PERSONNEL GROUP OF AMERICA INC, 10-K405, 1997-02-28

PERSONNEL GROUP OF AMERICA INC
10-K405, 1997-02-28
HELP SUPPLY SERVICES

Previous: HOUSEHOLD CONSUMER LOAN CORP, S-1/A, 1997-02-28

Next: PROTECTIVE VARIABLE LIFE SEPARATE ACCOUNT, 24F-2NT, 1997-02-28

<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

-----------------
FORM 10-K
-----------------
(Mark One)
[X]

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 29, 1996
OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

For the transition period from _______________ to _____________

Commission file number 001-13956

PERSONNEL GROUP OF AMERICA, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 56-1930691
- -------------------------------------------------------------- -----------------------------------
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

6302 Fairview Road, Suite, 201
Charlotte, North Carolina 28210
- -------------------------------------------------------------- ------------------------------------
(Address of principal executive offices) (Zip Code)
</TABLE>

(704) 442-5100
------------------
(Registrant's telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

Common Stock, $.10 par value
----------------------------
(Title of Class)

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

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]

The aggregate market value of voting stock held by non-affiliates of
the registrant as of February 14, 1997, computed by reference to the closing
sale price on such date, was $291,578,193. (For purposes of calculating this
amount only, all directors, executive officers and greater than 10% shareholders
of the registrant are treated as affiliates.) As of the same date, 12,074,355
shares of Common Stock, $.01 par value, were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

The Registrant's definitive Proxy Statement pertaining to the 1997
Annual Meeting of Shareholders ("the Proxy Statement") filed with the Commission
pursuant to Regulation 14A are incorporated herein by reference into Part III.

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

<PAGE> 2

PART I.

ITEM 1. BUSINESS

Personnel Group of America, Inc. (the "Company"), is a leading provider
of personnel staffing services to businesses, professional and governmental
organizations. The Company is organized into three Divisions, Commercial
Staffing, Information Technology and Health Care Services, and operates in
strategic markets throughout the United States. The Company's staffing services
include temporary staffing, placement of full time employees, on-site management
of temporary employees, training and testing of temporary and permanent workers
and information technology consulting. At February 14, 1997, the Company
operated through a network of 141 Company-operated, 34 franchised and 17
licensed offices in 37 states and the District of Columbia. Each of the
Company's offices does business under established brand names, most of which
have been continuously in use for more than 16 years.

The Commercial Staffing Division offers a wide variety of temporary
office and clerical services to more than 10,000 organizations nationwide. This
division also provides light technical and light industrial services to its
customers, but these services typically account for less than 25% of the
division's total revenues. The Information Technology Division offers
information technology professionals and consulting services in a range of
computer-related disciplines. The Health Care Services Division provides health
care personnel to supplement the staffing needs of hospitals, nursing homes and
other health care facilities and home health care services and related products
to individuals. For the year ended December 29, 1996 on a pro forma basis, the
Commercial Staffing, Information Technology and Health Care Services Divisions
represented approximately 43%, 30% and 27%of the Company's total revenues,
respectively.

The Company reviews acquisition opportunities in the ordinary course of
business and completed the acquisition of nine companies in eight transactions
in 1996. Four of the companies acquired in 1996 are in the commercial staffing
business and five are in the information technology business. These companies
had pro forma revenues of approximately $180.0 million in 1996. The Health Care
Services Division also converted six franchised offices in 1996 (which had pro
forma 1996 revenues of approximately $16.8 million) into Company-operated
branches.

Since December 29, 1996, the Company has completed the acquisitions of
Word Processing Professionals, Inc. ("Word Processing Professionals") in New
York, New York and Energetix, Inc. ("Energetix") in Chicago, Illinois. Word
Processing Professionals, acquired on January 3, 1997, provides word processing
and desktop publishing services to professional services firms and financial
institutions in mid-town Manhattan. Energetix, acquired on February 3, 1997,
provides information technology staffing services to a variety of clients in the
Chicagoland area. These companies had combined revenues in excess of $13.0
million in 1996.

The Company endeavors to protect its intellectual property rights and
has obtained registrations in the United States of certain of the trademarks,
trade names and service marks that appear in this report.

COMMERCIAL STAFFING DIVISION

At February 14, 1997, the Company operated its Commercial Staffing
Division ("Commercial Staffing") through 73 offices. Commercial Staffing
provides temporary personnel who perform general office and administrative
services, word processing and desktop publishing, office automation, records
management, production/assembly/distribution, telemarketing and other staffing
services. Certain of Commercial Staffing's offices also provide full-time
placement and payrolling services. Payrolling services entail employment by
Commercial Staffing of individuals recruited by a customer on a fee basis.

1
<PAGE> 3

Operations

Commercial Staffing markets its staffing services to local and regional
clients through its network of offices across the United States. The marketing
efforts of Commercial Staffing are decentralized and capitalize on long-standing
business relationships with the clients of Commercial Staffing's companies and
their established brand names, most of which have been in use for more than 16
years. The following table sets forth information at February 14, 1997 on the
names, markets, number of offices and dates founded of Commercial Staffing's
brands:

<TABLE>
<CAPTION>
NUMBER OF DATE
NAME MARKETS OFFICES(1) FOUNDED
---- ------- ---------- -------

<S> <C> <C> <C>
Abar Staffing San Francisco Bay Area, CA 6 1954

Allegheny Personnel (2) Pittsburgh, PA 4 1972

Denver Temporaries (2) Denver, CO 2 1978

FirstWord Staffing Services Dallas, TX 7 1978

Judith Fox Staffing Companies (2) Richmond and Charlottesville, VA 3 1978
New York, NY

Profile Temporaries (2) Loop Area of Chicago, IL 1 1979

Staffinders Personnel Houston, TX 3 1983

Temp Connection New York and Long Island, NY 2 1982

TempWorld Atlanta, GA 15 1980
Birmingham, AL
Washington, DC

Thomas Staffing Los Angeles/Orange County, CA 21 1969
Riverside/San Bernardino, CA
San Diego, CA

West Personnel Service North and West Suburban Chicago, IL 6 1954

Word Processing Professionals(3) New York, NY 1 1982

Word Processors Personnel Services Atlanta, GA 2 1978
- ---------------
</TABLE>

(1) Does not include vendor-on-premises locations at customer sites.
(2) Allegheny and Profile were acquired by the Company in March 1996,
Judith Fox was acquired in May 1996 and Denver Temporaries was acquired
in July 1996.
(3) Word Processing Professionals was acquired by the Company in January
1997.

Commercial Staffing strives to satisfy the needs of its customers by
providing customized services, such as on-site workforce management and
full-time placement services. The flexibility of Commercial Staffing's
decentralized organization allows it to tailor its operations to meet local
client requirements. For example, certain clients are provided with customized
billings, utilization reports and safety awareness and training programs.

To meet the growing demand in the staffing services business for
on-site management capability, Commercial Staffing offers SourcePLUS, its
customized on-site temporary personnel management system. SourcePLUS places an
experienced staffing services manager at the client facility to provide complete
staffing support. This program facilitates client use of temporary personnel and
allows the client to outsource a portion of its personnel responsibility to
Commercial Staffing's on-site representative, who gathers and records requests
for temporary jobs from client department heads and then fulfills client
requirements. These Commercial Staffing representatives can also access
Commercial Staffing's systems through on-site personal computers.

2
<PAGE> 4

Commercial Staffing's full-time placement services provide traditional
staff selection and recruiting services to its clients. In addition to
recruiting employees through referrals, Commercial Staffing places
advertisements in local newspapers to recruit employees for specific positions
at client companies. Commercial Staffing utilizes its expertise and selection
methods to evaluate the applicant's credentials. If the applicant receives and
accepts a full-time position at the client, Commercial Staffing charges the
employer a one-time fee, generally based on the annual salary of the employee.

In order to maintain a consistent quality standard for all its
temporary employees, Commercial Staffing uses a comprehensive automated system
to screen and evaluate potential temporary personnel, make proper assignments
and review a temporary employee's performance. Commercial Staffing uses the
QuestPLUS System to integrate the results of their skills testing with personal
attributes and work history and automatically matches available candidates with
customer requirements.

Sales and Marketing

Commercial Staffing has implemented a business development program to
target potential customers with temporary staffing needs and to maintain and
expand existing customer relationships. Commercial Staffing obtains new clients
primarily through personal sales presentations and referrals from other clients
of the Commercial Staffing and the Information Technology Division and supports
its sales efforts with telemarketing, direct mail solicitation and advertising
in a variety of local and national media, including the Yellow Pages,
newspapers, magazines and trade publications.

Commercial Staffing devotes the majority of its selling efforts to the
local and regional operations of a wide variety of businesses (including a
number of Fortune 500 companies) and to other potential customers that it has
identified as consistent users of temporary staffing services. Local and
regional accounts are characterized by shorter sales cycles and higher gross
margins. Commercial Staffing generally does not seek any national account
agreements, but does provide services to a wide variety of customers with
national and international businesses. Bids for large user accounts and the
provision of services to clients with multiple location requirements are
coordinated at the Company's headquarters.

The commercial staffing business is subject to the seasonal impact of
summer and holiday employment trends. Typically, the second half of the calendar
year is more heavily affected, as companies tend to increase their use of
temporary personnel during this period. While the commercial staffing industry
is cyclical, the Company believes that the broad geographic coverage of its
operations and the diversity of the services it provides (including its emphasis
on high-end white collar clerical workers) generally mitigates the adverse
effects of economic cycles in a single industry or geographic region.

INFORMATION TECHNOLOGY DIVISION

The Company's Information Technology Division (the "IT Division")
provides information technology professionals and consulting services through 19
offices in 13 states. The IT Division employed approximately 1,750 consultants
at February 14, 1997, of which approximately 50% were salaried employees and 50%
were hourly.

The IT Division was created in 1996 following the acquisition by the
Company of five companies in the information technology services business. The
IT Division provides skilled personnel, such as programmers, systems designers,
LAN administrators, systems integrators, helpdesk staff and other technology
specialists, to a wide variety of clients, typically on an as-needed time and
materials basis. The IT Division's staffing services include providing
individuals or teams of computer professionals to corporations and other
organizations that need assistance with project management, analysis, systems
design, programming, maintenance, testing and special technologies for
short-term and long-term information technology projects. These services
encompass a wide variety of tasks, ranging from management of all aspects of
project

3
<PAGE> 5

management services or the implementation of turnkey systems to the fulfillment
of temporary staffing needs for technology projects. The IT Division also
provides information technology outsourcing services for long-term information
technology projects.

Selected offices in the IT Division also provide complementary or
stand-alone consulting services in the information technology area, again
typically on a time and materials basis. For example, BEST Consulting's NewTec
division works with clients, chief executive officers and other executives
interested in alternatives to outsourcing their internal information technology
organization, as well as implementing complex systems integration solutions, and
offers a broad range of consulting services, including systems development
projects and client/server networks that span mainframe, mid-range and desktop
systems. These services are provided at the client's site or at NewTec's
off-site development center. Other IT Division companies also provide consulting
services to supplement their staffing services offerings.

Operations

The following table sets forth information at February 14, 1997 on the
names, markets, number of offices, dates formed and dates acquired of the IT
Division companies:

<TABLE>
<CAPTION>
NUMBER OF DATE DATE
NAME MARKETS OFFICES FORMED ACQUIRED
---- ------- ------- ------ --------
<S> <C> <C> <C> <C>
BEST Consulting Seattle and Olympic WA 10 1990 Sept. 1996
Portland, OR
Salt Lake City, UT
Boise, ID
Sacramento, CA
Phoenix, AZ
Minneapolis, MN
Las Vegas and Reno, NE

Broughton Systems Richmond, VA 1 1981 July 1996

Command Technologies Denver, CO 1 1978 July 1996

Computer Resources Group San Francisco, 4 1972 June 1996
Sacramento and Santa Clara, CA
Salt Lake City, UT

Energetix Chicago, IL 1 1988 Feb. 1997

Software Service Corp. Atlanta, GA 2 1990 Sept. 1996
Birmingham, AL
</TABLE>

Sales and Marketing

The IT Division has developed a sales and marketing strategy that
focuses on both regional and local accounts, and is implemented in a
decentralized manner through its various branch locations. Accounts are targeted
by account managers at the branch offices permitting the IT Division to
capitalize on the brand names of the companies in the IT Division and the local
expertise and established relationships of its branch office employees. Such
accounts are solicited through personal sales presentations, telephone
marketing, direct mail solicitation, referrals from clients and other companies
in the IT and Commercial Staffing Divisions and advertising in a variety of
local and national media. These advertisements appear in the Yellow Pages,
newspapers and trade publications. Local employees are also encouraged to be
active in civic organizations and industry trade groups to facilitate the
development of new customer relationships.

4
<PAGE> 6

HEALTH CARE SERVICES DIVISION

The Company's Health Care Services Division ("Nursefinders") operates
under one brand name and provides health care staffing services through 49
Company-operated, 34 franchised and 17 licensed locations at February 14, 1997.
Nursefinders provides home care services to individuals and health care
personnel for supplemental staffing to hospitals, nursing homes and other health
care institutions. The Company believes that Nursefinders is one of the largest
national providers of home nursing care services in terms of revenue and number
of offices. The Company also believes Nursefinders is the largest provider of
supplemental staffing services to health care institutions.

Nursefinders provides a wide range of licensed and trained personnel
such as registered nurses and licensed practical/vocational nurses, nursing
assistants and technicians, certified aides and companions. Registered nurses
and licensed practical/vocational nurses perform skilled procedures for patients
in the home or in an institutional setting, including nursing assessment and
evaluation, medication administration, infusion therapy, complex therapeutic
treatments and case management. Nursing assistants and technicians perform
personal care and simple procedures for patients in institutional staffing
settings. Home health and personal care aides provide basic personal care,
feeding, dressing and assisting with activities of daily living to the homebound
patient. Companions assist home care patients with meal preparation, shopping
and other light housekeeping tasks. Institutional staffing and home care
services are also provided by physical, occupational, speech and respiratory
therapists and medical social workers. For the year ended December 29, 1996,
approximately 66% of Nursefinders' revenues were derived from providing home
health care services, with the balance derived from health care staffing
services provided to hospitals and other institutions and from franchise fees.

Operations

The Nursefinders brand name has been in use for more than 18 years, and
Nursefinders is recognized as a leading provider of home health care staffing
and related services. Nursefinders' local managers have the flexibility of
determining staff selection, compensation, business mix, marketing and pricing,
which allows each Nursefinders office to respond to local competitive
conditions. Most health care staffing services are purchased at the local level,
and Nursefinders' established reputation has resulted in ongoing referrals in
the communities it serves.

Nursefinders maintains and monitors compliance with precise quality
assurance standards for all of its Company-operated, franchised and licensed
offices. The Company believes these policies and procedures comply with all
local, state and federal regulations for hiring criteria, training programs and
patient care delivery systems. Nursefinders has applied for, and has received
for certain locations, accreditation for Company-operated, franchised and
licensed offices by the Joint Commission on Accreditation of Healthcare
Organizations ("JCAHO"). JCAHO is the recognized national accrediting authority
for health care services, and by participating in the voluntary accreditation
program, Nursefinders is able to better compete in the health care staffing
market. JCAHO has determined that Nursefinders' policies meet JCAHO standards
and began the compliance survey stage of the accreditation review during 1995.

Nursefinders believes that in the provision of home health care the
caregiver is the critical factor in (i) providing and assuring the quality of
care, (ii) coordinating the effective utilization of all home health care
services and products, and (iii) determining the frequency and level of patient
health care intervention. Nursefinders monitors its home care services through
close supervision and evaluation of patient care outcomes. Specific criteria are
used in accepting and discharging patients so that Nursefinders can assure that
patient needs are met in the home setting. Clinical documentation used in home
care patient records meet professional standards of practice, and quarterly
record reviews are performed by health care professionals to validate the
quality and appropriateness of care.

5
<PAGE> 7

With managed care organizations focusing on cost containment, an
increasing number of patients are being transferred from hospitals to lower cost
care settings. Consequently, patients with increasingly complex needs are
receiving care in their homes, and the number of patients requiring multiple
services in the home is also increasing significantly. In order to meet this
need, Nursefinders developed the SingleSource program, in which Nursefinders
contracts with other providers of health care products and services to provide
the full continuum of home health care needs. These services include skilled and
non-skilled nursing care, IV therapy, respiratory, physical, occupational and
speech therapies, home medical equipment and medical supplies. Nursefinders pays
its personnel and subcontractors while billing third party payors at
pre-negotiated rates. The Company believes that Nursefinders' ability to manage
all aspects of home health care as a single source or full service provider with
access to and supervision of home health care personnel positions it as a
provider of choice with managed care organizations.

Managed care and insurance companies are increasingly focusing their
attention on disease states that are expensive to treat because of long hospital
stays. Nursefinders has developed disease-specific early intervention programs
to monitor, and reduce the need for hospitalization of, patients with diabetes,
cancer, cardiovascular conditions and asthma. Nursefinders also is developing
specialty programs to further address the desire of managed care organizations
to reduce costs for psychiatric and pediatric care.

In the midst of the changing health care legislative and regulatory
environment, Nursefinders believes that participation in the Medicare program
remains important. The trend towards home health care services has resulted in
an increase in the portion of health care revenues being remitted through
Medicare and Medicaid. Additionally, Nursefinders believes Medicare
certification serves as a widely recognized indicator of quality and standing in
local communities and is, therefore, important in obtaining desirable business
from physicians, managed care organizations and certain other referral sources.
At February 14, 1997, Nursefinders provided Medicare and Medicaid services
through its Company-operated network of 28 Medicare- or Medicaid-certified
locations. Additionally, six licensed offices and eight franchised offices are
Medicare- and , in some cases, Medicaid-certified. For the year ended December
29, 1996, approximately 32%, 36% and 32% of Nursefinders' revenues were derived
from private pay and other sources, the Medicare and Medicaid programs and
supplemental staffing services, respectively. Nursefinders locations that are
not certified cannot participate in the Medicare and Medicaid programs and
instead derive all their revenues from supplemental staffing, private pay and
other sources.

Sales and Marketing

Home health care staffing services are generally purchased at the local
level, either by case managers on behalf of private insurers or by private
individuals through referrals from physicians, health maintenance organizations
or hospital discharge planners. Nursefinders' marketing efforts for health care
services principally involve direct sales presentations to contract
administrators, utilization review nurses, medical directors and case managers
for managed health care programs, government agencies, social service agencies,
physicians and their staffs, hospital discharge planners, nursing home
supervisors, insurance company representatives and employers with self-funded
employee health benefit programs. Nursefinders also advertises in local and
national media, including the Yellow Pages, newspapers, magazines and trade
publications. Nursefinders has longstanding relationships with clients from whom
it receives referrals and with governmental social service agencies with which
Nursefinders conducts business under non-exclusive contracts that generally are
renewable automatically from year to year.

6
<PAGE> 8

RECRUITING OF TEMPORARY EMPLOYEES

The Company recruits its temporary employees and IT Division
consultants through a recruiting program that primarily utilizes local and
national advertisements. In addition, the Company has succeeded in recruiting
qualified employees through referrals from its existing labor force. To
encourage further referrals, certain of the companies in Commercial Staffing and
IT Divisions have initiated policies whereby they pay referral fees to employees
responsible for attracting new recruits. The Company interviews, tests, checks
references and evaluates the skills of applicants for temporary employment,
utilizing systems and procedures developed and enhanced over the years by the
Company. Additionally, Nursefinders verifies that all of its health care
providers maintain current licenses. In Commercial Staffing and at Nursefinders,
temporary employees are employed by the Company on an as needed basis dependent
upon client demand. These temporary employees are paid only for time they
actually work.

In the IT Division, the demand for technology consultants significantly
exceeds supply. In an effort to attract a wide spectrum of employees, the
Company offers a wide variety of employment options and training programs. The
Company emphasizes the utilization of salaried full-time status for its
consultants with the payment of annual salaries irrespective of assignment. In
addition, the IT Division operates a number of formal and informal training
programs to provide its consultants with access to and training in new software
applications and a diverse mix of mainframe, client/server and personal computer
technologies. The Company believes that these training initiatives have improved
employee recruitment and retention, increased the technical skills of the IT
Division's personnel and resulted in better service for the IT Division's
clients.

ORGANIZATIONAL STRUCTURE

The Company utilizes a combination of Company-operated and, at
Nursefinders, franchised and licensed offices based on the characteristics of
the particular market and the nature of services that the Company markets. At
Nursefinders, the Company focuses its licensing and franchising activities in
smaller and mid-sized markets. In larger markets, the Company employs a
Company-operated branch strategy to permit existing supervisory, advertising,
and administration expenses to be spread over a larger number of offices in
close proximity. The Company believes that its franchise and license network is
a benefit to Nursefinders because its franchises and licenses provide the
Company with a substantial local market presence. The franchise and license
network also provides Nursefinders with royalty and license fee income.

Company-operated Offices

Each Company-operated office reports to a manager who is responsible
for day-to-day operations and the profitability of the office. Depending on,
among other things, the number of Company-operated offices in a region, branch
managers may report to regional managers, division vice presidents or division
presidents. Branch and regional managers are given a high level of autonomy in
making decisions about the operation of their principal region. The compensation
of branch and regional managers includes bonuses generally based on the
incremental year-to-year increase in profitability and is designed to motivate
them to maximize the growth and profitability of their offices.

Franchised Offices

Prior to 1990, Nursefinders offered franchises for Nursefinders
offices. Nursefinders has experienced a low turnover rate in its franchise
operations, with an average tenure of franchise ownership of nine years and
approximately 50% of franchisees operating more than one franchise. At February
14, 1997, Nursefinders' 12 franchisees operated 34 franchised offices.

