<SUBMISSION>
<ACCESSION-NUMBER>0000950144-03-004936
<TYPE>10-K
<PUBLIC-DOCUMENT-COUNT>8
<PERIOD>20021229
<FILING-DATE>20030415
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>PERSONNEL GROUP OF AMERICA INC
<CIK>0000948850
<ASSIGNED-SIC>7363
<IRS-NUMBER>561930691
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>0103
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-K
<ACT>34
<FILE-NUMBER>001-13956
<FILM-NUMBER>03649415
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>5605 CARNEGIE BLVD
<STREET2>STE 500
<CITY>CHARLOTTE
<STATE>NC
<ZIP>28209
<PHONE>7044425100
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>5605 CARNEGIE BLVD
<STREET2>SUITE 500
<CITY>CHARLOTTE
<STATE>NC
<ZIP>28209
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>g81654k1e10vk.htm
<DESCRIPTION>PERSONNEL GROUP OF AMERICA
<TEXT>
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<TITLE>PERSONNEL GROUP OF AMERICA</TITLE>
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<P align="center"><FONT size="4"><B>SECURITIES AND EXCHANGE COMMISSION</B>
</FONT>

<DIV align="center"><FONT size="3"><B>WASHINGTON, D.C. 20549</B>
</FONT>
</DIV>

<P align="center"><HR align="center" size="1" width="30%" noshade>

<P align="center"><FONT size="5"><B>Form&nbsp;10-K</B>
</FONT>

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<DIV align="center"><FONT size="2">(Mark One)
</FONT>
</DIV>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="91%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="4"><FONT face="wingdings">x</FONT></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
<B>ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE<BR>
SECURITIES EXCHANGE ACT OF 1934</B></FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">For the fiscal year ended December&nbsp;29, 2002<BR>
OR
</FONT>

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<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="91%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="4"><FONT face="wingdings">o</FONT></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
<B>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF<BR>
THE SECURITIES EXCHANGE ACT OF 1934</B></FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">For the transition period from &nbsp; to &nbsp;
</FONT>

<P align="center"><FONT size="2">Commission file number 001-13956
</FONT>

<P align="center"><FONT size="6"><B>PERSONNEL GROUP OF AMERICA, INC.</B>
</FONT>

<DIV align="center"><FONT size="2">(Exact name of Registrant as specified in its charter)
</FONT>
</DIV>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
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    <TD width="34%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
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    <TD width="5%">&nbsp;</TD>
    <TD width="28%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2"><B>Delaware</B></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
<B>7363</B>
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2"><B>56-1930691</B></FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">(State or other jurisdiction of<BR>
incorporation or organization)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
(Primary Standard<BR>
Industrial<BR>
Classification Code<BR>
number)
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">(I.R.S. employer<BR>
identification<BR>
number)</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">Five LakePointe Plaza<BR>
2709 Water Ridge Parkway, 2nd Floor<BR>
Charlotte, North Carolina 28217<BR>
(Address, including zip code, of<BR>
Registrant&#146;s principal executive offices)
</FONT>

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<P align="center"><FONT size="2">(704)&nbsp;442-5100
</FONT>

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</DIV>

<DIV align="center"><FONT size="2">(Registrant&#146;s telephone number, including area code)
</FONT>
</DIV>

<P align="center"><FONT size="2">SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE<BR>
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
</FONT>

<P align="center"><FONT size="2">Common Stock, $.01 par value
</FONT>

<DIV align="center"><HR align="center" size="1" width="30%" noshade>
</DIV>

<DIV align="center"><FONT size="2">(Title of Class)
</FONT>
</DIV>

<P align="center"><HR align="center" size="1" width="30%" noshade>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark whether the registrant (1)&nbsp;has filed all reports
required to be filed by Section&nbsp;13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12&nbsp;months (or such shorter period that the registrant
was required to file such reports), and (2)&nbsp;has been subject to such filing
requirements for the past 90&nbsp;days.&nbsp;Yes <FONT face="wingdings">x</FONT>&nbsp;No&nbsp;<FONT face="wingdings">o</FONT>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation&nbsp;S-K is not contained herein, and will not be contained, to
the best of registrant&#146;s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form&nbsp;10-K or any
amendment to this Form&nbsp;10-K. <FONT face="wingdings">x</FONT>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule&nbsp;12b-2 of the Securities Exchange Act of 1934).&nbsp;Yes&nbsp;<FONT face="wingdings">o</FONT>&nbsp;No
<FONT face="wingdings">x</FONT>
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The aggregate market value of voting stock held by non-affiliates of the
registrant as of June&nbsp;28, 2002, computed by reference to the closing sale price
on such date, was $23,654,002. (For purposes of calculating this amount only,
all directors and executive officers are treated as affiliates. This
determination of affiliate status is not necessarily a conclusive determination
for other purposes.) As of March&nbsp;31, 2003, 26,881,212 shares of the
registrant&#146;s Common Stock, $.01 par value, were outstanding.
</FONT>
<P align="center"><FONT size="2"><B>DOCUMENTS INCORPORATED BY REFERENCE</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain portions of the Registrant&#146;s Annual Report to Stockholders for the
fiscal year ended December&nbsp;29, 2002 (the &#147;Annual Report&#148;) furnished to the
Commission pursuant to Rule&nbsp;14a-3(b) are incorporated herein by reference into
Parts II and IV hereof.
</FONT>
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<P align="center"><FONT size="2"><B>PART I.</B>
</FONT>

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<DIV align="left"><A NAME="001"></A></DIV>
<P align="left"><FONT size="2"><B>Item&nbsp;1. Business</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Personnel Group of America, Inc. (the &#147;Company&#148;), is a leading provider of
information technology and commercial staffing services to businesses,
professional and government organizations. The Company is organized into two
divisions, the Information Technology Services Division (&#147;IT Services&#148;) and the
Commercial Staffing Services Division (&#147;Commercial Staffing&#148;), and operates in
strategic markets throughout the United States. Certain financial information
is reported by segment in Note 17, &#147;Segment Information,&#148; to the Consolidated
Financial Statements included in Part II, Item&nbsp;8 of this report. The Company&#146;s
services include information technology consulting, temporary staffing,
placement of full time employees, on-site management of temporary employees and
training and testing of temporary and permanent workers. The Company also
provides technology tools for human capital management that enable its
customers to automate portions or all of their hiring processes. At February
28, 2003, the Company operated through a network of 118 offices located in
major metropolitan areas throughout the United States.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IT Services offers information technology professionals on a temporary
basis and consulting services in a range of computer-related disciplines.
Commercial Staffing offers a wide variety of temporary office, clerical,
finance and accounting services. Commercial Staffing also provides light
technical and light industrial services to its customers, but these services
typically account for less than 25% of the division&#146;s total revenues. Each
division also offers permanent placement services in a range of specialties.
For the year ended December&nbsp;29, 2002, IT Services and Commercial Staffing
represented approximately 53% and 47%, respectively, of the Company&#146;s total
revenues.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company completed the rebranding of its operations in 2002, and
renamed its IT operations &#147;Venturi Technology Partners&#148; and its Commercial
Staffing operations &#147;Venturi Staffing Partners&#148; and, for commercial operations
that have a specialty in permanent placement services, &#147;Venturi Career
Partners.&#148; The Company&#146;s shareholders approved a corporate name change to
&#147;Venturi Partners, Inc.&#148; at the 2002 Annual Meeting of Shareholders, and the
Company currently expects to complete that process later this spring. The
Company endeavors to protect its intellectual property rights and has obtained
registrations in the United States of certain of the trademarks, trade names
and service marks that appear in this report.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company completed a
comprehensive financial restructuring in April 2003 in which it
amended and restated its revolving credit facility, issued shares of Common
Stock and Series&nbsp;B Preferred Stock in exchange for approximately
$109.7&nbsp;million
of its outstanding 5.75% Convertible Subordinated Notes due 2004
(the &#147;5.75% Notes&#148;). As a result of the financial
restructuring, the Company used substantially all of its cash on hand
(after payment of transaction expenses) to repay approximately
$38.0&nbsp;million of its outstanding credit facility and eliminated
an additional $120.0 million of its outstanding indebtedness. See Note&nbsp;1,
&#147;Subsequent Event &#150; Comprehensive Financial Restructuring,&#148; to the Consolidated
Financial Statements included in Part II, Item&nbsp;8 of this report.
</FONT>
<P align="left"><FONT size="2"><B>Information Technology Services Division</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IT Services provides information technology professionals on a temporary
basis and consulting services through 28 offices in 20 states at February&nbsp;28,
2003. IT Services had approximately 1,860 consultants on assignment at
February&nbsp;28, 2003, of which approximately 590 (or 32%) were salaried employees.
Of the balance (68% of the total), approximately 735 consultants were hourly
employees and 535 consultants were independent contractors.
</FONT>
<P align="center"><FONT size="2">2</FONT>
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<P align="left"><FONT size="2"><I>Service Offerings</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IT Services provides skilled personnel, such as web developers and
consultants, project managers, programmers, systems designers, software
engineers, LAN administrators, systems integrators, helpdesk staff and other
technology specialists, to a wide variety of clients, typically on an as-needed
time and materials basis. A number of IT Services&#146; offices have developed
technology specialties, and have entered into alliances with packaged software
and systems vendors and other technology partners to provide services necessary
to install, integrate and maintain their partners&#146; technologies. Many IT
Services offices also provide software engineering, web design, applications
development and strategic consulting services.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IT Services&#146; staffing services include providing individuals or teams of
computer professionals to corporations and other organizations that need
assistance with project management, analysis, systems design, programming,
maintenance, testing and special technologies for short-term and long-term
information technology projects. The division&#146;s service offerings encompass a
wide variety of tasks, ranging from management of all aspects of a project or
the implementation of turnkey systems to the fulfillment of temporary staffing
needs for technology projects.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selected offices in IT Services also provide complementary or stand-alone
consulting services in the information technology area, typically on a time and
materials basis. For example, certain offices work with clients interested in
alternatives to outsourcing their internal information technology organization,
as well as implementing complex systems integration solutions, and offer a
range of consulting services in areas such as systems development and
client/server networks that span mainframe, mid-range and desktop systems.
These services are provided at the client&#146;s site or at off-site development
centers. The Company intends to continue expanding the consulting services
component of the IT Services service offerings as part of its strategy to offer
a full range of IT services to its clients.
</FONT>
<P align="left"><FONT size="2"><I>Technology Tools and Automated Hiring Systems</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To complement its core staffing and consulting services offerings, the
Company also offers its customers a variety of technology tools and automated
hiring systems designed to streamline and automate portions or all of their
human capital management processes. These tools and systems include vendor
management systems, a career enhancement website and internet job board,
website development and hosting services and web based employment channels.
</FONT>
<P align="left"><FONT size="2"><I>Sales and Marketing</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IT Services has developed a sales and marketing strategy that focuses on
both national and local accounts, and is implemented in a decentralized manner
through its various branch locations. At the national level, IT Services has
focused on the attainment of preferred vendor status at large customers to
provide leverage across the practice. These accounts are typically targeted by
a local IT Services office with a presence in a specific market, and then are
sold on the basis of the strength of IT Services&#146; geographic presence in
multiple markets. IT Services also is supported by centralized proposal
generating and vendor management systems sales departments, which assist in the
development of responses to large account RFPs and support the division&#146;s
efforts to broaden its preferred vendor relationships.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Local accounts are targeted and sold by account managers at the branch
office level, permitting IT Services to capitalize on the established local
expertise and relationships of its branch office employees. These accounts are
solicited through personal sales presentations, telephone marketing, direct
mail solicitation, referrals and advertising in a variety of local and national
media. Advertisements appear in the Yellow Pages, newspapers and trade
publications. Local employees are encouraged to be active in civic
organizations and industry trade groups to facilitate the development of new
customer relationships.
</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The information technology services business is affected by the timing of
holidays and seasonal vacation patterns, generally resulting in lower IT
revenues and lower operating margins in the fourth quarter of each year.
</FONT>
<P align="left"><FONT size="2"><B>Commercial Staffing Services Division</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At February&nbsp;28, 2003, Commercial Staffing operated through 90 offices in
14 states and the District of Columbia. Commercial Staffing provides temporary
personnel who perform general office and administrative services, word
processing and desktop publishing, office automation, records management,
production/assembly/distribution, telemarketing, finance, accounting and other
staffing services. Certain of Commercial Staffing&#146;s offices also provide
full-time placement and payrolling services. Payrolling services entail
employment by Commercial Staffing of individuals recruited by a customer on a
fee basis.
</FONT>
<P align="left"><FONT size="2"><I>Operations</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commercial Staffing markets its staffing services to local and regional
clients through its network of offices across the United States.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commercial Staffing strives to satisfy the needs of its customers by
providing customized services, such as on-site workforce management and
full-time placement services. The flexibility of Commercial Staffing&#146;s
decentralized operations allows it to tailor its service offerings, reporting
and pricing to meet local client requirements. For example, certain clients
are provided with customized billings, utilization reports and safety awareness
and training programs.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To meet the growing demand in the
staffing services business for vendor-on-premise (&#147;VOP&#148;) capability, Commercial Staffing offers SourcePLUS, its customized
on-site temporary personnel management system. SourcePLUS places an
experienced staffing service manager at the client facility to provide complete
staffing support that is customized to meet client-specific needs. This
program facilitates client use of temporary personnel and allows the client to
outsource a portion of its personnel responsibility to Commercial Staffing&#146;s
on-site representative, who gathers and records requests for temporary jobs
from client department heads and then fulfills client requirements. These
Commercial Staffing representatives can also access Commercial Staffing&#146;s
systems through on-site personal computers.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commercial Staffing&#146;s full-time placement services provide traditional
staff selection and recruiting services to its clients. In addition to
recruiting employees through referrals, Commercial Staffing places
advertisements in local newspapers to recruit employees for specific positions
at client companies. Commercial Staffing utilizes its expertise and selection
methods to evaluate the applicant&#146;s credentials. If the applicant receives and
accepts a full-time position at the client, Commercial Staffing charges the
employer a one-time fee, generally based on the annual salary of the employee.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To maintain a consistent quality standard for all its temporary employees,
Commercial Staffing uses a comprehensive automated system to screen and
evaluate potential temporary personnel, make proper assignments and review a
temporary employee&#146;s performance. Commercial Staffing uses the QuestPLUS
System to integrate the results of this skills testing with personal attributes
and work history and automatically matches available candidates with customer
requirements. Commercial Staffing also provides uniform training to all of its
employees in sales, customer service and leadership skills.
</FONT>
<P align="left"><FONT size="2"><I>Sales and Marketing</I>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commercial Staffing has implemented a standardized Business Development
Process to target potential customers with temporary staffing needs and to
maintain and expand existing customer relationships. The marketing efforts of
Commercial Staffing are decentralized and capitalize on the division&#146;s
long-standing customer relationships and the lengthy market tenure of the
division&#146;s offices, which have been in their existing geographic markets for
more than 25&nbsp;years on average. Commercial Staffing obtains new clients
primarily through personal
</FONT>
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<P align="left"><FONT size="2"> sales presentations and referrals from other clients
and supports its sales efforts with telemarketing, direct mail solicitation and
advertising in a variety of local and national media, including the Yellow
Pages, newspapers,
magazines and trade publications. Commercial Staffing also is supported by
centralized proposal generation and large account sales departments, which
assist in the development of responses to large account RFPs and otherwise
support the division&#146;s efforts to broaden its large account base.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commercial Staffing devotes the majority of its selling efforts to the
local and regional operations of a wide variety of businesses (including a
number of Fortune 500 companies) and to other potential customers that it has
identified as consistent users of temporary staffing services. Local and
regional accounts are characterized by shorter sales cycles and higher gross
margins. Commercial Staffing generally does not seek low margin national
account agreements, but does provide services to a wide variety of customers
with national and international businesses. Bids for large user accounts and
the provision of services to clients with multiple location requirements are
coordinated at the Company&#146;s headquarters.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The commercial staffing business is subject to the seasonal impact of
summer and holiday employment trends. Typically, the second half of each
calendar year is more heavily affected, as companies tend to increase their use
of temporary personnel during this period. While the commercial staffing
industry is cyclical, the Company believes that the broad geographic coverage
of its operations and the diversity of the services it provides (including its
emphasis on high-end white collar clerical workers) may partially mitigate the
adverse effects of economic cycles in a single industry or geographic region.
</FONT>
<P align="left"><FONT size="2"><B>Recruiting and Retention of Temporary Employees</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company recruits its Commercial Staffing temporary associates and IT
Services consultants through a decentralized recruiting program that primarily
utilizes the internet and local and national advertisements. In addition, the
Company has succeeded in recruiting qualified employees through referrals from
its existing labor force. To encourage further referrals, the IT Services and
Commercial Staffing operations pay referral fees to employees responsible for
attracting new recruits. The Company interviews, tests, checks references and
evaluates the skills of applicants for temporary employment, utilizing systems
and procedures developed and enhanced over the years. Commercial Staffing
employs temporary associates on an as needed basis dependent upon client
demand. These temporary associates are paid only for time they actually work.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In an effort to attract a broad spectrum of qualified employees, the
Company offers a wide variety of employment options and training programs. In
addition, IT Services operates a number of formal and informal training
programs to provide its consultants with access to and training in new software
applications and a diverse mix of mainframe, client/server and other computer
technologies. The Company believes that these training initiatives have
improved consultant recruitment and retention, increased the technical skills
of IT Services&#146; personnel and resulted in better service for IT Services&#146;
clients.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company provides competitive compensation packages and comprehensive
benefits for its Commercial Staffing temporary associates and IT Services
consultants. Most of the temporary associates and IT Services consultants are
also eligible for one of the Company&#146;s 401(k) plans.
</FONT>
<P align="left"><FONT size="2"><B>Organizational Structure</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company operates through a network of decentralized offices, none of
which are franchised or licensed. Each office reports to a manager who is
responsible for day-to-day operations and the profitability of the office.
Depending on, among other things, the number of offices in a region, branch
managers may report to operating company presidents, regional managers,
division vice presidents or division presidents. Branch and regional managers
are given a high level of autonomy in making decisions about the operations in
their principal region. The compensation of branch and regional managers
includes bonuses primarily based on the growth and profitability of their
operations and is designed to motivate them to maximize revenue and profit
growth each year.
</FONT>
<P align="center"><FONT size="2">5</FONT>
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<P align="left"><FONT size="2"><B>Systems</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commercial Staffing uses a number of automated systems to measure the
skills of the temporary employee candidates that make themselves available and
to match skills with client requests. The ProficiencyPLUS program is designed
to test specific computer-related skills by allowing the candidate to operate
in the actual software
program environment. The QuestPLUS system integrates the results of the
Company&#146;s skills testing with personal attributes and work history and
automatically matches available candidates with customer requirements. This
system also allows the Company to track the performance of its temporary
employees and provide quality reports to customers that document the level of
the Company&#146;s performance.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company utilizes separate paybill systems for IT Services and Commercial Staffing. The
paybill processing systems provide payroll processing and customer invoicing.
The Company has also installed common financial and human resources systems in
all of its offices.
</FONT>
<P align="left"><FONT size="2"><B>Competition</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Despite significant consolidation within the United States staffing
services market, the market remains highly competitive and highly fragmented
and has limited barriers to entry. A number of publicly owned companies
specializing in professional staffing services in the United States have
greater marketing, financial and other resources than the Company.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the temporary staffing industry, competition generally is limited to
firms with offices located within a customer&#146;s particular local market. In
most major markets, commercial staffing competitors generally include many of
the publicly traded companies and, in addition, numerous regional and local
full-service and specialized temporary service agencies, some of which may
operate only in a single market. Competitors for information technology
services include local IT staffing and consulting firms, large, multi-service
staffing and consulting firms and the consulting affiliates of large accounting
firms.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since many clients contract for their staffing services locally,
competition varies from market to market. In most areas, no single company has
a dominant share of the market. Many client companies use more than one
staffing services company, and it is common for large clients to use several
staffing services companies at the same time. However, in recent years there
has been a significant increase in the number of large customers consolidating
their temporary staffing purchases with a single supplier or vendor manager, or
with a smaller number of preferred vendors. The trend to consolidate temporary
staffing purchases has in some cases made it more difficult for the Company to
gain business from potential customers who have already contracted to fill
their staffing needs with competitors of the Company. In other cases, the
Company has been able to increase the volume of business with certain customers
who choose to purchase staffing services primarily from the Company.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The competitive factors in obtaining and retaining clients include an
understanding of clients&#146; specific job requirements, the ability to provide
appropriately skilled temporary personnel at the local level in a timely
manner, the monitoring of job performance quality and the price of services.
The primary competitive factors in obtaining qualified candidates for temporary
employment assignments are wages, responsiveness to work schedules and the
number of hours of work available. Management believes that it is highly
competitive in these areas due to its focus on local markets and the autonomy
given to its local management.
</FONT>
<P align="left"><FONT size="2"><B>Regulation</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Temporary employment service firms are generally subject to one or more of
the following types of government regulation: (i)&nbsp;regulation of the
employer/employee relationship between a firm and its temporary employees; (ii)
registration, licensing, record keeping and reporting requirements; and (iii)
substantive limitations on its operations. Staffing services firms are the
legal employers of their temporary workers (other than independent contractors)
and are governed by laws regulating the employer/employee relationship, such
as tax withholding or reporting, social security or retirement,
anti-discrimination and workers&#146; compensation.
</FONT>
<P align="center"><FONT size="2">6</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<P align="left"><FONT size="2"><B>Trademarks</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company maintains a number of trademarks, tradenames, service marks
and other intellectual property rights, and licenses certain other proprietary
rights in connection with its businesses. The Company is not currently aware
of any infringing uses or other conditions that would materially and adversely
affect its use of its proprietary rights.
</FONT>
<P align="left"><FONT size="2"><B>Employees</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At February&nbsp;28, 2003, the Company had approximately 1,025 permanent
administrative employees. Additionally, approximately 1,325 of the information
technology consultants in IT Services were full-time salaried or hourly
employees. None of the Company&#146;s employees are covered by collective
bargaining agreements. The Company believes that its relationships with its
employees are good.
</FONT>
<P align="left"><FONT size="2"><B>Risk Factors and Forward Looking Information</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s financial performance is subject to a number of risks and
uncertainties. Additionally, certain statements contained in or incorporated
into this report are forward-looking statements regarding events and
financial trends that may affect the Company&#146;s future operating results or
financial position. These statements may be identified by words such as
&#147;estimate,&#148; &#147;forecast,&#148; &#147;plan,&#148; &#147;intend,&#148; &#147;believe,&#148; &#147;should,&#148; &#147;expect,&#148;
&#147;anticipate,&#148; or variations or negatives thereof, or by similar or comparable
words or phrases. Forward-looking statements are also subject to risks and
uncertainties that could cause actual results to differ materially from those
expressed in such statements.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These risks and uncertainties include, but are not limited to, the following:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">changes in levels of unemployment and other economic conditions in
the United States, or in particular regions or industries;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">continuing weakness or further reductions in corporate information
technology spending levels;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the ability of the Company to maintain existing client
relationships and attract new clients in the context of changing
economic or competitive conditions;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the impact of competitive pressures, including any change in the
demand for the Company&#146;s services, or the Company&#146;s ability to maintain
or improve its operating margins;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">an Internal Revenue Service audit of the Company&#146;s income tax
returns and the risk that assessments for additional taxes, penalties and interest could
be levied against the Company;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the entry of new competitors into the marketplace or expansion by
existing competitors;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the Company&#146;s success in attracting, training and retaining
qualified management personnel and other staff employees;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">reductions in the supply of qualified candidates for temporary
employment or the Company&#146;s ability to attract qualified candidates;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the possibility of the Company incurring liability for the
activities of its temporary employees or for events impacting its
temporary employees on clients&#146; premises;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the risk in an uncertain economic environment of increased
incidences of employment disputes, employment litigation and workers&#146;
compensation claims;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the risk that further cost cutting or restructuring activities
undertaken by the Company could cause an adverse impact on certain of
the Company&#146;s operations;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">economic declines that affect the Company&#146;s liquidity or ability to
comply with its loan covenants;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the risks of defaults under the Company&#146;s credit agreements or the
demand by any holder of the Company&#146;s remaining outstanding 5.75% Notes
for repayment following the occurrence of a repurchase event under the
indenture applicable to the 5.75% Notes;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">adverse changes in credit and capital markets conditions that may
affect the Company&#146;s ability to obtain financing or refinancing on
favorable terms;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">7</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>




<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">adverse changes to management&#146;s periodic estimates of future cash
flows that may affect management&#146;s assessment of its ability to fully
recover its goodwill;</FONT></TD>
</TR>
<TR><TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">whether governments will impose additional regulations or licensing
requirements on staffing services businesses in particular or on
employer/employee relationships in general; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&#149;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">other matters discussed in this
report and the Company&#146;s other SEC
filings.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">Because long-term contracts are not a significant part of the Company&#146;s
business, future results cannot be reliably predicted by considering past
trends or extrapolating past results. The Company undertakes no
obligation to update information contained in this report.
</FONT>
<!-- link2 "Item&nbsp;2. Properties" -->
<P align="left"><FONT size="2"><B>Item&nbsp;2. Properties</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Generally, the Company&#146;s offices are leased under leases of relatively
moderate duration (typically three to five years, with options to extend)
containing customary terms and conditions. IT Services and Commercial Staffing
offices are typically in office or industrial buildings, and occasionally in
retail buildings, and the Company&#146;s headquarters facilities and regional
offices are in similar facilities.
</FONT>
<!-- link2 "Item&nbsp;3. Legal Proceedings" -->
<P align="left"><FONT size="2"><B>Item&nbsp;3. Legal Proceedings</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From time to time the Company is involved in certain disputes and
litigation relating to claims arising out of its operations in the ordinary
course of business. Further, the Company periodically is subject to government
audits and inspections. In the opinion of the Company&#146;s management, matters
presently pending will not, individually or in the aggregate, have a material
adverse effect on the Company&#146;s results of operations or financial condition.
</FONT>
<!-- link2 "Item&nbsp;4. Submission of Matters to a Vote of Security Holders" -->
<P align="left"><FONT size="2"><B>Item&nbsp;4. Submission of Matters to a Vote of Security Holders</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No matter was submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.
</FONT>
<!-- link1 "PART II." -->
<P align="center"><FONT size="2"><B>PART II.</B>
</FONT>

<!-- link2 "Item&nbsp;5. Market for Registrant&#146;s Common Equity and Related Shareholder Matters" -->
<P align="left"><FONT size="2"><B>Item&nbsp;5. Market for Registrant&#146;s Common Equity and Related Shareholder Matters</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s Common Stock has traded since November 2002 on the Over the
Counter Bulletin Board (the &#147;OTC Bulletin Board&#148;) following notification by the
New York Stock Exchange (the &#147;NYSE&#148;) of its intent to seek the removal of the
Common Stock from the NYSE list. Following an unsuccessful appeal of the
NYSE&#146;s decision pursuant to NYSE rules, the NYSE delisted the Common Stock in February 2003. The restructuring agreement for the Company&#146;s recently
completed financial restructuring contemplates that the Company will use its
best efforts to procure a new stock exchange listing for the shares of Common
Stock issued in the restructuring (or to be issued upon the conversion of the
Series&nbsp;B Preferred Stock issued in the restructuring), but in the meantime the
Company expects that the Common Stock will continue to trade on the OTC
Bulletin Board.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of February&nbsp;28, 2003, there were approximately 5,044 shareholders based
on the number of holders of record and an estimate of the number of individual
participants represented by securities position listings.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s policy has been to retain earnings for use in its business
and, accordingly, it has not historically paid cash dividends on the Common
Stock. In addition, the Company&#146;s revolving credit facility currently
prohibits the payment of dividends. In the future, the Company&#146;s Board of
Directors will determine whether to pay cash dividends based on conditions then
existing, including the Company&#146;s earnings, financial condition, capital
requirements, financing arrangements, the terms of the Company&#146;s credit
agreements and any other factors deemed relevant by the Board of Directors.
</FONT>
<P align="center"><FONT size="2">8</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth the high, low and closing sales prices for
the Common Stock as reported on the New York Stock Exchange for each quarter
during the fiscal year ended December&nbsp;30, 2001, as well as for each quarter
during the fiscal year ended December&nbsp;29, 2002, through November&nbsp;20, 2002. It
also sets forth the range of high and low bids for the Common Stock from
November&nbsp;21, 2002 through the end of fiscal 2002 as reported by the OTC
Bulletin Board:
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="70%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>High</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Low</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Close</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>2002</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">First Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">1.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">0.81</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">1.35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Second Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.64</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.90</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Third Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fourth Quarter (through November&nbsp;20, 2002)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.37</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fourth Quarter (beginning November 21,
2002)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.06</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2"><B>2001</B></FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">First Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">3.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">1.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">1.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Second Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2.07</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.09</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Third Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.77</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.85</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fourth Quarter</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0.88</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="left"><FONT size="2">The last reported bid price on March&nbsp;31, 2003 was $0.17.
</FONT>
<!-- link2 "Item&nbsp;6. Selected Financial Data." -->
<P align="left"><FONT size="2"><B>Item&nbsp;6. Selected Financial Data.</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The information required by this Item is included in the Company&#146;s Annual
Report under the caption &#147;Selected Financial Data,&#148; which information is set
forth in Exhibit&nbsp;13.1 to this Form&nbsp;10-K and is hereby incorporated herein by
reference.
</FONT>
<!-- link2 "Item&nbsp;7. Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations." -->
<P align="left"><FONT size="2"><B>Item&nbsp;7. Management&#146;s
Discussion and Analysis of Financial Condition and Results of Operations.</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The information required by this Item is included in the Company&#146;s Annual
Report under the caption &#147;Management&#146;s Discussion and Analysis of Financial
Condition and Results of Operations,&#148; which information is set forth in Exhibit
13.1 to this Form&nbsp;10-K and is hereby incorporated herein by reference.
</FONT>
<!-- link2 "Item&nbsp;7A. Quantitative and Qualitative Disclosures About Market Risk" -->
<P align="left"><FONT size="2"><B>Item&nbsp;7A. Quantitative and Qualitative Disclosures About Market Risk</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The information required by this Item is included in the Company&#146;s Annual
Report under the caption &#147;Management&#146;s Discussion and Analysis of Financial
Condition and Results of Operations, Market Risk Disclosures,&#148; which
information is set forth in Exhibit&nbsp;13.1 to this Form&nbsp;10-K and is hereby
incorporated herein by reference.
</FONT>
<!-- link2 "Item&nbsp;8. Financial Statements and Supplementary Data." -->
<P align="left"><FONT size="2"><B>Item&nbsp;8. Financial Statements and Supplementary Data.</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The information required by this Item is included in the Company&#146;s Annual
Report under the captions &#147;Report of Independent Accountants,&#148; &#147;Consolidated
Balance Sheets,&#148; &#147;Consolidated Statements of Operations,&#148; &#147;Consolidated
Statements of Shareholders&#146; Equity (Deficit),&#148; &#147;Consolidated Statements of Cash Flows&#148;
and &#147;Notes to
</FONT>
<P align="center"><FONT size="2">9</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>


