PERSONNEL GROUP OF AMERICA INC, PRE 14A, 1997-03-31

PERSONNEL GROUP OF AMERICA INC
PRE 14A, 1997-03-31
HELP SUPPLY SERVICES

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<PAGE> 1

SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

<TABLE>
<S> <C>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>

Personnel Group of America, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

[ ] Fee paid previously with preliminary materials:

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:
<PAGE> 2

[LOGO]
PERSONNEL GROUP OF AMERICA, INC.
6302 FAIRVIEW ROAD, SUITE 201
CHARLOTTE, NORTH CAROLINA 28210

April 10, 1997

Dear Shareholder:

You are cordially invited to attend the 1997 Annual Meeting of
Shareholders to be held at The Park Hotel, 2200 Rexford Road, Charlotte, North
Carolina, on Thursday, May 21, 1997, at 9:30 a.m., local time.

The Notice of Annual Meeting of Shareholders and Proxy Statement are
attached hereto. The matters to be acted upon by our shareholders are set forth
in the Notice of Annual Meeting and discussed in the Proxy Statement.

We would appreciate your signing, dating and returning the enclosed
proxy card in the envelope provided at your earliest convenience. If you choose
to attend the meeting, you may revoke your proxy and personally cast your votes.

Also enclosed herewith is a copy of the Company's 1996 Annual Report to
Shareholders.

We look forward to seeing you at the Annual Meeting.

Sincerely yours,

/s/ Edward P. Drudge, Jr.

Edward P. Drudge, Jr.
Chairman and Chief Executive Officer

<PAGE> 3

PERSONNEL GROUP OF AMERICA, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON MAY 21, 1997

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

TO THE SHAREHOLDERS
OF PERSONNEL GROUP of AMERICA, INC.

NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Shareholders of
Personnel Group of America, Inc., a Delaware corporation (the "Company"), will
be held at 9:30 a.m., local time, on May 21, 1997, at The Park Hotel, 2200
Rexford Road, Charlotte, North Carolina, for the following purposes:

(1) To elect two members to the Company's Board of Directors
to hold office until the Annual Meeting of Shareholders in 2000 or
until their successors are duly elected and qualified;

(2) To consider and act upon a proposal to amend the Company's
Certificate of Incorporation to increase the Company's authorized
Common Stock;

(3) To consider and act upon a proposal to amend the Company's
1995 Equity Participation Plan;

(4) To consider and act upon a proposal to approve the
Company's 1997 Employee Stock Purchase Plan;

(5) To consider and act upon a proposal to ratify the
selection of Price Waterhouse LLP as the Company's independent public
accountants for 1997; and

(6) To transact such other business as may properly come
before the Annual Meeting and any adjournments or postponements
thereof.

The Board of Directors has fixed the close of business on March 28,
1997 as the record date for determining those shareholders entitled to notice
of, and to vote at, the Annual Meeting and any adjournments or postponements
thereof. A list of those shareholders may be examined at the principal executive
office of the Company, 6302 Fairview Road, Suite 201, Charlotte, North Carolina,
during the 10-day period preceding the meeting.

Whether or not you expect to be present, please sign, date and return
the enclosed proxy card in the enclosed pre-addressed envelope as promptly as
possible. No postage is required if mailed in the United States.

By Order of the Board of Directors,

/s/ Edward P. Drudge, Jr.

Edward P. Drudge, Jr.
Chairman and Chief Executive Officer

Charlotte, North Carolina
April 10, 1997

ALL SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. THOSE SHAREHOLDERS
WHO ARE UNABLE TO ATTEND ARE URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY CARD
AS PROMPTLY AS POSSIBLE. SHAREHOLDERS WHO EXECUTE A PROXY CARD MAY NEVERTHELESS
ATTEND THE MEETING, REVOKE THEIR PROXY AND VOTE THEIR SHARES IN PERSON.

2
<PAGE> 4

1997 ANNUAL MEETING OF SHAREHOLDERS
OF PERSONNEL GROUP OF AMERICA, INC.

---------------------
PROXY STATEMENT
---------------------

This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Personnel Group of America, Inc., a Delaware
corporation ("PGA" or the "Company"), of proxies from the holders of the
Company's Common Stock, par value $.01 per share (the "Common Stock"), for use
at the 1997 Annual Meeting of Shareholders of the Company to be held at The Park
Hotel, 2200 Rexford Road, Charlotte, North Carolina, at 9:30 a.m., local time,
on May 21, 1997, or at any adjournments or postponements thereof (the "Annual
Meeting"), pursuant to the enclosed Notice of Annual Meeting of Shareholders.
The approximate date that this Proxy Statement and the enclosed form of proxy
are first being sent or given to holders of Common Stock is April 10, 1997. The
Company's principal executive offices are located at 6302 Fairview Road, Suite
201, Charlotte, North Carolina 28210, and its telephone number is (704)
442-5100.

INFORMATION CONCERNING PROXY

The enclosed proxy is solicited on behalf of the Company's Board of
Directors. The giving of a proxy does not preclude the right to vote in person
should any shareholder giving the proxy so desire. Shareholders have a right to
revoke their proxy at any time prior to the exercise thereof, either in person
at the Annual Meeting or by filing with the Company's Secretary at the Company's
headquarters a written revocation or duly executed proxy bearing a later date.

The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting of Shareholders and the enclosed proxy is to be borne
by the Company. In addition to the use of mail, employees of the Company may
solicit proxies personally and by telephone. The Company's employees will
receive no compensation for soliciting proxies other than their regular
salaries. The Company may request banks, brokers and other custodians, nominees
and fiduciaries to forward copies of the proxy material to their principals and
to request authority for the execution of proxies. The Company has retained
Corporate Communications, Inc. to aid in the proxy solicitation at an estimated
cost of $5,000.

PURPOSES OF THE MEETING

At the Annual Meeting, the Company's shareholders will consider and
vote upon the following matters:

(1) A proposal to elect two members to the Company's Board of
Directors to serve until the Annual Meeting of Shareholders in 2000 or
until their successors are duly elected and qualified;

(2) A proposal to amend the Company's Certificate of
Incorporation to increase the Company's authorized Common Stock;

(3) A proposal to amend the Company's 1995 Equity
Participation Plan;

(4) A proposal to approve the Company's 1997 Employee Stock
Purchase Plan;

(5) A proposal to ratify the selection of Price Waterhouse LLP
as the Company's independent public accountants for 1997; and

(6) Such other business as may properly come before the Annual
Meeting, including any adjournments or postponements thereof.

Unless contrary instructions are indicated on the enclosed proxy, all
shares represented by valid proxies received pursuant to this solicitation (and
which have not been revoked in accordance with the procedures set forth above)
will be voted (a) in favor of the election of the two nominees for directors
named below and (b) in favor of each of the other proposals in clauses (2)
through (5) above. In the event a shareholder specifies a different choice by
means of the enclosed proxy, his or her shares will be voted in accordance with
the specification so made.

3
<PAGE> 5

OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS

The Board of Directors has set the close of business on March 28, 1997
as the record date (the "Record Date") for determining shareholders of the
Company entitled to notice of and to vote at the Annual Meeting. As of the
Record Date, there were 12,076,755 shares of Common Stock issued and
outstanding, all of which are entitled to one vote on all matters to be acted
upon at the Annual Meeting. Neither the Company's Certificate of Incorporation
nor Bylaws provides for cumulative voting rights.

The representation in person or by proxy of a majority of the issued
and outstanding shares of Common Stock entitled to vote will constitute a quorum
at the Annual Meeting. Directors of the Company are elected by a plurality vote,
and votes may either be cast in favor of nominees or withheld. Withheld votes
will be excluded entirely from the vote and will have no effect on the outcome
of the election. Approval of the remaining proposals (other than the proposed
amendment to the Certificate of Incorporation) requires the affirmative vote of
the holders of a majority of the shares of Common Stock present in person or
represented by proxy and entitled to vote. On any such proposal, an abstention
will have the same effect as a negative vote but, because shares held by brokers
will not be considered entitled to vote on matters as to which the brokers
withhold authority, a broker non-vote will have no effect on the vote. The
proposed amendment to the Certificate of Incorporation will require the
affirmative vote of a majority of the issued and outstanding Common Stock;
accordingly, abstentions and broker non-votes will have the same effect as
negative votes on this proposal.

SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of March 28, 1997, the number and
percentage of outstanding shares beneficially owned by each person known by the
Company to own beneficially more than 5% of the Company's Common Stock, by each
director and nominee for director of the Company, by each officer named in the
Summary Compensation Table under the heading "Executive Compensation" and each
current executive officer and by all directors and current executive officers of
the Company as a group. Except as otherwise indicated, each shareholder named
has sole voting and investment power with respect to such shareholder's shares.

<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF SHARES Percent of Common
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED (1) Stock Outstanding
- ------------------------------------ ---------------------- -----------------

<S> <C> <C>
RCM Capital Management, L.L.C.
RCM Limited L.P.
RCM General Corporation..................................... 694,500 (2) 5.8%
Four Embarcadero Center, Suite 3000
San Francisco, California 94111-4189

Edward P. Drudge, Jr........................................ 197,807 (3) 1.6
Peter R. Sollenne........................................... 24,842 *
Rosemary Payne-Harris....................................... 16,815 *
James C. Hunt .............................................. 16,060 (4) *
Kevin P. Egan .............................................. 15,375 *
Gene C. Wilson.............................................. 14,715 *
Ken R. Bramlett, Jr. ....................................... 13,432 (5) *
Richard L. Peranton......................................... 12,715 *
James V. Napier............................................. 12,575 *
J. Roger King............................................... 10,375 *
William J. Simione, Jr. .................................... 10,375 *

All directors and current executive officers
as a group (9 persons).................................... 313,556 2.5%

</TABLE>

* Less than one percent

(1) Includes the following shares subject to stock options exercisable
within 60 days after March 28, 1997: Mr. Drudge--167,245; Mr. Sollenne-
-23,842; Ms. Payne-Harris--12,715; Mr. Hunt--14,000; Mr. Egan--9,375;
Mr. Wilson--12,715; Mr. Bramlett--9,182; Mr. Peranton--10,715; Mr.
Napier--9,375; Mr. King--9,375; Mr. Simione--9.375; Directors and
current executive officers as a group--262,484.

(2) The amount and nature of the shares beneficially owned are as of
December 29, 1996 and are based on the most recent Schedule 13G, or
amendment thereto, on file with the Company. Of the total shares
reported, sole voting power is reported with respect to only 597,500
shares and shared dispositive power is reported with respect to 44,000
shares.

(3) Includes 2,500 shares held in the names of Mr. Drudge's spouse and
children.

(4) Includes 560 shares held in the names of Mr. Hunt's spouse and
children.

(5) Includes 250 shares held in the name of Mr. Bramlett's spouse.

4
<PAGE> 6

PROPOSAL 1

ELECTION OF DIRECTORS

NOMINEES

The Company's Certificate of Incorporation and Bylaws provide for seven
directors who are divided into three classes. The terms of the directors in the
initial classes are being phased in over a three-year period, and after the
expiration of the terms of these directors, newly elected directors will serve
for a three-year term or until their successors are elected and qualify. Messrs.
Drudge, Napier and Simione were appointed to Class III to serve until the Annual
Meeting of Shareholders in 1998. Messrs. Egan and King were appointed to Class
II to serve until this Annual Meeting. Mr. Hunt, who replaced Michael P. Bernard
as the Company's Chief Financial Officer, has been appointed to Class I to serve
the remainder of Mr. Bernard's term, which would have expired at the Annual
Meeting of Shareholders in 1999. The Board of Directors is seeking a director
candidate to fill the Class I vacancy created by Ms. Joyce Mazero's resignation
in April 1996, but has yet to fill the vacancy. Messrs. Egan and King are the
sole nominees standing for election at the Annual Meeting and, if elected, will
serve for a term expiring at the Annual Meeting of Shareholders in 2000,
expected to be held in May 2000, or until their successors have been duly
elected and qualified. Any director appointed after this Annual Meeting to fill
the vacancy on the Board will be designated a Class I director and will serve a
term expiring at the Annual Meeting of Shareholders in 1999, expected to be held
in May 1999, or until a successor has been duly elected and qualified.

The Board of Directors makes nominations for director candidates as
permitted by the Company's Bylaws. Section 14 of Article II of the Company's
Bylaws prescribes the procedure a shareholder must follow to make nominations
for director candidates. Shareholder nominations for director will be considered
at an annual meeting or a special meeting of shareholders if the shareholder
(who must be, at the time of delivery of notice, a shareholder of record)
delivers to the Secretary of the Company a timely notice setting forth the
information specified in Section 14 of Article II of the Company's Bylaws. In
the case of an annual meeting, such notice shall be considered timely if
delivered not earlier than the close of business on the 90th day, nor later than
the close of business on the 60th day, prior to the first anniversary of the
preceding year's annual meeting. If, however, the annual meeting date is more
than 30 days before or 60 days after the anniversary date of the preceding
year's annual meeting, the notice will be considered timely if delivered not
earlier than the close of business on the 90th day prior to such meeting nor
later than the close of business on the later of (i) the 60th day prior to such
meeting or (ii) the 10th day following the day on which the public announcement
of the date of such meeting is first made by the Company. In the case of a
special meeting, such notice shall be considered timely if delivered not earlier
than the close of business on the 90th day prior to such meeting nor later than
the close of business on the later of (i) the 60th day prior to such meeting or
(ii) the 10th day following the day on which public announcement is first made
of the special meeting date and the nominees proposed by the Board of Directors.
Any shareholder desiring a copy of the Company's Bylaws will be furnished one
without charge upon written request to the Secretary. The Board of Directors has
no reason to believe that the nominees will refuse to act or be unable to accept
election; however, in the event that a nominee for a directorship is unable to
accept election or if any unforeseen contingencies should arise, it is intended
that proxies will be voted for such other person as may be designated by the
Board of Directors, unless it is directed by a proxy to do otherwise.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF MESSRS. EGAN AND
KING FOR ELECTION AS CLASS II DIRECTORS.

5
<PAGE> 7

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth information as to the Company's current
executive officers and directors:

<TABLE>
<CAPTION>
NAME Age Position
---- --- --------
<S> <C> <C>
Edward P. Drudge, Jr. 57 Chairman of the Board and Chief Executive Officer
James C. Hunt 40 Senior Vice President, Chief Financial Officer, Treasurer and Director
Ken R. Bramlett, Jr. 37 Senior Vice President, General Counsel and Secretary
Peter R. Sollenne 47 President-Commercial Staffing Division
Richard L. Peranton 46 President-Nursefinders
Kevin P. Egan (1) 53 Director
J. Roger King (1) 56 Director
James V. Napier(1)(2) 60 Director
William J. Simione, Jr.(2) 55 Director
</TABLE>

(1) Member of the Compensation Committee of the Board of Directors.

(2) Member of the Audit Committee of the Board of Directors.

Edward P. Drudge, Jr.: Mr. Drudge is the Chairman of the Board and
Chief Executive Officer of the Company and has served as such since the
formation of the Company in July 1995. Prior to that time, Mr. Drudge was
President of the Personnel Group of America Division of Adia, S.A. a Swiss
corporation ("Adia") and Senior Vice President of Adia Services, Inc., a
California corporation and wholly owned subsidiary of Adia ("Adia California"),
having joined Adia in April 1989. Prior to joining Adia, Mr. Drudge held senior
management positions with Manpower Inc., a provider of personnel services, for
16 years, and prior to that, sales and marketing positions with Procter &
Gamble.

James C. Hunt: Mr. Hunt joined the Company as a Senior Vice President
on January 2, 1997, and has served as Chief Financial Officer and Treasurer and
as a director of the Company since March 1, 1997. Prior to joining the Company,
Mr. Hunt spent 18 years with Arthur Andersen LLP, a worldwide accounting and
consulting firm, the last six years as a partner.

Ken R. Bramlett, Jr.: Mr. Bramlett has served as Senior Vice President,
General Counsel and Secretary of the Company since October 1996. Prior to
joining the Company, Mr. Bramlett spent 12 years with Robinson, Bradshaw &
Hinson, P.A., a Charlotte, North Carolina law firm, the last six years as a
partner. Mr. Bramlett also serves on the board of directors of World Acceptance
Corporation, a small loan consumer finance company headquartered in Greenville,
South Carolina.

Peter R. Sollenne: Mr. Sollenne has served as President of the
Commercial Staffing Division since October 1996. Mr. Sollenne served as
President of the Commercial Staffing Division's Abar Staffing Company in San
Francisco from July 1995 through October 1996. Prior to joining PGA, Mr.
Sollenne spent six years as Senior Vice President of Sales, Marketing and
Customer Services with USL Capital Fleet Services, a division of Ford Financial
Services, Inc., and prior to that was President of PHH Financial Services, and
held other senior management positions with PHH Corporation, Commercial Union
Assurance Companies and Bank of Boston.

Richard L. Peranton: Mr. Peranton has served as President of the Health
Care Services Division since April 1994 and has 15 years experience in the home
health care industry. From 1982 until April 1994, he held several executive
positions with Kimberly Quality Care, a provider of home health care services,
including President of that company's Southeastern Division.

Kevin P. Egan: Mr. Egan has served as a director of the Company since
September 1995. Since October 1995, Mr. Egan has been the President of Tamarack
Holdings, an investment company. From 1983 to September 1995, Mr. Egan served as
President and Chief Operating Officer of PrimeNet DataSystems, St. Paul,
Minnesota. PrimeNet provides database and integrated marketing services. Prior
to forming PrimeNet in 1983, Mr. Egan was senior vice president of Manpower
Temporary Services from 1975 to 1983. Mr. Egan also previously held marketing
and management positions with the Graphic Services Division of 3M Company and
Transamerica Computer Co., London, England.

6
<PAGE> 8

J. Roger King: Mr. King has served as a director of the Company since
September 1995. Mr. King joined the Frito-Lay Division of PepsiCo, Inc. in 1969
and has served in various personnel and employee relations positions for PepsiCo
since that time, including Senior Vice President of Personnel of PepsiCo from
1984 to 1995 and Senior Vice President of Human Resources of Frito-Lay from June
1995 to the present.

James V. Napier: Mr. Napier has served as a director of the Company
since September 1995. Since November 1992, Mr. Napier has been the Chairman of
Scientific-Atlanta, Inc., a telecommunications company. Between 1988 and 1992,
Mr. Napier served as Chairman and Chief Executive Officer of The Commercial
Telephone Group, a telecommunications engineering and design company, and
between 1985 and 1986, served as Chief Executive Officer and President of HBO &
Company, Inc., a health care information services company. In addition to
serving on the Board of Directors of Scientific-Atlanta, Mr. Napier is a
director of Engelhard Corporation, Vulcan Materials Company, HBO & Company,
Inc., Rhodes, Inc., Intelligent Systems Corporation and Westinghouse Air Brake
Company.