Nursefinders grants each franchisee the exclusive right to establish an
office and provide Nursefinders' products and services within a designated
geographic area using the Nursefinders trade names, service marks, advertising
materials, sales programs, manuals and forms. Franchisees receive training from

7
<PAGE> 9

Nursefinders, attend seminars, participate in marketing programs and utilize
Nursefinders' sales literature. Nursefinders requires its franchisees to follow
the basic procedures and standards established for its branch and licensed
offices. Nursefinders assists its franchisees in obtaining business from its
national and regional accounts. Nursefinders also makes available to each
franchised office software used by its branch offices to assist in maintaining
availability listings on temporary employees, scheduling employees, maintaining
licensure and other information required by health care providers, and
facilitating the payroll and billing functions.

Franchisees operate their businesses autonomously within the framework
of Nursefinders' policies and standards, and recruit, employ and pay their own
employees. Each franchisee is responsible for screening and recruiting qualified
temporary personnel, as well as obtaining clients. Nursefinders receives a
royalty equal to 5% of each franchisee's sales. Franchisees pay Nursefinders an
initial non-recurring franchise fee of $19,600 partially to cover screening,
training and other start-up costs incurred by Nursefinders in establishing a
franchised office. Franchise agreements are generally for a term of five years,
but are cancelable by the franchisee upon specified prior notice, and renew at
the option of the franchisee for successive five-year periods thereafter.
Nursefinders may terminate a franchise if the franchisee fails to meet
Nursefinders' standards or otherwise breaches the franchise agreement. In recent
periods, termination of franchise agreements has not had a material adverse
impact on the Company, but there can be no assurance that such terminations in
future periods will not have a material adverse effect on Nursefinders' and the
Company's results of operations, financial condition or business prospects.

Licensed Offices

In 1990, Nursefinders began granting licenses instead of franchises
because it believed that the reduced capital requirements of a licensed office
would be more attractive to a larger number of potential licensees and because
it believed that the license arrangement afforded it better control over the
quality of patient care. At February 14, 1997, the Company had 11 licensees
operating 17 licensed offices.

Licensees operate their businesses autonomously within the framework of
Nursefinders' policies and standards, and recruit, employ and pay their own
permanent employees. Licensees must maintain their own insurance coverage for
the licensed office and its permanent employees, including workers'
compensation, general liability and automobile liability insurance coverage.
Licensees enjoy all the benefits afforded to franchisees. In addition, under the
license agreements, Nursefinders employs all temporary employees, pays all
payroll costs of employing the temporary employees, including workers'
compensation and liability insurance and fidelity bonds, bills the customers and
owns the receivables (with recourse to the licensee). The customers of the
licensed operation belong to Nursefinders.

Nursefinders records as revenues the amounts billed to clients of
licensees, and the costs of wages and related benefits are recorded by
Nursefinders as costs of services (the difference between revenues and cost of
services being gross profit). Nursefinders remits monthly to licensees the gross
profit of the licensed office less the sum of 7% of gross revenues,
uncollectible receivables and certain other expenses of each licensed office.

Licensees pay Nursefinders an initial non-recurring license fee of
$19,600 partially to cover screening, training and other start-up costs incurred
by Nursefinders in establishing a licensed office. License agreements are
generally for a term of ten years and renew at the option of the licensee for
successive five-year periods thereafter. Nursefinders may terminate a license if
the licensee fails to meet Nursefinders' standards or otherwise breaches the
agreement. To date, termination of license agreements has not had a material
effect on the Company, but there can be no assurance that such terminations in
future periods will not have a material adverse effect on Nursefinders' and the
Company's results of operations, financial condition or business prospects.

8
<PAGE> 10

AUTOMATED OPERATING SYSTEMS

Commercial Staffing uses a number of automated systems to allow it to
quickly and effectively measure the skills of the temporary employee candidates
that make themselves available and to match skills with client requests. The
ProficiencyPLUS program is designed to test specific computer-related skills by
allowing the candidate to operate in the actual software program environment.
The QuestPLUS system integrates the results of the Company's skills testing with
personal attributes and work history and automatically matches available
candidates with customer requirements. This system also allows the Company to
track the performance of its temporary employees and provide quality reports to
customers that document the level of the Company's performance. Nursefinders
utilizes a similar automated operating system.

The software used in the QuestPLUS system is owned by the Company's
former parent. The Company has entered into an agreement to use the software for
a monthly fee of approximately $13,600 through September 1997, with an option to
extend for an additional year. During this period, the Company intends to
replace the software with comparable software developed in connection with the
implementation of the Company's new branch operating and paybill systems
described below.

The Company has entered into an agreement with a software company for
new branch operating and paybill systems for Commercial Staffing, which will
integrate the results of the Company's skills testing with personal attributes
and work history and automatically match available candidates with customer
requirements. The paybill processing system will provide payroll processing and
customer invoicing. This new system will enhance the QuestPLUS system that is
now utilized. Installation of the new system began in the second quarter of 1996
and is expected to be completed by the end of 1997.

In the IT Division, the Company has entered into an agreement with a
software company for a new branch operating system for the existing information
technology companies. Installation of this new system is expected to begin in
the first quarter of 1997 and be completed for the existing IT Division
companies in 1998.

COMPETITION

The United States staffing services market is highly competitive and
highly fragmented, with more than 15,000 offices competing in the industry, and
has limited barriers to entry. However, the commercial staffing, information
technology staffing and health care staffing industries have been undergoing
significant consolidation. The largest publicly owned companies specializing in
personnel staffing services in the United States are Manpower Inc., Kelly
Services, Inc., Adecco, Inc., The Olsten Corporation, AccuStaff, Incorporated,
Interim Services Inc. and Norrell Corporation, all of which have greater
marketing, financial and other resources than the Company.

In the temporary staffing industry, competition generally is limited to
firms with offices located within a customer's particular local market. In most
major markets, competitors generally include many of the publicly traded
companies and, in addition, numerous regional and local full-service and
specialized temporary service agencies and health care providers, some of which
may operate only in a single market.

Since many clients contract for their staffing services locally,
competition varies from market to market. In most areas, no single company has a
dominant share of the market. Many client companies use more than one staffing
services company, and it is common for large clients to use several staffing
services companies at the same time. However, in recent years, there has been a
significant increase in the number of large customers consolidating their
temporary staffing purchases with a single supplier or with a small number of
firms. The trend to consolidate temporary staffing purchases has in some cases
made it more difficult for the Company to gain business from potential customers
who have already contracted to fill their staffing needs with competitors of the
Company. In other cases, the Company has been able to increase the volume of
business with certain customers who choose to purchase staffing primarily from
the Company.

9
<PAGE> 11

The competitive factors in obtaining and retaining clients include an
understanding of clients' specific job requirements, the ability to provide
appropriately skilled temporary personnel at the local level in a timely manner,
the monitoring of quality of job performance and the price of services. The
primary competitive factors in obtaining qualified candidates for temporary
employment assignments are wages and responsiveness to work schedules and the
number of hours of work available. Management believes that it is highly
competitive in these areas due to its focus on local markets and the autonomy
given to its local management.

REGULATION

Temporary employment service firms are generally subject to one or more
of the following types of government regulation: (i) regulation of the
employer/employee relationship between a firm and its temporary employees; (ii)
registration, licensing, record keeping and reporting requirements; and (iii)
substantive limitations on its operations. Staffing services firms are the legal
employers of their temporary workers. Therefore, such firms are governed by laws
regulating the employer/employee relationship, such as tax withholding or
reporting, social security or retirement, anti-discrimination and workers'
compensation.

The Company's Health Care Services Division is subject to extensive
government regulation under federal, state and local law, including licensing
requirements, certificate of need requirements, Medicare and Medicaid
certification requirements, reimbursement requirements, periodic examinations by
government agencies, federal and state anti-fraud, anti-abuse and anti-kickback
statutes and regulations, and federal and state laws prohibiting physician
ownership or compensation arrangements with home health care agencies to which
they refer patients for home health care services. Health care providers are
also subject to extensive documentation requirements of government agencies and
industry participants, such as insurance companies and managed care companies.

The federal Medicare program in particular has come under renewed
pressure recently to reduce costs. Legislative and administrative responses to
these pressures have focused to date on the implementation of reductions in
permitted allocations of general and administrative expenses as reimbursable
shared costs under the Medicare program and on lower reimbursable cost limits
generally. New HCFA instructions implemented in 1996 relating to the allocation
of administrative costs could restrict the allocation of certain previously
reimbursable shared costs under the program going forward. Additionally, the
President's proposed fiscal year 1998 federal budget submitted to Congress in
February 1997 could have the effect of further lowering reimbursable cost limits
for home health agencies that are Medicare providers. These and other
regulations could affect the ability of the Company to collect its fees for
services provided. There can be no assurance that the Company will be able to
continue to obtain or maintain the required governmental approvals or licenses,
obtain reimbursement for its services or avoid compliance or other problems
under applicable laws and regulations, or that changes in applicable laws or
regulations will not have an adverse effect on its results of operations.

Home health care providers are subject to certificate of need laws in
22 jurisdictions. Some jurisdictions require home health care service providers
to have a certificate of need in order to be licensed to provide home health
care services, including Medicare and Medicaid services, and other jurisdictions
require a certificate of need only to provide Medicare home health care
services. Certificate of need laws restrict the types of care that may be
provided and can limit or eliminate a provider's ability to provide certain
services, including home health care services, to establish or expand operations
and to act as a Medicare or Medicaid provider. The process of obtaining a
certificate of need can be costly and time consuming. The Company currently has
no certificates of need, but offers certain services not restricted by
certificate of need laws in some states which require certificates of need. Some
states in which the Company does business are not currently granting additional
certificates of need. Accordingly, such laws may render it more difficult for
the Company to, or preclude the Company from, expanding the geographic scope of
its home health care services.

New York State requires the approval by the Public Health Council of
the New York State Department of Health ("NYPHC") of any change in "the
controlling person" of an operator of a licensed

10
<PAGE> 12

health care services agency (an "LHCSA") or any transfer, assignment or other
disposition of the stock or voting rights thereunder which results in the change
of ownership or control of more than 10% of the stock or voting rights
thereunder of the LHCSA. "Controlling person" includes a person who either
directly or indirectly possesses the ability to direct or cause the direction of
the actions, management or policies of a person, whether through the ownership
of voting securities or voting rights by contract or otherwise, and includes a
parent corporation that possesses or will possess the ability to direct or cause
the direction of the actions, management or policies of the LHCSA corporation
that is the licensed home health care agency. Control of an entity is presumed
to exist if any person directly or indirectly owns, controls or holds the power
to vote 10% or more of the voting securities of such entity. A person seeking to
become a controlling person of an operator of an LHCSA must file an application
for prior approval from NYPHC. The Company has one office in New York State
which is an LHCSA and which is Medicaid certified. Such office accounted for
less than 2% of the Company's revenues for the year ended December 29, 1996. If
any person should become the owner or holder, or acquire control, of the right
to vote 10% or more of the Common Stock of the Company, such person could not
exercise control of the Company's LHCSA until such ownership, control or holding
has been approved by the NYPHC.

The Company is also subject to various federal and state laws relating
to franchising, principally the Federal Trade Commission's franchise rules and
state franchise registration, disclosure, and relationship laws and state
business opportunity laws.

TRADEMARKS

The Company maintains a number of trademarks, tradenames, service marks
and other intangible rights, and licenses certain other proprietary rights in
connection with its businesses. Certain proprietary rights relating to the
Company's three divisions, including the tradenames Nursefinders and TempWorld,
are licensed from the Company's former parent corporation pursuant to perpetual
licenses, subject to the former parent corporation's right to require the
Company to purchase these rights at a predetermined price. The Company's former
parent has advised the Company that it intends to require the Company to
purchase such rights. The Company is not currently aware of any infringing uses
or other conditions that would materially and adversely affect its use of its
proprietary rights.

EMPLOYEES

At February 14, 1997, the Company had approximately 1,100 permanent
administrative employees, of whom 74 were Nursefinders billable staff who
rendered temporary services to patients, and approximately 1,750 information
technology consultants in the IT Division. During 1996, the Company and its
licensees placed over 50,000 temporary employees with clients. None of the
Company's employees are covered by collective bargaining agreements. The Company
believes that its relationships with its employees are good.

ITEM 2. PROPERTIES

Generally, the Company's offices are leased under leases of relatively
moderate duration (typically three to five years, with options to extend)
containing customary terms and conditions. The Commercial Staffing and IT
Division offices are typically in high quality office or industrial buildings,
and occasionally in retail buildings, the Company's headquarters facilities and
regional offices are in similar facilities. Nursefinders offices are typically
in medical office buildings or parks.

11
<PAGE> 13

ITEM 3. LEGAL PROCEEDINGS

From time to time the Company is involved in certain disputes and
litigation relating to claims arising out of its operations in the ordinary
course of business. Further, the Company periodically is subject to government
audits and inspections. In the opinion of the Company's management, matters
presently pending will not in the aggregate have a material adverse effect on
the Company's results of operation or financial condition.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this report.

12
<PAGE> 14

PART II.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS.

Since September 26, 1995, the Company's common stock, $.01 par value
(the "Common Stock"), has been listed on the New York Stock Exchange under the
symbol "PGA." As of February 14, 1997, there were approximately 4,670
shareholders based on the number of holders of record and an estimate of the
number of individual participants represented by securities position listings.

The Company has paid no cash dividends on its Common Stock with respect
to earnings subsequent to the consummation of the Company's initial public
offering in September 1995. Its policy has been to retain earnings for use in
its business. In addition, the Company's credit agreement with its lenders
currently restricts the payment of dividends, subject to certain terms contained
therein. In the future, the Company's Board of Directors will determine whether
to pay cash dividends based on conditions then existing, including the Company's
earnings, financial condition, capital requirements, financing arrangements and
any other factors deemed relevant by the Board of Directors.

The following table sets forth the reported high and low sales prices
for the Company's common stock during the periods indicated as reported on the
New York Stock Exchange:

<TABLE>
<CAPTION>
1996 HIGH LOW CLOSE
- ---- ---- --- -----
<S> <C> <C> <C>
First Quarter 20 13 18-1/4
Second Quarter 26-1/4 18-3/8 24-5/8
Third Quarter 26 19-7/8 26
Fourth Quarter 29-1/8 19-3/8 24-1/8
</TABLE>

<TABLE>
<CAPTION>
1995
- ----
<S> <C> <C>
First Quarter Not traded
Second Quarter Not traded
Third Quarter 14-1/8 14
Fourth Quarter 15 11
</TABLE>

The last reported sales price on February 14, 1997 was $24.25.

13
<PAGE> 15

ITEM 6. SELECTED FINANCIAL DATA.

The following table sets forth selected consolidated financial data for
the Company as of and for each of the years ended December 1996, 1995, 1994,
1993 and 1992. The consolidated financial data as of and for each of such years
are derived from the consolidated financial statements of the Company, which
have been audited by Arthur Andersen LLP, independent public accountants. The
consolidated financial statements include assets and liabilities at historical
amounts from the consolidated financial statements of the Company's former
parent, and other adjustments intended to reflect the revenues and expenses the
Company would have reported had the enterprise been combined prior to the
beginning of the earliest period presented. The results of operations for all
periods are not necessarily indicative of the results which would have been
obtained had the Company been independent in all periods. The data set forth
below should be read in conjunction with the financial statements and other
financial information, including Management's Discussion and Analysis of
Financial Condition and Results of Operations, included elsewhere in this
report.

(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
RESULTS OF OPERATIONS

<S> <C> <C> <C> <C> <C>
Revenues $ 366,545 $251,055 $211,867 $172,478 $151,388

Direct costs of services 263,277 178,966 155,987 126,286 109,707

Other operating expenses 81,987 59,675 48,920 41,576 41,129

Income before income taxes 19,849 12,414 6,960 4,616 552

Provision for income taxes 8,332 5,305 3,061 2,080 462

Net income $ 11,517 $ 7,109 $ 3,899 $ 2,536 $ 90
========== ======== ======== ======== ========

Net income per share $ 1.13 -- -- -- --
========== ======== ======== ======== ========

Pro forma net income per share(1) $ -- $ 0.89 $ 0.49
========== ======== ========

Weighted average shares 10,216 8,000 8,000
outstanding

FINANCIAL POSITION AT YEAR-END

Working capital $ 36,712 $ 28,969 $ 26,440 $ 21,331 $ 14,190

Total assets 314,327 102,623 90,984 84,333 79,395

Short-and long-term debt 85,722 -- -- -- --

Shareholders' equity 183,257 75,986 68,438 64,257 58,987
- --------------------------
</TABLE>

(1) Pro forma net income per share has been computed assuming the 8,000,000
shares issued in the Company's initial public offering in September 1995 were
outstanding throughout 1995 and 1994.

14
<PAGE> 16

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

INTRODUCTION

The following discussion and analysis should be read in conjunction
with the Company's consolidated financial statements and notes thereto included
elsewhere in this document. The Company's fiscal year ends on the Sunday nearest
to December 31 and the fiscal quarters end on the Sunday nearest to the end of
the respective calendar quarters.

The Company operates within one industry segment and is organized into
three Divisions: the Commercial Staffing Division, which provides a wide variety
of temporary office and clerical staffing services; the Information Technology
Division, which provides information technology staffing and consulting services
in a range of computer-related disciplines; and the Health Care Services
Division, which, through Company operated, franchised and licensed offices,
provides home health care services and supplemental staffing for health care
facilities. At December 29, 1996, the Commercial Staffing Division was comprised
of 12 companies, the Information Technology Division was comprised of five
companies and the Health Care Services Division operated under the Nursefinders
brand.

The following table sets forth the number and nature of the Company's
offices at the end of the years indicated and at February 14, 1997:

<TABLE>
<CAPTION>
FEBRUARY 14,
1997 1996 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Commercial staffing offices 73 74 58 57
Information technology offices 19 18 -- --
Company operated Nursefinders offices 49 50 48 47
Licensed Nursefinders offices 17 17 10 4
Franchised Nursefinders offices 34 33 40 48
--- --- --- ---
Total offices 192 192 156 156
</TABLE>

The Company recognizes as revenues the amounts billed to clients of licensed
Nursefinders offices. In these cases, the temporary workers are the Company's
employees and all costs of employing the temporary workers are the
responsibility of the Company and are included in direct cost of services. The
Company remits monthly to its licensees the gross profits of each licensed
office less 7% of gross revenues, uncollectable receivables and certain other
expenses of the licensed office. The Company does not recognize revenues from
its franchised Nursefinders offices other than a 5% royalty on the gross
revenues of each franchised office.

The Company has not actively marketed new licenses or franchises in
recent periods and, accordingly, franchise and license fees have not been
material. However, the Company views its franchises and licenses as an important
part of the health care services business, because the program allows
Nursefinders to operate in areas that might not otherwise meet the Company's
criteria for a Company operated office, allows a further spreading of fixed
costs over additional revenues, and is believed to yield a fair profit for the
Company services provided to the licensees and franchisees.

The Company completed its initial public offering (the "IPO") in
September 1995. Prior to the IPO , the Company was an indirect wholly owned
subsidiary of Adia, S.A., a Swiss corporation ("Adia"). The Company was
organized by Adia to facilitate the IPO. As a result of the IPO, in which Adia
sold its entire ownership interest in the Company, the Company became an
independent public company. The Company did not receive any of the proceeds of
the sale of its shares by Adia in the IPO.

15
<PAGE> 17

In June 1996, the Company issued 4,025,000 shares of its common stock
in a second underwritten public offering (the "Secondary Offering"), which
raised approximately $95.6 million of net proceeds for the Company. The net
proceeds of the Secondary Offering were used to repay outstanding borrowings
under the Company's revolving credit facility and to fund several recent
acquisitions.

In 1996, the Company acquired four commercial staffing companies and
five information technology companies. The combined revenues of these nine
companies were approximately $180.0 million in 1996. Also in 1996, the Company
converted six former Nursefinders franchised offices, which had combined 1996
revenues of approximately $16.8 million, to Company operated offices by
acquiring the applicable franchises. Had the Company owned each of these nine
acquired companies and six converted franchises at January 1, 1996, the
Company's pro forma 1996 revenues would have been approximately $464.6 million
and 43%, 30% and 27% of such revenues would have come from Commercial Staffing,
Information Technology and Health Care Services, respectively.

Each of the Company's acquisitions to date has been accounted for using
the purchase method of accounting, and has been included in the following
discussion as applicable since the respective date of acquisition. In the
future, the Company's revenues and expenses may be significantly affected by the
number and timing of the opening or acquisition of additional offices or
businesses. The timing of such expansion activities also can affect
period-to-period comparisons of the Company's results of operations.

