persons. The Incentive Plan permits the Committee
to make awards of a variety of equity-based incentives, including (but not
limited to) stock awards, options to purchase shares of common stock and to sell
shares of common stock back to the Company, stock appreciation rights, so-called
"cash-out" or "limited stock appreciation rights" (which the Committee may make
exercisable in the event of certain changes in control of the Company or other
events), phantom shares, performance incentive rights, divided equivalent rights
and similar rights (together, "Stock Incentives"). The number of shares of
common stock as to which a Stock Incentive is granted and to whom any Stock
Incentive is granted, and all other terms and conditions of a Stock Incentive,
is determined by the Committee, subject to the provisions of the Incentive Plan.
The terms of particular Stock Incentives may provide that they terminate, among
other reasons, upon the holder's termination of employment or other status with
respect to the Company and any affiliate, upon a specified date, upon the
holder's death or disability, or upon the occurrence of a change in control of
the Company. Stock Incentives may also include exercise, conversion or
settlement rights to a holder's estate or personal representative in the event
of the holder's death or disability. At the Committee's discretion, Stock
Incentives that are held by an employee who suffers a termination of employment
may be cancelled, accelerated, paid or continued, subject to the terms of the
applicable Stock Incentive agreement and to the provisions of the Incentive
Plan. Stock Incentives generally are not transferable or assignable during a
holder's lifetime.

The maximum number of shares of Common Stock with respect to which options
or stock appreciation rights may be granted during any fiscal year of the
Company as to certain eligible recipients shall not exceed 100,000, to the
extent required by Section 162(m) of the Internal Revenue Code for the grant to
qualify as qualified performance-based compensation. The number of shares of
Common Stock reserved for issuance in connection with the grant or settlement of
Stock Incentives or to which a Stock Incentive is subject, as the case may be,
and the exercise price of each option are subject to adjustment in the event of
any recapitalization of the Company or similar event, effected without the
receipt of consideration. In the event of certain corporate reorganizations and
similar events, Stock Incentives may be substituted, canceled, accelerated,
cashed-out or otherwise adjusted by the Committee, provided such adjustment is
not inconsistent with the express terms of the Incentive Plan or the applicable
Stock Incentive Agreement.

F-5
<PAGE> 68

INDEPENDENT AUDITORS' REPORT

To the Partners
Staff Capital, L.P.
Bradenton, Florida

We have audited the accompanying consolidated balance sheets of Staff
Capital, L.P. (a Delaware limited partnership) and subsidiaries as of December
31, 1995 and 1996, and the related consolidated statements of operations,
changes in common partners' capital (deficit) and cash flows for each of the
three years in the period ended December 31, 1996. These consolidated financial
statements are the responsibility of management. Our responsibility is to
express an opinion on these consolidated 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, such consolidated financial statements present fairly, in
all material respects, the financial position of Staff Capital, L.P. and
subsidiaries as of December 31, 1995 and 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996 in conformity with generally accepted accounting principles.

Deloitte & Touche LLP

Stamford, Connecticut
March 5, 1997

F-6
<PAGE> 69

STAFF CAPITAL, L.P. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1995 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets:
Cash...................................................... $ 13 $ 12
Accounts receivable -- net of allowance for doubtful
accounts of $784 and $440, respectively................ 26,743 33,956
Other receivables......................................... 1,031 660
Other current assets...................................... 763 770
-------- --------
Total current assets.............................. 28,550 35,398
-------- --------
Property and equipment -- net............................... 13,183 16,812
Goodwill -- net of accumulated amortization of $1,580 and
$2,313, respectively...................................... 13,087 12,358
Other assets -- net of accumulated amortization of $1,038
and $1,762, respectively.................................. 2,112 1,414
-------- --------
Total assets...................................... $ 56,932 $ 65,982
======== ========
LIABILITIES AND COMMON PARTNERS' DEFICIT
Current liabilities:
Current portion of long-term debt......................... $ 6,287 $ 7,092
Accrued workers' compensation premiums and health loss
reserves............................................... 18,369 13,697
Accrued payroll and payroll taxes......................... 28,886 35,279
Accounts payable and other accrued liabilities............ 8,401 10,113
Customer deposits and prepayments......................... 818 1,396
-------- --------
Total current liabilities......................... 62,761 67,577
-------- --------
Long-term debt.............................................. 25,231 14,354
Other long-term liabilities................................. 850 2,009
Minority interest........................................... 39 47
Commitments and contingencies (Note 6)......................
Redeemable preferred partnership interests.................. 2,000 31,208
Common partners' deficit.................................... (33,949) (49,213)
-------- --------
Total liabilities and common partners' deficit.... $ 56,932 $ 65,982
======== ========
</TABLE>

See notes to consolidated financial statements.

F-7
<PAGE> 70

STAFF CAPITAL, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------
1994 1995 1996
--------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Revenues................................................ $735,763 $1,091,588 $1,432,131
-------- ---------- ----------
Cost of services:
Salaries, wages and payroll taxes..................... 657,534 975,887 1,283,787
Benefits, workers' compensation, state unemployment
taxes and other costs.............................. 46,194 83,664 88,839
-------- ---------- ----------
Total cost of services........................ 703,728 1,059,551 1,372,626
-------- ---------- ----------
Gross Profit............................................ 32,035 32,037 59,505
-------- ---------- ----------
Operating expenses:
Salaries, wages and commissions....................... 15,537 29,674 37,264
Other general and administrative...................... 6,836 19,420 19,528
Depreciation and amortization......................... 1,307 3,219 3,154
-------- ---------- ----------
Total operating expenses...................... 23,680 52,313 59,946
-------- ---------- ----------
Operating income (loss)................................. 8,355 (20,276) (441)
Interest expense........................................ 3,448 4,764 3,401
Other expenses (income)................................. 95 (98) 23
-------- ---------- ----------
Net income (loss)....................................... 4,812 (24,942) (3,865)
Return on preferred interests........................... (164) -- (1,772)
-------- ---------- ----------
Net income (loss) attributable to common partnership
interests............................................. $ 4,648 $ (24,942) $ (5,637)
======== ==========
Unaudited pro forma information (Note 12):
Pro forma adjustments................................. --
----------
Pro forma net loss attributable to common
shareholders....................................... $ (5,637)
==========
Pro forma net loss per share attributable to common
shareholders....................................... $ (.28)
==========
Pro forma weighted average shares outstanding......... 19,935
==========
</TABLE>

See notes to consolidated financial statements.

F-8
<PAGE> 71

STAFF CAPITAL, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN COMMON
PARTNERS' CAPITAL (DEFICIT)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996

<TABLE>
<CAPTION>
COMMON
GENERAL LIMITED WARRANT
PARTNER PARTNERS HOLDER TOTAL
-------- -------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Balance, January 1, 1994 -- net of contribution notes
receivable of $500................................... $ 57 $ 5,044 $ 750 $ 5,851
Partner contribution................................... -- 201 -- 201
Exercise of 7.5% common limited partner warrants....... -- 375 (375) --
Exercise of 6% preferred limited partner warrants...... -- 1 -- 1
Repurchase of 7.5% common limited partner warrants..... -- (7,725) (375) (8,100)
Partner capital distributions, net of partner loan
repayments of $783................................... (100) (9,117) -- (9,217)
Partner tax distributions.............................. (58) (2,499) -- (2,557)
Return on preferred interests.......................... -- (164) -- (164)
Net income............................................. 46 4,766 -- 4,812
-------- -------- ------ --------
Balance, January 1, 1995 -- net of partner contribution
notes receivable of $45.............................. (55) (9,118) -- (9,173)
Partner contributions.................................. -- 99 -- 99
Repurchase of common limited partner interests......... -- (468) -- (468)
Warrants issued in connection with financings to
purchase limited partnership interests............... -- -- 1,080 1,080
Exercise of common limited partnership warrants........ -- 540 (540) --
Partner tax and other distributions.................... -- (545) -- (545)
Net loss............................................... (22,967) (1,975) -- (24,942)
-------- -------- ------ --------
Balance, January 1, 1996 -- net of partner contribution
notes receivable of $326............................. (23,022) (11,467) 540 (33,949)
Partner contributions.................................. 250 -- -- 250
Repurchase of common limited partners' interest and
conversion to Preferred Class B...................... -- (9,811) -- (9,811)
Exercise of common limited partnership warrants........ -- 540 (540) --
Accretion of Preferred Class A......................... -- (170) -- (170)
Return on preferred interests.......................... -- (1,602) -- (1,602)
Other.................................................. (3) (63) -- (66)
Net loss............................................... (1,013) (2,852) -- (3,865)
-------- -------- ------ --------
Balance at December 31, 1996, net of partner
contribution notes receivable of $371................ $(23,788) $(25,425) $ -- $(49,213)
======== ======== ====== ========
</TABLE>

See notes to consolidated financial statements.

F-9
<PAGE> 72

STAFF CAPITAL, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1994 1995 1996
-------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)......................................... $ 4,812 $(24,942) $(3,865)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization expense.................. 1,307 3,219 3,154
Amortization of debt issuance costs.................... 1,798 668 560
Provision for bad debts................................ 221 1,476 651
Other amortization of original issue discount.......... 708 1,080 --
Minority interest...................................... 90 (126) 8
Other.................................................. 173 154 (101)
Changes in assets and liabilities:
Increase in accounts receivable...................... (7,921) (11,413) (7,864)
(Increase) decrease in other receivables............. (1,496) 1,090 371
Increase in other current assets..................... (576) (26) (7)
Increase (decrease) in accrued workers' compensation
premiums and health loss reserves................. 696 12,969 (4,672)
Increase in accrued payroll and payroll taxes........ 9,004 12,208 6,393
Increase in accounts payable and other accrued
liabilities....................................... 81 8,405 1,712
Increase in long-term liabilities.................... -- -- 1,159
Increase in customer deposits and prepayments........ 94 101 578
-------- -------- -------
Net cash provided by (used in) operating
activities...................................... 8,991 4,863 (1,923)
-------- -------- -------
Cash flows from investing activities:
Proceeds from sale of assets.............................. 43 63 18
Capital expenditures...................................... (751) (11,619) (5,923)
Other assets.............................................. (615) -- 34
-------- -------- -------
Net cash used in investing activities............. (1,323) (11,556) (5,871)
-------- -------- -------
Cash flows from financing activities:
Preferred and common partner contributions................ 52 2,099 21,103
Proceeds from sale-leaseback of fixed assets.............. -- 3,439 597
Repurchase of preferred and common partners' interest..... (1,691) (468) (3,177)
Proceeds (repayments) from revolving credit -- net........ 5,800 (3,300) (2,500)
Proceeds from long-term debt.............................. 25,000 -- --
Partner capital and tax distributions..................... (11,774) (545) --
Repurchase of common limited partner warrants............. (8,100) -- --
Repayment of long-term debt............................... (12,000) (1,050) (6,250)
Payments under capital leases............................. -- (786) (1,920)
Debt issuance costs....................................... (1,866) (297) (60)
-------- -------- -------
Net cash (used in) provided by financing
activities...................................... (4,579) (908) 7,793
-------- -------- -------
Net increase (decrease) in cash............................. 3,089 (7,601) (1)
Cash beginning of year...................................... 4,525 7,614 13
-------- -------- -------
Cash end of year............................................ $ 7,614 $ 13 $ 12
======== ======== =======
Supplemental disclosure:
Interest paid............................................... $ 1,091 $ 3,438 $ 3,485
======== ======== =======
</TABLE>

See notes to consolidated financial statements.

F-10
<PAGE> 73

STAFF CAPITAL, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation -- The accompanying consolidated financial
statements include the accounts of Staff Capital, L.P. ("Staff Capital") and all
of its subsidiaries (collectively, the "Partnerships"). Staff Capital has a 99%
limited partnership interest in each of its consolidated subsidiaries. Staff
Acquisition, Inc., the general partner of Staff Capital, directly owns the
remaining 1% general partnership interest in each of the consolidated
subsidiaries. All significant intercompany balances have been eliminated.

The consolidated financial statements include only those assets,
liabilities and results of operations which relate to the business of the
Partnerships. The consolidated financial statements do not include any assets,
liabilities or operations attributable to the individual partners' activities.

Staff Capital is headquartered in Bradenton, Florida and provides
professional employer services to small to medium-sized businesses in the states
of Florida, Texas and Georgia. Staff Capital, through its subsidiaries, provides
a broad range of services, including payroll administration , risk management,
benefits administration, unemployment services and other human resource
management services to their clients. The Partnerships are paid a service fee to
cover the cost of certain employment related taxes, workers' compensation
insurance coverage and administration and field services, plus a markup to cover
overhead and to provide a profit.

On February 28, 1997, Staff Capital agreed to a reorganization in which the
common limited partners will exchange 100% of their common limited partnership
interests for all of the current outstanding stock of a newly-formed holding
company, Staff Leasing, Inc. (See Note 11). Subsequent to the exchange, Staff
Leasing, Inc. will own the 99% common limited partnership interest in Staff
Capital.

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 and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. The Partnerships more significant estimates relate
to the reserve for health benefit claims. Actual results could differ from those
estimates.

Property and Equipment -- Property and equipment are stated at cost.
Depreciation is computed using the straight-line method over the lesser of the
remaining estimated useful lives of the related assets or lease terms, as
follows:

<TABLE>
<CAPTION>
YEARS
------
<S> <C>
Automobiles................................................. 5
Computer hardware and software.............................. 5
Furniture and equipment..................................... 5 to 7
Leasehold improvements...................................... 10
</TABLE>

Goodwill -- Goodwill is being amortized using the straight-line method over
a period of 20 years. The Partnerships continually evaluate the reasonableness
of their amortization for intangibles. In addition, if it becomes probable that
expected future undiscounted cash flows associated with intangible assets are
less than their carrying value, the assets are written down to its fair value.

Impairment of Long-Lived Assets -- In March 1995, Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of," ("SFAS No. 121") was
issued. SFAS No. 121 requires impairment losses to be recorded on long-lived
assets used in operations when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are less than
the assets' carrying amount. The Partnerships adopted SFAS No. 121 in the first
quarter of 1996 with no material effect on the consolidated financial
statements.

F-11
<PAGE> 74

STAFF CAPITAL, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

Other Assets -- Included in other assets at December 31, 1996 are
organization costs of $612, non-competition covenant costs of $265, and debt
issuance costs of $2,223, (See Note 4). Of the debt issuance costs, $818 was
paid to certain lenders that are also Common Limited Partners of Staff Capital
during 1995. Organization costs are being amortized over a period of five years
using the straight-line method, while debt issuance costs are amortized over the
life of the related debt using the effective interest rate method. Costs related
to non-competition covenants are being amortized over five years which
corresponds to the life of the agreements.

For the years ended December 31, 1994, 1995 and 1996, total amortization of
other assets, including amortization of goodwill of approximately $730 per year,
was $1,965, $1,602 and $1,457, respectively.

Revenue Recognition -- Service revenues are recognized in the period in
which the worksite employee works. The accrual for payroll and payroll taxes
represents the portion of payroll paid subsequent to year end for which the
worksite employee worked prior to year end. Included in accounts receivable at
December 31, 1995 and 1996 were accruals of $22,380 and $23,355, respectively,
representing accrued payroll and payroll taxes plus the normal gross profit
percentage.

Sales and Marketing Commissions and Client Referral Fees -- Sales and
marketing commissions and client referral fees are expensed as incurred. Such
expenses are classified in salaries, wages and commissions in the consolidated
statement of operations.

Workers' Compensation -- Workers' compensation claims incurred by worksite
employees are fully insured through a guaranteed cost arrangement with Liberty
Mutual.

Health Benefits -- Health benefit claims incurred by worksite employees
under the Partnerships' health minimum premium arrangements are expensed by the
Partnerships as incurred. (See Note 5).

Stock-Based Compensation -- In 1996, the Partnership adopted the provisions
of Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" ("SFAS No. 123"). SFAS No. 123 encourages, but does
not require companies to record at fair value compensation cost for stock-based
employee compensation plans. The Partnership accounts for equity-based
compensation arrangements under the provisions of Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees", and intends to
continue to do so. Accordingly, compensation cost for restricted partnership
equity issued to employees is measured by the excess of the fair value of such
restricted interests at the measurement date over the amount an employee is
required to pay or has paid.

Income Taxes -- The Partnerships have operated as limited partnerships
since they were formed on November 5, 1993, and accordingly, have not recorded
any provision or benefit for federal and state income taxes, nor any related
assets or liabilities. The tax effects of the Partnerships' activities accrue to
the individual partners. Prior to the closing of the proposed public offering,
Staff Capital will reorganize its structure to a corporate form, as described in
Note 11.

Statement of Cash Flows -- During 1995 and 1996, Staff Capital entered into
several capital leases. Fixed assets subject to capital leases, having a value
of $2,416 were excluded from the statement of cash flows at December 31, 1995.
During 1996, $2,198 of existing Preferred Limited partnership interests were
converted to Class A Interests and $6,773 of Common Limited partnership
interests were converted to Class B Interests. Cash equivalents are defined as
short-term investments with original maturities of three months or less.

2. THE PARTNERSHIP

General -- Staff Capital was formed on November 5, 1993 for the purpose of
acquiring and operating the assets of Staff Leasing, Inc., Total Employee
Leasing Services, Inc., Staff Insurance, Inc., E.I.F., Inc., Tele-Smart, Inc.
and Staff Leasing of Georgia, Inc. (collectively the "operating subsidiaries")
which were acquired

F-12
<PAGE> 75

STAFF CAPITAL, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

on November 5, 1993. During 1995, E.I.F., L.P. and Tele-Smart, L.P. were
liquidated and their residual net assets were distributed to a partnership
within the consolidated group.

During the year ended December 31, 1994, Staff Capital acquired Florida
Payroll Leasing Services, L.P. (currently known as Staff Leasing V, L.P.). In
addition, during the year ended December 31, 1994, Staff Capital established,
through the acquisition of nonoperating entities, Staff Leasing II, L.P., Staff
Leasing III, L.P., Total Employee Leasing Services of Georgia, L.P. (currently
known as Staff Leasing II of Georgia, L.P.), Staff Leasing of Texas, L.P. and
Staff Leasing of Texas II, L.P. to engage in employee leasing. As of December
31, 1996, only Staff Leasing of Texas L.P., Staff Leasing of Georgia, L.P.,
Staff Leasing II, L.P. and Staff Leasing V, L.P. have commenced operations.

Common Limited Partnership Interests -- The common ownership structure of
Staff Capital is 1% owned by the General Partner -- Staff Acquisition, Inc. and
99% owned by the Common Limited Partners. The General Partner also owns the 1%
general partnership interest in each of the operating subsidiaries. The
percentage ownership by the General Partner of the operating subsidiaries, plus
its share of income and losses allocated thereon, is reflected as minority
interest in the consolidated balance sheets and statements of operations of
Staff Capital.

The General Partner and Common Limited Partners have made capital
contributions in the following amounts (net of contribution notes receivable):

<TABLE>
<CAPTION>
COMMON
GENERAL PARTNER LIMITED PARTNERS
--------------- ----------------
<S> <C> <C>
Aggregate capital contributions through December 31,
1996................................................... $300 $5,468
</TABLE>

The contribution notes receivable consisted of twelve notes in an aggregate
amount of $326 at December 31, 1995 and twenty notes in an aggregate amount of
$371 at December 31, 1996 from Common Limited Partners. Principal under these
notes is due on November 1, 2000. Interest is payable quarterly at rates ranging
from 5.22% to 7.12% per annum.

Redeemable Preferred Partnership Interests

Class B Interests -- On August 31, 1996, certain Common Limited Partners
exchanged a portion of their Common Limited partnership interests for cash and
Class B Interests. Class B Interests earn a fixed return of 5.86% per annum and
are mandatorily redeemable on the earlier of July 1, 1997 or in the event Staff
Capital shall have issued additional securities in an initial public offering.
If the Class B Interests are not so redeemed on the mandatory redemption date,
they shall automatically convert back to Common Limited partnership interests
with the same ownership percentages as if they had never been converted
originally. At December 31, 1996, $6,906 in Class B Interests are outstanding.
Included in this balance is $134 of accrued fixed return earned during the year.
The accrued fixed return has been classified as a reduction of Common Limited
partnership interests with a corresponding increase to Redeemable Preferred
Partnership Interests.

Class A Interests -- On April 26, 1996, Staff Capital issued $21,710 in
Class A Interests. Included in this amount was the conversion of $2,198 of
existing Preferred limited partnership interests. The net cash proceeds amounted
to $17,762 after deducting issuance fees of $1,200 and notes receivable of $550.
In August 1996, Staff Capital sold an additional $3,135 of Class A Interests
before deduction of issuance fees of $60. Approximately $510 of the issuance
fees paid were paid to the General Partner and a Common Limited Partner for
financing services performed.

The Class A Interests were issued in series A-1, A-2 and A-3, and are
mandatorily redeemable on the earlier of March 31, 2001 or an initial public
offering of additional securities. The Class A Interests earn a fixed return of
8% per annum until April 30, 1997, 10% per annum subsequent to April 30, 1997
until April 30,

F-13
<PAGE> 76

STAFF CAPITAL, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

1998 and 12% per annum thereafter until the mandatory redemption date.
Subsequent to July 31, 1996 and prior to the mandatory redemption date, any
Class A Limited Partner may convert his Class A Interest, in whole or in part,
into a Common Limited partnership interest at such ownership percentage as
defined in the Amended and Restated Agreement of Limited Partnership of Staff
Capital, L.P. dated April 26, 1996 (the "Agreement"). Any accrued and unpaid
return as of the conversion date shall be paid in cash. Additionally, if
requested by Staff Capital, subsequent to the earlier of April 30, 1997 or the
date on which Staff Capital shall be incorporated, holders of at least 25% of
the Class A Interests shall be offered by Staff Capital the opportunity to
exchange their Class A Interests for a new class of Preferred limited
partnership interests with substantially the same terms as the original except
that such new Preferred limited partnership interests shall be non-convertible
and include warrants to acquire Common Limited partnership interests with terms
equivalent to the conversion terms of the original Class A Interests exchanged.

For the year ended December 31, 1996, the Class A Interests earned a
preferred return of $1,270 which is reflected as a reduction of Common Limited
partnership interests with a corresponding increase to Redeemable Preferred
Partnership Interests. Additionally, accretion amounting to $170 was also
charged to the Common Limited partnership interests representing the 1996
amortization of the initial Class A Interests discount related to the $1,260 of
issuance fees. The total discount is being amortized on a straight-line basis
through the mandatory redemption date (March 31, 2001). For presentation
purposes, both the accretion and the preferred return are being reflected as an
increase to net loss to derive the net loss attributable to Common partnership
interests in the consolidated statements of operations.