William J. Simione, Jr.: Mr. Simione has served as a director of the
Company since September 1995. Mr. Simione is Vice Chairman and Executive Vice
President of Simione Central Holdings, Inc., which provides consulting services
and information systems to the home health care industry. He is a member of the
Prospective Payment Task Force, a Regulatory Affairs Subcommittee for the
National Association for Home Care, and is one of the Subcommittee's National
Reimbursement Consultants. Mr. Simione is also a member of many state and
federal committees involving home care issues.

During the fiscal year ended December 29, 1996, the Board of Directors
held four meetings and took certain actions by unanimous written consent. During
1996, all incumbent directors had perfect attendance at (a) all meetings of the
Board of Directors held during the period, and (b) all meetings of committees of
the Board of Directors held during the period any such directors served on such
committees.

Messrs. Napier and Simione served as members of the Audit Committee of
the Board of Directors (the "Audit Committee") during 1996. The principal
functions of the Audit Committee are to meet with appropriate financial and
legal personnel and independent public accountants of the Company and review the
internal controls of the Company and the objectivity of its financial reporting.
This Committee makes recommendations to the Board of Directors with respect to
the appointment of the independent public accountants to serve as auditors in
examining the corporate accounts of the Company. The Company's independent
public accountants periodically meet privately with the Audit Committee and have
access to the Audit Committee at any time. The Audit Committee met twice during
1996.

Messrs. King, Egan and Napier served as members of the Compensation
Committee of the Board of Directors (the "Compensation Committee") during 1996.
The principal functions of the Compensation Committee are to review proposals
regarding the establishment or change of benefit plans, salaries and
compensation of the executive officers and other employees of the Company and
advise management and make recommendations to the Board of Directors with
respect thereto and administer the Company's 1995 Equity Participation Plan and
the Company's Management Incentive Compensation Plan. The Compensation Committee
met once during 1996 and took a number of actions by written consent.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than 10% of
a registered class of the Company's equity securities, to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Executive officers, directors and greater than 10% shareholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file. To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company during the fiscal year ended December 29,
1996, all Section 16(a) filing requirements applicable to its executive officers
and directors and any greater than 10% beneficial owners (the Company is aware
of none) were complied with.

7
<PAGE> 9

DIRECTOR COMPENSATION

During 1996, each non-employee director received an annual retainer of
$7,500, and each such director who chaired a committee received an annual
retainer of $1,000. In addition, non-employee directors received meeting fees of
$1,000 per board meeting attended and $500 per committee meeting attended, plus
reimbursement of expenses. Each non-employee director receives, upon joining the
Board, an initial option grant to purchase 6,250 shares of Common Stock at the
then fair market value, an additional option grant to purchase 3,125 shares of
Common Stock at the then fair market value in each of the succeeding two years,
and an annual option grant to purchase 1,500 shares of Common Stock at the
then fair market value in each year thereafter that such director remains on
the Board. All of such options will be granted under the Company's 1995 Equity
Participation Plan. Officers of the Company who are also directors are not paid
any director fees.

EXECUTIVE COMPENSATION

The following table sets forth information concerning the compensation
for the fiscal years ended December 29, 1996, December 31, 1995 and January 1,
1995 for those persons who were, at December 29, 1996, the Chief Executive
Officer and the Company's four other most highly compensated officers:

SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
--------------
Annual Compensation SECURITIES
--------------------- UNDERLYING ALL OTHER
SALARY BONUS OPTIONS(#)(1) COMPENSATION(2)
------ ----- ------------- ---------------
Name and Principal Position
- ---------------------------
<S> <C> <C> <C> <C> <C>
Edward P. Drudge, Jr ................. 1996 $307,500 $ -- 271,817(3) $ 500(4)
Chairman and Chief Executive Officer 1995 269,994 302,535 178,572 30,993(5)
1994 243,750 296,535 -- 30,575(6)

Peter R. Sollenne .................... 1996 $154,826 $ -- 36,642(3) $ --
President-Commercial Staffing ...... 1995 58,872 36,795 8,000 --
1994 -- -- -- --

Richard L. Peranton .................. 1996 $211,762 $105,144 -- $ --
President-Nursefinders .............. 1995 205,691 191,394 26,786 20,609(7)
1994 133,333 133,333 -- --

Gene C. Wilson ....................... 1996 $170,500 $ 85,108 10,000 $ --
Senior Vice President .............. 1995 162,500 149,894 26,786 9,555(7)
1994 155,173 70,873 -- 14,605(6)

Rosemary Payne-Harris ................ 1996 $124,000 $ 49,394 10,000 $ 500(4)
Senior Vice President .............. 1995 106,750 102,352 26,786 10,729(8)
1994 92,175 61,331 -- 8,219(6)
</TABLE>

- ----------
(1) Except as set forth below, amounts shown for each of the named officers
are 20% vested, and will vest an additional 20% on each successive
anniversary of the grant date through the year 2000.

(2) Each of the named officers are eligible to participate in the Company's
non-qualified profit-sharing plan, but non-qualified profit-sharing
allocations for 1996 are not currently available.

(3) Includes 51,817 options and 16,642 options granted to Mr. Drudge and
Mr. Sollenne, respectively, on January 2, 1997 in lieu of 1996 bonuses.
See "Compensation Committee Report on Executive Compensation." These
options were vested 100% on the date of grant.

(4) Amounts represent employer matching contributions to individual
retirement accounts.

(5) Amount includes $30,493 in non-qualified profit-sharing allocations for
1995 and $500 in employer matching contributions to individual
retirement account.

(6) Amounts represent non-qualified profit-sharing allocations for 1994.

(7) Amount represents non-qualified profit-sharing allocation for 1995.

(8) Amount includes $10,246 in non-qualified profit-sharing allocations for
1995 and $483 in employer matching contributions to individual
retirement account.

Option Grants Table. The following table sets forth certain information
concerning grants of stock options to the named officers during the fiscal year
ended December 29, 1996:

8
<PAGE> 10

OPTION GRANTS IN LAST FISCAL YEAR

INDIVIDUAL GRANTS

<TABLE>
<CAPTION>
Number of % of Total Potential Realizable Value at
Securities Options Assumed Annual Rates of
Underlying Granted to Exercise Stock Price Appreciation for
Options Employees or Base Option Term
Granted in Fiscal Price Expiration ----------------------------
Name (#)(1) Year ($/Sh) Date 5% ($) 10% ($)
---- -------- ---- ------ ------ --------- -------

<S> <C> <C> <C> <C> <C> <C>
Edward P. Drudge, Jr.(2) .. 220,000 52.3% $24.94 9/25/06 $3,449,600 $8,745,000
Peter R. Sollenne(2) ...... 20,000 4.8% $27.00 11/5/06 $ 339,600 $ 860,800
Gene C. Wilson ............ 10,000 2.4% $24.94 9/25/06 $ 156,800 $ 397,500
Rosemary Payne-Harris ..... 10,000 2.4% $24.94 9/25/06 $ 156,800 $ 397,500
</TABLE>

(1) Amounts shown for each of the named officers are 20% vested, and will
vest an additional 20% on each successive anniversary of the grant date
through the year 2000.

(2) Amounts shown exclude 51,817 and 16,642 options granted to Mr. Drudge
and Mr. Sollenne, respectively, on January 2, 1997, in lieu of 1996
bonuses. See "Compensation Committee Report on Executive Compensation."
These options were granted at an exercise price of $23.18 and vested
100% on the date of grant.

Option Year-End Value Table. The following table sets forth certain
information concerning unexercised options held as of December 29, 1996:

FISCAL YEAR-ENDED OPTION VALUE

<TABLE>
<CAPTION>
Number of Securities Underlying Value Of Unexercised In-the-Money
Unexercised Options at FY-End (#) Options At FY-End ($)
------------------------------------ --------------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Edward P. Drudge, Jr.(1)... 115,428 283,144 $732,137 $1,098,226
Peter R. Sollenne(1)....... 7,200 20,800 $ 34,784 $ 51,936
Richard L. Peranton........ 10,715 16,071 $109,829 $ 164,727
Gene C. Wilson............. 12,715 24,071 $109,829 $ 164,727
Rosemary Payne-Harris...... 12,715 24,071 $109,829 $ 164,727

</TABLE>

(1) Amounts shown exclude 51,817 and 16,642 options granted to Mr. Drudge
and Mr. Sollenne, respectively, on January 2, 1997, in lieu of 1996
bonuses. See "Compensation Committee Report on Executive Compensation."
These options were granted at an exercise price of $23.18 and vested
100% on the date of grant.

9
<PAGE> 11

EMPLOYMENT AGREEMENTS

Edward P. Drudge, Jr. is employed pursuant to the terms of an
employment agreement, dated as of September 29, 1995, which provides for his
employment as Chief Executive Officer of the Company until September 30, 1998,
subject to automatic renewal for successive one-year periods unless either the
Company or Mr. Drudge has given notice of non-renewal six months prior to
expiration. The employment agreement currently provides for (i) an annual base
salary of $330,000 (subject to annual adjustment as determined by the
Compensation Committee) and (ii) the right to earn bonuses under the Company's
Management Incentive Compensation Plan. If the employment agreement is
terminated by the Company other than for cause or by Mr. Drudge upon a change in
terms and conditions of employment or following a change in control of the
Company, the Company must pay Mr. Drudge severance equal to 24 months' salary
and any unpaid bonus to which he would otherwise have been entitled, and all
unvested options to purchase Common Stock then held by Mr. Drudge become
immediately exercisable. The employment agreement contains a provision
prohibiting Mr. Drudge from competing with the Company or soliciting employees
and customers of the Company for a period of two years from the date Mr.
Drudge's employment with the Company ceases.

Peter R. Sollenne is employed pursuant to an employment agreement,
dated as of October 1, 1996, which provides for his employment as President of
the Commercial Staffing Division of the Company until September 30, 1997,
subject to automatic renewal for successive one-year periods unless either the
Company or Mr. Sollenne has given notice of non-renewal six months prior to
expiration. The employment agreement currently provides for (i) an annual base
salary of $200,000 (subject to annual adjustment as determined by the
Compensation Committee) and (ii) the right to earn bonuses under the Company's
Management Incentive Compensation Plan. If the employment agreement is
terminated by the Company other than for cause or by Mr. Sollenne upon a change
in terms and conditions of employment or following a change in control of the
Company, the Company must pay Mr. Sollenne severance equal to 12 months' salary
and any unpaid bonus to which he would otherwise have been entitled, and all
unvested options to purchase Common Stock then held by Mr. Sollenne become
immediately exercisable. The employment agreement contains a provision
prohibiting Mr. Sollenne from competing with the Company or soliciting
employees and customers of the Company for a period of two years from the date
Mr. Sollenne's employment with the Company ceases.

The Company assumed the obligations of Nursefinders, Inc. under an
employment agreement with Richard L. Peranton, dated April 1, 1994, which
provides for his employment as President of Nursefinders, Inc. The employment
agreement currently provides for (i) an annual base salary of $212,000 (subject
to annual adjustment as determined by the Compensation Committee), and (ii) the
right to earn bonuses of up to 100% of this base salary based on the performance
of Nursefinders. Under the employment agreement, Mr. Peranton must be given six
months notice of termination. In addition, if Nursefinders is sold during the
first three years of Mr. Peranton's employment and Mr. Peranton elects not to be
an employee of the acquiring company, the Company must pay Mr. Peranton
severance equal to 12 months' salary (not including bonus or benefits). The
employment agreement contains a provision prohibiting Mr. Peranton from
competing with the Company or soliciting employees and customers of the Company
for a period of one year from the date Mr. Peranton's employment with the
Company ceases.

10
<PAGE> 12

Gene C. Wilson is employed under an employment agreement dated
October 1, 1996, which provides for his employment as President of Thomas
Staffing Services, Inc. The employment agreement currently provides for (i) an
annual base salary of $173,350 (subject to annual adjustment as determined by
the Compensation Committee) and (ii) the right to earn bonuses under the
Company's Management Incentive Compensation Plan. If the employment agreement
is terminated by the Company other than for cause or by Mr. Wilson upon a
change in terms and conditions of employment or following a change in control
of the Company, the Company must pay Mr. Wilson severance equal to 12 months'
salary and any unpaid bonus to which he would otherwise have been entitled, and
all unvested options to purchase Common Stock then held by Mr. Wilson become
immediately exercisable. The employment agreement contains a provision
prohibiting Mr. Wilson from competing with the Company or soliciting employees
and customers of the Company for a period of two years from the date Mr.
Wilson's employment with the Company ceases.

The Company entered into an employment agreement with Rosemary
Payne-Harris, dated October 19, 1995, which has been renewed and provides for
her employment as Senior Vice President of the Company until October 31, 1997,
subject to automatic renewal for further successive one-year periods unless the
Company or Ms. Payne-Harris has given notice of non-renewal six months prior to
expiration. The employment agreement currently provides for (i) an annual base
salary of $144,000 (subject to annual adjustment as determined by the
Compensation Committee) and (ii) the right to earn bonuses under the Company's
Management Incentive Compensation Plan. If the employment agreement is
terminated by the Company other than for cause or by Ms. Payne-Harris upon a
change in terms and conditions of employment or following a change in control of
the Company, the Company must pay Ms. Payne-Harris severance equal to 12 months'
salary and any unpaid bonus to which she would otherwise be entitled, and all
unvested options to purchase Common Stock then held by Ms. Payne-Harris become
immediately exercisable. The employment agreement contains a provision
prohibiting Ms. Payne-Harris from competing with the Company or soliciting
employees and customers of the Company for a period of two years from the date
Ms. Payne-Harris' employment with the Company ceases.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

GENERAL

It is the Compensation Committee's responsibility to review and
recommend to the Board for approval the compensation of the Company's senior
executives. The goals of the Company's compensation program for executive
officers are to base compensation on the attainment of performance objectives,
to establish compensation levels that will enable the Company to attract and
retain talented individuals and to motivate them to achieve the Company's
business objectives, including increasing shareholder value. To achieve these
goals, the Company has established a compensation program consisting of three
principal components. The components are base salary, incentive bonus awards and
discretionary bonuses in the form of equity-based compensation consisting
primarily of qualified (i.e., incentive) and non-qualified stock options. The
Company strives to structure its compensation program to enable it to attract,
retain and reward executive officers whose contributions are critical to the
long-term success of the Company.

BASE SALARY

The Company considers the sustained performance of its executives in
establishing base salaries. Among the factors considered are length of service
with the Company, individual performance, scope of responsibilities and
successful management of administrative or financial functions or operating
subsidiaries or divisions. The assessment of management performance focuses on
both qualitative (leadership qualities) and quantitative (growth of revenues and
operating earnings, as well as management of expenses) factors.

11
<PAGE> 13

The Chief Executive Officer evaluates the overall performance of the
other executive officers, including the executive officers and former executive
officers named in the Summary Compensation Table. Financial and business goals
and objectives are discussed with key executives and periodic meetings of key
executives are held to discuss business strategies, financial and business
performance, budgeting matters and strategic planning matters. An executive's
overall evaluation is a combination of a qualitative review by fellow executives
and the Chief Executive Officer and a review of the extent to which
pre-established business and financial objectives have been obtained.

Base salaries for fiscal 1996 for all officers named in the Summary
Compensation Table were determined in accordance with the terms of employment
agreements in effect with such executives, as adjusted annually by the
Compensation Committee based on the factors mentioned above. The recommendation
for a particular base salary adjustment was determined primarily by the Chief
Executive Officer, based on the above factors, with no specified weight being
given to any particular performance factor, business or financial objective. The
recommendations were presented to the Compensation Committee, together with data
compiled by outside consultants engaged by the Company to obtain competitive
compensation data. For fiscal 1996, financial goals established for determining
adjustments to base salary were met or exceeded in most cases and, in such
cases, appropriate adjustments to base salary were made.

INCENTIVE BONUS AWARDS

Early in the fiscal year, the Compensation Committee establishes a
range of incentive bonus compensation that may be earned as part of each
executive's annual compensation. Incentive bonus compensation is based on the
achievement of pre-established annual financial goals relating to increases in
earnings growth, relative to budget and prior year, before interest and taxes of
the business unit or operating subsidiary for which such executive is
responsible. The financial goals established for fiscal 1996 for the payment of
incentive compensation to the Company's key executive officers were met or
exceeded in most cases, and bonuses were paid where appropriate.

For Messrs. Drudge, Sollenne and Bramlett, the Compensation Committee
determined that it would be in the Company's best interests to pay corporate
executives' 1996 bonuses in the form of stock options granted under the 1995
Equity Participation Plan and, accordingly, granted 51,817, 16,642 and 5,182
options to these individuals, respectively, on January 2, 1997, in lieu of 1996
cash bonuses. These options vested 100% on the date of grant. The Compensation
Committee's determination was based on two factors (in addition to the other
factors considered below in the granting of stock options generally). First,
distributing bonuses in the form of stock options to these executives enabled
the Company to conserve cash for investment. Second, paying bonuses in stock
options was consistent with one of the Compensation Committee's stated goals of
increasing the equity portion of senior executive compensation generally.

DISCRETIONARY BONUS AWARDS/EQUITY BASED COMPENSATION

The Company also rewards its executives with discretionary compensation
awards, generally in the form of incentive stock options and non-qualified stock
options. Through the granting of stock options, the Company seeks to align the
interests of key employees more closely with those of the Company's shareholders
by motivating and rewarding actions which lead to long-term value creation for
shareholders, and one of the Compensation Committee's stated goals is to
increase the equity portion of senior executive compensation generally. In
addition, the Company recognizes that stock options are a necessary part of its
competitive compensation program which, as discussed above, is designed to
attract and retain qualified executives. Historically, options granted to
executives and other employees have vested over a four to five-year period in
order to encourage executives and other key employees to remain in the employ of
the Company and to foster a long-term perspective.

In fiscal 1996, the Company used non-qualified stock options to achieve
the competitive compensation levels it determined to be necessary for the
executive officers and former executive officers named in the Summary
Compensation Table. In addition, the Company granted incentive options in fiscal
1996 to a group of other key employees, consisting of approximately 185
individuals. The 1996 options vest over a four-year period and, accordingly, are
a form of long-term compensation.