16
<PAGE> 18

OVERVIEW

The following table summarizes certain income statement information for
the Company for the years ended December 1996, 1995 and 1994:

<TABLE>
<CAPTION>
Percent of Percent of Percent of
1996 revenues 1995 revenues 1994 revenues
---- -------- ---- -------- ---- --------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Commercial Staffing $188,136 51.4% $143,243 57.1% $125,822 59.4%
Information Technology Services 55,472 15.1 -- -- -- --
Health Care Services (including
franchise fees) 122,937 33.5 107,812 42.9 86,045 40.6
-------- ----- -------- ----- -------- -----

Total revenues 366,545 100.0 251,055 100.0 211,867 100.0
-------- ----- -------- ----- -------- -----

Direct cost of services 263,277 71.8 178,966 71.3 155,987 73.6
Selling, general and administrative 68,329 18.7 51,592 20.5 42,842 20.2
Depreciation and amortization 5,969 1.6 3,665 1.5 4,391 2.1
License fees 7,689 2.1 4,418 1.8 1,687 0.8
-------- ----- -------- ----- -------- -----
Total expenses 345,264 94.2 238,641 95.1 204,907 96.7
-------- ----- -------- ----- -------- -----

Operating income 21,281 5.8 12,414 4.9 6,960 3.3

Interest expense 1,432 -- -- -- -- --
-------- ----- -------- ----- -------- -----

Income before income taxes 19,849 5.4 12,414 4.9 6,960 3.3

Income tax expense 8,332 2.3 5,305 2.1 3,061 1.5
-------- ----- -------- ----- -------- -----

Net income $ 11,517 3.1% $ 7,109 2.8% $ 3,899 1.8%
======== ===== ======== ===== ======== =====
</TABLE>

The staffing business is subject to the seasonal impact of summer and
holiday employment trends. Typically, the second six months of each calendar
year is more heavily affected as companies tend to increase their use of
temporary personnel during this period. While the staffing industry is cyclical,
the Company believes that the broad geographic coverage of its operations, and
its emphasis on high-end clerical staffing and information technology staffing
and consulting, mitigate the adverse effects of economic cycles in a single
industry or geographic region.

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 29, 1996 VERSUS YEAR ENDED DECEMBER 31, 1995

REVENUES

Total revenues increased 46.0% to $366.5 million in 1996 from $251.1
million in 1995. Commercial Staffing Division revenue grew 31.3%, primarily as
the result of the contribution of revenues from the four commercial staffing
companies acquired by the Company in 1996, internal growth attributable to
increases in billable hours and billing rates and an improved service mix.
During this period, the Health Care Services Division experienced a 14.0%
increase in revenues (including franchise fees), primarily as a result of the

17
<PAGE> 19

revenues added by the Division from the six franchised office conversions
completed in 1996, increases in home health care visits and billable hours and
increased billing rates and franchise fees. All of the Information Technology
Division's revenues were acquired in 1996.

DIRECT COST OF SERVICES

Direct costs, consisting of payroll and related expenses of temporary
workers, increased 47.1% to $263.3 million from $179.0 million in 1995. Direct
cost of services as a percentage of revenue increased slightly to 71.8% from
71.3% during 1995. This increase reflected the continuing effects of the
reclassification beginning in the fourth quarter of 1995 of certain non-billable
administrative costs in the Health Care Services Division related to the
Medicare program as direct cost of services, offset by increases in billing
rates and an improved service mix and the positive effects of the Company's
expansion into the higher margin information technology services sector.

OTHER OPERATING EXPENSES

Other operating expenses, consisting of selling, general and
administrative expenses, depreciation and amortization expense and license fees,
increased 37.4% to $82.0 million in 1996 from $59.7 million in 1995. As a
percentage of revenues, selling, general and administrative expenses decreased
to 18.7% in 1996 from 20.5% for 1995 primarily as the result of the
reclassification of non-billable administrative cost related to the Medicare
program as discussed above and the spreading of these expenses over a larger
revenue base. Depreciation and amortization expense recognized during 1996
increased to 1.6% of revenues from 1.5% of revenues for 1995 primarily due to
the acquisitions completed during 1996. License fees increased by 74.0% to $7.7
million due primarily to an increase in the number of licensed offices during
the year.

INTEREST EXPENSE

Interest expense increased to $1.4 million in 1996 as the Company
borrowed funds under its revolving credit facility and from certain
owner-sellers at various times during the year primarily to finance
acquisitions. See "Liquidity and Capital Resources." Prior to March 1996, the
Company had not borrowed any funds under the revolving credit facility, and
interest expense had been immaterial.

INCOME TAX EXPENSE

The effective tax rate decreased to 42.0% in 1996 from 42.7% for 1995.
This decrease was due to reductions in nondeductible amortization expense
related to pretax income and in state income taxes attributable to changes in
the Company's business mix geographically among the states. Although the
Company's effective tax rate has historically been higher than the U.S. federal
statutory rate of 35.0% primarily due to this nondeductible amortization
expense, the Company expects that its effective tax rate will continue to
decline gradually as this nondeductible amortization expense declines.

NET INCOME

Net income increased 62.0% to $11.5 million in 1996 (or 3.1% of
revenue) from $7.1 million (2.8% of revenue) in 1995 due to the factors
discussed above.

18
<PAGE> 20

YEAR ENDED DECEMBER 31, 1995 VERSUS YEAR ENDED DECEMBER 25, 1994

REVENUES

Total revenues increased 18.5% to $251.1 million in 1995 from $211.9
million in 1994. Commercial Staffing Division revenue grew 13.8%, primarily as
the result of increases in billable hours and billing rates and an improved
service mix. During this period, the Health Care Services Division experienced a
25.3% increase in revenues (including franchise fees), primarily as a result of
increases in home health care visits and billable hours and increased billing
rates and franchise fees.

DIRECT COST OF SERVICES

Direct costs, consisting of payroll and related expenses of temporary
workers, increased 14.7% to $179.0 million in 1995 from $156.0 million in 1994.
Direct cost of services as a percentage of revenue decreased to 71.3% during
1995 from 73.6% during 1994. This decline reflected faster growth in the Health
Care Services Division during the period, which typically has higher gross
margins, and increases in billing rates and an improved service mix.

OTHER OPERATING EXPENSES

Other operating expenses, consisting of selling, general, and
administrative expenses, depreciation and amortization expenses and license
fees, increased 22.0% to $59.7 million in 1995 from $48.9 million in 1994.
Selling, general and administrative expenses for 1995 as a percentage of total
revenues did not significantly change compared with 1994. Depreciation and
amortization expense recognized during 1995 decreased to 1.5% of revenues from
2.1% of revenues for 1994 primarily due to the completion of the amortization of
certain intangibles as of December 25, 1994, and increased revenues from
licensed Nursefinders' offices. This increase in license fees included $0.8
million related to new licensed offices and $1.1 million related to existing
licensed locations.

INCOME TAX EXPENSE

The effective tax rate decreased to 42.7% for 1995 from 44.0% for 1994.
This decrease was due to a reduction in nondeductible intangible amortization
expense relative to pretax income for the period. The Company's effective tax
rate was higher than the U.S. federal statutory rate of 35.0% primarily due to
the nondeductibility for tax purposes of certain of the Company's intangible
amortization expense.

NET INCOME

Net income increased 82.3% to $7.1 million (2.8% of revenue) in 1995
from $3.9 million (1.8% of revenue) in 1994 due to the factors discussed above.

19
<PAGE> 21

LIQUIDITY AND CAPITAL RESOURCES

The Company's principal uses of cash are to finance receivables and
fund acquisitions and capital expenditures. As of December 29, 1996, receivables
for the Commercial Staffing Division, the Information Technology Division and
the Health Care Services Division remained outstanding an average of 50, 52 and
68 days, respectively, after billing. Health care receivables are generally paid
by insurance companies and governmental agencies and therefore tend to be
outstanding longer than commercial receivables. In the aggregate, days sales
outstanding were 57 at December 29, 1996.

The Company's primary capital expenditure requirements relate to
acquisitions. During 1996, the Company made cash payments and issued notes
aggregating approximately $179.0 million for acquisitions of existing businesses
and for the conversion of six franchised Nursefinders offices to Company
operated offices. In addition, subsequent to December 29, 1996, the Company has
made post-closing payments to former shareholders of $5.9 million. The Company
is also obligated under certain acquisition agreements to repay seller notes
during the next three years of approximately $17.2 million and to make
contingent earnout payments to former shareholders of acquired companies. The
Company anticipates that the cash generated by the operations of the acquired
companies will provide a substantial part of the capital required to fund the
seller notes and earnout payments. The Company is actively seeking acquisition
opportunities and management believes that the Company will continue to make
acquisitions as attractive opportunities become available. The Company intends
to seek additional capital as necessary to fund other potential acquisitions
through one or more funding sources that may include borrowings under the Credit
Facility described below or offerings of debt or equity securities of the
Company. In addition, the Company regularly evaluates its asset base and
business mix and could elect to make changes in order to take advantage of
attractive acquisition opportunities. Cash flow from operations, to the extent
available, may also be used to fund a portion of these expenditures.

The Company also expects to spend approximately one percent (1%) of its
revenues during 1997 on capital expenditures not directly related to
acquisitions. The Company plans to open six offices in the Commercial Staffing
Division in 1997. Start-up costs related to the opening of the new branches
vary, but are expected to approximately $100,000 per branch. Costs for
furniture, fixtures and equipment are capitalized and depreciated, and other
start-up costs are expensed as incurred. New Company operated and licensed
offices impose additional working capital requirements on the Company.

Cash flow provided by operating activities decreased to $7.2 million in
1996 from $10.5 million for 1995, primarily as the result of higher working
capital requirements relating to the Company's revenue growth. Cash used for
investing activities increased to $164.0 million in 1996, from $0.1 million in
1995, reflecting the Company's acquisitions and additions to property and
equipment. Cash flows from financing activities during the same period
approximated $157.6 million, primarily reflecting the net proceeds from the
issuance of 4,025,000 shares of the Company's common stock in the Secondary
Offering completed in June 1996 and net borrowings under the Credit Facility
described below.

The Company has a bank loan agreement providing for a three-year $125.0
million revolving line of credit (the "Credit Facility"). As of December 29,
1996, approximately $67.3 million had been borrowed under the Credit Facility
(most of which was borrowed to consummate the BEST Consulting and SSC
acquisitions) and approximately $2.8 million had been used for the issuance of
undrawn letters of credit to secure the Company's workers' compensation
programs. Borrowings under the Credit Facility bear interest, payable quarterly,
at a rate equal to LIBOR plus a percentage corresponding to the Company's
consolidated leverage ratio, as defined, or the agents' base rate, as defined,
at the Company's option. At December 29, 1996, the majority of the Company's
borrowings under this facility bore interest at approximately 7.0% (or LIBOR
plus 1.35%). The Credit Facility is secured by pledges of the stock of the
Company's subsidiaries and contains customary covenants such as the maintenance
of certain financial ratios, minimum net worth and working capital requirements
and a restriction on the payment of cash dividends on common stock. The Credit
Facility also limits borrowing availability for acquisition-related purposes.

20
<PAGE> 22

The Company believes that cash flow from operations, the current
borrowing capacity under the existing Credit Facility and other available
financing alternatives will be adequate to meet its presently anticipated needs
for working capital, capital expenditures and acquisitions.

INFLATION

The effects of inflation on the Company's operation were not
significant during 1996.

FORWARD-LOOKING INFORMATION

Information or statements contained in this report, other than
historical information, should be considered forward-looking in nature and are
subject to various risks and uncertainties. For instance, the Company's
strategies and expectations involve risks of competition, changing market
conditions, changes in laws and regulations affecting the Company's industries
and numerous other factors discussed in this report and the Company's other
filings with the Securities and Exchange Commission. Accordingly, actual results
may differ materially from those set forth in any such forward-looking
information or statements.

21
<PAGE> 23

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Shareholders of
Personnel Group of America, Inc.:

We have audited the accompanying consolidated balance sheets of Personnel Group
of America, Inc. and subsidiaries (a Delaware corporation) as of December 29,
1996, and December 31, 1995, and the related consolidated statements of income,
shareholders' equity and cash flows for each of the three years in the period
ended December 29, 1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Personnel Group of America, Inc. and subsidiaries as of December 29, 1996, and
December 31, 1995, and the results of their operations and their cash flows for
each of the three years in the period ended December 29, 1996, in conformity
with generally accepted accounting principles.

/s/ Arthur Andersen LLP

Arthur Andersen LLP

Charlotte, North Carolina,
February 7, 1997.

22
<PAGE> 24

PERSONNEL GROUP OF AMERICA, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS -- DECEMBER 29, 1996 AND DECEMBER 31, 1995

(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
ASSETS 1996 1995
------ --------- ----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 6,087 $ 5,273
Accounts receivable, net of allowance for
doubtful accounts of $1,068 and
$514 in 1996 and 1995, respectively,
Prepaid expenses and other current assets 67,849 36,727
Deferred income taxes 3,359 1,889
Total current assets 3,512 3,347
--------- ----------
80,807 47,236

Property and equipment, net 7,845 3,602
Excess of cost over fair value of net assets acquired, net 219,928 50,091
Other intangibles, net 3,815 1,056
Other assets 1,932 638
--------- ----------
Total assets $ 314,327 $ 102,623
========= ==========

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Current portion of long-term debt $ 6,847 $ --
Accounts payable 2,877 222
Accrued liabilities 33,593 16,269
Income taxes payable 778 1,776
Total current liabilities --------- ----------
44,095 18,267

Long-term debt 78,875 --
Deferred income taxes 8,100 8,370
Total liabilities --------- ----------
131,070 26,637
---------- ----------
COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value; shares authorized 5,000;
no shares issued and outstanding -- --
Common stock, $.01 par value; shares authorized 20,000;
12,034 and 8,000 shares issued and outstanding in 1996 and 1995, 120 80
respectively
Additional paid-in capital 169,273 73,559
Retained earnings 13,864 2,347
--------- ----------
Total shareholders' equity 183,257 75,986
--------- ----------
Total liabilities and shareholders' equity $ 314,327 $ 102,623
========= ==========
</TABLE>

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

23
<PAGE> 25

PERSONNEL GROUP OF AMERICA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 29, 1996, DECEMBER 31, 1995
AND JANUARY 1, 1995

(IN THOUSANDS, EXCEPT PER SHARE DATA)

1996 1995 1994
-------- -------- --------
REVENUES $366,545 $251,055 $211,867
-------- -------- --------
<S> <C> <C> <C>
OPERATING EXPENSES:
Direct costs of services 263,277 178,966 155,987
Selling, general and administrative 68,329 51,592 42,842
Depreciation and amortization 5,969 3,665 4,391
License fees 7,689 4,418 1,687
-------- -------- -------
Total operating expenses 345,264 238,641 204,907

OPERATING INCOME 21,281 12,414 6,960

INTEREST EXPENSE 1,432 -- --
-------- -------- -------
INCOME BEFORE INCOME TAXES 19,849 12,414 6,960

PROVISION FOR INCOME TAXES 8,332 5,305 3,061
-------- -------- -------
NET INCOME $ 11,517 $ 7,109 $ 3,899
======== ======== =======

NET INCOME PER SHARE $ 1.13 $ -- $ --

PRO FORMA NET INCOME PER SHARE $ -- $ .89 $ .49
======== ======== =======

WEIGHTED AVERAGE SHARES OUTSTANDING 10,216 8,000 8,000
</TABLE>

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

24
<PAGE> 26

PERSONNEL GROUP OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 29, 1996, DECEMBER 31, 1995
AND JANUARY 1, 1995
(IN THOUSANDS)

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
----------------------- PAID-IN RETAINED SHAREHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS NET ASSETS EQUITY
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, January 2, 1994 -- $ -- $ -- -- $ 64,257 $ 64,257
Capital contributions, net -- -- -- -- 282 282
Net income -- -- -- -- 3,899 3,899

BALANCE, January 1, 1995 -- $ -- $ -- -- $ 68,438 $ 68,438
Cash distributions -- -- -- -- (7,351) (7,351)
Contributions of assets -- -- -- -- 7,790 7,790
Net income -- -- -- 2,347 4,762 7,109
Reclassification of net assets as of September 30, 1995 8,000 80 73,559 -- (73,639) --
--------- --------- --------- --------- --------- ---------

BALANCE, December 31, 1995 8,000 $ 80 $ 73,559 $ 2,347 -- $ 75,986
Issuance of common stock 4,025 40 95,589 -- -- 95,629
Exercises of stock options 9 -- 125 -- -- 125
Net income -- -- -- 11,517 -- 11,517
--------- --------- --------- --------- --------- ---------

BALANCE, December 29, 1996 12,034 $ 120 $ 169,273 $ 13,864 -- $ 183,257
========= ========= ========= ========= ========= =========

</TABLE>

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

25
<PAGE> 27

PERSONNEL GROUP OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 29, 1996, DECEMBER 31, 1995
AND JANUARY 1, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995 1994
--------- -------- -------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 11,517 $ 7,109 $ 3,899
Adjustments to reconcile net income to net cash provided by
operating activities-
Depreciation and amortization 5,969 3,665 4,391
Deferred income taxes, net (435) (140) (469)
Changes in assets and liabilities:
Accounts receivable (11,749) (3,547) (7,322)
Prepaid expenses and other current assets (158) (531) (272)
Other assets (1,155) (384) 57
Accounts payable and accrued liabilities 4,266 2,585 2,740
Income taxes payable (1,026) 1,776 --
--------- -------- -------
Net cash provided by operating activities 7,229 10,553 3,024
--------- -------- -------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (3,793) (840) (3,251)
Acquisitions, net of cash acquired (160,177) -- --
--------- -------- -------
Net cash used in investing activities (163,970) (840) (3,251)
--------- -------- -------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net 95,629 -- --
Proceeds from exercise of stock options 125 -- --
Repayments under credit facility (30,775) -- --
Borrowings under credit facility 98,100 -- --
Repayments of acquired debt (5,524) -- --
Contributions from (distributions to) Adia, net -- (7,351) 282
--------- -------- -------
Net cash provided by (used in) financing 157,555 (7,351) 282
activities --------- -------- -------

Net increase in cash and cash equivalents 814 2,342 55

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 5,273 2,931 2,876
CASH AND CASH EQUIVALENTS AT END OF YEAR --------- -------- -------
$ 6,087 $ 5,273 $ 2,931
========= ======== =======

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash payments during the period for-
Income taxes $ 9,617 $ 3,737 $ 3,530
Interest $ 1,307 $ -- $ --
</TABLE>

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

<PAGE> 28

PERSONNEL GROUP OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

1. ORGANIZATION AND NATURE OF OPERATIONS:

BASIS OF PRESENTATION

Personnel Group of America, Inc. and its subsidiaries (collectively,
the "Company") completed its initial public offering (the "IPO") in September
1995. Prior to the IPO, the Company was an indirect wholly owned subsidiary of
Adia, S.A., a Swiss corporation ("Adia"). The Company was organized by Adia to
facilitate the IPO. In the Company's formation and organization, Adia
transferred to the Company the subsidiaries and divisions that it had previously
owned (and that now comprise the Company's Health Care Services Division and a
portion of the Commercial Staffing Division) in exchange for common stock. The
financial statements of the Company are presented on an historical cost basis,
and all significant intercompany transactions have been eliminated.

As a result of the IPO, in which Adia sold its entire ownership
interest in the Company, the Company became an independent public company. The
Company did not receive any of the proceeds of the sale of its shares by Adia in
the IPO.

NATURE OF OPERATIONS

The Company operates through a network of Company-operated, franchised
and licensed offices. The Company's business is organized into three Divisions:
the Commercial Staffing Division, which provides temporary office, clerical and
light industrial and light technical services; the Information Technology
Division, which provides information technology staffing and consulting services
in a range of computer-related disciplines; and the Health Care Services
Division, which provides health care personnel for home health care services and
institutional staff augmentation. At December 29, 1996, the Commercial Staffing
Division was comprised of twelve companies, the Information Technology Division
was comprised of five companies and the Health Care Services Division operated
under the Nursefinders name. The Health Care Services Division is subject to
extensive federal, state and local laws and government regulations, including
licensing requirements, certificate of need requirements to be a Medicare
provider in some states, periodic examinations by government agencies, and
federal and state antifraud, anti-abuse and anti-kickback statutes and
regulations.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

RECOGNITION OF REVENUE

Other than for the items described below, revenues are recognized upon
the performance of services.

Nursefinders' franchise-related revenues are recognized pursuant to the
specific terms of two different types of agreements (herein referred to as
"Franchise Agreements" and "License Agreements"). For Franchise Agreements, the
Company provides general training, operating, site selection and marketing
programs, administration of insurance and payroll tax obligations and assistance
in tax planning and legal matters. In exchange for these services, the Company
recognizes franchise royalty revenue generally based on 5% of the franchisees'
patient and staffing services revenue. Revenue is recognized upon performance of
patient or staffing service by the franchisee.

27
<PAGE> 29

Existing Franchise Agreements have a five-year term. Under Franchise
Agreements, the Company recognized revenue of $2,825, $3,702 and $3,345 in
1996, 1995 and 1994, respectively. In addition, included in 1995 revenues is a
$405 gain on the cancellation of the Cleveland franchise agreement.

For License Agreements, in addition to the services described above,
the Company employs and pays individuals to perform services for the licensees'
customers, invoices customers, maintains professional liability insurance and
supports the training, office administration, systems and marketing needs of the
licensee. All revenues and expenses generated by the licensee, therefore, belong
to the Company and are included in the Company's revenues and expenses. The
Company is primarily liable for operating expenses. The Company pays the
licensee a license fee, based on gross margin for temporary services less 7% of
revenues, adjusted for uncollectible receivables and certain other expenses.
Gross margin is the difference between the amounts billed to clients less direct
cost of services consisting of direct labor, payroll taxes, insurance and
benefits for temporary employees. License fees are included in other operating
expenses. License Agreements generally have a 10-year term.

Initial agreement fees under both Franchise and License Agreements are
recognized currently as income. These fees are not material.

Medicare revenues are recognized at an amount equivalent to allowable
costs as defined by the Medicare program. Medicare reimbursable costs are
limited by aggregate cost limits and by disallowance of certain costs not
directly resulting from patient care services such as promotion and advertising.
The Company believes it has not exceeded the aggregate cost limits and believes
adequate provisions have been made for any potential disallowances as a result
of future audits.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of cash on hand and highly liquid
investments with original maturities of three months or less.

PROPERTY AND EQUIPMENT

Property and equipment are carried at cost and depreciated on a
straight-line basis over their estimated useful lives (generally three to seven
years). Leasehold improvements are stated at cost and amortized over the shorter
of the lease term or the useful life of the improvements.