Contribution notes receivable in an aggregate amount of $585 at December
31, 1996 were due from the Class A Partners. Principal and interest under these
notes is due on March 31, 2001. The interest rate on these notes is variable
based on the Partnerships' borrowing rate and is compounded annually. The rate
at December 31, 1996 was 9.4%.

A summary of preferred limited partner activity from January 1, 1994
through December 31, 1996 is as follows:

<TABLE>
<CAPTION>
ORIGINAL PREFERRED PREFERRED
PREFERRED CLASS A CLASS B TOTAL
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Balance, January 1, 1994....................... $ 1,528 $ -- $ -- $ 1,528
Repurchase of preferred limited partner
interests.................................... (1,692) -- -- (1,692)
Return on preferred interests.................. 164 -- -- 164
------- ------- ------ -------
Balance, January 1, 1995....................... -- -- -- --
Partner contributions.......................... 2,000 -- -- 2,000
------- ------- ------ -------
Balance, January 1, 1996....................... 2,000 -- -- 2,000
Partner contributions.......................... -- 20,838 -- 20,838
Repurchase of preferred limited partner
interests.................................... -- (139) -- (139)
Conversion of common limited partner
interests.................................... -- -- 6,772 6,772
Conversion of preferred limited partner
interests.................................... (2,198) 2,198 -- --
Accretion of Preferred Class A................. -- 170 -- 170
Return on preferred interests.................. 198 1,270 134 1,602
Other.......................................... -- (35) -- (35)
------- ------- ------ -------
Balance at December 31, 1996, net of
contribution notes receivable of $585........ $ -- $24,302 $6,906 $31,208
======= ======= ====== =======
</TABLE>

Tax Distributions -- As set forth in the Agreement, the Partnership is
required to distribute quarterly a cash distribution in an amount sufficient to
enable the Common Partners to discharge their Federal and appropriate state
income tax liabilities arising from the recognition of taxable income and gain
of Staff Capital

F-14
<PAGE> 77

STAFF CAPITAL, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

to the Partners. Each distribution in respect of taxes shall be allocated in a
manner that takes into account the type and amounts of taxable income and gain
to the Partners for the period with respect to which such distribution is being
made. Any other distributions, including the return of capital, must be made
first to the Preferred Limited Partners until the Preferred Limited Partners'
capital contributions and the fixed return amount to which the Preferred Limited
Partners are entitled has been paid in full; and second, 1% to the General
Partner and 99% to the Common Limited Partners to be allocated among the Common
Limited Partners pro rata on the basis of their participation percentages.

For purposes of allocating income, loss and distributions among the Common
Limited Partners, the warrants issued to the Preferred Limited Partners were
considered to have been exercised. The warrants were exercised during the year
ended December 31, 1994.

Allocations of Net Income and Net Losses -- In accordance with the
Agreement, in the event there is net income it shall first be allocated to the
General Partner to the extent the General Partner has been previously allocated
net losses resulting from capital accounts of the Common Limited Partners being
reduced to zero; second to the Preferred Limited Partners to the extent of any
accrued and undistributed fixed return; and third 1% to the General Partner and
99% to the Common Limited Partners. Net losses, if any, shall generally be
allocated 1% to the General Partner and 99% to the Common Limited Partners until
the capital accounts of such Common Limited Partners have been reduced to zero,
at which time any excess losses shall be allocated 100% to the General Partner.
For the year ended December 31, 1995, the Partnership allocated substantially
all of its losses to the General Partner as a result of the capital accounts of
its Common Limited Partners having been reduced to zero. For the year ended
December 31, 1996, the Partnership allocated certain additional losses to the
General Partner as a result of the capital accounts of certain of its Common
Limited Partners having been reduced to zero. As of December 31, 1996, the
General Partner has been allocated tax losses in excess of the Common Limited
Partners capital accounts of $12,900.

3. PROPERTY AND EQUIPMENT

At December 31, 1995 and 1996, property and equipment (at cost) was
comprised of the following:

<TABLE>
<CAPTION>
1995 1996
------- -------
<S> <C> <C>
Leasehold improvements...................................... $ 1,144 $ 1,083
Furniture and fixtures...................................... 1,428 1,337
Vehicles.................................................... 343 163
Equipment................................................... 728 562
Computer hardware and software.............................. 12,161 16,746
------- -------
Total property and equipment................................ 15,804 19,891
Less accumulated depreciation............................... (2,621) (3,079)
------- -------
$13,183 $16,812
======= =======
</TABLE>

Included in property and equipment at December 31, 1995 and 1996 were
$5,855 and $6,452, respectively, of computer hardware, software and equipment
under capital leases. Depreciation expense related to such leased assets was
$437 and $1,065 for the years ended December 31, 1995 and 1996, respectively.
For the years ended December 31, 1994, 1995 and 1996 depreciation expense was
$404, $2,285 and $2,257, respectively.

4. LONG TERM DEBT

Effective December 8, 1994, Staff Capital refinanced its credit agreement.
The $38,000 amended and restated credit agreement (the "Credit Agreement")
consisted of a $25,000 term loan and a revolving credit

F-15
<PAGE> 78

STAFF CAPITAL, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

facility of $13,000 (which was reduced to $10,000 effective March 31, 1995).
Staff Capital has available, a $5,000 letter of credit facility which is
included in the revolving credit facility. Borrowings under the Credit Agreement
bear interest, at the borrower's option, at either the base rate, or the
Eurodollar rate, plus the applicable margin as defined in the Credit Agreement.
Interest is generally payable quarterly in arrears unless otherwise specified in
the Credit Agreement. In addition, the Partnership must pay a commitment fee of
0.5% on the unutilized revolving loan commitment and a commission of 2.5% on the
outstanding letter of credit balance. The notes and any borrowings under the
revolver are secured by substantially all of the assets of Staff Capital and are
guaranteed by each of the subsidiaries. Staff Capital has guaranteed its
subsidiaries' performance under a separate agreement. In addition, the lender
has a secured interest in the assets of Staff Insurance, L.P. and Staff Leasing
of Georgia, L.P.

On June 29, 1995, the Credit Agreement was amended and restated for the
purpose of increasing the revolving loan commitment by $3,000 through September
30, 1995 as well as extending out the scheduled principal repayments due under
the term loan. In exchange for this amendment, Staff Capital issued to certain
of the lenders a detachable warrant to purchase a 1% Common Limited partnership
interests which was exercisable at a nominal amount. This warrant was valued at
$1,080 and is reflected in the consolidated statement of operations as original
issue discount amortization which is a component of interest expense. One half
of these warrants were exercised in September 1995. The remainder was exercised
in April 1996. In addition, Staff Capital paid debt issuance costs of $297.

Amounts outstanding under the revolving loan facility are payable to the
extent of any excess of the then aggregate outstanding revolving principal and
outstanding letters of credit, as permitted under the Credit Agreement, over the
total revolving loan commitment. Unless otherwise repaid, all outstanding
principal shall be due and payable on December 8, 1999. Staff Capital maintains
a cash management system whereby available cash balances are utilized to reduce
outstanding borrowings under Staff Capital's revolving loan facility.
Accordingly, Staff Capital does not maintain significant cash balances but has
$10,000 available for borrowings under the amended revolving loan facility and
letter of credit at December 31, 1996. At December 31, 1996, there was no
balance outstanding under the revolving credit facility.

The Credit Agreement contains, among other terms and conditions, provisions
relating to maintaining specific levels of consolidated net worth and EBITDA (as
defined in the Credit Agreement), maintaining a defined ratio of consolidated
EBITDA to consolidated interest expense and indebtedness, a limitation on
capital expenditures and health care adjustments. At December 31, 1996, Staff
Capital was not in compliance with one of the above covenants of the Credit
Agreement. On March 5, 1997, Staff Capital obtained an amendment to the Credit
Agreement which cured such covenant violation effective December 31, 1996 and
reset the covenants for fiscal 1997 and 1998.

In addition to the scheduled debt principal payments, on an annual basis
Staff Capital shall pay additional principal payments in an amount up to 75% of
the excess cash flow, as defined in the Credit Agreement.

In addition to the above, Staff Capital has the right to defer up to
$10,000 of payments to a key vendor. All deferred premiums must be repaid on or
before September 30, 1999.

Staff Capital's debt also consists of $5,069 and $3,746 for the years ended
December 31, 1995 and 1996, respectively, in capital lease obligations. All but
one of the capital leases were entered into during 1995 and primarily represent
leases for computer hardware, software and equipment. Several of the capital
leases entered into were as a result of sale leaseback transactions at cost,
consummated during 1995. One lease was entered into during 1996.

F-16
<PAGE> 79

STAFF CAPITAL, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

The principal outstanding under the term loan and revolving credit
facility, as well as existing capital leases is payable as follows on December
31, 1996:

<TABLE>
<CAPTION>
TERM NOTES
AND REVOLVER CAPITAL LEASES TOTAL
------------ -------------- -------
<S> <C> <C> <C>
1997................................................ $ 5,000 $ 2,348 $ 7,348
1998................................................ 6,000 1,528 7,528
1999................................................ 6,700 127 6,827
2000................................................ -- 89 89
------- ------- -------
17,700 4,092 21,792
------- ------- -------
Less amounts representing interest.................. -- (346) (346)
Less current portion................................ (5,000) (2,092) (7,092)
------- ------- -------
Long-term debt...................................... $12,700 $ 1,654 $14,354
======= ======= =======
</TABLE>

The effective interest rate on borrowings and capital lease obligations
approximated 12.4% and 9.9% for the years ended December 31, 1995 and 1996,
respectively, exclusive of debt issuance cost amortization. The carrying amount
of the Partnership's long-term debt approximates fair value.

5. HEALTH BENEFITS

The Partnerships currently provide health benefits to those worksite
employees electing coverage. In October 1994, the Partnerships conducted an
open-enrollment in order to increase participation in its health benefit plan.
During 1995, the Partnerships incurred significantly higher claims under this
plan than projected. The effect of the above plus charges incurred for
consultants and vendors in connection with the 1995 health benefit plan was an
expense of $20,600, of which $10,500 was accrued at December 31, 1995. The
Partnerships took corrective actions in 1995 and 1996.

During 1996, the Partnerships increased premiums charged to the worksite
employees for health benefits and redesigned its benefit offerings to help
reduce the level of subsidies experienced during 1995. For the year ended
December 31, 1996, the Partnerships recorded a health benefit plan subsidy of
$10,100, of which $8,900 was accrued at December 31, 1996. $1,000 of the amount
accrued at December 31, 1996 has been classified as long-term due to the
expected period the ultimate payments will be made.

Health benefit claims incurred by worksite employees under the
Partnerships' PPO health benefit arrangements are expensed as incurred. The
Partnerships' ultimate liability for its PPO health benefit claims is capped at
a factor based on premiums as set forth in the Partnerships' minimum premium
agreement with their health insurance carrier, with stop loss coverage provided
at 125% of projected claims in the 1996 plan year. The Partnerships' HMO
liability is equal to its premium. The Partnerships' worksite employees whom
elect coverage are fully insured relative to their health benefits subject to
the terms of coverage under the health benefit plans. Certain year-end
liabilities for accrued insurance premiums and health benefit loss reserves were
based upon actuarial estimates of claims incurred under the health plans at
December 31, 1995 and 1996, but not reported. The actual ultimate liability may
differ from these actuarial estimates.

6. COMMITMENTS AND CONTINGENCIES

Operating Leases -- The Partnerships occupy office facilities and lease
office equipment under operating leases which expire in various years through
2005. Lease expense was $926, $1,887 and $2,602 for the years ending December
31, 1994, 1995 and 1996, respectively. During 1996, approximately $430 of lease
expense related to certain automobile leases were paid to an entity owned by a
Common Limited Partner.

F-17
<PAGE> 80

STAFF CAPITAL, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

Future minimum payments under noncancellable operating leases as of
December 31, 1996 are as follows:

<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31, AMOUNT
------------ -------
<S> <C>
1997..................................................... $ 2,282
1998..................................................... 1,951
1999..................................................... 1,745
2000..................................................... 1,634
2001..................................................... 1,500
Thereafter............................................... 5,935
-------
$15,047
=======
</TABLE>

Staff Capital has entered into a five-year employment contract with a
limited partner which requires annual payments of $362. There are two years
remaining under this commitment.

The Partnerships are party to certain pending claims which have arisen in
the normal course of business, none of which, in the opinion of management, are
expected to have a material adverse effect on the consolidated financial
position or results of operations if adversely resolved.

The Partnerships' employer and health care operations are subject to
numerous federal, state and local laws related to employment, taxes and benefit
plan matters. Generally, these regulations affect all companies in the U.S.
However, the regulatory environment for professional employer organizations
("PEOs") is an evolving area due to uncertainties resulting from the
non-traditional employment relationships. Many federal and state laws relating
to tax and employment matters were enacted prior to the development of PEOs and
do not specifically address the obligations and responsibilities of these
co-employer relationships. If the IRS concludes that PEOs, are not "employers"
of certain worksite employees for purposes of the Internal Revenue Code of 1986,
as amended (the "Code"), the tax qualified status of the Partnerships' 401(k)
retirement plan as in effect prior to April 1, 1997 could be revoked, its
cafeteria plan may lose its favorable tax status and the Partnerships may no
longer be able to assume the client's Federal employment tax withholding
obligations. Any adverse developments in the above noted areas could have a
material effect on the Partnerships' financial condition and future results of
operations.

7. MANAGEMENT AGREEMENT

Staff Capital has entered into a management agreement with certain limited
partners of Staff Capital whereby they have agreed to provide management support
and financial services with respect to the operation and management of Staff
Capital. The agreement required an annual fee in the amount of $300, $300 and
$400 for the years ended December 31, 1994, 1995 and 1996, respectively. In
conjunction with the Reorganization, (See Note 11) the management agreement will
be terminated.

8. RETIREMENT PLAN

The Partnerships currently offer a defined contribution 401(k) retirement
plan to its internal employees as well as its external worksite employees. The
Partnerships do not match any portion of such employees' elective contributions.
Effective April 1, 1997, the Partnerships will offer a new 401(k) plan to its
employees which will be designed to be a "multiple employer" plan under the
Internal Revenue Code -- Section 413(c). This new plan will enable
employee-owners, as well as highly compensated internal and external employees
of the Partnerships to participate. Such persons were excluded from the existing
401(k) plan to avoid issues of discrimination in favor of highly-compensated
employees.

F-18
<PAGE> 81

STAFF CAPITAL, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

9. GEOGRAPHIC MARKET CONCENTRATION AND DEPENDENCE ON KEY VENDORS

Geographic Market Concentration. Staff Capital has offices in three states
and worksite employees in 39 states. Staff Capital's Florida operations
accounted for 95%, 91% and 82% of the Partnerships' total worksite employee
salaries and wages in 1994, 1995 and 1996, respectively. As a result of the size
of Staff Capital's base of worksite employees in Florida and continued growth
from its Florida operations, Staff Capital's profitability over the next several
years is expected to be largely dependent on economic and regulatory conditions
in Florida. Any adverse change in either of these conditions could have a
material adverse effect on Staff Capital's profitability and growth prospects.

Dependence on Key Vendors. The maintenance of health insurance plans that
cover worksite employees is a significant part of Staff Capital's business. The
current health contracts are provided by vendors with whom Staff Capital has
recently established relationships, on terms that Staff Capital believes to be
favorable. While Staff Capital believes that replacement contracts could be
obtained on competitive terms with other carriers, such replacement could cause
a significant disruption to Staff Capital's business resulting in increased
client attrition and general dissatisfaction with Staff Capital's service
offering. This, in turn, could have a material adverse effect on Staff Capital's
future results of operations or financial condition.

Staff Capital's workers' compensation policy provided by its current
vendor, Liberty Mutual Insurance Company, was initially issued in March 1994 and
its renewal term does not expire until December 31, 1999. In the event Staff
Capital is unable to renew or replace such policy on the same or more favorable
terms, such failure could have a material adverse effect on Staff Capital's
future results of operations or financial condition.

10. RESTRICTED PARTNERSHIP EQUITY PLAN

Certain members of Staff Capital's management have purchased common limited
partnership equity at prices based upon a formula derived from the original
acquisition price of the Partnerships in November, 1993. Prior to July 1995, the
sale of such common limited partnership equity interests were restricted to
Staff Capital and were not freely transferable. The sales price that Staff
Capital would pay, if repurchased, was based upon the same formula used to
derive the original purchase price. In July, 1995 Staff Capital enacted a
vesting schedule whereby the above-noted restrictions would lapse over a four
year vesting period commencing with the first anniversary subsequent to the date
of purchase. Accordingly, Staff Capital obtained appraisals in order to derive
estimated fair values of the purchased common limited partnership equity
interests then owned as of July 1995 and subsequently purchased and recorded
deferred compensation expense to the extent that the estimated fair values
exceeded the purchase prices. Deferred compensation is being amortized on a
straight-line basis over the vesting period. Compensation expense recorded for
the year ending December 31, 1996 was approximately $16. Deferred compensation
at December 31, 1996 was approximately $296.

As of December 31, 1996, a total of 12.3% of the outstanding Common Limited
partnership interests in Staff Capital has been issued to employees under the
restricted partnership interest plan.

11. REORGANIZATION AND INITIAL PUBLIC OFFERING

Staff Leasing, Inc. ("Staff Leasing") was formed on February 28, 1997 to
facilitate a proposed reorganization (the "Reorganization") of Staff Capital. As
part of the Reorganization, Staff Capital's Common Limited Partners will
exchange their Limited Partnership Interests for all of the outstanding common
stock of Staff Leasing. This transaction will be accounted for as a purchase
among entities under common control. Subsequent to the Reorganization, Staff
Leasing intends to file a registration statement for the initial public offering
of its common stock.

F-19
<PAGE> 82

STAFF CAPITAL, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

Upon the Reorganization and consummation of the Offering: (i) certain of
the Class A preferred limited partnership interests in the Partnership (the
"Class A Interests") will be exchanged for an aggregate of 2,029,657 shares of
Common Stock; (ii) Certain of the Class A Interests will be exchanged (a) for
non-convertible preferred limited partnership interests in the Partnership,
which will be repurchased with approximately $9.8 million of the proceeds of the
Offering and (b) for Warrants (the "Warrants") to purchase an aggregate of
1,352,253 shares of Common Stock at an aggregate exercise price of approximately
$9.8 million ($7.24 per share); (iii) certain of the Class A Interests will be
exchanged for (a) an aggregate of 42,523 shares of Common Stock and (b)
approximately $0.6 million of the proceeds from the Offering; (iv) the Class B
non-convertible preferred limited partnership interests in the Partnership (the
"Class B Interests") will be purchased with approximately $6.8 million of the
proceeds of the Offering; (v) all of the common limited partnership interests in
the Partnership (the "Common Interests") will be exchanged for an aggregate of
17,122,205 shares of Common Stock; and (vi) approximately $2.2 million, payable
on the Class A Interests and Class B Interests in respect of the fixed return on
such interests (the "Fixed Return Amount"), will be paid from the proceeds of
the Offering to the holders of such interests as required under the partnership
agreement governing the Partnership.

As part of the Reorganization, Charles S. Craig, the Chairman and CEO of
the Company and the owner of all of the stock of Staff Acquisition, will enter
into a voting trust agreement pursuant to which the Company, as trustee under
the voting trust agreement, will possess, and be entitled to exercise, all
rights to vote the stock of Staff Acquisition and to give consents or waivers in
respect of such stock. The same persons constitute the Boards of Directors of
the Company and Staff Acquisition. In addition, Mr. Craig will grant to the
Company an option to acquire the stock of Staff Acquisition in exchange for
417,900 shares of Common Stock. The number of shares of Common Stock issuable to
Mr. Craig in connection with the exercise of such option was determined on the
same basis used to determine the number of shares of Common Stock issued in
exchange for the Common Interests.

12. UNAUDITED PRO FORMA INFORMATION:

Statements of Operations. Prior to the closing of the proposed public
offering, Staff Capital will change its structure to a corporate form, as
described in Note 11. The objective of the pro forma information is to show what
the effects on historical financial statements might have been for the year
ended December 31, 1996 had the Partnerships operated in a corporate form. The
pro forma adjustment reflects the tax benefit for state and federal income taxes
based upon an estimated effective rate of 37%, as if the Company were subject to
such taxes. A 100% valuation allowance has been recorded, based on the
Partnerships' insufficient levels of taxable income available to recognize
benefits of the net operating loss carryforwards.

Net Loss Per Share Attributable to Common Shareholders. Pro forma net loss
per share attributable to common shareholders is based on the weighted average
number of shares outstanding using the treasury stock method. Pursuant to the
rules of the Securities and Exchange Commission, all warrants granted at a price
less than the initial public offering price during the twelve months preceding
the Offering date have been included as common stock equivalents in the
calculation of weighted average shares outstanding for the period presented.

F-20
<PAGE> 83

STAFF CAPITAL, L.P. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
MARCH 31,
1997
--------------
(IN THOUSANDS)
(UNAUDITED)
<S> <C>
ASSETS
Current assets:
Cash...................................................... $ 2,241
Accounts receivable, net of allowance of $606............. 37,822
Other receivables......................................... 937
Other current assets...................................... 1,710
--------
Total current assets.............................. 42,710
--------
Property and equipment -- net............................... 17,059
Goodwill, net of accumulated amortization of $2,496......... 12,175
Other assets, net of accumulated amortization of $1,923..... 1,334
--------
Total assets...................................... $ 73,278
========

LIABILITIES AND COMMON PARTNERS' DEFICIT
Current liabilities:
Current portion of long-term debt......................... $ 7,387
Accrued workers' compensation premiums and health loss
reserves............................................... 19,191
Accrued payroll and payroll taxes......................... 39,706
Accounts payable and other accrued liabilities............ 6,198
Customer deposits and prepayments......................... 1,391
--------
Total current liabilities......................... 73,873
--------
Long-term debt.............................................. 12,304
Other long-term liabilities................................. 1,971
Minority interest........................................... 86
Redeemable preferred partnership interests.................. 32,220
Common partners' deficit.................................... (47,176)
--------
Total liabilities and common partners' deficit.... $ 73,278
========
</TABLE>

See notes to consolidated financial statements.