All options were granted by the Compensation Committee, acting as the
stock option committee under the Company's 1995 Equity Participation Plan. In
determining the employees to whom options would be awarded and the size of the
option awards, the Committee received a recommended list of key employees that
was compiled primarily by the Chief Executive Officer and the operating
subsidiary/division presidents with a view toward a fair and equitable
distribution of options among the employee pool.

12
<PAGE> 14

CHIEF EXECUTIVE OFFICER'S COMPENSATION

The compensation of Edward P. Drudge, Jr., the Company's Chief
Executive Officer, is determined pursuant to the terms of his employment
agreement with the Company, as adjusted annually by the Compensation Committee
based on the factors described above. See "Executive Compensation -- Employment
Agreements." In fiscal 1996, Mr. Drudge's employment agreement provided for a
base annual salary, adjusted based on 1995 performance, and an incentive bonus
based on 1996 earnings growth, relative to budget and prior year, before
interest and taxes. For the year, revenues, earnings before interest and taxes
and net income increased 46.0%, 71.4% and 62.0%, respectively, over 1995, and
over the same period the Company's selling, general and administrative expenses
declined as a percentage of revenues from 20.6% to 18.6%. Because these
financial results met or exceeded the financial goals established for
determining the payment of incentive compensation, Mr. Drudge was granted 51,817
stock options under the 1995 Equity Participation Plan in January 2, 1997, in
lieu of a cash bonus as described above.

Also in 1996, the Compensation Committee granted 220,000 stock options
to Mr. Drudge on September 26, 1996. Of this total, 70,000 options comprised Mr.
Drudge's long-term compensation award for 1996 and the balance of the grant
represented a special, one-time long-term compensation award. The 1996 award was
made by the Compensation Committee on the basis of the factors set forth above
under the heading "Discretionary Bonus Awards/Equity Based Compensation." The
special award was made by the Compensation Committee on the basis of several
additional factors, including contributions made by Mr. Drudge since the
Company's initial public offering in September 1995 that the Committee deemed to
be extraordinary and an acknowledgment by the Committee that Mr. Drudge's equity
based compensation was lower than that generally paid to a number of similarly
situated executives at comparable companies.

SECTION 162(M) OF THE INTERNAL REVENUE CODE

It is the Company's policy generally to design the Company's
compensation programs to comply with Section 162(m) of the Code, so that total
compensation paid to any employee will not exceed $1 million in any one year,
except for compensation payments in excess of $1 million which qualify as
"performance-based." The Company intends to comply with other requirements of
the performance-based compensation exclusion under Section 162(m), including
option pricing requirements and requirements governing the administration of the
1995 Equity Participation Plan, so that the deductibility of compensation paid
to top executives thereunder is not expected to be disallowed.

Compensation Committee:

Kevin P. Egan
J. Roger King
James V. Napier

13
<PAGE> 15

CORPORATE PERFORMANCE GRAPH

The following graph compares the cumulative total return on the
Company's Common Stock from the effective date of the Company's initial public
offering, September 25, 1995, to December 29, 1996, with the cumulative total
return of (a) the S&P 400 Index and (b) a peer group index selected by the
Company (the "Peer Group Index"), consisting of nine public companies that
specialize in providing personnel staffing services in the United States. All
cumulative returns assume the investment of $100 in each of the Company's Common
Stock, the S&P 400 Index and the Peer Group Index on September 25, 1995, and
assume the reinvestment of dividends.

[GRAPH HERE]

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
SEPTEMBER 25, 1995 December 31, 1995 December 29, 1996
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Personnel Group of America, Inc. 100 104.5 149.1
- ----------------------------------------------------------------------------------------------
S&P 400 100 100.3 119.6
- ----------------------------------------------------------------------------------------------
Peer Group* 100 118.8 144.7
- ----------------------------------------------------------------------------------------------
</TABLE>

*The Peer Group Index consists of the following companies: Interim
Services Inc., The Olsten Corporation, AccuStaff Incorporated, Barrett Business
Services Inc., Robert Half International Inc., Kelly Services, Inc., Manpower,
Inc., Norrell Corporation and Staff Builders Inc. Career Horizons, Inc., which
was included in the Peer Group Index in the proxy statement relating to last
year's annual meeting of shareholders, was omitted from this year's Peer Group
Index because it was acquired by AccuStaff Incorporated during 1996.

14
<PAGE> 16

PROPOSAL 2

AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION

The shareholders are being asked to adopt an amendment to the Company's
Certificate of Incorporation to increase the number of authorized shares of
Common Stock from 20,000,000 to 95,000,000. The Company currently has 20,000,000
authorized shares of Common Stock, of which 12,076,755 shares were issued and
outstanding as of March 28, 1997, and 5,000,000 authorized shares of Preferred
Stock, no par value (the "Preferred Stock"), none of which has been issued. The
Company also currently has reserved 1,200,000 shares for issuance pursuant to
the 1995 Equity Participation Plan (of which options with respect to 968,399
shares are currently outstanding), and the Board of Directors has proposed for
shareholder approval at the Annual Meeting an amendment to the 1995 Equity
Participation Plan to reserve at all times for issuance pursuant to that plan a
number of shares equal to 15% of the then outstanding Common Stock. See
"Amendment to the Company's 1995 Equity Participation Plan." The Board also has
proposed for shareholder approval at the Annual Meeting the 1997 Employee Stock
Purchase Plan, under which 500,000 shares of Common Stock would be reserved for
issuance. See "Approval of The 1997 Employee Stock Purchase Plan." The proposed
amendment to the Certificate of Incorporation would increase by 75,000,000 the
number of authorized shares of Common Stock and would not affect the number of
authorized shares of Preferred Stock. Adoption of the amendment requires the
affirmative vote of a majority of the outstanding shares of Common Stock. If
adopted by the shareholders, the proposed amendment will become effective upon
filing with the Secretary of State of Delaware of articles of amendment
certifying and setting forth the amendment.

If the amendment to the Certificate of Incorporation is adopted, the
Company would have approximately 81,723,245 authorized shares of Common Stock
(or approximately 80,611,732 shares, assuming approval of the proposed amendment
to the 1995 Equity Participation Plan and approval of the 1997 Employee Stock
Purchase Plan) that are neither issued nor reserved for issuance pursuant to
stock plans. The Board of Directors believes that it is advisable to have such
additional shares of Common Stock authorized in order to provide an added
element of flexibility in the Company's capital structure. Although the Company
has no present plans for the issuance of additional shares, the Board of
Directors of the Company believes that having additional Common Stock available
for issuance as the need may arise will enable the Company to take advantage of
business opportunities such as acquisitions without the delay and expense of
calling a meeting of shareholders to authorize such shares.

The proposed text of the amendment to the Certificate of Incorporation
is set forth in its entirety as Exhibit A attached hereto.

FOR THE REASONS SET FORTH ABOVE, THE BOARD UNANIMOUSLY RECOMMENDS A
VOTE FOR ADOPTION OF THE AMENDMENT TO THE CERTIFICATE OF INCORPORATION.

PROPOSAL 3

AMENDMENT TO THE COMPANY'S 1995 EQUITY PARTICIPATION PLAN

On February 26, 1997, the Board of Directors, subject to the approval
of the shareholders, amended the 1995 Equity Participation Plan (the "1995
Plan") to change the methodology of reserving shares of Common Stock available
for issuance under the 1995 Plan. Prior to the amendment, the 1995 Plan simply
reserved a fixed number of shares, 1,200,000 shares, for issuance under the
plan. The amendment changes the 1995 Plan to provide that at any time and from
time to time the number of shares reserved under the plan will equal 15% of the
Company's issued and outstanding Common Stock at such time. Based on the
outstanding Common Stock as of March 28, 1997, the number of shares reserved
under the amended 1995 Plan using this formula would be 1,811,513 shares. The
amendment will be effective as of February 26, 1997 if approved by the
shareholders. Approval of the amendment requires the affirmative vote of a
majority of the outstanding shares present or represented by proxy and entitled
to vote at the Annual Meeting.

The amendment to the 1995 Plan changes the methodology of reserving
shares of Common Stock that may be issued under the 1995 Plan by tying the
shares reserved at any time to the size of the outstanding share base at that
time. The Board of Directors believes this change is needed to permit the 1995
Plan to continue as an important means of attracting, holding and motivating key
employees. Without the amendment, the 1995 Plan by its terms would have only
255,691 shares left for issuance as of March 28, 1997, and the Board believes
that a change is necessary to allocate more shares to the 1995 Plan. The
amendment would have the short-term effect of achieving that goal, and long-term
would link further increases to growth in the Company's outstanding share base.
The 1995 Plan requires any amendment to increase the number of shares issuable
under the 1995 Plan (other than increases triggered by certain anti-dilution
provisions of the 1995 Plan) to be approved by the shareholders.

15
<PAGE> 17

SUMMARY OF THE 1995 PLAN

The following summary of the 1995 Plan is qualified in its entirety by
reference to the text of the 1995 Plan, a copy of which may be obtained, without
charge, by written request to the Company, 6302 Fairview Road, Suite 201,
Charlotte, North Carolina 28210, Attention: Corporate Secretary.

The 1995 Plan was adopted to attract and retain officers, key
employees, consultants and directors. Prior to the proposed amendment, an
aggregate of 1,200,000 shares of Common Stock (or their equivalent in other
equity securities), subject to adjustment for stock splits, stock dividends and
certain other types of recapitalizations, was authorized for issuance upon
exercise of options, stock appreciation rights ("SARs"), and other awards, or as
restricted or deferred stock awards under the 1995 Plan. The Compensation
Committee administers the 1995 Plan and determines the persons to whom options,
SARs, restricted stock and other awards are to be granted and the terms and
conditions, including the number of shares and the period of exercisability,
thereof; provided, however, that the Board, acting by a majority, generally
administers the 1995 Plan with respect to options granted to non-employee
directors. Options, SARs, restricted stock and other awards under the 1995 Plan
may be granted to individuals who are then officers or other employees of the
Company or any of its present or future subsidiaries and who are determined by
the Compensation Committee to be key employees. Such awards also may be granted
to consultants of the Company selected by the Compensation Committee for
participation in the 1995 Plan. Approximately 225 officers and other employees
are eligible to participate in the 1995 Plan.

The 1995 Plan authorizes the grant or issuance of various options and
other awards to employees and consultants, and the terms of each such option or
award will be set forth in separate agreements. In addition, non-employee
directors (including the directors who administer the plan) are eligible to
receive non-discretionary grants of non-qualified stock options ("NQSOs") under
the 1995 Plan pursuant to a formula. Pursuant to such formula, each of the
Company's non-employee directors received in September 1995 a grant of NQSOs to
purchase 6,250 shares of the Company's Common Stock at the initial public
offering price. Additionally, each non-employee director received or will
receive annual grants of options to purchase 3,125 shares of Common Stock in
1996 and 1997 and thereafter an annual grant of options to purchase 1,500
shares, in each case on the date of the Company's shareholders' meeting at which
such non-employee director was reelected and with an exercise price equal to the
fair market value of the Common Stock on the date of the grant. NQSOs may be
granted to an employee or consultant for any term specified by the Compensation
Committee 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 under Section 162(m) of the Internal Revenue
Code, may be less than fair market value on the date of grant (but not less than
par value), and may become exercisable (in the discretion of the Compensation
Committee) in one or more installments after the grant date. Of the NQSOs
granted to non-employee directors, 100% are fully vested and exercisable upon
grant, and the term of each such option shall be 10 years, subject to expiration
90 days after the director ceases to serve as a director, except upon the
director's retirement in accordance with the Company's retirement policy
applicable to directors. Incentive stock options may be granted only to
employees and, if granted, will be designed to comply with the provisions of the
Code and will be subject to restrictions contained in the Code, including a
required exercise price equal to at least 100% of fair market value of Common
Stock on the grant date and a 10-year restriction on their term, but may be
subsequently modified to disqualify them from treatment as an incentive stock
option. SARs may be granted to employees and consultants and may be granted in
connection and simultaneously with the grant of an option, with respect to a
previously granted option or independent of an option. Participants may receive
dividend equivalents representing the value of the dividends per share paid by
the Company, calculated with reference to the number of shares covered by the
stock options, SARs or performance awards held by the participant. Performance
awards may be granted by the Compensation Committee to employees and consultants
and may include bonus or "phantom" stock awards that provide for payments based
upon increases in the price of the Company's Common Stock over a predetermined
period. Restricted stock may be sold to employees and consultants at various
prices (but not below par value) and made subject to such restrictions as may be
determined by the Compensation Committee. Deferred stock may be awarded to
employees and consultants, typically without payment of consideration, but
subject to vesting conditions based on continued employment or on performance
criteria established by the Compensation Committee. Whereas purchasers of
restricted stock will have voting rights and will receive dividends prior to the
time when the restrictions lapse, recipients of deferred stock generally will
have no voting or dividend rights prior to the time when vesting conditions are
satisfied. Stock awards may be made to employees and consultants and the number
of shares shall be determined by the Compensation Committee and may be based
upon the fair market value, book value, net profits or other measure of the
value of Common Stock or other specific performance criteria.

16
<PAGE> 18

The exercise or purchase price for all options, SARs, restricted stock
and other rights to acquire Common Stock, together with any applicable tax
required to be withheld, may be paid in cash or at the discretion of the
Compensation Committee (or the Board, in the case of NQSOs granted to
non-employee directors), in shares of Common Stock owned by the optionee (or
issuable upon exercise of the option) or in other lawful consideration,
including services rendered.

The dates on which options or other awards under the 1995 Plan first
become exercisable and on which they expire will be set forth in individual
stock options or other agreements setting forth the terms of the awards. Such
agreements generally will provide that options and other awards expire upon
termination of the optionee's status as an employee or consultant, although the
Committee may provide that such options continue to be exercisable following a
termination without cause, or following a change in control of the Company, or
because of the grantee's retirement, death, disability or otherwise. Similarly,
restricted stock granted under the 1995 Plan which has not vested generally will
be subject to repurchase by the Company in the event of the grantee's
termination of employment or consultancy, although the Committee may make
exceptions, based on the reason for termination or on other factors, in the
terms of an individual restricted stock agreement.

No restricted stock, deferred stock, option, SAR or other right to
acquire Common Stock granted under the 1995 Plan may be assigned or transferred
by the grantee, except by will or the laws of intestate succession, although
such shares or the shares underlying such rights may be transferred if all
applicable restrictions have lapsed. During the lifetime of the holder of any
option or right, the option or right may be exercised only by the holder.

The shares subject to stock options, SARs or other awards which have
terminated or lapsed unexercised or which have been canceled upon grant of a new
option, SAR or other award, and shares which are withheld by the Company upon
the exercise of stock options or other awards in payment of the exercise price
thereof, will continue to be available for issuance under the 1995 Plan.

The Compensation Committee has the right to accelerate, in whole or in
part, from time to time, conditionally or unconditionally, the right to exercise
any option or other award granted under the 1995 Plan other than NQSOs granted
to non- employee directors.

All amendments of the 1995 Plan to increase the number of shares as to
which options, SARs, restricted stock and other awards may be granted (except
for adjustments resulting from stock splits and the like) require the approval
of the Company's shareholders. The 1995 Plan generally may be amended, modified,
suspended or terminated by the Compensation Committee, unless such action would
otherwise require shareholder approval as a matter of applicable law, regulation
or rule. Amendments of the 1995 Plan will not, without the consent of the
participant, affect such person's rights under an award previously granted,
unless the award itself otherwise expressly so provides. The 1995 Plan
terminates 10 years from the date it was adopted by the Company's Board of
Directors.

Federal Income Tax Consequences. Certain tax consequences of the 1995
Plan under current federal law are summarized in the following discussion, which
deals with the general tax principles applicable to the 1995 Plan and is
intended for general information only. Alternative minimum tax and state and
local income taxes are not discussed, and may vary depending on individual
circumstances and from locality to locality.

17
<PAGE> 19

For Federal income tax purposes, the recipient of NQSOs granted under
the 1995 Plan will not have taxable income upon the grant of the option, nor
will the Company then be entitled to any deduction. Generally, upon exercise of
NQSOs the optionee will realize ordinary income, and the Company will be
entitled to a deduction, in an amount equal to the difference between the option
exercise price and the fair market value of the stock at the date of exercise.
An optionee's basis for the stock for purposes of determining his gain or loss
on his subsequent disposition of the shares generally will be the fair market
value of the stock on the date of exercise of the NQSO. There is no taxable
income to an employee when an ISO is granted to him or when that option is
exercised; however, the amount by which the fair market value of the shares at
the time of exercise exceeds the option price will be an "item of tax
preference" for the optionee. Gain realized by an optionee upon sale of stock
issued on exercise of an ISO is taxable at capital gains rates, and no tax
deduction is available to the Company, unless the optionee disposes of the
shares within two years after the date of grant of the option or within one year
of the date the shares were transferred to the optionee. In such event the
difference between the option exercise price and the fair market value of the
shares on the date of the option's exercise will be taxed at ordinary income
rates, and the Company will be entitled to a deduction to the extent the
employee must recognize ordinary income. An ISO exercised more than three months
after an optionee's retirement from employment, other than by reason of death or
disability, will be taxed as an NQSO, with the optionee deemed to have received
income upon such exercise taxable at ordinary income rates. The Company will be
entitled to a tax deduction equal to the ordinary income, if any, realized by
the optionee. No taxable income is realized upon the receipt of an SAR, but upon
exercise of the SAR the fair market value of the shares (or cash in lieu of
shares) received must be treated as compensation taxable as ordinary income to
the recipient in the year of such exercise. The Company will be entitled to a
deduction for compensation paid in the same amount which the recipient realized
as ordinary income. An employee or consultant to whom restricted or deferred
stock is issued will not have taxable income upon issuance and the Company will
not then be entitled to a deduction, unless in the case of restricted stock an
election is made under Section 83(b) of the Code. However, when restrictions on
shares of restricted stock lapse, such that the shares are no longer subject to
repurchase by the Company, the employee will realize ordinary income and the
Company will be entitled to a deduction in an amount equal to the fair market
value of the shares at the date such restrictions lapse, less the purchase price
therefor. Similarly, when deferred stock vests and is issued to the employee or
consultant, the employee or consultant will realize ordinary income and the
Company will be entitled to a deduction in an amount equal to the fair market
value of the shares at the date of issuance. If an election is made under
Section 83(b) with respect to restricted stock, the employee will realize
ordinary income at the date of issuance equal to the difference between the fair
market value of the shares at that date less the purchase price therefor and the
Company will be entitled to a deduction in the same amount. The Code does not
permit a Section 83(b) election to be made with respect to deferred stock.