EXCESS OF COST OVER FAIR VALUE OF NET ASSETS ACQUIRED AND OTHER INTANGIBLES

The Company's businesses were initially acquired from unrelated third
parties in exchange for cash and other consideration. Excess of cost over fair
value of net assets acquired resulting from such acquisitions have been recorded
on the books of the Company at historical cost and is amortized on a
straight-line basis over 40 years. In January 1995, Adia acquired all of the
remaining outstanding shares of a majority-owned subsidiary. This acquisition
resulted in additional excess of cost over fair value of net assets acquired
being recorded by Adia. The Company recorded its pro rata share ($7,191) of this
excess. Accumulated amortization of excess of cost over fair value of net assets
acquired amounted to $16,131 and $12,941 at December 29, 1996 and December 31,
1995, respectively.

Other intangibles consist primarily of client and employee lists and
covenants not to compete.

The Company evaluates the recoverability of its investment in excess of
cost over fair value of net assets acquired and other intangibles in relation to
anticipated future cash flows on an undiscounted basis. Based on this
assessment, the Company expects its investment in excess of cost over fair value

28
<PAGE> 30

of net assets acquired and other intangibles to be fully recovered.

INCOME TAXES

Deferred tax assets and liabilities are recorded for the expected tax
consequences of temporary differences arising between the tax bases of assets
and liabilities and their reported amounts in accordance with the provisions of
Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes."

The Company's operating results through September 29, 1995 were
included in Adia's consolidated federal income tax return and combined state tax
returns filed in various states. The Company has filed its own consolidated
federal income tax return and various state returns for the periods ending after
September 29, 1995. The income tax provision is calculated on a separate company
basis for all years presented.

NET INCOME PER SHARE

Net income per share has been provided only for periods or quarters
subsequent to the IPO (see Note 15). Pro forma net income per share for all
other periods provided is presented assuming that the weighted average number of
shares outstanding equals the 8,000,000 shares sold by Adia in the IPO. The
impact of stock options on net income per share is not material for any of the
periods presented.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates and
assumptions. These affect the reported amounts of assets, the 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. Actual amounts could differ from those estimates.

3. ACQUISITIONS

During 1996, the Company acquired the following businesses in eight
separate transactions:

<TABLE>
<CAPTION>
NAME OF BUSINESS TYPE OF BUSINESS DATE ACQUIRED
- ---------------- ---------------- -------------
<S> <C> <C>
Profile Temporary Services Commercial Staffing March 1996
Allegheny Personnel Services Commercial Staffing March 1996
Judith Fox Staffing Companies Commercial Staffing May 1996
Computer Resources Group Information Technology June 1996
Broughton Systems Information Technology July 1996
Denver Temporary Services Commercial Staffing July 1996
Command Technologies Information Technology July 1996
BEST Consulting Information Technology September 1996
Software Service Corp. Information Technology September 1996
</TABLE>

In addition, the Company converted six formerly franchised Nursefinders'
officers to Company-operated branches in 1996 (one each in January, March and
April and three in July). The acquisitions and the franchise conversions are
collectively referred to hereinafter as the "Transactions" and the acquired
businesses and converted franchised offices are collectively referred to
hereinafter as the

29
<PAGE> 31

"Acquired Companies." The Acquired Companies had combined annual revenues in
1996 of approximately $197,000.

The Company has paid approximately $179,000 in cash and notes to
consummate the Transactions (which included direct acquisition costs but
excluded contingent earnout payments associated with certain of the
Transactions). In addition, subsequent to December 29, 1996, the Company made
postclosing payments to former shareholders of $5,882. Certain of the
acquisitions provide for additional purchase price consideration upon attainment
of certain earnings targets for various periods during the next three years. Any
additional consideration will be recorded as additional purchase price when paid
and will increase the amount of excess of cost over fair value of net assets
acquired. All of the Transactions have been accounted for using the purchase
method of accounting. Accordingly, the assets and liabilities of the entities
acquired, based on preliminary allocations, were recorded at their estimated
fair values at the dates of the acquisitions and the results of operations of
the Acquired Companies have been included in the Company's consolidated results
of operations from the dates of the respective acquisitions. Final allocation of
the purchase price may result in adjustments to the amounts previously recorded
as excess of cost over fair market value of net assets acquired. The excess of
cost over the estimated fair value of the net assets acquired is being amortized
on a straight-line basis over 40 years.

The following table presents the Company's pro forma consolidated
results of operations for 1996 and 1995, as if the Transactions had occurred on
January 1, 1995:

<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Revenues $464,554 $413,419
Net income 12,421 8,766
Net income per share $ 1.22 $ 1.10
======== ========
Weighted average shares
outstanding 10,216 8,000
======== ========
</TABLE>

30
<PAGE> 32

4. ACCOUNTS RECEIVABLE:

Accounts receivable consisted of the following at December 29, 1996 and
December 31, 1995:

<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Trade accounts receivable $ 61,549 $ 28,190
Medicare/Medicaid, net of contractual allowances 6,712 6,725
Other 656 2,326
-------- --------
68,917 37,241
Less-Allowance for doubtful accounts (1,068) (514)
-------- --------
$ 67,849 $ 36,727
======== ========
</TABLE>

The following table sets forth further information on the Company's
allowance for doubtful accounts:

<TABLE>
<CAPTION>
BALANCE AT CHARGED TO BALANCE
BEGINNING OF COSTS AND AT END OF
YEAR ENDED OF PERIOD EXPENSES DEDUCTIONS PERIOD
- ---------- --------- -------- ---------- ------
<S> <C> <C> <C> <C>
December 29, 1996 $514 $1,627 $(1,073) $1,068
December 31, 1995 547 906 (939) 514
January 1, 1995 697 599 (749) 547
==== ====== ======= ======
</TABLE>

5. PROPERTY AND EQUIPMENT, NET:

Property and equipment, net, consisted of the following at December 29,
1996 and December 31, 1995:

<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Purchased software and computer equipment $ 7,709 $ 3,249
Furniture and other equipment 7,012 5,602
Leasehold improvements 818 659
-------- --------
15,539 9,510
Less - Accumulated depreciation (7,694) (5,908)
-------- --------
$ 7,845 $ 3,602
======== ========
</TABLE>

<PAGE> 33

6. OTHER INTANGIBLE ASSETS:

Other intangible assets consisted of the following at December 29, 1996
and December 31, 1995:

<TABLE>
<CAPTION>
USEFUL
LIVES 1996 1995
------------- -------- --------
<S> <C> <C> <C>
Covenants not to compete 4 to 5 years $ 3,091 $ 4,686
Client and employee lists 5 years 1,265 5,641
Franchise agreements 10 years 100 1,665
Other 5 years 443 881
-------- -------
4,899 12,873
Less - Accumulated amortization (1,084) (11,817)
-------- -------
$ 3,815 $ 1,056
======== =======
</TABLE>

7. ACCRUED LIABILITIES:

Accrued liabilities consisted of the following at December 29, 1996 and
December 31, 1995:

<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Accrued wages and benefits $ 15,852 $ 8,062
Accrued workers' compensation benefits 5,461 5,381
Post-closing payments to former shareholders 5,882 --
Other 6,398 2,826
-------- --------
$ 33,593 $ 16,269
======== ========
</TABLE>

8. EMPLOYEE BENEFIT PLANS:

The Company has 401(k) profit sharing and nonqualified profit sharing
plans, which cover substantially all of its employees. Company contributions or
allocations are made on a discretionary basis for these plans (except for
matching contributions made to 401(k) profit sharing plans as required by the
terms of such plans). Contributions charged to operating expenses were $810,
$706 and $470 for the years ended December 29, 1996, December 31, 1995 and
January 1, 1995, respectively.

The Company does not provide postretirement health care and life
insurance benefits to retired employees or postemployment benefits to terminated
employees.

9. CAPITAL STOCK AND STOCK OPTIONS:

In June 1996, the Company issued 4,025,000 shares of its common stock
in an underwritten public offering (the "Secondary Offering"), which raised
$95,629 for the Company, net of offering expenses. The proceeds from the
Secondary Offering were used to repay outstanding borrowings under the Company's
revolving credit facility (see Note 11) and fund several recent acquisitions
(see Note 3).

The Company's Board of Directors adopted its 1995 Equity Participation
Plan (the "Incentive Plan") to attract and retain officers, key employees,
consultants and directors. An aggregate of 1,200,000 shares of common stock was
authorized for issuance upon exercise of options, stock

32
<PAGE> 34

appreciation rights, and other awards, or as restricted or deferred stock
awards under the Incentive Plan. Incentive stock options may be granted only to
employees and, when granted, have an exercise price equal to at least 100% of
fair market value of common stock on the grant date and a term not longer than
10 years.

In addition, nonemployee directors (including the directors who
administer the plan) are eligible to receive nondiscretionary grants of
nonqualified stock options ("NQSOs") under the Incentive Plan pursuant to a
formula. The NQSOs granted to nonemployee directors are fully vested and
exercisable upon grant and the term of each such option is 10 years. NQSOs may
also be granted to an employee or consultant for any term specified by the
compensation committee of the Board and will provide for the right to purchase
common stock at a specified price which, except with respect to NQSOs intended
to qualify as performance-based compensation, may be less than fair market value
on the date of grant (but not less than par value), and may become exercisable
(at the discretion of the compensation committee) in one or more installments
after the grant date.

A summary of stock option activity follows:

<TABLE>
<CAPTION>
WEIGHTED
SHARES AVERAGE
UNDER PRICE
OPTION PER SHARE
------- -------
<S> <C> <C>
Outstanding, January 1, 1995 -- $ --
Granted in 1995 432,705 13.85
------- -------
Outstanding, December 31, 1995 432,705 13.85
Granted in 1996 420,648 25.31
Exercised 9,310 13.38
Expired 24,090 14.61
------- -------

Outstanding, December 29, 1996 819,953 $ 20.29
======= =======

Exerciseable, December 31, 1995 111,541 $ 13.85
======= =======
Exerciseable, December 29, 1996 263,556 $ 17.85
======= =======
</TABLE>

Pursuant to the requirements of SFAS No. 123, Accounting for
Stock-Based Compensation ("SFAS 123"), the following disclosures are presented
to reflect the Company's pro forma net income for the years ended December 31,
1996 and 1995 as if the fair value method of accounting prescribed by SFAS 123
had been used. In preparing these disclosures, the Company has determined the
value of all options granted during 1996 and 1995 using the minimum value
method, as discussed in SFAS 123, and based on the following weighted average
assumptions used for grants:

<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Risk-free interest rate 6.9% 6.7%
Expected dividend yield 0.0% 0.0%
Expected life 5 years 5 years
</TABLE>

33
<PAGE> 35

Using these assumptions, the fair value of the stock options granted in
1996 and 1995 was approximately $4,920 and $2,744, respectively. Had
compensation expense been determined consistent with SFAS 123, utilizing the
assumptions above and the straight-line amortization method over the vesting
period, the Company's net income would have been reduced to the following pro
forma amounts:

<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Net income, as reported $11,517 $7,109
Net income per share, as reported 1.13 0.89
Pro forma net income 9,922 6,400
Pro forma net income per share $ 0.97 $ 0.80
======= ======
</TABLE>

On February 6, 1996, the Board of Directors of the Company declared a
dividend of one nonvoting preferred share purchase right (a "Right") for each
outstanding share of common stock. The dividend was paid on February 27, 1996,
to the shareholders of record on that date. In the event of an acquisition, or
the announcement of an acquisition, by a party of a beneficial interest of at
least 15% of the Company's common stock, each right would become exercisable
(the "Distribution Date"). Each Right entitles the registered holder to purchase
from the Company one one-hundredth of a share of Series A Junior Participating
Preferred Stock, par value $0.01 per share, of the Company at a price of $95.00
per one one-hundredth of a share of Preferred Stock, subject to adjustment. In
addition, each Right entitles the right holder to certain other rights as
specified in the Company's rights agreement. The Rights are not exercisable
until Distribution Date. The Rights will expire on February 6, 2006 (the "Final
Expiration Date"), unless the Final Expiration Date is extended or unless the
Rights are earlier redeemed or exchanged by the Company.

10. MANAGEMENT FEES:

Prior to the IPO, Adia and its affiliates provided certain services and
paid certain expenses for the Company in exchange for a management fee. These
services included accounting, billing and collections, legal and other selling,
general and administrative expenses. Management of the Company negotiated with
Adia's management to determine the appropriate fee charged based on the
approximate cost of the services provided and the expenses paid by Adia on
behalf of the Company. All transactions between the Company and Adia were
reflected in the consolidated financial statements. Management fees paid to Adia
for the nine month period ended September 1995 and the year ended January 1,
1995 were $426 and $582, respectively. In addition, the Company had cash
clearing transactions with Adia primarily for dividends, estimated tax payments,
management fees and workers' compensation expenses that were recorded in an
intercompany account. Following the IPO, Adia agreed to provide certain services
to the Company pursuant to various written agreements on terms and at prices as
set forth in such agreements. Fees paid to Adia for services following the IPO
were not material.

<PAGE> 36

11. LONG-TERM DEBT:

Long-term debt consisted of the following at December 29, 1996:

<TABLE>
<CAPTION>
1996
----
<S> <C>
$125,000 revolving credit facility due September 30, 1999 $67,325
Notes payable to sellers of the Acquired Companies 17,225
Other notes payable 1,172
-------
85,722
Less current portion 6,847
-------
$78,875
=======
</TABLE>

During 1996, the Company entered into a new revolving credit agreement
with a bank. This agreement was subsequently amended on December 12, 1996 in
connection with the syndication of the loans. Under the terms of the amended and
restated credit agreement, the Company now has available a $125,000 revolving
credit facility (the "Credit Facility").

During 1996, the maximum aggregate outstanding borrowing under the
Credit Facility was $67,325 and the average outstanding balance during the 197
days during the year in which the Company had borrowings was $37,800. In
addition, approximately $2,800 of the Credit Facility has been used for
the issuance of undrawn letters of credit to secure the Company's workers'
compensation program. The daily weighted average interest rate under the Credit
Facility was 6.8% and a commitment fee of 3/8% of the unused line was charged
during 1996. At February 7, 1997, the amount available for borrowing under the
Credit Facility was approximately $30,000.

Borrowings under the Credit Facility bear interest, at a rate equal to
LIBOR plus a percentage corresponding to the Company's consolidated leverage
ratio, as defined, or the agent's base rate, as defined, at the Company's
option. The majority of the Company's borrowings under the Credit Facility bore
interest at an average rate of 7.0% at December 29, 1996. The Credit Facility is
secured by pledges of stock of the Company's subsidiaries and contains customary
covenants such as the maintenance of certain financial ratios, minimum net worth
and working capital requirements and a restriction on the payment of cash
dividends on common stock. The Credit Facility also limits borrowing
availability for acquisition-related purposes. At December 29, 1996, the Company
was in compliance with the covenants contained in the Credit Facility.

The Company issued notes payable in connection with certain of the
Transactions. These notes are due in varying installments and carry variable
interest rates ranging from 6.6% to 6.9% at December 29, 1996.

Scheduled maturities of long-term debt at December 29, 1996 are as
follows:

<PAGE> 37

12. INCOME TAXES:

The provision for income taxes for the years ended December 29, 1996,
December 31, 1995 and January 1, 1995 consisted of the following:

<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Current provision $8,767 $5,445 $3,530
Deferred benefit (435) (140) (469)
------ ------ ------
Total $8,332 $5,305 $3,061
====== ====== ======
</TABLE>

The reconciliation of the effective tax rate is as follows:

<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Federal statutory rate 35.0% 35.0% 35.0%
State taxes, net of federal benefit 4.8 5.0 4.3
Effect of nondeductible amortization and
other 2.2 2.7 4.7
---- ---- ----
Total 42.0% 42.7% 44.0%
==== ==== ====
</TABLE>

The components of the Company's net deferred tax assets and liabilities
were as follows at December 29, 1996 and December 31, 1995:

<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Deferred tax liability - Excess of cost over fair value of
net assets acquired $8,100 $8,370
------ ------
Deferred tax assets-
Accrued workers' compensation 2,237 2,614
Allowance for doubtful accounts and other 1,275 733
------ ------
3,512 3,347
------ ------
Net deferred tax liability $4,588 $5,023
====== ======
</TABLE>

In certain of the Company's acquisitions, the Company was able to
deduct currently, for tax purposes, certain amounts representing purchase price
paid in excess of book value of recorded assets and liabilities. For financial
reporting purposes, this was recorded as excess of cost over fair value of net
assets acquired with a corresponding deferred tax liability related to this
timing difference.

TAX-SHARING AGREEMENT

Generally, Adia is liable for income taxes of the Company for any
taxable period that ends on or before September 29, 1995, and the Company is
liable for income taxes for any period beginning after September 29, 1995.

<PAGE> 38

13. FINANCIAL INSTRUMENTS:

FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of the Company's cash and cash equivalents, accounts
receivable, accounts payable and accrued liabilities approximates the book value
at December 29, 1996, due to the short-term nature of these instruments. The
fair value of the Company's borrowings under the Credit Facility and other
long-term debt approximate the book value at December 29, 1996, because of the
variable rate associated with the borrowings.

CONCENTRATION OF CREDIT RISK

The Company maintains cash and cash equivalents with various financial
institutions.

Credit risk with respect to accounts receivable is dispersed due to the
nature of the business, the large number of customers and the diversity of
industries serviced. The Company performs credit evaluations of its customers.

14. COMMITMENTS AND CONTINGENCIES:

OPERATING LEASES

The Company leases facilities under operating leases, certain of which
require it to pay property taxes, insurance and maintenance costs. Operating
leases for facilities are usually renewable at the Company's option and include
escalation clauses linked to inflation.

Future minimum annual rentals for the next five years are as follows:

<TABLE>
<S> <C>
1997 $ 4,335
1998 3,260
1999 2,232
2000 1,270
2001 and thereafter 1,152
-------
$12,249
=======
</TABLE>

Total rent expense under operating leases amounted to $4,280, $3,151
and $2,991 for the years ended December 29, 1996, December 31, 1995, and
January 1, 1995, respectively.

INSURANCE

The Company maintains a self-insurance program for workers'
compensation and medical and dental claims. The Company accrues liabilities
under this program based on the loss and loss adjustment expenses as estimated
by an outside administrator. At December 29, 1996, the Company had a standby
letter of credit with a bank in connection with a portion of its workers'
compensation program.

The Company is subject to claims and legal actions by patients and
customers in the ordinary course of business. The Company maintains professional
liability insurance for losses.

<PAGE> 39

MEDICARE COST-REIMBURSEMENT PROGRAM

Final determination of amounts earned under the Medicare
cost-reimbursement program are subject to review and audit by appropriate
governmental authorities or their agents. In the opinion of management, adequate
provision has been made for any adjustments that could result from future
Medicare audits.

For the years ended December 29, 1996, December 31, 1995, and January
1, 1995, 9%, 13% and 12% of the Company's revenues, respectively, were derived
from the Medicare program. The Medicare program is subject to statutory and
regulatory changes, retroactive and prospective rate adjustments and
administrative rulings and funding restrictions, all of which could have the
effect of limiting or reducing reimbursement levels for the Company's services.

EMPLOYMENT AGREEMENTS

The Company has agreements with several executive officers providing
for cash compensation and other benefits in the event that a change in control
of the Company occurs.

LEGAL PROCEEDINGS

The Company is involved in various legal actions and claims. In the
opinion of management, after considering appropriate legal advice, the future
resolutions of all actions and claims will not have a material adverse effect on
the Company's consolidated financial position or results of operations.

INDEMNIFICATION

The Company and Adia entered into an indemnification agreement in
connection with the IPO, whereby the Company agreed to indemnify Adia against
certain expenses or losses incurred by Adia arising from the conduct of the
Company's business.

15. SUMMARY OF QUARTERLY FINANCIAL INFORMATION (UNAUDITED):

The following table sets forth quarterly financial information for each
quarter in the years ended December 29, 1996 and December 31, 1995:

<TABLE>
<CAPTION>
1996
----------------------------- -------
FIRST SECOND THIRD FOURTH
------- ------- ------- --------
<S> <C> <C> <C> <C>
Revenues $66,873 $77,867 $99,302 $122,503
Operating expenses 64,282 73,728 93,308 113,946
Net income 1,490 2,250 3,575 4,202
Net income per share $ 0.19 $ 0.26 $ 0.30 $ 0.35
======= ======= ======= ========

</TABLE>

<TABLE>
<CAPTION>
1995
--------------------------------------
FIRST SECOND THIRD FOURTH
------- ------- ------- --------
<S> <C> <C> <C> <C>
Revenues $59,512 $61,260 $63,855 $ 66,428
Operating expenses 57,675 58,194 60,462 62,310
Net income 1,065 1,700 1,997 2,347
Net income per share -- -- -- 0.29
Pro forma net income per share
$ 0.13 $ 0.21 $ 0.25 $ --
======= ======= ======= ========
</TABLE>

38
<PAGE> 40

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

The Company has no disagreements on accounting or financial
disclosure matters with its independent public accountants to report under this
Item 9.

PART III.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

Information contained in the Proxy Statement in the first paragraph
under the caption "Election of Directors--Nominees," and under the caption
"Election of Directors--Directors and Executive Officers," is incorporated
herein by reference in response to this Item 10.

ITEM 11. EXECUTIVE COMPENSATION.

Information contained in the Proxy Statement under the captions
"Election of Directors--Director Compensation" and "Executive Compensation" is
incorporated herein by reference in response to this Item 11.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

Information contained in the Proxy Statement under the caption
"Securities Ownership of Certain Beneficial Owners and Management" is
incorporated by reference herein in response to this Item 12.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Information contained in the Proxy Statement under the caption
"Certain Transactions" is incorporated herein by reference in response to this
Item 13.