F-21
<PAGE> 84

STAFF CAPITAL, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------
1996 1997
----------- -----------
(IN THOUSANDS, EXCEPT PER
SHARE AMOUNTS)
(UNAUDITED)
<S> <C> <C>
Revenues.................................................... $324,720 $402,455
-------- --------
Cost of services:
Salaries, wages and payroll taxes......................... 290,638 362,837
Benefits, workers' compensation, state unemployment taxes
and other costs........................................ 20,793 19,723
-------- --------
Total cost of services............................ 311,431 382,560
-------- --------
Gross profit................................................ 13,289 19,895
Operating expenses:
Salaries, wages and commissions........................... 8,956 10,239
Other general and administrative.......................... 4,245 5,387
Depreciation and amortization............................. 756 845
-------- --------
Total operating expenses.......................... 13,957 16,471
-------- --------
Operating income (loss)..................................... (668) 3,424
Interest expense............................................ 1,016 675
Other expenses.............................................. 11 38
-------- --------
Net income (loss)........................................... (1,695) 2,711
Return on preferred interests............................... 60 655
-------- --------
Net income (loss) attributable to common partnership
interests................................................. $ (1,755) $ 2,056
========
Unaudited pro forma information (Note 4):
Pro forma adjustments..................................... 38
--------
Pro forma net income attributable to common
shareholders........................................... $ 2,094
========
Pro forma net income per share attributable to common
shareholders........................................... $ .11
========
Pro forma weighted average shares outstanding............. 19,935
========
</TABLE>

See notes to consolidated financial statements.

F-22
<PAGE> 85

STAFF CAPITAL, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN COMMON

PARTNERS' DEFICIT

THREE MONTHS ENDED MARCH 31, 1997

<TABLE>
<CAPTION>
COMMON
GENERAL LIMITED
PARTNER PARTNERS TOTAL
-------- -------- --------
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C> <C>
Balance at January 1, 1997, net of partner contribution
notes receivable of $371.................................. $(23,788) $(25,425) $(49,213)
Repurchase of common limited partner interests, net......... (19) (19)
Accretion of Preferred Class A.............................. (64) (64)
Return on preferred interests............................... (591) (591)
Net income.................................................. 2,711 2,711
-------- -------- --------
Balance at March 31, 1997, net of partner contribution notes
receivable of $357........................................ $(21,077) $(26,099) $(47,176)
======== ======== ========
</TABLE>

F-23
<PAGE> 86

STAFF CAPITAL, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------
1996 1997
------- -------
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Cash flow from operating activities:
Net income (loss)......................................... $(1,695) $ 2,711
Adjustments to reconcile net income (loss) to net cash
(used in) provided by operating activities:
Depreciation and amortization expense.................. 756 845
Amortization of debt issuance costs.................... 146 125
Provision for bad debts................................ 110 180
Other.................................................. 13 20
Changes in assets and liabilities:
Increase in accounts receivable...................... (4,697) (4,046)
Decrease (increase) in other receivables, current.... 37 (278)
Decrease (increase) in other current assets.......... 287 (940)
Decrease in accounts payable and other accrued
liabilities......................................... (3,557) (3,915)
Increase in accrued payroll and payroll taxes........ 5,284 4,427
Increase in accrued workers' compensation premiums
and health loss reserves............................ 2,640 5,494
Increase (decrease) in customer deposits and
prepayments......................................... 351 (5)
Decrease in other long-term liabilities.............. -- (38)
------- -------
Net cash (used in) provided by operating
activities....................................... (325) 4,580
------- -------
Cash flows from investing activities:
Capital expenditures...................................... (958) (858)
Other assets.............................................. (5) (95)
------- -------
Net cash used in investing activities............. (963) (953)
------- -------
Cash flows from financing activities:
Preferred and common partners' contributions.............. -- 435
Repurchase of common partners' interest................... -- (78)
Proceeds from sale-leaseback of fixed assets.............. 597 --
Payments under capital leases............................. (468) (505)
Borrowings (repayments) of long-term debt, net............ 1,159 (1,250)
------- -------
Net cash provided by (used in) financing
activities....................................... 1,288 (1,398)
------- -------
Net increase in cash........................................ -- 2,229
Cash -- beginning of period................................. 13 12
------- -------
Cash -- end of period....................................... $ 13 $ 2,241
======= =======
Supplemental disclosure:
Interest paid............................................... $ 760 $ 498
======= =======
</TABLE>

F-24
<PAGE> 87

STAFF CAPITAL, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

(UNAUDITED)

1. GENERAL:

The accompanying unaudited consolidated financial statements for the three
months ended March 31, 1997 have been prepared by Staff Capital, L.P. ("the
Company"), without audit. All adjustments which, in the opinion of management,
are necessary for a fair presentation of the consolidated financial statements
for the three months ended March 31, 1997 have been reflected. All such
adjustments are of a normal recurring nature. It is suggested that the March 31,
1997 consolidated financial statements be read in conjunction with the
consolidated financial statements and notes thereto included elsewhere in this
Prospectus for the year ended December 31, 1996.

2. PROPERTY AND EQUIPMENT:

At March 31, 1997, property and equipment (at cost) was comprised of the
following:

<TABLE>
<S> <C>
Leasehold improvements...................................... $ 1,093
Furniture and fixtures...................................... 1,357
Vehicles.................................................... 163
Equipment................................................... 579
Computer hardware and software.............................. 17,557
-------
Total property and equipment................................ 20,749
Less accumulated depreciation............................... (3,690)
-------
$17,059
=======
</TABLE>

Included in property and equipment at March 31, 1997 was $6,452 of computer
hardware, software and equipment under capital leases. Depreciation expense
related to such leased assets was $252 for the three months ended March 31,
1997. For the three months ended March 31, 1997 depreciation expense was $611.

3. ADOPTION OF SFAS NO. 128:

The Company will adopt the Statement of Financial Accounting Standards No.
128, "Earnings Per Share" (FAS 128) in the fourth quarter of 1997, as required.
The Company will continue to apply APB Opinion No. 15, "Earnings Per Share"
until the adoption of FAS 128. The standard specifies the computation,
presentation and disclosure requirements for earnings per share.

4. PRO FORMA INFORMATION:

Statements of Operations. The objective of the pro forma information is to
show what the effects on historical financial statements might have been for the
three months ended March 31, 1997 had the Partnerships operated in a corporate
form. The pro forma adjustments reflect the tax benefit from state and federal
income taxes based upon a estimated effective rate of 37%, as if the Company
were subject to such taxes as well as reduction of income allocated to minority
interest. A 100% valuation allowance has been recorded, based on the
Partnerships' insufficient levels of taxable income available to recognize
benefits of the net operating loss carryforwards.

F-25
<PAGE> 88

STAFF LEASING, INC.

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

The following pro forma consolidated financial information sets forth
historical information which has been adjusted to reflect a reorganization (the
"Reorganization") which includes, among other things: (i) certain transactions
associated with the conversion of the Company into a corporate form (the
"Incorporation"); (ii) the issuance by the Company of 3,500,000 shares of Common
Stock at an assumed offering price of $16.00 per share in an initial public
offering, net of related fees and expenses; (iii) the application of the net
proceeds to repay the outstanding term notes and revolver of $16,450; (iv) the
application of the net proceeds to repay the outstanding capital lease
obligations of $3,241; and (v) the application of the net proceeds to repay
certain of the outstanding Preferred Class A and B limited partnership
interests.

Non-recurring expenses as of March 31, 1997 for: (i) the write-off of $895
in unamortized deferred financing costs associated with the repayment of the
term notes and revolver which are expected to be repaid with the proceeds of the
offering; (ii) the write-off of $194 in unamortized organization costs
associated with the reorganization of the structure of the limited partnerships;
and (iii) $1,026 of accelerated accretion associated with the early redemption
of certain of the Preferred Class A interests have been reflected in the
Unaudited Pro Forma Consolidated Balance Sheet.

The Unaudited Pro Forma Consolidated Balance Sheet assumes the
Reorganization took place on the date presented. See "Notes to Unaudited Pro
Forma Consolidated Balance Sheet." The pro forma information is based on certain
assumptions and estimates that management believes are reasonable in the
circumstances and does not purport to be indicative of the results which
actually would have been attained had the above transaction occurred as of the
date indicated. This information should be read in conjunction with the
Company's consolidated financial statements and related notes included elsewhere
in this prospectus.

F-26
<PAGE> 89

STAFF LEASING, INC.

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

MARCH 31, 1997

<TABLE>
<CAPTION>
OTHER STAFF
STAFF INCORPORATION STAFF RECAPITALIZATION LEASING INC.
CAPITAL PRO FORMA LEASING INC. PRO FORMA PRO FORMA
L.P. ADJUSTMENTS PRO FORMA ADJUSTMENTS (AS ADJUSTED)
-------- ----------------- ------------ ----------------- -------------
DR CR DR CR

(IN THOUSANDS)
ASSETS
Current assets:
<S> <C> <C> <C> <C> <C> <C> <C>
Cash................ $ 2,241 $ 2,241 $12,011 (5) $ 14,252
Accounts
receivable -- net
of allowance for
doubtful accounts
of $440........... 37,822 37,822 37,822
Other receivables..... 937 937 937
Other current
assets.............. 1,710 1,710 1,710
-------- ----------- -----------
Total current
assets..... 42,710 42,710 54,721
-------- ----------- -----------
Property and
equipment --........ 17,059 17,059 17,059
Goodwill -- net....... 12,175 12,175 12,175
Other assets -- net... 1,334 $ 194(1) 1,140 $ 895(6) 245
-------- ----------- -----------
Total
assets..... $ 73,278 $ 73,084 $ 84,200
======== =========== ===========

LIABILITIES AND OWNERSHIP EQUITY
Current liabilities:
Current portion of
long-term debt.... $ 7,387 $ 7,387 $ 7,387 (5) $ 0
Accrued workers'
compensation
premiums and
health loss
reserves.......... 19,191 19,191 19,191
Accrued payroll and
payroll taxes..... 39,706 39,706 39,706
Accounts payable and
other accrued
liabilities....... 6,198 6,198 6,198
Customer deposits
and prepayments... 1,391 1,391 1,391
-------- ----------- -----------
Total current
liabilities... 73,873 73,873 66,486
-------- ----------- -----------
Long-term debt........ 12,304 12,304 12,304 (5) 0
Long-term
obligations......... 1,971 1,971 1,971
Minority interest..... 86 $ 86 (2) 0 0
Redeemable preferred
stock............... $18,694(3) 18,694 18,694 (5)(6) 0
Redeemable preferred
partnership
interests........... 32,220 32,220 (3) 0 0
</TABLE>

F-27
<PAGE> 90

STAFF LEASING, INC.

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET -- (CONTINUED)

(IN THOUSANDS)
OWNERSHIP EQUITY
<S> <C> <C> <C> <C> <C> <C> <C>
Partners' deficit:
Limited partners'
interests......... $(26,099) $26,099(4) 0 0
General partner
interest.......... (21,077) 21,077(4) 0 0
-------- ----------- -----------
Total
partners'
interests... (47,176) 0 0
Shareholders' equity:
Common stock and
paid-in-capital... $11,632 14,124(3)(4) $ 2,492 $51,422(5)(6) $ 53,914
Shareholder notes
receivable........ 955 (4) (955) (955)
Accumulated
deficit........... 35,295 (1)(2)(4) (35,295) $ 1,921 (5)(6) (37,216)
-------- ----------- -----------
Total
shareholders'
equity
(deficit)... 0 (33,758) 15,743
-------- ----------- -----------
Total
ownership
equity..... (47,176) (33,758) 15,743
-------- ----------- -----------
Total...... $ 73,278 $ 73,084 $ 84,200
======== =========== ===========
Pro forma outstanding
common stock........ 19,194,385 22,694,385
=========== ===========
</TABLE>

F-28
<PAGE> 91

STAFF LEASING, INC.

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

(DOLLARS IN THOUSANDS)

PRO FORMA CONSOLIDATED BALANCE SHEET

(1) Adjustment to record the write-off of unamortized organization costs in
conjunction with reorganization of the Partnership.

(2) Adjustment to minority interest to reflect the current deficit balance
of the minority interest account.

(3) Adjustment to reflect the conversion, on a dollar for dollar basis, of
Preferred Class B and certain of the Preferred Class A limited
partnership interests to Preferred Stock as part of the incorporation as
well as the conversion of the remaining Preferred Class A limited
partnership interests into 2,029,657 shares of common stock of the
newly-formed corporation. The 2,029,657 shares is derived based upon a
pro forma total of 21,000,000 shares which the Company has allocated for
issuance.

(4) Adjustment to reflect the exchange of common limited partnership
interests for common stock as part of the incorporation.

(5) Adjustment to give effect to the use of proceeds from the issuance of
3,500,000 shares of common stock at an issuance price of $16.00 per
share being offered by the Company to fund the payment of (i) the
outstanding term notes and revolver, (ii) the outstanding capital lease
obligations and (iii) the redeemable preferred stock which was carried
over as a payment obligation to the incorporated Company. Expenses
associated with the Offering, including underwriting discounts and
commissions, are estimated to be $5,220, resulting in estimated net
proceeds to the Company of $50,780.

(6) Adjustment to record the write-off of unamortized debt issuance costs
associated with the repayment of the term notes and revolver with the
net proceeds from the Offering ($895) and record the accelerated
accretion on the redemption of the redeemable preferred stock ($1,026).

F-29
<PAGE> 92

Inside Back Cover

Outline description of services provided by the Company to clients, accompanied
by illustrative photographs and Company logo.

<PAGE> 93

======================================================

NO DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON HAS BEEN AUTHORIZED IN
CONNECTION WITH THE OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN SO
AUTHORIZED BY THE COMPANY, ANY SELLING SHAREHOLDER OR ANY OF THE UNDERWRITERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OFFERED OTHER THAN THE SHARES OF COMMON STOCK TO
WHICH IT RELATES OR AN OFFER TO, OR SOLICITATION OF, ANY PERSON IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Summary Consolidated Financial and
Operating Data...................... 7
Risk Factors.......................... 9
The Reorganization.................... 14
Use of Proceeds....................... 17
Dividend Policy....................... 17
Capitalization........................ 18
Dilution.............................. 19
Selected Financial Data............... 20
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 22
Business.............................. 33
Industry Regulation................... 44
Management............................ 47
Principal and Selling Shareholders.... 52
Certain Transactions.................. 54
Description of Capital Stock.......... 55
Shares Eligible for Future Sale....... 57
Underwriting.......................... 59
Legal Matters......................... 60
Experts............................... 61
Additional Information................ 61
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>

---------------------------
UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK OFFERED HEREBY, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS REQUIREMENT IS IN ADDITION TO THE OBLIGATIONS OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
======================================================
======================================================

4,000,000 SHARES

[STAFF LEASING, INC. LOGO]

STAFF LEASING, INC.

COMMON STOCK
---------------------------

PROSPECTUS
, 1997

---------------------------
LEHMAN BROTHERS

DONALDSON, LUFKIN & JENRETTE

SECURITIES CORPORATION

MONTGOMERY SECURITIES

======================================================
<PAGE> 94

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following are the estimated expenses, other than underwriting discounts
and commissions, to be borne by the Company in connection with the issuance and
distribution of the Common Stock being registered:

<TABLE>
<CAPTION>
ITEM AMOUNT
- ---- ----------
<S> <C>
Securities and Exchange Commission registration fee......... $ 25,091
NASD filing fee............................................. 8,780
Nasdaq National Market listing fee.......................... 49,000
Blue Sky fees and expenses.................................. 8,500
Printing and engraving expenses............................. 175,000
Legal fees and expenses..................................... 275,000
Accounting and tax advisory fees and expenses............... 400,000
Transfer Agent and Registrar fee............................ 7,000
Directors' and officers' liability insurance policy
premiums.................................................. 300,000
Miscellaneous............................................... 51,629
----------
Total............................................. $1,300,000
==========
</TABLE>

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

* To be completed by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company has also entered into agreements with each of its current
directors and executive officers pursuant to which it is obligated to indemnify
those persons to the fullest extent authorized by law and to advance payments to
cover defense costs against an unsecured obligation to repay such advances if it
is ultimately determined that the recipient of the advance is not entitled to
indemnification. The indemnification agreements provide that no indemnification
or advancement of expenses shall be made (a) if a final adjudication establishes
that the indemnification actions or omissions were material to the cause of
certain adjudicated and constitute: (i) a violation of criminal law (unless the
indemnitee had reasonable cause to believe that his actions were lawful); (ii) a
transaction from which the indemnitee derived an improper personal benefit;
(iii) an unlawful distribution or dividend when the Florida Act; or (iv) willful
misconduct or a conscious disregard for the just interests of the Company in a
derivative or shareholder action, (b) for liability under Section 16(b) of the
Exchange Act, or (c) if a final decision by a court having jurisdiction in the
matter determines that indemnification is not lawful.

II-1
<PAGE> 95

Reference is made to the Underwriting Agreement filed as Exhibit 1 to this
Registration Statement, which contains provisions pursuant to which each
Underwriter agrees to indemnify the Company, each person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act, each
director of the Company and each officer of the Company who signs this
Registration Statement against losses, liabilities, and reasonable expenses,
including attorneys' fees, arising out of claims under the Securities Act based
upon material misstatements or omissions of material facts in any Preliminary
Prospectus, the Prospectus, or this Registration Statement, but only to the
extent that such misstatement or omission was made in any Preliminary
Prospectus, the Prospectus, or this Registration Statement in reliance upon and
in conformity with written information furnished to the Company by the
Underwriters expressly for use therein.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company,
the Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, enforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, office or controlling person of the Company 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 Company undertakes, unless in the opinion of its counsel the
matter has been settled by controlling precedent, to submit to a court of
appropriate jurisdiction the question whether such indemnification by its is
against public policy as expressed in the Act and agrees to be governed by the
final adjudication of such issue.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

During the last three years, Staff Capital, L.P. ("Staff Capital") sold
limited partnership interests, consisting either of common limited partnership
interests ("Common Interests") or preferred limited partnership interests
("Class A Interests") (and in one case, a warrant to purchase Class A Interests)
for consideration consisting either of cash or promissory notes (and with
respect to warrants sold to certain lenders in consideration of the lenders'
financing of Staff Capital). These transactions are summarized in the table
below. No underwriters were involved in any of these transactions. Staff Capital
relied upon the exemption provided by Section 4(2) of the Securities Act of 1933
(the "1933 Act") from the registration provisions of the 1933 Act. Each of the
securities issued was restricted as to transfer and the purchasers acquired such
securities for investment and not with a view to the distribution thereof. All
but 23 of the purchasers were believed by the Company to be "accredited
investors" within the meaning of Rule 501 under the Act.

(a) Sales to Officers and Directors

II-2
<PAGE> 96

<TABLE>
<CAPTION>
SECURITIES SOLD CONSIDERATION RECEIVED
OFFICERS ------------------- -----------------------
COMMON CLASS A CASH PROMISSORY
DATE OF SALE PURCHASER INTEREST INTEREST PAYMENT NOTES
- ------------ --------- -------- -------- ---------- ----------
<C> <S> <C> <C> <C> <C>
4/26/96 John C. Whitney(2)........................ 0.1463% $ 87,250 $131,000
8/30/96 John C. Whitney(2)........................ 0.0330 50,000
6/1/95 Joyce Lohse(1)............................ 0.10 % 6,348
4/26/96 Joyce Lohse(2)............................ 0.0134 10,000 10,000
6/1/95 Richard A. Goldman(1)..................... 1.00 63,469
4/26/96 Richard A. Goldman(2)..................... 0.1148 88,750 82,500
4/26/96 Trust f/b/o Zachary I. Goldman(2)......... 0.0022 3,333
4/26/96 Trust f/b/o Zoe A. Goldman(2)............. 0.0022 3,333
12/31/96 Richard A. Goldman(1)..................... 0.15 10,356
8/1/95 Susan Dupper(1)........................... 0.10 6,904
4/26/96 Susan Dupper(2)........................... 0.0065 4,875 4,875
1/1/96 Kim Rutledge(1)........................... 0.05 3,452
1/1/96 Jayne Hill(1)............................. 0.05 3,452
4/26/96 Jayne Hill(2)............................. 0.1341 100,000 100,000
1/1/96 Joseph A. Gulash, Jr.(1).................. 0.05 3,452
4/26/96 Joseph A. Gulash, Jr.(2).................. 0.0040 3,000 3,000
8/1/95 Greg Surles(1)............................ 0.10 6,904
4/26/96 Greg Surles............................... 0.0101 7,500 7,500
1/1/96 John Heffron(1)........................... 0.05 3,452
4/26/96 John Heffron(2)........................... 0.0067 10,000
1/15/96 John Bilchak, Jr.(1)...................... 0.28 18,986
4/26/96 John Bilchak, Jr.(2)...................... 0.0426 31,750 31,750
8/30/96 John Bilchak, Jr.(2)...................... 0.0330 50,000
12/31/96 John Bilchak, Jr.(1)...................... 0.15 10,356
8/30/96 Genevieve Sullivan(2)..................... 0.0350 50,000
8/31/96 Genevieve Sullivan(1)..................... 0.05 3,452
4/26/96 Charles S. Craig(2)....................... 0.4896 730,144
8/30/96 Charles S. Craig(2)....................... 0.0165 25,000
4/30/96 Charles S. Craig Rollover IRA(2).......... 0.3319 494,945
8/30/96 Charles S. Craig Rollover IRA(2).......... 0.0495 75,000
8/30/96 SEP Plan of Charles S. Craig(2)........... 0.0528 80,000
4/26/96 Trust f/b/o K.C. Craig(2)................. 0.3395 506,270
8/30/96 Trust f/b/o K.C. Craig(2)................. 0.0495 75,000
4/26/96 Trust f/b/o N.H. Craig(2)................. 0.3395 506,270
8/30/96 Trust f/b/o N.H. Craig(2)................. 0.0495 75,000
4/26/96 David Varnadore(2)........................ 0.0034 5,000
8/31/96 Richard Bibler(1)......................... 0.05 3,452
1/31/97 Kelly Marshall(1)......................... 0.05 3,452
1/31/97 Thomas Shehan(1).......................... 0.05 3,452
1/31/97 Joyce Lillis McGill(1).................... 0.50 34,520
1/31/97 John Geis(1).............................. 0.05 3,452
</TABLE>