Under Section 162(m) of the Code, income tax deductions of
publicly-traded companies may be limited to the extent total compensation
(including base salary, annual bonus, stock option exercises and non-qualified
benefits) for certain executive officers exceeds $1 million (less the amount of
any "excess parachute payments" as defined in Section 280G of the Code) in any
one year. However, under Section 162(m), the deduction limit does not apply to
certain "performance-based" compensation established by a compensation committee
of outside directors and adequately disclosed to, and approved by, shareholders.
In particular, stock options and SARs will satisfy the performance-based
exception if the awards are made by a qualifying compensation committee, the
plan sets the maximum number of shares that can be granted to any particular
employee within a specified period and the compensation is based solely on an
increase in the stock price after the grant date (i.e. the option exercise price
is equal to or greater than the fair market value of the stock subject to the
award on the grant date).

18
<PAGE> 20

The table below sets forth certain information concerning grants under
the 1995 Plan during the fiscal year ended December 29, 1996 to (i) each officer
of the Company named in the Summary Compensation Table, (ii) all current
executive officers of the Company as a group, (iii) all non-employee directors
as a group and (iv) all employees other than the current executive officers as a
group.

PLAN BENEFITS
UNDER 1995 EQUITY PARTICIPATION PLAN

<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE (1) NUMBER OF UNITS (#)(2)
- ----------------- ---------------- ----------------------

<S> <C> <C>
Edward P. Drudge, Jr...................................... $151,800 220,000
Chairman and Chief Executive Officer

Peter R. Sollenne......................................... -- 20,000
President-Commercial Staffing Division

Gene C. Wilson............................................ 6,900 10,000
Senior Vice President

Rosemary Payne-Harris..................................... 6,900 10,000
Senior Vice President

All current executive officers as a group (5 persons)..... 209,400 260,000

All non-employee directors as a group (4 persons)......... 39,125 12,500

All employees other than current executive officers
as a group (182 persons)................................ 13,800 148,148
</TABLE>

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

(1) Dollar value is based on the difference between grant prices of stock
options and $25.63, the closing price of the Company's Common Stock on
March 10, 1997.

(2) All amounts shown are awards of options to purchase Common Stock.
Except for options granted to non-employee directors, which vested 100%
on the date of grant, these options are currently 20% vested, and will
continue vesting an additional 20% on each successive anniversary of
the grant date through the year 2000.

The proposed text of the amendment to the 1995 Plan is set forth in its
entirety as Exhibit B attached hereto.

FOR THE REASONS SET FORTH ABOVE, THE BOARD UNANIMOUSLY RECOMMENDS A
VOTE FOR THE APPROVAL OF THE AMENDMENT TO THE 1995 PLAN.

19
<PAGE> 21

PROPOSAL 4

APPROVAL OF THE 1997 EMPLOYEE STOCK PURCHASE PLAN

On February 26, 1997, the Board of Directors of the Company adopted the
1997 Employee Stock Purchase Plan (the "Stock Purchase Plan"), effective July 1,
1997, for the purpose of encouraging employee participation in the ownership of
the Company by offering eligible employees of the Company and its subsidiaries
an opportunity to purchase Common Stock of the Company at a discount through
payroll deductions. The Board of Directors believes that employee participation
in ownership is to the combined benefit of the employee, the Company, its
subsidiaries and the Company's shareholders. Accordingly, the Board of Directors
unanimously adopted, and proposes that the shareholders approve, the Stock
Purchase Plan. Shareholder approval is required to qualify the Stock Purchase
Plan for treatment as an "employee stock purchase plan" under Section 423 of the
Internal Revenue Code, and the Stock Purchase Plan will not be effective unless
shareholder approval is obtained.

The Stock Purchase Plan is set forth as Exhibit C attached hereto and
the description of the Stock Purchase Plan contained herein is qualified in its
entirety by reference to such Exhibit C.

Under the Stock Purchase Plan, eligible employees of the Company and
its subsidiaries may participate by electing to have payroll deductions made in
an amount of not less than 1% nor more than 7% of the employee's compensation,
provided that the Market Value (defined generally as the last reported sales
price of the Common Stock on a specified date) of Common Stock (determined at
the beginning of each "three-month Purchase Period") purchased in any year may
not exceed $25,000. All employees who meet specified criteria for hours worked
and months worked within a calendar year will be eligible to participate upon
completion of 180 days of continuing employment. However, any beneficial owner
of 5% or more of the Common Stock shall not be eligible to participate.

Eligible employees may elect to participate by delivering a completed
purchase agreement prior to the beginning of each Purchase Period. At the end of
each Purchase Period, each participant's payroll deductions are applied to
acquire Common Stock at a price equal to 85% of the Market Value of the Common
Stock on either the first day or the last day of the Purchase Period, whichever
is lower (the "Exercise Price"). Shares acquired under the Stock Purchase Plan
may not, except in the case of death or disability, be sold or otherwise
disposed of for at least six months after the last day of the Purchase Period in
which such shares were acquired.

Employees may voluntarily withdraw from participation in the Stock
Purchase Plan by notifying the Company at such time in advance as the
Compensation Committee shall determine. An employee's participation shall cease
upon termination of employment for any reason, or otherwise if such employee no
longer qualifies as an eligible employee. Upon any withdrawal from
participation, all payroll deductions not applied to purchase Common Stock will
be returned to the employee (except in the case of certain inactive employees
who are awaiting assignment).

The number of shares of Common Stock reserved for purchase under the
Stock Purchase Plan is 500,000. Except pursuant to an adjustment as a result of
a change in the Company's capital structure, the number of shares of Common
Stock reserved for purchase under the Stock Purchase Plan will not be decreased
as a result of a decrease in the number of shares outstanding. Such reserved
shares may be made available by the Company from either authorized and unissued
shares or treasury shares.

The Stock Purchase Plan will be administered by the Compensation
Committee, which will have the authority to make, adopt, construe and enforce
rules not inconsistent with the Stock Purchase Plan, to interpret the Stock
Purchase Plan, and to prescribe the contents of all forms and documents required
in connection with the Plan. The Stock Purchase Plan may be amended in any
respect at any time by the Board of Directors, except that where shareholder
approval is necessary or desirable to comply with applicable law, in which case
such amendment shall be conditioned on such approval. The Stock Purchase Plan
may be terminated at any time by the Board of Directors.

20
<PAGE> 22

FEDERAL INCOME TAX CONSIDERATIONS

The Stock Purchase Plan is intended to qualify as an "employee stock
purchase plan" within the meaning of Section 423 of the Code, and it is intended
to comply with the provisions of Sections 421 and 424 of the Code as well.

Under the Code as currently in effect, there are no federal income tax
consequences in connection with the acquisition of Common Stock pursuant to the
Stock Purchase Plan until the year in which the participant sells or otherwise
disposes of the shares, or, if earlier, the year in which the participant dies.
However, social security (FICA) taxes are applicable on the last day of each
Purchase Period (the "Exercise Date") on the amount by which purchase price is
discounted from the fair market value of the shares. If the shares are sold or
otherwise disposed of prior to a participant's death, then the income tax
consequences will depend upon whether or not the shares are sold within two
years after the first business day of the applicable three-month period in which
such shares were purchased (the "Offering Date").

If the shares are sold or disposed of more than two years after the
applicable Offering Date, then the participant will recognize ordinary income in
an amount equal to the lesser of (i) 15% of the fair market value of the shares
on the applicable Offering Date or (ii) the amount by which the fair market
value of the shares at the time of such sale or disposition exceeds the amount
paid for the shares, and the Company will not be entitled to any income tax
deduction. If the shares are sold or otherwise disposed of within two years
after the applicable Offering Date, a participant will generally recognize
ordinary income in the amount by which the fair market value of the shares on
the applicable Exercise Date exceeds the amount paid for the shares, and the
Company will be entitled to a corresponding income tax deduction.

In the event of the death of a participant prior to a sale or other
disposition of the shares (whether or not within two years after the applicable
Offering Date), a participant will be subject to ordinary income tax in an
amount equal to the lesser of (i) 15% of the fair market value of the shares on
the applicable Offering Date, or (ii) the amount, if any, by which the fair
market value of the shares as of the date of death exceeds the amount actually
paid for the shares.

In any case, the participant may also have a capital gain or loss
(long-term or short-term depending upon the length of time the shares were held)
in an amount equal to the difference between the amount realized upon the sale
and the participant's adjusted tax basis in the shares (the amount paid for the
shares plus the amount of ordinary income which the participant must recognize
at the time of the sale or other disposition).

The affirmative vote of a majority of the outstanding shares of Common
Stock present in person or represented by Proxy at the Annual Meeting and
entitled to vote is required to approve the adoption of the Stock Purchase Plan.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL
OF THE ADOPTION OF THE 1997 EMPLOYEE STOCK PURCHASE PLAN.

21
<PAGE> 23

PROPOSAL 5

RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS

The Board of Directors, on the recommendation of the Company's Audit
Committee, has selected Price Waterhouse LLP ("Price Waterhouse") as of March
17, 1997 as the Company's independent public accountants for the year ending
December 28, 1997. One or more representatives of Price Waterhouse LLP will be
present at the Annual Meeting, will have the opportunity to make a statement if
they desire to do so and are expected to be available to respond to appropriate
questions from shareholders. The Company has been advised by Price Waterhouse
LLP that the firm did not have any direct financial interest or any material
interest in the Company and its subsidiaries during the Company's most recent
fiscal year.

As the result of hiring a new Chief Financial Officer, Mr. James Hunt,
who has a family relationship with a partner in the Greensboro, North Carolina
office of Arthur Andersen LLP ("Arthur Andersen"), which had served as the
Company's independent public accountants since 1995, the Company received a
letter from Arthur Andersen dated March 17, 1997 indicating that it would
decline to stand for reappointment as the Company's independent public
accountants for the current fiscal year.

The reports of Arthur Andersen on the Company's financial statements
for the fiscal years ended December 31, 1995 and December 29, 1996 contained no
adverse opinion or disclaimer of opinion, nor were they qualified or modified as
to uncertainty, audit scope or accounting principles.

In connection with the audits of the Company's financial statements for
each of the fiscal years ended December 31, 1995 and December 29, 1996, there
were no disagreements with Arthur Andersen on matters of accounting principles
or practices, financial statement disclosure or auditing scope or procedures
which, if not resolved to the satisfaction of Arthur Andersen, would have caused
Arthur Andersen to make reference to such matter in its report.

The Company has furnished Arthur Andersen with a copy of the
disclosures in the three preceding paragraphs and, in response thereto, Arthur
Andersen has furnished the Company with a letter dated March 21, 1997, addressed
to the Securities and Exchange Commission, indicating no disagreement with the
foregoing statements.

One or more representatives of Arthur Andersen will be present at the
Annual Meeting, will have the opportunity to make a statement if they desire to
do so and are expected to be available to respond to appropriate questions from
Shareholders.

Approval of the proposal to ratify the selection of Price Waterhouse
requires the affirmative vote of a majority of the outstanding shares of Common
Stock present in person or represented by proxy at the annual meeting and
entitled to vote. Should the Shareholders vote negatively, the Board of
Directors will consider a change in independent public accountants for the next
fiscal year.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE PROPOSAL
TO RATIFY THE SELECTION OF PRICE WATERHOUSE LLP AS THE COMPANY'S INDEPENDENT
PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 28, 1997.

22
<PAGE> 24

PROPOSALS FOR 1998 ANNUAL MEETING OF SHAREHOLDERS

Shareholders who intend to present proposals for consideration at next
year's annual meeting are advised that any such proposal must be received by the
Secretary of the Company no later than the close of business on December 11,
1997 if such proposal is to be considered for inclusion in the proxy statement
and proxy appointment form relating to that meeting.

OTHER BUSINESS

The Board knows of no other business to be brought before the Annual
Meeting. If, however, any other business should properly come before the Annual
Meeting, the persons named in the accompanying proxy will vote proxies as in
their discretion they may deem appropriate, unless they are directed by a proxy
to do otherwise.

23
<PAGE> 25

EXHIBIT A

PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION

Paragraph (a) of Article IV of the Company's Restated Certificate of
Incorporation shall be amended and restated in its entirety by deleting the
current text of such paragraph (a) of Article IV and replacing it with the
following:

"(a) The Corporation is authorized to issue two classes of
shares to be designated, respectively, "Common Stock" and "Preferred
Stock." The total number of shares which the Corporation shall have
authority to issue is One Hundred Million (100,000,000) shares, and the
aggregate par value of all such shares which are to have a par value is
One Million (1,000,000). The total number of shares of Preferred Stock
which the Corporation shall have authority to issue is Five Million
(5,000,000) shares, and the par value of each share of Preferred Stock
is One Cent ($0.01). The total number of shares of Common Stock which
the Corporation shall have the authority to issue is Ninety-Five
Million (95,000,000) shares, and the par value of each share of Common
Stock is One Cent ($0.01)."

24
<PAGE> 26

EXHIBIT B

PROPOSED AMENDMENT TO 1995 EQUITY PARTICIPATION PLAN

The second sentence of Section 2.1(a) of the 1995 Equity Participation
Plan is hereby amended and restated in its entirety by deleting the current text
of such sentence and replacing it with the following:

"The aggregate number of such shares which may be issued upon
exercise of such options or rights upon any such awards under the Plan
shall not exceed 15% of the then issued and outstanding Common Stock of
the Company, and the number of shares reserved for issuance under the
Plan shall automatically be adjusted from time to time to an amount
equal to 15% of the Common Stock then issued and outstanding."

<PAGE> 27

EXHIBIT C

PERSONNEL GROUP OF AMERICA, INC.

EMPLOYEE STOCK PURCHASE PLAN

ARTICLE I

INTRODUCTION

Sec. 1.01 Statement of Purpose. The purpose of the Personnel Group of America,
Inc. Employee Stock Purchase Plan is to provide eligible employees of the
Company and its Subsidiaries, who wish to become stockholders, an opportunity to
purchase common stock of the Company. The Board of Directors of the Company
believes that employee participation in ownership will be to the mutual benefit
of both the employees and the Company.

Sec. 1.02 Internal Revenue Code Considerations. The Plan is intended to
constitute an "employee stock purchase plan" within the meaning of section 423
of the Internal Revenue Code of 1986, as amended.

ARTICLE II

DEFINITIONS

Sec. 2.01 "Board" means the Board of Directors of the Company.

Sec. 2.02 "Code" means the Internal Revenue Code of 1986, as amended.

Sec. 2.03 "Company" means Personnel Group of America, Inc., a Delaware
corporation.

Sec. 2.04 "Compensation" means the total remuneration paid, during the period of
reference, to an Employee by the Company or a Subsidiary, including regular
salary or wages, overtime payments, bonuses, commissions and vacation pay, to
which has been added (a) any elective deferral amounts by which the Employee has
had his current remuneration reduced for the purposes of funding a contribution
to any plan sponsored by the Company and satisfying the requirements of section
401(k) of the Code, and (b) any amounts by which the Employee's compensation has
been reduced pursuant to a compensation reduction agreement between the Employee
and the Company for the purpose of funding benefits through any cafeteria plan
sponsored by the Company meeting the requirements of section 125 of the Code.
There shall be excluded from "Compensation" for the purposes of the Plan,
whether or not reportable as income by the Employee, expense reimbursements of
all types, payments in lieu of expenses, the Company contributions to any
qualified retirement plan or other program of deferred compensation (except as
provided above), the Company contributions to Social Security or worker's
compensation, the costs paid by the Company in connection with fringe benefits
and relocation, including gross-ups, and any amounts accrued for the benefit of
Employee, but not paid, during the period of reference.

<PAGE> 28

Sec. 2.05 "Compensation Committee" means the Compensation Committee of the
Board.

Sec. 2.06 "Continuous Service" means the period of time during which the
Employee has been employed by the Company or a Subsidiary and during which there
has been no interruption of Employee's employment by the Company. For this
purpose, periods during which an Employee is on Temporary Inactive Status shall
not be considered to be interruptions of Continuous Service. If determined by
the Compensation Committee, periods of service with an entity prior to its
becoming a Subsidiary shall be taken into account.

Sec. 2.07 "Effective Date" shall mean July 1, 1997 if, within 12 months of that
date, the Plan is or has been approved at a meeting of the stockholders of the
Company by the affirmative vote of the holders of the majority of the
outstanding Stock of the Company.

Sec. 2.08 "Eligible Employee" means each person who:

(a) is an Employee whose customary employment is for more than 20 hours
per week and more than 5 months in any calendar year;

(b) is an Employee on the Effective Date, or otherwise has completed at
least 180 days of Continuous Service; and

(c) is not deemed for purposes of section 423 (b) (3) of the Code to
own capital stock possessing 5% or more of the total combined voting
power or value of all classes of capital stock of the Company.

Sec. 2.09 "Employee" means each person employed by the Company or a Subsidiary.

Sec. 2.10 "Exercise Date" means the last day of each Purchase Period.

Sec. 2.11 "Market Value" means, with respect to Stock, the fair market value of
such Stock, determined by such methods or procedures as shall be established
from time to time by the Compensation Committee; provided, however, that if the
Stock is listed on a national securities exchange or quoted in an interdealer
quotation system, the Market Value of such Stock on a given date shall be based
upon the last sales price or, if unavailable, the average of the closing bid and
asked prices per share of the Stock on such date (or, if there was no trading or
quotation in the Stock on such date, on the next preceding date on which there
was trading or quotation) as provided by one of such organizations.

2
<PAGE> 29

Sec. 2.12 "Offering" means the offering of shares of Stock under the Plan.

Sec. 2.13 "Offering Date" means the first business day of each July, October,
January and April during which the Plan is in effect, or such dates as may
otherwise be specified by the Compensation Committee.

Sec. 2.14 "Participant" means each Eligible Employee who elects to participate
in the Plan.

Sec. 2.15 "Plan" means the Personnel Group of America, Inc. Employee Stock
Purchase Plan, as the same is set forth herein and as may hereafter be amended.

Sec. 2.16 "Purchase Agreement" means the document prescribed by the Compensation
Committee pursuant to which an Eligible Employee has enrolled to be a
Participant.

Sec. 2.17 "Purchase Period" means the period beginning on an Offering Date and
ending on the business day preceding the next following Offering Date.

Sec. 2.18 "Purchase Price" means such term as it is defined in Section 4.03
hereof.

Sec. 2.19 "Stock" means the common stock, $.01 par value, of the Company.

Sec. 2.20 "Stock Purchase Account" means a noninterest bearing account
consisting of all amounts withheld from an Employee's Compensation (or otherwise
paid into the Plan) for the purpose of purchasing shares of Stock for such
employee under the Plan, reduced by all amounts applied to the purchase of Stock
for such Employee under the Plan.