39
<PAGE> 41

PART IV.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

a. Documents filed as part of this Report

(1) The following financial statements of the Company and the
Report of Independent Public Accountants are contained in Item 8 above:

CONSOLIDATED FINANCIAL STATEMENTS:

Report of Independent Public Accountants

Consolidated Balance Sheets as of December 29, 1996
and December 31, 1995

Consolidated Statements of Income for the years
ended December 29, 1996, December 31, 1995 and
January 1, 1995

Consolidated Statements of Shareholders' Equity for
the years ended December 29, 1996, December 31, 1995
and January 1, 1995

Consolidated Statements of Cash Flows for the years
ended December 29, 1996, December 31, 1995 and
January 1, 1995

Notes to Consolidated Financial Statements

(2) No financial statement schedules are filed as part of this
report. All financial statement schedules for which provision is made in the
applicable accounting regulations of the Securities and Exchange Commission are
not required under the related instructions, are inapplicable, or the required
information is included elsewhere in the notes to financial statements referred
to above.

(3) Exhibits:

The Exhibits to this Report on Form 10-K are listed in the
accompanying Exhibit Index.

b. Reports on Form 8-K

The Company filed the following Current Reports on Form 8-K during
the fourth quarter of 1996:

<PAGE> 42

Form 8-K, dated September 30, 1996, to report under Item 2,
"Acquisition or Disposition of Assets," the completion of the acquisition of
BEST Consulting (the "BEST 8-K").

Form 8-K/A, dated November 7, 1996, amending the previously filed
BEST 8-K to include certain pro forma financial information relating to the
BEST Consulting acquisition under Item 7, "Financial Statements."

41
<PAGE> 43

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on February 26, 1997.

PERSONNEL GROUP of AMERICA, INC.

By: /s/ Edward P. Drudge, Jr.
-----------------------------------
Edward P. Drudge, Jr.
Chairman and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons in the capacities indicated on
February 26, 1997.

<TABLE>
<CAPTION>
Signature
---------
<S> <C>
/s/ Edward P. Drudge, Jr. Chairman, Chief Executive Officer and Director
- -----------------------------------
Edward P. Drudge, Jr.

/s/ Ken R. Bramlett, Jr. Chief Financial Officer and Senior Vice President
- -----------------------------------
Ken R. Bramlett, Jr.

/s/ Kevin P. Egan Director
- -----------------------------------
Kevin P. Egan

/s/ J. Roger King Director
- -----------------------------------
J. Roger King

/s/ James V. Napier Director
- -----------------------------------
James V. Napier

/s/ William J. Simione, Jr. Director
- -----------------------------------
William J. Simione, Jr.
</TABLE>

<PAGE> 44

EXHIBIT INDEX

<TABLE>
<CAPTION>
FILED HEREWITH
(*), NON-
APPLICABLE (NA)
OR INCORPORATED
BY REFERENCE
FROM
COMPANY REG.
PREVIOUS NO.
EXHIBIT EXHIBIT OR
NUMBER DESCRIPTION NUMBER REPORT
- ------ ----------- ------ --------
<S> <C> <C> <C>
3.1 Amended and Restated Certificate of 3.1 33-95228
Incorporation of the Company

3.2 Amended and Restated Bylaws of the Company 3.2 33-95228

4.0 Specimen Stock Certificate 4.0 33-95228

4.1 Rights Agreement between the Company and 1 0-27792
The First National Bank of Boston

10.1+ 1995 Equity Participation Plan 10.1 10-Q for quarter
ended 9/30/95

10.2+ Management Incentive Compensation Plan 10.2 10-Q for quarter
ended 9/30/95

10.3+# Director and Officer Indemnification 10.3 10-K for year
Agreement of James V. Napier ended 12/31/95

10.4 License Agreement between Adia Services, 10.4 10-Q for quarter
Inc., a California corporation ("Adia ended 9/30/95
California") and StaffPLUS, Inc.

10.5 License Agreement between Adia Services, 10.5 10-Q for quarter
Inc., a Delaware corporation ("Adia ended 9/30/95
Delaware") and Nursefinders, Inc.

10.6 Administrative Services Agreement between 10.6 10-Q for quarter
the Company and Adia California ended 9/30/95

10.7 Paybill Services Agreement between the 10.7 10-Q for quarter
Company and Adia California ended 9/30/95

10.8 Software License Agreement between the 10.8 10-Q for quarter
Company and Adia California ended 9/30/95

10.9+ Employment Agreement between the Company 10.9 10-Q for quarter
and Edward P. Drudge, Jr. ended 9/30/95

</TABLE>

<PAGE> 45
<TABLE>
<CAPTION>
FILED HEREWITH
(*), NON-
APPLICABLE (NA)
OR INCORPORATED
BY REFEREMCE
FROM

COMPANY REG.
PREVIOUS NO.
EXHIBIT EXHIBIT OR
NUMBER DESCRIPTION NUMBER REPORT
- ------- ----------- -------- ------
<S> <C> <C> <C>

10.10+ Employment Agreement between the Company *
and James C. Hunt

10.11+ Employment Agreement between Adia 10.13 33-95228
Delaware, PFI Corp. and Richard L.
Peranton

10.12+ Employment Agreement between the Company *
and Peter R. Sollenne

10.13+ Employment Agreement between the Company *
and Ken R. Bramlett, Jr.

10.14 Indemnification Agreement between the 10.14 10-Q for quarter
Company and Adia Delaware ended 9/30/95

10.15 Tax-Sharing Agreement between the 10.15 10-Q for quarter
Company, Adia Delaware and Adia California ended 9/30/95

10.16 Amended and Restated Non-Qualified *
Profit-Sharing Plan

10.17 Loan Agreement between the Company and 10.17 10-Q for quarter
NationsBank, N.A., as agent ended 9/29/96

10.18 Amendment No. 1 to Loan Agreement between *
the Company and NationsBank, N.A., as
agent

10.19 Asset Purchase Agreement between the 10.19 333-04573
Company and Judith Fox Staffing Companies

10.20 Asset Purchase Agreement between the 10.2 333-04573
Company and Computer Resources Group
</TABLE>

<PAGE> 46

<TABLE>
<CAPTION>
FILED HEREWITH
(*), NON-
APPLICABLE (NA)
OR INCORPORATED
BY REFEREMCE
FROM

COMPANY REG.
PREVIOUS NO.
EXHIBIT EXHIBIT OR
NUMBER DESCRIPTION NUMBER REPORT
- ------- ----------- -------- ------
<S> <C> <C> <C>
10.21 Asset Purchase Agreement between the 2 8-K dated 9/30/96
Company and Business Enterprise Systems
and Technology, Inc. (BEST Consulting)

21.01 Subsidiaries of the Company *

23.01 Consent of Arthur Andersen LLP in *
connection with the Company's
Registration Statement on Form S-8

27.01 Financial data schedule (for SEC filing *
purposes only)
</TABLE>

+Management contract or compensatory plan required to be filed under Item 14(c)
of this report and Item 601 of Regulation S-K of the Securities and Exchange
Commission.

#This Exhibit is substantially identical to Director and Officer
Indemnification Agreements of the same date between the Company and the
following individuals: Edward P. Drudge, Jr., Richard L. Peranton, Kevin P.
Egan, J. Roger King, and William Simione, Jr.

<PAGE> 1
EXHIBIT 10.10

EMPLOYMENT AGREEMENT

THIS AGREEMENT is made and entered into this 2nd day of
January 1997, by and between Personnel Group of America, Inc., a Delaware
corporation (the "Company"), and James C. Hunt ("Executive").

W I T N E S S E T H:

WHEREAS, Executive and the Company deem it to be in their
respective best interests to enter into an agreement providing for the
Company's employment of Executive pursuant to the terms herein stated;

NOW, THEREFORE, in consideration of the premises and the
mutual promises and agreements contained herein, it is hereby agreed as
follows:

1. Effective Date. This Agreement shall be effective as of
the 2nd day of January 1997, which date shall be referred to herein as the
"Effective Date".

2. Position and Duties.

(a) The Company hereby employs Executive: (i) as a
Senior Vice President from the date hereof until the day after the Company's
1996 Form 10-K and Annual Report are filed with the SEC; and (ii) thereafter
through the end of the "Term of Employment" (as herein defined below) as its
Chief Financial Officer and Treasurer. In these capacities, Executive shall
devote his best efforts and his full business time and attention to the
performance of the services customarily incident to such offices and positions
and to such other services of a senior executive nature as may be reasonably
requested by the Board of Directors (the "Board") of the Company, which may
include services for one or more subsidiaries or affiliates of the Company.
Prior to becoming Chief Financial Officer and Treasurer as provided in clause
(ii) above, the parties acknowledge and agree that Executive will have no
supervisory or management responsibility over the Company's financial or
accounting functions. Additionally, the Executive will have no responsibility
or involvement in connection with the 1996 year-end audit process. Executive
shall in his capacity as an employee of the Company be responsible to and obey
the reasonable and lawful directives of the Board.

(b) Executive shall devote his full time and
attention to his duties hereunder, except for sick leave, reasonable vacations,
and excused leaves of absence as more particularly provided herein. Executive
shall use his best efforts during the Term of Employment to protect, encourage,
and promote the interests of the Company.

1
<PAGE> 2

3. Compensation.

(a) Base Salary. The Company shall pay to Executive
during the Term of Employment a minimum salary at the rate of two hundred
twenty-five thousand dollars ($225,000) per calendar year and agrees that such
salary shall be reviewed at least annually. Such salary shall be subject to
discretionary annual increases as determined by the Board of Directors. Such
salary shall be payable in accordance with the Company's normal payroll
procedures. (Executive's annual salary, as set forth above or as it may be
increased from time to time as set forth herein, shall be referred to
hereinafter as "Base Salary.") At no time during the Term of Employment shall
Executive's Base Salary be decreased from the amount of Base Salary then in
effect.

(b) Performance Bonus. In addition to the
compensation otherwise payable to Executive pursuant to this Agreement,
Executive shall be eligible to receive an annual bonus ("Bonus") pursuant to a
performance bonus plan (the "Bonus Plan") as set forth in the Executive's Offer
Letter from the Company dated December 16, 1996.

4. Benefits. During the Term of Employment:

(a) Executive shall be eligible to participate in
any and all life, health and long-term disability insurance programs, pension
and retirement programs, stock option and other incentive compensation
programs, and other fringe benefit programs made available to senior executive
employees of the Company from time to time, and Executive shall be entitled to
receive such other fringe benefits as may be granted to him from time to time
by the Company's Board of Directors.

(b) Executive shall be allowed twenty-eight days of
personal time off (PTO) with pay per calendar year and leaves of absence with
pay on the same basis as other senior executive employees of the Company.

(c) The Company shall reimburse Executive for
reasonable business expenses incurred in performing Executive's duties and
promoting the business of the Company, including, but not limited to,
reasonable entertainment expenses, travel and lodging expenses, following
presentation of documentation in accordance with the Company's business expense
reimbursement policies.

(d) Executive shall be added as an additional named
insured under all liability insurance policies now in force or hereafter
obtained covering any officer or director of the Company in his or her capacity
as an officer or director. Company shall indemnify Executive in his capacity
as an officer or director and hold him harmless from any cost, expense or
liability arising out of or relating to any acts or decisions made by him on
behalf of or in the course of performing services for the Company (to the
maximum extent provided by the Company's Bylaws and applicable law).

2
<PAGE> 3

(e) Executive shall also be allowed such other
benefits as contained in the Executive's Offer Letter from the Company dated
December 16, 1996.

5. Term; Termination of Employment. As used herein, the
phrase "Term of Employment" shall mean the period commencing on the Effective
Date and ending on December 31, 1997; provided, however, that as of the
expiration date of each of (i) the initial Term of Employment and (ii) if
applicable, any Renewal Period (as defined below), the Term of Employment shall
automatically be extended for a one (1) year period (each a "Renewal Period")
unless either the Company or Executive provides six (6) months' notice to the
contrary. Notwithstanding the foregoing, the Term of Employment shall expire
on the first to occur of the following:

(a) Termination by the Company Without Cause or By
Executive With Good Reason. Notwithstanding anything to the contrary in this
Agreement, whether express or implied, the Company may, at any time, terminate
Executive's employment for any reason other than Cause (as defined below) by
giving Executive at least 60 days' prior written notice of the effective date
of termination. In the event Executive's employment hereunder is terminated by
the Company other than for Cause or by Executive for Good Reason (as defined
below), Executive shall be entitled to receive (y) his Base Salary as he would
have received such amounts during the period commencing on the effective date
of such termination and ending on the second anniversary thereof (the "Salary
Continuation Period"), as if Executive were still employed hereunder during the
Salary Continuation Period; and (z) if it has not previously been paid to
Executive, any Bonus to which Executive had become entitled under the Bonus
Plan prior to the effective date of such termination. In addition, all of
Executive's stock options with respect to the Company's stock shall become
immediately and fully exercisable. During the Salary Continuation Period,
Executive and his spouse and dependents shall be entitled to continue to be
covered by all group medical, health and accident insurance or other such
health care arrangements in which Executive was a participant as of the date of
such termination, at the same coverage level and on the same terms and
conditions which applied immediately prior to the date of Executive's
termination of employment, until Executive obtains alternative comparable
coverage under another group plan, which coverage does not contain any
pre-existing condition exclusions or limitations; provided, however, that if,
as the result of the termination of Executive's employment, Executive and/or
his otherwise eligible dependents or beneficiaries shall become ineligible for
benefits under any one or more of the Company's benefit plans, the Company
shall continue to provide Executive and his eligible dependents or
beneficiaries, through other means, with benefits at a level at least
equivalent to the level of benefits for which Executive and his dependents and
beneficiaries were eligible under such plans immediately prior to the date of
Executive's termination of employment. At the termination of the benefits
coverage under the preceding sentence, Executive and his spouse and dependents
shall be entitled to continuation coverage pursuant to Section 4980B of the
Internal Revenue Code of 1986, as amended, Sections 601-608 of the Employee
Retirement Income Security Act of 1974, as amended, and under any other

3
<PAGE> 4

applicable law, to the extent required by such laws, as if Executive had
terminated employment with the Company on the date such benefits coverage
terminates.

For purposes of this Agreement, "Good Reason" shall mean, without the
express written consent of Executive, the occurrence of any of the following
events unless such events are fully corrected within 30 days following written
notification by Executive to the Company that he intends to terminate his
employment hereunder for one of the reasons set forth below:

(i) a material breach by the Company of any
material provision of this Agreement, including, but not
limited to, the assignment to Executive of any duties
inconsistent with Executive's position in the Company or an
adverse alteration in the nature or status of Executive's
responsibilities;

(ii) the Company's requiring the Executive
to be based anywhere other than the metropolitan area where he
currently works and resides; and

(iii) the occurrence of a "Change in
Control" as defined below.

For purposes of this Agreement a "Change in Control" shall mean an
event as a result of which: (i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act")),
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act, except that a person shall be deemed to have "beneficial
ownership" of all securities that such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 50% of the total voting power of the
voting stock of the Company; (ii) the Company consolidates with, or merges with
or into another corporation or sells, assigns, conveys, transfers, leases or
otherwise disposes of all or substantially all of its assets to any person, or
any corporation consolidates with, or merges with or into, the Company, in any
such event pursuant to a transaction in which the outstanding voting stock of
the Company is changed into or exchanged for cash, securities or other
property, other than any such transaction where (A) the outstanding voting
stock of the Company is changed into or exchanged for (x) voting stock of the
surviving or transferee corporation or (y) cash, securities (whether or not
including voting stock) or other property, and (B) the holders of the voting
stock of the Company immediately prior to such transaction own, directly or
indirectly, not less than 50% of the voting power of the voting stock of the
surviving corporation immediately after such transaction; or (iii) during any
period of two consecutive years, individuals who at the beginning of such
period constituted the Board of the Company (together with any new directors
whose election by such Board or whose nomination for election by the
stockholders of the Company was approved by a vote of 66-2/3% of the directors
then still in office who were either directors at the beginning of such period
or whose election or nomination for election was previously so approved) cease
for any reason to constitute a majority of the Board of the Company then in
office; or (iv) the Company is liquidated or dissolved or adopts a plan of
liquidation, provided, however, that a Change in Control shall not include any
going private or leveraged buy-out transaction which is sponsored by Executive
or in which Executive

4
<PAGE> 5

acquires an equity interest materially in excess of his equity interest in the
Company immediately prior to such transaction (each of the events described in
(i), (ii), (iii) or (iv) above, as provided otherwise by the preceding clause
being referred to herein as a "Change in Control").

(b) Termination for Cause. The Company shall have
the right to terminate Executive's employment at any time for Cause by giving
Executive written notice of the effective date of termination (which effective
date may, except as otherwise provided below, be the date of such notice). If
the Company terminates Executive's employment for Cause, Executive shall be
paid his unpaid Base Salary through the date of termination and the amount of
any unpaid Bonus to which Executive had become entitled under the Bonus Plan
prior to the effective date of such termination and the Company shall have no
further obligation hereunder from and after the effective date of termination
and the Company shall have all other rights and remedies available under this
or any other agreement and at law or in equity.

For purposes of this Agreement only, Cause shall mean:

(i) fraud, misappropriation,
embezzlement, or other act of
material misconduct against the
Company or any of its affiliates;

(ii) substantial and willful failure to
perform specific and lawful
directives of the Board, as
reasonably determined by the Board;

(iii) willful and knowing violation of any
rules or regulations of any
governmental or regulatory body,
which is materially injurious to the
financial condition of the Company;
or

(iv) conviction of or plea of guilty or
nolo contendere to a felony;

provided, however, that with regard to subparagraph (ii) above, Executive may
not be terminated for Cause unless and until the Board has given him reasonable
written notice of its intended actions and specifically describing the alleged
events, activities or omissions giving rise thereto and with respect to those
events, activities or omissions for which a cure is possible, a reasonable
opportunity to cure such breach; and provided further, however, that for
purposes of determining whether any such Cause is present, no act or failure to
act by Executive shall be considered "willful" if done or omitted to be done by
Executive in good faith and in the reasonable belief that such act or omission
was in the best interest of the Company and/or required by applicable law.

5
<PAGE> 6

(c) Termination on Account of Death. In the event
of Executive's death while in the employ of the Company, his employment
hereunder shall terminate on the date of his death and Executive shall be paid
his unpaid Base Salary through the date of termination and the amount of any
unpaid Bonus to which Executive had become entitled under the Bonus Plan prior
to the effective date of such termination. In addition, any other benefits
payable on behalf of Executive shall be determined under the Company's
insurance and other compensation and benefit plans and programs then in effect
in accordance with the terms of such programs.

(d) Voluntary Termination by Executive. In the
event that Executive's employment with the Company is voluntarily terminated by
Executive other than for Good Reason, Executive shall be paid his unpaid Base
Salary through the date of termination and the amount of any unpaid Bonus to
which Executive had become entitled under the Bonus Plan prior to the effective
date of such termination, and the Company shall have no further obligation
hereunder from and after the effective date of termination and the Company
shall have all other rights and remedies available under this Agreement or any
other agreement and at law or in equity. Executive shall give the Company at
least 30 days' advance written notice of his intention to terminate his
employment hereunder.

(e) Termination on Account of Disability. To the
extent not prohibited by The Americans With Disabilities Act of 1990 or the
North Carolina Handicapped Persons Protection Act if, as a result of
Executive's incapacity due to physical or mental illness (as determined in good
faith by a physician acceptable to the Company and Executive), Executive shall
have been absent from the full-time performance of his duties with the Company
for 120 consecutive days during any twelve (12) month period or if a physician
acceptable to the Company advises the Company that it is likely that Executive
will be unable to return to the full-time performance of his duties for 120
consecutive days during the succeeding twelve (12) month period, his employment
may be terminated for "Disability." During any period that Executive fails to
perform his full-time duties with the Company as a result of incapacity due to
physical or mental illness, he shall continue to receive his Base Salary, Bonus
and other benefits provided hereunder, together with all compensation payable
to him under the Company's disability plan or program or other similar plan
during such period, until Executive's employment hereunder is terminated
pursuant to this Section 5(e). Thereafter, Executive's benefits shall be
determined under the Company's retirement, insurance, and other compensation
and benefit plans and programs then in effect, in accordance with the terms of
such programs.

6
<PAGE> 7

6. Confidential Information, Non-Solicitation and
Non-Competition.

(a) During the Term of Employment and for two (2)
years thereafter, Executive shall not, except as may be required to perform his
duties hereunder or as required by applicable law, disclose to others or use,
whether directly or indirectly, any Confidential Information regarding the
Company. "Confidential Information" shall mean information about the Company,
its subsidiaries and affiliates, and their respective clients and customers
that is not available to the general public and that was learned by Executive
in the course of his employment by the Company, including (without limitation)
any proprietary knowledge, trade secrets, data, formulae, information, and
client and customer lists and all papers, resumes, records (including computer
records) and the documents containing such Confidential Information. Executive
acknowledges that such Confidential Information is specialized, unique in
nature and of great value to the Company, and that such information gives the
Company a competitive advantage. Upon the termination of his employment for
any reason whatsoever, Executive shall promptly deliver to the Company all
documents, computer tapes and disks (and all copies thereof) containing any
Confidential Information.