<P align="left"><FONT size="2">Consolidated Financial Statements,&#148; which information is set
forth in Exhibit&nbsp;13.1 to this Form&nbsp;10-K and is hereby incorporated herein by
reference.
</FONT>
<!-- link2 "Item&nbsp;9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure." -->
<P align="left"><FONT size="2"><B>Item&nbsp;9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has no disagreements on accounting or financial disclosure
matters with its independent public accountants to report under this Item&nbsp;9.
</FONT>
<!-- link1 "PART III." -->
<P align="center"><FONT size="2"><B>PART III.</B>
</FONT>

<!-- link2 "Item&nbsp;10. Directors and Executive Officers of the Registrant." -->
<P align="left"><FONT size="2"><B>Item&nbsp;10. Directors and Executive Officers of the Registrant.</B>
</FONT>

<P align="left"><FONT size="2"><B>Information About Directors and Executive Officers</B></FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth information about our executive officers
and directors as of the date of this report:
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="38%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="53%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Name</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Age</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Position</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">Larry L. Enterline</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
50</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Chief Executive Officer and Director</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">James C. Hunt</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
46</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">President and Chief Financial Officer</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Michael H. Barker</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
48</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">President &#150; Division Operations</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Ken R. Bramlett, Jr.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
43</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Senior Vice President, General Counsel and Secretary</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Thomas E. Stafford</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
58</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Vice President of Human Resources</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">James V. Napier (1)(3)(5)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
66</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Director</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Christopher Pechock (1)(2)(3)(4)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
38</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Director</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Elias J. Sabo (1)(2)(3)(4)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
32</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Director</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Janice L. Scites (3)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
52</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Director</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">William J. Simione, Jr. (2)(3)(5)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
61</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Director</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Victor E. Mandel(4)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">
38</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Director</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Member of the Compensation Committee of the Board of Directors.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(2)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Member of the Governance Committee of the Board of Directors.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(3)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Member of the Audit Committee of the Board of Directors.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(4)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Messrs.&nbsp;Pechock, Sabo and Mandel were appointed to the Board in April
2003 to fill vacancies created following the completion of the Company&#146;s
financial restructuring. The Company is considering the Committee
memberships of each of its Board members and may change the composition of
certain or all of its Board Committees following a transitional period.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(5)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Messrs.&nbsp;Napier and Simione are currently serving as Class&nbsp;II directors
and have advised the Company that they do not intend to stand for
reelection to the Board at the Company&#146;s upcoming 2003 Annual Meeting of
Shareholders.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Larry L. Enterline: </I>Mr.&nbsp;Enterline has served as our Chief Executive
Officer and as a director since December 2000. From 1984 to 1989, Mr.
Enterline served as Vice President of Marketing and Sales with Bailey Controls.
From 1989 to 1999, Mr.&nbsp;Enterline served in various management roles with
Scientific-Atlanta, Inc., most recently as a Senior Vice President in charge of
its worldwide sales and service organization. Mr.&nbsp;Enterline holds a bachelor&#146;s
degree in electrical engineering and a Master&#146;s degree in business
administration.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>James C. Hunt: </I>Mr.&nbsp;Hunt has served as our President and Chief Financial
Officer since January 2001. Prior to that time, Mr.&nbsp;Hunt served as our
President from October 1999 to January 2001, Chief Financial Officer and
Treasurer from March 1997 until October 1999 and Senior Vice President from
January 1997 until March 1997. Mr.&nbsp;Hunt served as a director from January 1997
to April 2003. Prior to joining us in
January 1997, Mr.&nbsp;Hunt spent 18&nbsp;years with Arthur Andersen LLP, a worldwide
accounting and consulting firm, the last six years as a partner.
</FONT>
<P align="center"><FONT size="2">10</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Michael H. Barker: </I>Mr.&nbsp;Barker has served as President of Division
Operations since January 2003. From January 2001 through January 2003, Mr.
Barker served as President of our IT Services Division. Prior to that time,
Mr.&nbsp;Barker served as President of Division Operations from October 1999 to
January 2001 and as President of the Commercial Staffing division from January
1998 until October 1999. Prior to joining us, from 1995 to 1997 Mr.&nbsp;Barker
served as the Chief Operations Officer for the Computer Group Division of IKON
Technology Services, a diversified technology company.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Ken R. Bramlett, Jr.: </I>Mr.&nbsp;Bramlett has served as our Senior Vice
President, General Counsel and Secretary since January 2001. Prior to that
time, Mr.&nbsp;Bramlett served as our Chief Financial Officer and Treasurer from
October 1999 to January 2001 and as our Senior Vice President, General Counsel
and Secretary from October 1996 until October 1999. Mr.&nbsp;Bramlett also served
as a director from August 1997 to January 2001. Prior to joining us in October
1996, Mr.&nbsp;Bramlett spent 12&nbsp;years with Robinson, Bradshaw &#038; Hinson, P.A., a
Charlotte, North Carolina law firm, the last six years as a partner. Mr.
Bramlett serves on the board of directors of World Acceptance Corporation, a
small loan consumer finance company headquartered in Greenville, South
Carolina.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Thomas E. Stafford: </I>Mr.&nbsp;Stafford has served as our Vice President of
Human Resources since January 2000. Prior to that time, Mr.&nbsp;Stafford served as
the Director of Human Resources for the Film and Fiber Division of
Hoechst Celanese Corporation from 1992 to April 1998 and as Director of
Benefits from April 1998 to April 1999.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>James V. Napier: </I>Mr.&nbsp;Napier has served as a director since September
1995. From November 1992 to November 2000, Mr.&nbsp;Napier served as the Chairman
of Scientific-Atlanta, Inc., a telecommunications company. In addition to
serving on our board of directors and on Scientific-Atlanta&#146;s Board, Mr.
Napier serves on the boards of directors of Engelhard Corporation, Vulcan
Materials Company, McKesson Corporation, Intelligent Systems Corporation and
WABTEC Corp.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Christopher Pechock</I>: From 1998 to 2003, Mr.&nbsp;Pechock has served as a
partner at MatlinPatterson Global Opportunities Partners, an asset management
firm specializing in corporate restructurings, and its predecessor. From 1996
to 1998, Mr.&nbsp;Pechock was employed by Turnberry Capital Management, a capital
management firm. Mr.&nbsp;Pechock has a Master&#146;s degree in business administration
from Columbia Business School. Mr.&nbsp;Pechock also serves on the board of
directors of Huntsman Holdings, Inc. and several private companies.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Elias J. </I>Sabo<I>: </I>From 1998 to 2003, Mr.&nbsp;Sabo has served as a founding
partner at The Compass Group International LLC. Prior to joining Compass, Mr.
Sabo worked in the acquisition department for Colony Capital, a Los
Angeles-based real estate private equity firm, from 1992 to 1996 and as a
healthcare investment banker for CIBC World Markets (formerly Oppenheimer &#038;
Co.) from 1996 to 1998. Mr.&nbsp;Sabo also serves on the boards of directors of
several private companies.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Janice L. Scites: </I>Ms.&nbsp;Scites has served as a director since August 1999.
Since 2000, Ms.&nbsp;Scites has served as President of Scites Associates, Inc., an
information technology and management consulting firm. From 1995 to 2000, Ms.
Scites served in various management roles with AT&#038;T, initially as Vice
President in its Business Customer Care and Value-Added Services organizations
and most recently as Vice President in the Internet Implementation Strategy
Group. Prior to joining AT&#038;T, Ms.&nbsp;Scites spent 13&nbsp;years with Phoenix Mutual
Life Insurance Company and five years with Connecticut Mutual Life Insurance
Company. Ms.&nbsp;Scites also serves on the board of directors of Central Vermont
Public Service Corporation, a Vermont-based electric utility.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>William J. Simione, Jr.: </I>Mr.&nbsp;Simione has served as a director since
September 1995. From January 1996 to October 2001, Mr.&nbsp;Simione served as
President of Simione Consulting, LLC, a subsidiary of CareCentric, Inc.
(formerly Simione Central Holdings, Inc.). Since October 2001, Mr.&nbsp;Simione has
served as managing principal of Simione Consulting, LLC, which provides
consulting services and information systems to the home healthcare industry.
Mr.&nbsp;Simione also serves on the board of directors of CareCentric, Inc. 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&#146;s
National Reimbursement Consultants.
</FONT>
<P align="center"><FONT size="2">11</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Victor E. Mandel: </I>Since 2001, Mr.&nbsp;Mandel has served as founder and
Managing Member of Criterion Capital Management, an investment company. From
May 1999 to November 2000, Mr.&nbsp;Mandel was Executive Vice President&#151;Finance and
Development of Snyder Communications, Inc., with operating responsibility for
its publicly-traded division Circle.com. From June 1991 to May 1999, Mr.
Mandel was a Vice President in the Investment Research department at Goldman
Sachs &#038; Co. covering emerging growth companies.
</FONT>
<P align="left"><FONT size="2"><B>Section&nbsp;16(a) Beneficial Ownership Reporting Compliance</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;16(a) of the Securities Exchange Act of 1934 requires our
directors and executive officers, and persons who own more than 10% of a
registered class of our equity securities, to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of our equity securities. Executive officers, directors and greater
than 10% stockholders are required by Commission regulations to furnish us with
copies of all Section&nbsp;16(a) forms they file. To our knowledge, based solely on
a review of the copies of such reports furnished to us during and for the
fiscal year ended December&nbsp;29, 2002, our executive officers and directors and
any greater than 10% beneficial owners complied with all applicable Section
16(a) filing requirements.
</FONT>
<!-- link2 "Item&nbsp;11. Executive Compensation." -->
<P align="left"><FONT size="2"><B>Item&nbsp;11. Executive Compensation.</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth compensation information for fiscal years
2002, 2001 and 2000 for those persons who were, except as otherwise noted, our
Chief Executive Officer and our four other most highly paid
executive officers as of December&nbsp;29, 2002:
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="37%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Long Term</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Compensation</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Awards</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Annual Compensation</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Securities</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Other Annual</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Underlying</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>All Other</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center" colspan="2"><FONT size="1"><B>Name and Principal Position</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Salary</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Bonus</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Compensation</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Options(#)(1)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Compensation</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Larry L. Enterline (2)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;&nbsp;&nbsp;409,476</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151; </FONT></TD>
    <TD nowrap><FONT size="2">(3)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;&nbsp;&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Chief Executive Officer</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">414,666</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151; </FONT></TD>
    <TD nowrap><FONT size="2">(3)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">4,404</FONT></TD>
    <TD nowrap><FONT size="2">(4)</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151; </FONT></TD>
    <TD nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">700,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD nowrap><FONT size="2">&nbsp;</FONT></TD>
</TR>





<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">James C. Hunt</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;&nbsp;&nbsp;307,445</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;&nbsp;147,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;&nbsp;50,000</FONT></TD>
    <TD nowrap><FONT size="2">(5)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">President and Chief Financial Officer</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">307,965</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">200,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">50,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">131,216</FONT></TD>
    <TD nowrap><FONT size="2">(6)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">308,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">40,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">50,000</FONT></TD>
    <TD nowrap><FONT size="2">(7)</FONT></TD>
</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Michael H. Barker</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;&nbsp;&nbsp;246,741</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;84,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;&nbsp;&nbsp;2,750</FONT></TD>
    <TD nowrap><FONT size="2">(5)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">President
&#150; Division Operations</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">247,379</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">108,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">40,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">67,759</FONT></TD>
    <TD nowrap><FONT size="2">(6)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">247,870</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">40,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">16,236</FONT></TD>
    <TD nowrap><FONT size="2">(7)</FONT></TD>
</TR>


<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Ken R. Bramlett, Jr.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;&nbsp;&nbsp;247,175</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;84,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;&nbsp;20,160</FONT></TD>
    <TD nowrap><FONT size="2">(5)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Senior Vice President, General Counsel and</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">247,695</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">96,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">30,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">102,013</FONT></TD>
    <TD nowrap><FONT size="2">(6)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Secretary</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">248,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">40,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">50,000</FONT></TD>
    <TD nowrap><FONT size="2">(7)</FONT></TD>
</TR>


<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Thomas M. Wittenschlaeger (8)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;&nbsp;&nbsp;205,441</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;70,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">&nbsp;&nbsp;16,215</FONT></TD>
    <TD nowrap><FONT size="2">(5)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Senior Vice President, Corporate</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">165,336</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">69,750</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">50,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">27,376</FONT></TD>
    <TD nowrap><FONT size="2">(9)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Development and Chief Technology Officer</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Option grants for the named
officers in 2000 and 2001 generally vested 25%
on each of the first four anniversaries of the grant dates. In connection
with the Company&#146;s recently completed financial restructuring, each of the
named executives has irrevocably waived his right to exercise all of his
outstanding PGA stock options granted under the 1995 Stock Option
Plan, including these options, and has forfeited all of such options to
the Company.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">12</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>


<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(2)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Mr.&nbsp;Enterline was appointed as our Chief Executive Officer in December
2000.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(3)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">At the request of the Compensation Committee, Mr.&nbsp;Enterline has deferred
the payment of his bonuses for 2001 and 2002. Mr.&nbsp;Enterline&#146;s bonus for
2001 was a guaranteed $400,000, and his bonus for 2002 was $280,000.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(4)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Represents relocation expense reimbursements paid to Mr.&nbsp;Enterline in
2001.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(5)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Represents 2002 allocations to our non-qualified profit-sharing plan for
Messrs.&nbsp;Hunt, Bramlett and Wittenschlaeger and a matching contribution to
our IT Services Division 401(k) plan for Mr.&nbsp;Barker.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(6)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Represents 2001 allocations to our non-qualified profit-sharing plan for
Messrs.&nbsp;Hunt, Barker and Bramlett of $50,000, $17,964 and $19,903,
respectively, and $81,216, $49,795 and $82,110, respectively, paid to the
named officers in connection with the termination and amendment of then in
effect vacation and paid time off plans.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(7)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Represents 2000 allocations to our non-qualified profit-sharing plan for
the named officers.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(8)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Mr.&nbsp;Wittenschlaeger served as our Senior Vice President, Corporate
Development and Chief Technical Officer from April 2001 until his
resignation in January 2003.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(9)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Represents a 2001 allocation to our non-qualified profit-sharing plan for
Mr.&nbsp;Wittenschlaeger of $10,020 and $17,356 of relocation expense
reimbursements.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company did not grant stock options to any of the named officers in
2002.
</FONT>
<P align="left"><FONT size="2"><B>Option Year-End Value Table</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth certain information concerning unexercised
options held as of the end of 2002. None of the named officers exercised any
options during 2002.
</FONT>
<P align="center"><FONT size="2"><B>Fiscal Year-End Option Value</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="50%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Number of Securities Underlying</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Value of Unexercised In-the-Money</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Unexercised Options at FY-End (#)(1)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="7"><FONT size="1"><B>Options at FY-End ($)(2)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="7"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Name</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Exercisable</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Unexercisable</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Exercisable</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Unexercisable</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Larry L. Enterline</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">350,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">350,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">James C. Hunt</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">296,248</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">71,574</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Ken R. Bramlett, Jr.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">177,771</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">52,199</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Michael H. Barker</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">103,471</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">54,375</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Thomas M. Wittenschlaeger</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">12,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">37,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In connection with PGA&#146;s recently completed financial restructuring, each
of the named officers has irrevocably waived his rights to exercise all of
these options and forfeited them to the Company.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(2)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The fair market value of the common stock used for these computations was
$0.14, which was the last bid price for our Common Stock on the OTC
Bulletin Board on December&nbsp;27, 2002.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2"><B>Employment Agreements</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following six paragraphs describe the employment agreements with our
executive officers that were in effect until the completion of our financial
restructuring in April 2003, or in the case of Mr.&nbsp;Wittenschlaeger, until his
resignation as an executive officer in January 2003.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Larry L. Enterline was employed pursuant to a letter agreement dated
December&nbsp;20, 2000. The letter agreement provided for (i)&nbsp;an annual base salary
of $400,000 (subject to annual adjustment as determined by the Compensation
Committee), and (ii)&nbsp;the right to earn bonuses under the Company&#146;s Management
Incentive Compensation Plan. The letter agreement also provided for a minimum
annual bonus for 2001 of $400,000, but the Compensation Committee notified Mr.
Enterline in December 2001 that it had elected to defer the payment
</FONT>
<P align="center"><FONT size="2">13</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>


<P align="left"><FONT size="2">of his 2001
bonus until January 2003. The letter agreement did not specify a term of
employment for Mr.&nbsp;Enterline. However, it did provide that if Mr.&nbsp;Enterline&#146;s
employment were terminated within the first two years by the Company other than
for cause or by Mr.&nbsp;Enterline following a change in control of the Company, the
Company would pay Mr.&nbsp;Enterline severance equal to 12&nbsp;months&#146; 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.&nbsp;Enterline would become
immediately exercisable.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;James C. Hunt was employed pursuant to the terms of an employment
agreement, dated as of January&nbsp;2, 1997, that provided for his employment until
December&nbsp;31, 2002, subject to automatic renewal for successive one-year periods
unless either the Company or Mr.&nbsp;Hunt gave notice of non-renewal six months
prior to expiration. Neither the Company nor Mr.&nbsp;Hunt gave notice of
non-renewal prior to June&nbsp;30, 2002. The employment agreement provided for (i)
an annual base salary of $300,000 (subject to annual adjustment as determined
by the Compensation Committee) and (ii)&nbsp;the right to earn bonuses under the
Company&#146;s Management Incentive Compensation Plan.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Michael H. Barker was employed pursuant to the terms of an employment
agreement, dated as of January&nbsp;19, 1998, that provided for his employment until
January&nbsp;18, 2003, subject to automatic renewal for successive one-year periods
unless either the Company or Mr.&nbsp;Barker gave notice of non-renewal six months
prior to expiration. Neither the Company nor Mr.&nbsp;Barker gave notice of
non-renewal prior to July&nbsp;18, 2002. The employment agreement provided for (i)
an annual base salary of $240,000 (subject to annual adjustment as determined
by the Compensation Committee) and (ii)&nbsp;the right to earn bonuses under the
Company&#146;s Management Incentive Compensation Plan.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ken R. Bramlett, Jr. was employed pursuant to the terms of an employment
agreement, dated as of October&nbsp;7, 1996, that provided for his employment until
September&nbsp;30, 2002, subject to automatic renewal for successive one-year
periods unless either the Company or Mr.&nbsp;Bramlett gave notice of non-renewal
six months prior to expiration. Neither the Company nor Mr.&nbsp;Bramlett gave
notice of non-renewal prior to March&nbsp;31, 2002. The employment agreement
provided for (i)&nbsp;an annual base salary of $240,000 (subject to annual
adjustment as determined by the
Compensation Committee) and (ii)&nbsp;the right to earn bonuses under the Company&#146;s
Management Incentive Compensation Plan.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Thomas M. Wittenschlaeger was employed pursuant to the terms of an
employment agreement, dated as of April&nbsp;11, 2001, that provided for his
employment until April&nbsp;11, 2003, subject to automatic renewal for successive
one-year periods unless either the Company or Mr.&nbsp;Wittenschlaeger gave notice of
non-renewal six months prior to expiration. The employment agreement currently
provides for (i)&nbsp;an annual base salary of $200,000 (subject to annual
adjustment as determined by our Compensation Committee) and (ii)&nbsp;the right to
earn bonuses under the Company&#146;s Management Incentive
Compensation Plan. In accordance with the terms of Mr.
Wittenschlaeger&#146;s separation arrangement, the Company will pay
him severance equal to one year&#146;s base salary.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each of these employment agreements for Messrs.&nbsp;Hunt, Barker, Bramlett and
Wittenschlaeger also provided that if the employment agreement were terminated
by the Company other than for cause, or by the executive upon a change in terms
and conditions of employment or following a change in control of the Company,
the Company would pay the executive severance equal to 12&nbsp;months&#146; salary (24
months&#146; salary, in the case of Mr.&nbsp;Hunt) and any unpaid bonus to which he would
otherwise have been entitled, and all unvested options to purchase Common Stock
then held by the executive would become immediately exercisable. Each
employment agreement also contained a provision prohibiting the executive from
competing with the Company or soliciting employees and customers of the Company
for a period of two years from the date his employment with the Company ceased.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each of Messrs.&nbsp;Enterline, Hunt, Barker and Bramlett is now employed
pursuant to an employment agreement dated as of the closing date of our
financial restructuring. Each employment agreement provides for an annual base
salary (subject to annual adjustment as determined by our Compensation
Committee), the right to earn annual bonuses as described below and
in the event that
our shareholders approve our new equity incentive plan at our 2003 annual
meeting, the right to participate in such new plan. The initial annual base
salaries established in these agreements for Messrs.&nbsp;Enterline, Hunt, Barker
and Bramlett are $400,000, $300,000, $240,000 and $240,000, respectively. Each
employment agreement is for an initial term of two years, with automatic
one-year
</FONT>
<P align="center"><FONT size="2">14</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>


<P align="left"><FONT size="2">extensions thereafter unless either party provides written notice of
termination at least three months prior to any scheduled expiration date.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each annual bonus under these employment agreements will have both an
objective component and a subjective component: 70% of the bonus will be tied
to achievement of at least 90% of a targeted EBITDA figure for the year, with the executive eligible to earn the
maximum portion of this component of the bonus if we achieve 140% of the
targeted EBITDA figure. The remaining 30% will be subject to the discretion of
our Compensation Committee. The targeted EBITDA bonus awards for each
executive officer will be determined as a percentage of the executive&#146;s base
salary, as follows:
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="70%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Maximum</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Executive</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Bonus at Target EBITDA(1)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Bonus(1)</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Larry L. Enterline</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">30</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">100</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">James C. Hunt</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">30</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">90</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Michael H. Barker</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">30</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">90</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Ken R. Bramlett,
Jr.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">30</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">60</FONT></TD>
    <TD nowrap><FONT size="2">%</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Percentage of base salary. The Bonus at Target EBITDA column is based
upon achievement of 100% of the targeted EBITDA number, while the Maximum
Bonus column is based upon achievement of 140% of the targeted EBITDA
number. Both columns are based upon full award of the 30% of bonus that
is subject to the Compensation Committee&#146;s discretion.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with our recently completed financial restructuring, each of
the named officers has irrevocably waived all of his rights to exercise his
outstanding stock options granted under our 1995 Stock Option Plan and
forfeited all of such options to the Company. For the number of options
forfeited by each of these executives, see the table labeled &#147;Fiscal Year-End
Option Value&#148; above. Each of these officers has also been awarded an initial
grant of stock options under our new 2003 Equity Incentive Plan , subject to
shareholder approval of the new plan at our upcoming 2003 Annual Meeting of
Shareholders. Those initial stock option awards under the new plan were for
5,750,000 shares to Mr.&nbsp;Enterline, 2,985,000 shares to Mr.&nbsp;Hunt, 2,250,000
shares to Mr.&nbsp;Barker and 1,600,000 shares to Mr.&nbsp;Bramlett
and all have exercise prices higher than the per share trading price
of the Common Stock on the date of the award.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The employment agreement of each of Messrs.&nbsp;Enterline, Hunt, Barker and
Bramlett provides that options granted under the new equity incentive plan to
these executive officers will vest on a pro rata basis over 4&nbsp;years. If any of
these executive officers is terminated without cause prior to the first
anniversary of the date of his employment agreement, 25% of the options
initially granted to him will vest automatically as of the date of termination.
In addition, all of these options will vest automatically in the event of a
change of control involving the Company. Following a termination of
employment, each executive will have three months to exercise his vested stock
options unless his termination was without cause, in which event the exercise
period will be extended to 12&nbsp;months.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The employment agreements for Messrs.&nbsp;Enterline, Barker and Bramlett also
provide these executive officers with one year of severance upon termination
(including any non-renewal) without cause. Mr.&nbsp;Hunt&#146;s employment agreement
provides him with two years of severance. Each of the four employment
agreements requires the executive to agree to customary non-compete and
non-solicitation provisions.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The employment agreements for Messrs.&nbsp;Enterline and Bramlett also provide
them with additional severance benefits if there is a change of control
involving the Company in the first year of their agreements&#146; term (i.e., before
April 2004). If a change of control occurs during this first year, the
severance benefits for Messrs.&nbsp;Enterline and Bramlett severance will be
extended to two years from one year. However, if the sale price per share of
our capital stock in such change of control transaction represents a total
equity value of more than $100&nbsp;million each of these officers&#146; additional
severance will be reduced, dollar for dollar, if and to the extent that the sum
of any stock option gains realized by the officer in such change of control
transaction, plus the additional
</FONT>
<P align="center"><FONT size="2">15</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>


<P align="left"><FONT size="2"> severance, exceeds the sum of the officer&#146;s
additional severance plus his realized stock option gains in a change of
control transaction with a total equity value equal to $100&nbsp;million.
</FONT>
<P align="left"><FONT size="2"><B>Director Compensation</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2002, Mr.&nbsp;Kevin Egan was paid $10,000 for his service as non-executive
Chairman of the Board during the year and $10,000 for special services as a
director in connection with our financial restructuring. Additionally, each
non-employee director received an annual retainer of $15,000, and an additional
annual retainer of $1,000 for each Board committee he or she chaired.
Non-employee directors also received meeting fees of $1,000 per Board meeting
attended and $750 per committee meeting attended, plus reimbursement of
expenses. Members of the Special Committee of the Board received an additional $10,000 for
their service on that committee. Mr.&nbsp;Egan and Mr.&nbsp;Roger King (each of whom had
served on our Board of Directors since 1995) recently resigned from the Board
simultaneously with the closing of our financial restructuring.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We offer a deferred fee plan for our non-employee directors under which
participating directors may defer any or all of their retainer and meeting fees
for specified time periods. The deferred fee plan is non-qualified for tax
purposes. Deferred fees under the plan earn interest at the prime rate or, at
each participating director&#146;s option, a return based on our stock price
performance over time. Each non-employee director, except for Mr.&nbsp;King,
elected to defer 100% of the retainer and meeting fees to which he or she
otherwise was entitled in 2002 under the deferred fee plan. None of our directors
are participating in this plan for 2003.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each of our 2002 directors also received an annual option grant to
purchase 3,000 shares of common stock in 2002 under our 1995 Stock
Option Plan, which required that the exercise price for options granted
under the plan equal the fair market value of our common stock on the date of
grant. In connection with the Company&#146;s recently completed financial
restructuring, each of our 2002 directors (other than Mr.&nbsp;King) has irrevocably
waived his or her right to exercise all of his or her outstanding PGA stock
options granted under the 1995 Stock Option Plan, including these
options, and has forfeited all of such options to the Company. Additionally,
the 1995 Stock Option Plan has been terminated.
</FONT>
<!-- link2 "Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters" -->
<P align="left"><FONT size="2"><B>Item&nbsp;12. Security Ownership of
Certain Beneficial Owners and Management and Related Stockholder Matters</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth, as of March&nbsp;31, 2003 (except where
otherwise noted), the number and percentage of outstanding shares beneficially
owned by each person known by us to own beneficially more than 5% of our common
stock, by each of our directors who were serving as directors on March&nbsp;31,
2003, by our Chief Executive Officer, by all of our executive officers
(including the four other most highly paid executive officers for 2002) and by
all of our 2002 directors and executive officers as a group. Except as
otherwise set forth below, each stockholder named has sole voting and
investment power with respect to his or her or its shares.
</FONT>

<P align="center"><FONT size="2">16</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="69%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Amount and Nature of Shares</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Percent of Common</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center" colspan="2"><FONT size="1"><B>Name and Address* of Beneficial Owner</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Beneficially Owned(1)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Stock Outstanding</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">MatlinPatterson Global
Opportunities Partners L.P.<BR>
and MatlinPatterson Global Opportunities Partners (Bermuda) L.P.
</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">3,398,568</FONT></TD>
    <TD nowrap><FONT size="2">(2)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">11.2%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">520 Madison Avenue</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">New York, New York 10022<BR>
and<BR>
Links Partners, L.P. and<BR>
Inland Partners, L.P.<BR>
61 Wilton Avenue, 2nd Floor<BR>
Westport, Connecticut 06880</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Amalgamated Gadget, L.P.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,012,051</FONT></TD>
    <TD nowrap><FONT size="2">(3)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">7.3%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">City Center Tower II</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">301 Commerce Street, Suite&nbsp;2975</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Fort Worth, Texas 76102</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">SC Fundamental Value Fund, L.P. et al</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,583,087</FONT></TD>
    <TD nowrap><FONT size="2">(4)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.9%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">420 Lexington Avenue, Suite&nbsp;2601</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">New York, New York 10170</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Larry L. Enterline</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">450,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.7%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">James C. Hunt</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">334,282</FONT></TD>
    <TD nowrap><FONT size="2">(5)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1.2%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Michael H. Barker</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">144,948</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">**</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Ken R. Bramlett, Jr.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">202,185</FONT></TD>
    <TD nowrap><FONT size="2">(6)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">**</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Thomas M. Wittenschlaeger</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">37,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">**</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Thomas E. Stafford</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">15,063</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">**</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Kevin P. Egan</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">201,974</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">**</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">J. Roger King</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">99,200</FONT></TD>
    <TD nowrap><FONT size="2">(7)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">**</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">James V. Napier</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">85,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">**</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">William J. Simione, Jr.</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">48,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">**</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Janice L. Scites</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">35,750</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">**</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">All directors and executive officers as a group (11 persons)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">1,653,902</FONT></TD>
    <TD nowrap><FONT size="2">(8)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">5.9%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">*</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Addresses are furnished only for beneficial owners of more than 5% of our
common stock</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">**</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Less than one percent</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Includes the following shares subject to stock options exercisable within
60&nbsp;days after March&nbsp;31, 2003: Mr.&nbsp;Enterline &#150; 350,000; Mr.&nbsp;Hunt &#150;
311,572; Mr.&nbsp;Barker &#150; 113,471; Mr.&nbsp;Bramlett &#150; 188,095; Mr.&nbsp;Wittenschlaeger
&#150; 12,500; Mr.&nbsp;Stafford &#150; 13,125; Mr.&nbsp;Egan &#150; 97,000; Mr.&nbsp;Napier &#150; 40,000;
Mr.&nbsp;King &#150; 40,000; Mr.&nbsp;Simione &#150; 40,000; Ms.&nbsp;Scites &#150; 24,750; and all
directors and executive officers as a group &#150; 1,230,513. Each of these
persons (other than Mr.&nbsp;King) has irrevocably waived his or her right to
exercise all of these options and has forfeited all of such options to the
Company. Additionally, the 1995 Equity Participation has been terminated</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(2)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The amount and nature of the shares beneficially owned are as of
March&nbsp;14, 2003, and are based on the most recent
Schedule&nbsp;13D amendment on file with us. Such amendment
was filed by MatlinPatterson Global Opportunities Partners L.P.,
MatlinPatterson Global Opportunities Partners (Bermuda) L.P., Links
Partners, L.P., Inland Partners, L.P., MatlinPatterson Global
Advisers LLC, MatlinPatterson Global Partners LLC, MatlinPatterson
Asset Management LLC, MATLINPATTERSON LLC, Coryton Management Ltd.,
Arthur Coady, Elias Sabo and I. Joseph Massoud and the parties
reported shared voting and dispositive powers with respect to all
shares reported.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(3)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">The amount and nature of the shares beneficially owned are as of February
10, 2003, and are based on the most recent Schedule&nbsp;13G (or amendment
thereto) on file with us. Amalgamated Gadget
reports sole voting and dispositive power with respect to only
1,223,000 of the shares reported.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(4)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">In its Schedule 13G dated as of
January 2, 2003, the most recent Schedule 13G or amendment on file
with us, SC Fundamental Value Fund, L.P., reports
voting and dispositive power with respect to 647,150 shares, and
SC Fundamental Value BVI, Ltd. reports sole voting and
dispositive power with respect to 823,641 shares. Related
parties variously report shared voting and dispositive power with
respect to 647,150, 823,641 and 1,470,791&nbsp;shares.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(5)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Includes 1,120 shares held in the names of Mr.&nbsp;Hunt&#146;s spouse and
children.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(6)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Includes 500 shares held in the name of Mr.&nbsp;Bramlett&#146;s spouse.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(7)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Includes 8,500 shares and options to purchase 15,500 shares over which
beneficial ownership has been transferred to Mr.&nbsp;King&#146;s ex-spouse under
the terms of a property settlement. Mr.&nbsp;King disclaims beneficial
ownership of these shares. Also includes 1,700 shares held in the name of
Mr.&nbsp;King&#146;s current spouse.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">17</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>