Sec. 2.21 "Subsidiary" shall mean a corporation described in section 424(f) of
the Code that has, with the permission of the Board, adopted the Plan.

Sec. 2.22 "Temporary Inactive Status" shall describe the status of a former
hourly Employee whose employment was terminated upon completion of an assignment
for the Company or a Subsidiary, for so long as such former Employee (i) remains
available for future assignments with the Company or a Subsidiary, (ii) has not,
directly or indirectly, accepted an assignment from or a position with an entity
unaffiliated with the Company and its Subsidiaries, and (iii) otherwise remains
in good standing with the Company and its Subsidiaries.

3
<PAGE> 30

ARTICLE III

ADMISSION TO PARTICIPATION

Sec. 3.01 Initial Participation. Any Eligible Employee may elect to be a
Participant and may become a Participant by executing and filing with the
Compensation Committee a Purchase Agreement at such time in advance and on such
forms as prescribed by the Compensation Committee. The effective date of an
Eligible Employee's participation shall be the Offering Date next following the
date on which the Compensation Committee receives from the Eligible Employee a
properly executed and timely filed Purchase Agreement. Participation in the Plan
will continue automatically from one Purchase Period to another unless notice to
the contrary is given pursuant to Section 3.02.

Sec. 3.02 Voluntary Discontinuance of Participation. Any Participant may
voluntarily withdraw from the Plan by filing a Notice of Withdrawal with the
Compensation Committee at such time in advance as the Compensation Committee may
specify. Upon such withdrawal, there shall be paid to the Participant the
amount, if any, standing to his credit in his Stock Purchase Account.

Sec. 3.03 Involuntary Discontinuance of Participation. If a Participant ceases
to be an Eligible Employee, the entire amount, if any, standing to the
Participant's credit in his Stock Purchase Account shall be refunded to him.
Notwithstanding the foregoing, should a Participant cease to be an Eligible
Employee by reason of acquiring Temporary Inactive Status, such Participant may
continue to participate through the end of the Purchase Period during which such
status was acquired with respect to payroll deductions attributable to the
portion of the Purchase Period prior to the time such status was acquired.

Sec. 3.04 Readmission to Participation. Any Eligible Employee who has previously
been a Participant, who has discontinued participation, and who wishes to be
reinstated as a Participant may again become a Participant for any subsequent
Purchase Period by executing and filing with the Compensation Committee, at such
time in advance as the Compensation Committee shall determine, a new Purchase
Agreement on forms provided by the Compensation Committee. Reinstatement to
Participant status shall be effective no earlier than the Offering Date that
occurs six months following the Exercise Date for the Purchase Period in which
the Eligible Employee discontinued participation.

4
<PAGE> 31

ARTICLE IV

STOCK PURCHASE

Sec. 4.01 Reservation of Shares. There shall be 500,000 shares of Stock reserved
for the Plan, subject to adjustment in accordance with the antidilution
provisions hereinafter set forth. Except as provided in Section 5.02 hereof, the
aggregate number of shares that may be purchased under the Plan shall not exceed
the number of shares reserved for the Plan.

Sec. 4.02 Limitation on Shares Available. The maximum number of shares of Stock
that may be purchased for each Participant on an Exercise Date is the lower of
(a) the number of shares of Stock that can be purchased by applying the full
balance of his Stock Purchase Account to such purchase of shares at the Price
(as hereinafter determined), or (b) the Participant's proportionate part of the
maximum number of whole shares of Stock available within the limitation
established by the maximum aggregate number of such shares reserved for the
Plan, as stated in Section 4.01 hereof. Notwithstanding the foregoing, if any
person entitled to purchase shares pursuant to any offering hereunder would be
deemed for the purposes of section 423(b) (3) of the Code to own stock
(including any number of shares that such person would be entitled to purchase
hereunder) possessing 5% or more of the total combined voting power or value of
all classes of capital stock of Company, the maximum number of shares that such
person shall be entitled to purchase pursuant to the Plan shall be reduced to
that number which, when added to the number of shares of Stock that such person
is so deemed to own (excluding any number of shares that such person would be
entitled to purchase hereunder), is one less than such 5%. Any portion of a
Participant's Stock Purchase Account that cannot be applied by reason of the
foregoing limitation shall remain in the Participant's Stock Purchase Account
for application to the purchase of Stock on the next Offering Date (unless
withdrawn before that Offering Date).

Sec. 4.03 Purchase Price of Shares. The Purchase Price per share of the Stock
sold to Participants pursuant to any Offering shall be the sum of (a) 85% of the
Market Value of such share on the Offering Date on which such Offering commences
or on the Exercise Date on which such Offering expires, whichever is lower, and
(b) any transfer, excise or similar tax imposed on the transaction pursuant to
which such share of Stock is purchased. If the Exercise Date with respect to the
purchase of Stock is a day on which the Stock is selling ex-dividend but is on
or before the record date for such dividend, then for Plan purposes the Purchase
Price per share will be increased by an amount equal to the dividend per share.
In no event shall the Purchase Price be less than the par value of the Stock.

Sec. 4.04 Exercise of Purchase Privilege.

(a) Subject to the provisions of Section 4.02 above, if on the date of
the last paycheck of a Participant issued prior to any Exercise Date
there is a bank credit in the Participant's Stock Purchase Account,
there shall be purchased for the Participant at the Purchase Price of
the Purchase Period that expires on such Exercise Date the largest
number of whole shares of Stock as can be purchased with the entire
amount standing to the Participant's credit in his Stock Purchase
Account on such paycheck issue date. Each such purchase shall be deemed
to have occurred on the Exercise Date occurring at the close of the
Offering for which the purchase was made.

5
<PAGE> 32

(b) Any amount remaining in the Stock Purchase Account on the Exercise
Date after the purchase of the maximum number of whole shares shall
remain in the Stock Purchase Account to the credit of the Participant
and be applied to purchase additional shares of Stock on subsequent
Exercise Dates.

(c) Notwithstanding anything contained herein to the contrary, a
Participant may not during any calendar year purchase shares of Stock
having an aggregate Market Value, determined at the time of each
Offering Date during such calendar year, of more than $25,000.

Sec. 4.05 Establishment of Stock Purchase Account. Each Participant shall
authorize payroll deductions from Compensation for the purposes of funding his
Stock Purchase Account. In the Purchase Agreement, each Participant shall
authorize a deduction from each payment of his Compensation during a Purchase
Period, which deduction shall be not less than 1% nor more than 7% of the gross
amount of such payment, subject to Section 4.04 (c). Subject to Section 3.02, a
Participant may not reduce or increase his payroll deduction rate during any
Purchase Period. However, a Participant may change the deduction to any
permissible level for any subsequent Offering by filing notice thereof at such
time preceding the Offering Date on which such subsequent Offering commences as
the Compensation Committee shall determine.

Sec. 4.06 Payment for Stock. The Purchase Price for all shares of Stock
purchased by a Participant under the Plan shall be paid out of the Participant's
Stock Purchase Account. As of each Exercise Date, the entire amount standing to
the credit of each Participant in his Stock Purchase Account on the date of the
last paycheck issued to the Participant prior to the Exercise Date in the
Purchase Period that expires on such Exercise Date shall be charged with the
aggregate Purchase Price of the shares of Stock purchased by such Participant on
the Exercise Date. No interest shall be paid or payable with respect to any
amount held in the Participant's Stock Purchase Account.

Sec. 4.07 Share Ownership; Issuance of Certificates.

(a) The shares purchased by a Participant on an Exercise Date shall,
for all purposes, be deemed to have been issued and/or sold at the
close of business on such Exercise Date. Prior to that time, none of
the rights or privileges of a stockholder of the Company shall inure to
the Participant with respect to such shares. All the shares of Stock
purchased under the Plan shall be delivered by the Company in a manner
as determined by the Compensation Committee.

6
<PAGE> 33

(b) The Compensation Committee, in its sole discretion, may determine
that the shares of Stock shall be delivered by the Company (i) by
issuing and delivering to the Participant a certificate for the number
of whole shares of Stock purchased by such Participant on an Exercise
Date or during a calendar year, or (ii) by issuing and delivering a
certificate or certificates for the number of shares of Stock purchased
by all Participants on an Exercise Date or during a calendar year to a
member firm of the New York Stock Exchange which is also a member of
the National Association of Securities Dealers, as selected by the
Compensation Committee from time to time, which shares shall be
maintained by such member firm in separate brokerage accounts of each
participant, or (iii) by issuing and delivering a certificate or
certificates for the number of shares of Stock purchased by all
Participants on an Exercise Date or during the calendar year to a bank
or trust company or affiliate thereof, as selected by the Compensation
Committee from time to time, which shares shall be maintained by such
bank or trust company or affiliate in separate accounts for each
Participant or, if he designates on his Stock Purchase Agreement, in
his name jointly with his spouse, with right of survivorship. A
Participant who is a resident of a jurisdiction that does not recognize
such joint tenancy may have a certificate or account in his name as
tenant in common with his spouse, without right of survivorship. Such
designation may be changed by filing a notice thereof signed by the
Participant and his spouse. Such spouse shall be bound by all of the
terms and conditions of the Plan as if such spouse were a Participant.

Sec. 4.08 Restrictions on Resale. Stock acquired under the Plan may not be sold
or otherwise disposed of for at least six months after the Exercise Date on
which the shares were acquired, except in the case of death or disability. Any
Stock certificates delivered to a Participant prior to the expiration of such
six-month period shall contain a legend to reflect such restriction.

ARTICLE V

SPECIAL ADJUSTMENTS

Sec. 5.01 Shares Unavailable. If, on any Exercise Date, the aggregate funds
available for the purchase of Stock would purchase a number of shares in excess
of the number of shares then available for purchase under the Plan, the
following events shall occur:

(a) The number of shares that would otherwise be purchased by each
Participant shall be proportionately reduced on the Exercise Date in
order to eliminate such excess;

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<PAGE> 34

(b) The Plan shall automatically terminate immediately after the
Exercise Date as of which the supply of available shares is exhausted;
and

Sec. 5.02 Antidilution Provisions. The aggregate number of shares of Stock
reserved for purchase under the Plan, as hereinabove provided, and the
calculation of the Purchase Price per share may be appropriately adjusted to
reflect any increase or decease in the number of issued shares of Stock
resulting from a subdivision or consolidation of shares or other capital
adjustment, or the payment of a stock dividend, or other increase or decrease in
such shares, if effected without receipt of consideration by the Company. Any
such adjustment shall be made by the Compensation Committee acting with the
consent of, and subject to the approval of, the Board.

Sec. 5.03 Effect of Certain Transactions. Subject to any required action by the
stockholders, if the Company shall be the surviving or resulting corporation in
any merger or consolidation, or if the Company shall be merged for the purpose
of changing the jurisdiction of its incorporation, any Offering hereunder shall
pertain to and apply to the shares of stock of the Company or the survivor.
However, in the event of a dissolution or liquidation of the Company, or of a
merger or consolidation in which the Company is not the surviving or resulting
corporation, the Plan and any Offering hereunder shall terminate upon the
effective date of such dissolution, liquidation, merger or consolidation, and
the balance then standing to the credit of each Participant in his Stock
Purchase Account shall be returned to him.

ARTICLE VI

MISCELLANEOUS

Sec. 6.01 Nonalienation. The right to purchase shares of Stock under the Plan is
personal to the Participant, is exercisable only by the Participant during his
lifetime except as hereinafter set forth, and may not be assigned or otherwise
transferred by the Participant. Notwithstanding the foregoing, there shall be
delivered to the executor, administrator or other personal representative of a
deceased Participant such shares of Stock and such residual balance as may
remain in the Participant's Stock Purchase Account as of the date the
Participant's death occurs. However, such representative shall be bound by the
terms and conditions of the Plan as if such representative were a Participant.

Sec. 6.02 Administrative Costs. The Company shall pay all Administrative
expenses associated with the operation of the Plan. No Administrative charges
shall be levied against the Stock Purchase Accounts of the Participants.

Sec. 6.03 Collection of Taxes. The Company shall be entitled to require any
Participant to remit, through payroll withholding or otherwise, any tax that it
determines it is so obligated to collect with respect to the issuance of Stock
hereunder, or the subsequent sale or disposition of such Stock, and the
Compensation Committee shall institute such mechanisms as shall insure the
collection of such taxes.

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<PAGE> 35

Sec. 6.04 Compensation Committee. The Compensation Committee shall have the
authority and power to administer the Plan and to make, adopt, construe and
enforce rules and regulations not inconsistent with the provisions of the Plan.
The Compensation Committee shall adopt and prescribe the contents of all forms
required in connection with the administration of the Plan, including, but not
limited to the Purchase Agreement, payroll withholding authorizations,
withdrawal documents and all other notices required hereunder. The Compensation
Committee shall have the fullest discretion permissible under law in the
discharge of its duties. The Compensation Committee's interpretations and
decisions in respect of the Plan, the rules and regulations pursuant to which it
is operated, and the rights of Participants hereunder shall be final and
conclusive.

Sec. 6.05 Amendment of the Plan. The Board may amend the Plan without the
consent of stockholders or Participants, except that any such action shall be
subject to the approval of the Company's stockholders at or before the next
annual meeting of stockholders for which the record date is after such Board
action if such stockholder approval is required by any federal or state law or
regulation or the rules of any stock exchange or automated quotation system on
which the Stock may then be listed or quoted, and the Board may otherwise, in
its discretion, determine to submit other such changes to the Plan to
stockholders for approval; provided, however, that, without the consent of an
affected Participant, no such action may materially impair the rights of such
Participant under any award theretofore granted to him.

Sec. 6.06 Termination of the Plan. The Plan shall continue in effect unless
terminated pursuant to action by the Board, which shall have the right to
terminate the Plan at any time without prior notice to any Participant and
without liability to any Participant. Upon the termination of the Plan, the
balance, if any, then standing to the credit of each Participant in his Stock
Purchase Account shall be refunded to him.

Sec. 6.07 Repurchase of Stock. The Company shall not be required to purchase or
repurchase from any Participant any of the shares of Stock that the Participant
acquired under the Plan.

Sec. 6.08 Notice. A Purchase Agreement and any notice that a Participant files
pursuant to the Plan shall be on the form prescribed by the Compensation
Committee and shall be effective only when received by the Compensation
Committee.

Sec. 6.09 Government Regulation. The Company's obligation to sell and to deliver
the Stock under the Plan is at all times subject to all approvals of any
governmental authority required in connection with the authorization, issuance,
sale or delivery of such Stock.

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<PAGE> 36

Sec. 6.10 Headings, Captions, Gender. The headings and captions herein are for
convenience of reference only and shall not be considered as part of the text.
The masculine shall include the feminine, and vice versa.

Sec. 6.11 Severability of Provisions; Prevailing Law. The provisions of the Plan
shall be deemed severable. In the event any such provision is determined to be
unlawful or unenforceable by a court of competent jurisdiction or by reason of a
change in an applicable statute, the Plan shall continue to exist as though such
provision had never been included therein (or, in the case of a change in an
applicable statute, had been deleted as of the date of such change). The Plan
shall be governed by the laws of the State of Delaware, to the extent such laws
are not in conflict with, or superseded by, federal law.

<PAGE> 37

APPENDIX A

[DETACH HERE]

PROXY

PERSONNEL GROUP OF AMERICA, INC.
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 21, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Edward P. Drudge, Jr. and Ken R. Bramlett,
Jr. as Proxies, each with the power to appoint his substitute, and hereby
authorizes each of them to represent and to vote, as designated on the reverse
side, all the shares of common stock of Personnel Group of America, Inc. (the
"Company") held of record by the undersigned on March 28, 1997, at the annual
meeting of shareholders to be held on May 21, 1997 or any adjournment thereof.

CONTINUED AND TO BE SIGNED ON REVERSE SIDE
[See reverse side]

- -----------------------------------------------------------------------------
detach here

[X] Please mark votes as in this example.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH PROPOSAL, AND THIS PROXY WILL
BE VOTED FOR EACH PROPOSAL AND FOR THE ELECTION OF THE DIRECTOR NOMINEES NAMED
HEREIN UNLESS THE SHAREHOLDER DIRECTS OTHERWISE, IN WHICH CASE IT WILL BE VOTED
AS DIRECTED.

1. ELECTION OF DIRECTORS:

NOMINEES: Kevin P. Egan, J. Roger King
FOR [ ] WITHHELD [ ]

[ ] _______________________________________
For both nominees except as noted above

MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW [ ]

2. Proposal to amend the Company's Certificate of Incorporation to increase
the Company's authorized Common Stock.

FOR [ ] AGAINST [ ] ABSTAIN [ ]

3. Proposal to amend the Company's 1995 Equity Participation Plan.

FOR [ ] AGAINST [ ] ABSTAIN [ ]

4. Proposal to approve the Company's 1997 Employee Stock Purchase Plan.

FOR [ ] AGAINST [ ] ABSTAIN [ ]

5. Proposal to ratify the selection of Price Waterhouse LLP as the Company's
independent public accountants.

FOR [ ] AGAINST [ ] ABSTAIN [ ]

6. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.

The undersigned acknowledges receipt of the Notice of Annual Meeting and Proxy
Statement dated April 10, 1997, and revokes all proxies heretofore given by the
undersigned.

PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
POSTAGE PREPAID ENVELOPE.

Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a Partnership, please sign in partnership name by
authorized person.

Signature:________________________Date:_____________

<PAGE> 38

APPENDIX B

THE 1995 EQUITY PARTICIPATION PLAN
OF
PERSONNEL GROUP OF AMERICA, INC.

Personnel Group of America, Inc., a Delaware corporation, has
adopted The 1995 Equity Participation Plan of Personnel Group of America, Inc.
(the "Plan"), effective September 21, 1995, for the benefit of its eligible
employees, consultants and directors. The Plan consists of two plans, one for
the benefit of key Employees (as such term is defined below) and consultants and
one for the benefit of Independent Directors (as such term is defined below).

The purposes of this Plan are as follows:

(1) To provide an additional incentive for directors, key
Employees and consultants to further the growth, development and financial
success of the Company by personally benefiting through the ownership of Company
stock and/or rights which recognize such growth, development and financial
success.

(2) To enable the Company to obtain and retain the services of
directors, key Employees and consultants considered essential to the long range
success of the Company by offering them an opportunity to own stock in the
Company and/or rights which will reflect the growth, development and financial
success of the Company.

ARTICLE I

DEFINITIONS

1.1 General. Wherever the following terms are used in this
Plan they shall have the meaning specified below, unless the context clearly
indicates otherwise.