II-3
<PAGE> 97

<TABLE>
<CAPTION>
SECURITIES SOLD CONSIDERATION RECEIVED
DIRECTORS(4) ------------------- -----------------------
COMMON CLASS A CASH PROMISSORY
DATE OF SALE PURCHASER INTEREST INTEREST PAYMENT NOTES
- ------------ --------- -------- -------- ---------- ----------
<C> <S> <C> <C> <C> <C>
4/26/96 George B. Beitzel Grantor Trust(2)........ 0.0757% $ 112,922
8/30/96 George B. Beitzel Grantor Trust(2)........ 0.0330 50,000
4/26/96 George B. Beitzel IRA Rollover(2)......... 0.0138 20,510
4/26/96 Mary L. Beitzel(2)........................ 0.1353 201,832
4/26/96 Mary L. Beitzel Grantor Trust(2).......... 0.0757 112,922
8/30/96 Mary L. Beitzel Grantor Trust(2).......... 0.0330 50,000
4/26/96 Ronald Davis(2)........................... 0.3035 452,685
8/30/96 Ronald Davis(2)........................... 0.1319 200,000
4/26/96 William J. Mullis Grantor Trust(2)........ 0.3744 558,369
4/26/96 David T.K. Sarda(2)....................... 0.0667 99,475
4/26/96 Aileen Sarda(2)........................... 0.0489 72,915
4/26/96 IRA for David Sarda SEP(2)................ 0.0640 95,467
8/30/96 IRA for David Sarda SEP(2)................ 0.0148 22,500
4/26/96 Pro Employer Invest Inc.(2)............... 0.0536 80,000
4/26/96 Sarda Family Trust(2)..................... 0.0110 16,332
</TABLE>

(b) Institutional purchasers in financing transactions:

<TABLE>
<CAPTION>
SECURITIES SOLD CONSIDERATION RECEIVED
------------------- -----------------------
COMMON CLASS A CASH PROMISSORY
DATE OF SALE PURCHASER INTEREST INTEREST PAYMENT NOTES
- ------------ --------- -------- -------- ---------- ----------
<C> <S> <C> <C> <C> <C>
1/1/95 Banque Paribas............................ 0.25 % $ 15,871
7/31/95 Banque Paribas............................ 0.50 (3) 100
4/26/96 Banque Paribas(2)......................... 6.2319% 9,294,185
1/30/97 Banque Paribas............................ 0.2434 370,000
7/1/95 Pilgrim Prime Rate Trust.................. 0.50 (3) 100
4/26/96 Pilgrim Prime Rate Trust(2)............... 0.0409 61,000
4/26/96 Indosuez Staff Capital Partners(2)........ 0.1397 208,315
4/26/96 S.F. Invesco LLC(2)....................... 2.0618 3,075,000
</TABLE>

II-4
<PAGE> 98

<TABLE>
<CAPTION>
SECURITIES SOLD CONSIDERATION RECEIVED
---------------------- -----------------------
COMMON CLASS A CASH PROMISSORY
DATE OF SALE PURCHASER INTEREST INTEREST(2) PAYMENT NOTES
- ------------ --------- -------- ----------- ---------- ----------
<C> <S> <C> <C> <C> <C>
4/26/96 Massimo Ferragamo......................... 0.0236% $ 35,208
4/26/96 Robert H. Flint........................... 0.0173 25,842
8/30/96 GKP, LLC.................................. 0.1979 300,000
4/26/96 Scott Grayson............................. 0.0168 25,000
4/26/96 W. Bradley Hall........................... 0.0037 5,476
8/30/96 Wendi Becker Hoak......................... 0.0066 10,000
4/26/96 Ronald Jewell............................. 0.0168 25,000
4/26/96 Jonathan H. Kagan......................... 0.0048 7,208
4/26/96 Barbara Kelly............................. 0.0101 15,000
4/26/96 Jules Kortenhorst Family Trust............ 0.0137 10,250 $ 10,250
4/26/96 Jules Kortenhorst......................... 0.1592 118,750 118,750
4/26/96 TR Lifetime Benefit Alison Large.......... 0.0035 5,208
4/26/96 TR Lifetime Benefit David Laird........... 0.0035 5,208
4/26/96 TR Lifetime Benefit John Laird............ 0.0035 5,208
4/26/96 TR Lifetime Benefit K. Dalgleis........... 0.0035 5,208
4/26/96 Paul Maddock, Jr.......................... 0.0514 76,687
8/30/96 Paul Maddock, Jr.......................... 0.0330 50,000
4/26/96 C.P. Marshall............................. 0.0168 25,000
8/30/96 C.P. Marshall............................. 0.0165 25,000
4/26/96 Anthony Miller............................ 0.0048 7,208
8/30/96 Marci Morelli............................. 0.0066 10,000
4/26/96 Peter K. Pak.............................. 0.0268 40,000
4/26/96 IRA for Theresa Perruzza SEP.............. 0.0093 13,812
8/30/96 IRA for Theresa Perruzza SEP.............. 0.0049 7,500
4/26/96 Eugene Peters............................. 0.0101 15,000
4/26/96 N.C. Rumbough............................. 0.0413 61,527
4/26/96 Stanley Rumbough, Jr...................... 0.1836 273,886
8/30/96 Stanley Rumbough, Jr...................... 0.1649 250,000
4/26/96 Nolan Ryan................................ 0.0036 5,355
4/26/96 John Sabre................................ 0.0671 100,000
8/30/96 John Sabre................................ 0.0660 100,000
4/26/96 Deferred Comp TR J. Sabre................. 0.1006 150,000
8/30/96 Deferred Comp TR J. Sabre................. 0.0660 100,000
7/31/94 Don Sanders............................... 0.10 % 9,670
4/26/96 Don Sanders............................... 0.0018 2,679
4/26/96 Nandy Sarda............................... 0.0738 109,990
4/26/96 Nandy Sarda IRA Rollover.................. 0.3272 488,000
4/26/96 Evangeline M. Sarda....................... 0.0142 21,249
4/26/96 Linda S. Sarda............................ 0.0338 50,416
4/26/96 Maya M. Sarda............................. 0.0142 21,249
4/26/96 Ram M. Sarda.............................. 0.0271 40,416
4/26/96 Rughnath B. Sarda......................... 0.0190 28,332
4/26/96 Seagrape L.P.............................. 0.6705 1,000,000
8/30/96 Seagrape L.P.............................. 0.1253 190,000
4/26/96 Barbara Skislock.......................... 0.0011 1,666
4/26/96 Brendan J. Skislock....................... 0.0047 7,000
4/26/96 Moira Skislock............................ 0.0040 6,000
4/26/96 Rory Skislock............................. 0.0011 1,666
8/30/96 Waveland Partners, L.P.................... 0.1319 200,000
8/30/96 W.M.P.B. Inc.............................. 0.0330 50,000
</TABLE>

(footnotes appear on following page)

II-5
<PAGE> 99

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

(1) These sales were to management employees as a part of the Restricted Equity
Plan (See "Management Executive Compensation").

(2) These transactions consist of sales of Class A Preferred Interests to an
aggregate of 95 investors, of whom all but 23 were accredited investors. Of
the purchasers, 18 purchasers exchanged previously held interests in Staff
Capital for the Class A Preferred interests.

(3) These securities consisted of warrants to purchase Common Interests and were
issued as a part of the June 1995 refinancing. The exercise price for each
warrant was the $100.

(4) These Common Interests were issued to new members of the Board of Directors
(or to members of their families, retirement plans, or trusts for their
benefit, as directed by them) of the Company or its affiliates, in
conjunction with their election to such Boards.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
1.1 -- Form of Underwriting Agreement.***
3.1 -- Articles of Incorporation of Staff Leasing, Inc.**
3.2 -- Bylaws of Staff Leasing, Inc.**
4.1 -- Specimen Common Stock certificate.***
4.2 -- See Exhibits 3.1 and 3.2 for the provisions of Staff
Leasing, Inc.'s Articles of Incorporation and Bylaws
governing the rights of holders of securities of Staff
Leasing, Inc.
4.3 -- Form of proposed Agreement and Plan of Merger by and among
SLI Transitory, L.P., Staff Capital, L.P. and Staff Leasing,
Inc.**
4.4 -- Proposed form of Warrant to be issued to certain former
holders of Class A Limited Partnership Interests in Staff
Capital, L.P.**
5.1 -- Opinion of Powell, Goldstein, Frazer & Murphy LLP.***
10.1 -- 1997 Stock Incentive Plan of Staff Leasing, Inc.**
10.2 -- Form of Indemnification Agreement dated March 3, 1997,
between Staff Leasing, Inc. and each of its directors and
executive officers.**
10.3 -- Form of Executive Agreement between Staff Leasing, Inc. and
its executive officers.**
10.4 -- Form of proposed Voting Trust Agreement by and between
Charles S. Craig and Staff Leasing, Inc., together with
related Voting Trust Certificate.**
10.5 -- Form of proposed Option to Purchase Agreement by and between
Charles S. Craig and Staff Leasing, Inc., relating to
outstanding capital stock of Staff Acquisition, Inc.**
10.6 -- Amended and Restated Credit Agreement among Staff
Acquisition, Inc., Staff Capital, L.P., various banks and
Banque Paribas, as Agent, dated as of November 5, 1993 and
Amended and Restated as of December 8, 1994, together with
First Amendment thereto dated as of June 29, 1995, Second
Amendment thereto dated as of April 26, 1996, Third
Amendment thereto dated as of August 31, 1996, Fourth
Amendment thereto dated as of November 30, 1996, and Fifth
Amendment thereto dated as of March 5, 1997 (all of which
were previously filed) and the Sixth Amendment thereto dated
as of May 29, 1997.***
</TABLE>

II-6
<PAGE> 100

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
10.7 -- Agreement of Lease dated March 27, 1995 between Quixotic
Investment Holdings, Inc. (Landlord) and the Company for
premises located at 600 301 Boulevard West, Suite 202,
Bradenton, Florida 34205.**
10.8 -- Workers' Compensation and Employers' Liability Policy issued
by Liberty Mutual Insurance Company to Staff Leasing,
effective January 1, 1997.***
10.9 -- 1993 Restricted Equity Plan, as Amended and Restated.**
10.10 -- Employment Agreement dated as of November 5, 1993 between
Staff Leasing, L.P. and William J. Mullis.**
21.1 -- List of Subsidiaries of the Registrant.**
23.1 -- Consent of Powell, Goldstein, Frazer & Murphy LLP (to be
included in its opinion to be filed as Exhibit 5.1).
23.2 -- Consent of Deloitte & Touche LLP.***
24.1 -- Power of Attorney (included in the signature page in Part II
of the Registration Statement).
27.1 -- Financial Data Schedule (for SEC use only).***
</TABLE>

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

* To be filed by amendment.

** Previously filed.

*** Filed herewith.

(b) Financial Statement Schedules:

The financial statement schedule for which provision is made in the
applicable accounting regulations of the Commission is included on Page S-1
hereof.

ITEM 17. UNDERTAKINGS

The Company hereby undertakes to provide to the Underwriters at the closing
specified in the underwriting agreement, certificates in such denominations and
registered in such names as required by the Underwriters to permit prompt
delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company,
the Company 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 Company
of expenses incurred or paid by a director, officer or controlling person of the
Company 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 Company will, unless in the opinion of its
counsel the matter has been 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 a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
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-7
<PAGE> 101

SIGNATURES

Pursuant to the requirements of the Securities Act, the Company has duly
caused this Amendment No. 1 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Bradenton,
State of Florida on the 28th day of May, 1997.

STAFF LEASING, INC.

By: /s/ RICHARD A. GOLDMAN
------------------------------------
Richard A. Goldman
President

Pursuant to the requirements of the Securities Act, this Amendment No. 1 to
the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

/s/ CHARLES S. CRAIG* Chairman of the Board and Chief May 28, 1997
- ----------------------------------------------------- Executive Officer
Charles S. Craig

/s/ JOHN E. PANNING Chief Financial Officer May 28, 1997
- ----------------------------------------------------- (principal financial and
John E. Panning accounting officer)

/s/ GEORGE B. BEITZEL* Director May 28, 1997
- -----------------------------------------------------
George B. Beitzel

/s/ RONALD V. DAVIS* Director May 28, 1997
- -----------------------------------------------------
Ronald V. Davis

/s/ MELVIN R. LAIRD* Director May 28, 1997
- -----------------------------------------------------
Melvin R. Laird

/s/ JAMES F. MANNING* Director May 28, 1997
- -----------------------------------------------------
James F. Manning

/s/ WILLIAM J. MULLIS* Director May 28, 1997
- -----------------------------------------------------
William J. Mullis

/s/ ELLIOT B. ROSS* Director May 28, 1997
- -----------------------------------------------------
Elliot B. Ross

/s/ DAVID T. K. SARDA* Director May 28, 1997
- -----------------------------------------------------
David T. K. Sarda

*By: /s/ RICHARD A. GOLDMAN
------------------------------------------------
Attorney-in-fact
</TABLE>

II-8
<PAGE> 102

INDEPENDENT AUDITORS' REPORT

To the Partners
Staff Capital, L.P.
Bradenton, Florida

We have audited the consolidated financial statements of Staff Capital,
L.P. (a Delaware limited partnership) and subsidiaries as of December 31, 1995
and 1996, and for each of the three years in the period ended December 31, 1996
and have issued our report thereon, dated March 5, 1997 (included elsewhere in
this Registration Statement). Our audits also included the financial statement
schedule listed in Item 16(b) of Part II of this Registration Statement. This
financial statement schedule is the responsibility of management. Our
responsibility is to express an opinion based on our audits. In our opinion,
such financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects the information set forth therein.

Deloitte & Touche LLP

Stamford, CT
March 5, 1997

S-1
<PAGE> 103

STAFF CAPITAL, L.P. AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
SCHEDULE II (REG 210.12-09)

<TABLE>
<CAPTION>
ADDITIONS
---------------- DEDUCTIONS
BALANCE AT CHARGED TO ---------------
BEGINNING OF COSTS WRITE-OFFS, NET BALANCE AT
PERIOD AND EXPENSES OF RECOVERIES END OF PERIOD
------------ ---------------- --------------- -------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C>
Description
Year ended December 31, 1996
Allowance for Doubtful Accounts.......... $784 $ 651 $995 $440
==== ======= ==== ====
Year ended December 31, 1995
Allowance for Doubtful Accounts.......... $302 $1,476 $994 $784
==== ======= ==== ====
Year ended December 31, 1994
Allowance for Doubtful Accounts.......... $342 $ 221 $261 $302
==== ======= ==== ====
</TABLE>

S-2

<PAGE> 1
Exhibit 1.1

4,000,000 Shares

STAFF LEASING, INC.

Common Stock

UNDERWRITING AGREEMENT

June __, 1997

LEHMAN BROTHERS INC.
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
MONTGOMERY SECURITIES
As Representatives of the several
Underwriters named in Schedule 1,
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285

Dear Sirs:

Staff Leasing Inc., a Florida corporation (the "Company"), and a
stockholder of the Company named in Schedule 2 hereto (the "Firm Selling
Stockholder") propose to sell an aggregate of 4,000,000 shares (the "Firm
Stock") of the Company's common stock, par value $.01 per share (the "Common
Stock"). Of the 4,000,000 shares of Firm Stock, 3,500,000 are being sold by the
Company and 500,000 by the Firm Selling Stockholder. In addition, the Company
and certain stockholders of the Company named in Schedule 2 hereto (the "Option
Selling Stockholders" and, together with the Firm Selling Stockholder,
collectively referred to as the "Selling Stockholders") propose to grant to the
Underwriters named in Schedule 1 hereto (the "Underwriters") an option to
purchase up to an additional 600,000 shares of the Common Stock on the terms and
for the purposes set forth in Section 3 (the "Option Stock"). The Firm Stock and
the Option Stock, if purchased, are hereinafter collectively called the "Stock."
This is to confirm the agreement concerning the purchase of the Stock from the
Company and the Selling Stockholders by the Underwriters named in Schedule 1
hereto (the "Underwriters").

1. Representations, Warranties and Agreements of the
Company. The Company represents, warrants and agrees that:

(a) A registration statement on Form S-1, and an
amendment thereto, with respect to the Stock has (i) been prepared
by the Company in conformity with the requirements of the United
States Securities Act of 1933 (the "Securities Act") and the rules
and regulations (the "Rule and Regulations") of the United

<PAGE> 2

States Securities and Exchange Commission (the "Commission")
thereunder, (ii) been filed with the Commission under the Securities
Act and (iii) become effective under the Securities Act. Copies of
such registration statement and the amendment or amendments thereto
have been delivered by the Company to you as the representatives
(the "Representatives") of the Underwriters. As used in this
Agreement, "Effective Time" means the date and the time as of which
such registration statement, or the most recent post-effective
amendment thereto, if any, was declared effective by the Commission;
"Effective Date" means the date of the Effective Time; "Preliminary
Prospectus" means each prospectus included in such registration
statement, or amendments thereof, before it became effective under
the Securities Act and any prospectus filed with the Commission by
the Company with the consent of the Representatives pursuant to Rule
424(a) of the Rules and Regulations; "Registration Statement" means
such registration statement, as amended at the Effective Time,
including all information contained in the final prospectus filed
with the Commission pursuant to Rule 424(b) of the Rules and
Regulations in accordance with Section 6(a) hereof and deemed to be
a part of the registration statement as of the Effective Time
pursuant to paragraph (b) of Rule 430A of the Rules and Regulations;
and "Prospectus" means such final prospectus, as first filed with
the Commission pursuant to paragraph (1) or (4) of Rule 424(b) of
the Rules and Regulations. The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus.

(b) The Registration Statement conforms, and the
Prospectus and any further amendments or supplements to the
Registration Statement or the Prospectus will, when they become
effective or are filed with the Commission, as the case may be,
conform in all material respects to the requirements of the
Securities Act and the Rules and Regulations and do not and will
not, as of the applicable effective date (as to the Registration
Statement and any amendment thereto) and as of the applicable filing
date (as to the Prospectus and any amendment or supplement thereto)
contain 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; provided that no representation
or warranty is made as to information contained in or omitted from
the Registration Statement or the Prospectus in reliance upon and in
conformity with written information furnished to the Company through
the Representatives by or on behalf of any Underwriter specifically
for inclusion therein.

(c) Each of the Company, Staff Acquisition, Inc.
("Staff Acquisition") and each of the partnerships identified in
Section 17 (collectively, the "Subsidiaries") has been duly
incorporated or organized, as the case may be, and is validly
existing as a corporation or limited partnership, as the case may
be, in good standing under the laws of its jurisdiction of
incorporation or organization, as the case may be, is duly qualified
to do business and is in good standing as a foreign corporation or
limited partnership, as the case may be, in each jurisdiction in
which its ownership or lease of property or the conduct of its
businesses

2
<PAGE> 3

requires such qualification, except where the failure to be so
qualified would not result in a material adverse effect on the
consolidated financial position, stockholders' or partners' equity,
results of operations, business or prospects of the Company, Staff
Acquisition or the Subsidiaries, and has all power and authority
necessary to own or hold its properties and to conduct the
businesses in which it is engaged. Other than the Subsidiaries, the
Company has no "subsidiary," as that term is defined in Rule 405 of
the Rules and Regulations.

(d) The Company has an authorized capitalization
as set forth in the Prospectus, and all of the issued shares of
capital stock of the Company have been duly and validly authorized
and issued, are fully paid and non-assessable and conform to the
description thereof contained in the Prospectus; all of the issued
equity interests of each Subsidiary have been duly and validly
authorized and issued and are fully paid and non-assessable and,
other than a one percent general partner interest in each Subsidiary
owned by Staff Acquisition, are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or
claims; and all of the issued shares of capital stock of Staff
Acquisition have been duly and validly authorized and issued and are
fully paid and non-assessable and are owned by Charles S. Craig,
free and clear of all liens, encumbrances, equities or claims,
except the Option to Purchase Agreement between Charles S. Craig and
the Company, dated _________, 1997, (the "Option Agreement") and the
Voting Trust Agreement between Charles S. Craig and the Company,
dated ___________, 1997 (the "Voting Trust Agreement").

(e) The unissued shares of the Stock to be
issued and sold by the Company to the Underwriters hereunder have
been duly and validly authorized and, when issued and delivered
against payment therefor as provided herein, will be duly and
validly issued, fully paid and non-assessable and will conform to
the description thereof contained in the Prospectus.

(f) This Agreement has been duly authorized,
executed and delivered by the Company.

(g) The execution, delivery and performance of
this Agreement, the Option Agreement and the Voting Trust Agreement
and the consummation of the transactions contemplated hereby and
thereby will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company, Staff Acquisition or
any of the Subsidiaries is a party or by which the Company, Staff
Acquisition or any of the Subsidiaries is bound or to which any of
the property or assets of the Company, Staff Acquisition or any of
the Subsidiaries is subject, nor will such actions result in any
violation of the provisions of the charter, by-laws or governing
instruments of the Company, Staff Acquisition or any of the
Subsidiaries or any statute or any order, rule or regulation of any
court or governmental agency or body having

3
<PAGE> 4

jurisdiction over the Company, Staff Acquisition or any of the
Subsidiaries or any of their properties or assets; and except for
the registration of the Stock under the Securities Act and such
consents, approvals, authorizations, registrations or qualifications
as may be required under the Exchange Act and applicable state
securities laws in connection with the purchase and distribution of
the Stock by the Underwriters, no consent, approval, authorization
or order of, or filing or registration with, any such court or
governmental agency or body is required for the execution, delivery
and performance of this Agreement, the Option Agreement and the
Voting Trust Agreement and the consummation of the transactions
contemplated hereby and thereby.

(h) There are no contracts, agreements or
understandings between the Company or any Subsidiary and any person
granting such person the right (other than rights which have been
waived or satisfied or which will not be exercisable prior to the
Second Delivery Date (as defined below) to require the Company to
file a registration statement under the Securities Act with respect
to any securities of the Company owned or to be owned by such person
or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in
any securities being registered pursuant to any other registration
statement filed by the Company under the Securities Act.

(i) Except as described in the Registration
Statement, the Company has not sold or issued any shares of Common
Stock during the six-month period preceding the date of the
Prospectus, including any sales pursuant to Rule 144A under, or
Regulations D or S of, the Securities Act, other than shares issued
pursuant to employee benefit plans, qualified stock options plans or
other employee compensation plans or pursuant to outstanding
options, rights or warrants.

(j) Neither the Company, Staff Acquisition nor
any of the Subsidiaries has sustained, since the date of the latest
audited financial statements included in the Prospectus, any
material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated
in the Prospectus; and, since such date, there has not been any
change in the capital stock or long-term debt of the Company, Staff
Acquisition or any of the Subsidiaries or any material adverse
change, or any development involving a prospective material adverse
change, in or affecting the general affairs, management, financial
position, stockholders' or partners' equity or results of operations
of the Company, Staff Acquisition or any of the Subsidiaries,
otherwise than as set forth or contemplated in the Prospectus.