<P align="left"><FONT size="2"><B>Equity Compensation Plan Information</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The table below contains information about the Company&#146;s compensation
plans as of December&nbsp;29, 2002 under which equity securities of the Company are
authorized for issuance.</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="43%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Number of</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>securities</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>remaining available</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Number of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>for future issuance</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>securities to be</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>under equity</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>issued upon</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Weighted-average</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>compensation plans</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>exercise of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>exercise price of</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(excluding</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>outstanding</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>outstanding</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>securities</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>options, warrants</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>options, warrants</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>reflected in column</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center" colspan="2"><FONT size="1"><B>Plan Category</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>and rights</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>and rights</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(a))</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(a)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(b)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>(c)</B></FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Equity compensation
plans approved by
security holders(1)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,837,635</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">6.63</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,162,968</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Equity compensation
plans not approved
by security holders</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD colspan="2"><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">&nbsp;</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom" bgcolor="#eeeeee">
    <TD><FONT size="2">&nbsp;</FONT></TD>

<TD><DIV style="margin-left:10px; text-indent:-10px"><FONT size="2">Total
(2)</FONT></DIV></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,837,635</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">$</FONT></TD>
    <TD align="right"><FONT size="2">6.63</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right"><FONT size="2">2,162,968</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">A number of the Company&#146;s employees, including each of the Company&#146;s
executive officers at the end of 2002, and all but one of the
Company&#146;s 2002 Directors have irrevocably cancelled any and all rights that they had to
exercise any and all stock options that were previously granted to such persons
and agreed that all such options would be forfeited to the Company. These
directors and employees held in the aggregate 2,190,030 of the stock options
that were outstanding under the 1995 Stock Option Plan as of December&nbsp;29, 2002.
As a result of these voluntary forfeitures, only 545,445 stock options remain
outstanding under the 1995 Stock Option Plan and these options have a weighted
average exercise price of $9.23 per share. Although the 1995 Stock Option Plan
has been terminated and no future issuances thereunder will be made, these
remaining outstanding stock options will continue to be exercisable in
accordance with their terms.</FONT></TD>
</TR>
<TR>
        <TD>&nbsp;<BR></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">(2)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">Excludes 1,734,894 shares reserved
at December 29, 2002 for issuance under the Company&#146;s 2001
Non-Qualified Employee Stock Purchase Plan, which plan was terminated
on December&nbsp;31, 2002.</FONT></TD>
</TR>
</TABLE>

<!-- link2 "Item nbsp;13. Certain Relationships and Related Transactions" -->
<P align="left"><FONT size="2"><B>Item&nbsp;13. Certain Relationships and Related Transactions</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has no relationships or transactions to report under this Item&nbsp;13.
</FONT>
<!-- link2 "Item&nbsp;14. Controls and Procedures" -->
<P align="left"><FONT size="2"><B>Item&nbsp;14. Controls and Procedures</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Within the 90&nbsp;days prior to the date of this annual report on Form&nbsp;10-K,
the Company evaluated the effectiveness of the design and operation of its
disclosure controls and procedures (&#147;disclosure controls&#148;), and its internal
controls and procedures for financial reporting (&#147;internal controls&#148;).
Disclosure controls mean those controls and other procedures that are designed
for the purpose of ensuring that information required to be disclosed in the
Company&#146;s reports filed under the Securities Exchange Act of 1934, such as this
annual report, is recorded, processed, summarized and reported within the time
periods specified in the SEC&#146;s rules and forms. Internal
controls are procedures designed for the purpose of providing reasonable
assurance that the Company&#146;s transactions are properly authorized, its assets
are safeguarded against unauthorized or improper use and its transactions are
properly recorded and reported, all to permit the preparation of the Company&#146;s
financial statements in conformity with generally accepted accounting
principles. This evaluation was performed under the
</FONT>
<P align="center"><FONT size="2">18</FONT>
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>


<P align="left"><FONT size="2"> supervision and with the
participation of management, including the Company&#146;s Chief Executive Officer
and Chief Financial Officer.
</FONT>


<!-- link2 "Item&nbsp;15. Exhibits, Financial Statement Schedules and Reports on Form&nbsp;8-K." -->
<P align="left"><FONT size="2"><B>Item&nbsp;15. Exhibits, Financial Statement Schedules and Reports on Form&nbsp;8-K.</B>
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">a.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Documents filed as part of this report:</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(1)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="88%"><FONT size="2">The following Report of Independent Accountants and
financial statements of the Company are contained in Item&nbsp;8
above:</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2"><B>&nbsp;</B></FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="88%"><FONT size="2"><B>Consolidated Financial Statements:</B></FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="86%"><FONT size="2">Report of Independent Accountants</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Consolidated Balance Sheets as of December&nbsp;29, 2002 and
December&nbsp;30, 2001</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Consolidated Statements of Operations for the years ended
December&nbsp;29, 2002, December&nbsp;30, 2001 and December&nbsp;31, 2000</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Consolidated Statements of
Shareholders&#146; Equity (Deficit) for the years
ended December&nbsp;29, 2002, December&nbsp;30, 2001 and December&nbsp;31,
2000</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Consolidated Statements of Cash Flows for the years ended
December&nbsp;29, 2002, December&nbsp;30, 2001 and December&nbsp;31, 2000</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Notes to Consolidated Financial Statements</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(2)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="88%"><FONT size="2">No financial statement schedules are filed as part of
this report. All financial statement schedules for which
provision is made in the applicable accounting regulations of the
Securities and Exchange Commission are not required under the
related instructions, are inapplicable, or the required
information is included elsewhere in the notes to the financial
statements referred to above.</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(3)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="88%"><FONT size="2">Exhibits:</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The Exhibits filed with or
incorporated by reference into this annual report on Form&nbsp;10-K are listed in the accompanying Exhibit&nbsp;Index.</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">b.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Reports on Form&nbsp;8-K:</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The Company submitted the following reports on Form&nbsp;8-K during the fourth
quarter:</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="20%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(i)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="76%"><FONT size="2">November&nbsp;12, 2002, in which
the Company reported on the execution of an
Agreement in Principle for a financial
restructuring; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(ii)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">November&nbsp;19, 2002, in which
the Company commented on an announcement by the
NYSE of its intent to
suspend the Common Stock from trading on the
NYSE and to seek the delisting of the Common
Stock.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">19</FONT>
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>




<!-- link1 "SIGNATURES" -->
<P align="center"><FONT size="2"><B>SIGNATURES</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of Section&nbsp;13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized on April&nbsp;14, 2003.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="45%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="49%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" valign="top" align="left"><FONT size="2">PERSONNEL GROUP of AMERICA, INC.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
By:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">/s/ Larry L. Enterline</FONT></TD>
</TR>
<TR>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Larry L. Enterline<BR>
Chief Executive Officer</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the Chief Executive Officer and Chief Financial
Officer of the Company, and by a majority of the Company&#146;s Board of Directors,
on April&nbsp;14, 2003.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="41%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="54%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Signature</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">/s/  Larry L. Enterline<BR>
</FONT><HR size="1" noshade><FONT size="2">
Larry L. Enterline</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Chief Executive Officer and Director</FONT></TD>
</TR>
<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">/s/  James C. Hunt<BR>
</FONT><HR size="1" noshade><FONT size="2">
James C. Hunt</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
President and Chief Financial Officer</FONT></TD>
</TR>
<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">/s/  James V. Napier<BR>
</FONT><HR size="1" noshade><FONT size="2">
James V. Napier</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Director</FONT></TD>
</TR>
<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">/s/  William J. Simione, Jr.<BR>
</FONT><HR size="1" noshade><FONT size="2">
William J. Simione, Jr.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Director</FONT></TD>
</TR>
<TR><TD><FONT size="2">&nbsp;</FONT></TD></TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">/s/  Janice L. Scites<BR>
</FONT><HR size="1" noshade><FONT size="2">
Janice L. Scites</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Director</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">20</FONT>
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<!-- link1 "CERTIFICATIONS" -->
<P align="center"><FONT size="2"><B>CERTIFICATIONS</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;I, Larry L. Enterline, certify that:
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;I have reviewed this annual report on Form&nbsp;10-K of Personnel Group of
America, Inc. (the &#147;registrant&#148;);
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The registrant&#146;s other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules&nbsp;13a-14 and 15d-14) for the registrant and we have:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) evaluated the effectiveness of the registrant&#146;s disclosure controls
and procedures as of a date within 90&nbsp;days prior to the filing date of this
annual report (the &#147;Evaluation Date&#148;); and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The registrant&#146;s other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant&#146;s auditors and the audit
committee of registrant&#146;s board of directors (or persons performing the
equivalent function):
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant&#146;s ability to record,
process, summarize and report financial data and have identified for the
registrant&#146;s auditors any material weaknesses in internal controls; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant&#146;s internal
controls; and</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The registrant&#146;s other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="45%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">Date: April&nbsp;14, 2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
/s/ Larry L. Enterline</FONT></TD>
</TR>
<TR>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
<HR size="1" noshade></FONT></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Larry L. Enterline<BR>
Chief Executive Officer</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">21</FONT>
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="center"><FONT size="2"><B>CERTIFICATIONS</B>
</FONT>

<P align="left"><FONT size="2">I, James C. Hunt, certify that:
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;I have reviewed this annual report on Form&nbsp;10-K of Personnel Group of
America, Inc. (the &#147;registrant&#148;);
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The registrant&#146;s other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules&nbsp;13a-14 and 15d-14) for the registrant and we have:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) evaluated the effectiveness of the registrant&#146;s disclosure controls
and procedures as of a date within 90&nbsp;days prior to the filing date of this
annual report (the &#147;Evaluation Date&#148;); and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The registrant&#146;s other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant&#146;s auditors and the audit
committee of registrant&#146;s board of directors (or persons performing the
equivalent function):
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant&#146;s ability to record,
process, summarize and report financial data and have identified for the
registrant&#146;s auditors any material weaknesses in internal controls; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant&#146;s internal
controls; and</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The registrant&#146;s other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="34%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="61%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">Date: April&nbsp;14, 2003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
/s/ James C. Hunt</FONT></TD>
</TR>
<TR>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
<HR size="1" noshade></FONT></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
James C. Hunt<BR>
President and Chief Financial Officer</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">22</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<!-- link1 "EXHIBIT INDEX" -->
<P align="center"><FONT size="2"><B>EXHIBIT INDEX</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="14%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Filed Herewith (*)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Non-Applicable (NA)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>or Incorporated by</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Reference from</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Previous</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Company Reg. No.</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Exhibit</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Exhibit</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>or</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Number</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Description</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Number</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Report</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">3.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Restated Certificate of
Incorporation of the Company, as
amended
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">3.1</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">333-31863</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">3.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Amended and Restated Bylaws of the
Company
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">3.2</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">33-95228</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">4.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Specimen Stock Certificate
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">4.0</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">33-95228</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">4.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Rights Agreement between the Company
and First Union National Bank (as
successor trustee)
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">1</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">0-27792</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">4.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
First Amendment to Rights Agreement
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">4.1</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">8-K filed 12/31/01</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">4.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Indenture between the Company and
HSBC Bank USA (as successor trustee)
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">4.2</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">333-31863</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">4.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Form of Note Certificate for 5-3/4%
Convertible Subordinates Notes
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">4.3</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">333-31863</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">10.1&#043;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
1995 Equity Participation Plan, as amended
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">10.1</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">333-31863</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">10.2&#043;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Amended and Restated Management
Incentive Compensation Plan
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">10.2</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">10-K for year ended<BR>
1/3/99</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">10.3&#043;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
2001 Non-Qualified Employee Stock Purchase Plan
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">4.1</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">333-66334</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">10.4#&#043;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Director and Officer Indemnification
Agreement of James V. Napier
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">10.3</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">10-K for year ended<BR>
12/31/95</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">10.5&#043;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Letter of Employment between the
Company and Larry L. Enterline
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">10.5</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">10-K for year ended<BR>
12/31/00</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">10.6&#043;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Supplemental Retirement Plan for
Edward P. Drudge, Jr.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">10.7</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">10K for year ended<BR>
1/2/00</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">10.7&#043;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Form of Retirement Agreement between
the Company and Edward P. Drudge,
Jr.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">10.8</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">10-K for year ended<BR>
1/2/00</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">10.8&#043;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Employment Agreement between the
Company and James C. Hunt
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">10.10</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">10-K for year ended<BR>
12/29/96</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">10.9&#043;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Employment Agreement between the
Company and Ken R. Bramlett, Jr.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">10.13</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">10-K for year ended<BR>
12/29/96</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2">23</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="14%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Filed Herewith (*)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Non-Applicable (NA)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>or Incorporated by</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Reference from</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Previous</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Company Reg. No.</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Exhibit</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Exhibit</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>or</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Number</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Description</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Number</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Report</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">10.10&#043;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Employment Agreement between the
Company and Michael H. Barker
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">10.9</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">10-K for year ended<BR>
1/3/99</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">10.11&#043;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Employment Agreement between the
Company and Thomas M.
Wittenschlaeger
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">10.11</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">10-K for year ended<BR>
12/30/01</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">10.12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Amended and Restated Non-Qualified
Profit-Sharing Plan
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">10.16</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">10-K for year ended<BR>
12/29/96</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">10.13&#043;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Director&#146;s Non-Qualified Deferred
Fee Plan
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">10.12</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">10-K for year ended<BR>
12/28/97</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">10.14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Amendment No.&nbsp;4 to Amended and
Restated Credit Agreement among the
Company and its subsidiaries, the
lenders party thereto and Bank of
America, as Agent
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">99.2</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">8-K filed 2/12/02</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">10.15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Equity Appreciation Rights Agreement
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">99.3</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">8-K filed 2/12/02</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">10.16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Registration Rights Agreement
between the Company and the Initial
Purchasers
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">10.17</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">333-31863</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">10.17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Agreement-in-principle among the
Company, certain of its lenders
under Amendment No.&nbsp;4 to the Amended
and Restated Credit Agreement and
certain holders of the Company&#146;s
5-3/4% Convertible Subordinated
Notes, due 2004
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">99.2</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">8-K filed 11/12/02</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">10.18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Purchase Option Agreement among the
Company, certain of its lenders and
Bank of America, N.A., as agent
under Amendment No.&nbsp;4 to the Amended
and Restated Credit Agreement, and
certain holders of the Company&#146;s
5-3/4% Convertible Subordinated
Notes, due 2004
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">99.3</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">8-K filed 11/12/02</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">10.19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Amendment No.&nbsp;5 to Amended and
Restated Credit Agreement among the
Company and its subsidiaries, the
lenders party thereto and Bank of
America, as Agent
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">*</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">24</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="14%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Filed Herewith (*)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Non-Applicable (NA)</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>or Incorporated by</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Reference from</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Previous</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Company Reg. No.</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Exhibit</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Exhibit</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>or</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><FONT size="1"><B>Number</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Description</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center" colspan="3"><FONT size="1"><B>Number</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Report</B></FONT></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD colspan="3"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">12.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Statement regarding computation of
ratio of earnings to fixed charges
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">*</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">13.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Those portions of the Annual Report
incorporated by reference in Parts
II, Items 6, 7, 7A and 8 and Part
IV, Item&nbsp;15(a)(1) of this report
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">*</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">21.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Subsidiaries of the Company
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">*</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">23.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Consent of PricewaterhouseCoopers LLP
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">*</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">99.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section 906 Certification of Larry L. Enterline, Chief Executive
Officer of the Company
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">*</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">99.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section 906 Certification of James C. Hunt, Chief Financial Officer
of the Company
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">*</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;# This Exhibit is substantially identical to Director and Officer
Indemnification Agreements (i)&nbsp;of the same date between the Company and the
following individuals: Kevin P. Egan, J. Roger King, and William Simione, Jr.;
(ii)&nbsp;dated April&nbsp;17, 1998 between the Company and each of James C. Hunt and Ken
R. Bramlett, Jr.; and (iii)&nbsp;dated August&nbsp;9, 1999 between the Company and Janice
L. Scites.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#043; Management Contract or Compensatory plan required to be filed under Item
14(c) of this report and Item&nbsp;601 of Regulation
S-K of the Securities and Exchange Commission.
</FONT>


<P align="center"><FONT size="2">25</FONT>




</BODY>
</HTML>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.19
<SEQUENCE>3
<FILENAME>g81654k1exv10w19.txt
<DESCRIPTION>AMENDMENT NO. 5 TO AMENDED AND RESTATED CREDIT
<TEXT>
<PAGE>

                                  EXHIBIT 10.19

 Amendment No. 5 to Amended and Restated Credit Agreement among the Company and
   its subsidiaries, the lenders party thereto and Bank of America, as Agent
<PAGE>
                     AMENDMENT NO. 5 TO AMENDED AND RESTATED
                           CREDIT AGREEMENT AND WAIVER

            THIS AMENDMENT NO. 5 TO AMENDED AND RESTATED CREDIT AGREEMENT AND
WAIVER (this "Amendment"), dated as of December 31, 2002, is entered into by and
among PERSONNEL GROUP OF AMERICA, INC. (the "Borrower"), certain subsidiaries of
the Borrower identified on the signatures pages hereto, the financial
institutions identified on the signature pages hereto and BANK OF AMERICA, N.A.,
formerly known as NationsBank, N.A., as agent for the Lenders (in such capacity,
the "Agent"). Except as otherwise defined in this Amendment, terms defined in
the Credit Agreement referred to below (as amended by this Amendment) are used
herein as defined therein.

                                    RECITALS

            A. The Borrower, the Guarantors party thereto, the Lenders party
thereto and the Agent entered into that certain Amended and Restated Credit
Agreement dated as of June 23, 1997 (as amended by Amendment No. 1 to Amended
and Restated Credit Agreement dated as of March 17, 1998, Amendment No. 2 to
Amended and Restated Credit Agreement dated as of September 29, 1999, Amendment
No. 3 to Amended and Restated Credit Agreement dated as of March 21, 2001, a
Waiver Agreement dated as of December 14, 2001 and Amendment No. 4 to Amended
and Restated Credit Agreement dated as of February 8, 2002 and as otherwise
modified prior to the date hereof, the "Credit Agreement").

            B. The Borrower and the Lenders have agreed to certain modifications
to the Credit Agreement.

            C. Such modifications require the consent of the Required Lenders.

            D. The Required Lenders have consented to the requested
modifications on the terms and conditions set forth herein.

                                    AGREEMENT

            NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

A. AMENDMENTS TO CREDIT AGREEMENT

            1. Amendment of Section 1.1. The definition of "Consolidated EBITDA"
set forth in Section 1.1 is hereby amended and restated in its entirety to read
as follows:

            "Consolidated EBITDA" means, for any period, the sum of (i)
Consolidated Net Income for such period plus (ii) an amount which, in the
determination of Consolidated Net Income for such period, has been deducted for
(A) interest expense, (B) total Federal, state, local and foreign income, value
added and similar taxes, (C) depreciation and amortization expense, (D) for the
Borrower's fourth quarter of its 2001 fiscal year, Restructuring Charges taken
by the Borrower and its Subsidiaries in such period (but in no event shall all
of the add-backs pursuant to this clause (D) exceed $5,750,000 in the aggregate
for the Borrower's fourth quarter of its 2001 fiscal year), (E) for any period
during the Borrower's fiscal year 2002 and beyond, Restructuring Charges taken
by the Borrower and its Subsidiaries (but in no event shall
<PAGE>
all of the add-backs pursuant to this clause (E) exceed $6,000,000 (plus the
amount of any Restructuring Charges consisting of (x) expenses that may be
incurred in connection with the hiring of investment advisers to address the
Borrower's capital structure and (y) other fees and expenses not to exceed
$5,500,000 in the aggregate incurred by the Borrower after September 30, 2002 in
connection with any financial restructuring transaction)), (F) for the
Borrower's fourth quarter of its 2001 fiscal year, non-cash charges taken by the
Borrower in connection with the sale of Paladin Consulting, Inc. (but in no
event shall all of the add-backs pursuant to this clause (F) exceed $7,750,000
in the aggregate), (G) non-cash intangible asset impairment charges taken by the
Borrower and its Subsidiaries in any such period (but in no event shall all of
the add-backs pursuant to this clause (G) exceed $400,000,000 in the aggregate)
and (H) non-cash charges taken by the Borrower and its Subsidiaries in
connection with the Equity Appreciation Rights Agreement.

            2. Further Amendment of Section 1.1. Section 1.1 is further amended
by adding the following new definition:

            "Purchase Option Agreement" means that certain Purchase Option
Agreement, dated as of November 11, 2002, by and among the Borrower, the Lenders
party thereto, the Subordinated Noteholders party thereto and the Agent.

            3. Further Amendment of Section 1.1. Section 1.1 is further amended
by adding the following new definition:

            "Repurchase Event" shall have the meaning assigned to such term in
the Subordinated Note Indenture.

            4. Amendment of Section 2.1(a). Section 2.1(a) is hereby amended by
deleting the reference therein to "ONE HUNDRED THIRTY SIX MILLION DOLLARS
($136,000,000)" and replacing it with "ONE HUNDRED FOURTEEN MILLION DOLLARS
($114,000,000)".

            5. Amendment of Section 6.2. Section 6.2 is hereby amended by
deleting the parenthetical clause in subsection (a) thereof and replacing it
with the following: (except as has been publicly disclosed prior to the Fifth
Amendment Effective Date)".

            6. Amendment of Section 6.3. Section 6.3 is hereby amended by adding
"or limited partnership" after "limited liability company" in clause (a)
thereof.

            7. Amendment of Section 7.1(k). Section 7.1(k) is hereby amended by
replacing the last sentence thereof with the following:

                  Additionally, on a monthly basis concurrently with the
            delivery of the other items set forth in this Section 7.1(k), (i) a
            written report shall be provided to the Lenders, in reasonable
            detail and in a form reasonably acceptable to the Agent, updating
            the Lenders as of the end of such calendar month on the status of
            (A) the Proposed Restructuring (as defined in Exhibit B to the
            Purchase Option Agreement) and (B) the de-listing of the Borrower's
            common stock from the New York Stock Exchange and (ii) a certificate
            of the chief financial officer of the Borrower demonstrating
            compliance with the financial covenants set forth in Section 7.11 as
            of the end of such fiscal month or quarter (as applicable) and
            stating that no Default or Event of Default exists, or if any
            Default or Event of Default does exist, specifying the nature and
            extent thereof and what action the Borrower proposes to take with
            respect thereto.

                                       2
<PAGE>
            8. Amendment of Section 7.8. Section 7.8 is hereby amended and
restated in its entirety to read as follows:

            7.8 PERFORMANCE OF OBLIGATIONS.

            The Borrower will, and will cause each of its Subsidiaries to,
perform in all material respects all of its obligations under the terms of all
material agreements, indentures, mortgages, security agreements or other debt
instruments to which it is a party or by which it is bound; provided, however,
that to the extent the Borrower is not in compliance with the Subordinated Note
Documents due to the de-listing of the Borrower's stock or any related
Repurchase Event, such non-compliance shall be deemed not to constitute a
violation of this Section 7.8

            9. Amendment of Section 7.11(e). Section 7.11(e) is hereby amended
and restated in its entirety to read as follows:

            (e) Minimum Rolling Consolidated EBITDA. Consolidated EBITDA,
calculated monthly on a three-month rolling basis, shall not be less the amount
shown below:

<TABLE>
<CAPTION>
                FISCAL MONTH ENDING NEAREST      MINIMUM 3-MONTH ROLLING CONSOLIDATED EBITDA
                ---------------------------      -------------------------------------------
<S>                                              <C>
              November 30, 2002                                  $3,449,000
              December 31, 2002                                  $2,851,000
              January 31, 2003                                   $2,029,000
              February 28, 2003                                  $1,771,000
              March 31, 2003                                     $2,737,000
              April 30, 2003                                     $2,997,000
              May 31, 2003                                       $3,713,000
              June 30, 2003                                      $3,679,000
</TABLE>

            10. Amendment of Section 7. Section 7 is hereby amended to add the
following subsection after Section 7.18:

            7.19 PERIODIC MEETINGS.

            (a) On a quarterly basis, and in conjunction with the filing of the
Borrower's Form 10-Q with the Securities and Exchange Commission, the Borrower
shall hold a telephonic meeting, at an agreed upon time, at which (i) the
Lenders' Financial Advisor will present to the Lenders (subject to existing
confidentiality and other applicable restrictions among the Agent and any of the
Lenders) a written report prepared by the Lenders' Financial Advisor analyzing
the Borrower's financial results as of the end of such fiscal quarter, and (ii)
the Borrower will review such financial results and discuss the market outlook.

            (b) Upon the request of the Agent, the Borrower shall hold a meeting
on an agreed upon date and at an agreed upon location to discuss the reports
delivered pursuant to Section 7.1(k) or Section 7.19(a).

            11. Amendment of Section 9.1(g)(i). Section 9.1(g)(i) is hereby
amended and restated in its entirety to read as follows:

            (i) The Borrower or any of its Subsidiaries shall default in the
performance or observance (beyond the applicable grace period with respect
thereto, if any) or any material obligation or condition of any contract or
lease material to the Borrower and its Subsidiaries taken as a whole; provided,
however, that

                                       3
<PAGE>
to the extent the Borrower is not in compliance with the Subordinated Note
Documents due to the de- listing of the Borrower's stock or any related
Repurchase Event, such non-compliance, default or non-performance shall be
deemed not to constitute a Default or Event of Default hereunder; or

            12. Amendment of Section 9.1(k). Section 9.1(k) is hereby amended
and restated in its entirety to read as follows:

            (k) Subordinated Note Indentures. (i) There shall occur and be
continuing any Event of Default or Repurchase Event under, and in each case, as
defined in the Subordinated Note Indenture, and the Subordinated Noteholders
have caused the Subordinated Indebtedness to be accelerated and such
acceleration is not rescinded within 30 days, or (ii) any of the Borrower's
Obligations for any reason shall cease to be "Senior Indebtedness" under and as
defined in the Subordinated Note Indenture; or

            13. Amendment of Schedules. The following schedules are amended and
restated in their entirety and attached hereto: Schedule 1.1B - Liens; Schedule
6.9 - Intellectual Property Schedule 6.11 - Taxes; Schedule 6.14 - Subsidiaries;
and Schedule 8.1 Indebtedness.

B. WAIVER

            The Required Lenders hereby waive any failure of the Borrower to
comply with the financial covenants measured by Section 7.11(a), (b), (c) and
(d) of the Credit Agreement during the period from the Payment Date (as defined
in the Purchase Option Agreement) through the Expiration Date (as defined in the
Purchase Option Agreement). This is a one time waiver and shall not be construed
to be (i) an amendment or modification to the Credit Agreement, (ii) an
agreement to waive any other future Defaults or Events of Default or (iii) a
waiver of any other Default or Event of Default except as expressly set forth
herein.

C. CONSENT TO INTERNAL REORGANIZATION

            1. Reorganization. The Credit Parties are undertaking certain
internal reorganization steps as follows (collectively, the "Reorganization"):

            (a) Convert InfoTech Services, Inc. in to a North Carolina LLC. The
Borrower is making a capital contribution of the intercompany debt due from
InfoTech Services, Inc. to PFI Corp., which will then contribute this
intercompany debt to the capital of InfoTech Services, Inc. InfoTech Services,
Inc. will convert to a North Carolina limited liability company on or prior to
December 29, 2002.

            (b) California Restructuring. The Borrower will transfer all of its
Los Angeles-area commercial staffing branches (except for its Ontario branch) to
Venturi Staffing Partners LLC, effective January 1, 2003. The transfer of
assets, liabilities and employees, as described above, will be accomplished by
contributing the property first from the Borrower to PFI Corp., a wholly owned
subsidiary of the Borrower, then PFI Corp. contributes the property to
Staffplus, Inc., a wholly owned subsidiary of PFI Corp. and, finally, Staffplus,
Inc. contributes the property to Venturi Staffing Partners, LLC, a wholly owned,
Subsidiary of Staffplus, Inc.