1.2 Award Limit. "Award Limit" shall mean two hundred thousand
(200,000) shares of Common Stock.

1.3 Board. "Board" shall mean the Board of Directors of the
Company.

1.4 Code. "Code" shall mean the Internal Revenue Code of 1986,
as amended.

1.5 Committee. "Committee" shall mean the Compensation
Committee of the Board, or a subcommittee of the Board, appointed as provided in
Section 9.1.

1.6 Common Stock. "Common Stock" shall mean the common stock
of the Company, par value $.01 per share, and any equity security of the Company
issued or authorized to be issued in the future, but excluding, any warrants,
options or other rights to purchase Common Stock. Debt securities of the Company
convertible into Common Stock shall be deemed equity securities of the Company.

1.7 Company. "Company" shall mean Personnel Group of
America, Inc., a Delaware corporation.

<PAGE> 39

1.8 Deferred Stock. "Deferred Stock" shall mean Common Stock
awarded under Article VII of this Plan.

1.9 Director. "Director" shall mean a member of the Board.

1.10 Dividend Equivalent. "Dividend Equivalent" shall mean a
right to receive the equivalent value (in cash or Common Stock) of dividends
paid on Common Stock, awarded under Article VII of this Plan.

1.11 Employee. "Employee" shall mean any officer or other
employee (as defined in accordance with Section 3401(c) of the Code) of the
Company, or of any corporation which is a Subsidiary.

1.12 Exchange Act. "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.

1.13 Fair Market Value. "Fair Market Value" of a share of
Common Stock as of a given date shall be (i) the mean between the highest and
lowest selling price of a share of Common Stock on the principal exchange on
which shares of Common Stock are then trading, if any, on such date, or if
shares were not traded on such date, then on the closest preceding date on which
a trade occurred, or (ii) if Common Stock is not traded on an exchange, the mean
between the closing representative bid and asked prices for the Common Stock on
such date as reported by NASDAQ or, if NASDAQ is not then in existence, by its
successor quotation system; or (iii) if Common Stock is not publicly traded, the
Fair Market Value of a share of Common Stock as established by the Committee (or
the Board, in the case of Options granted to Independent Directors) acting in
good faith.

1.14 Grantee. "Grantee" shall mean an Employee or consultant
granted a Performance Award, Dividend Equivalent, Stock Payment or Stock
Appreciation Right, or an award of Deferred Stock, under this Plan.

1.15 Incentive Stock Option. "Incentive Stock Option" shall
mean an option which conforms to the applicable provisions of Section 422 of the
Code and which is designated as an Incentive Stock Option by the Committee.

1.16 Independent Director. "Independent Director" shall mean a
member of the Board who is not an Employee of the Company.

1.17 Non-Qualified Stock Option. "Non-Qualified Stock Option"
shall mean an Option which is not designated as an Incentive Stock Option by the
Committee.

1.18 Option. "Option" shall mean a stock option granted under
Article III of this Plan. An Option granted under this Plan shall, as determined
by the Committee, be either a Non-Qualified Stock Option or an Incentive Stock
Option; provided, however, that Options granted to Independent Directors and
consultants shall be Non-Qualified Stock Options.

1.19 Optionee. "Optionee" shall mean an Employee, consultant
or Independent Director granted an Option under this Plan.

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<PAGE> 40

1.20 Performance Award. "Performance Award" shall mean a cash
bonus, stock bonus or other performance or incentive award that is paid in cash,
Common Stock or a combination of both, awarded under Article VII of this Plan.

1.21 Plan. "Plan" shall mean The 1995 Equity Participation
Plan of Personnel Group of America, Inc.

1.22 Restricted Stock. "Restricted Stock" shall mean Common
Stock awarded under Article VI of this Plan.

1.23 Restricted Stockholder. "Restricted Stockholder" shall
mean an Employee or consultant granted an award of Restricted Stock under
Article VI of this Plan.

1.24 Rule 16b-3. "Rule 16b-3" shall mean that certain Rule
16b-3 under the Exchange Act, as such Rule may be amended from time to time.

1.25 Stock Appreciation Right. "Stock Appreciation Right"
shall mean a stock appreciation right granted under Article VIII of this Plan.

1.26 Stock Payment. "Stock Payment" shall mean (i) a payment
in the form of shares of Common Stock, or (ii) an option or other right to
purchase shares of Common Stock, as part of a deferred compensation arrangement,
made in lieu of all or any portion of the compensation, including without
limitation, salary, bonuses and commissions, that would otherwise become payable
to a key Employee or consultant in cash, awarded under Article VII of this Plan.

1.27 Subsidiary. "Subsidiary" shall mean any corporation in an
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain then owns
stock possessing 50 percent or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.

1.28 Termination of Consultancy. "Termination of Consultancy"
shall mean the time when the engagement of Optionee, Grantee or Restricted
Stockholder as a Consultant to the Company or a Subsidiary is terminated for any
reason, with or without cause, including without limitation, resignation,
discharge, death or retirement; but excluding terminations where there is a
simultaneous commencement of employment with the Company or any Subsidiary. The
Committee, in its absolute discretion, shall determine the effect of all matters
and questions relating to Termination of Consultancy, including, but not by way
of limitation, the question of whether a Termination of Consultancy resulted
from a discharge for good cause, and all questions of whether particular leaves
of absence constitute Terminations of Employment. Notwithstanding any other
provision of this Plan, the Company or any Subsidiary has an absolute and
unrestricted right to terminate a consultant's service at any time for any
reason whatsoever, with or without cause, except to the extent expressly
provided otherwise in writing.

1.29 Termination of Directorship. "Termination of
Directorship" shall mean the time when an Optionee who is an Independent
Director ceases to be a Director for any reason, including, but not by way of
limitation, a termination by resignation, failure to be elected, death or
retirement. The Board, in its sole and absolute discretion, shall determine the
effect of all matters and questions relating to Termination of Directorship.

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<PAGE> 41

1.30 Termination of Employment. "Termination of Employment"
shall mean the time when the employee-employer relationship between the
Optionee, Grantee or Restricted Stockholder and the Company or any Subsidiary is
terminated for any reason, including, but not by way of limitation, a
termination by resignation, discharge, death, disability or retirement; but
excluding (i) terminations where there is a simultaneous reemployment,
continuing employment of an Optionee, Grantee or Restricted Stockholder by the
Company or any Subsidiary, (ii) at the discretion of the Committee, terminations
which result in a temporary severance of the employee-employer relationship, and
(iii) at the discretion of the Committee, terminations which are followed by the
simultaneous establishment of a consulting relationship by the Company or a
Subsidiary with the former employee. The Committee, in its absolute discretion,
shall determine the effect of all matters and questions relating to Termination
of Employment, including, but not by way of limitation, the question of whether
a Termination of Employment resulted from a discharge for good cause, and all
questions of whether particular leaves of absence constitute Terminations of
Employment; provided, however, that, with respect to Incentive Stock Options, a
leave of absence, change in status from an employee to an independent contractor
or other change in the employee-employer relationship shall constitute a
Termination of Employment if, and to the extent that, such leave of absence,
change in status or other change interrupts employment for the purposes of
Section 422(a)(2) of the Code and the then applicable regulations and revenue
rulings under said Section. Notwithstanding any other provision of this Plan,
the Company or any Subsidiary has an absolute and unrestricted right to
terminate an Employee's employment at any time for any reason whatsoever, with
or without cause, except to the extent expressly provided otherwise in writing.

ARTICLE II

SHARES SUBJECT TO PLAN

2.1 Shares Subject to Plan.

(a) The shares of stock subject to Options, awards of
Restricted Stock, Performance Awards, Dividend Equivalents, awards of Deferred
Stock, Stock Payments or Stock Appreciation Rights shall be Common Stock,
initially shares of the Company's Common Stock, par value $.01 per share. The
aggregate number of such shares which may be issued upon exercise of such
options or rights or upon any such awards under the Plan shall not exceed one
million two hundred (1,200,000). The shares of Common Stock issuable upon
exercise of such options or rights or upon any such awards may be either
previously authorized but unissued shares or treasury shares.

(b) The maximum number of shares which may be subject to
Options or Stock Appreciation Rights granted under the Plan to any individual in
any calendar year shall not exceed the Award Limit. To the extent required by
Section 162(m) of the Code, shares subject to Options which are cancelled
continue to be counted against the Award Limit and if, after grant of an Option,
the price of shares subject to such Option is reduced, the transaction is
treated as a cancellation of the Option and a grant of a new Option and both the
Option deemed to be cancelled and the Option deemed to be granted are counted
against the Award Limit. Furthermore, to the extent required by Section 162(m)
of the Code, if, after grant of a Stock Appreciation Right, the base amount on
which stock appreciation is calculated is reduced to reflect a reduction in the
Fair Market Value of the Company's Common Stock, the transaction is treated as a
cancellation of the Stock Appreciation Right and a grant of a new Stock
Appreciation Right and both the Stock Appreciation Right deemed to be cancelled
and the Stock Appreciation Reheat deemed to be granted are counted against the
Award Limit.

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<PAGE> 42

2.2 Unexercised Options and Other Rights. If any Option, or
other right to acquire shares of Common Stock under any other award under this
Plan, expires or is cancelled without having been fully exercised, the number of
shares subject to such Option or other right but as to which such Option or
other right was not exercised prior to its expiration or cancellation may again
be optioned, granted or awarded hereunder, subject to the limitations of Section
2.1. Shares of Common Stock which are withheld by the Company upon the exercise
of any Option or other award under this Plan in payment of the exercise price
thereof may again be optioned, granted or awarded hereunder, subject to the
limitations of Section 2.1.

ARTICLE III

GRANTING OF OPTIONS

3.1 Eligibility. Subject to the Award Limit, any Employee or
consultant selected by the Committee pursuant to Section 3.4(a)(i) shall be
eligible to be granted an Option. Each Independent Director of the Company shall
be eligible to be granted Options at the times and in the manner set forth in
Section 3.4(d).

3.2 Disqualification for Stock Ownership. No person may be
granted an Incentive Stock Option under this Plan if such person, at the time
the Incentive Stock Option is granted, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or any then existing Subsidiary unless such Incentive Stock Option
conforms to the applicable provisions of Section 422 of the Code.

3.3 Qualification of Incentive Stock Options. No Incentive
Stock Option shall be granted unless such Option, when granted, qualifies as an
"incentive stock option" under Section 422 of the Code. No Incentive Stock
Option shall be granted to any person who is not an Employee.

3.4 Granting of Options.

(a) The Committee shall from time to time, in its absolute
discretion, and subject to the applicable limitations of this Plan:

(i) Determine which Employees are key Employees and
select from among the key Employees or consultants (including Employees
or consultants who have previously received Options or other awards
under this Plan) such of them as in its opinion should be granted
Options;

(ii) Subject to the Award Limit, determine the
number of shares to be subject to such Options granted to the selected
key Employees or consultants;

(iii) Determine whether such Options are to be
Incentive Stock Options or Non-Qualified Stock Options and whether such
Options are to qualify as performance-based compensation as described
in Section 162(m)(4)(C) of the Code; and

(iv) Determine the terms and conditions of such
Options, consistent with this Plan; provided, however, that the terms
and conditions of Options intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall
include, but not be

5
<PAGE> 43

limited to, such terms and conditions as may be necessary to
meet the applicable provisions of Section 162(m) of the Code.

(b) Upon the selection of a key Employee or consultant to be
granted an Option, the Committee shall instruct the Secretary of the Company to
issue the Option and may impose such conditions on the grant of the Option as it
deems appropriate. Without limiting the generality of the preceding sentence,
the Committee may, in its discretion and on such terms as it deems appropriate,
require as a condition on the grant of an Option to an Employee or consultant
that the Employee or consultant surrender for cancellation some or all of the
unexercised Options, awards of Restricted Stock or Deferred Stock, Performance
Awards, Stock Appreciation Rights, Dividend Equivalents or Stock Payments or
other rights which have been previously granted to him under this Plan or
otherwise. An Option, the grant of which is conditioned upon such surrender, may
have an option price lower (or higher) than the exercise price of such
surrendered Option or other award, may cover the same (or a lesser or greater)
number of shares as such surrendered Option or other award, may contain such
other terms as the Committee deems appropriate, and shall be exercisable in
accordance with its terms, without regard to the number of shares, price,
exercise period or any other term or condition of such surrendered Option or
other award.

(c) Any Incentive Stock Option granted under this Plan may be
modified by the Committee to disqualify such option from treatment as an
"incentive stock option" under Section 422 of the Code.

(d) During the term of the Plan, each person who is an
Independent Director as of the date of the consummation of the initial public
offering of Common Stock automatically shall be granted (i) an option to
purchase six thousand two hundred fifty (6,250) shares of Common Stock (subject
to adjustment as provided in Section 10.3) on the date of such initial public
offering, (ii) an option to purchase three thousand one hundred twenty-five
(3,125) shares of Common Stock (subject to adjustment as provided in Section
10.3) on the date of each of the first and second annual meetings of
stockholders after such initial public offering at which the Independent
Director is reelected to the Board, and (iii) an option to purchase one thousand
five hundred (1,500) shares of Common Stock (subject to adjustment as provided
in Section 10.3) on the date of each annual meeting of stockholders after the
second annual meeting after such initial public offering at which the
Independent Director is reelected to the Board. During the term of the Plan
after the consummation of the initial public offering of Common Stock, a person
who is initially elected to the Board and is then an Independent Director
automatically shall be granted (i) an option to purchase six thousand two
hundred fifty (6,250) shares of Common Stock (subject to adjustment as provided
in Section 10.3) on the date of such initial election, (ii) an option to
purchase three thousand one hundred twenty-five (3,125) shares of Common Stock
(subject to adjustment as provided in Section 10.3) on the date of each of the
first and second annual meetings of stockholders after such initial election at
which the Independent Director is reelected to the Board, and (iii) an option to
purchase one thousand five hundred (1,500) shares of Common Stock (subject to
adjustment as provided in Section 10.3) on the date of each annual meeting of
stockholders after the second annual meeting after such initial election at
which the Independent Director is reelected to the Board. Members of the Board
who are employees of the Company who subsequently retire from the Company and
remain on the Board will not receive an initial Option grant pursuant to clause
(i) of the preceding sentence, but to the extent that they are otherwise
eligible, will receive, after retirement from the Company, Options as described
in the clauses (ii) and (iii) of the preceding sentence. All the foregoing
Option grants authorized by this Section 3.4(d) are subject to stockholder
approval of the Plan.

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<PAGE> 44

ARTICLE IV

TERMS OF OPTIONS

4.1 Option Agreement. Each Option shall be evidenced by a
written Stock Option Agreement, which shall be executed by the Optionee and an
authorized officer of the Company and which shall contain such terms and
conditions as the Committee (or the Board, in the case of Options granted to
Independent Directors) shall determine, consistent with this Plan. Stock Option
Agreements evidencing Options intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall contain such
terms and conditions as may be necessary to meet the applicable provisions of
Section 162(m) of the Code. Stock Option Agreements evidencing Incentive Stock
Options shall contain such terms and conditions as may be necessary to meet the
applicable provisions of Section 422 of the Code.

4.2 Option Price. The price per share of the shares subject to
each Option shall be set by the Committee; provided, however, that (i) such
price shall be no less than the par value of a share of Common Stock, (ii) in
the case of Options intended to qualify as performance-based compensation as
described in Section 162(m)(4)(C) of the Code, such price shall be no less than
100% of the Fair Market Value of a share of Common Stock on the date the Option
is granted, (iii) in the case of Options granted to Independent Directors, such
price shall be equal to 100% of the Fair Market Value of a share of Common Stock
on the date the Option is granted, except with respect to the Options granted to
Independent Directors pursuant to Section 3.4(d) upon the consummation of the
initial public offering of Common Stock, in which case such price shall be equal
to the public offering price, and (iv) in the case of Incentive Stock Options
such price shall not be less than the greater of: (a) 100% of the Fair Market
Value of a share of Common Stock on the date the Option is granted, or (b) 110%
of the fair market value of a share of Common Stock on the date such Option is
granted in the case of an individual then owning (within the meaning of Section
424(d) of the Code) more than 10% of the total combined voting power of all
classes of stock of the Company or any Subsidiary.

4.3 Option Term. The term of an Option (other than an Option
granted to an Independent Director) shall be set by the Committee in its
discretion; provided, however, that, in the case of Incentive Stock Options, the
term shall not be more than ten (10) years from the date the Incentive Stock
Option is granted, or five (5) years from such date if the Incentive Stock
Option is granted to an individual then owning (within the meaning of Section
424(d) of the Code) more than 10% of the total combined voting power of all
classes of stock of the Company or any Subsidiary. The term of an Option granted
to an Independent Director shall be ten (10) years from the date the Option is
granted, provided, however, that the Option shall expire ninety (90) days after
the Independent Director ceases to serve as a Director, except upon the
Independent Director's retirement in accordance with the Company's retirement
policy applicable to Directors. Subject to the foregoing provisions and except
as limited by requirements of Section 422 of the Code and regulations and
rulings thereunder applicable to Incentive Stock Options, the Committee may
extend the term of any outstanding Option in connection with any Termination of
Employment or Termination of Consultancy of the Optionee, or amend any other
term or condition of such Option relating to such a termination.

4.4 Option Vesting.

(a) The period during which the right to exercise an Option in
whole or in part vests in the Optionee shall be set by the Committee and the
Committee may determine that an Option may not be exercised in whole or in part
for a specified period after it is granted; provided, however, that no

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Option granted to a person subject to Section 16 of the Exchange Act shall be
exercisable until at least six months have elapsed from (but excluding) the date
on which the Option was granted. At any time after grant of an Option, the
Committee may, in its sole discretion and subject to whatever terms and
conditions it selects, accelerate the period during which an Option vests.
Notwithstanding the foregoing, all Options granted to Independent Directors
shall be exercisable immediately on the date of grant, without variation.

(b) No portion of an Option which is unexercisable at
Termination of Employment, Termination of Directorship or Termination of a
Consultancy, as applicable, shall thereafter become exercisable, except as may
be otherwise provided by the Committee with respect to Options granted to
Employees or consultants, either in the Stock Option Agreement or in a
resolution adopted following the grant of the Option.

(c) To the extent that the aggregate Fair Market Value of
stock with respect to which "incentive stock options" (within the meaning of
Section 422 of the Code, but without regard to Section 422(d) of the Code) are
exercisable for the first time by an Optionee during any calendar year (under
the Plan and all other incentive stock option plans of the Company and any
Subsidiary) exceeds $100,000, such Options shall be treated as Non-Qualified
Options to the extent required by Section 422 of the Code. The rule set forth in
the preceding sentence shall be applied by taking Options into account in the
order in which they were granted. For purposes of this Section 4.4(c), the Fair
Market Value of stock shall be determined as of the time the Option with respect
to such stock is granted.