(b) During the Term of Employment and for two (2)
years thereafter, Executive shall not, directly or indirectly in any manner or
capacity (e.g., as an advisor, principal, agent, partner, officer, director,
shareholder, employee, member of any association or otherwise) engage in, work
for, consult, provide advice or assistance or otherwise participate in any
activity which is competitive with the business of the Company, in any
geographic area in which the Company is now or shall then be doing business,
including without limitation, those geographic areas set forth on Exhibit A
hereto. Executive further agrees that during such period he will not assist or
encourage any other person in carrying out any activity that would be
prohibited by the foregoing provisions of this Section 6 if such activity were
carried out by Executive and, in particular, Executive agrees that he will not
induce any employee of the Company to carry out any such activity; provided,
however, that the "beneficial ownership" by Executive, either individually or
as a member of a "group," as such terms are used in Rule 13d of the General
Rules and Regulations under the Exchange Act, of not more than five percent
(5%) of the voting stock of any publicly held corporation shall not be a
violation of this Agreement. It is further expressly agreed that the Company
will or would suffer irreparable injury if Executive were to compete with the
Company or any subsidiary or affiliate of the Company in violation of this
Agreement and that the Company would by reason of such competition be entitled
to injunctive relief in a court of appropriate jurisdiction, and Executive
further consents and stipulates to the entry of such injunctive relief in such
a court prohibiting Executive from competing with the Company or any subsidiary
or affiliate of the Company in violation of this Agreement.

(c) During the Term of Employment and for two (2)
years thereafter, Executive shall not, directly or indirectly, influence or
attempt to influence customers or suppliers of the Company or any of its
subsidiaries or affiliates, to divert their business to any competitor of the
Company.

7
<PAGE> 8

(d) Executive recognizes that he will possess
confidential information about other employees of the Company relating to their
education, experience, skills, abilities, compensation and benefits, and
interpersonal relationships with customers of the Company. Executive
recognizes that the information he will possess about these other employees is
not generally known, is of substantial value to the Company in developing its
business and in securing and retaining customers, and will be acquired by him
because of his business position with the Company. Executive agrees that,
during the Term of Employment, and for a period of two (2) years thereafter, he
will not, directly or indirectly, solicit or recruit any employee of the
Company for the purpose of being employed by him or by any competitor of the
Company on whose behalf he is acting as an agent, representative or employee
and that he will not convey any such confidential information or trade secrets
about other employees of the Company to any other person.

(e) If it is determined by a court of competent
jurisdiction in any state that any restriction in this Section 6 is excessive
in duration or scope or is unreasonable or unenforceable under the laws of that
state, it is the intention of the parties that such restriction may be modified
or amended by the court to render it enforceable to the maximum extent
permitted by the law of that state.

(f) Executive acknowledges that he was informed
of the time, territory, scope and other essential requirements of the
restrictions in this Section 6 when he agreed to become employed with the
Company under the terms set forth in this Agreement, and Executive further
acknowledges that he has received sufficient and valuable consideration for his
agreement to such restrictions.

7. No Offset - No Mitigation. Executive shall not be
required to mitigate damages under this Agreement by seeking other comparable
employment. The amount of any payment or benefit provided for in this
Agreement, including welfare benefits, shall not be reduced by any compensation
or benefits earned by or provided to him as the result of employment by another
employer, except as provided otherwise in Section 5(a) with respect to health
and insurance benefits provided during the Salary Continuation Period.

8. Designated Beneficiary. In the event of the death of
Executive while in the employ of the Company, or at any time thereafter during
which amounts remain payable to Executive under Section 5, such payments (other
than the right to continuation of welfare benefits) shall thereafter be made to
such person or persons as Executive may specifically designate (successively or
contingently) to receive payments under this Agreement following Executive's
death by filing a written beneficiary designation with the Company during
Executive's lifetime. Such beneficiary designation shall be in such form as
may be prescribed by the Company and may be amended from time to time or may be
revoked by Executive pursuant to written instruments filed with the Company
during his lifetime. Beneficiaries designated by Executive may be any natural
or legal person or persons, including a fiduciary, such as a trustee or a trust
or the legal representative of an estate. Unless otherwise provided

8
<PAGE> 9

by the beneficiary designation filed by Executive, if all of the persons so
designated die before Executive on the occurrence of a contingency not
contemplated in such beneficiary designation, then the amounts payable under
this Agreement shall be paid to Executive's estate.

9. Taxes. All payments to be made to Executive under this
Agreement will be subject to any applicable withholding of federal, state and
local income and employment taxes.

10. Miscellaneous. This Agreement shall also be subject to
the following miscellaneous considerations:

(a) Executive and the Company each represent and
warrant to the other that he or it has the authorization, power and right to
deliver, execute, and fully perform his or its obligations under this Agreement
in accordance with its terms.

(b) Except as set forth in Executive's Offer Letter
from the Company dated December 16, 1996, this Agreement contains a complete
statement of all the arrangements between the parties with respect to
Executive's employment by the Company; this Agreement supersedes all prior and
existing negotiations and agreements between the parties concerning Executive's
employment other than the Offer Letter; and this Agreement can only be changed
or modified pursuant to a written instrument duly executed by each of the
parties hereto.

(c) If any provision of this Agreement or any
portion thereof is declared invalid, illegal, or incapable of being enforced by
any court of competent jurisdiction, the remainder of such provisions and all
of the remaining provisions of this Agreement shall continue in full force and
effect.

(d) This Agreement shall be governed by and
construed in accordance with the internal laws of the State of North Carolina,
except to the extent governed by federal law.

(e) The Company may assign this Agreement to any
direct or indirect subsidiary or parent of the Company or joint venture in
which the Company has an interest, or any successor (whether by merger,
consolidation, purchase or otherwise) to all or substantially all of the stock,
assets or business of the Company and this Agreement shall be binding upon and
inure to the benefit of such successors and assigns. Except as expressly
provided herein, Executive may not sell, transfer, assign, or pledge any of his
rights or interests pursuant to this Agreement.

(f) Any rights of Executive hereunder shall be in
addition to any rights Executive may otherwise have under benefit plans,
agreements, or arrangements of the Company to which he is a party or in which
he is a participant, including, but not limited to, any Company-sponsored
employee benefit plans. Provisions of this Agreement shall not in any way
abrogate Executive's rights under such other plans, agreements, or
arrangements.

9
<PAGE> 10

(g) For the purpose of this Agreement, notices and
all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States certified or registered mail, return receipt requested, postage prepaid,
addressed to the named Executive at the address set forth below under his
signature; provided that all notices to the Company shall be directed to the
attention of the Board with a copy to the Secretary of the Company, or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.

(h) Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of
this Agreement for any other purpose.

(i) Failure to insist upon strict compliance with
any of the terms, covenants, or conditions hereof shall not be deemed a waiver
of such term, covenant, or condition, nor shall any waiver or relinquishment
of, or failure to insist upon strict compliance with, any right or power
hereunder at any one or more times be deemed a waiver or relinquishment of such
right or power at any other time or times.

(j) This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

11. Resolution of Disputes. Any dispute or controversy
arising under or in connection with this Agreement shall be settled exclusively
by arbitration, conducted before a panel of three arbitrators in the City of
Charlotte, North Carolina in accordance with the rules of the American
Arbitration Association then in effect. The Company and Executive hereby agree
that the arbitrator will not have the authority to award punitive damages,
damages for emotional distress or any other damages that are not contractual in
nature. Judgment may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that the Company shall be entitled to seek a
restraining order or injunction in any court of competent jurisdiction to
prevent any continuation of any violation of the provisions of Section 6, and
Executive consents that such restraining order or injunction may be granted
without the necessity of the Company's posting any bond except to the extent
otherwise required by applicable law. The expense of such arbitration shall be
borne by the Company.

10
<PAGE> 11

not limited to, reasonable fees and expenses of attorneys and expert witnesses,
including costs of appeal. If such successful party shall recover judgment in
any such action or proceeding, such costs, expenses and fees may be included in
and as part of such judgment. The successful party shall be the party who is
entitled to recover his costs of suit, whether or not the suit proceeds to
final judgment. If no costs are awarded, the successful party shall be
determined by the arbitrator or court, as the case may be.

11
<PAGE> 12

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

EXECUTIVE COMPANY

PERSONNEL GROUP OF AMERICA, INC.

/s/ James C. Hunt By: /s/ Edward P. Drudge, Jr.
- --------------------------- -------------------------------
JAMES C. HUNT
Name: Edward P. Drudge, Jr.
Title: Chairman of the Board and
Chief Executive Officer

Address:

3518 Bellevue Lane
Charlotte, NC 28226

<PAGE> 1
EXHIBIT 10.12

EMPLOYMENT AGREEMENT

THIS AGREEMENT is made and entered into this 1st day of
October 1996, by and between Personnel Group of America, Inc., a Delaware
corporation (the "Company"), and Peter Sollenne ("Executive").

W I T N E S S E T H:

WHEREAS, Executive and the Company deem it to be in their
respective best interests to enter into an agreement providing for the
Company's employment of Executive pursuant to the terms herein stated;

NOW, THEREFORE, in consideration of the premises and the
mutual promises and agreements contained herein, it is hereby agreed as
follows:

1. Effective Date. This Agreement shall be effective as of
the 1st day of October 1996, which date shall be referred to herein as the
"Effective Date".

2. Position and Duties.

(a) The Company hereby employs Executive as its
President of Commercial Staffing Division commencing as of the Effective
Date for the "Term of Employment" (as herein defined below). In this capacity,
Executive shall devote his best efforts and his full business time and
attention to the performance of the services customarily incident to such
offices and position and to such other services of a senior executive nature as
may be reasonably requested by the Chairman and Chief Executive Officer of the
Company which may include services for one or more subsidiaries or affiliates
of the Company. Executive shall in his capacity as an employee and officer of
the Company be responsible to and obey the reasonable and lawful directives of
the Chief Executive Officer.

(b) Executive shall devote his full time and
attention to such duties, except for sick leave, reasonable vacations, and
excused leaves of absence as more particularly provided herein. Executive
shall use his best efforts during the Term of Employment to protect, encourage,
and promote the interests of the Company.

3. Compensation.

(a) Base Salary. The Company shall pay to Executive
during the Term of Employment a minimum salary at the rate of two hundred
thousand dollars ($200,000) per calendar year and agrees that such salary
shall be reviewed at least annually. Such salary shall be subject to
discretionary annual increases as determined by the Board of Directors. Such
salary shall be payable in accordance with the Company's normal payroll
procedures. (Executive's annual salary, as set forth above or as it may be
increased from time to time as set forth herein, shall be referred to
hereinafter as "Base Salary.") At no time during the
<PAGE> 2

Term of Employment shall Executive's Base Salary be decreased from the amount
of Base Salary then in effect.

(b) Performance Bonus. In addition to the
compensation otherwise payable to Executive pursuant to this Agreement,
Executive shall be eligible to receive an annual bonus ("Bonus") pursuant to a
performance bonus plan (the "Bonus Plan") which shall be established by the
Company for its senior executive officers and which shall provide for bonus
compensation to be payable based upon the financial and other performance of
the Company and its senior executives.

4. Benefits. During the Term of Employment:

(a) Executive shall be eligible to participate in
any life, health and long-term disability insurance programs, pension and
retirement programs, stock option and other incentive compensation programs,
and other fringe benefit programs made available to senior executive employees
of the Company from time to time, and Executive shall be entitled to receive
such other fringe benefits as may be granted to his from time to time by the
Company.

(b) Executive shall be allowed 28 days of paid time
off (PTO) per calendar year and leaves of absence with pay on the same basis as
other senior executive employees of the Company.

5. Term; Termination of Employment. As used herein, the
phrase "Term of Employment" shall mean the period commencing on the Effective
Date and ending on September 30, 1997; provided, however, that as of the
expiration date of each of (i) the initial Term of Employment and (ii) if
applicable, any Renewal Period (as defined below), the Term of Employment shall
automatically be extended for a one (1) year period (each a "Renewal Period")
unless either the Company or Executive provides six (6) months' notice to the
contrary. Notwithstanding the foregoing, the Term of Employment shall expire
on the first to occur of the following:

2
<PAGE> 3

such amounts during the period commencing on the effective date of such
termination and ending on the First Anniversary thereof (the "Salary
Continuation Period"), as if Executive were still employed hereunder during the
Salary Continuation Period; and (z) if it has not previously been paid to
Executive, any Bonus to which Executive had become entitled under the Bonus
Plan prior to the effective date of such termination. In addition, all of
Executive's stock options with respect to the Company's stock shall become
immediately and fully exercisable. During the Salary Continuation Period,
Executive and his spouse and dependents shall be entitled to continue to be
covered by all group medical, health and accident insurance or other such
health care arrangements in which Executive was a participant as of the date of
such termination, at the same coverage level and on the same terms and
conditions which applied immediately prior to the date of Executive's
termination of employment, until Executive obtains alternative comparable
coverage under another group plan, which coverage does not contain any
pre-existing condition exclusions or limitations; provided, however, that if,
as the result of the termination of Executive's employment, Executive and/or
his otherwise eligible dependents or beneficiaries shall become ineligible for
benefits under any one or more of the Company's benefit plans, the Company
shall continue to provide Executive and his eligible dependents or
beneficiaries, through other means, with benefits at a level at least
equivalent to the level of benefits for which Executive and his dependents and
beneficiaries were eligible under such plans immediately prior to the date of
Executive's termination of employment. At the termination of the benefits
coverage under the preceding sentence, Executive and his spouse and dependents
shall be entitled to continuation coverage pursuant to Section 4980B of the
Internal Revenue Code of 1986, as amended, Sections 601-608 of the Employee
Retirement Income Security Act of 1974, as amended, and under any other
applicable law, to the extent required by such laws, as if Executive had
terminated employment with the Company on the date such benefits coverage
terminates.

(ii) the Company's requiring the Executive
to be based anywhere other than the metropolitan area where he
currently works and resides; and

(iii) the occurrence of a "Change in Control"
as defined below.

3
<PAGE> 4

defined in Rule 13d-3 under the Exchange Act, except that a person shall be
deemed to have "beneficial ownership" of all securities that such person has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, of more than 50% of the
total voting power of the voting stock of the Company; (ii) the Company
consolidates with, or merges with or into another corporation or sells,
assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of its assets to any person, or any corporation consolidates
with, or merges with or into, the Company, in any such event pursuant to a
transaction in which the outstanding voting stock of the Company is changed
into or exchanged for cash, securities or other property, other than any such
transaction where (A) the outstanding voting stock of the Company is changed
into or exchanged for (x) voting stock of the surviving or transferee
corporation or (y) cash, securities (whether or not including voting stock) or
other property, and (B) the holders of the voting stock of the Company
immediately prior to such transaction own, directly or indirectly, not less
than 50% of the voting power of the voting stock of the surviving corporation
immediately after such transaction; or (iii) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Board of the Company (together with any new directors whose election by
such Board or whose nomination for election by the stockholders of the Company
was approved by a vote of 66-2/3% of the directors then still in office who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of the Company then in office; or (iv) the
Company is liquidated or dissolved or adopts a plan of liquidation, provided,
however, that a Change in Control shall not include any going private or
leveraged buy-out transaction which is sponsored by Executive or in which
Executive acquires an equity interest materially in excess of his equity
interest in the Company immediately prior to such transaction (each of the
events described in (i), (ii), (iii) or (iv) above, as provided otherwise by
the preceding clause being referred to herein as a "Change in Control").

For purposes of this Agreement only, Cause shall mean:

i) fraud, misappropriation, embezzlement, or
other act of material misconduct against the
Company or any of its affiliates;

4
<PAGE> 5

ii) substantial and willful failure to
perform specific and lawful directives of the
Board, as reasonably determined by the Board;

iii) willful and knowing violation of any
rules or regulations of any governmental or
regulatory body, which is materially
injurious to the financial condition of the
Company; or

iv) conviction of or plea of guilty or nolo
contendere to a felony;

provided, however, that with regard to subparagraph (ii) above, Executive may
not be terminated for Cause unless and until the Company has given his
reasonable written notice of its intended actions and specifically describing
the alleged events, activities or omissions giving rise thereto and with
respect to those events, activities or omissions for which a cure is possible,
a reasonable opportunity to cure such breach; and provided further, however,
that for purposes of determining whether any such Cause is present, no act or
failure to act by Executive shall be considered "willful" if done or omitted to
be done by Executive in good faith and in the reasonable belief that such act
or omission was in the best interest of the Company and/or required by
applicable law.

(d) Voluntary Termination by Executive. In the
event that Executive's employment with the Company is voluntarily terminated by
Executive other than for Good Reason, Executive shall be paid his unpaid Base
Salary through the date of termination and the amount of any unpaid Bonus to
which Executive had become entitled under the Bonus Plan prior to the effective
date of such termination, and the Company shall have no further obligation
hereunder from and after the effective date of termination and the Company
shall have all other rights and remedies available under this Agreement or any
other agreement and at law or in equity. Executive shall give the Company at
least 60 days' advance written notice of his intention to terminate his
employment hereunder.

5
<PAGE> 6

Company advises the Company that it is likely that Executive will be unable to
return to the full-time performance of his duties for 120 consecutive days
during the succeeding twelve (12) month period, his employment may be
terminated for "Disability." During any period that Executive fails to perform
his full-time duties with the Company as a result of incapacity due to physical
or mental illness, he shall continue to receive his Base Salary, Bonus and
other benefits provided hereunder, together with all compensation payable to
his under the Company's disability plan or program or other similar plan during
such period, until Executive's employment hereunder is terminated pursuant to
this Section 5(e). Thereafter, Executive's benefits shall be determined under
the Company's retirement, insurance, and other compensation and benefit plans
and programs then in effect, in accordance with the terms of such programs.

6. Confidential Information, Non-Solicitation and Non-Competition.

6
<PAGE> 7

will or would suffer irreparable injury if Executive were to compete with the
Company or any subsidiary or affiliate of the Company in violation of this
Agreement and that the Company would by reason of such competition be entitled
to injunctive relief in a court of appropriate jurisdiction, and Executive
further consents and stipulates to the entry of such injunctive relief in such
a court prohibiting Executive from competing with the Company or any subsidiary
or affiliate of the Company in violation of this Agreement.

(d) Executive recognizes that he will possess
confidential information about other employees of the Company relating to their
education, experience, skills, abilities, compensation and benefits, and
interpersonal relationships with customers of the Company. Executive
recognizes that the information he will possess about these other employees is
not generally known, is of substantial value to the Company in developing its
business and in securing and retaining customers, and will be acquired by his
because of his business position with the Company. Executive agrees that,
during the Term of Employment, and for a period of two (2) years thereafter, he
will not, directly or indirectly, solicit or recruit any employee of the
Company for the purpose of being employed by his or by any competitor of the
Company on whose behalf he is acting as an agent, representative or employee
and that he will not convey any such confidential information or trade secrets
about other employees of the Company to any other person.

7
<PAGE> 8

9. Taxes. All payments to be made to Executive under this
Agreement will be subject to any applicable withholding of federal, state and
local income and employment taxes.

10. Miscellaneous. This Agreement shall also be subject to
the following miscellaneous considerations:

(b) This Agreement contains a complete statement of
all the arrangements between the parties with respect to Executive's employment
by the Company; this Agreement supersedes all prior and existing negotiations
and agreements between the parties concerning Executive's employment; and this
Agreement can only be changed or modified pursuant to a written instrument duly
executed by each of the parties hereto.

(d) This Agreement shall be governed by and
construed in accordance with the internal laws of the State of North Carolina,
except to the extent governed by federal law.

8
<PAGE> 9

and inure to the benefit of such successors and assigns. Except as expressly
provided herein, Executive may not sell, transfer, assign, or pledge any of his
rights or interests pursuant to this Agreement.

(g) For the purpose of this Agreement, notices and
all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States certified or registered mail, return receipt requested, postage prepaid,
addressed to the named Executive at the address set forth below under his
signature; provided that all notices to the Company shall be directed to the
attention of the Board with a copy to the Chief Executive Officer of the
Company, or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notice of change of
address shall be effective only upon receipt.

(h) Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of
this Agreement for any other purpose.

(j) This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

9
<PAGE> 10

sity of the Company's posting any bond except to the extent otherwise required
by applicable law. The expense of such arbitration shall be borne by the
Company.

12. Attorneys' Fees. Should either party hereto or their
successors retain counsel for the purpose of enforcing, or preventing the
breach of, any provision hereof, including, but not limited to, by instituting
any action or proceeding in arbitration or a court to enforce any provision
hereof or to enjoin a breach of any provision of this Agreement, or for a
declaration of such party's rights or obligations under the Agreement, or for
any other remedy, whether in arbitration or in a court of law, then the
successful party shall be entitled to be reimbursed by the other party for all
costs and expenses incurred thereby, including, but not limited to, reasonable
fees and expenses of attorneys and expert witnesses, including costs of appeal.
If such successful party shall recover judgment in any such action or
proceeding, such costs, expenses and fees may be included in and as part of
such judgment. The successful party shall be the party who is entitled to
recover his costs of suit, whether or not the suit proceeds to final judgment.
If no costs are awarded, the successful party shall be determined by the
arbitrator or court, as the case may be.

10
<PAGE> 11

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

EXECUTIVE COMPANY

PETER SOLLENNE PERSONNEL GROUP OF AMERICA, INC.

By: /s/ Peter R. Sollenne By: /s/ Edward P. Drudge, Jr.
--------------------------------- -------------------------------

Title: President, Commercial Name: Edward P. Drudge, Jr.
Staffing Division Title: Chairman of the Board and
Chief Executive Officer

Address:

3450 Deer Ridge Drive
Danville, CA 94506

<PAGE> 1
EXHIBIT 10.13

EMPLOYMENT AGREEMENT

THIS AGREEMENT is made and entered into this 7th day of
October 1996, by and between Personnel Group of America, Inc., a Delaware
corporation (the "Company"), and Kenneth R. Bramlett, Jr. ("Executive").