            (c) Texas Restructuring. Staffplus, Inc. will transfer the assets
and employees of its Houston-area commercial staffing branch to a new Texas
limited partnership to be named, Venturi Texas Staffing Partners, LP, effective
January 1, 2003. The assets, liabilities and employees (collectively, "the
property") as described above will be transferred to the Texas LP as follows:

                                       4
<PAGE>
                  -     a 1% interest in the property is transferred directly to
                        the Texas LP from Staffplus in exchange for a 1% general
                        partnership interest in the Texas LP,

                  -     a 99% interest in the property will be transferred to
                        Venturi Staffing Partners, LLC from Staffplus Inc., and

                  -     the 99% interest in the property will then be
                        transferred, in its entirety, to the Texas LP in
                        exchange for a 99% limited partnership interest in the
                        Texas LP.

            (d) Illinois. Staffplus, Inc. will transfer the assets and employees
of all of its Chicago-area commercial staffing branches (except for its downtown
Chicago office) to Venturi Staffing Partners, LLC effective January 1, 2003.

            2. Notwithstanding anything in Section 8.4 of the Credit Agreement
to the contrary, the Required Lenders hereby consent to the Reorganization and,
in furtherance of the foregoing, the Credit Parties hereby agree,
contemporaneously herewith, to, in accordance with the terms of the Credit
Agreement, cooperate with the Agent to (i) cause InfoTech Services, LLC and
Venturi Staffing Partners Texas Limited Partnership to execute a Joinder Agent
in the form of Schedule 7.12 to the Credit Agreement, (ii) cause the partnership
or membership interests of InfoTech Services, LLC and Venturi Texas Staffing
Partners, LP to be pledged to the Agent, for the benefit of the Lenders, and
(iii) deliver such documentation as the Agent may reasonably request in
connection with the foregoing, including without limitation, certified
resolutions and organizational and authorizing documents of each such entity,
and appropriate UCC-1 financing statements, all in form, content and scope
reasonably satisfactory to the Agent.

D. MISCELLANEOUS

            1. Representations and Warranties. Each of the Credit Parties
represents and warrants to the Lenders and the Agent as follows:

                  (a) It has taken all necessary action to authorize the
            execution, delivery and performance of this Amendment.

                  (b) This Amendment has been duly executed and delivered by
            such Credit Party and constitutes such Credit Party's legal, valid
            and binding obligation, enforceable in accordance with its terms,
            except as such enforceability may be limited (x) by general
            principles of equity and conflicts of laws or (y) by bankruptcy,
            reorganization, insolvency, moratorium or other laws of general
            application relating to or affecting the enforcement, of creditors'
            rights.

                  (c) No consent, approval, authorization or order of, or
            filing, registration or qualification with, any court or
            governmental authority or third party is required in connection with
            the execution, delivery or performance by such Credit Party of this
            Amendment.

                  (d) The execution and delivery of this Amendment does not
            diminish or reduce its obligations under the Credit Documents
            (including, without limitation, in the case of each Guarantor, such
            Guarantor's guaranty pursuant to Section 4 of the Credit Agreement)
            in any manner, except as specifically set forth herein.

                  (e) Such Credit Party has no claims, counterclaims, offsets,
            or defenses to the Credit Documents and the performance of its
            obligations thereunder, or if such Credit Party has any such

                                       5
<PAGE>
            claims, counterclaims, offsets, or defenses to the Credit Documents
            or any transaction related to the Credit Documents, the same are
            hereby waived, relinquished and released in consideration of the
            Required Lenders' execution and delivery of this Amendment.

                  (f) The representations and warranties of the Credit Parties
            set forth in Section 6 of the Credit Agreement are true and correct
            as of the date hereof (except those that expressly relate to an
            earlier date) and all of the provisions of the Credit Documents,
            except as amended hereby, are in full force and effect.

                  (g) Subsequent to the execution and delivery of this Amendment
            and after giving effect hereto, no unwaived event has occurred and
            is continuing which constitutes a Default or an Event of Default.

            2. Liens. Each Credit Party affirms the liens and security interests
created and granted by it in the Credit Documents (including, but not limited
to, the Pledge Agreement and the Security Agreement) and agrees that this
Amendment shall in no manner adversely affect or impair such liens and security
interests.

            3. Effect of Amendment. Except as expressly modified and amended in
this Amendment, all of the terms, provisions and conditions of the Credit
Documents shall remain unchanged and in full force and effect. The Credit
Documents and any and all other documents heretofore, now or hereafter executed
and delivered pursuant to the terms of the Credit Agreement are hereby amended
so that any reference to the Credit Agreement shall mean a reference to the
Credit Agreement as amended hereby.

            4. Expenses. The Borrower agrees to pay on demand all reasonable
costs and expenses of the Agent incurred in connection with the negotiation,
preparation, execution and delivery of this Amendment, including the reasonable
fees and expenses of the Agent's legal counsel (including without limitation
amounts incurred and invoiced on or prior to the Fifth Amendment Effective Date
and referenced in Part C, Section 5(d) below).

            5. Conditions Precedent. This Amendment shall become effective as of
the date hereof (the "Fifth Amendment Effective Date") once each of the
following conditions precedent has been satisfied:

                  (a) the Agent shall have received counterparts of (i) this
            Amendment, duly executed and delivered by each of the Credit
            Parties, the Required Lenders and the Agent; (ii) a Joinder
            Agreement dated as of the date hereof which shall have been executed
            by InfoTech Services, LLC and Venturi Texas Staffing Partners, LP
            along with all such organizational and authorizing documents as the
            Agent may reasonably request; and (iii) such UCC-1 Financing
            Statements as the Agent shall reasonably require.

                  (b) the Agent shall have received a certified copy of the
            resolutions of the Board of Directors of the Borrower and each other
            Credit Party evidencing its approval of this Amendment and the other
            Credit Documents and matters contemplated hereby, and a certified
            copy of all documents evidencing other necessary corporate action
            and governmental approvals, if any, with respect to this Amendment
            and the other Credit Documents;

                  (c) no Default or Event of Default shall have occurred and be
            continuing; and

                  (d) the Borrower shall have paid any and all out-of-pocket
            costs (to the extent invoiced) incurred by the Agent (including the
            reasonable fees and expenses of the Agent's legal

                                       6
<PAGE>
            counsel), and fees and other amounts payable to the Agent, in each
            case in connection with the negotiation, preparation, execution and
            delivery of this Amendment.

            6. Counterparts/Telecopy. This Amendment may be executed in any
number of counterparts, each of which when so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument.
Delivery of executed counterparts by telecopy shall be effective as an original
and shall constitute a representation that an original will be delivered.

            7. Governing Law. This Amendment shall be governed by and construed
in accordance with the laws of the State of North Carolina.

            8. ENTIRETY. THIS AMENDMENT, THE CREDIT AGREEMENT AND THE OTHER
CREDIT DOCUMENTS EMBODY THE ENTIRE AGREEMENT BETWEEN THE PARTIES AND SUPERSEDE
ALL PRIOR AGREEMENTS AND UNDERSTANDINGS, IF ANY, RELATING TO THE SUBJECT MATTER
HEREOF. THESE CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES.

            9. Severability. If any provision of this Amendment is determined to
be illegal, invalid or unenforceable, such provision shall be fully severable
and the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.

            10. Release. In consideration of the Required Lenders execution of
this Amendment, the Credit Parties hereby release the Agent, the Lenders and
each of their respective Affiliates, officers, employees, representatives,
agents, trustees, counsel and directors (collectively, the "Released Persons")
from any and all actions, causes of action, claims, demands, damages and
liabilities of whatever kind or nature, in law or in equity, now known or
unknown, suspected or unsuspected to the extent that any of the foregoing arises
from any action or failure to act by any of the Released Persons on or prior to
the date hereof in connection with the Credit Documents and transactions related
thereto.

              [the remainder of this page intentionally left blank]

                                       7
<PAGE>
            IN WITNESS WHEREOF, the parties hereto have caused this Amendment,
to be duly executed and delivered by their proper and duly authorized officers
as of the day and year first above written.


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

                           By:      /s/ James C. Hunt
                                    -------------------------
                           Name:    James C. Hunt
                           Title:   President and
                                    Chief Financial Officer

GUARANTORS:                STAFFPLUS, INC.,
                           a Delaware corporation
                           INFOTECH SERVICES LLC,
                           a North Carolina limited liability company
                           BAL ASSOCIATES INCORPORATED,
                           a California corporation
                           ADVANCED BUSINESS CONSULTANTS, INC.,
                           a Kansas corporation
                           PERSONNEL GROUP HOLDINGS, INC.,
                           a Florida corporation
                           VENTURI STAFFING PARTNERS, LLC,
                           a California limited liability company


                           By:      /s/ James C. Hunt
                                    -------------------------
                           Name:    James C. Hunt
                           Title:   Senior Vice President of each of the
                                    above-named Guarantors


                           PFI CORP.,
                           a Delaware corporation

                           By:      /s/ James C. Hunt
                                    -------------------------
                           Name:    James C. Hunt
                           Title:   President
<PAGE>
AGENT:                     BANK OF AMERICA, N.A.,
                           formerly known as NATIONSBANK, N.A.
                           and BANK OF AMERICA ILLINOIS,
                           as AGENT


                           By:           /s/ H. Leonard Norman
                                         ----------------------------
                           Name:         H. Leonard Norman
                           Title:        Managing Director


LENDERS:                   BANC OF AMERICA
                           STRATEGIC SOLUTIONS, INC.

                           By:           /s/ H. Leonard Norman
                                         ----------------------------
                           Name:         H. Leonard Norman
                           Title:        Managing Director

                           BNP PARIBAS

                           By:           /s/ Stephanie Rogers
                                         ----------------------------
                           Name:         Stephanie Rogers
                           Title:        Vice President

                           By:           /s/ Rick Pace
                                         ----------------------------
                           Name:         Rick Pace
                           Title:        Director

                           BANK ONE, NA

                           By:           /s/ Dianne M. Stark
                                         ----------------------------
                           Name:         Dianne M. Stark
                           Title:        First Vice President

                           HBV CAPITAL MANAGEMENT LLC

                           By:           /s/ George J. Konomos
                                         ----------------------------
                           Name:         George J. Konomos
                           Title:        Portfolio Manager

                           INLAND PARTNERS L.P.

                           By:           /s/ Elias J. Sabo
                                         ----------------------------
                           Name:         Elias J. Sabo
                           Title:        Attorney-in-fact
<PAGE>
                           LINKS PARTNERS L.P.

                           By:           /s/ Elias J. Sabo
                                         ----------------------------
                           Name:         Elias J. Sabo
                           Title:        Attorney-in-fact

                           MATLINPATTERSON GLOBAL OPPORTUNITIES PARTNERS L.P.

                           By:  MatlinPatterson Global Advisors LLC

                           By:           /s/ David J. Matlin
                                         ----------------------------
                           Name:         David J. Matlin
                           Title:
                                         ----------------------------

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12.1
<SEQUENCE>4
<FILENAME>g81654k1exv12w1.txt
<DESCRIPTION>STATEMENT REGARDING COMPUTATION RATIO OF EARNINGS
<TEXT>
<PAGE>
                                                                               .
                                                                               .
                                                                               .
                                  EXHIBIT 12.1
<TABLE>
<CAPTION>
                                             1998           1999          2000         2001           2002
                                           ---------     ---------     ---------     ---------      ---------
<S>                                        <C>           <C>           <C>           <C>            <C>
FIXED CHARGES:
Interest expense including
   amortization of debt issuance costs     $  12,491     $  16,447     $  20,108     $  18,278      $  17,301
Interest on rent expense (1)                   2,463         3,419         3,453         3,564          2,938
                                           ---------     ---------     ---------     ---------      ---------
Total fixed charges                           14,954        19,866        23,561        21,842         20,239

EARNINGS:
Income (loss) before income taxes             53,757        51,830         6,803       (76,364)      (107,427)
Fixed charges                                 14,954        19,866        23,561        21,842         20,239
                                           ---------     ---------     ---------     ---------      ---------
Income (loss) before fixed charges            68,711        71,696        30,364       (54,522)       (87,188)

RATIO OF EARNINGS TO FIXED CHARGES               4.6           3.6           1.3          -2.5           -4.3
</TABLE>


      (1)   The Company believes one-third of rent expense represents a
            reasonable approximation of the interest factor.



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13.1
<SEQUENCE>5
<FILENAME>g81654k1exv13w1.txt
<DESCRIPTION>THOSE PORTIONS OF THE ANNUAL REPORT INCORPORATED
<TEXT>
<PAGE>
                                  EXHIBIT 13.1

       PART II EXHIBITS FOR ITEMS 6 THROUGH 8 AND PART IV, ITEM 15 (A)(1)
<PAGE>
ITEM 6.  SELECTED FINANCIAL DATA

(in thousands, except earnings per share)

<TABLE>
<CAPTION>
                                                       2002            2001           2000          1999          1998
                                                     ---------      ---------      ---------      ---------     ---------
<S>                                                  <C>            <C>            <C>            <C>           <C>
RESULTS OF OPERATIONS

Revenues                                             $ 557,748      $ 732,327      $ 881,992      $ 918,437     $ 783,925

Goodwill impairment                                     89,935         56,779         11,021             --            --
Restructuring and rationalization charges                8,278         16,134          1,960             --            --

Operating income (loss)                                (90,126)       (58,086)        26,911         68,277        66,248

Interest expense                                        17,301         18,278         20,108         16,447        12,491

Income (loss) before cumulative effect of change
  in accounting principle                             (108,030)       (66,678)        (2,175)        29,753        31,017
Cumulative effect of change in accounting
  principle, net of taxes                             (242,497)            --             --             --            --

Net income (loss)                                     (350,327)       (66,678)        (2,175)        29,753        31,017

Earnings per diluted share:(1)
  Earnings before cumulative effect of change
   in accounting principle                               (4.04)         (2.52)         (0.09)          0.99          0.96
  Cumulative effect of change in accounting
   principle                                             (9.06)            --             --             --            --
  Net income (loss)                                  $  (13.10)     $   (2.52)     $   (0.09)     $    0.99     $    0.96

Average diluted shares outstanding(1)                   26,756         26,503         25,090         34,299        36,752

FINANCIAL POSITION

Working capital                                      $  17,494      $  72,241      $  82,577      $  86,787     $  84,151
Goodwill                                               103,532        478,162        561,452        557,421       535,981
Total assets                                           247,406        634,123        743,593        735,350       708,890
Short- and long-term debt                              218,648        234,882        265,647        254,351       235,406
Shareholders' equity (deficit)                         (52,348)       298,093        364,299        369,843       394,630

PRO FORMA FINANCIAL DATA(2)

Total assets                                         $ 225,716
Short- and long-term debt                               94,192
Shareholders' equity                                    51,957
</TABLE>




(1)  The assumed conversion of the Company's 5.75% Notes into Common Stock was
     excluded from the calculation of earnings per diluted share in 2002, 2001
     and 2000 because the effect of conversion was antidilutive.

(2)  Pro forma financial data as of December 29, 2002 reflects the effects of
     the financial restructuring completed in April 2003 as if the financial
     restructuring had been completed on December 29, 2002. For a complete
     discussion of the financial restructuring, see "Management's Discussion and
     Analysis of Financial Condition and Results of Operations - Liquidity and
     Capital Resources" and Note 1, "Subsequent Event - Comprehensive Financial
     Restructuring," to the Consolidated Financial Statements included elsewhere
     in this Annual Report.


                                       1
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

    The following discussion and analysis should be read in conjunction with the
Company's consolidated financial statements and related notes appearing
elsewhere in this report. The Company's fiscal years end on the Sunday nearest
to each December 31 and its fiscal quarters end on the Sunday nearest to the end
of each calendar quarter.

FORWARD-LOOKING INFORMATION

    In addition to historical information, this report, including "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
contains certain statements that are forward-looking statements regarding events
and financial trends that may affect the Company's future operating results or
financial position. These statements may be identified by words such as
"estimate," "forecast," "plan," "intend," "believe," "should," "expect,"
"anticipate," or variations or negatives thereof, or by similar or comparable
words or phrases. Forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially from those
expected in such statements. These risks and uncertainties include, but are not
limited to, the following:

      -     changes in levels of unemployment and other economic conditions in
            the United States, or in particular regions or industries;

      -     continuing weakness or further reductions in corporate information
            technology spending levels;

      -     the ability of the Company to maintain existing client relationships
            and attract new clients in the context of changing economic or
            competitive conditions;

      -     the impact of competitive pressures, including any change in the
            demand for the Company's services, or the Company's ability to
            maintain or improve its operating margins;

      -     an Internal Revenue Service audit of the Company's income tax
            returns and the risk that assessments for additional taxes,
            penalties and interest could be levied against the Company;

      -     the entry of new competitors into the marketplace or expansion by
            existing competitors;

      -     the Company's success in attracting, training and retaining
            qualified management personnel and other staff employees;

      -     reductions in the supply of qualified candidates for temporary
            employment or the Company's ability to attract qualified candidates;

      -     the possibility of the Company incurring liability for the
            activities of its temporary employees or for events impacting its
            temporary employees on clients' premises;

      -     the risk in an uncertain economic environment of increased
            incidences of employment disputes, employment litigation and
            workers' compensation claims;

      -     the risk that further cost cutting or restructuring activities
            undertaken by the Company could cause an adverse impact on certain
            of the Company's operations;

      -     economic declines that affect the Company's liquidity or ability to
            comply with its loan covenants;

      -     the risks of defaults under the Company's credit agreements or the
            demand by any holder of the Company's remaining outstanding 5.75%
            Notes for repayment following the occurrence of a repurchase event
            under the indenture applicable to the 5.75% Notes;

      -     adverse changes in credit and capital markets conditions that may
            affect the Company's ability to obtain financing or refinancing on
            favorable terms;

      -     adverse changes to management's periodic estimates of future cash
            flows that may affect management's assessment of its ability to
            fully recover its goodwill;

      -     whether governments will impose additional regulations or licensing
            requirements on staffing services businesses in particular or on
            employer/employee relationships in general; and

      -     other matters discussed in this Annual Report and the Company's SEC
            filings.

Because long-term contracts are not a significant part of the Company's
business, future results cannot be reliably predicted by considering past trends
or extrapolating past results. The Company undertakes no obligation to update
information contained in this annual report.


                                       2
<PAGE>
OVERVIEW

      The Company is organized into two Divisions: the Information Technology
Services Division ("IT Services"), which provides information technology
staffing and consulting services in a range of computer-related disciplines and
technology tools for human capital management, and the Commercial Staffing
Services Division ("Commercial Staffing"), which provides a variety of temporary
office, clerical, accounting and finance, light technical and light industrial
staffing services. Approximately 53% of the Company's 2002 revenues came from IT
Services and 47% came from Commercial Staffing.

      The following table sets forth the number of the Company's offices by
Division at the end of each of the years indicated:

<TABLE>
<CAPTION>
                          2002        2001       2000
                           ---        ---        ---
<S>                       <C>         <C>        <C>
IT Services                 28         33         45
Commercial Staffing         90         92        104
                           ---        ---        ---
      Total offices        118        125        149
                           ===        ===        ===
</TABLE>

      The Company's operating results declined overall in each of 2001 and 2002
due primarily to the weak economic environment, including a continued decline in
corporate technology spending, and its impact on revenue. Although the Company
continued its aggressive cost cutting programs throughout 2002, these efforts
could not offset the overall revenue declines in IT Services and Commercial
Staffing and as a result served only to slow the reduction in overall operating
profitability. Although the Company remains optimistic that demand for its
services will recover long-term, it does not expect any meaningful improvement
in the current demand climate or customer spending patterns before the second
half of 2003.

      The Company adopted Statement of Financial Accounting Standards No. 142
("SFAS 142") as of the beginning of 2002, which resulted in a goodwill
impairment charge of $242.5 million, net of an income tax benefit of $42.2
million. This charge was recorded as a cumulative effect of change in accounting
principle.

      SFAS 142 requires goodwill to be tested at least annually for impairment.
In the fourth quarter of 2002, the Company performed its annual test for
impairment and recorded an impairment charge of $89.9 million for goodwill
associated with its IT Services operations. The Company experienced lower than
expected operating profits and cash flows in 2002 for the IT Services reporting
unit. As a result of this trend and the overall industry expectations, the
projected operating profits and cash flows for the IT Services operations were
reduced for the next five years resulting in a reduction in the fair value of
the Company's goodwill. The decrease in fair value resulted in the recognition
of the $89.9 million impairment loss. No additional impairment was identified
for the goodwill associated with the Company's Commercial Staffing reporting
unit.

      In response to the decline in demand for the Company's services, the
Company has restructured and rationalized certain operations. The goal with the
restructuring initiatives was to better align the Company's cost structure with
its expected lower revenue levels through elimination of inefficiencies and
duplicate functions, while realigning its sales and recruiting teams to achieve
greater customer penetration and improve customer service. As a result, the
Company recorded charges totaling $8.3 million in 2002 primarily related to
employee severance, lease abandonment and termination costs and, in connection
with the Company's financial restructuring, $3.6 million of professional
services fees and expenses, consisting primarily of legal and accounting
services. See " -- Results of Operations."

      After the end of 2002, the Company completed a comprehensive financial
restructuring with its senior lenders and the holders of approximately $109.7
million of its outstanding 5.75% Notes in which it amended and extended its
revolving credit facility and exchanged newly issued shares of the Company's
common and preferred stock with the participating noteholders representing
approximately 82% of the Company's outstanding capital stock immediately after
the financial restructuring. As part of the financial restructuring transaction,
the Company used substantially all of its cash on hand (after payment of
transaction expenses) to repay approximately $38.0 million of its outstanding
credit facility and eliminated an additional $120.0 million of its outstanding
indebtedness, which will result in substantial reductions in the Company's
interest expense in future periods. Equally as important, however, the financial
restructuring greatly reduced the debt overhang that has restricted the
Company's financial flexibility over the last two years. See " -- Liquidity and
Capital Resources, Financial Restructuring."


                                       3
<PAGE>
      IT Services' business is affected by the timing of holidays and seasonal
vacation patterns, generally resulting in lower IT revenues and operating
margins in the fourth quarter of each year. Commercial Staffing's business is
subject to the seasonal impact of summer and holiday employment trends.
Typically, Commercial Staffing's business is stronger in the second half of each
calendar year than in the first half.

      The following table summarizes certain income statement information for
the Company for years 2002, 2001 and 2000 both in dollars and as a percentage of
total revenues:

(dollars in thousands)

<TABLE>
<CAPTION>
                                                     2002                      2001                     2000
                                            ----------------------    ----------------------    ----------------------
<S>                                         <C>          <C>          <C>          <C>          <C>          <C>
Revenues:
  IT Services                               $ 295,387         53.0%   $ 447,862         61.2%   $ 537,535         60.9%
  Commercial Staffing                         262,361         47.0%     284,465         38.8%     344,457         39.1%
                                            ---------    ---------    ---------    ---------    ---------    ---------
     Total revenues                           557,748        100.0%     732,327        100.0%     881,992        100.0%
Direct costs of services                      427,947         76.7%     540,659         73.8%     631,442         71.6%
                                            ---------    ---------    ---------    ---------    ---------    ---------
Gross profit                                  129,801         23.3%     191,668         26.2%     250,550         28.4%
Operating expenses:
  Selling, general and administrative         114,590         20.5%     152,928         20.9%     185,743         21.1%
  Depreciation and amortization                 7,124          1.3%      23,913          3.3%      24,915          2.8%
  Goodwill impairment                          89,935         16.1%      56,779          7.8%      11,021          1.2%
  Restructuring and rationalization
    charges                                     8,278          3.2%      16,134          2.2%       1,960          0.2%
                                            ---------    ---------    ---------    ---------    ---------    ---------
Operating income (loss)                       (90,126)      -16.2%      (58,086)       -7.9%       26,911          3.1%
Interest expense                               17,301          3.1%      18,278          2.5%      20,108          2.3%
                                            ---------    ---------    ---------    ---------    ---------    ---------
Income (loss) before income taxes
  and cumulative effect of change
  in accounting principle                    (107,427)      -19.3%      (76,364)      -10.4%        6,803          0.8%
Provision (benefit) for income taxes              603          0.1%      (9,686)       -1.3%        8,978          1.0%
                                            ---------    ---------    ---------    ---------    ---------    ---------
Net loss before cumulative effect of
  change in accounting principle             (108,030)      -19.4%      (66,678)       -9.1%       (2,175)       -0.2%
Cumulative effect of change in
  accounting principle, net of taxes         (242,497)      -43.5%           --           --           --           --
                                            ---------    ---------    ---------    ---------    ---------    ---------
Net loss                                    $(350,527)      -62.8%    $ (66,678)       -9.1%    $  (2,175)       -0.2%
                                            =========    =========    =========    =========    =========    =========
</TABLE>


                                       4
<PAGE>
RESULTS OF OPERATIONS

        YEAR ENDED DECEMBER 29, 2002 VERSUS YEAR ENDED DECEMBER 30, 2001

REVENUES

      Total revenues decreased 23.8% to $557.7 million in 2002 from $732.3
million in 2001 due to the weak economic environment, including a continued
decline in corporate technology spending. IT Services revenues decreased 34.0%
primarily as the result of the continuing industry-wide slowdown in customer
demand for IT staffing services. IT Services billable consultants on assignment
declined from approximately 2,500 at year-end 2001 to approximately 1,970 at
year-end 2002. Commercial Staffing revenues declined 7.8% to $262.4 million in
2002 primarily due to the weak economic climate, which resulted in declines in
permanent placement revenues and the retail component of the Company's temporary
staffing business. Permanent placement revenues were 3.2% of Commercial Staffing
revenues in 2002, down from 6.3% in 2001, while the retail component of
temporary staffing also declined to 62.0% of Commercial Staffing revenues in
2002, down from 69.9% in 2001. Offsetting these declines was the increase in the
vendor-on-premise ("VOP") business. VOP revenues totaled 34.8% in 2002 and 23.8%
in 2001 of Commercial Staffing revenues, respectively. The Company does not
expect improvements in demand for its services before the second half of 2003 in
light of ongoing economic and geopolitical uncertainties. In addition, there can
be no assurance that IT Services revenues will increase as the broader economy
strengthens or these other uncertainties subside.

DIRECT COSTS OF SERVICES AND GROSS PROFIT

      Direct costs, consisting of payroll and related expenses of consultants
and temporary workers, decreased 20.8% to $427.9 million in 2002 on the lower
revenues. Gross profit decreased 32.3% to $129.8 million on the lower revenues.
Gross profit as a percentage of revenue also decreased to 23.3% in 2002 from
26.2% in 2001. These decreases primarily were the result of the continued
softening in the higher margin sectors of the staffing and consulting
businesses, the significant decline in permanent placement services and
continuing downward bill rate pressure imposed by many of the Company's larger
customers.

OPERATING EXPENSES

      Operating expenses, consisting of selling, general and administrative
expenses and depreciation and amortization expense, decreased 31.2% to $121.7
million in 2002 from $176.8 million in 2001. The decrease was primarily due to
the Company's aggressive cost reduction program, including its workforce
reduction and office consolidation initiatives. Approximately 17.5% (26% in
2001) of the Company's permanent workforce was eliminated during the year. Also,
variable or incentive compensation declined due to lower revenues and operating
margins. As a percentage of revenues, selling, general and administrative
expenses decreased to 20.5% in 2002 from 20.9% in 2001. In addition,
depreciation and amortization expense decreased to 1.3% of revenues in 2002 from
3.3% in 2001 primarily due to the change in accounting principle eliminating
goodwill amortization in 2002. Goodwill amortization expense was $15.4 million
in 2001.

GOODWILL IMPAIRMENT

      Effective at the beginning of 2002, the Company adopted SFAS 142. The
provisions of SFAS 142 prohibit the amortization of goodwill and
indefinite-lived intangible assets and require that goodwill and
indefinite-lived intangibles assets be tested at least annually for impairment.
In the second quarter of 2002, the Company completed its initial valuation as of
the adoption date, December 31, 2001 and in the fourth quarter of 2002 completed
its annual test for impairment. In order to assess the fair value of its
goodwill, the Company engaged an independent valuation firm to assist in
determining the fair value. The fair value of each of the Company's two
reporting units was calculated as of December 31, 2001 and December 29, 2002, on
an enterprise value basis using the market multiple approach and discounted cash
flow approach. Under the market multiple approach, market ratios and performance
fundamentals relating to similar public companies' stock prices or enterprise
values were applied to the reporting units to determine their enterprise value.
Under the discounted cash flow ("DCF") approach, the indicated enterprise value
was determined using the present value of the future cash flows projected to be
generated considering appropriate discount rates. The discount rates used in the
calculation reflected all associated risks of realizing the projected future
cash flows. Certain of the valuation assumptions were based on management's
expectations for future performance of the IT Services and Commercial Staffing
reporting units. These assumptions included expected time frames for recoveries
in technology spending and the broader economy as well as future growth rates in
the IT Services and Commercial Staffing businesses. A relatively high discount
rate of 17% was utilized in the discounted cash flow valuation approach due
principally to the inherent uncertainties associated with these assumptions.


                                       5
<PAGE>
      Based upon the results of the initial valuation, which was completed in
the second quarter of 2002, the Company recorded a goodwill impairment charge of
$284.7 million ($242.5 million net of an income tax benefit of $42.2 million) as
a cumulative effect of the change in accounting principle.

      In the fourth quarter of 2002, the Company performed its annual impairment
test and recorded an additional impairment charge of $89.9 million for goodwill
associated with its IT Services operations. The Company experienced lower than
expected operating profits and cash flows in 2002 for the IT Services reporting
unit. As a result of this trend and the overall industry expectations, the
projected operating profits and cash flows for the IT Services operations were
reduced for the next five years resulting in a reduction in the fair value of
the Company's goodwill. The decrease in fair value resulted in the recognition
of the $89.9 million impairment loss. No additional impairment was identified
for the goodwill associated with the Company's Commercial Staffing reporting
unit. At December 29, 2002, the Company had goodwill with a carrying value of
$103.5 million of which $41.2 million relates to IT Services and $62.3 million
relates to Commercial Staffing.

      Prior to the adoption of SFAS 142, the Company followed SFAS 121 to test
for its goodwill and intangible asset impairment. The Company's policy included
a projection of undiscounted cash flows for each operating company to determine
if the goodwill associated with that business component was recoverable. When
the Company performed its analysis in the fourth quarter of fiscal 2001, it
identified several operations, principally in the IT Services division, for
which negative cash flows were projected in early years and for which projected
undiscounted cash flows were not sufficient to recover the carrying amount of
related goodwill. As a result, the Company recorded a goodwill impairment charge
of $56.8 million in the fourth quarter of 2001. The impairment charges for IT
Services and Commercial Staffing were $41.1 million and $15.7 million,
respectively. These charges related to operations where future cash flows were
projected to be negative and, accordingly, the impairment charge represented the
entire carrying amount of the related goodwill.