(k) The financial statements (including the
related notes and supporting schedules) filed as part of the
Registration Statement or included in the Prospectus present fairly
the financial condition and results of operations of the entities

4
<PAGE> 5

purported to be shown thereby, at the dates and for the periods
indicated, and have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis
throughout the periods involved.

(l) Deloitte & Touche, LLP, who have certified
certain financial statements of the Company and the Subsidiaries,
whose reports appear in the Prospectus and who have delivered the
initial letter referred to in Section 9(g) hereof, are independent
public accountants as required by the Securities Act and the Rules
and Regulations.

(m) Each of the Company, Staff Acquisition and
the Subsidiaries has good and marketable title to all personal
property owned by it, in each case free and clear of all liens,
encumbrances and defects except such as are described in the
Prospectus or such as do not materially affect the value of such
property and do not materially interfere with the use made and
proposed to be made of such property by the Company, Staff
Acquisition and the Subsidiaries; and all material real property and
buildings held under lease by the Company, Staff Acquisition or any
of the Subsidiaries are held by them under valid, subsisting and
enforceable leases, with such exceptions as are not material and do
not interfere with the use made and proposed to be made of such
property and buildings by the Company, Staff Acquisition and the
Subsidiaries. Neither the Company, Staff Acquisition nor any of the
Subsidiaries own any real property.

(n) The Company, Staff Acquisition and each of
the Subsidiaries carry, or are covered by, insurance in such amounts
and covering such risks as is adequate for the conduct of their
respective businesses and the value of their respective properties.

(o) Each of the Company, Staff Acquisition and
each of the Subsidiaries own or possess adequate rights to use all
material patents, patent applications, trademarks, service marks,
trade names, trademark registrations, service mark registrations,
copyrights and licenses necessary for the conduct of its businesses
and have no reason to believe that the conduct of its businesses
will conflict with, and have not received any notice of any claim of
conflict with, any such rights of others.

(p) There are no legal or governmental
proceedings pending to which the Company, Staff Acquisition or any
of the Subsidiaries is a party or of which any property or assets of
the Company, Staff Acquisition or any of the Subsidiaries is the
subject which, if determined adversely to the Company, Staff
Acquisition or any of the Subsidiaries, could reasonably be expected
to have a material adverse effect on the consolidated financial
position, stockholders' or partners' equity, results of operations,
business or prospects of the Company, Staff Acquisition or the
Subsidiaries; and to the best of the Company's

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<PAGE> 6

knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.

(q) There are no contracts or other documents
which are required to be described in the Prospectus or filed as
exhibits to the Registration Statement by the Securities Act or by
the Rules and Regulations which have not been described in the
Prospectus or filed as exhibits to the Registration Statement or
incorporated therein by reference as permitted by the Rules and
Regulations.

(r) No relationship, direct or indirect, exists
between or among the Company on the one hand, and the directors,
officers, stockholders, customers or suppliers of the Company on the
other hand, which is required to be described in the Prospectus
which is not so described.

(s) No labor disturbance by the employees of the
Company or any of the Subsidiaries exists or, to the knowledge of
the Company, is imminent which might be expected to have a material
adverse effect on the consolidated financial position, stockholders'
or partners' equity, results of operations, business or prospects of
the Company, Staff Acquisition or the Subsidiaries.

(t) Each of the Company, Staff Acquisition and
the Subsidiaries is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and
published interpretations thereunder ("ERISA"); no "reportable
event" (as defined in ERISA) has occurred with respect to any
"pension plan" (as defined in ERISA) for which the Company, Staff
Acquisition or any of the Subsidiaries would have any liability;
neither the Company, Staff Acquisition nor any of the Subsidiaries
has incurred and does not expect to incur liability under (i) Title
IV of ERISA with respect to termination of, or withdrawal from, any
"pension plan" or (ii) Sections 412 or 4971 of the Internal Revenue
Code of 1986, as amended, including the regulations and published
interpretations thereunder (the "Code"); and each "pension plan" for
which the Company, Staff Acquisition or any of the Subsidiaries
would have any liability that is intended to be qualified under
Section 401(a) of the Code is so qualified in all material respects
and nothing has occurred, whether by action or by failure to act,
which would cause the loss of such qualification.

(u) Each of the Company, Staff Acquisition and
the Subsidiaries has filed all federal, state and local income and
franchise tax returns required to be filed through the date hereof
and has paid all taxes due thereon, and no tax deficiency has been
determined adversely to the Company, Staff Acquisition or any of the
Subsidiaries which has had (nor does the Company have any knowledge
of any tax deficiency which, if determined adversely to the Company,
Staff Acquisition or any of the Subsidiaries, might have) a material
adverse

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<PAGE> 7

effect on the consolidated financial position, stockholders' or
partners' equity, results of operations, business or prospects of
the Company and the Subsidiaries.

(v) Since the date as of which information is
given in the Prospectus through the date hereof, and except as may
otherwise be disclosed in or contemplated by the Prospectus, neither
the Company nor any of the Subsidiaries has not (i) issued or
granted any securities, (ii) incurred any liability or obligation,
direct or contingent, other than liabilities and obligations which
were incurred in the ordinary course of business, (iii) entered into
any transaction not in the ordinary course of business or (iv)
declared or paid any dividend on its capital stock.

(w) Each of the Company, Staff Acquisition and
each of the Subsidiaries (i) makes and keeps accurate books and
records and (ii) maintains internal accounting controls which
provide reasonable assurance that (A) transactions are executed in
accordance with management's authorization, (B) transactions are
recorded as necessary to permit preparation of its financial
statements and to maintain accountability for its assets, (C) access
to its assets is permitted only in accordance with management's
authorization and (D) the reported accountability for its assets is
compared with existing assets at reasonable intervals.

(x) Neither the Company, Staff Acquisition nor
any of the Subsidiaries (i) is in violation of its charter, by-laws
or governing instruments, (ii) is in default in any material
respect, and no event has occurred which, with notice or lapse of
time or both, would constitute such a default, in the due
performance or observance of any term, covenant or condition
contained in any material indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which it is a party or
by which it is bound or to which any of its properties or assets is
subject or (iii) is in violation in any material respect of any law,
ordinance, governmental rule, regulation or court decree to which it
or its property or assets may be subject or has failed to obtain any
material license, permit, certificate, franchise or other
governmental authorization or permit necessary to the ownership of
its property or to the conduct of its business, where such violation
or failure would have a material adverse effect on the consolidated
financial position, stockholders' or partners' equity, results of
operations, business or prospects of the Company, Staff Acquisition
or the Subsidiaries.

(y) Neither the Company, Staff Acquisition nor
any of the Subsidiaries, nor any director, officer, agent, employee
or other person associated with or acting on behalf of the Company,
Staff Acquisition or any of the Subsidiaries, has used any corporate
funds for any unlawful contribution, gift, entertainment or other
unlawful expense relating to political activity; made any direct or
indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; violated or is in
violation of any provision of the Foreign

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<PAGE> 8

Corrupt Practices Act of 1977; or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.

(z) There has been no storage, disposal,
generation, manufacture, refinement, transportation, handling or
treatment of toxic wastes, medical wastes, hazardous wastes or
hazardous substances by the Company, Staff Acquisition or any of the
Subsidiaries (or, to the knowledge of the Company, any of their
predecessors in interest) at, upon or from any of the property now
or previously owned or leased by the Company, Staff Acquisition or
the Subsidiaries in violation of any applicable law, ordinance,
rule, regulation, order, judgment, decree or permit or which would
require remedial action under any applicable law, ordinance, rule,
regulation, order, judgment, decree or permit, except for any
violation or remedial action which would not have, or could not be
reasonably likely to have, singularly or in the aggregate with all
such violations and remedial actions, a material adverse effect on
the general affairs, management, financial position, stockholders'
or partners' equity or results of operations of the Company, Staff
Acquisition or the Subsidiaries; there has been no material spill,
discharge, leak, emission, injection, escape, dumping or release of
any kind onto such property or into the environment surrounding such
property of any toxic wastes, medical wastes, solid wastes,
hazardous wastes or hazardous substances due to or caused by the
Company, Staff Acquisition or any of the Subsidiaries or with
respect to which the Company, Staff Acquisition or any of the
Subsidiaries have knowledge, except for any such spill, discharge,
leak, emission, injection, escape, dumping or release which would
not have or would not be reasonably likely to have, singularly or in
the aggregate with all such spills, discharges, leaks, emissions,
injections, escapes, dumpings and releases, a material adverse
effect on the general affairs, management, financial position,
stockholders' or partners' equity or results of operations of the
Company, Staff Acquisition or the Subsidiaries; and the terms
"hazardous wastes", "toxic wastes", "hazardous substances" and
"medical wastes" shall have the meanings specified in any applicable
local, state, federal and foreign laws or regulations with respect
to environmental protection.

(aa) Neither the Company, Staff Acquisition nor
any Subsidiary is an "investment company" within the meaning of such
term under the Investment Company Act of 1940 and the rules and
regulations of the Commission thereunder.

(bb) At the First Delivery Date (as defined in
Section 5 hereof), pursuant to the terms of an Agreement and Plan of
Merger by and among SLI Transitory, L.P., the Company, Staff
Acquisition and Staff Capital, L.P. (the "Merger Agreement"), all of
the equity interests in Staff Capital L.P. will have been duly and
validly exchanged for Common Stock of the Company, cash and/or
warrants to purchase Common Stock of the Company, and all of the
equity interest in Staff Capital L.P., other than a one percent
general partner interest

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<PAGE> 9

held by Staff Acquisition, will be owned directly by the Company,
free and clear of all liens, encumbrances, equities and claims; and,
at the First Delivery Date, all of the shares of Common Stock to be
issued in exchange for the equity interests in Staff Capital L.P.
will have been duly authorized and will be fully paid and
non-assessable.

(cc) Each of the Option Agreement and Voting
Trust Agreement has been, and prior to the First delivery Date, the
Merger Agreement will be, duly authorized, executed and delivered by
each of the parties thereto and constitute valid and binding
agreements of each of the parties thereto, enforceable in accordance
with their respective terms.

2. Representations, Warranties and Agreements of the
Selling Stockholders. Each Selling Stockholder severally represents, warrants
and agrees that, as to himself or itself only:

(a) The Selling Stockholder has, and immediately
prior to the First Delivery Date (as defined in Section 5 hereof) in
the case of the Firm Selling Stockholder, and the Second Delivery
Date (as defined in Section 5 hereof) in the case of the Option
Selling Stockholders, the Selling Stockholder will have, good and
valid title to the shares of Stock to be sold by the Selling
Stockholder hereunder on such date, free and clear of all liens,
encumbrances, equities or claims; and upon delivery of such shares
and payment therefor pursuant hereto, good and valid title to such
shares, free and clear of all liens, encumbrances, equities or
claims, will pass to the several Underwriters.

(b) The Selling Stockholder has placed in
custody under a custody agreement (the "Custody Agreement" and,
together with all other similar agreements executed by the other
Selling Stockholders, the "Custody Agreements") with
_________________, as custodian (the "Custodian"), for delivery
under this Agreement, certificates in negotiable form (with
signature guaranteed by a commercial bank or trust company having an
office or correspondent in the United States or a member firm of the
New York or American Stock Exchanges) representing the shares of
Stock to be sold by the Selling Stockholder hereunder.

(c) The Selling Stockholder has duly and
irrevocably executed and delivered a power of attorney (the "Power
of Attorney" and, together with all other similar agreements
executed by the other Selling Stockholders, the "Powers of
Attorney") appointing _____________ and one or more other persons,
as attorneys-in-fact, with full power of substitution, and with full
authority (exercisable by any one or more of them) to execute and
deliver this Agreement and to take such other action as may be
necessary or desirable to carry out the provisions hereof on behalf
of the Selling Stockholder.

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<PAGE> 10

(d) The Selling Stockholder has full right,
power and authority to enter into this Agreement, the Power of
Attorney and the Custody Agreement; the execution, delivery and
performance of this Agreement, the Power of Attorney and the Custody
Agreement by the Selling Stockholder and the consummation by the
Selling Stockholder of the transactions contemplated hereby and
thereby will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Selling Stockholder is a party
or by which the Selling Stockholder is bound or to which any of the
property or assets of the Selling Stockholder is subject, nor will
such actions result in any violation of any statute or any order,
rule or regulation of any court or governmental agency or body
having jurisdiction over the Selling Stockholder or the property or
assets of the Selling Stockholder; and, except for the registration
of the Stock under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be required
under the Exchange Act and applicable state securities laws in
connection with the purchase and distribution of the Stock by the
Underwriters, no consent, approval, authorization or order of, or
filing or registration with, any such court or governmental agency
or body is required for the execution, delivery and performance of
this Agreement, the Power of Attorney or the Custody Agreement by
the Selling Stockholder and the consummation by the Selling
Stockholder of the transactions contemplated hereby and thereby.

(e) The Selling Stockholder has no reason to
believe that the representations and warranties of the Company
contained in Section 1 hereof are not materially true and correct,
is familiar with the Registration Statement and the Prospectus (as
amended or supplemented) and has no knowledge of any material fact,
condition or information not disclosed in the Registration
Statement, as of the effective date, or the Prospectus (or any
amendment or supplement thereto), as of the applicable filing date,
which has adversely affected or may adversely affect the business of
the Company and is not prompted to sell shares of Common Stock by
any information concerning the Company which is not set forth in the
Registration Statement and the Prospectus.

(f) The Selling Stockholder has not taken and
will not take, directly or indirectly, any action which is designed
to or which has constituted or which might reasonably be expected to
cause or result in the stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of the
shares of the Stock.

3. Purchase of the Stock by the Underwriters. On the basis
of the representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell 3,500,000 shares of
the Firm Stock and the Firm Selling Stockholder agrees to sell 500,000 shares of
the Firm Stock, severally and not jointly, to the several Underwriters and each
of the Underwriters, severally and not jointly,

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<PAGE> 11

agrees to purchase the number of shares of the Firm Stock set opposite that
Underwriter's name in Schedule 1 hereto. Each Underwriter shall be obligated to
purchase from the Company and the Firm Selling Stockholder that number of shares
of the Firm Stock which represents the same proportion of the number of shares
of the Firm Stock to be sold by the Company and by the Firm Selling Stockholder
as the number of shares of Firm Stock set forth opposite the name of such
Underwriter in Schedule 1 represents of the total number of shares of the Firm
Stock to be purchased by all Underwriters pursuant to this Agreement. The
respective purchase obligations of the Underwriters with respect to the Firm
Stock shall be rounded among the Underwriters to avoid fractional shares, as the
Representatives may determine.

In addition, the Company and the Option Selling Stockholders grant
to the Underwriters an option to purchase up to [ ] shares of Option Stock. Such
option is granted solely for the purpose of covering over-allotments in the sale
of Firm Stock and is exercisable as provided in Section 5 hereof. [Shares of
Option Stock shall be purchased first from the Option Selling Stockholders, pro
rata, and then from the Company and the Firm Selling Stockholder, pro rata.]
Shares of Option Stock shall be purchased severally for the account of the
Underwriters in proportion to the number of shares of Firm Stock set opposite
the name of such Underwriters in Schedule 1 hereto. The respective purchase
obligations of each Underwriter with respect to the Option Stock shall be
adjusted by the Representatives so that no Underwriter shall be obligated to
purchase Option Stock other than in 100 share amounts. The price of both the
Firm Stock and any Option Stock shall be $_____ per share.

The Company and the Selling Stockholders shall not be obligated to
deliver any of the Stock to be delivered on the First Delivery Date or the
Second Delivery Date, as the case may be, except upon payment for all the Stock
to be purchased on such Delivery Date as provided herein.

4. Offering of Stock by the Underwriters.

Upon authorization by the Representatives of the release of the Firm
Stock, the several Underwriters propose to offer the Firm Stock for sale upon
the terms and conditions set forth in the Prospectus.

5. Delivery of and Payment for the Stock. Delivery of and
payment for the Firm Stock shall be made at the office of ____________________,
________________________, ________, ________ _____, at 10:00 A.M., New York City
time, on the [third] [fourth] full business day following the date of this
Agreement or at such other date or place as shall be determined by agreement
between the Representatives and the Company. This date and time are sometimes
referred to as the First Delivery Date." On the First Delivery Date, the Company
and the Firm Selling Stockholder shall deliver or cause to be delivered
certificates representing the Firm Stock to the Representatives for the account
of each Underwriter against payment to or upon the order of the Company and the
Firm Selling Stockholder of the purchase price by certified or official bank
check or checks payable in Clearing House (next-day) funds. Time shall be of the
essence, and delivery at the time and place specified pursuant to this Agreement
is a further condition of the obligation of each Underwriter hereunder. Upon
delivery, the Firm

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<PAGE> 12

Stock shall be registered in such names and in such denominations as the
Representatives shall request in writing not less than two full business days
prior to the First Delivery Date. For the purpose of expediting the checking and
packaging of the certificates for the Firm Stock, the Company and the Firm
Selling Stockholder shall make the certificates representing the Firm Stock
available for inspection by the Representatives in New York, New York, not later
than 2:00 P.M., New York City time, on the business day prior to the First
Delivery Date.

At any time on or before the thirtieth day after the date of this
Agreement, the option granted in Section 3 may be exercised by written notice
being given to the Company and the Option Selling Stockholders by the
Representatives. Such notice shall set forth the aggregate number of shares of
Option Stock as to which the option is being exercised, the names in which the
shares of Option Stock are to be registered, the denominations in which the
shares of Option Stock are to be issued and the date and time, as determined by
the Representatives, when the shares of Option Stock are to be delivered;
provided, however, that this date and time shall not be earlier than the First
Delivery Date nor earlier than the second business day after the date on which
the option shall have been exercised nor later than the fifth business day after
the date on which the option shall have been exercised. The date and time the
shares of Option Stock are delivered are sometimes referred to as the "Second
Delivery Date" and the First Delivery Date and the Second Delivery Date are
sometimes each referred to as a "Delivery Date").

Delivery of and payment for the Option Stock shall be made at the
place specified in the first sentence of the first paragraph of this Section 5
(or at such other place as shall be determined by agreement between the
Representatives, the Company and the Option Selling Stockholders) at 10:00 A.M.,
New York City time, on the Second Delivery Date. On the Second Delivery Date,
the Company shall deliver or cause to be delivered the certificates representing
the Option Stock to the Representatives for the account of each Underwriter
against payment to or upon the order of the Company of the purchase price by
certified or official bank check or checks or wire transfer payable in same-day
funds. Time shall be of the essence, and delivery at the time and place
specified pursuant to this Agreement is a further condition of the obligation of
each Underwriter hereunder. Upon delivery, the Option Stock shall be registered
in such names and in such denominations as the Representatives shall request in
the aforesaid written notice. For the purpose of expediting the checking and
packaging of the certificates for the Option Stock, the Company shall make the
certificates representing the Option Stock available for inspection by the
Representatives in New York, New York, not later than 2:00 P.M., New York City
time, on the business day prior to the Second Delivery Date.

6. Further Agreements of the Company. The Company agrees:

(a) To prepare the Prospectus in a form approved
by the Representatives and to file such Prospectus pursuant to Rule
424(b) under the Securities Act not later than Commission's close of
business on the second business day following the execution and
delivery of this Agreement or, if applicable, such earlier time as
may be required by Rule 430A(a)(3) under the Securities Act; to make
no further amendment or any supplement to the Registration Statement
or to the Prospectus except as permitted herein; to advise

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<PAGE> 13

the Representatives, promptly after it receives notice thereof, of
the time when any amendment to the Registration Statement has been
filed or becomes effective or any supplement to the Prospectus or
any amended Prospectus has been filed and to furnish the
Representatives with copies thereof; to advise the Representatives,
promptly after it receives notice thereof, of the issuance by the
Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus,
of the suspension of the qualification of the Stock for offering or
sale in any jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the Commission
for the amending or supplementing of the Registration Statement or
the Prospectus or for additional information; and, in the event of
the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus
or suspending any such qualification, to use promptly its best
efforts to obtain its withdrawal;

(b) To furnish promptly to each of the
Representatives and to counsel for the Underwriters a signed copy of
the Registration Statement as originally filed with the Commission,
and each amendment thereto filed with the Commission, including all
consents and exhibits filed therewith;

(c) To deliver promptly to the Representatives
such number of the following documents as the Representatives shall
reasonably request: (i) conformed copies of the Registration
Statement as originally filed with the Commission and each amendment
thereto (in each case excluding exhibits other than this Agreement
and the computation of per share earnings) and (ii) each Preliminary
Prospectus, the Prospectus and any amended or supplemented
Prospectus and, if the delivery of a prospectus is required at any
time after the Effective Time in connection with the offering or
sale of the Stock or any other securities relating thereto and if at
such time any events shall have occurred as a result of which the
Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall be
necessary to amend or supplement the Prospectus in order to comply
with the Securities Act, to notify the Representatives and, upon
their request, to prepare and furnish without charge to each
Underwriter and to any dealer in securities as many copies as the
Representatives may from time to time reasonably request of an
amended or supplemented Prospectus which will correct such statement
or omission or effect such compliance.