W I T N E S S E T H:

WHEREAS, Executive and the Company deem it to be in their
respective best interests to enter into an agreement providing for the
Company's employment of Executive pursuant to the terms herein stated;

NOW, THEREFORE, in consideration of the premises and the
mutual promises and agreements contained herein, it is hereby agreed as
follows:

1. Effective Date. This Agreement shall be effective as of
the 7th day of October 1996, which date shall be referred to herein as the
"Effective Date".

2. Position and Duties.

(a) The Company hereby employs Executive as its
Senior Vice President of Administration and General Counsel commencing as
of the Effective Date for the "Term of Employment" (as herein defined below).
In this capacity, Executive shall devote his best efforts and his full business
time and attention to the performance of the services customarily incident to
such offices and position and to such other services of a senior executive
nature as may be reasonably requested by the Chairman and Chief Executive
Officer of the Company which may include services for one or more subsidiaries
or affiliates of the Company. Executive shall in his capacity as an employee
and officer of the Company be responsible to and obey the reasonable and lawful
directives of the Chief Executive Officer.

3. Compensation.

(a) Base Salary. The Company shall pay to Executive
during the Term of Employment a minimum salary at the rate of one hundred
sixty-five thousand ($165,000) per calendar year and agrees that such salary
shall be reviewed at least annually. Such salary shall be subject to
discretionary annual increases as determined by the Board of Directors. Such
salary shall be payable in accordance with the Company's normal payroll
procedures. (Executive's annual salary, as set forth above or as it may be
increased from time to time as set forth herein, shall be referred to
hereinafter as "Base Salary.") At no time during the
<PAGE> 2

Term of Employment shall Executive's Base Salary be decreased from the amount
of Base Salary then in effect.

(b) Performance Bonus. In addition to the
compensation otherwise payable to Executive pursuant to this Agreement,
Executive shall be eligible to receive an annual bonus ("Bonus") pursuant to a
performance bonus plan (the "Bonus Plan") which shall be established by the
Company for its senior executive officers and which shall provide for bonus
compensation to be payable based upon the financial and other performance of
the Company and its senior executives.

4. Benefits. During the Term of Employment:

(b) Executive shall be allowed 28 days of paid time
off (PTO) per calendar year and leaves of absence with pay on the same basis as
other senior executive employees of the Company.

2
<PAGE> 3

(ii) the Company's requiring the Executive
to be based anywhere other than the metropolitan area where he
currently works and resides; and

(iii) the occurrence of a "Change in Control"
as defined below.

3
<PAGE> 4

For purposes of this Agreement only, Cause shall mean:

i) fraud, misappropriation, embezzlement, or
other act of material misconduct against the
Company or any of its affiliates;

4
<PAGE> 5

ii) substantial and willful failure to
perform specific and lawful directives of the
Board, as reasonably determined by the Board;

iii) willful and knowing violation of any
rules or regulations of any governmental or
regulatory body, which is materially
injurious to the financial condition of the
Company; or

iv) conviction of or plea of guilty or nolo
contendere to a felony;

(d) Voluntary Termination by Executive. In the
event that Executive's employment with the Company is voluntarily terminated by
Executive other than for Good Reason, Executive shall be paid his unpaid Base
Salary through the date of termination and the amount of any unpaid Bonus to
which Executive had become entitled under the Bonus Plan prior to the effective
date of such termination, and the Company shall have no further obligation
hereunder from and after the effective date of termination and the Company
shall have all other rights and remedies available under this Agreement or any
other agreement and at law or in equity. Executive shall give the Company at
least 60 days' advance written notice of his intention to terminate his
employment hereunder.

5
<PAGE> 6

6. Confidential Information, Non-Solicitation and Non-Competition.

6
<PAGE> 7

(d) Executive recognizes that he will possess
confidential information about other employees of the Company relating to their
education, experience, skills, abilities, compensation and benefits, and
interpersonal relationships with customers of the Company. Executive
recognizes that the information he will possess about these other employees is
not generally known, is of substantial value to the Company in developing its
business and in securing and retaining customers, and will be acquired by his
because of his business position with the Company. Executive agrees that,
during the Term of Employment, and for a period of two (2) years thereafter, he
will not, directly or indirectly, solicit or recruit any employee of the
Company for the purpose of being employed by his or by any competitor of the
Company on whose behalf he is acting as an agent, representative or employee
and that he will not convey any such confidential information or trade secrets
about other employees of the Company to any other person.

7
<PAGE> 8

9. Taxes. All payments to be made to Executive under this
Agreement will be subject to any applicable withholding of federal, state and
local income and employment taxes.

10. Miscellaneous. This Agreement shall also be subject to
the following miscellaneous considerations:

(b) Except as set forth in the Offer Letter, which
is intended to supplement this Agreement, this Agreement contains a complete
statement of all the arrangements between the parties with respect to
Executive's employment by the Company; this Agreement supersedes all prior and
existing negotiations and agreements between the parties concerning Executive's
employment; and this Agreement can only be changed or modified pursuant to a
written instrument duly executed by each of the parties hereto.

(d) This Agreement shall be governed by and
construed in accordance with the internal laws of the State of North Carolina,
except to the extent governed by federal law.

8
<PAGE> 9

all of the stock, assets or business of the Company and this Agreement shall be
binding upon and inure to the benefit of such successors and assigns. Except
as expressly provided herein, Executive may not sell, transfer, assign, or
pledge any of his rights or interests pursuant to this Agreement.

(g) For the purpose of this Agreement, notices and
all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States certified or registered mail, return receipt requested, postage prepaid,
addressed to the named Executive at the address set forth below under his
signature; provided that all notices to the Company shall be directed to the
attention of the Board with a copy to the Chief Executive Officer of the
Company, or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notice of change of
address shall be effective only upon receipt.

(h) Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of
this Agreement for any other purpose.

(j) This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

9
<PAGE> 10

sity of the Company's posting any bond except to the extent otherwise required
by applicable law. The expense of such arbitration shall be borne by the
Company.

10
<PAGE> 11

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

EXECUTIVE COMPANY

KENNETH R. BRAMLETT, JR. PERSONNEL GROUP OF AMERICA, INC.

By: /s/ Kenneth R. Bramlett, Jr. By: /s/ Edward P. Drudge, Jr.
--------------------------------- --------------------------------

Title: Senior Vice President Name: Edward P. Drudge, Jr.
Title: Chairman of the Board and
Chief Executive Officer

Address:

307 Hunter Lane
Charlotte, NC 28211

<PAGE> 1
EXHIBIT 10.16

PERSONNEL GROUP OF AMERICA, INC.

NON-QUALIFIED PROFIT SHARING PLAN

AMENDED AND RESTATED
EFFECTIVE JANUARY 1, 1996

<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<S> <C> <C>
ARTICLE I. INTRODUCTION AND PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Establishment of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Purpose of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE II. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1. Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2. Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.3. Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.4. Basic Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.5. Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.6. Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.7. Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.8. Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.9. Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.10. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.11. Controlled Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.12. Disability or Disabled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.13. Eligible Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.14. Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.15. Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.16. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.17. Hardship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.18. Hour of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.19. Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.20. Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.21. Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.22. Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.23. Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.24. Termination of Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.25. Valuation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.26. Vested Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.27. Year of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

ARTICLE III. ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1. Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

ARTICLE IV. COMPANY ALLOCATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.1. Non-qualified Profit Sharing Allocation . . . . . . . . . . . . . . . . . . . . . . 4
4.2. Eligibility to Receive an Allocation . . . . . . . . . . . . . . . . . . . . . . . 5
4.3. Unpaid Leaves of Absence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.4. Suspended Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
</TABLE>

-i-
<PAGE> 3

<TABLE>
<S> <C> <C>
4.5. Cessation of Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

ARTICLE V. ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.1. Establishment of Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.2. Bookkeeping Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.3. Valuation of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

ARTICLE VI. VESTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
6.1. Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
6.2. Forfeiture Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
6.3. Reallocation of Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

ARTICLE VII. PAYMENT OF ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
7.1. Method of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
7.2. Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
7.3. Beneficiary Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
7.4. Payment to Minors or Legal Incompetents . . . . . . . . . . . . . . . . . . . . . . 8

ARTICLE VIII. PLAN ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
8.1. Adoption and Administration of the Plan . . . . . . . . . . . . . . . . . . . . . . 8
8.2. Amendment and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
8.3. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
8.4. Impartiality of Committee Members . . . . . . . . . . . . . . . . . . . . . . . . . 9

ARTICLE IX. CLAIMS PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

ARTICLE X. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
10.1. No Funding Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
10.2. Non-alienation of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
10.3. Limitation of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
10.4. Captions and Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
10.5. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>

-ii-
<PAGE> 4

ARTICLE I.
INTRODUCTION AND PURPOSE

1.1. Establishment of the Plan. Effective August 15, 1995, Personnel
Group of America, Inc. (the "Company") assumed the Plan sponsorship
and a portion of the obligations and liabilities for certain
participating employers in the ADIA Services, Inc. Nonqualified
Profit Sharing Plan, as in effect on January 1, 1995. This
amendment and restatement of the Plan is effective as of January 1,
1996.

1.2. Purpose of the Plan. The Company intends to maintain the Plan
primarily for the purpose of providing deferred compensation for a
select group of management or highly compensated employees, within
the meaning of ERISA Section 401(a)(1). The Plan will be
interpreted in a manner that comports with these intentions.

ARTICLE II.
DEFINITIONS

Definitions are contained in this Article and throughout other Sections of the
Plan. The location of a definition is for convenience only and should not be
given any significance. A word or term defined in this Article (or in any
other Article) will have the same meaning throughout the Plan unless the
context clearly requires a different meaning.

Whenever referred to in this Plan, the following capitalized terms shall have
the meanings set forth below except where otherwise provided. As used in the
Plan, the masculine, feminine and neuter genders and the singular and plural
numbers shall each be deemed to include the other or others.

2.1. "Account" means a Participant's Non-qualified Profit Sharing
Account established pursuant to Section 5.1.

2.2. "Affiliate" means any corporation, partnership or other
organization which, during any period of employment of a
Participant, was at least 50% controlled by the Company or any
member of the Controlled Group of which the Company is a member.

2.3. "Beneficiary" means the person(s) designated pursuant to Section
7.3 to receive benefits in the event of the Participant's death.

2.4. "Basic Plan" means the ADIA 401(k)/Profit Sharing Plan I and its
successor plan the Personnel Group of America, Inc. 401(k) Plan.

2.5. "Board" means the Board of Directors of Personnel Group of America,
Inc.

<PAGE> 5

2.6. "Change of Control" means a change in ownership of more than 50% of
the stock of a participating Employer. If, because of a Change of
Control, one or more of the participating Employers are no longer
members of the Controlled Group of which the Company is a member, a
Change of Control is not triggered for the remaining participating
Employers. For the purpose of this Section, the provisions of Code
Section 318 concerning the constructive ownership of stock do not
apply. Notwithstanding the foregoing provisions of this Section, a
Change of Control will not be deemed to have occurred solely
because of the acquisition of securities of a participating
Employer's direct parent by an employee benefit plan maintained by
the Company for its Employees.

2.7. "Code" means the internal Revenue Code of 1986 as amended.

2.8. "Committee" means the Compensation Committee of the Board.

2.9. "Company" means Personnel Group of America, Inc. The Company will
be the "plan administrator" under ERISA.

2.10. "Compensation" means the earnings paid to a Participant by an
Employer during a Plan Year as reported on Internal Revenue Service
Form W-2, including any amounts not includible in the Participant's
Form W-2 by reason of a salary reduction arrangement with an
Employer under Code Section 125, 401(k), 402(e)(3), 402(h) or
403(b) which if paid would have been Compensation. However,
Compensation does not include director's fees, reimbursement of
expenses, severance and other payments at or following termination
of employment, and other amounts as determined by the Committee on
a uniform basis.

2.11. "Controlled Group" means any two or more corporations, trades, or
businesses which constitute a controlled group or an affiliated
service group of which the Company is a member, or are under common
control with the Company, within the meaning of Code Section
414(b), (c), (m), or (o), but only for the period during which such
relationship exists.

2.12. "Disability or Disabled" has the same meaning as under the
Company's long term disability plan.

2.13. "Eligible Employee" means an Employee who satisfies both of the
following requirements:

(a) a full-time salaried Employee identified by the Committee
as eligible to participate in the Plan for a Plan Year. The
group of Eligible Employees for any Plan Year will be
limited to, and may be more restrictive than, the group of
Employees who are members of a select group of management
or highly compensated employees (within the meaning of
ERISA Section 401(a)(1)). An

-2-
<PAGE> 6

employee's eligibility to participate in the Plan for a
given Plan Year does not guarantee continued eligibility to
participate in any future Plan Year; and

(b) an Employee who is excluded from participating in the Basic
Plan because of being a highly compensated employee, as
defined by Code Section 414(q) and the regulations
thereunder.

2.14. "Employee" means a common law employee of an Employer.

2.15. "Employer" means the Company and any other Affiliate which by the
action of its directors has adopted the Plan with the Company's
consent; and any successors of such entities.

2.16. "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.

2.17. "Hardship" means an unforeseeable and unanticipated emergency which
is caused by an event beyond the control of the Participant or
Beneficiary, and which would result in severe financial hardship to
the Participant or Beneficiary if a distribution is not permitted.
Hardship conditions will be evaluated in accordance with the terms
of Treasury Regulations Section 1.457-2(h)(4). The Committee will
have the sole discretion to determine whether a Hardship condition
exists and the Committee's decision will be final.

A Participant or Beneficiary must submit a written request for a
Hardship to the Committee on such form and in such manner as the
Committee prescribes, and must certify as to the Hardship condition
and the severe financial need. The Committee will have sole
discretion to determine whether a Hardship exists and to determine
the appropriate action, if any.

2.18. "Hour of Service" means an hour of service as defined in the Basic
Plan.

2.19. "Interest Rate" means the interest rate credited to a Participant's
Account under Article V. Interest shall be credited as of each
Valuation Date. Initially, the Interest Rate shall equal the
guaranteed long-term interest rate in effect as of the Valuation
Date under the Basic Plan. However, the Committee, in its sole
discretion, may decide to change the basis for determining the
Interest Rate. The revised Interest Rate shall apply to calendar
quarters commencing after the Committee adopts a revised Interest
Rate policy.

2.20. "Participant" means an Employee (a) who has satisfied the
requirements to participate under Article III or (b) an individual
who continues to have an Account balance greater than zero.

-3-
<PAGE> 7

2.21. "Plan" means the Personnel Group of America, Inc. Non-qualified
Profit Sharing Plan as set forth herein and as amended from time to
time.

2.22. "Plan Year" means the calendar year.

2.23. "Spouse" means the person to whom the Participant is married on the
date of his death.

2.24. "Termination of Employment" means any voluntary or involuntary
termination of employment (including by reason of death or
Disability) with an Employer or successor Employer.

2.25. "Valuation Date" means the last business day of each calendar
quarter or other date specified by the Committee pursuant to
Section 5.3.

2.26. "Vested Percentage" means the nonforfeitable percentage of a
Participant's Account determined under Article VI.

2.27. "Year of Service" means a year of service for vesting purposes as
defined in the Basic Plan. In addition, the Committee shall have
the discretion to grant past service credit to any Participant
recruited in the middle of his career.

ARTICLE III.
ELIGIBILITY

3.1. Eligibility. An Employee shall become a Participant on the date
after he becomes an Eligible Employee, has attained age 21 and has
completed one Year of Service.

ARTICLE IV.
COMPANY ALLOCATIONS

4.1. Non-qualified Profit Sharing Allocation. The Company may, in its
discretion, make a Non-qualified Profit Sharing Allocation for any
Plan Year. Such amount shall be allocated according to a formula
as specified by the Committee. If no formula is specified, then
the total Company allocation shall be allocated to each Participant
eligible to be credited with an allocation in the proportion which
such Participant's compensation for the Plan Year bears to the
compensation for such year of all such Participants.

-4-
<PAGE> 8

4.2. Eligibility to Receive an Allocation. A Participant is eligible to
receive a Company allocation and a share of any forfeitures
allocated for the Plan Year provided that he has:

(a) completed 1,000 Hours of Service during the Plan Year; and

(b) is an active Employee on December 31 of the Plan Year.

4.3. Unpaid Leaves of Absence. If a Participant is granted an unpaid
leave of absence, there will be no Company Allocations during the
period of leave.

4.4. Suspended Participants. A Participant shall become a suspended
Participant for any Plan Year in which he does not qualify for a
Company allocation under Section 4.2.

4.5. Cessation of Participation. A Participant shall continue
participation until such time as the full value of the Vested
Percentage of the Participant's Account has been distributed
pursuant to Article VII or forfeited pursuant to Article VI.

ARTICLE V.
ACCOUNTS

5.1. Establishment of Account. In lieu of paying the Participant
Compensation equal to the Non-qualified Profit Sharing Allocation,
the Company shall credit such amount during the first calendar
quarter following the end of the Plan Year to an account in the
name of the Participant (the "Non-qualified Profit Sharing
Account").

5.2. Bookkeeping Accounts. Accounts will be primarily for accounting
purposes and will not restrict the operation of the Plan or require
separate earmarked assets to be allocated to any account on behalf
of any Participant. The establishment of an Account will not give
any Participant the right to receive any asset held by the Company
in connection with the Plan or otherwise.

5.3. Valuation of Accounts. The Company shall value each Participant's
Account each Valuation Date as follows:

(a) first, Account balances will be debited with distributions
or forfeitures;

(b) next, Account balances will be credited with investment
gains or losses, determined by the Interest Rate;

-5-
<PAGE> 9

The Committee may, in its sole discretion, change the Valuation
Date, provided, however, Accounts shall be valued on at least one
day in each Plan Year.

ARTICLE VI.
VESTING

6.1. Vesting. Subject to the limitations of Section 6.2, a Participant
has a fully vested right to the amounts allocated to the
Participant's Account in accordance with the following schedule:

<TABLE>
<CAPTION>
Years of Service Vested Percentage
---------------- -----------------
<S> <C>
Less than 3 years 0%
3 but less than 4 years 20%
4 but less than 5 years 40%
5 but less than 6 years 60%
6 but less than 7 years 80%
7 or more years 100%
</TABLE>

In addition, the amounts allocated to a Participant's Account shall
be fully vested upon his death while employed.

6.2. Forfeiture Provisions. Notwithstanding Section 6.1 and any Plan
provision to the contrary, at the discretion of the Committee, a
Participant's Account remains subject to forfeiture if:

(a) he is discharged for cause or performs an act of willful
malfeasance or gross negligence in a matter of material
importance to the Company; or

(b) for the twelve-month period following his Termination of
Employment he engages in competition with the Company
(without prior written authorization by the Committee) to
the extent such non-compete provision is permitted under
ERISA.

6.3. Reallocation of Forfeitures. If pursuant to Section 6.2, the
Committee determines that a Participant forfeits his Account
balance or if at Termination of Employment a Participant has a
Vested Percentage less than 100%, the forfeitable and unvested
portion of his Account shall be reallocated to the remaining
Participants as of the allocation date at the end of the Plan Year
in which the forfeiture occurs in accordance with Article IV. A
Participant is eligible to receive a portion of reallocated
forfeitures only if he is eligible for a Company allocation for
such Plan Year.

-6-
<PAGE> 10

ARTICLE VII.
PAYMENT OF ACCOUNTS

7.1. Method of Distribution. Unless otherwise expressly provided by the
Committee, any distribution from a Participant's Account will be
paid in cash and in a single lump sum payment.

7.2. Distribution.

(a) Termination of Employment. A Participant shall be entitled
to receive the Vested Percentage of his Account on the
one-year anniversary of his Termination of Employment. The
Committee shall value the Vested Percentage of the
Participant's Account on the Valuation Date coinciding with
or immediately preceding the distribution date.

(b) Distribution Because of Death. If a Termination of
Employment is because of a Participant's death, his
Beneficiary shall be entitled to receive 100% of his
Account valued as of the Valuation Date coinciding with or
immediately preceding the date of death.

(c) Distribution in the Event of Hardship. Prior to a
distribution under paragraphs (a) or (b) payment of a
portion of a Participant's Account may be made in the event
of Hardship, as defined in Section 2.17. The amount of any
Hardship distribution will not exceed the amount required
to meet the Hardship, including any taxes or penalties due
on the distribution, or the vested amount credited to the
Participant's Account.

(d) Unpaid Leaves of Absence. If a Participant is granted an
unpaid leave of absence and the Participant does not return
to active employment within the twelve-month period
following his last date of active employment, in the
Committee's discretion it may deem that a Termination of
Employment has occurred for purposes of a distribution
under the Plan. If the Committee deems that a Termination
of Employment has occurred, the Participant shall be
entitled to the Vested Percentage of his Account in
accordance with paragraph (a) above.

7.3. Beneficiary Designation.

(a) A Participant may designate by written notice delivered to
the Committee a Beneficiary (or Beneficiaries) to receive
all or a portion of the amount of the Participant's Account
in case of the Participant's death. A Beneficiary
designation may be revoked by the Participant at any time
by written notice delivered to the Committee.

-7-
<PAGE> 11

(b) If a Beneficiary has not been designated, cannot be located
or the Beneficiary does not survive the Participant,
payment of the Participant's death benefit will be made to
the Participant's surviving Spouse or, if none, to the
Participant's estate.

7.4. Payment to Minors or Legal Incompetents.

(a) If any Beneficiary is a minor or is physically or mentally
incapable of giving a valid receipt for any payment due him
and no legal representative has been appointed, the
Committee may, in its discretion, direct payment to any
person or institution maintaining the Beneficiary. If the
Beneficiary has a legal representative, payment shall be
made to the legal representative.

(b) In the event of a dispute as to whom distribution is to be
made under this Section, payment may be made to a court of
proper jurisdiction, with final distribution to be
determined by such court.

(c) Any payment made in accordance with the provisions of this
Section shall completely discharge any liability for the
making of such payment under the provisions of the Plan.