RESTRUCTURING AND RATIONALIZATION CHARGES

      Beginning in 2001, the Company implemented a plan to restructure and
rationalize certain operations. As a result, the Company recorded charges
totaling $8.3 million and $16.1 million in 2002 and 2001, respectively. These
charges were comprised of the following components (in thousands):

<TABLE>
<CAPTION>
                                                         2002            2001
                                                       --------        --------
<S>                                                    <C>             <C>
Employee severance                                     $  1,915        $  1,678
Lease abandonment and termination costs                   2,689           3,869
Professional services charges                             3,628             875
Property abandonment charges                                 46           2,568
Loss on sale of business                                     --           7,683
Other                                                        --            (539)
                                                       --------        --------
Total restructuring and rationalization charges        $  8,278        $ 16,134
                                                       ========        ========
</TABLE>

      Following is a summary of the accrued liability for cash restructuring and
rationalization charges for the years ended December 29, 2002 and December 30,
2001 (in thousands):

<TABLE>
<CAPTION>
                                             EMPLOYEE          LEASE       PROFESSIONAL
                                             SEVERANCE         COSTS         SERVICES          OTHER           TOTAL
                                             ---------         -----         --------          -----           -----
<S>                                          <C>              <C>          <C>                <C>             <C>
Initial charges                               $ 1,678         $ 3,869         $   875         $   434         $ 6,856
Cash payments                                  (1,636)           (760)           (675)           (113)         (3,184)
                                              -------         -------         -------         -------         -------
Accrued liability at December 30, 2001             42           3,109             200             321           3,672
2002 charges                                    1,915           2,689           3,628              --           8,232
Cash payments                                  (1,398)         (1,140)         (2,782)           (237)         (5,557)
                                              -------         -------         -------         -------         -------
Accrued liability at December 29, 2002        $   559         $ 4,658         $ 1,046         $    84         $ 6,347
                                              =======         =======         =======         =======         =======
</TABLE>

      Employee severance-related costs included the elimination of both
administrative and income-producing employees. Under the workforce reduction
plan, approximately 17.5% (26% in 2001) of the Company's permanent workforce, or
194 (395 in 2001) employees, was eliminated during the year. Lease abandonment
and termination costs related primarily to office closures, branch
consolidations and leased space reductions. Professional services charges
consisted primarily of legal and accounting services incurred in connection with
the financial restructuring.


                                       6
<PAGE>
      Property abandonment costs consisted of the write-down of abandoned
leasehold improvements and other equipment. These assets were written down to
zero as they were abandoned. The loss on the sale of business related to the
sale of one of the Company's IT Services offices in Dallas, which was completed
on December 31, 2001. Other rationalization expenses of ($0.5) million were
recorded in 2001 associated with incremental costs in downsizing the business to
current operating levels, the loss on the sale of CareerShop and changes in
estimates for previous lease terminations of $0.4 million, net of other income
of $1.6 million related to favorably settling certain obligations.

      Of the remaining accrued liability at December 29, 2002, the Company
expects to pay approximately $3.1 million over the next twelve months and the
balance, primarily lease payments, over the following seven years.

      The Company expects to continue consolidating operations in other
geographic markets in which it currently operates multiple branches and to
downsize in selected other existing locations, which will result in additional
restructuring and rationalization charges in 2003; however, the amount of such
additional charges is not currently determinable. The Company also incurred
substantial professional services charges and lending fees in connection with
its financial restructuring in the first and second quarters of 2003. See " -
Liquidity and Capital Resources, Financial Restructuring."

INTEREST EXPENSE

      Interest expense decreased 5.3% to $17.3 million in 2002 from $18.3
million in 2001 due to lower borrowing levels under the Company's revolving
credit facility. The average interest rate on borrowings was 7.3% in 2002, up 10
basis points from 2001. With the recent completion of its financial
restructuring, the Company expects a substantial reduction in its interest
expense for future periods. See " -- Liquidity and Capital Resources, Financial
Restructuring."

PROVISION (BENEFIT) FOR INCOME TAXES

      In 2002, the Company recorded an income tax provision of $0.6 million,
comprised of an income tax benefit of $4.6 million related to its operating
losses, offset by a charge of $5.2 million related to the adoption of SFAS 142.
This charge provided a valuation allowance against certain deferred tax assets,
but had no effect on the Company's cash flows. The effective tax benefit rate of
12.7% in 2001 was lower than the U.S. federal statutory rate of 35% primarily
due to the impact of non-deductible amortization expense, valuation allowances
established during the year, and certain nondeductible restructuring and
rationalization charges, offset in part by the $1.4 million tax benefit related
to the diminution in value in the Company's investment in CareerShop, which was
sold during the second quarter of 2001.

        YEAR ENDED DECEMBER 30, 2001 VERSUS YEAR ENDED DECEMBER 31, 2000

REVENUES

      Total revenues decreased 17.0% to $732.3 million in 2001 from $882.0
million in 2000. IT Services revenues decreased 16.7% primarily as the result of
the continuing industry-wide slowdown in customer demand for IT staffing
services. IT Services billable consultants on assignment declined from
approximately 3,700 at year-end 2000 to approximately 2,500 at year-end 2001.
Commercial Staffing revenues declined 17.4% to $284.5 million in 2001 primarily
due to the weak economic climate, which resulted in declines in permanent
placement revenues and the retail component of the Company's temporary staffing
business. Permanent placement revenues were 6.3% of Commercial Staffing revenues
in 2001, down from 10.0% in 2000, while the retail component of temporary
staffing declined to 69.9% of Commercial Staffing revenues in 2001, down from
73.5% in 2000.

DIRECT COSTS OF SERVICES AND GROSS PROFIT

      Direct costs, consisting of payroll and related expenses of consultants
and temporary workers, decreased 14.4% to $540.7 million in 2001 on lower
revenues. Gross profit decreased 23.5% to $191.7 million on the lower revenues.
Gross profit as a percentage of revenue also decreased 220 basis points to 26.2%
in 2001 from 28.4% in 2000. These decreases primarily were the result of the
continued softening in the higher margin sectors of the staffing and consulting
businesses, the significant decline in permanent placement services and downward
bill rate pressure imposed by many of the Company's larger customers.


                                       7
<PAGE>
OPERATING EXPENSES

      Operating expenses, consisting of selling, general and administrative
expenses and depreciation and amortization expense, decreased 16.1% to $176.8
million in 2001 from $210.7 million in 2000. The decrease was primarily due to
the Company's aggressive cost reduction program, including its workforce
reduction and office consolidation initiatives. Approximately 26% of the
Company's permanent workforce was eliminated during 2001. Also, variable or
incentive compensation declined due to lower revenues and operating margins. As
a percentage of revenues, selling, general and administrative expenses decreased
to 20.9% in 2001 from 21.1% in 2000. In addition, depreciation and amortization
expense increased to 3.3% of revenues in 2001 from 2.8% in 2000 primarily due to
the decline in revenues in 2001.

GOODWILL IMPAIRMENT

      Prior to the adoption of SFAS 142, the Company followed SFAS 121 to test
for its goodwill and intangible asset impairment. The Company's policy included
a projection of undiscounted cash flows for each operating company to determine
if the goodwill associated with that business component was recoverable. When
the Company performed its analysis in the fourth quarter of fiscal 2001, it
identified several operations, principally in the IT Services division, for
which negative cash flows were projected in early years and for which projected
undiscounted cash flows were not sufficient to recover the carrying amount of
related goodwill. As a result, the Company recorded a goodwill impairment charge
of $56.8 million in the fourth quarter of 2001. The impairment charges for IT
Services and Commercial Staffing were $41.1 million and $15.7 million,
respectively. These charges related to operations where future cash flows were
projected to be negative and, accordingly, the impairment charge represented the
entire carrying amount of the related goodwill.

      In the fourth quarter of 2000, the Company incurred a goodwill impairment
charge of $11.0 million related primarily to CareerShop.com.

RESTRUCTURING AND RATIONALIZATION CHARGES

      Beginning in 2001 the Company implemented a plan to restructure and
rationalize certain operations. As a result, the Company recorded charges
totaling $16.1 million in 2001. These charges were comprised of the following
components: employee severance of $1.7 million, lease abandonment and
termination charges of $3.9 million, professional services of $0.9 million,
property abandonment charges of $2.6 million, loss on sale of business of $7.7
million and other charges of ($0.5) million.

      Employee severance-related costs included the elimination of both
administrative and income-producing employees. Under the workforce reduction
plan, approximately 26% of the Company's permanent workforce, or 395 employees,
was eliminated in 2001. Lease abandonment and termination costs related
primarily to office closures, branch consolidations and leased space reductions.
Property abandonment costs consisted of the write-down of abandoned leasehold
improvements and other equipment. These assets were written down to estimated
fair value, generally zero, as they were abandoned. The loss on the sale of
business related to the sale of one of the Company's IT Services offices in
Dallas, which was completed December 31, 2001. On the date of the sale, the net
book value of this operation was $11.5 million and consideration of $3.8 million
was received, resulting in the write-down of $7.7 million of goodwill in the
fourth quarter of 2001. This business was included in the IT Services segment
and contributed $11.5 million in revenues and $0.3 million in net income for the
year ended December 30, 2001. Professional services charges consisted primarily
of legal and accounting services incurred in connection with the Company's
financial restructuring. Other rationalization expenses of $(0.5) million were
recorded in 2001 associated with incremental costs in downsizing the business to
current operating levels, the loss on the sale of CareerShop, changes in
estimates for previous lease terminations of $0.4 million, net of other income
of $1.6 million related to favorably settling certain obligations.

INTEREST EXPENSE

      Interest expense decreased 9.1% to $18.3 million in 2001 from $20.1
million in 2000 due to lower borrowing levels under the Company's revolving
credit facility and decreases in interest rates throughout the year. The average
interest rate on borrowings was 7.2% in 2001, down 80 basis points from 2000.
See " -- Liquidity and Capital Resources."


                                       8
<PAGE>
PROVISION (BENEFIT) FOR INCOME TAXES

      The effective tax benefit rate of 12.7% in 2001 was lower than the U.S.
federal statutory rate of 35% primarily due to the impact of non-deductible
amortization expense, valuation allowances established during the year, and
certain nondeductible restructuring and rationalization charges, offset in part
by the $1.4 million tax benefit related to the diminution in value in the
Company's investment in CareerShop which was sold during the second quarter of
2001. The effective tax rate was 132.0% in 2000, higher than the U.S. federal
statutory rate of 35%, primarily due to nondeductible amortization expense and
state income taxes.

LIQUIDITY AND CAPITAL RESOURCES

      The Company has experienced declines in revenues over the last two years
as the result of ongoing weak economic conditions and does not expect any
significant improvements in demand for its services before the second half of
2003. In light of these revenue declines, the Company has focused on reducing
expenses generally, limiting capital expenditures to only the highest priority
projects and managing its accounts receivable very closely. As a result of the
reduced need for working capital and these priorities, the Company's cash needs
have been reduced substantially from prior years.

      During 2002, the committed amount of the Company's senior revolving credit
facility was reduced in anticipation of the Company's financial restructuring
and the Company's primary sources of cash during the year were cash from
operations and income tax refunds. As a result of the recent completion of the
Company's financial restructuring and the execution of further amendments and
maturity date extensions to the revolving credit facility (as amended, the
"Credit Facility") in connection therewith, the Company's sources of cash in
2003 will also include available borrowings under the Credit Facility. The
Company's principal uses of cash are to repay debt, fund working capital and
meet its diminished requirements for capital expenditures. The Company believes,
subject to the conditions and contingencies described above in
"--Forward-Looking Information," that cash flow from operations and borrowings
under the Credit Facility will be adequate to meet its debt repayment objectives
and its diminished needs for working capital and capital expenditures.

      For the year ended December 29, 2002, the Company's $20.9 million of cash
provided by operating activities included $19.2 million in federal income tax
refunds received in June 2002. Cash provided by operating activities in 2002 was
substantially lower than the $55.6 million of cash provided from operations in
2001, which was more favorably impacted by the reduction in accounts receivable.
The Company had $22.6 million of cash on hand as of December 29, 2002. In the
aggregate, day's sales outstanding decreased to 49 days at December 29, 2002
from 50 days at December 30, 2001. Cash provided by investing activities was
$2.0 million during 2002 due primarily to the cash proceeds received from the
sale of a business. Cash used for investing activities of $12.7 million in 2001
related primarily to the Company's final contingent earn-out obligations (which
expired in October 2001) and capital spending. Capital spending in 2002 was $1.8
million, down from $3.0 million in 2001. Cash used for financing activities was
$17.8 million in 2002, down from $31.5 million in 2001, as the Company continued
to focus on the repayment of its revolving credit facility.

      Congress passed new federal tax legislation in 2002 that allowed the
Company to carry back federal net operating losses for five years, substantially
increasing the Company's ability to recover income taxes previously paid. As of
December 29, 2002, the Company had recorded an additional $25.5 million of
recoverable income taxes and it received $25.0 million of these recoverable
taxes in refunds subsequent to year-end.

     The Company is subject to periodic review by federal, state and local
taxing authorities in the ordinary course of business and as is customary for
tax returns claiming significant income tax refunds has been advised by the
Internal Revenue Service that the Service is reviewing the Company's 2001 and
2000 federal income tax returns to determine whether to perform an income tax
audit for one or both of those tax years. If any of the Company's income tax
returns are audited, certain tax positions taken by the Company could be
challenged and adjustments proposed that could result in assessments for
additional taxes payable, together with penalties and interest. The Company
believes that its tax positions comply with applicable tax laws and the Company
would vigorously defend these positions if challenged. Although the Company
believes that it has adequately accrued for any foreseeable payments resulting
from tax examinations, there can be no assurance that any such additional taxes,
penalties or interest payable would not have a material effect on the Company's
liquidity or financial condition.


                                       9
<PAGE>
      The Company's revolving credit facility in effect during 2002 provided for
a $114.0 million revolving line of credit due June 2003 and was subject to
certain maturity date extensions in six-month increments up through January
2004. As a result of the recent completion of the Company's financial
restructuring and the execution of further amendments and maturity date
extensions to the credit facility, $65.0 million of the $103.0 million
outstanding at December 29, 2002, was classified as long-term in the Company's
consolidated balance sheet. The facility contained customary covenants that
required monthly maintenance of minimum tangible net worth and EBITDA levels, as
defined in the agreement. The Company was in compliance with these financial
covenants as of December 29, 2002. The facility also contained restrictions on
the payment of cash dividends on the Common Stock and placed additional
limitations on share repurchases, acquisitions and capital expenditures.
Interest rates payable under the revolving credit facility were set at prime
plus 300 basis points through June 2003. As of February 28, 2003, the interest
rate payable under the facility was 7.25%.

      After the end of 2002, the Company was able to maintain compliance with
its revolving credit facility covenant requiring minimum EBITDA levels as of the
three-month period ended February 23, 2003, by obtaining a waiver in March 2003
of an anticipated default of that covenant.

FINANCIAL RESTRUCTURING

      On April 14, 2003, the Company completed a comprehensive financial
restructuring with its senior lenders and the holders of approximately $109.7
million of its outstanding 5.75% Convertible Subordinated Notes due 2004 in
which it issued shares of the Company's Common Stock and Series B Preferred
Stock to the participating noteholders in exchange for their 5.75% Notes (the
"Exchange Transaction"). In the Exchange Transaction, which was privately
negotiated, the Company exchanged newly issued equity with the participating
noteholders and issued the following consideration for each $1,000 in principal
amount of notes exchanged:

      -     $28.75 in cash;

      -     190.9560 shares of newly issued shares of the Company's Common
            Stock; and

      -     9.5242 shares of Series B Preferred Stock of the Company, each share
            of which will be convertible into 100 shares of Common Stock and
            will automatically convert into shares of Common Stock upon any
            amendment to the Company's charter increasing the authorized number
            of shares of Common Stock or effecting a reverse split of
            outstanding shares of Common Stock that increases the number of
            authorized but unissued shares. The Series B Preferred Stock will
            vote on all matters with the Common Stock as if converted, will have
            a liquidation preference of $.01 per share, and otherwise will have
            no greater rights or privileges than the Common Stock.

      In connection with the Exchange Transaction, the Company entered into an
agreement with each of the former noteholders participating in the exchange to
provide them with registration rights with respect to the shares of Common Stock
issued in the exchange or acquired upon conversion of the Series B Preferred
Stock.

      As a result of the Exchange Transaction, the participating noteholders in
the aggregate were issued 20,940,425 shares of Common Stock and 1,044,433 shares
of Series B Preferred Stock, which together represent approximately 82% of the
Company's outstanding Common Stock (assuming for this purpose that all shares of
the Series B Preferred Stock issued to the participating noteholders have been
converted). The existing shareholders retained ownership of their outstanding
26,881,212 shares of Common Stock, which represent approximately 18% of the
outstanding Common Stock (on the same, as-converted, basis). In connection with
this ownership change, the Company also reconstituted its Board of Directors to
provide for a seven-person Board and the designation of two representatives of
the new major shareholders to serve as new Board members, together with the
Company's Chief Executive Officer, one incumbent independent Board member who
was designated by the Company with the consent of the participating noteholders
and three independent Board members, two of whom are incumbents, who were
designated by the participating noteholders (although these two incumbents have
stated their intention not to stand for reelection at the upcoming 2003 Annual
Meeting of Shareholders).


                                       10
<PAGE>
      In order to permit the closing of the Exchange Transaction contemplated in
the financial restructuring and to provide for the terms on which the existing
senior lenders would continue to finance the Company's working capital needs,
the Company and its existing senior lenders also executed definitive loan
agreements for the Credit Facility, which provided for certain further
amendments and maturity date extensions to the revolving credit facility and
eliminated the Equity Appreciation Right (the "EAR") held by the senior lenders
(the "Senior Debt Restructuring"). The Senior Debt Restructuring provided for
the forgiveness of indebtedness in the amount of $10.3 million. As a result of
the Exchange Transaction and the Senior Debt Restructuring, the Company used
substantially all of its cash on hand (after payment of transaction expenses) to
repay approximately $38.0 million of its outstanding credit facility and
eliminated an additional $120.0 million of its outstanding indebtedness, which
will result in substantial reductions in the Company's interest expense in
future periods. The Company does not anticipate that any material income tax
liability will arise as a result of the forgiveness of debt in these financial
restructuring transactions due to sufficient current period tax losses and net
operating loss carryforwards available to offset any taxable income on the debt
forgiveness.

      The Credit Facility provides for a $70.7 million revolving line of credit
due May 1, 2004 and is subject to certain maturity date extensions in six-month
increments up through May 1, 2005. Availability of borrowings under the Credit
Facility is subject to a borrowing base calculated as specified percentages of
the Company's eligible accounts receivable (as defined) in the aggregate, and
the Company had approximately $8.0 million of availability thereunder as of the
closing date. The Credit Facility contains customary covenants, including
financial covenants that require monthly maintenance of cumulative monthly
EBITDA levels (as defined in the amended agreement) commencing with April 2003
and an interest and funded indebtedness coverage ratio. The Credit Facility also
contains restrictions on the payment of cash dividends on the Company's capital
stock and places additional limitations on share repurchases, acquisitions and
capital expenditures. Finally, in lieu of the EAR included as part of the
revolving credit facility that was in effect in 2002 the Company has issued
common stock purchase warrants to the lenders under the Credit Facility
entitling them to purchase a total of 19,224,916 shares of Common Stock, or 10%
of the outstanding Common Stock on a fully diluted basis. These warrants are
exercisable in whole or part over a 10-year period and the exercise price
thereunder is $0.3121 per share (which was based on a stated equity valuation
for the Company of $60.0 million). The exercise price for these warrants is not
necessarily indicative of fair value. Interest rates payable under the Credit
Facility are set at prime plus 325 basis points through June 2003 with increases
during each six-month period through May 1, 2005.

      In connection with the financial restructuring the Company agreed to seek
shareholder approval at the 2003 Annual Meeting of Shareholders to amend and
restate its certificate of incorporation. The proposed amendments to the
certificate of incorporation include the following:

      -     a reverse stock split of the Company's Common Stock at a
            one-for-twenty-five ratio;

      -     elimination of provisions that separate the Board of Directors into
            three classes and that prohibit action by consent of shareholders
            without a meeting;

      -     an election by the Company not to be governed by Section 203 of the
            Delaware General Corporation Law, which restricts the ability of the
            Company to engage, directly or indirectly, in a business combination
            transaction with a holder of 15% or more of its voting stock;

      -     addition of provisions requiring a supermajority vote of the Board
            of Directors or shareholders to adopt changes to the certificate of
            incorporation or bylaws; and

      -     addition of a provision to protect minority shareholders in
            connection with certain transactions with a shareholder that
            beneficially owns 20% or more of the shares of the Company's capital
            stock that are entitled to vote on matters submitted to a vote of
            the shareholders.

Each of the noteholders that participated in the exchange have agreed to vote
their shares of Common Stock and Series B Preferred Stock in favor of these
proposals. The Company has agreed that pending shareholder approval of the
amended and restated certificate of incorporation, it will comply with the
proposed provision to protect minority shareholders described above.


                                       11
<PAGE>
      In addition, in connection with the financial restructuring, the Board of
Directors amended and restated the Company's bylaws. The amended and restated
bylaws provide, among other things, that, as long as there are "Significant
Holders" (defined as the beneficial owners of shares of capital stock of the
Company representing 20% or more of the votes entitled to be cast by holders of
outstanding shares of voting capital stock), the Significant Holders shall be
entitled to designate, in the aggregate, two members (such designees, being
"Significant Holder Designees") of the Board of Directors, the size of which is
initially set at seven members, and to designate two observers entitled to
attend all meetings of the Board of Directors and its committees. Furthermore,
the amended and restated bylaws provide that, subject to applicable law, for so
long as there are any Significant Holders, a committee comprised of the two
Significant Holder Designees and one independent director who is not also a
Significant Holder Designee shall be responsible for designating between one (1)
and four (4) independent nominees for election to the Board of Directors, with
the number within such range depending on the amount of voting stock
beneficially owned by the Significant Holders.

      As a result of the financial restructuring, three former noteholders, two
of which are affiliates of one another, are Significant Holders within the
meaning of the amended and restated bylaws. These three former noteholders are
also senior lenders under the Credit Facility. Also as a result of the financial
restructuring, these three former noteholders collectively beneficially own
common and Series B preferred stock of the Company having approximately 45% of
the voting power of the Company's capital stock in the aggregate, excluding any
shares of Common Stock under warrants issued to them as senior lenders in
connection with the amendment and restatement of the Credit Facility.
Accordingly, these three former noteholders have the power to designate either
directly, or through a committee including Significant Holder Designees, an
aggregate of six nominees for election to the board of directors (at least four
of whom must qualify as independent directors under applicable exchange rules
and listing standards) and two board observers.

      In connection with the financial restructuring, the Company amended and
restated the shareholder rights agreement that governs the terms of preferred
share purchase rights that currently accompany the Common Stock. The amendments
include, among other things, exemptions preventing the following from triggering
separation of the rights from the Common Stock: (i) beneficial ownership of
capital stock by the participating noteholders acquired in the financial
restructuring; (ii) beneficial ownership by any Significant Holder of capital
stock of the Issuer acquired in accordance with the amended and restated
certificate of incorporation; and (iii) beneficial ownership by any third party
of capital stock of the Issuer acquired in a transfer from a Significant Holder
pursuant to a transaction that complies with the amended and restated
certificates of incorporation. In addition, the shareholder rights plan was
amended to include a tag-along right for the benefit of any holder (including
certain holders of more than 2% acting together as a group) of 5% or more of the
voting stock of the Company pursuant to which such holder (or group) will be
entitled to participate pro rata, for the same amount and form of consideration
and otherwise on substantially the same terms and conditions, in any transfer by
any Significant Holders of capital stock of the Company of 20% or more of the
voting stock of the Company.

      In connection with the Company's financial restructuring, the Company has
terminated its 1995 Stock Option Plan. See Note 12, "Capital Stock and Stock
Options" to the Audited Consolidated Financial Statements appearing elsewhere in
this Annual Report. Additionally, a number of the Company's employees, including
each of the Company's executive officers at the end of 2002 and all but one of
the Company's Board of Directors have irrevocably canceled any and all rights
that they had to exercise any and all stock options that were previously granted
to such persons and agreed that all such options would be forfeited to the
Company. These directors and employees held in the aggregate 2,190,030 of the
stock options that were outstanding under the 1995 Stock Option Plan as of
December 29, 2002. As a result of these voluntary forfeitures, only 545,445
stock options remain outstanding under the 1995 Stock Option Plan and these
options have a weighted average exercise price of $9.23 per share. Although the
1995 Stock Option Plan has been terminated and no future issuances thereunder
will be made, these remaining outstanding stock options will continue to be
exercisable in accordance with their terms.

      The Company's Board of Directors adopted the 2003 Equity Incentive Plan
(the "2003 Equity Plan") simultaneously with the completion of the Company's
financial restructuring. The 2003 Equity Plan authorizes grants of stock
options, stock appreciation rights (or "SARs"), restricted stock, deferred stock
awards and performance awards (and dividend equivalent rights relating to
options, SARs, deferred stock and performance awards), in the case of stock or
option awards, for up to 19,870,873 shares, or 10.3%, of the Company's fully
diluted Common Stock. Awards under the 2003 Equity Plan are to be made to key
employees, directors and consultants as selected by the Board of Directors or
the Compensation Committee. The duration of any option or SAR granted under the
2003 Equity Plan will not exceed ten years. Awards will generally vest 20% on
each


                                       12
<PAGE>
anniversary of the date of grant unless either the Board of Directors or
Compensation Committee approves or a participant's employment agreement provides
otherwise. Following a termination of employment, vested options and/or SARs
must be exercised within 3 months (12 months in the case of death or
disability), except that options and SARs terminate immediately upon a
termination for cause as defined in the relevant participant's employment
agreement, or as determined in the discretion of the Board of Directors or the
Compensation Committee if no employment agreement exists. Any non-vested option,
SARs or other awards issued under the 2003 Equity Plan will be forfeited upon
any termination. The Board of Directors and Compensation Committee retain the
discretion to extend the post-employment exercise period of an option or SAR and
to accelerate vesting of awards under the 2003 Equity Plan.

      In connection with the financial restructuring, four executive officers,
including the Company's chief executive officer and chief financial officer,
entered into employment agreements with the Company. These employment agreements
replaced the existing employment agreements with these executive officers. Each
of these new employment agreements provides for an annual base salary
approximately equal to the current base salary (subject to annual adjustment as
determined by the Company's Compensation Committee), the right to earn annual
bonuses ranging from a maximum of 60% of annual salary to 100% of annual salary
(for the chief executive officer) and, subject to shareholder approval of the
2003 Equity Plan, options under that plan as described below. Each of these
executive officers had previously surrendered all options awarded to them under
existing option plans. Each employment agreement is for an initial term of two
years, with automatic one-year extensions thereafter unless either party
provides written notice of termination at least three months prior to any
scheduled expiration date. Each employment agreement provides severance payment
equal to one year's salary (two years' salary for the chief financial officer)
and a pro-rated portion of any earned bonus following termination of employment
by the Company without cause. In addition, certain of these executive officers,
other than the chief financial officer, would be entitled to additional
severance of up to one year's salary if in the first year following the
financial restructuring the Company is acquired at a price per share below a
specified threshold.

      Subject to shareholder approval of the 2003 Equity Plan at the Company's
2003 Annual Meeting, the Board of Directors has approved the granting of
stock options for 12,585,000 shares, representing 6.5% of the Company's fully
diluted Common Stock, to these executive officers. Of these initial grants,
8,700,000 options have an exercise price of $0.3121 per share, and the other
3,885,000 options in these initial grants have an exercise price of $0.4681 per
share. The initial stock option grants to these officers vest monthly at an
annual rate of 25% and each will have 12 months following the termination of his
employment (other than for cause) to exercise vested stock options held as of
the termination date. The exercise price of a portion of these options is based
on an aggregate stated equity value of the Company of $60.0 million and for the
remaining options the exercise price is based on an aggregate stated equity
value of $90.0 million. The exercise price for these stock options is not
necessarily indicative of fair value. Following these initial grants, options
for 7,285,873 shares, or 3.8%, of the Company's fully diluted Common Stock will
remain authorized for issuance under the 2003 Equity Plan and will be reserved
for future grants. For any grants within six months after the date any existing
options are cancelled, the Company will be required to apply variable accounting
to such new options which may result in non-cash compensation expense in future
periods.

PRO FORMA FINANCIAL INFORMATION

      Because of the significance of the financial restructuring transactions
discussed above on the Company's financial position, the Company has included
certain pro forma financial information to highlight the impact of such
transactions. The following pro forma consolidated financial data as of December
29, 2002 has been derived from the application of pro forma adjustments to the
Company's historical consolidated financial statements. The pro forma data is
presented for illustrative purposes only and is not necessarily indicative of
the financial position that would have actually been reported had the financial
restructuring transactions occurred as of December 29, 2002, nor is it
indicative of the Company's future financial position.

      The pro forma condensed consolidated balance sheet as of December 29, 2002
gives effect to the Exchange Transaction and the Senior Debt Restructuring as if
each had occurred on the date of the consolidated balance sheet.


                                       13
<PAGE>

                      PRO FORMA CONSOLIDATED BALANCE SHEET
                                DECEMBER 29, 2002
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                   PRO FORMA
                                                                 HISTORICAL        ADJUSTMENTS                 PRO FORMA
                                                                 ----------        -----------                 ---------
<S>                                                              <C>               <C>                         <C>
ASSETS
Cash and cash equivalents                                        $  22,623         $  (14,795)(1)             $    1,575
                                                                                       (3,153)(2)
                                                                                       (3,100)(4)
Other current assets                                                 80,118                                       80,118
Recoverable income taxes                                             25,476                                       25,476
                                                                  ---------         ---------                  ---------
      Total current assets                                          128,217           (21,048)                   107,169
Noncurrent assets                                                   119,189              (642)(3)                118,547
                                                                  ---------         ---------                  ---------
      Total assets                                                $ 247,406         $ (21,690)                 $ 225,716
                                                                  =========         =========                  =========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current portion of long-term debt                                 $  38,633         $ (13,685)(1)              $  24,948
Other current liabilities                                            72,090            (1,100)(4)                 70,990
                                                                  ---------         ---------                  ---------
      Total current liabilities                                     110,723           (14,785)                    95,938
  Long-term debt -
    Convertible, subordinated notes                                 115,000          (109,661)(2)                  5,339
    Revolving credit facility                                        65,015            (1,110)(1)                 63,905
  Other long-term liabilities                                         9,016              (439)(1)                  8,577
                                                                  ---------         ---------                  ---------
      Total liabilities                                             299,754          (125,995)                   173,759
Total shareholders' equity (deficit)                                (52,348)          104,305(1,2,3,4)            51,957
                                                                  ---------         ---------                  ---------
      Total liabilities and shareholders' equity (deficit)        $ 247,406         $ (21,690)                 $ 225,716
                                                                  =========         =========                  =========
</TABLE>

(1)   Adjustments to reflect cash paid to existing senior lenders which
      includes $13,685 of principal debt repayments and $1,110 of fees paid in
      connection with the completion of the Credit Facility, as amended, and
      cancellation of equity appreciation rights resulting in a reduction in
      accrued liabilities of $439.