(d) To file promptly with the Commission any
amendment to the Registration Statement or the Prospectus or any
supplement to the Prospectus that may, in the judgment of the
Company or the Representatives, be required by the Securities Act or
requested by the Commission;

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<PAGE> 14

(e) Prior to filing with the Commission any
amendment to the Registration Statement or supplement to the
Prospectus or any Prospectus pursuant to Rule 424 of the Rules and
Regulations, to furnish a copy thereof to the Representatives and
counsel for the Underwriters and obtain the consent of the
Representatives to the filing;

(f) As soon as practicable after the Effective
Date to make generally available to the Company's security holders
and to deliver to the Representatives an earnings statement of the
Company and its subsidiaries (which need not be audited) complying
with Section 11(a) of the Securities Act and the Rules and
Regulations (including, at the option of the Company, Rule 158);

(g) For a period of five years following the
Effective Date, to furnish to the Representatives copies of all
materials furnished by the Company to its stockholders and all
public reports and all reports and financial statements furnished by
the Company to the principal national securities exchange upon which
the Common Stock may be listed pursuant to requirements of or
agreements with such exchange or to the Commission pursuant to the
Exchange Act or any rule or regulation of the Commission thereunder;

(h) Promptly from time to time to take such
action as the Representatives may reasonably request to qualify the
Stock for offering and sale under the securities laws of such
jurisdictions as the Representatives may request and to comply with
such laws so as to permit the continuance of sales and dealings
therein in such jurisdictions for as long as may be necessary to
complete the distribution of the Stock; provided that in connection
therewith the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in
any jurisdiction;

(i) For a period of 180 days from the date of
the Prospectus, not to, directly or indirectly, offer for sale, sell
or otherwise dispose of (or enter into any transaction or device
which is designed to, or could be expected to, result in the
disposition by any person at any time in the future of) any shares
of Common Stock (other than (i) the Stock and shares issued pursuant
to employee benefit plans, qualified stock option plans or other
employee compensation plans existing on the date hereof or pursuant
to currently outstanding options, warrants or rights, (ii) issuance
of shares of Common Stock and warrants to purchase Common Stock
pursuant to the Merger Agreement and (iii) issuance of shares of
Common Stock in acquisition transactions not involving a public
offering), or sell or grant options, rights or warrants with respect
to any shares of Common Stock (other than the grant of options
pursuant to option plans existing on the date hereof), without the
prior written consent of Lehman Brothers Inc.; and to cause each
officer, director and shareholder of the Company (other than the
Selling Stockholders) to furnish to the Representatives, prior to
the First Delivery Date, a letter or letters, in form and substance
satisfactory to counsel for the

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<PAGE> 15

Underwriters, pursuant to which each such person shall agree not to,
directly or indirectly, offer for sale, sell or otherwise dispose of
(or enter into any transaction or device which is designed to, or
could be expected to, result in the disposition by any person at any
time in the future of) any shares of Common Stock for a period of
180 days from the date of the Prospectus, without the prior written
consent of Lehman Brothers Inc.;

(j) Prior to the Effective Date, to apply for
the inclusion of the Stock on the National Market System and to use
its best efforts to complete that listing, subject only to official
notice of issuance, prior to the First Delivery Date;

(k) To apply the net proceeds from the sale of
the Stock being sold by the Company as set forth in the Prospectus;

(l) Prior to filing with the Commission any
reports on Form SR pursuant to Rule 463 of the Rules and
Regulations, to furnish a copy thereof to the counsel for the
Underwriters and receive and consider its comments thereon, and to
deliver promptly to the Representatives a signed copy of each report
on Form SR filed by it with the Commission; and

(m) To take such steps as shall be necessary to
ensure that neither the Company, Staff Acquisition nor any
Subsidiary shall become an "investment company" within the meaning
of such term under the Investment Company Act of 1940 and the rules
and regulations of the Commission thereunder.

7. Further Agreements of the Selling Stockholders. Each
Selling Stockholder severally agrees:

(a) For a period of 180 days from the date of
the Prospectus, not to, directly or indirectly, offer for sale, sell
or otherwise dispose of (or enter into any transaction or device
which is designed to, or could be expected to, result in the
disposition by any person at any time in the future of) any shares
of Common Stock (other than the Stock), without the prior written
consent of Lehman Brothers Inc.

(b) That the Stock to be sold by the Selling
Stockholder hereunder, which is represented by the certificates held
in custody for the Selling Stockholder, is subject to the interest
of the Underwriters and the other Selling Stockholders thereunder,
that the arrangements made by the Selling Stockholder for such
custody are to that extent irrevocable, and that the obligations of
the Selling Stockholder hereunder shall not be terminated by any act
of the Selling Stockholder, by operation of law, by the death or
incapacity of any individual Selling Stockholder or, in the case of
a trust, by the death or incapacity of any executor or trustee or
the termination of such trust, or the occurrence of any other event.

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<PAGE> 16

(c) To deliver to the Representatives prior to
the First Delivery Date, in the case of the Firm Selling
Stockholder, or the Second Delivery Date, in the case of the Option
Selling Stockholders, a properly completed and executed United
States Treasury Department Form W-8 (if the Selling Stockholder is a
non-United States person) or Form W-9 (if the Selling Stockholder is
a United States person.)

8. Expenses. The Company agrees to pay (a) the costs
incident to the authorization, issuance, sale and delivery of the Stock and any
taxes payable in that connection; (b) the costs incident to the preparation,
printing and filing under the Securities Act of the Registration Statement and
any amendments and exhibits thereto; (c) the costs of distributing the
Registration Statement as originally filed and each amendment thereto and any
post-effective amendments thereof (including, in each case, exhibits), any
Preliminary Prospectus, the Prospectus and any amendment or supplement to the
Prospectus, all as provided in this Agreement; (d) the costs of producing and
distributing this Agreement and any other related documents in connection with
the offering, purchase, sale and delivery of the Stock; (e) the costs of
delivering and distributing the Custody Agreements and the Powers of Attorney;
(f) the filing fees incident to securing any required review by the National
Association of Securities Dealers, Inc. ("NASD") of the terms of sale of the
Stock; (g) any applicable listing or other fees; (h) the fees and expenses of
qualifying the Stock under the securities laws of the several jurisdictions as
provided in Section 6; (h) the costs of preparing, printing and distributing a
Blue Sky Memorandum (including related fees and expenses of counsel to the
Underwriters); and (i) all other costs and expenses incident to the performance
of the obligations of the Company [and the Selling Stockholders under this
Agreement;] provided that, except as provided in this Section 8 and in Section
14 the Underwriters shall pay their own costs and expenses, including the costs
and expenses of their counsel, any transfer taxes on the Stock which they may
sell and the expenses of advertising any offering of the Stock made by the
Underwriters, and each Selling Stockholder shall pay the fees and expenses of
his or its counsel, the Custodian (and any other attorney-in-fact), and any
transfer taxes payable in connection with his or its respective sales of Stock
to the Underwriters and reimburse the Company for his or its pro rata share of
the filing fee paid by the Company to the Commission and to the NASD referred to
in clause (f) of this Section 8 in connection with the offering of the Stock.

9. Conditions of Underwriters' Obligations. The respective
obligations of the Underwriters hereunder are subject to the accuracy, when made
and on each Delivery Date, of the representations and warranties of the Company
and the Selling Stockholders contained herein, to the performance by the Company
and the Selling Stockholders of their respective obligations hereunder, and to
each of the following additional terms and conditions:

(a) The Prospectus shall have been timely filed
with the Commission in accordance with Section 6(a); no stop order
suspending the effectiveness of the Registration Statement or any
part thereof shall have been issued and no proceeding for that
purpose shall have been initiated or threatened by the Commission;
and any request of the Commission for inclusion of additional

16
<PAGE> 17

information in the Registration Statement or the Prospectus or
otherwise shall have been complied with.

(b) No Underwriter shall have discovered and
disclosed to the Company on or prior to such Delivery Date that the
Registration Statement or the Prospectus or any amendment or
supplement thereto contains an untrue statement of a fact which, in
the opinion of O'Melveny & Myers LLP, counsel for the Underwriters,
is material or omits to state a fact which, in the opinion of such
counsel, is material and is required to be stated therein or is
necessary to make the statements therein not misleading.

(c) All corporate proceedings and other legal
matters incident to the authorization, form and validity of this
Agreement, the Option Agreement, the Voting Trust Agreement, the
Merger Agreement, the Custody Agreements, the Powers of Attorney,
the Stock, the Registration Statement and the Prospectus, and all
other legal matters relating to this Agreement and the transactions
contemplated hereby, shall be reasonably satisfactory in all
material respects to counsel for the Underwriters, and the Company,
Staff Acquisition and the Selling Stockholders shall have furnished
to such counsel all documents and information that they may
reasonably request to enable them to pass upon such matters.

(d) Powell, Goldstein, Frazer & Murphy LLP shall
have furnished to the Representatives its written opinion, as
counsel to the Company, addressed to the Underwriters and dated such
Delivery Date, in form and substance reasonably satisfactory to the
Representatives, to the effect that:

(i) The Company, Staff Acquisition
and each of the Subsidiaries have been duly incorporated
or organized, as the case may be, and are validly
existing as corporations or limited partnerships, as the
case may be, in good standing under the laws of their
respective jurisdictions of incorporation or
organization, are duly qualified to do business and are
in good standing as foreign corporations or limited
partnerships, as the case may be, in each jurisdiction
in which their respective ownership or lease of property
or the conduct of their respective businesses requires
such qualification and have all power and authority
necessary to own or hold their respective properties and
conduct the businesses in which they are engaged;

(ii) The Company has an authorized
capitalization as set forth in the Prospectus, and all
of the issued shares of capital stock of the Company
(including the shares of Stock being delivered on such
Delivery Date) have been duly and validly authorized and
issued, are fully paid and non-assessable and conform to
the description thereof contained in the Prospectus; all
of the issued equity interests of each Subsidiary have
been duly and validly authorized and issued and are
fully paid, non-assessable

17
<PAGE> 18

and, other than a one percent general partner interest
in each Subsidiary owned by Staff Acquisition, are owned
directly or indirectly by the Company, free and clear of
all liens, encumbrances, equities or claims; and all of
the issued shares of capital stock of Staff Acquisition
have been duly and validly authorized and issued and are
fully paid, non-assessable and owned by Charles S.
Craig, free and clear of all liens, encumbrances,
equities and claims, except the Option Agreement and the
Voting Trust Agreement;

(iii) There are no preemptive or other
rights to subscribe for or to purchase, nor any
restriction upon the voting or transfer of, any shares
of the Stock pursuant to the Company's charter or
by-laws or any agreement or other instrument known to
such counsel;

(iv) To the best of such counsel's
knowledge and other than as set forth in the Prospectus,
there are no legal or governmental proceedings pending
to which the Company, Staff Acquisition or any of the
Subsidiaries is a party or of which any property or
assets of the Company, Staff Acquisition or any of the
Subsidiaries is the subject which, if determined
adversely to the Company, Staff Acquisition or any of
the Subsidiaries, might have a material adverse effect
on the consolidated financial position, stockholders' or
partners' equity, results of operations, business or
prospects of the Company, Staff Acquisition or the
Subsidiaries; and, to the best of such counsel's
knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened
by others;

(v) The Registration Statement was
declared effective under the Securities Act as of the
date and time specified in such opinion, the Prospectus
was filed with the Commission pursuant to the
subparagraph of Rule 424(b) of the Rules and Regulations
specified in such opinion on the date specified therein
and no stop order suspending the effectiveness of the
Registration Statement has been issued and, to the
knowledge of such counsel, no proceeding for that
purpose is pending or threatened by the Commission;

(vi) The Registration Statement and
the Prospectus and any further amendments or supplements
thereto made by the Company prior to such Delivery Date
(other than the financial statements and related
schedules therein, as to which such counsel need express
no opinion) comply as to form in all material respects
with the requirements of the Securities Act and the
Rules and Regulations;

(vii) To the best of such counsel's
knowledge, there are no contracts or other documents
which are required to be described in the

18
<PAGE> 19

Prospectus or filed as exhibits to the Registration
Statement by the Securities Act or by the Rules and
Regulations which have not been described or filed as
exhibits to the Registration Statement or incorporated
therein by reference as permitted by the Rules and
Regulations;

(viii) This Agreement has been duly
authorized, executed and delivered by the Company;

(ix) The issue and sale of the shares
of Stock being delivered on such Delivery Date by the
Company and the compliance by the Company with all of
the provisions of this Agreement will not conflict with
or result in a breach or violation of any of the terms
or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument known to such counsel to
which the Company, Staff Acquisition or any of the
Subsidiaries is a party or by which the Company, Staff
Acquisition or any of the Subsidiaries is bound or to
which any of the property or assets of the Company,
Staff Acquisition or any of the Subsidiaries is subject,
nor will such actions result in any violation of the
provisions of the charter, by-laws or governing
instruments of the Company, Staff Acquisition or any of
the Subsidiaries or any statute or any order, rule or
regulation known to such counsel of any court or
governmental agency or body having jurisdiction over the
Company, Staff Acquisition or any of the Subsidiaries or
any of their properties or assets; and, except for the
registration of the Stock under the Securities Act and
such consents, approvals, authorizations, registrations
or qualifications as may be required under the Exchange
Act and applicable state securities laws in connection
with the purchase and distribution of the Stock by the
Underwriters, no consent, approval, authorization or
order of, or filing or registration with, any such court
or governmental agency or body is required for the
execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated
hereby;

(x) To the best of such counsel's
knowledge, there are no contracts, agreements or
understandings between the Company or any Subsidiary and
any person granting such person the right (other than
rights which have been waived or satisfied or which will
not be exercisable prior to the Second Delivery Date) to
require the Company to file a registration statement
under the Securities Act with respect to any securities
of the Company owned or to be owned by such person or to
require the Company to include such securities in the
securities registered pursuant to the Registration
Statement or in any securities being registered pursuant
to any other registration statement filed by the Company
under the Securities Act;

19
<PAGE> 20

(xi) The merger of SLI Transitory,
L.P. and Staff Capital, L.P. has been duly and validly
consummated in accordance with the terms of the Merger
Agreement and all of the equity interests in Staff
Capital L.P. have been duly and validly exchanged for
Common Stock of the Company, cash and/or warrants to
purchase Common Stock of the Company in accordance with
the terms of the Merger Agreement, and all of the equity
interests in Staff Capital L.P., other than a one
percent general partner interest held by Staff
Acquisition, are owned directly by the Company, free and
clear of all liens, encumbrances, equities and claims;
and all of the shares of Common Stock issued in exchange
for the equity interests in Staff Capital L.P. have been
duly authorized and are fully paid and non-assessable;
and

(xii) Each of the Option Agreement and
the Voting Trust Agreement has been duly authorized,
executed and delivered by each of Staff Acquisition and
the Company and constitutes a valid and binding
agreement of each of Staff Acquisition and the Company,
enforceable in accordance with their respective terms.

In rendering such opinion, such counsel may state that its opinion
is limited to matters governed by the Federal laws of the United
States of America and the laws of the State of New York and Florida.
Such counsel shall also have furnished to the Representatives a
written statement, addressed to the Underwriters and dated such
Delivery Date, in form and substance satisfactory to the
Representatives to the effect that such counsel has acted as counsel
to the Company in connection with the preparation of the
Registration Statement, and based on the foregoing, no facts have
come to the attention of such counsel which cause it to believe that
the Registration Statement, as of the Effective Date, contained any
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the
statements therein not misleading, or that the Prospectus contains
any untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading. The foregoing opinion and statement may
be qualified by a statement to the effect that such counsel does not
assume any responsibility for the accuracy, completeness or fairness
of the statements contained in the Registration Statement or the
Prospectus except for the statements made in the Prospectus under
the captions "The Reorganization," "Industry Regulation,"
"Description of Capital Stock" and "Shares Eligible for Future
Sale," insofar as such statements relate to the Stock and concern
legal matters.

(e) At the First Delivery Date, in the case of
the Firm Selling Stockholder, and at the Second Delivery Date if it
occurs, in the case of the Option Selling Stockholders, the
respective counsel for each of the Selling

20
<PAGE> 21

Stockholders shall each have furnished to the Representatives their
written opinion, as counsel to each of the Selling Stockholders for
whom they are acting as counsel, addressed to the Underwriters and
dated the Second Delivery Date, in form and substance reasonably
satisfactory to the Representatives, to the effect that:

(i) Such Selling Stockholder has
full right, power and authority to enter into this
Agreement, the Power of Attorney and the Custody
Agreement; the execution, delivery and performance of
this Agreement, the Power of Attorney and the Custody
Agreement by such Selling Stockholder and the
consummation by such Selling Stockholder of the
transactions contemplated hereby and thereby will not
conflict with or result in a breach or violation of any
of the terms or provisions of, or constitute a default
under, any statute, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument
known to such counsel to which such Selling Stockholder
is a party or by which such Selling Stockholder is bound
or to which any of the property or assets of such
Selling Stockholder is subject, nor will such actions
result in any violation of any statute or any order,
rule or regulation known to such counsel of any court or
governmental agency or body having jurisdiction over
such Selling Stockholder or the property or assets of
such Selling Stockholder; and, except for the
registration of the Stock under the Securities Act and
such consents, approvals, authorizations, registrations
or qualifications as may be required under the Exchange
Act and applicable state securities laws in connection
with the purchase and distribution of the Stock by the
Underwriters, no consent, approval, authorization or
order of, or filing or registration with, any such court
or governmental agency or body is required for the
execution, delivery and performance of this Agreement,
the Power of Attorney or the Custody Agreement by such
Selling Stockholder and the consummation by such Selling
Stockholder of the transactions contemplated hereby and
thereby;

(ii) This Agreement has been duly
executed and delivered by or on behalf of such Selling
Stockholder;

(iii) A Power-of-Attorney and a
Custody Agreement have been duly executed and delivered
by such Selling Stockholder and constitute valid and
binding agreements of such Selling Stockholder,
enforceable in accordance with their respective terms;

(iv) Immediately prior to the
Delivery Date, such Selling Stockholder had good and
valid title to the shares of Stock to be sold by such
Selling Stockholder under this Agreement, free and clear
of all liens, encumbrances, equities or claims, and full
right, power and authority to

21
<PAGE> 22

sell, assign, transfer and deliver such shares to be
sold by such Selling Stockholder hereunder; and

(v) Upon payment for and delivery of
the Stock to be sold by such Selling Stockholder in
accordance with the terms of this Agreement, assuming
the Underwriters are acquiring such Stock in good faith
without notice of any adverse claim, the Underwriters
will acquire such stock free and clear of any adverse
claim.

In rendering such opinion, such counsel may state that its opinion
is limited to matters governed by the Federal laws of the United
States of America, the laws of ______________________. Such counsel
shall also have furnished to the Representatives a written
statement, addressed to the Underwriters and dated the Delivery
Date, in form and substance satisfactory to the Representatives, to
the effect that (x) such counsel has acted as counsel to such
Selling Stockholder in connection with the preparation of the
Registration Statement, and (y) based on the foregoing, no facts
have come to the attention of such counsel which lead it to believe
that the Registration Statement, as of the Effective Date, contained
any untrue statement of a material fact relating to such Selling
Stockholder or omitted to state such a material fact required to be
stated therein with respect to such Selling Stockholder or necessary
in order to make the statements therein with respect to such Selling
Stockholder not misleading, or that the Prospectus contains any
untrue statement of a material fact relating to such Selling
Stockholder or omits to state such a material fact required to be
stated therein with respect to such Selling Stockholder or necessary
in order to make the statements therein with respect to such Selling
Stockholder, in light of the circumstances under which they were
made, not misleading. The foregoing opinion and statement may be
qualified by a statement to the effect that such counsel does not
assume any responsibility for the accuracy, completeness or fairness
of the statements contained in the Registration Statement or the
Prospectus.

(f) The Representatives shall have received from
O'Melveny & Myers LLP, counsel for the Underwriters, such opinion or
opinions, dated such Delivery Date, with respect to the issuance and
sale of the Stock, the Registration Statement, the Prospectus and
other related matters as the Representatives may reasonably require,
and the Company and the Selling Stockholders shall have furnished to
such counsel such documents as they reasonably request for the
purpose of enabling them to pass upon such matters.

(g) At the time of execution of this Agreement,
the Representatives shall have received from Deloitte & Touche LLP a
letter, in form and substance satisfactory to the Representatives,
addressed to the Underwriters and dated the date hereof (i)
confirming that they are independent public accountants within the
meaning of the Securities Act and are in compliance with the
applicable requirements relating to the qualification of accountants
under Rule 2-01 of

22
<PAGE> 23

Regulation S-X of the Commission, (ii) stating, as of the date
hereof (or, with respect to matters involving changes or
developments since the respective dates as of which specified
financial information is given in the Prospectus, as of a date not
more than five days prior to the date hereof), the conclusions and
findings of such firm with respect to the financial information and
other matters ordinarily covered by accountants' "comfort letters"
to underwriters in connection with registered public offerings.

(h) With respect to the letter of Deloitte &
Touche LLP referred to in the preceding paragraph and delivered to
the Representatives concurrently with the execution of this
Agreement (the "initial letter"), the Company shall have furnished
to the Representatives a letter (the "bring-down letter") of such
accountants, addressed to the Underwriters and dated such Delivery
Date (i) confirming that they are independent public accountants
within the meaning of the Securities Act and are in compliance with
the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of the Commission,
(ii) stating, as of the date of the bring-down letter (or, with
respect to matters involving changes or developments since the
respective dates as of which specified financial information is
given in the Prospectus, as of a date not more than five days prior
to the date of the bring-down letter), the conclusions and findings
of such firm with respect to the financial information and other
matters covered by the initial letter and (iii) confirming in all
material respects the conclusions and findings set forth in the
initial letter.

(i) The Company shall have furnished to the
Representatives a certificate, dated such Delivery Date, of its
Chairman of the Board, its President or a Vice President and its
chief financial officer stating that:

(i) The representations, warranties
and agreements of the Company in Section 1 are true and
correct in all material respects as of such Delivery
Date; the Company has complied in all material respects
with all its agreements contained herein; and the
conditions set forth in Sections 9(a) and 9(m) have been
fulfilled; and

(ii) They have carefully examined the
Registration Statement and the Prospectus and, in their
opinion (A) as of the Effective Date, the Registration
Statement and Prospectus did not include any untrue
statement of a material fact and did not omit to state a
material fact required to be stated therein or necessary
to make the statements therein not misleading, and (B)
since the Effective Date no event has occurred which
should have been set forth in a supplement or amendment
to the Registration Statement or the Prospectus.

(j) At the First Delivery Date, in the case of
the Firm Selling Stockholder, and at the Second Delivery Date if it
occurs, in the case of the

23
<PAGE> 24

Option Selling Stockholders, each Selling Stockholder (or the
Custodian or one or more attorneys-in-fact on behalf of the Selling
Stockholders) shall have furnished to the Representatives on such
Delivery Date a certificate, dated such Delivery Date, signed by, or
on behalf of, such Selling Stockholder (or the Custodian or one or
more attorneys-in-fact) stating that the representations, warranties
and agreements of such Selling Stockholder contained herein are true
and correct in all material respects as of the Second Delivery Date
and that such Selling Stockholder has complied in all material
respects with all agreements contained herein to be performed by the
Selling Stockholder at or prior to the Second Delivery Date.