4.5 Consideration. In consideration of the granting of an
Option, the Optionee shall agree, in the written Stock Option Agreement, to
remain in the employ of (or to consult for or to serve as an Independent
Director of, as applicable) the Company or any Subsidiary for a period of at
least one year after the Option is granted (or until the next annual meeting of
stockholders of the Company, in the case of an Independent Director). Nothing in
this Plan or in any Stock Option Agreement hereunder shall confer upon any
Optionee any right to continue in the employ of, or as a consultant for, the
Company or any Subsidiary, or as a director of the Company, or shall interfere
with or restrict in any way the rights of the Company and any Subsidiary, which
are hereby expressly reserved, to discharge any Optionee at any time for any
reason whatsoever, with or without good cause.

ARTICLE V

EXERCISE OF OPTIONS

5.1 Partial Exercise. An exercisable Option may be exercised
in whole or in part. However, an Option shall not be exercisable with respect to
fractional shares and the Committee (or the Board, in the case of Options
granted to Independent Directors) may require that, by the terms of the Option,
a partial exercise be with respect to a minimum number of shares.

5.2 Manner of Exercise. All or a portion of an exercisable
Option shall be deemed exercised upon delivery of all of the following to the
Secretary of the Company or his office:

(a) A written notice complying with the applicable rules
established by the Committee or the Board stating that the Option, or a portion
thereof, is exercised. The notice shall be signed by the Optionee or other
person then entitled to exercise the Option or such portion;

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(b) Such representations and documents as the Committee or the
Board, in its absolute discretion, deems necessary or advisable to effect
compliance with all applicable provisions of the Securities Act of 1933, as
amended, and any other federal or state securities laws or regulations. The
Committee or Board may, in its absolute discretion, also take whatever
additional actions it deems appropriate to effect such compliance including,
without limitation, placing legends on share certificates and issuing
stop-transfer notices to agents and registrars;

(c) In the event that the Option shall be exercised pursuant
to Section 10.1 by any person or persons other than the Optionee, appropriate
proof of the right of such person or persons to exercise the Option; and

(d) Full cash payment to the Secretary of the Company for the
shares with respect to which the Option, or portion thereof, is exercised.
However, at the discretion of the Committee (or the Board, in the case of
Options granted to Independent Directors), the terms of the Option may (i) allow
a delay in payment up to thirty (30) days from the date the Option, or portion
thereof, is exercised; (ii) allow payment, in whole or in part, through the
delivery of shares of Common Stock owned by the Optionee, duly endorsed for
transfer to the Company with a Fair Market Value on the date of delivery equal
to the aggregate exercise price of the Option or exercised portion thereof;
(iii) subject to the timing requirements of Section 5.3, allow payment, in whole
or in part, through the surrender of shares of Common Stock then issuable upon
exercise of the Option having a Fair Market Value on the date of Option exercise
equal to the aggregate exercise price of the Option or exercised portion
thereof; (iv) allow payment, in whole or in part, through the delivery of
property of any kind which constitutes good and valuable consideration; (v)
allow payment, in whole or in part, through the delivery of a full recourse
promissory note bearing interest (at no less than such rate as shall then
preclude the imputation of interest under the Code) and payable upon such terms
as may be prescribed by the Committee or the Board, or (vi) allow payment
through any combination of the consideration provided in the foregoing
subparagraphs (ii), (iii), (iv) and (v). In the case of a promissory note, the
Committee or the Board may also prescribe the form of such note and the security
to be given for such note. The Option may not be exercised, however, by delivery
of a promissory note or by a loan from the Company when or where such loan or
other extension of credit is prohibited by law.

5.3 Certain Timing Requirements. At the discretion of the
Committee (or Board, in the case of Options granted to Independent Directors),
shares of Common Stock issuable to the Optionee upon exercise of the Option may
be used to satisfy the Option exercise price or the tax withholding consequences
of such exercise, in the case of persons subject to Section 16 of the Exchange
Act, only (i) during the period beginning on the third business day following
the date of release of the quarterly or annual summary statement of sales and
earnings of the Company and ending on the twelfth business day following such
date or (ii) pursuant to an irrevocable written election by the Optionee to use
shares of Common Stock issuable to the Optionee upon exercise of the Option to
pay all or part of the Option price or the withholding taxes made at least six
months prior to the payment of such Option price or withholding taxes.

5.4 Conditions to Issuance of Stock Certificates. The Company
shall not be required to issue or deliver any certificate or certificates for
shares of stock purchased upon the exercise of any Option or portion thereof
prior to fulfillment of all of the following conditions:

(a) The admission of such shares to listing on all stock
exchanges on which such class of stock is then listed;

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(b) The completion of any registration or other qualification
of such shares under any state or federal law, or under the rulings or
regulations of the Securities and Exchange Commission or any other governmental
regulatory body which the Committee or Board shall, in its absolute discretion,
deem necessary or advisable;

(c) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Committee or Board shall, in its
absolute discretion, determine to be necessary or advisable;

(d) The lapse of such reasonable period of time following the
exercise of the Option as the Committee or Board may establish from time to time
for reasons of administrative convenience; and

(e) The receipt by the Company of full payment for such
shares, including payment of any applicable withholding tax.

5.5 Rights as Stockholders. The holders of Options shall not
be, nor have any of the rights or privileges of, stockholders of the Company in
respect of any shares purchasable upon the exercise of any part of an Option
unless and until certificates representing such shares have been issued by the
Company to such holders.

5.6 Ownership and Transfer Restrictions. The Committee (or
Board, in the case of Options granted to Independent Directors), in its absolute
discretion, may impose such restrictions on the ownership and transferability of
the shares purchasable upon the exercise of an Option as it deems appropriate.
Any such restriction shall be set forth in the respective Stock Option Agreement
and may be referred to on the certificates evidencing such shares. The Committee
may require the Employee to give the Company prompt notice of any disposition of
shares of Common Stock acquired by exercise of an Incentive Stock Option within
(i) two years from the date of granting such Option to such Employee or (ii) one
year after the transfer of such shares to such Employee. The Committee may
direct that the certificates evidencing shares acquired by exercise of an Option
refer to such requirement to give prompt notice of disposition.

ARTICLE VI

AWARD OF RESTRICTED STOCK

6.1 Award of Restricted Stock.

(a) The Committee shall from time to time, in its absolute
discretion:

(i) Select from among the key Employees or
consultants (including Employees or consultants who have previously
received other awards under this Plan) such of them as in its opinion
should be awarded Restricted Stock; and

(ii) Determine the purchase price, if any, and other
terms and conditions applicable to such Restricted Stock, consistent
with this Plan.

(b) The Committee shall establish the purchase price, if any,
and form of payment for Restricted Stock; provided, however, that such purchase
price shall be no less than the par value of the

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Common Stock to be purchased. In all cases, legal consideration shall be
required for each issuance of Restricted Stock.

(c) Upon the selection of a key Employee or consultant to be
awarded Restricted Stock, the Committee shall instruct the Secretary of the
Company to issue such Restricted Stock and may impose such conditions on the
issuance of such Restricted Stock as it deems appropriate.

6.2 Restricted Stock Agreement. Restricted Stock shall be
issued only pursuant to a written Restricted Stock Agreement, which shall be
executed by the selected key Employee or consultant and an authorized officer of
the Company and which shall contain such terms and conditions as the Committee
shall determine, consistent with this Plan.

6.3 Consideration. As consideration for the issuance of
Restricted Stock, in addition to payment of any purchase price, the Restricted
Stockholder shall agree, in the written Restricted Stock Agreement, to remain in
the employ of, or to consult for, the Company or any Subsidiary for a period of
at least one year after the Restricted Stock is issued. Nothing in this Plan or
in any Restricted Stock Agreement hereunder shall confer on any Restricted
Stockholder any right to continue in the employ of, or as a consultant for, the
Company or any Subsidiary or shall interfere with or restrict in any way the
rights of the Company and any Subsidiary, which are hereby expressly reserved,
to discharge any Restricted Stockholder at any time for any reason whatsoever,
with or without good cause.

6.4 Rights as Stockholders. Upon delivery of the shares of
Restricted Stock to the escrow holder pursuant to Section 6.7, the Restricted
Stockholder shall have, unless otherwise provided by the Committee, all the
rights of a stockholder with respect to said shares, subject to the restrictions
in his Restricted Stock Agreement, including the right to receive all dividends
and other distributions paid or made with respect to the shares; provided,
however, that in the discretion of the Committee, any extraordinary
distributions with respect to the Common Stock shall be subject to the
restrictions set forth in Section 6.5.

6.5 Restriction. All shares of Restricted Stock issued under
this Plan (including any shares received by holders thereof with respect to
shares of Restricted Stock as a result of stock dividends, stock splits or any
other form of recapitalization) shall, in the terms of each individual
Restricted Stock Agreement, be subject to such restrictions as the Committee
shall provide, which restrictions may include, without limitation, restrictions
concerning voting rights and transferability and restrictions based on duration
of employment with the Company, Company performance and individual performance;
provided, however, that no share of Restricted Stock granted to a person subject
to Section 16 of the Exchange Act shall be sold, assigned or otherwise
transferred until at least six months have elapsed from (but excluding) the date
on which the Restricted Stock was issued, and provided, further, that by a
resolution adopted after the Restricted Stock is issued, the Committee may, on
such terms and conditions as it may determine to be appropriate, remove any or
all of the restrictions imposed by the terms of the Restricted Stock Agreement.
Restricted Stock may not be sold or encumbered until all restrictions are
terminated or expire. Unless provided otherwise by the Committee, if no
consideration was paid by the Restricted Stockholder upon issuance, a Restricted
Stockholder's rights in unvested Restricted Stock shall lapse upon Termination
of Employment or, if applicable, upon the termination of his consulting
relationship with the Company.

6.6 Repurchase of Restricted Stock. The Committee shall
provide in the terms of each individual Restricted Stock Agreement that the
Company shall have the right to repurchase from the Restricted Stockholder the
Restricted Stock then subject to restrictions under the Restricted Stock

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Agreement immediately upon a Termination of Employment or, if applicable, upon a
termination of any consulting relationship between the Restricted Stockholder
and the Company, at a cash price per share equal to the price paid by the
Restricted Stockholder for such Restricted Stock; provided, however, that
provision may be made that no such right of repurchase shall exist in the event
of a Termination of Employment or Termination of Consultancy without cause, or
following a change in control of the Company or because of the Restricted
Stockholder's retirement, death or disability, or otherwise.

6.7 Escrow. The Secretary of the Company or such other escrow
holder as the Committee may appoint shall retain physical custody of each
certificate representing Restricted Stock until all of the restrictions imposed
under the Restricted Stock Agreement with respect to the shares evidenced by
such certificate expire or shall have been removed.

6.8 Legend. In order to enforce the restrictions imposed upon
shares of Restricted Stock hereunder, the Committee shall cause a legend or
legends to be placed on certificates representing all shares of Restricted Stock
that are still subject to restrictions under Restricted Stock Agreements, which
legend or legends shall make appropriate reference to the conditions imposed
thereby.

ARTICLE VII

PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS,
DEFERRED STOCK, STOCK PAYMENTS

7.1 Performance Awards. Any key Employee or consultant
selected by the Committee may be granted one or more Performance Awards. The
value of such Performance Awards may be linked to the market value, book value,
net profits or other measure of the value of Common Stock or other specific
performance criteria determined appropriate by the Committee, in each case on a
specified date or dates or over any period or periods determined by the
Committee, or may be based upon the appreciation in the market value, book
value, net profits or other measure of the value of a specified number of shares
of Common Stock over a fixed period or periods determined by the Committee. In
making such determinations, the Committee shall consider (among such other
factors as it deems relevant in light of the specific type of award) the
contributions, responsibilities and other compensation of the particular key
Employee or consultant.

7.2 Dividend Equivalents. Any key Employee or consultant
selected by the Committee may be granted Dividend Equivalents based on the
dividends declared on Common Stock, to be credited as of dividend payment dates,
during the period between the date an Option, Stock Appreciation Right, Deferred
Stock or Performance Award is granted, and the date such Option, Stock
Appreciation Right, Deferred Stock or Performance Award is exercised, vests or
expires, as determined by the Committee. Such Dividend Equivalents shall be
converted to cash or additional shares of Common Stock by such formula and at
such time and subject to such limitations as may be determined by the Committee.

7.3 Stock Payments. Any key Employee or consultant selected by
the Committee may receive Stock Payments in the manner determined from time to
time by the Committee. The number of shares shall be determined by the Committee
and may be based upon the Fair Market Value, book value, net profits or other
measure of the value of Common Stock or other specific performance criteria
determined appropriate by the Committee on the date such Stock Payment is made
or on any date thereafter.

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7.4 Deferred Stock. Any key Employee or consultant selected by
the Committee may be granted an award of Deferred Stock in the manner determined
from time to time by the Committee. The number of shares of Deferred Stock shall
be determined by the Committee and may be linked to the market value, book
value, net profits or other measure of the value of Common Stock or other
specific performance criteria determined appropriate by the Committee, in each
case on a specified date or dates or over any period or periods determined by
the Committee. Common Stock underlying a Deferred Stock award will not be issued
until the Deferred Stock award has vested, pursuant to a vesting schedule or
performance criteria set by the Committee. Unless otherwise provided by the
Committee, a Grantee of Deferred Stock shall have no rights as a Company
stockholder with respect to such Deferred Stock until such time as the award has
vested and the Common Stock underlying, the award has been issued.

7.5 Performance Award Agreement, Dividend Equivalent
Agreement, Deferred Stock Agreement, Stock Payment Agreement. Each Performance
Award, Dividend Equivalent, award of Deferred Stock and/or Stock Payment shall
be evidenced by a written agreement, which shall be executed by the Grantee and
an authorized Officer of the Company and which shall contain such terms and
conditions as the Committee shall determine, consistent with this Plan.

7.6 Term. The term of a Performance Award, Dividend
Equivalent, award of Deferred Stock and/or Stock Payment shall be set by the
Committee in its discretion.

7.7 Exercise Upon Termination of Employment. A Performance
Award, Dividend Equivalent, award of Deferred Stock and/or Stock Payment is
exercisable only while the Grantee is an Employee or consultant; provided that
the Committee may determine that the Performance Award, Dividend Equivalent,
award of Deferred Stock and/or Stock Payment may be exercised subsequent to
Termination of Employment or Termination of Consultancy without cause, or
following a change in control of the Company, or because of the Grantee's
retirement, death or disability, or otherwise.

7.8 Payment on Exercise. Payment of the amount determined
under Section 7.1 or 7.2 above shall be in cash, in Common Stock or a
combination of both, as determined by the Committee. To the extent any payment
under this Article VII is effected in Common Stock, it shall be made subject to
satisfaction of all provisions of Section 5.4.

7.9 Consideration. In consideration of the granting of a
Performance Award, Dividend Equivalent, award of Deferred Stock and/or Stock
Payment, the Grantee shall agree, in a written agreement, to remain in the
employ of, or to consult for, the Company or any Subsidiary for a period of at
least one year after such Performance Award, Dividend Equivalent, award of
Deferred Stock and/or Stock Payment is granted. Nothing in this Plan or in any
agreement hereunder shall confer on any Grantee any right to continue in the
employ of, or as a consultant for, the Company or any Subsidiary or shall
interfere with or restrict in any way the rights of the Company and any
Subsidiary, which are hereby expressly reserved, to discharge any Grantee at any
time for any reason whatsoever, with or without good cause.

ARTICLE VIII

STOCK APPRECIATION RIGHTS

8.1 Grant of Stock Appreciation Rights. Subject to the Award
Limit, a Stock Appreciation Right may be granted to any key Employee or
consultant selected by the Committee. A Stock Appreciation Right may be granted
(i) in connection and simultaneously with the grant of an Option, (ii) with

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respect to a previously granted Option, or (iii) independent of an Option. A
Stock Appreciation Right shall be subject to such terms and conditions not
inconsistent with this Plan as the Committee shall impose, and shall be
evidenced by a written Stock Appreciation Right Agreement, which shall be
executed by the Grantee and an authorized officer of the Company. The Committee,
in its discretion, may determine whether a Stock Appreciation Right is to
qualify as performance-based compensation as described in Section 162(m)(4)(C)
of the Code and Stock Appreciation Right Agreements evidencing Stock
Appreciation Rights intended to so qualify shall contain such terms and
conditions as may be necessary to meet the applicable provisions of Section
162(m) of the Code. Without limiting the generality of the foregoing, the
Committee may, in its discretion and on such terms as it deems appropriate,
require as a condition of the grant of a Stock Appreciation Right to an Employee
or consultant that the Employee or consultant surrender for cancellation some or
all of the unexercised Options, awards of Restricted Stock or Deferred Stock,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents or Stock
Payments, or other rights which have been previously granted to him under this
Plan or otherwise. A Stock Appreciation Right, the grant of which is conditioned
upon such surrender, may have an exercise price lower (or higher) than the
exercise price of the surrendered Option or other award, may cover the same (or
a lesser or greater) number of shares as such surrendered Option or other award,
may contain such other terms as the Committee deems appropriate, and shall be
exercisable in accordance with its terms, without regard to the number of
shares, price, exercise period or any other term or condition of such
surrendered Option or other award.

8.2 Coupled Stock Appreciation Rights.

(a) A Coupled Stock Appreciation Right ("CSAR") shall be
related to a particular Option and shall be exercisable only when and to the
extent the related Option is exercisable.

(b) A CSAR may be granted to the Grantee for no more than the
number of shares subject to the simultaneously or previously granted Option to
which it is coupled.

(c) A CSAR shall entitle the Grantee (or other person entitled
to exercise the Option pursuant to this Plan) to surrender to the Company
unexercised a portion of the Option to which the CSAR relates (to the extent
then exercisable pursuant to its terms) and to receive from the Company in
exchange therefor an amount determined by multiplying the difference obtained by
subtracting the Option exercise price from the Fair Market Value of a share of
Common Stock on the date of exercise of the CSAR by the number of shares of
Common Stock with respect to which the CSAR shall have been exercised, subject
to any limitations the Committee may impose.