(2)   Adjustments to reflect payments to participating holders of the 5.75%
      Notes and exchange of $109,661 of such notes for newly issued shares of
      the Company's Common and Series B Preferred Stock. The equity issued in
      exchange for the 5.75% Notes is recorded at estimated fair value.

(3)   Adjustments to reflect the write-off of deferred debt issuance costs of
      $642 associated with the 5.75% Notes exchanged for equity.

(4)   Adjustment to record estimated professional fees incurred and paid in
      connection with the comprehensive financial restructuring including
      $1,100 which had been accrued in the Company's historical balance
      sheet at December 29, 2002.

ACCOUNTING FOR FINANCIAL RESTRUCTURING TRANSACTIONS

      Upon consummation of the Exchange Transaction, the Company will record the
issuance of its equity securities in exchange for outstanding 5.75% Notes at the
fair value of the newly issued equity securities, with the excess of the debt
carrying value over the fair value of equity securities recorded as a gain. The
forgiveness of $10.3 million in Senior Debt will reduce future interest expense
over the term of the amended Credit Facility and the $1.1 million of fees paid
to the senior lenders will be reflected as a reduction in the principal
balances outstanding as required under accounting for troubled debt
restructuring. The Company will determine and record the fair value, if any, of
the warrants issued in connection with the Senior Debt Restructuring as
additional shareholders' equity with a corresponding reduction in the
outstanding Senior Debt, with


                                       14
<PAGE>
such amount recognized as a component of interest expense over the term of the
Senior Debt. The Company will complete the determination of fair value and the
accounting adjustments required as a result of the Exchange Transaction and the
Senior Debt Restructuring in the second quarter of fiscal 2003. The net gain
from debt restructuring will be classified as a component of income from
operations in accordance with the recently issued SFAS No. 145.

MANAGEMENT'S PLANS FOR LIQUIDITY AND DEBT COMPLIANCE

      The Company experienced declining revenue and significant operating losses
in 2001 and 2002. In response to the declining operating performance, the
Company undertook several initiatives beginning in 2001 including the following:

      -     Execution of the Exchange Transaction and the Senior Debt
            Restructuring discussed above, which has resulted in the Company
            using substantially all of its cash on hand (after payment of
            transaction expenses) to repay approximately $38.0 million of its
            outstanding credit facility and elimination of an additional
            $120.0 million of its outstanding indebtedness, which will result in
            a substantial reduction in prospective annual interest expense;

      -     Filing for and receiving substantial income tax refunds by carrying
            back current period tax losses to recover income taxes previously
            paid, with a substantial portion of such refunds used to reduce
            outstanding indebtedness;

      -     Restructuring actions including the reduction of approximately 17.5%
            (26% in 2001) of the permanent workforce during 2002 and
            rationalization of office space;

      -     Reduction in accounts receivable with resulting cash flow used to
            reduce outstanding indebtedness; and

      -     Plans for further office space rationalization to reduce operating
            costs and improve efficiency in 2003.

      The Company's ability to continue operating is largely dependent upon its
ability to maintain compliance with the financial covenants of the Credit
Facility. The financial covenants include a cumulative monthly EBITDA
requirement (as defined) commencing with April 2003 and an interest and funded
indebtedness coverage ratio. These covenants require the Company to generate
EBITDA, as defined, in the aggregate amount of $5.9 million from April through
December 2003; this compares to $12.2 million of EBITDA, as defined, actually
reported for April through December 2002. Based on the Company's fiscal 2003 and
2004 projections, which reflect declining demand for the Company's services,
offset by reductions in costs associated with the reduced revenues and resulting
from personnel and office space rationalization, management believes the Company
will be able to maintain compliance with the financial covenants for the
remaining term of the Credit Facility. The Company also believes that the
operating trends in the first quarter of 2003 support the key assumptions in its
2003 and 2004 operating plans. However, there can be no assurance that the
economy or the Company will perform as expected or that further economic
declines will not adversely impact the Company's ability to comply with the
financial covenants. If the Company does violate future covenants, it would seek
waivers and amendments from its lenders, but can give no assurance that any such
waivers and amendments would be available at all or on acceptable terms. If the
Company were unable to obtain a waiver of future covenant violations, the
lenders would be entitled to require immediate repayment of all amounts
outstanding under the Credit Facility. An acceleration of outstanding amounts
under the Credit Facility would also cause a default under, and permit
acceleration of, the Company's remaining 5.75% Convertible Subordinated Notes.
In the event of one or more such defaults, the Company's ongoing viability would
be seriously threatened, and it would be forced to evaluate a number of
strategic alternatives, including a further debt restructuring or other
reorganization, the closure of certain operating locations or the sale of
certain or all of its assets in order to continue to fund its operations. In the
current economic environment, management believes that any such sale of assets
would be at depressed prices that could be significantly lower than the net book
value of assets sold and may not be sufficient to satisfy the Company's
liabilities.

      The Company's Common Stock has traded since November 2002 on the Over the
Counter Bulletin Board (the "OTC Bulletin Board") following notification by the
New York Stock Exchange (the "NYSE") of its intent to seek the removal of the
Common Stock from the NYSE list. Following an unsuccessful appeal of the NYSE's
decision pursuant to NYSE rules, the Common Stock was delisted by the NYSE in
February 2003. The restructuring agreement for the Company's recently completed
financial restructuring contemplates that the Company will use its best efforts
to procure a new stock exchange listing for the shares of Common Stock issued in
the restructuring (or to be issued upon the conversion of the Series B Preferred
Stock), but in the meantime the Company expects that the Common Stock will
continue to trade on the OTC Bulletin Board.


                                       15
<PAGE>

      As a result of the financial restructuring recently completed by the
Company, the aggregate outstanding principal amount of the 5.75% Notes was
reduced to approximately $5.3 million. As of April 14, 2003, the Company
believes it is in compliance with the indenture related to the 5.75% Notes.
Failure to maintain or effect the listing of the Common Stock on a national
securities exchange or an established automated over-the-counter trading market
in the United States would constitute a repurchase event under the 5.75% Notes
and entitle each remaining noteholder to demand repayment of its Notes in full.
In the event that the Company is unable to repay any noteholder who makes such a
demand following a repurchase event and also unable to obtain waivers of such
repurchase event from each affected noteholder, events of default could occur
under the 5.75% Notes and the Credit Facility and the noteholders could demand
repayment of their respective debt obligations in full. Additionally, in the
event that the noteholders accelerated the payment of the debt obligations
evidenced by the remaining outstanding Notes, the Credit Facility lenders could
demand repayment of the Credit Facility in full.

CONTRACTUAL AND COMMERCIAL COMMITMENTS

      The following table summarizes contractual obligations and commercial
commitments at December 29, 2002 after reflecting the effects of the financial
restructuring completed in April 2003 as if the restructuring had been completed
on December 29, 2002:

<TABLE>
<CAPTION>
                                                                 PAYMENTS DUE BY PERIOD
                                                      --------------------------------------------
CONTRACTUAL OBLIGATIONS                    TOTAL      LESS THAN 1 YEAR   1-3 YEARS       4-9 YEARS
-----------------------                    -----      ----------------   ---------       ---------
<S>                                       <C>         <C>                <C>             <C>
Short- and long-term debt                 $ 94,192        $ 24,948        $ 69,244        $     --
Operating leases                            25,939           8,667          14,621           2,651
                                          --------        --------        --------        --------
Total contractual cash obligations        $120,131        $ 33,615        $ 83,865        $  2,651
                                          ========        ========        ========        ========
</TABLE>

<TABLE>
<CAPTION>
                                                            COMMITMENT EXPIRATION PER PERIOD
                              TOTAL AMOUNT      -----------------------------------------------------
OTHER COMMERCIAL COMMITMENTS   COMMITTED        LESS THAN 1 YEAR         1-3 YEARS            4-9 YEARS
----------------------------   ---------        ----------------         ---------            ---------
<S>                           <C>               <C>                      <C>                  <C>
Letters of credit               $9,002               $   --               $9,002               $   --
</TABLE>

MARKET RISK DISCLOSURES

      The Company's outstanding debt under its revolving credit facility at
February 28, 2003 was $103.0 million. Interest on borrowings under that facility
was based on the prime rate plus a variable margin. Based on the outstanding
balance at February 28, 2003, a change of 1% in the interest rate would cause a
change in interest expense of approximately $1.0 million on an annual basis.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

      The Company's analysis and discussion of its financial condition and
results of operations are based upon its consolidated financial statements that
have been prepared in accordance with generally accepted accounting principles
in the United States (US GAAP). The preparation of financial statements in
conformity with US GAAP requires management to make estimates and assumptions.
These estimates include the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the period.
The Company evaluates these estimates and assumptions on an ongoing basis,
including but not limited to those related to the recoverability of goodwill,
collectibility of accounts receivable, useful lives of property and equipment,
reserves against permanent placement revenues, workers' compensation costs,
restructuring and rationalization reserves and realization of deferred tax
assets. Estimates and assumptions are based on historical and other factors
believed to be reasonable under the circumstances. The results of these
estimates may form the basis of the carrying value of certain assets and
liabilities and may not be readily apparent from other sources. Actual results,
under conditions and circumstances different from those assumed, may differ from
these estimates.

      The Company believes the following accounting policies are critical to its
business operations and the understanding of its results of operations and
include the more significant judgments and estimates used in the preparation of
its consolidated financial statements.


                                       16
<PAGE>
RECOVERABILITY OF GOODWILL

      Effective at the beginning of 2002, the Company adopted SFAS 142, which
provides that goodwill and other intangible assets with indefinite lives will
not be amortized, but will be tested at least annually for impairment.
Assumptions and estimates used in the determination of the recoverability of
goodwill, such as future cash flows, operating margins, growth rates and
discount rates may affect the carrying value of goodwill, and possible
impairment expense in the Company's consolidated financial statements.

COLLECTIBILITY OF ACCOUNTS RECEIVABLE

      The Company maintains accounts receivable allowances for estimated losses
resulting from the inability of its customers to make required payments.
Additional allowances may be required if the financial condition of the economy
or the Company's customers deteriorates.

USEFUL LIVES OF PROPERTY AND EQUIPMENT

      The Company records depreciation based on estimated useful lives of the
property and equipment. If the Company determines that an asset has a shorter
useful life than originally estimated, additional expense may be required.

RESERVES AGAINST PERMANENT PLACEMENT REVENUES

      In the Company's permanent placement businesses, the Company recognizes
revenue when employment candidates accept offers of permanent employment.
Allowances are established, based on historical data, to estimate losses due to
placed candidates not remaining employed through the Company's guarantee period,
typically 90 days or less. Additional allowances may be required if a greater
percentage of candidates do not fulfill the guarantee period than historical
rates reflect.

WORKERS' COMPENSATION COSTS

      The Company maintains a self-insurance program for workers' compensation
and accrues liabilities under that program based on the loss and loss adjustment
expenses as estimated by an outside administrator. If actual claims experience
deteriorates from historical experience, additional expense may be required.

RESTRUCTURING AND RATIONALIZATION RESERVES

      The Company records restructuring and rationalization reserves as a result
of its workforce reduction program and cost reduction initiatives which resulted
in closing and consolidating certain offices. The reserve primarily relates to
lease abandonment and termination costs that have been reduced by the amount of
subleases expected to be collected. The Company uses current market information
to estimate sublease income. If the sublease income is less than estimated,
additional reserves may be required.

INCOME TAX ASSETS AND LIABILITIES

      The Company records an income tax valuation allowance when it is no longer
more likely than not that its certain deferred tax assets, net of operating
losses and capital loss carryforwards, will be realized. These deferred tax
items represent expenses recognized for financial reporting purposes, which will
result in tax deductions over varying future periods. Certain judgments,
assumptions and estimates may affect the carrying value of the deferred tax
assets such as estimates of future taxable income, availability of capital gains
in future periods, timing or amount of future reversals of existing deferred tax
liabilities, and other tax planning strategies that may be available to the
Company.

      The Company records an estimated tax liability or tax benefit for income
and other taxes based on what it determines will likely be paid in the various
tax jurisdictions in which it operates. Management uses its best judgment in the
determination of these amounts. However, the liabilities ultimately realized and
paid are dependent upon various matters, including resolution of tax audits, and
may differ from amounts recorded. An adjustment to the estimated liability would
be recorded through income in the period in which it becomes probable that the
amount of the actual liability differs from the recorded amount.


                                       17
<PAGE>
RECENT ACCOUNTING PRONOUNCEMENTS

      In June 2002, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 146 ("SFAS 146"), "Accounting
for Costs Associated with Exit or Disposal Activities" which nullifies Emerging
Issues Task Force Issue No. 94-3 ("Issue 94-3"), "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)." SFAS 146 requires that a
liability for a cost associated with an exit or disposal activity be recognized
when the liability is incurred. Under Issue 94-3, a liability for an exit cost
as defined in Issue 94-3 was recognized at the date of an entity's commitment to
an exit plan. The provisions of SFAS 146 are effective for exit or disposal
activities that are initiated after December 31, 2002, with early application
encouraged. The Company does not expect that adoption of this statement will
have a material impact on the Company's results of operations, financial
position or cash flows.


                                       18
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT ACCOUNTANTS

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

In our opinion, the accompanying consolidated balance sheets, together with the
pro forma consolidated balance sheet data as of December 29, 2002, and the
related consolidated statements of operations, shareholders' equity (deficit)
and cash flows present fairly, in all material respects, the financial position
of Personnel Group of America, Inc. and subsidiaries (collectively, the
"Company") at December 29, 2002 and December 30, 2001, and the results of their
operations and their cash flows for each of the three years in the period ended
December 29, 2002, in conformity with accounting principles generally accepted
in the United States of America. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States of America, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

As described in Note 1, on April 14, 2003 the Company completed a comprehensive
financial restructuring. The pro forma consolidated balance sheet data reflects
the impact of the financial restructuring on the Company's financial condition
at December 29, 2002 had the financial restructuring been completed on that
date.

As disclosed in Note 7 to the consolidated financial statements, the Company
changed its method of accounting for goodwill and indefinite-lived intangible
assets as of December 31, 2001.

/s/ PricewaterhouseCoopers LLP

Charlotte, North Carolina
April 14, 2003


                                       19
<PAGE>
                PERSONNEL GROUP OF AMERICA, INC. AND SUBSIDIARIES
     CONSOLIDATED BALANCE SHEETS -- DECEMBER 29, 2002 AND DECEMBER 30, 2001
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                             DECEMBER 29, 2002             DECEMBER 30,
                                                                        ---------------------------         ---------
                                                                        PRO FORMA        HISTORICAL           2001
                                                                        ---------         ---------         ---------
<S>                                                                     <C>              <C>               <C>
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                                             $   1,575         $  22,623         $  17,557
  Accounts receivable, net of allowance for doubtful accounts of
     $2,956 and $2,451 in 2002 and 2001, respectively                      76,178            76,178            87,088
  Prepaid expenses and other current assets                                 3,940             3,940             7,975
  Recoverable income taxes                                                 25,476            25,476            10,005
  Deferred income taxes                                                        --                --            11,896
                                                                        ---------         ---------         ---------
      Total current assets                                                107,169           128,217           134,521
Property and equipment, net                                                13,240            13,240            18,061
Goodwill                                                                  103,532           103,532           478,162
Other assets                                                                1,775             2,417             3,379
                                                                        ---------         ---------         ---------
      Total assets                                                      $ 225,716         $ 247,406         $ 634,123
                                                                        =========         =========         =========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
  Current portion of long-term debt                                     $  24,948         $  38,633         $     882
  Accounts payable                                                          9,887             9,887             9,598
  Accrued wages, benefits and other                                        61,103            62,203            51,800
                                                                        ---------         ---------         ---------
      Total current liabilities                                            95,938           110,723            62,280
  Long-term debt -
    Convertible, subordinated notes                                         5,339           115,000           115,000
    Revolving credit facility                                              63,905            65,015           119,000
  Other long-term liabilities                                               8,577             9,016            39,750
                                                                        ---------         ---------         ---------
      Total liabilities                                                   173,759           299,754           336,030
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (DEFICIT):
  Preferred stock, $.01 par value; shares authorized 5,000;
    no shares issued and outstanding                                           10                --                --
  Common stock, $.01 par value; shares authorized 95,000;
    33,065 shares issued and outstanding                                      540               331               331
  Additional paid-in capital                                              337,227           315,404           316,694
  Retained earnings (accumulated deficit)                                (242,281)         (324,544)           25,983
  Less common stock held in treasury at cost -
    6,184 shares at December 29, 2002 and 6,371 shares
    at December 30, 2001                                                  (43,539)          (43,539)          (44,915)
                                                                        ---------         ---------         ---------
      Total shareholders' equity (deficit)                                 51,957           (52,348)          298,093
                                                                        ---------         ---------         ---------
      Total liabilities and shareholders' equity (deficit)              $ 225,716         $ 247,406         $ 634,123
                                                                        =========         =========         =========
</TABLE>

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


                                       20
<PAGE>
                PERSONNEL GROUP OF AMERICA, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
 FOR THE YEARS ENDED DECEMBER 29, 2002, DECEMBER 30, 2001 AND DECEMBER 31, 2000
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                           2002              2001              2000
                                                                         ---------         ---------         ---------
<S>                                                                      <C>               <C>               <C>
REVENUES                                                                 $ 557,748         $ 732,327         $ 881,992
DIRECT COSTS OF SERVICES                                                   427,947           540,659           631,442
                                                                         ---------         ---------         ---------
GROSS PROFIT                                                               129,801           191,668           250,550
OPERATING EXPENSES:
  Selling, general and administrative                                      114,590           152,928           185,743
  Depreciation and amortization                                              7,124            23,913            24,915
  Goodwill impairment                                                       89,935            56,779            11,021
  Restructuring and rationalization charges                                  8,278            16,134             1,960
                                                                         ---------         ---------         ---------
OPERATING INCOME (LOSS)                                                    (90,126)          (58,086)           26,911
INTEREST EXPENSE                                                            17,301            18,278            20,108
                                                                         ---------         ---------         ---------
INCOME (LOSS) BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF
  CHANGE IN ACCOUNTING PRINCIPLE                                          (107,427)          (76,364)            6,803
PROVISION (BENEFIT) FOR INCOME TAXES                                           603            (9,686)            8,978
                                                                         ---------         ---------         ---------
LOSS BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE           (108,030)          (66,678)           (2,175)
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE, NET OF TAXES         (242,497)               --                --
                                                                         ---------         ---------         ---------
NET LOSS                                                                 $(350,527)        $ (66,678)        $  (2,175)
                                                                         =========         =========         =========
BASIC AND DILUTED EARNINGS PER COMMON SHARE:
  Loss before cumulative effect of change in accounting principle        $   (4.04)        $   (2.52)        $   (0.09)
  Cumulative effect of change in accounting principle                        (9.06)               --                --
                                                                         ---------         ---------         ---------
  Net loss                                                               $  (13.10)        $   (2.52)        $   (0.09)
                                                                         =========         =========         =========
WEIGHTED AVERAGE BASIC AND DILUTED SHARES OUTSTANDING                       26,756            26,503            25,090
</TABLE>

        The accompanying notes are an integral part of these statements.


                                       21
<PAGE>

                PERSONNEL GROUP OF AMERICA, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
 FOR THE YEARS ENDED DECEMBER 29, 2002, DECEMBER 30, 2001 AND DECEMBER 31, 2000
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                      RETAINED                  COMMON
                                                                         ADDITIONAL   EARNINGS                  STOCK
                                                         COMMON STOCK      PAID-IN  (ACCUMULATED   DEFERRED    HELD IN
                                                        SHARES   AMOUNT   CAPITAL     DEFICIT)   COMPENSATION  TREASURY    TOTAL
                                                        ------   ------  ---------    ---------   ---------   ---------  ---------
<S>                                                     <C>      <C>     <C>         <C>          <C>         <C>        <C>
BALANCE, JANUARY 2, 2000                                33,065   $  331  $ 330,237    $  94,836   $     (61)  $(55,500)  $ 369,843

        Stock issued for acquisitions                       --       --     (6,520)          --          --     11,588       5,068
        Repurchases of common stock                         --       --         --           --          --    (10,584)    (10,584)
        Stock issued for employee stock purchase plan
               and exercises of stock options               --       --     (3,807)          --          --      5,893       2,086
        Amortization of deferred compensation               --       --         --           --          61         --          61
        Net loss                                            --       --         --       (2,175)         --         --      (2,175)
                                                        ------   ------  ---------    ---------   ---------   --------   ---------
BALANCE, DECEMBER 31, 2000                              33,065      331    319,910       92,661          --    (48,603)    364,299
                                                        ------   ------  ---------    ---------   ---------   --------   ---------
        Stock issued for employee stock purchase plan       --       --     (3,216)          --          --      3,688         472
        Net loss                                            --       --         --      (66,678)         --         --     (66,678)
                                                        ------   ------  ---------    ---------   ---------   --------   ---------
BALANCE, DECEMBER 30, 2001                              33,065      331    316,694       25,983          --    (44,915)    298,093
                                                        ------   ------  ---------    ---------   ---------   --------   ---------
        Stock issued for employee stock purchase plan       --       --     (1,290)          --          --      1,376          86
        Net loss                                            --       --         --     (350,527)         --         --    (350,527)
                                                        ------   ------  ---------    ---------   ---------   --------   ---------
BALANCE, DECEMBER 29, 2002                              33,065   $  331  $ 315,404    $(324,544)  $      --   $(43,539)  $ (52,348)
                                                        ======   ======  =========    =========   =========   ========   =========
</TABLE>


        The accompanying notes are an integral part of these statements.
<PAGE>
                PERSONNEL GROUP OF AMERICA, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
 FOR THE YEARS ENDED DECEMBER 29, 2002, DECEMBER 30, 2001 AND DECEMBER 31, 2000
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                      2002              2001              2000
                                                                                    ---------         ---------         ---------
<S>                                                                                 <C>               <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
       Net loss                                                                     $(350,527)        $ (66,678)        $  (2,175)
       Adjustments to reconcile loss to net cash provided
                by operating activities:
       Depreciation and amortization                                                    7,124            23,913            24,915
       Cumulative effect of change in accounting principle, net of deferred
                tax benefit of $42,198                                                242,497                --                --
       Loss on abandonment and disposals                                                   --            10,743                --
       Goodwill impairment charge                                                      89,935            56,779            11,515
       Deferred income taxes on loss before cumulative effect of
                change in accounting principle, net (including $19,217 of income
                tax refunds received in 2002)                                          20,117            (2,479)            6,050
       Changes in assets and liabilities:
       Accounts receivable                                                             10,910            39,124            (1,324)
       Accounts payable and accrued liabilities                                        (1,260)           (8,690)           10,451
       Other, net                                                                       2,081             2,878              (493)
                                                                                    ---------         ---------         ---------
                Net cash provided by operating activities                              20,877            55,590            48,939
CASH FLOWS FROM INVESTING ACTIVITIES:
       Proceeds from sale of business                                                   3,825               372                --
       Acquisition-related payments                                                        --           (10,120)          (43,127)
       Purchase of property and equipment, net                                         (1,831)           (2,999)           (7,924)
                                                                                    ---------         ---------         ---------
                Net cash provided by (used in) investing activities                     1,994           (12,747)          (51,051)
CASH FLOWS FROM FINANCING ACTIVITIES:
       Repayments under credit facility                                               (44,000)          (53,000)          (51,500)
       Borrowings under credit facility                                                28,000            22,000            63,500
       Credit facility amendment fees                                                  (1,657)           (1,227)               --
       Repurchases of common stock                                                         --                --           (10,638)
       Repayments of other debt, net                                                     (234)              236              (855)
       Proceeds from employee stock purchase plan                                          86               472             2,086
                                                                                    ---------         ---------         ---------
                Net cash provided by (used in) financing activities                   (17,805)          (31,519)            2,593
                                                                                    ---------         ---------         ---------
Net increase in cash and cash equivalents                                               5,066            11,324               481
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                         17,557             6,233             5,752
                                                                                    ---------         ---------         ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR                                            $  22,623         $  17,557         $   6,233
                                                                                    =========         =========         =========
SUPPLEMENTAL CASH FLOW INFORMATION:
       Cash payments during the year for --
                Income taxes                                                        $      24         $     518         $   5,497
                Interest                                                            $  15,194         $  15,942         $  18,588
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
       Accrued acquisition related earnout payments                                 $      --         $      --         $  11,458
</TABLE>


        The accompanying notes are an integral part of these statements.


<PAGE>


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

1. SUBSEQUENT EVENT - COMPREHENSIVE FINANCIAL RESTRUCTURING

      On April 14, 2003, Personnel Group of America, Inc. and its subsidiaries
(collectively, the "Company") completed a comprehensive financial restructuring
with its senior lenders and the holders of approximately $109,661 of its
outstanding 5.75% Convertible Subordinated Notes due 2004 (the "5.75% Notes") in
which it issued shares of the Company's Common Stock and Series B Preferred
Stock to the participating noteholders in exchange for their 5.75% Notes (the
"Exchange Transaction"). In the Exchange Transaction, which was privately
negotiated, the Company exchanged newly issued equity with the participating
noteholders and issued the following consideration for each $1 in principal
amount of notes exchanged:

      -     $28.75 in cash (not in thousands);

      -     190.9560 shares of newly issued shares of the Company's Common
            Stock; and

      -     9.5242 shares of Series B Preferred Stock of the Company, each share
            of which will be convertible into 100 shares of Common Stock and
            will automatically convert into shares of Common Stock upon any
            amendment to the Company's charter increasing the authorized number
            of shares of Common Stock or effecting a reverse split of
            outstanding shares of Common Stock that increases the number of
            authorized but unissued shares. The Series B Preferred Stock will
            vote on all matters with the Common Stock as if converted, will have
            a liquidation preference of $.01 per share, and otherwise will have
            no greater rights or privileges than the Common Stock.

      In connection with the Exchange Transaction, the Company entered into an
agreement with each of the former noteholders participating in the exchange to
provide them with registration rights with respect to the shares of Common Stock
issued in the exchange or acquired upon conversion of the Series B Preferred
Stock.

      As a result of the Exchange Transaction, the participating noteholders in
the aggregate were issued 20,940,425 shares of Common Stock and 1,044,433 shares
of Series B Preferred Stock, which together represent approximately 82% of the
Company's outstanding Common Stock (assuming for this purpose that all shares of
the Series B Preferred Stock issued to the participating noteholders have been
converted). The existing shareholders retained ownership of their outstanding
26,881,212 shares of Common Stock, which represent approximately 18% of the
outstanding Common Stock (on the same, as-converted, basis). In connection with
this ownership change, the Company also reconstituted its Board of Directors to
provide for a seven-person Board and the designation of two representatives of
the new major shareholders to serve as new Board members, together with the
Company's Chief Executive Officer, one incumbent independent Board member who
was designated by the Company with the consent of the participating noteholders
and three independent Board members, two of whom are incumbents, who were
designated by the participating noteholders (although these two incumbents have
stated their intention not to stand for reelection at the upcoming 2003 Annual
Meeting of Shareholders).

      In order to permit the closing of the Exchange Transaction contemplated in
the financial restructuring and to provide for the terms on which the existing
senior lenders would continue to finance the Company's working capital needs,
the Company and its existing senior lenders also executed definitive loan
agreements for the Credit Facility, which provided for certain further
amendments and maturity date extensions to the revolving credit facility and
eliminated the Equity Appreciation Right (the "EAR") held by the senior lenders
(the "Senior Debt Restructuring"). The Senior Debt Restructuring provided for
the forgiveness of indebtedness in the amount of $10,300. As a result of the
Exchange Transaction and the Senior Debt Restructuring, the Company used
substantially all of its cash on hand (after payment of transaction expenses)
to repay approximately $37,985 of its outstanding credit facility and
eliminated an additional $119,961 of its outstanding indebtedness,


                                       24
<PAGE>

which will result in substantial reductions in the Company's interest expense
in future periods. The Company does not anticipate that any material income tax
liability will arise as a result of the forgiveness of debt in these financial
restructuring transactions due to sufficient current period tax losses and net
operating loss carryforwards available to offset any taxable income on the debt
forgiveness.

      The Credit Facility provides for a $70,700 revolving line of credit due
May 1, 2004 and is subject to certain maturity date extensions in six-month
increments up through May 1, 2005. Availability of borrowings under the Credit
Facility is subject to a borrowing base calculated as specified percentages of
the Company's eligible accounts receivable (as defined) in the aggregate, and
the Company had approximately $8,000 of availability thereunder as of the
closing date. The Credit Facility contains customary covenants, including
financial covenants that require monthly maintenance of cumulative monthly
EBITDA levels (as defined in the amended agreement) commencing with April 2003
and an interest and funded indebtedness coverage ratio. The Credit Facility also
contains restrictions on the payment of cash dividends on the Company's capital
stock and places additional limitations on share repurchases, acquisitions and
capital expenditures. Finally, in lieu of the EAR included as part of the
revolving credit facility that was in effect in 2002 the Company has issued
common stock purchase warrants to the lenders under the Credit Facility
entitling them to purchase a total of 19,224,916 shares of Common Stock, or 10%
of the outstanding Common Stock on a fully diluted basis. These warrants are
exercisable in whole or part over a 10-year period and the exercise price
thereunder is $0.3121 per share (which was based on a stated equity valuation
for the Company of $60,000). The exercise price for these warrants is not
necessarily indicative of fair value. Interest rates payable under the Credit
Facility are set at prime plus 325 basis points through June 2003 with increases
during each six-month period through May 1, 2005.