(k) (i) Neither the Company, Staff Acquisition
nor any of the Subsidiaries shall have sustained since the date of
the latest audited financial statements included in the Prospectus
any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth or contemplated in the
Prospectus or (ii) since such date there shall not have been any
change in the capital stock or long-term debt of the Company or any
of the Subsidiaries or any change, or any development involving a
prospective change, in or affecting the general affairs, management,
financial position, stockholders' or partners' equity or results of
operations of the Company, Staff Acquisition or the Subsidiaries,
otherwise than as set forth or contemplated in the Prospectus, the
effect of which, in any such case described in clause (i) or (ii),
is, in the judgment of the Representatives, so material and adverse
as to make it impracticable or inadvisable to proceed with the
public offering or the delivery of the Stock being delivered on such
Delivery Date on the terms and in the manner contemplated in the
Prospectus.

(l) Subsequent to the execution and delivery of
this Agreement there shall not have occurred any of the following:
(i) trading in securities generally on the New York Stock Exchange
or the American Stock Exchange or in the over-the-counter market, or
trading in any securities of the Company on any exchange or in the
over-the-counter market, shall have been suspended or minimum prices
shall have been established on any such exchange or such market by
the Commission, by such exchange or by any other regulatory body or
governmental authority having jurisdiction, (ii) a banking
moratorium shall have been declared by Federal or state authorities,
(iii) the United States shall have become engaged in hostilities,
there shall have been an escalation in hostilities involving the
United States or there shall have been a declaration of a national
emergency or war by the United States or (iv) there shall have
occurred such a material adverse change in general economic,
political or financial conditions (or the effect of international
conditions on the financial markets in the United States shall be
such) as to make it, in the judgment of a majority in interest of
the several Underwriters, impracticable or inadvisable to proceed
with the public offering or delivery of the

24
<PAGE> 25

Stock being delivered on such Delivery Date on the terms and in the
manner contemplated in the Prospectus.

(m) The National Market System shall have
approved the Stock for inclusion, subject only to official notice of
issuance.

All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.

10. Indemnification and Contribution.

(a) The Company and each Subsidiary, jointly and severally,
shall indemnify and hold harmless each Underwriter, its officers and employees
and each person, if any, who controls any Underwriter within the meaning of the
Securities Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof (including, but not limited to, any
loss, claim, damage, liability or action relating to purchases and sales of
Stock), to which that Underwriter, officer, employee or controlling person may
become subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained (A) in
any Preliminary Prospectus, the Registration Statement or the Prospectus or in
any amendment or supplement thereto or (B) in any blue sky application or other
document prepared or executed by the Company (or based upon any written
information furnished by the Company) specifically for the purpose of qualifying
any or all of the Stock under the securities laws of any state or other
jurisdiction (any such application, document or information being hereinafter
called a "Blue Sky Application"), (ii) the omission or alleged omission to state
in any Preliminary Prospectus, the Registration Statement or the Prospectus, or
in any amendment or supplement thereto, or in any Blue Sky Application any
material fact required to be stated therein or necessary to make the statements
therein not misleading, or (iii) any act or failure to act or any alleged act or
failure to act by any Underwriter in connection with, or relating in any manner
to, the Stock or the offering contemplated hereby, and which is included as part
of or referred to in any loss, claim, damage, liability or action arising out of
or based upon matters covered by clause (i) or (ii) above (provided that the
Company and the Subsidiary shall not be liable under this clause (iii) to the
extent that it is determined in a final judgment by a court of competent
jurisdiction that such loss, claim, damage, liability or action resulted
directly from any such acts or failures to act undertaken or omitted to be taken
by such Underwriter through its gross negligence or willful misconduct), and
shall reimburse each Underwriter and each such officer, employee or controlling
person promptly upon demand for any legal or other expenses reasonably incurred
by that Underwriter, officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Company and the Subsidiaries shall not be liable in any such case to
the extent that any such loss, claim, damage, liability or action arises out of,
or is based upon, any untrue statement or alleged untrue statement or omission
or alleged omission made in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or in any such amendment or supplement, or in any
Blue Sky

25
<PAGE> 26

Application, in reliance upon and in conformity with written information
concerning such Underwriter furnished to the Company through the Representatives
by or on behalf of any Underwriter specifically for inclusion therein, and
further, provided, however, that the Company and the Subsidiaries shall not be
liable to an Underwriter in respect of any Preliminary Prospectus, or any
amendment or supplement thereto, to the extent that both (i) all of the untrue
statements or alleged untrue statements or omissions or alleged omissions of a
material fact contained in any Preliminary Prospectus or any amendment or
supplement thereto were fully corrected in the Prospectus or in an amendment or
supplement thereto and (ii) the Prospectus, together with such amendment or
supplement, if any, was provided to such Underwriter by the Company prior to the
time the written confirmation of the sale of Stock to such person was sent and
was not sent or given to the purchaser of the stock in question by such
Underwriter at or prior to the written confirmation of the sale of Stock to such
person. The foregoing indemnity agreement is in addition to any liability which
the Company or the Subsidiaries may otherwise have to any Underwriter or to any
officer, employee or controlling person of that Underwriter.

(b) The Selling Stockholders, severally and not jointly,
shall indemnify and hold harmless each Underwriter, its officers and employees,
and each person, if any, who controls any Underwriter within the meaning of the
Securities Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof (including, but not limited to, any
loss, claim, damage, liability or action relating to purchases and sales of
Stock), to which that Underwriter, officer, employee or controlling person may
become subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state in any Preliminary Prospectus, Registration Statement or the Prospectus,
or in any amendment or supplement thereto, any material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement or the Prospectus or in any
amendment or supplement thereto in reliance upon and in conformity with written
information concerning such Selling Stockholder furnished by such Selling
Stockholder to the Company specifically for inclusion therein, and shall
reimburse each Underwriter, its officers and employees and each such controlling
person for any legal or other expenses reasonably incurred by that Underwriter,
its officers and employees or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Selling Stockholders shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or action arises out of, or is
based upon, any untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus or in any such amendment or supplement in reliance upon and in
conformity with written information concerning such Underwriter furnished to the
Company through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein, and further, provided, however, that the
Selling Stockholders shall not be liable to an Underwriter in respect of any
Preliminary

26
<PAGE> 27

Prospectus, or any amendment or supplement thereto, to the extent that both (i)
all of the untrue statements or alleged untrue statements or omissions or
alleged omissions of a material fact contained in any Preliminary Prospectus or
any amendment or supplement thereto were fully corrected in the Prospectus or in
an amendment or supplement thereto and (ii) the Prospectus, together with such
amendment or supplement, if any, was provided to such Underwriter by the Company
prior to the time the written confirmation of the sale of Stock to such person
was sent and was not sent or given to the purchaser of the stock in question by
such Underwriter at or prior to the written confirmation of the sale of Stock to
such person. The foregoing indemnity agreement is in addition to any liability
which the Selling Stockholders may otherwise have to any Underwriter or any
officer, employee or controlling person of that Underwriter.

(c) Each Underwriter, severally and not jointly, shall
indemnify and hold harmless the Company, its officers and employees, each of its
directors, each person, if any, who controls the Company within the meaning of
the Securities Act, and each Selling Stockholder from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof,
to which the Company or any such director, officer, controlling person or
Selling Stockholder may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained (A) in any Preliminary Prospectus, the Registration Statement or
the Prospectus or in any amendment or supplement thereto, or (B) in any Blue Sky
Application or (ii) the omission or alleged omission to state in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or in any amendment or
supplement thereto, or in any Blue Sky Application any material fact required to
be stated therein or necessary to make the statements therein not misleading,
but in each case only to the extent that the untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information concerning such Underwriter furnished to the
Company through the Representatives by or on behalf of that Underwriter
specifically for inclusion therein, and shall reimburse the Company and any such
director, officer, controlling person or Selling Stockholder for any legal or
other expenses reasonably incurred by the Company or any such director, officer,
controlling person or Selling Stockholder in connection with investigating or
defending or preparing to defend against any such loss, claim, damage, liability
or action as such expenses are incurred. The foregoing indemnity agreement is in
addition to any liability which any Underwriter may otherwise have to the
Company or any such director, officer, employee, controlling person or Selling
Stockholder.

(d) Promptly after receipt by an indemnified party under
this Section 10 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 10, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 10 except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 10.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate

27
<PAGE> 28

therein and, to the extent that it wishes, jointly with any other similarly
notified indemnifying party, to assume the defense thereof with counsel
reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 10 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the Representatives shall have the right to employ counsel to represent jointly
the Representatives and those other Underwriters and their respective officers,
employees and controlling persons who may be subject to liability arising out of
any claim in respect of which indemnity may be sought by the Underwriters
against the Company or the Subsidiaries or any Selling Stockholder under this
Section 10 if, in the reasonable judgment of the Representatives, it is
advisable for the Representatives and those Underwriters, officers, employees
and controlling persons to be jointly represented by separate counsel, and in
that event the fees and expenses of such separate counsel shall be paid by the
Company or the Subsidiaries or such Selling Stockholder, it being understood
that the Company, the Subsidiaries and the Selling Stockholders shall not be
liable for the expenses of more than one separate counsel (together with local
counsel) in any one jurisdiction. No indemnifying party shall (i) without the
prior written consent of the indemnified parties (which consent shall not be
unreasonably withheld), settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding, or (ii) be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with the consent of
the indemnifying party or if there be a final judgment of the plaintiff in any
such action, the indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of such
settlement or judgment.

(e) If the indemnification provided for in this Section 10
shall for any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 10(a), 10(b) or 10(c) in respect of any loss,
claim, damage or liability, or any action in respect thereof, referred to
therein, then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Company, the Subsidiaries and the Selling Stockholders
on the one hand and the Underwriters on the other from the offering of the Stock
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company, the Subsidiaries, and the Selling Stockholders on the one hand and
the Underwriters on the other with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, or action in respect thereof,
as well as any other relevant equitable considerations. The relative benefits
received by the Company, the Subsidiaries and the Selling Stockholders on the
one hand and the Underwriters

28
<PAGE> 29

on the other with respect to such offering shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Stock purchased
under this Agreement (before deducting expenses) received by the Company, the
Subsidiaries and the Selling Stockholders, on the one hand, and the total
underwriting discounts and commissions received by the Underwriters with respect
to the shares of the Stock purchased under this Agreement, on the other hand,
bear to the total gross proceeds from the offering of the shares of the Stock
under this Agreement, in each case as set forth in the table on the cover page
of the Prospectus. The relative fault shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Company, the Subsidiaries, the Selling Stockholders or the Underwriters, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. For purposes of
the preceding two sentences, the net proceeds deemed to be received by the
Company shall be deemed to be also for the benefit of the Subsidiaries and
information supplied by the Company shall also be deemed to have been supplied
by the Subsidiaries. The Company, the Subsidiaries, the Selling Stockholders and
the Underwriters agree that it would not be just and equitable if contributions
pursuant to this Section were to be determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section shall be deemed to include, for
purposes of this Section 10(e), any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 10(e), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Stock underwritten by it and distributed
to the public was offered to the public exceeds the amount of any damages which
such Underwriter has otherwise paid or become liable to pay by reason of any
untrue or alleged untrue statement or omission or alleged omission and no
Selling Stockholder shall be liable for any amount in excess of the proceeds to
such Selling Stockholder from the sale of Stock by such Selling Stockholder. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute as provided in this Section 10(e) are several in
proportion to their respective underwriting obligations and not joint.

(f) The Underwriters severally confirm and the Company and
the Selling Stockholders acknowledge that the statements with respect to the
public offering of the Stock by the Underwriters set forth on the cover page of,
the legend concerning over-allotments on the inside front cover page of and the
concession and reallowance figures appearing under the caption "Underwriting"
in, the Prospectus are correct and constitute the only information concerning
such Underwriters furnished in writing to the Company by or on behalf of the
Underwriters specifically for inclusion in the Registration Statement and the
Prospectus.

29
<PAGE> 30

11. Defaulting Underwriters.

If, on either Delivery Date, any Underwriter defaults in the
performance of its obligations under this Agreement, the remaining
non-defaulting Underwriters shall be obligated to purchase the Stock which the
defaulting Underwriter agreed but failed to purchase on such Delivery Date in
the respective proportions which the number of shares of the Firm Stock set
opposite the name of each remaining non-defaulting Underwriter in Schedule 1
hereto bears to the total number of shares of the Firm Stock set opposite the
names of all the remaining non-defaulting Underwriters in Schedule 1 hereto;
provided, however, that the remaining non-defaulting Underwriters shall not be
obligated to purchase any of the Stock on such Delivery Date if the total number
of shares of the Stock which the defaulting Underwriter or Underwriters agreed
but failed to purchase on such date exceeds 9.09% of the total number of shares
of the Stock to be purchased on such Delivery Date, and any remaining
non-defaulting Underwriter shall not be obligated to purchase more than 110% of
the number of shares of the Stock which it agreed to purchase on such Delivery
Date pursuant to the terms of Section 3. If the foregoing maximums are exceeded,
the remaining non-defaulting Underwriters, or those other underwriters
satisfactory to the Representatives who so agree, shall have the right, but
shall not be obligated, to purchase, in such proportion as may be agreed upon
among them, all the Stock to be purchased on such Delivery Date. If the
remaining Underwriters or other underwriters satisfactory to the Representatives
do not elect to purchase the shares which the defaulting Underwriter or
Underwriters agreed but failed to purchase on such Delivery Date, this Agreement
(or, with respect to the Second Delivery Date, the obligation of the
Underwriters to purchase, and of the Company and the Option Selling Stockholders
to sell, the Option Stock) shall terminate without liability on the part of any
non-defaulting Underwriter or the Company or the Selling Stockholders, except
that the Company will continue to be liable for the payment of expenses to the
extent set forth in Sections 8 and 13. As used in this Agreement, the term
"Underwriter" includes, for all purposes of this Agreement unless the context
requires otherwise, any party not listed in Schedule 1 hereto who, pursuant to
this Section 11, purchases Firm Stock which a defaulting Underwriter agreed but
failed to purchase.

Nothing contained herein shall relieve a defaulting Underwriter of
any liability it may have to the Company and the Selling Stockholders for
damages caused by its default. If other underwriters are obligated or agree to
purchase the Stock of a defaulting or withdrawing Underwriter, either the
Representatives or the Company may postpone the Delivery Date for up to seven
full business days in order to effect any changes that in the opinion of counsel
for the Company or counsel for the Underwriters may be necessary in the
Registration Statement, the Prospectus or in any other document or arrangement.

12. Termination. The obligations of the Underwriters
hereunder may be terminated by the Representatives by notice given to and
received by the Company and the Selling Stockholders prior to delivery of and
payment for the Firm Stock if, prior to that time, any of the events described
in Sections 9(k) or 9(l), shall have occurred or if the Underwriters shall
decline to purchase the Stock for any reason permitted under this Agreement.

30
<PAGE> 31

13. Reimbursement of Underwriters' Expenses. If (a) the
Company or any Selling Stockholder shall fail to tender the Stock for delivery
to the Underwriters by reason of any failure, refusal or inability on the part
of the Company or such Selling Stockholder to perform any agreement on its or
his part to be performed, or because any other condition of the Underwriters'
obligations hereunder required to be fulfilled by the Company or Selling
Stockholder is not fulfilled, the Company and the defaulting Selling Stockholder
will reimburse the Underwriters for all reasonable out-of-pocket expenses
(including fees and disbursements of counsel) incurred by the Underwriters in
connection with this Agreement and the proposed purchase of the Stock, and upon
demand the Company and the defaulting Selling Stockholder shall pay the full
amount thereof to the Representatives. If this Agreement is terminated pursuant
to Section 11 by reason of the default of one or more Underwriters, neither the
Company nor any Selling Stockholder shall be obligated to reimburse any
defaulting Underwriter on account of those expenses.

14. Notices, etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:

(a) if to the Underwriters, shall be delivered
or sent by mail, telex or facsimile transmission to Lehman Brothers
Inc., Three World Financial Center, New York, New York 10285,
Attention: Syndicate Department (Fax: 212-526- 6588), with a copy,
in the case of any notice pursuant to Section 11(d), to the Director
of Litigation, Office of the General Counsel, Lehman Brothers Inc.,
3 World Financial Center, 10th Floor, New York, NY 10285;

(b) if to the Company or to the Subsidiaries,
shall be delivered or sent by mail, telex or facsimile transmission
to the address of the Company set forth in the Registration
Statement, Attention: President (Fax: (941) 741-4333);

(c) if to any Selling Stockholder, shall be
delivered or sent by mail, telex or facsimile transmission to such
Selling Stockholder at the address set forth on Schedule 2 hereto;

provided, however, that any notice to an Underwriter pursuant to Section 10(d)
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Representatives, which address will be supplied to any other party hereto by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company and the
Selling Stockholders shall be entitled to act and rely upon any request,
consent, notice or agreement given or made on behalf of the Underwriters by
Lehman Brothers Inc. on behalf of the Representatives and the Company and the
Underwriters shall be entitled to act and rely upon any request, consent, notice
or agreement given or made on behalf of the Selling Stockholders by the
Custodian.

15. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Underwriters, the Company,
the Selling Stockholders and

31
<PAGE> 32

their respective personal representatives and successors. This Agreement and the
terms and provisions hereof are for the sole benefit of only those persons,
except that (A) the representations, warranties, indemnities and agreements of
the Company and the Selling Stockholders contained in this Agreement shall also
be deemed to be for the benefit of the person or persons, if any, who control
any Underwriter within the meaning of Section 15 of the Securities Act and (B)
the indemnity agreement of the Underwriters contained in Section 10(c) of this
Agreement shall be deemed to be for the benefit of directors of the Company,
officers of the Company who have signed the Registration Statement and any
person controlling the Company within the meaning of Section 15 of the
Securities Act. Nothing in this Agreement is intended or shall be construed to
give any person, other than the persons referred to in this Section 15, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision contained herein.

16. Survival. The respective indemnities, representations,
warranties and agreements of the Company, the Subsidiaries, the Selling
Stockholders and the Underwriters contained in this Agreement or made by or on
behalf on them, respectively, pursuant to this Agreement, shall survive the
delivery of and payment for the Stock and shall remain in full force and effect,
regardless of any investigation made by or on behalf of any of them or any
person controlling any of them.

17. Definition of the Terms "Business Day" and "Subsidiary".
For purposes of this Agreement, (a) "business day" means any day on which the
New York Stock Exchange, Inc. is open for trading and (b) "Subsidiary" shall
mean [IDENTIFY SUBSIDIARIES BY NAME].

18. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF NEW YORK.

19. Counterparts. This Agreement may be executed in one or
more counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.

20. Headings. The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.

32
<PAGE> 33

If the foregoing correctly sets forth the agreement among the
Company, the Subsidiaries, the Selling Stockholders and the Underwriters, please
indicate your acceptance in the space provided for that purpose below.

Very truly yours,

STAFF LEASING, INC.

By
-----------------------------------------
[Insert title of person executing
agreement]

[THE SUBSIDIARIES]

By
-----------------------------------------
[Insert title of person executing
agreement]]

The Selling Stockholders named in Schedule
2 to this Agreement

By
-----------------------------------------
Attorney-in-Fact

Accepted:

LEHMAN BROTHERS INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MONTGOMERY SECURITIES

For themselves and as Representatives
of the several Underwriters named
in Schedule 1 hereto

By LEHMAN BROTHERS INC.

By
---------------------------------
Authorized Representative

33
<PAGE> 34

SCHEDULE 1

Number of
Underwriters Shares
- ------------ ------
<S> <C>
Lehman Brothers Inc. ..........................................

Donaldson, Lufkin & Jenrette Securities Corporation............

Montgomery Securities..........................................
---------

Total 4,000,000
=========
</TABLE>

34
<PAGE> 35
SCHEDULE 2

<TABLE>
<CAPTION>
Number of Shares
of Stock
-----------------
<S> <C>
Firm Selling Stockholder

[To Come]

Option Selling Stockholders

[To Come]
</TABLE>

<PAGE> 1

EXHIBIT 4.1
STAFF LEASING, INC.

NUMBER SHARES
-------- --------
INCORPORATED UNDER THE LAWS SEE REVERSE FOR CERTAIN DEFINITIONS
OF THE STATE OF FLORIDA
CUSIP

THIS CERTIFIES THAT

is the owner of

FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK,
PAR VALUE $.01 PER SHARE, OF

STAFF LEASING, INC.

transferable on the books of the Corporation by the holder hereof, in person or
by duly authorized attorney, upon surrender of this certificate properly
endorsed. This certificate and the shares represented hereby are issued and
shall be held subject to all of the provisions of the Articles of
Incorporation of the Corporation and all the amendments thereto, to all of
which the holder of this certificate assents by his acceptance hereof.

This certificate is not valid unless countersigned and registered by the
Transfer Agent and Registrar.
Witness the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.

Dated

/s/ CORPORATE /s/
- ------------------------ SEAL -------------------------
SECRETARY PRESIDENT

COUNTERSIGNED AND REGISTERED:
THE BANK OF NEW YORK
TRANSFER AGENT
AND REGISTRAR
BY
AUTHORIZED OFFICER

<PAGE> 2

STAFF LEASING, INC.

The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations;

TEN COM - as tenants in common UNIF GIFT MIN ACT- Custodian
TEN ENT - as tenants by the entireties ---- -----
JT TEN - as joint tenants with right (Cust) (Minor)
of survivorship and not as under Uniform Gifts to Minors
tenants in common Act
--------------------------
(State)

Additional abbreviations may also be used though not in the above list.

The Corporation is authorized to issue different classes of shares and
different series within a class.
The Corporation will furnish to the holder hereof upon request and without
charge a full statement of the designations, relative rights, preferences and
limitations applicable to each class and the variations and rights, preferences
and limitations determined for each series (and the authority of the Board of
Directors of the Corporation to determine variations for future series).

For value received, hereby sell, assign and transfer unto
-------------------

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE

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

- -------------------------------------------------------------------------------
(PLEAE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)

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

- -------------------------------------------------------------------------------
shares
- -----------------------------------------------------------------------
of the Common Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
Attorney
- --------------------------------------------------------------------
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.

Dated
----------------

--------------------------------------------
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME AS WRITTEN UPON THE
FACE OF THE CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY
CHANGE WHATEVER.

SIGNATURE(S) GUARANTEED:
--------------------------------------------
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN
ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS
AND CREDIT UNIONS WITH MEMBERSHIP IN AN
APPROVED SIGNATURE GUARANTEE MEDALLION
PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.