ARTICLE VIII.
PLAN ADMINISTRATION

8.1. Adoption and Administration of the Plan.

(a) This Plan shall be adopted by the Board. The Company will
be the "plan administrator" under ERISA. The Company's
responsibilities as plan administrator, under the Plan and
under law, shall be carried out by or under the supervision
of the Compensation Committee. The Compensation
Committee's actions shall be actions on behalf of the plan
administrator and not on behalf of itself or of its
individual members.

(b) The Committee shall have the sole authority, in its
discretion, to adopt, amend and rescind such rules and
regulations as it deems advisable in the administration of
the Plan, to construe and interpret the Plan, the rules and
regulations, and Plan forms, and to make all other
determinations and interpretations of the Plan. All
decisions, determinations and interpretations of the
Committee will be binding on all interested parties. The
Committee may delegate in writing its responsibilities as
it sees fit.

-8-
<PAGE> 12

8.2. Amendment and Termination. This Plan may be amended in any way or
may be terminated, in whole or in part, at any time, in the
discretion of the Board. However, no amendment, suspension or
termination of the Plan will affect a Participant's right or the
right of a Beneficiary, to receive the benefits such Participant
has accrued prior to or as of the effective date of such amendment
or termination.

8.3. Indemnification. The Company will indemnify and hold harmless any
of its employees, officers, directors or members of the Committee
who have responsibilities with respect to the Plan from and against
any and all losses, claims, damages, expenses and liabilities
(including reasonable attorneys' fees and amounts paid, with the
approval of the Board, in settlement of any claim) arising out of
or resulting from the implementation of a duty, act or decision
with respect to the Plan, so long as such duty, act or decision
does not involve gross negligence or willful misconduct on the part
of any such individual.

8.4. Impartiality of Committee Members. Committee members who are
Participants will abstain from voting on any Plan amendment or on
any administrative matters that relate primarily to themselves or
that would cause them to be in constructive receipt of amounts
credited to their Accounts. The Chief Executive Officer of the
Company will identify three or more individuals to serve as a
temporary replacement of the Committee members in the event that
all three members must abstain from voting.

8.5. Change of Control. In the event of a Change of Control, the
Company shall fully fund all vested Plan Accounts with cash or
other liquid assets. In the Committee's discretion, it can
establish a revocable rabbi trust to hold the assets. If such
Change of Control occurs, the trust will become an irrevocable
rabbi trust, the value of all vested Accounts shall be immediately
paid to or on behalf of all Participants and Beneficiaries, and the
Plan shall be discontinued. If the Change of Control does not
occur, at such time as the Company determines it to be no longer
likely and imminent, the Company may recover the assets that it
deposited in the revocable rabbi trust.

ARTICLE IX.
CLAIMS PROCEDURE

9.1. A person with an interest in the Plan shall have the right to file
a claim for benefits under the Plan and to appeal any denial of a
claim for benefits. Any request for a Plan benefit or to clarify
the claimant's rights to future benefits under the terms of the
Plan shall be considered to be a claim.

9.2. A claim for benefits will be considered as having been made when
submitted in writing by the claimant (or by such claimant's
authorized representative) to the Committee. No particular form is
required for the claim, but the written claim must

-9-
<PAGE> 13

identify the name of the claimant and describe generally the
benefit to which the claimant believes he is entitled. The claim
may be delivered personally during normal business hours or mailed
to the Committee.

9.3. The Committee will determine whether, or to what extent, the claim
may be allowed or denied under the terms of the Plan. If the claim
is wholly or partially denied, the claimant shall be so informed by
written notice within 90 days after the day the claim is submitted
unless special circumstances require an extension of time for
processing the claim. If such an extension of time for processing
is required, written notice of the extension shall be furnished to
the claimant prior to the termination of the initial 90-day period.
Such extension may not exceed an additional 90 days from the end of
the initial 90-day period. The extension notice shall indicate the
special circumstances requiring an extension of time and the date
by which the Plan expects to render the final decision. If notice
of denial of a claim (in whole or in part) is not furnished within
the initial 90-day period after the claim is submitted (or, if
applicable, the extended 90-day period), the claimant shall
consider that his claim has been denied just as if he had received
actual notice of denial.

9.4. The notice informing the claimant that his claim has been wholly or
partially denied shall be written in a manner calculated to be
understood by the claimant and shall include:

(1) The specific reason(s) for the denial.
(2) Specific reference to pertinent Plan provisions on which
the denial is based.
(3) A description of any additional material or information
necessary for the claimant to perfect the claim and an
explanation of why such material or information is
necessary.
(4) Appropriate information as to the steps to be taken if the
claimant wishes to submit his claim for review.

9.5. If the claim is wholly or partially denied, the claimant (or his
authorized representative) may file an appeal of the denied claim
with the Committee requesting that the claim be reviewed. The
Committee shall conduct a full and fair review of each appealed
claim and its denial. Unless the Committee notifies the claimant
that due to the nature of the benefit and other attendant
circumstances he is entitled to a greater period of time within
which to submit his request for review of a denied claim, the
claimant shall have 60 days after he (or his authorized
representative) receives written notice of denial of his claim
within which such request must be submitted to the Committee.

9.6. The request for review of a denied claim must be made in writing.
In connection with making such request, the claimant or his
authorized representative may:

(1) Review pertinent documents.

-10-
<PAGE> 14

(2) Submit issues and comments in writing.

9.7. The decision of the Committee regarding the appeal shall be
promptly given to the claimant in writing and shall normally be
given no later than 60 days following the receipt of the request
for review. However, if special circumstances (for example, if the
Committee decides to hold a hearing on the appeal) require a
further extension of time for processing, the decision shall be
rendered as soon as possible, but no later than 120 days after
receipt of the request for review. However, if the Committee holds
regularly scheduled meetings at least quarterly, a decision on
review shall be made by no later than the date of the meeting which
immediately follows the Plan's receipt of a request for review,
unless the request is filed within 30 days preceding the date of
such meeting. In such case, a decision may be made by no later
than the date of the second meeting following the Plan's receipt of
the request for review. If special circumstances (for example, if
the Committee decides to hold a hearing on the appeal) require a
further extension of time for processing, the decision shall be
rendered as soon as possible, but no later than the third meeting
following the Plan's receipt of the request for review. If special
circumstances require that the decision will be made beyond the
initial time for furnishing the decision, written notice of the
extension shall be furnished to the claimant (or his authorized
representative) prior to the commencement of the extension. The
decision on review shall be in writing and shall be furnished to
the claimant or to his authorized representative within the
appropriate time for the decision. If a decision on review is not
furnished within the appropriate time, the claim shall be deemed to
have been denied on appeal.

9.8. The Committee may, in its sole discretion, decide to hold a hearing
if it determines that a hearing is necessary or appropriate in
order to make a full and fair review of the appealed claim.

9.9. The decision on review shall include specific reasons for the
decision, written in a manner calculated to be understood by the
claimant, as well as specific references to the pertinent Plan
provisions on which the decision is based.

9.10. A person must exhaust his rights to file a claim and to request a
review of the denial of his claim before bringing any civil action
to recover benefits due to him under the terms of the Plan, to
enforce his rights under the terms of the Plan, or to clarify his
rights to future benefits under the terms of the Plan.

9.11. The Committee shall exercise its responsibility and authority under
this claims procedure as a fiduciary and, in such capacity, shall
have the discretionary authority and responsibility (1) to
interpret and construe the Plan and any rules or regulations under
the Plan, (2) to determine the eligibility of Employees to
participate in the Plan, and the rights of Participants to receive
benefits under the Plan, and (3) to make factual determinations in
connection with any of the foregoing.

-11-
<PAGE> 15

ARTICLE X.
MISCELLANEOUS

10.1. No Funding Obligation. The amounts credited to a Participant's
Account are not held in a trust or escrow account and are not
secured by any specific assets of an Employer. This Plan shall not
be construed to require an Employer to fund any of the benefits
provided hereunder nor to establish a trust for such purpose. The
Company may make such arrangements as it desires to provide for the
payment of benefits. Neither the Participant, any Beneficiary nor
the Participant's estate shall have any rights against an Employer
with respect to any portion of the Participant's Account except as
a general unsecured creditor of the Employer. No Participant has
an interest in his Account until the Participant actually receives
payment.

10.2. Non-alienation of Benefits. No benefit under this Plan may be
sold, assigned, transferred, conveyed, hypothecated, encumbered,
anticipated, or otherwise disposed of, and any attempt to do so
shall be void. No such benefit shall, prior to receipt thereof by
a Participant, be in any manner subject to the debts, contracts,
liabilities, engagements, or torts of such Participant. However,
the Committee will honor a court order regarding the payment of
alimony or other support payments, or the establishment of
community property or other marital property rights, to the extent
required by law.

10.3. Limitation of Rights. Nothing in this Plan shall be construed to
limit in any way the right of an Employer to terminate an
Employee's employment at any time for any reason whatsoever with or
without cause; nor shall it be evidence of any agreement or
understanding, express or implied, that the Employer (a) will
employ an Employee in any particular position, (b) will ensure
participation in any incentive programs, or (c) will grant any
awards from such programs.

10.4. Captions and Headings. The captions and headings in this Plan are
for convenience only and shall not in any way affect the meaning or
interpretation of the Plan.

10.5. Applicable Law. This Plan shall be construed and its provisions
enforced and administered in accordance with the laws of the State
of North Carolina except as otherwise provided in ERISA.

PERSONNEL GROUP OF AMERICA, INC.

By: /s/ Edward P. Drudge, Jr.
--------------------------------

Title: Chairman and CEO
------------------------------

Date: 1 January 1996
------------------------------

-12-

<PAGE> 1

EXHIBIT 10.18

AMENDMENT NO. 1 TO CREDIT AGREEMENT

THIS AMENDMENT NO. 1 TO CREDIT AGREEMENT (this "Amendment No. 1"),
dated as of December 18, 1996, is entered into by and among PERSONNEL GROUP OF
AMERICA, INC. (the "Borrower"), CERTAIN SUBSIDIARIES OF THE BORROWER IDENTIFIED
ON THE SIGNATURES PAGES HERETO (the "Guarantors"), NATIONSBANK, N.A. (the
"Existing Lender"), THE PERSONS IDENTIFIED AS A "NEW LENDER" ON THE SIGNATURE
PAGES HERETO (the "New Lenders" and, together with the Existing Lender, the
"Lenders") and NATIONSBANK, N.A., as agent for the Lenders (in such capacity,
the "Agent").

RECITALS

WHEREAS, the Borrower, the Guarantors, the Existing Lender and the
Agent entered into that certain Credit Agreement dated as of September 30, 1996
(the "Existing Credit Agreement");

WHEREAS, the parties hereto have agreed to amend the Existing Credit
Agreement as set forth herein;

NOW, THEREFORE, in consideration of the agreements herein contained,
the parties hereby agree as follows:

PART I
DEFINITIONS

SUBPART 1.1. Certain Definitions. Unless otherwise defined
herein or the context otherwise requires, the following terms used in this
Amendment No. 1, including its preamble and recitals, have the following
meanings:

"Amended Credit Agreement" means the Existing Credit Agreement
as amended hereby.

"Amendment No. 1 Effective Date" is defined in Subpart 3.1.

SUBPART 1.2. Other Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this Amendment No. 1,
including its preamble and recitals, have the meanings provided in the Amended
Credit Agreement.

<PAGE> 2

PART II
AMENDMENTS TO EXISTING CREDIT AGREEMENT

Effective on (and subject to the occurrence of) the Amendment No. 1
Effective Date, the Existing Credit Agreement is hereby amended in accordance
with this Part II. Except as so amended, the Existing Credit Agreement and all
other Credit Documents shall continue in full force and effect.

SUBPART 2.1. Amendment to Section 1.1. The definition of "Borrower's
Obligations" set forth in Section 1.1 of the Existing Credit Agreement is
amended in its entirety to read as follows:

"Borrower's Obligations" means, without duplication, (i) all
of the obligations of the Borrower to the Lenders (including the
Issuing Lender) and the Agent, whenever arising, under the Credit
Agreement, the Notes or any of the other Credit Documents (including,
but not limited to, any interest accruing after the occurrence of a
Bankruptcy Event with respect to the Borrower, regardless of whether
such interest is an allowed claim under the Bankruptcy Code) and (ii)
all liabilities and obligations, whenever arising, owing from the
Borrower to any Lender, or any Affiliate of a Lender, arising under any
Hedging Agreement.

SUBPART 2.2. Amendment to Section 2.1(a). Section 2.1(a) of the
Existing Credit Agreement is amended in its entirety to read as follows:

2.1 Loans.

(a) Commitment. Subject to the terms and conditions hereof and
in reliance upon the representations and warranties set forth herein,
each Lender severally agrees to make available to the Borrower such
Lender's Commitment Percentage of revolving credit loans requested by
the Borrower in Dollars ("Loans") from time to time from the Closing
Date until the Termination Date, or such earlier date as the
Commitments shall have been terminated as provided herein for the
purposes hereinafter set forth; provided, however, that the sum of the
aggregate principal amount of outstanding Loans shall not exceed ONE
HUNDRED TWENTY-FIVE MILLION DOLLARS ($125,000,000) (as such aggregate
maximum amount may be reduced from time to time as provided in Section
3.4, the "Committed Amount") ; provided, further, (i) with regard to
each Lender individually, such Lender's outstanding Loans shall not
exceed such Lender's Commitment Percentage of the Committed Amount, and
(ii) with regard to the Lenders collectively, the aggregate principal
amount of outstanding Loans plus LOC Obligations outstanding shall not
exceed the Committed Amount. Loans may consist of Base Rate Loans or
Eurodollar Loans, or a combination thereof, as the Borrower may
request, and may be repaid and reborrowed in accordance with the
provisions hereof; provided, however, that (x) during the Initial
Interest Rate Period, all Eurodollar Loans shall have an Interest

2
<PAGE> 3

Period of one (1) month and (y) no more than 7 Eurodollar Loans shall
be outstanding hereunder at any time. For purposes hereof, Eurodollar
Loans with different Interest Periods shall be considered as separate
Eurodollar Loans, even if they begin on the same date, although
borrowings, extensions and conversions may, in accordance with the
provisions hereof, be combined at the end of the existing Interest
Periods to constitute a new Eurodollar Loan with a single Interest
Period. Loans hereunder may be repaid and reborrowed in accordance with
the provisions hereof.

SUBPART 2.3. Amendments to Schedule 2.1(a). Schedule 2.1(a) of the
Existing Credit Agreement is hereby deleted in its entirety and a new schedule
in the form of Schedule 2.1(a) attached hereto is substituted therefor.

PART III
ASSIGNMENTS AND ASSUMPTIONS

The Existing Lender hereby sells and assigns, without recourse, to the
New Lenders, and the New Lenders hereby purchase and assume, without recourse,
from the Existing Lender, effective as of the Amendment No. 1 Effective Date,
such interests in the Existing Lender's rights and obligations under the
Existing Credit Agreement (including, without limitation, the Commitments of the
Existing Lender on the Amendment No. 1 Effective Date and the Loans and LOC
Obligations which are outstanding on the Amendment No. 1 Effective Date) as
shall be necessary in order to give effect to the reallocations of the Committed
Amounts and Commitment Percentages effected by the amendments to the Existing
Credit Agreement pursuant to Part II. The Existing Lender and each of the New
Lenders hereby makes and agrees to be bound by all the representations,
warranties and agreements set forth in Section 11.3(b) of the Amended Credit
Agreement. From and after the Amendment No. 1 Effective Date (i) each of the New
Lenders shall be a party to and be bound by the provisions of the Amended Credit
Agreement and, to the extent of the interests assigned hereby, have the rights
and obligations of a Lender thereunder and under the other Credit Documents and
(ii) the Existing Lender shall, to the extent of the interests assigned hereby,
relinquish its rights and be released from its obligations under the Existing
Credit Agreement. The Agent shall record in the register referred to in Section
11.3(c) of the Amended Credit Agreement on the Amendment No. 1 Effective Date
the information relating to the assignments and assumptions effected pursuant to
this Part III. The Agent hereby agrees (i) that no transfer fee shall be payable
under Section 11.3(b) of the Existing Credit Agreement or otherwise in
connection with the assignments effected pursuant to this Part III and (ii) to
pay to each New Lender its portion of the Upfront Fee as separately agreed to by
the Agent and such New Lender.

<PAGE> 4

PART IV
CONDITIONS TO EFFECTIVENESS

SUBPART 4.1. Amendment No. 1 Effective Date. This Amendment No. 1 shall
be and become effective as of the date hereof (the "Amendment No. 1 Effective
Date") when all of the conditions set forth in this Subpart 4.1 shall have been
satisfied, and thereafter this Amendment No. 1 shall be known, and may be
referred to, as "Amendment No. 1."

SUBPART 4.1.1. Execution of Counterparts of Amendment. The Agent shall
have received executed counterparts (or other evidence of execution, including
facsimile signatures, satisfactory to the Agent) of this Amendment No. 1, which
collectively shall have been duly executed on behalf of each of the Borrower,
the Guarantors, the Lenders and the Agent.

SUBPART 4.1.2. Execution of Notes. The Agent shall have received an
appropriate original Note for each Lender (but, in the case of the new Note to
the Existing Lender, with notation thereon that it is given in substitution for
and replacement of the original Note or any replacement notes thereof).

SUBPART 4.1.3. Corporate Authority. The Agent shall have received all
documents it may reasonably request relating to the corporate or other necessary
authority for the execution, delivery and performance of this Amendment No. 1.

SUBPART 4.1.4. Other Documents. The Agent shall have received such
other documents as the Agent, the Lender or counsel to the Agent may reasonably
request.

PART V
MISCELLANEOUS

SUBPART 5.1. Cross-References. References in this Amendment No. 1 to
any Part or Subpart are, unless otherwise specified, to such Part or Subpart of
this Amendment No. 1.

SUBPART 5.2. Instrument Pursuant to Existing Credit Agreement. This
Amendment No. 1 is a Credit Document executed pursuant to the Existing Credit
Agreement and shall (unless otherwise expressly indicated therein) be construed,
administered and applied in accordance with the terms and provisions of the
Existing Credit Agreement.

SUBPART 5.3. References in Other Credit Documents. At such time as this
Amendment No. 1 shall become effective pursuant to the terms of Subpart 3.1, all
references in the Credit Documents to the "Credit Agreement" shall be deemed to
refer to the Amended Credit Agreement.

SUBPART 5.4. Representations and Warranties. Each Credit Party hereby
represents and warrants that (i) each Credit Party that is party to this
Amendment No. 1: (a) has the requisite corporate power and authority to execute,
deliver and perform this Amendment No. 1, as

4
<PAGE> 5

applicable and (b) is duly authorized to, and has been authorized by all
necessary corporate action, to execute, deliver and perform this Amendment No.
1, (ii) the Borrower has no claims, counterclaims, offsets, or defenses to the
Credit Documents and the performance of its obligations thereunder, or if the
Borrower has any such claims, counterclaims, offsets, or defenses to the Credit
Documents or any transaction related to the Credit Documents, the same are
hereby waived, relinquished and released in consideration of the Lender's
execution and delivery of this Amendment No. 1, (iii) the representations and
warranties contained in Section 6 of the Existing Credit Agreement are, subject
to the limitations set forth therein, true and correct in all material respects
on and as of the date hereof as though made on and as of such date (except for
those which expressly relate to an earlier date) and (iv) no Default or Event of
Default exists under the Existing Credit Agreement on and as of the date hereof
or will occur as a result of the transactions contemplated hereby.

SUBPART 5.5. Liens. The Borrower and the Guarantors, as applicable,
affirm the liens and security interests created and granted in the Credit
Documents and agree that this Amendment No. 1 shall in no manner adversely
effect or impair such liens and security interest.

SUBPART 5.6. Acknowledgement of Guarantors. The Guarantors acknowledge
and consent to all of the terms and conditions of this Amendment No. 1 and agree
that this Amendment No. 1 and all documents executed in connection herewith do
not operate to reduce or discharge the Guarantors' obligations under the Amended
Credit Agreement or the other Credit Documents. The Guarantors further
acknowledge and agree that the Guarantors have no claims, counterclaims,
offsets, or defenses to the Credit Documents and the performance of the
Guarantors' obligations thereunder or if the Guarantors did have any such
claims, counterclaims, offsets or defenses to the Credit Documents or any
transaction related to the Credit Documents, the same are hereby waived,
relinquished and released in consideration of the Lenders' execution and
delivery of this Amendment No. 1.

SUBPART 5.7. No Other Changes. Except as expressly modified and amended
in this Amendment No. 1, all the terms, provisions and conditions of the Credit
Documents shall remain unchanged.

SUBPART 5.8. Counterparts. This Amendment No. 1 may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an
original and all of which shall constitute together but one and the same
agreement.

SUBPART 5.9. Entirety. This Amendment No. 1, the Amended Credit
Agreement and the other Credit Documents embody the entire agreement between the
parties and supersede all prior agreements and understandings, if any, relating
to the subject matter hereof. These Credit Documents represent the final
agreement between the parties and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements of the parties.

5
<PAGE> 6

SUBPART 5.10. Governing Law. THIS AMENDMENT NO. 1 AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA.

SUBPART 5.11. Successors and Assigns. This Amendment No. 1 shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.

[Signatures to Follow]

<PAGE> 7

This Amendment No. 1 is executed as of the day and year first written
above.

BORROWER: PERSONNEL GROUP OF AMERICA, INC.,
a Delaware corporation

By: /s/ Ken Bramlett
----------------------------------
Name: Ken Bramlett
------------------------------------
Title: Senior Vice President
-----------------------------------

GUARANTORS: STAFFPLUS, INC.,
a Delaware corporation