      In connection with the financial restructuring the Company agreed to seek
shareholder approval at the 2003 Annual Meeting of Shareholders to amend and
restate its certificate of incorporation. The proposed amendments to the
certificate of incorporation include the following:

      -     a reverse stock split of the Company's Common Stock at a
            one-for-twenty-five ratio;

      -     elimination of provisions that separate the Board of Directors into
            three classes and that prohibit action by consent of shareholders
            without a meeting;

      -     an election by the Company not to be governed by Section 203 of the
            Delaware General Corporation Law, which restricts the ability of the
            Company to engage, directly or indirectly, in a business combination
            transaction with a holder of 15% or more of its voting stock;

      -     addition of provisions requiring a supermajority vote of the Board
            of Directors or shareholders to adopt changes to the certificate of
            incorporation or bylaws; and

      -     addition of a provision to protect minority shareholders in
            connection with certain transactions with a shareholder that
            beneficially owns 20% or more of the shares of the Company's capital
            stock that are entitled to vote on matters submitted to a vote of
            the shareholders.

Each of the noteholders that participated in the exchange have agreed to vote
their shares of Common Stock and Series B Preferred Stock in favor of these
proposals. The Company has agreed that pending shareholder approval of the
amended and restated certificate of incorporation, it will comply with the
proposed provision to protect minority shareholders described above.

      In connection with the financial restructuring, the Company amended and
restated the shareholder rights agreement that governs the terms of preferred
share purchase rights that currently accompany the Common Stock. The amendments
include, among other things, exemptions preventing the following from triggering
separation of the rights from the Common Stock: (i) beneficial ownership of
capital stock by the participating noteholders acquired in the financial
restructuring; (ii) beneficial ownership by any Significant Holder of capital
stock of the Issuer acquired in


                                       25
<PAGE>
accordance with the amended and restated certificate of incorporation; and (iii)
beneficial ownership by any third party of capital stock of the Issuer acquired
in a transfer from a Significant Holder pursuant to a transaction that complies
with the amended and restated certificates of incorporation. In addition, the
shareholder rights plan was amended to include a tag-along right for the benefit
of any holder (including certain holders of more than 2% acting together as a
group) of 5% or more of the voting stock of the Company pursuant to which such
holder (or group) will be entitled to participate pro rata, for the same amount
and form of consideration and otherwise on substantially the same terms and
conditions, in any transfer by any Significant Holders of capital stock of the
Company of 20% or more of the voting stock of the Company.

      In connection with the Company's financial restructuring, the Company has
terminated its 1995 Stock Option Plan. See Note 12, "Capital Stock and Stock
Options" to the Audited Consolidated Financial Statements appearing elsewhere in
this Annual Report. Additionally, a number of the Company's employees, including
each of the Company's executive officers at the end of 2002 and all but one of
the Company's Board of Directors have irrevocably cancelled any and all rights
that they had to exercise any and all stock options that were previously granted
to such employees and agreed that all such options would be forfeited to the
Company. These directors and employees held in the aggregate 2,190,030 of the
stock options that were outstanding under the 1995 Stock Option Plan as of
December 29, 2002. As a result of these voluntary forfeitures, only 545,445
stock options remain outstanding under the 1995 Stock Option Plan and these
options have a weighted average exercise price of $9.23 per share. Although the
1995 Stock Option Plan has been terminated and no future issuances there under
will be made, these remaining outstanding stock options will continue to be
exercisable in accordance with their terms.

      The Company's Board of Directors adopted the 2003 Equity Incentive Plan
(the "2003 Equity Plan") simultaneously with the completion of the Company's
financial restructuring. The 2003 Equity Plan authorizes grants of stock
options, stock appreciation rights (or "SARs"), restricted stock, deferred stock
awards and performance awards (and dividend equivalent rights relating to
options, SARs, deferred stock and performance awards), in the case of stock or
option awards, for up to 19,870,873 shares, or 10.3%, of the Company's fully
diluted Common Stock. Awards under the 2003 Equity Plan are to be made to key
employees, directors and consultants as selected by the Board of Directors or
the Compensation Committee. The duration of any option or SAR granted under the
2003 Equity Plan will not exceed ten years. Awards will generally vest 20% on
each anniversary of the date of grant unless either the Board of Directors or
Compensation Committee approves or a participant's employment agreement provides
otherwise. Following a termination of employment, vested options and/or SARs
must be exercised within 3 months (12 months in the case of death or
disability), except that options and SARs terminate immediately upon a
termination for cause as defined in the relevant participant's employment
agreement, or as determined in the discretion of the Board of Directors or the
Compensation Committee if no employment agreement exists. Any non-vested option,
SARs or other awards issued under the 2003 Equity Plan will be forfeited upon
any termination. The Board of Directors and Compensation Committee retain the
discretion to extend the post-employment exercise period of an option or SAR and
to accelerate vesting of awards under the 2003 Equity Plan.

      Subject to stockholder approval of the 2003 Equity Plan at the Company's
2003 Annual Meeting, the Board of Directors has approved the granting of stock
options for 12,585,000 shares, representing 6.5% of the Company's fully diluted
Common Stock, to these executive officers. Of these initial grants, 8,700,000
options have an exercise price of $0.3121 per share, and the other 3,885,000
options in these initial grants have an exercise price of $0.4681 per share. The
initial stock option grants to these officers vest monthly at an annual rate of
25% and each will have 12 months following the termination of his employment
(other than for cause) to exercise vested stock options held as of the
termination date. The exercise price of a portion of these options is based on
an aggregate stated equity value of the Company of $60,000 and for the remaining
options the exercise price is based on an aggregate stated equity value of
$90,000. The exercise price for these stock options is not necessarily
indicative of fair value. Following these initial grants, options for 7,285,873
shares, or 3.8%, of the Company's fully diluted Common Stock will remain
authorized for issuance under the 2003 Equity Plan and will be reserved for
future grants. For any grants within six months after the date any existing
options are cancelled, the Company will be required to apply variable accounting
to such new options which may result in non-cash compensation expense in future
periods.




                                       26
<PAGE>
PRO FORMA FINANCIAL INFORMATION

      Because of the significance of the financial restructuring transactions
discussed above on the Company's financial position, the Company has included
certain pro forma financial information to highlight the impact of such
transactions. The following pro forma consolidated financial data as of December
29, 2002 has been derived from the application of pro forma adjustments to the
Company's historical consolidated financial statements. The pro forma data is
presented for illustrative purposes only and is not necessarily indicative of
the financial position that would have actually been reported had the financial
restructuring transactions occurred as of December 29, 2002, nor is it
indicative of the Company's future financial position.

      The pro forma condensed consolidated balance sheet as of December 29, 2002
gives effect to the Exchange Transaction and the Senior Debt Restructuring as if
each had occurred on the date of the consolidated balance sheet.

                      PRO FORMA CONSOLIDATED BALANCE SHEET
                                DECEMBER 29, 2002
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                                    PRO FORMA
                                                                 HISTORICAL         ADJUSTMENTS                PRO FORMA
                                                                 ----------         -----------                ---------
<S>                                                              <C>                <C>                        <C>
ASSETS
Cash and cash equivalents                                         $  22,623         $ (14,795)(1)              $   1,575
                                                                                       (3,153)(2)
                                                                                       (3,100)(4)
Other current assets                                                 80,118                                       80,118
Recoverable income taxes                                             25,476                                       25,476
                                                                  ---------         ---------                  ---------
      Total current assets                                          128,217           (21,048)                   107,169
Noncurrent assets                                                   119,189              (642)(3)                118,547
                                                                  ---------         ---------                  ---------
      Total assets                                                $ 247,406         $ (21,690)                 $ 225,716
                                                                  =========         =========                  =========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current portion of long-term debt                                 $  38,633         $ (13,685)(1)              $  24,948
Other current liabilities                                            72,090            (1,100)(4)                 70,990
                                                                  ---------         ---------                  ---------
      Total current liabilities                                     110,723           (14,785)                    95,938
  Long-term debt -
    Convertible, subordinated notes                                 115,000          (109,661)(2)                  5,339
    Revolving credit facility                                        65,015            (1,110)(1)                 63,905
  Other long-term liabilities                                         9,016              (439)(1)                  8,577
                                                                  ---------         ---------                  ---------
      Total liabilities                                             299,754          (125,995)                   173,759
Total shareholders' equity (deficit)                                (52,348)          104,305(1,2,3,4)            51,957
                                                                  ---------         ---------                  ---------
      Total liabilities and shareholders' equity (deficit)        $ 247,406         $ (21,690)                 $ 225,716
                                                                  =========         =========                  =========
</TABLE>

(1)   Adjustments to reflect cash paid to existing senior lenders which
      includes $13,685 of principal debt repayments and $1,110 of fees paid in
      connection with the completion of the Credit Facility, as amended, and
      cancellation of equity appreciation rights resulting in a reduction in
      accrued liabilities of $439.

(2)   Adjustments to reflect payments to participating holders of the 5.75%
      Notes and exchange of $109,661 of such notes for newly issued shares of
      the Company's Common and Series B Preferred Stock. The equity issued in
      exchange for the 5.75% Notes is recorded at estimated fair value.

(3)   Adjustments to reflect the write-off of deferred debt issuance costs of
      $642 associated with the 5.75% Notes exchanged for equity.

(4)   Adjustment to record estimated professional fees incurred and paid in
      connection with the comprehensive financial restructuring including
      $1,100 which had been accrued in the Company's historical balance
      sheet at December 29, 2002.


                                       27
<PAGE>
ACCOUNTING FOR FINANCIAL RESTRUCTURING TRANSACTIONS

      Upon consummation of the Exchange Transaction, the Company will record the
issuance of its equity securities in exchange for outstanding 5.75% Notes at the
fair value of the newly issued equity securities, with the excess of the debt
carrying value over the fair value of equity securities recorded as a gain. The
forgiveness of $10,300 in Senior Debt will reduce future interest expense
over the term of the amended Credit Facility and the $1,110 of fees paid
to the senior lenders will be reflected as a reduction in the principal balances
outstanding as required under accounting for troubled debt restructuring. The
Company will determine and record the fair value, if any, of the warrants issued
in connection with the Senior Debt Restructuring as additional shareholders'
equity with a corresponding reduction in the outstanding Senior Debt, with such
amount recognized as a component of interest expense over the term of the Senior
Debt. The Company will complete the determination of fair value and the
accounting adjustments required as a result of the Exchange Transaction and the
Senior Debt Restructuring in the second quarter of fiscal 2003. The net gain
from debt restructuring will be classified as a component of income from
operations in accordance with the recently issued SFAS No. 145.

MANAGEMENT'S PLANS FOR LIQUIDITY AND DEBT COMPLIANCE

      The Company experienced declining revenue and significant operating losses
in 2001 and 2002. In response to the declining operating performance, the
Company undertook several initiatives beginning in 2001 including the following:

      -     Execution of the Exchange Transaction and the Senior Debt
            Restructuring discussed above, which has resulted in the Company
            using substantially all of its cash on hand (after payment of
            transaction expenses) to repay approximately $37,985 of its
            outstanding credit facility and elimination of an additional
            $119,961 of its outstanding indebtedness, which will result in a
            substantial reduction in prospective annual interest expense;

      -     Filing for and receiving substantial income tax refunds by carrying
            back current period tax losses to recover income taxes previously
            paid, with a substantial portion of such refunds used to reduce
            outstanding indebtedness;

      -     Restructuring actions including the reduction of approximately 17.5%
            (26% in 2001) of the permanent workforce during 2002 and
            rationalization of office space;

      -     Reduction in accounts receivable with resulting cash flow used to
            reduce outstanding indebtedness; and

      -     Plans for further office space rationalization to reduce operating
            costs and improve efficiency in 2003.

      The Company's ability to continue operating is largely dependent upon its
ability to maintain compliance with the financial covenants of the Credit
Facility. The financial covenants include a cumulative monthly EBITDA
requirement (as defined) commencing with April 2003 and an interest and funded
indebtedness coverage ratio. These covenants require the Company to generate
EBITDA, as defined, in the aggregate amount of $5,946 from April through
December 2003; this compares to $12,157 of EBITDA, as defined, actually reported
for April through December 2002. Based on the Company's fiscal 2003 and 2004
projections, which reflect declining demand for the Company's services, offset
by reductions in costs associated with the reduced revenues and resulting from
personnel and office space rationalization, management believes the Company will
be able to maintain compliance with the financial covenants for the remaining
term of the Credit Facility. The Company also believes that the operating trends
in the first quarter of 2003 support the key assumptions in its 2003 and 2004
operating plans. However, there can be no assurance that the economy or the
Company will perform as expected or that further economic declines will not
adversely impact the Company's ability to comply with the financial covenants.
If the Company does violate future covenants, it would seek waivers and
amendments from its lenders, but can give no assurance that any such waivers and
amendments would


                                       28
<PAGE>
be available at all or on acceptable terms. If the Company were unable to obtain
a waiver of future covenant violations, the lenders would be entitled to require
immediate repayment of all amounts outstanding under the Credit Facility. An
acceleration of outstanding amounts under the Credit Facility would also cause a
default under, and permit acceleration of, the Company's remaining 5.75%
Convertible Subordinated Notes. In the event of one or more such defaults, the
Company's ongoing viability would be seriously threatened, and it would be
forced to evaluate a number of strategic alternatives, including a further debt
restructuring or other reorganization, the closure of certain operating
locations or the sale of certain or all of its assets in order to continue to
fund its operations. In the current economic environment, management believes
that any such sale of assets would be at depressed prices that could be
significantly lower than the net book value of assets sold and may not be
sufficient to satisfy the Company's liabilities.

2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:


BASIS OF PRESENTATION

      The consolidated financial statements include the accounts of Personnel
Group of America, Inc. and its subsidiaries. All significant intercompany
transactions have been eliminated. Certain amounts in prior years have been
reclassified to conform to the 2002 presentation.

      The Company's fiscal years ended December 29, 2002, December 30, 2001 and
December 31, 2000 are referred to in these financial statements as years 2002,
2001 and 2000, respectively.

      The Company is organized into two Divisions: the Information Technology
Services Division ("IT Services"), which provides information technology
staffing and consulting services in a range of computer-related disciplines and
technology tools for human capital management, and the Commercial Staffing
Services Division ("Commercial Staffing"), which provides a variety of temporary
office, clerical, accounting and finance, light technical and light industrial
staffing services. All of the IT Services and Commercial Staffing branch offices
are located in the United States, and none are franchised or licensed.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REVENUE RECOGNITION

      The Company recognizes revenue at the time its services are performed.
Substantially all revenues of the Company are derived from or generated in
connection with the sale of staffing and consulting services. Permanent
placement revenues are recognized when employment candidates accept offers of
permanent employment. Allowances are established, based upon historical data, to
estimate losses due to placed candidates not remaining employed through the
Company's guarantee period, typically 90 days or less.

CASH AND CASH EQUIVALENTS

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

PROPERTY AND EQUIPMENT

      Property and equipment are carried at cost and depreciated on a
straight-line basis over their estimated useful lives, generally three to seven
years. Computer software costs consist of costs to purchase and develop
software. The Company capitalizes internally developed software costs in
accordance with SOP 98-1, whereby the costs are capitalized only after it is
probable that the project will be completed and the software will be used for
the function intended. The majority of capitalized software costs are
depreciated on a straight-line basis over a period of six years. Leasehold
improvements are stated at cost and amortized over the shorter of the lease term
or the useful life of the improvements.

GOODWILL AND OTHER INTANGIBLE ASSETS

      The Company adopted Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets" ("SFAS 142"), at the beginning of 2002.
Goodwill, which was previously amortized on a straight-line basis


                                       29
<PAGE>
over the periods benefited, is no longer being amortized to earnings, but
instead is subject to testing for impairment at least annually based on the fair
value of these assets compared to their carrying value. Intangible assets
determined to have definite lives are amortized over their remaining useful
lives.

      The Company's businesses have been acquired from unrelated third parties
for cash and other consideration and have been accounted for using the purchase
method of accounting. The assets and liabilities of the entities acquired were
recorded at their estimated fair values at the dates of the acquisitions.
Goodwill has been recorded at historical cost. Other intangible assets consist
mainly of covenants not to compete.

      Certain of the Company's acquisitions provided for additional purchase
price consideration upon attainment of certain specified targets for various
periods after closing of the acquisition. The Company paid $10,120 and $36,555
(of which $2,483 was paid by the issuance of 784,437 shares of Common Stock in
2000) in contingent consideration in 2001 and 2000, respectively. The Company
completed, in 2001, its obligation to make additional earn-out payments on the
acquired businesses. All consideration was recorded as additional purchase price
when earned and increased the amount of goodwill.

INCOME TAXES

      Income taxes are accounted for under the asset and liability method. Under
this method, deferred tax assets and liabilities are recognized for the
estimated future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases, and operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are measured using enacted tax rates in
effect for the year in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in the Consolidated Statement of Operations in
the period that includes the enactment date. A valuation allowance is recorded
to reduce the carrying amounts of deferred tax assets if it is more likely than
not that such assets will not be realized.

STOCK OPTIONS

      The Company uses the intrinsic-value method of accounting for stock-based
awards granted to employees and, accordingly, does not currently recognize
compensation expense for its stock-based awards to employees in the Consolidated
Statements of Operations.

      Pursuant to the requirements of Statement of Financial Accounting
Standards No. 123 ("SFAS 123"), "Accounting for Stock-Based Compensation," the
following disclosures are presented to reflect the Company's pro forma net
income for 2002, 2001 and 2000 as if the fair value method of accounting
prescribed by SFAS 123 had been used. In preparing these disclosures, the
Company has determined the value of all stock options granted under the 1995
Stock Option Plan using the Black-Scholes model, as discussed in SFAS 123, and
based on the following weighted average assumptions used for grants:


<TABLE>
<CAPTION>
                             2002          2001        2000
                           ---------    ---------    ---------
<S>                        <C>          <C>          <C>
Risk-free interest rate          4.2%         5.7%         6.2%
Expected dividend yield          0.0%         0.0%         0.0%
Expected life              4.7 years    5.6 years    6.5 years
Expected volatility             80.3%        68.1%        60.0%
</TABLE>

      The fair value of the stock options granted under the 1995 Stock Option
Plan and the Stock Purchase Plan issuances in 2002, 2001 and 2000 were
approximately $35, $459 and $2,560, respectively. Had compensation expense been
determined consistent with SFAS 123, utilizing the assumptions set forth above
and the straight-line amortization method over the vesting period, the Company's
net loss would have been increased to the following pro forma amounts:



                                       30
<PAGE>
<TABLE>
<CAPTION>
                                              2002           2001          2000
                                          -----------    -----------   -----------
<S>                                       <C>            <C>           <C>
Net loss, as reported                     $  (350,527)   $   (66,678)  $    (2,175)
Earnings per diluted share, as reported        (13.10)         (2.52)        (0.09)

Pro forma net loss                        $  (352,086)   $   (69,041)  $    (5,400)
Pro forma earnings per diluted share           (13.16)         (2.61)        (0.21)
</TABLE>


USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

      The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates and
assumptions. These estimates include the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual amounts could differ from management's
estimates. Estimates are used for, but not limited to, recoverability of
goodwill, collectibility of accounts receivable, useful lives of property and
equipment, reserves against permanent placement revenues, workers' compensation
costs, restructuring and rationalization reserves, taxes and contingencies.

3. RECENT ACCOUNTING PRONOUNCEMENTS:

      In June 2002, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 146 ("SFAS 146"), "Accounting
for Costs Associated with Exit or Disposal Activities" which nullifies Emerging
Issues Task Force Issue No. 94-3 ("Issue 94-3"), "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)." SFAS 146 requires that a
liability for a cost associated with an exit or disposal activity be recognized
when the liability is incurred. Under Issue 94-3, a liability for an exit cost
as defined in Issue 94-3 was recognized at the date of an entity's commitment to
an exit plan. The provisions of SFAS 146 are effective for exit or disposal
activities that are initiated after December 31, 2002, with early application
encouraged. The Company does not expect that adoption of this statement will
have a material impact on the Company's results of operations, financial
position or cash flows. The Company will apply SFAS 146 to restructuring
activities initiated after December 29, 2002.

4. ACCOUNTS RECEIVABLE:

      Accounts receivable consisted of the following at December 29, 2002 and
December 30, 2001:


<TABLE>
<CAPTION>
                                                        2002           2001
                                                     ---------      ---------
<S>                                                  <C>            <C>
   Trade accounts receivable                         $  79,134      $  89,539
   Less - Allowance for doubtful accounts               (2,956)        (2,451)
                                                     ---------      ---------
                                                     $  76,178      $  87,088
                                                     =========      =========
</TABLE>



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


<TABLE>
<CAPTION>
                                 BALANCE AT   CHARGED TO                 BALANCE
                                 BEGINNING    COSTS AND                  AT END
    YEAR ENDED                    OF YEAR     EXPENSES     DEDUCTIONS    OF YEAR
-----------------                ----------   ----------   ----------    -------
<S>                              <C>          <C>          <C>           <C>
December 29, 2002                $    2,451   $    3,084   $   (2,579)   $ 2,956
December 30, 2001                     3,799        7,077       (8,425)     2,451
December 31, 2000                     2,690        9,159       (8,050)     3,799
</TABLE>




                                       31
<PAGE>
5. PROPERTY AND EQUIPMENT, NET:

      Property and equipment, net, consisted of the following at December 29,
2002 and December 30, 2001:


<TABLE>
<CAPTION>
                                                         2002            2001
                                                       --------        --------
<S>                                                    <C>             <C>
   Software and computer equipment                     $ 30,892        $ 35,027
   Furniture and other equipment                          5,553           6,822
   Leasehold improvements                                 2,017           2,567
                                                       --------        --------
                                                         38,462          44,416
   Less - Accumulated depreciation                      (25,222)        (26,355)
                                                       --------        --------
                                                       $ 13,240        $ 18,061
                                                       ========        ========
</TABLE>


      Depreciation expense was $6,652, $7,635 and $8,089 for 2002, 2001 and
2000, respectively.

6. LONG-TERM DEBT:

      Long-term debt at December 29, 2002 and December 30, 2001 was as follows:


<TABLE>
<CAPTION>
                                                              2002        2001
                                                            --------    --------
<S>                                                         <C>         <C>
5.75% Convertible Subordinated Notes due July 2004          $115,000    $115,000
Revolving credit facility                                    103,000     119,000
Other                                                            648         882
                                                            --------    --------
                                                             218,648     234,882
Less current portion                                          38,633         882
                                                            --------    --------
                                                            $180,015    $234,000
                                                            ========    ========
</TABLE>

      The Company's 5.75% Convertible Subordinated Notes are due July 2004.
Interest on the 5.75% Notes is payable semi-annually. The 5.75% Notes are
convertible into Common Stock of the Company at any time before maturity at an
initial conversion price of $17.81 per share. Beginning in July 2000, the
Company was permitted to redeem the 5.75% Notes initially at 103.29% and at
decreasing prices thereafter to 100% at maturity, in each case together with
accrued interest. The 5.75% Notes are subordinated to all present and future
senior indebtedness of the Company (as defined), including indebtedness under
the Company's Credit Facility.

      The Company's revolving credit facility was amended in 2002 to provide for
a $114,000 revolving line of credit due January 2003. The Company was permitted
to extend the maturity of the facility in six-month increments up through
January 2004 subject to specified conditions and did elect to extend the
maturity date to June 2003. As a result of the recent completion of the
Company's financial restructuring and the execution of further amendments and
maturity date extensions to the Credit Facility, $65,015 of the $103,000
outstanding at December 29, 2002 was classified as long-term in the consolidated
balance sheet. The revolving credit facility in effect in 2002 contained
customary covenants that required monthly maintenance of minimum tangible net
worth and EBITDA levels (as defined). It also contained restrictions on the
payment of cash dividends on the Common Stock and placed additional limitations
on share repurchases, acquisitions and capital expenditures. Interest rates
payable under revolving credit facility were set at prime plus 300 basis points
through June 2003 and but for the closing of the Credit Facility in connection
with the financial restructuring would have increased to prime plus 400 basis
points for the period from July 2003 through January 2004.



                                       32
<PAGE>
      During 2002, the maximum aggregate outstanding borrowing under the
revolving credit facility was $125,000 and the average outstanding balance
during the year was $108,100. In addition, approximately $9,002 of the revolving
credit facility was used at December 29, 2002 for the issuance of undrawn
letters of credit primarily to secure the Company's workers' compensation
program. The daily weighted average interest rate under the revolving credit
facility was 7.3% during 2002. The weighted average interest rate for the
Company's borrowings under the facility was 7.3% at December 29, 2002. As of
February 28, 2003, the interest rate under the facility was 7.25%.

      Scheduled maturities of long-term debt at December 29, 2002 were as
follows:


<TABLE>
<S>                           <C>
       2003                   $ 38,633
       2004                    180,015
                              --------
                              $218,648
                              ========
</TABLE>

      Subsequent to year end, the Company completed a comprehensive financial
restructuring. See Note 1, "Subsequent Event - Comprehensive Financial
Restructuring."

7. GOODWILL IMPAIRMENT:

      Effective at the beginning of 2002, the Company adopted SFAS 142. The
provisions of SFAS 142 prohibit the amortization of goodwill and
indefinite-lived intangible assets and require that goodwill and
indefinite-lived intangibles assets be tested at least annually for impairment.
In the second quarter of 2002, the Company completed its initial valuation as of
the adoption date, December 31, 2001, and in the fourth quarter of 2002
completed its annual test for impairment. In order to assess the fair value of
its goodwill, the Company engaged an independent valuation firm to assist in
determining the fair value. The fair value of each of the Company's two
reporting units was calculated as of December 31, 2001 and December 29, 2002, on
an enterprise value basis using the market multiple approach and discounted cash
flow approach. Under the market multiple approach, market ratios and performance
fundamentals relating to similar public companies' stock prices or enterprise
values were applied to the reporting units to determine their enterprise value.
Under the discounted cash flow ("DCF") approach, the indicated enterprise value
was determined using the present value of the projected future cash flows to be
generated considering appropriate discount rates. The discount rates used in the
calculation reflected all associated risks of realizing the projected future
cash flows. Certain of the valuation assumptions were based on management's
expectations for future performance of the IT Services and Commercial Staffing
reporting units. These assumptions include expected time frame of technology
spending and broader economic recoveries as well as future growth rates in the
IT Services and Commercial Staffing businesses. A relatively high discount rate
of 17% was utilized in the discounted cash flow valuation approach due
principally to the inherent uncertainties associated with these assumptions.

      Based upon the results of the initial valuation, which was completed in
the second quarter, the Company recorded a goodwill impairment charge of
$284,695 ($242,497 net of an income tax benefit of $42,198) as a cumulative
effect of the change in accounting principle.

      In the fourth quarter of 2002, the Company performed its annual impairment
test and recorded an impairment charge of $89,935 million for goodwill
associated with its IT Services operations. The Company experienced lower than
expected operating profits and cash flows in 2002 for the IT Services reporting
unit. As a result of this trend and the overall industry expectations, the
projected operating profits and cash flows for IT Services operations were
reduced for the next five years resulting in a reduction in the fair value of
the Company's goodwill. The decrease in fair value resulted in the recognition
of the $89,935 million impairment loss. No additional impairment was identified
for the goodwill associated with the Company's Commercial Staffing reporting
unit.


                                       33
<PAGE>
      A reconciliation of goodwill for the years ended December 29, 2002 and
December 30, 2001 is as follows:


<TABLE>
<CAPTION>
                                                                        COMMERCIAL
                                                         IT SERVICES     STAFFING         TOTAL
                                                         -----------    ----------      ---------

<S>                                                      <C>            <C>             <C>
 Balance, December 31, 2000                              $   440,679    $  120,773      $ 561,452
    Impairment loss under SFAS 121                           (41,027)      (15,752)       (56,779)
    Sale of a business and other                             (11,146)            7        (11,139)
    Amortization expense                                     (11,968)       (3,404)       (15,372)
                                                         -----------    ----------      ---------
 Balance, December 30, 2001                                  376,538       101,624        478,162
    Impairment loss resulting from SFAS 142 adoption        (245,373)      (39,322)      (284,695)
    Impairment loss resulting from SFAS 142 annual test      (89,935)           --        (89,935)
                                                         -----------    ----------      ---------
 Balance, December 29, 2002                              $    41,230    $   62,302      $ 103,532
                                                         ===========    ==========      =========
</TABLE>


      The following table sets forth a reconciliation of net loss and earnings
per share information for 2002, 2001 and 2000 as adjusted for the
non-amortization provisions of SFAS 142:


<TABLE>
<CAPTION>
                                                                    2002            2001            2000
                                                                ------------    ------------    ------------
<S>                                                             <C>             <C>             <C>
Net loss before cumulative effect of accounting change,
      as reported                                               $   (108,030)   $    (66,678)   $     (2,175)
Add:  Goodwill amortization, net of tax                                   --          11,297          11,627
                                                                ------------    ------------    ------------
Adjusted net income (loss) before cumulative effect of
      accounting change                                             (108,030)        (55,381)          9,452
Cumulative effect of accounting change, net of tax                  (242,497)             --              --
                                                                ------------    ------------    ------------
Adjusted net income (loss)                                      $   (350,527)   $    (55,381)   $      9,452
                                                                ============    ============    ============

BASIC AND DILUTED EARNINGS PER SHARE:
      Net loss before cumulative effect of accounting change,
            as reported                                         $      (4.04)   $      (2.52)   $      (0.09)
      Add:  Goodwill amortization, net of tax                             --            0.43            0.47
                                                                ------------    ------------    ------------
      Adjusted net income (loss) before cumulative effect of
            accounting change                                          (4.04)          (2.09)           0.38
      Cumulative effect of accounting change, net of tax               (9.06)             --              --
                                                                ------------    ------------    ------------
      Adjusted net income (loss)                                $     (13.10)   $      (2.09)   $       0.38
                                                                ============    ============    ============
</TABLE>


      The following table sets forth a reconciliation of intangible assets
subject to amortization, which are included in other assets on the Consolidated
Balance Sheets, by intangible asset class as of December 29, 2002 and December
30, 2001:


<TABLE>
<CAPTION>
                                                      2002                                  2001
                                     -----------------------------------     ----------------------------------
                                      GROSS                                   GROSS
                                     CARRYING    ACCUMULATED                 CARRYING   ACCUMULATED
                                      AMOUNT     AMORTIZATION       NET       AMOUNT    AMORTIZATION      NET
                                     --------    ------------     ------     --------   ------------     ------
<S>                                  <C>         <C>              <C>        <C>        <C>              <C>
Non-Compete agreements               $  2,413    $     (2,223)    $  190     $  5,997   $     (5,338)    $  659

Trade names                                29             (17)        12           29            (14)        15
                                     --------    ------------     ------     --------   ------------     ------
  Total intangible assets subject
     to amortization                 $  2,442    $     (2,240)    $  202     $  6,026   $     (5,352)    $  674
                                     ========    ============     ======     ========   ============     ======
</TABLE>


      Non-compete agreements are amortized over a period of five years and trade
names are amortized over a period of 10 years. Amortization expense for 2002,
2001 and 2000 was $472, $16,278 and $16,826, respectively. Estimated
amortization expense remaining for the succeeding fiscal years is $190 in 2003,
$6 in 2004, $3 in each of 2005 and 2006 and $1 in 2007.