<PAGE> 1
EXHIBIT 5.1

[LETTERHEAD OF POWELL, GOLDSTEIN, FRAZER & MURPHY LLP APPEARS HERE]

May 28, 1997

Staff Leasing, Inc.
601301 Boulevard West
Suite 202
Bradenton, Florida 34205

Gentlemen:

We have acted as counsel to Staff Leasing, Inc., a Florida corporation
(the "Company"), in connection with the preparation and filing by the Company of
a Registration Statement on Form S-1, as amended (Registration No. 333-22933),
(the "Registration Statement") relating to the public offering of up to
4,600,000 shares (the "Shares") of Common Stock, $.01 par value per share (the
"Common Stock"), of the Company (including 600,000 Shares subject to the
underwriters' over-allotment option). Of the Shares, 3,945,347 are being
offered by the Company (including 445,374 Shares subject to the underwriters'
over-allotment option) and 654,653 are being offered by certain shareholders of
the Company (including 154,653 Shares subject to the underwriters'
over-allotment option).

We have examined copies of the Articles of Incorporation and By-Laws of
the Company, the Registration Statement, and such other corporate records and
documents as we deemed necessary to form the basis for the opinion hereinafter
expressed. In our examination of such material, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to
us as originals and the conformity to original documents of all copies
submitted to us. As to various questions of fact material to such opinion, we
have relied upon statements and certificates of officers and representatives of
the Company and others.

Based upon the foregoing, we are of the opinion that all of the Shares
have been duly authorized and, when issued and sold in accordance with the
terms described in the Prospectus forming a part of the Registration Statement,
will be validly issued, fully paid and non-assessable.

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, to the reference to us in the Prospectus and to the
filing of this opinion as an exhibit to any application made by or on behalf of
the Company or any dealer in connection with the registration of the Common
Stock under the securities or blue sky laws of any state or jurisdiction. In
giving such permission, we do not admit hereby that we come within the category
of persons whose consent is required under Section 7 of the Securities Act of
1933, as amended, or the rules and regulations of the Securities and Exchange
Commission thereunder.
Very truly yours,

/s/ Powell, Goldstein, Frazer & Murphy
--------------------------------------
POWELL, GOLDSTEIN, FRAZER & MURPHY LLP

<PAGE> 1
EXHIBIT 10.6

SIXTH AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT

SIXTH AMENDMENT (this "Amendment"), dated as of May ___, 1997, among
Staff Acquisition, Inc. (the "General Partner"), Staff Capital, L.P, (the
"Borrower"), the lending institutions party to the Amended and Restated Credit
Agreement refered to below (the "Banks") and Banque Paribas, as Agent (in such
capacity, the "Agent"). All capitalized terms used herein and not otherwise
defined shall have the respective meanings provided such terms in the Amended
and Restated Credit Agreement referred to below.

WITNESSETH:

WHEREAS, the General Partner, the Borrower, the Banks and the Agent are
parties to an Amended and Restated Credit Agreement, dated as of November 5,
1993 and amended and restated as of December 8, 1994 (as amended as of the date
hereof, the "Amended and Restated Credit Agreement");

WHEREAS, the parties hereto wish to amend the Amended and Restated
Credit Agreement as herein provided:

NOW, THEREFORE it is agreed;

1. Section 2.01(c) of the Amended and Restated Credit Agreement is
hereby amended by deleting the reference to "5,000,000" contained therein and
inserting "$10,000,000" in lieu thereof.

2. Section 9.03 of the Amended and Restated Credit Agreement is hereby
amended by deleting such Section in its entirely and inserting in lieu thereof,
the following new Section 9.03:

"9.03 Distributions. The Borrower shall not nor shall the General
Partner permit any of its Subsidiaries to, declare or pay any
Distributions with respect to the Borrower or any of its Subsidiaries,
except that: (i) any Subsidiary of the Borrower may make Distributions
to the Borrower or any Wholly-Owned Subsidiary of the Borrower; (ii) so
long as there shall exist no Default or Event of Default under Section
10.01 (and after giving effect to such Distributions there
<PAGE> 2
will exist no Default or Event of Default under Section 10.01), the
Borrower may make cash Distributions to the Partners at times and in
amounts necessary for the Borrower to make tax distributions pursuant to
Section 4.4(b) of the Partnership Agreement of the Borrower; (iii) the
Borrower may consummate the Refinancing Transaction on the Restatement
Effective Date; (iv) the Borrower may consummate the Phase One
Recapitalization Transaction on the Second Amendment Effective Date and
the Phase Two Recapitalization Transaction on or before August 31, 1996;
provided that any equity interests issued pursuant to the Phase Two
Recapitalization Transaction which are subject or entitled to mandatory
redemption provisions contained in the Partnership Agreement shall not
be redeemed without the prior written consent of the Required Banks; (v)
the Borrower may repurchase up to $900,000 principal amount of the Class
A-3 Preferred Limited Partnership Interests (to the extent not
repurchased in the Phase Two Recapitalization Transaction) at various
times on or prior to December 15, 1996 in accordance with Section
3A.2(c)(iii) of the Partnership Agreement of the Borrower, amended and
restated as of April 26, 1996; and (vi) the Borrower may redeem Class B
Preferred Limited Partnership Interests with a face amount of $3,386,250
on May 31, 1997 for an aggregate redemption price of not more than
$3,535,075 (the "May 1997 Redemption").

3. Section 9.06 of the Amended and Restated Credit Agreement is hereby
amended by adding the following clause at the end thereof;

"; and (vii) the Borrower may give effect to the May 1997 Redemption""

4. Section 9.07 of the Amended and Restated Credit Agreement is hereby
amended by (i) deleting the word "and" at the end of clause (iv) and inserting
"," in lieu thereof and (ii) inserting the following clause at the end thereof:

"; and (vi) the Borrower may give effect to the May 1997 Redemption "."

5. Section 11.01 of the Amended and Restated Credit Agreement is
hereby amended by inserting the following new definition in appropriate
alphabetical order:

"May 1997 Redemption" shall have the meaning provided in Section 9.03
hereof.

6. Representations. To induce the Agent and the Banks to enter into
this Amendment, each of the General Partner and the Borrower hereby represents
and warrants that (x) no Default or Event of Default exists on the Sixth
Amendment Effective Date after giving effect to this Amendment, (y) all of the
representations and warranties contained in the Credit Documents shall be true
and correct in all material respects on the Sixth Amendment Effective Date both
before and after giving effect to this Amendment with the same effect as though
such representations and warranties had been made on and as of the Sixth
Amendment Effective Date

-2-

<PAGE> 3
(it being understood that any representation or warranty made as of a specific
date shall be true and correct in all material respects as of such specific
date) and (z) the transactions contemplated by this Amendment do not require
the consent of any Person other than the Required Banks, including, without
limitation, any warrantholders or partners of the Borrower.

7. Amendment Effectiveness. This Amendment shall become effective on
the date (the "Sixth Amendment Effective Date") when (i) each of the General
Partner, the Borrower and the Required Banks shall have signed a copy hereof
(whether the same or different copies) and shall have delivered (including by
way of telecopier) the same to the Agent at its Notice Office and (ii) the
Borrower shall have paid to the Agent all fees and compensation as have been
agreed to in writing by the Borrower and the Agent and all unpaid costs and
expenses (including legal fees and expenses) of the Agent.

8. Miscellaneous. (a) This Amendment is limited as specified and
shall not constitute a modification, acceptance or waiver of any other
provision to the Amended and Restated Credit Agreement or any other Credit
Document.

(b) This Amendment may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Borrower and the Agent.

(c) This Amendment and the rights and obligations of the parties
hereunder shall be construed in accordance with and governed by the law of the
State of New York.

(d) All references in the Amended and Restated Credit Agreement and
each of the other Credit Documents to the Amended and Restated Credit Agreement
shall be deemed to be references to the Amended and Restated Credit Agreement
after giving effect to this Amendment.

* * *

-3-
<PAGE> 4
IN WITNESS WHEREOF, each of the parties hereto has caused their
duly authorized officers to execute and deliver a counterpart of this Amendment
as of the date first above written.

STAFF CAPITAL, L.P.

BY ITS SOLE GENERAL PARTNER,
STAFF ACQUISITION, INC.

By
-----------------------------------
Title:

STAFF ACQUISITION, INC.

By
----------------------------------
Title:

BANQUE PARIBAS.
Individually, as Collateral Agent and as
agent

By
-----------------------------------
Title:

NATIONSBANK OF FLORIDA, N.A.

By
-----------------------------------
Title:

-4-
<PAGE> 5

PILGRIM AMERICA PRIME RATE
TRUST

By
------------------------
Title:

-5-

<PAGE> 1
ISSUING OFFICE 001N EXHIBIT 10.8
INFORMATION PAGE

WORKERS COMPENSATION AND
EMPLOYERS LIABILITY POLICY

[LIBERTY MUTUAL LOGO]

ACCOUNT NO. SUB ACCOUNT NO. SUBJECT TO DEDUCTIBLE
00 41 10 0000

<TABLE>
<CAPTION>
POLICY NO. TD/CD SALES OFFICE CODE SALES REPRESENTATIVE CODE N/R 1ST YEAR
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WA1-65D-004110-297 61/3 TAMPA FL 555 HOUSER D 8830 2 94

</TABLE>

Item 1. Name of STAFF LEASING, L.P. AND AS
Insured PER ENDORSEMENT 1
600 301 BLVD. WEST, SUITE 202 FEIN 061379318
Address BRADENTON, FL 34205 RISK ID 917648190

Status PARTNERSHIP

Other workplaces not shown above: SEE ITEM 4

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Mo. Day Year Mo. Day Year
<S> <C> <C> <C> <C> <C> <C> <C>
Item 2. Policy Period: From 01 01 97 to 01 01 98
12:01 AM standard time at the address of the insured as stated herein.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Item 3. Coverage

A. Workers Compensation Insurance: Part One of the policy applies
to the Workers Compensation Law of the states listed here:

AL AZ AR CA CO CT DE DC FL GA IL IN IA KS KY LA ME
MD MA MI MN MS MO NE NH NJ NM NY NC OK PA RI SC TN
TX UT VA

B. Employers Liability Insurance: Part Two of the policy applies to
work in each state listed in item 3.A. The limits of our liability
under Part Two are:

Bodily Injury by Accident $ 1,000,000 each accident
Bodily Injury by Disease $ 1,000,000 policy limit
Bodily Injury by Disease $ 1,000,000 each employee

C. Other States Insurance: Part Three of the policy applies to the
states, if any, listed here:
NOT APPLICABLE

D. This policy includes these endorsements and schedules: SEE
EXTENSION OF INFORMATION PAGE
AND DEDUCTIBLE ENDORSEMENTS ATTACHED

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Item 4. Premium -- The premium for this policy will be determined by our Manuals of Rules, Classifications, Rates and Rating Plans.
All information required below is subject to verification and change by audit.
- -----------------------------------------------------------------------------------------------------------------------------------
Premium Basis Rates LINE
---------------------------------------------------------------
<S> <C> <C> <C> <C>
Estimated Per $100 Estimated
Code Total Annual of Re- Annual
Classifications No. Remuneration muneration Premiums
- ------------------------------------------------------------------------------------------------------------------------------------
SEE EXTENSION OF INFORMATION PAGE
ASSESSMENTS AND SURCHARGES -
SEE ATTACHED SCHEDULE
- ------------------------------------------------------------------------------------------------------------------------------------
Minimum Premium $1850 (PA) Total Estimated Annual Premium $ 53,036,393
- ------------------------------------------------------------------------------------------------------------------------------------
Interim adjustment of premium shall be made: MONTHLY Deposit Premium $ 4,402,185

*N*1L08*
- ------------------------------------------------------------------------------------------------------------------------------------
This policy, including all endorsements issued therewith, is hereby countersigned by /s/
---------------------------------------------
Authorized Representative Date 02/26/97
- -----------------------------------------------------------------------------------------------------------------------------------

- -----------------------------------------------------------------------------------------------------------------------------------
Loc. Code Term. Oper. DP Audit Basis Periodic Payment Rating Basis Pol. H.G. Home State Dividend RENEWAL OF
6 02/26/97 6 DED FL WA1-65D-004110-296
- -----------------------------------------------------------------------------------------------------------------------------------
GPO 4030 R1 WC 00 00 01 A
Copyright 1987 National Council on Compensation Insurance

</TABLE>

<PAGE> 2
Extension of Information Page WC 00 0001 A Item 4.

SURCHARGE AND ASSESSMENT SCHEDULE

TOTALS

<TABLE>
<S> <C>
CA WC ADMIN SURCHARGE $ 293
CA FRAUD SURCHARGE $ 487

CT SECOND INJURY FUND $ 1,440
CT WC FUND ASSESSMENT $ 40
MAINE WC DEFICIT RESO $ 0
ME ASSESSMENT $ 0
KY TAX $ 669
MA ASSESSMENT $ 54

MO SECOND INJURY FUND $ 18
NY ASSESSMENT $ 0

TX SURCHARGE $ 36,473

NJ SECOND INJURY FUND $ 1,754
NJ UNINSURED EMP FUND $ 70
</TABLE>

WAI-65D-004110-297 Page 2
<PAGE> 3
Extension of Information Page WC 0000 01 A

PREMIUM SUMMARY SCHEDULE

<TABLE>
<CAPTION>
NAME ANNUAL DEPOSIT
0 0
<S> <C> <C>
STAFF LEASING, L.P. 8,865,866 735,867

STAFF LEASING OF TEXAS, L.P. 2,805,875 232,888

STAFF LEASING OF GA L.P. 1,886,895 156,612

STAFF LEASING IV, L.P. 38,942,797 3,232,417

STAFF LEASING V, L.P. 157,315 13,057

STAFF LEASING OF GEORGIA II, L.P. 71,860 5,964

STAFF INTERNAL 226,973 18,839

TELS INTERNAL 13,306 1,104

STAFF LEASING OF GA INTERNAL 10,063 835

STAFF LEASING OF TX INTERNAL 55,443 4,602

STAFF LEASING II, L.P. 0 0

STAFF LEASING III, L.P. 0 0

STAFF LEASING OF TEXAS II, L.P. 0 0

STAFF INSURANCE, L.P. 0 0
---------------------------

TOTAL 53,036,393 4,402,185
</TABLE>

WAI-65D-004110-297 PAGE 3
<PAGE> 4
Extension of Information Page WC00 01A

ENDORSEMENT SCHEDULE

WA1-65D-004110-297

FORM NUMBER FORM NAME
- ----------- ---------
WC300601 NM CANCELLATION/NONRENEWAL END.
WC290301 NJ PART 2 LIMIT OF LIABILITY
WC310308 NY LIMIT OF LIABILITY END.
WC280604 NH AMENDATORY ENDORESEMENT
WC280601 NH SOLE REPRESENTATIVE END.
WC350601A OK CANCELATION-NONRENEWAL END.
WC370603A PA ACT 86 - 1986 END.
WC380602 RI SAFETY INSPECTION END.
WC370602 PA NOTICE
WC380601 RI DIRECT LIABILITY STATUTE
WC420301D TX AMENDATORY ENDORSEMENT
WC000414 NOTIFICATION OF OWNERSHIP CHNG
WC000311A VOL COMP EMP LIAB COV END
WC040305 VOL COMP EMPL LIAB COV - CA
WC040303B EMPLOYERS LIABILITY COV. END.
WC990312 REPATRIATION EXPENSE END.
WC000106A L AND HW COMP. ACT. COV. END.
WC040101A L AND HW COMP. ACT. COV. - CA
WC000109A OUTER CONTINENTAL SHELF LANDS
WC990641 CA FOREIGN COVERAGE END.
WC990610 FOREIGN COVERAGE ENDORSEMENT
WC000201A MARITIME COVERAGE ENDORSEMENT
WC000203 VOL. COMP. MARITIME COVERAGE
WC000101A DEFENSE BASE ACT COVERAGE END.
WC000104 FED. EMPL. LIAB. ACT COV. END.
WC320301A NC AMEND COVERAGE ENDORSEMENT
WC420310 TX SOLE PROP, OFFICERS, OTHERS
WC000310 SOLE PROP, PARTN, OFFICER COV.
WC420305 TX EXEMPT EMPLOYEES COVERAGE
WC000301A ALTERNATE EMPLOYER ENDORSEMENT
WC450602 VA MANDATORY ENDORSEMENT
WC000302 DESIGNATED WORKPLACES ECLU.
WC990637 IL AMENDMENT TO DEDUCTIBLE END
WC430601 UT WORKPLACE SAFETY PROG END
WC350603 OK FRAUD WARNING ENDORSEMENT
WC240403 MO SAFETY CERTIFICATION END
WC990652 NH NOTICE OF CANCELLATION
WC990634 NC NOTICE OF CANCEL ATION
WC180603A ME CANCELATION AND NONRENEWAL
WC990657 CO NOTICE OF CANCELATION
WC100601A GA CANCEL/NONRENEWAL END.
WC040601A CA CANCELATION END.
WC990304 NOTICE OF CANCELLATION
WC990406 NOTICE OF DIVIDEND CLASSIF.
WC000402 ANNIVERSARY RATING DATE END.
WC420402 TX ANNIVERSARY RATING DATE END
WC040401 ANNIVERSARY RATING DATE END.
WC220402 MN ANNIVERSARY RATING DATE END.
WC990307 LA PUNITIVE DAMAGES END.
WC000313 WAIVER OF OUR RIGHT TO RECOV.

<PAGE> 5
Extension of Information Page WC 00 01A

ENDORSEMENT SCHEDULE

WA1-65D-004110-297
<TABLE>
<CAPTION>

FORM NUMBER FORM NAME
- ----------- ---------
<S> <C>
WC040402 CA MANDATORY RATE CHANGE END.
WC990693 ME DEDUCTIBLE CANCELLATION END.
WC000404 PENDING RATE CHANGE END.
WC990671 OK LOSS REIMBURSEMENT END.
WC200403 MA CONTR. CLASS. PREM. ADJ END
WC090401 FL CONTRACTING CLASS. ADJUST.
WC070402 DE CONSTRUCTION CLASS. ADJUST
WC050402 CO CLASSIFICATION ENDORSEMENT
WC180406A ME NOTICE OF SURCHARGE END.
WC990649R1 DEDUCTIBLE ENDORSEMENT
WC990688 CA DED. END. AMENDATORY END.
WC990651 DEDUCTIBLE ENDORSEMENT
WC990683 PA DEDUCTIBLE ENDORSEMENT
WC990656R1 KS DEDUCTIBLE END
WC290601A NJ LARGE DEDUCTIBLE END.
WC990686 CO DEDUCTIBLE END.
WC990679 UT LARGE DEDUCTIBLE END.
WC990676 AZ LARGE DEDUCTIBLE END.
WC990685 OH EMPLOYERS LIABILITY END.
WC990668 MO DEDUCTIBLE ENDORSEMENT
WC990658 NE DEDUCTIBLE ENDORSEMENT
WC990654 TX DEDUCTIBLE ENDORSEMENT
WC990647R1 DEDUCTIBLE ENDORSEMENT
WC990643R1 DEDUCTIBLE ENDORSEMENT
WC990642 DEDUCTIBLE ENDORSEMENT
WC990638R1 DEDUCTIBLE ENDORSEMENT
WC990631R2 DEDUCTIBLE ENDORSEMENT
WC990627R2 DEDUCTIBLE ENDORSEMENT
WC990625R2 DEDUCTIBLE ENDORSEMENT
WC420601 TX NOTICE OF MATERIAL CHG. END.
WC990695 MD DEDUCTIBLE CANC. END.
WC990304 NOTICE OF CANCELLATION END.
WC990304 NOTICE OF CANCELLATION END.
WC000302 DESIGNATED WORKPLACE EXCL. END.
WC000302 DESIGNATED WORKPLACE EXCL. END.
WC000302 DESIGNATED WORKPLACE EXCL. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
</TABLE>

<PAGE> 6

Extension of Information Page WC 00 01A

ENDORSEMENT SCHEDULE

WA1-65D-004110-297
<TABLE>
<CAPTION>

FORM NUMBER FORM NAME
- ----------- ---------
<S> <C>

WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
</TABLE>

<PAGE> 7
Extension of Information Page WC 00 01 A

ENDORSEMENT SCHEDULE

WA1 -65D-004110-297

FORM NUMBER FORM NAME
- ----------- ---------

WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC4204O6A TX EMP. PROV/CLIENT CO. END.
WC4204O6A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.

<PAGE> 8
Extension of Information Page WC 00 01 A

ENDORSEMENT SCHEDULE

WA1 -65D-004110-297

FORM NUMBER FORM NAME
- ----------- ---------

WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC4204O6A TX EMP. PROV/CLIENT CO. END.
WC4204O6A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.
WC420406A TX EMP. PROV/CLIENT CO. END.

<PAGE> 9
Extension of Information Page WC00 01A

ENDORSEMENT SCHEDULE

WA1-65D-004110-297

FORM NUMBER FORM NAME

ENDORSEMENT SCHEDULE

WA1-65D-004110-297

FORM NUMBER FORM NAME

ENDORSEMENT SCHEDULE

WA1-65D-004110-297

FORM NUMBER FORM NAME

<PAGE> 1

Exhibit 23.2

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Amendment No.1 to Registration Statement
No.333-22933 of Staff Leasing, Inc. on Form S-1 of our report dated February
28, 1997 (March 24, 1997 as to Note 3) on the balance sheet of Staff Leasing,
Inc. and our report dated March 5, 1997 on the consolidated financial
statements of Staff Capital, L.P., appearing in the Prospectus, which is part
of this Registration Statement and our report dated March 5, 1997 relating to
the financial statement schedule of Staff Capital, L.P. appearing elsewhere in
this Registration Statement. We also consent to the reference to us under the
heading "Experts" in such Prospectus.

Deloitte & Touche LLP
Stamford, Connecticut

May 28, 1997

<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 2,241
<SECURITIES> 0
<RECEIVABLES> 37,822
<ALLOWANCES> (606)
<INVENTORY> 0
<CURRENT-ASSETS> 42,710
<PP&E> 17,059
<DEPRECIATION> (3,690)
<TOTAL-ASSETS> 73,278
<CURRENT-LIABILITIES> 73,873
<BONDS> 0
32,220
0
<COMMON> (47,176)
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 73,278
<SALES> 0
<TOTAL-REVENUES> 402,455
<CGS> 0
<TOTAL-COSTS> 382,560
<OTHER-EXPENSES> 16,471
<LOSS-PROVISION> 180
<INTEREST-EXPENSE> 675
<INCOME-PRETAX> 2,711
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,711
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,711
<EPS-PRIMARY> 0
<EPS-DILUTED> 0

</TABLE>