8.3 Independent Stock Appreciation Rights.

(a) An Independent Stock Appreciation Right ("ISAR") shall be
unrelated to any Option and shall have a term set by the Committee. An ISAR
shall be exercisable in such installments as the Committee may determine. An
ISAR shall cover such number of shares of Common Stock as the Committee may
determine; provided, however, that no ISAR granted to a person subject to
Section 16 of the Exchange Act shall be exercisable until at least six months
have elapsed from (but excluding) the date on which the Option was granted. The
exercise price per share of Common Stock subject to each ISAR shall be set by
the Committee. An ISAR is exercisable only while the Grantee is an Employee or
consultant; provided that the Committee may determine that the ISAR may be
exercised subsequent to Termination of Employment or Termination of Consultancy
without cause, or following a change in control of the Company, or because of
the Grantee's retirement, death or disability, or otherwise.

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(b) An ISAR shall entitle the Grantee (or other person
entitled to exercise the ISAR pursuant to this Plan) to exercise all or a
specified portion of the ISAR (to the extent then exercisable pursuant to its
terms) and to receive from the Company an amount determined by multiplying the
difference obtained by subtracting the exercise price per share of the ISAR from
the Fair Market Value of a share of Common Stock on the date of exercise of the
ISAR by the number of shares of Common Stock with respect to which the ISAR
shall have been exercised, subject to any limitations the Committee may impose.

8.4 Payment and Limitations on Exercise.

(a) Payment of the amount determined under Section 8.2(c) and
8.3(b) above shall be in cash, in Common Stock (based on its Fair Market Value
as of the date the Stock Appreciation Right is exercised) or a combination of
both, as determined by the Committee. To the extent such payment is effected in
Common Stock it shall be made subject to satisfaction of all provisions of
Section 5.4 hereinabove pertaining to Options.

(b) Grantees of Stock Appreciation Rights who are subject to
Section 16 of the Exchange Act may, in the discretion of the Board or Committee,
be required to comply with any timing, or other restrictions under Rule 16b-3
applicable to the settlement or exercise of a Stock Appreciation Right.

8.5 Consideration. In consideration of the granting of a Stock
Appreciation Right, the Grantee shall agree, in the written Stock Appreciation
Right Agreement, to remain in the employ of, or to consult for, the Company or
any Subsidiary for a period of at least one year after the Stock Appreciation
Right is granted. Nothing in this Plan or in any Stock Appreciation Right
Agreement hereunder shall confer on any Grantee any right to continue in the
employ of, or as a consultant for, the Company or any Subsidiary or shall
interfere with or restrict in any way the rights of the Company and any
Subsidiary, which are hereby expressly reserved, to discharge any Grantee at any
time for any reason whatsoever, with or without good cause.

ARTICLE IX

ADMINISTRATION

9.1 Compensation Committee. The Compensation Committee (or a
subcommittee of the Board assuming the functions of the Committee under this
Plan) shall consist of two or more Independent Directors appointed by and
holding office at the pleasure of the Board, each of whom is both a
"disinterested person" as defined by Rule 16b-3 and an "outside director" for
purposes of Section 162(m) of the Code. Appointment of Committee members shall
be effective upon acceptance of appointment. Committee members may resign at any
time by delivering written notice to the Board. Vacancies in the Committee may
be filled by the Board.

9.2 Duties and Powers of Committee. It shall be the duty of
the Committee to conduct the general administration of this Plan in accordance
with its provisions. The Committee shall have the power to interpret this Plan
and the agreements pursuant to which Options, awards of Restricted Stock or
Deferred Stock, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments are granted or awarded, and to adopt such rules
for the administration, interpretation, and application of this Plan as are
consistent therewith and to interpret, amend or revoke any such rules.
Notwithstanding the foregoing, the full Board, acting by a majority of its
members in office, shall conduct the general administration of the Plan with
respect to Options granted to Independent Directors. Any

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such grant or award under this Plan need not be the same with respect to each
Optionee, Grantee or Restricted Stockholder. Any such interpretations and rules
with respect to Incentive Stock Options shall be consistent with the provisions
of Section 422 of the Code. In its absolute discretion, the Board may at any
time and from time to time exercise any and all rights and duties of the
Committee under this Plan except with respect to matters which under Rule 16b-3
or Section 162(m) of the Code, or any regulations or rules issued thereunder,
are required to be determined in the sole discretion of the Committee.

9.3 Majority Rule. The Committee shall act by a majority of
its members in attendance at a meeting at which a quorum is present or by a
memorandum or other written instrument signed by all members of the Committee.

9.4 Compensation; Professional Assistance; Good Faith Actions.
Members of the Committee shall receive such compensation for their services as
members as may be determined by the Board. All expenses and liabilities which
members of the Committee incur in connection with the administration of this
Plan shall be borne by the Company. The Committee may, with the approval of the
Board, employ attorneys, consultants, accountants, appraisers, brokers, or other
persons. The Committee, the Company and the Company's officers and Directors
shall be entitled to rely upon the advice, opinions or valuations of any such
persons. All actions taken and all interpretations and determinations made by
the Committee in good faith shall be final and binding upon all Optionees,
Grantees, Restricted Stockholders, the Company and all other interested persons.
No members of the Committee or Board shall be personally liable for any action,
determination or interpretation made in good faith with respect to this Plan,
Options, awards of Restricted Stock or Deferred Stock, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments, and all members of
the Committee shall be fully protected by the Company in respect of any such
action, determination or interpretation.

ARTICLE X

MISCELLANEOUS PROVISIONS

10.1 Not Transferable. Options, Restricted Stock awards,
Deferred Stock awards, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments under this Plan may not be sold, pledged,
assigned, or transferred in any manner other than by will or the laws of descent
and distribution, unless and until such rights or awards have been exercised, or
the shares underlying such rights or awards have been issued, and all
restrictions applicable to such shares have lapsed. No Option, Restricted Stock
award, Deferred Stock award, Performance Award, Stock Appreciation Right,
Dividend Equivalent or Stock Payment or interest or right therein shall be
liable for the debts, contracts or engagements of the Optionee, Grantee or
Restricted Stockholder or his successors in interest or shall be subject to
disposition by transfer, alienation, anticipation, pledge, encumbrance,
assignment or any other means whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy, attachment, garnishment or
any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect.

During the lifetime of the Optionee or Grantee, only he may
exercise an Option or other right or award (or any portion thereof) granted to
him under the Plan. After the death of the Optionee or Grantee, any exercisable
portion of an Option or other right or award may, prior to the time when such
portion becomes unexercisable under the Plan or the applicable Stock Option
Agreement or other agreement, be exercised by his personal representative or by
any person empowered to do so under the deceased Optionee's or Grantee's will or
under the then applicable laws of descent and distribution.

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10.2 Amendment, Suspension or Termination of this Plan. This
Plan may be wholly or partially amended or otherwise modified, suspended or
terminated at any time or from time to time by the Committee. However, without
approval of the Company's stockholders given within twelve months before or
after the action by the Committee, no action of the Committee may, except as
provided in Section 10.3, increase the limits imposed in Section 2.1 on the
maximum number of shares which may be issued under this Plan or modify the Award
Limit, and no action of the Committee may be taken that would otherwise require
stockholder approval as a matter of applicable law, regulation or rule.
Notwithstanding the foregoing, the provisions of this Plan relating to formula
Option grants to Independent Directors, including the amount, price and timing
thereof, shall not be amended more than once in any six-month period other than
to comport with changes in the Code, the Employee Retirement Income Security
Act, or the respective rules thereunder, No amendment, suspension or termination
of this Plan shall, without the consent of the holder of Options, Restricted
Stock awards, Deferred Stock awards, Performance Awards, Stock Appreciation
Rights, Dividend Equivalents or Stock Payments, alter or impair any rights or
obligations under any Options, Restricted Stock awards, Deferred Stock awards,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents or Stock
Payments theretofore granted or awarded, unless the award itself otherwise
expressly so provides. No Options, Restricted Stock, Deferred Stock, Performance
Awards, Stock Appreciation Rights, Dividend Equivalents or Stock Payments may be
granted or awarded during any period of suspension or after termination of this
Plan, and in no event may any Incentive Stock Option be granted under this Plan
after the first to occur of the following events:

(a) The expiration of ten years from the date the Plan is
adopted by the Board; or

(b) The expiration of ten years from the date the Plan is
approved by the Company's stockholders under Section 10.5.

10.3 Changes in Common Stock or Assets of the Company. In the
event that the outstanding shares of Common Stock are hereafter changed into or
exchanged for cash or a different number or kind of shares or other securities
of the Company, or of another corporation, by reason of reorganization, merger,
consolidation, recapitalization, reclassification, stock splitup, stock
dividend, or combination of shares, appropriate adjustments shall be made by the
Committee in the number and kind of shares for which Options, Restricted Stock
awards, Performance Awards, Stock Appreciation Rights, Dividend Equivalents,
Deferred Stock awards or Stock Payments may be granted, including adjustments of
the limitations in Section 2.1 on the maximum number and kind of shares which
may be issued and of the Award limit described in Section 1.2, and appropriate
adjustments shall be made by the Board in the number and kind of shares for the
purchase of which Options are granted to Independent Directors under Section
3.4(d).

In the event of such a change or exchange, subject to the
other provisions of this Plan, the Committee (or the Board, in the case of
Options granted to Independent Directors) shall also make an appropriate and
equitable adjustment in the number and kind of shares as to which all
outstanding Options, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments, or portions thereof then unexercised, shall be
exercisable and in the number and kind of shares of outstanding Restricted Stock
or Deferred Stock. Such adjustment shall be made with the intent that after the
change or exchange of shares, each Optionee's and each Grantee's and each
Restricted Stockholder's proportionate interest shall be maintained as before
the occurrence of such event. Such adjustment in an outstanding Option,
Performance Award, Stock Appreciation Right, Dividend Equivalent or Stock
Payment may include a necessary or appropriate corresponding adjustment in
Option, Performance Award, Stock Appreciation Right, Dividend Equivalent or
Stock Payment exercise price, but shall be

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made without change in the total price applicable to the Option, Performance
Award, Stock Appreciation Right, Dividend Equivalent or Stock Payment, or the
unexercised portion thereof (except for any change in the aggregate price
resulting from rounding-off of share quantities or prices).

Where an adjustment of the type described above is made to an
Incentive Stock Option under this Section, the adjustment will be made in a
manner which will not be considered a "modification" under the provisions of
subsection 424(h)(3) of the Code.

In the event of a "spin-off" or other substantial distribution
of assets of the Company which has a material diminutive effect upon the Fair
Market Value of the Company's Common Stock, the Committee (or the Board, in the
case of Options granted to Independent Directors) shall make an appropriate and
equitable adjustment to the Option, Performance Award, Stock Appreciation Right,
Dividend Equivalent or Stock Payment exercise price to reflect such diminution.

10.4 Merger of the Company. In the event of the merger or
consolidation of the Company with or into another corporation, the exchange of
all or substantially all of the assets of the Company for the securities of
another corporation, the acquisition by another corporation or person of all or
substantially all of the Company's assets or 80% or more of the Company's then
outstanding voting stock, or the liquidation or dissolution of the Company:

(a) At the discretion of the Committee (or the Board, in the
case of Options granted to Independent Directors), the terms of an Option,
Performance Award, Stock Appreciation Right, Dividend Equivalent or Stock
Payment may provide that it cannot be exercised
after such event.

(b) In its discretion, and on such terms and conditions as it
deems appropriate, the Committee (or the Board, in the case of Options granted
to Independent Directors) may provide either by the terms of such Option,
Performance Award, Stock Appreciation Right, Dividend Equivalent or Stock
Payment or by a resolution adopted prior to the occurrence of such event that,
for a specified period of time prior to such event, such Option, Performance
Award, Stock Appreciation Right, Dividend Equivalent or Stock Payment shall be
exercisable as to all shares covered thereby, notwithstanding anything to the
contrary in this Plan or in the provisions of such Option, Performance Award,
Stock Appreciation Right, Dividend Equivalent or Stock Payment.

(c) In its discretion, and on such terms and conditions as it
deems appropriate, the Committee (or the Board, in the case of Options granted
to Independent Directors) may provide either by the terms of such Option,
Performance Award, Stock Appreciation Right, Dividend Equivalent or Stock
Payment or by a resolution adopted prior to the occurrence of such event that
upon such event, such Option, Performance Award, Stock Appreciation Right,
Dividend Equivalent or Stock Payment shall be assumed by the successor
corporation, or a parent or subsidiary thereof, or shall be substituted for by
similar options, rights or awards covering the stock of the successor
corporation, or a parent or subsidiary thereof, with appropriate adjustments as
to the number and kind of shares and prices.

(d) In its discretion, and on such terms and conditions as it
deems appropriate, the Committee may provide either by the terms of a Restricted
Stock award or Deferred Stock award or by a resolution adopted prior to the
occurrence of such event that, for a specified period of time prior to such
event, the restrictions imposed under a Restricted Stock Agreement or a Deferred
Stock Agreement upon some or all shares of Restricted Stock or Deferred Stock
may be terminated, and, in the case of Restricted Stock, some or all shares of
such Restricted Stock may cease to be subject to repurchase under Section 6.6
after such event.

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(e) None of the foregoing discretionary terms of this Section
10.4 shall be permitted with respect to Options granted under Section 3.4(d) to
Independent Directors to the extent that such discretion would be inconsistent
with the requirements of Rule 16b-3.

10.5 Approval of Plan by Stockholders. This Plan will be
submitted for the approval of the Company's stockholders within twelve months
after the date of the Board's initial adoption of this Plan. Options,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents or Stock
Payments may be granted and Restricted Stock or Deferred Stock may be awarded
prior to such Stockholder approval, provided that such Options, Performance
Awards, Stock Appreciation Rights, Dividend Equivalents or Stock Payments shall
not be exercisable and such Restricted Stock or Deferred Stock shall not vest
prior to the time when this Plan is approved by the stockholders, and provided
further that if such approval has not been obtained at the end of said
twelve-month period, all Options, Performance Awards, Stock Appreciation Rights,
Dividend Equivalents or Stock Payments previously granted and all Restricted
Stock or Deferred Stock previously awarded under this Plan shall thereupon be
cancelled and become null and void.

10.6 Tax Withholding. The Company shall be entitled to require
payment in cash or deduction from other compensation payable to each Optionee,
Grantee or Restricted Stockholder of any sums required by federal, state or
local tax law to be withheld with respect to the issuance, vesting or exercise
of any Option, Restricted Stock, Deferred Stock, Performance Award, Stock
Appreciation Right, Dividend Equivalent or Stock Payment. Subject to the timing
requirements of Section 5.3, the Committee (or the Board, in the case of Options
granted to Independent Directors) may in its discretion and in satisfaction of
the foregoing requirement allow such Optionee, Grantee or Restricted Stockholder
to elect to have the Company withhold shares of Common Stock (or allow the
return of shares of Common Stock) having a Fair Market Value equal to the sums
required to be withheld.

10.7 Loans. The Committee may, in its discretion, extend one
or more loans to key Employees in connection with the exercise or receipt of an
Option, Performance Award, Stock Appreciation Right, Dividend Equivalent or
Stock Payment granted under this Plan, or the issuance of Restricted Stock or
Deferred Stock awarded under this Plan. The terms and conditions of any such
loan shall be set by the Committee.

10.8 Limitations Applicable to Section 16 Persons and
Performance-Based Compensation. Notwithstanding any other provision of this
Plan, any Option, Performance Award, Stock Appreciation Right, Dividend
Equivalent or Stock Payment granted, or Restricted Stock or Deferred Stock
awarded, to a key Employee or Director who is then subject to Section 16 of the
Exchange Act, shall be subject to any additional limitations set forth in any
applicable exemptive rule under Section 16 of the Exchange Act (including any
amendment to Rule 16b-3 of the Exchange Act) that are requirements for the
application of such exemptive rule, and this Plan shall be deemed amended to the
extent necessary to conform to such limitations. Furthermore, notwithstanding
any other provision of this Plan, any Option or Stock Appreciation Right
intended to qualify as performance-based compensation as described in Section
162(m)(4)(C) of the Code shall be subject to any additional limitations set
forth in Section 162(m) of the Code (including any amendment to Section 162(m)
of the Code) or any regulations or rulings issued thereunder that are
requirements for qualification as performance-based compensation as described in
Section 162(m)(4)(C) of the Code, and this Plan shall be deemed amended to the
extent necessary to conform to such requirements.

10.9 Effect of Plan Upon Options and Compensation Plans. The
adoption of this Plan shall not affect any other compensation or incentive plans
in effect for the Company or any Subsidiary.

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Nothing in this Plan shall be construed to limit the right of the Company (i) to
establish any other forms of incentives or compensation for Employees, Directors
or consultants of the Company or any Subsidiary or (ii) to grant or assume
options or other rights otherwise than under this Plan in connection with any
proper corporate purpose including but not by way of limitation, the grant or
assumption of options in connection with the acquisition by purchase, lease,
merger, consolidation or otherwise, of the business, stock or assets of any
corporation, partnership, firm or association.

10.10 Compliance with Laws. This Plan, the granting and vesting
of Options, Restricted Stock awards, Deferred Stock awards, Performance Awards,
Stock Appreciation Rights, Dividend Equivalents or Stock Payments under this
Plan and the issuance and delivery of shares of Common Stock and the payment of
money under this Plan or under Options, Performance Awards, Stock Appreciation
Rights, Dividend Equivalents or Stock Payments granted or Restricted Stock or
Deferred Stock awarded hereunder are subject to compliance with all applicable
federal and state laws, rules and regulations (including but not limited to
state and federal securities law and federal margin requirements) and to such
approvals by any listing, regulatory or governmental authority as may, in the
opinion of counsel for the Company, be necessary or advisable in connection
therewith. Any securities delivered under this Plan shall be subject to such
restrictions, and the person acquiring such securities shall, if requested by
the Company, provide such assurances and representations to the Company as the
Company may deem necessary or desirable to assure compliance with all applicable
legal requirements. To the extent permitted by applicable law, the Plan,
Options, Restricted Stock awards, Deferred Stock awards, Performance Awards,
Stock Appreciation Rights, Dividend Equivalents or Stock Payments granted or
awarded hereunder shall be deemed amended to the extent necessary to conform to
such laws, rules and regulations.

10.11 Titles. Titles are provided herein for convenience only
and are not to serve as a basis for interpretation or construction of this Plan.

10.12 Governing Law. This Plan and any agreements hereunder
shall be administered, interpreted and enforced under the internal laws of the
State of Delaware without regard to conflicts of laws thereof.

* * *

I hereby certify that the foregoing Plan was duly adopted by the Board
of Directors of Personnel Group of America, Inc. on September 21, 1995.

Executed on this 9th day of November, 1995.

/s/ Rosemary Payne-Harris
---------------------------
Secretary