                                       34
<PAGE>

      In the fourth quarter of 2001, the Company conducted a strategic review of
its operations within each business segment. The strategic review triggered an
impairment review of the goodwill related to certain of these operations. The
Company evaluated the recoverability of the goodwill by estimating future
undiscounted cash flows that were deemed inadequate to support the carrying
value of the goodwill associated with certain operations. As a result, the
Company recorded a goodwill impairment charge of $56,779 in the fourth quarter
of 2001 based on fair value determined by discounted cash flows. The impairment
charge related to operations located principally within certain geographic
markets for which the operating performance through the fourth quarter of 2001
had substantially under-performed the broader operating segment and where
management did not anticipate recovery to profitable levels. The impairment
charges for IT Services and Commercial Staffing were $41,059 and $15,720,
respectively.

      In the fourth quarter of 2000, the Company incurred a goodwill impairment
charge of $11,021 related primarily to CareerShop.com. At the time of the
CareerShop.com acquisition, the Company expected CareerShop.com's job board and
related businesses to become cash positive by the end of 2000 and break even
from a profit standpoint during 2001. Acquired assets, consisting primarily of
$11,232 of intangibles, were recorded as a result of the acquisition (total
consideration paid, including assumption of debt, was $11,949, of which $9,365
was cash and the remainder was stock). However, CareerShop.com's separate
businesses failed to produce expected results. Due to the significance of the
change in conditions, management performed an evaluation of the recoverability
of the goodwill related to these operations and recorded the impairment charge.
CareerShop.com was sold in June 2001, resulting in a loss of $660.

8. RESTRUCTURING AND RATIONALIZATION CHARGES:

      Beginning in 2001, the Company implemented a plan to restructure and
rationalize certain operations. As a result, the Company recorded charges
totaling $8,278 and $16,134 in 2002 and 2001, respectively comprised of the
following components:


<TABLE>
<CAPTION>
                                                      2002         2001
                                                    --------     --------
<S>                                                 <C>          <C>
Employee severance                                  $  1,915     $  1,678
Lease abandonment and termination costs                2,689        3,869
Professional services charges                          3,628          875
Property abandonment charges                              46        2,568
Loss on sale of business                                  --        7,683
Other                                                     --         (539)
                                                    --------     --------
Total restructuring and rationalization charges     $  8,278     $ 16,134
                                                    ========     ========
</TABLE>


      Following is a summary of the accrued liability for cash restructuring and
rationalization charges for 2002 and 2001:


<TABLE>
<CAPTION>
                                         EMPLOYEE     LEASE    PROFESSIONAL
                                         SEVERANCE    COSTS      SERVICES       OTHER      TOTAL
                                         ---------   -------   ------------   ---------   -------
<S>                                      <C>         <C>       <C>            <C>         <C>
Initial charges                          $   1,678   $ 3,869   $        875   $     434   $ 6,856
Cash payments                               (1,636)     (760)          (675)       (113)   (3,184)
                                         ---------   -------   ------------   ---------   -------
Accrued liability at December 30, 2001          42     3,109            200         321     3,672
2002 charges                                 1,915     2,689          3,628          --     8,232
Cash payments                               (1,398)   (1,140)        (2,782)       (237)   (5,557)
                                         ---------   -------   ------------   ---------   -------
Accrued liability at December 29, 2002   $     559   $ 4,658   $      1,046   $      84   $ 6,347
                                         =========   =======   ============   =========   =======
</TABLE>


      Employee severance-related costs included the elimination of both
administrative and income-producing employees. Under the workforce reduction
plan, approximately 17.5% (26% in 2001) of the Company's permanent workforce, or
194 (395 in 2001) employees, was eliminated during the year. Lease abandonment
and termination costs related primarily to office closures, branch
consolidations and leased space reductions. Professional services charges
consisted primarily of legal and accounting services incurred in connection with
the financial restructuring. Property abandonment costs consisted of the
write-down of abandoned leasehold improvements and other equipment. These assets

                                       35
<PAGE>
were written down to zero as they have been abandoned. The loss on the sale of
business relates to the sale of one of the Company's IT Services offices in
Dallas, which was completed on December 31, 2001. On the date of the sale, the
net book value of this operation was $11,508 and consideration of $3,825 was
received, resulting in the write-down of $7,683 of goodwill for the year ended
December 30, 2001. This business was included in the IT Services segment and
contributed $11,499 in revenues and $310 in net income for the year ended
December 30, 2001. Other rationalization expenses of ($539) were recorded in
2001 associated with incremental costs in downsizing the business to current
operating levels, the loss on the sale of CareerShop and changes in estimates
for previous lease terminations of $433, net of other income of $1,633 related
to favorably settling certain obligations.

      Of the remaining accrued liability at December 29, 2002, the Company
expects to pay approximately $3,115 over the next twelve months and the balance,
primarily lease payments, over the following seven years.

      Restructuring and rationalization charges of $1,960 were recorded in 2000,
related primarily to severance and other benefits related to the early
retirement of the former Chief Executive Officer.

9. ACCRUED LIABILITIES:

      Accrued liabilities consisted of the following at December 29, 2002 and
December 30, 2001:


<TABLE>
<CAPTION>
                                                       2002        2001
                                                     --------    --------
<S>                                                  <C>         <C>
Accrued wages, benefits and other personnel costs     $25,364     $32,644
Accrued interest                                        4,251       5,009
Accrued workers' compensation benefits                  3,856       2,652
Accrued restructuring and rationalization charges       3,115       1,478
Income tax reserves                                    17,755       3,535
Other                                                   7,862       6,482
                                                     --------    --------
                                                      $62,203     $51,800
                                                     ========    ========
</TABLE>


      See Note 13, "Income Taxes," for further discussion of the Company's
income tax reserves.

10. OTHER LONG-TERM LIABILITIES:

      Other long-term liabilities consisted of the following at December 29,
2002 and December 30, 2001:


<TABLE>
<CAPTION>
                                                       2002        2001
                                                     --------    --------
<S>                                                  <C>         <C>
Deferred tax liabilities                              $   342     $33,068
Employee benefit obligations                            3,514       3,114
Workers' compensation reserves                          1,928       1,374
Accrued restructuring and rationalization charges       3,232       2,194
                                                     --------    --------
                                                      $ 9,016     $39,750
                                                     ========    ========
</TABLE>


11. EMPLOYEE BENEFIT PLANS:

      The Company has 401(k) profit sharing and nonqualified profit sharing
plans, which cover substantially all of its employees. Company contributions or
allocations are made on a discretionary basis for these plans (except for
matching contributions made to certain 401(k) profit sharing plans as required
by the terms of such plans). Contributions charged to operating expenses were
$1,507, $2,288 and $2,914 in 2002, 2001 and 2000, respectively.

      The Company does not provide post-retirement health care and life
insurance benefits to retired employees or post-employment benefits to
terminated employees.

                                       36
<PAGE>
      During 1999, the Company established a Supplemental Employee Retirement
Plan (the "SERP") for its then Chief Executive Officer. The Company announced
the retirement of such officer in February 2000, and in connection therewith the
annual benefit payable under the SERP was fixed at $150. As of December 29,
2002, the Company had accrued approximately $1,465 for the SERP.

12. CAPITAL STOCK AND STOCK OPTIONS:

      The Company repurchased 1,664,300 shares of its Common Stock at an
aggregate purchase price of $10,584 in 2000, under a stock repurchase program.

      The Company's Board of Directors adopted the 2001 Non-Qualified Employee
Stock Purchase Plan (the "2001 Stock Purchase Plan") for the purpose of
encouraging employee participation in the ownership of the Company. This plan
replaced the 1997 Employee Stock Purchase Plan (the "1997 Stock Purchase Plan"),
which terminated in the first quarter of 2001. Purchases under the 2001 Stock
Purchase Plan were made monthly at the market price on the last day of the
calendar month. Under the 1997 Stock Purchase Plan, employees could elect to
have payroll deductions made to purchase Common Stock at a discount. During 2001
and 2000, 423,856 and 798,978 shares, respectively, of Common Stock were issued
under the 1997 Stock Purchase Plan. During 2002 and 2001, 187,147 and 77,959
shares, respectively, of Common Stock were issued under the 2001 Stock Purchase
Plan. The Company terminated the 2001 Stock Purchase Plan effective December 31,
2002.

      The Company's Board of Directors adopted its 1995 Equity Participation
Plan (the "1995 Stock Option Plan") to attract and retain officers, key
employees, consultants and directors. The 1995 Stock Option Plan had reserved
for issuance 15% of the Common Stock issued and outstanding, as defined, from
time to time. The Stock Option Plan allowed for the issuance of options, stock
appreciation rights, restricted or deferred stock awards and other awards.
Incentive stock options were granted only to employees and, when granted, were
to have an exercise price equal to at least 100% of the fair market value of the
Common Stock on the grant date and a term not longer than 10 years. As of
December 29, 2002, 2,162,968 shares were reserved for the issuance of new
options under the Stock Option Plan.

      In addition, nonemployee directors (including the directors who administer
the Stock Option Plan) receive nondiscretionary grants of nonqualified stock
options ("NQSOs") under the Stock Option Plan pursuant to a formula specified in
the Plan. The NQSOs granted to nonemployee directors were fully vested and
exercisable upon grant, and the term of each such option was 10 years. NQSOs
could also be granted to an employee or consultant for any term specified by the
compensation committee of the Board and 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, could have been less than fair market
value on the date of grant (but not less than par value), and may become
exercisable (at the discretion of the compensation committee) in one or more
installments after the grant date. A summary of stock option activity under the
1995 Stock Option Plan follows:

                                       37
<PAGE>
<TABLE>
<CAPTION>
                                                  WEIGHTED
                                    SHARES        AVERAGE
                                    UNDER        PRICE PER
                                    OPTION         SHARE
                                  ----------    -----------
<S>                               <C>           <C>
Outstanding, January 2, 2000       3,475,305     $    11.88
   Granted in 2000                 1,461,250           2.33
   Exercised                           1,300           6.69
   Canceled                          529,958          12.32
                                  ----------    -----------
Outstanding, December 31, 2000     4,405,297           8.68
   Granted in 2001                   321,875           1.75
   Canceled                          344,160           9.07
                                  ----------    -----------
Outstanding, December 30, 2001     4,383,012           8.14
   Granted in 2002                    57,500           0.93
   Canceled                        1,602,877          10.56
                                  ----------    -----------
Outstanding, December 29, 2002     2,837,635     $     6.63
                                   =========     ==========
Exercisable, December 31, 2000     2,286,797     $    11.99
                                   =========     ==========
Exercisable, December 30, 2001     2,814,878     $    10.74
                                   =========     ==========
Exercisable, December 29, 2002     1,976,068     $     8.55
                                   =========     ==========
</TABLE>


      The following table summarizes options outstanding and options exercisable
under the 1995 Stock Option Plan as of December 29, 2002, and the related
weighted average remaining contractual life (years) and weighted average
exercise price:


<TABLE>
<CAPTION>
                                OPTIONS OUTSTANDING                  OPTIONS EXERCISABLE
                    ----------------------------------------     ------------------------------
                                      AVERAGE
                                     REMAINING      AVERAGE
   RANGE OF           OPTIONS       CONTRACTUAL     EXERCISE       OPTIONS          AVERAGE
EXERCISE PRICES     OUTSTANDING        LIFE          PRICE       EXERCISABLE     EXERCISE PRICE
---------------     -----------     -----------     --------     -----------     --------------
<S>                 <C>             <C>             <C>          <C>             <C>
$0.59 - $1.20            50,000         9.4           $ 0.89          15,000             $ 1.03
$1.21 - $2.50         1,014,625         8.0             1.56         449,527               1.54
$2.51 - $5.00           390,587         7.5             2.66         206,144               2.73
$5.01 - $8.00           280,271         5.7             5.73         229,456               5.83
$8.01 - $12.00          365,364         5.1            10.48         345,114              10.57
$12.01 - $18.00         623,488         5.3            13.75         617,527              13.75
$18.01 - $23.08         113,300         5.0            18.91         113,300              18.91
                    -----------     -----------     --------     -----------     --------------
                      2,837,635         6.7           $ 6.63       1,976,068             $ 8.55
                    ===========     ===========     ========     ===========     ==============
</TABLE>


      On February 6, 1996, as amended in December 2001, the Company declared a
dividend of one nonvoting preferred share purchase right (a "Right") for each
outstanding share of Common Stock. This dividend was paid on February 27, 1996
to the shareholders of record on that date. In the event of an acquisition, or
the announcement of an acquisition, by a party of a beneficial interest of at
least 20% of the Common Stock, each right would become exercisable (the
"Distribution Date"). Each Right entitled the registered holder to purchase from
the Company one one-hundredth of a share of Series A Junior Participating
Preferred Stock, par value $0.01 per share, of the Company at a price of $95.00
per one one-hundredth of a share of Preferred Stock, subject to adjustment. In
addition, each Right entitled the right holder to certain other rights as
specified in the Company's rights agreement. The Rights were not exercisable
prior to the Distribution Date. In March 2003, the agreement governing the
Rights was amended to permit

                                       38
<PAGE>
the issuance of capital stock and warrants to holders of the 5.75% Notes and the
senior lenders in the Company's financial restructuring without causing the
Rights to become exercisable even though certain of such received a beneficial
interest in more than 20% of the Common Stock as a result of the transactions.

      In connection with the Company's financial restructuring, the Company
implemented a new stock option plan, terminated the 1995 Stock Option Plan,
issued stock purchase warrants to its senior lenders and amended and restated
its rights plan. For a description of these matters and of the financial
restructuring generally, see Note 1, "Subsequent Event - Comprehensive Financial
Restructuring".

13. INCOME TAXES:

      The provision (benefit) for income taxes for 2002, 2001 and 2000 consisted
of the following:


<TABLE>
<CAPTION>
                                                      2002         2001         2000
                                                   ---------    ---------    ---------
<S>                                                <C>          <C>          <C>
Income (loss) before income taxes and cumulative
  effect of change in accounting principle         $(107,427)   $ (76,364)   $   6,803
                                                   =========    =========    =========


Provision (benefit) for income taxes:
  Current provision (benefit)
    Federal                                        $ (20,530)   $ (11,858)   $   2,443
    State                                               (235)        (169)         485
                                                   ---------    ---------    ---------
      Total current provision (benefit)              (20,765)     (12,027)       2,928
                                                   ---------    ---------    ---------
  Deferred provision
    Federal                                           21,368        2,235        4,840
    State                                                 --          106        1,210
                                                   ---------    ---------    ---------
      Total deferred provision                        21,368        2,341        6,050
                                                   ---------    ---------    ---------
      Total provision (benefit) for income taxes   $     603    $  (9,686)   $   8,978
                                                   =========    =========    =========
</TABLE>


      The reconciliation of the effective tax rate is as follows:


<TABLE>
<CAPTION>
                                                     2002         2001         2000
                                                   ---------    ---------    ---------
<S>                                                <C>          <C>          <C>
Federal statutory rate                                 35.0%        35.0%        35.0%
State taxes, net of federal benefit                       --          4.3         13.3
Effect of increase in valuation allowances             (34.3)       (23.1)          --
Effect of nondeductible amortization and other          (1.3)        (3.5)        83.7
                                                   ---------    ---------    ---------
Total                                                   (0.6)%       12.7%       132.0%
                                                   =========    =========    =========
</TABLE>


                                       39
<PAGE>
      The components of the Company's net deferred tax liability were as follows
at December 29, 2002 and December 30, 2001:


<TABLE>
<CAPTION>
                                              2002          2001
                                            ---------     ---------
<S>                                         <C>           <C>
Deferred income tax assets:
   Goodwill impairment                      $  76,428     $  15,151
   Accrued workers' compensation and other      2,557         2,193
   Allowance for doubtful accounts                964         1,041
   Accrued benefits                             1,498         1,157
   Net operating loss carryforward            101,983         2,242
   Other                                        7,409         7,773
   Valuation allowances                      (187,111)      (17,661)
                                            ---------     ---------
   Total deferred tax assets                $   3,728     $  11,896
                                            =========     =========
Deferred tax liabilities:
   Goodwill                                 $      --     $  28,445
   Property and equipment                       3,734         4,251
   Other                                          336           372
                                            ---------     ---------
   Total deferred tax liabilities           $   4,070     $  33,068
                                            =========     =========

   Net deferred tax liability               $     342     $  21,172
                                            =========     =========
</TABLE>


      As of December 29, 2002 and December 30, 2001, the Company had deferred
income tax assets of $76,428 and $15,151, respectively, related to the goodwill
impairment charges recorded by the Company. The Company also had federal and
state net operating loss carryforwards with a tax benefit of $101,983 and
$2,242, respectively, most of which expire primarily after the year 2012. The
Company has recorded valuation allowances totaling $187,111 and $17,661 as of
December 29, 2002 and December 30, 2001, respectively, primarily related to the
goodwill impairment, net operating loss carryforwards and the loss on the sale
of one of the Company's IT Services offices in Dallas. These valuation
allowances were recorded as the Company concluded it is more likely than not
that these deferred income tax assets would not be realized. Although
realization is not assured, the Company has concluded that it is more likely
than not that the remaining deferred tax assets will be realized based on the
scheduling of deferred tax liabilities and projected taxable income. The amount
of the net deferred tax assets actually realized, however, could vary if there
are differences in the timing or amount of future reversals of existing deferred
tax liabilities or changes in the actual amounts of future taxable income.

      The Company is subject to periodic review by federal, state and local
taxing authorities in the ordinary course of business and as is the custom for
tax returns claiming significant income tax refunds has been advised by the
Internal Revenue Service that the Service is reviewing the Company's 2001 and
2000 federal income tax returns to determine whether to perform an income tax
audit for one or both of those tax years. The Company believes its tax positions
comply with applicable tax laws and would vigorously defend these positions if
challenged. The final disposition of any positions challenged by any taxing
authority could require the Company to make additional tax payments or pay
interest and penalties, and accordingly, the Company has recorded a provision
for such risks.

                                       40
<PAGE>
14.  EARNINGS PER SHARE

      The following table reconciles net loss and weighted average shares
outstanding to the amounts used to calculate basic and diluted earnings per
share for each of 2002, 2001 and 2000:


<TABLE>
<CAPTION>
                                                                 2002            2001            2000
                                                             ------------    ------------    ------------
<S>                                                          <C>             <C>             <C>
Basic and diluted earnings per share:
  Loss before cumulative effect of change in
    accounting principle                                     $   (108,030)   $    (66,678)   $     (2,175)
  Add: Interest expense on 5.75% Notes, net of tax                     --              --              --
                                                             ------------    ------------    ------------
  Diluted loss before cumulative effect of change in
    accounting principle                                         (108,030)        (66,678)         (2,175)
  Cumulative effect of change in accounting principle            (242,497)             --              --
                                                             ------------    ------------    ------------
  Diluted net loss                                           $   (350,527)   $    (66,678)   $     (2,175)
                                                             ============    ============    ============

Weighted average common shares outstanding                     26,755,651      26,503,412      25,090,199
  Add: Dilutive employee stock options                                 --              --              --
  Add: Assumed conversion of 5.75% Notes                               --              --              --
                                                             ------------    ------------    ------------
Diluted weighted average common shares outstanding             26,755,651      26,503,412      25,090,199
                                                             ============    ============    ============

Basic and diluted earnings per share:
  Loss before cumulative effect of change in accounting
    principle                                                $      (4.04)   $      (2.52)   $      (0.09)
  Cumulative effect of change in accounting principle               (9.06)             --              --
                                                             ------------    ------------    ------------
  Net loss                                                   $     (13.10)   $      (2.52)   $      (0.09)
                                                             ============    ============    ============
</TABLE>


      Stock options to purchase 2,837,635, 4,383,012 and 4,405,297 shares of
Common Stock were outstanding for 2002, 2001 and 2000, respectively, but were
excluded from the computation of earnings per diluted share because their effect
was antidilutive. The conversion of the 5.75% Notes into common shares was
excluded from the computation of earnings per diluted share in 2002, 2001 and
2000 because their effect was antidilutive.

15. FINANCIAL INSTRUMENTS:


FAIR VALUE OF FINANCIAL INSTRUMENTS

      The fair value of the Company's cash and cash equivalents, accounts
receivable, accounts payable and accrued liabilities approximated the book value
at December 29, 2002, due to the short-term nature of these instruments. The
fair value of the Company's borrowings under the revolving credit facility and
other long-term debt approximated the book value at December 29, 2002, because
of the variable rate associated with the borrowings. The 5.75% Notes had an
estimated fair value of approximately $36,500 and $48,000 at December 29, 2002
and December 30, 2001, respectively, as compared to the carrying value of
$115,000. See Note 1, "Subsequent Event - Comprehensive Financial
Restructuring."

CONCENTRATION OF CREDIT RISK

      The Company maintains cash and cash equivalents with various financial
institutions, which at times exceeds federally insured limits.

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

                                       41
<PAGE>
16. COMMITMENTS AND CONTINGENCIES:

OPERATING LEASES

      The Company leases facilities under operating leases, certain of which
require it to pay property taxes, insurance and maintenance costs. Total rent
expense under operating leases amounted to $8,813, $10,692 and $10,360 for 2002,
2001 and 2000, respectively. Operating leases for facilities are usually
renewable at the Company's option and include escalation clauses linked to
inflation.

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


<TABLE>
<CAPTION>
                GROSS      SUBLEASE       NET
               RENTALS      INCOME      RENTALS
               -------     --------     -------
<S>            <C>         <C>          <C>
2003           $10,025     $ (1,358)    $ 8,667
2004             7,625         (979)      6,646
2005             5,824         (898)      4,926
2006             3,605         (556)      3,049
2007             2,274         (486)      1,788
Thereafter       1,666         (803)        863
               -------     --------     -------
               $31,019     $ (5,080)    $25,939
               =======     ========     =======
</TABLE>


INSURANCE

      The Company maintains self-insurance programs for workers' compensation
and medical and dental claims. The Company accrues liabilities under the
workers' compensation program based on the loss and loss adjustment expenses as
estimated by an outside administrator. At December 29, 2002, the Company had
standby letters of credit with a bank in connection with a portion of its
workers' compensation program. Additionally, the Company maintains certain
workers' compensation and medical catastrophic insurance coverages.

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

EMPLOYMENT AGREEMENTS

      The Company has agreements with several executive officers providing for
cash compensation and other benefits in the event that a change in control of
the Company occurs. See Note 1, "Subsequent Event - Comprehensive Financial
Restructuring."

LEGAL PROCEEDINGS

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

17. SEGMENT INFORMATION:

      The Company is organized in two segments: IT Services and Commercial
Staffing. IT Services provides technical staffing, training and information
technology consulting services and technology tools for human capital
management. Commercial Staffing provides temporary staffing services, placement
of full-time employees and on-site management of temporary employees. The
Company evaluates segment performance based on income from operations before
corporate expenses, amortization of goodwill and intangible assets, interest and
income taxes. Because of the

                                       42
<PAGE>
Company's substantial goodwill, management does not consider total assets by
segment an important management tool and, accordingly, the Company does not
report this information separately. The table below presents segment information
for IT Services and Commercial Staffing for 2002, 2001 and 2000:


<TABLE>
<CAPTION>
OPERATING RESULTS

                                                           2002         2001         2000
                                                        ---------    ---------    ---------
<S>                                                     <C>          <C>          <C>
Total revenues
      IT Services                                       $ 295,387    $ 447,862    $ 537,535
      Commercial Staffing                                 262,361      284,465      344,457
                                                        ---------    ---------    ---------
           Total revenues                                 557,748      732,327      881,992
Gross profit
      IT Services                                          72,007      114,524      145,268
      Commercial Staffing                                  57,794       77,144      105,282
                                                        ---------    ---------    ---------
           Total gross profit                             129,801      191,668      250,550
Operating income
      IT Services                                          13,457       28,994       38,223
      Commercial Staffing                                  11,263       18,161       33,696
                                                        ---------    ---------    ---------
           Total segment operating income, as defined      24,720       47,155       71,919

Unallocated corporate expenses                             16,161       16,050       15,201
Goodwill impairment                                        89,935       56,779       11,021
Restructuring and rationalization charges                   8,278       16,134        1,960
Amortization of goodwill and intangible assets                472       16,278       16,826
Interest expense                                           17,301       18,278       20,108
Income (loss) before income taxes and
      cumulative effect of change in                    ---------    ---------    ---------
      accounting principle                              $(107,427)   $ (76,364)   $   6,803
                                                        =========    =========    =========

OTHER FINANCIAL INFORMATION

Accounts receivable, net
      IT Services                                       $  46,318    $  59,313    $  85,344
      Commercial Staffing                                  29,860       27,775       41,398
      Corporate                                                --           --          550
                                                        ---------    ---------    ---------
           Total accounts receivable, net               $  76,178    $  87,088    $ 127,292
                                                        =========    =========    =========
</TABLE>

                                       43
<PAGE>
18. SUMMARY OF QUARTERLY FINANCIAL INFORMATION (UNAUDITED):

      The following table sets forth quarterly financial information for each
quarter in 2002 and 2001:


<TABLE>
<CAPTION>
                                                                  2002
                                            ------------------------------------------------
                                              FIRST       SECOND        THIRD       FOURTH
                                            ---------    ---------    ---------    ---------
<S>                                         <C>          <C>          <C>          <C>
Revenues                                    $ 142,053    $ 141,732    $ 137,681    $ 136,282
Gross profit                                   33,761       33,349       31,716       30,975
Goodwill impairment                                --           --           --      (89,935)
Restructuring and rationalization charges        (263)      (1,348)      (1,001)      (5,666)
Operating income (loss)                         1,496        1,008        1,582      (94,212)
Cumulative effect of change in accounting
     principle, net of taxes                 (242,497)          --           --           --
Net loss                                     (249,631)      (2,721)      (2,159)     (96,016)

Diluted earnings per share                  $   (9.35)   $   (0.10)   $   (0.08)   $   (3.58)
</TABLE>


<TABLE>
<CAPTION>
                                                                  2001
                                            ------------------------------------------------
                                              FIRST       SECOND        THIRD       FOURTH
                                            ---------    ---------    ---------    ---------
<S>                                         <C>          <C>          <C>          <C>
Revenues                                    $ 209,624    $ 194,370    $ 173,573    $ 154,760
Gross profit                                   56,674       51,855       44,122       39,017
Goodwill impairment                                --           --           --      (56,779)
Restructuring and rationalization charges        (387)      (3,858)        (440)     (11,449)
Operating income (loss)                         6,649        1,757        2,568      (69,060)
Net loss                                          930       (1,059)      (1,170)     (65,379)

Diluted earnings per share                  $    0.04    $   (0.04)   $   (0.04)   $   (2.45)
</TABLE>


                                       44

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21.1
<SEQUENCE>6
<FILENAME>g81654k1exv21w1.txt
<DESCRIPTION>SUBSIDIARIES OF THE COMPANY
<TEXT>
<PAGE>
                                                                               .
                                                                               .
                                                                               .

                                  EXHIBIT 21.1

                SUBSIDIARIES OF PERSONNEL GROUP OF AMERICA, INC.

<TABLE>
<CAPTION>
                                             State of
Subsidiary                                Incorporation        Does Business As
-----------------------------------     ------------------     --------------------------------------------------
<S>                                     <C>                    <C>
PFI Corp                                     Delaware          N/A; serves as a holding company

StaffPLUS, Inc.                              Delaware          Venturi Staffing Partners, Venturi Career Partners

Personnel Group Holdings, Inc.               Florida           N/A; serves as a holding company

InfoTech Services, LLC                    North Carolina       Venturi Technology Partners; Broughton Systems
                                        limited liability
                                             company

BAL Associates, Inc.                        California         Venturi Technology Partners

Advanced Business Consultants, Inc.           Kansas           Venturi Technology Partners

Venturi Staffing Partners, LLC          California limited     Venturi Staffing Partners, Venturi Career Partners
                                        liability company

Venturi Texas Staffing Partners, LP       Texas limited        Venturi Staffing Partners, Venturi Career Partners
                                           partnership
</TABLE>



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>7
<FILENAME>g81654k1exv23w1.txt
<DESCRIPTION>CONSENT OF PRICEWATERHOUSECOOPERS LLP
<TEXT>
<PAGE>

                                  EXHIBIT 23.1

Consent of Independent Accountants

      We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (File No. 333-19541, 333-39361 and 333-66334) and Form
S-3 (File No. 333-31863) of Personnel Group of America, Inc. of our report dated
April 14, 2003 relating to the financial statements, which appears as Exhibit
13.1 in this Annual Report on Form 10-K.

 /s/  PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP

Charlotte, North Carolina
April 14, 2003

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>8
<FILENAME>g81654k1exv99w1.txt
<DESCRIPTION>SECTION 906 CERTIFICATION FOR CEO
<TEXT>
<PAGE>

                                  EXHIBIT 99.1

                 PERSONNEL GROUP OF AMERICA, INC. AND AFFILIATES


                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



            In connection with the Annual Report of Personnel Group of America,
Inc.(the "Company"), on Form 10-K for the period ending December 29, 2002 as
filed with the Securities and Exchange Commission on the date hereof (the
"Report"), and pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of
the Sarbanes-Oxley Act of 2002, Larry L. Enterline, Chief Executive Officer of
the Company, hereby certifies that:

      (1)   The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

      (2)   The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.


/s/ Larry L. Enterline
--------------------------
Larry L. Enterline
Chief Executive Officer
April 14, 2003

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>9
<FILENAME>g81654k1exv99w2.txt
<DESCRIPTION>SECTION 906 CERTIFICATION FOR CFO
<TEXT>
<PAGE>

                                  EXHIBIT 99.2

                 PERSONNEL GROUP OF AMERICA, INC. AND AFFILIATES


                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



            In connection with the Annual Report of Personnel Group of America,
Inc.(the "Company"), on Form 10-K for the period ending December 29, 2002 as
filed with the Securities and Exchange Commission on the date hereof (the
"Report"), and pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of
the Sarbanes-Oxley Act of 2002, James C. Hunt, Chief Financial Officer of the
Company, hereby certifies that:

      (1)   The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

      (2)   The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.


/s/ James C. Hunt
--------------------------
James C. Hunt
Chief Financial Officer
April 14, 2003

</TEXT>
</DOCUMENT>
</SUBMISSION>
